Reflections on Jens Rushing, and Marx’s Value, Price and Profit

Reflections on Jens Rushing, and Marx’s Value, Price and Profit

Thomas L. Lynn, Jr.

A point of encouragement was the broad sharing of Jens Rushing's remarks about the issues surrounding the  the similarity in pay of fast food workers and Emergency Medical Technicians (EMTs). By dint of a certain synchronicity, this came up as I was revisiting a talk of Marx that he gave in 1865. Entitled Value, Price, and Profit,  reading it in tandem with the present focus on minimum wage provoked a measure of astonishment. This was in virtue of that the contours of the question of worker compensation have persisted remarkably  since even the middle nineteenth century into the present.The talk was given to a Working Man's Association. In it, Marx responds directly to the claims of  John Weston that a general raise in wages would be detrimental to the working class, inviting retaliatory action from capitalists that would raise prices across the board. Today, the movement to hike the minimum wage, even to a rather anemic $15.00/hr, has elicited a very similar  resistance from many (e.g.,the Cato Institute).

Among the lines which their objections take, we may take two here for our consideration. One of these is precisely a recapitulation of Weston’s point from 1865 that raising the minimum wage would provoke  a spike in prices to compensate for the resultant loss of profit margin. There is a granule of truth here as indeed a raise in wages would translate into a diminution of that fraction of the surplus value from which profit is derived. However, if one maintains, as those who oppose the raise of minimum wage often do, that the market is an adequate assessor of value, the coherence of this line of reasoning is open to serious question. This is in virtue of the circumstance that the value of a commodity is not a function of the capitalist's whim, but rather is founded upon the cost of its production and reproduction. As such, its determination is distinct from the relative proportion of value allocated to wage or profit.  To recall Marx:

The value of a commodity is determined by the total quantity of labour contained in it. But part of that quantity of labour is realized in a value for which and equivalent has been paid in the form of wages; part of it is realized in a value for which NO equivalent has been paid. Part of the labour contained in the commodity is paid labour; part is unpaid labour. By selling, therefore, the commodity at its value, that is, as the crystallization of the total quantity of labour bestowed upon it, the capitalist must necessarily sell it at a profit. He sells not only what has cost him an equivalent, but he sells also what has cost him nothing, although it has cost his workman labour. The cost of the commodity to the capitalist and its real cost are different things.

I repeat, therefore, that normal and average profits are made by selling commodities not above, but at their real values.  (Value, Price and Profit, Sec.X)

There is some subtlety here. For reflection shows though that what transpires in a raising of wage does curtail how much of a produced commodity’s value is available for extracting profit. Yet this does not change the overall value of the commodity, but rather merely how that value is subsequently allocated upon its realization in sale.  Thus, if one endeavors to raise the price of that commodity in response to more of that value being disbursed to labor, one will actually be swimming against the current of the market. This, of course, doesn’t prevent an effort to effect such a raise nevertheless. However, over time such efforts would founder upon the very shores where they seek refuge. For to offer  an item or service at a price above its value will discourage its sale.   Additionally, there are plenty of complications to muddy the water. In fact, if the general wage is raised, this should in principle translate to an increased effective demand for those commodities which are sought more specifically by the working class. But this would actually result in an enhanced profitability in the industries providing those goods and services, an enhanced profitability which would effect a shift in the distribution of investment capital in general. This would then provoke greater competition within those industries which would equilibriate the initial spike, returning it to its original level in real terms. And thus, the ultimately beneficial character of the raised wage is preserved.

This, it is worth repeating, is the outcome which derives from an adherence to the very principles of classical political economy as espoused by Adam Smith, or David Ricardo. What is seen thus is that the call for more robust remuneration of workers then is actually a rather conservative position, a reformist position. For simply to call for a raise in the general wage, especially the general minimum wage, is to leave intact the logic of the wage system itself. It is this latter which plays so essential a role in preserving class stratification by subordinating people to an economic rationality. To spell that out, one may recall that the wage is the price of labour-time, which is treated accordingly a commodity. The price of commodities is reflective of the value involved in their production and reproduction. Hence we arrive syllogistically to see that the proper level of a wage is what it would take to enable the worker to return to work the next day. In fact, the contract form whereby one one enters into such a wage agreement strictly insulates one from participation in the fruits of one’s own creative efforts. In this connection, a portal to volumes of elaboration is opened. Yet here we will restrict ourselves but one.  Namely, it is the concern to which Jens was speaking in his own happily distributed remarks.

There are many who have expressed grief that the gains made by fast food workers (yet still minimal, but at least emergent) result in a rather unfair situation for those in other professions, such as, but not exclusively, EMTs. As Rushing points out, this is a rather inverse manner in which to see the situation.  The problem is not that fast food workers make too much, but that EMTs, and indeed most people make too little. The more appropriate response then should be one of solidarity, not antagonism. And we may recall to avail Rushing’s own remark. “Look, if any job is going to take up someone's life, it deserves a living wage. If a job exists and you have to hire someone to do it, they deserve a living wage. End of story.”  I may hazard to append to this the additional, technical point: within a classical, or neo-classical economic framework, the function of a wage is not to provide reward for one’s efforts, but simply to enable the perpetuation of work. Thus, we see, that by and large, the notion of jobs being differentially rewarded actually is at odds with the imperatives of a commodity logic. Under that logic, the worker’s s  ontological status, or rather our status ontological status  is commensurate with that of mere machines requiring maintenance and fuel for operation. As we are human beings and not mere machines, though, we do not fit well on the Procrustean table of that rationality. And hence when its full implications begin to unfold we are drawn to revolt against its absurdity. To this point we shall return presently. But first, to complete the thought started in this paragraph, anxieties about how different sorts of works are in fact valued err, I would contend, in fixating upon wage or remuneration as the locus where upon to focus their concern.  For one, such fixation misunderstands the function of the wage. But of far greater significance, it also distracts from appreciating the more substantial roots of the troubles which confront us in the very system of economy whereof the wage is but emblematic.

Yet even the system is not the bottom line. It is but the material expression of our  relationships. And as such it very largely masks the dynamics of power which constitute them. It is in fact the distortions within those dynamics where the glaring tragedies of our time originate, manifesting macroscopically in the gross class stratification of our cultures and societies. And those we return to the question of revolt. Here is not meant some adolescent reactivity. Rather, it is the notion emergent from our very hearts, the perception that this state of affairs is simply incongruent with what we are and with what we are capable of being. It is thus not only against the oppressive structures that we inherit. Indeed, the opposition is secondary. Rather it is a movement to create a different world, the different world which Charles Eisenstein has eloquently called the more beautiful one that we know in our hearts to be possible. This world’s birth though is not to be found as macroscopically originated. Instead, it’s birth, its naissance is found within our immediate lives. That is, it originates in how we treat each other.  Let us, in that, err on the side of the generous.

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Here is a video reflection of similar themes from my YouTube Channel:
Karl Marx, Minimum Wage and Questions of Power