(Translation by Soumya Saheen and Jayarshi Bhattacharya from original Bengali version published in Jabardakhal on May 5, 2020)
It has been a colloquial since the last century to talk about how infallible Karl Marx’s analysis was about the capitalist economy. Even the paean of capitalism that was attempted after the collapse of the Soviet Union did not refute Marx’s widely circulated interpretation of capitalism, but rather sidestepped it. However, as the market demand for Marx’s ‘Capital’ rose again after the crisis of 2008, our established ‘Communists’ saw the hope of re-emerging from the rehab centre, although the approach being basically like this: “Look, the infidels are also reading our scriptures, our religion is still alive”. But Gentlemen, the ‘Jihad’ will not arrive this way, even through life long chanting! In fact, you all know very well and believe from your heart that the form of exploitation you are witnessing today, and the lessons you have learned and been teaching about Marxist economy, are running completely parallel without touching each other. That’s what your words say, such as “Those are theoretically correct, but these are realities!” And only to the questions where those ‘theories’ and these ‘realities’ happen to agree precisely, even if you don’t want it to do so, you are compelled to admit: first, capitalism means poverty and unemployment, and second, capitalism will be messed up in its own conflict leading to its crisis. And barely touching these two feet of Marx, you make yourself relieved from all the responsibilities of being a ‘Communist’.
On the other hand, the bourgeoisie economists have been desperate to refute Marx since past hundred and fifty years; continuously; they have repeatedly brought newer and newer patchwork theories by imposing logics over logics and every time reality has slapped flat on their face proving their theoretical bankruptcy.
But in fact, to take the struggle even one step further, the questions that today are piercing the communist movement from within, cannot be avoided avoiding but to be crossed. Amongst these, most important and seemingly contradictory questions are:
Firstly, the majority of the organized workers, commonly referred to as the proletariat class, receive these days substantially higher wages (e.g. in India, ~Rs 60,000-Rs 1.5 lakh or more per month). Are they the really proletariat? Are they creating surplus value? Has the very productivity of the machine increased the value of their labour so much? Similarly, how should we identify the classes of high-income professors-doctors-high ranking employees?
Secondly, does the capitalist exploitation have anything to do with the self-employed workers and other small producers who have emerged in huge numbers in our country and even around the world today? Because they are not working in a factory, so they are not creating any surplus value!
Thirdly, in a country like ours, where the small-scale agricultural land is predominant and the ‘large-scale farming’ is at very low, resulting in so low productivity, is there any capitalist exploitation at all? If so, what are its features?
Fourthly, what is the reason for corporate owners to become land-sharks? Is there any surplus value or exploitation related to the huge amount of money made buying and selling lands?
We will limit this article to finding answers to these key questions, and will do so based on Marx’s economic theory. It is worthy tomention that in addition to these questions, another important questions is, in the modern age of speculative businesses, where money is being made by investing money without any production, huge profits are being appropriated, does there exist any relevance of the ‘theory of surplus value’? This profit is coming without the wage-labour of any production! So therefore, can it be identified as an exploitative system anymore? This is not something we will discuss in this article, it requires a separate space. The aim of this article is to identify today’s exploited classes and to expose the nature of today’s exploitation on them.
Now, first of all, the most important thing we need to mention is that Marx’s economic theory is usually described as a ‘theory of value’, or in more detail, a ‘theory of surplus value creation’. But Marx’s theory did not stop at the ‘value’ or ‘creation of surplus value’, but also explained, scientifically and historically, how, in the course of capitalist development, ‘value’ got transformed into ‘price’ leading to the system of ‘distribution of surplus value’. No detailed discussion of this vast work is possible within the scope of this article. But the solution to today’s major questions will be found only in the basic aspect of this part. That is why we need to give a brief account of the course development of the capitalist exploitative system over time, and only on the basis of such course of development it is possible to analyse the nature of today’s exploitation. Secondly, since last hundred years, the bourgeois economists have been refuting the Marxist theory of the transformation of ‘value’ to ‘price’ with several arguments and the so-called Marxist economists too have grossly uttered ‘yes’ to those. We will also expose their complex tricky patchworked theories. And that the further development of this infallible theory of Marx can only explain the new situation today will be shown in this article, which is the essence of our present proposition.
In his book, ‘Capital’, Marx, on the basis of historic analyses showed that the commodity system was introduced in society before the advent of capitalism, practically in the Middle Ages. At that time, people used to exchange their own commodities (C) with some other commodities (C’) made by other persons; which means that a commodity must have a ‘use value’ as well as an ‘exchange value’. And naturally, at that time the only yardstick of the exchange of these commodities was the average amount of ‘labour’ paid or ‘labour time’ taken by these people to produce the corresponding commodity. As a result, this ‘labour’ or ‘labour time’ is the ‘exchange-value’, or as simply termed as ‘value’, of the commodity, and such exchange used to take place in equal (on the basis of the equal amount of ‘labour’ or ‘labour-time). This era can be marked as C↔C’; this was the central character of economic system in the society then.
Money was also there in the circulation at that time, but only among those traders who used to trade abroad. Then gradually the money entered the centre of the economic system; a person used to produce a commodity (C) and sell it to another in exchange with this money (M), and use that money to buy another product (C’) from someone else. That is, C→M→C’ became the central feature of this period. Even then, such exchange used to take place in equal, on the basis of the equal amount of ‘labour’ or ‘labour-time.
But in this era, as money became the medium of exchange, a given amount of money started expressing the value of different quantities of all kinds of goods; as a result, it became qualitatively limitless but quantitatively limited; and it is this feature that made people tend to hoard money. With this came the next age, i.e. capitalism, that set off the system of buying commodities in exchange for money (M) and producing new commodities (C) from those and selling them to earn more money (M+△M); i.e. M→C→M+△M. But the commodity is bought at its ‘labour value’, sold also at its ‘labour value’, that is, through equality; then where does this increase (△M), i.e. the profit, come from? The total capital (M) that a capitalist owner invests has its two parts: first, constant capital (MC) for the means of production, such as machinery, raw materials, electricity, etc., and second, variable capital (MV) for the wages of workers; i.e. M=MC+MV. But the ‘exchange value’ of the commodity produced by it, has become M+△M, i.e. △M extra from the investment. But if buying has taken place in equal (i.e. in labour value) as also is the selling (i.e. in labour value), then what is that the capitalist has bought from the labourers in exchange for their wages to get this ‘extra’? It is, certainly, a commodity that can expend more labour than the labour it is produced of. This is Marx’s epoch-making discovery.
The commodity that the capitalist buys from the workers is their ‘labour power’ (not ‘labour’), their capacity to peform work (not the work itself), with which they can be employed to work more or less as wished. The wage that a worker receives in exchange for this ‘capacity to work’ barely allows him to buy only that amount of things so that he can come back to the factory the next day with the same ‘capacity to work’. Wage is the ‘exchange value’ of ‘labour power’ that the worker runs his own expenses with. And the ‘use-value’ of this ‘labour-power’ is the ‘labour’ given by the workers into production in the factory, which in turn is added to the ‘exchange-value’ of the commodities produced in this factory. That is to say, the ‘labour power’ of man is such a thing that can create commodities of the ‘value’ more than the ‘value’ of commodities, that it is created at the expense of, and this very extra is the profit of the capitalist. This is the ‘surplus value’ (MS) created by the worker that the capitalist exploits. For instance, a restaurant cook, who along with his family eats at night only a little dal-roti of much less ‘value’, can prepare, and indeed prepares, plates of ‘biriyani’ of much higher ‘value’ throughout the day, and this very difference in ‘value’ is the profit of the restaurant owner.
And therefore, the only concern of every such individual-capitalist is how much profit (MS) can be appropriated from how much of investment (MC+MV), and that is why, he wants to exploit a worker as much as possible compared to the wage he gives; he wants to increase the MS (surplus-value) compared to the MV (wage), that is, wants to increase the rate of surplus-value, as much as possible. That is why they make a labourer work for even up to 10-12-14 hours in exchange for a minimal wage. Against this, workers from all over the world fought for 8 hours of work, which has been immortalized as the ‘May Day’ struggle. But as a result of the limited working hours, the capitalists were forced to further improve the machinery, so that more commodities could be made by working for the same time so that much more profit could be made in return for the same wages. It is with these advanced machineries that they manage to increase the MS in a ‘relative’ to the MV. As a further result of this, to increasing MC (i.e. constant capital) compared to MV, (i.e. variable capital), that is, a tendency to invest more in machineries than on labourers emerged. It can be said that the entire history of capitalism is the history of this very tendency to increase the investment in machineries compared to that on the workers.
Now suppose, among two industries, the investment in machineries compared to the investment in labourers (i.e. MC/MV) is higher in the first than in the second. It initiates a tug of war: if the ‘rate of surplus-value’ (MS/MV) is greater in one industry than the other, the workers, to reduce the exploitation on them would like displace to the industry where this rate is lesser, or they would try to reduce this rate by organising movements; on the other hand, if the profit per investment, i.e the rate of profit [MS/(MC+MV)], is greater in one industry than the other, then the capital would flow towards that direction. As a result of this tug of war, both these ratios, i.e. the ‘rate of surplus value’ and the ‘profit rate’ tend to assume a socially determined average value. And as a consequence, the yardstick for exchange of commodity was transformed from ‘value’ to ‘price’. Although ‘value’ and ‘price’ are commonly used in the same sense, the difference between them is of immense importance in Marxist economic analysis.
We are presenting the issue with a simple example. Suppose the total investment of each of the two industries is Rs.100 crore, of which Rs.80 crore is invested in machineries and Rs.20 crore in wages for the first; in the second industry, the investment in machineries is Rs. 60 crore and the investment in the wages of workers is Rs.40 crores. If the ‘rate of surplus value’ is roughly 100% on an average, then the ‘surplus value’ in the first industry is Rs. 20 crore and the ‘surplus value’ in the second industry is Rs. 40 crores. That is, the total ‘value’ of the commodities of the first is Rs. 120 crores and that of the second is Rs. 140 crores, where the total investment of both is Rs. 100 crore each.
Therefore, the ‘rate of profit’ in ‘value’ terms will be 20% for the first and 40% for the second. But in that case, capital investment would tend to displace from the first to the second industry. That is why, only according to ‘average profit rate’ (i.e. 30% in this case), the ‘price’ of one’s commodities will be determined, and that will be the yardstick of exchange, not the ‘value’ as before. For instance, in this case, the total ‘price’ of commodities of each of the industries will be Rs. 130 crore, although the ‘value’ of the first is Rs. 120 crores and that of the second is Rs. 140 crores. That is, the ‘price’ of the first is greater than its ‘value’, while the ‘price’ of the second is less than its ‘value’, so that the ‘rate of profit’ results the same (30%). However, the total ‘price’ of all the commodities of the two fields is equal to their total ‘value’ (in this case 130+130=120+140=260 in Rs. Cr). Therefore, a share of the ‘surplus value’ of the workers of the second industrial sector (which can be called labour-intensive) is being appropriated by the first industrial sector (so-called capital-intensive) without any direct production or trade-based inter-relationship among themselves.
That is to say as a whole, the ‘prices’ of commodities of different industries or production sectors, determined on the basis of ‘average profit rate’, differs from their own ‘values’, somewhere more while somewhere less, however, the total ‘price’ of all commodities in all sectors of production is identical to their total ‘value’. Now, the ‘surplus value’ of the workers in a factory or a production sector is not only being usurped by their own capitalist proprietors, but the ‘surplus value’ of all the workers in the whole society is being usurped by all the capitalist proprietors, and taking home the profits in proportion to their investments. Now the capitalist owner of a factory or a production sector is not only exploiting his own workers, rather the entire capitalist class is exploiting the entire working class. It can further be said that from the labour-intensive industries to the capital-intensive industries, from the small-investment sectors to the large-investment sectors, from one nation-state to the other, the ‘surplus value’ is being transferred according to the amount of investment.
The lackeys of bourgeoisie economy were hell-bent to reject this impeccable theory by Marx about the reality of the development of capitalism. They brutally attacked immediately after the publication of third volume of the ‘Capital’. It would not be an overstatement to say that Engels gave them a harsh slap in response, while making them understand by adding an appendix to this volume. Although they were temporarily morrosed, the attack did not stop. After Engels’ death, the bourgeoisie economy again started attacking and got desperate to disprove this theory of Marx through algebraic equations. They have been carrying out this attack for more than a hundred years. It is a pity that instead of responding to this the established Marxist economists have de facto accepted the arguments of the bourgeoisie. Lenin also waged a theoretical struggle on this issue (against Tugan-Baranovsky’s argument) but it did not receive much exposure from Marxists. And especially following Paul Sweezy, the Marxists practically surrendered to the bourgeoisie argument. However, the importance of this theory is immense in analysing the current situation and our proposition also stands on its foundation. It is therefore imperative to expres our view on the established bourgeoisie arguments that condemn Marx’s theory of transformation from ‘value’ to ‘price’.
We would like to cite here the argument of L.Von Bortkiewicz since its very essence has been used as the basis of all the bourgeoisie and established Marxist economists’ explanations to refute Marx’s theory of the transformation from ‘value’ to ‘price’. Bortkiewicz refuted Marx, using the Tugan-Baranovsky model by a slight numerical alteration of a mathematical example given by Marx. Marx’s example (including the numerical manipulations by Bortkiewicz) is given in the following two tables. Here, five different production sectors are considered, where the ratio of constant capital MC (investment on machineries) to variable capital MV (investment on labourers) are different [e.g. 80:20, 70:30, 60:40, …]; again, the fraction of expnses on machineries and raw-materials etc in one production cycle (fMC) per expense on labour-power is also different [e.g. 50:20, 50:30, 52:40, …]. The rate of surplus-value is assumed to be 100% on average. On the basis of this, the calculations of ‘Value’ in Table-1 and ‘Price’ in Table-2 are given.
TABLE 1: ‘Value’ Determination
TABLE 2: ‘Price’ Determination
It can be seen from Table-1 that if all the commodities were exchanged for their ‘value’, the profit rates would have been different in these different production sectors [e.g. 20%, 30%, 40%, …]; however, it is evident from Table-2 that if the ‘price’ is determined as per the profit per investment according to the average rate of profit [as shown earlier], then the profit rate becomes the same (22%) in each production sector. The ‘price’ (92) is higher than the ‘value’ (90) of the product in the first production sector and vice versa in the second production sector (110 and 102, respectively). The difference between ‘value’ and ‘price’ disappears when the sum is taken all over the production sectors. Marx showed that this is how the average rate of profit has emerged in the society, so that the capitalist owners take away the profits according to the power of their respective amount of investment, in proportion to the amount of their investment in the total amount of capital in the society.
Although found Mathematically-correct, Bortkiewicz argued that a real inconsistency is present in this formulation. Following the path shown by Tugan-Baranovsky (in fact, Tugan-Baranovsky ‘borrowed’ it from Marx (Capital, Vol. II), albeit in an inapt way), Bortkiewicz divided these production sectors into three fundamental branches of capitalist production: Branch-1, which produces the means of production, such as machineries, raw materials, etc.; Branch-2, which produces products for the sustenance of the worker and his family; and Branch-3, which produces the consumables of the capitalists. For simplification, it has been assumed that there are only a total of these five (above) production sectors in the society and the case of a simple reproduction has been analysed (where all the surplus-value is spent by the capitalist on personal consumption, not on increasing production).
Now Bortkiewicz showed, as can be seen from Table-1, that the total ‘value’ (132+70=202) of the commodities prodced in the production sectors-3 and -4 is equal to the total investment made by all the manufacturing sectors for machineries and raw materials (202). Thus, it can be assumed that these two production sectors make the machineries and raw materials required for all the production sectors, i.e. they constitute Branch-1. In a similar way, the total ‘value’ (90+20=110) of the commodities produced in the production sectors-1 and -5 is equal to the total ‘variable capital’ (110) of all the production sectors; therefore, it can be assumed that they make stuffs for the sustenance of the workers and there families, i.e. Branch-2. And in exactly the same way, the production sector-2 can be assumed in this case to be Branch-3, which produces the consumables of the capitalists whose total ‘value’ (110) is equal to the total ‘surplus value’ (110) of all the sectors of production. In this condition, Bortkiewicz shows that if the issue is looked at in terms of ‘price’ (Table-2), then all the workers in all the production sectors get a total ‘wage’ of 110, while the total ‘price’ of consumables for the sustenance of the workers and their families is 92+36=129, that is more; in that case, the workers will not be able to consume their necessities, and on the other hand, Branch-2 of the production sectors will not be able to sell all of their commodities. The same thing will also happen in the other two branches. Therefore, in this case, the theoretical model of ‘price’ is failing. And what fails in a particular case is never a complete generalized theory.
What an astonishing argument! Firstly, in an era, where the yardstick of exchange is not ‘value’, but ‘price’, Bortkiewicz identified the branches of production (e.g. production sectors-1 and -5 are falling in branch-2) not on the basis of ‘price’ of the commodities of the production sectors, but on the basis of their ‘values’! Isn’t it evident that when the exchange is based on ‘price’, then even in mathematical aspect, for instance, the production sectors-1 and -5, whose total ‘price’ of commodities be 92 + 36 = 129, which is more than the total wage of the workers (110), can never produce only the commodities of branch-2! In that case, these two production sectors together certainly have produced commodities of some other branch(s), along with those of branch-2. This holds equally true for all other branches. Any arbitrary mathematical calculations, assuming anything that pleases, can not be considered as science; rather, the assumptions must have some factual basis. It is, in fact, as simple as the children’s books that when the exchange is taking place based on ‘price’ instead of ‘value’, which of the production sectors can belong to any particular branch(s) can only be determined based on the calculation that is consistent, not with the ‘values’, but with the ‘prices’, and not the vice versa. Whereas, the bourgeoisie scholars as well as the ‘Marxist economists’ who bootlick them for ‘establishment’ have been running behind such dysfunctional arguments of Bortkiewicz since past hundred years!
Secondly, this was only about the mathematical reasoning. But the fact is that in a capitalist economy, it has never been, cannot be and will never be possible for all the commodities of all the branches to get sold out. Because it is inherent to the capitalist production relation that the total value or the total price of the output (M+M) be always greater than (M) the total value or the total price of the input (M) of production. As a result, not only that they are compelled to offer ‘sales’ at festivals and year endings, furthermore, if such a crisis of ‘excess production’ attains a shape of ‘epidemic’, they can uphold the banner of some other ‘pandemic’ with a ‘lame excuse’ and might adopt even a ‘lock-down’ measure. It is the Communist Manifesto, where Marx pointed out: “In these crises there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity—the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce”.
The third point is a little deeper and of immense importance. As we saw in the previous section, C↔C’, C→M→C’, M→C→M+△M, ‘Value’→‘Price’, this is how the eras of the economy has evolved, where it is imperative to note that any of these forms did not emerge all over the society at the same time. When C↔C’ became the central feature of the economy in the era of direct exchange of commodities, there were still marginal sections of the society who did not practice such exchanges (there are still tribal people around the world who do not exchange); at the same time, the traders started practicing C→M→C’, i.e. the currency system, although in an amateurish way. Similarly, in the subsequent era when the central feature was C→M→C’, the practice of C↔C’ was still there marginally (note that land is still leased in Indian villages in exchange for a certain amount (‘kunko’ in local dialect) of paddies or a few boxes of fruits (termed as ‘dadan’ colloquially), which does not include any money); on the other hand, M→C→M+△M had, at that time, already come into practice among the traders, though not in a cohesive manner. Even in the following era of capitalism, when the central feature was M→C→M+△M, the C→M→C’ and even the C↔C’ practices remained marginally. That is to say, in the course of history, each age, with its central feature, continues to carry the decaying remnants of its previous age and the immature hints of the next age in marginal ways. Furthermore, in the era of capitalism, there has been a long period during which the system C→M→C’ not only existed marginally, but even the central system of M→C→M+△M itself had carried with it, the previous system of C→M→C’. In the first volume of ‘Capital’, Marx explained the issue elaborately. The system for the capitalist owner was M→C→M+△M, i.e. buying commodities for money and making new commodities and selling them for more money; however, the system was still C→M→C’ for its workers, who used to sell their own labour-power (C) for wages (M) and buy household commodities (C’) using such wages, i.e. a feature of the previous era. In exactly the same way, when Marx was composing ‘Capital’, when the central character of production has evolved from ‘value’ to ‘price’ system, even then the commodity sold by the worker, i.e. the labour-power, was still being exchanged in its ‘value’ of the previous age, that is, equal to the cost to run his household, there is no question of profit. The capatialist was buying the machineries and raw materials at ‘price’, while the ‘labour-power at ‘value’ and the sum is the corresponding ‘cost-price’ (Marx was conscious enough to refrain himself from using any term like ‘cost-value’ anywhere). Therefore, in this era, constant capital is expressing the corresponding ‘price’ and variable capital is expressing the respective ‘value’, and that is why in both Table-1 and Table-2, the numericals of these two were considered to be the same.
It is apparent that its subsequent evolution will answer the questions of today’s epoch.
To get the answers of the major questions that have arisen about today’s capitalism, we need to understand the subsequent evolution of the developmental trend of capitalism as explained by Marx. In the previous section, we have shown that a common feature of this development is that the commodity of the working class itself, that is, its ‘labour power’, does not acquire the central character of the economy at the same time, rather, it lags behind. And the other marginal sections lag even behind that. As a result, when capitalism entered the era, whose central feature was the transformation of ‘Value’→‘Price’, the ‘labour power’ was still being exchanged in ‘value’; this is, up to which Marx’s explanation incorporated, because it was the reality of that age. However, in the following epoch, in the same course of evolution, the measure of exchange for ‘labour-power’ gradually transformed from ‘value’ to ‘price’, which is similarly determined by considering an added amount to the investement according to the average rate of profit, the standard basis being: the higher the investment, the higher is the price. Such evolution has come about with the use of new technologies and the consequent emergence of myriad types of so-called ‘expertise’ (indeed the corresponding labour-division). This has led to a new definition of skilled/unskilled labour. Such definition is not anyhow based on the capability of any particular type of labour, rather based on how much investment has been made in the development of a particular type of labour-power or skill, may be in terms of money or time.
We will try to understand the issue with an example. For instance, is this only because of its delightful taste that the wage of a biriyani-chef of a top-notch restaurant in Mumbai is several times higher than that of a biryani-cook in a remotely-located shop in Lucknow? Perhaps, exactly the opposite may be true (in fact, there is no ‘perhaps’ in my personal opinion)! Then what is the matter? The money it took to get a degree to become a chef in this top-notch restaurant, and/or the special time it took, has indeed been deemed in the society as an investment. And therefore, no matter how good the second cook is, he/she is unskilled labourer, while the first one is skilled. In the same way, think about the special skills of a tea-worker, who pluck tea-leaves (usually women workers in the Terai/mountains acquire these special skills), which no prominent urban professor, doctor or engineer can acquire in twenty years. On the contrary, there are plenty of instances, where the children of tea-workers have become professors/doctors/engineers despite their huge practical obstales. Surprisingly, such tea-workers are named “unskilled labourer”, while the professors/doctors/engineers are defined as “skilled”! In fact, the definition is not at all regarding the skill, but the investment behind the development of such skill.
As a result of this different amount of investments in developing different skills, the ‘price’ of the same amount of labour can be completely different, and accordingly the wages/salaries too; because the higher the investment, the higher is the price. Consider, for an example, this case of a tea-worker and a software engineer; the investment for acquiring huge real skill by the first person is just as much as required for his/her sustenance, whereas the investment for acquiring the sub-ordinary skill of the second person is not just so, rather all the expenses for studying engineering, which is huge in terms of both money and time. That is why when a skilled tea-worker gets only Rs. 140 a day, an ordinary software engineer gets more than Rs. 60,000 per month.
As shown earlier that the ‘price’ of a commodity in the capital-intensive industry is higher than its ‘value’ and the same is lower in the case of the labour-intensive industry, and therefore through the ‘price’-based exchange, the first sector draws a share of the ‘value’ from the second, in the same way, since the ‘price’ of the labour-power is being determined based on the ‘investment required for skill-development’, the so-called ‘skilled labourers’, white-collar workers, professors-doctors-high-ranking employees get a share of the ‘value’ that the ‘unskilled labourers’ are deprived of. There may even be a much lower ‘price’ of the labour-power of a much higher ‘value’, and a much higher ‘price’ of the labour-power of a much lower ‘value’, even higher than its own ‘value’ (in such case there is no exploitation of his/her labour). That is, a share of the unearned ‘value’ of the so-called ‘unskilled’ labourer is being transferred to the wage/salary of the so-called ‘skilled’ labourer; naturally, he/she is no longer a ‘surplus creating’ worker/workman, but a ‘surplus consumer’. Therefore, as in the previous age all the workers could have been considered under the umbrella of ‘proletariat’ from class viewpoint, it is not possible these days; today, they have been divided crudely into at least two classes: ‘surplus creating’ and ‘surplus consuming’ workers/workmen. Today we can call only the first stratum as proletarian class, and the other stratum is giving rise to the opportunism in working class movement. In the early days of imperialism, as shown by Lenin, this second stratum appeared predominatly in the imperialist countries, which Lenin tremed as the ‘elite workers’ or ‘bribed workers’; today, however, with the development of capitalism, it has been created within all the countries, it is now a general trend that has come through the transformation of the yardstick of exchange of ‘labour power’ from its ‘value’ to ‘price’. However in this case, too, it is imperative to note that, firstly, it is only the central character around which the previous tendencies still remain; and secondly, wages/salaries are never tied to a rigid rule of iron law, they are always elastic (albeit within a certain limit), and significantly dependent on the state-of-the-art of the economy and politics. It is further important to note that the transformation of yardstick of the exchange of ‘labour power’ from its ‘value’ to ‘price’, the generation of ‘surplus creating’ and ‘surplus consuming’ workers/workmen – none of these have come about setting some rules before, but they have emerged through the socio-economic evolution, following a central philosophy already established in the society: “the more the investment, more is the profit”.
Although not in detail, here, it is necessary to mention about an issue briefly. In the course of development of capitalism, with its trade gaining immense importance along with the production, as the ‘productive capital’ and the ‘trade capital’ got established as separate sectors including their inter-contradictions, similarly in the modern phase of capitalist development, the ‘labour power’, with the transformation of its basis of exchange from ‘value’ to ‘price’, has gained a significant importance. And as a result of this, the ‘constant capital’ (investment in machineries etc) and ‘variable capital’ (investment in labourers) are becoming two separate sectors every day, albeit in the same way with their inter-conflicts. The emergence of this separate field of ‘variable capital’ (investment in labourer) is giving rise to the ubiquitous ‘labour contractor system’ today, which is an inevitable consequence of the transition to the era of exchange of labour-power in terms of ‘price’.
In the case of self-employed workers, such yardstick creates a more complicated situation. They do not sell their ‘labour power’ to anyone; rather buy equipment and combine own labour with it to produce new commodities and sell them; with that income, they run their household expenses again. In simple logic it seems that the system for him is C→M→C’; many economists, identifying it as a pre-capitalist system, presenting Rosa Luxemburg’s theory in a new look, have tried to show how through plundering such sections capitalism survives on the bases of these pre-capitalist forms. However, the fact is that today such self-employed workers do not sell their products at all on the yardstick of their labour. Rather, the equipment he buys is an ‘investment’ for him, and he determines the ‘market price’ of his product by taking an ‘extra’ on it, according to the social average profit rate (the demand-supply issue is just a ‘fluctuation’ over this, which we are not discussing here). This ‘profit’ may be less than his ‘labour value’, which is usually the case, resulting in a ‘social surplus value’ that large investors grab indirectly. We will try to understand the matter with an example.
Suppose there is a roadside tea-maker, whose cost of the equipment for 50 cups of tea is Rs. 200 and the labour value to yield this amount of tea is Rs.300. Then the total ‘value’ of the tea is 200+300=500 rupees, i.e. Rs. 10 each cup. But he does not keep in mind his ‘labour value’, in fact there is no way to keep it, he only has an account of that Rs.200; the 200 rupees spent on the equipment is the only investment of him; and he knows that currently there is an average of (let’s say) 25% profit rate running in the market. Therefore, the ‘price’ of his tea would be 200+50=250 rupees in total, i.e. Rs. 5 each cup. Since the ‘value’ is 10 rupees, now he is getting 5 rupees less for each cup.
Then, where is it going? It is being suctioned in two ways. Firstly, the person who buys tea from him with a less of Rs. 5, when buys another commodity, which is produced with much higher investment, resulting in its ‘price’ to be much higher than its ‘value’, as one might suppose, cold drinks or something like that, or even a cigarette bought from even that tea-maker’s shop— in all such cases that money is being transferred as an addition to their ‘value’. Again, if this buyer sells another product, in the same way, consequently through a chain network, this unpaid ‘value’, i.e. surplus-value will be distributed to the whole society based on their investments. Secondly, if the buyer is a labourer/employee of a factory or workplace (which is true in most cases), then one more episode will be added to this phenomenon; since the cost of such buyers (who are labourers/employees of the factories/workplaces) behind all such products is less than their ‘value’, the minimum wage/salary levels in such factories/workplaces will go down further, which would give their owners an extra profit.
In this way, capital is also exploiting all the self-employed workers through a complex network throughout the society, not because their economy is pre-capitalist, but because they have adopted the standard of capitalism: the more the investment, the greater is the profit. Of course, they are not alone, but the buyers have also adopted the same yardstick, only then it is possible to buy and sell. The interesting point to be noted here is that, if these self-employed workers could sell their commodities based on the yardstick of their ‘labour’, they would not be exploited at all, and consequently, they would not be included in the proletariat. They are being exploited by selling on the yardstick of ‘capital’ and therefore, they are entering into the class of the ‘surplus creating’ proletariat. It can be said that, whether they want to or not, to which extent they have been shifted to be small/petty-bourgeoisie from workers, it is in that extent that they have been overthrown to the class of the proletariat.
On the other hand, the method of functioning of capital in the agrarian sector is different from that in the industrial sector. Marx explained this in detail in the third volume of his book, ‘Capital’. Many readers think that Marx here only refined Ricardo’s theory of ‘differential rent’. Again, many others think that, since industrial capital had developed in the West on the base of agriculture, Marx also included the subject of agriculture in ‘Capital’. However, none of this is correct. It should be noted that Engels, based on Marx’s point of view, arranged the chapters of the book ‘Capital’, not only to analyse capital but also arranged it in a historic sequence to explain the development of capital. And here the issue of agriculture has been put at the end of it all. Its purpose is not to analyse the pre-capitalist agrarian system, not even the earlier eras of capitalism, but to unveil the nature of agriculture in the epoch of developed capitalism. In this book, Marx explained the process of functioning of capital in agriculture, when the era of Value→Price transformation on the basis of ‘average profit rate’ has been established, and the interest-based bank capital has drawn great importance. Its detailed description is beyond the scope of this article. However, in a nutshell it can be said that, unlike in the industrial sector where capital creates a ‘capitalist-labourer’ bipartite class-correlation, it creates a tripartite class-contradiction between ‘landlord-capitalist-labourer’ in the agrarian sector; Marx explained it with the ‘Trinity Formula’. Here the first one is the owner of the land, who leases his land, the second one is the ‘investor’, who invests in farming with that lease, and the third one is the agro-labourer, who gives his labour in the production. The agro-labourer receives the ‘price’ of his labour-power as the wage, and his ‘surplus value’ is divided into the ‘profit’ of the investor and the ‘rent’ of the landlord’s lease. In this case, there can be two types of ‘rents’, ‘differential’ (relative) and ‘absolute’ (non-relative). Marx showed that this ‘rent’ comes as a result of the transformation from ‘value’ to ‘price’ in the society on the basis of ‘average profit rate’, and that such money received by the landlord is usually no longer invested in agriculture, but goes/may go to other sectors of production along with the expenses for their own maintenance. It should be noted that it is a big misconception to perceive it as non-capitalist system if there is existence of a landlord or landowner or there is no large-scale farming, which has been carried forward by most of the communist theorists and economists in our country and others too. Neither the predominance of small plots of land nor the widespread existence of leased landowners in our country, today, in any way reflects the pre-capitalist system or feudalism; rather, their agricultural products are being produced predominantly for sale in the market, which upholds the commodity system only. And (as shown earlier) the yardstick of investment is only effective here.
It should be noted here that in the case of small agricultural lands, the representatives above three classes (landowners, investors and labourers) do not always have to be separate individuals; an individual can belong to any two or even three of these classes. For instance, a farmer is investing in his own land by employing labourer(s) for cultivation (the farmer belongs to the first two classes), or an agro-labourer himself is cultivating some other’s land on a lease (he is investor and labourer together), or a farmer himself is cultivating his own land taking a loan from other(s) (the farmer is the landowner and worker, but not an investor), or may be the farmer is investing in his own land and cultivating too (he belongs to all three classes), etc. All such combinations are observed in our country. Details of this are beyond the scope of this article. However, the important point is that, firstly, since the investment in developing the skills of the agricultural labourer is only a matter of running the costs of his sustenance, the ‘price’ of his ‘labour-power’ remains lower than the ‘value’ of the same, and secondly, since the investment in the agriculture is less, the profit becomes lower than the ‘surplus-value’, based on the yardstick of ‘average profit rate’; as a result to this, the ‘unpaid value of labour-power’ as wages and the ‘unpaid share of surplus value’ as profits are siphoned from the agricultural sector, as ‘social surplus value’, to the hands of large investors, through a complex network of exchanges at ‘prices’ (as shown earlier). Consequently, not only the agro-labourers but also the petty peasants are transformed into the proletariat in reality. Lenin in his book ‘The Development of Capitalism in Russia’ has shown how different sorts it may have. The bottom line here is that, not as a pre-capitalist system, but as a developed capitalist system in the epoch of Value→Price transformation, agriculture, today, is supplying an ‘extra surplus’ to the industry and service sectors.
This is where the question of the ‘price of land’ comes into play. Marx explained in ‘Capital’ that land is not a product of human labour, hence it cannot have a ‘value’, and in that case, where is the ‘price’ coming from? If the fertility of a particular land is more than that of the same amount of other lands, on the investment of equal amount of capital and labour, more crops would be yield from the former compared to the latter, resulting in the income of excess money on profits from the ‘market price’— this excess (i.e. differential rent) is included into the amount to be paid against the lease along with the amount the landowner gets only because of his ownership (i.e. absolute rent). Neither has he invested any capital in this production, nor has given any labour; he has given only the land (the natural resource that he has in his possession only), and annually he is getting a money for it. It is equivalent to the interest earned on a deposit kept in the bank and this equivalence creates the ‘price of land’. Suppose a landlord gets a lease of Rs. 10,000 per annum and the average bank interest rate is 5%; in that case, he gets this 10 thousand rupees (5% of 2 lakh rupees) as if to get an interest of 2 lakh rupees kept in a bank. So the ‘price his land’ or, as commonly termed as valuation, would be 2 lakh rupees. Therefore, certainly, the ‘market price of land’ cannot be created without the Value→Price transformation and the universality of interest-based banking capital. The ‘market price of land’ is itself an irrefutable proof of the functioning of capital on land. Of course, there is no assurance that each land will be sold at its ‘market price’, it can be sold at a completely different price due to different practical circumstances; the ‘market price’ only expresses the ‘valuation’ of the land.
It is due to such special feature of the creation of ‘price of land’ that factors completely uncorrelated with the production on land can also change the price of the land. For instance, changes in bank interest rates, or how close an irrigation canal passes to a land, how the transportation facility is, how far the market is, etc, generally have a profound impact on land prices; because, in addition to the productivity of the land, it is also determined based on how much or less amount will be earned by employing the same amount of capital and labour, and therefore, how much or less will go to the landowner. The ‘price’ of non-agricultural land is similarly determined in the same way, based on the commodities produced on that land, such as, like the fertility of an agricultural land, it is the holding capacity of soil for the real-estate land, excavability in case of the mining land etc. Along with these, the bank’s interest rate, transportation facility, market positions, etc are there. As a result, under this developed capitalist system, land turns out to be an ‘asset’. The urge of grabbing land that the corporates have is not only for setting up an industry, but also the same for acquiring the possession of such ‘asset’. They industrialize only one part of the land they take the possession of, and build up real estate on the other. Even if there is a loss in the industrial production at some point, a huge amount of money can be earned from the stock market by showing those ‘assets’. That is why, in the present days, identifying the corporates becoming ‘Landsharks’ as the ‘primitive accumulation of capital’ would be a grave mistake. The ‘primitive accumulation of capital’ was the process of direct or indirect plunder from the pre-capitalist system that the capitalists used to possess all the means of production. However, the land grab under the present era is not for that, rather it is aimed at getting a share of the ‘surplus value’, which can be appropriated through the complex network that the Value→Price transformation and the developed capitalism in the era of finance capital together have created. This is not at all ‘primitive accumulation’, but the ‘capitalist accumulation’, and that in a highly developed capitalist pathway. Such ‘land price’, being intertwined with the modern stock market, gives rise to a more complex situation, although that cannot be discussed here, as we have already mentioned, and a separate space is required for that.
It can be stated briefly while ending, that, first of all, in the industrial and service sectors, where capital is directly invested, the working class (or the working people) is predominantly divided into two groups: surplus-creating workers/working people (the so-called unskilled) and the surplus-consuming workers/working people (the so-called skilled), among whom only the former class can appropriately be termed as the ‘proletariat’, and the opportunism in working class movement is being generated from the latter one; secondly, the self-employed working class, due to its small/petty-bourgeois economy, is creating a ‘social surplus’ exactly like the ‘proletariat’, which the big-bourgeoisie class is appropriating through a complex network of modern developed capitalism; and thirdly, the biggest part of the peasantry, constituted as a rainbow of different classes—who contribute with their labour in the production, have taken the form of ‘proletarian class’ by creating ‘social surplus’; and the other small farmers and small landowners, due to their small amount of investment, being unable to appropriate a significant amount of the ‘surplus value’ created by their agro-labourers, have fallen into abject poverty, and along with that, just like pouring water on a drowned mouse, the greed of the corporate landsharks is determined to transform this class into the ‘proletariat’ by making them destitute. Evidently, with the development of capital and the corresponding transformation in the form of exploitation, the previous class-correlations have drastically been changed in today’s new situation. Hitherto the revolutionary movement has advanced by identifying the class as ‘proletariat’, the revolutionary party has been formed on that basis, a larger part of that class has become the surplus-consuming opportunist class, resulting in the fall of these parties in the trap of opportunism. At the same time, the new form of exploitation has given birth to a new revolutionary class, has drawn newly a more larger section of the ‘surplus creators’, has increased the size of the revolutionary class to an unprecedented extent. Considering these as foundations, the revolutionary party, addressing the questions of today’s capitalist exploitation, should be built up and the directives of this party will mark the new triumph of Marxism.