First, I will begin with some general remarks.

The classical economists, Marx, and productive versus unproductive labor

The classical bourgeois political economists made a distinction between productive and unproductive labor. Marx’s greatly improved theory of value and surplus value brings into crystal-clear focus what is meant by unproductive and productive labor under the capitalist mode of production.

What is the aim of capitalist production? It is the production of an ever greater mass of profit. But profit is only the money form of surplus value. Therefore, as far as the capitalist system is concerned, labor is only productive if it creates a surplus value. It is not enough that labor creates value—that is, abstract labor embodied in a material commodity or service—but rather in addition it must create a surplus value.

Marx’s criticism of Adam Smith

The classical economists considered the labor of personal servants to be unproductive in the capitalist sense—the only sense they were interested in. They were quite correct in this. But this caused Adam Smith, in Marx’s view, to make an incorrect generalization. Smith held that only labor that makes material commodities, as opposed to services, is productive labor.

Suppose that I am a rich man—it doesn’t matter whether I am a capitalist or a landlord—who decides to hire workers to produce a piece of furniture that I will use only as an article of personal consumption. In this case, even though the workers who I hire produce a material use value and perform surplus labor (labor over and above the value of their labor power), their labor will not take the form of value because the furniture will not be exchanged. It will never be sold on the market. Since no value is produced, no surplus value can be produced either. Therefore, the fact that the labor of the workers produces a tangible material use value does not make their labor productive in the capitalist sense of the word.

But what about the opposite situation? What happens if I as a theatre owner who runs my theatre as a profit-making enterprise hire an opera singer with the intention of her giving live performances that I allow only money-paying customers to attend? Is the labor of the opera singer productive in the capitalist sense? Does it produce surplus value?

Smith versus Marx on service-producing labor

Adam Smith answered no. No tangible commodity is produced. The product of the opera singer, Smith pointed out, perishes as soon as it is performed. Smith reasoned that since no material commodity is produced, no surplus value, to use Marx’s terminology, is produced either.

Marx disagreed with Smith on this point. True, the opera singer’s labor is not productive from the viewpoint of the members of the audience who pay to hear the performance. For them, the labor of the singer is no more productive than it would be if they hired the singer to perform personally for them.

But according to Marx, from the viewpoint of the theatre owner who hires the singer’s labor power, the singer’s labor is productive labor. (1) The singer produces not only value—but assuming that the singer is paid at the value of her labor power—the singer will also produce surplus value for the theatre owner. Therefore, from the capitalist point of view—and this is all we are interested in here—the labor of the singer is productive labor.

According to Marx, it makes no difference in regards to the production of surplus value that the product of the singer’s labor—vibrations in the gases that make up the air in the theatre that are perceived by the human ear and brain as music—last only for an instant.

Now, keeping Marx’s criticism of Adam Smith in mind, let’s examine some of Mike’s examples in light of Marx’s distinction between productive and unproductive labor.

Workers in nationalized industry

“If an industry (where workers produce commodities and surplus value like the coal industry) is nationalized,” Mike comments, “then surely they continue to do so.”

True, with this qualification. If the state takes over a profitable industry such as the coal-mining industry, the state will function as a collective industrial capitalist. It will purchase their labor power and use the purchased labor power to produce surplus value.

However, as a general rule the capitalist state does not take over profitable industries. As the state of the capitalist class, it tries very hard to avoid competing with the industrial capitalists.

The state might, however, take over the coal industry if the industry is not making a profit for its capitalist owners. For example, the state might do this if the productivity of labor in the coal industry of a given nation—perhaps because of the depletion of the coal mines or maybe due to the discovery of richer coal mines abroad—is so low relative to the average on the world market that an hour of concrete labor performed by its coal miners only counts for a half hour of abstract labor on the world market.

Suppose that on average on a world market basis coal miners work half the time for themselves and half the time for the bosses—a rate of surplus value of 100 percent. But in the case of our unprofitable coal mines, an hour of concrete labor on average represents only a half hour of abstract labor. Therefore, in terms of abstract labor the workers are performing only four hours of labor per day.

Since we assume that they are paid the full value of their labor power—the unproductive character of the coal mines does not affect the value of the labor power of the workers that work in them—the workers will be working for themselves the entire workday. They will perform no unpaid labor for the boss. While the workers will be producing both use values and values from the viewpoint of the mine owners, the labor of the workers in these coal mines is unproductive because they are not producing any surplus value.

Because in the above example the coal miners are not producing surplus value, the mines cannot function as capital. The mine owners finding they cannot function as industrial capitalists by operating these mines—as long as they are obliged to pay the labor power of the miners at its value—therefore sell the mines to the state.

Perhaps the capitalist state will be willing to operate the mines at a loss—or at a break-even level. For example, the government might be concerned about what will happen if there is an energy embargo or a blockade. So the state—but not the individual or corporate (collective) capitalists—might be willing to operate the mines at a break-even level or even—within limits—at an outright loss. The main job of the state, after all, is to look after the general interests of the capitalists of a particular nation—as opposed to making a profit and acting as an industrial capitalist for its own account.

The labor of prostitutes

“The exchange,” Mike writes, “of a service for revenue (like prostitution) does not produce surplus value. If that industry is organized along capitalist lines (in brothels) then they still don’t produce surplus value.”

It’s true that if I am the “john”—the customer—of the brothel owner, the prostitute won’t make any money for me by meeting my need for sexual gratification. From my point of view, the prostitute’s labor is not productive labor—it produces no surplus value.

However, from the viewpoint of the brothel owner, the labor of the prostitute is very much productive labor—just like the labor of a singer is productive labor from the viewpoint of the theatre owner. The fact that singers are greatly admired by official society while prostitution is condemned as universally as it is practiced makes no difference here at all. (2)

Workers in the arms industry

“An arms industry,” Mike continues, “(though unproductive from a social viewpoint) does produce commodities (and surplus value) whether nationalized or not.”

In this case, nationalization does make a difference. If arms manufacturers sell arms—commodities—to the state that have use value to the state—the manufacturers are producing commodities, and therefore the workers who work for the arms manufacturers—the industrial capitalists—are productive (of surplus value) workers—even if the use value of their labor might be far more disastrous for society than the use value of the labor of the prostitutes that I examined above.

But suppose the arms plant is nationalized. The state cannot sell the arms to itself. (3) Instead, the state consumes the use value—arms—that it produces for its own use much as would be the case if I produced a chair with my own labor for my own use. No exchange occurs. Therefore, there is no way that the concrete labor of the workers employed in a state-owned arms plant can be reduced to abstract human labor embodied in the arms. Where there is no value production, there cannot be any production of surplus value. From the capitalist viewpoint, the production that is carried out in a state-owned arms factory is unproductive labor.

The only way the labor employed in a state-owned arms plant can be productive labor, would be if the state sells the arms it produces to other governments or other arms purchasers at a profit. In this case, the state would be acting as a collective industrial capitalist.

The labor of educators

“Education and Health services are more complicated,” Mike writes. “If they are personal services (from a tutor or local self employed doctor) they don’t produce surplus value. However they make me able to work, or more skilled in my work and therefore have an indirect benefit to capital assuming I am producing surplus value. And I assume that is why the state has entered these roles more extensively in more advanced capitalist societies. But I am not sure that putting this labour in a for profit school or hospital creates surplus value.”

Labor power is not produced capitalistically. That is, it is not produced by an industrial capitalist exploiting wage labor with the intention of realizing the surplus value in its money form as profit. But if the labor of educators hired by workers in training increases the value of the workers’ labor power, doesn’t that make the workers who hire the educators’ labor power an industrial capitalist, at least to a degree?

In my opinion, no. No matter how much the value of the labor power of a worker is enhanced, the owners of the enhanced labor power still have to sell their labor power to a buyer in order to live. We can be pretty sure the buyer of such labor power will put it to work. Therefore, no matter how complex my labor power becomes, I will still have to work in order to live. A real capitalist, on the other hand, sells commodities or services (produced by others) in order to be able to live without working. This is no small difference!

Therefore, if I am a worker in training, I am not an industrial capitalist. No matter how much the labor power of trainers that I consume increases the value of my labor power, the revenue that I will realize when—and if—I find a buyer for my labor power is a wage or salary and not profit. As long as I have to sell labor power in order to earn the income I need to live, I am no capitalist.

However, if I hire the labor power of teachers to set up a for-profit business, the labor power of the teachers that I hire—my industrial workers—will be productive to me as an industrial capitalist. In this case, the teachers will indeed be producing surplus value, and therefore their labor will be productive in the capitalist sense. Its use value to its purchaser will be the production of surplus value.

Fast-food workers

“The fast food industry seems different,” Mike writes. “Here we have a service (cooking food) that is transformed into a commodity (a Big Mac) and surplus value producing industry. My union in New Zealand organizes this industry and it certainly seems to be the case.”

Correct. Except I wouldn’t say “service.” Cooking food produces a material commodity. You could just as well say a service is transformed into steel ingots—another material commodity. Though the fast-food industry is certainly not “heavy industry,” this has nothing to do with whether or not the workers are productive.

Indeed, just as is the case within the steel industry itself, the workers produce a very tangible commodity—a Big Mac. In reality, the workers in restaurants are very much industrial workers working for industrial capitalists, the owners of the fast-food industry. In addition—though, as we saw above, this makes no difference as to whether or not their labor is productive labor—the fast-food workers produce a material commodity—a cooked meal such as a Big Mac—even if the use value might be rather dubious in this case! Even if we use Adam Smith’s definition of productive labor, as opposed to that of Marx, workers that produce Big Macs are productive workers.

Capitalist statisticians like to classify fast-food workers as service workers. They do this to make it appear that the industrial working class—the workers who produce surplus value—is rapidly shrinking in size if it is not disappearing altogether. This is an example of why we have to approach the official economic statistics issued by capitalist governments with the greatest caution—whether this involves the definition of a “recession” or the number of industrial workers in a given country at a given time.

Recently, if I remember correctly, it was proposed in the United States that the fast-food workers be re-classified from service workers to manufacturing workers. The reason for this proposal? The decline in “manufacturing workers”—as defined by the U.S. government—is reaching such alarming proportions that it might make the U.S. economy seem healthier if the number of such workers could be given a boost—by redefining some workers, such as fast-food workers, now classified as service workers, as manufacturing workers!

Movie theatre workers

“Another industry we organise is the film theatre workers,” Mike writes. “Again there is no commodity being sold directly. The customers are sold a service. The sales of DVD’s however does seem to be commodity and value producing. The difficulty I have here is the ‘movie’ itself. Labour goes into its production and is the showing of the film a form of bit by bit sale so that over time the revenue reflects its ‘sale’ and therefore the realization of the surplus value it contains.”

This really involves two questions in value theory. One part of Mike’s comment involves the question whether the theatre workers are productive (of surplus value). I think I already answered this question when I dealt with Marx’s criticism of Adam Smith that involved the question of whether the labor of singers employed by theatre owners is productive. While Smith said the labor of such a singer is not productive, Marx said it was.

If the theatre’s employees are popcorn makers, they are creating a material commodity popcorn, just like in the fast-food industry. But it really doesn’t matter. The workers who maintain and run the theatre—for example, cleaning the bathrooms, cleaning up at the end of the day, running the projector—are productive workers just as much as a singer giving a live performance.

It is Mike’s job as a union leader to make sure that the theatre workers his union represents get the full value of their labor power. I seriously doubt that bosses are offering workers who are represented by Mike’s union anything more than the value of their labor power. The workers need a union to make sure they get more or less the value of their labor power.

The only possible example of the kind of theatre workers that Mike’s union might represent who would not be productive (of surplus value) would be ticket sellers, since their labor sees to it that people pay for the right to consume the services—the showing of movies—provided by the theatre. The ticket sellers belong to what Marx called the commercial proletariat, while all the other theatre workers belong to what Marx called the industrial proletariat—the workers who actually produce surplus value.

But in the case of the theatre ticket sellers as well, Mike as a union leader has a duty to make sure that they are also paid the full value of their labor power—even if the use value of their labor power to their capitalist exploiters is something other than the production of surplus value.

Digital products

The value of the movies the theatre rents—or you rent with the intention of playing it on your TV or home computer—on a DVD is a different question. And here the changes in technology over the last few decades makes a difference.

What kind of labor is necessary to produce a DVD? First, you have to make the movie. The production of a movie requires many different types of labor powers. For example, you need the labor power of writers, actors, directors, technicians, camera people, gaffers, and janitors to clean the bathrooms in the studios, for example.

Then you need need human labor to produce the medium, in this case the DVD itself. The labor used to produce the DVD as a physical object involves no special problems in value theory. As far as the threatre owner is concerned, the DVD as a physical object is a form of fixed capital, though the amount of capital—value—involved here is extremely small. There is no doubt that the labor that produces the DVD is productive of surplus value.

Information wants to be free

However, the value of the medium—the DVD—represents only a tiny part of the price of a DVD with a movie on it. What does the movie consist of? The movie itself is a computer data file—a string of ones and zeros represented as tiny pits on the surface of the DVD. The labor of writers, actors, directors, the studio janitors and so on is needed to produce the information that is encoded by strings of ones and zeros.

However, to reproduce the strings of zeros and ones and with all the information those strings of zeros and ones encodes—I need only slip a DVD with the movie on it and a blank DVD into a computer, fire up the appropriate program, and burn a brand new copy of the movie onto the blank DVD. How much labor does this take? A trivial amount. And if I am burning the DVD not as part of a capitalist business—but rather simply to watch the DVD myself, no exchange is involved. And since the tiny amount of labor that I perform involves no exchange, not an atom of value, not to speak of surplus value, is produced.

On the other hand, if DVD burning is performed on an industrial scale by industrial capitalists hiring workers to perform this function with the intention of selling the “burned” DVDs to movie houses, this labor would produce both value and surplus value. This raises no special problems in value theory.

The value of the labor of actors, directors and so on, however, does raise an interesting question in value theory. Given current digital technology, once a movie is made it can be copied without a degradation of quality indefinitely. And the DVD is not even necessary in order to make a copy. All you need is a computer connected to the Internet and you can copy—or reproduce—the movie file that encodes all the information that we call a “movie” as many times as you wish without having to employ the labor powers of writers, actors, directors, camera people, gaffers, studio janitors and so on.

Indeed, as soon as a new movie nears release these days, sites appear on the Internet that allow you to download the movie illegally for nothing. Only the copyright laws and the police of the capitalist state prevent theatre owners and law-abiding residents from obtaining copies of movies for absolutely nothing—though they have to pay for the computers and the Internet use—all proper commodities that are produced by productive (of surplus value) workers. Given current technology, the movie-making industry—what the capitalists call their business model—would quickly collapse if it weren’t for the copyright laws and the police that enforce them.

The problem is that in the absence of intervention by the capitalist state and its police apparatus the value of the movie is determined by the quantity of (abstract) labor that is necessary to produce another identical commodity under the prevailing conditions of production—that is, the quantity of abstract human labor that is necessary to reproduce it. We need the labor power of the writers, actors and so on to make new movies containing new information, but we do not need their labor to reproduce copies of existing movies containing information that already exists.

Computer software

This does not apply only to movies. If you are running the Windows operating system—which costs more than $100—on your computer, you can if you wish go to a Web site and download absolutely legally a copy of the powerful GNU/Linux operating system for nothing. The GNU/Linux operating system is used to run everything from lowly netbooks to the most powerful super-computers.

You can then install this operating system on your computer. You have not only the basic operating system but access to thousands of applications. The exact number depends on the specific GNU/Linux distribution—there are many such distributions to choose from—that you can also download for absolutely nothing from the Internet. Or you can download the source code from sites like SourceForge and compile it yourself, also absolutely free of charge. In either case, you never need to pay a single penny again for software.

It goes without saying that the labor that produces a free (as in zero price) product—like the GNU/Linux operating system—cannot possibly produce any profit for a producer and is not value producing labor. And where no value is produced, no surplus value is produced. Such labor is therefore not productive labor in the capitalist sense of the word.

Just like is the case with Hollywood, given the current technology, software companies like Microsoft, Adobe and Oracle could not exist as capitalist businesses without the whole complex of copyright and patent laws and the police apparatus that enforce them. Without these special laws, the price of computers programs—which give instructions—and computer data files—like movies that the theatres your union is organizing show—would fall to zero making it impossible to either make movies, record music, and produce complex software products like computer operating systems, word processors, data base programs or any other type of computer software on a capitalist basis.

The Hollywood ‘star system’

Even if we leave aside the problem of the virtually zero amount of labor needed to reproduce—as opposed to produce—the information that we call a “movie” in a string of zeros and ones—the question of whether the labor of actors and directors is productive is also affected by the Hollywood star system. The biggest movie “stars” are paid a million dollars or more per week. When it comes to movie stars paid these kinds of wages, even if their labor were to create surplus value if they were paid only the real value of their labor power, their labor is not productive when they are paid millions of dollars per week.

Suppose that I am a Hollywood star and I earn a million dollars a week. The value of the amount of gold bullion that a million dollars represents would be far more than the amount of abstract human labor that I perform in a week—even if we grant that the labor of a skilled actor represents labor with a high degree of complexity. Therefore, the rate of surplus value would be negative. Unlike a productive (of surplus value) worker, I would be paid for all my labor and a considerable amount of labor beyond that which I do not in fact perform.

The same applies to professional sports stars who are paid similar amounts. The entire “entertainment” industry—movies, music and sports—is monopolistic from top to bottom.

Become a star, become a capitalist

In the case of workers who are paid exceptionally high salaries—like million-dollars-a-week Hollywood stars and sports figures—even if they are not capitalists, they will quickly become at least money capitalists. They will accumulate so much money—moneyed capital—that they will soon be able to live quite nicely off the interest alone. They may choose to continue to work, but even if they don’t or can’t, they will be able to live in considerable luxury without working. They have become full-scale capitalists.

The only way stars will be able to avoid becoming capitalists is either to figure out a way of spending a million dollars or more per week on items of personal consumption, or keep their money in the form of paper bills, gold coins or gold bars—in which case they will be misers, not capitalists, or make such bad investments in the stock and commodity markets that they are wiped out—which perhaps does happen occasionally.

But as a general rule, if you earn an income of a million dollars or more per week and invest it in a reasonably conservative and intelligent fashion, you become a capitalist who will be able to live without performing work of any kind.

The same is true of highly paid business executives. These people are not capitalists because they are running huge corporations. In this capacity, they are workers, not capitalists. But they soon become capitalists—if they are not already capitalists—because their salaries, bonuses, stock options and so forth are of such amounts that they are soon able to live—in luxury at that—off the dividends and interest alone.

Therefore, Hollywood stars and professional sports “heros,” along with top-ranking business executives, can as a rule be considered part of the capitalist class.

Architects, bookkeepers, call center workers and restaurant order takers

“One more category of worker to consider:” Mike concludes. “‘Service sector’ workers who are actually necessary to the productive process but have been put together in a separate company. These may include architects (necessary for builders) and possibly even accountants (at least the basic bookkeeping). One category I am not sure of are sales workers in supermarkets (do they exist solely because of the capitalist character of distribution) or in call centres.”

In the case of architects, even if they are directly employed by a construction company, assuming that they are paid according to the value of their labor power, they would be productive workers, since architects are highly skilled workers and their labor powers are highly complex. The commodity architect labor power represents many simple labor powers.

However, unlike the case with workers who are necessary to produce—but not reproduce—a movie, an architect is necessary each time a building is built. No two buildings have the same plan, leaving aside tract housing. The same is true each time a building is modified.

Bookkeepers are generally considered to be unproductive workers, because they deal with changes in titles of ownership and related tasks. However, if they are employed by a capitalist that offers bookkeeping as a service to other capitalists, the bookkeepers’ labor would be productive of surplus value for the same reasons that the labor of a singer or a prostitute is productive to a capitalist buyer of their labor power—not the consumer of their labor power.

Pure “sales workers”—store workers who are employed to pester customers into buying things or cashiers that do nothing else such as restocking shelves or cleaning the floors—belong to the commercial proletariat—the non-productive (of surplus value) workers. But all other store workers are productive (of surplus value).

What about call centers? If the call center workers—generally from countries like India where the value of labor power is for historical reasons very low—are hired by big capitalist companies to act purely as sales workers, they would belong to the unproductive (of surplus value) proletariat. However, if a company went into business and offered its call services to other companies, then the call service workers would produce surplus value for the company that employs them.

Finally, Mike raised the question of order takers in a restaurant. Without the order takers, the restaurant wouldn’t know what its customers wanted, regardless of the social relations of production that prevail. The restaurant would not be able to deliver the meals the customers desire. Therefore, even the labor of order takers is a form of productive labor if the order takers are working for a capitalist buyer of their labor power, even though they are performing unproductive (of surplus value) labor from the viewpoint of the restaurant customers. Pure cashiers, on the other hand, would be unproductive—in the capitalist sense—commercial workers, not productive (of surplus value) industrial workers.

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1 Strictly speaking, the singer’s labor is productive (of surplus value) from the viewpoint of the entire class of capitalists. Through the transformation of values—or direct prices—into prices of production, the total surplus value is distributed among the capitalists in such a way that equal capitals earn equal profits over equal periods of time. Individual capitalists, therefore, share in the surplus value produced by the entire working class and not simply the surplus value that their “own” workers produce. Marx called this the “unconscious communism” of the capitalist class.

2 The only solution to the problem of prostitution is to create a society where a decently paid job is a right—that is, labor power ceases to be a commodity—and those who are not able to work are fully supported according to the material standards of the epoch. Under these conditions, nobody of either sex, whether adult or child, will have to sell their bodies in order to live.

The U.S. government has passed very tough laws against child pornography. It is a crime in the U.S. to have child pornography on the hard disk of a computer, and people have been prosecuted for this crime. But the U.S. government works overtime to maintain the social conditions that makes the crime of child pornography inevitable—an example of capitalist hypocrisy at its worst!

3 This is why I do not support the theory that the mode of production that existed in the former Soviet Union represented “state capitalism.” Since all—or almost all—of industry and a significant part of agriculture was owned by the state (state farms) or at least closely integrated with the state economy (collective farms), there was no real exchange of products among independent producers. As a result, concrete labor within the Soviet state economy did not take the form of abstract human labor embodied in commodities—value.

Where there is no value there is no surplus value. And where there is no production of surplus value, there is no capitalist mode of production. That this is not merely a theoretical point is shown by the fact that the Soviet state economy knew no internal crises of generalized overproduction, though it was affected to various degrees by such crises that raged on the world market, insomuch as it engaged in world trade.

Instead of independent commodity producers knowing “no higher authority than that of competition, of the coercion exerted by the pressure of their mutual interests,” as Marx put it in Volume 1 of “Capital,” the producers within the state economy did know a higher authority, the state plan, even if the state plan was far from perfect.