What is Anarchism?

"But if all the wealth is the product of labor, then why does it not belong to labor?" -Alexander Berkman, What is Anarchism?

This week, I’m trying to understand anarchism. Here are my notes from Berkman’s book.

Is making a profit really stealing? What is a profit? According to Merriam-Webster, profit is defined as a valuable return, or a gain. In a market, this means selling a good for more than it cost to produce it. There is nothing inherently wrong with this. 

But how do we increase profits? We can increase the markup of the good, selling it for more of a margin than it cost to produce. This path is generally not attractive, because people will buy less of a good at a higher price. So what is the alternative? We can try to reduce factor costs. In macroeconomics, we learned that these include land, capital, enterprise, and labor. Land and capital are generally difficult to manipulate, since the markets land and capital are less exploitable. Labor, on the other hand, is relatively easy to change the cost of. A company can lower wages. Sure, employees will quit, but soon enough they will realize that they need to make money to survive and will return to jobs at lower wages. Perhaps money really is instrument of control in capitalism. We are forced to work because we need money to buy food and pay for a place to live. Without money, it is literally impossible for us to do these things.

Now that we have figured out that lowering wages will increase our profit, we have successfully increased profit. But wait… the value of labor has not got down. After all, the goods are still being sold for the same amount, or marginally less. The fact that lowering wages increases profits is one that should be disturbing. How can it be that workers are paid less than their labor is worth? This idea would not generally be accepted in other aspects of capitalism, or in other factor markets. We can’t just pay the farmer less for his wheat––he will provide less wheat according to the law of supply. 

But why are we able to extract value from labor so easily?