Profit is Theft
Capitalist profit — not taxation — is the real theft that occurs every day in the workplace.
A co-worker recently lamented to me how much larger his paycheck would be if it were not for the government’s withdrawal of taxes. This is a common misconception among working-class people about why their wages are so low. The libertarian-right has been particularly influential in spreading this misinformation with its popular credo that “taxation is theft.”
‘Cause I’m the Tax Man
Let’s put aside for the time being the fact that this particular co-worker utilizes taxpayer-funded roads to travel to work every day. Let’s also assume, for the sake of argument, that he bathes with public water, powers his home with town electricity, sends his kids to public school, and is planning on collecting Social Security when he retires.
Point being, this person benefits daily from those pesky taxes he resents paying so much. Indeed, anti-tax libertarians are the biggest hypocrites on this issue. Even Ayn Rand collected Social Security, for Christ’s sake!
This is not to suggest that all taxes are put to good, socially beneficial use. Nearly 60 percent of our federal tax dollars go to the Pentagon. And WMD-manufacturers like Maine’s Bath Iron Works pay virtually nothing in taxes.
Furthermore, contrary to right-wing propaganda, working-class Americans pay a relatively small amount in taxes compared to what citizens in Sweden, Denmark, France, Italy and other countries pay. In fact, the U.S. is among the lowest-taxed nations in the world, according to the Organization for Economic Co-operation and Development (OECD).
And consider the material benefits citizens of Denmark and Sweden receive for their higher tax-rates: free college tuition for all, universal health care, paid parental leave, and ample vacation time to name just a few. Implementing just one of these incredibly popular social programs here in the U.S. would go a long way toward making this country less of a pathetic failed state. (You read correctly: I just called America a “failed state.” Prove me wrong.)
But my co-worker is right about one thing: There is a form of theft going on at the workplace. Where he is wrong is on the source of that theft. The reason your paycheck is so small is because your employer does not pay you what your labor is actually worth.
In fact, this is how capitalists make a profit: By paying workers the bare minimum they can legally get away with. Thus, profit, not taxes, is the real theft.
How Capitalism Works
Under capitalism, working-class people have nothing to sell but their labor-power or their ability to work. Workers, unlike the bourgeoisie, do not own the means of production (i.e. the factories, retail stores, Amazon warehouses or small businesses). In order to make a living, a working-class person has no choice but to “sell” him or herself to an employer for a wage. What the employer is really purchasing is the worker’s time along with her physical, mental, and perhaps even emotional labor-power. For eight hours a day (or more) the capitalist employer basically “owns” the worker. Thus, to be a worker is to be exploited.
The goal of any capitalist is simple: To make money. Rather, to put it more precisely, the capitalist’s goal is to make more money than he originally started with. In other words, he wants to make a profit.
This is not because the capitalist is necessarily an “evil” or “greedy” person. It is merely the name of the game. Any capitalist who does not do everything possible to maximize profits is not deemed a “serious” or “efficient” player of the game that is capitalism. And that inefficient capitalist will promptly be replaced by a more productive one. Petty-bourgeois or small business owners who fail to maximize profits ahead of any and all other considerations will simply go out of business.
This is why the liberal fixation on supposedly “good” or “benevolent” millionaire CEOS like Bill Gates is misplaced at best — a perverse form of sycophantic bourgeois worship, at worst. It makes little difference what individual capitalists are like as people or how kindly they may treat the employees they are screwing over. Marxists are interested in the system as a whole — not the personality traits of a few of its players.
Nothing Will Come From Nothing
Karl Marx, in the first volume of his three-part economic treatise, Capital, published in 1867, lays out the basic framework of capitalist accumulation. Marx zeroes in on the commodity as the starting point of all capitalist analysis. A commodity is any useful object, be it a toothbrush, a purse, a coffee mug or a cellphone. (Today, we might also classify various services such as those provided by restaurant, fast-food, or retail workers as a “commodity.”) Labor-power, or again, one’s ability to work, is also considered a commodity.
Every commodity has two types of value: Use-value (or what useful function the commodity serves), and exchange value (or its monetary value). At its most basic level, capitalism is a process in which a person sells a commodity for money and then uses that money to purchase other commodities. This is a process of selling in order to buy. Indeed, this is how most working-class people experience capitalism on a daily basis. I sell a record from my admittedly vast collection at a yard sale, then I use the money collected to purchase a bag of Romaine lettuce. Marx transcribes this simple transaction as “C-M-C” or the conversion of a Commodity into Money and then back into a Commodity.
But a wealthy capitalist who has just purchased a factory (or the “means of production”) has no interest in selling in order to buy. This process merely shifts goods and money around from one person to another. As Marx observes in Capital, “Use-value must … never be treated as the immediate aim of the capitalist.”
Rather, the capitalist’s goal is the exact inverse: He wants to transform his initial investment of the factory into more money than he started out with. In other words, the capitalist wants to buy in order to sell. Thus, the formulation C-M-C is now inverted to M-C-M’ or converting Money into a Commodity, and then into more Money. Note the apostrophe after the second “M” in this new formula. This is no typo. It denotes Money plus an additional surplus. The capitalist pockets this surplus value for himself as his profit.
The capitalist’s goal, Marx explains, is “the unceasing movement of profit-making.”
But where does this surplus come from…? This is where the worker comes in.
The wealthy entrepreneur now owns an entire factory, including all of the tools, machines, and resources he needs to make a commodity (say, boots). But he has nobody to do the actual work: i.e. to manufacture the boots. So he hires you, the worker with nothing to sell but your labor-power, to join a staff of other workers who will do the actual labor of producing the boots. Now the capitalist has become an employer. He pays you $25 an hour to produce boots. In a typical hour, you can produce about six boots.
At this pay rate you would make enough money to meet all of your basic needs (food, housing, clothes, etc.) in about four hours’ time. (For the sake of argument, let’s just assume $100 is enough to cover all of these costs.) But the capitalist has scheduled you for a full eight-hour workday. In other words, the capitalist has purchased your labor-power for longer than you really need to work in order to sustain yourself for the rest of the day — so you can wake up tomorrow morning and do it all over again. These additional four hours which the capitalist has scheduled you for is essentially surplus labor-power on your part. And the capitalist pockets this surplus for himself. The labor you expend during the additional four hours you must work is essentially unpaid labor.
This, my comrades, is what has truly been stolen from your paycheck. This is why work is inherently exploitative.
As Marx writes of this process:
The capitalist pays the value of the labor-power… and receives in exchange the right to dispose of the living labor-power itself. The length of time during which he utilizes the labor-power is divided into two separate periods. During one period, the worker produces a value that only equals the value of his labor-power, i.e. he produces its equivalent. Thus the capitalist receives, in return for advancing the price of the labor-power, a product of the same price. It is the same as if he had bought the product ready-made in the market. During the other period, the period of surplus labor, the utilization of the labor-power creates a value for the capitalist without costing him any value in return. He is thus able to set labor-power in motion without paying for it. It is in this sense that labor can be called unpaid labor.
Labor Creates all Wealth
Most economists and economic professors ignore the source of profit, entirely. Many insist profit is merely the capitalist’s “reward” for “creating jobs” and for his overall “innovation,” and “entrepreneurial skills.” Yet, as Paul D’Amato writes in his socialist primer, The Meaning of Marxism, “The capitalist’s ‘reward,’ in fact, results from workers ‘forbearing to consume’ the fruits of their own labor.”
He adds, “Whether capitalists reinvest the surplus to expand production, or whether they spend it on their own personal luxury — and they do both in extravagant proportions — they are making use of wealth they did not produce.”
This is the real theft that occurs in the workplace.
But there is more. Marx’s analysis also points to another significant — though rarely acknowledged — aspect of capitalism: Labor — not the supposed “genius” of the exalted bourgeois “job-creators” — is the real source of all wealth in society. Without the labor of the working class no goods would be delivered to grocery and retail stores. No mail would be delivered. Buses, taxis, trains, and trucks would not reach their destinations. Students would have nobody to teach them. And restaurant patrons would be forced to serve themselves.
No wonder so many businesses were quick to declare their services “essential” last year at the start of the COVID-19 pandemic. They understood that without the wealth their workers create, the economy would all but shut down.
This is why workers should collectively own the schools, factories, warehouses, and stores they labor in. Under socialism, workers could democratically decide how to spend their surplus labor. They could also have a say in the length of their workday, the conditions under which they labor, and make policy decisions democratically among themselves. Most importantly, they would receive the full compensation for their labor — a “fair day’s pay for a fair day’s work,” as the saying goes.
This is the ultimate goal of socialism. It represents the self-emancipation of the working class.
So, let’s take back the money that has been stolen from us. And, while we are at it, let’s seize the means of production, as well.
“Let us finally imagine … an association of free men, working with the means of production held in common,” Marx writes, “and expending their many different forms of labor-power in full self-awareness as one single social labor force.”