The Worker (Update), September 22, 2008
Published by the Workers Party, USA
P.O. Box 25716, Chicago, IL 60625

Introduction to Political Economy:

Wage-Labor and Capital

In order to assist workers and political activists to look into the question, "What is the way out of the economic crisis?" we are printing a series of articles on political economy written by Michael Thorburn. We are printing these articles with the aim to 1) give people a concrete picture of some of the contemporary features of capitalism, 2) provide an analysis of the underlying laws of motion of capitalism, and 3) initiate discussion on some of the lessons from the historical and contemporary struggles of the workers against exploitation and the capitalist system. We invite our readers to contribute to this discussion.

Wage-Labor and Capital

For several years now, the program and propaganda of the ruling class in the U.S. has been directed towards "unfettering the free market system" and "increasing the international competitiveness of U.S. capitalism." The capitalists and their spokespersons claim that the so-called "free market system" is not only the "natural order" of things but also the way to generate the maximum wealth, provide individual opportunity and guarantee individual freedom.

Underlying this entire propaganda is the oldest fairy-tale of capitalism - that capital is the source and creator of society's wealth and that the accumulation of capital in the hands of a few is a result of the hard work and creativity of the individual owners of capital.

On the basis of this fairy-tale, the capitalists naturally insist that the way to increase prosperity and the production of new wealth is to remove any restraints on capital so as to increase its rate of accumulation and self-expansion.

But what is "capital?" If "capital" is looked upon either as a hoard of money or an accumulation of means of production (tools) and raw materials, it can never produce any new value. Dollar bills do not give birth to new dollar bills and even the largest factory in the world will not yield any new products whatsoever if it stands idle and is not set in motion by the labor of the workers. Thus is can be seen that the only thing which creates new values and wealth is the labor of the workers. Throughout history it has always been the muscles and minds, the sweat and creativity of the laboring masses, which has produced all the material blessings.

When the capitalist economists and politicians attempt to attribute some mystical, generative power to capital, they are trying to hide the fact that under the capitalist system, capital is not simply a hoard of money or an accumulation of tools but precisely a social relationship. Under capitalism, the means of production - generally including not only the factories and other tools but also the land and natural resources of the country - are monopolized by the owners of private property. The other side of this coin is the fact that the vast majority of the population - the laboring classes - are deprived of any property in the means of production and therefore are forced to sell themselves day in and day out to the capitalists. It is this social relationship which allows the capitalists to expropriate the product of the labor of others. It is this social relationship which creates the appearance that the capitalist is the agent of social production and that the increasing wealth of society is a function of the increase of capital.

In reality, then, the so-called "free market" is nothing more than a modern-day slave market. The worker comes to this market indeed "free" of any means of securing a livelihood. The "freedom" that the worker has is to try to find a capitalist who will exploit him/her; at best the worker can choose whether to be exploited by GM or Ford. True, unlike the slave system in which the master owned the slave outright, there is no legal compulsion to work for the capitalists. But economic necessity always confronts the worker with the question of going to work for the capitalists or starving. Thus, day in and day out, the worker has no choice but to sell his/her ability to work to the capitalists.

Not only is the worker forced to work for the capitalists but in the "bargaining" over wages, the capitalist has all the advantages. Everyday experience shows that when a worker is "lucky" enough to find a job, the capitalist tells him/her bluntly what the pay will be, adding "you may take it or leave it." The capitalist has millions and billions of dollars hoarded away and is not worried about paying the rent. Furthermore, the permanent and ever-growing army of unemployed workers allows the capitalist to remind anyone who balks at her/his wages or working conditions: "There are plenty more workers to choose from.." The worker, on the other hand, needs the job in order to put food on the table, to keep a roof over his/her head and clothe the family. The worker cannot afford to "hold out" for too long but must take what the capitalist "offers." Thus, the price paid by the capitalist for the worker's labor-power always remains at or near subsistence - the cost necessary for the worker to stay alive and appear again and again in the "free market" to sell her/his labor to the capitalists. Although sometimes the wage may be slightly higher or slightly lower, one thing remains certain: the workers always produces a great deal more during a day's labor than he/she receives in wages. The remainder, the surplus, accrues to the capitalist as profit.

Capitalism, characterized by private ownership of the means of production, means the forcible economic disenfranchisement of the laboring masses who are reduced to the status of wage slaves. The reality is that the individual owners of capital have not gained their vast wealth through their own "hard work" but precisely because their monopoly over the means of production enables them to exploit the labor of the workers. Thus under capitalism the highly advertised "freedom of the individual" and "individual opportunity" means nothing more than "opportunity and freedom" for the few - for the owners of capital. And the wealth, opportunity and freedom of the capitalists is based on the exploitation, poverty, oppression and denial of freedom for the vast majority of the people.

Bailing out the Rich Again

As The Worker goes to press, the Bush administration is negotiating with Congress to authorize the federal government to spend $700 billion to bailout big bankers and other capitalists who are defaulting on their debts due to the financial crisis.

The proposed $700 billion follows on the heels of a number of other bailouts recently pledged by the Federal government, including $25 billion for mortgage finance companies Fannie Mae and Freddie Mac, $29 billion for Bear Stearns together with JPMorgan Chase, and $85 billion for the insurance giant American International Group.

The bailouts mean that the government is, once again, using billions and billions of dollars taken out of the paychecks of the workers to underwrite the investments and profits of the Wall Street bankers.

The price tag for the bailouts mentioned above amounts to more than 12 times the total federal budget for public education. And while the government already spends hundreds of billions of dollars guarantying the profits of the capitalists (through the militarization of the economy, through interest on the debt, through research and development grants, through infrastructure investments in industry,etc.), it keeps slashing essential public services such as public education, income-support programs for the poor, public housing, etc.

In other words, the capitalist class is relying on its political power and government to protect its profits while shifting an ever-greater burden of misery and hardship onto the people.

The Economics of Barack Obama and the Democratic Party

During the elections, Obama and the Democrats are campaigning largely on a promise to help the workers. But the real program of the Democrats tells a different story.
The Democrats' election platform, approved at their national convention in August, describes the Democrats' economic philosophy as one of, "investing in American competitiveness" and insists that it is the "free market that has been the engine of America's progress."

Barack Obama's economic platform is elaborated in his "Blueprint for Change" which outlines a series of governmental measures to give the private sector more and more capital in order to "create new jobs." The "blueprint" promises to "bolster the competitiveness of U.S. manufacturers" and to ensure that America can "compete in a global economy." Obama will set up investment funds for "job creators" who will "identify and invest in the most compelling advanced manufacturing strategies." Obama also promises to increase government funding for corporate research and infrastructure through funding structures that aim to "improve efficiency, implement new technology and strengthen company growth."

In other words, Obama and the Democrats plan to take billions of dollars accumulated by the government through taxes on the working people and use these monies not to give jobs or income-support to the workers but to give business more capital. Again, our country's social capital is being turned over to a handful of private owners.

This economics, well-known as "trickle-down" economics, is a fraud from beginning to end. In the first place, providing the capitalists with investment funds, research and development grants, etc. will not create jobs but rather result in more unemployment. This is because the capitalists invest in new technology and equipment with the precise motive of sweating more and more work out of fewer and fewer workers. The capitalist goal is not to create jobs but to increase profits by increasing the exploitation of the workers.

Furthermore, Obama's economics turns truth upsidedown. It is not the capitalists who create economic growth and jobs. It is the labor of the workers which produces all the wealth of the country.

The Democratic party, just like the Republican party, is a party of capitalism, a party devoted to the exploitation of the working class. Furthermore, in the present conditions, the Democrats, just like the Republicans, are a party of the anti-social offensive which is attacking the rights of the workers and people all along the line.

Democrat Bill Clinton was the president who pushed through the North American Free Trade Agreement (NAFTA) and the so-called "welfare reform" which drastically slashed income-support programs for the poor and most vulnerable.

Democratic Party govenors and mayors all across the country are in the forefront of slashing public investments in education, in health care, in income-support programs and other vital social services.

The Democrats in Congress have voted again and again to fund the wars in Iraq and Afghanistan and to turn over billions of dollars for the militarization of our country.

In opposition to the economics of Obama and McCain, the economic program of the working class goes directly against the power and privilege of capital. The workers demand that the economic resources of the country must be directly in service of the people and that the first principle and very motive of economic life must be to guarantee the economic rights and well-being of everyone.

The workers must recognize that only the conscious and organized struggle of the people themselves can defeat the economics of the Republicans and Democrats. As a starting point, we must come out to demand:

–an end to the militarization of the economy
–an end to the robbery of the public treasury by the big monopolies
–full funding for public services and the public sector of the economy
–ironclad guarentees for all the economic rights of the people, including the right to a secure livelihood, the right to free comprehensive health care, the best possible education, to food, clothing and shelter, etc.

DPRK on the Agreement of the Six-Parties

The following statement concerning U.S. violation of the agreement made at the six-party talks was released by the DPRK Foreign Ministry on September 19, 2008. It is reprinted from the Korean Central News Ageny (KCNA) online edition. Minor grammatical changes have been made.

A spokesman for the DPRK Foreign Ministry gave the following answer to a question put by KCNA Friday as regards the U.S. act of misleading the public opinion while persistently evading the implementation of the October 3 agreement:

As already clarified by the DPRK, it suspended the disablement of its nuclear facilities and work has been under way to restore its nuclear facilities in Nyongbyon to their original state since some time ago as a counter-measure against the action taken by the U.S. to indefinitely put on hold the effectuation of the measure for delisting the DPRK as a "state sponsor of terrorism."

This was a logical product of the U.S. non-abidance by the principle of "action for action" stipulated in the September 19 joint statement, the February 13 agreement and the October 3 agreement.

The U.S., however, is asserting that the measure taken by the DPRK is in violation of the agreement of six parties while trying hard to convince the public that the DPRK's presentation of the nuclear declaration was premised on the verification in line with the "international standard."

It is sophism totally distorting the agreements so far reached to claim that the measure for taking the DPRK off the list of the "state sponsors of terrorism" was to take effect only when an agreement is made on the verification of the nuclear declaration in line with the "international standard."

No verbal agreement, to say nothing of a written one on this issue was made either among the six parties or between the DPRK and the U.S.

The core of the October 3 agreement is for the five parties including the U.S. to make political and economic compensation in return for the DPRK's disablement of its nuclear facilities and presentation of the declaration on its nuclear program.

It was the commitment the U.S. was obliged to completely fulfill at the second phase for the implementation of the September 19 joint statement according to this October 3 agreement to implement the measure for delisting the DPRK as a "state sponsor of terrorism." It is, therefore, an issue quite different from the verification of the nuclear declaration.

The issue of setting up a verification and monitoring mechanism which was agreed upon at the talks of heads of the delegations to the six-party talks in July was envisaged as a measure for verifying the fulfillment of the commitments by all six participating parties at the phase of realizing the denuclearization of the whole Korean Peninsula according to the September 19 joint statement.

This notwithstanding, the U.S. is foolishly trying to force the DPRK to dismantle nuclear weapons unilaterally through pressure and deception while misleading the public opinion by creating impression that the process of the denuclearization was put into stalemate because the DPRK evaded the verification.

The U.S. put on hold the effectuation of the measure for taking the DPRK off the list of "state sponsors of terrorism," its commitment, under the pretext of the verification of the nuclear declaration in line with the "international standard," though no agreement was made on it. This glaringly reveals its true intention to step up its hostile policy toward the DPRK in the end.

The U.S. seeks to make a house-search of the DPRK, which is neither signatory to the Nonproliferation Treaty (NPT) nor member of the International Atomic Energy Agency (IAEA,) under the pretext of "international standard." This is no more than a pipedream.

Now that the U.S. true colors are brought to light, the DPRK neither wishes to be delisted as a "state sponsor of terrorism" nor expects such a thing to happen. It will go its own way.