Chapter 6: The Sale and Purchase of Labour Power

Outline of Marx's Discussion
Expanded value of M - C - M'
-- must originate in C
-- can not occur in exchange value of C
-- must occur in use-value of C, esp. in labor power (LP)

Definition of labor power
-- aggregate of capabilities to produce use-values

Labor Market
-- buying and selling labor power
-- workers own their labor power (LP)
-- workers have no means of production (MP)

Value of labor power
-- socially necessary labor time to produce MS
-- MS is historically determined

Use-value of LP
-- source of expanded value
-- ability to work


It is in this chapter that Marx makes the transition from the sphere of circulation to the sphere of production --which was implied in the previous chapter. He makes this transition by deducing that it is within the realization of the use-value of labor-power that the origin of surplus value is to be found . In the process of doing this he examines briefly both the exchange-value and the use-value of labor-power. By focusing on the use-value of labor-power as production of surplus value, he is concentrating on the qualitative essence of surplus value. He will return again and again to the quantitative determination of surplus value but first he begins here and continues in Chapter 7 the analysis of qualitative aspect of the use-value of labor-power. His concern with the exchange-value of labor-power at this point is only to show that the origin of surplus-value lies not in cheating the workers during the sale of their labor-power, but rather that it [surplus-value] may occur even in the presence of equal exchange. Now let us follow Marx's reasoning by which he moves from circulation to production.

The first steps of Marx's reasoning are as follows:

1. The increase in the value associated with the formula of capital M-C-M' cannot take place within the M of M - C because it is determined by the value of C.

2. The increase cannot originate in the second act of sale C - M either for this too is only a change in form.

3. The increase "must therefore take place in the commodity which is bought in the first act of circulation,"i.e., in the C in M - C.

4. But it cannot occur within the exchange-value of C because exchange is equal.

5. Therefore, "the change can originate only in the actual use-value of the commodity."

6. The question is, is there a commodity whose use-value "possesses the peculiar property of being a source of value"?Whose consumption involves the creation of value?

7. The answer of course is yes, and the commodity is labor-power, or the capacity to labor.

Definition of labor-power: "the aggregate of those mental and physical capabilities existing in the physical form, the living personality, of a human being, capabilities which he sets in motion whenever he produces a use-value of any kind."

At this point there appears a conceptual problem in that Marx does not differentiate between mental and physical abilities, or personality, under capitalism and under any other regime. The definition appears to be a-historical, and abstracted from the concrete conditions of capital. But this will be at least partially resolved in the next chapter.

Marx then goes over the two conditions which must be fulfilled for labor-power to be available in a market:

1. The workers are free proprietors of their own labor capacity as commodity -- and this includes that labor-power be differentiated from the rest of self, i.e., that the workers are not slaves. Here Marx quotes Hegel from the Philosophy of Right and follows his discussion of alienation, independent wills, contract, etc.

2. The workers cannot produce commodities independently of capital, i.e., that capital has expropriated the means of production.

These are of course exactly those conditions whose historical origins Marx traces in Pt. VIII of Volume I, on primitive accumulation. Marx says he ignores detailing this history at this point in the book (he does mention it) saying, "We confine ourselves to the fact theoretically, as he does practically."

Marx then goes on to discuss first the exchange-value, and then a little of the use-value of labor-power, as it exists under capital.
The Value of Labor-Power

-- "is determined . . . by the labor-time necessary for the production and consequently, also the reproduction of this specific article."

-- "is the value of the means of subsistence necessary for the maintenance of its owner." [i.e., the M in LP - M - C(MS) is determined by the C(MS)]

-- "the number and extent of his so-called necessary requirements as also the manner in which they are satisfied, are themselves products of history . . . the determination of the value of labor-power contains a historical and moral element."

-- because the owner is mortal and must be replaced, "the sum of means of subsistence necessary for the production of labor-power must include the means necessary for the worker's replacements, i.e., his children"

-- because various skills and dexterity are required, special education or training is required and "this in turn costs an equivalent in commodities" and this amount will depend on the degree of training.

These then are the determinants of the amount of use-values labor must receive. As Marx immediately points out the value of these use-values will depend on the productivity in their production . We have determinants here not only of the value of labor-power in general but also by implication[though Marx does not point it out here] we also have at least the beginnings of a theory of the wage hierarchy and the waged/unwaged division of the class. This lies in the notion that the price of labor-power must include means of subsistence for families, so those with families, ceteris paribus, must earn more than those without. Also the training requirement that varies with skill, etc., implies that the more skills that are needed the greater will be the expenditure for the production of labor-power by capital. This might take the form of direct expenditures on the shop-floor, or indirect, in the allowance of higher wages to pay for schooling -- this fits in with the data that shows skill categories of families tend to reproduce themselves at the same level, i.e., doctors produce doctors, etc.

Another important point lies in the concept of the "family wage" -- the fact that the wage must pay for the production and reproduction of unwaged members of the family. This is the equivalent to seeing that the production of the means of subsistence must be adequate to reproduce the unwaged. In early forms of capital this may have worked partly through the extended family where unwaged members were supported by the family wage. Later, direct payments by the state as collective capitalist are differentiated in unemployment insurance, aid to dependent children, etc.

Finally, we should note that the famous "moral and historical element" remains very much unspecified at this point. It has little content. Saying this is determined by "the level of civilization" is not saying much. Later on Marx will make clear that the major factor is the balance of power between the classes -- that the exchange-value of labor-power is determined by working class power vis a vis capital, and that changes historically, and morally in the sense that the working-class imposes its "morality" of less exploitation on capital. But in general the value of labor-power is equal to the value of all the commodities which capital must consecrate to the reproduction of the working class. The higher the value per workers, the fewer workers capital can hire with a given amount of capital.

Toward the end of this discussion there is a curious passage in which Marx talks about a "minimum limit" of the value of labor-power. "The limit is formed by the value of the physically indispensable means of subsistence." Yet he then goes on to say that "if the price of labor-power falls to this minimum, it falls below its value" because the labor-power functions at less than normal quality. So there would seem to be no such thing as a "minimum limit" after all, unless it be the level necessary to sustain labor-power at its normal quality. What is at issue here, is the amount of use-values the workers receive. In principle their "value" can drop toward zero as productivity rises. The amount of use-values can fall either because the money wage falls with the value of use-value consumed remaining constant, or the wage is constant and the prices of those use-values rise -- either because of a rise in their value, or because of the devaluation of money. There is one other way in which the value of labor-power can be lowered -- that is through the kind of cheating Marx describes in his footnote on the adulteration of bread. When the worker spends his wage M in LP - M - C(MS) he expects to get a commodity C of a usual, recognized quality. If the use-value is reduced, by adulteration the bread seller is selling his bread at a price above its value. The adulteration is carried out to cheapen his costs, yet he sells it at the going price, or somewhat less.

As we will see shortly the lower limit to the value of labor-power is zero and its upper limit is set by the total amount of new value created in the work process. This later as we will see comes to include the cost of variable capital (v) and surplus value (s) and it is possible for s to fall in the short run to zero.
The Use-Value of Labor-Power

-- "consists in the subsequent exercise of that power" [of the aggregate mental and physical capabilities . . . of a human being].

-- "possesses the peculiar property of being a source of value, whose actual consumption is therefore an objectification of labor, hence creation of value" . In other words, if labor-power is the capacity to work, the use-value of labor-power is the actual work itself. As work for capital, it is abstract labor, and as such it is value.

-- "the process of the consumption of labor-power is at the same time the production process of commodities and of surplus-value." This last is an important point, work is value only when it produces surplus value, contributes the expansion of value. It is not that work which does not, is not serving a function of social control at the moment it occurs, but rather that it does not result in a form, a commodity through which that work can be realized and reproduced in the future. So capitalist work is always work that produces surplus value. If it does not, then it is not fulfilling its social role in the system. More on this in the next chapter.

Finally, Marx notes that it is normally the case that the workers give the capitalist their labor-power before they receives their wage. They are therefore, in effect, giving the capitalist credit during the period they work without pay. During which time the capitalist often turns around and exploits the worker by selling him/her things on credit -- credit on which the worker often has to pay credit interest!!!

We now pass as Marx says fully into "the hidden abode of production where . . . the secret of profit making must at last be laid bare".

We leave the realm of FREEDOM - free contracts
of EQUALITY -- equal exchange
of PROPERTY -- each sells his own
and of BENTHAM -- each looks to his own advantage

And enter into the realm of COERCION -- where, as we will see, the capitalist rules as a despot, and the workers slave as cogs in the machine -- at least in as much as the capitalist can make them do so!
Concepts For Review
labor power
value of labor power
LP - M - C(MS)
family wage
"moral and historical element"
means of subsistence
use-value of labor-power
LP - M - C(MS) . . . P. . . LP*

Questions For Review

1. Explain the reasoning through which Marx concludes that the origin of surplus value must lie within the C of M - C - M'.

2. Explain the difference between labor and labor-power. Why does Marx insist on this point?

3. What are the conditions which must be met for there to be a market for labor-power? What does this have to do with Primitive Accumulation?

4. In what double sense are workers free within capitalism?

5. Distinguish between the exchange-value and use-value of labor-power? Discuss the interests of the capitalists and the workers in these two sides. In what ways are they focal points of struggle?

6. Discuss the upper and lower limits of the value of labor-power. What factors determine where it will in fact be found between these two bounds?'

7. What is the relationship, if any, between work performed in consumption of the means of subsistence and the value of labor-power? Is this commodity producing work? What is the difference between this work and work done in the factory?

8. What is there in Marx's discussion of the determination of the value of labor power which might give us some insight into the structure of the wage hierarchy?

9. Should we include transfer payments such as social security, unemployment benefits of federal aid to students in the value of labor power?

10. When and where do workers give the capitalist credit? Do you know of situations in which there has been a crisis associated with such credit?

11. What is there about rural workers, or peasants, which often makes it possible for the capitalist to pay them wages which are well below subsistence for city workers?

12. What do you think constitutes "subsistence wages" today, here, in Austin?

13. Discuss the relationship between the representation LP - M - C(MS) . . . P. . . LP* and Critical Theory. What is . . . P . . . here? What is LP*? As . . . P . . . grows what would you expect to happen to LP*?

14. Evaluate the relative advantages and disadvantages of the two representations LP - M - C(MS) and LP - M - C(MS) . . . P . . . LP*. Does one represent the working class point of view and the other the capitalist's? In what sense, if any?