Marxist Economics Simplified
To a lot of people, Marxist economics in its more rigorous and scientific mechanics seem impenetrable, because while you can understand the words, it’s hard to imagine them in a metaphysical way, to see how it all ties together in the mind. The “Are” is easy, but the “How” is difficult. Most people come away from Marx understanding that workers are exploited, but the mechanisms of this exploitation might be harder to digest.
So, I will explain using what is in my opinion more illustrative language.
First off: Value. Value is like the bedrock of any economy. Socialist, capitalist, gift economy, even post apocalyptic warlords, the guy in the loincloth from Mad Max has to estimate the value of his shotgun shell, in relation to the water bottles that the Bartertown merchant is lugging.
Perhaps it’s not a lot of water, perhaps another merchant will turn up in an hour with more water. Perhaps he’s really thirsty and doesn’t want to risk heat stroke, Professor Cannibal, as his friends call him, must make a careful choice.
This is value. The most fundamental transaction of value that we make is generally time and effort. A lumberjack decides that their time and effort is worth the production of lumber. A farmer decides that their time and effort is worth the production of crops, and so on. All this is the transaction of value.
As technology, tools, machines and so on grow more advanced, the laws of value change. What might’ve been not worth something yesterday, is viable today.
That’s how, for instance, the shovel made roads possible, or how dynamite allowed us to create artificial lakes. It’s all very minecraft at this stage.
But value is the key ingredient that ties all economic goods and services together, and what determines value is simply put human judgement. Value can be ascribe rationally, conservatively, wastefully, irrationally, effectively and ineffectively, the market forces of value are driven by the arbitrary judgements of people.
The market cannot in any way determine if something is good or bad, but rather if two people are willing to engage in a transaction over it. This is why, for instance, curing cancer is very unprofitable in lieu of expensive treatments, or why slavery is outrageously profitable in lieu of literally anything but slavery.
And Marx understood how, in particular, the market became very obsessed with slavery. Any old excuse to introduce slaves or slave labour to the market. This is because Marx didn’t see slavery as some particular historical context, or aesthetic, or cultural typification, but rather as a worker’s relationship to value.
And interestingly enough, in Frederick Douglass’ famous book, he actually agreed with Marx. Saying that waged labour was not all too different from slave labour, that it existed in a relative sense.
So how does that work?
Well, remember the lumberjack? Chop, chop, chop, and lumber. That lumber is a more valuable version of the tree, the lumberjack put their labour into the tree, and made it more valuable by turning it into lumber.
So let’s say that lumber is worth 100 units. Think of units as a kind of acme-approach to money.
Now the lumberjack is not a land owner, he works for a lumber company who owns the land he works on. So, he won’t get 100 units. He will get 40 units. The lumber company will keep the rest as revenue, a kind of tax workers pay to companies for the right to work.
Revenue is then spend on upkeep, maintenance, shareholder dividends and so on. So the lumberjack is in effect paying for the land, the bills and the upkeep of the company which is taxing him for the right to work for said company.
In Marxist terms, this lumberjack is relatively enslaved. A slave is also given value, not as a wage, but as room and board. So the lumberjack gets 40% of the value, a slave might get 10%. The lumberjack is therefore in a position of society where he has more in common with the slave than he does the capitalist.
Because just like the slave, they both surrender their value to a company that is then ultimately maintained by this value. They are in effect paying for something that another person then gets to own. This is why Marx believed workers are exploited. Because the investor doesn’t actually take any risks, the workers do. The investor isn’t the one who might get their fingers chopped off, or have a trunk fall on them, or who might have their harness come apart whilst removing a treetop; The worker takes these risks.
Moreover, since the worker creates the value of the invested capital, they also take this risk. The investor doesn’t go hungry, the investor doesn’t have to pick between bills or rent. The worker has to. The investor lives perfectly content in luxury throughout the entire investment process, performing minimal managerial labour whilst telling the world they’re a self made man who risked everything for success.
It’s all made up, all the value that creates a business comes from workers. All the investor does is set up a bill of credit that the workers are expected to pay on the investor’s behalf, and then the investor keeps the property the workers paid for.
So yes, exploitation.
But it gets worse, because markets are not merely things of the imagination, they are like a pest of sorts. Like locusts or a disease. Because the market doesn’t actually run on supply and demand. Supply and demand is rather a pricing model, which is a bit different from the market itself.
A market can be subsidised, corrected, it can boom, it can bust, it acts independently of supply and demand. This is because the market is driven by forces of capital. A hundred million people with a dollar each, have as much influence over the market as a single man with a hundred million dollars.
That’s why, for instance, we have thousands of nuclear weapons, and a constant shortage of doctors. Because wealth is power, and power wants nukes. Doesn’t matter what you want, or what the average person wants, or even what the average voter wants, if capitalists say it, then it goes. Just like in monarchism.
And what’s worse yet is how the most common form of demand goes by a different word, namely scarcity. Scarcity is actually a product under capitalism as well. There are firms who specialise in creating scarcity, and this is usually known as market development.
Market development involves everything from tearing down vacant homes, to throwing perfectly good food in a landfill, to even lobbying for wars and destroy entire cities just to give construction contracts to private firms. Market development is also about depriving people of common goods. Water, food and even air become privatised so that people have to pay some random person with a property deed for something that their ancestors took for granted.
This is how the farmer became the peasant, and how the craftsman became the contractor. How people who used to have land, workshops, facilities and independence became beholden to shareholders, bankers and moneymen.
Because corporations all follow this law of value, there’s no physical way in which to pay workers more and still profit, it’s always a zero sum game, and this is how capitalism creates monopolies.
They like to tell you that you have freedom of choice, but there is no such thing as a radical corporation. They all do things the same way, their investors make the same demands, they follow the same market trends. You won’t step into a corporation and feel as if you’re in a different country, or society, or culture, as if you have made a meaningful choice that makes you different from other companies. At most they got a different logo, and if they’re really living on the wild side: A ping pong table in the lounge.
Corporations don’t actually offer free choice, you can either choose corporation 1, corporation 2, corporation 3, corporation 4, or corporation 5. They might tell you “Oh but if you don’t like it then start a business.”
And yet, why is nobody doing that? Where are all these businesses started by the hundreds of millions of people who are sick and tired of corporate tyranny? Where are all these businesses that do not trade in profits, but rather honour, decency, ethics and societal welfare?
They don’t exist. Because they can’t exist. The game is set up to always favour corporations, because corporations cheat in order to win.
The history of corporations began with land enclosures. There used to be public land, and democratic businesses, and merchant ethics and so on, but then came a new class of people: The landlords.
And the landlords had mercenaries. This was known as the fencing of the commons, and later on, the colonisation of the Americas. In Europe, the peasants were subjugated in a series of takeovers by bandits and mercenary lords. In the new world, the same thing happened at the hands of Spanish conquistadors. But the end result was the same, each parcel of land was written up to be part of the landlord monopoly, which later on became the modern institutions of economics we know today.
The German hansa, which started out with currency exchanges, quickly realised that you could just as easily sell stakes in private venues, this is how the first stock market was set up in Dusseldorf. And do you know where the equity came from? All that capital needed to jumpstart this financial economy? It came from slave mines in Brazil and Mexico.
So the claim that modern day capitalists have to their property and the monopoly of land comes from genocide and slavery, and not to mention your income.
And that isn’t to say that we don’t all have to pitch in for some things. Infrastructure, public works, city planning and civic government, as well as many vital services will always demand that we all pass the hat around.
But you know what? We can do that with our own work, we can do that and still keep the margin of our money that is spent on the novelties of men like Epstein. I think none of us want to know that we are funding such terrible habits.
What Marx explains is how to turn the economy into something democratic, that gives us the power over society that to this very day has been given to a modern aristocracy of usurers, landlords and merchants.