The Ethics of Business

Adam Smith defines productive labor as, “labor that exchanges with capital to produce wealth that has the specific social form of commodity capital, i.e., a commodity whose sale brings a profit.” (Smith, 175) Smith believes that “productive labor must produce something lasting. Unproductive labor, according to Smith, is “service labor; it leaves nothing enduring behind.” (Smith, 175-76) For example, a shipbuilder constructing a vessel using separate materials would be considered productive labor, whereas the captain of the ship steering it, with passengers or cargo on board, towards a certain destination is providing a service and therefore partaking in unproductive labor.

Marx describes the day laborer as productive because he produces the commodity that can be sold for a profit and the tenant farmer as unproductive because he is providing the capital and overseeing the labor. However, once you are referring to the money involved, Marx attempts to resolve issues he had with Smith’s definition by tweaking the terms into reproductively and unproductively. “The five silver groschen, have been consumed reproductively for capital […] to the tenant farmer [produces ten silver groschen], and unproductively for the worker, for subsistence has no lasting value.” (Marx, 209)

According to Marx, capitalism promises the worker: the harder you work the more money you make. That is, “The more rapidly the worker increases the wealth of others, the richer will be the crumbs that fall to him” (Marx, 211). Marx believes capitalism does not fulfill this promise because to increase capital businesspersons will divide up labor and add machinery, making it so that they simply need a lot of unskilled workers that they can underpay.

Audre Lorde criticizes Capitalism for the benefits it receives from separation and dehumanization of the workers. The majority of the workers, or “surplus people” (Lorde, 119), are separated from the societies that consume the commodities they produce, and in the process dehumanize them as a means to an end. We have this huge working class that we need but we also ignore. Additionally, she brings up this mythical norm we have for the workers in a Capitalist society – a “white, thin, male, young, heterosexual, Christian, and financially stable” (116) – that is actually an outlier from the true definition of an underpaid and undervalued minority or non-white female/male.

Neo-liberals, from the perspective of the worker, define a wage as an income, not the price at which he (the worker) sells his labor power. An income is then a return on capital and capital is everything that can be a source of future income, thus creating a cyclical way of life. This definition entails to the theory of human capital, which is the more you invest on yourself (education, health care, etc.) plus the good hereditary genes and parenting practices (listening to Mozart while being pregnant with you, putting you into a progressive pre-school, etc.) will in turn output a higher wage, because you are more productive and valuable with a higher human capital. The neo-liberal answer differs from Marx because he believes, “wages are the sum of money paid by the Capitalists to buy labor power.” (Marx, 204) Marx also states that workers sell labor power to survive/exist, contradicting the neo-liberal definition stated above.

In American neo-liberalism, the extension of economic analysis encompasses human capital, a domain not formerly considered economic. Neo-liberals say human capital is made up of, “innate elements and other, acquired elements.” (Foucault, 227) Human capital is the intangibles that are completely unique of each individual that play a part in their production as laborer or worker.