Recently, a meme posted by one of the many socialists on Twitter garnered a lot of attention, and the message it seemed to convey was that workers are undervalued because they are paid far less than the amount of work they produce.
The meaning is clear, and it reflects a common talking point among socialists: the worker in this meme produces 3,000 plastic rings in one hour of work, but is only paid enough per hour to buy three of them. In other words, he is only paid 1/1000th of the value of what he produces. Surely that’s exploitation?
No, it’s not. There are two big points that this meme misses that make all the difference. The first is that this worker can’t actually produce 3,000 plastic rings per hour. If he could, he would set up shop in his garage, produce them himself, and sell them directly, greatly increasing his income. He can only produce 3,000 per hour because he is using machines that are manufactured by others and paid for by others. His labor alone cannot produce 3,000 per hour. His labor must be combined with the huge capital investment that the company has made to make his labor more productive. This investment takes place in the context of a business that provides him with a working environment, raw materials, and tools, handles orders and sales, and also handles the myriad other aspects necessary for the work he does. To claim that the worker is producing 3,000 per hour with his own labor, you would have to significantly discount and ignore the labor and investment of many other people. His labor is certainly important, but it is only one step in the incomprehensibly complex process that requires the cooperation of countless workers to produce that plastic ring.
As is often the case, the flaw in this kind of thinking is Adam SmithIn a familiar (but apparently not well-known) description of what it takes to ultimately produce a simple wool coat, he gives the following:
For example, the woollen coat worn by the day laborer, though rude and crude in appearance, is the product of the combined labor of many workers. Shepherds, wool-selectors, carders, dyers, scribes, spinners, weavers, fullers, tailors, and many others must all bring their skills together to complete this humble product. And how many merchants and carriers must be employed to convey the materials from some of these workers to others, who often live in very distant regions? How many trades and navigations, and especially shipbuilders, sailors, sail-makers, and rope-makers, must be employed to procure the various chemicals used by the dyers, which are often brought from the most distant parts of the world? How much labor is required to produce even the humblest tools of these workers? Consider how much labor is required to make such simple machinery as the shears with which the shepherd cuts the wool, to say nothing of such complex machinery as the sailor’s ship, the fuller’s machine, and the weaver’s loom. Miners, builders of furnaces for smelting the ore, fellers of wood, burners of charcoal for the smelters, bricklayers, bricklayers, furnace workers, millers, smiths, blacksmiths, all these people must combine their skills to produce it…If we consider all these things, and how much labour is invested in each, we will see that without the aid and cooperation of many thousands, even the poorest person in a civilized country could not be supported.
In the modern world, the web of activity and labor that goes into the production of a plastic ring is incomprehensibly vaster than what Adam Smith described in the 18th century for the production of a wool coat. All that work, effort, investment, and cooperation is erased from existence by the type of “reasoning” employed in this meme. Socialists may claim to be on the side of workers, but in making such a claim, they ironically belittle and ignore the importance of the cooperative efforts of vast numbers of workers.