A Rough Estimate of the Value of Labor

A Rough Estimate of the Value of Labor

Comrade Serve The People
30 June 2005

Let’s try to calculate the value of average abstract socially necessary labor. This will give us an idea of how much people produce and who is exploited.

Now that virtually the entire world’s economy is integrated into one giant imperialist formation, we can use Comrade Marx’s labor theory of value to determine what labor is worth. Comrade Marx pointed out that labor is the substance of value. He said that the number of hours of average abstract socially necessary labor needed to produce a commodity represents its value. That means labor of average productivity under the given working conditions for the specified type of work. Therefore, if traded at value, one hour of labor put into harvesting parsnips is exchangeable against one hour of assembling washing machines (if the labor in both cases is of average productivity).

The nominal GDP of the entire world was $31.9 trillion in 2002. (1) This figure represents everything produced in the world, including services (which tend to be overvalued), in a year’s time. The population is about 6.4 billion people. Assume that 2/3 of them work full time on a typical U$ schedule of 2000 hours per year. Then the value of average labor is $7500 per year, or about $3.75 per hour. (Slightly higher, actually, since the world’s population was a bit lower in 2002 than it is today.)

Elsewhere I have seen estimates from the UN that the world’s nominal GDP in 2005 is about $36 trillion. That would put the value of labor at $8400 per year, or $4.20 per hour.

What is the implication? In the US, the minimum wage is $5.15 per hour, and even higher in some states and cities. If average labor is worth $4.20, then even people making the minimum wage are overpaid on average by about 23%. The average wage in the US is about $18 per hour, which is more than 4 times the value of labor.

This little exercise shows that no one legally working in the US is likely to be exploited. On the contrary, US workers receive superprofits extracted from the Third World by the imperialists and thus benefit from imperialist exploitation. The same goes for most Western European countries, where the minimum wage is generally even higher than in the US.

To disprove this claim, it would be necessary to show that US workers were more productive than average. The truth is that they are probably less productive than the international average, since the intensity of labor tends to be much higher in the Third World.

But there is exploitation in the US. Chinese garment workers illegally employed in sweatshops for $1.50 an hour and Mexican agricultural workers illegally employed at similar wages are exploited. Possibly some prisoners are exploited as well, although the calculations are a little more difficult in that case. And there may be some isolated Stakhanovites who are so far above the average in productivity that they count as exploited.

Even so, the vast majority of Americans are clearly not exploited. They are, in fact, exploiters.


1. http://hdr.undp.org/statistics/data/indic/indic_121_1_1.html

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