Karl Marx’s Theory of Primitive Accumulation Is Wrong

“It is a win-win situation—not the zero-sum world of Marx’s gloomy dystopia. Institutions that reduce transaction costs and enforce well-defined property rights provide an environment in which incentives to economic initiative can thrive.”

According to its most famous critic, “capitalism” is defined by a contest between capital and labor for the spoils of economic production. In this ongoing contest, capital usually wins. Except for brief interludes of worker empowerment, the history of capitalism is the history of wealth accumulation for a few capitalists at the expense of many wage laborers on whose backs such wealth is built. Capital carries the weight of a social relation in which the owners of the means of production grow rich by paying workers a wage that is less than the value of the commodities they produce.

To adopt Karl Marx’s lexicon, unpaid labor is designated as “surplus value.” The purportedly “free” laborer must work for the “capitalist,” who dictates the terms of employment under which the laborer earns only a subsistence wage. The most important term of employment is the length of the working day. For capital to accumulate, the length of the working day must exceed the “socially necessary labor time” required for production of commodities sufficient for human subsistence based on the living standards of the day. This can be done by extending the working day in absolute terms. It can also be done by employing technological innovations or intensifying the labor process to reduce the amount of “socially necessary labor time” relative to a fixed number of hours constituting the total working day. Either way, the basic terms of employment under a capitalist mode of production provide for a wage paid to the worker that is equal not to the total value of what he produces but, rather, to the value of commodities necessary for his subsistence.

In a world without capitalism, workers would produce what they need and walk away with what they produce. In the world of capitalism, workers produce more than they need and walk away with less than they produce. Where does the surplus go if not to the workers? To the capitalists, of course. Not because they contribute to production but because the power of their social position ensures that they can extract surplus value (profit) from the workers. Property rights and the “fetish” of commodity exchange, which disguises the social relation underlying production and exchange, protect and preserve the social hierarchy. Capitalism is state-sanctioned theft.