Tag: marx

Presence of Trusts.  Monopoly Conditions. Occam’s Razor.

~ nicholasjayboyes

When looking at the concentration and consolidation of the joint stock companies, the socialization of commodity production must be noted.  As the trusts and monopolies dictate production, they are planning what to build, and how much to charge for the commodities they produce in large factories.  

Agriculture uses the state as a planning organization; the United States Department of Agriculture (USDA) disburses tens of billions of dollars to large farmers in an attempt to decide what will be grown, how, and by who.

Competition was used to determine by supply and demand the price of a commodity in the earlier stages of capitalism.  The companies would produce as much as possible to drive their competitor out of business, and to maximize surplus value. The USDA keeps this under control by paying farmers not to grow, a central planning structure indicating socialization of production, under capitalism.  

Production of many of the main commodities, gas and electricity for individual households and businesses, for instance, is owned and controlled by Wisconsin Electric and Gas (WEPCO).  There is no competition, the price is determined by the production of gas from the wells, and coal from the mines, and then wherever WEPCO can get away with selling it for a price they set, not by competition with other companies,it is sold by them ot consumers.

Much of the price of gas and oil, according to the monthly bill, is distribution of gas through the lines, which are wholly owned by WEPCO.  The electricity lines, the high voltage ones, as well as the smaller lines, are all property of WEPCO.  This is a  large part of the cost, and we know WEPCO makes a profit through its ownership of these means of production.  

WEPCO is no longer using nuclear energy;. There is only one electrical generator left in Point Beach, 25 km from Green Bay,the last of Wisconsin’s nuclear energy experiment.  It was built in 1970, and has been running for 55 years now.  It was designed to go about 40 years, but the bourgeois fetish with nuclear energy has meant the constant danger to Green Bay of a meltdown to squeeze another ten  years out of it.

Obviously Point Beach’s days are numbered.  Nuclear energy is too dirty, it leaves a spent reactor and waste product mankind has yet to find a way of safely  disposing of for 100,000 years, the length of time before the waste is safe to be handled by humans again.

There are tons of this stuff just sitting in the spent reactors, a monument to bourgeois disdain for ecology, and future generations who live and use Lake Michigan.  

WEPCO now uses coal and gas for generation of electricity, and with Donald Trump in power this will probably not change, at least not soon.  His idea that climate change is not important should keep coal being used for power generation for some time to come.  Even switching to natural gas looks unlikely as Trump supports coal production.

I have previously noted the state of the grocery markets, the presence of a smaller and smaller number of owners of the stores.  WalMart, Kroger, and Albertsons control most of Milwaukee”s markets.  Piggly Wiggly is Albertsons, Pick and Save is Kroger. These two stores used to have competition, but given they were planning to merge, how much competition are we to believe is occurring?  They planned to remove competition  through a merger, they are no longer together?  

Which ultimately leads to revolutionary activity, such as employee owned stores like Woodmans.  The product is sold at its va;lue, determined by how much labour it contains, whether or not it is paid for. .

The alternative of a cooperative for production, proletarian socialization of industry, is the direction society seems to be traversing.

But there is more.  Karl Marx said “ the antithesis of capital is living labour”.  He meant that the individual doing the labour a capitalist would be doing, instead of the contractor, a capitalist,  is revolutionary.  Doing it yourself also removes the capitalist from production.  Plumbing your own drain, for instance, removes a capitalist company coming with the plumber. This saves money, and the instructions for small repairs of this type are all over YouTube.

Youtube brings us much closer to socialism; there are recipes on it a person can cook themselves, and avoid going to the restaurant, which is owned by a capitalist.  

Living labour is a direction society is starting to traverse more and more, reducing the power of large capitalists.  Setting up a rooftop solar panel system is currently expensive, although it pays for itself eventually.  The panels are becoming cheaper, and it is probably no accident it is China, with “ one country, two systems” that produce 80% of the solar panels. 

A more self-sufficient lifestyle, with labour for one’s self and family, combined with the cooperatives, restricts capitalists from total domination. 

There was a time in the past all manual labour was considered to be something to be avoided.  We see this today as luxury cars, for instance, are equipped with a driverless system.  Even if it was safe, (it will always be like riding a motorcycle), the labour of even driving your own car is unpalatable to the bourgeoisie. Imagine cutting your own wood,  or cooking for yourself?

Things are starting to change.  Many people have had enough of the monopolies controlling their lifestyles, and are ready to start to do more for themselves. Combined with the knowledge that cooperatives work,  the trust’s days may be numbered.  Living labour and a changing pattern of ownership, made necessary due to the lack of competition, where WEPCO owns the gas and electricity, produces the commodities, and sets prices, is shifting towards solar generation from home, and other forms of renewable energy..

Socialization of production is occurring in land ownership for agriculture, and production of commodities in the factories.  The days of small shops and competition have given way to trusts and monopolies in control of society.  A central planning mechanism  by capitalists, dictating what and how much to produce, has taken root. Ownership is increasingly in the hands of a few families, who own the shares of joint stock companies, and reap the surplus value. Manual labour is still considered demeaning to the bourgeoisie who own the stocks, but the amount of energy required to produce the lifestyle of luxury looks increasingly ridiculous. A $150 meal for the family at the restaurant, etc. shows the foolishness of our bourgeoisie, whose waste of energy looks much like Roman society’s extravagance towards the end of their rule.  Luxury production is mostly this, and this bourgeois is in control of the state.  Elon Musk, who produces luxury automobiles; Sheldon Addison, casino owner;  contributed more than 350 million dollars to Trump to get reelected. It worked too. The disdain for manual labour could not possibly be more felt than now.  Imagine Musk cutting his own wood, or making  himself dinner.  It’s just not going to happen.

The trajectory of capitalism has not changed, we are just in its late stages. Pressure for a  simpler life without luxury production is becoming more socially acceptable. The simplest answer is usually the right one, Occam’s Razor, comes into play.  It should be possible to cook a better meal than the restaurant, at a fraction of the cost, and energy usage.  When we get over washing the dishes and cooking,, manual labour,, our vision of society changes. Material conditions change, and with it our consciousness. A quest  to produce it yourself comes to be.

Nicholas Jay Boyes 

Milwaukee Wisconsin

American Democratic Republic

1 20 2025

revision 9 20 2025

From the Archive Article about Thomas Malthus

~ nicholasjayboyes

A Paradigm Shift Away from Laissez Faire Economic Ideas 5 1 2021

There is an idea that had gained traction in the 80’s in particular, that was if capitalists made large profits, and used the money as revenue, the workers would benefit.  This idea was called”laissez faire “.  There were also fantasies about not having to use the state to prop up capitalist industry.

The presence of this large group of people who are mostly service workers, producing mostly luxuries, restaurant workers, for instance, is part of capitalist industry.  Every increase in productivity displaces workers in industry; the machinery becomes more advanced, the labour less skilled, or redundant with the advances in machinery.  

This creates a constant industrial reserve army of workers, what Marx called attention to, who are lucky to find employment, and it is often unskilled if they do, as the job the worker used to do has been eliminated.   It is replaced with a machine, and an unskilled worker.

These workers who have been shed by modern industry are often forced into luxury production, or used as some form of menial servant.  The service industry is basically this.  This is supposed to be  a consolation for a displaced worker, that the wealth will trickle down somehow when the bourgeois create capital through the exploitation of the worker, and the worker can become a low wage service worker now that he is no longer producing necessary commodities.

They spend their revenue on these luxury goods, which do not increase profits.  Luxury production is not goods for the workers to consume.  This form of production is for the bourgeoisie, and is for them an expenditure, rather  than an investment. 

The jobs this supports are not much different  from menial servants, which are what Malthus suggested the workers should be thankful for; a large number of workers displaced by industrial progress harnessed by capitalists who are reduced to menial servants. We see this in the number of service occupations that are not far removed from Mathus’s menial servants.

There is more profit to be made as industry progresses, and machinery that displaces workers increases surplus value when productivity increases. It creates the industrial reserve army of workers, a capitalist phenomenon.  The work is unskilled, and throttling the capitalist mechanism forward creates these workers. 

Perhaps they could content themselves as being porters, barmaids, massage workers, etc.  The surplus value has to go somewhere, its production can only be reinvested to a certain degree.  The population rising justifies the surplus; it is for more workers to be able to labour. 

But what happens to the surplus when the workers can only consume so much of it, as they are paid wages that are not able to consume all they are producing?  If they were paid the value of their labour by the capitalist, there would no longer be a capitalist.  The whole system is based on producing a surplus, and it has to be consumed somehow.  

This provided Malthus and the bourgeois a way out, namely increasing the number of servants and menial labourers.  This would seem to be a root of the laissez faire economic ideas which were popular in the  80’s.

Advancement of machinery lowers the value of the product.  It is not the fault of machinery the capitalist relationship of exploitation exists.  It is a social order, a historical condition. It is the way it is used, that more expensive machinery reduces the workers control of the means of production.  

The presence of large numbers of people who are in menial labour indicates a surplus is coming from somewhere, supporting the unproductive classes.  Trickle down ideas justified the increased number of these people.

But the question of if it really did is being rejected.  It may have created more capital, but it increased the proportion of the working class, and left about 1,000 families in control of most of the joint stock companies shares.  They control the surplus value, and laissez faire was a theory that supported them.  The idea of the state money being somehow separate from profit was just plain silly, every crisis bailouts of trillions of dollars occurs with the state money. 

This is because taxes come from profit, and it is claimed by those who pay into the pot, so to speak, of state money.  It is used in times of crisis to keep the business making a profit.

Clearly all capitalists do this.  Yet they suggest the state should have less role in capitalist industry, which is a contradiction.

But the question of where the surplus goes that cannot be reinvested seems to be answered by expenditure of revenue by our capitalist.  The unproductive expenditure would seem to be at odds with abstinence, which is often preached as justification for a bourgeois to have gotten control of business and made a profit, allowing for them to exploit the working class. 

On one hand you have the capitalist wanting more consumption of his commodity, on the other hand his workers are paid minimum wage, and expected to be spendthrifty.

The consumption of luxury items and menial servants, the basis of the restaurant industry, is from the surplus value created in production for capitalist enjoyment.  It doesn’t matter to them the dishwasher or busboy is an unskilled worker getting minimum wage, working 12 hours a day.  This is supposed to be right, the wealth is trickling down.  But from the perspective of the worker the condition is considerably different.  On one hand you have massive wealth, accumulating capital, on the other an industrial reserve army of workers, who have to labour in luxury production or as service workers for the minimum of wages.  Trickle down economics not only justifies their position,  it perpetuates the exploitation of a class who is destined to labour. 

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

5 1 2021

Fictitious Capital and Speculation

~ nicholasjayboyes

Fictitious Capital and Speculation  

The amount of money the national debt comprises is more than 30 trillion dollars according to the National Debt Clock website.  This money carries interest, and it is this process which is what is referred to below. 

“… fictitious capital,  the object of gambling on the stock exchange, which is actually nothing but the selling and buying of entitlement of a certain part of the annual tax revenue.”

Karl Marx Theories of Surplus Value volume 3 p. 111

“ By fictitious capital Marx here means the capital of the National Debt which is brought into being by loans (of the bourgeois or bourgeois landowner state) and never intended to be invested as capital and on which the creditors are paid interest on the taxes, imposed on the people. “

Footnote in Prometheus books edition #40

“U.S. Budget Deficit & The National Debt. The National Debt is the total amount of money owed to all external parties by the US government. Most of that debt is in the form of outstanding government securities such as treasury bills, notes, and bonds that the government has issued.

Mar 22, 2022

Google search “is the national debt paid for with bonds or stocks?” 8 10 2022

The state’s money comes from profit, taxes are a subdivision of this profit. You have to first have a profit before the capitalist state can pay taxes, and the state’s money is not investment, at least it makes no profit. Rather it is revenue, and revenue refers to money spent that does not create surplus value, the object of capitalist production.  

All production is carried out to create surplus value, if there is state production it is something needed by capitalists they cannot produce and make a profit doing so, but is essential, like city buses, the passenger train, the highway system, etc. so the worker can, for instance, get to work in the factory on time.

The bond market is speculation on the state’s taxation in the future.  It is an investment on something that has not yet been created; there is no commodity 10 years from now when the bond matures that will be sold.  It is pure speculation on the income of taxes, gambling in the stock exchange on the states debts. 

Marx calls this “fictitious capital”, as it creates no real surplus value, rather is speculation on the annual tax money.  If it was capital it would make a profit. The company is not run firstly to pay taxes, then to make profit, rather the opposite, to make a profit then to subdivide this into taxes.  Industrial capital and agricultural capital create the surplus value, it is the unpaid section of the workday.  The state does not create surplus value, it is an expenditure of capitalists, and claimed by them as revenue. 

We are somehow supposed to feel that we have some say over taxes, as if the amount of taxes displayed on the paycheck would be the property of the worker if it did not have to be paid by the bourgeois.

Being privy to his tax expenditures is sort of interesting, perhaps we should have the whole profit printed on the paycheck?  If you want to hear the capitalists cry bloody murder, try bringing a vote on that. If the taxes did not have to be paid, there is no reason to assume the capitalist would not simply pay the worker the same, and keep the money.  It’s not like the worker is buying into something, an investment of sorts.  This money is directly from the profit, the worker does not choose how much he wants to give, and when liberal progressive bourgeoisie soften a little, and use the taxes for ecology or more worker friendly things, there is usually a corresponding retrogression.

This type of speculation indicates fictitious capital is still alive and real, just as it was in 1863 when Marx wrote Theories of Surplus Value.  The bond market is still large, and if it carries interest, the amounts of which are a sizable sum of money.  Have we ever seen taxes go down, under either party? In the real world, not the Ivory towers, life is a different experience.  

Taxes do come from the  worker, it is part of the unpaid section of the workday, the surplus value. When it is paid directly by the worker it is calculated for beforehand by the employer as a part of his wages..  

We thus see a society that is still functioning the same 167 years after being described by Marx in Theories of Surplus Value Volume 3. 

Nicholas Jay Boyes   

Milwaukee Wisconsin

American Democratic Republic

Purpose of State Industry Under Capitalism. Expenditures at Maximum Limit.

~ nicholasjayboyes

It is interesting to see the capitalists suggesting the state is too expensive, and attempting to pay less money towards it.  This would be the idea of Elon Musk, the white South African billionaire, also the world’s richest man; that the state is wasting money, and its expenditures need to be cut drastically.

I guess we have to look at what is owned by the state.  We have a passenger railroad industry, Amtrak, the Post Office,  and waste pickup among others.

The railroad is owned by the state, and usually loses money.  But every other industrialized nation has passenger railways, with Western Europe having high speed railroads, and advanced locomotives that have their own tracks, that go in the mountains and such.

They serve the practical purpose of connecting people between large cities, from downtown regions to other downtown regions.  It’s like going between downtown Chicago and Milwaukee, you don’t always want to drive your car as you encounter traffic , and even if it did not slow you down (which is ridiculous),  driving to downtown Chicago can be a real adventure.

Even if you fly 150 km south, which uses large amounts of energy compared to Amtrak, you still have to ride the L or rent a car to get from O’hare to downtown.  It is about a 45 minute ride between the train station to O’Hare on the L, making flying down there kind of rough.

So the bourgeoisie rises to the occasion, and even though Amtrak does not make a profit, passenger rail is seen as needed, and paid for by a subdivision of taxes from the profit.  

Perhaps to remind us that the capitalist state does good things too, Musk will try to cut railroad money.   He owns a luxury car company; I guess he must be in favor of auto travel.  

But selling it to anyone who has had to commute downtown, and drive it, is a hard sell.

Perhaps gutting the Post Office would be a source of savings.  They committed the sin of moving the mail in ballots we all use to vote, when we were losing the drop boxes the Republican bourgeoisie have come to detest. 

But the bills from the electricity and gas monopoly come in the mail.  They get the money from the bank automatically, but send a receipt showing your energy usage.  Paper receipts are essential in a failure, such as crashed computers.

So no real help there.  Taxes are also sent by mail; every year it comes time to pay the taxman, and it goes in checks by mail.  

This system seems to be working.  There is also mail that has to leave the country. Ever tried to use United Parcel Service, UPS, to send something outside the country? Try Canada, it’s like 10 times more expensive to send a letter UPS than the mail.    Need to send a package? Milwaukee to near Toronto Canada, about 900 miles, our package would have cost 217 dollars for Worldwide Express plus (same day),  $166 for the end of the day.  It costs $153 for worldwide expedited, and for standard (5 days or less), about $44.  The package was less than a pound.

Perhaps the fact recycling is now being done with Waste Management instead of the city sorter would be some savings.  Considering the city sorter burned down, it is now Waste Management that is sorting recyclables. 

But it certainly looks like using the city to get started recycling was effective.  We always said it would save money to recycle, now it is profitable.  Recycling proved to be a real success.  I guess the only question is if you really want to tamper with a working system of city garbage pickup.  It is one of the few remaining parts of our recycling program still not privatized. It may fall, but the fact remains recycling was accomplished without surplus value as a goal of the movement.  And the city pickup created no surplus value, it was not the reason for recycling, we were concerned about what disposable society was doing to the ecology. It is an example of the state giving in ot the desires of workers to do something that the profit motive was neglecting,, helping ecology. So they can give in sometimes, but once it could be done with a profit Waste Management commenced doing the recycling.

They look an awful lot like a monopoly, or a trust. They seem to be handling most of Milwaukee’s recycling, doing the sorting. Whether they own the recyclables is a more difficult question. Capitalists often prefer monopoly to state ownership, like NASA and Elon Musk. He now has a monopoly on what NASA used to do, launch men to the space station. He gets government contracts to do this. All this has done is move capital from the state to Musk’s pocketbook, from industry that was functioning just fine before capitalists decided they wanted a private company to do the launches.

So here we have 3 or 4 of the things the state owns, and it doesn’t look possible to remove the money being used to keep this industry productive and working.  

Maybe instate college tuition?  That is huge.  But it is a subsidy to the petty bourgeoisie and the middle class, who vote and support the Republicans.  It would be very surprising to see this gravy train come to a halt.  Our bourgeois political economists Ivory Towers are connected to this; good luck getting that through Congress. 

So we are really left to ponder, where will these massive savings Musk wants will come from?  Cutting off welfare, Social Security payments, could keep them from having to spend their sacred profits on senior citizens pensions.  But that is not popular with their following either, many of whom are retired or going to retire soon.  

Given any industry that can make a profit is made to do so, through privatization of nationalized assets, what could be unnationalized?  School systems?  There are capitalists who may be supportive of religion in schools,  but their beloved Constitution divides Church and State very  directly.  They have been promoting using state money for religious schools, they call them charter schools.  But they have shown no real promise of providing a better education than the state schools they are meant to replace.  And the right to an education is a thing all of us value, it is not socially acceptable to have children labouring instead of in school.

Basically the state really cannot be removed more than it already is without causing a social crisis for capitalists.  The industry the state controls is only this way as it is needed but cannot create a profit.  Are we to believe Musk can make the Post Office create a surplus this year?  Welcome back to planet Earth Elon.  It hasn’t created a surplus in decades, and unless something big really changes, expect  it to remain a government institution paid for by the state.  

It is sort of amusing to see the same institution, the state, which is used to hold down the proletariat, shrinking.  In this respect it is hard to take Musk and Donald Trump seriously.  We all remember the movement to pay less money to the riot police, defunding the police became a rallying call for the bourgeois.  No savings there either.  

The more you look at it, the more foolish it looks. It would seem to be an empty threat, from a rich man and his puppet.  It remains to be seen if doctrinaire experiments will follow. 

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

Monopoly, Trusts., Joint Stock Companies.  Imperialism.  Ecological Consciousness and Materialism.  8 1 2024

~ nicholasjayboyes

Monopoly, Trusts., Joint Stock Companies.  Imperialism.  Ecological Consciousness and Materialism.  8 1 2024

In Vladimir Lenin’s book Imperialism, the Highest Stage of Capitalism, he talks about how the system of capitalism gets away from competition and free markets, only to be replaced by trusts, joint stock companies, and state ownership of production.  

This seemed like new territory, but if you read Friedrich Engels Anti- Duhring, you can see that in Karl Marx and Engels time there were already trusts, monopolies, and joint stock companies. By the late 19th century, there was already concentrated ownership of the means of production,  and crisis due to overproduction was a reality.  There had been a crisis about once every ten years, and every time ownership became more concentrated, until there were large trusts and monopolies.

Engels’ Anti- Duhring was published in 1878, Lenin’s Imperialism the Highest Form of Capitalism was published in 1917.  Engels’ observations of the direction modern industry was going was pretty much dead on; by 1917 most large industry in Europe and America was in trusts, or monopoly.  

In this respect Lenin’s observations, although nothing new to Marx and Engles, show the strength of Engels work; he was able to predict the progression of capitalism, from handicrafts, to manufacture, to large industry, then to joint stock companies.  He also predicted the demise of capitalism, and the shift to employee ownership and nationalization without compensation by the workers.

But the point I’m making is Lenin did not discover all he wrote in his book about imperialism, rather Marx and Engels had already shown what trusts and joint stock companies represented by 1875.

Lenin was a gifted thinker, and had a good understanding of Marxism.  By 1917 he grasped what Marx represented, and his book in 1902 What is to be Done? shows he had a knowledge of social democracy in Germany, and was at the beginning of his writing as a Marxist.

What Lenin learned from Engels was the theory of social progression, from the early stages of capitalism, when production was by individuals, or a family unit, for instance raising sheep, shearing wool, using the spinning wheel to make yarn and weaving it etc., then Engels and Marx trace this production, referred to as handicraft production, to the presence of the merchant, who at first trades the surplus from the family, the wool in our example, and provides money and access to goods the individuals doing the handicrafts could not get, often from far away.

The next step is the merchant and property owner begins to put together production in larger groups, manufacture.  The individual weavers, doing handicraft labour, are replaced by a collection of individuals producing not for themselves, but socially.  This is the first stage of commodity production, handicrafts are replaced by collective production, rather than for immediate consumption by the individual who created the product, controlled by a capitalist.

The next stage is large industry, where it is production of commodities, but instead of workers simply put together to produce commodities by dividing up the work, it is replaced by machinery.  The labour is made simpler, the job now working, for instance, a power loom, where the wool is milled by a large machine, and skill is less important, it is a low skilled job primarily.  The worker does not own the loom, rather works for a capitalist, who obtains his product without exchange with the labourer , at least not as any commodity he is selling.    

But the exchange of the commodity is the same as it was under the manufacturer ; the person in charge of the manufacture still simply trades his product for its value. Its value is the amount of labour required to produce it, regardless of whether or not it is paid for.  

And in all commodity production the worker does not own the means of production, and the exchange of the commodity labour power means the worker does not receive the entire value of the commodity he produces, rather part of the value is kept by the capitalist as surplus value.

Large scale industry makes massive collective production a necessity, competition forces the capitalist to invest in ever larger machinery, further making it impossible for the worker to ever be able to purchase the means of production.  The producers work on machinery they do not own, and ownership of the means of production remains in the hands of the bourgeoisie.   Every invention to save labour is used to compel the worker to labour more, to create an ever larger amount of surplus value for the capitalist.

This is the point where capitalism becomes dominated by joint stock companies and trusts.  The trust is when a few large companies control an entire production process, and as a monopoly determine the price of the product, rather than by supply and demand, and competition.

The latter was already happening by the time Engels wrote Anti During in 1875.  Lenin saw this stage in 1917,  as he had left Russia as an exile.  Russia was still an agricultural country just coming out of feudalism and serfdom in 1902, when Lenin wrote What is to be Done?.  

But by a strange confluence of factors, Russia had a revolution in 1917, and Lenin was chosen to lead it.  It was an early attempt to put the ideas of Marx and Engels into practice.  

But the center of these ideas remained Western Europe, as it was here the worker had experienced these stages I mentioned above play out in real  history. In retrospect, we should have seen the shift from trusts and monopoly ownership to the next stage, social ownership, would never really be understood in Russia.  What they tried to do was skip a stage in society, to go from agriculture and manufacture directly to socialism.  

What they built lasted about 75 years, and was for its time a remarkable achievement.  But by 1989 their vision of socialism was faltering, and without a strong movement in the west where large scale industry was in the form of trusts and monopoly, and partial state ownership in the joint stock company as a buyer and owner of shares, a capitalist arrangement, society began to falter,. When Russia returned to capitalism, industry became owned again, sold off at absurd prices to capitalists. Russia could no longer practice the socialism they tried in vain to produce.

The ecological movement was rooted in large industry, satellites to record the warming, for instance, and the windmills and solar panels to stop it. It was tragic; by 1989 Russia was exporting petroleum, nuclear energy, and metals.  When the Chernobyl nuclear reactors melted down, it was clear a main export was a disaster  waiting to happen.   In time even Germany would scrap nuclear power altogether, as the Fukushima reactors in Japan, built by America’s General Electric and Japan’s Hitachi., also melted down. 

This left Russia with a dangerous export nobody wanted: Russian reactors.  But the return to capitalism in 1991 did not make the Russians any more free of nuclear energy, and they’re still trying to export what is basically the same technology used in Chernobyl.   

The Americans and the French are still trying to build nuclear energy, but a reactor  now costs about 10 billion dollars to produce, putting in question if it is an investment to make a profit or a doctrinaire experiment. 

Russia did not make the transition to renewable energy before or after the fall of socialism there.  Compounding their  problems was they had put massive investments in petroleum production, drilling oil with no real concern for ecology.  When it became clear climate change was coming, the pumping of oil the main cause, Russia was reverting to capitalism.

And instead of producing renewable energy, Russia just kept pumping as much oil as possible for export. They never even looked back.

Russia has yet to start a recycling program, and its metals production suffers from this.  The end of socialism did not bring recycling.  Whether their exports of metals are even competitive is questionable; the ecological cost of production cannot always be materially measured.  What does a strip mine for bauxite really cost?   

Had Russia kept trying to build socialism, they may  have become ecological.  But what they went through proved the opposite.  What they built for its time was once state of the art, but without experience of capitalist ways, gained through centuries of living under capitalism in Britain, France and their colonies, the latter built for capitalism, Russia was destined to fail.

The failure of Russia was not due to a failure of Marx and Engels.  At worse we can say ecological thinking was in its infancy then, in Anti- Duhring ecology is only starting to be mentioned.  For example the dreams of modern sewage filtration, and the embrace of Charles Darwin in Anti-Duhring.  

But the socialism of Russia seemed to have no ecological compass,it was designed as a paradise for humans.  But as far as Marx and Engels theories go, they clearly saw the direction the society was taking.  Lenin only sharpened the ideas of the 19th century about trusts and monopolies being in control of this stage of capitalism. But Marx and Engels remain the founders of thought about what modern capitalism represents.  That will not change, the only thing different today is ecological.  Industry has moved forward allowing us to pollute less, and understand our symbiotic relationship with ecology.  It is not  a matter of man’s mastery of nature, this effort was coming to a close in the 21st century.  What we have learned is without ecological consciousness, industry is impossible.  Clearly decomposition is the heaviest industry, and recycling and composting precisely this.  If man had mastery of ecology we wouldn’t be having a climate change problem, clearly symbiosis with nature is the answer, rather than crude mastery through destruction of ecosystems. The question becomes if we ask workers to pressure their boss to , for instance, use less petroleum. Does this sound like a good idea? Should we be surprised when he no longer can ask his boss for ecological progress?

It is left to the workers on their own to fix ecology. Asking the bourgeoisie for concessions results in physical suffering by the worker, following him for the rest of his life. They never forgive anyone who questions their authority, for instance asking them to use less petroleum. It is a compelling reason why capitalism will never reform itself.

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

8 1 2024

Capitalism and Monopoly

~ nicholasjayboyes

In Friedrich Engels Socialism, Utopian and Scientific, he talks about trusts, cartels, and joint stock companies.   The book is from 1883.  The relevant passages read:

“As a matter of fact, since 1825, when the first general crisis broke out, the whole industrial and commercial world, production and exchange among all civilized peoples and their more or less barbaric hangers-on, are thrown out of joint about once every 10 years. Commerce is at a stand-still, the markets are glutted, products accumulate, as multitudinous as they are unsaleable, hard cash disappears, credit vanishes, factories are closed, the mass of the workers are in want of the means of subsistence, because they have produced too much of the means of subsistence; bankruptcy follows upon bankruptcy, execution upon execution. The stagnation lasts for years; productive forces and products are wasted and destroyed wholesale, until the accumulated mass of commodities finally filter off, more or less depreciated in value, until production and exchange gradually begin to move again. Little by little, the pace quickens. It becomes a trot. The industrial trot breaks into a canter, the canter in turn grows into the headlong gallop of a perfect steeplechase of industry, commercial credit, and speculation, which finally, after breakneck leaps, ends where it began — in the ditch of a crisis. And so over and over again. We have now, since the year 1825, gone through this five times, and at the present moment (1877), we are going through it for the sixth time. And the character of these crises is so clearly defined that Fourier hit all of them off when he described the first “crise plethorique”, a crisis from plethora.”

“In these crises, the contradiction between socialized production and capitalist appropriation ends in a violent explosion. The circulation of commodities is, for the time being, stopped. Money, the means of circulation, becomes a hindrance to circulation. All the laws of production and circulation of commodities are turned upside down. The economic collision has reached its apogee. The mode of production is in rebellion against the mode of exchange.“

“The fact that the socialized organization of production within the factory has developed so far that it has become incompatible with the anarchy of production in society, which exists side by side with and dominates it, is brought home to the capitalist themselves by the violent concentration of capital that occurs during crises, through the ruin of many large, and a still greater number of small, capitalists. The whole mechanism of the capitalist mode of production breaks down under the pressure of the productive forces, its own creations. It is no longer able to turn all this mass of means of production into capital. They lie fallow, and for that very reason the industrial reserve army must also lie fallow. Means of production, means of subsistence, available laborers, all the elements of production and of general wealth, are present in abundance. But “abundance becomes the source of distress and want” (Fourier), because it is the very thing that prevents the transformation of the means of production and subsistence into capital. For in capitalistic society, the means of production can only function when they have undergone a preliminary transformation into capital, into the means of exploiting human labor-power. The necessity of this transformation into capital of the means of production and subsistence stands like a ghost between these and the workers. It alone prevents the coming together of the material and personal levers of production; it alone forbids the means of production to function, the workers to work and live. On the one hand, therefore, the capitalistic mode of production stands convicted of its own incapacity to further direct these productive forces. On the other, these productive forces themselves, with increasing energy, press forward to the removal of the existing contradiction, to the abolition of their quality as capital, to the practical recognition of their character as social production forces.

“This rebellion of the productive forces, as they grow more and more powerful, against their quality as capital, this stronger and stronger command that their social character shall be recognized, forces the capital class itself to treat them more and more as social productive forces, so far as this is possible under capitalist conditions. The period of industrial high pressure, with its unbounded inflation of credit, not less than the crash itself, by the collapse of great capitalist establishments, tends to bring about that form of the socialization of great masses of the means of production which we meet with in the different kinds of joint-stock companies. Many of these means of production and of distribution are, from the outset, so colossal that, like the railways, they exclude all other forms of capitalistic expansion. At a further stage of evolution, this form also becomes insufficient. The producers on a large scale in a particular branch of an industry in a particular country unite in a “Trust”, a union for the purpose of regulating production. They determine the total amount to be produced, parcel it out among themselves, and thus enforce the selling price fixed beforehand. But trusts of this kind, as soon as business becomes bad, are generally liable to break up, and on this very account compel a yet greater concentration of association. The whole of a particular industry is turned into one gigantic joint-stock company; internal competition gives place to the internal monopoly of this one company. This has happened in 1890 with the English alkali production, which is now, after the fusion of 48 large works, in the hands of one company, conducted upon a single plan,…“

“In the trusts, freedom of competition changes into its very opposite — into monopoly; and the production without any definite plan of capitalistic society capitulates to the production upon a definite plan of the invading socialistic society. Certainly, this is so far still to the benefit and advantage of the capitalists. But, in this case, the exploitation is so palpable, that it must break down. No nation will put up with production conducted by trusts, with so barefaced an exploitation of the community by a small band of dividend-mongers.

“In any case, with trusts or without, the official representative of capitalist society — the state — will ultimately have to undertake the direction of production. [4] This necessity for conversion into State property is felt first in the great institutions for intercourse and communication — the post office, the telegraphs, the railways.

“If the crises demonstrate the incapacity of the bourgeoisie for managing any longer modern productive forces, the transformation of the great establishments for production and distribution into joint-stock companies, trusts, and State property, show how unnecessary the bourgeoisie are for that purpose. All the social functions of the capitalist has no further social function than that of pocketing dividends, tearing off coupons, and gambling on the Stock Exchange, where the different capitalists despoil one another of their capital. At first, the capitalistic mode of production forces out the workers. Now, it forces out the capitalists, and reduces them, just as it reduced the workers, to the ranks of the surplus-population, although not immediately into those of the industrial reserve army.

Friedrich Engels Socialism, Utopian and Scientific

Chapter 3

So essentially by 1883 this was visible, the transition of capitalism to what Lenin would call ”imperialism”, in Imperialism, the Highest Form of Capitalism, in 1917.  In 1883 Karl Marx died, and it is not clear what condition he was in near the end of his life, and if he cooperated with Engels to write the book just quoted from.  

Anyhow, the presence of monopoly trusts and joint stock companies is alive and well in Milwaukee, Wisconsin in June of 2024.   The electric and gas company, Wisconsin Electric, owns the electric and natural gas factories, with no competition.  They seem to determine the price, and own the power lines too.  It has been like this as long as I can remember.

Also the cable company Charter (Verizon)  is currently in a cartel with AT&T and the  other cable companies to keep the government from capping the fee for low income people to get internet at $30.  AT&T is good at running monopolies.

“AT&T officially broke up on Jan. 1, 1984. Its 22 members were formed into seven independent Regional Holding Companies or the Baby Bells.”

Google search ATT break up to baby bells

Dec 7, 2020

So AT&T is no stranger to organizing trusts, which is what we see:

“AT&T, Charter, Comcast and Verizon are quietly trying to weaken a $42.5 billion federal program to improve internet access across the nation, aiming to block strict new rules that would require them to lower their poorest customers’ monthly bills in exchange for a share of the aid.”

“In state after state, the telecom firms have blasted the proposed price cuts as illegal — forcing regulators in California, New York, South Carolina, Tennessee, Virginia and elsewhere to rethink, scale back or abandon their plans to condition the federal funds on financial relief for consumers.

Washington Post April 15 2024

https://www.washingtonpost.com/business/2024/04/15/telecom-lobbying-price-caps-broadband/

Article continues:

NCTA – the Internet & Television Association, whose members include Charter and Comcast, would be the name of the trust this group is being called.  

“In detailed guidelines issued in 2022, the Biden administration suggested that internet plans should cost consumers no more than $30 per month — though it allowed local officials to propose alternatives.”

“The opposition underscores the vast power and reach of the telecom industry, one of the most formidable political forces in capitals across the country. “

Ibid.

Here we have AT&T, Comcast, and Charter, all together to fight lower cost internet.  Their fixed price in New York is now $65 for internet, and it interferes with their ability to create surplus value if they have to provide cheap internet.  

One may ask why a state program to cap internet prices, and to pay state money to ATT would bother them.

The answer to this is obviously taxes are a part of the surplus value, a division of this.  This is why AT&T, Comcast, and Charter have built a trust, they are trying to refuse to pay part of their surplus value to make the internet affordable to low income people. 

The evidence is precisely what AT&T is doing now, which is to try to build a cartel like they had in telephones with their internet cable business, prior to being broken up in 84.

Lenin wrote in 1917

“Cartels come to an agreement on the terms of sale, dates of payment, etc. They divide the markets among themselves. They fix the quantity of goods to be produced. They fix prices. They divide the profits among the various enterprises, etc. “

“Competition becomes transformed into monopoly. The result is immense progress in the socialisation of production. In particular, the process of technical invention and improvement becomes socialised. “

“The German economist, Kestner, has written a book especially devoted to “the struggle between the cartels and outsiders”, i.e., the capitalists outside the cartels. He entitled his work Compulsory Organisation, although, in order to present capitalism in its true light, he should, of course, have written about compulsory submission to monopolist associations. It is instructive to glance at least at the list of the methods the monopolist associations resort to in the present-day, the latest, the civilised struggle for “organisation”: (1) stopping supplies of raw materials … (“one of the most important methods of compelling adherence to the cartel”); (2) stopping the supply of labour by means of “alliances” (i.e., of agreements between the capitalists and the trade unions by which the latter permit their members to work only in cartelised enterprises); (3) stopping deliveries; (4) closing trade outlets; (5) agreements with the buyers, by which the latter undertake to trade only with the cartels; (6) systematic price cutting (to ruin “outside” firms, i.e., those which refuse to submit to the monopolists. Millions are spent in order to sell goods for a certain time below their cost price; there were instances when the price of petrol was thus reduced from 40 to 22 marks, i.e., almost by half!); (7) stopping credits; (8) boycott.

“Here we no longer have competition between small and large, between technically developed and backward enterprises. We see here the monopolists throttling those who do not submit to them, to their yoke, to their dictation. This is how this process is reflected in the mind of a bourgeois economist:

“Even in the purely economic sphere,” writes Kestner, “a certain change is taking place from commercial activity in the old sense of the word towards organisational-speculative activity. The greatest success no longer goes to the merchant whose technical and commercial experience enables him best of all to estimate the needs of the buyer, and who is able to discover and, so to speak, ‘awaken’ a latent demand; it goes to the speculative genius [?!] who knows how to estimate, or even only to sense in advance, the organisational development and the possibilities of certain connections between individual enterprises and the banks. . . .”

“Translated into ordinary human language this means that the development of capitalism has arrived at a stage when, although commodity production still “reigns” and continues to be regarded as the basis of economic life, it has in reality been undermined and the bulk of the profits go to the “geniuses” of financial manipulation. At the basis of these manipulations and swindles lies socialised production; but the immense progress of mankind, which achieved this socialisation, goes to benefit . . . the speculators.”

Lenin Imperialism, the Highest Form of Capital

Chapter one

Here we see Lenin reaffirming what Engels said about joint stock companies, trusts, cartels.  Speculation becomes an integral part of commodity production, the Stock Exchange becomes a center of imperialist activity.  The banks use credit in the form of massive amounts of capital, channeled through investment bankers who gamble on joint stock assets on the financial markets.  Speculation runs rife, large bureaucracy becomes the norm for financial capital.  The banks include huge luxury office space in skyscrapers; a class who no longer labours at creating commodities, rather exists by drawing interest from production of commodities,  becomes ascendant to control of markets.  

Sometimes the state is in control of production, like railroads and the Post Office.

“In any case, with trusts or without, the official representative of capitalist society — the state — will ultimately have to undertake the direction of production. [4] This necessity for conversion into State property is felt first in the great institutions for intercourse and communication — the post office, the telegraphs, the railways.”

Engels ibid. see above

The passenger railroad Amtrak is nationalized property, the bourgeoisie cannot get it together to build passenger railroads anymore. The state run Amtrak runs on freight lines often.  The freight lines in the west are all owned by two large companies, Union Pacific and BNSF, the latter owned by Warren Buffett’s Berkshire Hathaway. I don’t really know how much competition there is between Union Pacific and BNSF, but with a duopoly, you can only  imagine. 

How close to state ownership like Amtrak these railroads are is a matter of opinion.  They are both joint stock companies,  Buffet controls the BNSF, and is not an engineer.  Rather he controls financial capital, as a sort of banker.  He invests capital gained through production for surplus value, gained through his exploitation of the proletariat.

If Amtrak could make a profit, it would no longer be owed by the state.  But even if it was not state owned, it would probably be spun off into one company or two, and would be a monopoly.  Capitalists are way to connected to producing automobiles to produce railroads.  

The Post Office, where the bills from our monopolized companies are sent to us through, is owned by the state. It is not an example of socialism, taxes are also paid through it. It is an essential part of the capitalist system, it is just not making a profit.  They hire veterans who are supportive of the capitalist  system to run it, they get favored status on the entrance exam.  Its leadership is picked by the White House, by capitalists. 

Even if the industry is state owned, it is still part of capitalism.  In this respect it is also a monopoly, the Post Office sets prices for mail delivery.  Of late it has been receiving some competition from UPS, the private post office, which delivers packages. It is an attempt to remove business from the state owned post office, which now moves mostly letters. But the postage rate is set by the capitalist state. 

“Prices and fees are then subject to review by the Postal Regulatory Commission (PRC), an independent agency created by the Postal Accountability and Enhancement Act of 2006 (PAEA) as a successor to the former Postal Rate Commission.

Google search post office rates governed by

June 19 2024

Which means the prices are set by the PRC, not by competition. Here we have the state company determining prices, controlled by capitalists.

Once Marx wrote Capital, he showed very clearly how the capitalist system was functioning.   This was 1863, and it is still relevant, in particular in the east, where capitalism is returning.

But the presence of trusts, cartels, joint stock companies, etc. is a more recent development.  Engels saw it, and Lenin later based his writing on Engels.  He developed Engels works further, when history had proven Engels correct.  The trusts are all real, the speculation part of capitalism.  Engels was correct,  Lenin picked up on this.

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

Notes on Ha Joon Chang Economics 4 2 2024

~ nicholasjayboyes

Notes on Ha Joon Chang Economics

Ha Joon Chang’s book Economics presents many economics principles in a way that is easier to  understand than Keynes, in other words, without essentially redefining the whole language of political economy to overshadow and conceal concepts like profit and surplus value.  These concepts, although not much mentioned by Chang when discussing the production process, are part of his description of financial capital, which he is talented at.

“Money is what others in your society owe you,  or your claim on particular amounts of the society’s resources.  

P.18 Ha- Joon Chang Economics 2014 Bloomsbury Press

Which places money as a commodity, a special one capable of representing other commodities.  The commodity represents social labour, done by the worker not for himself or his own enjoyment, rather for society, although mediated by the capitalist, who owns the means of production.  It is this disconnection that forms the basis of capitalism, the worker does not own the means of production he is labouring on, and the product he is producing  is a commodity, it is labour for society, not his personal enjoyment as a particular object he has created,

Here we see money as commanding commodities,  a claim on societies resources, social labour as “ societies resources”, rather than individual desires.

“So what is the capitalist economy, or capitalism? It is an economy in which production is organized in pursuit of profit, rather than your own consumption (as in subsistence farming) or for political authorities (here comes his dig against socialism, in parentheses here)- as in feudal or socialist economies where political authorities, respectively aristocrats and the central planning authorities tell you what to produce.” 

Ha – Joon Chang Economics p. 27

Well we must remember Chang is a Cambridge professor, so this should not surprise us (at least the misrepresented account of what socialism represents).  The part about production being organized to create profit is right. But to compare feudalism, whose labourers were often slaves or serfs, basically chained to the land, without earning money, which would have been contrary to their status as slaves, to socialism neglects that if nothing else slavery no longer exists, rather it was removed in cooperation with socialists, in 1863 when Karl Marx was involved in the Civil War, which emancipated the slaves, and with it the last vestiges of feudal society whose economic system was still  prevalent.  Incidentally at this point in 1867 the right to participate in universal suffrage was extended to freed black male slaves, a direct result of socialist cooperation with Abraham Lincoln.

Ha Joon Chang seems to think central planning is a repressive process, but look at agriculture under capitalism, with its more than 10 billion dollars worth of yearly farm subsidies, controlled by massive bureaucracies in the capitalist state with billion dollar budgets,, and you see central planning is a real part of collectivized agriculture, and is not feudalism.  The land is not rented, the landlord is not part of late capitalism, at some point he became redundant in the late 18th and early 19th centuries, and was replaced by large scale capitalist farmers, whose only goal was profit.   

The ethical argument for collectivized agriculture, that it ends rural backwardness by allowing for the once farmers to move to the city, where they will be more culturally advanced, as there are museums, theaters, libraries, etc. in the city that are not present in the country is a strong one.  Given the pull of rural society, backwards Republican bourgeois strongholds, compared to the urban proletariat, literate and industrialized more heavily, especially as of late with computers and the internet, it is hard to see any alternative to large scale collectivized agriculture.

To make it worse, to even be able to compete with a large farm vs a small one, requires money for tractors, harvesters, trucks, etc.  Unless you are a small organic farm, with a following in the cooperatives or Whole Foods organic food stores, competition with capitalists is difficult.

But what differentiates feudal from socialist agriculture is not central planning, it is the farmer owns his own land under socialism, individually or collectively.  Either he outright owns a farm,  with no landlord, rent or profit, or he labours in a collective farm with employee ownership of some sort, which differs from slavery obviously, that should be clear to our economist, who disparages the worker who has had the audacity to question the capitalist control the means of production. 

Chang seems to dis socialism anytime the world profit or profits comes up.  He never spells out exactly what profit is, instead goes right into financial capital  and an average rate of profit.  He also does not square off with what a community represents, no less a concept like surplus value.  It’s just more and more defense of profit, and financial capital.

About the only thing valuable about his “beginners guide to economics” is he does point out there is more financial capital today than previously.  But he does not see interest is  a subdivision of surplus value, like taxes.  Consumed by the fetish of interest bearing capital,  profit removed from the factory, he displays the many ways financial capital in form of bonds, stocks, derivatives, etc. make a profit for their owners.  

If it seems too complicated don’t worry, he even says himself of the myriad financial transactions he discusses they are all too difficult to understand, even to him.  It is abstraction basically, and Chang is caught up in it.  

He takes the vulgar view here:

“Capitalists own the means of production either directly or,  more commonly these days,  indirectly by owning shares(or stocks) in a company- that is , proportional claims on the total value of the company- that owns those means of production.  Capitalists hire other people on a commercial basis to operate these means of production. These people are known as wage labourers, or simply workers. Capitalists make profits by producing things and selling them to other people through the market, which is where goods and services are bought and sold.

Ha Joon Chang Economics p. 27

His view of profits being made by people selling things in markets shows the vulgar view of profit, namely it does not occur in production, rather when the commodity is exchanged for money.  First and foremost,  the value of a commodity is the amount of labour time contained in it, regardless of whether or not it is paid for.  David Ricardo showed us this on the first page of his book Principles of Political Economy and Taxation in 1817. Surplus value is the amount of unpaid labour contained in the commodity, its value (the commodity) is the amount of labour time required to produce it.  Its exchange value is how much money it is worth, which does not determine how much labour time is required for its production, it is a measure of it.  The unpaid labour, essentially profit, is not created by exchange, it is already present in the commodities value, realized by being sold at its price of production in the market. 

Indeed goods and services are bought and sold in the market, but this is not the cause of profit. It is the relationship with the wage labourers he identified who “operated on a commercial basis to operate these means of production” with the capitalist that is the source of the unpaid labour, the profit. Just what the “commercial basis” that makes one man owners of these means of production, that are “more commonly these days”  owned by more than one capitalist, and wage labour, remains a mystery not solved by Chang. This influences his views later of financial capital  and interest.

He then proceeds to show that much has changed since Adam Smith wrote Wealth of Nations.  Banking, stock exchanges, corporate bonds, are all touched on.  Things have changed, and Chang grudgingly accepts that the goal of production is the same, the quest for surplus value.  Adam Smith, however limited he was, is still further along than this fellow as he recognized the value of a commodity  is the amount of labour required to produce it, whether or not it is paid for.  He saw surplus value as part of the cost of production, not as coming from exchange, which our vulgarian just suggested.

He does acknowledge the quest for profit is the same as in Adam Smith’s time on page 33, when he says

“…competition among profit- seeking firms may still be a key driving force of capitalism, as in Smith’s scheme.”

Chang p. 33

Which is as close as he gets to looking at how Adam Smith viewed profit, and how surplus value is created  in production.  

“But it is not between small, anonymous firms which, accepting consumer tastes, fight it out by increasing the efficiency in the use of given technology. “

Chang p.33 ibid.

Smith  understood technological changes driving profits as,  for example, the power loom was making its introduction felt around his time.  His example of the needle making factory also fits in with a basic knowledge of commodity production and what Marx referred to as an increase in relative surplus value when a company invests in better machinery to remove a competitor, or create a profit windfall.  The needle example shows although Smith did not spell this out exactly like Marx,  he still understood what changes in the means of production represented.

These are just a few takes from his Economics book, which claims to explain for the beginner economics,  which he also suggests is simply a political concept.  In other words,  political economy is not a science. Fitting words to a man who cannot use the word “profits “without disparaging workers.

Nicholas Jay Boyes

MIlwaukee Wisconsin

American Democratic Republic

4 2 2024

Value. Profit. Surplus Value. Contradiction Between Rate of Profit and Surplus Value 12 27 2023

~ nicholasjayboyes

Value. Profit. Surplus Value. Contradiction Between Rate of Profit and Surplus Value 12 27 2023

It is essential to understand what the concept value represents, if you want to begin to understand political economy. What seems rather straightforward becomes tied up and difficult to understand the deeper one goes in it.

Adam Smith in his Wealth of Nations in 1775 showed he understood the importance of value, and its connection to the labour process. Value is the entire amount of labour time required to produce a product, whether or not it is paid for. David Ricardo noted this in Principles of Political Economy and Taxation 1817, in chapter one. He owes much to Adam Smith though, which formed the basis for his work.

Adam Smith understood the law of value, but could not directly put forward its inner essence, the presence of surplus value, the unpaid section of the product’s production. The fact it is not paid changes nothing in its value, but by connecting profit with surplus value, as Adam Smith did, confuses what surplus value is.

Because profit is the unpaid labour of the worker, the unpaid section offer workday, it was easy to overlook the contradiction, and lump all of capital that produced this unpaid labour into profit. Surplus value , onto other hand, is the relationship of the worker, wage labour, to the owner of capital. It is calculated by the amount of labour present in the product, paid and unpaid. Profit is the unpaid labour calculated in the entire expenditure including the machinery and raw materials.

This shows that the rate of surplus value can be very different when machinery becomes very advanced, compared to more mundane labour, with many workers but less machinery. The profit rate is higher where more manual labour is used than the sector of production where the labour uses more machinery. This is due to the profit rate being calculated onto total capital expenditure, the ratio of surplus value to the amount of product produced.

Machinery does not create surplus value, only labour can do this. Harnessing natural processes is not what creates the unpaid section of the workday, the value of a commodity is the amount of labour time required to produce it. Less labour is required to produce the product under conditions of modern industry. It requires more souls to produce the product without machinery, with a lower rate of surplus value, but at a higher rate of profit, as the machinery that is calculated with the variable capital, the cost of labour, lower for the owner of large means of production. Even a higher rate of surplus value is obscured when the total value of all the machinery and raw materials are calculated with cost of machinery, the constant capital. The profit rate falls.

Our other producer, whose rate of profit is the average rate, now has a larger section of his expenditure on raw labour. The product was worth more, its value falls with the constant march forward of modern industry. which reduces the amount of labour required to produce the commodity. The person with the machinery can now undersell his competitor, lowering the cost of the product, and the amount of unpaid labour accruing to the individual commodity.

It may seem the more primitive production is making more surplus value, but the cost of this is translated in the product, which falls with machinery becoming more advanced. The sector the machinery is unleashed on shows less profit, as the cost of the machinery is attached to the expenditure, but the surplus value rate can rise, Even if the worker receives higher wages, it is still cheaper to employ him with the help of machinery than without. The profit rate may have been higher prior to the introduction of the machinery, but productivity was lower. With the introduction of machinery, the worker creates more with less labour, resulting in more surplus value. But profit does not show this. This is the contradiction Adam Smith left us, which couldn’t be solved until the surplus value was directly examined. It wasn’t until about 1863 until profit and surplus value would be directly differentiated by Karl Marx, who would eventually cause revolution in the 20th century with his work. It is still causing revolution, and the theory of value still stands.

The study of political economy has to start with the theory of value. The value of the product is the amount of labour time required to produce it, and even if it were all paid labour (which it is not) its value would still be the amount of labour required to produce it. It changes nothing if it is not paid for. It just means part of the commodity is not owned by the worker, rather its production creates the compulsion for him to continue laboring, and the harder the labour the more surplus value, and the less and less chance of the worker to ever be able to buy the machinery he is harnessed to. The harder he works the less control his environment he gets. But if anything this reaffirms the law of value; his labour is still creating the value of the commodity, it is just that more is shared with the capitalist when machinery is more advanced.

The interesting thing is Smith and Ricardo grasped surplus value, yet Ricardo calls it profit. Both see the surplus value; they grasp it is present and can even see the theory of value, yet still do not directly differentiate between profit and surplus value. Ricardo should lave grasped this, but did not. Apparently a half a century more of industrial capitalism was required to unravel what was left to us from Adam Smith and Ricardo. Both were brilliant, a definite study, but inadequate to understanding the difference between surplus value and profit. You have to study Karl Marx to understand this latter difference.

The question what value is has yet to be common knowledge, which should tell us something. Someone doesn’t like the conclusions this brings forward. In many regions of Europe, the study of Marxism is illegal. And this in societies that lived under revolution for decades. They seem to be trying to put the genie back in the bottle, often violently. A universal suffrage minus the workers party, is practiced. There are whole institutions dedicated to removing Marx from political economy, some even purporting to be places of higher learning.

But for all their efforts, the theory of value remains. And the contradiction between the rate of profit and the rate of surplus value remains, becoming more important than ever as of late.

Nicholas Jay Boyes
Milwaukee Wisconsin
American Democratic Republic
12 27 2023