How A Capitalist Workplace Works
I’m fairly certain most people are at least somewhat familiar with the concept of a Capitalist workplace. An employer who has the resources to start a business hires employees and together they create a product or service. In this arrangement, both parties invest in the venture, but in different ways:
Employer – Provides the work environment, tools, and raw materials to create a product or service.
Employee – Provides the labour required to turn work environment, tools, and raw materials to create a product or service.
The Labour Theory of Value
This theory states that the combination of Capitalist and worker investment generates the eventual price of a product or service. Without the Capitalist in this system, the worker has no means to produce from their labour. Without the worker, the Capitalist has no means to turn their resources into it’s final form.
The work environment, tools, and raw materials on their own are not worth the value of the final product.
“The whole is greater than the sum of it’s parts.”
“Often this is expressed mathematically as:
- is the constant capital of materials used in a period plus the depreciated portion of tools and plant used in the process. (A period is typically a day, week, year, or a single turnover: meaning the time required to complete one batch of coffee, for example.)
- is the quantity of labor time (average skill and productivity) performed in producing the finished commodities during the period
- is the value (or think “worth”) of the product of the period ( comes from the German word for value: wert)”
While both employer and employee invest in the business, the employee is much more often than not unfairly compensated for their investment.
A fairly run business where both parties get what they invested in a business would look like this:
Capitalist – Retains the value of . They put this value in, it’s only fair that they continue to have this amount.
Worker – Gets the value of their labour which amounts to ( – = ). Without the worker, the resources would still maintain the value of with no change. It is through the worker’s labour that the final value is created.
In a Capitalist system, however, this is never the case. Workers are instead paid a value arbitrarily chosen by the Capitalist (a wage), leaving what is left in profits.
“…the value added during the period of production, , [is divided] into two parts. The first part is the portion of the process when the workers add value equivalent to the wages they are paid.
For example, if the period in question is one week and these workers collectively are paid $1,000, then the time necessary to add $1,000 to—while preserving the value of—constant capital is considered the necessary labor portion of the period (or week): denoted . The remaining period is considered the surplus labor portion of the week: or . The value used to purchase labor-power, for example the $1,000 paid in wages to these workers for the week, is called variable capital (). This is because in contrast to the constant capital expended on means of production, variable capital can add value in the labor process. The amount it adds depends on the duration, intensity, productivity and skill of the labor-power purchased: in this sense the buyer of labor-power has purchased a commodity of variable use. Finally, the value added during the portion of the period when surplus labor is performed is called surplus value (). From the variables defined above, we find two other common expressions for the value produced during a given period:
The first form of the equation expresses the value resulting from production, focusing on the costs and the surplus value appropriated in the process of production, . The second form of the equation focuses on the value of production in terms of the values added by the labor performed during the process .”
The Capitalist is only allowed to make this decision because they are assumed to be the one in control. We allow them this control because we see them as being “job creators” generating opportunity for hardworking Americans. We do this rather than seeing them as greedy, self-interested people who take advantage of the positions of others.