Have you ever heard a politician refer to company owners as job creators?
First of all, it’s a myth. But politicians use this rhetoric to frame the owning class as the ones who drive the economy. They say that if they give them tax cuts, they’ll have more money, which they’ll spend on hiring more people.
And so the public starts to believe that because the owning class owns the capital, it must be the capital that drives the economy. But it’s the working class, not the owning class, that drives every facet of the economy.
Let me explain.
Capital investment is when the owning class uses money to buy physical things that can help make more money in the future, such as a factory, machinery, tools, or software (which themselves are a form of capital).
The belief is that without capital investment, these factories, machinery, tools, or software wouldn’t exist. And neither would the jobs the employ the workers who use the machinery, tools, and software in those factories.
But neither the factory, nor the machinery, nor the tools, nor the software just magically appeared out of nowhere.
Workers built that factory. Workers assembled the machinery. Workers forged the tools. Workers programmed the software.
But it goes further than that.
Let’s say, for example, the factory was made out of bricks. Workers harvested the clay used to make the bricks. Workers made the bricks. Workers transported the bricks. Workers sold the bricks. Workers installed the bricks.
Plus, workers built all the machinery and tools that the miners used, that the brick factory workers used, that the truckers used, and that the brick supply workers used.
Labour is embodied into every stage of the supply chain, in every stage of the production process. There is so much embodied labour in the final product a customer purchases.
A chair doesn’t just embody the labour of the worker who planed and lathed the lumber.
That chair also embodies the labour of the timber workers, the truckers, the rail workers, the retail workers, the construction workers, the machinists, and the tool makers who made possible not only that lumber but the ability for the worker to turn it into a chair.
That chair also embodies the labour of the workers who installed and maintain the electricity supply, the water supply, the sanitation services, and the transportation network that made the factory possible and got the chair to market.
But even then, that’s only part of the story.
Financial capital itself is embodied labour.
Let’s use that chair example again. If a worker builds a chair that sells for $20 but they get paid $5, that chair has a surplus labour value of $15. Some of the surplus labour value is used to pay non-labour operating costs, such as utilities and more materials, but some of it goes back to the owning class as profit.
Profit is surplus labour value.
Without the worker using their labour to turn the lumber into a chair, the owning class wouldn’t have received that $20. If they’re lucky, they could resell that lumber for a buck or two.
The worker’s labour is what makes surplus labour value possible, and profit comes from that surplus labour value. Embodied in that profit is not only the labour of the worker who turned that lumber into a chair but also the labour of all the workers who contributed to the lumber getting to that factory and to the worker having the capacity to transform it.
Every time the owning class accumulates wealth by holding onto profit, they accumulate surplus labour value, which means they accumulate embodied labour.
Then when they use that accumulated wealth to invest into other business ventures, they are using that surplus labour value—that embodied labour—to purchase other forms of embodied labour: the factory, machine, tools, and so on.
When the owning class invests in business ventures, they expect to make back the financial capital they invested, often with interest. That financial capital is paid back to the owning class over time using revenue generated by the labour of the workers in that new business venture.
They pay back the surplus labour value they invested into the new venture by using surplus labour value from the new venture. And the cycle continues.
Now, some readers, at this point, might be mentioning financial capital that originated from speculative ventures, such as real estate or stocks. But they use surplus labour value to buy that real estate or those stocks.
Or they leverage the value of their company to generate wealth for themselves, even though the value of the company is made possible by the labour of all the workers it employs.
Let’s take Elon Musk, example.
Musk comes from a rich South African family that accumulated their wealth from engineering, retail, and mining ventures, all of which involved more labour than the family could perform.
He began his own business ventures when he and his brother teamed up with a third person to start what would become Zip2. His father provided several thousand dollars in funding to help the startup. When the company was sold to Compaq 4 years later, Musk received $22 million. Meanwhile, the workers whose labour created the $300 million valuation of that company got far less than that.
Later that year, Musk used $12 million of that to start up X.com, which would later become PayPal. When eBay purchased PayPal 3 years later, Musk got $176 million. But it wasn’t Musk’s labour that created the $1.5 billion valuation for that company; it was the labour of the thousands of workers who made the company run.
In both cases, Musk was rewarded for the labour of other people. They created value for the companies he sold, then he exploited that value for his own gain, and used the newfound money to build his net worth. He then leveraged this new wealth to start up Space X, which of course, depends on the labour of thousands of workers to generate revenue and profit, both directly and indirectly (through stock valuation, for example).
Since selling Zip2 in 1999, Musk has continued this cycle of exploiting the labour of his workers to enrich himself.
When he bought Twitter in 2022, he did so on the backs of the thousands of workers he had exploited over the previous two decades.
As we can see, even financial capital is embodied labour.
Workers are the ones who provide the real value.
All capital—whether financial or physical—comes from labour, and the value of that capital depends on the workers who use it.
