Wage, Labor, and Capital

By Karl Marx – 1847 - 1849 

Edited by Frederick Engels 1891

Reviewed by Steve Halpern

At a certain point in the lives of all workers, we go to employers and apply for a job. Karl Marx thought about this question in 1847, and wrote about the relationship between workers and employers. Why do workers apply for jobs? Why do employers hire workers? How do employers view the workers under their employ? Where do employers get the money to pay workers?

Our History 

Before we begin to answer these questions, we need to look at a bit of history. In the past, there was slavery. In those days, there were people who sold human beings for a price. Once this price was paid, the slave was the property of the slave owner. The slave then needed to fulfill the tasks of the owner for the rest of his or her life. 

Then, there was the system of feudalism, where peasants worked on the manor of the lord. Peasants gave most of their produce to the lord, but had the right to keep a portion of that produce to sustain themselves. Unlike the slave, the peasant had the right to work a plot of land, and could not be sold to another lord. 

The slavery of the United States did not reflect the norms of feudalism, but was similar to the slave empires of Greece and Rome. There, slaves could be sold to other slave owners. However, late in the Roman Empire, the law was changed to prohibit slave families from being separated. In the slave system in this country, slave owners routinely sold family members and split them apart.

So, here we see one difference between feudalism and slavery. In feudalism the peasant produced their own subsistence. In slavery the slaves had no resources and depended on the owner for their subsistence.  

The capitalist reality

Now we can talk about what happens in capitalism. First, we can say that all of the commodities of the world, without exception, are produced by the workers of the world. I will call this the international working class. So, if the working class produces everything of value, why do workers need to apply for employment?

Marx argued that workers apply for jobs “to secure the necessary means of life.” The problem here is that while workers produce all wealth, in the capitalist system, the working class doesn’t have, “the necessary means of life.” This is why we apply for jobs.

Understanding this reality, we can also say that employers are completely dependent on the fact that workers don’t have the means to sustain ourselves. If we had the resources to sustain ourselves, we might not apply for employment. If we did choose to work a job and the employer said something we didn’t like, we could quit on the spot.

So, here we see why we go to work every day. Employers are no longer allowed to use instruments of torture to coerce workers, as was the case in slavery. Instead, employers understand that we need to do things their way, or we can hit the highway. Hitting the highway means that we might not have the means to sustain ourselves. This is the capitalist method of coercion.  

When we begin to see this relationship, we see how there is no real equality between capitalists and workers. Because of this lack of equality, capitalists view workers as mere commodities. 

When we turn a car left, it goes left. When we turn a car right, it goes right. Capitalists expect that workers will do as we are told, just as any commodity is used by its owner. In slavery times, the slave was the property of the owner for their entire lives. Capitalists have control over workers for eight or more hours per day.

The myth and the reality

Clearly, in the United States, there is a Constitution that contains the Bill of Rights. Among those rights are the right to freedom of speech. However, workers understand that employers have the power to fire employees who attempt to organize a union. Employers will not say that organizing a union is the grounds for termination. They merely hunt for some kind of infraction that will enable the employer to have a legal excuse for firing the union organizer. 

So, thinking about this relationship, we might notice a few things. Students routinely celebrate when they receive degrees. Workers might have a party when they learn they have been hired for a new job. These achievements signify that someone might begin to have a bit more independence. They might have a job that doesn’t seem to be as oppressive as those jobs that don’t require university degrees. 

However, Marx argued that for the worker, “life begins where this activity ceases.” In other words, because workers have no control over our environment where we work, our only reason for working is that paycheck. Only when we leave work, do we begin to do all those things we want to do. 

However, while workers routinely spend about one-third of the day working for an employer, there are political pundits who argue that many of these same workers are “apathetic.” The basis for this seemingly absurd charge is that many workers do not vote in the elections. 

The facts are that while workers produce all wealth, few if any pro-capitalist candidates argue that we deserve the lifetime right to health care, education, housing, food, transportation, communication, or exposure to cultural activities. However, the working class of the world has done literally all the work required to provide for all those goods and services. 

I see this charge of “apathy” by those pundits to be particularly offensive. Many of my coworkers routinely volunteered to work long hours of overtime. Today, many workers work two or even three jobs. They do this, because workers only receive a small part of the wealth our class produces.

So, now we come to the question: Where do employers get the money they pay workers? Initially, Karl Marx argued that workers sell their labor. Then, Marx modified this position and argued that workers sell “labor power” to capitalists. Frederick Engels modified Marx’s pamphlet to reflect this change in Marx’s thinking.

When we say that workers sell our labor, then there is an implication that because of the sale of this labor, capitalists are entitled to derive a profit. Marx argued that when workers sell “labor power” they are actually giving the capitalist a completed commodity, where the owners do nothing to produce that commodity. 

Marx refined this observation arguing that employers view workers as “variable capital,” as opposed to machinery that he called “constant capital.” The capitalist needs to pay the entire cost of the machine. However, capitalists only use labor for as long as they need that labor. Then, jobs are eliminated. Today, we have seen millions of jobs eliminated during the pandemic. So, while those workers might have thought they had jobs, all jobs under capitalism can be called “variable.” 

Marx called the capital employers received, “surplus capital.” We can also say that interest payments made to banks, and payments made to insurance companies and advertising agencies also reflect “surplus capital.” All these payments add absolutely no value to commodities. Yet, constant capital and variable capital are requirements in the production of literally all commodities. Understanding all of this, Marx concludes:

“The essence of a class which possesses nothing but the ability to work is a necessary presupposition of capital.

“It is only the domination of past, accumulated, materialized labor over immediate living labor that stamps the accumulated labor with capital.”

Here Marx identified the essence of capitalism. While workers produce all wealth, capitalists take that wealth and leave workers with, “nothing but the ability to work.” Then, they convert their “domination of the past” into the money they use to pay workers, and gouge out their super-profits. 

Workers struggle because human needs are more important than profits

Now, let’s think about what the word “war” means. Why in the world did the United States go to war against the people of Vietnam? Marx argued that the capitalist system needs to dominate economies in order to convert labor into capital. In order to do this, they create an environment where our only power is our “ability to work.” 

Strikes and revolutions erupt because workers and farmers feel that our interests are more important than being dominated by forces that are only interested in accumulating capital. This is why Vladimir Ilyich Lenin argued that “Imperialism is the highest stage of capitalism.”   

So, now you might be thinking that the way Marx explained our reality is completely different from the values we are all raised with. While Marx’s ideas might sound implausible, those ideas give us a clear explanation of the gross inequality we see in this country and the world today.

While the government argues that we live in a “democracy,” capitalists are driven to create an environment where the working class only will have, “the means to live” if we dedicate our lives to their drive to maximize profits. 

Understanding this reality, we can also consider that a different kind of political economic system could begin to solve some of the most horrendous problems we face. A worker’s government could organize society in a way where we don’t need to contribute to profits for corporations, interest to banks, or payments to insurance and advertising companies. 

Without the need to pay for all those unnecessary services, we could guarantee everyone the absolute lifetime right to food, clothing, housing, health care, education, transportation, communication, as well as exposure to culture. There would be absolutely no reason for workers in one country to go to war against workers in another country. We wouldn’t go to work so we might have “the means to live.” We would begin to work to improve the standard of living for the entire working class of the world. 

Clearly, establishing that kind of government will be a monumental task. However, when we explore the question of what does it mean to work for a living, we can begin to see the road to a rational future. 

Giants – The Global Power Elite

By Peter Phillips

A review by Steve Halpern

Recently the world watched while a racist mob invaded the capital with the aim of decertifying a Presidential election. Many looked at this event in disbelief thinking: How did this happen? 

Then, there are the 389 of the most powerful managers of the capitalist system. Clearly a few of them might have scratched their heads about this event. However, given the role of these people in the world, we might say that, for them, this was just another day at the office. Reading Peter Phillips book titled, “The Global Power Elite,” we might understand why those who have the real power might have been relatively unfazed by the attack on the capitol.

One of the reasons why many people were interested in the attack on the capitol has to do with the fact that this involved elected officials. President Donald Trump consistently made the completely unsupported claim that he won the election, “by a landslide.” Then, there are the Democratic Party politicians who attempted to get him impeached, even after he left office.

However, for the 389 individuals who have immense power, and dedicate themselves to supporting the interests of the most affluent people in the world, they look at the attack on the capitol from a different perspective. These are power brokers from all over the world, who have attended elite universities, and have talked to one another at international conferences. 

They are well aware of the fact that the world capitalist economy is in a steep downturn. They are well aware of the fact that factories that used to be located in this country, are now located in nations where wages are between one and ten dollars per day. As a result, they know that today about 80% of the population of the world lives on ten dollars per day or less. They also know that this reality is a direct result of the policies they have been advancing throughout their lifetimes.

Understanding these facts, many of the 389 people mentioned supported Donald Trump. Trump managed to deflect the legitimate anger of millions of people away from the most affluent people in the world. Trump blamed the closure of numerous factories and the deteriorating standard of living on the Democrats. 

After he was elected President Trump continued to blame the Democrats, while he used his office to continue to enrich the affluent. He did this using the absurd argument that he was creating jobs. 

In fact, tens of millions of jobs had been created over several decades. Millions of jobs were also eliminated during those same years. The new jobs usually have lower pay, and replaced the higher paying jobs that left the country. The wealth that created all of those jobs came from the labor of the working class all over the world. The capitalists who are represented by the 389 defenders of their system produce absolutely no wealth.

While many capitalists supported Trump, most opposed the attack on the capitol. Certainly, this was not because they are opposed to overthrowing elected governments.

We know from history, that the government of this country supported the overthrow of elected governments in Iran, the Congo, Chile and other countries. However, in those nations, the elected governments made the argument that the interests of the people were more important than capitalist interests. That point of view is completely unacceptable to the power brokers of capitalism.

On the other hand, Joe Biden has proven himself over a long career to be an ardent supporter of the most affluent families in the world. So, given Biden’s long history, capitalists didn’t see a good reason to push him aside. Instead, they allowed Donald Trump to retire to his estate in Florida, until they might need him again. 

So, at this point, we might begin the discussion about who are those 389 people who represent what Phillips argues is the “Transnational Capitalist Class.” 

The Transnational Capitalist Class

Over 100 years ago, Vladimir Ilyich Lenin, a central leader of the Russian Revolution, wrote his pamphlet Imperialism – The highest stage of capitalism. In this pamphlet Lenin argued that imperialism is the economic and political domination of nations by the ruling powers of more powerful nations. Lenin went on to argue that this wasn’t happening because of a mistake in judgement. No, Lenin gave the evidence that imperialism is a necessary consequence, or the “highest stage” of capitalism.

Lenin also observed that while there are many small companies or corporations in capitalism, the system is dominated by large corporations. We can see this in the fact that we purchase homes using financing from banks, automobiles from large auto corporations, food in supermarkets, and clothing in department stores. Restaurants oftentimes are the small owner operated establishments. Then, there is McDonalds and Burger King.   

Lenin also observed that these large corporations are a part of international cartels. One cartel Lenin pointed to was based on sugar, and those cartels were beginning to dominate the world.

Peter Phillips calls the new capitalists and their money managers the “Transnational Capitalist Class.” According to Phillips, there are about 2,047 billionaires in the world. In 2017 they owned $7.3 trillion. Phillips also identified 17 asset management firms that control investments of $41 trillion in the world. There are 199 board members of those firms, and these people use their influence to control economies and governments throughout the world. The huge transnational corporations rely on these transnational investment companies for their financing. Those investment corporations also rely on investments from each other, allowing for mutual profitability. 

While most of these people don’t have the assets of the billionaires, their decisions concerning where to invest vast amounts of money qualify them as real power brokers. Phillips named the names of these money managers. He also claims that many of these board members know one another and have common social, educational, and political interests.

One of these money managers is James (Jamie) Diamond, who is the President and CEO of JPMorgan Chase. In 2016 Diamond’s assets were valued at $1.3 billion. His salary from JPMorgan Chase was $27.5 million. 

JPMorgan is a very old bank that has been profiting from its investments all over the world for a long time. The bank supported the Italian invasion of Ethiopia under Mussolini, as well as the Japanese invasion of China. 

Back in 1933, JPMorgan opposed the Glass-Steagall Act that put some minor regulations on banks during the depression. James Diamond worked to get Glass-Steagall overturned. 

During the housing market collapse of 2008, JPMorgan Chase made money by betting against the market. At the same time, the bank was making money by selling housing investment securities. It was these kinds of activities that caused the government to fine JPMorgan Chase several times. 

The government under President Barrack Obama responded to the 2008 economic collapse with the Dodd-Frank Wall Street Reform and Consumer Protection Act. James Diamond was apparently outraged at the very idea that the government would get in the way of the corporate drive to maximize profits. So, after Diamond expressed his opposition to Dodd-Frank, President Obama stopped inviting he to dinner parties. Before this disagreement, Diamond was viewed as “Obama’s favorite banker.”

In 2012, the Huffington Post asked Diamond, why he was such a consistent defender of Wall Street. This is how he answered the question. “This is not the Soviet Union.  .  . This is the United States of America.  .  .  Guess what.  .  . It’s a free f—ing country.” Apparently, James Diamond believes that the word freedom means a total and unconditional commitment to support for the corporate drive to maximize profits.         

Another of these money managers who caught my eye was Amy Gutmann, who is the President of the University of Pennsylvania and the Director of the Vanguard Group. As we might imagine, Ms. Gutmann has quite a resume. This includes the National Commission on the Humanities and Social Sciences, Presidential Commission for the Study of Bioethical Issues, World Economic Forum, Advisor: Secretary General of the United Nations, as well as other supposedly prestigious positions. 

Gutmann’s salary from the University of Pennsylvania is $3.5 million, and from Vanguard she receives a salary of $236,000. She has degrees from Radcliff, London School of Economics, and Harvard. We might also consider that only 30% of the 199 money managers in this group are women. 

The University of Pennsylvania is located in Philadelphia, the poorest of the large cities in the nation. One of the least affluent sections of the city is in the predominantly African American neighborhood of West Philly. On the other hand, the U of P is in the supposedly prestigious Ivy League with a tuition of $57,770. I’ve called this gross disparity as the U of P being an island of privilege in a sea of poverty. Apparently, Ms. Gutmann doesn’t see anything unethical about that relationship.

As I mentioned, Peter Phillips argues that 80% of the population of the world lives on ten dollars per day or less. Close to 800 million people do not have enough food to eat, with hundreds of millions lacking in direct access to water or electricity.

Phillips also argues that if there would be a 25% tax on the assets of the most affluent one percent of the population, hunger in the world could be permanently eliminated. Yet, money managers like Gutmann argue that while there are vast resources that could be used to eliminate poverty, investment funds need to be used to maximize profits. Apparently, the education and experience of these money managers taught them to view this state of affairs as ethical. 

Think Tanks

These seventeen investment banks don’t merely rely on their own information for their investment strategies. There are also international so-called groups that make investments and issue reports on the best ways of defending the free flow of capital. Two of these groups are the Trilateral Commission and the Group of 30 (G30). 

While we all go to work and try to make a living, the Trilateral Commission and the Group of 30 issue reports that are guides for where the investment banks park vast amounts of money.

Every year in Davos, Switzerland thousands meet to listen to reports. Davos is in an isolated location about 5,000 feet above sea level. This apparently, is to deter protesters from picketing the meeting. 

Corporations spend $5,000 for each of the five representatives that they send to this meeting. One of the five must be a woman. So, while corporations routinely pay women less for their work all over the world, they want to make sure that women are not totally excluded from these highly exclusive meetings. 

Another annual meeting many people from this group attend is the International Monetary Conference. Their 2013 meeting was held in Shanghai, China. One of the attendees at this meeting was Han Zheng, who is a Member of the Political Bureau of the Communist Party of China. Zheng was one of several Chinese power brokers who attended this meeting.

China has been a center for capitalist investment for decades. While the Chinese Communist Party claims to be Marxist in its orientation, the actions of the party tell another story. First, there were the disastrous policies of the Great Leap Forward and the Cultural Revolution. Deng Xiaoping spent several years in a reeducation camp because of his opposition to those policies. Then, after the death of Mao Zedong, Deng became the central leader of the C.C.P. and encouraged huge capitalist investment.

One reason why capitalists invested in China had to do with the fact that they wanted to stop paying relatively higher wages to workers in developed nations. Another reason was because China had a revolution that cut them off from imperialist exploitation. This meant that the Chinese government was able to make huge investments in infrastructures like railroads and highways. 

The massive investments in China enabled hundreds of millions of people to see their lives improved in many ways. However, today a huge Chinese working class toils long hours producing commodities for nations all over the world. The Uighurs of China are a nationality that has experienced horrendous discrimination because of policies of the government that calls itself communist.

These are some of the reasons why the Chinese now have a seat at the table where international capitalist financial investments are discussed. This also explains why there are about 819 billionaires living in China today.

The military support for the drive to maximize profits

Apparently, the hundreds of billions of dollars the United States government spends on the military isn’t enough to support corporate interests. Corporations spend about $200 billion more to protect their interests all over the world. So, there are several private military contractors who hire people to go to war to protect the wealth of the billionaires of the world. Today, many of the soldiers supporting the invading armies in Iraq and Afghanistan are being paid by private contractors. 

Two of those contractors are Blackwater (part of the Constellis Holdings) and G4S. G4S also runs prisons throughout the world.

Today, the governments of Russia and China also have huge armed forces. The governments of both those countries have worked with the international capitalist interests. However, because those governments are not directly controlled by capitalist interests, the armed forces they control are not seen as acceptable to many of the power brokers of the world.  

The corporations that control what we see and hear from the capitalist media 

In order for the United States government to organize a war against another nation, they must first go on a war drive. The facts are that the U.S. government hasn’t declared war against another nation since World War II. So, the President needs to have some public support for murdering people in other nations. This is one of the reasons why these public relations firms are necessary. 

The annual revenue of the media in the world is about $2.1 trillion. The share of that money in the United States is $632 billion. Of that money, the revenue for the Philadelphia based Comcast Corporation is $80 billion. 

I happened be in a demonstration in front of Comcast’s headquarters demanding that this multi-billion-dollar corporation pay for internet access for students who have not been going to school because of the pandemic. Comcast CEO Brian L. Roberts has an annual salary of about $28.6 million and his personal assets are about $1.8 billion.

The other smaller media outlets include: Disney, Time Warner, 21 Century Fox, Bertelsmann, Viacom and CBS. These huge corporations control most of the information we get from the airwaves. 

Then, there are the public relations corporations. One of those is PR organizations is the Rendon Group. The Rendon group worked to support the U.S. wars against both Panama and Iraq.

Then, there is Hill & Knowlton Strategies. The Kuwaiti government hired Hill & Knowlton to support the war against Iraq. We might recall a young woman by the name of Nayirah who claimed, “Iraqi soldiers come into the (Kuwaiti) hospital with guns. They took the babies out of the incubators, and left the children to die on the floors.” This entire statement was choreographed by the White House and Hill & Knowlton. Hundreds of thousands of the Iraqi people died as a result of the U.S. invasion of their country.  

Conclusion

According to Congressman David Jolly, Congresspeople need to raise about $18,000 every day in order to have enough money to run for office. Congressman Rick Nolan of Minnesota views himself as a “mid-level telemarketer dialing for dollars.” 

This means that these so-called representatives spend about thirty hours every week on the telephone begging for this money. The law prohibits government officials to make these phone calls from their offices in the Capitol. So, they go to call centers to beg for the money.

We might consider that heroin or crack addicts don’t need $18,000 per day to support their habits. We might also consider who these government officials are talking to. Those people might very well be connected to the 389 power brokers mentioned in Peter Phillips book. 

Everyone raised in this country is instilled with the idea that there is, “liberty and justice for all.” The educational system and the media also argue that we live in a “democracy.” However, when we begin to understand that there are 389 power brokers who have real control of the capitalist economies of the world, we might draw another conclusion. 

The word plutocracy means a government that supports the interests of the affluent. The facts presented in Peter Phillips book underscore the idea that we live in a plutocracy and not a democracy. 

Phillips wrote about what he calls the Transnational Capitalist Class. We can say that this class, represented by the 389, is ultimately interested in their international interests. They have made their indifference to the needs of the workers who produce all their wealth crystal clear. 

In my opinion, working people need to view ourselves as a Transnational or International Working Class. While the 389 support capitalist interests in the world, we need to support the interests of the working class of the world.

This was the idea Karl Marx and Frederick Engels wrote about in their 1848 Manifesto of the Communist Party. While many things have changed since that time, the idea of, “Workers of the world unite,” has never been more relevant.  

Today, about seven people have the same accumulated wealth as half the world’s population. This is one reason why 80% of the population of the world lives on ten dollars per day or less. We might imagine what it would mean if the wealth of the billionaires was used to provide for the needs of working people all over the world.

Poverty would be no more. Everyone would have the means to live a rewarding life. The environment could begin to recover. Discrimination would be no more, and we could move toward a place where there will be unconditional liberation for everyone. When we look at the world from this point of view, there can be only one conclusion. We need a completely new kind of government that makes human needs and not corporate profits the fundamental priority.