In the context of the current crisis Prof David Harvey gave a talk in July 2009 (London, Marxism 2009) on Marx’s theory of social change and what a revolutionary movement would look like. Click on the link below to watch his talk.
The bosses are trying to use the current economic crisis in Ireland to reduce wages and living standards. That is not a secret, but they claim that it is in the interest of the workers. The story goes like this; Irish companies must become more competitive than companies in other countries. In that way there will be more exports and more jobs will be created. If workers don’t accept cutbacks jobs will be lost. To challenge those ideas the labour movement need to return to Marx. It is not enough to argue against cutbacks in capitalist terms. This article proposes to start with the reading of “Wage Labour an Capital”.
Mary Harney, Health Minister, has recently declared that the minimum wage in Ireland will have to be cut in order to make the country more competitive. Brian Lenihan, Minister for finance, has then added that “if the minimum wage becomes an impediment to job creation the Government has to look at it”. On the other hand, Peter Bacon, government advisor for the setting up of NAMA, has recommended general wage cuts of 10 to 15 percent on top of the cutbacks recommended in the Bord Snip report. Social welfare cuts would be around 5 percent (Irish Independent, 21 July; Irish Times, 22 July).
The logic underlining the bosses’ point of view is that only capital can generate wealth and jobs, and on capital terms. So, both classes gain. Bosses get their profits and tworkers get their wages. But to do that, they argue, both workers and bosses must defeat other competitors by lowering wages and by bringing public sector workers down to the level of private sector workers. Day in day out that message is hammered into people’s heads. Union leaders argue that Irish wages are already low compared to other EU countries and that bosses pay lower taxes in Ireland. They also claim that EU economies with higher wages than Ireland are also more competitive. They are not wrong. Capital-intensive industries pay higher wages and are much more competitive than labour intensive industries based on low wages. The problem is that Irish companies lag behind in capital investment.
That argument, however, doesn’t challenge the dominant ideas of the ruling class. The labour movement needs to challenge the ideological foundations on which the hegemony of capital is grounded. That means to go back to Marx. There have been wide and far-reaching changes in capitalism since the times of Marx but the inner logics of capitalism remain the same. Constant change is part of the nature of capitalism. As Marx said in the Communist Manifesto:
Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.
Wage Labour and Capital
In his well-known essay, “Wage labour and capital”, Marx explains what wages are and how they are determined, but he also explains at length that the interest of capital and labour are antagonistic. Capital, Marx argues, can only exist and expand through its constant exchange for living labour power, since only labour can create value. Machinery just represents dead labour power and can’t add any value to the commodities it helps to produce. Workers, on the other hand, can only make a living by hiring themselves to those who own the means of production. They only have their labour power to offer. So Marx reasons like this:
Capital therefore presupposes wage-labour; wage-labour presupposes capital. They condition each other; each brings the other into existence… And so, the bourgeoisie and its economists maintain that the interest of the capitalist and of the labourer is the same. And in fact, so they are! The worker perishes if capital does not keep him busy. Capital perishes if it does not exploit labour-power, which, in order to exploit, it must buy. The more quickly the capital destined for production – the productive capital – increases, the more prosperous industry is, the more the bourgeoisie enriches itself, the better business gets, so many more workers does the capitalist need, so much the dearer does the worker sell himself. The fastest possible growth of productive capital is, therefore, the indispensable condition for a tolerable life to the labourer.
That argument exposes the grounds for reformism and class collaboration, which Social Partnership represents in Ireland. The left, particularly social democracy, bought into that idea long ago. During a period of sustained economic growth that might work as it happened as the turn of the 1900s, the period between 1945 and 1973, or in Ireland in the late 1990s. Wages then increase because capital grows rapidly and profits increase faster than wages. That means that the gap between the workers and the capitalists also increase. So, “class collaboration” benefits capital, and in the way it does some more breadcrumbs are left for the workers. The wage share of national income went down from 71.2 to 54 per cent between the periods 1980-1990 and 2001-2007. During those years there was a huge transfer of wealth to the elite. So Marx argues,
Therefore, although the pleasures of the labourer have increased, the social gratification which they afford has fallen in comparison with the increased pleasures of the capitalist, which are inaccessible to the worker, in comparison with the stage of development of society in general.
The implications are that the more capital grows the more grows the power of the capitalists in relation to the working class. Marx uses the term relative wages to express that balance of power. Relative wages “express the share of immediate labour in the value newly created by it, in relation to the share of it which falls to accumulated labour, to capital.” During a period of economic growth, as the years of the Celtic Tiger, nominal wages (money price) and real wages (what nominal wages can buy) increased, but relative wages decreased. Social inequality, therefore, has increased and “The power of the capitalist class over the working class has grown, the social position of the worker has become worse, has been forced down still another degree below that of the capitalist.”
According to Marx, wages have nothing to do with the value that workers create but with the price of the commodity “labour power”(capacity to work). Wages are the market price of labour, which is determined by, “the value of a definite quantity of the means of subsistence. It therefore varies with the value of these means or with the quantity of labour requisite for their production”. But the concept of relative wages allows him to regard both wages and profits as shares in the product of the worker. Therefore, Marx concludes that the interest of Wage Labour and Capital are “diametrically opposed”:
In whatsoever proportion the capitalist class, whether of one country or of the entire world-market, distribute the net revenue of production among themselves, the total amount of this net revenue always consists exclusively of the amount by which accumulated labour has been increased from the proceeds of direct labour. This whole amount, therefore, grows in the same proportion in which labour augments capital – i.e., in the same proportion in which profit rises as compared with wages… Finally, to say that “the most favourable condition for wage-labour is the fastest possible growth of productive capital”, is the same as to say: the quicker the working class multiplies and augments the power inimical to it – the wealth of another which lords over that class – the more favourable will be the conditions under which it will be permitted to toil anew at the multiplication of bourgeois wealth, at the enlargement of the power of capital, content thus to forge for itself the golden chains by which the bourgeoisie drags it in its train.
Competition and wages
But the growth of capital also brings an increase in competition between capitalists and crises of overproduction as we are witnessing now. Competition between capitalists, on the other hand, increases competition between workers and pushes wages down. It is worth quoting Marx here at some length:
The one capitalist can drive the other from the field and carry off his capital only by selling more cheaply. In order to sell more cheaply without ruining himself, he must produce more cheaply – i.e., increase the productive forces of labour as much as possible… And so there arises among the capitalists a universal rivalry for the increase of the division of labour and of machinery and for their exploitation upon the greatest possible scale… But the privilege of our capitalist is not of long duration. Other competing capitalists introduce the same machines, the same division of labour, and introduce them upon the same or even upon a greater scale. And finally this introduction becomes so universal that the price of [his commodity] is lowered not only below its old, but even below its new cost of production…
As a result competition between workers increases with the introduction of machinery and the further division of labour:
The greater division of labour enables one labourer to accomplish the work of five, 10, or 20 labourers; it therefore increases competition among the labourers fivefold, tenfold, or twentyfold. The labourers compete not only by selling themselves one cheaper than the other, but also by one doing the work of five, 10, or 20; and they are forced to compete in this manner by the division of labour, which is introduced and steadily improved by capital.
Furthermore, to the same degree in which the division of labour increases, is the labour simplified. The special skill of the labourer becomes worthless. He becomes transformed into a simple monotonous force of production, with neither physical nor mental elasticity. His work becomes accessible to all; therefore competitors press upon him from all sides. Moreover, it must be remembered that the more simple, the more easily learned the work is, so much the less is its cost to production, the expense of its acquisition, and so much the lower must the wages sink – for, like the price of any other commodity, they are determined by the cost of production. Therefore, in the same manner in which labour becomes more unsatisfactory, more repulsive, do competition increase and wages decrease.
The labourer seeks to maintain the total of his wages for a given time by performing more labour, either by working a great number of hours, or by accomplishing more in the same number of hours. Thus, urged on by want, he himself multiplies the disastrous effects of division of labour. The result is: the more he works, the less wages he receives. And for this simple reason: the more he works, the more he competes against his fellow workmen, the more he compels them to compete against him, and to offer themselves on the same wretched conditions as he does; so that, in the last analysis, he competes against himself as a member of the working class.
With the introduction of machinery fewer workers can produce a higher outcome. So, the number of the unemployed also grows and with it the competition for jobs, making it easer for the bosses to lower wages. In order to force workers to accept lower wages the bosses and the government need to reduce social welfare. I started this article by quoting attempts to reduce wages, including the minimum wage. The cutbacks in social welfare recommended by the Bord Snip Report have an easy logic. Government sources from the Tanaiste and Entreprise Minister Mary Coughlan have warned that, “We wouldn’t like a situation to arise where it is more attractive to be on social welfare than be out working” (Irish Independent, 21 July). That is, social welfare is another obstacle to capital accumulation, to the freedom of the market to be removed. In the course of this struggle the most reactionary newspapers such as the Irish Independent regularly contain anti-union articles, which they see as another obstacle.
The interests of capital and labour as Marx argued are antagonistic. The sooner the labour movement assumes that simple truth, and arms itself with the ideas of Marxism, the better it will be prepared for the battles that lie ahead. If capitalism cannot offer anything better than cutbacks and increasing deterioration of living standards, even under the most favourable conditions as Marx explains, then we must get rid of it and start the socialist transformation of society. To start with we must defend the old living standards and real wage levels by stopping attacks on living standards as a way out to the present crisis. We must make the rich pay for it by increasing our class power. That means an increase in relative wages, which can only be achieved through class struggle. But no gain is permanent under capitalism. Socialism is the only way out.
The next meeting of the Marx Reading Group will take place in Connolly Books (43 East Essex Street, Dublin 2), room upstairs, on Monday 6th July at 7.30pm. We will discuss Marx’s work “Wage Labour and Capital”
This work (1849) constitutes an early and brief exposition of Marx’s theory of value, which was later updated by Engels in 1891. In it we can learn among other things how the price of labour power (wages) is determined and why the interests of labour and capital are antagonistic.
There is also a study guide in the archives of Marxists.org that can be useful.
The proposed readings are:
1 The Communist Manifesto (1 session)
2. Wage Labour and Capital (1 session)
3. Wages, Price and Profit (2 sessions)
4. Socialism: Utopian and Scientific (1 session)
5. Capital, V1, David Harvey’s video lessons on Capital (13 sessions)