Who is ripped off? Worker, or consumer?

Dear professor Wolff, I was watching your second session of introductory course to Marxian economics on YouTube when a question came to my mind. Merchants and money-lenders enter the market with money and leave it with more money. What they do for gaining more money is to buy the commodities at the price of their value and sell them at a price higher than their value, which is certainly unfair. Now in Marxian economics we argue that the industrial-capitalist pays the workers less than what they added to the value of the tools and raw materials he has bought, but there is another possibility; he might pay the workers a wage equivalent to their labor, but sell their product at a higher price than its value. In this situation it is the consumers that are ripped off, not the workers. Is my described situation possible? If so, how can we distinguish between the consumer-exploitation (profiteering), worker-exploitation and hybrid case where there are elements of both kinds of ripping off present in the activity of the capitalist?

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  • commented 2017-01-06 12:56:09 -0500
    The consumer can be the workers who produce other commodities, or it can be the capitalists, the self-employed people, soldiers, etc. etc.
  • commented 2017-01-06 12:51:15 -0500
    Isabel, at least in ideal situations where we can ignore interfering factors, it is impossible for workers to rip off consumers by raising the prices. Why? Suppose that there are only two commodities in the market; X and Y which have exactly the same value. If you raise the price of the commodity X over its real value, workers would find producing X more profitable than Y. They would tend to stop producing Y and shift their activity to producing X. This would cause an imbalance between the amount X and Y in the market. The price of Y would rise because its supply would become relatively low in proportion to the demand for it. The price of X, on the other hand, would drop because its supply would become relatively high in proportion to the demand for it. “The invisible hand” returns everything to balance in the market. However, there are activities which prevent the invisible hand from doing its normal job. One of these evil activities is merchandise, the other one is usury, and, if I get it right, the third is industrial capitalism. Merchants, usurers, and capitalists are parasites of the market, they gain money but do no labor for it. But, in my idea, it is hard to determine who do they really exploit; producer (worker) or consumer?
  • tagged this with good 2017-01-06 11:25:03 -0500
  • commented 2017-01-06 10:30:37 -0500
    Worker value added $10.00, chair materials $2.00, item is NOT going to be marketed for $12.00. But in your question you pose the following…. But what if chair was sold for $32?? Well….then chair materials still $2.oo, so let’s give all those $10.00 to the worker! Yay! Uh…no. Not yay. Why? Because the value added is not only based on the 10$ the value added is ultimately what transformed the materials into a chair. The chair, final product is what’s being sold. The total surplus of that production is no longer only ten. It went up with the cost of the marketed item to a whole $30.00
  • commented 2017-01-06 10:21:18 -0500
    Worker and consumers can be one and the same at most instances. So elevating the price of the product any higher doesn’t really help the worker as rising the price still puts the capitalist getting a surplus. The higher the cost of the item, as long as the surplus maker gets still less than the price marketed for, the surplus being not received by the actual production worker is still not resolved. It is simply illogic to think that increasing the cost of the item out to market would resolve the surplus being taken away from the producer. Because that chair isn’t going to be sold for ten dollars if all ten dollars went to the producer. Rising cost of item, if not matching 100% the value of the surplus, solves no mathematical purpose nor moral purpose. The labor must cost always less than the cost of the chair for sale for the vicious capitalistic cycle to continue and for the worker to remain worked. (Employed).
  • commented 2017-01-06 09:00:47 -0500
    Isnt the worker also the consumer? Yeah, they git it goin in and comin out.
  • published this page in Ask Prof. Wolff 2017-01-05 17:35:11 -0500


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