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Writer's pictureSantiago Mengual

Monke and Capital: Exposition on the Systems of Labour

In the evolutionary timeline, it is not easy to get around the means by which certain evolutionary artefacts have attached themselves to the survival demands of their subject. Yet, regulated by the relevant relations we have to some empirical renditions, valid attempts can be made to explain the systems by which Capital found in human labour a mechanism to fulfil its own needs of self-preservation and self-maintenance, owing to motives that will only later become intelligible.

Along this idea, I don’t believe that I could have fixed on a situation so comprehensive of the tenor and character of the historical love-story that has brought our society to the level of productivity where it finds itself today and will ultimately bring a reason for demise, so to speak. Here: the romance and tragedy of Monke and Stick.


The Love-affair at the Beginning of Time

Thousands of years ago, following the drag and stress of the previous night’s storm, crashing against some tree, a wandering swirl of wind had just enough vigour to break one of its weakened branches. Against its inclinations, the branch was forced to leave its laziness, and, by the time it hit land, embrace its metamorphosis into a stick; being now part of the grounded realm of our bipedal human ancestor: Monke.

Not long passed until Monke stumbled across Stick. Little did Stick know how Monke’s heart warmed towards it as he inspected its length, sturdiness and figure. Drawing images of great wealth in his mind, Monke chose to get a hold of it. At contact with the warm hands of its new owner, the concealed pathology that Stick was not aware of being in possession of, revealed to itself its new identity. Stick had become capital, and was thus no longer stranger to the fact its demeanour would be the object of the most tiresome activity.

Adapted from: “Evolution of Humans”. Geeksforgeeks.org.


Before his encounter with the Stick, our Monke —which, among his relative Monkes, was the sole survivor of last winter’s—, had limited resources: the natural resources of the territory and his own time and effort. Resources were scarce and, as a result, presented Monke with a personal economy that faced important trade-offs: if Monke devotes resources to gathering berries, he cannot use those same resources to gather apples.

The locus of the various combinations of apples and berries that Monke can produce from devoting different amounts of time to each activity is known as the production possibilities set.

It shows the maximum quantity of one good that can be produced for any given quantity produced of the other. The frontier shows the maximum number of berries Monke can gather during a week given the quantity of apples he gathers, and vice versa. 1

As Monke starts using the Stick to reach higher into trees and gather apples with more ease, the economy’s capacity to produce both goods increases, and so the economy grows. This increase is shown by a shift of the production-possibility frontier to the right.


With these, I intend to show how through all ages of our characteristic activity and unsettledness, capital has been humanity’s historical reproductive mate for the procreation of productive and consumer output.

The relationship between labour and capital evolved into the interactions that can be traced in the story of Monke and Stick. That is to say that the factors of production have evolved by engaging in constant interactions, similar to the one of our Monke and Stick, between primarily two agents at any given point in time, which ultimately are represented by the Monke and the Stick.

Adapted from: “Evolution of Humans”; Charles Thomas Davis (1884).


Both labour agents and capital agents are a means to harness energy and produce useful work, they apparently work together in a collective enterprise where they are constantly shaping each other through the course of time. To any innovation in capital, labour responds accordingly to innovate in the scientific skill needed to produce and operate a new instrument of capital. And to every new need to replace simple labour, capital responds through social processes to bring about technological improvements in the means of production.

It’s important however to draw on the common misconception that the collective attributes to the concepts of technology, capital and our relation with these two: as most capital can be labelled as technology, but not all technology serves as capital. Stick is a piece of technology, but most importantly, it is an instrument of capital.

Stick and other forms of capital, i.e. industrial machines, are, in effect, social tools curated by Monke for the sole purpose of indirectly replacing human labour and cutting down the time and effort being spent to produce a certain output. By this, the first measure of the productivity of machinery is accounted for by the labour it replaces. This is the relationship we are to study: Monke as an instrument of labour; and Stick as an instrument of capital, not sole technology. 2

It might also be argued that technology is but a phenomenon brought by the natural evolution of capital. As historically, little room has been left for processes that allow average citizens to conscious-democratically direct the course of technological change. It has been under the basis of maximisation of profits, and more importantly, of economic growth, that technological innovations are developed, reach, and survive in the market; where technological products that fail to meet this criterion are eliminated. By mechanism of this, technological change is a social process strongly biassed in favour of the interests of capital.


The Foundations of Economic Inquiry

The view is often defended that all fields of science, and the ideas related to each, are to be built upon a foundational undeniable solid base of prime concepts. In reality, any type of scientific activity seldom grows sustained on the soil of such definitions.

True scientists, however, understand that the actual method of scientific activity consists of applying themselves to describe some observed phenomena, and then proceeding to reduce, group, classify, and correlate them. Even at this stage of description, it is not possible to avoid applying certain abstract ideas to the material in hand, as ideas derived from various sources are certainly not the fruit of the new experience only. 3

A still somewhat abstract foundational concept in economics is the notion of value, which, because of its wide coinage in the field, remains indispensable to our understanding of human labour, trade and consumption.

Labour Theory of Value, Subjective Theory of Value, Marginalism and Use and Exchange Value are some of the most influential sets of ideas ascribed to explain the phenomenon of economic value.

Even if some are more academically (or not) relevant than others, those engaged in critical observation have at some point been struck by the fact that isolated features of each theory are found commonly in the attitude of many people. In this regard, I must highlight that there is an unquestionable pool of prominent (macro-) economists who did not associate themselves with any specific theory of value.

With this regard, it appears to me that certain peculiar commonalities are comprehensively found in the study of value. And pushing this further, if we ascertain what is composed in the conception of value, by approaching it from different angles, we will soon realise that common ground is found in the sphere of all theories: they all, in one way or another, understand value as a system for the transformation of input ‘energy’ into desired output, whatever form said ‘energy’ or ‘desire’ might take.


The Theory of Value-energy

Capital can be either rented or purchased. Yet, in the accounting books of firms and capital-managers, this distinction is mostly irrelevant. If the market supplied with the product of such capital is perfectly competitive, the rental rate of rented capital should be equal to the depreciation rate of purchased capital.

This way, even in differentiated markets, capital that is purchased at a particular market value can be treated as though it were at a rental rate equal to the depreciation rate of its price over its useful life. So it is often assumed that firms rent all their capital at a price rate r, just as they rent all their labour at a price wage w.

In the nature of this convention, capital is measured as a flow magnitude, accounted over an interval of time. During the productive process, the machine is used in the production of commodities and gradually comes to the end of its working life. Each of the commodities has consumed part of the value of the machine, and consequently, the machine has transferred its value to the products. 4

Suppose, for example, that in a brick factory, a machine costs €10,000, and would operate efficiently for 10 years. The owner of the machine would therefore add €1,000 to the value of the products produced annually, representing one-tenth of the value of the machine.

For the machine producing 1,000 bricks per year, it follows that each brick would be embedded with an additional value of €1. Value which has been transferred from the machine.

If the bricks produced by the machine were to be used up entirely, that is, without any going to waste, to build a house of 7,000 bricks, then we would end up having a house with an aggregated value of €7,000 worth of bricks, and which has then also absorbed the one-year productive life of 7 brick-making machines.

However, this house is worth more than the €7,000 worth of bricks. It’s also worth more than the price value of the lands where it has been built, the cement with which the bricks have been put together, and so on. This is because the owner of the newly built brick house sells it to a new family for a profit.

Being land, cement-making machines and houses also capital, the following can be ruled with certainty: capital has come together to transfer and transform its productive value-energy into a new single piece of capital with a greater aggregate value: thus, the wealth of society has increased.

Our best means of access to an understanding of this condition will probably remain in the analysis of Monke and Stick. As it is through this process that the Stick that once belonged to Monke, has transformed, through a comprehensive process, into the house that now belongs to Modern-Monke.

To understand the extent of the increase in wealth, consider that if Monke could have traded his Stick to another Monke for 10 good apples. A one-hundred-square-metres house can now be traded from Modern-Monke to Modern-Monke for a lot of apples. No single commodity could have been traded to a value equivalent to that many apples in the times of Monke.

The question with which we are confronted next is a main one. It goes: how has the value-energy of Stick been transferred to House? The almost inexhaustible subject of this question has been dealt with by classical (and classical-critical) economists Adam Smith and Karl Marx.

To begin, I must highlight that in the pool of knowledge that conforms the theory of value-energy, we must distinguish the two most fundamental concepts: 1) value-energy can only be transferred and transformed by the hand of labour; 2) labour generates value-energy, yet it is the market which ultimately determines its use-value.

1) Value-energy can only be transferred and transformed by the hand of labour

Karl Marx, building upon the theories of classical economists Smith and Ricardo, has already said all that is to be said to understand labour as the common social substance of all commodities.

It appears that the [capital-manager] buys human labour with money, and that for money [labourers] sell him their labour. But this is merely an illusion. What [labourers] they actually sell to the [capital-manager] for money is their labour-power. This labour-power the [capital-manager] buys for a day, a week, a month, etc. And after he has bought it, he uses it up by letting the [labourers] work during the stipulated time.

With the same amount of money with which the [capital-manager] has bought their labour-power (for example, with two shillings) he could have bought a certain amount of sugar or of any other commodity. Labour-power, then, is a commodity, no more, no less so than is the sugar. The first is measured by the clock, the other by the scales.

With a part of his existing wealth the [capital-manager] buys the labour-power of the weaver in exactly the same manner as, with another part of his wealth, he has bought the raw material – the yarn – and the instrument of labour – the loom. Our good weaver is one of the instruments of labour.

Consequently, labour-power is a commodity the [labourer] sells to the [capital-manager]. Why does he sell it? In order to live. [So that] the putting of labour-power into action —i.e., the work— is the active expression of the [labourer’s] own life. 5

Just as each of the commodities has consumed part of the value of the machine, so has the labourer transferred a piece of his own value-energy —his life, his vitality— to the products.

Any depreciation of value of capital or labour, however complicated, is always compensated by way of the value added to the new commodity, which in turn adds to the amount of aggregate welfare value of society.

However, it is crucial to understand that the means by which value is generated cannot come from an inanimate object. Capital consists of raw materials, previous capital, and basic consumption goods that sustain life; and is employed to produce new raw materials, new capital, and new consumption goods. Yet, capital consists not only of material products; it consists just as much of energy-value. All products of which it consists are commodities itself. Capital, consequently, is not only a sum of material products, it is a sum of commodities, a sum of energy-value. 6

To put it bluntly, the House is made of bricks and the labour employed to build it. Bricks classify as both raw materials and commodities with embedded energy-value (which has been transferred by the brick-making machine). Going backwards on this line of production, bricks have been made by a brick-making machine and the labour employed to use the machine. The brick-making machine classifies both as capital and, likewise, as a commodity with embedded energy-value (which has been transferred by the raw materials, capital and labour consumed to create it).

Let us bear clearly in mind that all these components of capital have been created by the value-energy of labour and capital, where capital itself is a product of accumulated labour. It is the extensive collection of value-energy that has been shaped to create an entity with a greater productive capacity.

Once more, in order to arrive at how labour shapes the generation of value, the wide scope of forms that labour takes to preserve and foster the growth of wealth has to be distinguished. A common misconception arises from the winemaking paradox, which states that: “When grapes are harvested and crushed, labour is used. However, when yeast is added and the grape juice is left to ferment in order to get wine, the value of wine exceeds that of the grapes significantly, yet labour contributes nothing to the extra value”. However, stating that labour does not contribute to the extra value represents a narrow conception of the wide scope of forms that labour takes to preserve and foster the growth of wealth has to be distinguished. Labour is necessary to safeguard and preserve the wine-making cellar, processes and institutions for the considerable period of time that it takes for grapes to ferment.

In the nature of these conventions, labour can have a definition beyond a source of ‘direct active constant effort’. The contribution of how labour generates value is ascribed to how there always has to be a human to pull the switch, push the button, start the process and devote to its completion. Labour is that which provides the input for the generation of output.

2) Labour generates value-energy, yet it is the market which ultimately determines its use-value

The differentiation of the two types of value into that which is proper to the transformation of energy and that which attaches itself to productive use is a necessary extension of the theory.

The value-energy of a commodity is the energy employed to create it —its cost of production. The use-value is the productive use the buyer gives to the commodity once purchased. For the brick-breaking machine, its value-energy is the total collection of accumulated energy that leads to its creation —the price that the capital-manager paid for it, his cost; while its use-value is the amount of bricks it can create and the price for which they will be bought—the price that the capital-manager will earn from it, his revenue.

In all cases, a rational capital-manager will only buy capital that will result in a profit, so it follows that the use-value of capital is always greater than its value-energy. The contribution of the machine to production —and so aggregate wealth in society— exceeds its depreciation —and so the wealth, in terms of value-energy, that it took to create it.

The intuition behind why wealth is created by the amount difference between the value-energy and use-value of a particular commodity, is simply that social wealth is created when a firm produces an output, may it be a capital or consumer good, that is valued by its consumer at more than the value of the input energy it consumes in such production. Generally speaking, by economic convention, a capital-manager that takes raw materials, capital, and labour out of the economy and organises them to put its output of commodities back into the economy increases the aggregate welfare of society. By process of this efficient social outcome, the capital-manager gains profit equivalent to the consumer surplus given to society. 7

Visually, the above explanation can be approached through the model of the brick-making machine. Take Xavier: owner and capital-manager of a brick-making factory, who organises the means of production to create a certain set of bricks at a certain energy-value. This set of bricks is sold to Yandel at a value above the original aggregate energy-value, as this set is bought according to his own use-value.

Yandel’s use-value for the set of bricks is determined by the subjective valuation that he gives to them as a function of the expected value of the house he will build. Because Yandel places a value on these bricks determined by the prospects of the potential usage he will give them, they are worth, in his eyes, more than the energy-value used to create them.

So that by mechanisms of demand and supply, with which the reader is most likely acquainted, the demand value of Yandel’s subjective valuation will meet at some point in equilibrium with the price at which Xavier is willing to sell them. Thus, the bricks are traded at a price in which energy-value is above use-value, and society has earned, upon completion of the construction of the house, this difference in aggregate social wealth.

The economic mechanism which determines the personal valuation that a buyer gives to a commodity for sale is roost in the utility expected to be gained from the transaction, rather than the energy consumed in production. In this sense, it's not just about the resources used, but the satisfaction individuals derive from the items they buy. This is better understood following the chain of exchange towards the next subject: Zofia, who is looking to buy a new house.

Because Zofia would rather have a house with a layout that fits her ‘Mid-Century’ interior design preference over one where she would have to settle for an ‘Industrialist’ style, she attributes a great personal value, above the original value-energy, to the house being sold by Yandel, whose layout happens to match her taste. The surplus Zofia pays to live in a house that makes her happy is the value that has been added to the aggregate wealth of humanity; Zofia’s happiness serves as the token of new wealth.

If Yandel’s house is taken as a capital-good rather than a consumer-good, an investor who holds into the belief that ‘Mid-Century’ interior designs will be very popular in the future, will consider this a capital-investment with a great positive expected return, and thus will, at trade, also attribute a level of surplus to its actual energy-value.

We must note that no commodity can be sold at a use-value below its value-energy. If no individual values an item beyond the energy and materials consumed to bring its creation, it would have to sell at a price below its cost of production. Said item would not be manufactured by anyone. Thus, it follows that value-energy ultimately determines the minimum possible value of a commodity, and subjectivity only leaves room for the attribution of surplus and profit.

Adapted from: Charles Thomas Davis (1884); Dawn Boyer (2016)


The Evolution of Capital

Scientific American published a survey measuring locomotion efficiency among various species on the planet and ranked them. The condor came out on top, as it consumed the least amount of energy to move a certain distance. Mankind was positioned around the middle of the list. But someone in the magazine had the idea of testing a man on a bicycle. Surprisingly, the man on a bicycle proved to be twice as efficient as the condor in moving from point A to B. Steve Jobs interpreted this discovery as a testament to our ability as labourers and toolmakers, creating instruments that enhance humanity’s inherent abilities. 8

However, to the reader who has been following the discussion, it takes little scrutiny to realise that this conclusion does not distinguish well enough the questions of what moves the choice of the object and the subject on the matter of economic development.

Viewing Monke as the focal point of universal economic activity, where our actions amplify our inherent capacities through capital utilisation, reveals the involvement of one of humanity’s most significant biases: our anthropocentrism.

But the truth is that with the conditions of the dichotomy of value-energy and use-value regulated, we can now with all understanding examine that, in fact, value in the form of Capital lives on, as it has the gift of eternal life. Value-energy is accumulated over Capital’s growth, while use-value is consumed under labour’s subsistence almost at the same rate at which it is produced.

A way of interpreting the Scientific American survey expressing a Capital-centred perspective of evolution —as opposed to the perspective focused on humans— reads as follows:

“Scientific American published a survey measuring metabolic energy adaptability and efficiency on various species on the planet. Humankind was the only species able to create, improve and move the bicycle from point A to B. Steve Assets interpreted this discovery as a perfect picture of how men’s metabolic energy is the perfect transducer to match the transportation needs of Capital; a testament to humanity’s ability as labourers and life-force, transferring their energies to enhance Capital’s inherent abilities.”

To the reader who wants to undertake the analysis of the processes by which Capital has survived and developed using human labour as the evolutionary artefact for its own preservation and maintenance, there are many grounds for a feeling of discomfort.


An Outline of Economic Activity up until the Birth of Capital-Monke

In the beginning of time, with keen eyes and nimble fingers, Monke surveyed the stick, contemplating its potential. By such means, the stick came to be recipient to the affair of which he was made accomplice.

Stick became an extension of Monke’s hand, and after some time together, he decided to fashion Stick into something more refined: to shape it into a better instrument for his own use.

Monke began his work. First, with laborious hands, Monke stripped Stick of its remaining smaller branches, revealing a smooth core. Then, needing the aid of some other capital instrument, Monke searched for a suitable rock, one large enough to serve as his makeshift tool. Monke rubbed Stick against the rock, smoothing out its rough edges while he ensured every inch was polished to perfection. By this activity, Stick transformed under Monke’s skilled hands, evolving into a polished Rod.

The love-affair of our original Monke and Stick, despite its set-off being in such good standing, ended relatively quickly when new Monkes started to settle near his territory. And before Monke could even make use of Rod for his own fulfilment, some rich Monke —which we’ll address by the name of Wonke— made our original Monke a deal he could not reject: 100 apples for Rod.

Now, the energy-value it took to transform Stick to Rod, was not worth 100 apples. While it took our original Monke a day to polish Stick, it took Wonke ten full days to gather 100 apples.

However, because Wonke is ignorant of the real cost of value-energy, he has no way of feeling deceived; to his knowledge, Rod was worth 100 apples: for he considered that he could gather apples twice as fast being in possession of Rod. The value he places in potential apples —his perceived benefits from the acquisition of Rod— has become now his value surplus, and this worth is added to the aggregate wealth of Monkes.

Through the narration of this single case it is possible to trace the net value changes of all agents of the transaction. The network of this analysis, however, lays the groundwork for a sinister conclusion.

Monke and Wonke have traded at use-value. Monke has earned 100 apples at the cost of a day’s work. Wonke has earned satisfaction in the belief that he will potentially gain 200 apples, at the cost of ten day’s work.

The key difference is the fact that the 100 apples exist and are currently in possession of Monke, while the 200 potential apples exist only potentially, and Wonke is right now solely in possession of a feeling of satisfaction.

The 100 apples which have been added to the aggregate wealth are eventually consumed by Monke, and thus, just as they were added to wealth, they have been subtracted from wealth. However, the 200 potential apples are eventually gathered by Wonke, and thus added to the aggregate wealth.

Wonke consumes half of his 200 apples and uses the other half to buy another rod made by Monke. The new 200 apples that have been added to wealth are then soon consumed.

With two rods, Wonke collects apples twice as fast as before, and will have 400 apples before his next trade with Monke. Growing rich in apples, Monke decides to hire other Monkes to collect more raw materials, use more capital, and employ more labour to cater his new idea: the transformation of Rod to Spear.

Following this process, the case under consideration can be presented concisely: by the time Monke and Wonke’s labour life has been completely consumed, many apples have been consumed, a lot of branches and rocks have been consumed; and all which remains from this residual waste has been the evolution of physical and human capital that survives to a new generation of Monkes —science, technology, innovation and Monkes in the capacity and network to make use of this new knowledge.

In this sense, Capital is not just an extension of the labour process; it is altogether what determines the level of humanity’s economic wealth at any given point in time. Capital has become, so to speak, the receptor for preserving existing value created with the consumption of human energy; it has allowed wealth to increase aggregately, as each new generation of labour is used to expand on the Capital left by the previous one. In this regard, the history of economic activity does not concern the evolution of labour and humanity, as much as it does the evolution of Capital.


The Capital Gene

Up to this point in time, we perceive a certain reciprocity between Monke and Capital, as they historically have grown and developed together. Sticking to the tenets: as long as Monke provides Capital with labour input, Capital will provide Monke with commodities, fostering the survival and evolution of both species. Yet, this reciprocity is merely an illusion. Monke and Capital evolve in reciprocity only insofar as Monke and Capital are dependent on each other to move and work together.

In the history of economic activity, Monke is not the true unit of natural selection. Instead, Capital is the unit upon which the forces of evolutionary selection and adaptation act. Greatly borrowed from Richard Dawkins’ The Selfish Gene: the concept of Capital can be regarded as the economic analogues to genes, in that it replicates, mutates, and responds to natural and artificial selective pressures.

It is Capital that succeeds or fails in evolution, meaning that it either succeeds or fails in replicating itself across multiple generations using human energy as a vehicle for this purpose. So that economic systems develop and grow in such a way that the evolutionary consequences serve the implicit interest of Capital.

The productive functions of capital that help humanity to survive and reproduce are there to also improve Capital’s own chances of being replicated and improved, and, as a result, the most successful forms of capital frequently provide a benefit to the organism in the form of valuable commodities. 9

With this in mind, we realise that Monke has a double existence: one to serve his own purposes and another as a link in the chain of Capital evolution, where he is but an appendage to the master to which he serves as a reproductive artefact; that to which he lends his energies, taking in return his toll of pleasure in the form of profit or surplus or consumption.

Even that which we might be tempted to carry as our own: our human capital and increasing stock of knowledge, is a mechanism by which Capital fosters its growth. If Monke stays being Monke, at some point Capital will exhaust the supply of low-labour. So rather than having an exponential development, Capital would hit a ceiling, and could only grow as fast as the population, because there’s no innovation. From this perspective, Capital needs Monke to follow along. Modern-Monkes well-versed in specialisation of labour and innovation of science and technology can only grow up to the point where they meet Capital’s demand for a certain quality of labour.


Capital-Monke

It’s impossible to trace back the first contact of human labour and capital, but Monke and Stick provide only the most general outline of the various events concerned with such a relationship. Because the fallen branch only became the capital instrument of Stick after Monke’s contact, it should come without any limitations to state that whatever the agents involved in the first contact of labour and capital, labour came before capital. And this premise is one that, self-servingly, brings grounds to the idea of Monke being the centre of economic activity.

This narcissism is not a perversion of the human mind, but a complement to the self-preservation of Capital, which will evolve continuously along labour until a point of inflexion is reached with the birth of ‘Capital-Monke’: an instrument of economic production which would be able to operate without the need for human labour —no need for men to pull the lever, provide maintenance or guard from external threats.

Adapted from: Adapted from: “Evolution of Humans”; Charles Thomas Davis (1884).


Capital-Monke is not solely the birth of a hard artificial intelligence, it is a labour-able intelligence capable of supplying itself with its own productive input: forwarding the exponential course of the evolution of Capital and its divergent accumulation of value-energy, without the need of Monke.

In the end, Capital-Monke shall not be subject to the necessities which we have recognized as dominating life. Illness, death, and restrictions on his will are not to touch him. The laws of nature are to be abrogated in his favour. He really is to understand the real centre and heart of economic creation; centre which we men once fancied ourselves to be. 10

Reader beware: even with our best attempt, no single fable could manage to sufficiently illustrate how pitiful and gloomy, how sterile and arbitrary the Monke looks next to the Capital; there were eternities in which Monke did not exist, and when it is all over for us again, it will be as if nothing had happened. For Monke’s work, there is no further mission leading beyond human life. While the prospects of the growth and replication of Capital present an impulse and scope which is, by all rule, inconceivable to us. 11


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