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Chapter IV. The Source of Profit

In the last article we discovered that the wage worker produces a surplus of values in the course of the working day which accrues to the boss— values for which the boss gives the laborer no return.

As Marx puts it: "The surplus value, or that part of the total value of a commodity in which the surplus labor or unpaid labor is realized, I call Profit." (Value, Price and Profit, page 89.)

The average person believes that profit is made by charging for things a price above their value; by cheating, or in some devious way, but nothing can be further from fact than such a supposition. While there is robbery it does not take place over the counter, but has already taken place where the laborer works and while he was working, and it resolves itself into the unpaid labor crystallized in the commodities.

It is not by charging in excess of their values, but by selling (exchanging) them at their real values that profit is made. Let us again refer to Marx, "By selling, therefore, the commodity at its value, that is, as the crystallization of the total quantity of labor bestowed upon it, the capitalist must necessarily sell at a profit. He sells not only what has cost him an equivalent, but he sells also what cost him nothing, although it has cost his workman labor. The cost of the commodity to the capitalist (money cost—Ed) and its real cost (labor cost—Ed) are different things. I repeat, therefore, that normal and average profits are made selling commodities not above, but at their real values." (Value, Price and Profit, pages 87-88.)

When the capitalist takes his commodities into the market he exchanges with other capitalists for their commodities, and when the exchange is effected the capitalists, by exchanging for the real value of their commodities, all make a profit, for each of them will have pocketed that share of each commodity which cost them nothing. This is what Marx terms "normal and average profit." It is this that inspires capitalist production. If cheating were the rule there would be no cohesion among the capitalists, but it is imperative for their interest, for the continuation of the exploitation of wage labor, that profits be made legally. They have made laws (rules) to enforce this practice as a measure of safety, of course, for themselves.

The Prof it System.

Profits are the logical fruit of capitalist industry. They are inherent in this system of production and exchange. Capitalism has been appropriately termed the "profit system." Its products are commodities, and its production is for exchange. Production of commodities for exchange, with profit for its objective.

While its products are use values, it produces them only in the light of exchange values—things that will sell. Of course, people will only buy them when they intend to use them. To the capitalist they are things that will sell and for which he receives more than they cost him to produce—they are a means of profit.

A failure to understand the source and the nature of profit—surplus values out of which the wage worker is exploited—leads the average worker to believe that he is robbed in the purchase of the commodities he buys as a consumer. The workers who act upon this assumption are hunting the remedy in the wrong direction. For a rise in the price of the commodities which he must purchase means that the labor time necessary to produce his labor power has been increased. He must, and, when he understands, he will seek more pay from the employer. Whenever, and from whatever cause, the purchasing power of wages falls below what is required to enable the worker to maintain the established living standard he has received the equivalent of a cut in wages. Whether it be due to a rise in the price of commodities, or reflects a depreciation of the value of gold, it is to be repaired only by a corresponding increase in his wage; he, as a worker, must seek redress out of the measure of surplus value; he must increase the measure of his paid labor time—get more wages. If this does not happen labor power will be selling below its value.

For, if the consumer is exploited in the purchase of commodities, there need be no exploitation of the laborer in production. Not only that but as the individual capitalist is a greater consumer than the individual laborer he would be exploited to a greater degree. The worker and his employer would have a common interest and would make common cause with the baker against the grocery man and the butcher, Afterward they could form another alliance with the grocery man and the butcher against the baker, and so on, ad infinitum.

The worker would be going in the wrong direction. He would be traveling in a vicious circle and at the end of his activity would find that he was as badly off as before, and would realize that to regain his living standard he would be compelled to demand a higher wage from his boss.

For the worker is one member of the class of laborers. As a wage worker he produces values for which he receives no equivalent. He does not do this from choice, but because the situation of the class of which he is part compels him to sell his labor power that he may provide himself and family with the means of life. The capitalist class takes, as its portion of wealth production, all the surplus values resulting from the labor of the working class. If the living standard of the working class be lowered, the value of labor power will be reduced, and the measure of surplus value will be increased—profits will be greater.

The Class Struggle.

The interest of the capitalists lies, therefore, in forcing, if they can, a lower living standard upon the workers. Naturally the interest of the workers lies in not only maintaining their present standard but in trying to elevate it. This antagonism is an evidence of what we know as the class struggle. The class struggle is a living human and social fact, and must be the guide by which all working class activity is determined and directed. The consciousness of this class struggle should ever be with the worker, for the real position and condition of the "free laborer" in capitalist society is that of a member of a slave class. The individual worker may quit his job at will, but he must seek another boss without delay. As Marx puts it: "But the laborer, whose only source of earning is the sale of his labor power, cannot leave the whole class of its purchasers, that is the capitalist class, without renouncing his own existence. He does not belong to this or that employer, but he does belong to the capitalist class; and more than that, it is his business to find an employer; that is among the capitalist class it is his business to discover his own particular purchaser." (Wage Labor and Capital, page 19.)

Capitalist Enslavement.

Capitalist enslavement of the working class enables the capitalists to own the products of the workers' labor. And this is all that other forms of slavery meant. The difference is only in appearance; the slavery is as complete, in fact more complete. Says Marx: "Capital presupposes wage-labor and wage-labor presupposes capital." That is, there could not be a capitalist unless there was a class of workers which could not live except by selling their life energy—a class in a slave position.

The exploitation of the worker can only occur while he is working . Having nothing to be robbed of but his power to produce wealth he cannot be robbed of more than he has. It is in the working place—on the job—that the worker is exploited. Exploitation cannot occur anywhere else. There is no other place toward which he can apply for redress and expect to get it. His control over production is the only power he can exercise with a prospect of result. This power is beyond him, also, until he organizes to employ it. He need look to the capitalists for no consideration or help. Says Marx: "The interests of capital are in direct antagonism to the interests of wage-labor."

To blame the shopkeeper is a waste of time and misdirected energy, for the regulation of commodity prices is beyond the workers' powers. When prices rise, while wages remain stationary, the worker has received in effect a cut in wages. He must strive in the direction of a wage increase; he must seek an increase in the measure of his paid labor time; compel the boss to forego some of his surplus value. The worker is not robbed over the counter, but at the point of production, and it is in production he must look for restoration—in the working place and from the boss.


  • 1. What does Marx call profit?
  • 2. Is profit made, ordinarily, by charging excessive prices?
  • 3. How is normal or average profit made?
  • 4. Why is capitalism called "the profit system"?
  • 5. What happens if prices rise and wages do not rise correspondingly?
  • 6. Should the worker try to get prices lowered or to have wages raised? Why?
  • 7. Why do .the capitalists strive for lower living standards for the workers?
  • 8. What is the class struggle?
  • 9. What is the position of the free laborer in capitalist society?
  • 10. What is the substance of slavery?
  • 11. What is meant by "the interests of capital are in direct antagonism to the interests of wage-labor" ?

Next page: Chapter V. Prices of Commodities