Author Topic: Democracy for Whom  (Read 1560 times)

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Richard Mellor

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Democracy for Whom
« on: August 10, 2008, 07:44:48 PM »
I just love that word "lobbyist".  The act of lobbying is a euphemism for bribery. It is legalized bribery under a different name.  Here in the US, the twin parties of capital, Republicans and Democrats thrive on it.  The trade Union leaders use the dues money of their members to participate in the game---a game we can't win as capitalists have more capital they we do; they are the legitimate owners of capital in a capitalist economic system.

What we do have is labor power.  The capitalist purchases this ability to work, this labor power, and through its use extract labor or what would be called "productive activity" which is the source of value. The surplus value, that arises in this transaction and  which is the source of the capitalist's profit in the system of production we call capitalism, is made possible by the fact that the value that the capitalist hands over for the use of this labor power, what we call wages, is less than the value created by the the use of the labor power.  Labor power is the only commodity, the use of which, adds value to other commodities. The surplus value is "realized" as they say, when the product is sold as it contains not only labor that has been paid for but labor that is unpaid.  It is like exchanging $15 dollars for a $20 bill. If you ever wondered why you feel like you live in a 24 hour marketplace, here is the answer; an unsold commodity is unrealized surplus value.  Why do you think Bush, a representative of the capitalist class told us to "go shop" after 911?  

As the owners of labor power that we sell to the owners of capital, we are compelled to work under their direction and in their interests; like slavery or feudalism, it is a coercive relationship. Like a pimp and a prostitute. there can never be harmony between the two.  The owners of capital buy labor power to exploit it and they enforce this relationship through the power of the state.

The owners of capital live and die in the struggle for surplus value; they want to increase the amount of unpaid labor time and we want to increase the paid, hence the struggle for higher wages and why they viciously oppose reduced working time without a corresponding reduction in wages.

Trying to get the upper hand by bribing the politicians in one of their two political parties is pointless.  Private equity firms for example make billions through tax loopholes.  Private equity company earnings have been taxed as capital gains instead of regular income which is taxed much higher creating billionaires.  There was an attempt in Congress to reverse this last year but this was defeated due, as Business Week put it, to "heavy lobbying."   What a democracy! Now what worker would object to having a billionaire pay the same taxes as we do as opposed to half as much or in most cases, no taxes at all?  That's not exactly a revolutionary idea.

But while we don't own capital, we are the owners of labor power and can collectively demand a higher price for it and try to have some control over its use.  We can also refuse to sell it to them; we can withhold it. This is always harder for us as sellers than them as buyers but collectively we are in a potentially powerful position and it is the use of this power along with the exercise of our independent political power, that has brought gains.

In the last analysis of course, we cannot win until we eliminate this coercive relationship where labor is subordinate to capital, where labor power is purchased by capital, it's use supervised under the direction of capitalists and the product produced owned by them.  The owners of capital obviously benefit from the idea that how we produce, what we produce, and how we exchange what we produce can only be done under their direction. The feudal aristocracy made the same argument, so did the slave owner.

This process can be a collective one carried out in a rational and planned way for the benefit of society as a whole.  This is not utopian. The same forces that claim such nonsense also spend billions and devote massive resources propagating the idea that there is a heaven and a hell and that there are such things as angels flying around with wings on.  Original sin is a great idea for the owner of capital.  Let's face it, the dominant ideology in feudal society that the king was was king by god's will wasn't thought up by the peasant.



Richard Mellor
AFSCME Local 444, retired

"Capitalism teaches the people the moral conceptions of cannibalism are the strong devouring the weak; its theory of the world of men and women is that of a glorified pig-trough where the biggest swine gets the most swill." -James Connolly 1910.

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« Last Edit: August 11, 2008, 01:05:11 AM by Richard Mellor »

Tony Budak

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For Economic Democracy or Worker Managed Firms
« Reply #1 on: August 11, 2008, 12:31:53 AM »
See David Ellerman's point of view,
 
On the Role of Capital in "Capitalist" and in Labor-Managed Firms, click here...

This paper is divided into two parts.  The first part outlines the "fundamental myth" about the structure of property rights in a capitalist economy, namely the idea that being the residual claimant in a productive opportunity is part of a bundle of property rights known variously as "ownership of the firm," "ownership of the means of production," or, to economists, "ownership of the production set (or function)."  Residual claimancy is contractually determined and there is no "ownership" that legally determines how future contracts are made.  The fundamental myth leads to a basic fallacy in capital theory and in corporate finance theory.  Understanding the myth also allows us to clarify the role of capital in the system misnamed "capitalism."  The underlying theme is that the key institutional feature of "capitalism" is not any special legal rights of capital ("ownership of the firm") but the employment contract for the renting of human beings.  

In the second part, the role of the fundamental myth in capital theory is restated in slightly more formal terms and then attention is turned to a right-by-right comparison between the structure of rights in a conventional corporation and in a democratic firm (a labor-managed firm).  Of key importance is the role of the internal capital accounts in a democratic firm.

The Firm: Theory and Practice, click here...

For more in depth, click to here  see..
« Last Edit: August 11, 2008, 12:49:16 AM by Tony Budak »
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The Case for Workplace Democracy
« Reply #2 on: August 11, 2008, 01:03:01 AM »
The Case for Workplace Democracy
   
David Ellerman
 
World Bank*
 
  Introduction

  There is a clear and definitive case for workplace democracy based on first principles that descends to modern times from the democratic, anti-slavery, and inalienable rights theories of the Enlightenment and the Reformation with antecedents traceable back to Stoic thought.  By the 20th century, the arguments had been "lost" partly due to misconceptions, mental blocks, and misinterpretations embodied in Marxism, liberalism, and economic theory.  When one has worked through some of these intellectual road-blocks, then one may be better able to reassemble the case for workplace democracy from well-known first principles.  Let us try.
   
  The Basic Misconception of Liberalism

  The modern liberal consciousness was formed in the 19th century with the abolition of slavery and the triumph of political democracy as the normative ideal in the West.  Both changes were interpreted as moving from a coercive system to a system based on consent.  Thus "consent" became the root-principle of liberalism (always in the European sense of classical liberalism or libertarianism), a principle further exemplified with the triumph of market societies.
   
  But this "liberal principle of consent" is both a conceptual oversimplification of the issues as well as a historical falsification of the debates.  There were always sophisticated arguments for slavery and for non-democratic forms of government based on consent.  The advances in anti-slavery arguments and democratic arguments based on the inalienable rights arguments of the Enlightenment and Reformation were made against those liberal defenses of slavery and autocracy based on consent.  These inalienable rights arguments have been largely lost to modern liberalism (not to mention, neoclassical economics) with its dumbed-down dichotomy of "coercion versus consent."  Of course, there were always illiberal defenses of slavery and autocracy (e.g., racist arguments or divine-right theories), and those are precisely the ones propped up and then batted down by liberal philosophers and intellectual historians as they portray the triumphal march from status to contract.  
   
  Slavery

  Take slavery.  The contractual arguments for slavery go back even to antiquity.  In Justinian's codification of Roman law, each of the three legal means of becoming a slave had an incidence of contract.  One means was an explicit contract to sell one's labor services all at once, the self-sale contract.  Another means was the practice of allowing prisoners of war to plea bargain a lifetime of labor instead of being executed.  Finally, those who were born slaves received food, clothing, and shelter from their masters and they could (by manumission) pay off this liability inherited from their mothers' contractual condition, or they could continue the arrangement for another generation.  These same contractual aspects of slavery were even condoned by John Locke, the intellectual father of classical liberalism.  
   
  In the American debates over slavery, people like Reverend Samuel Seabury gave perfectly liberal consent-based defenses of slavery harking back to Grotius, Hobbes, Puffendorf, and Locke–using what economists now call "implicit contracts"–while George Fitzhugh and a host of others gave illiberal and racist arguments.  The reader is invited to see which arguments are propped up and batted down in the standard histories of the slavery debates.
   
  Today, the reigning social model finds its "scientific" expression in the neoclassical model of competitive capitalism which not only allows, but requires for efficiency, complete future markets in all goods and services including labor.  Although self-sale contracts were outlawed when slavery was abolished, the shining exemplar of liberal thought (the neoclassical economic model) requires that such lifetime labor contracts be re-allowed in order to get the basic efficiency results.  Modern economics profession uses "implicit contracts" and explicit lifetime contracts while blithely ignoring centuries of debate about the use of such contracts to condone slavery.  The issue–as seen through the simplifying lens of liberalism's basic misconception–is "consent versus coercion."  And economics has come down foursquare in favor of consent.  Bravo!
   
  To place emphasis of the libertarian logic of freedom, a leading philosopher, Robert Nozick of Harvard University, has argued that a free system would allow an individual "to sell himself into slavery."  As if to emphasize the modern studied ignorance of Enlightenment inalienable rights doctrine, Nozick even reinterprets an "inalienable" right as a right that one may not give up without consent–which just identifies "inalienable rights" with "rights" as opposed to privileges.  Nozick thus has no notion whatever of "inalienable right" in the original sense of a right that one may not give up even with consent (e.g., due to the inherent invalidity of the contract to alienate the right).  As if philosophical discourse was not dumbed-down enough in our time, we even see commentators presenting a Harvard professor who explicitly condones the slavery contract as a defender of "inalienable rights."
   
  Non-Democratic Government

  The contractual arguments for allowing non-democratic government also go back to antiquity and continue down to Nozick.  Any rulership that existed as a settled condition was interpreted as based on an implicit contract or covenant with the people.  For instance in the Institutes of Justinian, we find that the Roman people have by the lex regia enacted the imperium of the ruler.  The German legal scholar, Otto Gierke, finds that by the late middle ages, it was propounded as a philosophical axiom that rulership was based on a voluntary contractual alienation of rights from the ruled to the ruler, the contract of subjection or pactum subjectionis.  Surely the best-known version of this doctrine was Thomas Hobbes' (1588-1679) theory of contractual autocracy.  To avoid the war of all against all that would make life "nasty, brutish, and short" each along with the other would alienate the right of self-determination to the Sovereign.  This liberal tradition of non-democratic government based on the "consent of the governed" continues on down to Harvard's poster-child for free-market principles whose libertarian vision of a free system would allow the pactum subjectionis where individuals contract away their governance rights to a "dominant protective association."
   
  This completes the summary of the basic misconception of liberalism, that the abolition of slavery and the triumph of political democracy represented a decision for consent over coercion.  The older non-trivial debate, lost to modern liberalism, was not between consent and coercion but between two opposite forms of  voluntary contractual arrangements.  It was between a Hobbesian contract to alienate the rights of self-determination and a democratic constitution to secure those rights.  This does not mean for a moment that liberals are personally in favor of non-democratic government (at least in the political sphere).  It means, as the examples of modern economics and philosophical libertarianism illustrate, that the non-trivial inalienable rights arguments against such alienative contracts have been "forgotten."  The "problem" is that when the old inalienable rights arguments are understood in clear and modern terms, then it is quickly seen that the arguments cut far deeper that just ruling out buying other people and political autocracy–but that is getting ahead of our story.
   
  A Linguistic Glass-Wall in Capitalist Talk

  Let us pause to consider an amusing invisible barrier in "capitalist talk."  Suppose a person lived in the middle of a slave society (e.g., the ante-bellum American South).  Surely when asked if they knew of a society based on owning other human beings, they would recognize their own as an example.  Now consider present-day society and consider the following experiment the author has conducted with economics students.  
   
  First the students are told about the system of chattel slavery where workers are bought and sold as movable property.  But just as a house or a car can be bought and sold, so one can also rent a house or car.  Now instead of buying workers as in a slavery system, suppose we consider a system of renting workers.  The students are asked if anyone knows an economic system based on the renting of workers.  There is usually a puzzled silence.  A Black student might point out that during slack times, plantation slaves were rented out to work as stevedores, as hands in factories (for example, turpentine or sugar mills), or as common laborers.  The Professor agrees but asks again for an example of a whole economic system based on renting people.  After another pause, some students offer, "Well, what about feudalism?"  The Professor responds that feudalism might be seen as based on the voluntary homage contract, but that permanently attached the serf to the manor and was not a temporary rental contract. Thus we still need an example of a system of renting people.  After more embarrassed silence and shuffling feet, finally a student, by the process of elimination if by no other logic, offers: "Well, isn't that sort of like what we have now?"
   
  Yes, except that we use the word "hiring" or some other euphemism ("employing" or "giving a job") instead of "renting" when people are rented in the employment relation.  Hiring and renting are used interchangeably when referring to cars (e.g., "car-hire" instead of "car-rental" in the UK), but not for people.  Learning this unwritten rule is part of being socialized into a society based on renting human beings.  Try it on your friends.
   
  The R-Word That Cannot Be Spoken in Economics

  The "science" of economics has even stronger unwritten rules as to what words and concepts can be used.  Certain facts, known to all, are quite unmentionable in this "science."  For instance, we all know that only people can be blamed or held responsible for anything.  We all might occasionally indulge animistic metaphors about "things" being blamed for some outcome, but we are well aware of the metaphor.  We know, for example, that when a crime is committed, the responsibility for the crime must be imputed back through the tools or instruments to the human users.  When we do not blame the knife or gun for a crime, we do not think for a moment that the instrument was therefore of no "help" to the perpetrator in the commission of the crime (and thus some crimes and many accidents might be prevented if such tools were scarcer).  Of course, such instruments have some efficacy in crimes; otherwise they would not be used!  But we have no trouble differentiating that efficacy from responsibility for the crime.  No trouble, that is, unless one is a professional economist who must, in the interests of science, "overlook" what everyone knows.
   
  This simple and definitive differentiation of human actions from the services of things on the basis of the R-word "responsibility" has been lost to economics for the whole 20th century.  In economics, human actions and the services of things are seen alike as having a causal efficacy called "productivity" and they are represented symmetrically as input services in "production functions."  Economists flip-flop between two symmetrical pictures of the production process.  When feeling scientific, economists adopt an engineering mentality and a passive voice; the inputs are technologically transformed into the outputs.  When economists wax poetical, then all the inputs (such as land, labor, and capital) cooperate together to produce the product.  At all costs, the asymmetrical picture is avoided where persons use up materials and the services of the instrument to produce the outputs.
   
  Long years of rigorous economic training are necessary in order to "forget" such an obvious difference between persons and things.  The payoff from this rigorous indoctrination can be seen by investigating any economics textbook.  Before the 20th century, there was a darkness over the land and muddle-headed political economists like Thomas Hodgskin and other classical laborists had some sort of "labor theory" that tried to treat labor as having some "mysterious" attribute fundamentally different from the services of things.  Then around the turn of the 20th century, a light burst over the land as the theory of marginal productivity emerged to solve the "problem of imputation."  Every Principles text, from Marshall's and Samuelson's to their vast contemporary progeny, discusses (and dismisses) the "labor theory" and presents marginal productivity theory.  
   
  The reader is invited to try to find a single economics text in the entire 20th century which even mentions that only human actions (labor services) are imputable–that responsibility must be imputed back through whatever the instruments and tools to the human users.  For a couple of decades, I have offered any fellow economist a Free Lunch if they find such as text, but to no avail.  Failing that, one begins to appreciate the power of capitalist indoctrination in the "science" of economics.
   
  The Fundamental Myth of Capitalist Property Rights

  The last ideological misconception that we can consider is about the structure of property rights in production.  The labor theory of property is about the appropriation of newly produced property.  The standard view pretends that no appropriation takes place in capitalist production since the right to the product is supposedly already part of the "private ownership of the means of production."  Any appropriation, where the labor theory might be applied, could only be situated in some original state of nature when the first means of production were being appropriated, and in any case all that is lost in the mists of the past.  
   
  But the "story" is false from the get-go.  The rights to the product are not part of the "ownership of the means of production" (private or otherwise); that is the "fundamental myth."  Appropriation does take place in normal production, not just in some original state of nature.  Indeed, there is a market mechanism of appropriation quite unnoticed by conventional economics which buys the myth that the product is already part of the "ownership of the means of production."
   
  Consider a technically-defined production opportunity wherein people use some materials and a widget-maker machine to produce widgets.  The "fundamental myth" is that the right to the product is part and parcel of the ownership of the capital good, the widget-maker machine.  In this simple form, the myth is fairly easy to defeat.  Have labor hire capital or have some third party hire both.  Then the hiring party would own the product, not the owner of the machine.  
   
  But that insight is much more "difficult" to grasp if we put the capital asset inside a corporate shell.  Incorporate a company and have the owner of the widget-maker machine contribute it to the company in return for the only shares.  Then he is the owner of the company and would "supposedly" be the owner of whatever is produced using the capital assets of the company (that is, the widget-maker machine).  But that is again false for the same reasons.  The machine can be rented out by the company.  When the machine is rented out, then the company would not be the owner of the product produced using the company's capital assets (the machine).  The company would only be an input-supplier to the "firm" or "enterprise" using the machine.  Yet the original owner of the machine is still the owner of the company.  Thus the ownership of the product produced with a company's capital asset is not part and parcel of the ownership of the company.  That is the fundamental myth about capitalist property rights.  
   
  It is the direction of the hiring contracts (who hires what or whom) that determines who bears the input-liabilities and who thus appropriates the output-assets–not the "ownership of the means of production."  One party buys or already owns all the inputs to be used up in production and then, having absorbed those input-liabilities, can lay sole claim on the new produced assets.  That is the market mechanism of appropriation.
   
  The idea that the product was part of the "ownership of the means of production" was crystallized by Marx and thus he named the system "capitalism."  It is unfortunately a misnomer.  The product right is not part of capital.  Both Marxists and the defenders of "capitalism" agreed on the myth that the owner of capital was the "owner of the firm"; they agreed to disagree on whether that "owner" should be private or government.
   
  The Case for Workplace Democracy

  The Labor Theory of Property

  We are now in a position to briefly state the case for the democratic firm based on ordinary jurisprudence.  I will state the case based on the "labor theory of property"–which is just the ordinary juridical principle of assigning legal responsibility in accordance with de facto responsibility.  There is a parallel argument based on democratic theory that is left to the reader.
   
  Regardless of the productivity of the instruments and materials of production, only the human beings involved in the firm can be de facto responsible for producing the product.  But hordes of textbook-trained economists immediately throw up their hands and point out that you can't impute the entire output to Labor ("Labor" = "managers and workers"); the product must be divided to account for the income to the other inputs!  But they are wrong; they just think too positively.  They must learn to think negatively.  There is also a negative product.  Labor does not produce the product ex nihilo; Labor produces the product by using up the input materials and the services of the capital instruments.  And thus Labor is also de facto responsible for that negative product (and the satisfaction of those input-liabilities accounts for the other factor incomes).  The positive and negative product, the (undivided) produced assets and input-liabilities, make what we might call the "whole product."  It is not described by a number but by an ordered list of positive and negative numbers, a "vector."
   
  The imputation principle (assign the legal responsibility to the de facto responsible party) implies that Labor should have the legal responsibility for the positive and negative fruits of their labor.  In the 19th century, Hodgskin and others asserted "Labour's Right to the Whole Product."  Labor should be legally liable for the used-up inputs and should legally own the produced outputs; Labor should be the firm.  The net value of whole product is the "residual" so the responsibility argument concludes that Labor ought to be the residual claimant.
   
  The Inalienable Rights Argument

  It remains to square this argument with the "freedom of contract" such as the right to rent oneself out piecemeal or all at once.  The inalienable rights argument against not only buying but renting people can be illustrated with a simple story.  Suppose that an entrepreneur hired an employee for general services (no intimations of criminal intent).  The entrepreneur similarly hired a van, and the owner of the van was not otherwise involved in the entrepreneur's activities.  Eventually the entrepreneur decided to use the factor services he had purchased (man-hours and van-hours) to rob a bank.  After being caught, the entrepreneur and the employee were charged with the crime.  In court, the worker argued that he was just as innocent as the van owner.  Both had sold the services of factors they owned to the entrepreneur.  "Labor Service is a Commodity" as the scientific texts proclaim.  The use the entrepreneur makes of these commodities is "his own business."
   
  The judge would, no doubt, be unmoved by these arguments.  The judge would point out it was plausible that the van owner was not responsible.  He had given up and transferred the use of his van to the entrepreneur, so unless the van owner was otherwise personally involved, his absentee ownership of the factor would not give him any responsibility for the results of the enterprise.  But man-hours are a peculiar commodity in comparison with van-hours.  The worker cannot "give up and transfer" the use of his own person, as the van owner can the van.  Employment contract or not, the worker remained a fully responsible agent knowingly co-operating with the entrepreneur.  The employee and the employer share the de facto responsibility for the results of their joint activity, and the law will impute legal responsibility accordingly.  
   
  We see that when a crime is committed, the law ignores any alleged "contractual transfer of responsibility," sets aside the so-called "employment relationship," reconstructs the relationship as a partnership, and recognizes the joint de facto responsibility of the involved human beings.  But the facts about human responsibility are the same when no crime is involved.  Non-criminous human actions are not suddenly "transferable" like the services of a van.  Responsible human action, i.e., labor, is always not transferable.  Labor is "bought and sold" but it is never transferred (as the example illustrates).  The employer-employee contract for the renting of human beings is thus inherently invalid.  That is (one form of) the inalienable rights argument that descends from the Enlightenment and Reformation (where it took the form of the "Inalienability of Conscience").
   
  Notice that this argument is entirely independent of the size of the wage and has no connection to any theory of price or value including any so-called "labor theory of value."  The parallel argument from democratic theory arrives at the same conclusion about the employment contract except that it is then viewed as the private Hobbesian pactum subjectionis of the workplace.  The fact that a whole economic civilization is founded on an bogus "contract" to transfer what is untransferable (the contract to rent human beings) is "unbelievable" to most people which is why so much false consciousness needs to be socially constructed to sustain the system.
   
  Human beings should always rent the capital they need (but do not already own) rather than the owners of capital rent other human beings.  All enterprises, criminous or non-criminous, should be legally construed or reconstructed as the joint activity of the human beings (managers and workers) involved in the activity.  That is, all enterprises should be self-managed firms.
   
  Further Reading:
   
  Ellerman, David 1992. Property & Contract in Economics: The Case for Economic Democracy. Cambridge: Blackwell.
  Ellerman, David 1999. The Democratic Firm: An Argument Based on Ordinary Jurisprudence. Journal of Business Ethics. 21: 111-24.
 
        * The findings, interpretations, and conclusions expressed in this paper are entirely those of the author and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to the members of its Board of Directors or the countries they represent.
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Zwarich

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Castles of Rhetoric
« Reply #3 on: August 11, 2008, 01:24:01 PM »
I have long appreciated Mr. Mellor’s spirited support for the fortunes of working people, but I have always rolled my eyes over this kind of ideological rhetoric, to which he seems to resort so often, and so constantly. It sure seems to me that he builds rhetorical ‘castles in the air’ that lack any foundation in logic or the real world. He sets forth ‘heroic’ postulates as if we should accept them a priori, when in fact they don’t stand up well under even the most casual examination, and he then draws far-reaching conclusions from them.

In this piece, for example, he sets forth an ‘heroic’ postulate, upon which his whole argument seems to be built when he writes, “Labor power is the only commodity, the use of which, adds value to other commodities.” Having read Mr. Mellor’s work over an extended period of time, (several years), it has long seemed to me that his entire system of thought is built upon this basic postulate, which seems to me to be an obvious fallacy. (Like chickens and eggs, labor and capital simply cannot be forced into a rigid and artificial priority.)

It seems rather obvious that the application of the commodity ‘capital’ to the commodity ‘labor’ adds value to labor. Whether or not the application of capital to labor adds as much value to the latter as the application of labor to capital would be an interesting discussion. But to flatly state, as if it is a truth graven in natural law, that the flow of added value between capital and labor only flows one-way seems obviously (and completely) absurd to me.

If a worker or group of workers has no capital but sets out to build or make or do something, the value of what they build, make, or do will be limited to what they can accomplish with their bare hands, or with tools that they can fashion with their bare hands. Can Mr. Mellor explain how or why he thinks that the value of their labor is not enhanced by the use of capital to supply them with more advanced tools? (Or to organize a complex supply chain to provide them materials, etc?)

Mr. Mellor again sets forth a postulate which he seems to expect the reader to accept a priori, (which can only be done by setting aside our powers of reason), when he defines ‘surplus value’ as ‘unpaid labor’. Even a cursory logical examination reveals this to be a self-serving circular logical construct.

First of all there would obviously be no incentive for the application of capital to labor if all the value added thereby, (the existence of which Mr. Mellor does not recognize), accrued to labor. And over and above simply applying capital to the efforts of labor, enterprises that entail the application of capital to labor, (and vice versa), require intricately complex organization, and the ability and expertise required to create and apply this organization is an intrinsic element of the enterprise. This expertise contributes to the creation of the ‘surplus value’ that the enterprise produces, and it must be rewarded. Is Mr. Mellor suggesting that the portion of surplus value created by the expertise of these people is ‘unpaid labor’?  

The people who are able to supply labor to the enterprise are not always, (or even often), the same people who are able to create, organize, and run the enterprise. Yet obviously, (as stated above), the efforts of those who supply this creative and organizational expertise contribute to the creation of ‘surplus value’. Is this expertise not a ‘commodity’ that adds value to the other commodities, (capital and labor) in this equation? Does Mr. Mellor consider the value added by this kind of expertise to be ‘unpaid labor’? What if the owners of an enterprise are the same people who created, and who manage, the enterprise? What purpose does it serve to attempt to fit these diverse kinds of efforts that contribute to the creation of ‘surplus value’ by an enterprise into rigid ideological definitions, that seem to have little relation to the real world, simply to serve our own rhetoric?    

Mr. Mellor states that, “As the owners of labor power that we sell to the owners of capital, we are compelled to work under their direction and in their interests”. He says this as if we, (I use ‘we’ because I am a carpenter by trade), are forced at gunpoint, or by complete lack of access to our own sources of capital, to hire ourselves out for wages.

He completely fails to recognize that many people who are capable of supplying labor to an enterprise are simply not capable of organizing and running an enterprise, and further, that many of those workers who are capable of creating and managing enterprises voluntarily choose not to use those capabilities because they “don’t want the headaches”. They would rather simply work, and leave the ‘headaches’ to others. Those who are willing to take on the ‘headaches’ must be compensated out of the ‘surplus value’ the enterprise produces. Is the portion they contribute to 'surplus value' then, according to Mr. Mellor’s circular logic, “unpaid labor”, (rather than 'unpaid headaches')?

He also completely fails to recognize that many workers who are capable of supplying labor, and also are capable of creating and managing an enterprise, choose to do just exactly that. Millions upon millions of workers are self-employed. They are NOT “compelled” to work under the direction of others. They certainly work as part of an intricate web of shared, and often competing, interests, but they are able to self manage their own efforts in a way that serves their own interests first and foremost.

Concerning ‘lack of access to capital’ as an element that “compels” workers to work for wages, during the recent rounds of job buyouts in the American auto industry, groups of autoworkers had BILLIONS upon BILLIONS of dollars in liquid capital (cash) made available to them if they would agree to leave their jobs. Why does Mr. Mellor think that this group of workers didn’t use this ready access to an enormous supply of ready capital to start their own enterprise(s)? Of those who refused to accept a cash buyout, were they "compelled" to keep their jobs? Of those who accepted a buyout, were they “compelled” to seek other jobs working for wages? If so, what factors compelled them? Did Mr. Mellor hear any proposals that these workers should pool these BILLIONS of dollars to start their own enterprise(s)? I proposed this to groups of them myself at the time, and never even heard a reply. Why not? It certainly wasn’t lack of access to capital that prevented these workers from starting their own enterprise(s) with these billions of buyout dollars.  What was it?  

I greatly admire Mr. Mellor for his spirit and efforts to support justice for working people. I just think we need to have the discipline to ground our thinking in the real world, rather than build rhetorical castles that don’t stand up to simple common sense scrutiny.

Zwarich

Richard Mellor

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Where does profit come from?
« Reply #4 on: August 16, 2008, 12:46:23 AM »
I would like to ask Zwarich a question.  The money that the owner of capital possesses, lets say Kirk Kerkorian for example, or Clay Ford, with which they buy labor power (you confuse this with labor itself Zwarich), what is its source?

I would argue that this is accumulated surplus value that is transformed in to capital that is not used for personal consumption by the capitalist but for more means of production and the hiring of more workers. But Zwarich denies the existence of surplus value if I understand him right.

So even if a capitalist borrows money from the banker to purchase raw materials and labor power and through the productive process produces a commodity for sale (let's say shoes) where does that money come from?  Did the banker work for it, save it up and is now lending it out? No, it is capitalized surplus value.

And I say that the shoes contain within them labor that is paid for and labor that isn't; this is the process of production and the purpose of this for the owner of capital is to exit this process with more money than they entered it with. Where does this added amount come from?  You use all sorts of terms to discredit this, explanation of the process, "heroic" "ideological rhetoric" etc. but they don't explain much.

But I ask you, Zwarich, how is wealth created in a capitalist economy? How does the capitalist that owns the shoe factory make money?

I have explained how I think it is created.  I think that Marx was right.  That wealth is created, that the capitalist's profit has its source in surplus value that is created only through the labor process.  The owner of capital finds in the marketplace a commodity, the use of which adds value.  If we consume a chair by sitting in it ,it wears out.  From the minute we take a car out of the showroom or turn on a lathe we are consuming the congealed labor within that commodity and using up the value stored within it.

This surplus value is the difference between the value produced by the worker and what is paid to the worker for the use of that labor power. It is an unequal exchange and it is theft.  This theft is maintained by the forces of the state.

I would suggest you read Marx's Labor Theory of Value and the related material; it will clear up your confusion around labor and labor power for one thing.  I might also suggest that section of capital on the transformation of money in to capital; personally, it hit home for me.  I am not an economist and have never been to university which might be an asset really, but I have not discovered a better explanation of how the system in which we live functions. It's fine if you disagree with it but you would have to show me how the capitalist mode of production is not exploitive and what the source of profit is.  I agree with the saying that Labor creates all wealth.  If you don't believe that profit has its source in surplus value then tell me (and ther rest of us) where it comes from; I'm open to hearing your alternative.

The points you make regarding the auto workers are not worth responding to, they are the arguments of the small business man and self employed entrepreneur.
« Last Edit: August 16, 2008, 12:48:52 AM by Richard Mellor »

Richard Mellor

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Democracy for Whom
« Reply #5 on: August 17, 2008, 06:22:06 PM »
I wanted to clarify something.  I think this paragraph that I wrote in answer to my own question to Zwarich about the source of the capitalist's profit might be a bit confusing:

"I have explained how I think it is created. I think that Marx was right. That wealth is created, that the capitalist's profit has its source, in surplus value that is created only through the labor process. The owner of capital finds in the marketplace a commodity, the use of which adds value. If we consume a chair by sitting in it, it wears out. From the minute we take a car out of the showroom or turn on a lathe we are consuming the congealed labor within that commodity we are using up the value stored within it."

So the use of commodities does not create new value. By consuming or using these commodities with different use values we see that their use values degenerate along with their exchange value.  Obviously, the same applies to Labor power as the use of Labor power also can "wear out" the possessor of it, the worker, as anyone who works for a living knows; there are limits to the use of Labor power.

But I think what isn't clear in what I wrote is the special property of this commodity, Labor Power, that is the only commodity, the use of which creates value.  With money the capitalist purchases not only labor power but raw materials and instruments of labor, tools, machines etc. Marx explains that the capitalist then "consumes" labor power by putting it to use consuming the means of production that they have purchased, let’s say a worker working on a lathe or a building worker using the raw materials necessary to build a house.

The work is performed under the direction of the capitalist’s as they own the raw materials and the right to use the Labor power as they see fit just like anyone who buys a commodity in the market place.   The limits of the use of this labor power are determined by physical laws obviously and by workers organizing to demand higher prices for our labor power, limits on its use etc.

The product produced is the property of the capitalist.  It is not the property of the person(s) who produced it, the immediate producers.

As Marx explains, the Labor process is simply a process between things the capitalist has purchased so the products of that process belong to him/her.

So the object of the Labor process for the capitalist is to produce commodities whose value is greater than the total value of the commodities that were used up in the process of production itself. If the exchange value of the commodities produced do not exceed this, then the exercise would be useless for the capitalist as they would lose or at best might break even.

“Use-values must therefore never be looked upon as the real aim of the capitalist; neither must the profit on any single transaction. The restless never-ending process of profit-making alone is what he aims at.  This boundless greed after riches, this passionate chase after exchange-value, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The never-ending augmentation of exchange-value, which the miser strives after, by seeking to save his money from circulation, is attained by the more acute capitalist, by constantly throwing it afresh into circulation.”  Capital Chap 4 The General Formula For Capital.

Because the capitalists return less to us in wages than the actual value the use of our labor Power creates, they end up possessing value (exchange value) that they never paid for.  Or as Marx puts it, the commodity in which the labor is objectified contains Labor for which the worker received wages and labor for which he or she received nothing. When the capitalist sells the commodity which is rightfully theirs, they realize this return on their expenditure and some.

This relationship is sustained by their control of the state etc.  I’ll let Simon Mohun, professor of economics at Queen Mary University of London explain it:

“Capital has command over Labor power since people are forced to sell their Labor power for a wage by virtue of their historical separation from access to the mean of production and other than through the wage transaction.  And capital has command over Labor, since the exercise of Labor power is performed under the dictates of capital, whereby the working class is compelled to do more than is required for its own subsistence.  Accordingly, capital is a coercive social relation.”

This whole issue of capital and where it comes from is crucial.  Is it not capitalized surplus value? Zwarich, as the employers do when explaining it, seems to just pluck it magically out of thin air.

To me, Marx’s explanation of how the world works corresponds to objective reality.  It makes sense.  Now obviously the working class should relate differently to a person working for themselves or a person hiring one or two people as opposed to a corporation.  This middle layer, can be won to our side.  But this doesn’t alter the fact that the system itself based on wage labor is an exploitive, violent and coercive one.

So if Marx is wrong.  How does capitalism create wealth?  Where does the capitalist’s profit come from?