- Capitalism and Alternatives -

Another procapitalist who doesn't understand capitalism

Posted by: Barry Stoller on January 28, 19100 at 11:04:01:

In Reply to: Toward A Common Definition (FULL VERSION) posted by Fred on January 27, 19100 at 15:23:55:

: Capitalism has at least three basic beliefs: private property the market and personal responsibility.

: Let's take private property first, because that's what communists want to do away with first. Private property isn't necessarily your house or your yard (although it can be that); private property is your dreams, your destiny, your risk!

Communists do NOT want to 'do away' with all private property. They only want to do away with private property in the means of production, i.e. land, raw resources, factories, alienated labor of those who own nothing but labor.

: Take for example a woman--"Betty"--who makes her sandwiches so delicious that her daughter tells her to open a deli and sell her sandwiches for a profit. Betty then opens a sandwich shop and begins making sandwiches so delicious that the whole community wants to eat them. Betty then starts selling her sandwiches for a profit. This profit represents the community's appreciation of her sandwiches--the quality of the meat, the freshness of the tomato, the crispness of the lettuce.

Betty is not a capitalist.

Betty produces commodities to sell. Her labor produces surplus value (value over the cost of the maintenance of labor) but it is her surplus value that she exchanges with the public. Her business is an example of subsistence production---not capitalism. The surplus value produced by one individual---especially one without large-scale machinery (which, of course, represents the dead labor-power, hence surplus value, of others) is nominal.

: Now, the cost of her sandwiches are, say, two dollars a piece. Add rent on her building, electricity and water bills, and we come to 2.75 a sandwich. After that, Betty needs something to live on, so she charges 4.50 for each of her sandwiches.

Betty does not determine the price of her sandwiches. The price of all sandwiches are determined by the socially necessary labor-time averaged by the production of sandwiches in the market. Competition determines the price of her sandwiches. She can deviate from this average all she wishes but if she wishes to stay in business, she must not exceed the average amount of constant capital and labor costs that sandwiches cost (unless she has a monopoly or a monopoly 'resting on popular conviction').

: Well, Betty doesn't want to keep paying rent on her building forever, does she? So when she reads in the paper that the land on which she does business is for sale, Betty is delighted. In fact, that very day, her landlord calls her to ask if she would be interested in buying the land. Would she ever!

: Of course, the deal has to close soon, within a month. Betty needs at least $50,000 cash--a pretty hefty down payment. But Betty's landlord likes her, so he'll give her an extra two months in which to raise the funds with which she can buy the property on which her business stands.

: Even with the extra two months, Betty just doesn't have the cash. She has to raise her prices to 5.00 dollars a sandwich, then 5.50. Then 6.00!

Because her constant capital expenses have risen (in the anticipation of reducing them), she must now lower the labor costs of her sandwich production. In other words, she must produce more surplus value per aliquot part of production costs in order to maximize her new investment. This is accomplished by increasing productivity---putting more labor-power to task in a shorter time. Socialized labor is the only way to do this.

: But Betty finds that her sandwiches are quite popular and that she can't keep up with the demand. So, she begins hiring people to do the work, mostly high-school and college students.

Now---and only now---Betty becomes a capitalist.


[C]apitalist production begins from the moment when the conditions of labor belong to one class, and another class has at its disposal only labor-power. This separation of labor from the conditions of labor is the precondition of capitalist production.(1)

: These people share none of the risks associated with Betty's business (creditors, spoiled food, bankruptcy) and are therefore paid in wages , "x dollars per hour worked.

These people also do not 'share' access to the means of production. In order to live they must sell their labor-power to capitalists like Betty.

: Betty thinks this a very fair arrangement, for some days Betty makes nothing after her workers' pay.

Often the petty proprietor cannot compete with the large-scale capitalists because, as I said before, the price of all sandwiches are determined by the socially necessary labor-time averaged by the production of sandwiches in the market. Centralized capital, enjoying 'economies of scale' and more labor-power to extract surplus value from, can easily produce more commodities for less than independent capitalists like Betty.

: Sometimes she makes more than that, which is what she went into business for in the first place.


: When she gets enough money, Betty can buy the property. Then it becomes her private property. Betty is now a capitalist. She is responsible to herself and to herself alone.

Wrong---for reasons listed above.

: In addition to making sandwiches which the public will eat, she has to pay wages which will attract the best group of people she can. To this end, Betty will pay a higher wage than, say, McDonald's, because she wants to attract a higher level of employee, and thus attract a higher level clientele. So, the free-market comes into play not only in the sandwiches that Betty makes, but the people that Betty hires to make those sandwiches.

The 'free market' comes into play, but not quite in the way you imagine.

Betty pays her employees more than McDonald’s employees because she must.

A 'better' wage is what deters her employees from robbing her blind whenever they can. Because Betty has not purchased managers or surveillance systems to prevent her employees from robbing her blind, she pays them what seems to be above average wages. In fact, deducting the cost of a manager or a surveillance system, the (overall) labor wage is the same.

: Finally, the issue is one of personal responsibility. Betty didn't have to open the sandwich shop, but she did. Her "exploited workers" didn't have to work there but they did.

You make the common mistake of presenting each capitalist to the individual level. Capitalists are a class.

Indeed, 'exploited workers' do not have to work for Betty per se---but if they want to have shelter, heat and food they must work for one capitalist or another. Work or starve.

Capitalism, as Marx stated above, is a social relationship in which some people own the means of production and other people own only their labor. Because of this institutional inequality, capital ends up owning (more and more of) the labor-power of an entire class of people. That is the ultimate form of 'private property' in a capitalist system---owning the work of others.

: It's all a matter of the personal choices we make in life, not some Government telling us what we can and can't do. That's what capitalism has over communism.

'Personal choices' indeed. Social relations in class society demonstrate that one class has the advantage over another. Force creates the situation---and force can reverse it.



1. Marx, Theories of Surplus-Value, Progress 1963, p. 78.

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