Finance
Plastic rings and wool coats
Recently, a meme from one of Twitter’s many socialist residents gained a lot of attention. The message it seemed to convey was that workers are undervalued because they are paid for much less than they produce:
The implication is clear and reflects a popular talking point in socialist circles. The worker in this meme produces 3,000 of those plastic rings with every hour of labor, but is only paid enough per hour to buy three. That would mean he is only paid for one thousandth of the value of what he produces! Surely this is exploitation?
No. There are two big points this meme misses that change the picture quite a bit. The first is that the worker here cannot actually produce 3,000 of those plastic rings per hour. If he could, he would just set up shop in his garage and make them himself, sell them directly and improve his income immensely. He can only earn 3,000 euros per hour because he works with machines built by others and paid for by others. His labor by itself is not sufficient to produce 3,000 per hour. It requires combining his labor with the enormous capital investments the company has made to make his labor more productive, which takes place in the context of a company that also provides him with the working environment, raw materials and tools, which handles the orders and sales. , along with countless other aspects that go into allowing him to do what he does. For that worker to claim that he is specifically producing $3,000 per hour with his own labor, he must massively disregard the labor and investments of so many other people. His labor is certainly important, but it is only a small step in an incomprehensibly complex process that involves the cooperation of countless workers who are also involved in the production of those plastic rings.
As is often the case, the flaw in this kind of thinking was pointed out by Adam Smith, in his well-known (but apparently not well-known enough) description of what ultimately goes into the production of a simple wool coat:
The woolen coat, for example, which covers the day laborer, however coarse and rough it may appear, is the result of the combined labor of a great multitude of laborers. The shepherd, the sorter of wool, the wool comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, and many others, must all unite their several arts to accomplish even this. domestic production. Moreover, how many merchants and carriers there must have been in carrying the materials from some of those workmen to others, who often reside in a very remote part of the country! How much trade and shipping in particular, how many shipbuilders, sailors, sailmakers, and ropemakers must have been employed to bring together the various medicines used by the dyer, and which often come from the remotest corners? of the world! What a variety of labor is also required to make the tools of the meanest of these workmen! Not to mention such complicated machines as the sailor’s ship, the fuller’s mill, or even the weaver’s loom, let us just consider the variety of labor required to make that very simple machine, the scissors to make. with which the shepherd cuts the wool. The miner, the builder of the furnace for smelting the ore, the woodcutter, the burner of the charcoal used in the smelter, the brickmaker, the mason, the workmen who operate the furnace, the millwright, the forger, the blacksmith, they must all combine their several arts in order to produce them…if we, I say, examine all these things, and consider what variety of labor is employed in each of them, we shall be aware that without the help and cooperation of many thousands of the vilest person in a civilized country could not be foreseen.
In the modern world, the web of activity and labor that leads to the production of those plastic rings is incomprehensibly greater than what Adam Smith describes in the production of a wool coat in the eighteenth century. All that work, effort, investment and collaboration is erased from existence by the kind of ‘reasoning’ used in this meme. While socialists may claim to be labor’s allies, by making these types of claims they ironically devalue and dismiss the importance of the collective efforts of a large number of workers.
