Cost and Price of Labor, or How Much We Are Bought For

The simple fact that we are living under capitalism should not raise doubts on anyone. People who are afraid to face the truth, of course, can call the surrounding reality whatever they like, but, alas, this does not change its essence.

So it’s been 30 years since capitalism, that is, that stage of the commodity economy in which labor becomes a commodity.

What is “labor power”?

It is man’s ability to work, to create material values with his hands and mind. We wage earners, the vast majority of the population, own nothing that would allow us to survive except labor. And so we are forced to carry our only commodity onto the labor market, trying to sell it for as much as possible. Not only our personal survival, but also the survival of our family and its well-being depends on the results of this sale. And since workers constitute the majority of the population, so does the survival of the whole country.

We give labor force and receive money in return. At the same time, the owners of “factories, newspapers, steamships” are for some reason called “employers”, although if anyone gives work, it is the workers, while the capitalists, on the contrary, try to buy this ability to work at the lowest possible price. Can we blame them for that? As buyers in the marketplace, certainly not. Every customer will be looked upon badly if he wants to pay more for the same product. For us laborers, wages are our livelihood, but for the capitalist, wages are a cost of production, a cost at which his profit increases.

What is the difference between the cost and the price of labor?

The cost of labor is the cost of the entire mass of means of subsistence for the normal reproduction of an employee and his family members.

There is no need to invent anything new here: a person must eat well, live in decent conditions corresponding to the modern cultural level, receive timely medical care and education. A person must develop physically and spiritually: have enough time for rest and self-development and for communication with family.

Consequently, the value of labor costs is practically independent of a person’s profession; the specific place of work is irrelevant to its calculation.

Price is the value of goods expressed in money, it’s “what’s written on the price tag”.

Sometimes a commodity is sold at a price well below or above its value. This is the case with the commodity “labor power”. The capitalist and the worker, meeting on the labor market, are equal commodity-owners, but only formally. After all, the capitalist owns the whole factory, while the worker owns only a tiny fraction of the labor necessary to keep the whole organism of production going.

Therefore, labor is often sold at a price several times lower than its value, and in the extreme, the capitalist begins to pay the workers such an insignificant amount of money that it is only enough for their physiological survival. Such an insignificant amount that if you reduce it a little more, then the next day the worker will simply not be able to reach his workplace.

What is the “real salary content”?

Have you noticed that even if the salary remains unchanged, goods still continue to rise in price? That on the same salary of 600 euros six months ago you could buy more than today? In this case, they say that the real content of wages has decreased. Moreover, nominally, wages may even grow, while its real content may fall.

Inflation is an increase in prices for all goods, except for the commodity “labor power”. Inflation is specially regulated and imposed by the bourgeois state, since it helps to increase the profits of the capitalists at the expense of the impoverishment of the working people. If earlier you had to cut wages, now you can just wait – their real content will fall “by itself.”

But there is another way

In the labor market, the price has already been set by the employer. Representatives of the bourgeoisie, although they compete with each other, are united in various legal associations and organizations that not only exert a strong influence on the state, but also allow them to coordinate their actions aimed at achieving the main goal of capitalist production – making a profit. Profit is obtained only by appropriating someone else’s unpaid labor. The fact is that the louder and more literate the workers declare themselves, the more they unite, the more concessions the capitalists have to make. Therefore, the associations of capitalists direct all their work to suppress the working class, creating the main condition for lowering the real content of wages.

The power of unification

The force of uniting capital can only be opposed by the force of uniting workers.

In order to increase the price of labor power, bringing it closer to its value, the working people must jointly use the legal methods provided for by bourgeois-democratic legislation: unification in trade unions, the conclusion of a collective labor agreement, a strike.

White collars

It is known that a small percentage of workers receive a wage, albeit not equal to the cost of labor, but close to it, which, however, does not distort the overall picture – the bulk of workers today are content with wages that are 5-6 times less than the cost. These contradictions should therefore be viewed from the point of view of large groups of people – social classes – and not from individual employers and individual workers.

Workers should not consider themselves second-class people and put up with the fact that working 12 hours for a pittance is fate. Bourgeois democratic institutions still provide a lot of opportunities for improving their position. And this should be used.

For example, the labor legislation of Latvia contains a unique provision: an employee cannot be dismissed at the initiative of the employer without the consent of the trade union in which he is a member (and the trade union is the workers themselves!). As far as we know, this provision is not found in any other country in the world, and Latvian workers should actively use it.

State – committee on bourgeois affairs

The working people should not forget that the Latvian state, like any other bourgeois-democratic state, is essentially a collective capitalist. Therefore, we have the right to demand from him (and not only from our direct “employers”) an improvement in our living conditions: the return of free medical care for all segments of the population, free education, a reduction in utility bills – everything that is regulated by the state. and for which the working people give a considerable part of their wages, which is then redistributed to the pockets of the capitalists under various pretexts.

Do not expect mercy from the state. Only we ourselves – united and organized workers – can raise our salaries – the cost of labor power – to its value and higher.