Capitalism Is Not Efficient

More Effective Exploitation Is Not Efficient

Have you wondered why raw materials from the US will be shipped across the world to factories with low wages and long hours, then shipped back and still be sold on the cheap?  It's because labor makes profit.

So what is economic efficiency?  Well, efficiency requires the speaker to figure out what will be considered as important for efficiency (like, most work for least energy, most production for least pollution, etc.)

We are often told that capitalism is an efficient system compared to socialism, but capitalism seeks maximum exploitation of labor.

Labor Theory of Value

This understanding of the source of profit in capitalism comes from the Labor Theory of Value.  It essentially says this:

• Raw materials have a certain value (M)
• Labor uses these materials to build a commodity (M + L)
• The commodity is worth more than the material because labor added value (M + L = C)

That is a simplified version.  This goes into the argument with a bit more depth.