Study Circle 16 of 2019 – The Abolition of the Wages System

DYFI CUC organised the sixteenth study circle of the year yesterday. We completed reading Value, Price and Profit with Chapters 12-14.

Marx ties his arguments together and demonstrates how they work on a macro scale as well. He lists four main cases where fighting for wage increases is necessary to even maintain the worker’s own labouring power: 

1) If there is a decrease in productivity, wage increases are required for the worker to be able to afford the increased price of necessities. With an increase in productivity, wage gains help compensate for the worsening of relative social position of workers caused by an increase in the rate of profit.

2) A change in the value of money makes real wages depreciate and hence wage increases are necessary.

3) There is a constant pressure to prolong the working day and to intensify the work done in a given working day. To compensate for these tendencies, as they cause labouring power to deteriorate, wage increases are necessary.

4) During downturns in the business cycle, wages are decreased. As labour power is a commodity under capitalism, it should be treated like any other commodity and compensated with a more than proportionate increase in its price (wages) during upturns, to maintain the same average wage through a complete business cycle.

Thus we see that demands for wage increases are only reactions to actions undertaken by capital interests. However, Marx underlines that greater political struggle is required for the maintenance of any kind of concessions made for workers. And we must not lose sight of the actual goal: the abolition of the wage system itself. 

The conclusions are best summarised by Marx himself:

  • Firstly. A general rise in the rate of wages would result in a fall of the general rate of profit, but, broadly speaking, not affect the prices of commodities.
  • Secondly. The general tendency of capitalist production is not to raise, but to sink the average standard of wages.
  • Thirdly. Trades Unions work well as centers of resistance against the encroachments of capital. They fail partially from an injudicious use of their power. They fail generally from limiting themselves to a guerilla war against the effects of the existing system, instead of simultaneously trying to change it, instead of using their organized forces as a lever for the final emancipation of the working class that is to say the ultimate abolition of the wages system.

Next Sunday, we will begin a series of study circle meetings on fascism: what it is, how it has been dealt with in the past, perspectives about how to deal with it now. Do attend, because we expect lots of discussion!

Revolutionary Greetings,

Central Unit Committee,

Democratic Youth Federation of India – Delhi

Study Circle 15 of 2019: Why does profit exist?

Dear comrades and friends,

DYFI CUC organised the fifteenth study circle of the year yesterday, and we had the most intense discussions we’ve had in a while. We continued reading Value, Price and Profit and completed Chapters 8-11. 

The chapters elaborate on the difference between labour and labouring power, and on how the appropriation of surplus value reproduces the capitalist as a capitalist, and the worker as a worker.

Marx explains that the entirety of profit is the unpaid part of the labourer’s value addition. Industrial profit, rent, and interest are only ways to distribute surplus value amongst employing capitalists, landlords and moneylenders. Importantly, wages and profit change in opposite ways: when general wages increase, the general rate of profit declines, and vice versa.

In other words, profit exists because wages are less than value addition; and so, commodities are sold at prices equivalent to their value, not above it. 
We discussed the value added by management, and whether capitalists add value to production by taking risks – we talked about how they are able to take the risk only because they have the capital, and this capital has been accumulated through enclosure and capture of resources.

We also spoke of how digital platforms, along with venture capital, fit into this analysis, and from whom the surplus value is extracted in these businesses. 
Next week we will finish the remaining chapters.

Revolutionary Greetings,

Central Unit Committee,

Democratic Youth Federation of India – Delhi

Study Circle 14 of 2019: Value, price, and profit

DYFI CUC organised a few study circles in this interim, but we unfortunately do not have updates – hence we are counting today’s study circle as the fourteenth of this year. After having completed Wage Labour and Capital, today we read the first six chapters of Value, Price and Profit.

The book consists of speeches delivered by Marx at the First International, in response to John Weston’s arguments against a general increase in wages. Weston posited that if workers fought for a general increase in wages, the increase would simply be transferred by the capitalist to commodity prices. An increase in commodity prices would mean that the real wages of the workers would remain the same, given that their purchasing power would decrease.

Marx shows that this reasoning is based on several flawed assumptions. That wages determine prices is not a given, and that a certain general level of profit is required for production to continue is also not. Weston is unclear about whether there is a universal economic law about the level at which general wages should remain, or whether this depends on the will of the capitalist – if the former, the law is not presented and defended; if the latter, wages can be made to change against the will of the capitalist as well. In any event, there is a constant downward pressure on wages, that does not affect commodity prices in the opposite direction – meaning that the rates of profit and rent change, are not cosmically determined. Marx shows that, in fact, a general increase in wages would mean that either that commodity prices remain unchanged as the rate of profit declines, or that an increased demand for necessities and decreased demand for luxuries causes a temporary rise in the prices of necessities, which is fixed as capital moves to increase the supply of necessities to match demand. Marx uses historical examples to validate this.

At the heart of Weston’s argument is an erroneous theory of value, and the idea that profit arises at the point of exchange. Marx shows how this is impossible, and develops the labour theory of value. 

Next week we will continue reading the remaining chapters. 

Revolutionary Greetings,

Central Unit Committee,

Democratic Youth Federation of India – Delhi

Study Circle 13 of 2019: Wage, Labour and Capital

DYFI-CUC organised the thirteenth study circle of this year yesterday. We read the first five chapters of ‘Wage Labour and Capital’ (WLC) by Karl Marx — a pamphlet introducing some basic concepts in Marx’s critique of classical political economy.

It consists of lectures delivered by Marx before the German Workingmen’s Club of Brussels in 1847, and was first published in 1849 as an (incomplete) series of articles in the Neue Rheinische Zeitung, the German newspaper published by Marx between 1848-49. 

WLC (as retrospectively edited by Engels after Marx’s death to conform to Marx’s ideas as they had changed and crystallised in later decades) begins by explaining what wages are. It is commonly assumed that wages are what the capitalist employer pays a worker in return for a certain amount of labour for a certain amount of time (time-wages) or for a certain task (piece-wage). In other words, classical political economy assumes that the capitalist buys the labour of the worker and pays wages in return. 

However, the text clarifies that what the capitalist buys is not labour, but the labour-power of the worker. It goes on to explain that labour-power is a commodity — just like any other commodity that is produced for the purpose of exchange and thus has an exchange-value. This exchange value estimated in money is called its price. 

Wages, therefore, are simply the price of labour-power.

Next, Marx talks about the factors determining the price of any commodity — competition between sellers, competition between buyers, competition between buyers and sellers, and the laws of supply and demand under capitalism. However, the text makes it clear that a price can be said to have ‘fallen’ or ‘risen’ only in relation to the cost of production of the commodity — supply and demand merely cause the price to fluctuate either above (rise) or below (fall) this cost of production.  The price of a commodity expresses (in the form of money) the ratio or proportion in which one commodity can be exchanged for another commodity. If the price of a one commodity rises, then the price of some other commodity can be understood to have fallen in proportion to the rise in price of the first commodity. 

The cost of production of commodity is determined by raw materials, wear and tear, etc. as well as the labour-time necessary for the manufacture of the commodity.

Just like the price of any other commodity, the price of labour-power — or wages — is determined by the cost of production of the labour-power. 
This cost of the production of labour-power consists of the minimum necessary costs for the maintenance of the worker (social reproduction) so that the worker can continue to sell her labour-power, besides the cost of training the worker, if there is any.

Next, Marx talks about the nature and growth of capital. Capital, he says, consists of the raw materials, the instruments of labour and the means of subsistence that are used in production of new raw materials, new instruments and new means of subsistence. However, all of these components of capital are products of labour over periods of time in the past — or ‘accumulated labour’. 

But this accumulated labour becomes capital only when worked upon by ‘living’ labour (that is, when the exchange of labour-power takes place), which preserves and multiplies the exchange value of this accumulated labour, producing yet more capital.

Next week, we shall continue reading Wage Labour and Capital, and finish the remaining four chapters.

Revolutionary Greetings,

Central Unit Committee,

Democratic Youth Federation of India – Delhi