Karl Marx - Theory Of Wages

Theory of Wages, Karl Marx

Labor Power Is a Commodity

Marx's theory of wages is merely an extension of his general theory of value to a specific category of prices. In the Marxian sense, a wage is a price paid for labor power, not for labor. "By labor power or capacity for labor is to be understood the aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use value of any description." "Labor power" is the thing that enters the labor market, being sold by the laborer and purchased by the capitalist employer. Thus, "labor power" is a commodity having exchange value, since the laborer can alienate it from his person as he sells to the capitalist the right to use his use value or labor. It is only this right that can be alienated, and consequently "labor is the substance, and the immanent measure of value, but has itself no value" (that is, no exchange value).

In other words, Marx holds that the thing the worker sells to the employer is the right to put him as a worker to work. It is not the pro­ductivity of the worker that is sold; it is merely the right to make the worker exert himself. However, since the use value of the productivity of the worker cannot be severed from his power to release this use value or productivity, the employer buys the labor power but gets the use value of that labor power, or the labor itself. Thus, while it may appear that the use value of the worker, or the labor itself, is the subject of the wage contract and is paid for, the fact is that only the labor power is paid for, while the actual use of that labor power is a thing separate and distinct from it. In any event, it is the labor power that is paid for, and the value of this labor power is the wage. At this point this distinction is noted only as a part of the Marxian theory of wages. Its significance will be evident in the discussion of surplus value in the next chapter.

To Marx a wage can exist only in a situation in which (1) the worker is free to sell his labor power and (2) he cannot by himself make use of it in producing some commodity for sale.

Labor power can appear upon the market as a commodity only if, and so far as, its possessor, the individual whose labor power it is, offers it for sale, or sells it, as a commodity. In order that he may be able to do this, he must have it at his disposal, must be the untrammeled owner of his capacity for labor, i.e., of his person. . . . The second es­sential condition to the owner of money finding labor power in the market as a commodity is this—that the laborer, instead of being in the position to sell commodities in which his labor is incorporated, must be obliged to offer for sale as a commodity that very labor power, which exists only in his living self.

Normal Wage and Market Wage

Paralleling his distinction between normal values and market values, Marx notes that the wage actually paid a given worker or group of workers may be temporarily above or below the normal wage. Supply and demand forces only cause oscillations above and below a "certain mean." The mean is the "natural price . . . determined independently of demand and supply." Marx sought to answer these questions. What determines the height of this mean? What forces establish the "natural" or the equilibrium wage toward which actual market wages are incessantly drawn despite their temporary departures therefrom? "On the basis of the present system labor is only a commodity like others. It must, therefore pass through the same fluctuations to fetch an average price corresponding to its value.""' Marx makes numerous references to situations in which labor power ac­tually sells for more or less than its "value.'' These deviations mutually cancel each other, leaving the "normal wage" as the selling price of labor power received by workers over a period of time.

Labor Content Determines Value of Labor Power

Like other commodity values, the value of labor power is determined by its content of socially necessary labor time. "Therefore the labor time requisite for the production of labor power reduces itself to that neces­sary for the production of those means of subsistence; in other words, the value of labor power is the value of the means of subsistence necessary for the maintenance of the laborer." Numerous concise statements of this theory of wages are found in Marxian literature. Many of them—as, for instance, the following—emphasize the physical side of the concept subsistence:
The value of laboring power is determined by the value of the necessaries required to produce, develop, maintain, and perpetuate the laboring power.

In exchange he [the worker] receives just as much, and no more, of the necessaries of life as is required to keep up the repetition of the same bargain every day.

The average price of wage labor is the minimum wage, i.e., the quantum of the means of subsistence which is absolutely requisite to keep the laborer in bare existence as a laborer.

Hence, the cost of production of a workman is restricted, almost entirely, to the means of subsistence that he requires for his maintenance, and for the propagation of his race.

The value of labor power is determined, as in the case of every commodity, by the labor-time necessary for the production, and conse­quently also the reproduction, of this special article.
As with all other commodities, so with labor, its market price will, in the long run, adapt itself to its value; that, therefore, despite all the ups and downs, and do what he may, the working man will, on the average, only receive the value of his labor, which resolves into the value of his laboring power, which is determined by the value of the necessaries required for its maintenance and reproduction, which value of necessaries finally is regulated by the quantum of labor needed to produce them.

The Normal Price of Labor Power

Expressed in money terms, the normal price of a day's labor power there­fore is that quantity of the standard money containing the amount of metal that could be produced in the same socially necessary labor time as could the necessaries comprising one day's subsistence for the laborer. Marx il­lustrates this principle as follows:

Suppose that in this mass of commodities requisite for the average day there are embodied six hours of social labor, then [assuming that a standard length of the working day is twelve hours] there is incorporated daily in labor power half a day's average social labor; in other words, half a day's labor is requisite for the daily production of labor power. This quantity of labor forms the value of a day's labor power or the value of the labor power daily reproduced. If half a day's average social labor is incorporated in three shillings, then three shillings is the price corresponding to the value of a day's labor power.
In elaborating on this theory of wages, Marx placed it on a family rather than an individual basis. "The value of labor power was determined, not only by the labor time necessary to maintain the individual adult laborer, but also by that necessary to maintain his family."55 "Hence the sum of the means of subsistence necessary for the production of labor power must include the means necessary for the laborer's substitutes, i.e., his children, in order that this race of peculiar commodity-owners may perpetuate its appearance in the market." When family wage and family subsistence are tied together in this manner, Marx goes on to contend that "machinery, by throwing every member of the family on to the labor market, spreads the value of the man's labor over his whole family. It thus depreciates his labor power."

Wage Differential for Grade of Skill

Starting with this theory, wage differentials between grades of skill were also accounted for on the basis of differences in the cost of producing various categories of skill. If a period of training were prerequisite to at­taining a given degree of skill, the production of that skill would use up a larger amount of socially necessary labor time, and the labor power of such a skilled laborer would have an equivalently greater value. "As dif­ferent kinds of laboring power have different values, or require different quantities of labor for their production, they must fetch different prices in the labor market."

This apparently modifies subsistence into meaning the subsistence of skill. Each particular grade of skill thus would normally receive a wage sufficient to reproduce its kind. In the following summary Marx implies that education and training are the most important additional costs in the production of skilled labor power.

In order to modify the human organism, so that it may acquire skill and handiness in a given branch of industry, and become labor power of a special kind, a special education or training is requisite, and this, on its part, costs an equivalent in commodities of a greater or less amount. This amount varies according to the more or less complicated character of the labor power. The expenses of this education (ex­cessively small in the case of ordinary labor power) enter pro tanto into the total value spent in its production.

Meaning of Subsistence

In applying his theory of wages to the analysis of economic phenomena, Marx found himself between two difficulties. If, on the one hand, the normal wage, or cost of producing the labor, was to be considered an amount necessary to the worker's bare physical subsistence, the theory not only ran counter to certain easily observable wage facts but also proved ineffectual all attempts to raise wages under the capitalist system. If, however, the cost of production of labor power were thought of as capable of being extended by new desires on the part of workers, it would appear possible to raise wages through the workers' own efforts under the capitalist system. Since Marx refused to accept completely either of these corollaries of his wage theory, his treatment of wages wavers between the two positions. In certain connections, he appears to accept the mere phys­ical subsistence concept of wage-determining cost of labor power. In other portions of his analysis, he uses the more elastic interpretation of the con­cept subsistence.

In fact, one can find in Marxian writings passages indicating that almost nothing was ruled out of "subsistence," provided the worker wanted it badly enough to think and act as though that thing were a necessary part of his living. The scope of the items that in one connection or another Marx and Engels included in "subsistence" may be noted from the following passages (italics ours):

The value of labor power is determined by the value of the necessaries of life habitually required by the average laborer.
His means of subsistence must therefore be sufficient to maintain him in his normal stale as a laboring individual.
In contradistinction therefore to the case of other commodities, there enters into the determination of the value of labor power a historical and moral element.

A fair day's wage, under normal conditions, is the sum required to pro­cure to the laborer the means of existence necessary, according to the standard of life of his station and country, to keep himself in working order and to propagate his race.
But where a particular rate of piece wage has for a long time been fixed by tradition, and its lowering, therefore, presented especial difficulties, the masters, in such exceptional cases, sometimes had recourse to its compulsory transformation into time wages.

Besides this mere physical element, the value of labor is in every country determined by a traditional standard of life. It is not mere physical life, but it is the satisfaction of certain wants springing from the social conditions in which people are placed and reared up. . . . The important part which historical tradition and social habitude play in this respect, you may learn from Mr. Thornton's work on Overpopulation. . . . This historical or social element, entering into the value of labor, may be expanded, or contracted, or altogether extinguished, so that nothing remains but the physical limit. . . .By comparing the standard wages or values of labor in different countries, and by comparing them in value of labor itself is not a fixed but a variable magnitude. . . .

Thus while the Marxian theory of wages in its purely abstract form is clear enough, it becomes blurred by all the concessions Marx made when he found it necessary to define the items comprising the "subsistence" of labor power. At one time subsistence appears to mean only those things vital to the maintenance of physical health; at another, it is enlarged to include items that have come to be wanted by workers because of their social or historical environment.

Physical Subsistence Is Emphasized

However, when Marxian theory is considered as a whole, it clearly holds that wages are bound closely to a physical subsistence level. If there are any tendencies acting counter to this pull of physical subsistence, they are either temporary or so slow in their operation that they may be neg­lected in analyzing the basic forces at work under capitalism. In various other portions of his thought (to be considered later in another connection), Marx pointed out what he considered to be powerful forces that under capitalism effectively resisted any tendency for wages to rise significantly above a physical subsistence level. Certain modifications that Marx made in his theory of value (by way of injecting a concept of averages into it) did not prevent him from holding to the original theory as the "heart" of value determination. Similarly in the case of his wage theory, despite the numerous concessions and modifications apparently made in the sub­sistence concept, Marx still retained physical subsistence as the heart of the wage-determining cost of producing labor power.