What happens when capitalism devours a society
Karl Marx - Why Capitalism Destroys Itself
Karl Marx was an advocate of communism. His experiences in the factories of Manchester during industrialization made him lose faith in the capitalist system. Most of his record, however, is not concerned with communism, but with the hated economy. Step by step, Marx explains how capitalism creates poverty and misery - and why it will perish.
Like Adam Smith and David Ricardo, Marx argues that a commodity has the value of the labor that went into its production. This invested labor is paid by the employer with a salary. During industrialization, many workers were looking for employment. The competition among them meant that they were willing to work for wages at the subsistence level. The only alternative was unemployment. If a worker produces more than the mere value of what he receives in wages, he will
The profit we are talking about here is just another name for the surplus value itself. "
not earning more from it. The surplus of work done, the so-called added value, benefits the employer as profit. This profit is an important part of the capitalist system: without it, business would not be profitable for the employer.
However, profit can only be made through human labor. Machines, on the other hand, cannot create added value: their performance is transferred one-to-one to the product, but they cannot be exploited. What is the wage for the worker corresponds to the initial purchase or the rental fee for machines. However, this does not result in the mechanism that creates added value day after day in wage labor: there is a difference between wages and sales income that contributes to the profit of the
The surplus value does not cost the capitalist anything, precisely because it costs the worker unpaid labor. "
Entrepreneur leads. However, a machine will be sold or loaned to the factory owner at a price that is exactly the value it is capable of producing.
The production costs for goods are made up of precisely these two components: labor costs on the one hand, and fixed costs for materials and machines on the other. In the course of industrialization, the distribution of costs changes: machines take over the work of people. That requires investment that
The craft enterprise incurs its costs through material. He only pays his employees with the remaining 30 percent.
Fixed costs therefore make up a much more important percentage of total costs. 70% material costs are due in a craft business, plus 30% wage costs. In a very mechanized company there are 90% fixed costs and 10% labor costs for production. But since only work can create added value, the capitalist is beaten with his own weapons: He invests in machines in order to be competitive, but these cannot create added value. The employer's profit decreases as the proportion of fixed costs in total production costs increases.
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