There is anger stirring among the population, particularly as their living standards implode. Yet at the same time, there is widespread despair. The media spreads the notion that capitalism is the only alternative.
Reformists have prevailed over the decades and across the world but what do the people have to show for it? In some cases social welfare programs yet these are now in jeopardy. Has exploitation been ended, the enrichment of a few on the labor of the many? Poverty? Inequality? Is the economy planned to benefit the people? Have the creative powers of the ordinary person been unleashed? Reformists are content with class divisions, the dominance of the capitalists, and they do not challenge the existing structures
The worker need not hope for a reasonable wage. The capitalist has but to dismiss some of his hands, or fill their places with labor-saving machinery which other laborers have invented and constructed, and those thrown out of employment will immediately underbid those employed in order to be reinstated. If the latter do not accede to a reduction of wage, he will be dismissed to make room for the one who offers his services cheaper. If the workers form a union, and strike for higher wages, they cannot hold out as long as the capitalists to whom they have given up nearly the whole of their product, but surrender as soon as their idleness reduces them to poverty. Under the present system, where the wage-receiver works for a profit-taker, he can never retain his independence, or retain the fruits of his labor. It is useless to preach thrift to those who have nothing to save, or to hope for universal prosperity when the enrichment of the few is caused by the plunder of the many. Speculations in investments in stocks,and shares are all speculations on the possible future of losses of labor. Dividends do not create themselves – they are all filched from labor. If the laborers ceased to be plundered, there will be no dividends. The more they can cripple the bargaining power of the workers, the longer they can hold down wages the more profits are made from which to pay those dividends.
How can we get from the present unjust, destructive system, into one in which justice and happiness shall be the distinguishing characteristics? How shall we fight out of the present blood-thirsty system without the shedding of blood and without the disastrous reaction which has marked the bloody rebellions of the past? How shall we change bondage into liberty? We, slaves as we are, have to emancipate ourselves. It can be done. It must be done. It shall be done.
The basic problem of capitalist production has nothing to do with whether this capitalist is “good” and “generous,” and that capitalist “bad” and “miserly.” It is not at all the personal character of the capitalist that is involved – his character usually merely reflects his social position. It is not at all the individual capitalist who must be “changed” in order to change conditions. It is rather the mode of production that is involved. That is what must be studied, and that is what must be changed.
Let us take for our first example a modest and pious capitalist. He owes nothing, he argues, to the labor of others. All he has he acquired by his own labor or wit or good luck. By working like a slave for years, by stinting himself, by saving every penny; or by a legacy from a wealthy uncle; or by stumbling over a valuable gold nugget – he has managed to get hold of, say, $100,000. He got that wealth without employing labor, therefore, without exploiting anyone. So far, it seems, argument is on his side. It is not even necessary to challenge his argument, for thus far he is not yet a capitalist.
Suppose, however, that this man of wealth launches an enterprise in which he invests his hard-earned, self-earned, or luckily-found $100,000. We will even overlook how he got it in the first place. He has it, and he invests it in production.
On this sum of money, he makes a profit of ten per cent per year, or $10,000. We keep in mind here our theory of surplus-value, and we assume that the rate of surplus-value in this case is 100 per cent. That is, if the workers in his plant worked an average of four hours per day to produce the equivalent of their wages, they worked an additional four hours to produce the surplus-value. At the end of the year, the total capital would amount, thereafter, to $10,000 more than was originally invested, or to $110,000. The additional $10,000 is his profit.
The capitalist, however, is not too ambitious. He is not interested in accumulation, that is, in expanding production. All he wants is his modest profit of $10,000, and all he wants to do is spend every penny of it on food, clothing, a home, an automobile, a little life insurance, and some other necessities of life and a few small comforts for himself and his family. In other words, he consumes his profit personally and does not re-invest it. He is content in the feeling that he deserves this income because of his enterprising nature, the risk he took in launching the business, the talent he displayed in organizing production and selling his commodities on the market at a reasonable profit. His piety is satisfied by the feeling that he exploited nobody, but instead gave a number of workers a good job and good wages in return for a fair year’s work.
If this is the basis on which he operates, he will naturally start the second year as he did the first, with a capital of $100,000, having himself consumed, as an income he considers his rightful own, the $10,000 profit he made.
But let us stop a moment. The $100,000 with which he starts the second year is not the same $100,000 with which he started the first year. Of the original $100,000, he used $90,000 for machinery, raw materials, etc., and $10,000 for wages. When he received $110,000 on the market for the goods produced by the end of the year, it divided up this way: $90,000 represented the value of the machinery, raw materials, etc., incorporated into the finished products; $10,000 represented the value contributed by the workers to make up for the wages he gave them; and another $10,000 represented the surplus-value contributed by the workers in the second part of their working day.
After taking as his income $10,000, the capitalist still has left what he started with – $100,000. But only $90,000 of that came from his original capital; the remaining $10,000 came from the workers whom he exploited.
Now, if this same process is repeated during ten years, it should be clear that he will start the third year with only $80,000 of his original capital and $20,000 of surplus-value; the fourth year with only $70,000 of his original capital and $30,000 of surplus-value; and that he will enter his eleventh year in business without a penny of his original capital. He will once again invest a full $100,000, but every cent of it will have been the product of the exploitation of labor!
From this example it may be seen that no matter how noble and spotless the methods by which a man may have gathered together a large sum of money in the first place, the moment it is converted into capital, it cannot be increased, and it cannot even be maintained at its original size, without the exploitation of labor. What this or that capitalist desires to do is not decisive. The mode of production is what decides. The capitalist who does not accumulate, expand, is doomed. He must expand or be crushed. This lies not in his nature, but in the nature of capital itself.
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