A review of Imperialism in the 21st century by John Smith, published by the Monthly Review Press.
John Smith’s book is a powerful and searing indictment of the exploitation of billions of people in what used to be called the Third World and is now called the ‘emerging’ or ‘developing’ economies by mainstream economics (and is called ‘the South’ by Smith). But the book is much, much more than that. After years of research including a PhD thesis, John has made an important and original contribution to our understanding of modern imperialism, both theoretically and empirically. In this sense, his Imperialism is a complement to Tony Norfield’s The City, reviewed previously in this blog – or should I say Tony’s is a complement to John Smith’s. While Tony Norfield’s book shows the development of finance capital in the modern imperialist countries and the dominance of the financial powers of ‘the North’ (US and UK etc), John Smith shows how it is the ‘super-exploitation’ of wage workers in the ‘South’ that is the foundation of modern imperialism in the 21st century.
The book starts with some examples of how wage workers in the South are ‘super-exploited’ with wages below the value of labour power (Bangladesh textile workers):“The starvation wages, death-trap factories, and fetid slums in Bangladesh are representative of the conditions endured by hundreds of millions of working people throughout the Global South, the source of surplus value sustaining profits and feeding unsustainable overconsumption in imperialist countries” (p10).. and how the surplus-value created by these super-exploited workers is captured by the trans-national corporations and transferred through the ‘value-chain’ to the profits of the imperialist countries of the North (Apple i-phones and Foxconn). “The only part of Apple’s profits that appear to originate in China are those resulting from the sale of its products in that country. As in the case of the T-shirt made in Bangladesh, so with the latest electronic gadget, the flow of wealth from Chinese and other low wage workers sustaining the profits and prosperity of Northern firms and nations is rendered invisible in economic data and in the brains of the economists.” (p22).
Smith points out that “about 80 percent of global trade (in terms of gross exports) is linked to the international production networks of TNCs.” UNCTAD estimates that “about 60 percent of global trade . . . consists of trade in intermediate goods and services that are incorporated at various stages in the production process of goods and services for final consumption.”(p50). Smith argues that outsourcing has been a conscious strategy of capitalists, a powerful weapon against union organization, repressing wages and intensifying exploitation of workers at home, and has led above all to a huge expansion in the employment of workers in low-wage countries… “A striking feature of contemporary globalization is that a very large and growing proportion of the workforce in many global value chains is now located in developing economies. In a phrase, the centre of gravity of much of the world’s industrial production has shifted from the North to the South of the global economy.”, as Smith quotes Gary Gereffi.
It is Smith’s main contention that it is wages forced below the value of labour power that is the key characteristic of the profits of modern imperialist operations. It is not even financial hegemony (Norfield) and certainly not some form of ‘dispossession of capital and wealth’ (Harvey). “The capitalists’ lust for ultra-cheap labor-power is a fundamental determinant of the global shift of production.”
Smith exposes the neoclassical view that wages are low in the South because productivity is low there. This view, Smith points out, has “never been systematically criticized by heterodox and Marxist critics of neoliberalism… (and) contemporary Marxist scholarship,… with few but important exceptions…is astonishingly indifferent to and accepting of bourgeois economists’ argument that international wage differentials merely reflect international differences in labor productivity.” There is a deliberate attempt by neoclassical bourgeois theory to identify wage growth with the productivity of labour and many Marxists go along with this because they confuse use-values (the production of things and services) with their value (the prices of production). Instead, “wage differences are significantly affected by coercive suppression of labor mobility—in other words, by a factor that is, on the face of it, quite independent of productivity.” (p240).
But mainstream economic theory denies this reality. This leads to the idea that workers in China receive their ‘fair share’ in wages given their productivity level. Smith quotes Martin Wolf from his 2005 book, Why globalization works, lauding the benefits of globalisation (Wolf now forgets these perceived benefits of globalisation in his later works). “It is right to say that transnational companies exploit their Chinese workers in the hope of making profits. It is equally right to say that Chinese workers are exploiting transnationals in the (almost universally fulfilled) hope of obtaining higher pay, better training and more opportunities.” (Wolf).
In contrast to Wolf’s view, the huge low wage proletariat that has emerged in the last 30 years is the key to the profits of imperialism, transferred from the South to the North. Smith provides the evidence for this. In 2010, 79 percent, or 541 million, of the world’s industrial workers lived in “less developed regions,” up from 34 percent in 1950 and 53 percent in 1980, compared to the 145 million industrial workers, or 21 percent of the total, who in 2010 lived in the imperialist countries (p103). For workers in manufacturing industry, this shift is more dramatic still. Now 83 percent of the world’s manufacturing workforce lives and works in the nations of the Global South.
The world’s “economically active population” (EAP) grew from 1.9 billion in 1980 to 3.1 billion in 2006, a 63 percent increase. Almost all of this numerical growth has occurred in the “emerging nations,” now home to 84 percent of the global workforce,1.6 billion of whom worked for wages, the other one billion being small farmers and a multitude of people working in the infinitely variegated “informal economy.” (p113).
The global proletariat has never been larger in numbers and in its share of the total workforce. And yet the share of wages in domestic income has fallen, both in the South and North. According to the ILO, since the early 1990s the “share of domestic income that goes to labor … declined in nearly three-quarters of the 69 countries with available information.” The decline is generally more pronounced in emerging and developing countries than in advanced ones. The declines in labor’s share in emerging and developing economies were very steep—falling in Asia by around 20 percent between 1994 and 2010; moreover, “The pace of the decline accelerated in . . . recent years, with the wage share falling more than 11 percentage points between 2002 and 2006.”
As Smith says “The wages paid to workers in the South are affected by factors that have no bearing on or relevance to the productivity of these workers when at work, factors arising from conditions in the labor market and more general social structures and relations affecting the reproduction of labor-power, including the suppression of the free international movement of labor and the emergence of a vast relative surplus population in the Global South. This knocks a large hole in the tottering edifice of mainstream economics”.
This leads to one of Smith’s main theoretical points. Capitalism started with the exploitation of labour through absolute surplus value (a longer working day) and of course bringing more people into the workforce. Then as capitalism developed, as Marx showed for Britain in Capital, it was a rise in relative surplus value that dominated, namely labour-saving technology is introduced to reduce the value of labour power in the same working day. But now in the 21st century, Smith argues, the exploitation of the workers of the South is less through an expansion of absolute and relative surplus value and more through driving wages below the value of labour power (super-exploitation).
In Capital, Marx recognised this as being an important form of exploitation of labour, but argued that, even without it, capitalism could exploit labour power and capture surplus value. Marx considered that of the counteracting factors to the tendency of the rate to fall for capital, there was not just a rising rate of exploitation or falling costs of technology, or even increased foreign trade and financialisation of capital, but also the reduction in wages below the value of labour power (super exploitation). Marx ruled this factor out in his abstract analysis of the laws of motion of capital but: “Like many other things that might be brought in, it has nothing to do with the general analysis of capital, but has its place in an account of competition, which is not dealt with in this work. It is nonetheless one of the most important factors in stemming the tendency for the rate of profit to fall.” (p240).
But now, according to Smith, all three modes of exploitation of labour are operating, with the third being the most significant in the South, Smith argues, because the imperialist North finds this the best and easiest way to capture surplus value there. In Smith’s view, this development has been ignored, missed or confused by what he call the “Euro-Marxists” who argue that the workers of the North are more exploited than those in the south because they are more productive.
Smith reckons that this confusion arises because of the use of GDP and ‘value-added’ by mainstream economics and accepted mostly without question by Marxist economists. You see, gross domestic product (GDP) hides the fact that much of the value in, say, US GDP is not value created by American workers but is captured through multinational exploitation and transfer pricing from profits created from the exploitation of the workers of the South. GDP confuses value creating with value capture and so does not expose the exploitation of the South by the imperialist North: “GDP as a measure of the part of the global product that is captured or appropriated by a nation, not a measure of what it has produced domestically. The D in GDP, in other words, is a lie.” (p278).
Thus, according to Smith, Lenin’s famous analysis of imperialism one hundred years ago and now often dismissed as inadequate is still right. There are ‘oppressor nations’ and ‘oppressed nations’ and which is which is not determined by just financial power (Norfield) but also by the super-exploitation of the proletariat of the oppressed South on a systematic basis. Thus “On crucial questions—the exploitative character of relations between core and peripheral nations, the higher rate of exploitation in the latter, and the political centrality of the struggles in the Global South—the Marxist proponents of dependency theory were right and their orthodox critics wrong.” (p223).
But why has imperialism developed in such a way that exploitation now takes the form of super-exploitation? It’s partly that in countries with a fast-growing previously rural peasant workforce, authoritarian regimes in the South and powerful multi-nationals from the North were able to overcome the usual social limits on too low wages, working hours and conditions etc so that wages could be held below the value of labour power (the cost of the necessities of life). Also, Smith stresses the suppression of international mobility of labour by the North in contributing to this, as we see only too well in the current migration crisis in Europe.
And it is also a response to the changes (fall) in the profitability of capital in the Northern imperialist economies, particularly from the mid-1970s onwards. Neoliberal policies on wages, public services, trade unions in the North went with ‘globalisation’ of the South as capital in the major imperialist powers experienced a sharp fall in profitability. As my upcoming book, The Long Depression (out in May), will argue, something similar happened in the last period of imperialist expansion and ‘globalisation’ from the 1890s, leading to the export of capital to the South (Latin America, Asia) and growing imperialist rivalry for colonies and colonial profit that culminated in WW1.
It was this that was described by Lenin. But, as Smith quotes Andy Higginbottom, what was inadequate about Lenin’s analysis of the rise of imperialism as the highest stage of capitalism at the end of the 19th century, was not that exploitation is actually less in the South than the North or that there are not really oppressor and oppressed nations any more, but that “Lenin does not theorise imperialism with respect to the rising organic composition of capital or the tendency of the rate of profit to fall. . . . This theoretical incompleteness in the study of imperialism is atypical of Lenin, and stands in marked contrast with his own economic analyses of the development of capitalism on Russia, which are firmly based on the categories of Capital.” (p229).
Smith reckons that Marxist economists of the North in debating the role of Marx’s law of the tendency of the rate of profit to fall make no allowance for international variations in the rate of exploitation (s/v) as well as in the changes in the organic composition of capital (c/v). Well, it may be true that Marxist economists in this debate, like myself, have “ignore(d) the fact that a substantial part of the surplus-value that is captured by firms in imperialist countries and realised as profit was extracted from workers in low-wage countries”. (p248). But we debaters have not ignored overall movements in s/v. Indeed, one of the features of the post-1945 period is that the rate of surplus value has risen in the major economies while the rate of profit has fallen (on a secular basis). In my own work, I have shown this to be the case in the US (US rate of profit revisited) and also in recent work on a world rate of profit that included the economies of the South in the G20 nations like Brazil, Russia, China and India. Esteban Maito has done similar work with similar results (Maito, Esteban – The historical transience of capital. The downward tren in the rate of profit since XIX century).
We are not ignoring the movement in the overall rate of exploitation. Indeed what this work shows is that, although the level of rates of profit are higher in the South, they too have fallen despite rising and higher s/v, whether caused by absolute surplus value, relative surplus value or super exploitation. Here is my calculation of the rates of profit in G7 and BRIC economies over the last 60 years from my recent paper on the world rate of profit using the Penn World tables (Revisiting a world rate of profit June 2015).
Thus the law shows the limits to the long-term future of capital (and imperialism). Indeed, a new book by G Carchedi and myself (out later this year) collates the work of ‘non-Euro’ Marxist economists from around that shows the law of profitability identified by Marx operates just as much in the South as in the North.
Indeed, I am not sure that Smith has proved that ‘super-exploitation’ is the dominant characteristic of modern imperialism. As Smith shows, imperialism of the 19th century also relied on super-exploitation of the masses in the colonies (to the level of slavery) and that, in the industrialisation of imperialist countries like Britain in the late 18th and early 19th century, driving wages below the value of labour power was a powerful factor in the exploitation of labour (see Engels on The condition of the working-class in England).
For that matter, super-exploitation is visible in the imperialist economies too. ‘Zero-hour’ contracts, where workers are at the beck and call of employers at all hours for minimal pay, now affects two million workers in Britain. Across southern Europe, where youth unemployment rates are around 40-50%, young people are forced to live with their parents and earn pitiful amounts in low wage retail and leisure jobs. And the data show that poverty has risen for the bottom 10% of households since the 1980s in the North (including the US).
And the other side of the coin is that, alongside super-exploitation, there is also exploitation of the proletariat of the South through absolute surplus value and through the latest technology to save labour (relative surplus value) just as there was in the development of industrial capitalism in the 19th century onwards. Foxconn may super-exploit its workforce, but it also employs the latest technology. This is a feature of what Trotsky liked to call the combined and uneven development of capitalism in the imperialist epoch.
And it is in this debate on the relation between Marx’s law of profitability and the causes of economic crises that are now global under modern imperialism that I am not quite sure where Smith stands. He says, correctly I would say, that “Whether or not the rate of profit is increasing or declining, what matters is whether the total mass of surplus value is sufficient to reward all those with claims on it.” Yes, so the total mass of surplus value regularly gets insufficient due to Marx’s law operating. And when the mass of profit falls, it won’t be long for investment, employment and incomes to fall in a slump.
In his final chapter on the causes of crises, Smith firmly dismisses the idea that is prominent among mainstream and heterodox economics alike that the global financial crisis and the Great Recession were financial in origin. Alternatively, he suggests that the crisis was postponed by the shift to the South by imperialist combines because of ‘overproduction’ in the North. But the concept of ‘overproduction’ covers a multitude of sins. In Marx, overproduction of commodities is the result of over-accumulation of capital, but over-accumulation of capital is the result of falling profitability and profit (absolute over-accumulation).
As Smith so brilliantly shows, capital in the North restored much of the fall in its profitability suffered in the 1970s on the back of the super exploitation of the South: “surplus-value extracted from these new legions of poorly paid workers helped to dig the capitalism system out of its hole in the 1970s”. Increased debt, as Smith notes, added to the final crisis so that it took a financial form. As Smith says, “Exponentially increasing indebtedness succeeded in containing the overproduction crisis, but it has brought the global financial system to the point of collapse.” For this sentence, take the word ‘overproduction’ out and replace with ‘profitability’.
There may well be more room for imperialism to exploit the proletariat globally and so counteract falling profitability again, for a while. There are still reserve armies of labour from the rural areas in many countries to be drawn into globalised commodity production (and yes, often at below-value wages). But there are limits to the ability of imperialism to raise the rate of exploitation indefinitely, not least the struggle of this burgeoning proletariat in the South (and still substantial numbers in the North).
Marx’s law of profitability has not and will not be counteracted indefinitely even with super-exploitation. The law of profitability and the struggle of the global proletariat are imperialism’s Achilles heels.
Michael Roberts Blog 
Thank you very much for the review of this interesting book. As you yourself are not sure whether you agree with his super-exploitation thesis, could you elaborate a bit on the empirical basis of Smith’s argument? I.e. which empirical observations does he use to support the super-exploitation argument? How systematic are they? Qualitative or quantitative? Thank you!
It’s mostly qualitative but there is some empirical evidence too.
There’s an entire, largely empirical chapter devoted to “Global wage trends in the neoliberal era”, and also an extended study of what I call the ‘purchasing power anomaly’, how PPP$ are calculated to correct this distortion, and also a critique of mainstream explanations for the existence and persistence of this phenomenon.
Michael,
I would like to know if Smith constructs its own theorizing about the concept of overexploitation of the workforce, or if he also uses other Marxist contributions. I ask the question because there is an important contribution, started several decades ago by the Brazilian Marxist Ruy Mauro Marini, which remains relatively ignored, but that is currently being resumed, especially in Latin America. It is the Marxist Theory of Dependence, in which overexploitation has a central place, and would be an especially characteristic of dependent countries.
Best Regards.
Paulo Balanco
Professor of Political Economy – Federal University of Bahia, Brazil
As I remember, Smith refers to Marini approvingly in his book.
Here’s an excerpt from one of a number of passages in my book which extols the contribution of Marini (the quotes are from his Dialéctica de Dependencia):
The limitations of Amin’s theory are brought into sharp relief by the very different theory of dependency advanced by the Brazilian Marxist Ruy Mauro Marini, who argued that super-exploitation of workers in dependent economies was a “necessary condition of world capitalism, contradicting those who, like Fernando Enrique Cardoso, understand this to be an accidental development.” Marini successfully operationalized the law of value to explain the condition of dependency, in contrast to Amin’s argument, which—despite the title of his book—hinged on monopoly and rent, both of which negate the law of value. Marini hinged his argument on a fundamental aspect of Marx’s exposition of the law of value, namely the relation between absolute surplus-value and relative surplus-value. Marx argued that absolute surplus-value, that is, the extension of the working day to or beyond the physical limits of the worker and the restriction of her/ his consumption of use-values to or below the physical minimum, was both logically and historically prior to relative surplus-value, that is, increasing the productivity of labor through the introduction of machinery, thereby reducing necessary labor time and increasing surplus labor, and argued that the rise of modern industry signified the growing predominance of the second of these. For Marx, the transition from the predominance of absolute surplus- value to relative surplus-value was necessitated by the limits on absolute surplus-value imposed by the finite maximum length of the working day and the minimum level of consumption required for the reproduction of laborpower, and by the rising struggle of workers for higher wages and shorter working hours. Marini argued that another factor played a crucial role in this transition: the importation of cheap foodstuffs and other consumer goods from colonies and neo-colonies, especially from Latin America. These were cheap because of the prevalence of super-exploitation in those countries, while their transition from absolute to relative surplus-value, that is, their capitalist development, was impeded by the appropriation of part of the surplus by industrial capitalists in the dominant nations. Marx’s views on the historical progression from absolute to relative surplus-value have been misunderstood by Euro-Marxists to mean that the importance of absolute surplus-value has dwindled and all-but disappeared, but Marini argued that the opposite is true: “The central issue in the debate is . . . should forms of exploitation distinct from those that generate relative surplus-value on the basis of increased productivity be excluded from theoretical analysis of the capitalist mode of production? The mistake of Cardoso is to respond affirmatively to this question, as if the higher forms of capitalist accumulation imply the exclusion of inferior forms and develop independently of them.”
Why have you ncluded in the title of the book “capitalism’s final crisis”? What does ‘final’ mean? The end of capitalism? How can we know?
Hi N… I realise that I court ridicule with this startling claim, but I justify it in the final chapter of the book, which concludes:
Along with a huge expansion of domestic, corporate, and sovereign debt, the global shift of production gave the outmoded and destructive capitalist system a respite that lasted for barely twenty-five years. The “financial crisis” that brought this to an end is a secondary infection, a sickness caused by the medicine imbibed to relieve a deeper malaise, one for which capitalism has no alternative remedies. Exponentially increasing indebtedness succeeded in containing the overproduction crisis, but it has brought global financial system to the point of collapse. Outsourcing has boosted profits of firms across the imperialist world and sustained the living standards of its inhabitants, but this has led to deindustrialization, has intensified capitalism’s imperialist and parasitic tendencies, and has piled up global imbalances that threaten to plunge the world into destructive trade wars. All of the factors that produced this crisis—increasing debt, asset bubbles, global imbalances—are being amplified by the effects of the emergency measures designed to contain it. The irony of zero–interest rate policy and quantitative easing is that their greatest success—preserving the value of financial assets and thus the wealth of those who own these financial assets—blocks the only possible capitalist solution to the crisis, namely a massive cancelation and reassignment of claims on social wealth asset values. QE and ZIRP—Zero Interest Rate Policy, or “crack cocaine for the financial markets,” in a memorable phrase uttered by a Goldman Sachs banker —are therefore means of postponing the inevitable, of kicking the can down the road while waiting and hoping for the growth engine to restart.
Although the global crisis first manifested itself in the sphere of finance and banking, what’s now engulfing the world is far more than a financial crisis, it is the inevitable and now unpostponable outcome of the contradictions of capitalist production itself. In just three decades, capitalist production and its inherent contradictions have been utterly transformed by the vast global shift of production to low-wage countries, with the result that profits, prosperity, and social peace in imperialist countries have become qualitatively more dependent upon the proceeds of super-exploitation of living labor in countries like Vietnam, Mexico, Bangladesh, and China. It follows that this is not just a financial crisis, and it is not just another crisis of capitalism. It is a crisis of imperialism. (pp313-314)
The interaction between living labor and nature is the source of all wealth. Capitalism’s frenzied exploitation of both has resulted not only in a grave social and economic crisis, but also in a spreading ecological catastrophe. Rising concentrations of CO2 in the atmosphere, along with the rest of the filth generated by capitalist production and dumped on land and into rivers and oceans, are already causing extreme weather conditions across the Global South. Capitalism’s tendency to exhaust labor and nature is as old as capitalism itself, but like its voracious appetite for cheap labor and its dream of circumventing production altogether through financial alchemy, all of its destructive tendencies are reaching their most extreme expression at the same time. The capitalist destruction of nature means that this is not just capitalism’s greatest-ever crisis, it is capitalism’s final crisis, an existential crisis for humanity.
From here, then, all roads lead into the crisis. This, in the words of Cuban revolutionary leader Raúl Valdés Vivó, is “un crisis sin salida del capitalismo,” a crisis with no capitalist way out. The only way forward for humanity is to “begin the transition to a communist mode of production. . . . Either the peoples will destroy the imperialist power and establish their own, or the end of history. It is not ‘socialism or barbarism,’ as Rosa Luxemburg said in 1918, but socialism or nothing.” (p315)
Michael, Doesn’t the fact that almost 80% of industrial workers today are located in the “Global South,” together with the fact that most of these workers are super-exploited, indicate that super-exploitation is the dominant characteristic of imperialism today? Sure, there was super-exploitation in the past, but in capitalism’s heyday the predominant way of increasing the rate of exploitation was to increase productivity. And of course relative and absolute increases of surplus-value still take place today. But the question is, what predominates?
No, that doesn’t prove much of anything. What is the rate of surplus-value extracted from these workers? Half the world’s steel production capacity is in China, but the productivity in steel production in China was, last time I checked, about 1/8 of that in steel production in Japan, not to mention South Korea.
“Super-exploitation” certainly involves a transfer of value to the bourgeoisie. Indeed, it is subject to the same determinants as capitalist production anywhere in that the transfers and redistributions serve to create a general level of profit, and distribute that profit to the largest and most developed capitals with the most technically intensive structures.
“Super-exploitation” does not involve a transfer of value to workers of advanced countries. That much is made evident by the course of capitalist development certainly since 1973.
We might as well be arguing that the relative greater hourly wage of locomotive engineers in the railroad industry is dependent upon, is determined by, the lower wage rates paid to track workers, and car inspectors. Anybody want to argue that?
What exactly makes this “super-exploitation” of today, qualitatively different than the “sure there was super-exploitation in the past” super-exploitation? Is profit no longer apportioned as Marx analyzed it in his critique of capital? Is the law of value somehow suspended?
That capital does what it has always done– migrate to sources of lower costs, where it embeds its most advanced apparatus in the midst of backward social relations is not somehow an evolution in capital somehow outside the fundamental relations, and conflicts, of capitalism as it has been and will continue to be.
I subscribe to Smith’s argument and his critique of some Euro Marxists. Boffy is classic example of this rotten type.
I would add that we should not ignore the hidden slave class in the US, Japan and Europe. I.e. that cheap super exploited labour living right in our midst. I was watching a TV show about Greece which showed that even as Greeks were losing their jobs Greece was still using thousands of lowly paid and super exploited migrants to pick strawberries and do other back breaking jobs.
The fate of the migrant is super exploitation.
The important point about Smith’s analysis is that capitalism still needs to play out, as you say in the article, it’s laws cannot indefinitely be counteracted but there sure will be more time before that happens. There is life in the old dog yet!
This also explains the politics of Corbyn and Sanders and why ‘true path socialists’ should give them a bit of a break
Considering that a huge portion of the workers of the global ‘South’ are in China, the term ‘South’ is misleading. Not merely as a matter of geography – the proletarianization of China’s communal peasants during the last 25 years or so occurred with the expansion of a new, independent, and now fabulously rich capitalist class. It was useful to have foreign capital share in the surplus value, but the relatively peaceful joint exploitation is now in the process of breaking apart. We cannot understand global dynamics if we put the Chinese case in the same category as Latin America, other parts of Asia, and Africa.
I agree that China has many special and unique features, not least that it was the scene of a mighty socialist revolution and is attempting a transition to capitalism that is far from complete. Nevertheless, its recent history is defined above all by the decision of its rulers to offer up its workers for super-exploitation by imperialist TNCs, and this threw a life-line to them, helping them contain the falling rate of profit, enabling them to escape (for a while) from the systemic crisis of the 1970s.
For example, the book quotes from a study of EU-Chinese trade:
“Europe’s importers and retailers . . . increasingly rely on cheap inputs and goods from Asia. . . . EU companies are now also producing in low-cost countries, and not simply importing inputs.” Far from being locked in competition with China, “the possibility of off shoring the more labor-intensive production and assembly activities to China provides an opportunity to our own companies to survive and grow in an increasingly competitive environment,” and they conclude, “Our direct competitors in the tasks in which we have a comparative advantage are not located in China, but continue to be the usual suspects: the United States, Western Europe and a handful of High-Income East Asian economies.”
China’s “recent history is defined above all by the decision of its rulers to offer up its workers for super-exploitation by imperialist TNCs.”
This statement is partly true but to a greater degree partly false.
First, the surplus value of the tens of millions of new proletarians in China was divided between local capital (so-called state-owned enterprises as well as private corporations) and TNCs. Both got substantial portions, and domestic capital captured a bigger share of the surplus value in China than in other countries of the “South.”
Second, the relation between domestic Chinese capital and TNCs operating there directly or indirectly is changing rapidly – the former is asserting itself. At the start of the process of installing the accumulation of capital as the governor of the Chinese economy, foreign capital was a useful tool for hammering capitalist relationships into the economy. That function is largely fulfilled – your “recent history” is fading away, and a different – “more recent” so to speak – situation develops.
Once again, China does not fit in the same category as Latin America, other parts of Asia, and Africa – if one aims to lay out the significant actors of the global economy and their relationships. And when you remove China, now with the second largest economy in the world by some measures, from the “South,” the nature of the latter turns up much different.
One point does not come out from the above analysis, the dependency between relatively well paid western labor in the heyday of the welfare state (yes I know that tides are turning) and ‘superexploitation’ in the south. The ‘transfer of value’ has undergone a history from the colonial days of commodities and minerals production to the mass expansion/’transfer’ of industrial labor to the global south in more recent history. There are others who have written about this, Marini and Higginbottom were mentioned above, also Zac Cope (Divided World Divided Class) is interesting. The mechanisms of the transfer have to be laid out more clearly, though.
I think we can still learn a lot from Mike Kidron’s “Black Reformism” (in Kidron Capitalism and Theory, 1974) on this subject.
Michael Kidron was the pre-eminent economic theorist of the ‘International Socialist Tradition’, embodied today by the British SWP, which continues to uphold and repeat the arguments presented in ‘Black Reformism’, the chapter in ‘Capitalism and Theory’ (1972) where he dismisses (and traduces) dependency theory, concluding that “Workers in the North get more because they need more in order to produce much more better. In fact they are relatively underpaid in terms of quantity and quality of their ability to work. They get much more per head than workers in South, but they get much less per unit of labour-power. They are richer, but more exploited.” (p103)
He supports this denial of super-exploitation with a mixture of chauvinism and sophistry: “If there is one outstanding difference between [British and Indian workers] it lies in the different degrees to which they are culturally enriched. The average British worker can be expected to read and drive; he or she will normally be able to handle a wide range of tools and concepts and respond to a wide range of stimuli on the basis of knowledge rather than from personal experience. The Indian worker will not. The average competence of the two are obviously worlds apart qualitatively. The cost of maintaining them effectively – their value – is bound to reflect this difference.” (p100).
He then illustrates his argument with this:
“For example, a truck driver dare not make a practice of sleeping at the wheel and must therefore be able to ensure rest at home and a home to rest in; a bullock-cart driver dare and often does nod off, so his housing is less important to the employer… and his wage will not need to contain as large a housing component. New entrants into a factory in Britain need to be able to read, and their parents’ wages need to contain therefore a child-support and-education component. New mill hands in India need not, and usually do not, read, so the pressure on their parents’ wages is less. And so on and on – there is no end to the comparisons can be made.” (p101)
And this dares to masquerade as Marxism!
In response to sartesian
1. Sartesian asks, what is the rate of surplus-value extracted from super-exploited workers? Assuming that the productivity ratio of 1/8 in steel is correct, if the wage ratio is 1/10 or less, the rate of s-v in the “South” will still be higher. Further, labor productivity in China is growing faster than wages, especially in the export sectors, and in some industries it is comparable to the North – which points again to a higher rate of s-v in China.
2. Sartesian writes: “‘Super-exploitation’ does not involve a transfer of value to workers of advanced countries. That much is made evident by the course of capitalist development certainly since 1973.”
Agreed. The transfer of value is to the capitalists, South and North. Further, since many goods that Northern workers need are now produced more cheaply in the South, Northern capitalists can get away with refusing wage increases to their workers; and many Northern workers are being forced into taking lower-paying jobs. These setbacks are partly compensated for by the cheaper consumer goods from the South. So the value of labor power in the North goes down; the much higher rate of s-v in the South contributes to a rising (but less extreme) rate of s-v in the North.
3. Sartesian writes: “What exactly makes this “super-exploitation” of today, qualitatively different than the “sure there was super-exploitation in the past” super-exploitation?”
The big difference is the *prevalence* of super-exploitation. Marx talked about paying wages below value as a way of countering the falling rate of profit tendency, but he excluded that factor from Capital, in which he assumed that all commodities sold at their value, including labor power. But today hundreds of millions of Chinese migrant workers, for example, are paid below the value of their labor power and treated as illegal immigrants in their own country, thus deprived of education for their children, health care, decent housing, etc. – necessary components of reproducing the working class.
John Smith makes a strong case that this form of increasing the rate of surplus-value is predominant today, ahead of both absolute and relative increasing of the rate of s-v.
1. No, the super-exploitation is not based on a comparison of wage ratios between South Korea’s steelworkers and China’s steelworkers, but in a comparison of how long it takes China’s steelworkers to reproduce the value equivalent to their own wages TO the length of time it takes Korea’s steelworkers to reproduce the value equivalent to their own wages.
The fact that productivity is so much lower in China’s steel industry would indicate that more time is spent on reproducing the necessary value, not less time.
2. “The much higher rate of S/v in the South” is a proposition that requires proof, not a proof that can be taken as an assumption. My own direct experience, with railroads in various countries, is that the S/v in that sector in the US is dramatically greater than in the global ‘South.’
3. Hundreds of millions of workers everywhere, not just in China, are paid below the value of the labor power, the cost of its reproduction– in the US, Germany, Italy, Spain; a large portion of this falls upon the migrant workers in those “advanced” countries– but certainly not all.
4. The problem with the “super-exploitation” argument, IMO, is that basically, it’s ahistorical, and it doesn’t seem to take into account the basis for higher wages being in class struggle, and in the development of complex labor.
Anyway, interesting discussion. Just hate to see it devolve into something along the lines of “oppressor nations and oppressed nations.” What bollocks. “Nations” are a creation of capital.
Sartesian’s description of Lenin’s concept of imperialism as “bollocks” shows her/his distance from Marxism. As for the rest of this post, it says in my book:
“The Euro-Marxist argument that higher productivity in the North means that higher wages are consistent with higher rates of exploitation has been negated by a simple fact: as we know from the labels, the consumption goods consumed
by workers in the North are no longer produced solely or mainly in the North; to an ever-greater extent, they are produced by low-wage labor in the Global South. Their productivity, their wages significantly substantially determine the value of the basket of consumption goods that reproduces labor-power in imperialist countries.” (p220)
Distance from Lenin’s Imperialism– absolutely. Lenin’s “study” of imperialism is much like his supposed well researched “Development of Capitalism in Russia”– inaccurate, mistaken, and distorted.
Rejecting Lenin’s distortions of capital accumulation at the end of the 19th century (Lenin, where he did cite data, uses a lot from the end of the 19th century) is hardly the same as rejecting Marxism, given exactly what Lenin did with his supposed profound insights. Marxism after all is supposed to be a praxis, an activity developing the social revolution.
And where did Lenin’s “oppressed nation” praxis lead? Admission of the KMT as a full member of the 3rd International, no? Subordination of the workers’ movement in China to the “oppressed” bourgeoisie of China, no? Selling out, quite literally, of the left communists in Turkey to Ataturk and nationalism, no?
You can look it up.
Nice of Mr. Smith to throw in the term “Euro Marxist” as if such a label explains anything and is used for anything other than ideological reasons– that is as a substitute for critical analysis, but hey, I expect nothing less.
As for the argument about higher wages and the origin of consumer goods– all Smith is in essence doing is providing but another iteration of the mercantilist hand-wringing about the trade deficit, about trade imbalances.
Of course, that such imbalances follow the flight of capital to less developed areas as has taken place since 1973; that such imbalances and flight to less developed areas are accompanied not by improvements in the wages and benefits for workers in the advanced countries but in attacks on wages and benefits as have taken place since 1973; that such imbalances come on the decline in the rate of profit in the US after 1970; that such “benefits” of such “privilege” are accompanied by less access to better living conditions for workers as has occurred since the defeat of the US strike wave of 1974; that such “benefits” have been accompanied by a real transfer of wealth up the social ladder; that the trade deficit itself, if adjusted for related party trading, pretty much disappears, and the remainder can be explained by the price moves of a single commodity– oil… seems to have escaped Mr. Smith.
Thanks, Michael, for your very helpful, readable and thoughtful review.
Visitors to your blog might be interested in two articles available on-line from Monthly Review that summarise parts of the book’s argument:
http://monthlyreview.org/2015/07/01/imperialism-in-the-twenty-first-century/
and http://monthlyreview.org/2012/07/01/the-gdp-illusion
These two articles are also available in Chinese:
http://groundbreaking.cn/bqxs/yijie/2015/0911/3156.html
and
http://www.coolloud.org.tw/node/71927
What strikes me about Sartesian’s reply to John Smith is his anger and the flippancy that leads him into a series of self-contradictory sarcasms. Capitalism’s value creation has to be understood globally.
Let’s be clear. I have no disagreement that value production is global; that capitalism’s self-reproduction drives it across oceans and continents.
I have no disagreement that capitalism constantly seeks new supplies of cheap, or cheaper labor….until it doesn’t…until the very same dynamics that are manifest in the more advanced sectors and areas are made manifest in the “less advanced,” newly penetrated sectors and areas, and overproduction overtakes profitable accumulation.
I have no disagreement that the combination of increased capital investment with lower wage rates, which after all is what globalization is all about, is an attempt to offset the tendency of the rate of profit to decline; and that it can, in certain sectors, provide rates of surplus value sufficient to do just that, temporarily.
I have no disagreement that the bourgeoisie domiciled in advanced countries exploit workers in less advanced countries; expropriating surplus value and accruing profit.
What I do disagree with is the notion that certain nations, and all residents of certain nations, are “oppressors;” that certain other nations, and all residents of certain other nations, are “oppressed.”
That a nation’s capitalist development, it’s ability to “join” the “top rank” of capitalist nations is stunted, inhibited, impaired by the actions of those already in the top rank isn’t really news is it?
I emphatically disagree that “monopoly” or “state intervention” of finance, or “rent”– ground or otherwise– or fictitious capital nullify the imperatives of the law of value
I disagree with the notion that workers in advanced countries benefit from this movement of globalization; that “super-profits” are obtained in this process which are used to “bribe,” buy off, create a labor aristocracy etc.and all that other stuff that is tacked on Lenin’s Imperialism.
And I have not claimed that any of the above positions are John Smith’s. His response however to my comments on Walter Daum’s remarks seems to be based solely on my rejection of the “oppressed nation” vs. “oppressor nation,” model.
I happen to think Lenin’s slim volume on imperialism is a pretty lousy study… and if anyone wants my reasons for that, I’d be happy to provide a link to an article that touches on some of those deficiencies (and FWIW, it should be recognized just how inaccurate was Lenin’s supposedly rigorous early study on the development of capitalism in Russia)
I do think if an argument is going to be made that higher wages in the more advanced countries represent an, or are made possible by an “unequal exchange” with less advanced areas, a “global North” vs. “global South” with the “global South” subsidizing wage-workers in the “North,” then the argument has to be able to account for the attack on wages for the workers in the “North,” the decline in living standards, and declining prospects for the improvement of living standards for the next generations, of those workers that has been and is coincident with that “Southern” turn.
I think a theory that says capitalism is based on extracting superprofits from superexploitation of certain “nations” through the channels provided by investment needs to account for where the investments really are, and what the profits attributable to those various locations are. Just as simple as that.
I’d still like to know if anybody is prepared to argue that the higher wages of locomotive engineers on US railroads are only possible, are subsidized by the lower wages paid to track workers and car inspector?
Here’s how my book addresses the issues raised by sartesian’s last question (pp242-3, italics replaced with asterisks):
Though it is certainly true that workers using advanced technology will produce more use-values, the quantity of value and of surplus-value generated by their living labor will be no different than if the same labor was performed in a less advanced firm in the same branch of production, and the same is true when we consider the value generated by a given quantity of average labor in a different branch of production. The apparently higher productivity of workers in capital-intensive branches of production is an illusion created by transfers of value from capitals with low organic composition to those where it is higher and *also* by transfers of value from capitals with higher-than-average rates of exploitation to those with lower-than-average rates of exploitation. In other words, what the capitalist thinks of as profits magically appearing out of dead labor, that is, from his machinery and other inputs, is in fact value created by living labor employed by rival capitalists with lower organic compositions and/or higher rates of exploitation. It follows that, assuming that both labors are of average intensity, and ignoring the issue of qualified or complex labor, the new value generated by a given quantity of living labor *is wholly independent of the organic composition of the capital it sets in motion.* In other words, again assuming both labors are of average intensity and assuming they are paid the same wages, the quantity of value produced in a standard working day by the hamburger-flipper standing in the car-park of a steel factory is the same as that produced during the same time by the steelworker inside that factory. Not only is the relation between the productivity of labor and the exchange-value created by it not direct, as asserted by mainstream economic theory and echoed by Euro-Marxists, they are wholly independent of each other, as Marx emphasized:
“By productivity, of course, we always mean the productivity of concrete useful labor. . . . Useful labor becomes . . . a more or less abundant source of products in direct proportion as its productivity rises or falls. As against this, however, variations in productivity have no impact whatever on the labor itself represented in value. As productivity is an attribute of labor in its concrete useful form, it naturally ceases to have any bearing on that labor as soon as we abstract from its concrete useful form. The same labor, therefore, performed for the same length of time, always yields the same amount of value, independently of any variations in productivity. But it provides different quantities of use-values during equal periods of time.” (Marx, Capital, vol. 1, 137)
Belief in a direct relation between wages and productivity is therefore founded on a confusion of use-value with exchange-value, a confusion that wrecks the very foundation of Marx’s theory and in fact responds to the semblance of the relations of production in the mind of the capitalist.
John,
You are correct. The capitalist thinks he or she is claiming his or her “own” profits, when in reality it is a portion of the total profit that is being distributed in accordance with the size of the capital and its relative efficiency.
Except I am not arguing that wages are low because productivity is low in “less advanced” countries. I’m questioning the immediate identification of low wage “super-exploitation.”
The issues are: are workers’ wages equivalent to the time/value necessary for the reproduction of the laborers? And is the portion of the working day represented by the wage, larger or smaller than in more advanced countries, or more advanced sectors?
I meant, in response to Walter’s comment, what is critical, determining, is that the low wage may not be a case of super-exploitation compared to a higher wage, if the necessary labor represents the greater part of the working day.
I apologize in not making that clear with the comparison of time required for steel production in Japan and China, and for letting my irritation regarding the concept of “oppressor” nations and the conflation of Lenin’s book on imperialism with Marx divert from that point.
The issue as I see it is how quickly workers reproduce the value equivalent to the wage. Using data from the US Dept of Commerce’s Annual Survey of Manufacturers you can, IMO, make some fair approximations of rates of surplus value in the US. My efforts show for the overall manufacturing sector in the US in 2013 the ration of “s” /”v” was about 4.29. The same ratio in the petroleum sector measured over 16, while in food production, the ratio is 4.35.
So where is the labor more “ruthlessly” exploited? In the food production sector, where wages are generally lower, where more women and minorities are employed, where labor protections and work rules are generally weaker? Or in the petroleum (or chemical, or computer equipment) sector where wages are higher, and rates of surplus value are dramatically higher?
Moreover, is there any evidence that workers in the petroleum sector are paid more, have their wages subsidized by the lower wages generally paid out in the entire manufacturing sector? Is there a transfer of value in the “V” component?
Now regarding transfers of value, indeed precisely such transfers occur– we see it repeatedly and periodically in the oil price spikes, which serve to transfer value to this more technically intense sector– that is a transfer made so profit rates get equalized.
I have not yet had the opportunity to read your book. Maybe you address these concerns. I’ll find out soon when I get a copy.
However, Michael indicated he wasn’t sure you made the case for the essential, determining role of “super-exploitation.”
BTW, my ‘last question’ was: “I’d still like to know if anybody is prepared to argue that the higher wages of locomotive engineers on US railroads are only possible, are subsidized by the lower wages paid to track workers and car inspector?”
Is there a transfer of value, a subsidy so to speak, provided to the better compensated workesr by, and because of, lower compensation rates for other workers?
Dear Sartesian
I partly answered this above, in the quote you dismissed as “mercantilist hand-wringing”. The “portion of the working day represented by the wage” is determined by the quantity of labour required to produce the workers’ consumption goods. Since these are increasingly produced by low-wage workers in China, Bangladesh etc., it follows that both the rate of surplus value in the more ‘advanced’ countries and sectors, and the higher wages paid to their workers, is profoundly affected by super-exploitation of low-wage workers (and it cannot be ruled out that the higher wages reflect merely a lower rate of exploitation and not the absence of exploitation).
The other part of the proof of this is given in the other quote, which you say you agree with. The value generated by an hour of labour is independent of its productivity (assuming average intensity and leaving aside the issue of skilled or complex labour). The idea that workers in high-tech industries produce more surplus value than those in low-tech industries has nothing to do with Marxism; it is marginalist, bourgeois economics dressed up in Marxist terminology.
Such data, and your calculations, conflate value-added (which my book goes to great pains to show is a bourgeois concept derived from the rejection of the labour theory of value) and value (whose substance is socially-necessary labour time, and is completely independent of how this labour-power is utilised – whether in high-tech or low-tech production labour, or in non-production sectors such as advertising and finance which produce no value whatsoever, and where, according to your logic, the workers employed there would have to work for an infinity and still not replace the value of their wage).
It is false that “rates of surplus value are dramatically higher… in the petroleum (or chemical, or computer equipment) sectors” than in the food production sector. Read the last excerpt from my book above, which you say you agree with. Assuming the same intensity of labour and the same wages, the rate of surplus value is the same in each sector. Since the workers employed in meat-packing plants are paid lower wages and often work with higher intensity, their rate of exploitation will be significantly higher than in the high-wage, high-tech industries – and part of the surplus value extracted from them will be captured by the employers in the latter. And to answer you last point, yes, in principle it cannot be excluded that part of this transferred surplus value will be paid in super-wages to their employees – that’s certainly true, I believe, in the case of Apple’s US engineers and the sweated Chinese etc labour assembling Apple’s iPhones.
Which also answers your last question.
My last comment contained some quotes from sartesian, which I’d placed between chevrons. These were automatically stripped out, so I’ve replaced chevrons with quotation marks, and reposted….
Sartesian: “The issues are: are workers’ wages equivalent to the time/value necessary for the reproduction of the laborers? And is the portion of the working day represented by the wage, larger or smaller than in more advanced countries, or more advanced sectors? … the low wage may not be a case of super-exploitation compared to a higher wage, if the necessary labor represents the greater part of the working day…. The issue as I see it is how quickly workers reproduce the value equivalent to the wage.”
I partly answered this above, in the quote you dismissed as “mercantilist hand-wringing”. The “portion of the working day represented by the wage” is determined by the quantity of labour required to produce the workers’ consumption goods. Since these are increasingly produced by low-wage workers in China, Bangladesh etc., it follows that both the rate of surplus value in the more ‘advanced’ countries and sectors, and the higher wages paid to their workers, is profoundly affected by super-exploitation of low-wage workers (and it cannot be ruled out that the higher wages reflect merely a lower rate of exploitation and not the absence of exploitation).
The other part of the proof of this is given in the other quote, which you say you agree with. The value generated by an hour of labour is independent of its productivity (assuming average intensity and leaving aside the issue of skilled or complex labour). The idea that workers in high-tech industries produce more surplus value than those in low-tech industries has nothing to do with Marxism; it is marginalist, bourgeois economics dressed up in Marxist terminology.
Sartesian: “Using data from the US Dept of Commerce’s Annual Survey of Manufacturers you can, IMO, make some fair approximations of rates of surplus value in the US. My efforts show for the overall manufacturing sector in the US in 2013 the ration of “s” /”v” was about 4.29. The same ratio in the petroleum sector measured over 16, while in food production, the ratio is 4.35.”
Such data, and your calculations, conflate value-added (which my book goes to great pains to show is a bourgeois concept derived from the rejection of the labour theory of value) and value (whose substance is socially-necessary labour time, and is completely independent of how this labour-power is utilised – whether in high-tech or low-tech production labour, or in non-production sectors such as advertising and finance which produce no value whatsoever, and where, according to your logic, the workers employed there would have to work for an infinity and still not replace the value of their wage).
Sartesian: “So where is the labor more “ruthlessly” exploited? In the food production sector, where wages are generally lower, where more women and minorities are employed, where labor protections and work rules are generally weaker? Or in the petroleum (or chemical, or computer equipment) sector where wages are higher, and rates of surplus value are dramatically higher?”
It is false that “rates of surplus value are dramatically higher… in the petroleum (or chemical, or computer equipment) sectors” than in the food production sector. Read the last excerpt from my book above, which you say you agree with. Assuming the same intensity of labour and the same wages, the rate of surplus value is the same in each sector. Since the workers employed in meat-packing plants are paid lower wages and often work with higher intensity, their rate of exploitation will be significantly higher than in the high-wage, high-tech industries – and part of the surplus value extracted from them will be captured by the employers in the latter. And to answer you last point, yes, in principle it cannot be excluded that part of this transferred surplus value will be paid in super-wages to their employees – that’s certainly true, I believe, in the case of Apple’s US engineers and the sweated Chinese etc labour assembling Apple’s iPhones. Which also answers your last question.
First, it’s a good thing this debate is taking place. In response to John’s book, it’s bound to come up in other venues as well, physical as well as virtual. And it is long overdue. It is an echo of the debate decades ago between the dependency theorists and those I would call orthodox Marxists (John calls them Euro-Marxists, but I think “orthodox” is a more damning term when it comes to would-be Marxists.) Namely, the dependency side pointed correctly (and angrily) to the drain of surplus-value from South to North, but – with the partial exception only of Marini, as far as I know – could not satisfactorily explain the drain theoretically. They mainly saw it as a problem of circulation of surplus-value, not of production of s-v via super-exploitation. Whereas the orthodox insisted that there was nothing special about the semi-colonial status of the South, the role of monopoly power, or imperialism – it was just a matter of the normal operation of the law of value as Marx envisaged it. Sartesian embodies such a position today.
But of course the law of value does not operate normally between South and North. Most obvious is the erection of barriers, legal and physical, to the free movement of laborers across national borders. This means that the rate of exploitation cannot be assumed to equalize. Most workers in the South are not free to seek better wages, and lesser exploitation, in the North, other than through onerous and dangerous channels that subject them to super-exploitation in the North as well.
Then there is monopoly, mention of which Sartesian disdains. But Marx was well aware of its effects:
“Finally, if equalization of surplus-value into average profit meets with obstacles in the various spheres of production in the form of artificial or natural monopolies, … so that a monopoly price becomes possible, which rises above the price of production and above the value of the commodities affected by such a monopoly, then the limits imposed by the value of the commodities would not thereby be removed. The monopoly price of certain commodities would merely transfer a portion of the profit of the other commodity-producers to the commodities having the monopoly price.” (Capital III, Chapter 50.)
Whereas borders prevent the free flow of labor, monopolies hinder the free flow of capital, and likewise inhibit the equalization of profit rates between North and South and even among Northern firms, strong versus weak. I do not say, as did Hilferding and Sweezy, that this means that the law of value has been repealed in the epoch of imperialism. It operates, but its operation has to be modified to take into account conditions that Marx put aside in order to grasp the essence of capital’s laws of motion.
“It is false that “rates of surplus value are dramatically higher… in the petroleum (or chemical, or computer equipment) sectors” than in the food production sector. Read the last excerpt from my book above, which you say you agree with. Assuming the same intensity of labour and the same wages, the rate of surplus value is the same in each sector.”
OK, Walter, (and Michael, and anyone else who care to comment)– do you agree with that?– Not that the total value produced in a working day remains the same, but that the apportioning of that value between necessary and surplus labor time remains the same regardless of the organic composition of capital in a particular sector?
I hope Walter or Michael or anyone else will take up your invitation to comment on this crucial question; I just want to suggest that if you contemplate this (a footnote from my book) you will see the theoretical error in your argument. And you shouldn’t feel despondent – this error is widespread, endemic even, in actually-existing Marxism…
“The rate of surplus-value and the rate of exploitation are interchangeable, except for one sense in which they differ. The labor of workers in non-productive sectors such as finance, advertising, etc., produce no value or surplus-value, so it is not appropriate in their case to talk of a rate of surplus-value. But if four hours are required to produce a worker’s consumption goods and her/his working day is eight hours, this worker endures a 100 percent rate of exploitation, regardless of how the capitalist employs her/his labor.”
‘Organic composition’, you will understand, is completely and totally irrelevant when it comes to consideration of non-production labour…
John, Sartesian and others – this is a really high quality discussion that has important theoretical and practical outcomes for out better understanding of imperialism and exploitation. I am going to have go presenting my thoughts on the debate. But before I do, I’d like to clarify the gist of John’s argument from his book. If I have got anything wrong, then it’s best we konw now.
As I understand it, John argues that the main form of exploitation in ‘the South’ is through super-exploitation, wages being forced below the value of labour power. Exploitation through absolute and relative surplus value is secondary. He also argues that rates of surplus value in the imperialist countries and the South are the same, but it only appears that the Northern workers have higher rates because of the transfer of value through multi-national transfer pricing etc. Workers in the North are not more productive and more exploited because GDP measures do not reveal that higher rates of exploitation in the North are due to super-exploitation in the South. So Lenin and the old dependency theories are correct. and what he calls the “Euro-Marxists” are wrong. Unproductive workers produce no surplus value. What happens to the organic composition of capital is irrelevant to these questions. Is that correct?
Hi Michael, Sartesian,
I’m sorry, but I have no time to reply to your latest messages – I have to zoom off to catch a train. I’ll be back from London tomorrow. Michaels summary is, with some caveats I haven’t time for just now, basically correct.
John,
What I said I agree with is that no matter how “advanced” the production process, how great “c”– and in particular the fixed asset portion of “c” is, the total value extracted in production, or thrown into the markets, remains the same for that capitalist. 8 hours, after all, is always 8 hours.
That is quite different from saying– regardless of the technical component, of the organic composition of capital in any or all particular sectors, the rate of surplus value– the portion of the working time that the capitalist appropriates without compensation, remains the same.
I’m not despondent, but I am certainly gob-smacked by your assertion. I think it leads to a position where in fact you wind up saying– there is no such thing as relative surplus value; that increased levels, ratios of surplus value can only be achieved through (a) lengthening the working day (b) increasing the intensity of the work performed in each unit of the working period (c) always driving wages below the value, the necessary time of reproduction, of labor power.
(a) of course is always a possibility but not always utilized
(b) has many problems– not the least is how we measure such intensity, and isolate the change in intensity in labor effort from the increased “c” that is essential to increasing the intensity
(c)if it is the once, future, and always condition of capital makes it, to say the least, difficult to figure out why capitalism hasn’t just collapsed into the pile of bones and ash it creates as the working class can’t sustain itself, unless one wants to claim, the necessity is only for a certain amount of labor power to be super-exploited, to be compensated below its cost of reproduction.
(c) also is, IMO, quite clearly an argument that in essence, reduces capital accumulation to a “primitive” accumulation.
(c) also makes you wonder why Marx referred to the tendency of the rate of profit to decline as the “most important” law of capitalism.
My view is that indeed different rates of surplus value are predicated on the different applications of accumulated capital to the production process, and that these different rates yield an aggregate profit which is then distributed among capitals based on size and relative efficiency.
I have no doubt that capitalists can distribute profits to different categories of workers as the capitalists desire. That’s not my question. My question is if higher wage rates always represent a subsidy, a transfer, provided from lower wage rates.
Yes, I understand that non-productive labor is not the issue here.
I mean not only is this “mistake” endemic among Marxists, it’s endemic to Marx.
As I said, not despondent, gob smacked.
You agree that the value generate in 8 hours is independent of ‘c’, that is of labour productivity. Excellent. The value *of* the labour-power that generates this value is determined by the quantity of goods in the consumption basket and *the productivity of the workers who produce these consumption goods.* Advances in *their* productivity reduces the time necessary for the production of consumption goods, lowering “v” relative to the unchanged length of the working day (unless this decline is matched by a proportionate increase in consumption basket). This is what Marx meant by an increase in relative surplus value.
As Marx says, “An increase in the productivity of labor in those branches of industry which supply neither the necessary means of subsistence nor the means by which they are produced leaves the value of labor-power undisturbed.”
This answers ALL of your objections and queries.
No, not quite. Marx does not say ONLY that. Advances in the productivity of labor in other branches are not excluded from altering the relation between necessary and surplus labor time.
Increase of the relative surplus value means reducing the time necessary for producing the equivalent to the wage, and is not exclusive to reducing the value of the labor power.
In volume 1 Part 4 Chapter 12 Marx demonstrates how this works. After showing that indeed, in the market, in the realization process, the improved productivity gets rewarded through the pricing mechanism, where the “new technique” capitalist sells the product above the individual “new” value, and below the social “old” value, thus claiming as profit that formerly accruing to the “old” producers, Marx states:
“This augmentation of surplus value is pocketed by him, whether his commodities belong or not to the class of necessary means of subsistence that participate in determining the general value of labour power. Hence independently of this latter circumstance, there is a motive for each individual capitalist to cheapen his commodities by increasing the productiveness of labor.”
And moreover, Marx states:
“Nevertheless, even in this case, the increased production of surplus value arises for the curtailment of the necessary labor-time, and from the corresponding prolongation of the surplus-labour.”
After going through the numbers, Marx writes:
“The exceptionally productive labour operates as intensified labor [see what I mean about problems distinguishing intensity of labor from advances in technique?]; it creates in equal periods of time greater values than average social labour of the same kind. But our capitalist still continues to pays as before only five shilling as the value of a day’s labour power. Hence instead of 10 hours, the labourer need now work only 7 1/5 hours in order to reproduce this value. His surplus labour is, therefore, increased by 2 4/5 hours, and the surplus value he produces grows from one, into three shillings. Hence, the capitalist who applies the improved method of production, appropriates to surplus-labour a greater portion of the working day, than the other capitalists in the same trade. He does individually, what the whole body of capitalists, engaged in producing relative surplus-value, do collectively. On the other hand, however, this extra surplus value vanishes, so soon as the new method of production has become general and has consequently caused the difference between the individual value of the cheapened commodity and it social value to vanish. The law of determination of value by labour-time….forces his competitors to adopt the new method. The general rate of surplus-value is, therefore, ultimately affected by the whole process, only when the increase in the productiveness of labour has seized upon those branches of production that are connected with, and has cheapened those commodities that form part of the necessary means of subsistence, and are therefore elements of the value of labor power.”
As an example of changes affecting that general rate, I would point to the period known as the “long deflation”– generally around 1870-1898, when there was a pretty sustained decline in nominal wages in the US triggered by advances in transportation, communication, and production that brought down the costs for housing, food, and clothing– so much so, if I recall correctly, real wages actually rose.
The GENERAL RATE is affected as a whole only when productivity in the means of subsistence has reduced the value of those means.
That is not the same as saying– there are no differences in rates of surplus-value. Indeed, Marx is saying precisely the opposite:
“The value of a commodity is, in itself, of no interest to the capitalist. What alone interests him, is the surplus-value that dwells in it, and is realisable by sale. Realisation of the surplus-value necessarily carries with it the refunding of the value advanced. Now, since relative-surplus value increases in direct proportion to the development of the productiveness of labour, while, on the other hand, the value of commodities diminishes in the same proportion; since one and the same process cheapens commodities, and augments tthe surplus-value contained in them; we have here the solution of the riddle: why does the capitalist, whose sole concern is the production of exchange value, continually strive to depress the exchange value of commodities.”
Have a good trip.
Always a pleasure, never a chore.
Dear Sartesian,
You ask “Is the extraction of relative surplus value only impacted by changes reducing the value of the means of subsistence, and thus reducing the value of the labor power?” – but there is nothing, absolutely nothing, in any of the lengthy quotes you then cite from Marx that suggests that the answer to your question is yes; nothing, in other words, that contradicts Marx’s extremely clear view (already cited by me in response to an earlier post from me, but passed over by you) that
“By productivity, of course, we always mean the productivity of concrete useful labor. . . . Useful labor becomes . . . a more or less abundant source of products in direct proportion as its productivity rises or falls. As against this, however, variations in productivity have no impact whatever on the labor itself represented in value. As productivity is an attribute of labor in its concrete useful form, it naturally ceases to have any bearing on that labor as soon as we abstract from its concrete useful form. The same labor, therefore, performed for the same length of time, always yields the same amount of value, independently of any variations in productivity. But it provides different quantities of use-values during equal periods of time.” (Marx, Capital, vol. 1, 137)
Which bit of this do you have problems with? In the quote from Grundrisse you cite, Marx says “The increased productive force of his labour, to the extent that it is a shortening of the time required to replace the labour objectified in him (for use value, subsistence), appears as a lengthening of the time he labours for the realization of capital (for exchange value).” If he didn’t keep repeating this, it is because it is so basic, so elementary.
But I have a bigger question about your argument. Why do you go to such pains to deny the relevance or even existence of imperialist super-exploitation? In your erudite reading of Marx, why do you so wilfully ignore his many references to a third form of surplus-value increase – the reduction of wages below the value of labour power; and the relevance of this to a world in which the proletarian condition – its free mobility and equality – is violated by militarised borders and the rest of the superstructure of racist and imperialist domination? It was exactly with your view in mind that I wrote in the book (p240)
“In a much-discussed chapter in Capital III, Marx considers six counteracting factors that mitigate the tendency of the rate of profit to fall. One of these counteracting factors, the Reduction of Wages Below their Value, is another brief reference to this third way to increase surplus value, and is dealt with in just two short sentences: “Like many other things that might be brought in, it has nothing to do with the general analysis of capital, but has its place in an account of competition, which is not dealt with in this work. It is nonetheless one of the most important factors in stemming the tendency for the rate of profit to fall.”
“Once again, Marx mentions super-exploitation, that is, “pushing wages . . . below the value of labor-power,” stressing its great importance—and then excludes it from further analysis. This and other exclusions reviewed in this chapter were overlooked by orthodox Marxists as they scoured Capital for ammunition to use against dependency theory, seizing instead on Marx’s comment that higher real wages in England than in Germany and Russia are compatible with a higher rates of exploitation in England, his assumption of a very much lower rate of surplus-value in China than in England, and a few other scattered asides, in order to exclude the blindingly obvious fact of higher rates of exploitation from theory, and in so doing they use Capital itself to obscure capitalism’s imperialist trajectory and shield it from criticism.”
I don’t know what happened just now – I tried to post my last comment as a reply to later post by Sartesian. The message came “your comment cannot be posted”, and then it was posted, but in the wrong place.
Hi Michael,
I’m going to answer your questions in two parts; this one deals with the last of them, on the status of Lenin’s definition of the essence of imperialism, the division of the world into oppressed and oppressor nations. Thinking about your other questions, and how to answer Sartesian’s objections, has led to something of a eureka moment in my thinking, which I’ll write up later today in a separate post.
My views concerning the relationship between national oppression and class exploitation in the contemporary world are based on what I consider to be a major breakthrough made by my friend and comrade Andy Higginbottom, who argued, in two papers presented to the 2008 and 2009 Historical Materialism conferences that holding “(southern) wages … below the value of (northern) labour-power is a structurally central characteristic of globalised, imperialist capitalism… Imperialism is a system for the production of surplus-value that structurally combines national oppression with class exploitation.” (The Third Form of Surplus Value Increase, conference paper, Historical Materialism Conference 2009). A year earlier he wrote, “National oppression is manifest not only by dispossession, it is reproduced within the capital labour relationship as super-exploitation, that is to say intense work, long hours and the payment of a wage below the value of labour-power [i.e.] the minimum social standards achieved at that time in the heartlands of capital.” (Rent, Mining and British Imperialism, conference paper, Historical Materialism ‘Conference, 2008). This, as the book argues, provides the necessary foundation for a synthesis of Marx’s theory of value and Lenin’s theory of imperialism, for a Marxism-Leninism that is actually worthy of the name, unlike its previous Stalinist iterations.
Unfortunately, my decision to use chapter 1 as a way of introducing and structuring the rest of the book (dispensing with a separate intro) and to use the final chapter to analyse the ongoing global systemic crisis resulted in a lot of material on this hugely important topic being put to one side. I now regret not including at least some of this in my book, in particular the following passages:
Neoliberal globalisation signifies, above all, a new stage in the globalisation of the capital labour-relation. It pitches the workers of the dominant nations and the workers of the global South together, in competition with each other and yet bound together in mutual interdependence, connected by globalised production processes, exploited with different intensities by the same capitalists. But this qualitative, new stage in the evolution of the capital/labour relation possesses a very specific quality: the imperialist division of the world was inherited by capitalism; it is now inherent. In other words, the globalisation of the capital/labour relation, in the context of and on the foundation of a pre-existing division of the world into oppressed and oppressor nations, entails the internalisation of this division. Neoliberal globalisation is, therefore, the unfolding of the imperialist form of the capital relation.
As a result, this latest stage of capitalist development has been leading not to convergence of the oppressed nations with the ‘advanced’ countries and the supersession of the North-South divide but to something meriting the term global apartheid, in which the southern nations have become labour reserves for super-exploitation by northern capitalists, producing industrial inputs and consumer goods, sustaining the western ‘consumer society’. This is imperialism on an entirely capitalist basis, in an advanced stage of its development, in which the globalisation of the capital/labour relation has taken place on the basis of inherited imperialist division of the world. In the neoliberal era, capitalism has fully sublated the old colonial division of the world; discarding all that is inimical to it and preserving and making its own all that promotes its continuation and expansion.
The dismantling of the colonial empires and the attainment of formal sovereignty by the subject nations, advances made possible by the multitudes who joined hard-fought struggles for national liberation; and by the imperialists’ greatest fear, the increasing propensity of these movements to take a revolutionary socialist path, as shown on countless occasions from Korea to Algeria to Nicaragua. The new relationship of forces obliged imperialist powers to reorganise their relations with emerging capitalist elites within the subject nations, allowing their protégés to hold the reins of power while never letting go themselves. The end of colonialism and the attainment of formal sovereignty may have emancipated the national bourgeoisies, but the great majority—those left with nothing but their labour-power to sell, in a word the proletarianised peoples of these countries—still await their emancipation. The world continues to be divided into ‘oppressed and oppressor nations’, but now the national bourgeoisies act as intermediaries and accomplices in the imperialist plunder of their nation’s nature and living labour.
I’m sorry that deadlines and pressures of work forced me withdraw from the debate on my book – apologies to Sartesian, Michael and others for not until now answering your questions and comments, which I’ve found immensely useful and stimulating. For the record – and to reignite the debate, if you desire this – I am posting responses to major outstanding questions.
The productivity of labour and the organic composition of capital
This post addresses Sartesian’s question (posed, and therefore answered by me, both in the comments to Michaels original book review, and here, in comments on his ‘Thoughts’: “Can workers produce values equivalent to their own wages in less time… through the expansion of fixed assets…?” S/he answers yes, arguing that (given equal wages) workers in sectors with a high capital/labour ratio are subject to a higher rate of exploitation than in sectors with a low capital/labour ratio. I say no, arguing that “assuming both labors are of average intensity and assuming they are paid the same wages, the quantity of value produced in a standard working day by the hamburger-flipper standing in the car-park of a steel factory is the same as that produced during the same time by the steelworker inside that factory” (p242).
The answer to this matters a lot. If Sartesian is right then there’s a large hole in my argument that the global shift of production to low wage countries witnessed in recent decades has been driven by substantially higher rates of exploitation available in those countries. I remain convinced that I am right and that Sartesian is wrong, but in my haste to refute her/his argument I’ve missed an important detail, a grain of truth that needs to be rescued, and have failed to pin-point exactly where Sartesian’s error lies.
Sartesian says s/he agrees “that no matter how “advanced” the production process, how great “c”– and in particular the fixed asset portion of “c” is, the total value extracted in production… remains the same for that capitalist. 8 hours, after all, is always 8 hours. That is quite different from saying– regardless of the technical component, of the organic composition of capital in any or all particular sectors, the rate of surplus value– the portion of the working time that the capitalist appropriates without compensation, remains the same.”
Let us carefully examine this curious statement.
First, let us note that, in this context, “how great ‘c’ is” is just a different way of saying ‘organic composition of capital’. Thus the first part of Sartesian’s statement affirms that ‘the total value extracted in production’ in a given sector is independent of its organic composition. I agree with this. To argue otherwise, as does Michael Kidron and his modern-day disciples such as Alex Callinicos and Joseph Choonara, is to overturn this basic postulate of Marx’s theory of value. Sartesian is evidently aware of this and does not pursue this line of argument. Second, let us note that the value of this labour-power is determined by the quantity of socially-necessary labour time required for the production of the worker’s basket of consumption goods. This, too, is completely independent of the organic composition of capital in the sector in which this worker is employed. If we assume that the consumption levels of workers in sectors with different organic compositions is the same (i.e. that wages are equalised between the different sectors), then it necessarily follows that the rate of exploitation is identical, ‘regardless of the organic compositions’ of the different sectors, and the second sentence in Sartesian’s statement is nonsensical, and can only be made sensible by replacing ‘is quite different from saying…’ with ‘is the same as saying…’.
How does Sartesian justify this clanger? S/he wants to argue that ‘total value extracted’ in an 8-hour day is the same, but, using his/her words, “the portion of the working time that the capitalist appropriates without compensation” varies according to the organic composition of the capital which this labour sets in motion. With the value of labour-power given, (i.e., assuming uniform wages) Sartesian believes that workers in more capital-intensive sectors “produce values equivalent to their own wages in less time” than in less capital-intensive sectors. This directly and completely contradicts his/her affirmation that ‘total value extracted’ in an 8-hour day is the same, irrespective of organic composition.
So far, I have done nothing more than rehearse the dispute with Sartesian expressed in previous exchanges. Everything I’ve said so far in this comment applies to the rates of exploitation in different sectors with different organic compositions, and assumes that the productivity of each group of workers is the average for their particular sectors. In other words, it ignores intra-sectoral differences; i.e., it ignores what happens when an individual capital can produce a given commodity with less than the average socially-necessary labour-time. Most of the passages which Sartesian cites from Marx concerning relative surplus value to support his/her argument correspond to this level of abstraction and provide no justification for his/her argument. However, one extended passage cited by Sartesian deals specifically with intra-sectoral differences, i.e. it addresses differences between the average socially-necessary labour time required to produce a given commodity and the specific amount of labour-time needed for an individual firm to produce this commodity. About this, Marx says (Penguin, vol. 1 p435): “The exceptionally productive labour operates as intensified labour; it creates in equal periods of time greater values than average social labour of the same kind.” On the face of it, this appears to contradict Marx’s statement (vol. 1, p137) that “variations in productivity have no impact whatever on the labor itself represented in value… The same labor, therefore, performed for the same length of time, always yields the same amount of value, independently of any variations in productivity.” It is now clear to me that Sartesian’s error lies in her/his inability to resolve this apparent contradiction, and this is why s/he falsely believes that “rates of surplus value are dramatically higher… in the petroleum (or chemical, or computer equipment)” than in labour-intensive food production.
The contradiction between Marx’s two statements is only apparent because, in the first of these quotes, Marx focuses on firm-specific levels of productivity while in the second of these quotes he abstracts from this. The different rates of surplus value Marx talks about in the first quote deal exclusively with productivity differences between individual firms in a given sector, i.e. between firms producing identical commodities but in different amounts of time. Sartesian’s error is to transpose this to different sectors with different organic compositions. In order to see why this is a very big error, a major departure from Marx’s theory of value, we need to closely examine Marx’s argument.
In continuation of his first statement, Marx argues that “the capitalist who applies the improved method of production appropriates and devotes to surplus-labour a greater portion of the working day than other capitalists in the same business. He does as an individual what capital itself taken as a whole does when engaged in producing relative surplus-value. On the other hand, however, this extra surplus value vanishes as soon as the new method of production is generalised, for then the difference between the individual value of the cheapened commodity and it social value vanishes. The law of determination of value by labour-time….forces his competitors to adopt the new method. The general rate of surplus-value is therefore ultimately affected by the whole process only when the increase in the productivity of labour has seized upon those branches of production and cheapened those commodities that contribute towards the necessary means of subsistence, and are therefore elements of the value of labour-power.”
Several things of great importance arise from this.
First, the unequal distribution of surplus value is between capitalists ‘in the same business’, i.e. who produce the same commodities. The more productive capitalist will capture an extra share of surplus value at the expense of competitors whose productivity is lower than the average for that particular branch of production. It should be clear that this only applies to individual capitals in direct competition with each other, and does not in any way imply that capitals in branches of production with higher organic compositions have a higher rate of surplus value than those in branches of production with lower organic compositions. Sartesian’s argument therefore collapses in ruins.
My book deals with this issue as follows (pp241-4, asterixes indicate italics in original):
“Marx says [that] ‘a manufacturer who makes use of a new discovery before this has become general’ reaps a super-profit because his more technically advanced capital can produce a *given commodity* in less than the average socially necessary labor time required in the technically retarded country. These extra profits *only arise in competition between capitalists in the same branch*, producing similar goods in direct competition with each other, for example, cars, chemicals, or clothing, and results from capitals with differing costs of production all selling for the same price… Between branches of production, when trade is in dissimilar goods, matters are very different. Producers of entirely different commodities do not confront each other directly as competitors in product markets, but indirectly, as capitals competing for new investors. *Between* branches of production, assuming a uniform value of labor-power, relative prices are determined by the different amounts of socially necessary labor time required to produce each product and by profit-equalizing transfers of value generated by differences in the organic composition of capital….
“Value transfers to innovating capitals from less advanced capitals within a branch of production are the result of *differences in the individual productivities of the individual capitals* within that branch—and result in divergence in the rate of profit enjoyed by individual capitals. On the other hand, value transfers between different branches are effected by the *different value compositions of the total capital employed in the different branches*—and, in a unitary economy, in which capital and commodities freely flow, this results in *convergence* of the rate of profit between the different branches and the formation of an average, economy-wide rate of profit. Whether trade between countries involves competition between firms trading similar goods or instead involves the exchange of dissimilar goods is therefore of great importance, determining which type of value transfer is predominant. It is therefore highly significant that, as we saw in chapter 3, trade between imperialist nations is in similar goods, while, in contrast, trade between imperialist and developing nations are in different goods [chapter 3 discusses many exceptions to this, but argues that, in general, the relation between imperialist TNCs and their suppliers in low-wage countries, whether in-house FDI or arm’s length, is complementary, not competitive – e.g. M&S not compete with sweat-shops who make its garments]. We thus obtain this important result: in N-N trade differences in productivity are a prime cause of value-transfers and a prime determinant of above- or below-average profits, but in N-S trade *they are not*; and, for this reason, [innovation] does not explain anything about the interaction between imperialist and low-wage economies. An alternative explanation is required, one that rests on the central role played by the third form of surplus-value extraction, that is, super-exploitation.”
Second, more advanced production technique is only one of a wide range of factors which can cause surplus value to be unequally distributed between individual capitals. As is well known, Marx abstracted from all forms of monopoly that obstruct free competition. A capitalist with privileged access to cheaper raw materials or other inputs, or whose costs of transportation of finished commodities to the market are lower than for others in the same business, or which are able to profit from ‘brand rent’, will achieve the same result: a higher rate of surplus value than his competitors. To be consistent, Sartesian would have to argue that surplus profits arising from these factors also signify that its workers more rapidly replace the value of their labour-power, signifying a higher rate of exploitation.
Third, value, surplus-value etc are complex and contradictory social relations, and we should guard against reifying them, turning them into things, reducing them to mere numbers. The different rates of surplus value achieved by less- and more-productive capitals express the specific social relation between these capitals. When Marx says that “exceptionally productive labour operates as intensified labour,” this is only so because the labour employed by other capitals in direct competition with the innovating capital operate as less intensive labour. The exceptionally productive labour *operates as* intensified labour. This does not mean that this labour *is* more intense, i.e. that s/he is working harder and faster than average labour. It means that the effect, from the point of view of this individual capitalist, is *as if* his workers were working more intensively than average. Since the social value of the commodity is determined by the average socially-necessary labour time required for its production, it is clear that *all* of the labour employed in that sector counts equally towards the determination of this social average. This is why I explain in the book, in the midst of the passage quoted above, that
“It is important to note that, assuming labor of average intensity and complexity (we return to the subject of complex labor later in this chapter), all of the labor-power expended by workers employed in the less productive capitals counts equally toward total value, even if a disproportionate part of it is captured by the more productive capitalists. The more productive capitalists’ extra profits derive not from their own more productive workers but from surplus labor extracted from workers employed by technologically deficient capitals. Were these capitals to be driven out of production, the average socially necessary labor time required for the production of these commodities would decline, and with it their price and the surviving capitalists’ extra profits. Thus the value generated by productive workers in a given amount of time is independent of their productivity, even if the value added captured by their employers remains highly dependent on this. This is so fundamental, it must be repeated: a steelworker operating more technologically sophisticated machinery does not produce more exchange value, s/he simply allows her/his capitalist employer to capture a larger share of it. It follows that the rate of exploitation—assuming equal wages, intensity of labor, etc.—is not higher in more productive capitals than in less productive capitals, as Euro-Marxist critics of dependency theory argue.”
On the face of it, this passage from my book appears to contradict Marx’s statement that the exceptionally productive labour generates more value in a given amount of time than does average labour, but this contradiction is only apparent, for the reasons just given. Nevertheless, in retrospect, the book’s discussion of this issue is incomplete, and provides pedants and Euro-Marxists with a flimsy basis for rejecting my argument that the outsourcing of production to low-wage countries is driven by the higher rates of exploitation available there, and that this has been central to the (temporary) containment of the tendency the rate of profit to fall.
John smith said,
“But if four hours are required to produce a worker’s consumption goods and her/his working day is eight hours, this worker endures a 100 percent rate of exploitation, regardless of how the capitalist employs her/his labor.”
The crucial question here isn’t how the worker is exploited but what happens to the capitalist? If a capitalist is wholly involved in production that produces no surplus value, A) how is he a capitalist and b) if he already takes a share of already produced surplus value created in another sphere of production then isn’t it true that his unproductive workers are also paid out of already produced surplus value?
Moreover, are many workers in the advanced world in the same position as workers in the finance/unproductive sector, i.e. are they paid out of the increasing surplus produced by workers in the developed world? Another way to put it, are workers in the advanced world increasingly unproductive?
From my perspective there is too much conflation in the above comments between socially necessary labour time and the wage level. What a worker takes home when compared to what another worker takes home has very little to do with what each requires to sustain themselves. I.e. High wages and low wages do not reflect SNLT. Or put more bluntly, you need more than Marx’s theory to answer the question, why do workers in the advanced world get more than those in the developed world.
My own view is that the hourly compensation costs by nation tells us much, one thing it tells us is that the so called levelling off of wages between the advanced and developed world has not taken place. And this cannot be explained by productivity rates alone, if at all. When Sartesian tells us that the wages and benefits of advanced workers is under attack he is overstating the case. Doesn’t Andrew Kliman point to opposite conclusions about this?
Politically speaking, and I know something about this being more of a union activist than an academic, workers in the advanced world are well aware of their ‘privileged’ position in the world market and this awareness can explain a great deal about the politics. For example, why workers are nationalistic and why haven’t workers formed a separate and combative class.
First of all I apologize for my bad English. I hope to make me understand.
I find persuasive the arguments of John Smith. I just wanted to introduce some other element of reflection.
If you work in a production branch the average social conditions, 8 work hours add an identical value of the other branches of production to manufactured goods, irrespective of their productivity and the constant capital invested in them. Normally, as shown by Marx, it takes place a transformation of prices to allow individual capital to be remunerated on the basis of the total capital invested in its production. This transformation involves a value transfer in sectors with lower organic composition of capital to those with higher composition. Without this equalization, if prices were to be established on the basis of the embedded value in individual commodities, there would be a continuous transfer of capital to sectors that produce more value.
Increasing productivity, in terms of the greater amount of surplus value which can be appropriated to the capitalist, has significance only because increasing productivity there is a lower value, and therefore the price of individual goods that become portion necessary to the reproduction of labor power. But these effects are generalized, not only affect companies more productive but have the same consequences on the entire workforce, regardless of the industry or the company in which it is achieved. This is why the entire capitalist class is involved in the lowering of these prices of goods entering the reproduction of labor power and that allows him to reduce the necessary labor time, and then increase the relative surplus value. This is true even for companies of the same nation and is even more valid for companies of different countries. A point to be emphasized here is that the international division of labor and the imperialist control of finance usually sees concentrated productions with higher composition of capital in the more developed nations.
But this operation in itself does not imply an inequality in profits, since the capital are remunerated at an average rate of profit on the basis of invested amount not on the basis of the product’s value. Generally argue that the metropolis workers are more exploited than those of the suburbs is wrong. In fact, if the s / v rate of surplus value is determined by the actual surplus value added by labor and not from the profit of the capitalist is able to appropriate based on the organic composition of capital, it is very unlikely that this worker of the factory with the highest composition of capital gains less than a worker employed in a company where the organic composition is lower (except in special cases there is no need to examine here). The assumption made by Smith regards in particular the productive sectors that are part of intermediate processing of a final product. In this case, there may be a transfer of greater added value if the working conditions and wages in company that produces intermediate goods (longer hours, wages below the average, the more labor-intensive), are worse than where it is completed the final product.
Also in this case it is a phenomenon that can occur within a nation itself. But Smith has highlighted that on the basis of the current international division of labor, there is a extension and concentration of production with the above mentioned characteristics, in the peripheral countries. This is an irrefutable fact and is not a fact that falls from the sky. It is the result of the historical domination of the imperialist countries and depends on the fact that these countries control the knowledge, financial capital, have the appropriate infrastructure and are the most armed in the world. In these countries also trade union freedoms are very limited and the workers are subjected to much higher than those normally existing control measures and repression in the metropolitan countries. Moreover, in these countries the greater spread of capitalism is true that creates more jobs, but it is accompanied by destruction of subsistence economies, to expulsion from agriculture, as well as at a much higher population growth rate. For this reason, we are witnessing the same time as employment growth but also unemployment. This factor contributes, along with the repressive measures and the impediment to move the workforce, to keep down the price of labor power. Claiming that the wages paid to workers of the peripheries is appropriate to ensure their reproduction is very severe, since it suggests that these workers as needs to reproduce itself are inferior to those of workers in more developed countries. However, if these workers take the starvation wages it depends on the reasons mentioned above in which the entire world capitalist class helps to keep them. This perhaps is a point at which the analysis of Smith is not sufficiently clear because it does not stresses enough that the bourgeoisie of the southern countries is the first interested in holding down wages of their nation and plays this role in the alliance and on behalf of big international capital. When the ruling classes of these countries think they can escape to this role are attacked economically, diplomatically and militarily by the bourgeoisie of the imperialist countries. To keep the example of China: there is no external pressure that forces the political leadership of this country to keep wages so low, to repress trade union struggles of the workers, but the role they occupy in the international division of labor by they accepted.
This is to say that if I share Smith’s economic analysis, leave me somewhat perplexed the political implications of his address. Unfortunately, the workers of the dominated countries to free themselves from the domination of imperialism must fight against all the representatives of capital, including the bourgeoisie of their own country that lives of its exploitation. It is true that imperialism increases the gap between the dominant and the dominated countries, but this gap can never be overcome through inter-class alliance with its own bourgeoisie. Finally it must be said that, as there demonstrates the history of the past 30 years, the workers of the most developed countries they are also exploited by capital, and with the growing economic contradictions, also their relative privileges than their brothers class , are drastically reduced. This in my opinion, objectively reopens the discussion of the necessary unity of the international proletariat to free both from the rule of capitalism as from its most odious expression of imperialism.
First, Roberto, no apologies are necessary. A salute to your courage to take these issues on in a language with which you are not familiar is in order, but not an apology from you.
Of course 8 hours is 8 hours; and 8 hours can reflect very different wages based on historical conditions. Eight hours in China in 2006 means 500 pounds of steel. In Japan and Korea it means 8000 pounds of steel. Either one of those amounts reflects a far greater relation of surplus value to necessary value (wages, “v”, labor costs) than the other, or they represent exactly the same rate of surplus value to those labor costs. I find it impossible to explain capitalist accumulation, what Marx referred to as the “general law of capitalist accumulation, if the rates are identical. That’s why I ask for someone to do the calculations that show the rates are identical.
I do know, also from a study done years ago, that labor costs per hour of production in China’s steel industry were more than twice as great as those labor costs per hour of production in Korea’s or Japan’s, which kind of fits with Marx’s general law, and his remarks concerning the impact of fixed assets on production and relative surplus value.
Regarding this: “. Moreover, in these countries the greater spread of capitalism is true that creates more jobs, but it is accompanied by destruction of subsistence economies, to expulsion from agriculture, as well as at a much higher population growth rate.” there is no argument. Capitalism does that wherever it goes. That’s how it creates what it likes to call the market for “free labor.” Happens, and happened everywhere. Happened in the Philippines, happened in Africa when the big European fishing ships depleted stocks of both coasts, devastating the local economies and forcing increasing numbers of people to migrate to Europe to work in Spain’s agriculture sector, or construction sector, or as marginalized peddlers.
Happened in Mexico, before NAFTA, and was pushed along by NAFTA.
I have not every claimed that wages paid to workers in less advanced countries are “adequate” to ensure their reproduction. The very basis of “underdevelopment” is that capitalism has not “revolutionized” the pre-existing environment, cannot revolutionize the pre-existing environment and so produces little more than iterations of the special enterprise zones, the “maquiladoras” were wage levels are restrained by the ongoing destruction of subsistence communities and the ensuing waves of migration into the cities and these “special” zones.
I wrote earlier that as technology pushes, and expels disproportionately greater masses of labor from the production process, the wage differentials between high and low wage areas is likewise reduced– that does not mean that achieving that differential is any less important to the bourgeoisie. If production times are reduced from 10 hours per ton of steel to 2 hours per ton, then the difference between paying $10 per hour in the “2 hour” location vs. $2 per hour in the “10 hour” location disappears….on paper. The bourgeoisie however much they may then talk about “re-shoring” aren’t really going to do that, at least not very much. They are going to find someplace where they can pay $1 per hour and apply the “2 hour per ton” technology. The tendency of the rate of profit to decline rules against bringing the work “back home.”
Paul Baran to Paul Sweezy, May 2, 1960:
“Indeed, I am somewhat exhilarated by the thought that we may actually have in our hands something that is an important contribution to thought beyond Marx.”
http://monthlyreview.org/2010/12/01/two-letters-on-monopoly-capital-theory/
As a “traditionalist”, “orthodox”, “fundamentalist”, “Euro-Marxist” I would argue that Baran, Sweezy, Dependency theorists, and their followers knowingly or unknowingly have abandoned the law of value. For me however the law of value is the foundation of the Marxist political economy. If the law of value doesn’t operate anymore then what we have is a different mode of production. In that case categories such as rate of surplus value are devoid of any theoretical foundation because first and foremost there is a need to scientifically prove that exploitation exists to begin with. How can one believe in surplus value if one believes that the law of value does not operate anymore?
Sartesian challenged:
“OK, Walter, (and Michael, and anyone else who care to comment)– do you agree with that?– Not that the total value produced in a working day remains the same, but that the apportioning of that value between necessary and surplus labor time remains the same regardless of the organic composition of capital in a particular sector?”
Yes I agree, as does Marx.
John Smith answered already, but let me elaborate: the rate of exploitation of workers employed by a particular capital does not depend on the productivity or the organic composition of that capital. Very simply, the rate of exploitation is s/v, whereas the organic composition involves the constant capital invested, and the productivity involves the constant capital used up. Changes in either the stock or flow of constant capital do not affect the rate of exploitation, the formula for which does not include either “c”.
You responded by citing the case of a capitalist who introduces a new innovation in the production process ahead of his competitor capitalists. As a result he does collect extra surplus value by producing individual commodities more cheaply than his competitors. But the extra surplus value is not created by his or his competitors’ workers beyond the level they have previously created; it may appear that way, but it really comes out of the pockets of his undersold competitors. So the rate of the workers’ exploitation is not changed; only the distribution of surplus-value among the capitalists is changed. And the innovator’s advantage is only temporary, because the competitors, at least those who survive the intensified competition, catch up and adopt the new innovation.
As Marx says and John Smith repeats, the general rate of surplus-value is changed only when increased productivity “has seized upon those branches of production that are connected with … the necessary means of subsistence” and cheapens their commodities, which are elements of the value of labor power.
By the way, in the example you cite from Marx, he proposes: “Now let some one capitalist contrive to double the productiveness of labour, … the value of the means of production remaining the same.” That is, the value of “c” is unchanged; it is not a question of higher organic composition. So this example does not fit the challenge you posed.
On the other hand, let’s take a closer look at the sentence you question: “The exceptionally productive labour operates as intensified labor; it creates in equal periods of time greater values than average social labour of the same kind.”
Hmm – intensified labor? If Marx is saying that this innovative capitalist has just acquired a whip to make his wage-slaves work twice as fast, then we have an example of increasing surplus-value not relatively but absolutely. If this more intense labor doubles the output, as Marx says, then it is the equivalent of doubling the length of the working day. Well, that would indeed increase the rate of surplus-value, but without changing the organic composition. It’s getting late so I’m not fully awake, but it looks like Marx in this example is mixing up intensified labor and productive innovation. Whatever – I’ll stick with Marx’s last sentence in the passage you quote:
“The general rate of surplus-value is, therefore, ultimately affected by the whole process, ONLY when the increase in the productiveness of labour has seized upon those branches of production that are connected with, and has cheapened those commodities that form part of the necessary means of subsistence, and are therefore elements of the value of labor power.” (Emphasis added.)
Walter
That’s very interesting, but not quite clear enough for me. So I’d like to propose that we take actual concrete sectors of the capitalist economy, show how we calculate the real rate of surplus value in each, and see if in fact the rates are identical.
For example, take the data from the US Dept of Commerce’s ASM for the petroleum sector and the machinery sectors, show the adjustments necessary to “strip out” the “value added” distortions, and calculate the real rates of surplus value.
I also think it would be helpful to provide a demonstration, comparison, of calculating the rate of surplus value achieved in, for example, China’s steel industry, where according to various studies 30 hours of labor are required for the production of each ton of steel, and that of steel production in advanced countries, where production times are less than 2 hours per ton.
The example I cite from Capital Vol 1 was not made in reference to the organic composition of capital, but to point out that Marx acknowledges that relative surplus value is increased by changes in technique and not solely by reductions in the value of the means of subsistence.
All that to one side for a moment, if the rates of surplus value are the same regardless of development of technique and the applications of accumulated capital to the production process, but are solely driven by advancements in reducing the value of the means of subsistence, how is it possible for those rates to be the same when one country, say China, has approximately 40% of its population engaged in rural/agricultural production, and another country, say the US has less than 2% of its population engaged in rural/agricultural production?
I would think we could use the productivity of agriculture as a sort of marker in this area.
In any case, I think providing the method and the calculations for determining the real rates of surplus value would go a long way to clarifying this issue.
John’s book does sound interesting, I think his points about unequal exchange are bang on and very significant in explaining the recovery of profitability in the West.
However, his estimates of the growth of the working class in the “emerging markets” underestimate the impact of globalisation, as they do not account for the transition of the centrally planned economies to capitalism, in China, the ex-USSR and CEE.
In 1980 when his chart begins the population of these countries were not in market economies in any sense. Consequently, when you adjust for their transition to the market and adjust for the one off growth of real national income, then the issues he describes are even more significant, viz the size of the international working class that is exploited by capital, and the issue of super exploitation, unequal exchange etc.
I’ve written about it in my book reviewed here
http://marxandphilosophy.org.uk/reviewofbooks/reviews/2015/1772
which was summarised in an articled published in the RRPE earlier this year.
For Marx, society is viewed as a living organism, i.e. as a totality in a process of movement and change. A totality in motion that can only be understood in terms of the driving contradiction at the heart of a specific mode of production.
By locating the fundamental source of capitalist crisis in the contradiction between capital and labour, Marx dispels any theories of capitalist crisis that don’t see society as a totality in motion. That is, Marx reveals that as capital develops the social forces of production, it simultaneously develops the social relations of production.
Change in economic conditions, i.e. the decline of capital, although primary, should, however, not be seen as the only historical drive as the social relations of production evolve. That is, the subjective factor must also play its part, manifested in the consciousness of the social relations and reflected in the class struggle.
‘With the change of the economic foundation the entire immense superstructure is more or less rapidly transformed. In considering such transformations a distinction should always be made between the material transformation of the economic conditions of production, which can be determined with the precision of natural science, and the legal, political, religious, aesthetic or philosophic – in short, ideological forms in which men become conscious of this conflict and fight it out.’ (Preface to C.C.P.E. Karl Marx)
Time for those of the left, of any persuasion, to recapture the essence of Marx. To much time and effort wasted in producing e.g. so-called academic texts, i.e., attempts by e.g. left academics to make a name for themselves.
Marx was no soothsayer but those on the left who waste their time stating the obvious instead of educating the working class are examples of why Marx refused to be called a Marxist.
jim drysdale.
Thanks, Jim!
The graph reproduced in Michael’s review counts China as part of the ‘less developed regions’ and former Comecon countries as ‘more developed regions’. The categorisation of the latter is debatable; anyway, shifting them to ‘less developed’ would slightly soften the contrasting trajectories – ‘slightly’, because the industrial workers of ‘Central Europe and the Baltics’ currently amount to less than 10% of those in ‘more developed regions’ and around 2% of ‘less developed regions’; ‘soften’, because integration with the capitalist world has destroyed more industrial jobs in these countries than have been created.
I agree with your larger point. As the book says (p102):
“This quantitative growth is an indication of a qualitative transformation: the industrial workers of the Global South have not only become more numerous, they have become very much more integrated into the global economy, greatly magnifying their economic importance and social weight. The IMF has attempted to capture this qualitative change with its “export-weighted global workforce,” constructed by multiplying the numerical growth of the workforce by the increasing degree to which they produce for the global market rather than the domestic market, as is indicated by the growing ratio of exports to GDP. Since Southern-manufactured exports grew more than twice as fast as GDP during the quarter-century leading up to the outbreak of the global crisis in 2007, the IMF reckons that the “effective global workforce” quadrupled in size between 1980 and 2003.”
When BMW moved their 5 series to Vietnam within six months the ‘uneducated’, ‘uncivilised ‘ and poorly paid Vietnamese workers were producing more cars per hour per week than the highly paid, ‘educated’ and ‘highly civilised’ Bavarian worker.
Food for thought at least.
First, I don’t know anyone here who has or ever would refer to anybody anywhere, much less workers anywhere as “uneducated,” or “uncivilized.” Nobody has and nobody will. The issue is the relations of accumulation to the extraction of surplus value.
Moreover, there is no doubt that as technology improves, the combination of that technology with workers compensated at a lower rate provides a real boost to the increment of surplus value.
And moreover, it’s also quite clear that in “established” industries, “advanced” countries curtail production, or the rate of production, or the intensity of the labor process in response to things like– industrial unions; grievance procedures;work rules; environmental concerns; taxes — in short the “social consciousness” that comes with development of the working class in capitalism.
But just as certainly, the applications of advanced technology work, partly, and to some degree, to diminish the differential attributable to low wage labor. That is to say when it took 10 hours to produce a ton of steel (as it did, IIRC, in the US after WW2), then a wage differential of say $10 an hour appears as a big obstacle to expanding in the “advanced” area. And the big gain to be made in moving production to the low wage center. However, when only 2 hours is required to produce a ton, then the wage differential appears as less an obstacle.
My concern right now concerns solely the extraction of relative surplus value. Is the extraction of relative surplus value only impacted by changes reducing the value of the means of subsistence, and thus reducing the value of the labor power (i.e. the “long deflation” period)? Or is it possible along the lines also described by Marx in volume 1 of Capital:
“The prolongation of the working-day beyond the point at which the labourer would have produced just an equivalent for the value of his labour-power, and the appropriation of that surplus-labour by capital, this is production of absolute surplus-value. It forms the general groundwork of the capitalist system, and the starting-point for the production of relative surplus-value. The latter presupposes that the working-day is already divided into two parts, necessary labour, and surplus-labour. In order to prolong the surplus-labour, the necessary labour is shortened by methods whereby the equivalent for the wages is produced in less time. The production of absolute surplus-value turns exclusively upon the length of the working-day; the production of relative surplus-value, revolutionises out and out the technical processes of labour, and the composition of society. It therefore presupposes a specific mode, the capitalist mode of production, a mode which, along with its methods, means, and conditions, arises and develops itself spontaneously on the foundation afforded by the formal subjection of labour to capital. In the course of this development, the formal subjection is replaced by the real subjection of labour to capital.”
and as indicated in Volume 3:
“The prolongation of the working-day beyond the point at which the labourer would have produced just an equivalent for the value of his labour-power, and the appropriation of that surplus-labour by capital, this is production of absolute surplus-value. It forms the general groundwork of the capitalist system, and the starting-point for the production of relative surplus-value. The latter presupposes that the working-day is already divided into two parts, necessary labour, and surplus-labour. In order to prolong the surplus-labour, the necessary labour is shortened by methods whereby the equivalent for the wages is produced in less time. The production of absolute surplus-value turns exclusively upon the length of the working-day; the production of relative surplus-value, revolutionises out and out the technical processes of labour, and the composition of society. It therefore presupposes a specific mode, the capitalist mode of production, a mode which, along with its methods, means, and conditions, arises and develops itself spontaneously on the foundation afforded by the formal subjection of labour to capital. In the course of this development, the formal subjection is replaced by the real subjection of labour to capital.”
and further as examined in the Grundrisse:
“The worker would then have to work only 1/4 day in order to live a full day; the capitalist then needs to give the worker only 1/4 day’s objectified labour in exchange, in order to increase his surplus value in the production process from 1/2 to 3/4; so that he would gain 3/4 day’s objectified labour instead of 1/2. At the end of the production process, the value of the capital would have risen by 3/4 instead of by 2/4. Thus the capitalist would have to make the workers work only 3/4 day, in order to add the same surplus value – that of 1/2 or 2/4 objectified labour – to his capital. However, as representative of the general form of wealth – money – capital is the endless and limitless drive to go beyond its limiting barrier. Every boundary [Grenze] is and has to be a barrier [Schranke] for it. [48] Else it would cease to be capital – money as self-reproductive. If ever it perceived a certain boundary not as a barrier, but became comfortable within it as a boundary, it would itself have declined from exchange value to use value, from the general form of wealth to a specific, substantial mode of the same. Capital as such creates a specific surplus value because it cannot create an infinite one all at once; but it is the constant movement to create more of the same. The quantitative boundary of the surplus value appears to it as a mere natural barrier, as a necessity which it constantly tries to violate and beyond which it constantly seeks to go. * Therefore (quite apart from the factors entering in later, competition, prices etc.) the capitalist will make the worker work not only 3/4 day, because the 3/4 day bring him the same surplus value as the whole day did before, but rather he will make him work the full day; and the increase in the productive force which allows the worker to work for 1/4 day and live a whole day now expresses itself simply in that he now has to work 3/4 day for capital, whereas before he worked for it only 2/4 day. The increased productive force of his labour, to the extent that it is a shortening of the time required to replace the labour objectified in him (for use value, subsistence), appears as a lengthening of the time he labours for the realization of capital (for exchange value). From the worker’s standpoint, he now has to do a surplus labour of 3/4 day in order to live a full day, while before he only had to do a surplus labour of 2/4 day. The increase, the doubling of the productive force, has increased his surplus labour by 1/4 [day]. One remark here: the productive force has doubled, the surplus labour the worker has to do has not doubled, but has only grown by 1/4 [day]; nor has capital’s surplus value doubled; but it, too, has grown by only 1/4 [day]. This shows, then, that surplus labour (from the worker’s standpoint) or surplus value (from capital’s standpoint) does not grow in the same numerical proportion as the productive force. Why? The doubling in the productive force is the reduction of necessary labour (for the worker) by 1/4 [day], hence also the [increase of the] production of surplus value by 1/4, because the original relation was posited as 1/2. If the worker had to work, originally, 2/3 day in order to live one full day, then the surplus value would have been 1/3, and the surplus labour the same. ”
and in the Theories of Surplus Value:
“As a result of the introduction of machinery, a mass of workers is constantly being thrown out of employment, a section of the population is thus made redundant; the surplus product therefore finds fresh labour for which it can be exchanged without any increase in population and without any need to extend the absolute working-time. Let us assume that 500 workers were employed previously, whereas now there are 300 workers, who perform relatively more surplus labour. The other 200 can be employed by the surplus product as soon as it has increased sufficiently. One portion of the old [variable] capital is converted into fixed capital, the other gives employment to fewer workers but extracts from them more surplus-value in relation to their number and in particular also more surplus product. The remaining 200 are material created for the purpose of capitalising additional surplus product.”
and implied in Marx’s remarks on Herr Rodbertus:
If we find a high rate of profit though labour is as yet very unproductive, and machinery, division of labour etc., are not used, then this is the case only under the following circumstances; either as in India, partly because the requirements of the worker are extremely small and he is depressed even below his modest needs, but partly also because low productivity of labour is identical with a relatively small fixed capital in proportion to the share of capital which is spent on wages or, and this comes to the same thing, with a relatively high proportion of capital laid out in wages in relation to the total capital;
or on Ramsay:
Ramsay correctly expounds to what extent machinery, etc., insofar as it affects variable capital, influences profit and the rate of profit. That is to say, he shows that this influence results from the depreciation of labour-power, the increase of relative surplus labour or, if the production process is considered as a whole, also the reduction of the part of the gross return which goes to replace wages.”
And….with the implications that holds for the profitability of capitalist production, as Marx foresaw, again in the Grundrisse:
“Thus, in the same proportion as capital takes up a larger place as capital in the production process relative to immediate labour, i.e. the more the relative surplus value grows – the value-creating power of capital – the more does the rate of profit fall. We have seen that the magnitude of the capital already presupposed, presupposed to reproduction, is specifically expressed in the growth of fixed capital, as the produced productive force, objectified labour endowed with apparent life. The total value of the producing capital will express itself in each of its portions as a diminished proportion of the capital exchanged for living labour relative to the part of capital existing as constant value. Take e.g. manufacturing industry. In the same proportion as fixed capital grows here, machinery etc., the part of capital existing in raw materials must grow, while the part exchanged for living labour decreases. Hence, the rate of profit falls relative to the total value of the capital presupposed to production – and of the part of capital acting as capital in production. The wider the existence already achieved by capital, the narrower the relation of newly created value to presupposed value (reproduced value). Presupposing equal surplus value, i.e. equal relation of surplus labour and necessary labour, there can therefore be an unequal profit, and it must be unequal relative to the size of the capitals. The rate of profit can rise although real surplus value falls. Indeed, the capital can grow and the rate of profit can grow in the same relation if the relation of the part of capital presupposed as value and existing in the form of raw materials and fixed capital rises at an equal rate relative to the part of the capital exchanged for living labour. But this equality of rates presupposes growth of the capital without growth and development of the productive power of labour. One presupposition suspends the other. This contradicts the law of the development of capital, and especially of the development of fixed capital. Such a progression can take place only at stages where the mode of production of capital is not yet adequate to it,”
and further…
“The growth of the productive power of labour is identical in meaning with (a) the growth of relative surplus value or of the relative surplus labour time which the worker gives to capital; (b) the decline of the labour time necessary for the reproduction of labour capacity; (c) the decline of the part of capital which exchanges at all for living labour relative to the parts of it which participate in the production process as objectified labour and as presupposed value. The profit rate is therefore inversely related to the growth of relative surplus value or of relative surplus labour, to the development of the powers of production, and to the magnitude of the capital employed as [constant] capital within production. In other words, the second law is the tendency of the profit rate to decline with the development of capital, both of its productive power and of the extent in which it has already posited itself as objectified value; of the extent within which labour as well as productive power is capitalized.”
If I’m going to be called an “orthodox Marxist”– I’m going to be a damned good one, although I find it amusing that someone posting on this website would use “orthodox Marxist” as an epithet.
“I don’t know anyone here who has or ever would refer to anybody anywhere, much less workers anywhere as “uneducated,” or “uncivilized.” Nobody has and nobody will.”
This was a reference to John Smith’s above comment about Michael Kidron .
See here:
https://thenextrecession.wordpress.com/2016/03/07/imperialism-and-super-exploitation/#comment-66446
John quotes Kidron as follows:
“New entrants into a factory in Britain need to be able to read, and their parents’ wages need to contain therefore a child-support and-education component. New mill hands in India need not, and usually do not, read, so the pressure on their parents’ wages is less. ”
I think the above mentality from Kidron is implied in the argument. It is a dangerous argument to make because given Vietnamese workers outperformed Bavarian workers (were more productive), even though they receive much lower wages and live in a country lacking infrastructure and world class education, we could conclude that Bavarian workers were well over compensated!
Whatever, I have yet to see a better term than super-exploitation that encapsulates this state of affairs.
Dear Sartesian,
You ask “Is the extraction of relative surplus value only impacted by changes reducing the value of the means of subsistence, and thus reducing the value of the labor power?” – but there is nothing, absolutely nothing, in any of the lengthy quotes you then cite from Marx that suggests that the answer to your question is yes; nothing, in other words, that contradicts Marx’s extremely clear view (already cited by me in response to an earlier post from me, but passed over by you) that
“By productivity, of course, we always mean the productivity of concrete useful labor. . . . Useful labor becomes . . . a more or less abundant source of products in direct proportion as its productivity rises or falls. As against this, however, variations in productivity have no impact whatever on the labor itself represented in value. As productivity is an attribute of labor in its concrete useful form, it naturally ceases to have any bearing on that labor as soon as we abstract from its concrete useful form. The same labor, therefore, performed for the same length of time, always yields the same amount of value, independently of any variations in productivity. But it provides different quantities of use-values during equal periods of time.” (Marx, Capital, vol. 1, 137)
Which bit of this do you have problems with? In the quote from Grundrisse you cite, Marx says “The increased productive force of his labour, to the extent that it is a shortening of the time required to replace the labour objectified in him (for use value, subsistence), appears as a lengthening of the time he labours for the realization of capital (for exchange value).” If he didn’t keep repeating this, it is because it is so basic, so elementary.
But I have a bigger question about your argument. Why do you go to such pains to deny the relevance or even existence of imperialist super-exploitation? In your erudite reading of Marx, why do you so wilfully ignore his many references to a third form of surplus-value increase – the reduction of wages below the value of labour power; and the relevance of this to a world in which the proletarian condition – its free mobility and equality – is violated by militarised borders and the rest of the superstructure of racist and imperialist domination? It was exactly with your view in mind that I wrote in the book (p240)
“In a much-discussed chapter in Capital III, Marx considers six counteracting factors that mitigate the tendency of the rate of profit to fall. One of these counteracting factors, the Reduction of Wages Below their Value, is another brief reference to this third way to increase surplus value, and is dealt with in just two short sentences: “Like many other things that might be brought in, it has nothing to do with the general analysis of capital, but has its place in an account of competition, which is not dealt with in this work. It is nonetheless one of the most important factors in stemming the tendency for the rate of profit to fall.”
“Once again, Marx mentions super-exploitation, that is, “pushing wages . . . below the value of labor-power,” stressing its great importance—and then excludes it from further analysis. This and other exclusions reviewed in this chapter were overlooked by orthodox Marxists as they scoured Capital for ammunition to use against dependency theory, seizing instead on Marx’s comment that higher real wages in England than in Germany and Russia are compatible with a higher rates of exploitation in England, his assumption of a very much lower rate of surplus-value in China than in England, and a few other scattered asides, in order to exclude the blindingly obvious fact of higher rates of exploitation from theory, and in so doing they use Capital itself to obscure capitalism’s imperialist trajectory and shield it from criticism.”
Marx did not necessarily think that Chinese workers labored under a lower rate of surplus-value. Here is a passage where he notes that English capitalists would like to bring wages down to the “China price.” Marx cites a document by an English manufacturer who complains that French workers are paid one-third less than English and yet survive, so why not bring English wages down to the French level? Marx comments:
“In our day these aspirations have been left far behind, thanks to the cosmopolitan competition into which the development of capitalist production has thrown all the workers of the globe. It is no longer a case of simply reducing English wages to the level of those of continental Europe, but to reduce, in a future more or less close at hand, the European level to the Chinese level. This is the perspective that Mr. Stapleton, a member of the English parliament, has just revealed to his electors in a speech on the future cost of labor: ‘If China should become a great manufacturing country, I do not see how the manufacturing population of Europe could sustain the contest without descending to the level of their competitors’.” (Marx, Le Capital, Chapter 24, Part IV, p. 45.)
This paragraph on “cosmopolitan competition” shows that Marx considered the reduction of wages below the value of labor power to be more significant than other passages from Capital suggest. There is a more condensed formulation in the English editions: Vol. 1, Chapter 24, Part IV, footnote 40, in which Marx adds: “The wished-for goal of English capital is no longer Continental wages but Chinese.”
That Marx chose the example of China, so appropriate today, is remarkable. In any case, “Northern” capital, then like now, was not looking to China for a *lower* rate of exploitation.
John,
Oh.. I know you have a “bigger question…,” the problem with your bigger question is that it’s not relevant, because I have never denied super-exploitation occurs. I have explicitly stated that such super-exploitation does occur.
Moreover, I have written in other venues about the bourgeoisie’s drive to, under specific circumstances, attempt to drive the wage below the value of the labor power. I’ve even traced how, where, when and why it occurs. It’s called class struggle, and the bourgeoisie have been on the offensive pretty consistently since 1973.
However, as I read Michael’s take on your book, the assertion is that this super-exploitation is a permanent condition and the fundamental, pivotal, determining basis for capital accumulation, and capitalist reproduction to the point where the “world” gets divided between oppressed and oppressor nations.
I don’t agree that there are oppressor nations and oppressed nations, where all classes of one nation are oppressors, and all classes of another are oppressed.
I am fundamentally interested in the answer to these questions:
Can workers produce values equivalent to their own wages in less time (without the wage being driven below the value of the means of subsistence necessary for reproduction) through the expansion of fixed assets (in the production of steel, copper, aluminum, automobiles, pharmaceuticals, televisions, etc.) reducing the ratio of “v” in the process, but increasing the ratio of surplus labor to necessary labor internal to that “v”? Or…is such a change in the relations of the portions of the working day only possible where and when the value of the means of subsistence has been reduced and therefore the value of the labor has been reduced (although not super-exploited)
You claim there is no distinction in the rates of surplus value generated in the petroleum industry and in any other sector, and that the illusion of a differential is created by “value added” components that distort the actual processes.
OK, can you then show where the corrections need to be made, their quantitative values, and what the real rates of surplus value are?
You would claim, I gather, that there is no difference in the rates of surplus value in China’s steel production where 30 man-hours are required per ton of steel vs the rates achieved by Nippon Steel or POSCO where 30 man hours will give us 15 tons of steel; between China where labor costs per production hour in steel are twice those of labor costs per production hour in Japan or Korea.
Fair enough– so I asked for examples– a correct calculation for these industries so you can demonstrate the accuracy of your method and assertions.
I think it would be very helpful if you could provide that demonstration. Maybe Michael can help you with the numbers.
And, of course, I’ve got a bigger question of my own, but they can wait for these answers.
That’s fine, Walter, but then, by this same logic, Marx did not consider the Chinese workers to be super-exploited, but would have found the attack on British workers to be an example of super-exploitation.
And John, I experienced the same problem– message couldn’t be posted, and then it appeared on Walter’s post.
The conclusion of Smith’s book begins on page 313: “The vast wave of outsourcing of production processes to low-wage countries…was a strategic response to the twin crises of declining profitability and overproduction that resurfaced in the 1970s …, a course that was conditioned by the imperialists’ reluctance to reverse the expensive concessions that have helped convert the workers of the ‘Global North’ into passive bystanders, or even accomplices, to their subjugation of the rest of the world.”
Reluctance – what world is this? The U.S. imperialists showed no reluctance to attack trade unions and New Deal programs, and I was under the impression that from Ms. Thatcher on, the British imperialists showed no reluctance to attack trade unions and social programs.
Ok, so there has been an attack on workers pay and conditions in the West, and since 2008 this has intensified, we can agree on that.
But let us not overstate this, let us look at hourly compensation rates by nation, by year and do the comparison. For me it is clear, there is a political dimension which means workers in the West are used to a certain standard of living and simply bringing workers wages down to Chinese levels is not a political choice that can be made, at least not all at once. There is also a technical issue that by bringing everyone down to Chinese levels would impact the realised surplus and then we would also have the paradox that when Chinese workers passed Western workers pay the whole argument would be reversed so Chinese workers would be brought down to Western workers levels! All this illustrates is the exploitative nature of the system and that the argument to drive wages to the lowest is an ideological one from the standpoint of the exploiter. A socialist system would distribute according to needs based on available resources and not on the basis of what is good for the exploiting class!
It is also clear to me that when we look at, for example, pension fund investments we see that to a degree workers in the advanced world are to some extent living off the backs of the super exploited, i.e. not all the fruits of super exploitation are being distributed among the exploiting classes, In reality some of those spoils, albeit a smallish fraction, are going to workers. Politically this is important and has been for most of my politically active life.
I think we should note that this isn’t about high and low wages but higher and lower wages. The issue is also that most of the surplus goes to the exploiting class and ultimately when we do the math the expropriation of the exploiters will quantitatively leave 70% of us better off – if we make the rather crude assumptions in Cottrell and Cockshotts toward a new socialism! And we haven’t even begun to talk about the qualitative benefits!
So we can still say to workers, without them looking to us and saying, are you for fucking real, “Workers of the World Unite!”
John Smith asked me:”But I have a bigger question about your argument. Why do you go to such pains to deny the relevance or even existence of imperialist super-exploitation?”
Of course, I too have a bigger question, which Charles A answered in providing the quote from the conclusion of John’s book– which is to say the “political” praxis derived from this categorizing of “super-exploitation” as the, dominant, causal, determining relation of modern capitalism.
So here’s where it gets us: “a course that was conditioned by the imperialists’ reluctance to reverse the expensive concessions that have helped convert the workers of the ‘Global North’ into passive bystanders, or even accomplices, to their subjugation of the rest of the world.”
This conclusion however ignores the fact that the flight of capital to the so-called Global South, accrues mass, and speed, with the DEFEAT of workers struggles in the “advanced” countries, with attacks on the living standards, –wages, benefits, work rules, protections, social welfare, racial equality– sustained over the last 4 decades.
It is simply untrue to claim that the bourgeoisie have been “reluctant to reverse the expensive concessions..” That is a distortion of the path of capital accumulation since 1973 in the “advanced” countries. The bourgeoisie have orchestrated attack after attack on the expensive concessions– concessions that did not in fact find their origin in the super-exploitation of the third world, but in the Great Depression and the aftermath of WW2– concessions that were made only after millions of workers in the “advanced” countries (but not only the “advanced countries) were burnt to a crisp.
Does anyone seriously think Thatcher or Reagan were “reluctant” to “reverse the expensive concessions” afforded SOME workers in the “avanced” countries?
Was there reluctance when the NUM workers were broken by Thatcher (with the help of Jaruzelski, only too willing to export coal to the UK)?
Was there reluctance when Reagan fired the PATCO workers?
When the Hormel workers strike was defeated?
When real wages were forced lower as a consequence of the “double dip” recession in the US in the 1980s?
When Clinton and the US Congress eviscerated welfare protections and the incarceration rates of young black males began its hideous acceleration?
When pension plans were in fact gutted pretty much across the board (see the book The Great Retirement Heist).
And where those attacks have been blunted, how have they been blunted? Well in France, it was through the mobilization of workers in strikes, “general strikes,” or the threat of general strikes.
Does anyone think that, for example, the bail-out of the GM and Chrysler under TARP represented a reluctance to reverse expensive concessions made to US workers? Those bailouts were predicated on the closing of numerous factories, changes in work rules to reduce workers’ compensation, the introduction of “tiered” wages and tiered benefits for new workers, and……..the transferring the responsibility and the costs of the medical care program to the trade union with the corporations making their “contribution” in……..stock. Some reluctance. Some concessions.
The history of the last 40 years is that the increased flows of capital to the “global south” has been accompanied by sustained assaults on the living standards of workers in the “advanced” countries.
Those assaults cannot be reversed by “restricting” the movement of capital to that south, through any form of national “sovereignty, but only through class struggle which is consciously international, opposes capital as a global system. In the “advanced” countries these requires first and foremost combat against any and all attacks on migrants, combat against the categorization of workers as “legal” or “illegal.”
Dear Charles,
I’m sorry to keep you and others waiting.
Thanks for your message. You make a fair point. I do not say enough in the book about wage repression, speedups, attacks on social programs etc in the imperialist countries for what I mean by ‘reluctance’ to be sufficiently clear. What I mean is best expressed by this, whose omission from the conclusion is unfortunate:
“Despite the intensification of the labour process, increased labour productivity, real wage compression, and the expanded super-exploitation of immigrant workers, capitalists in the imperialist countries were unable to savagely cut domestic production costs to anything like the extent needed; despite all their efforts they have not yet succeeded in reversing the expensive post-World War II welfare reforms conceded to the working class in the imperialist countries, as Fidel Castro said, ‘out of fear of revolution, out of fear of socialism.’” (http://www.mediafire.com/view/?hesj1vceutyyomc, p27)
The extra surplus value which capitalists in the USA, UK etc have succeeded in extracting from their own working classes through wage repression, speedups and austerity in recent decades is far from sufficient to satisfy their voracious hunger, hence their imperialist impulse. And they have satisfied their imperial impulse and found a bountiful source of extra surplus value by outsourcing production to countries where wages are a fraction of those paid to and defended by their domestic workers. The book gives centre stage to the hundreds of millions of new members of the global working class, examines the conditions in which they are forced to sell their labour power, finds out why their labour power has been so attractive to transnational corporations. A commensurate study of the condition of the working class in imperialist countries would have needed several chapters to itself. Without such a study, it’s impossible to evaluate the relative contribution of wage compression etc at home and global labour arbitrage to TNC profits, but the very least that’s established in the book is that the latter is very large, has enormously grown over the neoliberal decades, and is obscured in GDP and trade statistics. The condition of the working people in imperialist countries is only considered from three perspectives – when studying global wage trends and labour’s falling share of GDP, and when considering the effect of outsourcing on the real wages and the value of labour power of workers in imperialist countries. But there remains a gap, one that can’t be filled just by finding a different word for ‘reluctance’.
On your more general point, the ruling class offensive in the imperialist countries has been most intense in the United States, whose capitalists are the most aggressive; the results are reflected in the near-zero growth in the median real wage since the late 1970s. With growing wage inequality, this means that many workers have suffered declines over this period, and US workers have less of a social wage to cushion them. In the UK, from mid-1980s to the onset of the global crisis most workers experienced a steady advance in real wages, despite Thatcher’s onslaught on unions.
To assess workers’ conditions in imperialist countries, we must account for the social wage as well as money wages. One important matter not discussed in the book is the absolute and relative size of the social wage in rich and poor countries. Despite often savage cuts on many areas of social spending, government social expenditure has continued to rise as a proportion of GDP (and even more so in absolute terms) in all imperialist countries. Government spending on health, education & transfer payments (pensions, unemployment pay etc) rose from around 25% in 1980 to 35% in 2010 in the UK, in the US it has risen by the same degree from a lower base, in France it has increased from 35% to 45%. (data: World Development Indicators, OECDStat).
This is definitely not what the rulers intended! It is further evidence that our rulers were reluctant to mount a generalised assault on our wages and living standards because they feared generalised resistance. The onset of the global crisis means that they now have no choice, and so the assault on wages and the social wage in the imperialist countries is set to intensify
From Chapter 2, (pp44-45)
“Neoliberal globalization has transformed the production of all commodities, including labor-power, as more and more of the manufactured consumer goods that reproduce labor-power in imperialist countries are produced by super-exploited workers in low-wage nations. The globalization of production processes impacts workers in imperialist nations in two fundamental ways. Outsourcing enables capitalists to replace higher-paid domestic labor with low-wage Southern labor, exposing workers in imperialist nations to direct competition with similarly skilled but much lower paid workers in Southern nations, while falling prices of clothing, food, and other articles of mass consumption protects consumption levels from falling wages and magnifies the effect of wage increases. The IMF’s World Economic Outlook 2007 attempted to weigh these two effects, concluding: “Although the labor share [of GDP] went down, globalization of labor as manifested in cheaper imports in advanced economies has increased the ‘size of the pie’ to be shared among all citizens, resulting in a net gain in total workers’ compensation in real terms.” In other words, cost savings resulting from outsourcing are shared with workers in imperialist countries. This is both an economic imperative and a conscious strategy of the employing class and their political representatives that is crucial to maintaining domestic class peace. Wage repression at home, rather than abroad, would reduce demand and unleash latent recessionary forces. Competition in markets for workers’ consumer goods forces some of the cost reductions resulting from greater use of low-wage labor to be passed on to them.”
According to the Statistical Abstract of the US 2015, the Consumer Price Index (1982-1984 base of 100) increased from app 131 in 1990 to 172 in 2000 to 218 in 2010 to 233 in 2013. Of the areas that make up the CPI– apparel registered period of decline (1995-2011), and has turned upwards over the last 2 years; and energy has started its descent.
The energy component decline of course, was initiated not super-exploitation or imports from the global south, but rather by the intense exploitation of shale oil technologies in the US.
The cost of medical care according to the CPI has about doubled in the last 20 years; transportation costs are up 50%; housing up 50%; food and beverages up 60%.
The basic components of the costs of reproducing “v” in the United States seem to refute the contention “manifested in cheaper imports in advanced economies has increased the ‘size of the pie’ to be shared among all citizens, resulting in a net gain in total workers’ compensation in real terms.”
Sartesian, true, “reluctance” was poorly chosen. I don’t think Smith would disagree with that or any of the other points you make. I leave that to him. For a layman like me, the neo-liberal strategy has been two-fold: super-exploitation of labor “there” (in the “emerging” countries) allows for the degradation (skill and pay) of labor “here” (at the imperial centers) where service workers are paid poorly, but at a much higher rate of compensation than the most highly productive workers there. …Exploitation of most workers at the imperial centers is a indisputable fact. Modern imperialism depends on a single, global field of value creation that allows for the transfer of value that goes mainly to capital, but some also serves as bribes to to better paid non-productive/ destructive labor and super-compensated labor at the imperial centers. Nevertheless, the strategy is no longer working. Worker discontent is growing North and South. What’s to be done? That depends on our understanding of the problem.
Maybe, maybe not. He does claim workers in the “imperial centers” are “even” accomplices in this super-exploitation. He doesn’t say union bureaucrats; he doesn’t say a specific “super-compensated” sector. His category is workers, and the entire category are participants.
I still would like a) to hear Michael’s take on whether the substitution of machinery for living labor can, and most often does, increase the rate of surplus value b) to see John Smith’s or Walter Daum’s “corrections” to the calculations for rates of surplus value, after stripping out the “distortions” of the value added category, so that we can see the underlying identical rates of surplus value across industrial sectors.
My take is that workers are accomplices in this super exploitation and that the fruits of this super exploitation to one extent or another are going to all workers. In other words they are conscious of it, feel guilty for sure, but if it is a case of them or me, it is going to be them!
I do not believe this happy alliance of capitalist class and workers will last forever but one thing is for sure Marx’s historical materialist teleological narrative failed to anticipate enough the problems this reality has caused.
Marxists need to address the subject will all honesty.
Where I am with Marx is that the way to tackle such issues is not by calls for protectionism or free trade. We need to develop a consistent class position. But that class position shouldn’t be blind to the glaring reality. I have often found with Euro Marxists, if we can call them that, is that they try every technical trick in the book, including gross misuse of the statistics and bringing irrelevancies into the debate, to argue that this super exploitation and the nature of it is not really a living reality.
Coming from a Union background I am used to being confronted with the manipulation of statistics and other technical tricks!
I will end by going out on a limb, workers in the West are not worse off than they were 40 years ago. And if there has been a sustained attack on workers pay and conditions in that 40 years then it hasn’t been all that successful.
Yeah, you’re way out on a limb, given the decline in labor-force participation rates, the transfer of wealth up the social ladder, the declining portion of GDP that is made up of wages, the gutting of pensions plans, the massive levels of unemployment among young workers.
You think there’s a “happy alliance” of capitalists and workers in the “advanced countries”? How do you measure that happiness? Do you have a quantitative measure, or is it all anecdotal?
Do you use the number of strikes, the lost work-days? So in 2009 and 2010 workers were unhappy, but in 2012 they were happy?
Happy alliance was a flippant remark, with a hint of sarcasm. Obviously?
It is more anecdotal as there are no official figures to measures this as far as I can see.
I think you have to be a little lateral to work this out, such as:
Number of days lost to strikes
Voting patterns of electorate
Survey responses re immigration
Attitudes to imperialist wars
Amount of civil disobedience
Most popular media publications
Somewhere in that whole mass database I think you can at least say if there isn’t a happy alliance there is at least no particular conflict. At least not one that disturbs the status quo.
Wealth up the social ladder has been a feature of capitalism for as long as I can remember, my memory and observations allied with the statistics tells me that over the last 40 years the so called attack on workers wages and conditions has been less than wholly successful. While the attack on workers wages and conditions has been less than successful this hasn’t stopped the ruling class enjoying more and more wealth and power. Wonder how they pulled that off?
Your memory is faulty. Post WW2 until the 1970s, there was a “flattening” in wealth distribution in the advanced countries.
I think it would be helpful for you to actually review the historical data.
I have reviewed the historical data, but more of it than you appear to have looked at. For example, I looked at medium household disposable income.
Even so a flattening of wealth distribution is hardly proof of a sustained attack on pay and living standards.
Maybe you need to look up sustained attack in the dictionary. And then maybe you should look up living standards. Then compare these things to the facts. The actual facts that are relevant would be advisable.
They all point to one thing, your belief in a sustained attack on the living standards of workers of the developed world is full of holes.
And seen as you are using this to justify your position, i would conclude your position is full of holes. But I am used to this sort of manipulation of the facts.
That’s not very sporting of you, Edgar. Here you are proclaiming a happy alliance with nothing but anecdotes to feed us; claiming pensions have protected the workers from the attacks of the bourgeoisie, when pensions in the US are so woefully underfunded, where they haven’t been looted, cancelled, or frozen, that the Pension Benefit Guaranty Corporation, a US govt. created entity, cannot maintain benefit coverage, and you go and directly twist, or misread, what I said. Of course “wealth flattening” isn’t a sustained attack on living standards. I was citing it in opposition to the growing inequality that has taken place since the late 1970s.
There has been a transfer, providing greater shares of national income and wealth to the top 5% and 1% with a corresponding lessening of the share to the lower 50% the lower 20% the lower 10%.
As for your other nonsense: Welfare support for families in individuals in the US was gutted thanks to Mr. Clinton and the Congress, so that the number of individuals receiving benefits for assistance in 2009, at the trough of the most severe contraction since WW2, was about 30 percent of those receiving benefits during the 1990 recession. Good you think, for the workers? Happy accomplices to the bourgeoisie, you think that made them?
You think median (don’t know about “medium”) household income means something, all by itself?
Well I’ve got my own simple way of calculating how happy the working class is with its super-privilege. It’s kind of a way for calculating the income going to that class from its employers.
It goes like this:
Manufacturing workers, full and part time, in the US 1990 (a recession year): 17.7 million.
Average hourly earnings of those 17.7 million in 1990: $14.32
Total: workers X average hourly earnings= $253.5 million
Manufacturing workers, full and part time: 2013: 12 million
Average hourly earnings $19.30.
Total: $231.6 million
I’d say, the industrial working class really can’t be that happy– its “cash flow” indicates trouble ahead, trouble behind, and trouble right now.
OK, you don’t like that bit of short hand? Try this: Employer costs for unionized employees are generally 50% higher than for non-unionized employees. The differential is made up of course of wages, medical care benefits, pensions, and…work rule protections.
So in 1985, in the private sector, 14.3% of all employees were unionized. In 2013… just 6.7% were unionized. Now maybe being unionized makes workers happy accomplices to the bourgeoisie, but the bourgeoisie have been doing their best since breaking the 1974 strike wave in the US to make THEMSELVES happy, without the need of accomplices.
Have a pleasant day.
Oh yeah, and just in case those big numbers about cash flow are confusing, let’s break it down into bite size pieces.
Suppose you work in an industry, and one day the CEO shows up and says: “I have good news and bad news. First the good news, The company plan is to provide its production workers with a 35% raise.”
Applause, whistles, you think? Naw…..everybody wants to hear the bad news:
“The bad news is I’m going to have to fire 33% of you. If you don’t agree to accept the reduction, if you go on strike, I’ll shut the plant down and move production to Mexico, or Thailand, or China.”
How would you feel? Would you want to take that deal?
Well that’s what has been going on in the “advanced” countries, with its “privileged” workers.
And wait, there’s more:
Let’s talk about poverty– like the fact that in 2002 12.4% of the population in the US was living below the poverty level, and in 2012, 15.9% of the population lived below the poverty level.
Percent of person by race below the poverty level?
White: 1985=11.4%; 2000=9.5%; 2007 10.5%;2012=12.7%
Black: 1985=31.3%; 2000=22.5%; 2007=24.5%;2012=27.2%
Hispanic: 29.0%, 22.7% 21.5%, 25.6%
Children? Believe me, you don’t want to know. — steady or steadily rising rates of children living in poverty, until the “boom years” of the Clinton get traction around 1994, then a turnaround with rates falling through 2000, when the boom ends and child poverty rates turn upward and steadily so, so that by 2012 they are back above the 1985 level for all children.
In a bit, we’ll look at pre-1985 rates, once I dig out my old StatAbs of the US.
Ok, just to give a bit of depth, and perspective to the change that took place in the US beginning in the late 1970s regarding rates of poverty:
Between 1959 and 1978, the number of people living below the poverty line in the US dropped from 39.5 million to 24.5 million. By 1987, the numbers were back up to 32.5 million and 13.5% of the population.
When does the reversal of the reduction in poverty rates take hold? 1979, with OPEC’s second price spike followed by the Volcker double-dip recession accompanied by the Reagan administrations attack on unions; the liquidation of assets through leveraged buy outs and private equity; the devastation of the rural industrial economy, and we might throw in there Deng’s “4 reforms” offering China up as a “low wage” haven, the migration of populations into the cities in much of Asia, and the beginning of the more than trillion dollars in FDI pouring out of the “advanced” countries seeking to create 2,3, many maquiladors.
I’m not so sure that “international mobility of labour” is being restricted. There are more people on the run globally (refugees and migrants) than ever before.
Hi George (Γιώργος)
Because the question of migrant movements and immigration controls is so important, here is an excerpt from the book (pp109-10):
The accelerated spread of capitalist social relations among Southern nations during the neoliberal era has been far more effective in dissolving traditional economies and ties to the land than in absorbing into wage labor those made destitute by this process. The rural exodus and growth of the urban workforce is analogous to what happened in Europe a century earlier, but there are important differences, the most far-reaching and significant of which is that the free movement of workers across borders and oceans that characterized the nineteenth century became subject to increasing restrictions.
Between 1850 and 1920—a time when, according to ILO economist Deepak Nayyar, “there were no restrictions on the mobility of people across national boundaries—passports were seldom needed and immigrants were granted citizenship with ease”—about 70 million people emigrated from Europe… The total migratory flow was equivalent to more than a sixth—17 percent—of the 408 million people living in Europe in 1900. This mass emigration to the Americas and Australasia mitigated the growth of pauperism and the reserve army of labor in Europe. According to Ajit Ghose, another senior ILO economist, “For several European countries, emigration was large and sustained enough to make growth rates of population and labor force insignificant or negative for years.” If the same proportion had emigrated from the Global South since the Second World War as left Europe between 1850 and 1920, 800 million people would have moved north, expanding the total population of the more developed countries by 70 percent. Instead, “a negligible 0.8 percent of the workforce of the developing world has migrated to work in industrial countries,” one-twentieth of the fraction of Europe’s population that emigrated in the earlier period. As Ghose remarks, “It is quite clear that, for most of the developing countries, international migration is of no help in coping with the major labor market problem—that of surplus unskilled or low-skilled labor.”
The contrast between the two periods is all the more striking when we consider reasons why much larger migration flows in the late twentieth century than a hundred years earlier could have been expected, including the huge increase in wage differentials and disparity in living conditions between source and destination countries, the greater ease and safety of travel, the vastly improved possibilities of maintaining contact with families and communities back home and of financially supporting them through remittances, and of eventual return…
[As Mike Davis says} “The European urban-industrial revolutions were incapable of absorbing the entire supply of displaced rural labor … but mass emigration … provided a dynamic safety valve that prevented the rise of mega-Dublins and super-Napleses…. Today, by contrast, surplus labor faces unprecedented barriers to emigration to rich countries.” Because of these barriers, “the majority of migrants move from one developing country to another rather than from a developing country to a developed one.” South-North migration was negligible before the Second World War, and, *relative to the potential migrant population*, it has remained negligible.
Hello, thanks for the reply!
In my last post I left out the most important point (about wage goods). Here’s how that sentence should go: “Modern imperialism depends on a single, global field of value creation that allows for the transfer of value that goes mainly to capital but also takes the form of a under-valued (based on super-exploited labor) basket of wage goods for the miserably paid average worker at the imperial center, as well as for bribes to better paid non-productive/destructive and super-compensated technical and managerial labor.”
Reblogged this on Econo Marx 21.
I review John’s book here https://marxandphilosophy.org.uk/reviewofbooks/reviews/2016/2290