Part Six (Chs 19-22): Wages

Hello again!

Today we are covering four brief chapters on the topic of wages. One fundamental theme of this book, of Marx's social science, is that the surface-level socio-economic reality we experience is just one level and a superficial and often misleading level at that. To more fully understand our society, and the capitalist mode of production, we need to dig deeper. The key point really in this Part Six is that the money form of wages - the thing that 'makes our world go round' - totally obscures the exploitative structure of social relations behind the scenes. Equally, Marx shows here that the superficial vagaries of supply and demand and market prices similarly obscures this reality.

Chapter 19

Marx starts Chapter 19 by stating that:

'On the surface of bourgeois society the worker's wage appears as the price of labour, as a certain quantity of money that is paid for a certain quantity of labour. Thus people speak of the value of labour, and call its expression in money its necessary or natural price. On the other hand they speak of the market prices of labour, i.e. prices which oscillate above or below its necessary price.'

He goes on to point out that, as he has previously shown, the actual value of a commodity is the 'objective form of the social labour expended in its production' and that this quantity of objectified labour is measured in time. So, there's an obvious and absurd tautology in saying that we can measure a 12-hour day of labour by the value of labour cos that's just like saying we can measure the hours of a day's work by the hours of a day's work!

If the quantity of money the worker gets for her day's work is equivalent to all the value she has produced then there is no surplus-value produced and 'the basis of capitalist production vanishes'. But, the production of surplus-value is precisely why she was employed, so in reality the wages she receives must be and is for an amount of hours of work less than she has actually laboured for, e.g. 8 hours for 12 hours' work). But, remember that this seems to be talking about labour, but labour has no value. Instead, the real value of a commodity is determined not by the labour objectified in it, but the amount of living labour it took to produce it, i.e. not labour, but labour-power. The capitalist buys the labour-power not the labour. Labour might be the 'substance and the immanent measure of value, but it has no value itself'. This couldn't be more importance because, as Marx points out, when bourgeois economists talk about the 'value of labour' they 'not only completely extinguish, but invert' the concept of value. The 'value of labour' is a category 'for the forms of appearance of essential relations', i.e. a superficial category that hides the real essence of social relations.

Marx moves on to give another absolutely crucial example of this - the 'price of labour' specifically and the conflation of price and value generally. Being good capitalists, the bourgeois political economists began their investigations by wanting to know the price of labour. But prices fluctuate and, as Marx famously puts it, rather than revealing value, when supply and demand balance they just cancel each other out and 'cease to explain anything'. So, the bourgeois political economists (and economists today) started looking at average prices over a given period of, say, a year and argued that this revealed a 'natural' price (as Adam Smith put it) of labour. 'In this way, the political economists believed they could penetrate to the value of labour through the medium of the accidental prices of labour'. Because they were concerned with matters of the marketplace primarily and not with the conditions of production, they conflated 'value of labour' with 'natural price of labour' and created 'inextricable confusions and contradictions' for themselves. I would argue that this continues to this very day in modern economics, orthodox and most heteredox forms also.

Remember the circuit that we workers are on? It's C-M-C - Commodity (labour power) - Money (wages) - Commodity (things we buy to reproduce our labour-power). So, the wage-form and, therefore, the money-form itself is absolutely pivotal. We work to receive money to live. And our ability to earn money is, of course, also bound up with our personal sense of self-worth tragically. What is politically most significant about the wage-form, then, argues Marx, is that it 'extinguishes every trace of the division of the working day into necessary labour and surplus labour, into paid labour and unpaid labour'. Take the corvee system in pre-revolutionary feudal France, says Marx, where it was clear that certain days the serf worked for himself and certain days for the lord. In capitalism, this is wholly obscured: 'the money-relation conceals the uncompensated labour of the wage-labourer'. In short, money/wages hide the social relations of production and hide, therefore, relations of power and exploitation.

'We may therefore understand the decisive importance of the transformation of the value and price of labour-power into the form of wages; or into the value and price of labour itself. All the notions of justice held by both the worker and the capitalist, all the mystifications of the capitalist mode of production, all capitalism's illusions about freedom, all the apologetic tricks of vulgar economics, have as their basis the form of appearance discussed above, which makes the actual relation invisible, and indeed presents to the eye the precise opposite of that relation.'

Wow! Yes! And then Marx gives a nod to his recognition of the historical nature of his contribution of this demystification:

'World history has taken a long time to get to the bottom of the mystery of wages, but, despite this, nothing is easier to understand than the necessity, the raison d'etre, of this form of appearance.'

Whether the necessity of hiding the fact that we work a good deal of the day for free for someone else's private benefit was consciously designed or an historical necessity is not explored. But, what is clear is that 'classical political economy stumbles approximately onto the true state of affairs, but without consciously formulating it. It is unable to do this as long as it stays within its bourgeois skin'.

Chapters 20 and 21

The next two chapters are analyses of the two main ways used to quantify wages - time-wages and piece-wages, i.e. whether workers are paid by the hour or by the amount they produce. Marx shows that piece-wages are really just another form of time-wages. It all comes down to time!! The form wages as well as the level of wages, of course, really reflects the power dynamic between bosses and workers.

Marx starts with a technical definition of the unit of measurement for time wages, the 'price of the working hour'. This is worked out by dividing the value of a day's labour-power by the number of hours in the average working day (daily value of l-p/working day).

Marx points out that if the capitalist has the power to pay the worker not on a daily or weekly rate, but just for the hours she chooses to employ the worker, she can 'employ him for a shorter time than that which is originally the basis of the calculation of the wages for the hour. Since the formula for calculating time wages is based on a given length of a working day, this kind of employment destroys 'the connection between the paid and unpaid labour'. This makes the capitalist able to:

'wring from the worker a certain quantity of surplus labour without allowing him the labour-time necessary for his own subsistence. He can annihilate all regularity of employment, and according to his own convenience, caprice, and the interest of the moment, make the most frightful over-work alternate with relative or absolute cessation of work. He can abnormally lengthen the working day without giving the worker any corresponding compensation, under the pretense of paying 'the normal price of labour'.'

How relevant is this observation to our conditions today? Governments across the post-industrial world crow about the historically low unemployment rates they have supposedly delivered. Forget the huge flaws in the way these unemployment rates are worked out for a moment. Let's focus instead on the employment reality in, say, the UK: large numbers of people underemployed in two or more jobs or taking a self-employed status, but almost all earning low and falling real incomes and almost all exposed to the vagaries of fluctuating demand for their labour.

This is pretty much a definition of the emergent global 'precariat' class, a term coined by Prof Guy Standing in his eponymous book. At bottom, widespread and intense precariousness among the working class is what you get in all capitalist periods, but it grows, of course, alongside the power of capital relative to labour - and this is why precariousness appears so pervasive these days.

Chapter 22

In Chapter 22, Marx considers 'National Differences in Wages'. He first observes that wage rates regionally and nationally will be determined by the complex interplay between the many specific local factors that affect the value of labour-power. But, whatever the conditions, these factors can be identified, measured, and an average wage rate calculated. From these national averages it follows that an 'average unit of universal labour' can also be calculated.

Among nations (and regions), then, we find different intensities of labour and, therefore, the same commodities possessing differing values and also, therefore, varying prices. So, it follows that in 'nations with a more developed capitalist mode of production' the 'relative value of money will therefore be less', i.e. in countries where workers are worked more intensively, there is more value in commodities and thus their relative nominal cost is higher.

Conclusion

Marx's critique of classical political economy is even more poignant and necessary today in our world in which the social science of economics dominates. The mathematical, epistemological, and ontological foundations of the 'science' of economics were laid down by figures such as W.S Jevons in England, Leon Walras in France, and Vilfredo Pareto in Switzerland in the late decades of the 19th Century at a time of growing working-class organisational power. Economics, it could be argued, was an inevitable and necessary creation - a political weapon disguised as a science used to entirely naturalise the capitalist social order and to obscure the real locus and nature of power in the system. Marx's work on the wage-form here is a crucial component of a critical political economy that reveals our structural exploitation and dependency that occurs through the money form - a substance that, for most of us, quite tragically, continues to significantly determine how we are valued in society and how we value ourselves...