Big global companies are currently making mega-bucks. Don’t be fooled by the big red arrows next to Wikipedia’s summaries of big companys’ incomes. Big companies may be making slightly less profit year in year out, but they’re still very profitable systems. Walmart reported a net profit of almost 15 billion dollars in 2015. The Apple computer corporation made almost 46 billion dollars net profit in 2015. Facebook made a little less, but still made a lot. Almost 4 billion dollars profit. The corporation that owns Google made over 16 billion dollars in 2015.
Stacks and stacks of Cash
Where is all this money coming from? It is also perhaps a good question to ask – how is any of this possible? I did some quick calculations and found out that, on average, one employee of Google’s parent company, Alphabet Incorporated, would be responsible for making over $USD 240 000 profit for the company in 2015. That’s incredible. It makes you wonder, what is the average salary of someone working at Google’s parent company?
Business Inside Australia reports that
Recruiter Scott Purcell says the software engineers he’s placing typically make a base salary of $165,000. The average base salary for a Google engineer is$128,000.
These figures are just for Google engineers, but I feel with a little liberty we can use them to proxy for what the average employee of Alphabet Inc earns.
Aren’t these figures stunning? Google engineers are well-paid, middle class employees, but they would, on average, make more profit every year for Alphabet Inc than they would take home themselves. If this continued the same way, year in and year out, the bosses of Alphabet Inc would soon be many times more wealthy than everyone they employed.
Phantasms and Mysteries
This is a strange and mysterious phenomenon, because, according to most mainstream economists this shouldn’t happen. One of the core principles of mainstream economics is that through competition , the complex system of commodity exchange in the free market will cause the supply and demand of commodities to equalise at prices which will result in corporations making no profit. So the story goes, competition in the market will force down commodity prices, which will decrease corporation revenues, decreasing profit to an ideal zero.
But this isn’t happening. Every year the biggest companies rake in billions of dollars of profit.
It turns out that mainstream economists are in bed with the bosses of these big companies. The supposed social “science” that the mainstream economics you will learn in high school and university is nothing but an ideology. It doesn’t have a grip on reality at all. Mainstream economics is called “bourgeois” economics by Communists for a reason. It is a system of mystification and distortion that serves the interest of bosses.
It is perfectly easy to understand how businesses are able to make profit. Marx explains in Part 3, Chapter 7 of Das Kapital that huge corporate profits are built into the structure of capitalism, and we should expect them. Marx explains that when you go to work, assuming you are employed in a perfectly free market, you will be paid the fair rate for the value of your labour power.
Labour power is the special commodity that people sell when they go to work. It is the power or activity that you have to do work. It is a commodity like any other, except in order for your boss to consume it, to turn it into a practical, useful object with utility (a “use-value”) your boss has to make you work. You have to expend your “vital force”, Marx says, you have to use up your nerves and muscle and be productive in your workplace. Be it cleaning, stacking shelves, driving trucks or teaching people new skills, you are all having your labour power consumed by your boss and realising it as a use-value in your labour.
Marx says that in a perfectly free market, your labour power is worth what it takes to replenish your vital bodily functions and get you ready to work every day. If your education was particularly expensive, your labour power would be worth more, because your training is a component of your organic function of your person. The “exchange-value” of your labour power would be worth more because the value of your education would be a component of your labour power.
But that’s all you’re worth, as a working person with no capital. You’re worth the market rate of the weekly, fortnightly or monthly value of your subsistence, however you’re paid.
The mystery of profit lies in the length of your working day. Because the value of your wages is fixed at the value of your subsistence, it doesn’t take very long for you to do enough economic activity in your workplace to cover your wages, and the capital outlay of whatever you’re working on. So for a good deal of your working day, you’re making value for the boss that you haven’t been paid for. You’re literally working for free. You’re making extra value for the boss that isn’t accounted for in your wages. This is called surplus value. Here is some data from a trustworthy Marxist economist, Michael Roberts on the rate of profit of the total US economy since 1946. We can think of the rate of profit right now as the ratio between the the surplus value you make and the value of your wages. Strictly speaking the ratio between surplus value and wages is the “rate of surplus value”, but we don’t need to worry about that right now.
As you can see, even though the rate of profit in the US has been falling, in 2014 it was still just under 25%. That is to say, on average, the American worker produces just under 25% free surplus value on top of the value of their wages to their bosses. Free value, year in, year out, to the bosses.
The Working Day
If your boss could get away with it, they would like to increase the rate of surplus value they get from you. This is what is happening in China, Bangladesh, Thailand, and other countries. People in factories work around the clock, increasing the amount of free value their (usually American) bosses get, so they can go back to their press conferences and report their yearly record profits. Exploitation is built into capitalism structurally, because the only way to get profit is to make workers work. It is only by lengthening the working day that profit can definitely increase. Any other method of profiting under capitalism is a gamble. It is a sure thing that squeezing extra value out of your employees will make you rich.
Theft, Pure and Simple
Marx says that the exchange you make with your boss in return for your wages is a fair one. He says that none of the laws of exchange of equivalents is violated by an employment contract between free individuals. This means that you are getting exactly what you should under capitalism.
But this doesn’t mean that the work you do for your boss isn’t theft. The exchange you are making with your boss is fundamentally unfair, because they are exploiting you. They are, as Marx outlines in Chapter 10 of Das Kapital, parasitically feeding off your vital forces and crystalising your moving bodily energy into capital.
As Marx says,
Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks. The time during which the labourer works, is the time during which the capitalist consumes the labour power he has purchased of him.
If the labourer consumes his disposable time for himself, he robs the capitalist.
The capitalist therefore takes his stand on the law of exchange of commodities. He, like all other buyers, seeks to get the greatest possible benefit out of the use-value of his commodity. (Marx, Das Kapital, 1867, Wordsworth Edition, 2013, p 162.)
Under communism, things would be different. For one thing you would work a lot less. Capitalism works people to the bone because it is driven by an ideological myth that corporate profits and the economy needs to grow every year in order to sustain human civilisation. Under communism, you would only need to work as much as was necessary to serve the purpose of your community. The majority of your time would be spent in leisure, and the rest of your time would be spent working to make sure people could leisure as much as possible.
Work would no longer be about producing “value”, under communism. Instead, society would be geared towards producing “use-values”, instead of “exchange values”. The surplus economic product that you created when you went to work would be democratically managed by the whole community, be it a big one or a small one. Everyone would have a say in where the extra produce went. This disqualifies Communism as a system of theft, because your economic surplus product would still belong to you, because it belonged to everyone.