Tuesday, January 11, 2011

Does Money Buy Happiness?

Thomas Riggins

Money does NOT buy happiness, according to a recent scientific study in Science Daily online for 12-14-10 ["Over Long Haul, Money Doesn't Buy Happiness"]. Well, you could have fooled me. This study comes from "the founder of the field of happiness studies" Richard Easterlin and he wants to demonstrate that countries having a higher rate of economic growth don't have a greater increase in happiness.

A longterm study of 37 countries was undertaken and the researchers found that "the sense of well being" does not go up in a country with the growth of income. This conclusion is somewhat ambiguous as the researchers seem to be talking about the "happiness" of countries when only individual people are capable of happiness.

This paper contradicts previous findings based on short term studies which did show a positive correlation between increased national income and the increase of happiness (well being). Easterlin's negative finding is based on a long term (an average of 22 years) investigation of the relationship. The USC University Professor stated: "This article rebuts recent claims that there is a positive long-term relationship between happiness and income, when in fact, the relationship is nil."

"Nil" is probably not the right word. There is a short term relationship which is positive. Can anyone look at the suffering in Haiti due to the neglect and exploitation of its population by the industrialized countries, or the people of the southern Sudan living on less than 75 cents a day per person, and seriously believe their sense of "well-being" would not be improved if they were to live above the level of destitution?

Easterlin knows this for he also says, "Simply stated, the happiness-income paradox [named for him the Easterlin Paradox] is this: at a point in time both among and within countries, happiness and income are positively related. But, over time, happiness does not increase when a country's income increases." There may be a simple explanation for this "paradox." People's happiness increases when their country begins to accumulate enough wealth to lift the majority out of abject poverty. Past that threshold capitalist accumulation kicks in and as wealth increases it is siphoned off as surplus value by the capitalist class and does not reach the masses. At this stage only a tiny minority's well-being is affected by the increase in national wealth.

We should study the relation between the increase of the well-being of the different classes within a country--- capitalists, workers, peasants. The overall wealth of a country could increase and not correlate with an increase of a sense of well-being in the overall population due to a maldistribution of the wealth to a tiny upper crust.

"With incomes rising so rapidly in [certain] countries, it seems extraordinary that no surveys register the marked improvement in subjective well-being that mainstream economists and policy makers worldwide expect to find," Esterlin pointed out. He says that, e.g., in Chile, China, and South Korea per capita income has doubled yet there is no statistically significant indication of an increase in subjective well-being. One of the reasons for this may be due to what I explained above. Per capita income having doubled does NOT mean everyone is getting twice as much as they used to get.

"Where does this leave us?" Easterlin asks. "If economic growth is not the main route to greater happiness, what is? We may need to focus policy more directly on urgent personal concerns relating to things such as health and family live, rather than on the mere escalation of material goods."

Maybe we should focus on the fair and equal distribution of the material wealth created in the society on the basis of from each according to their ability to each according to their labor as a starting point. Wealth is also more than just material goods accumulated for your own satisfaction.

Saturday, January 01, 2011


Thomas Riggins

In chapters seven and eight of part two of Anti-Dühring ("Capital and Surplus Value"), Engels continues his role as Marx's bulldog. Again, Herr Dühring has gone too far in his criticisms of Marx and must be put in his place by sounder judgment and sharper intellect. Dühring has claimed Marx says that "capital is born of money" and the birth pangs took place at the "opening of the sixteenth century." Dühring calls Marx's ideas a mixture of history and logic which have become "bastards of historical and logical fantasy."

This upsets Engels to no end who himself responds that Dühring has "a crude and inept manner of expressing himself. Marx's real statement on this subject is found in Das Kapital vol 1, part 2, chapter 4 "The General Formula For Capital" where he writes: "As a matter of history, capital, as opposed to landed property invariably takes the form at first of money; it appears as moneyed wealth, as the capital of the merchant and of the usurer. But we have no need to refer to the origin of capital in order to discover that the first form of the appearance of capital is money. We can see it daily under our very eyes. All new capital to commence with, comes on the stage, that is, on the market, whether as commodities, labour, or money, even in our days, in the shape of money that by a definite process has to be transformed into capital."

But how does this transformation take place. Capital is used to invest to make more money and more capital. So how do I turn money into capital? Engels says when I take my own commodities to market I sell them to get money to buy things I need to live on. This is simple exchange. The capitalist goes to market to buy things he does not need to live on; he buys them in order to sell them for what he paid plus a profit-- and increment in money. "Marx calls this increment

But where does it come from? Capitalism results in an increase in the values in circulation so it can't come from cheating (that would effect the distribution not the amount of values) nor
from buying under or selling above the values of the commodities because the sum of values still remains the same. Yet capitalists do accumulate riches by selling dearer than they have bought."This problem," Engels says,"must be solved, and it must be solved in a PURELY ECONOMIC way, excluding all cheating and the intervention of any force-- the problem being: how is it possible constantly to sell dearer than one has bought, even on the hypothesis that equal values are always exchanged for equal values?"

The most important contribution of Marx to economic thought was the solution to this problem; Engels calls it "epoch-making." Here is the solution as presented by Engels. The increment doesn't take place in the money itself, nor in the price of the commodity sold (at this stage we are dealing with the exchange of equivalents: price = value, later we see how they can
differ). But something does change in the bought commodity--not its exchange VALUE but its USE-VALUE. The increment takes place during the commodity's consumption; and not just any commodity, but a very specific one.

Here is what Marx says about this from Das Kapital vol 1, chapter vi "The Buying and Selling of Labour Power": "In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power."

But how is the value of labour-power determined? Again Marx: "The value of labour-power is determined, as in the case of every other commodity, by the labour-time necessary for the production, and consequently also the reproduction, of this special article. So far as it has value, it represents no more than a definite quantity of the average labour of society incorporated in it. Labour-power exists only as a capacity, or power of the living individual. Its production consequently pre-supposes his existence. Given the individual, the production of labour-power consists in his reproduction of himself or his maintenance. For his maintenance he requires a given quantity of the means of subsistence. Therefore the labour-time requisite for the production of labour-power reduces itself to that necessary for the production of those means of subsistence; in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer."

This also includes the cost of raising a family of little baby laborers to take his place in the next generation. Suppose a worker could produce in six hours the value of goodies he needs to live on and Moneybags gives the worker the full value of his labor power. The goodies cost
$60 and that is what the capitalist gives the worker, paying him $10 an hour. The worker has also made $60 worth of goodies for the capitalist. An even exchange-- no increment for the capitalist.

What to do? The capitalist will hire the worker for $5 an hour for 12 hours. This is what free labor and the labor market are all about. After 12 hours the worker gets his agreed upon wage, buys his $60 of goodies and goes home. The capitalist however has been left with $60 from the first 6 hours AND $60 from the last 6 hours of the worker's toil. He sells the first $60 worth of goodies and gets his money back-- and sells the surplus $60 of goodies and makes a profit; a profit he did not work for but that he expropriates from the surplus value created by the worker. And this, Engels says, is how the "trick has been performed. Surplus-value has been produced; money has been converted into capital." Marx has thus demonstrated how surplus-plus value is created and has revealed "the core around which the whole existing social order has crystallized."

Now, under capitalism there is a "prerequisite" without which the capitalist can not get his hands on surplus-value and that is he must go to market and hire a FREE LABOURER. That is, a worker who can sell his labour power as a commodity and it is the only commodity he can sell. This is the condition working people have found themselves in since the end of the fifteenth century and the disintegration of the feudal order. Marx says "It is clearly the result of a past historical development." Marx and Engels appeared after this transitional period had been underway for about 400 years and we are two centuries further on than they. The present great world wide capitalist depression may or maynot be the "final conflict" which will mark the disintegration of capitalism and the arrival of the socialist order but as Marxists we must always be open to that possibility and continue to hold down the fort.

What is the upshot of all of Dühring's criticism of Marx and his proposed explanation of how capitalism works? Well, we need not go over all of Dühring's arguments and bombast against Marx. Suffice it to say that Engels concludes that Dühring actually steals his ideas from Marx, puts them forth in his own words and style and attacks Marx to cover up his theft; as Engels puts it Dühring "commits a clumsy plagiarism of Marx."

Just what, then, is the difference in Dühring's conception of capital and Marx's? For Marx every class dominated mode of production sweats surplus labour out of the productive class-- be they slaves, serfs, or modern workers (wage slaves). But it is only when, under a regime based on commodity production for a market, when the means of production employ surplus labour in the form of surplus value, that we have capitalism. This is a specific historical stage in the evolution of production. Dühring says any system that uses "surplus labour in any form" produces capital. He thus blurs the distinctions between different modes of production and makes capital an eternal law of nature with regard to economic activity.

What is more, for Dühring surplus value becomes simply the earnings of capital and is equivalent to profit. Whereas Marx makes it very clear in volume one of Das Kapital that surplus value should NOT be confused with profit. Dühring appears to only credit the capitalist in his role as a manufacturer as generating profit (surplus value.) Since Dühring claims to be explaining what Marx believes, Engels points out that Dühring should have paid more attention to what Marx ACTUALLY wrote. The profit made by the MERCHANT, Marx clearly says, is also a part of surplus value and the merchant can make a profit only because the industrial or manufacturing capitalist sells his product to him BELOW its full value "and thus relinquishes to him a part of the booty."

There are other subforms of surplus value besides manufacture's and merchant's profit, e.g., interest and ground-rent. But the explanations of these subdivisions will have to await volumes two and three of capital: only the outlines are being laid down in volume one. The complete explanation awaits "a scientific analysis of competition" and we can't make that analysis until the real inner nature, the essence, of capital is revealed in volume one. Engels gives as an analogy the understanding we have of the seeming motions of the planets which is based on knowledge of their real motions "which are not directly perceptible to the senses." [Empiricists take note!] Nevertheless, Marx gives us enough information in volume one to at least grasp in broad outline the subforms of surplus value to be dealt with in the later volumes.

It is because he doesn't know how competition works and also doesn't understand what Marx has said about it in volume one of Das Kapital, that Herr Dühring can't figure out how capitalists get back all that they have put out plus the surplus product at prices way above "the natural outlays of production." Where does this profit come from? He can't answer this question so he flees from the field of economics to that of politics and claims that the capitalist imposes a surcharge on his products by means of force. But Engels says FORCE can seize wealth but cannot produce it. Not only that, but Dühring leaves unexplained the ORIGIN of force itself. Dühringian economics gets us nowhere.

But all is not lost for Herr Dühring. His research finally leads him to some correct answers, although his distinctive way of expressing himself is not as clear as we might wish. Engels provides two quotes from Dühring that are on the right track. "IN EVERY CASE THE NET PROCEEDS OBTAINED BY THE UTILIZATION OF LABOUR-POWER CONSTITUTE THE INCOME OF THE MASTER...." And:"The characteristic feature of earnings of capital is that they are AN APPROPRIATION OF THE MOST IMPORTANT PART OF THE PROCEEDS OF LABOUR-POWER."

What, Engels asks, is the INCOME OF THE MASTER but the surplus product the worker makes after the deduction for wages? What is THE MOST IMPORTANT PART OF THE PROCEEDS OF LABOUR-POWER but that part which comes after the worker has created the value of his own maintenance-- i.e., surplus value? So where did Herr Dühring finally get a clue to the correct explanation of the relation between capital and surplus value? He got it, Engels says by "in his own style, DIRECTLY COPYING from CAPITAL"[i.e., volume one of Das Kapital]. So much for Herr Dühring's alternative theory of economics.