Wage, Labour and Capital

Marx in his works talks about wages, specifically about what they are and how do we distribute
them. He says that worker is giving capitalist a certain amount of time from his days that is
called labour time. Worker is getting wages in return.
Wages are a sum of money which is paid by the capitalist for labour and thus a certain output is
created. He then goes onto say that there is no difference to a capitalist between a commodity
and commodity of labour power. We consume commodity just like we consume the capacity of
labour power. The price of a commodity does not include the wages, hence the price of
commodity and wages are distinct from one another.

Marx also talks about alienation that happens because the worker is devoid from the final
product. There were two economic laws studied which justified exploitation:

1) How price of commodity is determined by competition.

There three ways by which this could happen:
a) When there is competition between capitalists. (who provides less rate)
b) Competition between buyers. (who can give more money)
c) Competition between buyer and seller. (buyer wants to pay less and seller wants more
money)

2) How demand and supply determine the price:

When supply decreases demand increases and the price of commodity increases and vice
versa. When the demand increases, capitalists invest more money leading to
overproduction which leads to the decrease in demand.

Sometimes economists say that there is a third reason as well which is cost of production.
According to economists, average price of commodity is equal to its cost of production.
However Marx says that labour time is not included here which is important.

Marx says that cost of production is the minimum wage of the worker. It is the amount of
money a worker needs to sustain itself and also reproduce so that they give birth to the same
class as themselves. The individual needs are not kept in mind and are disconnected from
reality which clearly what capitalism is.

In the production of any commodity, some minimum amount of time is required which is
necessary time. This is necessary time is being compared by necessary wages which is required
to sustain a worker. Marx says that there is no rationality to this. Which is to say that minimum
wages are not determined based on human value but by the state of economy.
In capitalism, Marx says that bourgeouise has production relations. These relations have
helped them to gain control over capital and this capital means the need for subsistence which
is required by a worker to survive. Marx says that capital consists of material goods called
commodities and they all have exchange values. Capital is social power which has a tendency
to multiply itself and that is how it maintains its power. This social power maintains its power.

This social power is accessible to a portion of society which is the bourgeoise. Marx says that
capital cannot be created without labour power and is a prerequisite of capital. Capitals have
reserves because of past unpaid labours. The worker is not only against current exploitation but
also generational exploitation. The relationship between the worker and capitalist is that
worker has labour power and capitalist has money. The value of latter is more. In capitalism, a
worker can never become upwardly mobile as their wages are low.

This also comes to a realization that the exploitation of labour power is necessary for the
capitalist in order to survive. Marx says that the interest of worker and capitalist cannot be the
same as one is getting used and the other is the user. The only thing which will grow with the
growth of capitalist is the wage labourer.

Marx talks about nominal wage which is the money that worker gets after selling his labour
power. This is different because from this wage, the worker really purchases with. Marx
throws light that how worker is able to buy less and less. Capitalists thrive on unemployment.
This huge member of unemployed people help to get cheap labour. Capitalism is not good for
small business owners as they are being pushed towards poverty as they can’t compete with
capitalists.

Marx says that wages can be understood when you compare it with the price of other
commodities, this is how you determine whether a wage good or not.
Minimum wages are sometimes not enough to sustain the worker and those dependent on
them.
Marx talks about the various ways by which capitalists can expand profit:
➔ When they command more labour for same price.
➔ Expanding and opening new markets by advertising.

Marx continues by saying that capitalism promotes the environment of rivalry where the co-
workers are enemies as they are from different caste, colour, etc.
It also promotes rivalry with small industries because of the purchasing power and also because
of lack of equipment.

As a consequence, big industrialists become more and more powerful and the divide between
rich and poor keeps expanding.
Marx says that the more you work through in that amount of time, you are increasing the profits.
Hence forth, relatively your wages get lesser and lesser.

So, the workers are not just competing with other but also themselves in order to try and work
more to get more wages while sacrificing their rest, social life and also being alienated from their
family.

Marx has been criticized on this. The criticisms say that capitalism as an institution seems to be a
very durable economic system, and communism does not appear to be imminent or anywhere in
sight at all.

Marx concludes by saying that more capital grows there is more dimension of labour and
competition. This is leading to an extremely high rate of production or overproduction of
capitalism since there will be shortage of markets eventually. This will give way to communism;
which reflects proletariat ideologies and state looks after distribution etc.