-John Edmundson
(The Spark, November 2008)
With the financial turmoil dominating the news over the last two months, commentators are talking about the end of the free market. Some panicked commentators have even questioned the survival of capitalism itself. With capitalism in a state of panic and all sorts of people in the media suddenly talking about Marx, it does seem to be a good time to look at what Marx had to say about capitalism that made his ideas so resilient.
What concerned Marx was the fact that while there were a lot of critics of capitalism active in his day, there had been no scientific analysis of how capitalism worked, so socialist projects were idealist and unable to gain much traction. Marx decided to start at the most basic level of economic production, the commodity, to discover how and why capitalism seemed to be so productive yet also so prone to crisis.
Picking up where earlier political economists had left off, Marx showed that the key to understanding the economy was the production of commodities – goods or services produced for sale. The one thing that all commodities have in common is human labour. Assuming people work at an average pace (which Marx called “socially necessary labour time”), eight hours of shoemaking is equivalent to eight hours of farming or eight hours of weaving. If I work for eight hours making shoes, I can buy goods to the value of eight hours’ labour (using a special commodity – money). If those goods are enough to feed and clothe me, I will do that labour every day to replace my used-up labour power. Continue reading “How capitalists get their profit”