The Means of Production.

After some discussion (on the previous post's comments page) with KB I decided to wikipedia class to see what it had to say.

I am pleased to see that it broadly reflected what I had to say with regard to the definition of class. KB raised many pertinent points which I believe are exactly the type of question the man on the street would ask when the problem of class is posed.

One major contribution to a person's class status which I have overlooked (Which is strange, as I am always lecturing my work mates about surplus value and commodity exchange values) is their relationship toward the means of production.

A person who owns the means of production controls all of the profit and decides how to use that profit. Usually they decide to use it to pay themselves nice fat wage slips. They decide what to pay the workers and how to invest.

In effect the owner of the means of production owns the producers (workers). This goes some way to explaining some of behaviours I describe in the "Technical hierarchical superiority does not in any way infer a social hierarchical equivalence" post.

The question is :- Why do the owners of the means of production get paid such vastly different sums to those whose labour is used to actually produce?

What if the workers owned the means of production? Why does it have to be owned by a few individuals in the corporation or by the shareholders? Think about it.

Where do these owners actually get the profit from in order to pay their own wages/dividends?? I'm glad you asked.

We will use a Liquid pharmaceutical product as an example.

First we must consider why the bourgeoisie, (to borrow a term) need to employee anybody in the first place. After all these employees are just an annoying cost that the employer constantly plots to get rid of (As we are constantly told). The answer of course is that in order to make anything we require people. Machines on their own are not enough. Machines break down. Machines need to be operated etc etc.

Now, the workers during their interaction with the machines are imparting value to that product. They must be. They take raw materials and turn them into a finished product. The product is something that people want to buy. The finished product is sold for more than the sum of the parts (This includes transport costs and labour costs etc). In other words it's sold for more than it cost to make. The raw materials don't just float into reactors or test themselves to comply with FDA, or bottle themselves and then drive themselves to the supermarket. From where does this extra value arise? Where does the cost of any product ultimately originate?

It comes from labour time. Employees are paid for their time. Labour is required to make the product, to test it, to bottle it, to deliver it. The quicker or more efficiently this can be done then the lower the labour costs (It takes less labour time). To put it simply a factory that turns out 2000 bottles an hour can sell these bottles at half the price of a factory that turns out 1000 bottles an hour when all other things are equal (labour costs, raw materials etc).

But and here is the BIG BUT.

The more efficient factory doesn't sell its product at half the price (it may sell at a reduced price for a while to force the other out of business), it pockets the difference and makes even more money.

Where does this increased efficiency come from? You can talk about stock control, cash flow manipulation, more energy efficient machines etc. until you are blue in the face. It comes from getting the workforce to add more value to the product by taking on more and more tasks, finding quicker and better (better for who?) ways to make a high quality product (Think Kaizen, lean, six sigma, kanban, self managed teams etc).

So here we are. Value is added to any product by the labourer. The faster the labourer can add value to a product the more cheaply it can be made and the greater the profit margins. Increased profit margins are great news for the Bourgeoisie and Petty Bourgeoisie. They get a nice bonus, much increased pay etc etc.

So what is profit when related to the worker?

A worker adding value to a process adds £20 of value to a product/products every hour. However, and this is the trick, the worker gets paid £10 an hour. The owners of the means of production pocket the other £10 of value. They make £10 profit per hour per worker. They do nothing but sit there and watch the money meter tick round.




A problem arises. The more efficiently a product can be made, the cheaper it becomes. If competitors are trying to beat each other then they can use price to undercut each other. But the shareholders still want their dividends and the city wants to see growth. Lower prices mean lower returns. Costs must be cut to maintain/grow the profits. Obviously job cuts are looked at as well as other cuts (departmental stationary budget etc). If a company is already running on a skeleton crew then this is difficult. One way is to reduce the amount paid to the worker or new workers that replace others through natural wastage through retirement etc. This way the difference between the value that the worker adds to the product (Still £20 hr but is now paid £8 hr) and the "cut" that the Burgiouse takes increases. Of course the product is cheaper in the shops and so returns less money but the lower wage more than covers this.

One way companies do cut wages is to employ temp staff on lower hourly rates or by employing foreigners who will work for less. This is even better for the top hats because they can get rid of temps at the flick of a hand. This means they can frighten them into accepting poor conditions and poor wages. The cut increases still further!!!

An insidious way to scrape even more profit from the workers is by getting free labour from them. That's right, by making workers work breaks or lunch that they are not paid for. The worker is adding that self same value to the process but is getting nothing !!!! in return. The cut increases even more!!. No wonder the board members of a certain phama company have grins tattooed to their faces.


What does the man who actually creates this value and increased profit actually get?

He gets an end of year performance review. This is dressed up as a way to reward those that are doing a good job. What actually happens is that those who contribute to increased efficiency get a inflationary pay rise (Or no pay rise at all really because its in line with inflation) while the owners of the means of production get increased profits and nicely inflated wages.

It is not militant to demand your breaks if your not paid for them.

It is not wrong to work to contract. What is the point of a contract otherwise?

Unions are not a menace or outdated romantic idea.

All the rights you have at work today were fought for by people like you, for people like you.

To answer the question I posed earlier :- What if the workers owned the means of production?

The answer is of course that there is no cut to be taken by the Top Hats. Therefore all the value added to a product left over as profit is the workers to pocket and take home.

Many people fall into the trap of thinking that the tophats create wealth and they poo poo wealth redistribution.

Well now you can see they are wrong.