I think i understand the basics. For example, a capitalist buys wood for 20 (money) to make a chair, he employs someone else to make the chair which adds value to the wood…lets just say the value added through the labour is 20 (money) the chairs cost therefore is 40 (money) but the capitalist steas some of the added value to make a profit and now the chair is only worth 30 (money). The worker has therefore worked a significant amount of time for free because the value added does not correspond to what the chair is sold for. Thats already what i understand but how exactly does the capitalist turn this into profit? Yes he has gained some money but he still has 30 dollars in debt due to the production costs and the labours costs…and it would not change in the future as the debt just like the value he steals from the workers grows. Can someone pls explian?
His embedded productive capacity means he can buy wood for 2 (money) and then make the worker use his machinery and logistics create 20 (money) of value. He pays the worker 10 (money), pays his 2 (money) in costs, and pockets 8 (money) in profit.
This is also why the tendency is for the rate of profit to fall. The capitalist is always investing to increase production and reduce raw resource costs, but this inevitably leads to a massive amount of value tied up in their production and labor. Build a bigger factory to process more wood and chairs, now there’s a larger factory to upkeep and more workers to pay etc.
ohhh ok, thank you, but that would imply that the capitalist needs to buy the resources needed as cheaply as possible to have the maximum profit…which does make sense. The ingredients companies buy are often very cheap and low in quality and yet they sell it for disproportionate amounts of money even when considering the wage that the workers needs to be paid
Quality of materials only matters when taken broadly in the economy. When Capitalists find cheaper materials, they can sell the commodity for more than it’s worth for a short time before others find cheaper sources and undercut the price. Eventually the prices will balance and so will the sourcing of materials.
However, materials are also commodities, and their price is tied to the price of labor. What Capitalists can do in the real world is find a place or a people where labor is cheaper. They can pay nationally oppressed workers cheaper (i.e. Black American pay gap) and lower their cost of living which translates to wage. They can pay workers from another country much cheaper wages as their cost of living is lower from underdevelopment, i.e. Imperialism. They can even import workers but maintain a state machine that allows imported workers to be paid less than the national standard (i.e. undocumented and slave work).