Pt 2. Can the Capitalists Share Surplus Value with the Working Class?

In the last reply, I explained that skilled workers though they receive higher wages than unskilled workers do not appropriate any surplus value. On the contrary, their higher wages reflect the higher value of their labor power.

A single commodity labor power is actually an abstraction. In the real world, there are different types of labor powers—plumbers, carpenters, jewelers, assemblers, and so on with different values. However, from the viewpoint of the industrial capitalists, these different types of labor powers have the same use value, they all produce surplus value.

If one type of labor power, say that of carpenters, had a lower rate of surplus value than other types of labor power, the demand for the commodity carpenter labor power would drop causing the wages of carpenters to drop and raising the rate of surplus value.

Likewise, if the rate of surplus value was higher for carpenter labor power than average, the demand for the commodity carpenter labor power would rise. This would cause the wages of carpenters to rise, lowering the rate of surplus value on carpenter labor power. Therefore, over time—assuming the absence of monopolies—the rate of surplus value produced by each type of labor power tends towards equality with all other types of labor power.

It is extremely inconvenient to treat each type of the commodity labor power as a different type of commodity. So in order to simplify, we make an abstraction. We view each type of skilled commodity labor power as a collection of simple labor powers. Each individual member of the collection—simple labor power—produces on average in an hour an hour of abstract labor—the very substance of value once it becomes embodied in a commodity.

Similarly, a very unskilled type of labor power would represent a fraction of a simple labor power. It might take a number of these labor powers to add up a single simple labor power.

This situation doesn’t exist in reality—it is an abstraction. However, once we make this abstraction, which is made daily though unconsciously in the market place, we simplify the problem greatly. After all, practical businesspeople often talk about “labor” costs without making a distinction between the particular types of “labor.” When businesspeople talk about “labor,” they—and the vulgar economists as well—mean the costs of labor power, since they buy the workers’ ability to work and not “labor.”

Therefore, instead of using the term simple labor power, we simply have to refer to the commodity labor power. I believe that when Marx used the term labor power without qualification, that is what he meant.

Were the higher values of the labor powers of the skilled workers the underlying cause of the betrayal of August 4, 1914? (1)

Without denying the possibly that the higher wages of skilled workers can lead to more conservative political attitudes among them, Lenin did not attribute the betrayal of August 4 to the higher value of the labor power of the skilled workers relative to the value of the labor power of the unskilled workers. Something more was involved.

In his December 1916 article Imperialism and the Split in Socialism—which summarized his 1916 pamphlet “Imperialism, the Highest Stage of Capitalism”—Lenin examined the material roots of the betrayal of August 4.

Lenin noted that the Swiss economist Sismondi (1773-1842)—yes, the same Sismondi that pioneered crisis theory and who Marx considered to be, along with Ricardo, the last representative of classical political economy—pointed out that in contrast to the proletariat of ancient Rome, who lived off society, under capitalism society lives off the proletariat. (2)

“Marx specially stressed,” Lenin explained in Imperialism and the Split in Socialism, “this profound observation of Sismondi.” But, Lenin explains, “Imperialism somewhat [my emphasis—SW] changes the situation. A privileged upper stratum of the proletariat in the imperialist countries lives partly [my emphasis—SW] at the expense of hundreds of millions in the uncivilized nations.” (3)

Lenin when faced with unexpected events went back to Marx and Engels. He found that even in their lifetimes Marx and Engels were already aware of the problem of the corruption of certain sections of the working class by monopoly super-profits even though they lived before the imperialist era—the era of monopoly capitalism proper.

Marx and Engels were able to do this because England—the country in which they were living—though it lacked “modern” monopolistic corporations—trusts—and for the most part cartels (4), did have two elements of monopoly in addition to the monopoly of the capitalist class in the means of production, which defines the capitalist mode of production.

One was a monopoly in terms of the most powerful forces of production. This meant that the productivity of labor was qualitatively higher in England than elsewhere. This was the secret of the monopoly of England’s industry on the world market that lasted to almost the end of the 19th century. During the first three-fourths of the 19th century, the productive forces of English industry were qualitatively more powerful than any of its capitalist competitors. Later, in the middle years of the 20th century, the United States was to enjoy a similar monopoly.

Second, England had a huge monopoly in terms of colonies. For example, the second most populous country on earth, India, was an outright British colony. Moreover, Britain in the course of the 19th century was fighting a whole series of wars to reduce China, the most populous country in the world, to a colonial status as well. In addition, Britain was busy colonizing the African continent.

In a letter to Karl Kautsky dated September 12, 1882, Engels answered Kautsky’s question about what the English workers thought about England’s colonial policy, perhaps expecting Engels to answer that English workers were opposed to England’s aggressive polices. However, Engels did not romanticize the English workers.

“You ask me what the English workers think about colonial policy,” Engels replied. “Well, exactly the same as they think about politics in general: the same as what the bourgeois think. There is no workers’ party here, there are only Conservatives and Liberal-Radicals, and the workers gaily share the feast of England’s monopoly of the world market and the colonies.”

The results of these monopolies on the emerging workers’ movement in England were devastating. While England had a workers’ party in the form of Chartism in the 1840s, by the 1880s when Engels wrote his letter to Kautsky, the spirit of Chartism had almost completely disappeared among them. Why? Because the English workers were sharing “the feast” of England’s twin monopoly of the world market and the colonies. The result was that the English workers had been transformed into the mere tail of the two parties of the English exploiting classes—capitalists (Liberals) and landowners (Conservatives).

Lenin asked, “Why does England’s monopoly explain the (temporary) victory of opportunism in England? Because monopoly yields super-profits, i.e., a surplus of profits over and above the capitalist profits that are normal and customary all over the world. The capitalists can devote a part (and not a small one, at that!) of these super-profits to bribe their own workers. …”

Opportunism in the workers’ movement not simply a mistaken policy

So according to Lenin, opportunism is not simply a mistaken tendency in the workers’ movement. It has a definite material basis. And this basis is not the higher wages of skilled workers that reflect the higher value of their labor power but rather the actual sharing of super-profits by the capitalists with a section of the working class.

This detaches a section of the working class from the main mass of the working class—or proletariat—causing them to support their “own” capitalists against other sections of the working class as well as oppressed nations.

But exactly how can the sharing of surplus value with sections of the working class be explained in terms of Marx’s basic theory of value and surplus value? If this is not possible, then Lenin’s explanation of the events of August 4, 1914, and the general degeneration of the parties of the Second International would be fundamentally wrong.

In order to simplify the situation, I will at first assume that the entire world is a single capitalist country. It will not be hard then to see what the consequences will be if the capitalist world is not a single capitalist country—which is the case in reality.

Suppose an industrial capitalist in a particular line of industry—lets say the production of automobiles—happens to possess, for whatever reasons, machinery that is far more powerful than the machinery of any of his competitors. Our example capitalist—lets call him big moneybags—has a monopoly of the most powerful forces of production in his line of production—in this case automobiles. How he achieved this monopoly is of no concern for us here.

Assuming that big moneybags’ workers though they have only the average skills of autoworkers in general—and why should they not since big moneybags has the same pool of labor power to draw from as his competitors do—they will have a higher productivity of labor than the workers who work for other automobile manufacturers.

This will mean through no particular virtue of their own—they are not more skilled nor do they work harder than other autoworkers—an hour of concrete labor performed by the workers in the automobile assembly plants of big moneybags will on average represent considerably more—or count for more, as Marx liked to say—than an hour of abstract labor on the market. Perhaps an hour of labor of the workers who work for big moneybags will represent four hours of abstract labor.

Suppose that the value of an hour of labor power of the assembly line workers in the auto industry is $5 in money terms, and the rate of surplus value is 100 percent. In an eight-hour work day, the workers in this line of industry will on average produce $80 of value in money terms.

The workers are paid for half the labor they perform—receiving a wage of $40 a day. But since each assembly worker adds $80 worth of value to the automobiles being produced, the workers produce $40 for the bosses in the course of a typical work day.

But the workers who work for big moneybags produce four times as much value in a given period of time as the workers who work for the other capitalists. Is their labor power any more valuable than the workers who work for other capitalists? In the case of skilled workers, we saw that the answer was yes. This may not be “just” but it’s the reality in capitalist society.

But the workers who work for big moneybags have exactly the same skills as the workers who work for the other industrial capitalists engaged in auto production. As a material use value, the only commodity they have to sell, their labor power, is exactly the same as the workers who work for the other industrial capitalists. Therefore, the value of the labor power of the workers who work for big moneybags is exactly the same as the value of the labor power of the workers who work for the other industrial capitalists. Remember, I am assuming that the world is a single capitalist country. And under the capitalist mode of production, the workers are only entitled to the value of their labor power—the quantity of abstract labor that is necessary to reproduce their labor power under the prevailing conditions of production—and not a penny more.

If a group of workers for whatever reason do get more than the value of their labor power, they are sharing in the surplus value, even if they produce the extra surplus value they receive with their own labor. This situation should not be confused with a situation where the struggle of the working class raises the value of labor power through a permanent rise in wages of all workers who bring to the market a labor power of a given type.

If big money bags pays his workers the full value of their labor power—but no more—how much surplus value will each worker create in the course of an eight-hour work day? Remember, an hour of concrete labor performed by a worker working in factories of big moneybags will count on average not for one hour of abstract labor but for four hours of abstract labor.

Therefore, in an eight-hour working day a worker for big moneybags will perform the equivalent not of eight-hours of abstract labor but (8 * 4) or 32 hours of abstract labor. Assume that big moneybags pays his workers the value of their labor power, which here we assume comes to $5 an hour in money terms. If big moneybags pays his workers for only the four hours of abstract labor they perform, the total surplus value produced per worker will be (32 – 4) = 28 hours of labor per worker per eight-hour work day.

Or in money terms, in an eight-hour work day, a worker produces not $80 worth of value but (4 * 80) = $320 worth of value. Instead of making $40 in profit, big moneybags will make off each of his workers in an eight-hour work day ($320 – 40) or $280. Quite a super-profit!

But suppose a trade union succeeds in organizing the workers in the factories of big moneybags. The workers who lead the union are not Marxist revolutionaries who are interested in the liberation of the global working class but simply want to raise their own living standards any way they can. They are what Lenin would call opportunists. These opportunists see an opportunity to take advantage of the monopoly in the most advanced forces of production held by their “own” capitalist, big moneybags.

These opportunists say to big moneybags: “We demand that you share some of your super-profits with us! You are paying us only $5 an hour, yet we are producing not $10 worth of value for every hour of labor we perform for you but $40 of value. The $280 profit you make from our labor on a daily basis is intolerable. We demand that you share some of that $280 with us.”

Therefore: “We demand that our wages be increased from $5 and hour to $20 an hour. We should get for an eight-hour work day a wage of $160 rather than the $40 that we are getting now. In an eight-hour work day, we will work half the day for you and half the day for ourselves, just as the autoworkers working for your competitors do.” Isn’t this a ‘fair’ demand? Why should the workers of big money bags be exploited more than other workers?

Notice, however, that our opportunist workers are only trying to raise their own wages by taking advantage of the monopoly in the most advanced forces of production held by their “own” capitalist, big moneybags, and are not interested in raising the wages—increasing the value—of the labor power of the workers as a whole.

In return, our opportunists say to big moneybags: “We will do all in our power to prevent your competitors from breaking your monopoly in the most advanced forces of production. The safeguarding of your monopoly is not only in your interest, it is in our interest. We—big money bags and his workers—must remain number one! By joining forces together we will be able to safeguard your monopoly that we can both benefit from. We will support your ‘foreign policy’ and do all in our power to prevent the other industrial capitalists from acquiring the more powerful forces of production and breaking the monopoly we are jointly benefiting from.”

Why are the demands of the union opportunistic? After all, the workers who work for big moneybags are only demanding that the rate of surplus value be 100 percent—like is the case in the other auto factories.

If big money bags pays his workers only $5 an hour for their labor power instead of $20, the workers who work for big moneybags will be exploited at the rate of 800 percent (40/5 * 100). In an eight-hour work day, the workers who work for big moneybags will work one hour for themselves and seven hours for big moneybags. Therefore, the demands of the workers who work for big moneybags seem quite reasonable. How is this opportunism?

If a union organized all the automobile plants, not only the hyper-productive ones owned by big moneybags, and succeeded in a lasting way to raise the wages paid to autoworkers and the workers in other industries as well, the value of the workers’ labor power would rise. But if a group of workers takes advantage of the monopoly that their “own” capitalist has in terms of labor productivity and forms an alliance with him against other workers, the unity of the working class as a class is undermined. The struggle of the working class against the whole system of wage slavery is set back.

The wages of opportunism

In the long run, the advantage won by the workers of big moneybags will be as transient as big moneybag’s monopoly is. Suppose—and this the rule—that despite the joint efforts of big moneybags and the opportunist union, the other capitalists obtain the more advanced forces of production previously monopolized by big moneybags—or even more advanced forces of production. When that happens, the one hour of concrete labor performed by the workers who work for big moneybags will again count, under our assumptions, for only an hour of abstract human labor. There will be no way that big moneybags will be able to pay his workers $20 an hour when they are producing only $10 worth of value—assuming for purposes of simplification that the value of money has fallen in tandem with the values of other commodities, keeping prices and wages unchanged.

Indeed, the auto plants of big moneybags will be doomed to closure sooner or later if the rate of profit so much as falls below the average rate of profit. The end result will be that the plants will be shut down and the former autoworkers will be thrown back on the open labor market. Even if they are lucky enough to find another buyer for their labor power—which is far from guaranteed, particularly if they are past their prime working age—they will almost certainly have to accept a wage that is much more in line with the real value of their labor power—that is, drastically lower.

Therefore, in the long run, trade unions that are built on false—opportunist—principles fail if they do not use their power to raise the value of the labor power of all the workers in capitalist industry—or at least prevent it from falling. Above all, they fail—as, Marx pointed out in 1865 in “Value, Price and Profit”—when they don’t use their power to overthrow all the capitalists—big moneybags and all the other moneybags—and transform capitalist production into socialist production.

Suppose the workers of big moneybags succeed in raising their wages to $20 an hour while the workers who work for other auto companies continue to earn only $5—not forever but for a certain period of time. Does this make these “labor aristocrats” capitalists?

No. Unlike the capitalists, they have to work—perhaps very hard—in order to enjoy their ordinary wages of $5 per hour plus the extra $15 that represents their share of the super-profits. The real capitalists, because of their ownership of capital, obtain their profits—both their average profits—interest and the profit of enterprise—plus their share of the super-profits added on top of that without having to work.

However, the workers “bribed by super-profits” do become the basis of support for a rise of a pro-imperialist labor bureaucracy within the trade unions and workers’ political parties. Marxists must try to convince the members of the labor aristocracy to side with the working class as a whole rather than pursue their immediate narrow material interests. But as a general rule, the greater the immediate material benefits are for the labor aristocracy in collaborating with their own capitalists at the expense of other workers, the harder this will be.

The sharing of their super-profits with sections of the working class is one of the leading weapons the capitalists command in their class struggle against the global working class. This ability to share super-profits with sections of the workers explains why the capitalists have been able to extend their political rule into the 21st century.

Now lets drop our assumption of a single capitalist country, but assume a world market with more or less equal prices for commodities of equal quality. Suppose instead of our imaginary big moneybags we look at the capitalists of a real nation, the USA, at a given time, the middle of the decade of the 1940s, who have a monopoly in the most powerful forces of production. And let’s look in particular at the industrial capitalists engaged in auto production—namely the “big three” auto monopoly of General Motors, Ford and Chrysler.

A concrete historical example

Seventy years ago, the United Automobile Workers union in the United States was considered the flagship union of the Congress of Industrial Organizations—the CIO. In the mid 1930s in the wake of the super-crisis of 1929-33, U.S. workers in basic industry rose up on a mass scale and demanded the right to organize into industrial unions. (5)

Unlike the AF of L, which with few exceptions was based on craft unions—unions that united workers with a common skill such as electricians, plumbers and carpenters—the CIO was based on industrial unions—unions that united all the workers that worked in a given industry regardless of skill. In an industrial union, unlike a craft union, both skilled and unskilled workers are organized in the same union. The name CIO stood for Congress of Industrial Organizations.

The political leadership of the CIO

The leadership of the CIO unions was shared by the Communist Party and its allies—in the trenches, idealistic members of the CPUSA inspired by the example of the Russian Revolution had done much, perhaps most, of the actual organizing. The other main tendency—the one that held the upper hand—was represented by that part of the leadership that emerged from the the AF of L unions that by way of exception were organized along industrial as opposed to craft lines. The most powerful and well known of the AF of L industrial unions was the United Miner Workers of America, which organized the workers of the U.S. coal mining industry.

There were various other tendencies—mostly other left parties and tendencies that were active in the CIO. But these other forces found themselves either supporting or wavering between the two main political tendencies that were active within the CIO.

The pro-industrial union wing of the AF of L, which split from the rest of the AFof L, aimed at using the 1930s labor upsurge to organize the workers in large-scale basic industry along industrial lines, while the other AF of L leaders wanted to extend their craft unions into basic industry. However, the craft form of union organization is ill-suited for large-scale industry.

However, when it came to supporting the capitalist system and U.S. imperialism, there wasn’t much difference between the craft unionists and the industrial unionists within the old AF of L. For example, the United Mine Workers leadership under John L. Lewis (1880-1969) did all in its power to look after the interests of the U.S. coal mining industry. Lewis, who was extremely knowledgeable about the coal industry and knew it better than most of the coal bosses themselves, wanted the U.S. coal industry to make super-profits that could then be shared with the coal workers in the form of higher wages and benefits.

After Lewis retired from the presidency of the UMWA, President Lyndon B. Johnson awarded him the presidential medal of freedom. “An eloquent spokesman of labor,” Johnson proclaimed, “[Lewis] has given voice to the aspirations of the industrial workers of the country and led the cause of free trade unions within a healthy system of free enterprise [emphasis added—SW].” (6)

This pretty accurately sums up Lewis as a trade union leader. He and the other UMWA leaders wanted the coal industry—and U.S. industry as a whole—to make super-profits so that these super-profits could be shared with the UMWA members and other U.S. workers, with a generous cut going to the trade union leadership—the bureaucracy—of course.

The Lewis leadership of the UMWA could be very militant in terms of wage demands when the coal bosses were making big super-profits. On the other hand, Lewis knew full well that when the coal mining capitalists were making less than the average rate of profit—or no profit at all—there would no super-profits to share—and little possibility of raising the wages of the coal miners without challenging American imperialism and the capitalist system itself. Lewis had no intention of doing this.

The strongly pro-capitalist Lewis had no perspective of uniting the worldwide working class as a whole in order to establish the cooperative production of the associated producers. If he had, he would not have accepted, or of course even been nominated for, the “Presidential Medal of Freedom,” which is awarded to those who give extraordinary service to the cause of American imperialism.

During the Popular Front years, the Communist Party and its allies were able to work together with traditional pro-imperialist opportunist unionists such as Lewis and his successor as CIO president, Philip Murray, despite occasional friction. (7) This alliance between the CPUSA and the direct representatives of American imperialism within the CIO—such as Philip Murray—reached its peak during World War II when the United States was allied with the Soviet Union against its imperialist rivals Germany, Japan, Italy and the other axis powers. But in 1945, with U.S. troops occupying Berlin, Tokyo and Rome—the main axis powers—the Popular Front was quickly replaced by the Cold War.

Indeed, the Cold War in many ways began within the CIO when the pro-imperialist CIO leaders—obeying the command of the leaders of American imperialism—broke with the CPUSA and its allies and launched a witch hunt to drive them out of the CIO altogether. (8) As this campaign developed, the capitalist media dubbed the CPUSA-allied leaders the “left-wing union leaders” and the pro-imperialist anti-Communists the “right-wing leaders.” Some of the previous “left-wing” CIO leaders under this pressure from the bosses and their government and media shifted sides and joined the pro-imperialist right wing. Among them were the leaders of the CIO United Maritime Workers Union and Transport Workers Union.

The U.S. government—the bosses’ government—was determined to drive the Communist Party USA and other radicals out of the trade union movement. The capitalist ruling class saw this as a necessary step in the consolidation their new world empire. A trade union movement that was willing to serve as an arm of U.S. imperialism—in exchange for a cut of the super-profits—was a necessary tool in splitting and undermining the unions that were led by Communists and other radical forces in other countries and their replacement by “free” trade unions that would support U.S. imperialism and undermine any workers’ struggles that threatened the super-profits of American imperialism.

The battle for control of the auto union

At beginning of the Cold War, the struggle within the CIO centered in the United Auto Workers Union, where the leadership was more or less equally divided between the “right” and “left” wings. The outcome of the struggle within the UAW would largely determine the outcome within the CIO as a whole.

The leader of the right wing within the auto workers’ union was Walter Reuther (1907-1970), who had been elected union president in 1946 against the opposition of the pro-CPUSA forces. (9) But Reuther was not able to crush his “left” pro-CPUSA opposition. In 1946, under the new Reuther leadership the UAW won a generous wage settlement in a strike against General Motors, which greatly increased the prestige of Reuther’s pro-imperialist faction among the General Motors and other U.S. workers. Reuther, the pro-imperialist opportunist, was delivering the goods.

With the world market in a strong expansionary phase in the wake of the Depression, and with the economies of the other imperialist countries reeling from the devastating effects of World War II, the U.S. “big three” automobile industry was ensured of a continued monopoly in the most advanced auto-making technology and consequent super-profits for many years to come. (10) They could pay the U.S. auto workers much higher wages and benefits than they were paid before World War II and still keep a generous share of the super-profits for their stockholders and the top corporate managers.

Ideally, the U.S. auto bosses would have preferred to keep all the super-profits for themselves. But nothing was more important for U.S. imperialism than propping up the pro-imperialist right-wing CIO leaders beginning with Reuther in the UAW. In order to accomplish this task, the auto bosses and the other capitalists in U.S. basic industry organized by CIO unions were willing to share a portion of their super-profits with the CIO union workers.

But the U.S. autoworkers and the other CIO workers, though they were thus successfully detached from the struggle of the world working class against capitalism and U.S. world empire, were not transformed into capitalists. They still had to sell their labor power to the bosses in order to live and had to struggle to keep up with the assembly lines. Even if they lived far better than any other workers in the world, they were still exploited by the U.S. bosses, who forced them to perform unpaid labor and produce surplus value. The real capitalists got to enjoy their share of the profits, both their “normal” profits—interest and profit of enterprise—and their super-profits, without having to work.

In the long run, the super-profits that exist due to monopolies of technology are temporary. Sooner or later, the other industrial capitalists acquire the most advanced—and even more advanced—technology. The “technological” super-profits disappear. The bosses that previously enjoyed technological super-profits either have to take back their concessions to “their” workers, find other workers to exploit who are willing to work only for the perhaps much lower value of their labor power, or go out of business.

Today, the once powerful UAW is a mere shadow of its former self. It—and the other CIO unions—though they complained about it, failed to mount any serious resistance to the 1947 Taft-Hartley Act, which greatly restricted the right of the unions to strike while preserving their dependence on the government that was part of the original Wagner Act. (11)

Indeed, after the initial wave of strikes that gave birth to the CIO unions, the further growth of these unions depended on a rising demand for labor power on the part of the newly organized basic industries. This continued with fluctuations until the 1970s. But from 1979 onward, employment in U.S. basic industry entered into a long-term decline that has continued until the present. The old CIO unions—as well as the old AF of L unions—have found themselves generally unable to organize workers—with a few exceptions—within previously unorganized industries under the the National Labor Relations Board system.

And looking to the government and the capitalist Democratic Party rather than their members’ support, the current generation of U.S. union leaders find themselves unable to challenge the anti-union laws of the U.S. government. They are reduced to confining themselves to petitioning the now overwhelmingly Democratic U.S. Congress to amend the NLRB system to make union organizing a little easier—such as passing the proposed “card check” reform.

But this proposed reform has gone nowhere in the Democratic Congress, leaving the union leaders without any recourse at all—beyond attempting to hold the expected Republican gains to a minimum in this fall’s off-year congressional elections. The possibility of launching a struggle not only against the individual bosses but against the bosses’ government to demand the elementary right to organize simply doesn’t occur to them. How can they struggle against the capitalist government when they are completely dependent on it?

Lets return to the example of the UAW. This union has been unable to organize the growing number of non-union auto plants that have been built in the United States by Japanese, European and South Korean capitalists in recent years, while UAW-organized plants continue to progressively shut down. The only partial exception was the UAW-organized NUMMI (New United Motors) plant. This was a large plant in Fremont, California, operated by a joint venture of the the old General Motors and Toyota.

The plant originally belonged to General Motors alone, and therefore NUMMI inherited the existing UAW local. With the collapse of the old General Motors in 2009, the plant ended up in the hands of Toyota. Toyota quickly announced that it intended to close the plant. After all, the other auto plants that Toyota operates in the United States are non-union, and the Toyota bosses saw no reason to keep NUMMI open as a “union shop” with the consequent extra expenses—and lower profits—for Toyota—when all their other plants in the U.S. were non-union.

The NUMMI UAW local offered all kinds of concessions and went along with the local politicians who supported various tax breaks to the Toyota bosses to keep the plant going. The union leaders kept hinting to the workers that they would come to some kind of agreement with Toyota that would save the plant and the union local at the last moment. But to no avail. The very week that I am writing this reply the NUMMI plant has been shut down, effectively disbanding the UAW local. The sorry fate of the NUMMI UAW local symbolizes the long-term results of the victory of the opportunistic right-wing Reuther leadership within the UAW more than 60 years ago.

Colonial super-profits

As we saw above, another source of super-profits are colonial monopolies. In the case of such monopolies, the super-profits can arise from various causes. For example—as emphasized by Lenin—the capitalists are able to pay wages to workers in the colonized country that are below the wages they pay workers in the imperialist country. By paying wages that are far below the value of labor power of the imperialist country, the capitalists are able to earn huge super-profits.

This enables the capitalists to share some of these super-profits with the workers in the imperialist countries by paying them more than the value of their labor power. The problem for the opportunist trade unionists in this kind of situation is that the capitalists are tempted to shift more and more of their production to the colonized—or historically oppressed countries, where the value of labor power is very low—over time steadily reducing the number of high-paid “middle-class” trade union jobs in the imperialist countries. (12) Eventually, the opportunist trade unions collapse as the “middle-class” factory jobs disappear.

There are many other sources of monopoly super-profit. For example, monopolies can use their power not only to charge prices that are above their prices of production but can buy raw materials or auxiliary materials below their prices of production that are often produced in colonized or historically oppressed countries. They can therefore appropriate considerable amounts of the surplus value produced by the workers of the oppressed countries who produce these raw materials. The surplus value thus appropriated is then realized as super-profits that can be used to bribe sections of the working class of the imperialist countries.

The key point is that where super-profits arise—and lasting super-profits always arise from one kind of monopoly or another—there is always the possibility of sharing it with a section of the working class by paying them more than the value of their labor power. As long as this possibility exists, the trade union struggle—especially if it is conducted only as a trade union struggle and not a political struggle to overthrow the political rule of the capitalists—will tend to create new layers of labor aristocrats and new bases of support for opportunism within the trade union and the broader workers’—political parties—movement.

But the converse is also true. Struggles by the oppressed nations to free themselves of super-exploitation, even if under bourgeois leadership that aims not to build a socialist society but instead to obtain more favorable conditions for local capitalist development, undermines the monopoly of advanced industrial techniques and the monopoly pricing power of the capitalists of the imperialist countries—undercutting the material basis of opportunism within the workers’ movement.

The problem of unproductive workers and derivative incomes

Not all wage or salary workers produce surplus value. While production of surplus value is the main use value of the commodity labor power for the capitalist class, it isn’t the only one.

Classical political economy made a distinction between productive and unproductive labor. Remember, the classical economists did not distinguish between labor and labor power. By unproductive labor, the classical economists meant, in Marxist terms, labor power that has a use value to its purchaser other than production of surplus value.

Examples of unproductive workers given by the classical economists were personal servants. Take the example of a servant who is employed as a cook for the family of an industrial capitalist. The capitalist purchases the labor power of the cook, but he does not act as a capitalist.

Like is the case with the purchase of the labor power of a productive (of surplus value) worker, the industrial capitalist becomes the new owner of the labor power. However, unlike when he acts as an industrial capitalist, he uses the labor power of the cook to prepare meals that he and his family will consume—not sell as commodities on the market. We have the wage relationship here but not the capitalist relationship.

By doing this, our fellow relieves his wife of the need to prepare meals. Just like the men of the ruling class are freed of the need to perform productive industrial labor, the women of the ruling class are freed of the need to perform housework, which is the fate of women of the working class. Just like her husband, the female members of the ruling class are able to live without working. Instead, the housework—such as cooking, cleaning and even raising the children—governesses and nannies—is performed by domestic servants.

The labor of the domestic servant does not take the form of value when it is embodied in the cooked meal for the same reason that the labor of the working-class housewife doesn’t take the form of value. The cooked meal is not produced to be sold on the market but instead is consumed directly by the family of the cook’s employer as a material use value.

Like is the case with productive labor, the domestic servant—in this case a cook—sells her labor power in exchange for a sum of money, a wage. And just like the case with the productive (of surplus value) worker, the cook is entitled to the full value of her labor power and not a penny more under the laws of the capitalist system. As the classical economists put it, the labor (power) of the cook is exchanged against revenue, not capital.

That is, the money that the industrial capitalist lays out is spent not as money capital in order to produce a surplus value but rather is part of the capitalist’s and his family’s personal consumption.

Since the cook’s labor when the cook is employed as a personal servant does not take the form of value when it is embodied in the cooked meal, the value that cook consumes when she spends and consumes her wages on the means of subsistence must be replaced out of the surplus value produced by the productive workers. Like the capitalists and the landowners, the unproductive workers live off the surplus value produced by the productive workers.

Is the cook exploited?

The cook is exploited much like the housewife in the working-class household where the husband performs no—or very little—housework is exploited. The cook will almost certainly consume less labor in the form of her wage than she will perform for her employer. Just as was the case with the housewife, the fact that her labor does not take the form of value does not change the fact that she is forced to perform more labor than she is paid for.

Derivative incomes

Marx, following Adam Smith, described the incomes of society as consisting of the wages of labor, the profits of capital and the rent of land. The first, the wages of labor—the wages of the productive workers—represent the necessary product, while the other two—the profits of capital and the rent of land—represent the surplus value.

But aren’t there many other types of income—especially nowadays? First, there are the wages and salaries of the great mass of unproductive workers. Then there are those persons who live off tax revenues. These include both the creditors of the state and the employees of the state. But if we look at things more carefully, we see that these other incomes are derivative of one of the three primary forms of incomes.

The wage of the domestic cook is a form of derivative income. The primary income is the profit that is appropriated by the industrial capitalist. In this case, the industrial capitalist—not acting as an industrial capitalist expends a part of his profit—to purchase the labor power of the cook, which he uses in an unproductive way—in the sense of not using it to produce surplus value. Her wage income is a derivative of the industrial capitalist’s income or profit.

Is the cook a capitalist?

Since the cook is living off surplus value, does this make the cook employed as a domestic servant a capitalist? Not at all. The capitalist does not have to work—our industrial capitalist doesn’t even have to perform the labor of superintendence if he doesn’t want to. He can hire professional managers to actually run the business for him.

But the cook has to work in order to live, just like a productive (of surplus value) worker. She is forced to sell her labor power C for M and then use the M to purchase the means of subsistence whose value is equal to that of her labor power. The circuit is the same as it is for the productive worker when she sells her labor power C—M—C. Unlike the industrial capitalist she works for, she will never get rich.

Indeed, if the cook is laid off and obtains a new job working in a for-profit restaurant doing exactly the same thing, the cook will be a productive (of surplus value) industrial worker.

The relationship between the cook and her employer would not be changed if instead of an industrial capitalist she worked for a landowner who appropriates his share of the surplus value in the form of rent. The only difference would be that her wage would derive from the landlord’s ground rent instead of the industrial capitalist’s profit.

It is even possible the cook might work for a better-paid member of the productive (of surplus value) working class, perhaps a skilled worker whose labor power is equivalent to many simple labor powers. In this case, the cook’s wage would be a derivative of the wage of the productive worker who employs—and exploits—her, though this will not make the productive worker a capitalist of any kind.

Soldiers and other employees of the state

The other classic case of unproductive workers were the employees of the state, especially soldiers. Soldiers do not perform productive labor—produce surplus value. Instead, their labor power is used for war purposes by the buyer of their labor power—the capitalist state, which functions as the general representative of capitalist society. They are paid out of tax revenues or funds borrowed by the government that must ultimately be repaid out of tax revenues.

Taxes themselves are a form of derivative income. They are derivative of the taxed income that ultimately must derive from one of the primary forms of income—the profits of the capitalists, the rents of the landowners, or the wages of productive (of surplus value) workers. The wage income of the soldier derives from some combination of the three primary incomes.

This holds true even if we assume a considerable section of tax-paying independent commodity producers—such as peasant farmers—who produce commodities without employing wage labor. In this case, the independent commodity producer functions as a worker who is his or her own capitalist, or a capitalist who is his or her own worker. If the independent commodity producers manage to sell their commodities at their prices of production—which is actually unlikely—their income will include the equivalent of a wage and a profit.

The non-industrial capitalists

There are two types of non-industrial capitalists. One is the merchant, or commercial, capitalist; the other is the money-lending, or financial, capitalist. The merchant capitalists makes their profit by buying commodities from industrial capitalists at prices below their values—direct prices—and selling to the final consumers at their values, or direct prices.

The pure functions of the merchant should not be confused—which the classical economists often did—with the industrial functions of transporting and storing commodities. These functions add value to the commodities. The workers who engage in these activities are productive (of surplus value) workers, just as much as the workers who work in factories, mines and fields. Strictly speaking, they belong to the industrial proletariat and not the commercial proletariat, to use the terms employed by Marx.

The “pure merchant” deals with changes in the titles of ownership. It is this function that Marx considered “non-productive.” That is, it would not exist without capitalist relations of production. If we assume socialist production rather than capitalist production, products would still have to transported from their places of production and stored, but the only change in ownership would be the change from the ownership of the associated producers to the final individual consumers.

The financial capitalist

In the pure capitalist system analyzed by Marx, interest is a portion of surplus value appropriated by the capitalist. To the extent the industrial capitalist works with his own capital, the interest is part of the industrial capitalist’s profit, along with the profit of enterprise. However, if the capitalist borrows a portion of his capital, he must yield the interest earned on his borrowed capital to the lender.

However, in addition to capitalism’s primary means of exploitation, Marx noted there are what he called capitalism’s secondary means of exploitation—where money is lent to consumers, and not to industrial or commercial capitalists. During the imperialist epoch, and especially since the “financialization” that followed the “Volcker Shock,” these secondary means of exploitation have grown enormously. I will examine them in my next reply.

Another use value for labor power

Another use value of labor power is helping the commercial and financial capitalists carry out their non-productive, but for them profit-making, operations. Indeed, the capitalists who own the financial companies such as gigantic banks and insurance companies would be in a bad way if they had to perform all the labor necessary to run these concerns themselves!

Since the labor that these workers carry out does not produce value, their labor cannot produce surplus value. Are these workers exploited? Obviously.

First, both the commercial and financial capitalists exchange money for wages with these workers with the intention of making a profit, just like the industrial capitalists do—that is, in the form of capital rather than revenue. Though the commercial or financial capitalists do not use the labor power of their commercial or financial workers to produce surplus value, they do use their labor power for the purpose of appropriating surplus value produced by the productive workers. They expect to earn a profit on this expenditure, which is not the case with the money they use to purchase the labor power of their domestic servants. Therefore, the money they expend is from their point of view expended as capital rather then revenue.

A bank worker or a clerk in an insurance company, for example, puts in a 40-hour week—sometimes considerably more—but generally receives a salary that represents a far smaller amount of labor. This is true despite the fact that they are paid entirely out of surplus value. Though they do not produce surplus value, they are entitled to the full value of their labor power just like the seller of any type of labor power or indeed the seller of any other type of commodity is.

Unlike the capitalists, these “office workers” must sell their labor power in order to live, while the capitalists receive their surplus value merely because they own capital. (13)

Like the capitalists who function as industrial capitalists, the capitalists who function as non-industrial capitalists are able to live without working. But they can only do this because the non-value-producing labor necessary to run their businesses is carried out by wage or salaried workers. The workers do all the work necessary to run the banks and insurance companies, but a huge share of the incomes goes to the capitalist owners, who do not work.

One of the characteristics of imperialism has been the huge growth in the number of unproductive workers—especially the employees of the state and of the commercial and financial capitalists—relative to the number of productive (of surplus value) workers who are employed by the industrial capitalists.

As the productivity of labor advances—a given amount of value measured in terms of time represents a greater amount of material use values. Therefore, the possibility of maintaining a larger number of unproductive workers who consume the (commodity) capital of society without reproducing the value of the capital they consume in the form of commodities, and without producing a surplus value beyond that, grows.

The functions that the unproductive workers perform varies greatly. From the viewpoint of the working class, the labor performed by public school teachers and librarians working for public libraries is highly useful—neither a public school nor public library is a for-profit business. (14) The labor performed by school teachers and workers is far more useful for society than the labor of productive (of surplus value) workers in “defense” plants of the imperialist countries that produce nuclear bombs whose use value for their consumers—the imperialist governments—is to terrorize the world.

Super-profits and the unproductive workers

Remember, the material basis for the opportunist degeneration of the trade unions and workers’ political parties is the generation of super-profits that allow the capitalists to pay some workers more than the value of their labor power. As long as the unproductive workers are paid only the value of their labor power, these workers do not as such form the basis of opportunism in the labor movement—assuming they are organized.

But when a country is flush with imperialist super-profits, the opportunity is created of paying the unproductive workers—office employees working for large banks, commercial trading firms, and insurance companies, school teachers and librarians, and so on more than the value of their labor power just like is the case with industrial workers. In this way, a “large middle class” of well-paid “white collar” workers paid out of super-profits can be created that will have a strong tendency to support the capitalists of “their” country against the workers of other countries.

But again, if the super-profits disappear, the ability to pay large numbers of unproductive workers more than the value of their labor power will also disappear.

I am now in a position to take a deeper look at the significance of “financialization” and the thesis of Bryan, Martin and Rafferty. That will be the subject of my next reply.

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1 On August 4, 1914, the Reichstag (German parliament) fraction of the German Social Democratic Party voted in favor of war credits. This marked the end of the SPD’s role as the revolutionary party of the German working class and the end of the Second International as a progressive stage in the political development of the world working class.

2 In ancient Rome, the term proletariat referred to the lowest levels of the citizens, who were so poor that they could only provide Rome with their “proles”—offspring. Because of its exploitation of the entire Mediterranean world, the Roman government was able to support the impoverished residents of the city through the free distribution of grain. These Roman proletarians had few opportunities to sell their labor power and did little work. They lived off the labor of the producing classes, which in Rome largely consisted of chattel slaves. Thus, the Roman proletariat shared in the surplus product produced by the slaves and the peoples oppressed by Rome’s empire.

3 Before the Russian Revolution, Marxists including Marx, Engels and Lenin still used terminology like uncivilized and civilized—meaning the developed capitalist nations as opposed to nations that remained largely pre-capitalist and therefore had a far lower productivity of labor. Ultimately, the level of culture and civilization that can be achieved in a given country or epoch depends on the productivity of human labor. However, under the influence of the Russian Revolution and the wave of national liberation movements that followed, this terminology was dropped by virtually all Marxists—and eventually even by liberals—as reflecting the chauvinism of the exploiting imperialist countries.

4 In 1938, Paul Sweezy published an article entitled Monopoly and Competition in the English Coal Trade, 1550 to 1850 showing that cartels were not completely absent in England before the modern imperialist epoch. But their role was limited compared to the cartelization that prevailed after the turn of the 20th century—the era of monopoly capitalism, or imperialism, proper.

5 Before the 1930s, there had been many attempts to organize the U.S. workers in basic industry into industrial unions carried out by the Industrial Workers of the World (IWW), the Socialist Labor Party of Daniel DeLeon, the left wing of the U.S. Socialist Party represented by Eugene Debs, and later, the Communist Party. All had failed, and many declared the task impossible concluding that the U.S. workers were hopeless. But the great movement of the 1930s proved all these naysayers wrong.

6 By “free trade unions,” Lyndon Johnson and other spokespeople for U.S. imperialism over the years meant and mean unions that support the “free enterprise system”—the capitalist system in general and U.S. imperialism in particular. In general, what the imperialists call “free trade unions” work to improve the wages and working conditions of a particular strata of the working class at the expense of the economic and historical interests of the working class as a whole.

7 Lewis, a Republican, broke with the CIO in 1940 after he supported Republican Wendell Willkie against Roosevelt in the U.S. presidential election of 1940. The CIO supported Roosevelt. By 1944, Lewis had led the UMWA back into the AF of L. He was replaced as CIO president by Philip Murray (1886-1952), who was also a long-time member and leader of the UMWA. Murray as leader of the CIO proved to be an undeviating supporter of the Democratic Party and American imperialism. In the late 1940s, he spearheaded the purge of the Communist Party and other radicals from the CIO unions. He was succeeded by Walter Reuther (1907-1970), who agreed to merge the CIO back into the AF of L, forming the AFL-CIO in 1955. The AFL-CIO remains the dominant U.S. trade union center up until the present.

8 Besides the Communist Party, the other main left group active in the U.S. trade union movement was the Socialist Workers Party, led by supporters of exiled Russian revolutionary Leon Trotsky. In 1934, the leaders of the organization that was the forerunner of the SWP were the main leaders of the successful struggle of the Minneapolis truck drivers to organize themselves into the Teamsters Union—the AF of L truck drivers’ union. This made Minneapolis a union town and helped prepare the way for the rise of the CIO. In the early 1940s, however, the SWP was driven out of the Teamsters Union when the U.S. government accused the party of violating the Smith Act, which made it illegal to advocate the overthrow of the U.S. government.

The real reason for the prosecution of the SWP leaders was that the SWP was opposed to U.S. participation in World War II, unlike the CPUSA, which after Nazi Germany launched its invasion of the Soviet Union on June 22, 1941, supported U.S. participation in the “anti-fascist” war.

As was typical in those days, the Communist Party supported the U.S. government’s prosecution of what they called the “pro-fascist Trotskyites.” The SWP for its part had followed a policy of uniting with pro-imperialist forces in the CIO in what they called an “anti-Stalinist” front. This in spite the fact that Trotsky himself warned them that they were adapting to American imperialism with their “anti-Stalinist” front policies in the unions, and that sooner or later their “anti-Stalinist”—really pro-imperialist—”allies” would turn on them.

This is exactly what happened. During the witch hunt, the pro-imperialist CIO officials made no distinction between the “Stalinists” of the CPUSA and the “anti-Stalinist,” or “Trotskyist,” supporters of the Socialist Workers Party, driving both out of the trade union movement.

9 Though Walter Reuther was the leader of the “right wing” of the United Auto Workers Union, he did not begin as a right-winger and was a rather reluctant right-winger. Instead, Reuther had started out as a supporter of the Socialist Party in the 1930s and during the Depression became a supporter of the Soviet Union and of the Russian Revolution.

As a young worker, Reuther was unable to find a job in the U.S. auto industry as a result of the Depression. Instead, he had found employment in a Soviet auto factory and emerged from that experience a supporter of the Soviet Union and the Russian Revolution. “The atmosphere,” Reuther wrote after his return from the Soviet Union, “of freedom and security, shop meetings with their proletarian industrial democracy; all these things make an inspiring contrast to what we know as Ford wage slaves in Detroit. What we have experienced here has reeducated us along new and more practical lines.”

But Reuther could not resist the tremendous pressure that was put on him by the U.S. government and its political police—the FBI—to support U.S. imperialism against the Soviet Union and the Communist Party members and supporters and other radicals who had built the union. Despite Reuther’s going along with the witch hunt, there is much evidence that the U.S. government never really trusted him. The FBI continued to hound him.

“On May 9, 1970,” according to Wikipedia, “Reuther, his wife May, architect Oscar Stonorov, and also a bodyguard, the pilot and co-pilot were killed when their chartered Lear-Jet crashed in flames at 9:33 P.M. Michigan time. The plane, arriving from Detroit in rain and fog, was on final approach to the Pellston, Michigan, airstrip near the union’s recreational and educational facility at Black Lake, Michigan.

“In October 1968, a year and a half before the fatal crash, Reuther and his brother Victor were almost killed in a small private plane as it approached Dulles airport. Both incidents are amazingly similar; the altimeter in the fatal crash was believed to have malfunctioned. When Victor Reuther was interviewed many years after the fatal crash, he said, ‘I and other family members are convinced that both the fatal crash and the near fatal one in 1968 were not accidental.’ The FBI still refuses to turn over nearly 200 pages of documents involving Walter Reuther’s death, and correspondence between field offices and J. Edgar Hoover.”

10 In addition to monopoly profits, super-profits can rise above the average rate of profit during periods of economic boom or long waves of expansion. This creates the possibility of the bosses sharing some of these cyclical super-profits with the workers. But this possibility disappears as soon as the industrial cycle experiences a serious downward movement.

In his works “Class Struggles in France” and “The Eighteenth Brumaire of Louis Bonaparte,” Marx gave great attention to the ability of cyclical economic upswings to dampen the fighting spirit of the workers under certain conditions.

11 In 1935, the U.S. Congress passed and President Roosevelt signed into law the so-called Wagner Act, which was hailed as “labor’s magna carta.” It provided for a system of elections supervised by the National Labor Relations Board, a government body that would determine whether the workers desired to be represented by a union.

This encouraged union leaders to look to the government to support them rather than rely on the solidarity of their members. The NLRB system replaces strikes and picketing with a judicial process that wears down unionization drives and favors the bosses. If a union is established, the union leaders are encouraged to look to the government as their chief support, since all workers except new hires that are still on probation must pay dues to the union, whether they support the union or not.

Union leaders are then naturally reluctant to fight the government. Today, not only is the right to strike in the United States severely restricted by the Wagner Act, as amended by the Taft-Hartley Act, but political strikes against government policies by the unions, taken for granted as a basic democratic right and means of struggle in many countries, is altogether out of the question as far as U.S. union leaders are concerned. After all, the government would never authorize a strike against itself!

12 Answering the claims of the U.S. bosses that unions are now irrelevant, today’s U.S. trade union leaders plead that on the contrary the unions enabled large numbers of U.S. factory—and other—workers to enter the “middle class.” This is indeed the essence of opportunism. Instead of fighting for the liberation of the working class as a class, the U.S. trade union leaders simply aimed at sharing some of the super-profits earned by U.S. imperialism with the U.S. workers so that they could be detached from the global working class and enjoy a “middle class” life style.

Today, there are far smaller super-profits to share, and the “middle class” factory and other jobs organized by the U.S. trade unions, along with the unions themselves, are disappearing.

13 We shouldn’t forget that industrial corporations also function as merchant capitalists—they have to sell the commodities they produce—and also carry out large-scale financial operations. Therefore, in addition to employing industrial workers, defined as workers who produce surplus value, they are forced to hire many unproductive (of surplus value) workers as well.

14 The attempt to transform public schools in the United States into private for-profit “charter schools” would mean that the owners of these schools would function as industrial capitalists and the school teachers would become productive (of surplus value) industrial workers. This is why this “reform” is strongly supported by capitalist politicians, both Democrats and Republicans. Instead of “wasting” surplus value on paying teachers, why not transform the teachers into productive workers who will produce surplus value for capital instead of consuming it. Naturally, the aspiring industrial capitalist owners want the new for-profit schools to be union free so that the rate of surplus value on the teachers’ labor power will be as high as possible. The more surplus value—profit—produced, the better!