A few things that can be learned from Karl Marx
about wealth in capitalism

1. Three well-known absurdities of capitalism

1.1 Poverty and wealth

Many besides Karl Marx have pointed out the humanly destructive and irrational peculiarities of the capitalist mode of production. Humanitarians, religious leaders, social workers, politicians, union activists, etc., are always pointing them out, and everyone notices the shocking juxtaposition of wealth and poverty. In this country, millions of people can’t support themselves on their income or find a way to make a living. And if you look around the world, you see that hundreds of millions can’t survive in this global economy, that many are going hungry while others are getting by on a dollar a day. The media covers this all the time. It’s no secret: even in the successful centers of the global economy, the most extreme wealth and the bleakest poverty exist right next to each other. It’s taken for granted that the rich are getting richer and the ordinary workers are supposed to be happy if their real wages aren’t falling.

1.2 Productivity advances

The next peculiarity is that the productivity of labor is enormous and keeps increasing. Twenty-five years ago, it took a lot more people than today to keep the factories running. And the fewer number of workers does not mean that less is produced, but more. Labor productivity is said to increase about 5% a year; it doubles every twenty years. And yet the work never decreases. The productivity of labor skyrockets and the work is never reduced for those who do it; for them, work never becomes more productive. Right next to each other, there are employed people who are so overworked that they suffer from stress and mental illnesses and many who are desperately looking for work but can’t find any. And yet in this economy it’s not possible for the two groups to split the work between them.

1.3 Striving for economic growth

The third peculiarity – and this list is by no means exhaustive or systematic, these are just three particularly well known, striking examples – is that even when the economy is running smoothly and lots of people are making money, the general pursuit of growth reaches a breaking point. Not in the sense that a single firm goes out of business because a competitor has become more productive and forces it off the market, but in the sense that all firms, in striving to make more and more money, are suddenly making less and less money. The crisis becomes generalized and the economy as a whole does the opposite of what everyone is aiming for: it stagnates or slides into recession, although everyone is trying to ensure that there is more and more of everything.

2. Marx’s project

These absurdities of capitalism are noticed by everybody. You don’t need to read Marx to learn about them. Marx doesn’t contribute anything extra in the sense that he has even more to criticize about capitalism. He doesn’t want to take part in the widespread complaints or accusations, but to explain why these peculiarities exist. He deals with questions such as: what actually is “money”? This is a question that the members of bourgeois society are hardly interested in because they are busy making money and need to make as much of it as they can. They aren’t interested in what money is, but in how much of it they can get. All they need to know is that they can use it to buy stuff. Marx is concerned with a different question: what do you actually have when you have money?

2.1 Basic premise

Marx argues that all these evils (see above) are not malfunctions or results of misconduct by individual members of society, but rather necessary consequences of what this economic system is all about. This is in stark contrast to neoclassical economics, which explains the economy in terms of people’s intentions and motives for participating in the economy – which, by the way, are trivial and self-evident. When the economy is viewed in terms of motives, everything is completely rational. Why do people go to work? Because they want to make a living. Why do they always want to make more and more money? Because they want to live as well as possible. These motives are logical and self-evident; nobody sees this any differently. And economists don’t see it any differently either; on the contrary, they see it exactly the same way. This automatically predicates the economy on the idea that everything in it exists to satisfy needs. But whether or not that is true first needs to be verified.

Marx doesn’t focus on people’s motives, but on the social forms they get involved in when they want to make a living. That’s why Capital doesn’t begin with people, but with commodities. Marx begins with a discussion of the objectified forms of social wealth and says: these already tell the whole story. Whatever people’s intentions may be, they are completely irrelevant. If they have to deal with commodities and money, their purposes are already set, regardless of whether their motives are good or not-so-good.

2.2 Use value – value – labor

There are basically just a few steps to be explained here – but these are quite challenging.

This is the book’s famous opening sentences:

“The wealth of societies in which the capitalist mode of production prevails appears as an ‘immense collection of commodities’; the individual commodity appears as its elementary form. … They constitute the material content of wealth, whatever its social form may be. In the form of society to be considered here they are also the material bearers of … exchange-value.” (Karl Marx, Capital, Vol. I, p. 125-126)

You could say that such statements are obvious. What are we actually being told here? The wealth of this society, what makes it rich, what counts as wealth, appears as a collection of commodities. In other words, everything that a nation survives on, that constitutes its wealth, is for sale, is bought and sold, is a commodity. The individual element of this wealth is the individual commodity.

2.2.1 And what is a commodity?

Quite simply: a thing that is, firstly, useful and, secondly, has a price, is sold, is exchanged for something else.

We know exchange in its developed form: when made with money. You sell products and you buy things. That is the first simple piece of information that can’t be denied by anybody. That’s how the wealth of our society exists: in the commodity form. Everything can be bought, but it also has to be bought if you want it.

This already makes an interesting point: in rational terms, wealth consists of the useful things than can be used for meeting needs: your home, your food, your car, the toys adults play with, etc. But in this society, useful things are not wealth. Useful things are for something else. Namely: they are for sale. They are commodities. Incidentally: when someone works for their own needs, wealth consists simply in the useful thing. If you cook a good meal for yourself, you don’t end up with a commodity, but a good meal. In this society, wealth is not about useful things, but useful things are for something else, namely: for sale.

Then a conclusion is drawn:

“Exchange-value appears first of all as a quantitative relation, the proportion, in which use- values of one kind exchange for use-values of another kind. … x boot-polish, y silk, or z gold, etc. each represent the exchange-value of one quarter of wheat. Therefore x boot-polish, y silk, z gold, etc. must, as exchange-values, be mutually replaceable or of identical magnitude. … [T]he valid exchange-values of a particular commodity express something equal … [They] are therefore equal to a third thing, which in itself is neither one nor the other.” (ibid., p. 126-127)

If boot-polish, silk and gold are exchanged for wheat, or if wheat is exchanged for the other three things, and these things are worth the same in exchange, then these things must have the same substance. They must have a third thing in common which does not correspond to the use-value of the boot-polish or the silk.

2.2.2 The error of economics

This is a simple and straightforward observation. On the other hand, this is also contested by economics and popular beliefs which come from being taught economics in school. This is not generally accepted, so you have to be careful whether you want to agree with it or not.

Because here economics asks: what is the third thing in common? One person trades boot polish for gold and the other person trades gold for boot polish. Why? Well, because one person prefers gold to boot polish and the other prefers boot polish to gold. What you are supposed to learn in economics on this subject is that these commodities have nothing in common. If there is an equivalence, then it is the equivalence between the utility preferences of the two parties.

What is the thesis here? The thesis is that it is the utilities that are equal. They have something in common, namely their utility. This is incorrect because a utility always depends on the concrete use value of the concrete useful thing. The utility of a bed and the utility of a bottle of beer are not comparable. You can’t say whether the bed is more useful than the beer or whether the beer is more useful than the bed. This makes no sense. Because a utility can only be a predicate of a concrete utility. Utility in the abstract does not exist.

It should be added here that the economists even accept this to some degree. They bring in a trick that is quite wrong. They say it’s true, you can't compare a bed and beer very easily, so we won’t compare them any more. But you can compare the utility of bundles of goods. For example: 17 beds and 1 beer vs. 17 beers and 1 bed – that can be compared. Theoretically, it doesn’t get one step further than the first point. The idea is just that if they are made into bundles, then nobody will look any closer at whether the utility of one and the utility of the other are in any way comparable. Then they say: Yes, there are households that prefer different bundles of goods – so they do still have utility as the reason for the exchange value.

2.2.3 The common third thing / good or bad exchange

Here I would like to remind you that this common third thing is actually well known to everyone. When people exchange – in modern terms, buy – things, they have to pay attention to how much they get for what they give. They have the idea that they can make a good exchange or a bad exchange. If they do, then they also think there is a correct exchange.

It’s pretty vague, but what would be the correct exchange? It would be an exchange in which the owner gains nothing and loses nothing when trading one thing for another. However, from the point of view of the use value, you always gain from an exchange. You give up what you don’t need for something you need. That is in the nature of exchange: you exchange a use value for something you want.

But if you have the idea of a good and a bad exchange, this is not based on the use value. After all, the use value is always the benefit obtained from the exchange. I have always gotten the use value that I wanted and given away the money that I intended to spend. But when I differentiate between a good exchange and a bad exchange, I am thinking about quantity. How much did I get for my money? And here you will notice that I am thinking in terms of money. Marx talks about value before he explains money. In terms of value, you are equating things in exchange. In terms of use value, every exchange makes you better off, unless you have bought something you didn’t want. That does happen, but it’s not particularly relevant economically.

So this is the argument: the valid exchange values of a given commodity express an equal content. It is equal to neither to the one nor the other commodity, but rather to a third thing, a thing that both commodities have in common.

2.3 The conclusion about labor

Then comes a step that Marx doesn’t spend much time on, but has caused a lot of exasperation in economics.

“If then we disregard the use-value of commodities, only one property remains, that of being products of labour. … All these things now tell us is that human labour-power has been expended to produce them, human labour has been accumulated in them. As crystals of this social substance, which is common to them all, they are values – commodity values.” (ibid., p. 128)

Marx’s famous conclusion about labor has been taken as: what else could it be? All the other characteristics of commodities relate to their use-value: the weight, the smell, whether you can bite it or whether it is too hard, whether it plays music or whether you can saw with it, etc. So what do commodities have in common if everything related to their physical qualities can’t be what they have in common? After all, that is what makes them different, and an exchange is always between different things. It makes no sense to exchange things that are the same: I give you boot polish, you give me boot polish. At most, they might be different colors, but then their difference is the reason for the exchange, not the sameness. So what do the commodities have in common if you put aside everything that has to do with their physical qualities? Only that they are products of labor. And it’s nothing to wonder about either. Everything that society lives on, all the things that make up the economy, are products of labor.

2.3.1 Socially necessary labor time, or: the demand for proof

Here you might say that this is trivial in the sense that material wealth can only be created by labor. This is true of all societies. However, it’s not that simple. The labor that forms the substance of value, given that the things exchanged are products of labor, implies that it is not the individual labor, i.e. the actual labor of the individual, that forms the substance of commodities. That is, it is not how much labor you or I, or Mary and Joseph, needed to produce something, but rather how much socially necessary labor on average was needed to produce something. This is the next quote:

“The labor, however, which constitutes the substance of value is equal human labor.... the average labor-power of society [which] therefore requires, for producing a commodity, no more labor-time than necessary on an average, no more than is socially necessary.”

The bourgeois economists objected. Because there was a time when the economists dealt with Marx, and not just Marx, but Ricardo and Smith, the classic authors of political economy. All modern economics is based on a rejection of the labor theory of value, that is, the proposition that labor is the substance of value. A series of theorists in the 19th century objected that commodities rarely exchange exactly according to the labor hours incorporated in them, and they meant this as a criticism of the old communist theorist.

However, what Marx said is that it is not the real, individual labor time that constitutes the substance of value, but rather the socially average necessary labor time. In this respect, the fact that the exchange relations between commodities do not correspond to their actual individual labor times does not contradict the theory, but is a necessary consequence of it. It’s not the amount of labor time that an individual has actually expended, but rather the other way around: how much socially valid labor the individual producer has objectified with his effort is revealed to the individual producer by the price he attains for his commodity.

In this respect, the argument that it can’t be measured is hogwash. Marx is the one who explained that in this economy it can’t be measured. Economics asked the question: Can Marx predict prices? We, the economists, can’t, but if someone else can, we’ll take our hats off to him. And then they tested Marx to see whether he could do it. They said: he acts as if you can count the labor hours and then you will know the correct price of a commodity. The critical economists then said: let’s do the math. And what did they find? Today, potatoes cost this much, tomorrow they cost that much; they cost this much on this market and that much on another. They found that it usually doesn’t work out to compare the real labor hours of real individuals with prices, and they took this to be a refutation and not a consequence of what Marx said.

But why? Because they were so determined to take Marx as one of their own, to consider him as someone who wants to see capitalism as a rational system of exchange relations or as a rational way of producing wealth; and because they couldn't do this themselves, they criticized Marx by saying: “You can’t calculate it either.” But he really didn’t want to calculate it. Even then, Marx reacted to the criticism (among other places, in a letter to Kugelmann) that his thesis on the substance of value ought to be able to predict prices if you do the math. Marx thought they did not understand what it’s about when they demanded that value and its substance, socially necessary labor, had to be empirically proved.

“The nonsense about the necessity of proving the concept of value arises from complete ignorance both of the subject dealt with and of the method of science. Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish. Every child knows, too, that the masses of products corresponding to the different needs required different and quantitatively determined masses of the total labor of society. That this necessity of the distribution of social labor in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance, is self-evident. … And the form in which this proportional distribution of labor asserts itself, in the state of society where the interconnection of social labor is manifested in the private exchange of the individual products of labor, is precisely the exchange value of these products.” (Marx to Kugelmann, July 11, 1868, Letters to Kugelmann, p. 73)

2.4 The different ways of organizing needs in a society

Marx takes a completely different approach. He says that in any society, even on a medieval farm, there are lots of needs that have to be met and these require different types of labor. Shoes have to be made, grain has to be grown, grain has to be threshed, bread has to be baked, houses and subways and cell phones have to be assembled, and so on and so forth. And in every society, the labor has to be distributed across the different branches of production to meet the various needs. This must be decided both qualitatively – the various needs must be taken into consideration – and quantitatively – how much labor must be spent on grain, how much labor must be spent on cell phones, etc. All this has to be decided and the labor allocated in a certain way.

In every society, there is a proportionality between the concrete labor activities. In a planned economy, it’s done according to a plan. You are told how much labor you have to spend on steel and how much labor you have to spend on rolling mills and how much you have to spend on cars and so on. On a medieval farm, the farmer knew that he had to divide his time between feeding and sowing and harvesting and threshing and so on. He knew that he couldn’t spend all his labor time harvesting; he also had to sow. He couldn’t spend all his labor time threshing – the cows had to be milked, and so on. The labor has to be divided up.

And this also happens in our society. But in a society in which there is no general will, in which there is no overall plan, in which there is no deliberate distribution of labor between the various branches of production, but in which the interconnection between the various labors of society takes place through the private exchange of individual labor products, in which private owners produce only for the market, how does the necessary proportionality between labor activities assert itself? It asserts itself through the market making known to the producers how much they can get for their product. And if they don’t get anything for their product, they have to offer something else, or else they won’t get anything at all. And if you get very little for your product, then you have to change your occupation.

And in this way, in the private economy, i.e. in the economy of private producers, the proportionality between the amounts of labor times is established by how much one gets for it, by how much society, i.e. the market, i.e. the totality of customers, validates the labor as socially necessary, that is, by giving an equivalent value. This decides whether the individual labor was socially average necessary labor.

What does “average” and “socially necessary” labor time mean? Within an industry that produces the same goods, “average” means the average amount of labor expenditure that is required in this society to produce this commodity. If someone produces more than the average in the same amount of time, then more value is objectified in their labor than for other producers of the same commodity. If someone produces less, it objectifies less socially necessary average labor and thus also value. It is in competition, and only in competition, that average socially labor proves itself. At the same time, it proves how much socially necessary total labor time is expended on, e.g., picking strawberries or making electric watches. So if everyone in the watch industry only needs the average labor time to produce their watches, but too many watches were produced overall (which you only find out after the fact), then this proves to all watch producers that too much social labor has been expended in this sector. Then the producers of watches cannot realize what is socially necessary average labor because too much labor was expended on producing watches. Each producer has then expended less socially necessary labor time than he has individually put into it – notwithstanding the fact that his labor reaches the average within his industry. In this society, the purpose is not to produce what is necessary. Rather, what is socially necessary is revealed by the willingness of customers to pay money for a product. [1]

2.5 Interim summary 2.5.1 The division of labor

To recap: This society has a division of labor, and the products of labor are produced in response to social needs. It’s not like Robinson Crusoe and Friday who have to make everything themselves on their desert island, but social production. All production is calculated with regards to a social need.

The subsistence farmer who eats what he produces himself has all but disappeared. Everyone produces for others. It is social production, production based on a division of labor – but there is actually no division of labor. In this society, production is carried out within a division of labor, but the labor is not divided. Everyone produces for society, but only finds out afterwards, on the market, whether he has produced wealth for the society – or not.

You can see that in this society, one does not gets one’s labor remunerated; but rather, it’s a struggle for how how much you can get for it. It’s not a system based on fairness – one in which everyone gets out of it what they put into it. Rather, everyone has to make sure they get as much as possible for themselves in competition with, and at the expense of, other people who also want to pay as little as possible.

2.5.2 The role of needs in this society

It’s quite clear that production is for social needs, but not to satisfy them, but to exploit them. The needs of others are, so to speak, their weakness. Every producer is trying to use what he has to offer to exploit their dependence on his output and to get as much as he can with it from the others.

Needs are therefore not the purpose of production, but rather a means of gain. Something is produced for a social need, because others need it, but not so that others have this thing, but so that one can exploit their needs for oneself. A need is met insofar as it has an ability to pay; or, insofar as it can satisfy the producer’s property claims. Needs that aren’t able to pay do not count in this society. The needs of people who have no money do not matter. They just starve or hang out in the streets. Everyone knows this. The media tells us that the pharmaceutical industry has no interest in developing drugs for the Third World to fight diseases because the ability to pay is so low there. So it’s not worth producing drugs for them.

Vice versa, that’s why in this society, if you have money, every whim is catered to. There are products for any absurd desire while, at the same time, the most urgent needs are not met if there is no money to be made from them. That’s why a sensible order of priorities for production is out of the question in this society. The simple principle that the necessities of life come first, and then luxuries, does not exist here. It’s not that sailboats only exist if there is time for them. Such a simple principle does not exist in this society. Instead, in this society, there are plenty of sailboats for those who can pay for them and, on the other hand, there’s not enough to eat for those who have no money.

2.5.3 The purpose of the producers

From the producer’s point of view, the use value is not the purpose of production. Rather, it is the means. The useful qualities of what is produced are the instrument for producing exchange value, for getting one’s hands on exchange value. Actually, for the producers of commodities, nothing is more important than getting rid of the use value. They are interested in the useful side only as a means for getting others to take them. They don’t give a damn about the use value.

What do they actually want? They want value. They want to realize the exchange value of their commodity. They want to get the exchange value by getting rid of the specific useful thing and getting money for it. Whether and how much and how well they succeed in this has already been explained. That is their private risk because there is no plan in this society. You compete with other suppliers and have to find out whether the society, the customers, will accept your labor as part of overall social labor, as necessary labor, by putting money down for it.

Just another reminder: the idea that you are remunerated for your labor is complete nonsense. The product of labor is the means by which you enter into the competition. You don’t get remunerated for your labor, but see how much you can get in the competition for your labor product. This is completely different than being remunerated for your labor. But what do you get when you have sold your commodity? In other words, when the purpose of production has been achieved? You have money, or value. What is that actually?

3. Money

Everyone knows the saying: we can’t eat money. Economics completely reverses this and says: “money is a veil over the economy.” Everyone thinks that money is surely such a thing too. Economics thinks that money is not at stake. It is the medium of exchange: you give away a commodity, you get money so that you can buy another commodity, so in the end money merely exists to make exchange less complicated; that money is a way of exchanging one use value for another use value. Then you are back to the idea that this whole economy exists for the sake of needs. In fact, money creates a completely new purpose.

3.1 The purpose of money

The wealth of this society, which exists in the form of commodities, does not consist of useful things, but in the power to have the world of useful things at one’s disposal. The power to access the property of others is the true purpose of production. One acquires the social private power which makes available things that belongs to others so that one can use and command them for oneself.

And that says a lot: wealth in this society is not the “rational” wealth of useful things, but rather wealth in this society is the power over other people’s useful things and services. This can be retranslated over and over again: so you buy yourself sausage and bread with money. Only, the power to command social wealth has a somewhat different aim than sausage and bread. It’s an aim that is in principle unlimited. And when you then look and listen to the real world, it is well known to everybody that the wealthy in our society are those who have a lot of money.

However, having a lot of money doesn’t mean being able to buy a lot more bread and sausages, but having a million, 10 or a 100 or a 1000 million dollars. This power to have things at your disposal never translates back into consumer goods. The wealth that is accumulated in our society is not the means of consumption. Rather, it is an end in itself. Namely, the accumulation of a social private power. And that is inherent in the commodity itself, insofar as the wealth of this society does not consist of the use value, but rather has a social form that abstracts from the use value.[2]

4. Abstract labor

Subtitle: expended human effort is the substance and measure of wealth only in an economy based on exploitation.

4.1 The equal substance of commodities

Marx writes so little in Capital about the fact that what commodities have in common is that they are products of labor. He takes this for granted and doesn’t argue much about it. He is so proud of what he has discovered with regard to the role that labor actually plays in the creation of value. He is of the opinion that he is the first to have discovered this. The fact that commodities are products of labor, and the fact that they are exchanged and equated because they are products of labor, was actually discovered before him by other economists, namely the classical bourgeois economists. He thinks that they did not figure out what comes next. And it goes like this:

“Initially, the commodity appeared to us as an object with a dual character, possessing both use-value and exchange-value. Later on it was seen that labour, too, has a dual character: in so far as it finds its expression in value, it no longer possesses the same characteristics as when it is the creator of use-values. I was the first to point out and examine critically this two-fold nature of labour contained in commodities … this point is crucial to an understanding of political economy … ” (Karl Marx, Capital, Vol. I, p. 132)

We are only three pages in from the beginning of the book and he says: this is the crucial point for understanding political economy. Here we actually have at least a first clue as to what is peculiar and absurd about the capitalist economy.

So what is he saying about the capitalist economic system? He says that if commodities are equated in exchange, i.e. boot polish and silk are somehow equal, then the conclusion is that this is because they are both products of labor. Somehow and in some quantity, there is socially necessary labor in both, and in exchange the social necessity of this labor is recognized. He says: but if the labors are equalized in exchange, you could say, ok, labor is measured by time, that is, by the labor time. Then the very concrete labors are in fact equalized.

However, the production process for boot polish and the production process for silk are completely different types of labor. So the particularity of the labor, i.e. everything that has to do with the way it is carried out, that has to do with planning it out so that a product can be produced, everything that is focused on its production – none of this can be the common substance. Because the labors are indeed totally different in these respects. It’s different whether someone plays a violin concerto and gets money for it or whether someone bakes bread. Yet these completely different activities are equalized. What then is the equal substance? Now the question of abstract equality arises once again, specifically in relation to the labor. First, the question was: what is the same about boot polish and silk? Now the question is posed again.

4.2 The equal substance of labor

What is the same about boot polish production and silk production? They are completely different production processes. Then comes the answer in the following quote:

“If we leave aside the determinant quality of productive activity, and therefore the useful character of labour, what remains is its quality of being an expenditure of human labour-power. … expenditure of human brains, muscles, nerves, hands, etc.” (ibid., p. 134)

Now you might think: ok, that’s trivial. Yes, of course. What they have in common is general human labor, and labor time has been spent on them, and labor power has been expended on them. But now we come to the difficult point. In this society, the aspect of labor that counts is the effort expended to gain social recognition; labor in this society counts in terms of what it took from the individual. The nasty thing about work, that your lifetime is wasted in the process, that you get tired, that if you do it for 50 years you eventually get sick and old and worn out – the negative aspect of labor is what constitutes the social validity of labor in this society, or what the social validity of labor is based on. And that is a truly negative relationship to what in rational terms would be the social benefit of labor. On the use-value side, the social achievement of labor is the benefit it provides, not the toil it took. In this society, labor counts according to the toil it took. And that is a negative relationship to its benefit.

“In itself, an increase in the quantity of use-values constitutes an increase in material wealth. … Nevertheless, an increase in the amount of material wealth may correspond to a simultaneous fall in the magnitude of value. This contradictory movement arises out of the twofold character of labour. By ‘productivity’ of course, we always mean the productivity of concrete useful labour; in reality this determines only the degree of effectiveness of productive activity directed towards a given purpose within a given period of time. Useful labour, becomes, therefore, a more or less abundant source of products in direct proportion as its productivity rises or falls. As against this, however, variations in productivity have no impact whatever on the labour itself represented in value... [T]he same change in productivity which increases the fruitfulness of labour, and therefore the amount of use-values produced by it, also brings about a reduction in the value of this increased total amount, if it cuts down the total amount of labour-time necessary to to produce the use-values.” (ibid., p. 136-137)

The message here is: the more productive the labor becomes, i.e. the more productive the toil an hour of labor becomes in relation to the concrete product, the more it yields, the more concrete wealth it produces, the more use value it produces, the richer a society is.

But when it is about value, which is about money, when it is about acquiring the social power of possession through production, in this type of society, toil is the measure of wealth. The labor expenditure is what you get paid for in competition with others, if you are lucky. So if the production of a concrete item, a use value, takes someone less time due to the increase in the productivity of labor, then they have also incorporated less value into it and created less monetary value. Material wealth increases, but the monetary value does not increase at all. On the contrary: if the labor expenditure decreases, then the value objectified in a given mass of useful things can decrease. This has enormous consequences.

4.3 The increase in productivity or: the wealth of a society based on exploitation

In terms of material wealth, the things we all live on, the useful things, the increasing productive power of labor makes society increasingly richer. That is, as labor becomes relatively more superfluous – and this is actually the great blessing of productive power – toil is, or could be, eliminated.

If you can produce in one hour what used to take a hundred hours; or if today 2 farmers can feed ten thousand people instead of 10 farmers feeding 12 people like in the Middle Ages, then that is a huge blessing. Society no longer needs to work all the time. Needs can be met without always having to work so hard.

But as soon as it is about money, as soon as it is about the power of disposal over wealth, the use value and its quantity is not measured, but rather the production of the use value is socially recognized only to the extent that the necessary exertion has been carried out. So when the necessary exertion is reduced, the money value of the product is also reduced.

By the way, everyone hears this argument these days: food has become increasingly cheaper over the last 40, 50, 60 years. Households are spending an ever smaller proportion of their budget on food and drink. Everyone also knows that this has a systematic form today: when Nokia or Samsung bring out a cell phone, everyone knows that after three months the price will be reduced because in a quarter of a year a new model will be released. They become ever more abundant and cost less and less.

But that also means that the wealth, measured in money, can only increase in proportion to the amount of toil. The wealth constituting the sphere of use value would be enormous. You would only need to work a little and everyone could be satisfied. But as soon as it is about money, about wealth defined as: the power of disposal over everything that is for sale, including human labor power, this can only increase in proportion to the amount of toil. Because when labor becomes more productive, it also produces less value.

And this immediately becomes clear: a society in which the purpose of production is money, solely the exchange value, in which labor plays the role of the necessary exertion and labor produces wealth to the extent to which it proves to be the necessary exertion – this form of wealth can never be the wealth of those who do the work. Because, for them, the wealth increases as their sacrifices increase, and the wealth decreases as their sacrifices decrease.

So when Marx talks about the famous commodity producer in the first pages of the book, long before he notes that the commodity producer in the modern world is of course not one person but is divided into an entrepreneur who undertakes the production of commodities and owns the products of labor and an employee who does the necessary work, is compensated for it with wages, and is detached from the product of labor – it’s quite clear that this type of wealth can never be the wealth of the workers. This form of wealth, money wealth, is the wealth of a society based on exploitation.

4.3.1 Labor time as the measure of wealth

“For real wealth is the development of the productive powers of all individuals. The measure of wealth then is not any longer, in any way, labour time, but rather disposable time. Labour time as the measure of wealth posits wealth itself as founded on poverty, and disposable time as existing in and because of the anithesis to surplus labour time; or, the positing of an individual’s entire time as labour time, and his degradation therefore to mere worker, subsumption under labour. The most developed machinery thus forces the worker to work longer than the savage does, or than he himself did with the simplest, crudest tools.” (Karl Marx, Grundrisse, p. 708-709)

Marx said this in the 19th century. The worker has to work longer than primitive peoples, and more than when he was still the master of his labor with the crudest and most rudimentary tools. For those who do the work, labor never becomes more productive. That’s another way of saying that if the amount of labor defines wealth, then wealth can only increase in proportion to the amount of labor. For the people who work, work never becomes more productive. It never makes more money for them.

And there is this important piece of information: it is not a reasonable determination of social wealth if it is measured in expended labor. That is the whole mistake. In a rational society, wealth would not be the necessary labor, but the relative superfluousness of labor. That is, it would be the disposable time – the free time available. Labor time as a measure of wealth, labor expended, necessary effort as a measure of wealth, bases wealth on poverty. Actually, that’s already been said. Wealth has the same size as its sacrifice in time and energy. In other words, wealth is based on poverty. Of course, the developed capitalist mode is quite different. Here the wealth of some is based on the poverty of others. Here disposable time, the freely available time of a class of rich people, is based on the fact that others always have to work.

Conclusion

We’ve only addressed the form of wealth, not yet the concrete way in which wealth is created and distributed in this society. Let’s put it this way: those were the first 10 pages of several thousand. We’ve found initial answers to the peculiarities of the capitalist economic system which were cited at the beginning. I claimed that everyone somehow knows them. They raise questions. The first argument was about the indignation over the coexistence of enormous wealth and endless poverty. The second was about the disturbing phenomenon that work is becoming more and more productive, but there is no less of it. The third was about the crisis. Everyone is somehow trying to earn more and more money and at some point they earn nothing. We have already gotten some initial answers to these two peculiarities, even within the first few pages.

The coexistence of poverty and wealth is not surprising if needs are not the purpose of production. It is clear that if people’s needs are only satisfied to the extent that they have money, then it is clear that some needs are left unmet and some are met. We do not yet know why some people have no money and some have a lot of money, but we do know one thing: if the need and its satisfaction depends on whether someone has money, it is clear that the satisfaction and non-satisfaction of needs depends on this precondition. Then it’s no wonder that there are poor people.

And the second question has already been answered: work is becoming more productive, but there is never less work. But why? If it were a question of use value, of the supply of useful things, then labor would also be reduced to the extent that it becomes more productive. Then people’s disposable time would increase to the extent that they produce more and more in the same amount of time. Of course, the scope of needs would also grow. But when it’s about money, when money is the purpose, when value is the purpose of production, then that can’t be done without more expended labor. Then it is clear: labor can become as productive as you want, it will never be reduced.

We still don’t have an answer to the third question about crises. But that’s okay. After all, that was the abstract starting point for reflections that are developed over several thousand pages. We have only looked at the elementary form of wealth and put aside the developed forms of wealth, how they are produced and distributed.

We still haven’t even taken note of the fact that the free, self-employed commodity owner hardly exists and is absolutely an exceptional case in modern society anyway. Production is done by wage laborers and the producer is someone who doesn’t do any work, but rather organizes production and undertakes production with his money. And most wealth is produced in banks, which do no productive work at all.

This makes you realize: there’s still quite a lot in between the reality we know and this starting point, the elementary form of wealth. The study of capital addresses this in-between. It’s a whole course of study, and you have to dedicate yourself to it if you want to know how things work.

5. Addendum, or: How the reading of Capital goes wrong

The usual reading of Capital – there have been repeated attempts by all kinds of political tendencies and academic groups – very often goes as if the people reading and discussing it have become so inured to bourgeois living conditions that they read the first chapter on the commodity and then later the chapter on money as if it is saying: “yes, that’s how it is,” and they don’t take away any criticism from it. Many readers of Capital only get to the criticism when Marx talks about wage labor, capital, exploitation and surplus value.

Today I wanted to show that the book provides criticism from the very first page. One can discern in the very first pages that it is a critique of the irrationality of the capitalist mode of production because the wealth here involves human suffering; that this is a form of wealth that is irrational and not good for the vast majority of people. This can be taken from the beginning and not just when things become “unfair.” Because Marx thinks that everything here is fair in the sense that it is in keeping with the laws of this economy.

And the second thing that inevitably goes wrong when reading Capital is that people take it, especially the first pages and especially the first chapters, as if it were defining a structure of concepts. Along the lines of: you have to become familiar with Marx’s terminology if you want to come to the same conclusions as him. Of course, it’s clear that this sentence can easily be reversed. You have to defend yourself against the terminology as intellectual rape if you don’t want to arrive at the same conclusions.

But it’s not a definitional construct in the sense of “you can define it this way or you can define it another way.” Rather, it is an explanation of the reality we all know. It’s an introduction at an abstract point, but the fact that the point is abstract takes nothing away from its realism. It is no less real or realistic because it is abstract since we are talking about the commodity and not “already” about the factory. That comes later.

So you always have to ask yourself while reading it: “What am I being told here about the world that I know? What conclusions are being drawn about what I know from experience?” And make sure that you don’t get lost for a moment in the idea that “Marx defines it this way and defines it that way.” Because then you’re in a whimsical world in which someone has built a conceptual edifice and afterwards you say: “Wow, as a closed warning system that’s pretty impressive.” The arguments have to be tested at every point, and you shouldn’t think “somehow his definitions will work out.” These are the two major errors that occur in this approach to Capital. They should be avoided from the outset.

Footnotes

[1] Modern economists argue that Marx did not recognize that the price of commodities depends on supply and demand. Marx’s point, however, was not to deny that a price can’t be met without demand, but to explain the content of what is being asserted on the market. The market proves whether individually performed labor counts as socially necessary average labor or not. But that is only one side of the coin. It should always be noted that value determines supply and demand. The content of socially necessary average labor asserts itself in the price. On the other hand, the socially necessary labor must also be paid for in perpetuity, otherwise the products will not exist. If something is needed but does not realize a price that reimburses the producer for his efforts, then he will no longer supply the product. The product is produced and offered only if it is paid the price which enables the producer to reproduce himself. As you can see, value is the law of exchange, which does not contradict the fact that everyone wants to pay as little as possible and get as much as they can. This is precisely how socially necessary labor asserts itself as the measure of exchange in a society in which no one can say how many products of one kind are necessary or what the social average labor is for a pound of bread, and in which there is no general will.

[2] From these characteristics of the commodity and the form of social wealth, Marx draws a conclusion about the relationship of the subjects of this economy to the products of their labor that has often been misunderstood. We are talking about the fetish character of the commodity. The commodity is the objectified form of a social relationship in the sense that it does not pay off in its use value, but an exchange value. The social relation between the producers appears to them as what they are, namely as relations between things. A concern that is actually a concern between people who come to an agreement between themselves, appears to them as what it is, namely as a relationship between things that follow their own laws and which people are subservient to. Someone produces something, the commodity is in demand, he gets a price for it that he can live on, and tomorrow he produces the same thing and finds out that nobody is buying his product. Marx says: Instead of people being in control of their social relations, people are dominated by the social relations. The abstract lesson of the fetish chapter is that man is not the master of his circumstances. People submit themselves instrumentally to relations outside their control. They use social institutions, commodities, money, and capital, but they don’t even know what they’re using and have no control over what they’re using.