HOW CAN WE UNDERSTAND CAPITALISM?
In our last shareout, we made visible the problems with our capitalist food system, from the metabolic rift to the exploitation of land, the environment, and people. We also countered some popular capitalist arguments. But knowing the talking points and issues with a capitalist food system isn’t enough. We must also understand the system’s core components to grasp how they are fundamentally opposed to the well-being of people and the land.
Note: since this shareout contains many concepts and terms, we have attached a glossary at the end.
What is capitalism?
In a broad sense, capitalism is a political and economic system defined by the bourgeoisie’s private ownership of the means of production.
To truly understand what the implications of this are, we have to understand these key concepts:
Private property
Commodity
The three values
The formula of capital
The two main contradictions within capitalism
Private property
Holt-Giménez writes, “The main issue with regard to private property isn't really about whether individuals and families can own furniture, utensils, or grooming products. The real issue is the private ownership of the means of producing goods and services we all need to live” (86).
Private property is not your house, your car, or your toothbrush. When Marx speaks of private property under capitalism, he is talking about private ownership of the means of production (land, labor, and capital) by capitalists. Through the capitalist state’s coercive force (military, police, etc.), everything is commodified and turned into private property, including land, seeds, water, genetic information, carbon emissions, knowledge, etc. Essentially, the main issue is the private ownership of the means of producing life necessities.
Commodity
Marx begins his investigation of capitalism with commodities. As Marx writes in Capital: A Critique of Political Economy,
“A commodity is . . . an object outside of us, a thing that by its properties satisfies human wants of some sort or another” (45).
A commodity has three criteria:
It contains human labor (value)
It satisfies a human want or need (use value)
It can be traded in proportion to other commodities (exchange value)
Under capitalism, the objects that a factory worker personally labors to produce (e.g. clothes, shoes, computers) remain the “property” of the boss. The boss who “owns” the commodities and the factory embodies the interests of the bourgeoisie, derived from the French term referring to middle-class freemen dwelling in a town, as opposed to peasants in the countryside. The worker on the other hand embodies the interests of the proletariat, or precarious wage earners.
As we mentioned previously, private property holds capitalism together. Not only do the bourgeoisie own the means of commodity production (like a factory) — but they also maintain control over the use and exchange of those commodities. With this in mind, we must next understand the three values that characterize a commodity: 1) value, 2) use value, and 3) exchange value.
Three Values
What is value? Why does Holt-Giménez mention multiple types of value?
Holt-Giménez explains use value as “a measure of the usefulness of a thing.” To elaborate, use value refers to the human needs or wants a commodity fulfills. Think about a jacket: Its use values include keeping warm and looking stylish. In the case of food, it provides energy to live and can be enjoyable to eat.
Now onto another kind of value that is slightly more complex: Exchange value.
Marx began his analysis of exchange value with the analogy of a simple barter, the exchange of a given quantity of one thing for a given quantity of another. Marx used wheat and iron–two important commodities at the time–to illustrate his point. As iron and wheat are two very different things, you cannot simply trade one stalk of wheat for one bar of iron. For example, it takes many stalks of wheat to make something useful, like bread, but it only takes one bar of iron to make something useful, like a fork. As a result, you would trade 20 stalks of wheat for one bar of iron. This ratio represents a commodity’s exchange value. In other words, exchange value is the ratio or proportion at which a commodity can be exchanged for another.
When Holt-Giménez writes that exchange value is “roughly equal to the cost of its production (the work it took to make the object) plus profit” (60), it can be easy to confuse exchange value for price, but it is important to note that exchange value is not just the price of a commodity. Unfortunately, as we cannot constantly carry around bales of wheat or bars of iron, we must use currency like money to measure exchange value. Price and money are the way we measure exchange value, but they are not exchange value itself.
So, if use value is the way that a commodity can be used, and exchange value is the proportion at which commodities can be exchanged, we can now discuss the common link between all commodities: labor.
All commodities are the result of human labor, and Holt-Gimenez writes, “One way or another, human labor–physical and mental–is common to all commodities and directly or indirectly embeds the value of labor into everything we buy and sell.” Value, then, is the measure of labor, more specifically the Socially Necessary Labor Time that goes into creating a commodity.
And just what is Socially Necessary Labor Time?
Socially Necessary Labor Time
To understand how exchange value and work are related, we can look at the concept of Socially Necessary Labor Time (SNLT). What is meant by socially necessary? Socially necessary means that the labor you do has to serve a need or want in society, aka labor that creates use value. SNLT refers to the average time it takes to produce a given commodity with average tools.
When a home chef makes a chocolate treat, they can take as much time as they want. When Hershey’s makes chocolate, they are competing in the market against Nestlé, Ferrero, and more. If Hershey’s workers are slower, they produce less, and the company ends up selling fewer chocolates, which nets them less profit. Why can’t Hershey’s simply charge more to compensate for working slower? This is because the value (human labor input) of chocolate as a commodity is not arbitrarily set by individuals or a single company, but by the average amount of time it takes to produce chocolate. This is called the “Socially Necessary Labor Time.”
SNLT is real and observable. Let’s say that the average chocolate bar takes one hour to make. This takes into account the labor to harvest ingredients like cocoa beans (which often comes from exploited labor in Global South countries like Cote d’Ivoire or Ghana) and the baking process with the average tools available in our society. One hour is the Socially Necessary Labor Time for chocolate bars. But, the owner of Yummy Candy invested in a new machine that helps workers to make chocolate bars twice as fast. Yummy Candy can now make a chocolate bar in thirty minutes. This means that Yummy Candy is producing below the SNLT; it does not mean that thirty minutes is the new SNLT for chocolate bars. Yummy Candy can now produce twice as much chocolate in an hour than other chocolate companies, meaning they can drop the price of their chocolates to draw in more consumers and rake in more profit than their competitors!
Now, if Delicious Delights, Cool Confections, and other major candy companies also get their hands on the same technology, they can also reduce the time it takes to produce a chocolate bar to thirty minutes. This would mean that the Socially Necessary Labor Time for a chocolate bar is now thirty minutes, as that is now the industry average.
Corporations will always try to automate or cut labor costs as much as possible to be more productive than their competitors. For example, Yummy Candy might try to lay off workers to cut costs at their factories or pressure their cocoa bean partners to increase working hours for the same pay. Tying this back to value and exchange value, we can see that the decrease in SNLT means that the commodity has less value (human labor input) and in turn it exchanges for less in the market. This drives down the capitalist profit margins as their commodities become worth less and less. Marx calls this the “tendency of the rate of profit to fall.”
Workers are put in a precarious position as corporations replace their specialized roles with automation or pay them even less now that they can replace some of their work with automation.
Food as a Special Commodity
So, a commodity is anything that requires labor to produce, satisfies a human want or need, and can be exchanged. This makes food a commodity. Holt-Giménez, however, establishes food as a special commodity. Why? Simply put: We need food to live. According to Holt-Giménez, food is at the core of any society. Humans need to eat, and without food, we would not be able to engage in any kind of work or economic system. Yet despite its indispensable nature, food is bought and sold like any other commodity under capitalism.
This creates an issue, as food must now respond to the logic of capital, which focuses on seeking as much profit as possible. Those who have enough money can buy as much food as they want. Those who need food but cannot afford it have to produce it themselves, barter, steal, rely on charity, or go hungry.
Recap
| USE VALUE | EXCHANGE VALUE | VALUE |
|---|---|---|
| How a thing fulfills a human desire or need. | The proportion at which a commodity can be exchanged for other entities. | The amount of socially necessary labor time it takes to produce a commodity. |
| Qualitative | Quantitative | Qualitative and quantitative |
| E.g. A chocolate bar can be used as a gift to someone or it can be eaten. | E.g. 1 chocolate bar can be exchanged for: 3 apples, 1 latte, or 2 bananas… | Quantitative: SNLT can decrease with technological innovation and automation. E.g. New innovations in chocolate-making machines can decrease the SNLT it takes to produce chocolate. Qualitative: Socially necessary labor has to produce use value. E.g. Stirring random ingredients in your kitchen will not produce any use value but combining cocoa powder and cocoa butter to make chocolate does! |
The formula of capital: M–C–M’
Marx developed an equation to show how a capitalist accumulates profit. This equation is M–C–M’. M represents the initial investment of money used to purchase the inputs (including both the labor power and the means of production). C stands for commodity. M’ stands for the initial investment plus surplus value a.k.a profit.
Where does surplus value come from? Surplus value is extracted through the exploitation of the laborer during commodity production. A commodity not only requires materials but also the labor power the worker sells to the capitalist. The worker’s labor is what gives the commodity its value. Despite this fact, the capitalist does not pay the worker the full amount for said labor, so the worker will unknowingly work more than what they are paid for. This unpaid extra work retains profit for the capitalist.
For example, let’s say you make chocolate for a living. Your boss (the capitalist) spends $50 to buy the raw materials and pays you $25 for the work. Your boss has initially spent $75 (M). Now, you, the worker, will make a box of delicious chocolates (C)! With the hard work you put into making the chocolate, the commodity produced now has value. Your boss then decides they will sell this new box of chocolate for $150 (M’). They gain a profit of $75 ($150 - $75). Thus, the surplus value extracted is $75. You can also calculate the rate of exploitation by dividing the surplus value ($75) by the worker’s wage ($25) and can see that the capitalist made 3 times more than what they initially paid for your labor. The capitalist will re-invest this profit to produce more commodities to sell. Thus, M-C-M’, the formula of capital, "is profit in search of more profit” (33).
The two main contradictions in capitalism
Now that we have some of the basics of capitalism down, we can begin to piece together why there are so many problems with our capitalist food system. The author groups these problems into two main contradictions:
Labor and capital
Land and capital
Labor and capital
There is a major irreconcilable contradiction between the interests of the bourgeoisie and the proletariat. To increase their profits, the bourgeoisie try to exploit workers to produce as much as possible in as little time as possible. To do this, the bourgeoisie cut workers’ wages and automate the production process.
The relentless capitalist drive for profit leads to more and more underemployment. The proletariat, with little to no buying power, cannot consume as much as what is being produced. This leads to an oversupply of commodities and thus a crisis of overproduction. The author explains, “Goods and savings pile up and capital stagnates. Workers are laid off, which further reduces demand. The only solution is to find new markets, or take over someone else's market” (36).
Due to crises of overproduction, the bourgeoisie is motivated to go to war and seize new territories and markets to sell their commodities. “Capitalist wars are very efficient at producing profits. The products of the war industry — arms, ammunition, ships, vehicles, chemicals – are destroyed in the course of war, and so don't pile up, thus resolving the crisis of overproduction“ (184). So while capitalism hurts local workers, it also rears its ugly, war-driven head in the Global South.
Land and capital
The second major contradiction is between capitalism and the earth. The inherent capitalist drive to overproduce is opposed to the earth’s finite resources and climate system. We are seeing record greenhouse gas emissions and unprecedented rising global temperatures. Those facing the brunt of climate change are the proletariat and peasants, especially those in the Global South. Small farmers in the Global South have already seen numerous droughts, floods, and crop losses. Yet, the bourgeoisie sees these all as opportunities for profit and seeks to further commodify resources such as land, air, and water.
We have only skimmed the surface of capitalism. Even with just the basics, it becomes ever more clear that capitalism is opposed to the interests of people and the land. These contradictions cannot be resolved through reforms alone, as this is the nature of capital. So what can we do about capitalism? Stay tuned for our last shareout as we dive into how we can change our capitalist food system!
Glossary
| Term | Brief Definition |
|---|---|
| Bourgeoisie | The ruling class under capitalism and the owners of the means of production. |
| Capital | Profit in search of more profit. |
| Crisis of overproduction | A crisis that occurs due to capitalist overproduction. There are more goods than there is demand, causing prices to fall. Workers are subsequently laid off, and this reinforces the crisis because there is less buying power to absorb the oversupply of goods. |
| Commodity | An object outside of us that has use value, exchange value, and value. |
| Exchange value | The proportion in which a commodity can be exchanged for other commodities. E.g. 1 chocolate bar can be exchanged for 2 bananas or 3 apples. |
| Means of production | The physical inputs and systems used to produce goods and services, which include machinery, factory buildings, tools, etc. |
| Private property | The means of production (land, labor, and capital) owned by an individual or corporation. |
| Proletariat | The working class and those who have to sell their labor to the owners of the means of production. |
| Socially necessary labor time | The average time in society that it takes to produce a socially necessary commodity with average tools. |
| Surplus value | The difference between the income from selling a product and the amount it costs to produce it, also known as profit. |
| Use value | The utility or usefulness of a thing. E.g. Chocolate can be eaten for energy and to satiate a sweet tooth. |
| Value | The amount of socially necessary labor time it takes to create a commodity. |