3. Marx argues that competition between capitalists and competition between workers drives the system of capitalism. Interpret this part of the reading in your own words-- how are the two related? Think about how Marx uses the concepts of real wages and relative wages-- what is the difference? According to Marx, if real wages for workers increase, does it mean that the working-class has advanced? Why or why not?
Marx argues the competition between capitalists and competition between workers drives the system of capitalism. The higher competition between the capitalists is what drives the market. This competition is based on their (the capitalists) product, and the goal to sell to the consumer at a price which is lower, so as to increase profit as more product is sold. The capitalists are focused on taking the market from the other capitalists in hopes of increasing their profit on products and capturing the field by selling at a lower cost to the consumer.Thus, all the capitalists are then in competition with one another to sell their product, which then causes capitalists to increase the product production, however in doing so also attempt to limit the production costs. This competition and product production is a cyclic effect. Not only does it affect the market and the capitalists, but it also affects the workers who are producing said product. The laborers in this market are driven to make wages. These wages are based on the necessity it takes to keep a laborer alive and in the said position to produce the product. The laborers are thus competing with other laborers. The laborers are competing against one another to maintain their position and keep their wages. As the competition rises, the laborers are more driven to produce a product for the market, which in turn affects the gains of the capitalists as profits increase because the product is purchased by the consumer.
Addressing the concept of relative versus real wages is simple. As stated before, the competition rises not only between the capitalists, but the laborers as well. As the laborer increases production, they may see an increase in their real wages as there is a profit for the capitalists due to the profit from the product which is being sold. Once this profit occurs, the capitalists reward the laborer by increasing their real wages. However, as the laborers increase production and they see a rise in their real wages, their 'relative wages' decreases. The relative wage decreases as a result of the increasing share which the capitalists profit from. This profit further widensthe social gap between the laborer and the capitalist. For example, a profit on a product deemed necessary by the consumer increases by twenty two percent. The capitalists then reward the laborer, and provide a raise to the laborer's real wages. The laborer does not see an increase in their real wages by twenty percent, but only by two percent. The capitalist is the one who makes the gain from the profit of the product, widening the social gap between the capitalist and the laborer. Thus, the laborer has not profited, but in turn has fallen back as the capitalist continues to rise. On page 126 Marx states: "...when business is good, wages rise by five per cent, profit on the other hand by thirty per cent, then the comparative, the relative wages, have not increased but decreased."