Marxism Monday is brought to you today by the letters S&P, for Standard and Poor! Standard and Poor is a financial services company that is a subsidiary of McGraw Hill Financial (who also owns that textbook publishing company...just so you know). They publish market and financial research and their indices track stock health and overall financial and economic health. They're also one of the international credit ratings agencies. So, why is Marxism Monday brought to you by one of the most influential Capitalist organizations in the world? Because of this:
Do you notice anything about those dips? They correspond with the two most recent major sector collapses in the world economy. The first was the general economic downturn after the dot-com bubble collapsed and 9/11 shut down trade and consumer confidence (says Liberals and Capitalists), and the second is the occurrence of the housing bubble collapse and the banking sector collapse in rapid succession of one another. But what precedes both of them are unparalleled periods of growth. Seriously. Go to Google right now and type in "INDEXSP:INX" and it will give you the same page. Expand out the window. This rate of growth is ludicrous. Do you see how close that line is to the bottom before 1995? And look at the far right where it is now at the dawn of 2014.
A much more detailed analysis of economic activity would be necessary to explain fully these massive gains in the S&P 500 (S&P's American index) during periods when real wages are falling drastically against inflation and jobless numbers are down simply because people have stopped looking for work or jobless benefits have been cut. But what these graphs parallel is the state of the worker in relation to industry in Capital, Marx's seminal work. In "Outline and Criticism of Communist Theory from Marx to Mao", James J. O'Donnell explains it simply:
[T]he laborer is himself treated by the bourgeoisie as a commodity, and thus receives only the equivalent of the amount of labor that has been expended in producing him, that is, his subsistence...A laborer earning a daily wage of eight dollars might complete eight dollars' worth of work in three hours. If he works an eight-hour day then the additional five hours represents surplus value. Marx defines surplus value as the difference between the sale price and the worker's wages. It is something actually created by labor but appropriated arbitrarily by employers. (27)
A much more detailed analysis of economic activity would be necessary to explain fully these massive gains in the S&P 500 (S&P's American index) during periods when real wages are falling drastically against inflation and jobless numbers are down simply because people have stopped looking for work or jobless benefits have been cut. But what these graphs parallel is the state of the worker in relation to industry in Capital, Marx's seminal work. In "Outline and Criticism of Communist Theory from Marx to Mao", James J. O'Donnell explains it simply:
[T]he laborer is himself treated by the bourgeoisie as a commodity, and thus receives only the equivalent of the amount of labor that has been expended in producing him, that is, his subsistence...A laborer earning a daily wage of eight dollars might complete eight dollars' worth of work in three hours. If he works an eight-hour day then the additional five hours represents surplus value. Marx defines surplus value as the difference between the sale price and the worker's wages. It is something actually created by labor but appropriated arbitrarily by employers. (27)
This labor-value appropriation is very apparent when one looks at the above graph in relation to the state of workers in this country and Europe and even in China today. Record profits, record CEO bonuses, record growth in stock markets, etc. Yet real wages are in free fall. Rents and the price of food (specifically milk and eggs, the real measure of the health of the economy) are rising. West Virginia's coal mines are literally destroying clean drinking water while their CEO and his girlfriend laugh. The situation in the United States, specifically, is one in which Capitalists have already begun reaping their rewards for undermining business and banking regulations put in place due to the Great Depression. The worker is finding himself commoditized in ways unheard of since the 1920's. Though not as bad, things are certainly setting themselves up to be possibly much worse. Not only that, but the state and Federal Reserve Bank have run out of ideas on how to fix the problem.
Quantitative Easing didn't work. Letting the market collapse didn't work. Intervention didn't work. Non-intervention didn't work. These are the two strategies our government seems to think are the only viable options. Marxism says there is another option.
Marx posits that when workers control and collectively own the means of production, there is no Capitalist to arbitrarily appropriate the added labor-value contributed by the worker. Therefore, a greater portion of the final price of the commodity can be appropriated to the worker's wages. With rules in place (or psychological barriers, but that is a topic for Marketing Mondays...on another blog) to keep commodity prices from artificially inflating, consumer confidence returns. And Socialist or Capitalist, consumer confidence is important because it means 1) items are available to buy, and 2) they are being bought. Say what you will about consumerism (it's bad), any economy that still utilizes a currency relies on consumer confidence. Unless we're talking about Owenites, and I don't think we are, this holds true for most transitional Socialist societies as well. Ask Slavenka Drakulic, in her book "How We Survived Communism and Even Laughed". She says the reason Communism failed was because they did not produce enough tampons--her metaphor for consumer goods. And really, this is a common complaint from the former Soviet Bloc: everyone had plenty of money, but they were still standing in line for bread.
But, I'm in danger of veering off into tangential history. The point of this Marxism Monday can be summed up very briefly:
The price of any item is composed of three things: 1) the cost of initial goods to make the item, 2) the added labor value imparted by the worker, 3) profit. Labor value is calculated (according to Marx) as the difference between the sale cost of an item and the initial cost to make the item. The allocation of profit in Capitalism is arbitrarily done according to the individual desires of the Capitalist. The allocation of profit in Communism is intentionally done according to the collective needs of the workers. Arbitrary appropriation of labor value results in volatile markets, uncontrollable collapses, and vast increases in financial indices simultaneously alongside freefalling real wages, dangerously-high inflation, and uncontrollable cost-of-living increases. Intentional appropriation of labor value helps fix the market, ensure high standards of living, and overall economic health.
Now, this does raise a valid question, and one that has been alternately taken seriously and generously dismissed by Marxists and Capitalists, alike: that of the Socialist "value calculation"--that without a free and competitive market, how would economic value and item price be determined? Understanding the abstracted idea of what composes a "price" according to Marx, we will look into this next week on Marxism Monday.
Quantitative Easing didn't work. Letting the market collapse didn't work. Intervention didn't work. Non-intervention didn't work. These are the two strategies our government seems to think are the only viable options. Marxism says there is another option.
Marx posits that when workers control and collectively own the means of production, there is no Capitalist to arbitrarily appropriate the added labor-value contributed by the worker. Therefore, a greater portion of the final price of the commodity can be appropriated to the worker's wages. With rules in place (or psychological barriers, but that is a topic for Marketing Mondays...on another blog) to keep commodity prices from artificially inflating, consumer confidence returns. And Socialist or Capitalist, consumer confidence is important because it means 1) items are available to buy, and 2) they are being bought. Say what you will about consumerism (it's bad), any economy that still utilizes a currency relies on consumer confidence. Unless we're talking about Owenites, and I don't think we are, this holds true for most transitional Socialist societies as well. Ask Slavenka Drakulic, in her book "How We Survived Communism and Even Laughed". She says the reason Communism failed was because they did not produce enough tampons--her metaphor for consumer goods. And really, this is a common complaint from the former Soviet Bloc: everyone had plenty of money, but they were still standing in line for bread.
But, I'm in danger of veering off into tangential history. The point of this Marxism Monday can be summed up very briefly:
The price of any item is composed of three things: 1) the cost of initial goods to make the item, 2) the added labor value imparted by the worker, 3) profit. Labor value is calculated (according to Marx) as the difference between the sale cost of an item and the initial cost to make the item. The allocation of profit in Capitalism is arbitrarily done according to the individual desires of the Capitalist. The allocation of profit in Communism is intentionally done according to the collective needs of the workers. Arbitrary appropriation of labor value results in volatile markets, uncontrollable collapses, and vast increases in financial indices simultaneously alongside freefalling real wages, dangerously-high inflation, and uncontrollable cost-of-living increases. Intentional appropriation of labor value helps fix the market, ensure high standards of living, and overall economic health.
Now, this does raise a valid question, and one that has been alternately taken seriously and generously dismissed by Marxists and Capitalists, alike: that of the Socialist "value calculation"--that without a free and competitive market, how would economic value and item price be determined? Understanding the abstracted idea of what composes a "price" according to Marx, we will look into this next week on Marxism Monday.
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