Capital and Labor

The “core” of the modern bourgeoisie socioeconomic system which came after the feudal system, as Marx sought to demonstrate, was the relationship between capital on one hand and labor on the other hand. Thus, it is important to demonstrate the dynamics or the basic characteristics of the one relationship which is most basic and foundational to our entire system. As Marx argued, labor is a commodity which the laborer sells to the capitalist in order to survive. In turn, the capitalist buys or purchases the commodity known as ‘labor’ with a wage. Thus, a wage is the price which the capitalist pays in order to buy labor. 

Marx also argued that labor is something that has to be produced just like all other commodities, and as a result, there is the cost of “maintaining the worker as a worker” and the cost of “developing him into a worker” which has to be incurred by someone. Wages also fluctuate based on the price of other commodities. Overarching and encompassing the basics and the fundamentals of an economy – namely, production and distribution – are the social relations which are determined by the “means of production” such as capital and technology to borrow from Marx. These social relations are in turn defined by the fact that: “The existence of a class which possesses nothing but its capacity to labor is a necessary prerequisite of capital.” It follows that: “It is only the domination of accumulated, past, materialized labor over direct, living labor that turns accumulated labor into capital.” 

Because capital and labor “presuppose” one another, it follows that capital and labor “reciprocally condition the existence of each other; they reciprocally bring forth each other.” Marx noted: “The worker perishes if capital does not employ him. Capital perishes if it does not exploit labor power, and in order to exploit it, it must buy it.” 

And what folks may overlook is that a system which has this particular capital-labor relationship as its foundation cannot be deemed as fully democratic. As Michael Hudson wrote: “America’s K-shaped economy – up for financial markets creating wealth for the One percent, but down for labor markets and the 99 percent – is antithetical to real democracy.” Why China is deemed as an “autocracy” by the United States is because China has a policy of “keeping banking as a public utility, along with basic infrastructure instead of privatizing it” as Hudson argued. When an entire government and society is ruled and managed by “financial planners” and so forth, then the democratic jargon loses its potency and becomes questionable. 

The demand on the part of many ordinary Americans – but especially on the part of young Americans – for a more progressive tax system, universal education, universal health care, and universal basic income is thus at loggerheads with the basic and fundamental social relationship which in turn defines and shapes the whole of our government and society. Because labor depends on the growth of capital to survive, it follows that capital will dominate labor, and in turn, this domination or hegemony over labor translates into growing inequality. In turn, the growing inequality threatens the entire governmental and societal organization or structure set by the capitalist. 

Moreover, an “inequality regime” has to be justified and structured through “a set of discourses and institutional arrangements” as Thomas Piketty noted. Hence, the paradox at the heart of our system is the justification of what is unjustifiable, in addition to the irony of the basic necessity of the relationship that is at the heart of all socioeconomic relations ultimately serving as the driver or the impetus for the ultimate disintegration and demise of the system due to the inequities and inequalities which emerge from it.