Economics

The science of the ways in which people satisfy their material needs (for food, clothing, housing, etc.).

Politics

The science of the ways in which people organize themselves in society.

Production

The transformation of raw materials into things which people can use, like products. The product of one productive process, such as iron, may form the raw material of another productive process, such as engineering.

Means of production

The tools which people use to carry on production, from stone axe-head to a modern industrial factory.

What are the principle social systems known to history?

1. Primitive communism, as in African tribal society
2. Slavery, as in the Roman Empire
3. Feudalism, as in medieval Europe
4. Capitalism, as in America today
5. Socialism, as in the People’s Republic of China

Exploitation

The act of living, partly or wholly, on the work of others.

Class

A social group which…

• owns means of production and lives by exploiting a class which does not; or
• which owns means of production and lives by its own work; or
• which does not own means of production and is exploited by a social class which does.

What are the basic social classes in the United States today?

1. The capitalist class or bourgeoisie, which owns the principal means of production and lives by exploiting the social class which does not (the working class).
2. The middle class or petty bourgeoisie, which owns small means of production and lives primarily by its own work.
3. The working class or proletariat, which does not own means of production and is exploited by a social class which does (the capitalist class).

Which of the social systems known to history are based on exploitation?

1. Slavery (in which the slave class is exploited by the slave-owning class)
2. Feudalism (in which the serf class is exploited by the feudal aristocracy, the Lords)
3. Capitalism (in which the working class is exploited by the capitalist class)

What is the basic cause of historical change from one social system to another?

The development of new tools and techniques.

This development occurs within a particular social system until the point is reached where these new tools and techniques can no longer be developed – or even used to the fullest – within that particular social system. The frustrations resulting from this give rise to a political movement, the_aims of which are to change the social system to a new one. Eventually this change is brought about, allowing tools and techniques to be developed further within the new social system.

What is meant by “progressive?”

That which helps forward the development of society.

What is meant by “reactionary?”

That which tends to hold back, or turn back, the development of society.

What is the state?

The machinery of force by which one class rules over the rest of the people.

What is a revolution?

The forcible replacement of the rule of one class by that of a more progressive class.

Which of the social systems known to history was established by revolution?

1. The capitalist system, as a result of the revolutionary overthrow of the political power of the feudal aristocracy in the capitalist or bourgeois revolution.
2. The socialist system, as a result of the revolutionary overthrow of the political power of the capitalist class in the proletarian socialist revolution.

What is a counter-revolution?

The forcible replacement of the rule of one class by that of a more reactionary class.

What social class was put into power by the English Revolution of 1640?

The British capitalist class.

What social class was put into power by the French Revolution of 1789?

The French capitalist class.

What social class was put into power by the Russian Revolution of March 1917?

The Russian capitalist class.

What social class was put into power by the Russian Revolution of November 1917?

The Russian working class.

What is a commodity?

Something produced for exchange, not for the personal use of the producer and their family. A farmer who grows cabbages for their family to eat is engaged in production for use. But if they exchange the cabbages for cash at the farmers market, they are engaged in commodity production.

What is simple commodity production?

The production of commodities by producers who own their own means of production, as was carried on by artisans in the later stages of the feudal system.

What is capitalist commodity production?

The production of commodities by working class producers in a capitalist society, that is, by producers who do not own their own means of production and so are compelled, in order to live, to seek employment with capitalists owning the means of production.

What is a market?

An area where those who wish to dispose of a commodity and those who wish to obtain it are in contact.

Thus, we may speak of a livestock market or a rubber market. And we may speak of a local market, a national market and a world market. A market where there are a number of separate individuals or firms competing to dispose of a commodity and a number of separate individuals or firms competing to obtain a commodity is called a competitive market.

What is the rate of exchange of a commodity?

The number of commodities of other kinds for which a commodity can be exchanged in a market at a particular time. If a cow can be exchanged in a town market for two pigs, we say that the rate of exchange of a cow in that market is equal to 2 pigs, while the rate of exchange of a pig is equal to half a cow.

What is the value of a commodity?

Clearly it is not necessarily equal to its rate of exchange in a particular market, for in the last example we may speak of a cow being “worth more” or “worth less” than 2 pigs; that is, we may say that the value of a commodity is more or less than its exchange rate.

At the basis of the exchange rate between two commodities lies the relative quantity of work required to produce them. The value of a commodity is defined as the socially necessary labor time taken to produce it. If it takes 4,000 times as many man-hours to make a Ford F-150 as to make a fishing pole, we say that the value of the truck is 4,000 times that of the pole.

What determines the rate of exchange of a commodity in a competitive market?

Supply and demand, which may cause the rate of exchange of a commodity to fluctuate above or below its value. In a competitive market there is a long-term tendency for the rate of exchange of each commodity to correspond to it s value.

What is barter?

The direct exchange of one commodity for another.

What is money?

A commodity (or token of a commodity such as a $1 bill) which is generally accepted in a particular community as a medium of exchange.

The introduction of a monetary system removes many of the difficulties inherent in a barter system. Under the barter system, if a weaver wishes to obtain a pair of shoes, he must search for a shoemaker· who wants cloth. When money is in social use, he may sell his cloth to anyone for money and use this medium of exchange to buy shoes from any shoemaker he wishes.

What is price?

The rate of exchange of a commodity expressed in terms of money.

Why do precious metals, like gold and silver, come into use as money?

For convenience of use and transport. Being rare, their production involves a relatively high amount of labor time, so that a small quantity of a precious metal embodies a very large value.

What is labor power?

The capacity of a worker to work for a certain period of time. The worker, owning no means of production is compelled in order to live to sell his labor power to a capitalist. Thus, in capitalist society a worker’s labor power is a commodity.

What determines the value of labor power?

As with other commodities, the amount of socially necessary labour time involved in its production, that is, the value of the commodities required to produce, maintain and reproduce it.

The value of labor power is not, however, that of the bare subsistence of the worker and their dependents (who form the next generation of workers), but depends on such factors as the subsistence necessary to train a skilled worker, the degree of “civilization” existing in the country, and so on.

What are wages?

The price of labor power.

In a competitive labor market, as in the case of other commodities the price of labor power may fluctuate above or below its value according to supply and demand, but in the long run its price tends to equal its value.

What is surplus value?

The new value created by a worker’s labor in the course of production, over and above the value of their labor value.

If a worker receiving $400 a week in wages created only $400 of new value in a week, their employer would obtain no financial benefit from employing them. An employer employs a worker only because they produce in a week an amount of new value which exceeds what is paid to them in wages: the difference is the surplus value, which is created by the employed worker and appropriated by their employer. If a worker creates $1,000 in new value in a week and receives $400 in wages, their employer has obtained $600 of surplus value from that worker. If the employer employs 100 workers at the same wages, he obtains a total of $60,000 of surplus value in a week.

It is by this mechanism that the capitalist class exploits the working class – lives on its labor. Exploitation in a capitalist society has a more concealed nature than slavery or feudalism.

What is capital?

All that is owned or hired by capitalists in a capitalist society – buildings, plants, raw materials, labor power – enabling them to acquire surplus value, that is to exploit workers. Money spent by capitalists for the above purposes – a process known as investment – is also called capital.

What is constant capital?

All capital except that spent on the hire of labor power. Buildings, factories and raw materials do not themselves create new value, which is created only by human labor. Since the capital expended on these items remains unchanged in the course of capitalist production, it is called constant capital.

What is variable capital?

Capital spent on the hire of labor power. Since the new value created in the course of capitalist production is created entirely by workers’ labor power, it is the capital spent on this item which creates the new value (including the surplus value stolen by the capitalist). Thus the capital expended on labor power may be regarded as changing in value, as increasing in value, in the course of production. It is therefore called variable capital.

What are rent, interest and profit?

The portions of surplus value which are appropriated by different sections of the exploiting class in a capitalist society.

• Rent may be paid by the employer (the entrepreneur) to a landowner or landlord for the hire of the land and/or buildings where his enterprise is carried on.
• Interest may be paid by the employer to a financier or bank for the hire of the money capital he requires to carry on his enterprise.
• Profit is the portion of the surplus value which the employer retains for himself as the “reward” for his enterprise.

Rent, interest and profit all have their origin in the exploitation of the workers, and a capitalist who owns his own land buildings and capital retains all three portions of the surplus value for himself.

What is commercial profit?

The profit obtained by a capitalist merchant or reseller, one engaged in the distribution (the selling) of commodities.

What is the source of commercial profit?

Not in the distribution process itself. Value is created only by human labor engaged in production, surplus value only by labor employed in capitalist production. The act of selling creates neither value nor surplus value.

The source of commercial profit (as well as of the wages of employed distribution workers) lies in the surplus value crated by employed production workers. The capitalists concerned in production sell their finished commodities to the capitalists concerned in distribution at a discount below their value, and the latter realize their commercial profit by selling the commodities at their value.

In other words, the capitalists concerned in production pass to the capitalists engaged in distribution a part of the surplus value created by their employed production workers.

What is the motive of production under capitalism?

Profit. Each capitalist tries to make for itself the maximum amount of profit.