Today we are going to begin William Thompson’s discussion on Exchange Value and the exploitation of the working class. We will discuss Thompson on distribution and how capitalism perverts production from fulfilling the needs of the society towards the need of the capitalist to earn profits next week. To follow the continuity of Thompson’s argument, please read the previous diary from the series:
http://www.dailykos.com/....
Thompson's primary concern was the distribution of the social product and the notion of exploitation. The notion of exploitation was endemic to the system of competition as it was envisaged by Thompson. As such, in Thompson's writings, the determination of distribution in a competitive society incorporated within it the notion of exploitation. Thompson believed that it was in the distributive process that exploitation arose. Exploitation, according to Thompson occurred when labour does not receive its "just" equivalent for its contribution to production.
I. Exploitation of the working class
Thompson’s notion of exploitation as deriving from the inability of the worker to obtain a just equivalent for his labour time can also be noted in his description of a situation under which the worker has disposal of his product and then sells it as though it contained more labour than it actually did, i.e., he made a profit on its sale. If the labourer received more than the labour he had used for the production of the surplus, he,
[...] assumed the nature of a capitalist, he lived for so much on the labor of others without real equivalent - this would constitute unjust exchange and hence exploitation (Thompson, 1827, p. 16).
What Thompson meant by this was that the "forcible abstraction" of the product from the workers -- in that they did not have ownership over what they produced -- resulted in the workers being paid only for a portion of the working day, that part necessary for them only to subsist and reproduce.
[...] for suppose that eleven portions of an equivalent are given to him who deems that the value of his labor to be twelve portions, the balance, the one portion in this case, between what is given and the estimate of the loser, is so much taken by forcible abstraction (Thompson, 1824, p. 79).
Thompson, like Hodgskin, believed that the fact that capital was owned by the capitalists required that the workers, in order to remunerate the capitalists for the use of their capital, were forced to work additional hours over and above what would be required to be produced in order to only meet their own needs.
No doubt, in the present artificial and fortuitous combinations of society, from the monopoly of knowledge and the numberless and ever-varying expedients in which force and fraud are the agents of insecurity, the laborer is compelled, by the necessity of living, to exert his productive powers beyond that first produce, which if left to himself would be abundantly sufficient for his support (Thompson, 1924, p. 175).
It is the fact that the worker does not get remunerated for those additional hours of work that formed the basis of the worker's exploitation -- the wage did not reflect the quantity of labour hours contributed by the workers in production. Clearly, the production of the surplus was not considered exploitative, in and of itself. Exploitation arose from the fact that the capitalist owned the whole product, and subsequently paid the workers wages which were valued only for a part of the product, confiscating the surplus product. Hence, the workers never received the full value of the labour they had contributed to production.
II. Exchange Value and exploitation
According to Thompson, labour is the source of both exchange value and wealth. Moreover, this choice of a labour source of value implies for Thompson the notion of labour as a determinant of exchange value.
Wealth and Exchange Value
Like Ricardo, he began his argument by distinguishing whether an object constituted wealth from the basis of the exchange value of an object.
The word, wealth, signifies "that portion of the physical materials, or means of enjoyment which is afforded by the labor and knowledge of man turning to use the animate or inanimate materials or productions of nature (Thompson, 1824, p. 6).
Thompson argued that the notion of wealth temporally and historically precedes that of exchange value. By this he meant that objects could be produced for consumption, without embodying the possibility of exchange. Hence, Thompson, like Smith and Ricardo before him, recognized that commodities had two aspects: use and exchange value.
Value in exchange is not necessary, though it almost always attaches, to the idea of wealth: for small communities have been rich and happy by labor in common, without any exchanges [...]. Without value in exchange, an article, ever so much an object of desire to him that owns it, and produced by ever so much of his labour, can have no marketable value: it will not in a market be exposed for sale to those who have no desire for it: but that does not make it the less an object of wealth to him who desired it because it was useful, and who wisely employed himself in its fabrication for his own use (Thompson, 1824, p. 6).
Like all other British classical economists, Thompson argued that something could not be considered to be an object of wealth unless it was an object of desire, scarce, and, most pivotal, that it required labour for its production. In this respect, he was close to Locke in that he argued that an object of wealth must be considered to be desirable enough that labour be bestowed on its production and reproduction, and that the deliberate application of labour is what constituted an object as wealth.
Without labor there is no wealth. Labor is its distinguishing attribute. The agency of nature constitutes nothing an object of wealth: its energies are exerted altogether equally and in common, in the production of all the means of enjoyment or desire, whether objects of wealth or not objects of wealth. Labor is the sole parent of wealth (Thompson, 1824, p. 7).
According to Thompson, in any given society, and at any given point in time, labour is also the sole measure of the value of an object of wealth. Thus, Thompson, following Ricardo, argued that the exchange value of a commodity is determined by the quantity of labour directly and indirectly necessary for its production.
What is asserted, is, that in any given state of society, with any given desires, at any particular time, labor, employed with ordinary judgement on objects of desire, is the sole measure of their values; and under such circumstances an accurate measure. While the quantity of land and the supply of materials of many articles appears stationary, population and knowledge at the same time increasing; while desires or tastes vary as the moral and intellectual condition of mankind improves, no accurate measure of value, as applied to wealth, can be given. To seek it, is to hunt after a shadow. Nothing but labor or effort bears any relation to the converting of objects of desire into objects of wealth: they may by possibility all change their characters, and be at one time objects of wealth, while at another they are mere objects of desire; or may cease to be even objects of desire (Thompson, 1824, p. 15).
Heterogeneity of Labour and the determination of Value
Recognizing the fact that labour is heterogeneous in terms of its quality, Thompson therefore adopted as the measure of value the estimate of the value of a day's labour is that produced by the ordinary skill and diligence in the ordinary occupations of the laborious part of the community (Thompson, 1824, p. 16).
In order to utilize labour as the basis of exchange value, he espoused the ordinary labour of an ordinary worker as the determinant of value. However, at the same time, he recognised that this ordinary labour was not always an accurate measure of the relative value of commodities, due to the variations of what could be constituted as a day's ordinary labour both between and within industries within the same society.
Greater skill it is evident is exerted in one species of labor, and by one laborer at the same work, than in another. But they are resolvable into the ordinary labour of the community. [...] Thus, though labor is not an accurate measure of the relative value of articles of wealth under the varying conditions of human society, it is the best approximation to such a standard; and is the only standard by which we can judge whether an article of desire is or is not an article of wealth (Thompson, 1824, p. 16).
The total value of the product was seen by Thompson to derive from the workers. In Thompson's writings -- like Smith, Ricardo and Hodgskin -- capital, in and of itself, was not seen to be productive of value. It was the worker whom he believed created the additional value beyond that which was originally utilised in the production process.
'Twas labor that gave to all these their value as wealth, before they came into the hands of the mechanic; and by his additional labor alone can their value be still increased (Thompson, 1824, p. 166).
The worker not only had to produce his subsistence, he also had to replace the capital used up in production. However, the worker did far more than just reproduce the original situation. The worker's skill, combined with capital, enabled the production of additional surplus value beyond the simple reproduction of the society; yet that surplus product was claimed in full by the capitalist.
First, the laborer, say the mechanic at woolens or cottons, earning about two shillings a day or about thirty pounds a year, pays for his house or lodging about five pounds a year. [...] Next comes the claim of the employer who owns the buildings in which the mechanic works, the unwrought materials which he is to fabricate, and the machinery (the tools) with which he must operate, as well as the wages to be advanced until the wrought article is exchanged. The amount of this capital, fixed and circulating, may be from thirty to a hundred pounds for every laborer employed, the average profit on which may be set down at ten pounds. There can be no other source of this profit than the value added to the unwrought materials by the labor guided by the skill expended upon it. The materials, the building, the machinery, the wages, can add nothing to their own value. The additional value proceeds from labor alone. [...] In the usual course of things, then, the productive laborer is deprived of at least half the products of his labor by the capitalist; the amount of his labor being thirty pounds, and his rent and the profits of stock that is said to employ him, being fifteen pounds (Thompson, 1824, p. 166).
So, where does this leave us?
We know that Thompson argued that the capitalist system was essentially exploitative in nature, we also know that given his determination of prices, that we can demonstrate that labourers work additional hours over and above what is required to meet their own needs for subsistence. We also know that Thompson was a committed socialist and worked for and in the cooperative movement of his time. What is needed to complete the discussion of Thompson is to examine how exploitation is manifested in the distribution of the product between workers and capitalists. We will examine this discussion in Thompson next week along with his discussion on how the capitalist system of production and distribution leads to a perversion in the system of production in that the needs of the population are sacrificed to meet the needs and demands of the capitalist.
Suggested Readings
Claeys, Gregory. (1987) Machinery, Money and the Millennium: From Moral Economy to Socialism, 1815-1860, Princeton, NJ: Princeton University Press.
Locke, John. (1690) Two Treatises of Government, New York: New American Library, 1965.
Thompson, Noel, W. (1984) The People's Science: The Popular Political Economy of Exploitation and Crisis 1816-34, Cambridge: Cambridge University Press.
Thompson, William (1824) An Inquiry Into The Principles of the Distribution Of Wealth Most Conducive to Human Happiness, Applied to the Newly Proposed System of Voluntary Equality of Wealth, New York: A.M. Kelley Publishers, 1963.
Thompson, William (1827) Labor Rewarded - The Claims of Capital and Labor Conciliated; or How to Secure Labor the Whole of Its Exertions, New York: A.M. Kelley Publishers, 1969.
Please also take the time to read Hodgskin from the series so that you can compare his work to that of Thompson: http://www.dailykos.com/... and http://www.dailykos.com/...