This is a chapter from the book:
Work and Wealth (2nd revised edition)
II. The profitability imperative — or: Subsuming the productive force of labor under its effect on business success
The productive force of labor belongs to the owner of the means of production, who pays for it and has it done. So it is his demands that define the productive force of labor. It is not simply a matter of organizing a division of labor for people with suitable equipment to easily produce far more useful things than they need for themselves and for making their work easier. In a market economy, labor has to be productive by creating more business property measured in money than has to be payed out for wages for the labor, under the command of capital, and using the means of capital, thus according to capital’s dictates and calculations.
Accordingly, what counts as expenditure of labor is not the work expended, i.e., a person’s time and effort, but the wage expended for having the work done. The yield of labor is not measured by the needs satisfied, but by the proceeds from selling the goods produced. Labor performance is not considered to be the relation between work effort expended and product, but the value of goods created in relation to the amount of wages expended for it. Labor productivity is thus not a technical parameter, but is rather defined by business success.
Capital thus appropriates the productive power of labor as the source of its accumulation. It uses itself as the source of the monetary returns it has its workers achieve, and measures its business success by the relation of capital expenditure to monetary surplus thereby generated, i.e., capital productivity.
1. Work under the regime of others’ property
If workers normally run out of wages fairly fast, this is not because their work hasn’t yielded more than they need or habitually consume. The “overflowing” stores the market economy is famous for provide striking evidence to the contrary, especially those offering goods that the wage-dependent population can hardly ever afford. And all this is merely a fraction of the superabundance of useful goods that the working members of society bring about. And no wonder. When people use their minds and physical powers expediently on the basis of a division of labor, they not only produce their means of existence and production, but also achieve a certain amount of technological progress. And when they set to work at the currently attained level of technology, even complicated commodities can be produced in a matter of minutes. From this perspective, it would be no problem for workers today to churn out every kind of consumer good without much effort to supply themselves and anyone not able to work at the moment — if that was what work was all about.
That things inevitably work out so very differently is due to the peculiar social demands and established rights that wage-earning work must comply with. In the market economy, it holds, on the one hand, that human labor going into a product establishes property, that is, creates a monetary value the producer is entitled to. On the other hand, it holds that from the outset the commodity value that wage labor produces does not belong to those who perform the work, but to the businessman who pays the wages. For by paying the wages he acquires the right to control his staff’s work and thereby, without further ado, also acquires ownership of the products they produce.
Companies have the power to do this because the means of production necessary for modern commodity production belong to them. Consequently, it is also entirely up to them to organize the production process in which individual wage-workers have to perform their subfunctions. Wage-dependent workers cannot even go into action on their own; they have nothing to tender apart from their capacity and willingness to work. What they have to offer their employer is, on the one hand, exactly what matters in this mode of production: the ability to create new private property in the form of money. But this ability is worthless as long as it is not put to use — and as soon as it is, it stops belonging to them but belongs to the company. In practice, of course, workers are still putting their labor power and life time into the production process — things that cannot be detached from them like a piece of property an owner can do what he likes with. What goes on in a capitalist factory is still what they are doing, no matter how much the employer is in command. But even this falls under the legal category of property in a market economy. And property means in this case that the performance of work is formally separable from the person performing it. The money-creating activity itself becomes alienable and passes legally into the ownership of the employer, who incorporates it into his production process and pays wages for it. This at the same time determines whose property the work creates.
The fact that as soon as labor takes place it stops being attributable to those who apply their minds and spend energy and time to provide useful things, has a very tangible effect in the capitalistically organized production process itself. The basis of the wage-labor relation, that the means of production are the businessman’s private property, has consequences in this sphere. The appropriate use of machines and apparatus and expedient division of labor connecting the various subtasks — that is, precisely the non-private nature of the work that makes it productive in the first place — is not in the hands of the staff involved in the labor, but solely up to the businessman. The private power of his property is his basis for assigning individuals their place within the totality of the collective labor process and the way they operate the technological means of production. He separates the performance of labor from labor’s material productive force in actual practice. In his hands, the machinery that replaces the technical skill of human labor and multiplies its effect, and the cooperation between people that gets the production process going and keeps it going, act as a means of reducing the staff’s activities entirely to what makes them effective for property, creating not use-values but money value. Their activities are reduced to human labor in general, specifically to a maximum expenditure of labor power, to work in the primitive sense of “performance per time.”
Work is thus productive in the material sense because people are cooperating expediently using suitable equipment. This is no different in capitalism. Except there the social productive force of labor exists as the company’s private property, not just separately from those who do the work, but as a means of dominating the work they do in line with the revenue and expense calculation of capitalist property.
2. How employers are very reserved when it comes to valuing work but most demanding when making use of it
Capitalist firms accumulate their property by exploiting the productive force of labor. However, they only count performance as productive if it has the desired effect on their property. And they attribute this productive performance to themselves, to their invested capital. It isn’t so much their ideology — many an executive schooled in management skills likes to salute the creativity of his “coworkers” — as it is their real practice. What the productivity of labor generates is realized in capital’s accounts.
These accounts show nothing under the heading ‘Expenditures’ that reflects the effort employees have to expend. What counts as expenditure in a market economy is solely the company’s: the money it has to spend in order for production to take place. This expenditure involves two major elements.
First, there are the “work stations” — equipping a factory with machinery, and procuring raw materials, energy, and whatever else is needed for manufacturing and selling a product. These purchases are lost in the production process according to their material nature, being used up, worn out, transformed, productively consumed in one way or another. However, the one “quality” of the means of production that is posted in the company’s accounts, namely their value as stated in their purchase price, does not disappear or change at all. It reappears in the price of the manufactured goods, calculated for the individual product. Although this price first has to be realized for the businessman to get back the money he has laid out, he doesn’t let go of any of his property for the production process or during it. The fact that it all belongs to him remains unchanged.
With his other operating expense, wages, he puts property in the hands of others at his own expense. And if he is in the right mood, he claims in all seriousness that this is a major act of generosity on his part, which he receives far too little thanks for. At least this expense buys him his staff’s labor power so that he can freely decide how to employ it productively. The wage payment itself functions here as a means of command — an economic fact that disappears completely by taking the form of a legally impeccable contractual relationship, an exchange of money for work. The remuneration of commandable workers is paid, aptly enough, as the price of labor, according to the number of hours worked, or, even closer to the purpose of payment, according to whether a worker meets the time allowance for completing specific tasks or entire steps of production. This way of paying wages is the basis for the pretense — which is established both legally and in practice, and ideologically hashed over with great relish — that workers get paid fairly for the exact “share” their work contributes to the product or its value (the two being the same thing as capitalists calculate), that labor’s value is being remunerated. If that were the truth, a capitalist’s balance sheet would really be in trouble. What would be left over for the property owner if labor were paid for with the property it creates?! And if only part of the newly created property were used as payment, how could the performance of work as a “share” be delimited from the fact that the means of production belong to the employer as another “share”?! No capitalist has ever waited for this to be figured out properly; otherwise he would never have gotten his business off the ground.
In reality, the business with paid labor and its calculation work quite differently. As everyone knows, and every wage dispute shows, what is declared and paid as the price of labor is determined by nothing other than the conflict between the two parties, who have opposing monetary interests in this price. One side needs wages as a source of income to live on; for the other side it has to make sure the work is profitable. What this conflict ends up with as the “appropriate” price of labor cannot be determined by any arithmetic. It is simply a question of power. When trade unionists present their calculations to prove work has become more productive again and the pay should therefore be “correspondingly” higher, this is only worth as much as the actual pressure employees put on management — which never turns out to be that massive when calculations like that are used for justifying it. For then the trade unions are explicitly recognizing the profit interest of the other side and arguing that workers’ interest in wages is compatible with profit, thus at the same time taking back the antagonism they have to open up in a wage dispute.
The negotiated wages are regarded as the price of the work performed because here, too, the situation is defined by the legal form, a contract concluded between formally equal parties on a service and the service in return — and because businessmen simply calculate that way. They divide their wage payment proportionally to the product and have it reappear in the calculated product price, just as they do with the cost of their means of production, i.e., with the value of their industrially employed property. They calculate their wage costs as part of the price that the market has to pay them. And the way they take this calculation for granted, they are taking their money expenditure for the “labor factor” into account as a source of their increase in wealth, alongside the second source, their money expenditure for the “capital factor,” which they enter in the books as an expenditure exactly the same way, regardless of the fact that they are not parting with any of their property in this case but transforming part of their wealth into their means of production.
This calculation, which is not merely legally flawless but actually required in legal terms, produces an ideological effect and some very significant practical ones. The worldview of the market economy simply takes it for granted that there is a fair wage. It is the wage that remunerates a staff member for his proportional contribution to the sales price of the company's products; this contribution is calculated from the labor costs per product unit. So the particular negotiated wage is justified in an extremely short-circuited way, by simply turning around the calculation the businessman is making in practice. And if a business dismisses its workers because it can no longer sell its goods profitably, then this is regarded as conclusive proof that the cost of labor was higher than its real contribution to the realizable value of the product…
In practice, the device of measuring and paying wages according to the quantity of work delivered — that is, basically according to time, enriched with aspects of work intensity — achieves the exact opposite of neatly dividing up effort and return between employee and employer. What it achieves is precisely the company’s command over labor that is disclaimed by the way wages are paid. Delivered as the price of labor, the worker’s wage constantly coerces him to satisfy the company’s utterly one-sided and business-dictated demands on him. It compels him to be interested in earning this price hour by hour and as intensively as required. It thus eliminates that obstacle to the productive use of labor that lies in the fact that the company is appropriating others’ activity. The worker’s wage makes sure that he submits to the firm’s working-time and performance requirements of his own accord, out of his own interest in the wage. This is also an easy way to obtain flexibility, overtime, night work and continuous shift work, or the acceptance of particularly unhealthy working conditions. Conveniently, it is all the easier the lower the wage paid. This is the absolutely humane way — extortively aimed at its employees’ will — that a capitalist company takes hold of the productive force of labor, right down to the last working hour and the last work effort benefiting the company.
The achieved product enters in the company’s account of revenue and expenditures under the heading ‘revenue’: as a pure sum of value. This abstraction would be impractical if it were a matter of the contribution made to satisfying society’s needs as a whole by way of a sensible division of labor. But here it is the logical and final summary of the only thing that counts when it comes to work done, allowing the make-or-break comparison with the heading ‘expenditure.’ This comparison is what decides whether the company has “made money” — this not just being a colloquial expression for business success but precisely describing the matter at hand. The only product of importance is the monetary surplus of revenues over expenditures, the profit in a relation to the invested sum of money so as to make the capital investment financially worthwhile overall. This calculation completely does away with the real source of the freshly created monetary wealth, labor. Instead it features payment of labor, i.e., the expenditure for it, alongside and together with the expenditures for equipment, as the main benchmark. It is an expenditure to be put to proper use by the company as the basis for creating that part of the product value that actually increases the company’s property — the profit that all production is about.
The productive force of labor thus has its own capitalistic definition; and that is the criterion for whether labor has been productive at all or has actually remained unproductive regardless of the goods it has produced. What is important is not merely that it creates property in service to its buyer, i.e., for the benefit of its legal owner. It is productive if and only if it is profitable. Its price must stand in a favorable relation to its effect; and not only that. This profit relation, i.e., labor producing more monetary asset value realized as monetary proceeds on the market than its use costs, must stand in a satisfactory relation (from the firm’s point of view) to the size of the capital as a whole that employs the labor. Labor must either prove itself as a source, not only of profit as such, but of an adequate return on total capital — or it is worth nothing. At the same time, labor could never itself guarantee this result demanded so uncompromisingly and unconditionally. Labor itself is not able to provide any more than a product, which, if it were so planned, could end up contributing something useful for supplying society’s needs. Whether the product also has a value that enriches the company is a completely different question. How much money can be earned on the product is decided outside the world of work, on the market where the company offers its goods. And whether the proceeds make the capital investment worthwhile is decided by the size of the capital outlay and the employers’ required return on capital. The relation between the price and the effect of labor must prove itself against the return that a capital investment of a corresponding size typically yields. Capital’s criterion for applying labor is the productivity of capital.
For capital to be productive, companies do great things with the labor they purchase. Their appropriating its special productive force for their business is only the beginning of labor’s career taking it from being the source of all market-economy wealth to being the means of capitalist growth.
 It is not merely historically the case that the one thing, the production of useful goods for “the market,” i.e., for the sake of their monetary value, prevails everywhere only because the other thing, the exploitation of productive labor by capitalist owners, has prevailed. There is an inherent reason why the goods that society needs and wants are produced in order to be sold and to give the seller money, the means for getting hold of the products of other people’s labor. This reason is a contradictory relation existing in capitalism. On the one hand, all production of goods aims to meet far more than the individual producer’s own needs; it takes place with an expedient division of labor and far more potent means of labor than a simple hand tool. It takes place within largely automated production processes in which the various workers carry out quite specialized duties. On the other hand, this cooperation of labor collectives and this use of means of production involving all kinds of technical ingenuity, planning, collective design work, i.e., nothing but achievements of a social nature, take place only under the control of a powerful private actor, the capitalist company. They function as a private company’s means for producing not simply goods needed by society, but rather commodities for supplying the market, where nothing counts but the private power of money. The socially created productive force of labor that far exceeds the scope of any individual’s capacity for work is nevertheless applied solely as a company’s private possession, as the instrument of private property whose owner employs the labor of others as if it were his own. This is the permanent reason why work performed in the market economy only counts if it creates salable goods, property in the form of money. In short, the “market economy” exists only as a relation of exploitation.
 The point of work existing twice in this truly peculiar way, as the productive activity of the people being paid and as the company-owned process of creating value, is no secret to the workers themselves. Each one knows his work as a job that ultimately has no connection to him beyond the factory’s decision to put him at particular workstation, equip it to fit its own cost-output calculation, and pay him a wage in return. The trend-setting managerial idea of letting workers “share” in “shaping” “their” workplace does not reverse this relation, but is a calculating reaction to its unmistakable one-sidedness, making an offer to the living and thinking appendages of the production process to get involved in the conditions for their own functioning.
 Bourgeois economics has never deduced what price labor is worth. But it is all the more unabashed in advocating the ideology that wages pay exactly what labor — unlike the other “factor of production,” capital — has contributed to the value of the product. With the disarming dialectic so characteristic of this science, it cites the result as evidence: what the wage laborers get from the company’s total revenue and what the businessmen keep for themselves simply shows what each side has contributed to it. The proof: otherwise they wouldn’t have gotten it…
This “theory” of “factor costs” derives its plausibility from, of all things, the other side of the relationship it is dealing with, the technical side relating to use values. Without “capital” in the sense of capital equipment — the machines and working materials workers go to work on — they would be just as unproductive as this “capital” would be without workers to use it. The production of useful things requires natural materials in raw or processed form and equipment involving quite a bit of technologically applied empirical knowledge and science, just as much as it requires human skills and their employment.
Except that the analysis of this relation would never lead to the idea of separating two factors’ contributions to the total product that are of the same kind and only quantitatively different, let alone putting a figure on them. The latter comes from the market-economy way of calculating, which accounts for everything required for producing goods according to its price, i.e., as a like quantity. This subsumes materially incommensurable quantities under categories of property, making them monetary quantities of the same kind. Taking that as a basis, however, there can definitely be no question of any material need to divide the money proceeds up between labor and capital as like factors. After all, the product counts as an asset on the legal ground that it embodies the productive activity of a legal person, so the entire commodity value is the product of human labor. Insofar as this labor is paid for by a company, i.e., is part of its property, the entire commodity value is logically company property; none of it belongs to the workers. What they receive and are legally entitled to is the negotiated wage; by paying this wage the company appropriates the entire property-creating effect of their labor.
The appeal of this concept of factor costs is the idea that there is an automatic fairness in distributing the wealth that money owners and non-owners make such strikingly different contributions to and derive such strikingly different benefit from. The need for such an ideological view of the world guarantees its durability.
To endow factor costs with deeper meaning, economic research has furthermore come up with a way to attribute to capital providers and job takers a like effort that is included in the price of the product and recompensed from it. Both sides renounce some of their property for a certain period of time — the former giving up their freedom to use their assets for other purposes, and the latter their right to dispose of their time. So the source of free-market wealth is abstinence, in two forms. And the share that anyone gets justly depends on how tough it is for him to productively delay his gratification. The proof: if the remuneration did not correspond to the renunciation, each would have hung on to his property…
This way of accounting involves a contradiction that has considerable consequences in the competition between companies. In the world of the market economy, where work is done in order to earn money, i.e., where work functions as a source of property, the work being done is never enough. In the same market-economy world, where employers use labor as a source of property and relate its property-increasing effect to the expenditure it costs, this expenditure cannot be low enough. So obtaining a surplus calls for extremely sparing use of paid labor. How this contradiction takes effect and what it leads to is the subject of the following chapter III.
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