This is one of many passages where Marx makes clear that his own insights would not be possible without the historical emergence of capitalist economic relations and the notion of equality that is intertwined with them. Even before capitalism, labor time was implicitly the measure of value in exchange—otherwise it would be impossible to compare the “cost” of two different commodities—but only with the advent of capitalism is labor time explicitly the measure of value in exchange. The latter transformation requires not only that each person be recognized as equal but also that each person be recognized as free to spend her own time. Only the recognition that we have free time—and that our free time is inherently valuable for us—can make our labor intelligible as a cost and bestow value on the products of our labor. This is one of my central arguments, which is merely implied by Marx’s analysis but required for it to make sense.
The social form that recognizes the general right to free time under capitalism is wage labor. The institution of wage labor acknowledges that when I work for my subsistence I am operating in a realm of necessity, where my labor counts as a negative “cost” for which I am compensated with a wage. By the same token, it is acknowledged that wage labor is a means for the end of leading my life in a realm of freedom that opens up beyond my working hours. My wage is literally a means for my subsistence, which is supposed to give me free time to pursue the projects and commitments that matter to me (otherwise there would be no institutional difference between wage labor and slavery). Yet, as Marx maintains, the promise of freedom through wage labor is necessarily betrayed by the social form of wage labor itself. This argument needs to be carefully unpacked, since it illuminates how we are treating the time of our lives under capitalism and why that treatment contradicts our commitment to leading a free life.
The social form of wage labor has the capacity to produce large amounts of surplus value in the overall economy. The capacity for such a “growth” of value is the main reason why supporters of capitalism believe it is the best economic system possible. The decisive question, however, is how to account for the growth of value in a capitalist economy. Contrary to a widely held assumption, the source of economic growth cannot be located in the process of circulation (buying and selling). Particular economic actors can make a profit when buying something cheaply and selling it for a higher price, but in the economy as a whole this kind of profit is a zero-sum game, since gain for one actor amounts to loss for another. Accordingly, the process of buying and selling cannot explain why there is an increase of value in the economy as a whole. Yet we know that capitalist economies generate such a surplus (e.g., an annual growth of value). From where is the surplus value coming? The explanation resides in the process of production and specifically in the activity of living labor.
As I demonstrated in chapter 4, living beings necessarily generate a surplus of time by virtue of their own activity of self-maintenance. Speaking economically, we produce more lifetime than we need to “spend” on keeping ourselves alive. This is why we have free time, but it is also why we can be exploited. A being who would consume all her time merely in order to survive could never be used for any other purpose, since she would die as soon as you forced her to do anything but maintain her own life. Our activity of self-maintenance, however, generates more lifetime than it “costs.” The surplus of time makes it possible for us to lead free lives but also to be exploited in the social form of wage labor, which converts our surplus of lifetime into surplus value for the sake of profit and the growth of capital.
We can pursue the details of Marx’s argument by following the fate of wage labor and the dynamic of capitalism in our village. As a capitalist, I own the well that is located one hour from the village and is our only available means for producing water in an efficient manner. The demand for water is high—for drinking, cleaning, washing, growing vegetables, etc.—so I have hired five hundred workers to walk and retrieve water from the well for eight hours per day, six days a week.
The value of the commodity I am selling (a gallon of water) is determined by how much time it costs to produce it. More exactly, the value of a gallon of water is determined by the amount of labor time it takes for the average worker in our society to produce a gallon of water (two hours). This is what Marx calls socially necessary labor time. The socially necessary labor time depends on the available means of production in a society at a time, which in our case are the available well technologies in the country and the available tools for transporting water. If developments in technology and general work efficiency decrease the socially necessary labor time for producing a gallon of water from two hours to one, the value of a gallon of water will also be cut in half, since the production of a gallon now “costs” only one hour of labor time instead of two.
The value of the labor-power I am buying on the job market (the wage of the worker) is in turn determined by how much it costs to produce the power in question. Marx emphasizes that what I am buying as a capitalist is not the worker himself—in which case he would be a slave—but precisely his “labor-power” (Arbeitskraft). However, since labor-power exists only as the capacity of a living individual, the labor-power of a worker cannot be separated from the life of the worker himself. The cost of producing labor-power is therefore inseparable from the cost of reproducing the life of the worker, granting him enough food, sleep, and other means of subsistence to ensure that he can continue to labor. This is why the rate of wages is essentially related to the average cost for the means of subsistence in a society at a given time. For capitalism to reproduce itself day after day, it must provide the means for workers to reproduce themselves, so that they can generate both their own labor-power for tomorrow and children who can become workers the day after tomorrow. As Marx explains: “The labor-power withdrawn from the market by wear and tear, and by death, must continually be replaced by, at the very least, an equal amount of fresh labor-power. Hence the sum of the means of subsistence necessary for the production of labor-power must include the means necessary for the worker’s replacements, i.e., his children.”31
The investment in labor-power is generally a profitable investment because living beings generate more lifetime—and therefore more labor-power—than it costs to maintain them. This is the origin of the surplus value that is transformed into capital. The value that the average worker can produce in an hour of labor is greater than the cost of maintaining the life of the average worker for an hour of labor. How much greater the value is relative to the cost depends on numerous factors, but that the value produced by labor is greater than the cost of labor is necessary for there to be an increase of wealth in capitalist economies. Even after all the additional costs of production and retail have been factored in, there must be a surplus value that is generated by the activity of living labor—otherwise there would be no overall profit in the system, no “growth” in the economy. Moreover, the surplus cannot go back to the worker himself but must be reinvested and accumulated as capital by the owner of the means of production.
Yet, while the investment in living labor is generally a profitable investment, I cannot be certain that my investment in a particular worker will pay off and that my particular business will be profitable. Accordingly, as a capitalist employer, I must try to get my workers to labor as hard as possible. When I hire you, I am buying your labor-power for a certain amount of time—in our case: eight hours per day, six days a week—but I cannot know in advance how efficiently you will make use of the time. For this reason I cannot know how much profit you as a particular worker will bring me—or even if you will bring me any profit at all. If it takes you more than one hour to bring back one gallon of water to the village—because you are slow or lazy or for any other reason—the gallon of water does not become more valuable. The particular gallon becomes more expensive for me (since I am paying for your time), but the general value of a gallon remains the same and as a consequence my profit margins are negat
ively affected. The value of a gallon of water is not determined by the quantity of time it takes for you as a particular worker to produce it, but by the quantity of time it takes for the average worker under current societal conditions of production (the socially necessary labor time), which in our case is one hour for one gallon of water. If it takes you more time than the socially necessary labor time to deliver a gallon of water (if you are slower than the average worker), my profit decreases and may even dwindle away altogether. Inversely, if it takes you less time than the socially necessary labor time (if you are faster than the average worker), my profit increases and I can stay in business.
The reason that I am driven—as a capitalist employer—to press more labor out of my workers is therefore not primarily a matter of psychology or individual vice. Before Marx, socialist writers tended to portray capitalists as evil villains who exploit workers out of greed, as though the problem were one of morality. In contrast, Marx shows that the dynamic of exploitation is intrinsic to the social form of capitalism itself and not reducible to individual vice or virtue.32 To be sure, the exploitation of wage labor can be more or less violent and Marx was certainly attuned to the particular horrors of labor practices in the nineteenth century, with many workers (including children) driven to death from working both in factories and in the homes of individual employers. Furthermore, Marx’s insights should remind us of the terrible labor practices that persist throughout the world today. For example, workers are committing suicide in response to the conditions under which they produce the kind of computer on which I am typing this book. Yet, to reduce the issue to individual choice and character is to disregard how exploitation is systemic under capitalism. As an individual consumer, I can choose not to buy certain products, but without a collective transformation of the system of exchange I will continue to participate in capitalist exploitation. Likewise, as a capitalist employer, I will go out of business and find myself consigned to wage labor if I do not extract surplus value from my workers. As a wage laborer, finally, I have no choice but to submit to a capitalist employer if I want to make a living and survive.
In our village, I am a liberal and well-meaning capitalist employer. I have read Mill’s On Liberty and I endorse his definition of freedom as the right of each one of us to pursue “our own good in our own way, so long as we do not attempt to deprive others of theirs or impede their efforts to obtain it.”33 Moreover, I have studied A Theory of Justice by the great liberal philosopher John Rawls and I am committed to his idea that the best form of life should allow everyone to formulate their own personal “life plans,”34 so that they can articulate what matters to them and set out to accomplish it. I regard wage labor as a means to that end, and I take myself to be doing something good for the community when I hire five hundred workers to walk and retrieve water from the well. My water business alleviates the unemployment in our village, allowing the workers better means to provide for themselves and their families. I am genuinely concerned that the eight hours of labor for six days a week will not leave much time for my workers to articulate life plans that involve anything other than securing their means of survival. But in order to stay competitive with the water businesses in neighboring villages, I have to enforce the same labor practices as they have.
You are one of my workers and I pay you a wage of ten dollars per hour, which amounts to a weekly income of $480. This wage is established in relation to the socially average cost of subsistence for an individual in the village. Like me, you regard wage labor as a means for leading your life, securing free time that you can devote to planning and pursuing your life plan. The wage you receive for your labor—ten dollars per hour—is sufficient for you to sustain your life. The gallon of water you retrieve for my business during one hour of labor, however, I am able to sell for twenty dollars, since water resources are extremely scarce in our country and every gallon is highly priced. Even when I have deducted my other expenses (for rent, tools, retail, overhead, and so on), my remaining profit is five dollars for the gallon of water you procure during one hour of labor. This profit—which stems from your surplus labor time—is converted into my growing capital.
Now, to increase their profits, the water capitalists in neighboring villages begin to push their workers to labor more intensely and for more hours per day. There are no organized labor unions and the workday is extended to ten hours, combined with demands on each worker to walk faster and carry more water on the trail. Through these innovations, the neighboring capitalists can export cheaper water to our village and take over my market for water consumption. Thus, I adopt the same labor practices to save my business and the local jobs. The awareness that I am risking the lives of my workers keeps me up at night, but I stick with it, since otherwise I would lose my business and condemn myself to wage labor. Because of the new labor conditions, my workers do not get enough time to eat, sleep, and recover. Some of them even die from exhaustion on the trail to the well. In protest, the workers organize to form a union. You become the union leader and call attention to the exploitative practices of my business. You demand a shorter workday and higher wages for all workers. After a general strike, I and the other water capitalists in the country give in. The workday is now limited to a maximum of seven hours and the minimum wage is fifteen dollars.
With the new regulations in place, my profit rates are falling and I have to find a new way to make my business viable. Here I turn to improving the available technology. I invest my capital in creating an advanced machine for retrieving water—a kind of hyper-well—within the village itself. Thanks to the new technology, each one of my workers can produce ten gallons of water per hour, even though the average production time in the country (the socially necessary labor time) remains one gallon per hour. I am thus able to make what Marx calls super-profits. While each gallon now is ten times cheaper for me to produce, I can still price my gallons in accordance with the socially necessary labor time (or better: I sell my gallons for slightly less than the current price, to edge out my competitors). In effect, I am making ten times more profit from selling water in our village and I am also able to export water to the other villages with large profit margins.
Yet the period of super-profits is temporary. The other water capitalists soon acquire the same technology that I have and take back their share of the market. With the limits of the workday established, however, something fundamental has changed. I and the other capitalists cannot increase the amount of absolute surplus value we extract from our workers by making them labor for a longer time. Each hour of labor is a unit of surplus value, so when we added hours to the workday we added surplus value in absolute terms (unit by unit). With set restrictions on the length of the workday, extracting more surplus value from our workers depends on what Marx calls relative surplus value. Relative surplus value concerns the difference between the wage I have to pay my workers for one hour of labor and the value my workers can produce during one hour of labor. The development of technology is the best way to increase relative surplus value, since with a more efficient technology I can make my workers produce more value in less time and keep their wages down at the same time.
Let me explain how. When my workers produce a gallon of water twice as fast thanks to a new technology, the value of a gallon is reduced by half. To produce the same amount of value, my workers are now producing twice as much water during one hour of labor. As a consequence, a gallon of water is cheaper to buy in the village. The average cost of living for my workers is decreased and their wages lowered (or at least limited in their increase) while still allowing them to attain their necessary means of subsistence. The result is an increase in relative surplus value. My workers produce the same amount of value in an hour, but due to the decreased living costs a smaller percentage of the value is allocated to their wage and a greater percentage is surplus value for my business.
As a result, the technological race between water capitalists
in the country is becoming more and more intense. With every advance in technology, our workers can produce more in less time and the relative surplus value is converted into capital that in turn is invested in the development of even more advanced technologies. The wheels are spinning, but the collateral effects are making themselves felt in our village. Given the more efficient technology, fewer workers are required in the production process and we are faced with growing unemployment. The workers who lose their jobs join an increasing surplus population that has to move between temporary employments and accept lower wages to make a living at all. For me and the other capitalists, this is an advantageous situation, since it allows us to decrease or at least keep down the general level of wages. Moreover, members of the surplus population are now available as cheap labor and we can employ them for minimal costs to perform a range of services for us (housekeeping, gardening, childcare, cooking, washing clothes, and so on).
At the same time, with increased unemployment the possibility of crisis is always looming, since the population must have enough money to buy the commodities we produce. The consensus of our leading economists and politicians is that we must have an annual growth of value of at least 3 percent to avoid economic crises. The annual growth of value requires not only the production of more commodities but also the consumption of more commodities, not only selling but also buying. If a commodity is not purchased, its surplus value cannot be converted into capital and it will not contribute to the annual growth of value in the economy.
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