Karl Marx is best known in the realm of political economy for his great work, Capital. Marx is the original theorist, together with his associate Friedrich Engels, of scientific socialism. Marx wrote Capital in order to expose the inner workings of capitalism, so that workers could understand the system behind their exploitation, how this system arose historically, and the laws of motion inherent within it.

While Marx was writing Capital, he gave a lecture over two separate meetings to the General Council of the International Workingmen's Association, the First International. This was in June of 1865. This important lecture was published after Marx’s death in the form of a small pamphlet titled Wages, Price, and Profit, edited by Marx’s daughter, Eleanor Marx. It has also been published under the title Value, Price, and Profit. This important text summarizes some of the key ideas of Capital that he was engaged with writing at the time. 

The purpose of the lecture was to respond to John Weston, a follower of the utopian socialist Robert Owen. In a letter to Engels from May 20, 1865, Marx explains Weston’s position: “(1) that a general rise in the rate of wages would be of no use to the workers; (2) that therefore, etc., the trade unions have a harmful effect.” He goes on to elaborate that Weston’s “two main points are: (1) That the wages of labor determine the value of commodities, (2) that if the capitalists pay five instead of four shillings today, they will sell their commodities for five instead of four shillings tomorrow (being enabled to do so by the increased demand).” Marx ridicules these points, but notes that refuting them will be no simple task. “You can’t compress a course of political economy into one hour,” he writes, “But we shall have to do our best.”

So here we will further compress Marx’s already very concise argument, doing our best to draw out the main threads of his response to Weston and show why it is important to study this important work.

Marx’s argument

Marx summarizes Weston’s views like this: “If the working class forces the capitalist class to pay five shillings instead of four shillings in the shape of money wages, the capitalist will return in the shape of commodities four shillings' worth instead of five shillings' worth. The working class would have to pay five shillings for what, before the rise of wages, they bought with four shillings.” Put another way, Marx writes that, “reduced to their simplest theoretical expression,” Weston’s arguments are simply expressed as follows: “’The prices of commodities are determined or regulated by wages.’”

How so? Basically, according to Weston’s view, an increase in wages for the working class will increase its purchasing power, which will, in turn, increase demand relative to supply, thereby raising the price of commodities alongside the raise in wages. We’ve all heard this argument before. If the working class wins an increase in wages, then capitalists will simply raise prices to make up the difference, and nothing will have been accomplished. 

Ultimately, Marx notes, Weston’s argument goes nowhere. 

“First he told us that wages regulate the price of commodities and that consequently when wages rise prices must rise. Then he turned round to show us that a rise of wages will be no good because the prices of commodities had risen, and because wages were indeed measured by the prices of the commodities upon which they are spent. Thus we begin by saying that the value of labor determines the value of commodities, and we wind up by saying that the value of commodities determines the value of labor. Thus we move to and fro in the most vicious circle, and arrive at no conclusion at all.” 

In other words, Marx writes, we are left with “value determined by value,” which really tells us nothing at all about value, but rather, only obscures what is really going on. Marx stresses that the will of all capitalists is everywhere the same: to achieve the highest rate of profit. He says, “The will of the capitalist is certainly to take as much as possible. What we have to do is not to talk about his will, but to enquire into his power, the limits of that power, and the character of those limits.”

To push beyond this impasse, Marx explains the labor theory of value, that is, the creation of value by labor. Marx here points out that we must understand commodities as “crystallized social labor.” He goes on to explain it like this. “A commodity has a value, because it is a crystallization of social labor. The greatness of its value, or its relative value, depends upon the greater or less amount of that social substance contained in it; that is to say, on the relative mass of labor necessary for its production. The relative values of commodities are, therefore, determined by the respective quantities or amounts of labor, worked up, realized, fixed in them.” Marx then says that “As a general law we may, therefore, set it down that: — The values of commodities are directly as the times of labor employed in their production, and are inversely as the productive powers of the labor employed.” 

But what does this tell us about the value of labor, which is the crux of this debate? To Marx, this misstates the question. Why? “What the working man sells is not directly his labor, but his laboring power, the temporary disposal of which he makes over to the capitalist.” The real question, then, concerns the value of labor power. Marx tells us that “Like that of every other commodity, its value is determined by the quantity of labor necessary to produce it.” In other words, the value of labor power is determined by the labor that goes into the production of the basic needs of the workers, which allows them to go on living and working. If the basic necessities of the worker aren’t met, then, obviously, the worker can’t work. Marx sums it up by stating that “the value of laboring power is determined by the value of the necessaries required to produce, develop, maintain, and perpetuate the laboring power.” 

By understanding the value of labor power in this way, Marx is able to uncover the key of capitalist exploitation: the production of surplus value. Marx notes, “The daily or weekly value of the laboring power is quite distinct from the daily or weekly exercise of that power.” It is worthwhile to quote Marx at length here as he explains the theory of surplus-value: 

“The quantity of labor by which the value of the workman's laboring power is limited forms by no means a limit to the quantity of labor which his laboring power is apt to perform. Take the example of our spinner. We have seen that, to daily reproduce his laboring power, he must daily reproduce a value of three shillings, which he will do by working six hours daily. But this does not disable him from working ten or twelve or more hours a day. But by paying the daily or weekly value of the spinner's laboring power the capitalist has acquired the right of using that laboring power during the whole day or week. He will, therefore, make him work say, daily, twelve hours. Over and above the six hours required to replace his wages, or the value of his laboring power, he will, therefore, have to work six other hours, which I shall call hours of surplus labor, which surplus labor will realize itself in a surplus value and a surplus produce. If our spinner, for example, by his daily labor of six hours, added three shillings' value to the cotton, a value forming an exact equivalent to his wages, he will, in twelve hours, add six shillings' worth to the cotton, and produce a proportional surplus of yarn. As he has sold his laboring power to the capitalist, the whole value of produce created by him belongs to the capitalist, the owner pro tem. of his laboring power. By advancing three shillings, the capitalist will, therefore, realize a value of six shillings, because, advancing a value in which six hours of labor are crystallized, he will receive in return a value in which twelve hours of labor are crystallized. By repeating this same process daily, the capitalist will daily advance three shillings and daily pocket six shillings, one half of which will go to pay wages anew, and the other half of which will form surplus value, for which the capitalist pays no equivalent. It is this sort of exchange between capital and labor upon which capitalistic production, or the wages system, is founded, and which must constantly result in reproducing the working man as a working man, and the capitalist as a capitalist.”

Marx then makes a crucial point. He writes that “although one part only of the workman's daily labor is paid, while the other part is unpaid, and while that unpaid or surplus labor constitutes exactly the fund out of which surplus value or profit is formed, it seems as if the aggregate labor was paid labor.” In other words, by means of this shell game, the capitalist makes it look like the worker was paid fairly. “This false appearance distinguishes wages labor from other historical forms of labor,” writes Marx. “On the basis of the wages system even the unpaid labor seems to be paid labor.”

By increasing the amount of labor power expended beyond that which is necessary to cover the cost of the worker’s wages, the capitalist can increase the rate of surplus-value, that is, the rate of exploitation. And competition among the capitalists demands that they always strive to increase this rate of exploitation, becoming more and more efficient in their machinery and techniques, or else be devoured by those who do. 

It isn’t possible in this short article to get into all of the important distinctions and clarifications that Marx makes in regard to how this functions, but it is important to understand. In this regard, it is essential to study the text of Wages, Price, and Profit itself. But it is necessary to highlight a final point.

Marx emphasizes that the development of more advanced machinery and techniques, that is, more advanced productive forces, makes it possible to produce more with less labor. While this is essential to the capitalist’s survival within the system, it also has the long-term tendency of driving down the value of human labor power. This is at the root of declining wages under capitalism, and contributes to the cyclical crises that plague capitalism. Marx explains, “These few hints will suffice to show that the very development of modern industry must progressively turn the scale in favor of the capitalist against the working man, and that consequently the general tendency of capitalistic production is not to raise, but to sink the average standard of wages, or to push the value of labor more or less to its minimum limit.”

Because of this, and contrary to Weston’s view, it is all the more essential for workers to organize. Marx writes, “Trades Unions work well as centers of resistance against the encroachments of capital.” But, he notes, they fail over the long term against this encroachment because they limit themselves to addressing the symptoms, rather than the causes, of capitalist exploitation. The working class, Marx says, “ought not to forget that they are fighting with effects, but not with the causes of those effects; that they are retarding the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady.”

Therefore, Marx stresses that while these resistance struggles are unavoidable and necessary, the working class cannot stop there. “They ought to understand that, with all the miseries it imposes upon them, the present system simultaneously engenders the material conditions and the social forms necessary for an economical reconstruction of society. Instead of the conservative motto: “A fair day's wage for a fair day's work!” they ought to inscribe on their banner the revolutionary watchword: “Abolition of the wages system!“

Wages, Price, and Profit today

Today we always hear the same arguments from those who would preserve the current class structure: the capitalists will simply raise prices to offset workers’ wages. This argument is trotted out whenever workers start to organize to fight back. But Marx explains that capitalism is governed by laws, not simply by the whims of even the most powerful and greedy capitalists. To say, as Weston did, that commodity prices are determined by wages, is a naive, superficial view that obscures what is really happening and is intended to make working class struggle for better wages look pointless. This argument does the ideological work of the bourgeoisie and helps to preserve the status quo of capitalist exploitation.

Marx stresses a point driven home later by Lenin in his struggle against the Economists in Russia: if the working class limits itself to this economic struggle alone it will always be on the defensive, fighting a valiant but losing battle as real wages continue to be driven down in a crisis-ridden system. In order to turn the tide, it is also necessary to go on the offensive, to wage a revolutionary, political struggle for working class state power and the abolition of the capitalist system as such. 

Wages, Price, and Profit is essential reading for all working people. It is an important weapon in the ideological arsenal of the working class. It is a theoretical weapon against those who say the economic struggle against capital is fruitless and in vain. And it is also a weapon against those who say that such an economic struggle alone is enough. 

J. Sykes is the author of the book “The Revolutionary Science of Marxism-Leninism”. The book can be purchased by visiting tinyurl.com/revsciMLbook

#RevolutionaryTheory #RedReviews #MarxismLeninism #Marx #PoliticalEconomy

To understand Marx’s critique of capitalism, it is essential to understand capital dialectically. We see again and again in Capital itself that Marx breaks things down into their contradictory aspects. We’ve already seen this with value, which considers both use-value and exchange-value. Now, as we look at capital itself, we will see Marx’s dialectical method of analysis at work again, as Marx shows how capital is divided into constant and variable capital.

Let’s dig a little deeper into the value of a commodity. Remember that the value of a commodity is determined by the socially necessary labor time that is required to produce it. This was dealt with in our last article on the Law of Value. Marx’s conception of constant and variable capital helps make this clearer.

According to Marx, “Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks.” The relationship between capital to labor is parasitic, and this parasitic relationship is well-illustrated by this relationship between constant and variable capital.

Constant capital is what the capitalist spends on raw materials and fuel consumed in production, the machinery used, and the factory buildings. The capitalist builds, buys, maintains and repairs the factory, pays for materials, supplies, and the fuel needed to power the machinery. All of these things make up part of the value of the commodity. The cost of this capital investment is transferred into the commodities produced as they're worn out or used up in the production process. These things are called constant capital because they don’t add any new value to the commodity. The quantity of value isn’t changed by these things – it is constant.

Variable capital, on the other hand, is what the capitalist spends on the workers themselves, on purchasing their labor-power. The capitalist hires workers, agreeing to pay them a wage based on the socially necessary labor time that will allow them to go on living and working. Variable capital is called variable because it grows in the production process. It creates new value through creating a surplus, over and above what the worker is paid for. This is surplus value, which we’ll get into in detail later. For now, let’s give an example of how this works, as simply as possible.

Let’s say a worker is making a coffin for his capitalist boss, who owns a coffin factory. The worker earns a daily wage of $100, and uses $1000 worth of materials to make a coffin over the course of the work day. The capitalist then sells the finished coffin for $1200. The $1000 represents the constant capital that the capitalist has invested in machinery, tools, raw material and fuel. The $100 is the variable capital that is invested in labor power. The result of the process is the $100 surplus above both forms of capital invested, which the capitalist takes as profit.

Now, remember that a daily wage of $100 is paid to the worker. If the capitalist can get the worker to produce two coffins instead of one over the course of the day, then the capitalist will have invested $2000 in constant capital between the two coffins, and $100 in variable capital for the wage of the worker. Again, the capitalist then sells the coffins for $1200 each, totaling $2400 for both of them. Now the capitalist is ahead not by $100 per coffin, but by $150 per coffin.

Basically, what all of this means is that if a certain quantity of constant capital and variable capital are invested by a capitalist in a process of production, then by the end of that process these values will have reproduced or renewed themselves in the final product. However, if the labor power of the worker has exceeded the socially necessary labor time required for the worker to go on living and working, then there will be a surplus created which the capitalist pockets.

The profit, in this illustration, is made by increasing the intensity of the labor, by reducing the amount of labor time required to produce the commodity. Marx called this relative surplus value. The other method of increasing surplus value is lengthening the working day, which Marx called absolute surplus value. In either case, the capitalist is gaining from the unpaid labor of the worker. In our next article we’ll break down exactly how surplus value works in more detail.

#UnitedStates #politicalEconomy #MarxismLeninism #MLTheory #redTheory

In our previous article we looked at what a commodity is and examined use-value and exchange-value. This discussion of value is a cornerstone of Marx’s critique of political economy. The value of any commodity is equal to the socially necessary labor time required to produce that commodity. This is the Law of Value, and it is essential to understand if we are to really grasp what is revolutionary about Marx’s critique of capitalism.

In Capital, Marx writes, “That which determines the magnitude of the value of any article is ... the labor-time socially necessary for its production. Each individual commodity, in this connection, is to be considered as an average sample of its class. Commodities, therefore, in which equal quantities of labor are embodied, or which can be produced in the same time, have the same value. The value of one commodity is to the value of any other, as the labor-time necessary for the production of the one is to that necessary for the production of the other. ‘As values, all commodities are only definite masses of congealed labor-time.’”

In other words, since exchange-value is based on quantitatively exchanging things that are qualitatively different, then we need some quantitative commonality between these qualitatively different things. That commonality is the socially necessary labor time required to produce them.

But what do we mean by socially necessary labor time? Let’s break it down.

First, labor time is the time required by labor to produce a commodity. But we have to talk about labor time in terms of “socially necessary” labor time, because production is socialized. In other words, there is a division of labor in society that has to be taken into account. While someone could produce a commodity from start to finish by themselves (as in the period of handicraft production), they will not be able to do so with the speed and efficiency that the capitalist division of labor creates. Instead, as the Soviet textbook Fundamentals of Marxism-Leninism says, “value is determined by the average amount of labor expended by society for the production of the given type of commodity.” In this way, because it is really an average, the socially necessary labor that determines exchange-value is abstract, unlike the concrete labor that determines use-value.

But most exchange isn’t done in terms of direct exchange of one normal commodity for another. Nobody goes to the market and trades crates of hammers for their weekly groceries. We use a special commodity to make this exchange instead. This special commodity is money. Money stands in as a measure of the value of all other commodities and is the medium of commodity circulation. When we use money to express the value of a commodity, that value is its price.

The Law of Value in capitalist society takes on three functions.

First, it regulates the distribution of labor-power and the means of production within the society. The Law of Value causes the prices of commodities, based on supply and demand, to gravitate towards their value, even though the anarchy of production causes them to constantly fluctuate. If the market price exceeds the value of a commodity, production will increase, increasing with it the supply. Similarly, if the price is below the value of a commodity, production will decrease, decreasing the supply. Supply and demand can cause fluctuations in price around a commodity’s value.

Second, it serves as a motivator for technical progress. Development of the productive forces makes production more efficient. If a capitalist is able to use the most advanced machinery and techniques available, they are better able to produce at a cost below the socially necessary amount. They can use machinery to reduce the amount of labor required for production below the socially necessary average, thereby increasing their profit. Meanwhile, those who cannot compete, those who cannot keep up, are driven under by the more powerful capitalists.

Third, it develops the capitalist relations of production. This is precisely why they wrench up exploitation of labor to maximize their profits. Since there is an average social labor cost for producing any commodity, their ability to maximize profits is also dependent on how much they exploit their labor force. If a capitalist is able to have a commodity produced at a cost lower than this social average, then they’ll make an additional profit above the market price. If, on the contrary, they produce the commodity at a cost above this social average then they take a loss on the market price. And since the competition between capitalists themselves leads to the ruin of those smaller producers who cannot keep up, the means of production are further and further concentrated into the hands of fewer and fewer capitalists, as those few get richer and richer.

This is the essence of the Law of Value. It is important to note here that when the bosses speed up production, rely more and more on automation and mechanization of production, and demand higher production quotas, they are able to have more commodities produced in less time, thereby extracting a greater profit. In our next articles we will look more closely at the forms that capital takes, and how capitalist exploitation takes place through production of surplus value.

#UnitedStates #politicalEconomy #MarxismLeninism #MLTheory #redTheory

Karl Marx begins his critique of political economy in the great work, Capital, with an analysis of commodities. He writes, “The wealth of those societies in which the capitalist mode of production prevails, presents itself as ‘an immense accumulation of commodities,’ its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity.” So, what is a commodity, and why is it that Marx begins here?

First, we will define what a commodity is, and then we’ll break it down. A commodity is something that fulfills some need or want, and that is produced by labor in order to be sold on the market.

In other words, it is something that has some value to us, both in terms of some kind of usefulness, and in terms of exchange. Furthermore, it isn’t something that’s just lying around, like raw materials, but is something produced by labor. So, for example, water in a stream isn’t a commodity, but water bottled to sell is. Marx, therefore, divides the value of a commodity into two: it has use-value and exchange-value.

Regarding a commodity’s use-value, Marx says, “The utility of a thing makes it a use value,” which is simple enough. If something is neither needed nor wanted, then it is of no use to anyone. For something to have use-value, it must satisfy some need or want. We can think of use-value as the qualitative aspect of value. Regarding a commodity’s exchange-value, Marx says that it is “the exchange relation of commodities.” In other words, a commodity’s exchange value must be understood quantitatively. How many units of commodity A have the same value as commodity B?

So, a commodity combines these two aspects, use-value and exchange-value. Someone might, in preparation for the winter, make for themselves a warm wool coat. This obviously serves a need, but since it is made for personal use, it isn’t a commodity. Something useful, like a coat, only becomes a commodity when it is produced for the sake of exchange.

Marx brings up an interesting point here: “As use values, commodities are, above all, of different qualities, but as exchange values they are merely different quantities, and consequently do not contain an atom of use value.” It is hard to see, from here, how we are supposed to determine the value of one commodity in relation to another. What if, for example, a capitalist wants to exchange coats for coffins? How many coats are worth how many coffins? They’re made of different materials and serve different purposes. And certainly, the capitalist himself can only use one of each at a time. But their exchange value surely isn’t one for one. How do we compare them? These things are so dissimilar, comparing them is like comparing apples and oranges. Since exchange value is purely quantitative, we need, therefore, some quantitative commonality that all commodities share. As we will see, such a quantitative commonality does, in fact, exist.

In a speech that Marx gave to the International Workingmen’s Association, later published as the pamphlet Value, Price, and Profit, Marx explains in a clear and concise way how this all comes together.

According to Marx,

“As the exchangeable values of commodities are only social functions of those things, and have nothing at all to do with the natural qualities, we must first ask: What is the common social substance of all commodities? It is labor. To produce a commodity a certain amount of labor must be bestowed upon it, or worked up in it. And I say not only labor, but social labor. A man who produces an article for his own immediate use, to consume it himself, creates a product, but not a commodity. As a self-sustaining producer he has nothing to do with society. But to produce a commodity, a man must not only produce an article satisfying some social want, but his labor itself must form part and parcel of the total sum of labor expended by society. It must be subordinate to the division of labor within society. It is nothing without the other divisions of labor, and on its part is required to integrate them.”

Marx, therefore argued, that commodities are “crystallized social labor.” The value of a commodity is therefore determined by “the quantity of labor bestowed upon its production.”

In other words, if we want to exchange coats for coffins, the only thing we can use to measure a common quantitative value between them is the socially necessary labor time it takes to produce them. So, for example, if it takes, on average, one hour for a worker to make a coat for their capitalist boss, and six hours for a worker to make a coffin for their capitalist boss, then six coats have the same exchange value as one coffin.

Since the commodity is “crystallized social labor,” it can be used as the basic “atom” or fundamental unit of the capitalist mode of production. Understanding how commodities function in capitalist society will allow us to understand and analyze, in our forthcoming articles, not only value, but also wages, prices, and how capitalists derive their profits.

#UnitedStates #politicalEconomy #MarxismLeninism #MLTheory #redTheory

Despite what bourgeois economists, the priests of property and profit, would have us believe, capitalism isn’t the eternal way of things. It had a beginning, and it will have an end. As we begin our discussion of political economy, let’s draw upon historical materialism to examine how capitalism arose.

Capitalism didn’t arise out of nowhere, and it wasn’t born from the minds of Adam Smith or David Ricardo. It emerged historically and materially from the womb of feudalism, and like any mode of production is limited and conditioned by what came before it. There are several phases in its history, from agrarian to mercantile capitalism, and then to industrialization and on to its current, monopoly stage.

An important characteristic of capitalism’s early development emphasized by Marx in Capital is what he called “primitive accumulation.” What is primitive accumulation? Marx calls it the “original sin” of how capital came to be in the first place. Marx explains the myth of the origin of capital like this: “In times long gone-by there were two sorts of people; one, the diligent, intelligent, and, above all, frugal elite; the other, lazy rascals, spending their substance, and more, in riotous living. (...) Thus it came to pass that the former sort accumulated wealth, and the latter sort had at last nothing to sell except their own skins.” But of course this is just another lie the capitalists tell to justify their rule. The truth, Marx says, is much uglier: “The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signaled the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation.”

The capitalists originally accumulated their vast wealth by stealing it outright, through colonialism, genocide and enslavement. This primitive, or original accumulation, though fiercely resisted, has never really stopped. Despite the end of chattel slavery after the Civil War in the United States, national oppression still continues to form the basis of super-profits extracted from the oppressed nations within the U.S. while imperialism continues to wage wars to plunder the underdeveloped countries the world over.

In broad terms, early capitalism grew out of the collapse of the manorial system in Europe, followed by the enclosure of the commons beginning in the 16th century. The enclosure of common land and the clearing of the estates, primarily for grazing by sheep to profit from the market in wool, drove poor peasants off the land and into the towns. In chapter 27 of Capital, Marx refers to this as “the prelude of the revolution that laid the foundation of the capitalist mode of production.”

Poor peasants more and more were compelled to become “free workers,” with nothing but their own labor power to sell, leading to the early development of the working class. The towns became centers of handicraft industry, commodity production, and trade, and thus became the growing centers of power for the rising mercantile bourgeoisie against the feudal estates in the countryside. In the towns the early mercantile capitalists began to build their wealth through the production and trade in commodities, or products made solely to sell, along with colonial plunder, including everything from mineral wealth, spices, coffee and tobacco, to enslaved human beings.

The coastal cities of Europe, and later America, became the power centers for the merchant capitalist class, whose ports traded between Europe and its colonies. This period was characterized by violent class struggle between the rising bourgeoisie and the feudal lords, whose hereditary wealth and power were based upon the continuance of the feudal mode of production. Many of the modern, capitalist nation-states were formed in this period from the revolutionary defeat of the feudal principalities and kingdoms, as the capitalists seized and consolidated state power based on territories encompassing communities of economy, language and culture.

Having smashed the power of the feudal lords and established their own state power, the bourgeoisie was able to change the relations of production to suit their needs, clearing the way for the tremendous advancement of the productive forces in the industrial revolution and the development of the modern industrial proletariat.

There’s an important point to be made here that is often misunderstood. Marx and Lenin both said that capitalism was a progressive historical force, and they said this knowing full well what horrors of exploitation and oppression capitalism brought with it. So what does it mean to say that capitalism was progressive? At its core, historical progress is a scientific concept, not a moral one, and it is measured in two ways according to historical materialism. First, by the development of the productive forces, and second, by the expansion of democracy.

In terms of the advancement of the productive forces, capitalism freed the productive forces from the fetters of feudal productive relations. This allowed for the development of modern industry and a more advanced division of labor.

Advancement in the productive forces reduces the socially necessary labor to produce human needs, thereby reducing scarcity and paving the way, materially, for the possibility of more equitable distribution of the products of labor. In terms of the expansion of democracy, the social revolutions that established the rule of the bourgeoisie overthrew feudalism and took power from the small class of hereditary lords and put it into the hands of the larger class of the bourgeoisie. By both criteria, capitalism was progressive by leaps and bounds over feudalism, which was inferior in terms of both the superstructure and the economic base. Simply put, the feudal mode of production took more work to produce less for the benefit of fewer people. By further developing the productive forces, capitalist relations of production establish the material conditions necessary for socialism. This is the progressive side of capitalism, according to Marxism.

This isn’t to say that capitalism doesn’t have a reactionary and oppressive side as well. It certainly does. For working and oppressed people that has always been how capitalism has been experienced – as a system of misery, poverty, oppression and exploitation. As we shall see more and more in the articles that follow, capitalism contains its own exploitative and oppressive contradictions that must also be overcome. In doing so socialist revolution will likewise remove from the productive forces the fetters of capitalist relations of production and create a system that is far more democratic, “a million times more democratic,” as Lenin said, by taking power from the relatively small ruling class of capitalists and putting it into the hands of the working class for the benefit of the broad masses of the people.

#UnitedStates #CapitalismAndEconomy #politicalEconomy #MarxismLeninism #MLTheory #redTheory

Across the country, the movement sparked by Occupy Wall Street has caught fire. This movement, identified by the slogan, “We are the 99%” targets the 1% of rich and powerful who are running the country for their interests and profit, at the expense of the rest of us who face high unemployment, lower wages, soaring tuition costs, home foreclosures and lack of affordable health insurance. In addition, servants of Wall Street are pushing to dismantle Social Security and Medicare and to raise taxes on the poor while cutting taxes even more on the rich. They say that they have no money, but are sending bombers and troops to more and more countries, so that military spending is now the single largest expense of the federal government, costing more than $800 billion a year.

So who are the 1%? The movement has targeted Wall Street, and indeed, before the recession and financial crisis, the financial industry was making 40% of profits of big corporations. But while the pain inflicted by Wall Street on the housing market (while getting bailed out itself) is historic, corporations across the board have shifted jobs to other countries (cutting some 4 million jobs in the United States while creating 3 million in other countries) and amassed some $2 *trillion* dollars in profits that they are not spending.

While there are millions of small businesses that are owned and operated by a single person, these small businesses only do about 5% of all sales in the economy. On the other hand, corporations make up only 10% of all businesses but do more than three-quarters of all sales. An even smaller group of less than 1000 big corporations with sales of more than $2.5 billion each make up half of all sales in the economy. The domination of the economy by a small number of giant for-profit corporations is what is called *“monopoly capitalism.“*

The most common yardstick of one’s position in the economy is income. The U.S. Census Bureau, the government agency in charge of collecting statistics, does not report much on people with very high incomes. They do say that households making more than $250,000 in income make up 2.1% of all households, but this is a much broader group than the top 1%.The Internal Revenue Service did report that the wealthiest 1% of taxpayers had an Adjusted Gross Income of $380,000 in 2010. So one way to define the top 1% would be those making more than $400,000.

But there are problems with using income to define the top 1%. For example, many professional football players make more than $400,000 a year. But on average, they only play three and a half seasons, so their high incomes are temporary. In addition, studies show that the average pro football player only lives 52 years, some 25 years less than the average American male. So they are making a sacrifice that the real rich and powerful don’t make. In contrast, oil billionaire John Rockefeller lived to be 98 and billionaire investor Warren Buffett is still going strong at 81. Last, and perhaps most importantly, last year the football owners locked out the players in a dispute over pay and working conditions, showing the power of the wealthy individuals who own the teams over their highly paid employees.

A better measure of economic power is wealth. Wealth can be more long-lasting than income, and can be passed from parents to children, unlike income. Finally, wealth gives economic power and control, as opposed to income, which allows one to buy more, but doesn’t give one economic power. Those whose wealth controls the big corporations who dominate the economy are the *“monopoly capitalists.”*

According to the IRS estimates based on estate taxes, there were about 2.2 million people, or about 1% of the adult population, whose net worth was $1.5 million or more in 2004. Net worth is a measure of wealth that takes a person’s total assets (home, real estate, stock, bonds, businesses, retirement savings, etc.) and subtracts all debts (mortgages, credit card, etc.). This top 1% owned almost $3.3 *trillion* in stocks, or more than half of the $6 trillion in stock owned by households that year. This means that the top 1% controlled the big corporations that dominate the economy.

An earlier study by economist Edward Wolff, based on statistics from the Federal Reserve Bank’s “Survey of Consumer Finances,” showed that the top 1% owned 47% of the net financial wealth (stocks, bonds, and businesses but not cars and home equity) in 1998. Wolff found that the concentration of wealth was increasing during the 1980s and 1990s, hand in hand with the increasing concentration of income as the rich got richer and the poor got poorer.

The rich not only control the corporations, but also the government. Over 40% of congress people, a majority of senators (54 out of 100), and three of the last four presidents were millionaires (and the only one who wasn’t, Bill Clinton, is a millionaire now), far more than the 4 to 5% of households with net worth of more than a million dollars estimated by Wolff. In addition, campaign contributions from the rich and corporate elite, combined with the influence of lobbyists who work for them, make sure that only those who serve the elite can be elected to high political office.

The electoral system as a whole is stacked against working people. Both major parties, the Republicans and the Democrats, are parties of the rich. The Occupy Wall Street movement, by breaking away from the confines of our two-party political system and appealing directly to the people, offers real hope for a mass movement that can beat back the right-wing and corporate attacks on our jobs, homes, schools and social programs.

*Read [Part II: Who are the 99? The Working Class](http://www.fightbacknews.org/2011/11/29/who-are-99-part-ii-working-class)* *Read more [Fight Back! coverage of Occupy Wall street](http://www.fightbacknews.org/news/special-coverage/occupy-wall-street) and follow [@fightbacknews](https://twitter.com/#!/fightbacknews) for live updates from #OccupyWallStreet protests around the country.*

#UnitedStates #monopolyCapitalism #OccupyWallStreet #TheOnePercent #politicalEconomy #99