tion. The $800,000 worth of goods are worth just that amount in the finished products. There was also $200,000 worth of labor power. Let us follow that a little more closely. When a worker sells his labor power, he sells it for about what it costs him to produce it. A day's pay is about what it costs the worker to live a day. But the amount of time he works that day has nothing to do with his cost of living. That is regulated by the competition of workers for jobs, the strength of unions, factory legislation, etc. And, mark it well, regardless of whatever influences may favor him, there is a considerable difference between the number of hours it takes him to produce value equal to his wages and the total number of hours, constituting the working day, for which he has to work for those wages. When the capitalist buys labor power for a day, he pays for the number of hours it takes the worker to produce the equivalent of his wages; he pays for, say, two hours. When the capitalist sells the worker's product, he sells the total number of hours the worker has toiled; he sells, say, eight hours. This difference of six hours' labor time and value the capitalist pockets. This is surplus value. Thus while Mr. Coldcash's manager buys and sells labor power at its value, he nevertheless realizes $400,000 worth of surplus value. "Surplus value is unpaid labor," is Marx's theory that revolutionized political economy. And unpaid labor is the corner stone of the present social order. Let us follow Mr. Coldcash. That worthy gentleman does not pocket all of the $40,000. He has rented the factory from Mr. Codfish, a member of the landed aristocracy. Mr. Codfish must maintain himself in a manner becoming his station, which means that he must not soil his lily white hands with work, and, to avoid doing so, he exacts rent. Moreover, Mr. Coldcash is under some obligations to Mr. Moneybags, the financier, who lent Mr. Coldcash the $1,000,000 with which he started in business. Mr. Moneybags is also one of the pillars of society and must be supported in idleness. So Mr. Moneybags very graciously receives back his principal with interest at the current rate. What Mr. Coldcash retains as his share is industrial profit. While this division does not always take place, one individual often serving in two or even the three capacities, yet if for no other reason than to explain their different stages historically, we divide surplus value into rent, interest and profit. The distinction between profit and surplus value should be emphasized. Profits are the dividends paid on the total investment. Surplus value represents the exploitation of labor and is based upon the wages only. In the case of Mr. Moneybags, the gross profits were $40,000 on the $1,000,000 invested, or 4 per cent. At the same time that $40,000 was extracted out of the labor of the workers whose wages were $200,000. The rate of surplus value was 20 per cent. The distinction between profit and surplus value is so marked that one may increase while the other decreases. For example, take the "law of diminishing returns," offered to excuse Mr. Coldcash for pocketing his unearned increment. It happens that normally, in a number of commercial enterprises, by the increase of invested capital laid out in more expensive machinery, etc., as well as artificially, by over-capitalization, watering of stocks, lobbying and bribery of public officials, keeping a double set of books, and such other methods best known to the eminently respectable Mr. Coldcash, the average rate of profit may be shown to be dwindling from year to year. The rate of exploitation, however, constantly increases, due to labor-displacing machinery, the growth of the industrial reserve army and the consequent intenser competition for jobs, so that labor, and not capital, brings in diminishing returns. This, and this only accounts for the tremendous increase in the national wealth. We may also, in passing, consider a few more of the explanations offered to show cause why Mr. Coldcash and his colleagues are entitled to retain their unearned increment. Here is one holy trinity frequently encountered: Wages of risk, superintendence and abstinence. Wages or risk-by which it is claimed that the worker should insure Mr. Coldcash against the risk of not realizing surplus value out of the worker. Wages of superintendence—which overlooks the fact that surplus vaiues were never so meager as when Mr. Coldcash superintended the business. and never so abundant as when Mr. Coldcash was taking the rest cure at Monte Carlo. Wages of abstinence-which overlooks the fact that Mr. Coldcash was only absinent when the surplus value was meager; now that it is plentiful he is no longer ascetic, but leads a life of debauchery-or, rather, takes the rest cure-at Monte Carlo. But if Mr. Coldcash is to be remunerated for lack of risk, superintendence and abstinence, why not the workers who do run the risk of life and limb, do all the superintending, and whose wages compel them to be abstinent? Why is it that, for the workers, "virtue is its only reward?" The fact that dividends come to owners whether they be children, insane or degenerate, shows that profit is an income secured without returning an equivalent. In view of the ground we have now covered, let us amplify our definitions. Here is what Marx says of capital: "Capital does not consist of means of subsistence, implements of labor, and raw materials alone, nor only of material products; it consists just as much of exchange values. All the products of which it consists are commodities. Thus capital is not merely the sum of material products; it is a sum of com modities, of exchange values, of social quantities." Hyndman and Untermann, as well as Marx, have developed this thought further, illustrating the many garbs in which capital appears, also the divers functions. money perform. As to value and price, Untermann quotes Kautsky upon an important point. "It is not the value, but the price of production, which forms under a developed capitalist mode of production the level, around which market prices fluctuate under the influence of demand and supply. The price of production, however, is not floating on air, but rests upon value." The price of production consists of the value plus the average rate of profit which the Coldcashes are able to secure at the particular time. In regard to value, price of production and market price, it is well to heed Marx: "By comparing the standard wages or values of labor in different countries, and by comparing them in different historical epochs of the same country, you will find that the value of labor itself is not fixed but a variable magnitude, even supposing the values of all other commodities to remain constant. A similar comparison would prove that not only the market rates of profit change, but its average rates.' Whatever the ups and downs of the market, such as supply and demand, “buying cheap and selling dear," the influence of monopoly and such other "higgling of the market," which affect prices and give one capitalist the advantage over another, however turbulent the sea of conflicting emotions upon which capitalists are tossed as to the desirability of securing a slow, small and sure return on their investments as against a quick, large, but uncertain return, the workers remain the sole producers of value and the capitalists remain the idlers and appropriators of surplus value. When commodities have been produced, exchanged and distributed (all of which is included in the term production), the only exploitation of the workers peculiar to capitalism has been accomplished. With Marx's theory of surplus value as an X-ray, to borrow an idea from one of Rata Langa's masterly cartoons, we can lay bare the mechanism of capitalist production. It is the exploitation of labor, the accumulation of surplus values in the shape of exchange values in such quantity as to glut the market, that is the primary cause of commercial crises. A commercial crisis apprehends Messrs. Coldcash, Codfish and Moneybags in the act of "getting away with the goods." Here we may insert, both D. A. Wells and Hyndman note that the crisis of 1873 was the first to indicate that peoples remotely connected with capitalism are bound up with it in sharing the shock of an industrial disturbance. Capitalism scourges the whole world. During the crisis, the smaller capitalists are assimilated by the larger ones. This also results from attacks upon the "malefactors of wealth," and from insurance scandal and "frenzied finance" exposures. For the timid, petty traders are always first to sell when the market takes a bad turn and thus play into the hands of the big holders. Aside from any "illegal" measure, which is but the hissing steam signifying that the water, the current of commerce, has reached the boiling point-the point wherein amalgamation is inevitable—the tendency for capital to concentrate in every industry and to centralize into the hands of fewer capitalists, is only a higher form of the present system of production. Investment continues until an industry is saturated with capital, then independent companies are merged into one, the corporation next absorbs the business closely allied with it, the tentacles of the more successful promoters and captains of industry spread out in all directions until there comes "the entanglement of all peoples in the net of the world market and, with this, the international character of the capitalistic regime." Vandervelde and, especially, John A. Hobson, describe the trust tendency. Hobson shows that in the manufacture of American agricultural implements, no less than in other manufactures, the number of establishments has declined appreciably from 1880 to 1900. Altogether, in that time, the dependent class has increased 73.6 per cent, while the employing or independent class has increased only 27.4 per cent. Curiously, data to show how rapidly the number of manufacturing establishments is decreasing creeps into the Republican Campaign Text Book for 1908. At the same time, it is true, as Hobson says further along, "We find that it is precisely in those trades which are most highly organized, provided with the most advanced machinery, and composed of the largest units of capital, that the fiercest and most unscrupulous competition has shown itself." Such death grapples for mastery end in still greater consolidation and serve notice that the time is ripe for making the means of production the collective property of the whole people. In the hands of the Socialist, political economy ceases to be the "dismal science." The Marxian school, the historical school, vitalized political economy. More than that, the Socialist is not concerned with economic measures that oppress the capitalists of one country for the benefit of those of another country. He shows that exploitation has no fatherland. The Socialist is not a nationalist, but an internationalist. Only in his hands is political economy a social science. Only by the aid of the Marxian theories can we fully understand capitalist production, account for the poverty of the working class and the riches of the idle capitalist class, explain the widening gulf between the two classes, the periodic industrial depressions and the rise of monopoly. To the Socialist, the capitalist system fully developed is the point where it is in a condition of socialized production ready for socialized ownership, whereby the means of production will be stripped of their present class character as capital, whereby labor power will no longer be a commodity and exploitation of the producer will cease. Then the workers will receive the value they create, distress in the midst of plenty will be impossible, the world's productive forces will be scientifically and planfully controlled, and the problem of political economy will be solved: So to arrange the material conditions of life as to result in the happiness of the whole people. Philadelphia, Pa. A COURSE OF READING The following list of works is recommended to the student. They cover the subject touched upon by the above article, and it is suggested that they be read in the order named.-J. E. C. What Is Capital? By Ferdinand Lassalle. Paper, 5 cents. Wage Labor and Capital. By Karl Marx. Paper, cents. Evolution of Modern Capitalism. By John A. Hobson. Scribners, New York. schein & Co., London. Economics of Socialism. By H. M. Hyndman. Twentieth Century Press, London. Marxian Economics. By Ernest Untermann. Cloth, $1.00. Poverty of Philosophy. By Karl Marx. Cloth, $1.00. Contribution to the Critique of Political Economy. By Karl Marx. The International Library Publishing Co., New York. Capital. By Karl Marx. Three volumes, cloth, each $2.00. (The books in this list will be mailed on receipt of price by Charles H. Kerr & Company, 153 Kinzie street, Chicago, except where the name of another publisher is indicated. We have a few copies of Hyndman's "Commercial Crises of the 19th Century," which we will supply at $1.00, postpaid, while they last.) The Utopian is one who, starting from an abstract principle, seeks for a perfect social organization.-George Plechanoff, in Anarchism and Socialism. |