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The Analytical Power of Labor Power

“The nature of Marx’s critique of political economy may be indicated elliptically by pointing to the replacement of ‘distribution’ by ‘conditions of existence’ as an analytical focal point."

Bo Harvey

Apr 24, 2023

*Women Ironing* by Edgar Degas, circa 1884-1886

“The nature of Marx’s critique of political economy may be indicated elliptically by pointing to the replacement of ‘distribution’ by ‘conditions of existence’ as an analytical focal point."

An increase in the rate of exploitation (people working harder, longer) leads to more surplus for capitalists.

Could capitalists (mediated in some way by the state) not just use this surplus to increase employment, leaving workers with more money?

Perhaps to ‘full’ employment? According to the basic IS-LM ‘Keynesian model,’ increased consumption leads to the growth of the economy in general. So why, exactly, do the Marxists make such a big deal about exploitation? Is economic growth not a positive? Is it not the condition of human flourishing? Is selling one’s labor not the price – quite literally – we pay for this broader, ‘historically unprecedented’ prosperity?

One possible critique of exploitation is a moral one. Capitalism is unfair as it is based upon the unequal exchange of money (in the form of wages) for value-created (by the worker within the labor & valorization process). The obvious remedy to this unfairness is simply to raise wages to the point where they are par or equal with the value-created. Only then would the social situation be fair.

A capitalist would almost certainly respond that, in fact, it has to be unfair, for otherwise there would be no surplus at all.

It has to be unfair, in other words, as it is due to that unfairness that all the remarkable things around you possible; it is how they are produced; how production is possible—the phone in your hand, to the car you drive, the food that is delivered to you to eat, etc., ad absurdum.

In this hypothetical fair situation, we can imagine them remarking, how would anyone hire workers in the first place? Would investment not disappear? Would this not leave workers with less money, lower consumption, and destroy the economy as a whole? Would it not destroy their lives? Strangely, somehow unfairness starts to look like the most fair thing of all.

The insufficiencies of this kind of critique of exploitation caricatured above are clear after addressing the specificity of Marx’s concept of labor power. One of the tools Marx gives us to analyze production, appropriation, and distribution of surplus value under capitalism is precisely the way in which the specificity of Marx’s conception of labor power shifts the traditional disciplinary focus of economics away from issues related to ‘distribution’ or even ‘production’ and towards the imperatives that drive capitalism’s reproduction of its own conditions of existence; in particular, the inextricability of both economic and extra-economic forces vis a vis these conditions. To reduce one’s analysis of capitalist production to the former would be to replicate at the level of theory the extent to which capital itself retrospectively posits its own presupposition. This presupposition is labor power. Capitalist social relations, in other words, strive to produce types of individual subjects specific to it, and even those needs and wishes that define them as individual subjects.

These ‘value-subjects’ – who from their own standpoint are human beings thinking they are participating in ‘Life’ – are, from the standpoint of capital, simply bearers of labor power who, when considered from the standpoint of political economy, appear as always already given. The entirety of their Life, in other words, is treated as if it were a thing.

This discussion is limited primarily to themes in Capital Vol I, so there is no analysis of the real movement of many capitals and their competition. As Crotty points out, Volume I analyses the laws of capitalist production – in particular, the beginnings of a theory of competition – but does so by bracketing (1) the existence of financial markets and (2) the problem of the realization of value;

i.e., the question of whether there is sufficient monetary demand for commodities which have been produced to be sold at their value;

i.e., the question of whether there is sufficient monetary demand for commodities which have been produced to be sold at their value.

The relevant related problem is known as the problem of effective demand.

For Ricardo, the very act of production itself was enough to guarantee sufficient demand for all commodities to be sold, simply because nobody produces except to sell and nobody sells except to buy something else.

Marx criticizes this assumption this assumption via the category ‘labor power,’ theorizing crises as related to underconsumption or overproduction as occurring immanently to capitalism as a mode of production.

If there is any concept that captures Marx’s theory regarding the inherently antagonistic nature of capitalist growth it is the falling rate of profit. The pattern of its development and its connection to labor can be summarized in the following way: (1) rising productivity of labor leads to (2) a rising rate of surplus value and (3) a rising real wage. In turn, (4) a falling ratio of production wages to total capital outlays follows directly from a rise in real wages, leading to a decrease in surplus and (5) a falling rate of profit;

yet, in reducing itself of precisely this use, it robs itself of that which constitutes the surplus value that is its condition of possibility.

Hence the constant oscillation within capitalism between its absorption and dispersal of labor in the form of a growing and shrinking ‘reserve army of labor;’

that, “mass of human material always ready for exploitation by capital in the interests of capital’s own changing valorization requirements.”

The easiest way to explain the concept of labor power is to clearly distinguish between two levels of abstraction that in Capital that can at times seem confused: the historical and the logical. As Heinrich points out – at at least one level of abstraction – Marx is concerned with a theoretical analysis of capitalism rather than a historical account of its development, an analysis of a specific historical phase, or the exact empirical nature of the capitalist mode of production as it has and will always exist. “We are only out to present,” as Marx puts it, “the internal organization of the capitalist mode of production in its ideal average, as it were.”

Marx’s value here is epistemological and lies with the unfinished systematic account he produces of the ‘laws’ operating within capitalism, but within capitalism as a closed system. Of course, actually existing capitalism is not a closed system. No purely capitalist society has existed historically in the same way that no idea exists that is identical with its empirical referent; yet, understanding capitalism as a closed system – as a specific theoretical but not necessarily fully historically actual object – helps to explain economic and historical phenomena in the open systems within which we live. And it is to this open system that we come to labor-power, which as both 'life' and 'work,' exists between “the logical world of commodities…and the historical world of bodies;"

managing to somehow mediate the ‘law-like’ aspects of economic phenomena and the contingency of empirical history.

One of the odd aspects in trying to explain Marx’s ‘General Formula for Capital’

is that it can be hard to clearly delineate a beginning. We all know that the formula is M – C – M’, but how is it that the process starts with money? If value’s substance is labor, how does the capitalist arrive with money in the first place? Should Marx have begun with labor? The very first sentence of chapter 4 on the general formula begins with the sentence: “the circulation of commodities is the starting-point of capital.”

And the only way commodities circulate is via money; however, is money not just a representation of value qua price?

Marx presupposes the basic social positions of buyers and sellers as he unfolds the logic of capital for the reader. Marx’s order of presentation in other words is not limited simply to a full systematic account of the social form and economic dynamics capital itself poses as ideal vis a vis a heterogenous set of actually existing social contexts, but phenomenologically stages for the reader the way in which capital itself, in order to go through its cycle of accumulation, requires something given for these positions of buyers and sellers to even be able to be presupposed. This presupposition – i.e., that which is constituted by the forces of capital but is not captured in capital’s own idealized models of itself – is both the historical but also ongoing [i.e., contemporary] production of labor power. Marx’s critique of political economy is that it simply treats labour power as if it can be relied upon as somehow available a priori, without recognition of the extra-economic [social & historical] forces that create it.

In any case, these ‘extra-economic’ forces constituting the reproduction of capitalism’s conditions of existence in the form of the production of labor power are multiple. Kristin Munro, for example, has pointed out the extent to which “it is necessary to tie the household and household production to the dynamics of production and reproduction in capitalist society.”

While sharing with Quick the emphasis on necessity of unpaid household labor as an input into a household production process that also relies on commodities purchased with money from waged work – both of which are necessities for the life of the worker qua bearer of labor power – Munro, following Postone, rejects the ‘traditional Marxist’ conception of class struggle as involving, fundamentally, the attempt to recapture a portion of the value created their labor, while the capitalist class uses the state as an instrument to allow for the continued ‘theft’ of the surplus on behalf of the capitalist class.

For Munro, Quick, in examining capitalism from the standpoint of wages and unwaged labor (i.e., household production, historically carried out by women), refrains from examining how this labor relates to the larger whole; refrains, in other words, from examining, “how the household itself and the breadth of household production relates to the whole of capitalist society;" in particular, their implication in the reproduction of capitalist society writ large.

Paul Mattick, Theory as Critique: Essays on Capital, (Chicago: Haymarket Books, 2018): 192.

Rate of surplus value (r) = surplus value (s) / v variable (capital)

“The scale of accumulation may suddenly be extended merely by a change in the proportion in which the surplus-value or the surplus product is divided into capital and revenue – for all these reasons the requirements of accumulating capital may exceed the growth in labor-power or in the number of workers; the demand for workers may outstrip the supply, and thus wages will rise.” Marx, Capital I, 763. Here, Marx refers to what Crotty terms ‘capital widening,’ where “accumulation takes place without any significant change in the technical composition of capital;” i.e., where accumulation occurs without an advance in technological capacity. Where accumulation does occur due to advances in technology, Crotty refers to this as ‘capital deepening’ and it is ‘coercive’ in the sense that firms will die without adopting a given innovation. Within capital widening however, investment by firms is motivated purely by the prospect of faster growth and greater profits rather than any impetus to simply survive vis a vis rates of innovation. This is the sense in which competition between firms – under conditions of capital widening – is not ‘coerced.’ The negative side of this at-first seemingly booming situation is the erosion of the reserve army of labor. Given increased investment, output, and employment, workers no longer fear being fired and are in a position to negotiate higher wages. “Rapid capital-widening,” as Crotty puts it, therefore “erodes one of its conditions of existence.” But only one. James R. Crotty, “Rethinking Marxian Investment Theory: Keynes-Minsky Instability, Competitive Regime Shifts, and Coerced Investment,” 1992: 5.

For Foley, you don’t need an invented capitalist to point this out, who notes how this is explicitly Marx’s own position: “If we were to try and end exploitation by raising the value of labor-power so that workers received in their wages the whole value added, we would destroy the capacity of the system to produce a social surplus product, because surplus value is the form the surplus product takes in a capitalist society. If, on the other hand, we wanted to maintain or strengthen the ability of the society to produce a surplus product, and at the same time end exploitation, we would have to alter the fundamental organization of production in such a way that the surplus no longer took the form of a surplus value appropriated by a particular class.” Foley, Understanding Marx’s Capital, 41.

Cf. An attempt at an articulation of the connection between capitalist accumulation and technology – particularly as it relates to ‘control’ – can be found in another text on ‘Technology, Productivity, & Control’ (unpublished).

“The production of capitalist and wage laborer is thus a chief product of capital’s realization process. Ordinary economics, which looks only at the things produced, forgets this completely.” Karl Marx, Grundrisse, (London: Penguin, 1973): 512.

Crotty, “Rethinking Marxian Investment Theory,” 5.

These ideas are discussed by Marx in Vol II, where ‘healthy capitalistic growth’, presupposes a relative equilibrium between the rhythms of the three circuits of money capital that make up Marx’s ‘reproduction schemas’, where the circuit of money capital pertains to the rhythm of valorization, the circuit of productive capital pertains to the rhythm of accumulation, and the circuit of commodity capital pertains to the rhythm of the realization of value.

This has been given a number of notable treatments. For a summary of two opposing theories regarding the problem of effective demand that “find something like a point of intersection” (146) – namely, the ‘internal’ theory of Tugan-Baranovski (who claims that it is the antagonistic character of the demand for constant productivity even within capitalism as a close system that constitutes an obstacle for capitalist development, rather than markets) vs. the ‘external’ theory of Rosa Luxembourg (who considers the development of capitalism within a closed system impossible; rather, capitalism is dependent on the constant expansion of markets and therefore on imperial expansion). See Michael Kalecki, “The Problem of Effective Demand With Tugan-Baranovski and Rosa Luxembourg,” in Selected Essays on the Dynamics of the Capitalist Economy, (Cambridge: Cambridge University Press, 1971): 146-155. For a useful introduction to Kalecki’s interpretation of Luxembourg in particular, see Feiwel’s introduction to Kalecki, The Last Phase in the Transformation of Capitalism, (New York: Monthly Review Press, 2009): 16-18. Anwar Shaikh’s interpretation of the relation between accumulation and effective demand attempts to fashion a revised classical/Marxian approach that is able to explain growth endogenously via the rate of profit. See Anwar Shaikh, “Accumulation, Finance, and Effective Demand in Marx, Keyens, and Kalecki,” online at http://www.anwarshaikhecon.org/sortable/images/docs/publications/macroeconomic_theory/1989/2-Shaikh_Marx%20Keynes%20Kalecki%20on%20Effective%20Demand_86%20Semmler_Final.pdf.

c.f. P. Kenway, “Realization Problem,” In J Eatwell et al, Marxian Economics, (New York: Palgrave Macmillan, 1990): 326-333.

Cf. Duncan Foley, Understanding Capital: Marx’s Economic Theory, (Cambridge: Harvard University Press, 1986): 140.

i.e., an increasing ‘organic composition of capital’

“The working population therefore produces both the accumulation of capital and the means by which it is itself made relatively superfluous.” Marx, Vol I, 783.

Marx, Vol I, 781 – 793.

Marx, Vol I, 784.

Marx, Volume III, 970. Quoted in Michael Heinrich, An Introduction to the Three Volumes of Marx’s Capital, (New York: Monthly Review Press, 2012): 31.

Gavin Walker, The Sublime Perversion of Capital: Marxist Theory and the Politics of History in Modern Japan, (Durham: Duke University Press, 2016): 22.

As Mattick has pointed out, “the general formula must be expanded to the form studied in Volume II: M-C (LP + MP)…P…C’-M’,” where, “the initial conversion of money into labour power (LP) and means of production (MP) makes possible the creation of a surplus value in the production process (P), realized when the product is sold” (12).

Marx, Vol I, 247. David Kotz’s argument regarding the way in which, “using a simple circuit of capital model of accumulation [he/Marx] show[s] that credit plays a more fundamental role in accumulation than that of merely facilitating exchange and raises the rate of accumulation; indeed, surplus value cannot be used for accumulation at all without expanding credit,” should be connected to the way in which ‘money’ is both logically and historically prior to capitalist production. David Kotz, “Accumulation, Money, and Credit in the Circuit of Capital,” 120.

This should not be understood as a full articulation of the respective determinations of money, value, and price as concepts.

This should not be interpreted as Marx saying on the one hand there is the economic realm that needs to be supplemented by a social analysis or some separate social theory—even if the latter is ‘critical’. He’s saying that the concepts that are constitutive of certain specific disciplinary fields (in this case, political economy – but one can extrapolate and say, for example, sociology) are not sufficient vis a vis the series of relations they think they are describing. This is of course completely different than saying they are ‘wrong’ or lack ‘objectivity’.

Kristin Munro, “’Social Reproduction Theory,’” Social Reproduction, and Household Production,” Science & Society Vol 83:4 (2019): 454.

Paddy Quick, “Mode of Production and Household Production,” Review of Radical Political Economics 48 (4): 2016. Cf. Moishe Postone, Time, Labor, and Social Domination, (Cambridge: Cambridge University Press, 1996).

Munro, “Social Reproduction Theory,” 455.