[...] Labour is the specific or "real" act of working. Labour-power is the abstract "capacity to work": skills, knowledge, energy, etc. specific to each of those without access to means of productions except through capitalists. Wage workers do not sell "living labour," they sell the commodity labour-power on the labour market. The capitalist, who thus comes to control one more thing necessary for production (and the most important one at that--human energy and ingenuity) puts that labour-power to work as he or she sees fit, and pays the workers a wage for each unit of time they give up the control of their human energies.

[...] the "extra" or surplus value created in the producton process comes not from capital's contribution, but from the labour power workers contribute to the whole relationship. In other words, the appropriation of labour's surplus value--you can pay them less than what they produce in words--is the source of wealth in capitalism.

[...] If higher wages were all that is necessary, Marx would have been no more than a wordy and over-philosophical union activist. The problems, however, are much bigger: the wage relation and capitalist social relations themselves. The point is not to redistribute capitalist value, but to overcome it, to destroy it as the relation that rules the world.

The idea that capitalism will persist as long as the rule of value holds is Marx's essential lesson. This is not a majority opinion, and is easily taken as dismissive of "reformist" efforts to improve working conditions and the distribution of income. I don't mean to suggest such efforts are useless because they are not "radical" enough. Clearly, any effort on the part of labourers (and unemployed people) to improve the material conditions of their everyday lives is worthwhile. My point is that the fundamental problem with capitalism as a mode of production is not ultimately addressed by the redistribution of capital.

[...] The whole point of paying workers well is to keep the system going--in fact, there is a theory in orthodox economics that says this is exactly what "fair" wages do. So as a social justice strategy, wage demands are key. As a social transformation strategy, they are insufficient.

Yet it must be said that this still does not suggest an obvious reason to reject the idea that if workers were paid "fairly"--presumably at least as much as capitalists--then no one would want to be a capitalist anymore, or would have no self-interested incentive to be one, and the whole mode of production would fall apart. In other words, we might use the wage relation to overcome the wage relation. [...]

The first twist is in the theory of disribution. [...] In fact, the well-known neoclassical doctrine that "without interference" markets will function perfectly (or "clear") is also known as "demand theory". The second twist is in the theory of value: while the classicals took capitalist value, the relation of general equivalence, to be inherent in some material substance or human action, the neoclassicals understand it as "subjective," determined by individual tastes. [...]

[...] The neoclassical doctrine is basically a bald claim that distribution is somehow not a function of, or really even affected by, social power and property relations. Instead, we are told, who gets what is determined outside those processes, in the neutral, apolitical, and un-manipulatable field of the market. This is a critical step toward the idea that "the market" is "natural" and "disinterested"--the principal, maybe the only, basis upon which the word "market" can be paired with the word "free".

According to Keynes, this suboptimal up-and-down, occasionally with really high ups and really low downs, is how capitalism works. Its volatility is not a result of mismanagement or interference or workers' demand for "excessive" wages, but a part of how it functions "naturally". And, if the capitalist state does not manage the ups and downs, people might become so disgruntled that all that communism and socialism stuff whispered about in field and factory starts making sense. In the middle of the Depression and then World War II, with the Russian revolution in the background, that warning made many capitalists sit up and take notice. They may not have been big fans of liberal democracy, but it beat the alternative.

When we think of state power over territory, we think precisely of what defines the state as the state. In sociologist Max Weber's classic definition, the state is that set of institutions which enjoys "the monopoly of the legitimate use of physical force within a given territory." This power is coercive: the state, by virtue of its control over the police, law, military, etc., has the power to coerce you, if you are inside its territory, to do or not do certain things, and to punish you if you don't follow the rules, which the state itself determines. Virtually all capitalist states limit these powers via laws, constitutions and "bills of rights," for example requiring the police to have a warrant to enter and search your home. But the state (at least in theory) remains the sole possessor of this territorially defined coercive power.

This is not to say that the coercive part goes away. You might think, quite reasonably, that since coercion is always hovering in the background, the consent part is a bit of a joke: if you don't consent, you get coerced, meaning the consent is not all that consensual. At the level of the isolated individual, this is true. But if you think about it at a collective level, the consent part is much more evident. If every single person refused to consent, the state's coercive power would almost certainly be insufficient. The stability of the liberal democratic state as an institutional complex depends on the often tacit, sometimes explicit endorsement of its citizenry. Modern state power is constituted by a complicated, shifting, and contingent combination of coercion on the part of the state and consent on the part of the population.

[...] it is not only the state that can coerce. Private economic power rarely lacks some coercive aspect. [...] Banks can push through laws in their interest because the can use their market power to disrupt the whole economy--to coerce the government to meet their demands. [...]

The combination of coercion and consent (operated by both capital and the state) produces a relation known as "hegemony," a term first elaborated in this sense by a justly famous pre-World War II Italian communist named Antonio Gramsci. [...]

Gramsci worked out his idea of hegemony while he was reading the work of Lenin [...] capital's hegemony, its power to shape the "common sense" we tacitly share about the state, the ruling classes, and their power: that those relations are natural, that they serve a necessary function, that they are the only way to keep the peace. Those in power construct an effective hegemony when the existing order appears to be not only in their interests, but in everyone's interest. It is the practices that render a given social formation ideologically "normal".

Ingham [...] says there are three main ways the state interacts with "the economy," and, although they are not so easily separated, the distinctions are useful. They are:

1. State provision/production of social peace;
2. State maintenance of capitalist social relations (often via "liberal democracy"); and
3. Direct and indirect state participation in the economy.