Your pay envelope

My dear Mr. Smith,

After asserting that labor produces all value, and “showing” that the laborer receives but a very small portion of the value which he produces, Marx tells us that this unpaid-for labor—the labor-strength and time of which the worker is robbed—is used by the Capitalist Class (Marx’s term for the employer) in the further robbery of the worker. This unpaid-for labor Marx calls “surplus value,” and he includes under this term everything that the worker does not get in his own pay-envelope—dividends, interest, rents and profits of all kinds.

Of course, nobody will deny that “surplus value”—or, more correctly, profit—may exist in industry. If the employer could not reap more from the industry than the mere equivalent of wages paid, it would not be to his interest to keep on paying wages. But the “surplus value” to which I refer, and the thing that Marx means when he talks about “surplus value,” are entirely different.

To admit that Marx is right in his definition of surplus value, we must first come to the conclusion that the worker is entitled to all the value that is produced, and, as we have already seen, this is not so. If it is not so, what has become of Marx’s surplus-value theory? There may be industrial injustices; there are many instances in which employers fail to pay those who work for them a just wage. I am willing to admit that there are numerous cases of this kind. If I thought it would add to the strength of my argument to particularize, I could name many unjust employers. But it would do no good. Between the abuses committed by individual capitalists and the “awful crimes of capitalism” which Socialism depicts, there is a difference as great as the distance from pole to pole.

According to Marx’s theory, if a laborer can produce something equal to the amount of his wage in six hours of work, the value of the product which he turns out during the other six hours in his work-day is stolen from him. “The extra six hours,” says Marx, “I shall call surplus labor, which realizes itself in a surplus product having a surplus value” (“Capital,” p. 178).

Have I made this clear, John? Do you see what Marx is driving at—that, when you are helping your employer to pay his rent, the interest on the money he has borrowed that he might keep you at work, the dividends to his stockholders, or the profit to himself, you are helping him to rob you—actually contributing to the robbery of yourself?

The soap-box orator will talk to you by the hour about surplus value. He will tell you that it makes no difference how much money there is in your pay-envelope. So long as it does not contain every cent of your employer’s profit, you are being “robbed.” “No wage can ever be fair compensation for a day’s work!” he shouts. “Before there can be justice on earth, the making of goods for profit must come to an end, for this is the ‘tap-root’ from which all the evils of Society develop. No dividends! No Interest! No Rents! No Profits! In a word, no Surplus Value!”

Marx, like the soap-boxer on the corner, includes all profits in the category of robbery and exploitation. He admits that labor can do nothing without capital, but he contends that capital itself is the product of past labor and, therefore, ought rightfully to belong to the laborers of the present day. “Capital,” he says, “is dead labor, that, vampire-like, lives by sucking living labor” (“Capital,” p. 134).

In this we have the assumption that all labor is performed by “laborers” of the propertyless class, and that all capital is owned by “capitalists.”

This, as you know, is not true.

There are plenty of laborers who have a respectable little store of capital laid by for the proverbial rainy day, and many of them own stock in the very concern that employs them. Not every man who lives by the labor of his hands is existing on the verge of starvation, as Socialists would have you believe, nor is it true that all labor is performed by the “laboring class.” Many so-called “capitalists” are truly sons of toil, the performers of manual labor and the producers of wealth, even as Marx would define a “producer.”

But, let us stop generalizing, and get down to cases.

Marx says that all profit is robbery and exploitation. As an example of the utter absurdity of this theory, let me cite an illustration which Mr. G. W. de Tunzelmann once used in a debate with a prominent English Socialist.

He took the case of a man who buys a diamond for $498,000. The man pays $2,000 to the diamond-cutter for cutting the stone, and, finally, sells it for $550,000, making a 10 per cent. profit upon his outlay. If Marx argues rightly, this sum of $50,000 was obtained by robbery, but—who was robbed? Was it the diamond-cutter who was defrauded of a portion of his wages? Should the entire $52,000 have gone to him for his part in the transaction, while the capitalist got nothing?

The Socialist who was debating with Mr. de Tunzelmann found it impossible to answer this question intelligibly. “If the $50,000 did not come from the diamond-cutter’s wages, where did it come from?” was all he could say, and, John, it is all that any Socialist can say!

Then, here is an illustration from my own experience:

I have a friend who bought a painting from a young artist, paying $300 for it. This was a very fair price to pay for the picture. The artist was well satisfied with his bargain and my friend felt that the work of art was well worth $300 to him. Several years passed, and the comparatively obscure artist became a famous artist—so famous that there were lots of people who wanted to buy his pictures, and my friend found that he could sell his painting and get $2,000 for it.

May we again ask: Who was robbed? The man who painted the picture received its full value at the time; the man who bought the picture from my friend was satisfied that he got good value for his money. If Marx is right, my friend robbed somebody to the extent of $1,700. But whom did he rob?

As we have already seen, the value of an article is chiefly a matter of utility as adfected (raised or lowered) by difficulty of attainment—not the worker’s “difficulty of attainment,” not the time and effort he had to expend to produce this article, but your “difficulty of attainment,” or the effort you must make to secure it. The part that the worker plays in the production of a commodity is of minor importance when compared with the other factors which operate in determining its value. It is the employer, and not the worker, who assumes all the risk. It is the directing genius, and not the mere physical force used in operating the industry, that determines whether it shall succeed or fail. If this were not true, every business enterprise would be a success, for it would be nothing more than the proposition of getting money and men together and setting them to work. But you know that this is not what happens in real life.

Mr. Hyndman, the celebrated English Socialist, attempts to say that such a thing is possible. In his manual of Socialism he asks us to believe that a man who has $50,000 would find it a very simple matter to live permanently by robbing other men of part of the products of their labor. This man, he tells us, merely buys a mill of some kind—doesn’t it matter what kind of a mill he buys?—employs a manager and the necessary number of operatives, and then sits down and lets the wheels go round. Don’t smile, John, for this is precisely what Mr. Hyndman tells us the man does. “He has nothing to do but sit still and watch the mill go,” he asserts, naively (see Mallock’s “Socialism,” p. 13).

Do you believe this? Socialists do. As a practical man, do you imagine that any one method of employing capital will be just as successful as any other? If the laborer produces all value, and an article is valuable simply because of the labor there is in it, Mr. Hyndman and his master, Karl Marx, and the soap-box orator, who is telling you how to solve all of life’s problems by voting for the candidates on the Socialist ticket, are right. If this is not true, they are wrong, and you can’t get away from this conclusion. One might as well argue that an engine is sufficient unto itself and needs neither working capital in the form of fuel nor the directing hand of the engineer.

There is another class of “capitalists” who receive comparatively little attention from the Socialists. These are the employers who make no profits upon their investment, who purchase material and pay their workers’ wages and who do not earn enough to reimburse themselves for their outlay. The commercial agencies which report business conditions have records of many such cases. Men go into business and fail; people put their money into stock companies and never receive dividends. The work is done; the labor is performed; but there is no surplus value of which the worker may be “robbed.” In this case are we to assume that the unfortunate investors are robbed by their workmen?

Marx maintains that all capitalists are robbers. Are we therefore to believe that all capitalists are successful? We cannot deny that capital, and even the product of labor, may be transferred by the process of robbery. Before there can be any robbery, however, the capital or the value of the product must exist, and it is beyond the power of labor to call either capital or value into being.