# Shop Talks on Economics/Chapter 5

V.
Low Prices and More About Profits.
We know that strength to work, or labor-power, is a commodity. The value of a commodity is determined by the necessary social labor time contained in it.
If it takes three hours of social labor to produce the necessities of life for you one day, the value of your labor-power one day will be three hours of necessary social labor.
Figure A will represent the value of your labor power, because 3 hours of social labor are contained
in the necessities of life which will support you one day.
Let Figure C represent your product for one day. It contains 9 hours of labor time. The capitalist who employs you will need to return to you sufficient value to enable you to pay for A (or the cost of living).
​Figure B is equal to A because it contains 3 hours of labor. It represents the value returned to you by the boss in the shape of gold or wages.
We know that A is equal to B. And we know that C contains three times the value of A or B. We
know also that the capitalist is constantly trying to prolong C into ten or even eleven hours, and that capitalists cut wages whenever and wherever possible. It is only by constant struggle that the working class
has been able to maintain its position, to secure a, perhaps normal, increase in wages, or a shorter workday.
It is self-evident that if you secure more wages (B) there will be less of the value of your product (C) ​remaining for the capitalist employing you, just as a reduction in wages leaves more surplus value for him.
An increase in the length of your workday (C) to ten hours will leave 7 hours of unpaid labor instead of six. A shorter workday will leave less surplus value for the capitalist.
Reformers believe that if we could decrease the cost of living we would better our condition. They think if A (the cost of living) were lowered, we could save a part of our wages (B). Of course, the value of our labor-power falls with a decrease in the value of the necessities of life, but they imagine we might be able to lower the cost of living without suffering a corresponding decrease in wages.
Personally, you know if your landlord should cut your rent down one-half next month, you would have more money left to spend for other things. Personally, you know if your brother offered to board you at half the regular rate, you could save a still larger sum of money next month. This is true of your individual case.
But we are not talking about individual cases, though we use concrete examples for the sake of making things clear. We are asking if low prices would benefit the wage-working class.
We will suppose an extreme example in order to illustrate our explanation. Suppose the City of Chicago should buy up all the houses, flats and cottages that rent to the working class here, and suppose this ​city should cut rents down one-half. Suppose that Chicago had municipal ownership and it was possible for the city to reduce the cost of living here 50 per cent. What we want to consider is—would the reduction benefit the working class or that part of the capitalist class not directly engaged in producing the necessities of life?
When the cost of living is greatly reduced at any given city, workingmen and women flock to that point to sell their labor-power. They believe that if they can get jobs where it costs less to live, they will be able to save money and, perhaps, finally climb into the capitalist class themselves.
But note what happens. There is an immediate influx of workers into the city of low prices. The competition among workers for jobs becomes more keen at once, and it is always keen. Capitalists purchase labor-power at the lowest price. Men and women offer to sell their labor-power at a lower and still lower price till wages again fall to the cost of living. In a very short time these workers will find that they have gained nothing.
Take the examples of A, B and C. When the cost of living (A) is cut in half, the competition, among the sellers of labor-power, reduces wages (B) accordingly. If your capitalist employer is a steel manufacturer will he be able to appropriate more or less of the value of your product?
Capitalists rarely start industrial enterprises in ​Alaska because the cost of living (or value of labor-power) is so extremely high in the far north that there is very little surplus value left for them.
The value of a commodity is determined by the average social labor contained in it. The Alaska steel manufacturer would have to compete in a world market just as the Bethlehem and Gary mills compete, and it is necessary social labor only that makes value.
Reports are coming from Guatemala of cotton manufacturers who are locating and establishing cotton mills there. The natives of Central America can live on very low wages. Almost all natives in Guatemala build and own their own thatched huts. The climate is warm and artificial heat is never needed. Nobody requires steam heat or base-burners. A cotton shirt and cotton trousers clothe a man as well as his neighbors, so that the cost of living is a very negligible quantity. Bread fruit and bananas grow wild, and 10 or 12 cents a day will keep a native in comfort. A recent magazine article, which dwelt upon the advantages of capital in Central America, reports that Guatemala natives receive, on the average, 9, 10 or 12 cents a day.
If the Central American natives were driven to toil as fiercely as we are of the states, Guatemala would be a heaven for capitalists. But it is still possible for them to live without much labor. When, however, the capitalists gain control of the land, so that the natives will be forced to sell their labor-power in order to live, more ​exploiters of labor will turn toward the land where the cost of living is almost nothing (labor-power of little value), and where they will be able to appropriate a still larger portion of unpaid labor.
From no angle can we find where low prices will benefit the working class for any appreciable length of time, because the struggle for jobs soon brings wages down to just about enough to live on.
QUESTIONS.
The workingmen and women of Belgium have long labored to reduce the cost of living in Belgium. They have formed co-operatives and we learn that they actually HAVE been able to lower the prices on the necessities of life. If we had list prices of groceries in Belgium, we would probably be amazed at the difference in their prices and ours. And still only recently a Belgian Socialist wrote us that his country was still the Heaven for capitalists and the hell for workingmen and women.
Will wages in Belgium be as high as they are in Colorado or in Ohio? Why not? Are the Belgian comrades any better off than we are?
If every workingman owned his own home in Salt Lake City, would this tend to INCREASE or to DECREASE wages there? Explain why.
Why do the owners of factories usually build them in small towns? Why are there so few factories in New York and Chicago?
Is the wage-worker exploited of his product at the mine or factory or is he CHEATED when he spends his wages for the necessities of life?
Before you reply to the above question, reply to the following:
What determines the value of your labor-power? What determines the value of any commodity?
Does A (the cost of living) have anything to do with the amount of B (wages) you will receive?
​If B (wages) are not equal in value to A (the cost of living) will this mean that you HAVE NOT RECEIVED the value of your labor-power, or will it mean that the grocer, and butcher, and clothier are cheating you?
If wages (B) are reduced will your employer be able to appropriate more surplus value?
Owing to the improved methods of production the necessities of life are slowly decreasing in value. A contains less labor; is less valuable. Gold also is decreasing in value, contains less social labor. What would be the natural explanation of the fact that gold today exchanges for FEWER commodities than it did five years ago? Which would you expect to have decreased most in value—gold or the necessities of life?
If the necessities of life decreased FASTER than the value of gold decreased, would prices of the necessities fall? In this case B would be of more value than A. Would wages continue to be of more value than A for very long?
Would general co-operatives for reducing the cost of living in America benefit the working class? Or would they tend to reduce wages? Why?
Will we have to exclude the natives of Central America from the United States in order to prevent them from competing with us to sell their labor-power? Or are they already taking jobs from American cotton workers even though working in Guatemala? Explain.