Friday, January 22, 2016

Oxfam report: AN ECONOMY FOR THE 1%

This is my summary of Oxfam's summary. I haven't included their "solutions" since they depend on the collective good will of the wealthy, which is unrealistic. I have read their summary (12pp) but not their full report.
  • 62 individuals have the same wealth as the poorest 3.6 billion people of the world (This figure is reduced from 388 individuals as recently as 2010.)
  • $542 billion – the increase in wealth of the richest 62 individuals since 2010
  • 50% the amount of the global wealth increase since 2000 received by the top 1%
  • $1 trillion – the fall in wealth of the poorest 3.6 billion people since 2010 (a drop of 41%)
  • Since 2000, the poorest half of the global population received only 1% of the increase in global wealth
  • $3 rise in the average annual income of the poorest 10% of people in the world

1) Apologists for the status quo claim that concern about inequality is driven by ‘politics of envy’. They often cite the reduction in the number of people living in extreme poverty as proof that inequality is not a major problem. But this is to miss the point. As an organization that exists to tackle poverty, Oxfam is unequivocal in welcoming the fantastic progress that has helped to halve the number of people living below the extreme poverty line between 1990 and 2010. Yet had inequality within countries not grown during that period, an extra 200 million people would have escaped poverty. That could have risen to 700 million had poor people benefited more than the rich from economic growth.

2) Rising economic inequality also compounds existing inequalities. The International Monetary Fund (IMF) recently found that countries with higher income inequality also tend to have larger gaps between women and men in terms of health, education, labour market participation, and representation in institutions like parliaments. The gender pay gap was also found to be higher in more unequal societies. It is worth noting that 53 of the world’s richest 62 people are men.

3) One of the key trends underlying this huge concentration of wealth and incomes is the increasing return to capital versus labour. In almost all rich countries and in most developing countries, the share of national income going to workers has been falling. This means workers are capturing less and less of the gains from growth. In contrast, the owners of capital have seen their capital consistently grow (through interest payments, dividends, or retained profits) faster than the rate the economy has been growing. Tax avoidance by the owners of capital, and governments reducing taxes on capital gains have further added to these returns. As Warren Buffett famously said, he pays a lower rate of tax than anyone in his office – including his cleaner and his secretary.

4) Oxfam’s experience with women workers around the world, from Myanmar to Morocco, is that they are barely scraping by on poverty wages. Women make up the majority of the world’s low-paid workers and are concentrated in the most precarious jobs. Meanwhile, chief executive salaries have rocketed. CEOs at the top US firms have seen their salaries increase by more than half (by 54.3%) since 2009, while ordinary wages have barely moved. The CEO of India’s top information technology firm makes 416 times the salary of a typical employee there. Women hold just 24 of the CEO positions at Fortune 500 companies.

5) A powerful example of an economic system that is rigged to work in the interests of the powerful is the global spider’s web of tax havens and the industry of tax avoidance, which has blossomed over recent decades. It has been given intellectual legitimacy by the dominant market fundamentalist world view that low taxes for rich individuals and companies are necessary to spur economic growth and are somehow good news for us all. The system is maintained by a highly paid, industrious bevy of professionals in the private banking, legal, accounting and investment industries. 6It is the wealthiest individuals and companies – those who should be paying the most tax – who can afford to use these services and this global architecture to avoid paying what they owe. It also indirectly leads to governments outside tax havens lowering taxes on businesses and on the rich themselves in a relentless ‘race to the bottom’.

6) In the garment sector, firms are consistently using their dominant position to insist on poverty wages. Between 2001 and 2011, wages for garment workers in most of the world’s 15 leading apparel-exporting countries fell in real terms. The acceptability of paying women lower wages has been cited as a key factor in increasing profitability. The world turned its attention to the plight of workers in garment factories in Bangladesh in April 2013, when 1,134 workers were killed when the Rana Plaza factory collapsed. People are losing their lives as companies seek to maximize profits by avoiding necessary safety practices. Despite all the attention and rhetoric, buyers’ short-term financial interests still dominate activities in this sector, as reports of inadequate fire and safety standards persist.

7) Inequality is also compounded by the power of companies to use monopoly and intellectual property to skew the market in their favour, forcing out competitors and driving up prices for ordinary people. Pharmaceutical companies spent more than $228m in 2014 on lobbying in Washington. When Thailand decided to issue a compulsory licence on a number of key medicines – a provision that gives governments the flexibility to produce drugs locally at a far lower price without the permission of the international patent holder – pharma successfully lobbied the US government to put Thailand on a list of countries that could be subject to trade sanctions.

Full Oxfam reports here includes full report, summary and methodology

Wednesday, January 20, 2016

The commodity perspective of value

(updated Jan 21, February 24, 25 2016)
The commodity perspective of value: use value, exchange-value and value

Marx begins his mature analysis of capitalism (A Contribution to a Critique of Political Economy, 1859) with the commodity as a simple thing or abstraction which contained the germ of the capitalist contradiction between use value and value on which the whole of his argument could be built. See notes at the end which outlines the timeline of this evolution in Marx's thought.

A commodity is a useful thing (a use value) for others (not the producer, since they produce commodities in bulk), a social use value, which is the product of labour (which creates value) and is transferred to another person by exchange in a marketplace. So commodities have both a use value and an exchange value)

Use value is a natural form. In any society (capitalist or pre capitalist) labour is used to make useful things, starting from natural raw materials. Use values are independent of the amount of labour. They are realised only by consumption. They constitute the source of all wealth.

But value or exchange value is not natural, it is a creature of capitalism. Value is an emergent (historically contingent) social form specific to capitalist commodity exchange. Value is an emergent social form which takes on a universal material form (gold, money).

It is just that we are so used to shopping that exchange value feels natural. But Marx imagined a future society, communism, where there was no scarcity and people simply take what they needed from a public pool. In communist society the needs of people come first. Value and its forms, money, and its measurement (socially necessary labour time) have withered away.

Back to capitalism. Value is measured by the quantity of human labour added to the commodity. If productivity increases due to improved technology then the value or cost of the product should decline proportionately. eg. Power looms in England in Marx's time doubled productivity and so the cost of cloth produced by yarn should have halved.

Marx talks about materialized or crystallized or embedded or congealed or abstract human labour adding value to a commodity. Abstract here means general or simple labour. Contrast abstract with concrete, which means a particular type of labour. For example, teaching or engineering is concrete, particular labour. Abstract labour is reducing all the different types of labour to a common type. Marx assumes this can be done without going into detail of how to do it.

But a commodity cannot be dissected to find the elements that makes it exchangeable. Exchange values do not contain one atom of use value. Value is a social reality. It is a social form. It's very existence depends of the capitalist marketplace where commodities (another social form) are exchanged.

Value and exchange value are more like a mirror. A commodity has to see another commodity (or money) before an exchange can take place. This is a social process. Moreover, socially necessary labour time can't be measured at the point of production. If a commodity is not sold or exchanged then it doesn't have value.

But the mirror metaphor makes the embedded crystals of labour approach seem contradictory or absurd. How can value be added to a commodity, through labour, on the one hand and yet only be discerned through comparison with another commodity on the other? The commodity has a dual nature. We have to adapt our thinking to incorporate this dialectic, to hold contradictory images of a concept in our minds. The source of this is Hegelian dialectics which is used extensively in Marx's method.

Some people have tried to imagine life without money. Can you imagine life without commodities? There is a difference between commodities and products! Products are things made for use in any society. Commodities are made for sale. They are part of capitalist society. It could be said that commodities create capitalism. As such they have both a use value and an exchange-value. To us they are as normal as going shopping. But the contradiction between use value and exchange-value has enormous implications. Marx had the imagination to grasp this.

In primitive society people produce mainly for their own needs and not for others. There is very little exchange. From a historical perspective you could say that a use value slowly struggles to achieve a recognition of value (which is seen as exchange-value in the exchange process and which is theorised to be abstract human labour by Marx). At that point historically, as the market develops, the use value becomes a commodity. Commodity production arrives big time when products are produced in bulk for the purpose of exchange. The producer has no personal need for those products, s/he produces them to sell them.

What a commodity is not

When a peasant produced quit-rent-corn for a feudal lord he is make a product but not a commodity because exchange is not involved. To become a commodity a product must be transferred to another, whom it will serve as a use-value, by means of exchange. This commodity definition was inserted by Engels into the 4th German edition of Capital (at the end of Chapter 1, section 1) due to this misunderstanding: not everything produced by or consumed by another is a commodity.

A thing can be a use value without having value.

This can happens whenever its utility (usefulness) is not due to labour. eg. air, virgin soil. Land is a major capitalist category. Many forms of production require land. From the point of view of the average worker buying a house and the land it sits on is a major purchase. But land is part of nature, it exists without labour inputs, and so strictly speaking is not a commodity.

It also happens when personal, private production produces use values without producing value. eg. the labour involved in building a cubby for your child or mowing the lawn at home produces use values but is not part of the capitalist marketplace.

Stolen goods are intended commodities which are not paid for and if they are not subsequently sold, by the thief, do not have their value realised. This introduces the case of goods that are produced but not sold due to overproduction, which leads to an economic recession. Are they commodities? By my reading they are commodities in waiting but not true commodities until they are sold and their value is realised.

The difference between exchange-value and value

Early on the distinction between exchange-value and value was not clear to me. I later discovered that Marx did not distinguish between them himself in his earlier important introductory work, A Contribution to the Critique of Political Economy. See Simon Clarke's Reading Notes on Capital in his Publications. Finally, I found a place where he did spell it out in an Appendix he added to the first German edition of Capital at the request of Engels.

In Section 4 of that Appendix Marx says that a commodities “existence as value is revealed by the exchangeability of the body of another commodity” and that “exchange-value is the independent form of appearance of commodity-value”

My understanding of this is that exchange is what we see on the surface (“form of appearance” ) and that value is the underlying category. It was another piece of what felt like a jigsaw puzzle, put into place.

Note on Marx's timeline about starting with the commodity

1857- Marx began Grundrisse (Rough Draft). This wasn't published until 1939-41 in German (limited edition), then 1953 (German fuller version) and 1973 in English (Martin Nicolaus translation)

In Grundrisse the sequence goes like this: money → Capital → Surplus value → Circulation process of Capital → theories of surplus value → profit → Value (this section to be brought forward)

1859 In A Contribution to a Critique of Political Economy (published), Marx does begin with the commodity

1861-5 Capital volume one was written and then published in 1867

(part 3, to be continued)

Monday, January 18, 2016

unpacking the value suitcase

Clarifying the meaning of and distinguishing between the words: value, wealth, quality and money

Suitcase words: Marvin Minsky (The Emotion Machine) has coined this marvellous term to describe words that are not clearly defined and mean different things to different people. For example, Consciousness is a suitcase word. It can mean unifier, self awareness, identity, animator of the mind, provider of meaning, detector of feelings. It refers to many different mental activities that don’t have a single cause or origin. In part Minsky’s book is about the need to create a new vocabulary in order to discuss the workings of the mind.

So, let us discuss the value suitcase. Over the years it has become a very large suitcase with many thousands of words devoted to different interpretations of value theory resulting in a tangled mass of incoherent vocabulary.

I start with the folk perspective because what we pick up as the everyday background noise of the meaning of words does influence our understanding when we get around to analysing those words in more detail. We cannot properly acquire new understandings without first subjecting our old understandings to critical scrutiny. No construction, without destruction.

Here are some popular uses of the word value:
  1. Tom is good value, ask him to do the job
  2. That car is good value for money
  3. Gold increases in value during economic recessions
  4. Steve Jobs adds value to Apple shares
  5. The role of a teacher is to add value to their students
  6. It was a valuable experience to attend that Noel Pearson lecture
So, in folk use, value might be used to describe an attribute of a person, a commodity (two examples, car and gold), a business, a process or an experience. In some cases there is a close connection between value and money (sentences 2 and 4) but in other cases it refers to the ability of certain people to successfully transfer their skill to a job of work or to other people. It can also refer to a learning experience. In all of these cases value is a good thing and the more value there is the better.

In Capital, Marx doesn’t start with value. He starts with the commodity and then splits the commodity into something which possesses both use value and exchange value. It turns out later that exchange-value is the form of appearance of value. Exchange value is “observable” in a transaction. For example, one 32GB USB stick = 16 litres of Pura full cream milk. We can equate these values in real life but more realistically in our imagination and it does not have to involve money. Value is the underlying category, an abstraction, a theoretical underpinning of exchange-value.

In Marx’s terms value has a form, a substance and a magnitude. The form of value is its capacity to be exchanged. The substance of value is embedded abstract labour. The magnitude of value is the amount of embedded labour or socially necessary labour time. This thumbnail needs to be discussed in more detail later.

Marx clearly distinguishes between value and use value. For Marx value is a social product (or in his language, a social form). It only exists in a commodity society, a society where products are produced and sold to others. For Marx value does not exist, or only exists in embryonic form, in primitive society where hunters and gatherers are mainly working for themselves. For Marx value is historically contingent whereas use value is not. Use value refers to the properties of products that make them useful. For example, a car is useful for transportation. This is true irrespective of whether it is bought and sold in the marketplace. Marx makes a radical separation between the usefulness of products (true for all social systems) and their value, which is only true for products which are made to be sold in the marketplace. Such products are defined as commodities.

What is the difference between the folk perspective of value and the Marx perspective of value?

Well, Marx mercilessly dissects or interrogates the commodity and teases out a variety of meanings and distinctions (use value, exchange-value, value). For Marx value becomes a central theoretical concept which is complex in its own right, having social form, substance and magnitude. But for Marx a line is drawn between value and use value.

So, looking again at the starting sentences and adding some annotations about what the folk use of value means in each case:
  1. Tom is good value, ask him to do the job (Tom is useful at work of an unspecified character)
  2. That car is good value for money (I am prepared to exchange my money to buy that car)
  3. Gold increases in value during economic recessions (Gold is special for unstated reasons because it is always valuable, even in economic crises)
  4. Steve Jobs adds value to Apple shares (some individuals excel at their value interventions in the capitalist system because of their creative design and marketing skills)
  5. The role of a teacher is to add value to their students (in the “knowledge economy” value can refer to added knowledge too; the teacher transfers their knowledge to their students)
  6. It was a valuable experience to attend that Noel Pearson lecture (an experience can be valuable or personally enriching in its own right)
The folk usage of the word value does either mean or imply the similar concepts which Marx discovers in the commodity (usefulness, exchangeability), adds on a few more (creativity, knowledge transfer, enrichment) and then fuzzily blurs them all together. In folk usage value is a suitcase word. Folks are using the word value as a suitcase whereas Marx is starting with the commodity and meticulously teasing out various meanings in his analysis.

The folk perspective on value and Marx’s perspective also deviate when it comes to labour saving or productivity increasing technology. With technological progress the value of manufactured products decreases. They become cheaper to buy in the marketplace.

I said above in relation to the six introductory sentences which illustrate a variety of usages of value, that:
In all of these cases value is a good thing and the more value there is the better
But now I am pointing out that as technological productivity increases then the value of the manufactured products decreases. That experience is part of popular consciousness. We all know that we possess more products than our parents generation. We possess them because we can afford them since comparable items are cheaper relative to our wages than they used to be. But does the concept of declining value universally enter the popular consciousness?
7) Commodities are cheaper for my generation than previous generations. We’ve never had it so good!
There may be some awareness of this truth but it is not general folk wisdom. Why not?

Well, often prices don’t go down. Rather you buy a fancier equivalent of the commodity you want for the same price. You are getting more value for money but not getting the feeling that things are cheaper in an absolute sense. Windows 10 replaces Windows 9. It really doesn’t do anything different but has a few extra bells and whistles so you end up paying a similar price. In reality, absolutely free alternative operating systems such as Ubuntu are equivalent and better in some ways (no viruses).

Some prices do go up. For example, land, petrol, electricity, internet access in Australia.

It is cheaper to build a house now than previously, due to technological and organisational development. The house is cheaper but the land is often more expensive due to supply and demand for good location.

Petrol prices are subject to the control of a cartel (OPEC)

The price of electricity goes up due to lack of forward planning by governments who don’t build surplus capacity in good time.

The National Broadband Network (NBN) is potentially a good idea but due to government incompetence it is rolled out in a more expensive fashion than is needed.

Environmental costs contribute to rising prices. Once again, governments are generally incompetent in managing these issues,

It is hard to accurately compare our generation with previous generations. This arises from the nature of capitalist development. We have more things but in the main they are different things to our parents possessions. When I grew up we did not own a flush toilet, an electric frig, a TV, a microwave or a computer. They were either invented or became affordable consumer items later. Even the items that are common to both generations differ substantially. Houses and cars are far more sophisticated today, they possess added gadgets and functionality which was not present previously. This rough comparison makes it obvious that the current generation has far more material possessions than previous generations. The value of producing equivalent and / or better commodities has declined over time mainly due to productivity improvements.

What is the difference between value and wealth?

In folk usage wealth may refer to:
8 ) There are a wealth of ideas in the mind of that intellectual
9) James Packer is wealthy (aka filthy rich)
10) Capitalism increases the wealth of society but that wealth is distributed unevenly
If you substitute wealth for value in my original sentences it doesn’t work out. You wouldn’t say:
1′) Tom is good wealth, ask him to do the job
2′) That car is good wealth for money
5′) The role of a teacher is to add wealth to their students
but you could say:
4′) Steve Jobs adds wealth to Apple shares
This is because value means more than the finished product or money. It also means or implies productive labour. Wealth doesn’t fit in those sentences because it usually refers more to the end product or the market value of the end product than the productive labour required to obtain that product.

Marx and his predecessors also distinguished between value and wealth. Wealth is the sum of all use values irrespective of whether they require labour. Hence unadorned natural products, eg. virgin land, are part of wealth but not part of value. In Marx’s terms nature is not a source of value. Marx approved of his predecessor William Petty in distinguishing between labour and nature as sources of wealth:
“Labour is … not the only source of material wealth, ie of the use-values it produces. As William Petty says, labour is the father of material wealth, the earth is its mother.” (Marx, vol 1)
Wealth is the sum of all use values, which are concrete and particular. Wealth originates in both nature and labour. This applies to any society. Value is a creature of capitalism or a society where commodities are exchanged in the market place and display their exchange-value there.

What is the difference between value and quality?

In Marx’s terms value is not metaphysical. By metaphysical I mean broad trans historical concepts which attempt to define meaning in a permanent or grandiose sense. Marx’s analysis is relevant to capitalism, not all of history. Marx is not writing a theory of everything to last for all time but is doing a specific critique of capitalism and classical political economy, the partly correct then existing theories of his predecessors Adam Smith, David Ricardo and others.

It is a different approach to my memory of the sense in which Quality is discussed at length in Pirsig’s Zen and the Art of Motor Cycle Maintenance. I had the sense there that if only the slippery concept of Quality could be grasped then that would be similar to solving the riddle of life itself.

However, folk usage does not always embrace metaphysical texts. In folk usage there is not a clear distinction made between value and quality. If you take the sentences I began with:
1) Tom is good quality, ask him to do the job
2) That car is good quality for money
3) Gold increases in quality during economic recessions
4) Steve Jobs adds quality to Apple shares
5) The role of a teacher is to add quality to their students
6) It was a quality experience to attend that Noel Pearson lecture
For most of them you could substitute the word quality for the word value. It is only in sentence (3) that this substitution does not work. This is because the phenomenon of gold increasing in value during economic recession requires a detailed economic theory to explain it. Even though the sentence is part of folk usage the explanation of that sentence is not.

What is the difference between value and money?

From the original sentences value is measured in money terms in sentences 2 and 4 or at least the connection is clear:
2) That car is good value for money
4) Steve Jobs adds value to Apple shares
In folk terms the value suitcase is much broader than money and encompasses usefulness, creativity and experiences as well.

For Marx value originates from labour and evolves into a universal equivalent, gold money, which further evolves into paper money. But for Marx value is in motion. The capitalist uses money or credit to buy labour and means of production, proceeds to a production process, sells the resultant commodities and finally invests more into the production process in a continual cycle. Value moves through this whole process dynamically.

So value is far more than money in both folk and Marx’s usage but in different ways.

The folk connotation of value is that it is a good thing, that valuable things (people, commodities, experiences) are worth having. This is different from the Marxist understanding, that value is a creature of capitalism an underlying theoretical concept which is the starting point to explain the motion of the whole capitalist system. For Marx, value is the starting point for further analysis and understanding of capitalism.

(part 2, to be continued)

marx and the domains of ignorance

The domains of ignorance:
  • Known unknowns: All the things you know you don't know
  • Unknown unknowns: All the things you don't know you don't know
  • Errors: All the things you think you know but don't
  • Unknown knowns: All the things you don't know you know
  • Taboos: Dangerous, polluting or forbidden knowledge
  • Denials: All the things too painful to know, so you don't
The domains of ignorance are relevant to Marx. Some people don't read him because it is taboo. Some people read him and think they understand but they don't. Some people have a superficial knowledge of Marx and think that is good enough. But none of that really explains the extent of the marginalisation of Marx. I think the main issue is that he is difficult to understand. The thing missing from the domains of ignorance is contradictory knowledge.

Isaac Deutscher provides an anecdote about the knowledge of Marx in that era (the 1930s):
"Capital is a tough nut to crack, opined Ignacy Daszyński, one of the best known socialist "people's tribunes" around the turn of the 20th century, but anyhow he had not read it. But, he said, Karl Kautsky had read it, and written a popular summary of the first volume. He hadn't read this either, but Kazimierz Kelles-Krauz, the party theoretician, had read Kautsky's pamphlet and summarised it. He also had not read Kelles-Krauz's text, but the financial expert of the party, Hermann Diamand, had read it and had told him, i.e. Daszynski, everything about it"
Marx's critique of political economy is old knowledge, forbidden or marginalised knowledge and difficult to understand knowledge. Because it was written 150 years ago many think it is no longer relevant. Because communism is believed to have been tried and found wanting many who want change think it could not provide the answers we want. Because Marxism is an insignificant part of mainstream education and in particular often not taught in the economics faculty then it is only going to be accessed by those who think outside of the mainstream. Finally, the many volumes of Capital are difficult to understand for a variety of reasons.

Conceptually the work is very rich and it is difficult to keep the whole of fit in your head. Marx uses a method of investigation (his adaptation of Hegelian dialectics) that is unfamiliar to moderns. Much of the language he uses is unfamiliar and this issue is exacerbated through a variety of translations. The prose is dense. Marx established a precise, strict terminology, eg. use value, exchange value, value, relative and absolute surplus value and then uses it rigorously for hundreds of pages. Therefore you must pay close attention, otherwise you are lost. He frequently uses French and Latin quotations. He also employs fascinating, tangential footnotes, which must be read.

The economic crisis which began in 2007 created an intellectual crisis, which did already exist, but was not so obvious as before the crisis. For much of time following WW2 economic crisis was absent, the capitalists had appeared to work out how to stabilise an unstable system. That assumption has now been shown to be false.

My contention is that to understand the inner workings of capitalism you have to understand Marx. Although this will not provide any magic solution to the current issues of ongoing economic crisis it will provide a deep appreciation of the inner contradictions of capitalism that make it forever an unstable and unpredictable system.

To understand value theory you have to read the original Marx. My goal here is to describe some of the hurdles I encountered along the way and answers I found to those problems. I called these AHA moments. I'm writing it as a series of confusions or sticking points followed by breakthroughs which were then followed by more confusions, etc.

The Value concept is central to Marx's whole argument. To understand capitalism, how it works from the inside, requires an understanding of Value. It is this broad view that has motivated me to persevere in reading Marx, whose writings are difficult, and various interpretations.

(part one, to be continued)

Friday, January 15, 2016

marx on alienation

What did Marx mean by alienation and is it still relevant?

When using the word alienation, Marx was talking about the fundamental social structures of the capitalist system. He was not talking about psychological alienation. In saying that I would not discount the concept of psychological alienation in connection with Marx's analysis. Rather, it is not the starting point of comprehension of what Marx was on about.

Marx regarded the contradiction between private property (the social class who owns the means of production) and alienated labour (the social class who has no option but to work to earn money to maintain themselves) as the fundamental issue of the capitalist era. Fundamental here means the main underlying contradiction, the one that can't be resolved by capitalism. It is not the same as the principal contradiction. The principal contradiction is the one which manifests itself most sharply in any particular era. I won't attempt to say what the principal contradiction is in the world today but I will say that if the post 2008 economic situation continues to deteriorate then the principal contradiction may become aligned with the fundamental contradiction.

In this essay I'm focusing on Marx's 1844 writings (Economic and Philosophical Manuscripts of 1844, particularly the section on Estranged Labour)

Christopher Arthur summarises Marx's 1844 writings as follows:
“Because the worker has no property in the means of production his labour-power is excluded from the instrument and object of production owned by another; his labour realizes itself therefore only through the wage-contract whereby it is alienated to the master and works in his behalf.”
- dialectics-of-labour/chapter-01
Marx discusses the nature of alienated work under capitalism, from a four fold perspective:(1) alienation from the products of labour; (2) alienation from his own labour; (3) alienation from fellow men and (4) alienation from his own species.

Capitalism has been around for 150 years since Marx wrote and has adapted in that time. Workers have struggled successfully to improve their working conditions through trade union and other struggles. The productive forces have developed tremendously and many of the most difficult jobs are now less difficult because of machines assisting the work. The education system has developed and expanded world wide to keep up with the requirements of the more developed productive forces. Many of the worst jobs have been exported to the developing countries. Knowledge industry and service industry type jobs have replaced many jobs in the industrial and agricultural sectors. A useful book, which I read years ago discussing the shift from industrial to service industry work was Sleepers, Wake! Technology and the Future of Work by Barry Jones, but obviously that analysis needs to be updated and developed.

It seems that Marx didn't anticipate the resilience and longevity of capitalism. I feel that in some places he exaggerates how bad things are for the worker. Capitalism has been adaptable in order to survive. Capitalism is a flexible and adaptable system but within limits. The bottom line is that it must continue to find a way to extract surplus value. Capitalism can't compromise on that issue.

Given these changes I will make some qualifying comments on Christopher Arthur's summary of Marx's 1844 document about the nature of work:
“The labourer treats his labour as a commodity; as a consequence he has no interest in the work itself but only in the wage; labour does not belong to itself but to private property.”
It is true that most people are driven to work to earn money. However, given Marx's general attitude to the central importance of work (aka labour, activity) in human development it is strange that he asserts that the worker has no interest in the work itself

This is too extreme. In another place (Critique of the Gotha Program, 1875) Marx, anticipating communism, describes labour as life's prime want. IMO it is simply not possible for the boss-worker alienated relationship to comprehensively destroy all interest in the work itself. Marx's ironic statement that capitalism creates it own grave diggers (Communist Manifesto, 1848), a proletariat that has learnt to run the system by building it, is far closer to the mark.
“... the worker ... executes plans he does not form; he objectifies himself in his product only to have it taken from him”
This is correct for most factory work and low skill jobs but when it comes to the knowledge industry (eg. engineers, computer programmers, some aspects of teaching) the workers are significantly involved in the planning
“he produces palaces but lives in hovels; his labour creates beauty but deforms himself ...”
Today, many workers live in nice homes. Home ownership is a problematic aspiration of the capitalist system. Nice if you can get it but it is going to take a significant proportion of your working life to attain it.

Does the worker deform himself? In the physical or bodily sense this is another exaggeration, although true in the cases where difficult manual work and industrial accidents still occur. In the mental sense it is true in the sense that workers have to adapt their lives to the needs of their jobs – eg. long hours, division of labour – but there are other aspects of work that are enjoyable and enriching. I think the key issue here in interpreting Marx about division of labour is that even for relatively good jobs the emphasis in training is on technical skills and the education system is not designed to develop critical, broad ranging thinkers.
“ … the more intelligence is embodied in the design of the factory system the more machine-like and stupefying the routine of work, so much so that the labourer faces machinery as a competitor for his place”
It is true that the dead labour in machines (aka fixed capital) progressively replaces living labour. This is part of the evolutionary dynamic of capitalism. Marx anticipated this, see this passage from the Grundrisse (1857-61) [“The development of fixed capital indicates to what degree general social knowledge has become a direct force of production, and to what degree, hence, the conditions of the process of social life itself have come under the control of the general intellect and been transformed in accordance with it” source]. The intelligence also becomes part of the skilled workforce (managers, scientists, engineers, computer programmers). It remains a living thing, not just embodied in the design of the factory system.
“at work he does not feel at home; he feels himself only when he is not working; his work is not voluntary therefore, but is forced labour; in it the worker belongs not to himself but to another”
Many workers will testify that they would rather be at home than at work but nevertheless many workers also feel that being at work broadens and enriches them in significant ways.

If we focus on factory work (not knowledge work) for a minute it is relatively easy to see that in such work the worker is alienated from the product he makes but does not own. Marx goes onto argue that since the product is alien then the labour process which made the product must also be alien. He calls this self-estrangement. Marx sees labour or work or activity, when it is not alienated, as life itself, since productive activity between man and nature is human essence.

So, the factory worker feels external or outside or not at home with this labour process. What would it take for this feeling to be reversed? Well, say the worker is at home doing home improvements or building a cubby for their child or researching a favourite topic on the internet. This is more like life activity being internal to the worker. I would argue that this is an experience that knowledge workers obtain sometimes at work, which leads to the “I like my job” feeling.

The main thing I liked about my teaching job was that ability to research different innovative approaches that helped me teach concepts I felt were useful more effectively to my students. When doing that I felt inside the work. This approach to internalisation of development was expressed through the constructionist learning theory developed by Seymour Papert. He even described the turtle in turtle geometry as an object to think with, conveying the internalisation of the learning process. But this bottom up learning is only happening in a few classrooms controlled by innovative teachers. It hasn't been taken up by the education system as a whole, which favours more structured top down approaches, which have a legitimate place in learning theory and practice, as well.

Capitalism leads to the dominance of things over people. Things develop personalities and workers lose their personalities, become mere wage plugs. Capital and capitalists (Bill Gates, Mark Zuckerberg, Steve Jobs, James Packer, Twiggy Forest) have individuality, their wealth or things enables them to express it (the personification of capital), whilst the worker is always struggling to keep afloat, pay off the mortage. Veblen pointed out the phenomenon of conspicuous consumption. Dead labour dominates living labour. The worker becomes an abstract individual (impoverished, pared down). The world of objects (property) becomes massive and powerful relative to the worker's world. In the face of the massive development of productive forces it is easy for workers to feel powerless. But it is the labour of the working class which has created this massive world of things.

Marx wants to transform the whole work experience so that all workers can become fully alive at work. If the worker feels at one with society, rather then having to compete to earn money to stay alive, then even mundane or banal jobs, jobs which have to be done, would feel useful rather than alienating.

It follows on from product ownership (previous section) that workers will have anxious, insecure, alien and hostile relations with the capitalist and landlord. The capitalist is powerful and alien compared to the worker.

Our self conscious species life is potentially rich. We produce a great range of things including beautiful things and things which can be used later. But the potential to live to the full extent of our species being is destroyed because capitalists appropriate the product of our labour.

Capitalism dissolves the world into competitive atomistic individuals rather than the cooperative, harmonious and joyful species that we could be.

Capitalists are alienated too! They cannot have normal human relations with the worker. They are dominated by the social conditions of the system, including competition. They are driven by the desire to amass profits. They are not directly involved in productive activity themselves. They become greedy (for money because they don't produce themselves), cruel and hypocritical.


Taking a step back we can view work as a mediation between man and nature. Christopher Arthur puts it like this:
“(Marx) ... speaks of nature as 'man's inorganic body' and says that 'he must maintain a continuing dialogue with it if he is not to die ... for man is a part of nature'. On the other hand, he says that 'it is in his fashioning of the objective world that man really proves himself; through such productive activity 'nature appears as his work and his reality . . . and he can therefore contemplate himself in a world he himself created'; this process is characterized as 'objectification' (Vergegenständlichung) ...

(objectification means the making of a product or object)

In truth, man is neither passively dependent upon nature, nor is he able to create his world from nothing. It is rather the case that through industry, productive activity, a dynamic relationship between man and nature is established in which both poles are transformed ...”
The word mediation is used in the sense of an extended process between man and nature which determines the nature of change of man and society. Contrast mediation with immediate. The view that man is in some sort of passive, contemplative relationship with nature or, the opposite view that man can somehow overthrow nature both suggest an immediate, short term connection rather than a mutually transforming mediation. Rather, man transforms nature, a process which requires both struggle and unity, and in the process transforms himself.

This establishes Marx's fundamental ontology, that human essence arises, is created, through the process of productive activity which mediates between man and nature. This provides a thematic starting point for the outlook of historical materialism, that historical development can be understood through the working through of this process of productive activity which mediates between man and nature.

Christopher Arthur refers to Istávan Mészáros's analysis of first order and second order mediations. The mediation of productive activity between man and nature is a fundamental first order mediation which applies historically to all societies. Compare this with capitalist society where:
“... in the present economic conditions we find that productive activity itself is mediated through the division of labour, private property, exchange, wages, in sum a system of estrangement in which productive activity loses itself and falls under the sway of an alien power. Istávan Mészáros has termed this 'a set of second-order mediations . . . i.e. a historically specific mediation of the ontologically fundamental self-mediation of man with nature” (emphasis added)

I have explained what Marx meant by alienation, a fourfold analysis [(1) alienation from the products of labour; (2) alienation from his own labour; (3) alienation from fellow men and (4) alienation from his own species] and contrasted his meaning with the more fashionable interpretation today of psychological alienation. Marx's meaning of alienation needs to be contrasted with his vision of communism where the mediation of productive activity between man and nature (human essence) is not contaminated by the social forms of capitalism (division of labour, private property, exchange, wages).

I have touched on technological change and the changing nature of work and how that requires Marx's class analysis to be updated but by no means negates its fundamental importance.

I'll return to these topics in subsequent blogs.

update (Jan 16):
Marx's solution to the problems of capitalism is for the proletariat to seize political power, through revolution, and to proceed to create communism, through a transitional period of socialism, or dictatorship of the proletariat over the capitalist class.

Now, obviously the proletariat, the 99%, could achieve this against the capitalist class, the 1%, if there was clarity, unity and good leadership to attain such a goal. The reason we don't have socialism is for various reasons the proletariat doesn't strongly desire socialism.

What I will do here is attempt a rough preliminary analysis, in terms of the ideas discussed by Marx, of the push factors from capitalism to communism and contrast them with the pull factors which prevent the proletariat from embracing that change.

In favour of the transition from capitalism to communism: The iniquitous social forms of wage labour, private property, division of labour and exchange would be eliminated and replaced with a not alienated mediation of productive activity between man and nature.

Factors impeding the transition from capitalism to communism: In order to support the Marxist revolution you need to understand what it is. That requires some slow, deep thinking, reading and analysis. Most workers are too busy working long hours to pay off the mortgage, keeping afloat in a competitive system. Our education system trains specialists (a division of labour) and not whole people who reflect on wide ranging social issues. Overall, the education system is designed to reproduce existing class relations rather than overthrow them. Capitalist culture tends to distract or entertain people in a whole range of ways (from David Bowie to Buddhism to Foxtel to drugs). The disenfranchised are given welfare, enough to survive, which keeps them distracted and so that threat to the system has been manageable up until now.

Alternatively, it could be argued that Marx was wrong. I'm interested in those arguments and have at times adopted them myself. But I now suspect it is more the case that Marx has not been understood or only partially understood or that some "Marxist" leaders have been too dogmatic, one sided and have ended up offering bad leadership.


Arthur, Christopher. Dialectics of Labour: Marx and his Relation to Hegel, Ch 1

Jones, Barry. Sleepers, Wake! Technology and the Future of Work

Marx, Karl
Economic and Philosophical Manuscripts of 1844, particularly the section on Estranged Labour,

Communist Manifesto

Critique of the Gotha Programme

Grundrisse (section)