Work and Wealth
III.

1.

Capitalist employers refer to competition and its necessities for everything they do to work and their employees. This involves a fundamental hypocrisy: like anyone who enters a contest, businessmen, too, share the interest their competition is about — after all, they aren’t competing for first prize in relieving and enriching their “co-workers” or in devising the best plan for satisfying all needs. In putting pressure on their workforce in the interest of their “competitiveness,” they are not in any way compelled to do anything that truly goes against the grain or would be alien to their very own economic interest. Conversely, being “subjected” to their own interest as a constraint they have to satisfy on pain of rack and ruin only proves that no diverging viewpoint qualifies their economic aims: by appealing to unavoidable “pressures of competition,” they refer to nothing other than the universal and sole validity of their interests in the economy.

But what is perhaps more remarkable than their revealing hypocrisy is the truth these activists for competition admit to with their general excuse: when they do what their property enables them to do, namely, get work done and increase their assets, they do so against each other. The results of their command over the productivity of labor do not add up to an impressive heap of wealth; instead, the business success of one capitalist gets in the way of another’s. The negative, exclusive power of property does not only affect those who don’t have any and for that reason have to make their energy available for a small fee. Capitalistically active property, as the private power to push ahead with its own accumulation, is also focused in an excluding manner against the condition for growth needed equally by all commodity producers.

This condition is the money existing in society: wealth in its socially valid, abstract and private form. This kind of wealth just cannot be produced in the private sphere of an individual business; it can only be acquired “on the market” with the help of the manufactured commodity. Not until the commodity is successfully sold is it decided whether and to what extent the entire commodity production was of any use, namely whether it promotes property through the money it makes. And at this point capitalists stand in each other’s way. For in this last, crucial step in the course of their business, all of them want and need the same thing: the purchasing power of society.

It is not just when several companies offer the same commodity for sale that the competition of capitalists amounts to mutual exclusion. Since the purpose of production is making money, and conversely since money constitutes the quantitatively restricted access to all goods and pleasures, then everything produced is commensurable, the most dissimilar things become alternatives, and each manufacturer vies with his supply of goods against all others for the purchasing power of society. True, competition also stimulates business; one company’s successful growth lets others make some money as well; in general “growth phases,” more gainful employment can even come about on the whole and more purchasing power be generated. But not even then is the institution named “market” rid of the excluding character of private moneymaking; on the contrary: competing commodity producers raise increasingly greater claims on the money of society for the growth of their own firms, completely independent of what income they create and let others earn. Even if the final statistical accounts show some percentage or other of economic growth, independent businessmen did not enter into any complementary relationship, but fought against each other to expand their own sales; their antagonism doesn’t emerge only when business cycle observers have to admit a general decline in business. With this antagonistic interest in the same “stuff,” the purchasing power of society, capitalistic businessmen enter into a social relationship with each other and with the rest of mankind that needs their products.

This is the one, and indeed only, social relation between the various branches of production, as well as between production and consumption, that the property regime permits and enforces. What is produced and what isn’t, which needs are served, which are disregarded, which even have to be invented, all this is decided by the money that customers hand over and competing businessmen lay claim to; in a market economy there is no other criterion for what is necessary in society, or necessary for it. This also means — despite all ideologies about the “power of the consumer” or “consumer sovereignty” — that under the rule of money, social production is not subordinate to needs, let alone to even a rudimentary or tentative order of needs, sensibly determined according to urgency. Instead, the needs of society are sorted according to private disposal over money, subsumed as purchasing power under the sales interests of competing proprietors, and defined according to the criterion of business success attainable through them.^[9] “The market” is the moneymaking sphere for capitalistic commodity producers; it is their competition that decides which use-values a society has to get by with, which needs it can satisfy.

Conversely, this competition decides how suitable the production of commodities by the various companies is for the purpose of acquiring money, and consequently what it is really worth. It’s true that unsuccessful selling does not retroactively undo the capitalistic appropriation of the productivity of labor already taken place — the produced use-values exist and could contribute to the wealth of society — but renders it completely useless: turns it into a money-losing operation, destroying wealth in its socially valid form, i.e., capitalistically utilized property. It is this lunacy that is meant to be acknowledged and approved as an unquestionable matter of course in the references to “market risks” or the “pressures of competition.” Businessmen who fail at selling disqualify themselves as incompetent, have to stand accusations of mismanagement and worse, and even quickly come under suspicion of white-collar criminal transgressions — which, while certainly not fitting too well with purported “market” constraints that act like the hand of fate, lend support all the better to the biased belief that capitalistic companies have a duty and absolute right to be successful. The other way round, success elevates the successful to the rank of expert; by the same logic. At any rate, market economy fans with their bias for business success are thus also familiar with the idea that competition, imposing its “invisible hand” on capitalist proprietors, includes at the same time a certain degree of freedom: power over the means of business, which can be invested more or less effectively.

What capitalist businessmen really can do to succeed in making money “on the market,” they do in the arena where they are masters of events — they have to organize commodity production so that its results allow them to win the competition. This competition sets the standards that have to be met by the labor productivity achieved in the factory — mere appropriation of the productivity of labor by property does not do the trick.

2.

a) When capitalist businessmen attempt to turn their product into money, they run up against the result of the preceding competition in the form of the market price at which the commodity is generally offered for sale. This puts the cost price, the price they calculate for producing a unit of the commodity, to the test. For, profits, the ultimate point of it all, arise from the difference between the unit price, which they charge to expenditures, and the sales receipt, multiplied by the number of units actually sold. Obviously, profits rise when the cost price is below average, and dwindle when it is above.

However, a business does not reach its goal with a decent profit margin per unit: the point is to sell as much as possible; for this is what really gives the rate of profit its mass. This fundamentally unlimited need for sales, taken as a whole, comes up against the limit given by the sum of money customers have — money, moreover, that they have to budget for all their various needs. Yet this limit does not in the least directly concern the individual producer, who wants to turn as many products as he can into money. What immediately stands in his way are the other sellers, who are in like manner out to seize purchasing power for themselves, thus vying with him — as every enterprising businessman sees it — for possible sales and the profit that goes with them. To clear away this obstacle and capture other producers’ market shares, there is — even allowing for advertising, bribery and other forms of “cultivating the market” — ultimately only one method: undercutting competitors.^[10] This plainly conflicts with the purpose of increasing profits. The calculation can only work out if one manages to cheapen production in one’s own company. Consequently, all the efforts of a capitalistic manufacturer are aimed at reducing the production price of the commodity to be sold.

Once that has been accomplished and the cutthroat price introduced on the market against rivals, then the new, reduced price level becomes the binding base of reference for all who intend to keep pace and hold on to their market shares. A new market price has emerged, to which every producer must compare his own cost price, whose reduction then becomes the company’s condition of survival. In the end, the profit margin has of course not increased one bit; and the question remains whether the mass of profit on the whole has increased through additional sales. But who among the competitors sells how much is decided once again; and each party is concerned that this decision comes out in his own favor. Hence, efforts to reduce the cost price never cease; each success marks the prelude to the next offensive.

b) In the process all expenditure items in the capitalist accounts continually come under pressure. Extortionate price guidelines for suppliers, for example, are part of the everyday business practices of the larger conglomerates — the suppliers on their part then have to find ways to save their profit margins in the face of cuts in the price of the product they deliver, which once again comes down to internal cost reductions. Of course, that one big cost factor, the price of labor, always receives special attention and treatment; and for good reason. It offers two essential areas for attack.

For one thing, the absolute level of wages paid out to the workforce makes for an inviting target. There are, to be sure, generally binding agreements on wage scales that restrain the employers’ competition to remunerate work as little as possible. But the multiplicity of wage classifications normally codified in these agreements offers a way to lower the wage level within an individual company by the clever grouping of the workforce. The consent of labor representatives usually required for this is in principle easy to get, especially during economic slumps; if need be, it can also be had for circumventing or openly disregarding wage scale provisions. That reduces the wage share of the cost price of the commodity, the unit wage cost, thus acting like the increase in labor productivity that in fact it is: the product has required a smaller expenditure for labor.

The second, and by far more fruitful, point of attack in the struggle of capital against its wage costs is the technical “aspect” of labor productivity: the material efficiency of the mass of labor employed. For, every advance in this area reduces the share of wages in the production price of a commodity, the unit wage cost, even more — as if the workforce had become cheaper. And in fact it actually has, according, that is, to the calculation the company makes and implements: it immediately converts the increase in labor efficiency into the redundancy of manpower paid for until then, thus into a reduction of operating wage costs, then assesses its means of production by the results of this calculation and directs its investments accordingly.

The economic logic of this calculation is worth commenting on. It assumes technological progress in the material sense, ingenious methods for increasing the productivity of labor, masterstrokes of engineering in automating production and so on, presupposing their effectiveness in production, only to abstract from them and deal exclusively with two figures: by imputing a functional lifetime for the equipment to be purchased, the capital expenses incurred in making labor more efficient by new means of production are apportioned to the individual commodity, so that this expenditure becomes comparable with the other figure: the labor costs the investment saves by making manpower dispensable, expressed as reduced unit wage costs. If the second figure is larger than the first, economic reason dictates that labor be made more effective: that production — as it is therefore called — be “rationalized.” Hence attention is not paid at all to the increased productive power of work as such, but to the saving of labor costs; this is the service that capital expects from technological progress; this is how it actually defines what “upgraded means of production” are.

Thus, a capitalist employer draws a very peculiar conclusion from his standpoint as a property owner, whereby the labor he pays for is defined completely and exhaustively by the price he pays for it. He calculates with labor as a cost factor that not only can be added up with all other company costs and wonderfully compared with individual items, but also is to be mathematically offset against certain other expense items, namely those for investment, and, if the mathematics allows, exchanged for them in practice without further ado. To be sure, he has to know what lies behind the accounting entry for unit capital costs, etc., or at least that it signifies that productivity-increasing technology has been purchased; so he is also aware at least that the human activity that produces commodities and thereby creates property is not the same as the machinery employed, just because he pays for them both. But that said, he makes no distinction between labor and its price, nor between technology and his property in it. He does nothing more than tally up the labor costs to be saved, and in comparing them with investment expenditures, no longer has in mind the material reason why and in what way machines and robots reduce the expenditure of human labor, but only his decisive economic reason for putting such equipment into use. In all seriousness, he calculates as if his business did not profit at all from the labor he employs but from the labor he saves; as if the productive activity he still has to pay for were not in any way his means to success but merely a burden on his accounts: a residual item not yet cleared up, a remnant of unit labor costs not yet rationalized away that turn out to be too high in comparison with the immense expenditure for productivity-increasing machinery.

Capital can afford such a crazy calculation because it gets to the heart of its interests like nothing else. After all, it doesn’t really need to interest itself in its origin and the source of its accumulation. It is quite sufficient, for purposes of competition and accumulation, to put into practice the point of view that its production costs have to sink. For in its constricted fight against the cost factor ‘wages,’ it never really pulls off the trick of making more profit out of wages not paid and labor saved. Yet this is exactly the way it turns the labor it does make use of into the means for its competition. Which is admittedly not the same as a steady increase in profit, for there is a certain snag.

c) The reason all “labor-saving” investments save wages is because they make the labor they employ more productive: there is less and less labor embodied in an individual product; the volume of salable commodities per wage payment increases. This increases profits per item as long as the company collects the previously prevailing market price. But there is not much profit left when the price advantage is used to undercut competitors; and a higher profit margin will not come about at all if the company’s reduction of production costs lags behind a falling market price brought about by other firms applying the same measures. By reducing paid labor costs, capitalists end up reducing the sales price of the commodity — and thus reduce the increase in profits they are of course after. The only ones who get their money’s worth are those who succeed in throwing competitors off the market and taking over their sales; they really make more profit — at the expense of the losers. For, the possibility of everyone making a profit does not increase when unit prices fall due to saved wages: success for one party limits the chances of success for others. The independent efforts of all sellers to enrich themselves to an ever greater degree does not, in their forays against each other, increase the overall power of their productively invested property to bring forth profits. So it is, of all things, the excluding nature of their pursuit of profit that causes them to feel their common bond, based on the identity of their source of income: as independent, enterprising owners of private property, they exclude each other from the profit that each can make out of invested capital in general; as competitors, they have in their firms parts of the profitably invested, capitalistic wealth at their disposal. This is how the abstraction “capital” exists — as a source of income that all businessmen participate in and whose peculiar paradoxes they put into practice through their competition. In the present case: increasing the productivity of labor decreases the proceeds per commodity, its realizable value.

This paradox is the necessary consequence of the battle that capitalist employers fight against wage costs for the sake of their competitiveness. There is no question that their yield from paid labor increases: if the difference between unit costs and market price, i.e., the profit per commodity, stays even approximately the same at lower unit wage costs, then even a smaller expenditure for wages will give them the same profit, and a given wage bill a larger one. Only, it is precisely with that that they also saved a bit of the labor that blesses them with such lovely profits — per commodity, which is shown by its lower market value, as well as overall, in the total salable product, with which all competitors together realize less money than before. If capitalists derive their wealth so actively from saving wages, they can’t have both more profit from labor, and more — or only just as much — profit-yielding labor at the same time.

A word to avoid misunderstandings at this point: businessmen, who have been rationalizing their production like mad as long as anyone can remember, are not being accused here of employing a poor strategy — they’re simply doing their job. They do it so consistently that precisely the progress they themselves bring about once again casts a rather glaring light on the tense relationship between the productive power of work they make use of and the business purpose they use it for. Once and for all: more productive work means, and this is true for capitalism too, that less work is necessary for the individual product — and the same goes for the maintenance of society as a whole; this is not altered at all by capitalist property, which is fixated entirely on paid labor and is after nothing but lower wage costs. However, this effect — which would be utterly good and right and exactly what would be desired from the point of view of use-values, i.e., in a planned economy — collides in a market economy with the interest of capital in selling as much as possible, i.e., in having more and more stuff continually produced and getting the “market” to certify by payment that it is just what available purchasing power has been waiting for; for, this interest imperiously calls for more and more work to be harnessed. Of course, in a way that promotes property; therefore as needed for the competition for profits. And because capitalists, here in their capacity as employers, all single-mindedly hit on labor costs as the quantity most easily and effectively squeezed, they limit, in their antagonistic pursuit of profit, the necessary work that they absolutely can’t get enough of under their command.^[11]

This is how capitalists spread an incurable contradiction throughout their upside-down world, where wealth consists not in produced goods but in the cash value of property in these goods, and consequently where the creation of wealth is not measured by the material benefit brought about by work but by the sheer amount of work carried out, minus the quantum of work necessary for producing the equivalent value of paid wages. There is no more effective means for increasing this crucial difference then to decrease, of all things, the amount of work required for producing a single commodity in particular, and the whole lot of saleable commodities in general. Or conversely: all capitalist employers reduce the material work expended for the production of commodities as the tried and tested means for increasing their property, even though property itself consists not in any specific product but in the appropriation of work in general. In their drive to reduce labor costs to enlarge their property more rapidly, the heroes of the market economy make work more productive and save on it by one and the same operation; by rationalizing away paid labor, they spur the source of their wealth to greater productivity and reduce it at the same time.

d) What luck for employers that they don’t calculate this way. In calculating the profit-raising effects of reducing unit labor costs, they manage without the slightest difficulty to estimate profit per labor cost, without then having the faintest idea that profit might possibly result from labor — somehow… Instead they take the liberty of relating their gains to any expense item they please; this is in fact the starting point for their calculation of the profit-increasing “substitution” of labor costs by capital investments, as well as the motive for and standpoint behind their unremitting zeal to rationalize production. The calculation ends in the accounting of business profits, in which the obtained surplus is measured against total company expenses, summarized in a binding criterion for success: the ratio of profit to total business expenses must attain a “competitive” percentage; otherwise, the whole enterprise was pointless and the competition for profit has been lost.

Included among the items added up on the expense side of this “income and expenditure account” are two that are entirely incommensurable in substance: to the expenses for less work, which has yielded more profit due to its technologically enhanced productivity — recorded as reduced unit labor costs — are added the capital expenses thus incurred, by which the increased gains from more efficient labor are substantially relativized. In the sum of all these expenses, which, as the common denominator of operating results leads to the determination of the company’s rate of profit,^[12] this account presents the — fairly paradoxical — result, to which the tireless efforts of “substituting” “cheaper” capital for “expensive” labor costs has logically led: more and more expenditure is necessary for making less and less work increasingly productive, or for cutting down on increasingly productive work. Instead of uninhibitedly yielding more surplus, profit-increasing investments end up making the competition for profits increasingly costly, so that the quantity that everything really depends on, the company’s rate of return, is limited by the costly methods used to increase it.^[13]

Capitalist employers draw from this paradox the one conclusion that conforms to their system. Bursting with self-praise for their generosity in giving their workers only the best, but with an unmistakable undertone of complaint about ingratitude, they announce that competitive workplaces are becoming increasingly expensive.^[14] And everyone immediately understands whom they hold responsible for their contradiction: labor is only to be employed if it’s worth it, if its unit labor costs make total company expenses profitable. To businessmen, this is entirely logical: they’ve only gone to all this trouble in order to save labor costs; thus the remaining labor costs have to prove that the expense has paid off: the labor they still require has to justify the payment of labor costs through a surplus that comes out to a nice percentage of the total capital advanced inclusive of investment expenditures. To sum it up in a handy formula: work has to be profitable — or it won’t take place.

This is how capitalist employers turn their self-created tribulations over the growth of their capital into conditions for wage labor. And this production and cost factor looks accordingly.

3.

One thing is certain from the start: none of the technological progress that capital introduces into the world of work is of any benefit to those who do the work for wages. How could it, seeing as cutting costs is the purpose and criterion of all the measures businessmen employ to raise the productivity of labor. And this means, just to express it in other words: less of the created value, measured in the market price of a commodity, goes to the workers as unit labor costs. The fact that the increase in “output” does not reach the paid workforce is not some additional dirty trick of this progress, but the principle of it. With their work being required for company profit, and their remuneration conforming to the same requirement, workers remain excluded from ever greater amounts of property; the share of social wealth they have at their disposal with their total paid unit labor costs shrinks as productivity grows. In fact, workers have to exert massive pressure, and furthermore the authority responsible for everything, the state, has to officially acknowledge one or another of their concerns, in order to obtain recognition and remuneration for new necessities of life that come along with new living conditions. So in the course of time, increasingly more and diverse articles enter into the national average standard of living,^[15] but without workers ever securing more than their reproduction: the chance to meet the demanding requirements of a modern workplace, while at the same time keeping themselves intact as the body politic for the demands of the nation. The “realm of freedom,” i.e., of wealth exceeding the necessities of reproduction, which could be expanded for the whole of society with each increase in productivity, belongs in fact exclusively to capitalist property and is governed by its contradictory necessities for growth.

This is why, for the people dependent on working for money, not even their reproduction is secure. In fact, the calculation with saved labor costs, with just a slightly different emphasis, has yet another implication: for the commodity value he gets others to produce, and which he can realize by selling, an employer requires less paid labor; layoffs are the consequence. Defeated competitors really have no use for paid labor anymore; so there are even more workers released — of course without thereby being released from the necessity of gainful employment, i.e., from being coerced into “finding” some kind of work. The outcome is the absurd economic figure of the unemployed. Absurd because the fact that so many people are not needed follows from the achievement that less and less effort and hours of work are required to produce more and more goods, which, however, is no achievement at all for the workers now free of work. Their entire freedom consists in the necessity of being used again by an employer, which is not only grammatically a passive position to be in, being not at all under their control; especially as it goes against the trend that has just cost them their source of income. They are subject to a coercion they cannot comply with — other than by pathetic efforts, for which of course they find encouragement from all sides, and in fact also have to be urged to do: to offer themselves unconditionally for any possible demand for manpower.

At least the one lucky enough to find, or keep, a job can experience close up a bit of technical progress right at their own costly workstations. Not that the work gets more comfortable and can be tackled more calmly. At best, the industrial world has eliminated brute physical labor — due to its lack of profitability. It has been replaced by expensive machines, which place their own economic demands on the people who operate them. For, the sums invested in this equipment burden the company’s bottom line all the more, the longer they are tied up in the form of production plants and machinery that have not yet been fully depreciated. As long as these investments have not yet been made available again as a sum of money through the sale of the goods to be produced with them, they are threatened by a quite insidious form of depreciation: at the hand of competitors, who have once again achieved a profitable reduction of unit labor costs with better methods; for then, work carried out with the existing equipment no longer meets the prevailing standard for profitability, and the means of production themselves, no longer fit for the company’s purpose, lose their entire value. The rapid turnover of invested capital is therefore an imperious business necessity, which the workers have to satisfy, first of all by meeting higher production targets through the pace of work; then even more labor fits all by itself into the paid work hour, while the company can rejoice once more in a reduction of labor costs in addition to the accelerated turnover. The other, complex work virtue that progressive employers turn into a necessity for their workforce, because they themselves are subjected to the necessity of cost-reducing capital turnover, is known in current parlance as flexibility. This refers, for one thing, to the nature of the work itself. Working has long since ceased to have anything to do with formerly unchanging job descriptions; to say nothing of a connection between acquired skills and required tasks fabricated by so-called vocational training. In the continually restructured “job,” the abstractness of value-creating labor is the concrete, normal course of work life. The same goes for the work schedule: the duration of work, its distribution by day, week and year, the alternation between free time, work and standby status, all this results from machine run times, which firstly cannot tolerate employee-related interruptions, and secondly definitely have to be interrupted whenever it seems useful for such important accounting items as the order situation, sales climate, inventory, etc.

The necessity to adapt, arranged by the managers of the modern working world, is met by an abundant willingness to adapt. Not because postmodern employees have always really longed to exist as appendages of machines, but because they always make the same calculation; not for a handsome reward, but for the opposite reason: the money is never enough. Capitalism’s chief imperative, the lowering of unit labor costs, leaves its mark on the wage an individual earns, a wage that is moreover continually at risk. For, the earned sum shrivels under the state’s grasp; all the more, the smaller the nation’s total payroll turns out, out of which the treasury helps itself and social policy — until further notice — finances a certain minimum subsistence for more and more unemployed. Private financial hardship is thus part of the standard of living, compelling wage earners in practice to continually try and wring some extra compensation out of their source of income — or at least a bit of “job security,” even at the price of further sacrifices. In this way, the unsuitability of the wage system as a means of existence for wage earners reinforces their willingness to assess their own expenditure of time, energy and health — which are, after all, the conditions for whatever useful value their own life has for them — not at all as a kind of expenditure, but right from the outset as their resilient own means of income.

It is for the employer alone, who pays for it, that labor power thus becomes a truly effective use-value. It is harnessed to his competitive fight, as if it depended on wageworkers — maybe if they gave up overtime pay or were willing to work Sunday shifts — whether this fight, always “for jobs” of course, were won or lost; actually they have absolutely nothing to contribute, let alone to decide, apart from their usable labor power. All the freedom to get wage labor, the source of all property, to function as a means for competition lies with the employers; whose corresponding demands grow along with the means they employ.

And, interestingly enough, these means exceed by far what capitalist commodity producers extract from their workforce.

Notes