MERCANTILE CAPITALISM
MERCANTILE CAPITALISM
This article uses the pronoun "he" for expediency, but does not ignore the existence of female capitalists.
The invisible hand of the market will always find its way into the worker's pocket to take his/her last dollar. Political economy examines the relations of production and the development of social production as well as the distribution of merchandises. It is not about production pers se, but about the social relations of production.
Peasants from the countryside are forced to emigrate (from South America to the US) in search of salaried jobs and end their traditional way of life. The working class thus finds that capitalism, their master, is fated to transform itself into socialism once the working class is fully formed as a political force. The vehicle for this is political theory. Capitalism exists when capitalists have the means of production in their power. at the same time large numbers of people have no such means, and are forced to use their hands and become salaried workers. The early bourgeoisie indulged in depredation of the colonies, the ruin of peasants, slavery, usury, pirating and other crimes. The newly formed working class was not merely under the impulse of assuaging hunger, but was a victim of violence to the degree of bloodshed in order for the workforce to be disciplined by their bosses. The two phenomena appeared simultaneously- salaried workers and accumulation of riches in the hands of the capitalist owners.
Mercantile production is production for sale of merchandises. At first it was production by artisans, without exploitation of third persons, characterized by the social division of work and the private property over the means of production. If someone gives the fruit of their labor to themselves of their family, that is not merchandise. Merchandise only exists when there is buying and selling. Merchandise has two qualities- its capacity to be useful, use value, and its exchange value. This barter system illustrates the human labor that different merchandises have in common, even if they are radically different in other ways, such as wheat and iron, which can be bartered for thr reason that such merchandise has use value and exchange value at the same time. Value is determined by the amount of labor poured into a merchandise. The more labor, the higher the value. Equal merchandise can be produced by different people, which results in an unequal amount of labor invested in the merchandise in a variety of circumstances. In this case, value is measured by the mean determined by society as socially necessary work, which can be measured by the amount of time invested in producing the merchandise. The value of merchandise diminishes in view of the fact that less time and work are needed as production increases (efficiency).
Use value is created as a result of concrete work. Work is an investment in human energy- physical, nervous and intellectual. Human labor in general is characterized by abstract work. All merchandise is both abstract and concrete, since work is at once general and specific.
One use value is qualitatively different from another, and in the same way one concrete labor is different from another. Yet the value of one merchandise differs from the value of another quantitatively, and abstract work also differs from another quantitatively. By employing different genres of work, in relations of exchange, we find the social division of labor. In the marketplace these relations are expressed reciprocally as producers of social production. Thus value is a relation among humans, not things. Value of merchandise is created by labor, but it only manifests itself when one merchandise is compared to another. For this a buyer is needed. The medium of exchange could be cattle, skins, salt, copper, iron, and finally gold and silver. These last work well as universal mediums of exchange because they are universally acknowledged, they don't deteriorate, and can be divided into smaller amounts. Thus they exhibit the qualities of money. Money is a universal equivalent related to all merchandise. It has use value. It fulfills the function needed in a mercantile economy, since all merchandise expresses its value in money. This is its price.
Money also serves as a means of circulation. Whereas before its was merchandise = merchandise (barter)now we have merchandise = money = merchandise. The amount of money necessary to fulfill the needs of mercantile circulation is determined by the total prices of all merchandise in a particular year.
If the amount of paper money is greater than the mount of gold required to cover its price necessary for commerce, paper money is devalued. For example, if merchandise require 1 million gold units and the State emits 2 million in paper money, the bills are worth half of what is printed on them.
After the First World War paper money suffered great instability, and lost value. This is known as inflation, which affects workers who are getting paid the same, but can do less with the same salary. Inflation is a kind of hidden tax. Money is a means of accumulation. Those who are rich have accumulated a lot . In buying and selling on credit, money fulfills the function of a means of payment. Credit allows the society to reduce the amount of cash in circulation. In commerce between countries money fulfills the role of world money.
LAW OF VALUE.
In mercantile production the exchange of merchandise is ruled by the socially necessary work invested in that production. Each worker works in isolation from the others, with the aim of the market, but without knowing ahead of time what the demand might be. The equality between demand and supply, under conditions of anarchy of production, can only be established as a consequence of market fluctuations. This causes price to be separated from value,sometimes more, sometimes less. If the offer is greater than the demand, prices fall below their value, if the demand is greater than the supply, the opposite happens. Prices tend to balance out with their value, if the price of a piece of merchandise is greater than its value, production increases, increasing the supply making the price lower to its value, thus balancing out.
Competition regulates social work and means of production. The fluctuation of prices make some sectors abandon those sectors where the supply is superior to the demand, and prices fall. The drop in prices allows the smarter entrepreneurs to better their position, while others are ruined. The enrichment of some and the ruin of others is caused by the fluctuation of prices in relation to their value. Neither are they saved by the sale of merchandise at its face value. The law of value is the law of elemental development of the productive forces. Those who use better machinery have the advantage, since they have to spend less insofar as they may have socially necessary expenditures in relation to others. Some producers in this situation, and they are always a very few, become capitalists, while the rest are thrown into the labor market as workers. The means of production fall ever more into the hands of the capitalists, who transform the mercantile economy into a capitalist one. The law of value has 3 functions; it regulates the distribution of labor power in the means of production among economic sectors , it is a motor for technical development, and it leads to the establishment of capitalism, ruining the small producers of merchandise relations.
PROFIT. This is a simple matter in which the capitalist acquires the necessary merchandise and then sells it at a greater price. Merchandise - money - merchandise. The acquisition of merchandise not to satisfy a need, but for sale, is another matter: Money - merchandise - money. Buying for sale to make a profit. Capital is a value that grows by itself (the merchandise is the same) .It starts with money. It starts with the acquisition of the means of production and of the labor force. It becomes productive capital. The merchandise is sold at market and is transformed into monetary capital, not merchandise. Now the capitalist has more money than when he started. How is it possible that the capitalist is able to gain a higher value for the same merchandise? The answer is labor power. What value does labor power have? The value of each merchandise is determined by the amount of labor necessary to produce. Labor power is exercised by real people, who have needs for themselves and their families. The time that is necessary for the production of such resources is what determines the value of labor power. Suppose there is a six hour day. When the capitalist hires the worker, he will pay a full day that expresses six hours of work. The worker works his six hours and is paid for six hours. But this does not make capital out of money, because there is no profit. He who buys the labor power of the worker sees it differently. . The worker works 12 hours instead. The value of the labor force, and the value created by the labor force are two different things. The value that the worker gains for the capitalist is for 6 hours, while the value that the worker gives to the capitalist is the product of 12 hours. The owner of the money pockets the difference .Six hours are not paid for, 6 hours are. There has been a sleight of hand that transforms money into capital. The work that is not paid for is exactly what creates capital. This unpaid labor supports all who do not work in the society, and is used for taxes, the cost of the land, machinery, etc. The salaried worker creates the money necessary for his maintenance during part of the day. This is called necessary work time. The other half is complementary time. The worker with complementary labor creates profit, which is unpaid labor appropriated by the owner, who is not interested in the means of production, consumer goods, anything useful for society, but is only interested in the greatest profit possible. There is no end to their greed.
CAPITAL. Exploitation of salaried work is used to grow capitalist value, to broaden the power of capital. The is produced by profit. Capital only appears when it is the result of worker exploitation, it is not a thing, but a social relation between the two main classes, and the exploitation of the workers who live by selling their labor power.
In capital there are two elements 1- constant capital, the investment in the means of production, factories, machines, use of energy, raw materials, etc., and 2- variable capital, which is used to buy labor power. These are not the same. The means of production do not create any new value. The value of constant capital is transferred to the mercantile consumer good. Variable capital, on the other hand, creates profit in the process of production. The relation between profit and variable capital expresses the degree of exploitation and is called the profit quota.
The rise in profits has two characteristics. First the work day can be made longer, or the work can be intensified. (increase in work tension, or greater investment in human energy per time credit). This is absolute profit. A second way is to reduce the amount of necessary work time.This constitutes relative profit.
Capitalists would increase work time up to 24 hours if they could, because the more the worker works, the greater the profit. The worker on the other hand is interested in reducing it. Thus a struggle is produced.The production of relative profit increases the complementary time spent without increasing the work day, that is, reducing the the part of the day necessary to compensate the value of the labor force. This can be achieved by increasing productivity in consumer goods that are needed by the workers , and which in their totality determine the value of the work force. While work productivity is high , the time for work is lesser resulting and greater complementary work in capitalist enterprises. Necessary work time is also reduced in those sectors that provide means of production for consumer articles.
Some capitalists achieve mega profits. This happens when they have technical expertise that others lack. This means that they invest fewer resources, and even if they sell at the same price as others, make huge profits. Other capitalists fall in line, also seeking mega profits, and a competition war is unleashed.
Capitalism goes through 3 stages- 1-simple cooperation, 2- manufacturing, 3- big mechanized industry. The first is the concentration of salaried workers who produce one merchandise under the leadership of the capitalist. There is no division of labor. The second is capitalist cooperation based on the division of labor , although with a manual technique. It signifies a substantial increase in productivity. The third, which gives total ownership to the capitalist, ends small production, broadens the ambit of labor power, and provides the constant and unending intensification of profit. The theory of profit shows that instead of workers and bosses working in harmony, they are in constant contradiction, ever deeper, between capitalist interests and labor, and mobilizes the masses to struggle against capitalist exploitation.
SALARY. Under capitalism, salary represent the price of labor. However, It is not as it appears to be, the price of labor that the capitalist gives the worker for his labor and all his labor. That work creates value, but it does not have value in itself. The capitalist does not pay the worker for his labor, but for his labor POWER. Salary is not what it seems- it is not value, or price of labor but a hidden form of value, or price, of labor POWER. The quantity of the salary comes in two forms 1- physical, the need of the worker for he and his family to survive, and 2- historic or social, which depend on the social demands of the working class in this or that country. Capitalists try to lower salaries to the lowest possible point. Workers struggle to raise their standard of living.
That is why salary is dependent on the class struggle, of the workers organization, on the degree of worker resistance against capital. Worker's struggle can make their life better but it does not eliminate their emancipation from salary slavery. There are two forms of salary- time work and piece work. Time work expresses the value of labor power by hours, weeks or months. Piece work forces the worker to work to exhaustion. If the salary for an hour is 90 cents, and the worker produces two items, he will get 45 cents for each piece. If he instead of two pieces produces three, his salary will go up 50%. The increase in production at the expense of the intensity of labor increases the value of the labor power. This should result in a salary increases, but it never results in due correspondence. If a theoretical increase in salary does not match up with the intensification of value, the worker can actually be making less the more he works, because he is not compensated according to the energy he is putting out.This sparks the class struggle, for example, when there is a sharp decline in salaries as a result of inflation, or a rise in taxes or prices in consumer goods, or a rise in rents. Workers parties consider it a sacred duty to defend the population in their immediate needs and in their final struggles of transfer of power where they become the ruling class.
PERSONAL GAIN. This is what moves the capitalist. For him production is only a means to and end. All he is interested in is profit and personal gain. Capital gains express the relation between profit and the total capital invested in a company. It is the index of profitability. There are different sectors- the means of production, that don't yield profit by themselves, the rest is contracting work by hand, the proportion between fixed capital and variable capital. Greater investments in one sector cause that some raise prices while others lower them. Capitalism that directs itself toward those sectors with scarce merchandise makes the prices go up. Thus all the profit is produced by the working class, thanks to the movement of capital in different sectors, is distributed among capitalists in an approximate relation to their investments.
PRICE OF PRODUCTION. The price of production is the same as the expenses of production, plus the mean of capital gains. Every capitalist tries to get back at least his investment, plus a mean of the capital gains index. The price of production of an article may be thus be greater or lesser than the value, even though the totality of price of production is the same as the totality of the value of all the merchandise. Lets suppose that the value of the merchandise is 120 money units (constant capital, 90, variable 10, profit, 20) and in other sectors it reads 140 units, (constant 80, variable 20, profit 40). In the first example the sales are 10 monetary units over their value, while in the second they are 10 below. However, the value of all the merchandise (120+140+=260) is the same as the price of production (130+130++260)Even though the mean result is roughly the same, the capitalists are only interested in exploiting the workers individually and collectively. The mean rate of gains illustrates the solid class base among capitalists. This class solidarity the working class opposes with its own solidarity, which is based on ending their exploitation. The struggle of the workers cannot be limited to one or another company or corporation, but it is against the destruction of the entire system of exploitation, the destruction of the social regime of the bourgeoisie.
BOSSES BENEFIT AND INTEREST. Capitalist profit is broken up for the benefit of the impresario and of interest. The capitalist does not limit himself to operate with his own resources. For this he uses credit. That part of profit that is used by a capitalist by banks to provide sums of money is called interest. The gains minus the interest that the capitalist provides for the sums received on credit are called bosses' benefit. The banks act as intermediaries between capitalist payments, providing cash and bonds at the disposition of the capitalist. The banks are responsible for capitalist development and the centralization of capital, and thus they control labor and create the conditions for the capitalists to use as they please each time greater and greater amounts of the economic resources and incomes of the population.
PROFIT HAS LIMITS IN CAPITALIST PRODUCTION. Economists present capitalist profit as a stimulation of technical progress and unlimited gains in production. They keep quiet the fact that capitalist profit is the fruit of exploitation and exhaustion of the worker, they ignore that far from being a stimulus, the subordination of production to profit is the limit here everything grinds to a halt. They only produce if it is beneficial to them. They reduce production, put a brake on technical progress, and destroy large amounts of merchandise just and only to raise profits. In addition, the monopolies wage wars and cause damage without end simply to gain more and more profits.
CAPITALISM IN AGRICULTURE. Agricultural products are turned into merchandise. Agriculture becomes a factory like any other. The resulting competition creates havoc on the small producers, small farmers, those with less land, animals and instruments. These small farmers are ruined and forced to join the ranks of the working class. At the same time there are capitalist agriculturers, and the two extremes are formed; on one hand, poor farmers and braceros and on the other rich landowners. Part of the profits that are accumulated in the countryside is appropriated by the parasitic class of landowners in the form of land rent.
LAND RENT. The workers get a salary, the ones who hold the lease get the profits, and the owner gets the rent. There are things to consider, the quality of the land (better soil gives more, even with the same investment), and how close the land is to a viable market. Capitalists must make a profit out of both situations. The price of production must be the same in the worst lands , plus the median profit. The best lands yield that plus greater benefits. The origin of these benefits is brought forth by those who work the land, and winds up in the pocket of the capitalist. The supposed law of the decreasing fertility of the soil is a theory invented by capitalists to justify scarcity, the misery of the people, and the exploitation of the land. They pretend that population growth is greater that land production, and in order to keep a balance between the two. Wars , epidemics and birth control are needed (Malthus). Instead the fact is that landowners own vast acreage where nothing is grown. Even with the worst lands the landowners charge rent. Where does this rent come from? Since the owners invest less in land machinery than factory owners do, profit is greater from the land than from industry. If there are 100 unitary amounts, in industry 90 are spent and 10 are profit, while in agriculture 20 are profit. Because with privately owned land the fluctuation of capital is not allowed, there can be no leveling of industrial gains as compared to agricultural ones. That is why prices of agricultural produce do not adjust to production but rather to value, higher in the country, lower in industry. The tribute paid by society worsens the situation of the masses both in the country and in the city. Landowners also receive tribute from extractive industries, which raises the price of minerals. Rent also raises the price of land lots, which raises the price of rent. Higher rents also adversely affect agricultural workers who don't have their own land.
LAND LEASE AND THE RUIN OF SMALL FARMERS
The capitalist farmer turns over the rent of the land to the big landowner, which represents the surplus over the median income. Landowner and capitalist split the money, which the workers have generated, among themselves . This often causes the small framer to become ruined. This means that agricultural workers can only better their situation uniting with the industrial working class.
SOCIAL CAPITAL REPRODUCTION AND ECONOMIC CRISES
Humans have to constantly replace the means of production that are always being worn down and rendered useless. This reproduction is simple when the production volume is the same. (simple profit) . Capitalism works in the area of expanded reproduction. The capitalist exploits the labor of the workers, making more money while the workers remain in the same condition and have to sell their labor power over and over. In simple reproduction the capitalist must use up his profits sooner or later. If he makes 100,000 and takes out 10,000 each year, after 10 years he will be broke. This does not happen, however, because each day he has workers and he profits from their labor in cumulative form. The first aspect is the production of the means, and the second is the production of consumer goods. To this value one must add the third part destined to compensate fixed capital in a year, and the variable capital and profit produced in a year. These are the 3 parts that demonstrate the discomposition of value. In order for the capitalist to come out ahead, he must coordinate the first and second of these. In simple production it is necessary that the total of variable capital plus profit equal constant capital in the second sector. In this exchange, workers and capitalists receive consumer goods, and the capitalists in the second sector receive constant capital destined for new production. Thus means of production and consumer goods are mutually assured. In expanded reproduction however, the sum of variable capital and profit are greater than the value of constant capital of the second sector. This difference allows for accumulation of capital. This makes constant capital to grow and variable capital to diminish. The motive is to obtain greater and greater profit. This is also pushed by competition. The army of workers gets greater, and capital becomes more centralized and concentrated. The only way this can be achieved is through economic crises, crashes that show the antagonistic contradictions of overproduction.
CRASHES.
The tendency for capitalists to raise production without limit is one of the factors where consumption is reduced by reason of lack of solvency of the population, and this leads to a crisis of overproduction, resulting in the poverty and low wages of the people. The contradiction here is of the social character of production vs private, individualist appropriation by the capitalist. The first crisis took place in 1825. After that they came around every 10 years more or less. In England between 1825 and 1938 there were 3. The economic crises of overproduction, the difficulties in selling the accumulated products , the fall of prices and the fall of production all contribute to the crash. The result is massive unemployment, lower salaries, debt slavery and the ruin of small producers. The fall in stock prices gives impulse to renewal of machinery, and the demand for the means of production. The market is reactivated and the cycle crash-depression-reactivity-boom- crash manifests the cyclical nature of capitalism. The reason for this is the social character of production and the private confiscation of the fruits of labor. The social character of production manifests itself in specialization of production, and the division of labor, as well as each time greater concentration of the corporations (monopolies). New factories are built, railroads, electric companies, etc new demand for work is generated, greater consumer goods are made available. Sooner or later thanks to the anarchy of production, the great industrial boom smashes against the limited ability to consume, and the inability of the market to keep up. The crisis of overproduction clearly shows that the possibility of satisfying the needs of the entire society are there , but this can only happen if private property is converted to social property.
THE LAW OF CAPITALIST ACCUMULATION
New advances show that for the same amount of consumer goods, fewer workers are needed than previously. Fixed capital grows, while variable capital is reduced. As capitalism develops, it may grow exponentially but there is more unemployment. This creates great anxiety in those who do continue working. Capitalist accumulation accelerates the sidelining of workers and creates the reserve work force. The greater the reserve force, in comparison with those working, the greater the misery among the population. In addition the working people are also harmed, because the capitalist can easily get rid of "malcontents" or :unionizers", since they are easily replaced. Capitalists get richer and richer and everyone else sinks deeper into poverty.
THE WORKING CLASS.
Workers are harmed by the crash, but even when they get a rise and are working they can be also harmed. As work becomes more intense (more work for each in the same amount of time), there is greater need for proper nutrition, medical care, etc. In these conditions workers are worse off, even though they may be making more money. Social wealth always leads to a greater inequality between workers and bosses. One of the struggles of the working class is to have a better salary and better living conditions. After WWII;s defeat of fascism, world socialism forced capitalists to provide better working conditions in their countries. Capitalist accumulation creates the steps necessary to go from capitalism to socialism. The expropriators are expropriated.
This article uses the pronoun "he" for expediency, but does not ignore the existence of female capitalists.
The invisible hand of the market will always find its way into the worker's pocket to take his/her last dollar. Political economy examines the relations of production and the development of social production as well as the distribution of merchandises. It is not about production pers se, but about the social relations of production.
Peasants from the countryside are forced to emigrate (from South America to the US) in search of salaried jobs and end their traditional way of life. The working class thus finds that capitalism, their master, is fated to transform itself into socialism once the working class is fully formed as a political force. The vehicle for this is political theory. Capitalism exists when capitalists have the means of production in their power. at the same time large numbers of people have no such means, and are forced to use their hands and become salaried workers. The early bourgeoisie indulged in depredation of the colonies, the ruin of peasants, slavery, usury, pirating and other crimes. The newly formed working class was not merely under the impulse of assuaging hunger, but was a victim of violence to the degree of bloodshed in order for the workforce to be disciplined by their bosses. The two phenomena appeared simultaneously- salaried workers and accumulation of riches in the hands of the capitalist owners.
Mercantile production is production for sale of merchandises. At first it was production by artisans, without exploitation of third persons, characterized by the social division of work and the private property over the means of production. If someone gives the fruit of their labor to themselves of their family, that is not merchandise. Merchandise only exists when there is buying and selling. Merchandise has two qualities- its capacity to be useful, use value, and its exchange value. This barter system illustrates the human labor that different merchandises have in common, even if they are radically different in other ways, such as wheat and iron, which can be bartered for thr reason that such merchandise has use value and exchange value at the same time. Value is determined by the amount of labor poured into a merchandise. The more labor, the higher the value. Equal merchandise can be produced by different people, which results in an unequal amount of labor invested in the merchandise in a variety of circumstances. In this case, value is measured by the mean determined by society as socially necessary work, which can be measured by the amount of time invested in producing the merchandise. The value of merchandise diminishes in view of the fact that less time and work are needed as production increases (efficiency).
Use value is created as a result of concrete work. Work is an investment in human energy- physical, nervous and intellectual. Human labor in general is characterized by abstract work. All merchandise is both abstract and concrete, since work is at once general and specific.
One use value is qualitatively different from another, and in the same way one concrete labor is different from another. Yet the value of one merchandise differs from the value of another quantitatively, and abstract work also differs from another quantitatively. By employing different genres of work, in relations of exchange, we find the social division of labor. In the marketplace these relations are expressed reciprocally as producers of social production. Thus value is a relation among humans, not things. Value of merchandise is created by labor, but it only manifests itself when one merchandise is compared to another. For this a buyer is needed. The medium of exchange could be cattle, skins, salt, copper, iron, and finally gold and silver. These last work well as universal mediums of exchange because they are universally acknowledged, they don't deteriorate, and can be divided into smaller amounts. Thus they exhibit the qualities of money. Money is a universal equivalent related to all merchandise. It has use value. It fulfills the function needed in a mercantile economy, since all merchandise expresses its value in money. This is its price.
Money also serves as a means of circulation. Whereas before its was merchandise = merchandise (barter)now we have merchandise = money = merchandise. The amount of money necessary to fulfill the needs of mercantile circulation is determined by the total prices of all merchandise in a particular year.
If the amount of paper money is greater than the mount of gold required to cover its price necessary for commerce, paper money is devalued. For example, if merchandise require 1 million gold units and the State emits 2 million in paper money, the bills are worth half of what is printed on them.
After the First World War paper money suffered great instability, and lost value. This is known as inflation, which affects workers who are getting paid the same, but can do less with the same salary. Inflation is a kind of hidden tax. Money is a means of accumulation. Those who are rich have accumulated a lot . In buying and selling on credit, money fulfills the function of a means of payment. Credit allows the society to reduce the amount of cash in circulation. In commerce between countries money fulfills the role of world money.
LAW OF VALUE.
In mercantile production the exchange of merchandise is ruled by the socially necessary work invested in that production. Each worker works in isolation from the others, with the aim of the market, but without knowing ahead of time what the demand might be. The equality between demand and supply, under conditions of anarchy of production, can only be established as a consequence of market fluctuations. This causes price to be separated from value,sometimes more, sometimes less. If the offer is greater than the demand, prices fall below their value, if the demand is greater than the supply, the opposite happens. Prices tend to balance out with their value, if the price of a piece of merchandise is greater than its value, production increases, increasing the supply making the price lower to its value, thus balancing out.
Competition regulates social work and means of production. The fluctuation of prices make some sectors abandon those sectors where the supply is superior to the demand, and prices fall. The drop in prices allows the smarter entrepreneurs to better their position, while others are ruined. The enrichment of some and the ruin of others is caused by the fluctuation of prices in relation to their value. Neither are they saved by the sale of merchandise at its face value. The law of value is the law of elemental development of the productive forces. Those who use better machinery have the advantage, since they have to spend less insofar as they may have socially necessary expenditures in relation to others. Some producers in this situation, and they are always a very few, become capitalists, while the rest are thrown into the labor market as workers. The means of production fall ever more into the hands of the capitalists, who transform the mercantile economy into a capitalist one. The law of value has 3 functions; it regulates the distribution of labor power in the means of production among economic sectors , it is a motor for technical development, and it leads to the establishment of capitalism, ruining the small producers of merchandise relations.
PROFIT. This is a simple matter in which the capitalist acquires the necessary merchandise and then sells it at a greater price. Merchandise - money - merchandise. The acquisition of merchandise not to satisfy a need, but for sale, is another matter: Money - merchandise - money. Buying for sale to make a profit. Capital is a value that grows by itself (the merchandise is the same) .It starts with money. It starts with the acquisition of the means of production and of the labor force. It becomes productive capital. The merchandise is sold at market and is transformed into monetary capital, not merchandise. Now the capitalist has more money than when he started. How is it possible that the capitalist is able to gain a higher value for the same merchandise? The answer is labor power. What value does labor power have? The value of each merchandise is determined by the amount of labor necessary to produce. Labor power is exercised by real people, who have needs for themselves and their families. The time that is necessary for the production of such resources is what determines the value of labor power. Suppose there is a six hour day. When the capitalist hires the worker, he will pay a full day that expresses six hours of work. The worker works his six hours and is paid for six hours. But this does not make capital out of money, because there is no profit. He who buys the labor power of the worker sees it differently. . The worker works 12 hours instead. The value of the labor force, and the value created by the labor force are two different things. The value that the worker gains for the capitalist is for 6 hours, while the value that the worker gives to the capitalist is the product of 12 hours. The owner of the money pockets the difference .Six hours are not paid for, 6 hours are. There has been a sleight of hand that transforms money into capital. The work that is not paid for is exactly what creates capital. This unpaid labor supports all who do not work in the society, and is used for taxes, the cost of the land, machinery, etc. The salaried worker creates the money necessary for his maintenance during part of the day. This is called necessary work time. The other half is complementary time. The worker with complementary labor creates profit, which is unpaid labor appropriated by the owner, who is not interested in the means of production, consumer goods, anything useful for society, but is only interested in the greatest profit possible. There is no end to their greed.
CAPITAL. Exploitation of salaried work is used to grow capitalist value, to broaden the power of capital. The is produced by profit. Capital only appears when it is the result of worker exploitation, it is not a thing, but a social relation between the two main classes, and the exploitation of the workers who live by selling their labor power.
In capital there are two elements 1- constant capital, the investment in the means of production, factories, machines, use of energy, raw materials, etc., and 2- variable capital, which is used to buy labor power. These are not the same. The means of production do not create any new value. The value of constant capital is transferred to the mercantile consumer good. Variable capital, on the other hand, creates profit in the process of production. The relation between profit and variable capital expresses the degree of exploitation and is called the profit quota.
The rise in profits has two characteristics. First the work day can be made longer, or the work can be intensified. (increase in work tension, or greater investment in human energy per time credit). This is absolute profit. A second way is to reduce the amount of necessary work time.This constitutes relative profit.
Capitalists would increase work time up to 24 hours if they could, because the more the worker works, the greater the profit. The worker on the other hand is interested in reducing it. Thus a struggle is produced.The production of relative profit increases the complementary time spent without increasing the work day, that is, reducing the the part of the day necessary to compensate the value of the labor force. This can be achieved by increasing productivity in consumer goods that are needed by the workers , and which in their totality determine the value of the work force. While work productivity is high , the time for work is lesser resulting and greater complementary work in capitalist enterprises. Necessary work time is also reduced in those sectors that provide means of production for consumer articles.
Some capitalists achieve mega profits. This happens when they have technical expertise that others lack. This means that they invest fewer resources, and even if they sell at the same price as others, make huge profits. Other capitalists fall in line, also seeking mega profits, and a competition war is unleashed.
Capitalism goes through 3 stages- 1-simple cooperation, 2- manufacturing, 3- big mechanized industry. The first is the concentration of salaried workers who produce one merchandise under the leadership of the capitalist. There is no division of labor. The second is capitalist cooperation based on the division of labor , although with a manual technique. It signifies a substantial increase in productivity. The third, which gives total ownership to the capitalist, ends small production, broadens the ambit of labor power, and provides the constant and unending intensification of profit. The theory of profit shows that instead of workers and bosses working in harmony, they are in constant contradiction, ever deeper, between capitalist interests and labor, and mobilizes the masses to struggle against capitalist exploitation.
SALARY. Under capitalism, salary represent the price of labor. However, It is not as it appears to be, the price of labor that the capitalist gives the worker for his labor and all his labor. That work creates value, but it does not have value in itself. The capitalist does not pay the worker for his labor, but for his labor POWER. Salary is not what it seems- it is not value, or price of labor but a hidden form of value, or price, of labor POWER. The quantity of the salary comes in two forms 1- physical, the need of the worker for he and his family to survive, and 2- historic or social, which depend on the social demands of the working class in this or that country. Capitalists try to lower salaries to the lowest possible point. Workers struggle to raise their standard of living.
That is why salary is dependent on the class struggle, of the workers organization, on the degree of worker resistance against capital. Worker's struggle can make their life better but it does not eliminate their emancipation from salary slavery. There are two forms of salary- time work and piece work. Time work expresses the value of labor power by hours, weeks or months. Piece work forces the worker to work to exhaustion. If the salary for an hour is 90 cents, and the worker produces two items, he will get 45 cents for each piece. If he instead of two pieces produces three, his salary will go up 50%. The increase in production at the expense of the intensity of labor increases the value of the labor power. This should result in a salary increases, but it never results in due correspondence. If a theoretical increase in salary does not match up with the intensification of value, the worker can actually be making less the more he works, because he is not compensated according to the energy he is putting out.This sparks the class struggle, for example, when there is a sharp decline in salaries as a result of inflation, or a rise in taxes or prices in consumer goods, or a rise in rents. Workers parties consider it a sacred duty to defend the population in their immediate needs and in their final struggles of transfer of power where they become the ruling class.
PERSONAL GAIN. This is what moves the capitalist. For him production is only a means to and end. All he is interested in is profit and personal gain. Capital gains express the relation between profit and the total capital invested in a company. It is the index of profitability. There are different sectors- the means of production, that don't yield profit by themselves, the rest is contracting work by hand, the proportion between fixed capital and variable capital. Greater investments in one sector cause that some raise prices while others lower them. Capitalism that directs itself toward those sectors with scarce merchandise makes the prices go up. Thus all the profit is produced by the working class, thanks to the movement of capital in different sectors, is distributed among capitalists in an approximate relation to their investments.
PRICE OF PRODUCTION. The price of production is the same as the expenses of production, plus the mean of capital gains. Every capitalist tries to get back at least his investment, plus a mean of the capital gains index. The price of production of an article may be thus be greater or lesser than the value, even though the totality of price of production is the same as the totality of the value of all the merchandise. Lets suppose that the value of the merchandise is 120 money units (constant capital, 90, variable 10, profit, 20) and in other sectors it reads 140 units, (constant 80, variable 20, profit 40). In the first example the sales are 10 monetary units over their value, while in the second they are 10 below. However, the value of all the merchandise (120+140+=260) is the same as the price of production (130+130++260)Even though the mean result is roughly the same, the capitalists are only interested in exploiting the workers individually and collectively. The mean rate of gains illustrates the solid class base among capitalists. This class solidarity the working class opposes with its own solidarity, which is based on ending their exploitation. The struggle of the workers cannot be limited to one or another company or corporation, but it is against the destruction of the entire system of exploitation, the destruction of the social regime of the bourgeoisie.
BOSSES BENEFIT AND INTEREST. Capitalist profit is broken up for the benefit of the impresario and of interest. The capitalist does not limit himself to operate with his own resources. For this he uses credit. That part of profit that is used by a capitalist by banks to provide sums of money is called interest. The gains minus the interest that the capitalist provides for the sums received on credit are called bosses' benefit. The banks act as intermediaries between capitalist payments, providing cash and bonds at the disposition of the capitalist. The banks are responsible for capitalist development and the centralization of capital, and thus they control labor and create the conditions for the capitalists to use as they please each time greater and greater amounts of the economic resources and incomes of the population.
PROFIT HAS LIMITS IN CAPITALIST PRODUCTION. Economists present capitalist profit as a stimulation of technical progress and unlimited gains in production. They keep quiet the fact that capitalist profit is the fruit of exploitation and exhaustion of the worker, they ignore that far from being a stimulus, the subordination of production to profit is the limit here everything grinds to a halt. They only produce if it is beneficial to them. They reduce production, put a brake on technical progress, and destroy large amounts of merchandise just and only to raise profits. In addition, the monopolies wage wars and cause damage without end simply to gain more and more profits.
CAPITALISM IN AGRICULTURE. Agricultural products are turned into merchandise. Agriculture becomes a factory like any other. The resulting competition creates havoc on the small producers, small farmers, those with less land, animals and instruments. These small farmers are ruined and forced to join the ranks of the working class. At the same time there are capitalist agriculturers, and the two extremes are formed; on one hand, poor farmers and braceros and on the other rich landowners. Part of the profits that are accumulated in the countryside is appropriated by the parasitic class of landowners in the form of land rent.
LAND RENT. The workers get a salary, the ones who hold the lease get the profits, and the owner gets the rent. There are things to consider, the quality of the land (better soil gives more, even with the same investment), and how close the land is to a viable market. Capitalists must make a profit out of both situations. The price of production must be the same in the worst lands , plus the median profit. The best lands yield that plus greater benefits. The origin of these benefits is brought forth by those who work the land, and winds up in the pocket of the capitalist. The supposed law of the decreasing fertility of the soil is a theory invented by capitalists to justify scarcity, the misery of the people, and the exploitation of the land. They pretend that population growth is greater that land production, and in order to keep a balance between the two. Wars , epidemics and birth control are needed (Malthus). Instead the fact is that landowners own vast acreage where nothing is grown. Even with the worst lands the landowners charge rent. Where does this rent come from? Since the owners invest less in land machinery than factory owners do, profit is greater from the land than from industry. If there are 100 unitary amounts, in industry 90 are spent and 10 are profit, while in agriculture 20 are profit. Because with privately owned land the fluctuation of capital is not allowed, there can be no leveling of industrial gains as compared to agricultural ones. That is why prices of agricultural produce do not adjust to production but rather to value, higher in the country, lower in industry. The tribute paid by society worsens the situation of the masses both in the country and in the city. Landowners also receive tribute from extractive industries, which raises the price of minerals. Rent also raises the price of land lots, which raises the price of rent. Higher rents also adversely affect agricultural workers who don't have their own land.
LAND LEASE AND THE RUIN OF SMALL FARMERS
The capitalist farmer turns over the rent of the land to the big landowner, which represents the surplus over the median income. Landowner and capitalist split the money, which the workers have generated, among themselves . This often causes the small framer to become ruined. This means that agricultural workers can only better their situation uniting with the industrial working class.
SOCIAL CAPITAL REPRODUCTION AND ECONOMIC CRISES
Humans have to constantly replace the means of production that are always being worn down and rendered useless. This reproduction is simple when the production volume is the same. (simple profit) . Capitalism works in the area of expanded reproduction. The capitalist exploits the labor of the workers, making more money while the workers remain in the same condition and have to sell their labor power over and over. In simple reproduction the capitalist must use up his profits sooner or later. If he makes 100,000 and takes out 10,000 each year, after 10 years he will be broke. This does not happen, however, because each day he has workers and he profits from their labor in cumulative form. The first aspect is the production of the means, and the second is the production of consumer goods. To this value one must add the third part destined to compensate fixed capital in a year, and the variable capital and profit produced in a year. These are the 3 parts that demonstrate the discomposition of value. In order for the capitalist to come out ahead, he must coordinate the first and second of these. In simple production it is necessary that the total of variable capital plus profit equal constant capital in the second sector. In this exchange, workers and capitalists receive consumer goods, and the capitalists in the second sector receive constant capital destined for new production. Thus means of production and consumer goods are mutually assured. In expanded reproduction however, the sum of variable capital and profit are greater than the value of constant capital of the second sector. This difference allows for accumulation of capital. This makes constant capital to grow and variable capital to diminish. The motive is to obtain greater and greater profit. This is also pushed by competition. The army of workers gets greater, and capital becomes more centralized and concentrated. The only way this can be achieved is through economic crises, crashes that show the antagonistic contradictions of overproduction.
CRASHES.
The tendency for capitalists to raise production without limit is one of the factors where consumption is reduced by reason of lack of solvency of the population, and this leads to a crisis of overproduction, resulting in the poverty and low wages of the people. The contradiction here is of the social character of production vs private, individualist appropriation by the capitalist. The first crisis took place in 1825. After that they came around every 10 years more or less. In England between 1825 and 1938 there were 3. The economic crises of overproduction, the difficulties in selling the accumulated products , the fall of prices and the fall of production all contribute to the crash. The result is massive unemployment, lower salaries, debt slavery and the ruin of small producers. The fall in stock prices gives impulse to renewal of machinery, and the demand for the means of production. The market is reactivated and the cycle crash-depression-reactivity-boom- crash manifests the cyclical nature of capitalism. The reason for this is the social character of production and the private confiscation of the fruits of labor. The social character of production manifests itself in specialization of production, and the division of labor, as well as each time greater concentration of the corporations (monopolies). New factories are built, railroads, electric companies, etc new demand for work is generated, greater consumer goods are made available. Sooner or later thanks to the anarchy of production, the great industrial boom smashes against the limited ability to consume, and the inability of the market to keep up. The crisis of overproduction clearly shows that the possibility of satisfying the needs of the entire society are there , but this can only happen if private property is converted to social property.
THE LAW OF CAPITALIST ACCUMULATION
New advances show that for the same amount of consumer goods, fewer workers are needed than previously. Fixed capital grows, while variable capital is reduced. As capitalism develops, it may grow exponentially but there is more unemployment. This creates great anxiety in those who do continue working. Capitalist accumulation accelerates the sidelining of workers and creates the reserve work force. The greater the reserve force, in comparison with those working, the greater the misery among the population. In addition the working people are also harmed, because the capitalist can easily get rid of "malcontents" or :unionizers", since they are easily replaced. Capitalists get richer and richer and everyone else sinks deeper into poverty.
THE WORKING CLASS.
Workers are harmed by the crash, but even when they get a rise and are working they can be also harmed. As work becomes more intense (more work for each in the same amount of time), there is greater need for proper nutrition, medical care, etc. In these conditions workers are worse off, even though they may be making more money. Social wealth always leads to a greater inequality between workers and bosses. One of the struggles of the working class is to have a better salary and better living conditions. After WWII;s defeat of fascism, world socialism forced capitalists to provide better working conditions in their countries. Capitalist accumulation creates the steps necessary to go from capitalism to socialism. The expropriators are expropriated.
posted by ANTONIO at 7:51 AM
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