Since small producers own their own tools and depend largely on their own labor, they do not perceive any conflict between ownership of the means of production and labor: analysis from this standpoint, such as Proudhon’s, tends to collapse these categories together. Marx’s theorization of capitalism centered an emergent class of industrial proletarians, who, unlike small producers, owned nothing but their ability to sell their labor-power for a wage. Without any other means of survival, the proletarian could not experience the “labor market” as a meeting of equals coming to a mutually beneficial exchange of commodities, but as an abstraction from the concrete truth that working for whatever wage offered was compulsory, rather than a voluntary contract. Further, it was this very market for labor-power that, in the guise of equal exchange of commodities, helped to obscure that capitalist profit depended on extracting value from workers beyond what their wages compensated. This surplus value emerged in the production process, not, as Proudhon argued, at a later point where the goods produced were bought and sold. Without a conception of a contradiction between ownership and labor, the petty producer standpoint cannot see exploitation occurring in production.

Instead, Proudhon saw exploitation occurring after production, during exchanges on the market distorted by unfair monopolies held intact through state intervention, with which petty producers could not compete. However, Marx ([1867] 1992) demonstrated that “monopolies” were simply the outcome of the concentration of capital due to competition: in his memorable wording from Capital, “One capitalist always strikes down many others” (929). As producers compete and more and more producers fail and are proletarianized, capital is held in fewer and fewer hands. In other words, monopolies are a feature, not a bug, of market economies.