This is a chapter from the book:
Work and Wealth (2nd revised edition)

III. The role of technological progress in the market economy — or: The productive force of labor as a weapon in companies’ competition for returns

With the products of the work they command, capitalist businessmen have to succeed “on the market,” i.e., win the competition against their peers for society’s ability to pay. This is how the “consumer society” is “supplied with goods.” Conversely, success on the market determines which production was actually necessary for society.

The criterion for this success — and thus what regulates the livelihood that the market economy grants to its various actors — is the return on invested capital. In order to increase this return, businessmen go at the relation between the price and the effect of labor. They lower wages; and they increase the technological productive force of the applied labor so that its costs are distributed over more salable product, i.e., unit labor costs go down and thus the overall production costs per product. And this decrease has to be greater than the additional cost of this technological progress per unit of product; otherwise the saving in labor cost would not have been worth it. Production costs lowered this way enable the company to fight for market shares with lower prices — or more or better goods for the money — in order to bag more of the socially necessary production, meaning production that the sale of the products confirms as having been worthwhile. Of course, that means — as a general trend — giving up the advantage of a larger share of profit per product due to the increased productivity of labor in favor of a larger mass of profitable sales. This advantage disappears when competitors achieve the same progress and the cut-throat price used to conquer the market has become the new prevailing market price. In the end, production with less paid labor, increasingly elaborate workplaces, and a falling product price level generates a profit that has to justify increasing capital expenditure. For that reason, the struggle to make labor cheaper and more efficient never ends: every success achieved is the starting point for the next round in this competitive struggle.

Companies make this the wage earners’ problem. One section of them is constantly being made redundant and has to look around for a new way to earn a living. The other section is not spared any bit of work effort by “labor-saving” technological progress. On the contrary, the lucky ones who continue to be employed have to work hard enough to make sure their employer’s investments in “secure jobs” pay off, until their number is adjusted downward again in the course of the next “rationalization.”

1. Society lives on and for the capitalists’ competition to draw on its ability to pay

Everything employers do with their employees and their workplaces they chalk up to competition and its constraints. There is some fundamental hypocrisy at play here. Like anyone who enters a competition, business owners share the objective the contest aims at — after all, they are not competing for first prize in making life easier and more lucrative for their personnel, let alone for the best plan for satisfying everyone’s needs. When their interest in competitiveness leads them to pressure their workers, they are in any case not being forced to do anything that really goes against their grain or is alien to their own best economic interests. When, conversely, they must obey their own interests as if they were an objective constraint that must be met as a matter of life or death, then this only proves that there is no diverging point of view to modify their economic purposes. When they cite inescapable constraints of competition they are solely underlining that their interest in capital accumulation is universally and exclusively valid in a market economy.

What is perhaps even more noteworthy than their telling hypocrisy, however, is the truth the activists of competition are admitting to by offering this blanket excuse. As soon as they do what their property enables them to do, namely, have work done and increase their assets, they do so against each other. Although they command the productive force of labor, its results do not add up to a nice heap of wealth; instead, one capitalist’s business success gets in the way of the others. The exclusionary power of property is not directed only against those who have none and therefore have to put their energies at the disposal of others for a small remuneration. As the private power to pursue its own augmentation, property, when capitalistically operated, is directed in an exclusionary way at that condition for its growth that all commodity producers need equally.

This condition is the money existing in society: wealth in its socially valid, abstract, and private form. Within one’s own company one cannot produce property in this form, as the general equivalent; one can only earn money on the market by means of the commodities one has produced. Only when goods have managed to be sold is it clear whether and to what extent the entire commodity production was of any use, i.e., has increased property through money earned. And here the capitalists stand in each other’s way. For all of them want and need the same thing for this last, all-decisive step in their business: society’s ability to pay.

This means they shut each other out not only when several companies are offering the same commodity. When production takes place for money, when conversely money represents in a limited quantity the possibility of all goods and pleasures, then everything is commensurable. An utterly different thing becomes an alternative, and every commodity producer vies with all others for society’s buying power. Once a producer has achieved unrivaled success in his market segment, he can be sure that it won’t be long before his colleagues, in their never-ending search for the best return, discover his line of business, stock it with cheap offers, and ruin his extraordinary profit rate. The buying power being competed for is, in its turn, the work of the companies that are fighting over it.[1] And it is logically limited so that it is always exhausted far too quickly among the majority of customers: what the mass of final consumers can spend is determined by wage payments. All companies restrict this part of society’s purchasing power as best they can. They pay as much as necessary in the particular case in order to get as much as possible out of the work they are paying for and turn it into money. The more successful they are at this, the better they are able to pay for investments and for whatever “high earners” desire for themselves. Customers like these, however, can make demands on the offered price/performance relation and be quite picky about what they are willing to pay for. And the funds the state takes in — to pay its own personnel and act as a major customer buying whatever a supreme power needs — do secure sales and growth for many producers but diminish all the money incomes the state takes from. A money-making economy is one big battlefield of opposing interests all out for the same thing — and exactly that determines how a free society of this ilk is linked up in material terms. What is produced and what is not, which needs are served, which are disregarded, which are awakened or actually invented, which kind and qualities of commodities are available for people with their particular buying power to manage with or enjoy — all this is completely dependent on how competing suppliers calculate the ability to pay they reckon to bag for their stuff, how successful they are in competing with each other, and if or how much their resulting monetary wealth grows.[2]

So the “constraints of competition” do actually take effect, and are not just an excuse for free businessmen to use. And these constraints are nothing for the free society that obeys them to be ashamed of. The nasty effects and crazy consequences of competition for money put the go-getters to the test. A businessman who fails disqualifies himself as a loser, and has to listen to accusations of mismanagement and worse. Conversely, success makes the one who succeeds an ace, the logic being the same. In reality, winners and losers have been doing exactly the same thing to try and succeed in making money on the market. And this they have been doing where they are the masters of what goes on: in their own companies, with their property and their command over work.

2. The decisive weapon in competition between companies: Technologically increasing the productive force of labor to dispense with the need for wages and wage earners

When capitalist businessmen want to turn their product into money, they face the market price that is generally asked for the commodity, a result of the competition that has already taken place. This price decides what they can earn on the basis of their production costs per commodity. That puts to the test the price they calculate for producing one unit of goods. For it is the difference between production costs and sales revenue that yields the profit that is the point of it all, and production costs are what they can influence through their control over their own operations.

At the same time it is clear that having a decent profit margin per unit is not enough for a company to reach its objective. The quantity of sales is vital for adding mass to the rate of the profit, so sales can never be enough. Taken altogether, this basically unlimited need for sales comes up against the limits of the amount of money that customers have and must moreover budget to cover their various needs. But this limit is of no concern at all to the individual commodity producer out to turn as much product into money as possible. What stands directly in his way are other sellers also trying to monopolize buying power, thus depriving him — as every capable businessman sees it — of possible sales and the associated profit. There is only one real way to remove this obstacle and conquer others’ market shares, leaving aside advertising, bribery, and other ways of “managing the market,” and that is to undercut the competitors on price.[3] This obviously contradicts the purpose of increasing profit: profit margin and mass of profit conflict with each other. The calculation can only work out if a company succeeds in cheapening production to such an extent that reducing the selling price does not eat up the profit per unit. Consequently, all the capitalist manufacturer’s efforts are focused on lowering the production costs of the commodity to be sold.

This always means that all items in the capitalist account of expenditures come under pressure. Extortionate prices demanded of suppliers, for example, are part of the everyday business practices of large concerns. Suppliers then have to see how to manage to keep their profit margin at lower sales prices, which again boils down to reducing their internal costs and putting extortionate pressure on their business partners. Special attention and treatment is of course always bestowed everywhere on that one major cost factor, the expenditure for labor. And for good reason, since it offers two important areas of attack.

First of all, there are the wages paid to workers, in terms of their absolute amount. Although there are wage agreements imposing a binding framework on employers’ competition for the lowest pay, the variety of wage groups they usually codify already provides companies a way to adeptly group the workforce so as to lower their internal wage level. It is in principle always easy to obtain the consent of employee representatives, which is usually required, and some states of the economy make it even easier. If necessary, consent can also be obtained for circumventing or openly disregarding negotiated regulations, as the exemplary German collective-bargaining landscape shows. In “hard times,” employee representatives committed to market-economy rationality are quite prepared to agree on direct wage loss, to leave it up to the company to pay wage components depending on its profit situation, and so on. Further opportunities to lower wages are offered — with or without the consent of the trade unions — by forms of employment such as temporary work or special-order contracts by simply redefining employees so they no longer fall under (industry-wide) wage agreements or declaring them to be independent contractors. All of this helps enormously in lowering the wage share in the production price of goods, the unit labor costs. This makes labor more productive, as the market economy calculates: in relation to what the businessman pays for labor, it yields more product.

The other leverage point that capital uses for fighting wage costs and attaining higher profits, which is far more rewarding in the long run, is labor productivity in the technical sense, product output per quantity of labor hours used, or labor’s material efficiency measured on the product in some other way. On the one hand, the use of machines and equipment taking over tasks previously performed by workers has, taken by itself, only one effect: the individual product can be produced with less labor, or more useful goods can be produced with the same amount of labor. On the other hand, the company’s business interest aims at and achieves something quite different. When it uses advanced technology to ensure that a certain number of hours of work results in more salable product than before, then it is looking at the working time as its own expenditure to pay for the hours, days or weeks worked. The labor it has made more effective as a production factor is reckoned as a cost factor in the production price of the good. The increase in the material productive force of the labor still required is calculated as a reduction in the amount of money that has to be paid to its workforce per unit of goods, the increase in the number of units per unit of labor time is calculated as a reduction in unit labor costs — in other words, like a successful wage cut. And therein lies the whole meaning and purpose of “labor-saving” technological progress in the capitalist enterprise: it makes labor cheaper in relation to the salable product. With the same expenditure on personnel and working hours, the company can not only sell more products, but each product at more profit. Thanks to better technology, the individual product contains not just less labor, but less paid labor, i.e., a larger share in the sales revenue for the company. Sadly, this fine benefit comes at a price: progress costs money. It might even cost so much that spending for machines, plant, automatic units and their operation makes it more expensive to produce the goods, in terms of each unit. But this only means that the reduction in unit labor costs must also compensate for the increase in the “cost of capital” per unit, basically nothing but the advance the company has to pay when purchasing useful equipment. For the company, “labor-saving” tools are not simply that, i.e., aids for saving labor, but also not simply commodities that are worth as much as they cost, but rather investments whose costs are to bring a return, i.e., increase profit. And this they only do when wages drop by more than these costs. This investment cost is in principle on a par with wage payments. The two “cost factors” are compared critically, but they are anything but the same kind of thing. For the company’s calculation to work out, the increase in the productive force of labor must make labor cheaper per unit and the cheapening must be greater than the correspondingly calculated expenditure for technical equipment. The lower wage share in the production costs of the goods must justify the advance spent for this purpose, even and especially when the advance taken by itself increases the production costs. For an overall reduction in production costs is the benefit the company is aiming for in increasing output per unit of labor time. The growing output must go along with those who work to produce it being excluded from it to a growing extent; the lower unit labor costs quantify the extent of this exclusion.

By increasing the productive power of labor the capitalist enterprise thus does not simply obtain additional goods, but additional profit per unit of goods. This gives it more than a greater return; it provides a weapon for its competitive struggle for market shares to add to the profit rate the mass of profit the business needs for its growth. The fact that increased sales are accompanied by reduced proceeds from the sale of the individual commodity is not an effect that melts away the desired additional increase in the producer’s monetary property, but rather part of the company’s competitive strategy. The company is increasing the difference between production price and sales price of its products in order to undercut other producers and appropriate the profit they have been making. What matters to a capitalist firm is not the revenue from selling its goods as such, but the profit to be made that way; it is for increasing this profit that it uses “labor-saving” technologies. However, the increased profit is not to be simply kept; it is used to compete for growing proceeds from selling a growing output of goods.

Thus, capitalist commodity producers drive each other into a cycle between reducing work effort by elaborate technology in order to increase the rate of profit, and reducing the increased rate of profit in order to maximize the mass of their profits, i.e., to get more and more (both relatively and absolutely) of the reduced work effort to take place at their own factories. They calculate and act in such a way as if their increased profit resulted from the saving of work to be paid for, specified in “streamlined” jobs and planned dismissals. On the other hand, they cannot get enough of the work that is still necessary and must be paid for. So they not only promise to “secure jobs” but, if successful, continue to use workers threatened by dismissal, because it is not the work not done that establishes their profit but work that makes their investments profitable. This is how constructively and productively market-economy companies cope with their inherent contradiction between rate and mass of their enrichment through other people’s work — at the expense of their workforce, as always. Some of them are “rationalized” away by means of “labor-saving” technology, thus losing their source of income. The rest are allowed to do their jobs in thoroughly rationalized production operations and get used to new requirements, which certainly do not spare them that one thing: their own expenditure of working time and effort. For those who do the work that has been made more productive, their work remains just as unproductive as before, providing only the necessities of life allocated in wages. The others, who have hitherto lived on the wages for their less productive work, now have to find some way to live.[4]

Of course, capitalist enterprises are not unaffected by the contradiction between profitably reducing their demand for paid labor and using the resulting successes for their competition to maximize profitable labor under their control. This competition always leads to the result of some companies becoming more productive but failing to become more profitable, not finding any ready market for their goods produced with less labor. Company bankruptcies make it drastically clear that producers competing with “labor-saving” progress cannot make much or any additional net profit in total. But whenever this effect occurs, every surviving competitor always only draws the same conclusion: he has no choice but to keep trying to reduce unit labor costs and to start the next round in fighting for the greatest advantage from the labor to be paid, or to join the round another firm has already started. And yet each round shifts the starting conditions for the next one in a way that businessmen like to identify in a very self-assured complaining tone. Cost-effective workplaces, they say, are getting more and more expensive! Well, what did they expect? If they keep incurring huge expenses to achieve a reduction of wage costs that will not only pay for these expenses but make them pay off, what else could this lead to but a disproportionate growth of investments in relation to the bit of wages to be paid for the quantum of working time actually still required. Exploiting workers at the highest level simply costs money. And the instruments for waging capitalist competition also include the essential feature that increasing capital size is not only de facto the ultimately decisive condition for success in the market economy, it is also applied according to plan for overwhelming financially weak competitors, forcing them out of the market and, ideally, “controlling the market.”

When businessmen point out to the world at large how terribly much money they have to spend on a cost-effective workplace, they are obviously not out to provide information about methods and consequences of their competition. The capital outlay they are trying to finish each other off with is supposed to be understood as an extraordinary advance for their employees, which justifies a whole series of demands on them that necessarily follow according to the logic of competition. The fact that companies use their expensive “labor-saving” technology to “save” themselves a bunch of wage workers is supposed to be taken by those still needed for doing the now more productive work as a stroke of luck for themselves and their income. To them, it should be worth sacrificing some wages that they haven’t been laid off yet. Other opportunities readily arise for the workforce to show their gratitude for the large sums of money the company is spending to use them. First of all, with capitalist production plants it is a shame every minute that they are idle, and this is all the more so when they are particularly expensive and effective: non-use is profit lost. Secondly, an idle factory means that the advance will be delayed in flowing back in monetary form to allow operating assets to be reused for continuing and expanding business, which every business manager counts as a loss. Thirdly, every investment entails the risk of the never resting competition already taking the next step ahead and introducing even better production equipment and methods before one’s own invested sum has been “depreciated” as calculated, i.e., has returned with profit. Then it might no longer be worth it to use the production equipment one has invested in and that money will have to be accounted for as a loss. So there is no lack of constraints to keep rationalized workplaces in continuous operation. Expensive machines demand shift work and maximum output, keeping the workforce constantly and intensely busy. When it comes to how the workplaces themselves are set up, the capitalistically expedient way of saving labor involves eliminating every gap or pause in the work process. If human activity must specifically be paid for, then the employer may demand in return maximum activity per time, work in the physical sense, for his money. And his ownership of the means of production gives him the might to make his claim a strictly objective matter. While the question of how much to pay for work is not a technical one, it is in fact one of job evaluation, the necessary arguments being provided by the technical specifications of the workplace and a precise analysis of the human operations it requires. This is why innovations always offer the opportunity to lower wage payments by changing workers’ pay groups. Making people responsible for expensive equipment and demanding all kinds of new skills defined by modern machinery must not give anyone the idea of being entitled to higher wages. Conversely, modifying a job so it can be seen as easier justifies classifying it in a lower pay group.

If no one else will step up, then at least capital makes sure the world of work is constantly being revolutionized.

Digression on the relationship between forces of production and relations of production under capitalism[5]

In the market economy, the increased productive force of labor through technology and organized cooperation is no longer the result of reasonably well understood experience, individual ingenuity, and accidental discoveries. It is pursued systematically; it is quite obviously a requirement and an achievement of the mode of production itself. And for the first time in history, it makes it possible to produce general social wealth — not meaning a pile of fine goods, but society’s capability to create all that is needed without a lot of work and in fact with less and less work. According to a definition cited by Marx in his Outlines of the Critique of Political Economy, “‘A nation is truly rich if 6 instead of 12 hours are worked. Wealth is … disposable time, in addition to that employed in immediate production, for every individual and for the whole society’” (MECW Vol. 29, p. 92). Or more precisely in Marx's own words, “Real wealth manifests itself rather — and this is revealed by large-scale industry — in the immense disproportion between the labour time employed and its product, and similarly in the qualitative disproportion between labour reduced to a pure abstraction and the power of the production process which it oversees” (pp. 90–91). Work made productive according to plan by technological means absorbs only a small part both of people’s abilities and of the time they have to spend on satisfying their need for goods. And it is precisely the latter that makes people free and rich in the material sense: “the immediate material production process itself is stripped of its form of indigence and antagonism. Free development of individualities, and … the reduction of the necessary labour of society to a minimum, to which then corresponds the artistic, scientific, etc., development of individuals, made possible by the time thus set free and the means produced for all of them” (p. 91). The prerequisite for this has been created by the capitalist mode of production by developing large-scale, quasi-automatic machinery. That is the good news.

Here is the bad news. This virtually explosive development of the productive forces of labor, shared throughout society and equipped with ever more sophisticated machinery, has done anything but reduce the working hours of workers “employed in immediate production” and make their work easier. On the contrary, the demands made on them exceed any reasonable measure and even the scope known from primitive production conditions: “Hence the most developed machinery now compels the labourer to work for a longer time than the savage does, or than the labourer himself did when he was using the simplest, crudest implements” (p. 94). What applies to the modern employee is, on the one hand: “… in the degree in which large-scale industry develops, the creation of real wealth becomes less dependent upon labour time and the quantity of labour employed than upon the power of the agents set in motion during labour time. And their power … in turn bears no relation to the immediate labour time which their production costs, but depends, rather, upon the general level of development of science and the progress of technology, or on the application of science to production” (p. 90). On the other hand, stress and excessive working hours are a given in a contemporary workplace.

That is a contradiction. It needs to be explained.

The reason for extended working hours and most intensive use of workers at cost-effective workplaces — to begin with this side of the contradiction — is, of course, not “the most developed machinery” but the interest of capital in having workers work the machines. By insisting on a whole lot of work, this even being a prime state goal known as “employment,” free-market businesses are asserting the decisive principle of producing for the market, i.e., for the purpose of making as much money as possible on the production of goods. They are asserting the equation that what counts as wealth is what is produced to be exchanged for money and finds a buyer. This wealth is consequently as large as a production’s contribution to society’s needs is recognized as necessary through sale, i.e., as large as the quantum of production activity to this end. This wealth has by definition no target, there is no specific quantity it could ever finish reaching. Its measure is the labor time spent on making salable goods, which is why there can never be enough labor time. That labor creates wealth to the extent it is expended would be banal if it were a matter of overcoming natural scarcity, and even then it would not even be half the truth, because both such scarcity and the labor for overcoming it are also affected by how favorable natural conditions are, what quality the available means of production have, and how technically skilled the producers are. But capital is not interested in optimally adapting natural living conditions to sophisticated social needs, but in commodity production for making money. And when it comes to wealth defined this way, what matters is the quantity of labor that is contained in the products and confirmed as a source of monetary value by the market demand for them, i.e., by finding buyers able and willing to pay for them.

Businessmen assert their claim — that such labor serve to enrich them rather than those who perform it — the way masters have basically always done so in relation to servants. Workers can only acquire the goods they need to subsist on by serving the enrichment interests of the economically dominant side. In the market economy with the civilized way people deal with each other, this is accomplished by the state-guaranteed regime of property. This regime commits the propertyless and therefore wage-dependent majority to long and intensive work, which to them appears to be extremely unproductive work. It is in fact enormously productive, however, and its benefit — the actual surplus of the workers’ productive activity over their own modest necessities of life — goes entirely to the companies.[6] But the difference between the capitalist mode of production and all other modes of exploitation is not merely the institution of private property, which forces the majority of society to be interested in being utilized by big money owners. There is, among other things, the quite essential economic difference that companies are after a boundless maximum of money, without being satisfied with long working hours and low pay for their workers. What is important to them is to optimize the ratio between the quantity of labor that is “lost” on meeting their workers’ subsistence needs, i.e., has to be paid off for wages out of the sales proceeds, and the surplus, i.e., the monetary profit, that the same labor brings in for them. The way to do this, they have discovered, is to make the most of their control over the productive force of labor in the form of machinery and work organization. This they use to go systematically and — as one can see — extremely effectively at the quantity of labor contained in the individual products, and thus at the wage share in the value of the goods produced. Capital “diminishes labour time in the form of necessary labour time in order to increase it in the form of superfluous labour time; it thus posits superfluous labour time to an increasing degree as a condition … for necessary labour time” (p. 92).[7]

With their successes in reducing the wage share, however, capitalist employers increasingly dissolve the very equation they are taking as their starting point and exploiting, namely, that between the quantity of labor performed and the quantity of monetary wealth created. They alter the production process itself in a way that seriously waters down the very thing they are after, the accumulation of wealth in the form of private power of disposal over the products of private labor that is recognized as socially useful by being exchanged for a sum of money.[8]

The way this contradiction appears in business accounting is that firms technologically reorganize the labor process to resolutely reduce the exchange value of their products in order to keep more of the reduced proceeds for themselves. In order to gain as much “superfluous” labor as possible — that which increases their profit share — from the “necessary” labor, i.e., that required for producing the wage sum, they “save” on the quantity of labor that establishes the value of the individual product, so as to have a maximum of such “thrifty,” more efficient labor performed in their own factory.[9] The means for reorganizing the labor process accordingly are firstly having at the ready a multitude of workers who now perform only subtasks, and secondly using technological equipment that takes the real production process out of the workers’ hands, assigning them tasks — mainly menial or monitoring ones — that have only been defined by the technology in the first place. This quite fundamentally stops people’s production activity from being private work that only becomes “social” — i.e., part of a division of labor contributing to society’s life process — through exchange on the market. In order to position themselves as huge private masters of socially necessary labor and be active on the market, companies organize a lot of quite non-private collectives of labor and apply socially acquired knowledge and its implementation as a technology that can only be realized in a coordinated division of labor between the individual firms.[10] They take all independence from their employees’ work, acting themselves as the independent head of a vast amount of exchange value–creating labor.[11] In terms of the legal concept of property: as the industrialization of production progresses, companies spare, that is, take from, the work they have their workers do any content that would make workers appear as the producers of the products and would allow the objects produced to be attributed to them as their own, as objects representing their skill and their activity in shaping them. In so doing, companies annul the material basis and original economic substance of the legal category of property, viz., that a product is to be attributed to its producer. This they of course only do with the aim of making the product of the collective labor accrue to the company as its property, which is what results. They are out to assign the legal persons they buy the necessary labor from as little as possible of the product, which they already see themselves entitled to claim wholly as theirs as the buyers of means of production and labor. So in order to exclude their workers from ownership of the product of their work to the greatest possible extent not only formally but also in practice, capitalists industrialize production and thereby do away with labor as the production of a work of “one’s own.” They thus abolish the material prerequisite for the worker’s claim to ownership of “his” product, a claim formally overridden anyway. Just how successful they are at this is evident not least from the fact that the connection between the creation of a useful thing by human labor and the legal relation of ownership of that thing, a connection Marx and his contemporaries still took for granted,[12] has all but disappeared from social consciousness.[13]

The contradiction (to be explained) between enormously increasing the productive force of labor and excessively utilizing those who have to perform this labor — the same market-economy companies doing both — proves to be a necessary consequence of the contradiction inherent in this economic system between the companies’ interest in accumulating wealth in the form of money and their interest in having an exclusionary grip on the monetary value produced. In Marx’s words: “By striving to reduce labour time to a minimum, while, on the other hand, positing labour time as the sole measure and source of wealth, capital itself is a contradiction-in-process” (p. 91).

In principle, this contradiction allows, not exactly two readings, but two complementary emphases. One stresses that capitalists, in their struggle for profit, unintentionally but very effectively push forward a technological development that “reduces human labour … to a minimum.”[14] For their private benefit, which is hostile to all the rest of society in various ways, they organize cooperation and a social division of labor and mobilize the productive potentials of science. They monopolize private property in such a way and to such an extent that workers can definitely never go back to a mode of production where privately working individuals economically utilize the ownership of their products. The only decisive “emancipatory” progress they can achieve is to start making conscious, collective use of technologically perfected production plants to satisfy their needs and gain leisure time. In this respect, Marx sees reason to conclude, “Thus capital works to dissolve itself as the form which dominates production” (p. 86). On the other hand, however, the fact is that the work necessary for satisfying society’s needs is only reduced in order to exclude workers from material wealth, i.e., from the growing power of disposal over it, and from gaining free time, and to strengthen capital’s command; the “elevation of immediate into social labour appears to reduce individual labour to helplessness compared to the concentrated collectivity represented in capital…” (p. 86). And if capital proceeds to dissolve the “first law of property” — i.e., property originates in “living” labor being identical with its works — that only makes the “second law” apply all the more harshly. This one is based solely on legal force and characterized by the “negation of the alien quality of alien labour,” meaning that capital incorporates all “living” labor as a mass at its own disposal. In this respect, the untiring progress of society’s productive forces coincides — for the time being — with the completion of capital’s dominion over all production and consumption. And the sad fact is that this economic system, both in Marx’s time and since then, has been “working” far more effectively, not so much at dissolving itself, as at using a great deal of force to keep the “enormous social forces” that it mobilizes “confine[d] … within the limits necessary to maintain as value the value already created” — that is, to make sure they act solely as a means of capital for increasing its power.

That “capital works” to achieve this success is to be taken quite literally. Businessmen, but above all the political authorities who use the weight of an extensive legal system to grant businessmen their property rights, make tremendous effort — for their part doing usually badly and only sometimes better paid work at mainly exhausting and only sometimes pleasant workplaces that are also constantly being technologically changed — to put and keep capital in effect “as the form which dominates production” with all the consequences. The capitalist form of wealth and its social production requires huge work to secure it, to enforce it and all its concerns all over the world without any alternative, to keep its negative consequences under control, to pursue the resulting claims and necessities in the appropriate way. “Enormous social forces” are put into business that plants itself on top of the “immediate production” of useful goods and serves and creates completely new social needs never imagined before. The work done in these areas does not significantly differ in its lower to average pay grades from that done in the “immediate production process.” The latter work has long since ceased to have any material relation to the product it is needed for manufacturing; its whole purpose lies in the money to be earned, as far as the “living” workers are concerned, and in the comparison between what it costs and the cost-earnings account it goes into, as far as the other, decisive side is concerned. The relation of this work to the production process has completely dissolved into working through the tasks dictated by the employer. And as for the work done in the extended service of capitalism’s forms of social wealth and the resulting necessities and luxury needs, it is subject to precisely the same calculations and consequent conditions as work done in the “immediate” production of goods. Whoever performs it also does so only for money, and is dependent on his employer being enriched. And whoever offers such work is aiming for nothing but the greatest possible surplus of his income over the payment of the labor he employs to supply his “services,” and also makes use of all labor-saving technological achievements for that purpose.

So the inevitable comes to pass. An absurd “disproportion” is established in the most sweeping way and in every corner of the world. In the market economy, an enormous amount of useful things is produced in ridiculously little working time by comparison and using relatively little human ability, while those doing the work are nevertheless unable to freely choose how to spend their living time and to freely develop whatever abilities interest them. Instead, they either have to be intensely busy around the clock to make money or are excluded from society’s wealth since capital has no use for them. That explains why the enormous technological progress produced by capitalist companies does not free people from the hardships of working but is forever locking them into a constantly redefined circle of vital necessities, either leaving them no chance to manage these necessities or claiming most of their waking time and shattering their nerves into the bargain.

Not without reason did Marx think the victims of this insanity should not put up with it. That is why he explained to them the reasons for their material predicament — this “contradiction-in-process” that they stumble through life as appendages of — in order to agitate them to revolt against it. At the same time, and in some contradiction to this, he saw his diagnosis as being so much in accord with an ever wider labor movement to overthrow the capitalist mode of production that the contradictions of capital seemed to him to be pretty much a death sentence on capitalism. The real anti-capitalist labor movement blatantly corrected this error by incorporating it into its self-image and basing its strategies on it. In its revolutionary-minded parts and phases it actually saw itself as the agent of a historical trend that was happening anyway, so it didn’t need to act so much as the uncompromising defender of its material interests. The parties of “real socialism,” first successful in Russia and then spread further afield by the Soviet Union, quite explicitly embraced a historical dramaturgy that was somehow objectively given, which placed certain stages of development on the historical “agenda” leading to increasingly just participation of the “living” workers in state-administered common ownership of the results of their “unleashed” productive force. They accordingly pursued their project — revolutionizing the capitalist world and creating a classless society — as the mission to use their militarily conquered state power for organizing according to plan the value-creating process that was previously private and “anarchic.” This undertaking — not to abolish capitalist value production but to thoroughly reorganize it to make it rational and worker-friendly — was a contradiction fraught with consequences, which they coped with after a fashion by plans, following the idea that there was a series of intermediate stages, building on each other and each one “historically necessary,” going from capitalist exploitation to more and more “real socialism.”[15] Confronted with capitalism’s combination of ever less effort for “living” labor and ever greater demands on it, these communists intended to use their combination of worker-friendly justice and unhindered progress in productivity to “overtake without catching up to”[i] capitalism. They thus reduced their will for revolution by class struggle, and all criticism of the capitalist mode of production, both in practice and in theory to a “competition of systems.” In the end, the party and state leaders in charge gave up this — necessarily armed — struggle for lost. In a final act of theoretical self-justification, a few ideological executors also blamed this defeat on “history,” which had supposedly “proved it wrong” to — “prematurely?” — “attempt” to overcome capitalism. This was the definitive end to any interest of theirs in an objective critique of world events.


What proves extremely stable, in contrast, is the contradiction that Marx once formulated as follows in the posthumously published third volume of his main work: “The capitalist mode of production is, for this reason, a historical means of developing the material forces of production and creating an appropriate world-market” — that it is extremely effective at this is certainly undeniable — “and is, at the same time, a continual conflict between this its historical task and its own corresponding relations of social production” (Capital Vol III, International Publishers, New York 1967, p. 250).

Regarding the historical achievement of the capitalist mode of production when it comes to wealth and world-wide dealings as fulfilling a “historical mission” is an ironic metaphor, at best. It is basically mocking the globalization of the much marveled-at juxtaposition of enormous wealth and a poverty not due to any natural shortage but to the efficiency of a system that sorts everyone according to the use it makes of them. At worst, it is a teleological idiocy. In reality, the objective contradictions of this mode of production include no more, but also no less, than the fact that it “continually” creates good reasons to get rid of it.

3. Technological progress and its consequences for labor — or: Capital holds its source in contempt and treats it accordingly

One thing is certain from the outset. The technological progress that capital introduces into the world of work does not in any way benefit those who do the work for wages. How could it? After all, the purpose and criterion of all measures businessmen use to increase the productiveness of labor is cost reduction. And that means, merely put in different words, that less of the created property, which has its measure in the commodity’s market price, goes to the workers as unit labor costs. It is no extra dose of meanness that the increased output does not reach the paid hands; it is the principle of this progress. With their labor that is necessary for the company’s profit and with their pay that follows the same necessity, they remain excluded from a wealth that gets more and more gigantic. The share in society’s ability to pay that they have at their disposal with their added-up unit labor costs drops with the growth of productivity. They have to exert massive pressure and additionally get the right to one or another of their concerns granted by the universally responsible regulator, the state, in order to gain recognition and remuneration for their new necessities of life that society’s new living conditions impose on them. When they succeed at this, however, it is opposed by the necessary effect that companies are aiming at and achieving by rationalizing workplaces. Companies need less work, i.e., fewer paid workers, for producing salable goods; which company’s workforce is decimated, and to what extent, is decided by the competition between firms. Those who consequently become redundant are of course not released from the coercion to work for money, i.e., to find some kind of job. The result is the absurd economic figure of the unemployed person. Absurd, because the fact that so many people are not needed is a consequence of the achievement of requiring less and less labor effort and working time for producing more and more goods, but this is no achievement for those dismissed. Their whole freedom consists in the necessity to be used by an employer again, which is not only grammatically a passive matter, and not at all in their power. Also, they are facing a trend that has just cost them their source of income. They are being coerced to do something they cannot do — except by making the desolate effort that they are encouraged to make from all sides and pressured to make by their employment agency: to ready themselves to be a nonbinding offer for anyone in need of labor. This puts companies, in their capacity as employers, in an especially strong position; not only when it comes to hiring unemployed people but also in all wage disputes with their labor. There are always enough replacements standing by who are too desperate to make any wage demands — that is in any case how it is seen by modern employee representatives, who show restraint in wage disputes in view of the “force of circumstances.”

There is also the fact that the unemployed are a burden on the public authorities. The modern welfare state finances its expenditures for them out of the paychecks of those workers capital still needs. So in view of the negative effects that companies’ sparing use of labor involves for wage earners, the state proactively reduces what employees earn from serving the growth of others’ property. This expenditure is nevertheless counted as a burden on the state’s social welfare budget. In the form of a fiscal constraint, the interest in easing this burden adds to the state’s economic-policy interest in having the greatest possible number of its people employed usefully, i.e., profitably. This criterion — as much employment as possible, but only if profitable — makes one thing certain: the unemployed prove by their mere existence that employing them is unprofitable, i.e., too expensive. So even the authority managing the common good acts as a powerful advocate of a low national wage level. In the most advanced countries, those in charge have established an increasingly extensive low-wage sector and aligned social security contributions so that the state also does its part to reduce unit labor costs.

Those who are lucky enough to find or keep a job at least get a taste of technological progress at their costly workplaces. Not by the work getting easier to do or more relaxed, of course. At best, industrial work has lost its brute effort — for lack of profitability. Instead, there are expensive machines that make their own special economic demands on the people who operate them. Rapid turnover of invested capital is an absolute business necessity that workers have to meet by fulfilling the highest requirements in terms of pace of work. This even makes more work fit into the paid working hour as if by magic, and the company will be pleased to have not only accelerated turnover but also another wage-cost reduction. The other complex worker’s virtue that progressive employers force on their people because they themselves are forced to turn over their capital fast to reduce costs is known nowadays as flexibility. This relates, firstly, to what workers are doing. Set job descriptions have long been a thing of the past, as indeed has any connection between learned skills and required tasks, although so-called vocational training pretends there is one. Constant changes to the job make the abstractness of value-creating work what workers concretely experience every day. The same applies to working time. Its length, how it is divided up over the day, week and year, the alternation between free time, working, and preparing for work, all this results from the machine running times. These, firstly, must not suffer any employee-related interruptions and, secondly, must always be interrupted exactly whenever it seems useful for such important account items as the order situation, the sales climate, warehousing, etc.

With their policy of perpetual rationalization, free-market employers deal with labor in a way that amounts to systematic contempt for the source of their wealth. Labor is combated as a cost factor; as a factor of production it is fit into all the technological necessities that follow for the experts of profit-making from the criterion that the profitability of invested capital has to be increased constantly and always guaranteed anew. The performance of the workers is treated as a freely usable instrument belonging to the employers; how much they work and what they have to do is constantly being revised — and their ability is thrown away when capital has once again succeeded in making work superfluous. For their livelihood, employees have to make do with whatever fits into the unit labor–cost calculation of the competing companies, minus the contributions owed to the authority managing the free-market common good.

The pressure to adapt that the managers of the contemporary working world arrange meets with an extremely high willingness to adapt on the part of the majority of society who are treated with such contempt. This is not because postmodern employees have always wanted to be an appendage of a constantly changing production apparatus and a cost factor that is only sometimes in demand. It is because they have no alternative — as long as they put up with their status and thus the whole money-economy system. The money they earn only covers their basic needs until the next pay check, and the reason why they are employed constantly calls their employment into question. And that is exactly why they generally sacrifice their living time and labor-power to keep trying to convince an employer of their usefulness. It is thus because the wage system is an unfit means for earning a living that wage-earners can be counted on to be willing to see their own expenditure of time and energy and health — which are actually the conditions for life being worth living for people themselves — right from the start not as expenditure but as their own reliable means for making money.

So labor-power is really of use only to the employer who pays for it. It is integral to the employer’s competitive struggle, as if it were up to wage workers — up to them doing without overtime bonuses or being willing to work Sunday shifts, say — whether the company wins or loses this struggle, which of course is always “about jobs.” In reality, they have absolutely nothing to contribute apart from their utilizable labor-power, and even less to decide. All freedom to make wage labor — the source of all property — a means of competition lies with the companies. Their demands on it grow along with the means they apply.

And, interestingly, these means are far greater than everything capitalist commodity producers make on their employees’ labor.

Translators’ Note

[i] Walter Ulbricht, First Secretary of the Socialist Unity Party of (East) Germany and Chairman of the State Council, modifying Lenin’s “catch up and overtake.”

Authors’ Notes

[1] In the modern market economy, the credit industry plants itself on this achievement of commodity producers. Its credit creation puts it at the beginning of capitalist business, and its interest income at the end. Its right to make a profit on credit transactions enables it to equip the business world with ability to pay, and enables businesses to service its legal claims to profit. Thus it makes creating and capturing society’s payment ability its own business. What this means for labor in the service of capitalist wealth and what in turn follows for the course of capitalist business will be the subject of some reflections in the following chapter IV.

[2] When market-economy experts observe economic trends, they are seeing the consequences of this simple truth. Changes in the terms for selling goods and making money across the board are not due to erratic fluctuations of public taste, let alone sensible decisions about social priorities, but, as they admit, to the unpredictable effects of competition for ever more sales. The fact that these competitive efforts most reliably lead to obvious setbacks following phases of expansion, and vice versa, has not made the wise men of science interested in comprehending this madness. Instead, an entire branch of research is busy developing mathematical models of the unpredictable, solely due to the idea that academics owe capitalist society a quantifying forecast of its own free economic activity.

[3] We hope nobody will object on the basis of the experience in a market economy that prices mainly rise, this rise being so general that the individual increases add up to a rate of ‘price inflation.’ The reason why capitalist producers tend overall to charge and also get paid more and more for their goods is the unproductive bloat of society’s ability to pay always brought about by the credit industry with its professional contribution to economic growth by creating credit, i.e., by productively bloating companies’ ability to pay. The main contributor, though, is the state, with a budget debt not aimed at yielding any return but nevertheless instituted on a permanent basis. In a modern market economy, legal tender itself economically represents the credit circulating in society (this will be elaborated on in the following chapter IV). That is why a tendency toward general price inflation caused by bloating of the means of business goes with a functioning market economy — and especially with some forms of its derailment in a crisis.

[4] Thanks to decades of “labor-saving” technological progress, a growing, now overwhelming number of those without property, i.e., those dependent on wage labor, especially in the capitalistically most advanced “industrial nations,” are no longer needed or employed for industrial production at all, for producing either consumer goods or means of production or setting up and running automated production processes. Some of this majority earn a living by serving the necessities entailed by the capitalist form and purpose of society’s wealth — from wholesale and retail trade to the advertising industry and from financial services to payroll accounting and back again — and under which all other social activities, including science and culture, are subsumed. This sphere of “services” is also operated for the most part by private businessmen who, just like their colleagues from the commodity production sector, sell at a profit services they have employees provide for the lowest possible pay at workplaces they cleverly make ever more effective. These rank-and-file members of capitalist competition also get to know all the market-economy beauties of working for money. Another large section of social resources and constraints that a market economy requires for its functioning is seen to by the state power. It does not make any profit, but because it draws on privately created wealth, it follows the model of the private service industry when utilizing and paying the great mass of its “civil servants” (and this it does all the more consistently the more advanced it is). Thus, this portion of the world’s population is also fully subjected to all the constraints involved in earning money. On balance, the moneymaking “logic” prevails universally and across the board; it is not indiscriminate but uncompromising in overriding whatever differences there are between the various lines of work. That this result is commonly taken for granted was assumed by the first chapter of the present treatise so as to attack this wrong mindset.

[5] In what follows, we quote from notebooks VI and VII — [Fixed capital and the development of the productive forces of society] — of Karl Marx’s Outlines of the Critique of Political Economy (“Grundrisse”) from 1857–1858, MECW Vol. 29, Lawrence & Wishart, 2010, pp. 80 ff., because here Marx elaborates how the purpose of capitalist value production contradicts its means. It is well worth it to recall these considerations first of all for their own sake. Secondly, not only did the parties of ‘real socialism’ misuse this contradiction, clarified by Marx, in their ideology, but today’s leftists have also retained from this explanation at most the abstract idea that there is a contradiction pressing to resolve itself, while pretty much forgetting about the contradiction’s economic substance that Marx was interested in, and the sole basis for criticizing this mode of production. A consequence of this contradiction that characterized an essential phase of recent pan-German economic history, and has meanwhile taken on completely new forms, is dealt with in the article “Viele Probleme, große Projekte, eine Strategie: Die Nation senkt ihr Lohnniveau” [“Many problems, big projects, one strategy: The nation lowers its wage level” — untranslated] in issue 4-99 of the political quarterly GegenStandpunkt. This article recapitulates some of Marx’s considerations in its last section, pp. 70 ff.

[6] In the Grundrisse it reads like this: Labour time as the measure of wealth posits wealth itself as based upon poverty, and disposable time only as existing in and through the opposition to surplus labour time …” (p. 94).

[7] “The creation of an abundance of disposable time apart from necessary labour time, for society in general and for each of its members (i.e. scope for the development of the full productive powers of the individual, hence also of society), this creation of not-labour-time appears under the conditions of capital, and at all earlier stages, as the creation of not-labour-time, free time, for a few. What capital adds is that it increases the surplus labour time of the masses by all the means of art and science, because its wealth consists directly in its appropriation of surplus labour time; …” (pp. 93–94)

[8] “In the same measure as labour time — the simple quantity of labour — is posited by capital as the sole determinant of value, immediate labour and its quantity disappear as the determining principle of production, of the creation of use values. It is reduced both quantitatively, in that its proportion declines, and qualitatively, in that it, though still indispensable, becomes a subaltern moment in comparison to general scientific work, the technological application of the natural sciences, on the one hand, and also in comparison to the general productive power originating from the organisation of society in overall production …” (pp. 85–86)

[9] “Capital employs the machine … only in so far as it enables the worker to work a larger part of his time for capital, to relate to a larger part of his time as not belonging to him, to work a longer time for another. By this process, the quantity of labour necessary for the production of a certain object is in fact reduced to the minimum, but only in order that a maximum of labour can be valorised in a maximum of such objects. The first aspect is important because capital in this way — quite unintentionally — reduces human labour, the expenditure of [human] energy, to a minimum.” (p. 87)

[10] In fact, in the production process of capital, as will become more evident in the further analysis of that process, labour is a totality — a combination of labours — the individual components of which are alien to one another, so that the aggregate of labour, as a totality, is not the work of the individual worker, and, moreover, it is the work of the different workers taken together only in so far as they are combined [by an external force] — not entering into [voluntary] combination with each other. In combination, this labour likewise appears subservient to an alien will and an alien intelligence, and directed by the latter — having its animate unity outside itself, and subordinated in its material unity to the objective unity of machinery, of capital fixe, which as an animated monster objectifies the scientific idea, and is in fact the concentrating element, which in no way relates to the individual worker as instrument, but to which, on the contrary, he is affixed as an animated individual spot [of labour], a living isolated accessory to it.” (MECW Vol 28, p. 398)

[11] “In no respect does the machine appear as the means of labour of the individual worker. Its differentia specifica is not at all to mediate between the activity of the worker and the object, as is the case with the means of labour. On the contrary, the worker’s activity is posited rather as merely mediating the labour of the machine, its action upon the raw material — he watches over it and guards against obstructions. Not as in the case of the instrument, which the worker animates with his own skill and activity as an organ, and whose manipulation is thus dependent upon his virtuosity. On the contrary, the machine, which possesses skill and power in contrast to the worker, is itself the virtuoso. It possesses a soul of its own in the laws of mechanics which determine its operations; and to maintain its continuous self-motion it consumes coal, oil, etc. … , as the worker consumes foodstuffs. The activity of the worker, restricted to a mere abstraction of activity, is determined and governed in every respect by the movement of the machinery, not vice versa. Science, which compels the inanimate members of the machinery, by means of their design, to operate purposefully as an automaton, does not exist in the worker's consciousness, but acts upon him through the machine as an alien force, as the force of the machine itself.” (pp. 82–83)

“The accumulation of knowledge and skill, of the general productive forces of the social mind, is thus absorbed in capital as opposed to labour, and hence appears as a property of capital …” (p. 84)

“On the one hand, therefore, it calls into life all the powers of science and Nature, and of social combination and social intercourse, in order to make the creation of wealth (relatively) independent of the labour time employed for that purpose. On the other hand, it wishes the enormous social forces thus created to be measured by labour time and to confine them within the limits necessary to maintain as value the value already created. The productive forces and social relations — two different aspects of the development of the social individual — appear to capital merely as the means, and are merely the means, for it to carry on production on its restricted basis.” (p. 92)

[12] Marx treats the property-law aspect of the capitalist production process in great detail at the end of notebook IV and the beginning of notebook V of the Grundrisse: “In order to express the relations into which capital and wage labour enter as property relationships or laws, we have only to express the conduct of both sides in the process of valorisation as a process of appropriation. For instance, the fact that surplus labour is posited as surplus value of capital means that the worker does not appropriate the product of his own labour; that it appears to him as alien property; and, conversely, that alien labour appears as the property of capital. This second law of bourgeois property, which is the inversion of the first … is just as much established as a law as the first. The first law is the identity of labour with property; the second is labour as negated property or property as the negation of the alien quality of alien labour” (MECW vol. 28, pp. 397–398). When Marx characterizes the capitalist enterprise's ownership of the total product of the labor performed in its factories as “appropriation” and, on occasion, quite candidly as “theft,” the matter he is thinking of is how the equation of production and right of disposal is “inverted” into the higher equation of purchased dominion over production work and ownership of the product of others’ work, as characterized here. The real subsumption of production labor under the requirements of the capitalist enterprise, its transformation into machine operation, turns this “inversion” into an actual feature of the material production process: “In machinery, objectified labour confronts living labour in the labour process itself as the power which dominates it, a power which, in terms of its form, as the appropriation of living labour, is capital” (p. 83). “The means of labour makes the worker independent — posits him as a proprietor. Machinery — as fixed capital — posits him as dependent, as appropriated” (p. 88). In view of the Luddite movement (textile workers destroying textile machinery), Marx finds it advisable to add: “However, machinery has this effect only to the extent that it is determined as fixed capital; and it is determined as such only by the fact that the worker relates himself to it as a wage labourer, and the active individual in general as a mere labourer” (p. 88).

[13] If Krupp's metalworkers already saw themselves as “Kruppians” more than a hundred years ago and modern automobile workers — just when threatened with dismissal — proudly declare themselves to be part of the Opel “family,” they are certainly not laying claim to ownership of “their” company. They are solely expressing that they belong to the great collective actor, the company, i.e., expressing in a most affirmative way how they are subsumed under the competitive fate of the capital that is making use of them. In reality they have long since experienced what Marx determines to be the necessary result of capitalist development: “Hence, the full development of capital only takes place — or capital has only posited the mode of production corresponding to it — when the means of labour is not merely formally determined as fixed capital but is superseded in its immediate form, and fixed capital confronts labour within the production process as machinery. The entire production process … as technological application of science” (p. 85).

[14] At this point Marx continues, “this will be to the advantage of emancipated labour and is the condition for its emancipation” (p. 87).

[15] For more on this and on the — not necessary but logical — end of this mode of production and its state power, see the compilation by Karl Held (ed.), Das Lebenswerk des Michail Gorbatschow. Von der Reform des ‘realen Sozialismus' zur Zerstörung der Sowjetunion, [The Life’s Work of Mikhail Gorbachev. From the Reform of ‘Real Socialism’ to the Destruction of the Soviet Union] Gegenstandpunkt-Verlag, Munich 1992. Untranslated. In English there is Karl Held and Audrey Hill, From 1917 to Perestroika / The Victory of Morality over Socialism, Resultate-Verlag, Munich 1989

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