Your pay envelope

My dear Mr. Smith,

If you stop at the street corner to listen to a soap-boxer, there are two things that he is pretty certain to tell you: first, that you are a “wage slave,” and, second, that you are being “robbed” every day you work.

With a flood of words, carefully prepared to appeal to men in your position, and with stories that are supposed to illustrate the points he wants to make, the man on the street-corner will try to persuade you that labor is the sole factor in wealth production—that the workers produce all the wealth of the world—and that this wealth belongs rightfully to those who made it.

The agitator will tell you—what you already know—that there is a part of the product of your toil that goes to your employer. This should not surprise you. When you consented to work for three dollars a day, it was with a clear understanding that you would do enough more than three dollars’ worth of work a day to give your employer a fair return upon his investment. I’ll wager, you never suspected that he had no right to this share, but, instead, was stealing it from you, until the soap-box orator began to tell you that you were being “robbed.”

If you question the speaker as to the extent of this “robbery,” you will get little satisfaction. Socialists all agree that the worker is “robbed,” but they disagree very materially as to the amount of which he is “robbed.” One Socialist (I. L. P. pamphlet, “Simple Division”) tells you that the worker receives only one-seventh of what he produces. Another (Hazell, “A Summary of Marx’s ‘Capital’”) asserts that labor obtains one-fifth of its product. Still another (Victor Grayson, Speech, June 4, 1908) announces that the worker takes one-quarter of what he really earns. Another English Socialist (author of “The Basis and Policy of Socialism”) proves by statistics that one-third of the total product goes to the man who ought to have it all. A more reasonable individual (Chiozza-Money, “Riches and Poverty”) estimates the worker’s share as a “trifle more than one-half,” while Suthers, who makes a specialty of answering objections to Socialism, figures that the returns to labor represent two-thirds of the amount that the worker ought to receive (“Common Objections to Socialism Answered”).

You see what a hazy idea the Socialists have upon this question, how chaotic and self-contradictory their statements are; yet it is upon such “facts,” that the contentions or claims of Socialism depend.

The soap-box man’s statements about the “robbery” of the worker are based upon a principle that is taken from Karl Marx’s book, “Capital,” which is the Bible of all real Socialists. Karl Marx said that “labor is the source of all value,” and it is upon the truth of this statement that the whole economic structure of Socialism rests. If it is true that labor is the source of all value, it is possible to argue that the laborer is entitled to all he produces. If labor is not the sole source of value, the laborer is not entitled to all he produces and it is nonsense to say that he is. Thus, the whole question of the fairness of the principle upon which the modern wage system is based stands or falls with this “law” of value.

I suppose it is safe for me to assume that you have never read “Capital.” I suppose it is just as safe to assume that you never will read the three bulky tomes in which Marx has expounded the economic system that we call “Socialism.” You needn’t be ashamed to admit this fact. There are lots of others like you. Even the soap-boxer, who quotes Marx so fluently and who upholds his theories so energetically, has no advantage over you in this respect. It is a safe hundred to one shot that he also has never read—and never will read—“Capital.”

The German poet Heine tells us that when Hegel, the well-known philosopher, lay on his death-bed, he declared: “Only one has understood me.” But, immediately after, he added, irritably: “And he did not understand me, either.”

If this story had been told of Marx instead of Hegel, I should be quite as ready to believe that it is true. If the soap-box orator should attempt to explain the Marxian theory of value, he would have no audience in five minutes. It is because he explains the effects of this “law,” and not the principles supposed to underlie it, that he finds so many people willing to listen to him. Nobody wants to be “robbed,” and, when the Socialist orator asserts that all workers are constantly being “robbed” of the larger portion of their earnings, we are interested at once.

So, if I am to make you understand the reason that this theory of the Socialists is false, if I am to prove to you that you are not “robbed” (at least not in the way the Socialists say you are), I must avoid the technical words and often unintelligible expressions that have made Marx’s “law of value” so difficult to comprehend. I must appeal strictly to your common sense. Then, if you want to go more deeply into the intricate detail in which Marx has framed his economic theories, there are several books that will give you all the information you can possibly digest. One of these is “Socialism: A Critical Analysis,” by Professor Oscar D. Skelton of Queens University, Canada; another is “Socialism” by Cathrein-Gettelmann. You will find them in any good library.

Marx separated value into two classes: value in use and value in exchange. “Use-value” means the value that an article has in satisfying some human need. “Exchange value” means the value that an article has when we come to exchange it for something else—for money or for other articles. Thus, an article may be very valuable for use and still have no value in exchange. For example, both water and air are necessary to human life and so are very useful, yet, should we desire to exchange them for clothes or fuel, we should find it a difficult matter to make such a bargain, simply because water and air are usually free to all.

Articles that have exchange value are those for which men are willing to give something “in exchange,” but as the articles we can’t sell are frequently just as useful as those for which we can get a price in the market, Marx argued that there must be something in one that the other does not contain—some one factor upon which exchange-value depends—and he decided that this common element is human labor (“Capital,” p. 4).

Was Marx right in this assumption? Is it “labor that makes value”?

When you go to the store to buy an article, you do not ask what it cost the manufacturer to produce it, do you? You don’t care whether the man who made this article has profited by its manufacture or not. It doesn’t occur to you to ask how many hours of labor were put into it, or how much the workers who made it were paid. The question uppermost in your mind is: “How badly do I want it?” If you want it so badly that you would rather own it than spend the same amount of money for something else, you purchase it and take it away with you. If you prefer to spend the money in other ways, you go away without buying this article.

Now, what is the principle that influences you to make this decision? It is what this article is worth to you for your own use, is it not?

Has labor anything to do in making you form this decision? Neither capital nor labor has anything to do with the question. If the article has cost the manufacturer ten times as much as you are asked to pay for it, if ten times as much labor had been expended in making it, you wouldn’t give one penny more than it is worth to you for its use, would you?

Let us take another illustration:

Marx points out that labor—and he measures the value of labor by the time necessary to perform a given piece of work—is the sole source of exchange-value. As a result, Socialists propose to substitute what they call labor certificates for our present system of money, so that a man who spends four hours making cigars can buy with his labor certificates anything that represents a proportionate amount of labor.

Would this be a fair basis of exchange?

Would it be fair if a man working four hours in making cigars were to exchange the product of his labor for the gold or the diamonds that it had taken some other man four hours to extract from the earth? And is there no difference in the value of a silk dress and a cotton dress, if both kinds of cloth take the same time and skill in the making? Would it be fair to figure the value of any article on the amount of labor-time expended in producing it? There are mines in which gold is produced at a cost of less than $5 an ounce, and there are other mines where it costs so much to extract the gold that there is no profit in mining it. Is anybody so silly as to believe that the labor-time spent in one mine is as productive of value as the time expended in the other?

Any farmer will tell you that it is impossible to make the varying costs of agricultural products harmonize with the theories of Marx. In raising wheat, or potatoes, a great deal depends upon the quality of the land. If the land is very good, wheat may be grown at a cost of 50 cents a bushel, and with much less labor than the farmer would expend in raising wheat oh poorer land, though the latter crop might cost from 75 cents to a dollar a bushel to raise, if not more.

It is not the cost of an article that determines its value. Its value is based primarily upon its capacity to satisfy human wants. A useless article has no exchange-value, no matter how much it has cost. An article that has gone out of fashion possesses comparatively little value, in spite of the fact that it represents the expenditure of capital as well as actual labor which was “necessary labor” at the time it was performed. The Socialists have to admit this fact—Marx also admitted it (“Capital,” p. 189)—yet they do not seem to see the inconsistency of saying that the value of an article is affected by its loss of utility, while, at the same time, asserting that “a useful article has value only because human labor ... has been embodied in it.” If they told the truth they would say, “an article upon which labor has been expended has value only because it is useful.” But this would be to admit that their whole scheme is built upon a foundation of sand.

A commodity has value, not only because it has cost time and skill to produce it, and therefore is difficult of attainment, but also for the reason that it holds the one common property of all valuable articles—utility. It is true that articles of value are seldom produced without labor. It is not true that it is labor that makes them valuable. In confessing this, Socialism acknowledges that the law of Marx is contradicted by experience. Are we Simple Simons not to see this very obvious contradiction?

Take the commodity timber—because the woods which we use in building houses and those which are used in making furniture possess radically different values.

If you were to go to a primitive country, John, you would find plenty of trees that you could cut down, without asking anybody’s permission and without paying anybody for the privilege. Suppose that you were to take a gang of men into such a forest and were to cut down a lot of trees. If you took no pains in selecting these trees, but cut various kinds of wood, you would get different prices for the timber, and these prices would not in any way depend upon the cost of production (cutting down the trees) or the expense of transportation. As you know, there is a market price for every kind of wood, yet one wood costs practically no more than another to produce, and one may be transported as cheaply as another. What does this price depend upon? Upon utility, does it not? It is the use-value of the wood that ultimately fixes its price.

Then, too, you may take the products of the arts—the books we read and the paintings we admire. Does the amount of labor-time expended in the making fix the value of these commodities? An author may devote years to writing a novel, and yet see it fall still-born from the press, whereas another novelist, in a few months, may produce a story that nets him $25,000. Does labor-time count as a factor in determining the value of our books, our pictures, our musical compositions, or our scientific discoveries?

There is still another factor to be considered, John, and that is the productive power of thought. Marx, as you would see were you to analyze the first pages of his book, “Capital,” starts off with the idea that all labor is common, manual labor. Later on, he encounters the difficulty that labor when undirected is usually unproductive. A thousand men, working without direction, will produce nothing proportionate to the amount of physical strength they expend. Put a man with brains and knowledge over them, and he will show them how to make their labor fully productive.

Even Marx recognized the fact that he must make some provision for “skilled” and “mental” labor, so he grudgingly bridged over the gap by stating that “skilled labor counts only as unskilled labor, a given quantity of skilled labor being considered equal to a greater quantity of simple labor” (“Capital,” p. 11).

Socialists to-day try to deny that Marx intended to imply that the term “labor” means “average manual labor.” They will tell you, if you question them closely, that the term “labor” includes industrial effort of every kind—mental as well as physical labor. This is a worse absurdity than to say that manual labor is the source of all value. If we are to admit that “labor” includes every kind of effort, the assertion that all wealth should go to the laborers who produced it simply means that all wealth ought to go to the human race. And so it does. The only question remaining is: How can it be distributed more fairly?

This would take the very cornerstone away from the Socialist’s structure and bring it tumbling about his ears. If we do this, there is practically no room for argument left, for the number of persons who in no way contribute to the industrial progress of the world—the inheritors of wealth who are literally and positively idle—is so small that there is no reason why we should give them much serious consideration.