 So the board gets the profit. That's the fundamental class process in capitalism. Work is produced. Work is don't get. Capitalism. The board of directors get. Those are the receiving capitalists. Or if you want the appropriating capitalists, Marx calls them the industrial capitalists. What do they do with the surplus? Well, they take the surplus and they distribute the surplus. The subsumed class process in capitalism. Part of their job, they meet roughly four times, five times, whatever it is, a year. They get a director's fee for a meeting. And then they make decisions of what to do with the surplus. And they literally distribute the surplus to whom? Well, you can figure that out. A big portion of the surplus goes to the managers of the corporation. They get what? They get budgets. They get salaries. And what's their job? Well, they're to provide management. They're to provide the politics, the economics. Let me summarize this in industrial management language. They provide the planning, the organization, the staffing, the directing, and the control of the corporation, which will enable that corporation to exist, to be competitive, to grow, to be successful over time. That's their job, as it were. That's why they get the salaries and management. Salaries and budgets. So, they are to provide all kinds of politics and economics and culture. What's the culture here? Well, managers are part of their job as some of the managers of the corporation to provide a history of the corporation. Why was the corporation successful last year in a particular product that it was producing? What's going to happen next year with that particular product or other products? Well, those are various kinds of theorizations that the managers are going to produce, which will give to their managers on top of them and blah, blah, blah, blah, all the way up to the board of directors of the corporation so they can theorize the success of the corporation. Same thing. Managers are going to do what? They're going to, in part, oversee the left-hand side of the equation to make sure there's a surplus that the workers are producing and that they're efficient, blah, blah, blah. Managers also will purchase new means of production, equipment, and bonding new technology so that corporation can not only grow but be competitive with other corporations which are competing with it in that particular industry. So there's no question that managers provide a whole bunch of non-class processes which are crucial to the success, the survival, the growth of the corporation over time. They get a cut of the surplus, but then that's not all. A cut of the surplus is also going to be given to the state in the form of what? Corporate taxes. What is the state? Very interesting question. What does the state provide to the board of directors? Well, moments thought, the state also provides all kinds of non-class processes enabling the board of directors, the capitalists to survive and prosper. Laws of private property. Enabling workers and capitalism to sell their labor power to whoever will buy it. Road systems, education, new kinds of research which will help private corporations produce all kinds of new kinds of commodities in part, the computer revolution, the biological chemical revolutions that we've had in the United States and elsewhere across the globe. Airplanes, transport. All the various ideas that the state funds in the private and public universities in its own research labs help produce all the new kinds of products that the private capitalists produce and sell for profit. So the state is providing a variety of non-class processes and it's getting a cut of the surplus in the form of taxes. So it's not just you have the board of directors distributing a portion of the surplus to the managers but also to the state to get what? The conditions of existence from the managers, the conditions of existence for the state. Keep in your mind this kind of circular flow that each side conditions the existence of the other. But we're not finished by us. Hopefully the logic is becoming clear to you so you can begin to figure out what's on the right-hand side here. Who else might be on the right-hand side of this equation? Well, it's very, very difficult to build a corporation on a cloud. Typically corporations, if not always, are built on the ground. People own the ground. So over here you would have landlords. Something that Mark spends some time with, the analysis of landlords. They get a rent. So they give the board of directors access to privately owned land. And then the board of directors has to distribute to them rents. So it's not just taxes to the state, not just salaries and budgets to managers but a portion of the surplus. It could be a hefty portion given to the owners of the land upon which still sit the factories and offices. Let me take another very important one. They're all important. I'm going to add it over here. A payment given to the owners of the corporations. What does that mean? Well, the board of directors, the people who sit here and receive the gross profit, do not necessarily own that corporation. Rather than counting, this begins during, in Mark's day, with the growth of the joint stock companies. And it grows and matures over time until we have this kind of new kind of capitalism today that Mark's really did not... You only got a glimpse into, Angle's had a much better idea after Mark's died of what was happening here, that individuals through stock ownership, ownership of common stock, individuals purchase the stock, they become owners of the entire corporation. These individuals who sit in the board of directors have to give a cut of the surplus to the owners in the form of dividends in order to get access to the means of production of that corporation, which are owned by the owners, so that the board of directors can do what? Can receive the surplus. This is very tricky. It's very interesting. Not any more or less interesting than the others. It's just interesting in a different way. The owners also have the right of ownership. I'm sorry, have the right of voting. The ownership gives them the right to vote people on the left-hand side. So if you own a share of stock, you get a right to vote. And so the board of directors, one of the conditions they have to satisfy to stay in the left-hand side is to be elected. That's by the owners. And the owners then want a successful corporation. They want their dividends. They want them to grow and so forth. Even if the corporation is successful with its particular board of directors, then the owners will continue to vote them into a position in which they receive the surplus. But it's quite possible if the owners are unhappy, they could vote out those individuals on the board and elect a whole new board, which may include themselves. That's also possible. There's a nuance on this, which is very interesting. It's also possible that the owners may not be that interested in a dividend. Because of the tax laws in a society, it may be the case that dividends are taxed as ordinary income at a much higher rate than would be the capital gain, potential capital gain on the stock, the common stock that the owners own. And hence, it might be the case that owners are not that interested in dividends because if they receive the dividends from the board of directors, they pay a higher tax. They would rather have a higher price of their stock over time because potentially they could sell their stock, pay a lower tax, and maybe sometimes even a zero tax on their capital gain. And hence, they would be better off with a rising stock price rather than rising dividends. And that also gives the board of directors more of the surplus to distribute to managers or to landlords or whatever. That's just the nuance under the tax law, but it shows how complicated this can get. Let's just continue for a couple of others. A portion of the surplus would have to be given to merchants. Why? Because the merchants purchase the commodities of what the corporation is producing at a wholesale price, and then merchants, okay, a separate independent business, they sell those commodities to you and I at retail prices and the merchants make the difference between the retail price and the wholesale price that they pay. And that's a kind of merchant fee that the board of directors, the corporations pay to Walmart and all the independent automobile dealers and so forth, etc., all the grocery stores in order for them to sell their goods sooner than they would otherwise to those merchants. So the merchants provide an important condition of existence for the corporations which is getting access to money from the sales of their products at a wholesale price so that reduces risks to the corporations, these corporations, of having to stay in the market and worrying about if prices are going to fall. The merchants step in, purchase those goods, and then the merchant absorbs the risk of selling at a retail price, the risk being that that retail price may fall. Let me take one more. There are many, many more, but let me take one more which is very important. Watch. It's possible, always possible, that we have an inequality sign. Maybe the state bumps its taxes. Maybe the landlords raises its rents. Maybe merchants want, Walmart wants a higher fee for the merchant thing that it's providing. Owners want, let's assume, say a higher dividend. Managers argue for higher budgets and salaries for themselves. The Board of Directors is under pressure from one or more of higher demands and we have the inequality. The demands on the surplus, that's what this says, by one or more of the subsumed classes is greater than what the workers are producing in their surplus. So the Board of Directors has got a problem. You might even call it a crisis on its hands because the right-hand side exceeds the left-hand side. Well, there are a variety of ways whenever you have this issue in arithmetic to solve this problem. You can see one way to solve this problem is to bump the left-hand side. In other words, if the demands on the surplus exceed the surplus, get more surplus. Let's go back to our equation. It's very, very important to see this. Necessary labor, surplus labor, total labor that the workers are performing. Look, if this is increased because of the demands of the subsumed classes and if nothing else changes, I'll bar this, if that doesn't change then this has got to fall. That's rather dramatic because that says that the consumption of the workers are being squeezed because the capitalists, these Board of Directors, are trying to get more surplus out of the workers because something happened on the right-hand side of the equation. Marx is going to claim that this could engender. It's possible. It's not inevitable. A class struggle. That's one possibility. Second possibility. If one or more of these on the right-hand side increases, one other subsumed class, pressure could increase another subsumed class to get less. In other words, if the state increases its taxes and if the corporation doesn't want to get into a struggle with its workers over more surplus being pumped out of those workers, then it's possible it could say to its managers, okay, you get less because the state wants more. And you might say, my goodness, if that happens, yeah, the state gets more higher taxes, but then the managers have lower budgets, perhaps cut in salaries, won't that jeopardize the corporation? Absolutely. That goes for any of these. That goes, if you went it the other way, if the managers wanted more, then if you cut the state, then wouldn't that undercut the state's provision of conditions of existence? Absolutely. So there's no way to avoid these contradictions.