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hitherto out of reach, and was responsible for much of the commodity price rise. There was also a rise in the price of luxuries because the war-profiteering, and that which was not profit but plain (even if protected) graft enabled the profiteers and grafters to indulge their craving for luxurious adornment and other extravagances. The war period was the golden opportunity of the bourgeoisie and they minted every minute.
Had wages not risen everyone realizes what effect the restricted production and the consequent market condition would have had upon the workers and their living standard. Wages had to rise and did rise only after commodity prices compelled a raise. Whenever during the war period a rise in wages was demanded it was always based upon a preceding increase in commodity prices, rents, etc., which in itself shows that high wages did not cause high prices, but, on the contrary, followed as a result of high prices.
Had the period lasted longer there would have been a return to normal prices and as a result the workers would have established a new and improved standard of living. But the capitalists determined not only to prevent any elevation of the old, traditional living standard but to force a lowering of it.
“The American Plan” For every improvement of the workers' living standard strengthens the position of the working class and weakens that of the employing class. The advantage of cheap labor is well understood by the capitalist class, for the lower the living standard the cheaper the laborer. So there was a concerted move by the capitalist interests which had for its objective the lowering of the workers' living standard. This movement is known variously as “Americanism,” “The American Plan," and the “Open Shop Movement. It is well organized, well financed and well managed. This movement has made some headway due in great measure to the acceptance by the workers of the economic sophistry that the high prices were due to high wages. Just in proportion as they accepted this for truth they refused to resist the effort to reduce their living standard by accepting wage-cuts. But the principal reason was the fact that owing to their numerous craft unions they were unable to restrict competition among themselves and to present a united front to the capitalists.
“By what means is the price of a commodity determined?” asks Marx in “Wage, Labor and Capital,” and then proceeds to answer his own question as follows:
"By means of competition between buyers and sellers and the relation between supply and demand—offer and desire. And this competition by which the price of an article is fixed is threefold.
“The same commodity is offered in the market by various sellers. Whoever offers the greatest advantage to purchasers is certain to drive the other sellers off the field, and secure for himself the greatest sale. The sellers, therefore, fight for the sale and the market among themselves. Everyone of them wants to sell, and does his best to sell much, and if possible to become the only seller. Therefore each outbids the other in cheapness, and a competition takes place among the sellers which lowers the price of the goods they offer.
"Finally competition is going on between buyers and sellers; the one set want to buy as cheaply as possible, the other to sell as dear as possible. The result of this competition between buyers and sellers will depend upon the two previous aspects of the competition; that is, upon whether the competition in the ranks of the buyers or that in those of the sellers is the keener. Business thus leads two opposing armies into the field, and each of them presents the aspect of a battle in its own ranks among its own soldiers. That army whose troops are least mauled by one another carries off victory over the opposing host.”—(Wage, Labor and Capital, pp. 19-20.)
1. Is there a difference between the value of an article
and its price? 2. What regulates the price of a commodity? 3. Does a raise in wages compel a rise in prices? Why? 4. What was the primary cause of high prices during
and immediately following the war?
5. What does the “open shop drive” aim at? 6. Do the craft unions help those behind the open shop
drive? How? 7. Show the result of competition among sellers of a
commodity. Apply it to labor power. 8. What do you understand by “the competition be
ween buyers and sellers”? 9. What do you understand by "offer and desire" as
used in the text? 10. Can you apply Marx' illustration of “opposing ar
mies" to the workers? How?
Price Regulation "HE wages paid the workers do not affect the prices of commodities. That is to say that high wages do
not make high prices, nor do low wages make low prices. The relation of supply to demand is an important factor in price regulation.
If there are 100 tons of coal on the market and a thousand people each of whom want to buy a ton of coal, the competition between these thousand persons would bring the price of coal up; and if the weather was extremely cold the sellers of coal could charge much more than if the weather was mild. For the need of coal by each of the thousand persons would intensify the competition among them to obtain coal which the cold spell makes an imperative need to them. The value of coal would not have increased but its price would, due to the market conditions prevailing at the time of sale. But if the weather was mild the need of coal would not be so great and those who wanted coal would delay a day or so in the hope that a more favorable condition would then exist—the competition among the buyers would not be quite so keen and prices would not be so high.
If on the other hand there were 1,000 tons of coal on the market and only 100 purchasers the competition would be among the sellers of coal and prices would drop. Again the value of coal would not have altered, but the market condition would have depressed its price.
When prices remain above value for any period of time there is a compensating period, during which price is below value. But taking the fluctuations of price above and below value and on the average, commodities will be found to sell at their value—value and price are on the average equivalents. As profit is the objective of every capitalist enterprise and can only be realized in exchange, there must be some basis upon which commodities will exchange. That, as we have stated, is on the basis of the necessary social labor time incorporated in them. We found that this labor time consisted of two elements—paid labor time and unpaid labor time.
High Wages Do Not Make High Prices
Let us take the rectangle A to represent the day's working time, dividing it into ten parts to represent the hours of labor and using the pointer B to indicate the three hours which we have assumed is required to produce values equal to the day's wage of the worker.
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10
A If the labor power of the worker for one day is equivalent to the social labor time necessary to the production of one commodity, that commodity will exchange for other commodities containing a similar quantity of labor time. But part of that labor time is paid for (3 hours) and part of it is not paid for (7 hours). Now if the laborer's pay is raised from $3.00 to $4.00 per day it will require one more hour, or four hours, of his working time to produce values equivalent to the new wage. That is to say that he is now paid for four hours and the unpaid labor time, being less by one hour, the boss takes one hour less of values. But the commodity still requires ten hours of labor time to produce and on the market will only exchange upon that basis. The boss cannot add to its price because the law of the market forces obedience from him and the holders of other commodities will refuse to trade except in accordance with the law of exchange. There has occurred nothing to change the relationship of the commodity to other commodities. What has occurred is a change in the relationship of its constituent elements to each other -the paid labor time element has been increased and