2000s >> 2008 >> no-1250-october-2008

Production for profit

 The motive for production under capitalism is making a profit. In order for goods to be manufactured or services to be provided, they must result in a reasonable amount of profit, otherwise they won’t be produced. Even ‘loss leaders’ serve the goal of profit, by enticing customers into a shop.


In contrast, socialism will be based on production for use. The whole issue of profit will be meaningless in a socialist society, with no money or buying and selling. Items will be made because they are useful, because they satisfy people’s needs for food, housing, transport, clothes, leisure interests, or whatever.


Now, some supporters of capitalism will argue that production for profit implies production for use. No company, for instance, will make a profit by producing goods that nobody will want to use. There is therefore, so the argument goes, a requirement for capitalist concerns to produce useful things. Many objects that were once found in people’s homes (mangles, for instance) are not produced nowadays, because technological progress has meant they are no longer wanted.


There is a tiny bit of truth in this, in that people won’t on the whole buy what they don’t want or need. But there is far more to be said on this matter, and looking at it more closely reveals what’s wrong with production for profit, and indeed with capitalism more generally.


For a start, the other side of the coin of production for profit is ‘no profit, no production’. This applies not just to outdated fashions and technology, but to any good or service, no matter how badly it is needed. Take housing, for instance. In the current credit crunch, the number of new houses being built has been drastically reduced, even though there is clearly a need for more houses, given the increasing population and the amount of people homeless or living in sub-standard accommodation. But building houses is now not so profitable as it was a year or so ago, hence the cut in housebuilders’ profits and decline in new housing starts. Hence too the many blocks of flats that are half-built but will not be finished because there is no prospect of selling them at a profit.


And of course it’s not just housing. Whenever you hear of post offices being shut or rural bus services being axed, it’s because they don’t pay, not because nobody wants or needs them. About four pubs a day close; not enough people are spending money in them, but it’s not that they fail to meet some need or are of no use.


We referred above to the homeless or people in bad housing. These are likely to be the very poorest, who are unable to afford a mortgage or the rent for a decent home. But under capitalism they are not part of the possible market for new houses, owing to their destitution. What they lack is not the need for a good place to live but effective demand: they can’t pay so are of no interest to housebuilders. What capitalism fulfils, then, is not human need, but need that can be paid for. There is no point from a business perspective in producing goods if people, whatever their needs, cannot pay for them.

Effective demand further affects the quality of what is produced. It’s no good producing only the best whatever if they are unaffordable. The size of workers’ wages means there is a demand for cheap goods, though it can hardly be said that there is a need for shoddy and dangerous commodities. The current economic downturn has led to more people shopping in cheaper supermarkets, but hardly out of choice. Again, production for profit is in no way identical — or even similar — to production for use.


The same logic underlies the paradox of millions starving in a world where enough food can be produced to feed everyone. The starving in Africa and Asia barely form a market and cannot be sold to at a profit. This simple point by itself should be enough to condemn the domination of the profit motive.


And is it really the case that people only buy what they want? This view ignores the impact of advertising, which can lead people to purchase stuff to keep up with the Joneses or make their children happy or enable their teenagers to respond to peer pressure. Capitalism has to advertise its wares, both to encourage customers to buy new products and to keep them buying existing ones. In so doing, it necessarily promotes new ‘needs’ that are really no such thing.


Moreover, the imperative for companies to make a profit implies that they seek to lower costs, including the cost of labour power, the mental and physical energies of their workers. That’s what wages are: the price of our ability to work. Profits are realised when commodities are sold, but they are arise in the course of production. Workers produce more in the value of what they output than in what they are paid. Profits, or surplus value, come from this difference.


By driving down wages, or making workers labour for longer hours on the same pay, employers can increase their profits. The drive for profit also leads them to reduce spending on health and safety, as this cuts into profits. Whenever you hear about unsafe working practices, it’s a good bet that it’s due not to individual carelessness but to the need for profit.


It’s worth noting that, when we say socialism will be based on production for use, this does not mean that everybody will live in the lap of luxury. It does mean that there will be no squalid housing or a choice between eating and heating or children who go to bed hungry. They key criterion in production will be not ‘is it profitable?’ but ‘is it needed?’. And the process of production will be safe as it can be, and the goods produced will also be safe rather than harmful. Due care will be taken of the impact on the environment too. Production for profit will have been confined to a barely-understandable and barbaric past.


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