Marxist Exploitation: RIP

[20000miles]

There are still some people around who remian proponents of archaic economic theories broadly associated with Karl Marx. One theory in particular remains very popular: the theory that the relationship between capitalist and worker is inherently exploitative. This theory is untrue...

SHORT STORY:

The trade of wages for labour represents a trade of present for future goods, respectively, and it is impossible to trade present goods with future goods without a discount. The discount is not exploitation, but rather a discount the worker takes in exchange for present goods.

LONG STORY:

Quickly! What would you prefer? Fifty euros today, or fifty euros in one year? You'd probably choose to take the money today, right? That's becuase humans value goods in the present more highly than they do goods in the future. This is a phenomena known as time preference.

Keeping this in mind, let's look at the hardcore of the Marxist doctrine:

Now what then is his [Marx's] proof of the exploitative character of a clean capitalism? It consists in the observation that the factor prices, and in particular the wages paid to laborers by the capitalists, are lower than the output prices. The laborer, for instance, is paid a wage that represents consumption goods which can be produced in three days, but he actually works five days for his wage, and produces an output of consumption goods that exceeds what he receives as remuneration. The output of the two extra days -- the surplus value in Marxist terminology -- is appropriated by the capitalist. Hence, according to Marx, there is exploitation.

Furthermore:

Now what is wrong with this analysis? The answer becomes obvious once it is asked why the laborer would possibly agree to such a deal. He agrees because his wage-payment represents present goods, while his own labor services represent only future goods, and he values present goods more highly. After all, he could also decide not to sell his labor services to the capitalist and then reap the full value of his output himself. But this would of course imply that he would have to wait longer for any consumption goods to become available to him. In selling his labor services, he demonstrates that he prefers a smaller amount of consumption goods now, over a possibly larger one at some future date.

On the other hand, why would the capitalist want to strike a deal with the laborer? Why would he want to advance present goods -- that is, present money -- to the laborer in exchange for services that bear fruit only later? Obviously he would not want to pay out for instance $100 now, if he were to receive the same amount in one year's time. In that case, why not simply hold on to it one year, and receive the extra benefit of having actual command over it during the entire time? Instead, he must expect to receive a larger sum than $100 in the future, in order to give up $100 now in the form of wages paid to the laborer. He must expect to be able to earn a profit -- or more correctly, an interest return.

And he is constrained by time-preference -- that is, the fact that an actor invariably prefers earlier over later goods -- in yet another way: for if one can obtain a larger sum in the future by sacrificing a smaller one in the present, why then is the capitalist not engaged in more saving than he actually is? Why does he not hire more laborers than he does, if each one promises an additional interest return? The answer again should be obvious: because the capitalist is a consumer too, and cannot help being one. The amount of his savings and investing is restricted by the necessity that he too, like the laborer, requires a supply of present goods large enough to secure the satisfaction of all those wants, the satisfaction of which during the waiting time is considered more urgent than the advantags which a still greater lengthening of the period of production would provide.

Now what is wrong with Marx's theory of exploitation, then, is that he does not understand the phenomenon of time-preference as a universal category of human action. That the laborer does not receive his "full worth", so to speak, has nothing to do with exploitation, but merely reflects the fact that it impossible for man to exchange future goods against present ones except at a discount.

[COLOR=#006600]Hans Hermann Hoppe; Marxist and Austrian Class Analysis[/COLOR] [pp. 81-82]

[cantenaccio]

The one contradiction I found with Marx is his statement that the "revolution" will only happen with the burgeoise as the catylist.

[20000miles]

The one contradiction I found with Marx is his statement that the "revolution" will only happen with the burgeoise as the catylist.

That, and like all milennial thinkers, the Revolution (and the "final stage" of history) was always just around the corner but it never quite arrived...

[Republican-Socialist]

The one contradiction I found with Marx is his statement that the "revolution" will only happen with the burgeoise as the catylist.

Thats not a contradiction. I think the whole 'capitalism will create it's own grave diggers' is what you are referring to, theres no contradiction there. The more thorough exploitation by the bourgeoisie of the worker leading him to revolt, not rocket science

[Republican-Socialist]

That, and like all milennial thinkers, the Revolution (and the "final stage" of history) was always just around the corner but it never quite arrived...

Theres time yet dear

[cantenaccio]

I've yet to come across a Marxist who is truely working class.

[Republican-Socialist]

I've yet to come across a Marxist who is truely working class.

Do you know what the marxist definition of working class is? And feel free to go to Derry or Belfast and you will see working class marxists.

I share your probable contempt for the trendy college left with che tshirts,long unwashed hair etc then they go and work for a bank. Anarchists the same.

Im a marxist, Im working class, in fact I was unemployed until today when I started a new job, so now you have met one...on the internet though...but sure we all know thats how lasting relationships are built.

i agree though, the trendy left hypocrisy does my nut. The old trots. Their membership is like a revolving door! If they get an email off someone in a college and their signature then they counted as a member. Just a tip, stop selling your newspaper and passing email/name sheets round at every single event, trendy leftists are about as useful as a chocolate teapot and they make a mockery of genuine leftist politics

[Cael]

Its clear that Marx analysed the decline and self destruction of capitalism perfectly. All the Keynesians who thought they had overcome the business cycle have been proven dreadfully wrong. The Freidmanites have been totally discredited. The 20th century saw several false dawns for the Proletariat, but its certain that the 21 century will be a Communist century.

[20000miles]

Its clear that Marx analysed the decline and self destruction of capitalism perfectly. All the Keynesians who thought they had overcome the business cycle have been proven dreadfully wrong. The Freidmanites have been totally discredited. The 20th century saw several false dawns for the Proletariat, but its certain that the 21 century will be a Communist century.

[TurloghÓC]

I've yet to come across a Marxist who is truely working class.

Now you have.

Never attended university and have worked in factories from working on trains to stuffing inserts in packaging.

Anyway, I agree with 2000Miles criticisms of Keynesian economics in another thread, but the OP in this topic is pretty weak- "time preference" isn't really a rebuttal of the theory of surplus value.

The Marxist theory of the tendency for the rate of profit to fall is the best explanation we have at the moment to explain what's actually happening to the global economy. It explains why production has been moving to the developing countries- where extracted surplus value still allows for profit. Also, why the "new" poverty in the post-industrial imperialist countries is based on dumping all debt to the working class- not only through public buyouts of bad debt, but also in the form of loans and mortgages (like buying from the company store was in the 19th century).

The current gutting of the economy in which the wealthiest are plundering everyone else (with even the top strata of the bourgeoisie, the finance capitalists, plundering industrial capitalists) makes me think back to end of the Roman Empire. There the unchecked landowners destroyed even their own class of merchants.

That, and like all milennial thinkers, the Revolution (and the "final stage" of history) was always just around the corner but it never quite arrived...

Apologies in advance for being pedantic... but socialism/communism would be the final stages of pre-history, and everything after that would be (conscious) human history, according to Marx.