In attempting justify their assault on Social Security, Medicare, and other conquests of the working class, the capitalist press and politicians try to convince workers that there is a set amount of resources available for such things, and that there will simply not be enough to go around tomorrow if there aren't cutbacks today. This myth is false to the core, and it's not a new question.
In 1865 John Weston, a workers' representative from England and member of the General Council of the International Workingmen's Association, put forward the often-heard assertion that wage increases do not benefit workers and the struggle for them is in fact harmful to workers' interests. Karl Marx answered him in two speeches to the organization, explaining how capitalists derive their profit, or surplus value, from workers' labor. The division of the value created by labor is not set in stone, and therefore a rise in wages means a fall in profits, or vice versa.
Marx's presentation was published in a pamphlet, Value, Price and Profit, which remains a classic of scientific socialism today. The excerpts below are from the chapters titled "Production of surplus value" and "General relation of profits, wages and prices." Subheadings are by the Militant.
Now suppose that the average amount of the daily necessaries of a labouring man require six hours of average labour for their production. Suppose, moreover, six hours of average labour to be also realised in a quantity of gold equal to 3s [shillings]. Then 3s. would be the Price, or the monetary expression of the Daily Value of that man's Labouring Power. If he worked daily six hours he would daily produce a value sufficient to buy the average amount of his daily necessaries, or to maintain himself as a labouring man.
But our man is a wages labourer. He must, therefore, sell his labouring power to a capitalist. If he sells it at 3s. daily, or 18s. weekly, he sells it at its value. Suppose him to be a spinner. If he works six hours daily he will add to the cotton a value of 3s. daily. This value, daily added by him, would be an exact equivalent for the wages, or the price of his labouring power, received daily. But in that case no surplus value or surplus produce whatever would go to the capitalist. Here, then, we come to the rub.
In buying the labouring power of the workman, and
paying its value, the capitalist, like every other
purchaser, has acquired the right to consume or use the
commodity bought. You consume or use the labouring power
of a man by making him work, as you consume or use a
machine by making it run. By paying the daily or weekly
value of the labouring power of the workman, the
capitalist has, therefore, acquired the right to use or
make that labouring power work during the whole day or
week. The working day or the working week has, of course,
certain limits, but those we shall afterwards look more
closely at.
The value of labor power
For the present I want to turn your attention to one
decisive point.
The value of the labouring power is determined by the quantity of labour necessary to maintain or reproduce it, but the use of that labouring power is only limited by the active energies and physical strength of the labourer. The daily or weekly value of the labouring power is quite distinct from the daily or weekly exercise of that power, the same as the food a horse wants and the time it can carry the horseman are quite distinct. The quantity of labour by which the value of the workman's labouring power is limited forms by no means a limit to the quantity of labour which his labouring power is apt to perform.
Take the example of our spinner. We have seen that, to daily reproduce his labouring power, he must daily reproduce a value of three shillings, which he will do by working six hours daily. But this does not disable him from working ten or twelve or more hours a day. But by paying the daily or weekly value of the spinner's labouring power the capitalist has acquired the right of using that labouring power during the whole day or week. He will, therefore, make him work daily, say, twelve hours. Over and above the six hours required to replace his wages, or the value of his labouring power, he will, therefore, have to work six other hours, which I shall call hours of surplus labour, which surplus labour will realise itself in a surplus value and a surplus produce.
If our spinner, for example, by his daily labour of six hours, added three shillings' value to the cotton, a value forming an exact equivalent to his wages, he will, in twelve hours, add six shillings' worth to the cotton, and produce a proportional surplus of yarn. As he has sold his labouring power to the capitalist, the whole value or produce created by him belongs to the capitalist, the owner pro tem. of his labouring power. By advancing three shillings, the capitalist will, therefore, realise a value of six shillings, because, advancing a value in which six hours of labour are crystallised, he will receive in return a value in which twelve hours of labour are crystallised.
By repeating this same process daily, the capitalist will daily advance three shillings and daily pocket six shillings, one half of which will go to pay wages anew, and the other half of which will form the surplus value, for which the capitalist pays no equivalent. It is this sort of exchange between capital and labour upon which capitalistic production, or the wages system, is founded, and which must constantly result in reproducing the working man as a working man, and the capitalist as a capitalist.
The rate of surplus value, all other circumstances
remaining the same, will depend on the proportion between
that part of the working day necessary to reproduce the
value of the labouring power and the surplus time or
surplus labour performed for the capitalist. It will,
therefore, depend on the ratio in which the working day is
prolonged over and above that extent, by working which the
working man would only reproduce the value of his
labouring power, or replace his wages....
Relation between profits and wages
Deduct from the value of a commodity the value
replacing the value of the raw materials, and other means
of production used upon it, that is to say, deduct the
value representing the past labour contained in it, and
the remainder of its value will resolve into the quantity
of labour added by the working man last employed. If that
working man works twelve hours daily, if twelve hours of
average labour crystallise themselves in an amount of gold
equal to six shillings, this additional value of six
shillings is the only value his labour will have created.
This given value, determined by the time of his labour, is the only fund from which both he and the capitalist have to draw their respective shares or dividends, the only value to be divided into wages and profits. It is evident that this value itself will not be altered by the variable proportions in which it may be divided amongst the two parties. There will also be nothing changed if in the place of one working man you put the whole working population, twelve million working days, for example, instead of one.
Since the capitalist and workman have only to divide this limited value, that is, the value measured by the total labour of the working man, the more the one gets the less will the other get, and vice versa. Whenever a quantity is given, one part of it will increase inversely as the other decreases. If the wages change, profits will change in an opposite direction. If wages fall, profits will rise; and if wages rise, profits will fall.