Answers to Correspondents. (1910)

From the December 1910 issue of the Socialist Standard

“Barber.”—(Wigan.) 1. In Adam Smith’s day 3 per cent. was the usual rate of profit for sound security. To-day L.C.C. stock, second only to Consols, are issued at 3 ½ per cent. In many cases as large rates as ever are made to-day. The Cold Storage Co. paid over 100 per cent., some of the electric power companies have made similar profits, while some of the catering firms pay dividends of 30 to 40 per cent year after year.

The amount of profit apart from the rate, has of course increased enormously with the increased productiveness of labour.

2. Surplus value is the portion of wealth remaining after paying wages, cost of raw material and of machinery used up in the given time. But this as a rule undergoes further deduction for rent for the land, interest, and rates and taxes. The portion of the surplus value that remains is the capitalist’s Profit. Profit, therefore, is only a part of surplus value.

3. What you pay for your tobacco and sugar is their market prices, and taxes are the smallest factor in fixing these prices. The workers only receive sufficient to keep them in working condition, hence have no margin wherewith to pay taxes. See ” S.S.” for October 1904 and June 1905 where the matter is fully dealt with.

4. If you will send particulars of numbers joining we shall be pleased to help you.

5. Yes, old age pensions etc, do come out of surplus value, as shown by answer to question 3.

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E.C.R. asks “How do the S.P.G.B. propose to overthrow the present system of society and establish Socialism on Democratic lines and legislative means without Man and Woman Suffrage?”

The Socialist Party is not opposed to Adult Suffrage, but maintain that the working class have quite sufficient votes at their disposal to effect the revolutionary purpose when the class are sufficiently class conscious to make the time opportune. It is a question of education, not of extensions of the franchise ; and since the line of social cleavage is drawn through classes and not through sexes, there is nothing undemocratic in proposing to proceed even with our present limited male suffrage.

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E. Garvey asks how non-producing workers (instancing insurance collectors) can be exploited.

If 5 hours social labour produces a day’s energy, and the worker is compelled to render ten hours labour for the day’s necessaries which have taken only 5 hours to produce, then, no matter what the result of his labour (and the capitalist will see that it has some tangible result), he is exploited. Apart from this, however, even the so-called non-producing workers are necessary to the operations of the capitalist class, and Friend Garvey must not forget that the workers are exploited as a class since as a class they are deprived of the means of living except through wage slavery.

Replies to other correspondents held over.

Letter: Declining rate of profit? (2010)

Letter to the Editors from the August 2010 issue of the Socialist Standard

Declining rate of profit?

Dear Editors

The July edition of your journal contains a brief review of my recently published book Global Capitalism in Crisis: Karl Marx and the Decay of the Profit System. Although the book treats a great many issues of interest to socialists, the reviewer chose to focus on just one theoretical issue that I treat at some length in the book, namely, the specification of the wage bill of socially necessary unproductive labour (SNUL – in commerce, finance and the state) as a component of “constant capital” rather than as a part of surplus value or variable capital.

The reviewer is right to suggest that this approach is important to my analysis of the current global slump as rooted in the on-going displacement of living, productive labour from production (what Marx called a rising “organic composition of capital”).However he or she implies that my empirical measurement of constant capital in the Marxian ratios for the average rate of profit and the organic composition of capital includes the costs associated with unproductive labour. This is not the case, as such costs are assimilated by me to the flow of constant capital rather than to the “capital advanced,” i.e. to the constant capital stock. The magnitude of the constant capital flows does not enter into the measurement of either the average rate of profit or the organic composition of capital.

The main effect of treating SNUL costs as a component of the constant capital flow is that it removes these costs from the measurement of either aggregate surplus-value or aggregate variable capital, thereby allowing for more accurate measurements of Marx’s key quantitative ratios. In my view, the assimilation of SNUL costs to surplus value or to variable capital (or to both) has been a key stumbling block in empirically evaluating Marx’s law of the falling tendency of the rate of profit and to recognizing the centrality of this law to the dynamics of capital accumulation in the era of capital’s decay.

Murray E.G. Smith (by email)

Reply: 

We certainly accept that some of Marx’s writings on productive and unproductive labour are open to interpretation and were not fully worked out (e.g. the treatment of this issue is rather different in the Appendix of Volume I of Capital called ‘The Results of the Immediate Process of Production’ compared to the chapter in Volume 2 on ‘The Costs of Circulation’).

However, we get a strong sense that you are effectively redefining the rate of profit formula so that it might more easily show what you seek to prove and what others have failed to prove before you (that there is a pronounced and statistically observable long-term tendency for the rate of profit to fall in capitalism that will lead to the system’s demise).

This attempt seems divorced from some of the realities of capitalism and misses much of what has underpinned political and economic debate in recent decades: namely that it is the rate of profit after tax that is key for investment decisions and that governments have been in a desperate struggle to the reduce the tax-take from profits for years. Indeed, taxes themselves are ultimately a burden on capital – from surplus value – as therefore is the state machine funded by them, and this is the important point we seek to emphasise. – Editors.

Waste (1950)

From the July 1950 issue of the Socialist Standard

Waste, ruthless and rife, is indisputably one of the outstanding characteristics of present-day capitalistic society.

War, of course, is synonymous with waste; some of it’s recognisable features being the mass destruction of useful lives, the squandering of human energy and the prostitution of scientific achievements so laboriously acquired through long years of intensive social effort. Man’s age-long struggles with Nature culminating in the vast areas of habitable territory and the useful buildings of the times fall swift prey to the ravages of war.

So man must work, and war must take! “War and Waste” could fill the pages of quite a hefty tome but as it is not the title of this particular article we will proceed on more general lines.

Recent reports have appeared telling of unrestrained and deliberate acts of food destruction in the U.S.A. in particular and elsewhere wherever the profit motive in production prevails. That makes one wince most for the intake of food being man's strongest impulse coupled with the tragic fact that hundreds of millions of the world’s inhabitants are at the present time, in the throes of actual and partial starvation—or else in the relatively happier condition of never having really enough to eat!

Waste is apparent in the distribution of most things in most places. Individual needs are ignored in homage to capitalism’s lust for keeping markets “open” and prices “right.”

A particular example looms up into memory as these words are being written, which occurred about three years ago. Following the Peace-that-was-to-have-been-Eternal, the War Office found itself with about sixty thousand surplus, but good and usable, radio-sets on its hands. The Press and other mediums were then, as they still do from time to time, featuring appeals from interested individuals and welfare organisations asking that free sets should be issued to the chronic bed-ridden, T.B. sufferers, old-age pensioners and others who are for the most part confined to the home, and could not possibly afford to buy sets out of their meagre pensions.

Were those surplus thousands diverted to that necessitous channel?

Not a bit of it! For away in the West Country were some nice, disused and apparently inaccessible quarries deemed by His Majesty’s Labour Government —War Department, to be even more worthy recipients!

In passing, it should be noted that the issue of free wireless-sets to the registered blind has no connection with the disposal of governmental stocks. These sets are bought new direct from the makers with funds raised by charitable associations formed for that express purpose.

So the halt and the lame and the chronic bed-ridden are still without, for the most part, whilst those disused quarry-pits in far-away-places hold fast to what should have been the means of bringing much needed music and mirth (the latter in more senses than one!) into dreary lives.

But it should not be imagined that it is only the industrial rejects who are too poor to buy necessities. The great majority of the workers in this country are, for the present, in constant work and yet cannot afford to buy the requirements of a decent existence.

The harvest of work and wages (such as they are) engendered by the War is steadily petering out. Soon the relatively small acts of, say, throwing edible fish back into the seas as takes place frequently in this country and the destruction of good wheat in the Argentine will magnify and accelerate into far greater dimensions than ever before encountered. For, with the development of capitalism the workers progressively receive relatively less of the total wealth they produce.

It is not to be inferred that it is only the concrete commodities that are wasted, for look at the many and varied ways in which labour-power is dissipated on services that would have no place in a socialist system of society.

They are so very numerous that it is difficult to know where to begin. But as we have already touched on the subject of war and waste it may be as well to commence with those unfortunate fellow-workers, who are mainly forced into the armed forces by economic pressure or legal conscription. In addition, there are all those engaged in the making of all manner of destructive weapons and equipment for the war-machine. Amongst the exceedingly large number of unproductive occupations are those of the police-force, prison-warders. workhouse attendants, burglars, forgers, arson-mongers, "black” and "white” marketeers and spivs generally. Stock-exchange and insurance workers; politicians and trade-union officials; bankers and pawnbrokers; priests, pimps and parsons besides the advertising and time-motion-study parasites. Then there is the enormous gambling fraternity, all those engaged in whatever capacity in horse and hound racing, football pools (such an enormous industry) etc., and the terrific army of printers, clerks, electricians and telephonists involved.

The long procession of unproductive workers continue on and on and on . . . but the pages of the Socialist Standard do not so we will strike a concluding note with a reference to those large numbers of domestic workers; cooks, charwomen, boot-blacks, waiters and waitresses, chamber-maids and so on who slave for those usually in a far better position to do their own chores than the servants themselves through having superior material conditions under which to live.

Man, that creature with the sensitive hands, the agile brain and the keen senses, has already done much that is useful and good under severely limited social conditions. How much more will he do; will he want to do; when the earth and all that is on it—and can be on it—with all avoidable waste eliminated, becomes the common property of all mankind?

That state of Affairs will be known as Socialism and it is up to you to help hasten the day.

Linda.

Answers to Correspondents. (1907)

Letter to the Editors from the December 1907 issue of the Socialist Standard

A. Porcelli, Baron de St. Andrew (The Cottage, Camberley.)—Your statement that Society cannot be divided into two classes because “there are, for instance, children in arms,” is distinctly refreshing. We are, however, always glad to deal with intelligent opposition. We note also that you profess to belong neither “to the working class nor to the capitalist class, but to a much nobler class, viz, the Sons of God.” Nevertheless, if as we surmise the necessities and comforts of life which you enjoy in your baronial “Cottage” do not descend direct from heaven, but are the products of worldly labour, it would materially assist us in deciding (at least to our own satisfaction) to which economic category you belong if we were informed whether your present income is the result of your own mental and physical labour, or is derived through the ownership of property and is therefore a tax on others’ labour. This is not a personal question, for “we must all toil, or steal, (howsoever we name our stealing).”

The statements regarding your numerous charities to the distressed working class prove only that those who produce the wealth do not enjoy it and that the appropriators, who flourish through the workers’ misery, accompany their alms with misunderstanding and contempt. We would, indeed, in this connection (in return for the text on unclean beasts to which you referred us) commend to you respectfully Matthew VI., 1-4.

You assert that we are “perfectly ignorant of the Bible.” But to this we cannot plead guilty; for we regard and use the Bible as a valuable historical document of the upper status of barbarism in social evolution. As you, however, appear to value the Bible in quite another sense may we suggest that you take as texts for your next epistle Matthew XIX., 21-24 and Isaiah V., 8?

We cannot afford space to deal with all the curious points you raise. Your point of view, moreover, not being that of a wage-worker, and presenting otherwise no common ground of logic and experience as a basis for argument, renders further discussion difficult.

Socialism, as such, is not directly concerned with religion or the supernatural, and is not antagonistic thereto except in so far as religion is used against the working class. It would, however, be idle to deny that the fulcrum toward obtaining a rational conception of life provided by the scientific basis of Socialism can ultimately leave no room in the consistent mind for belief in the supernatural.

The concluding statement in your letter that “Woe betide the man who ignorantly seeks to make God responsible for the warped nature of fellow man, and the evils produced by Satanic devilry” is, as applied to us, entirely gratuitous; and you may be comforted by the assurance that we hold no metaphysical cloud-pusher responsible for the misery of the world.

G.H.L. (Kentish Town).—No. There is no “mental labour” that does not involve physical labour, and no physical or manual labour that does not involve mental labour also. When we speak of labour we do not discriminate between mental and manual, they are complementary.

The distinction you also desire to make between the “producer” of commodities, such as the brick-maker, and the “non-producer” such as the transport worker, will not hold. The transport worker is just as much a producer as the brickmaker, neither really produces in the sense you mean, both however are engaged in producing values. The brickmaker usefully alters the form of the raw material supplied by nature, and the transport worker usefully alters its position ; embodying in the process, quite as much as the brickmaker, a portion of the labour necessary to placing the bricks upon the market and creating values in so doing.

F.D. (Wimbledon).—There are essentially but two classes to-day, as we say. The capitalist class comprises all those whose income is derived from the ownership of property and is contrasted with the working class which comprises all those (with their dependents) who are possessors of only their power to labour which they are forced to sell to those who monopolise the means of wealth production.

All marketable wealth is the product of labour, and the able-bodied man who lives without contributing his quota of the necessary labour is robbing his fellows.

On the border line, between the two classes of exploiter and exploited, (which are, on the whole, vividly distinct), there are a number—with a foot in each camp—called the “middle class.” The members of this group are becoming an almost negligible factor owing to the growing centralisation of industry, but in so far as they express themselves politically they cling tenaciously to the capitalist side of their interests, and all the more desperately since the small property or position that they hold is alone that which distinguishes them from the working class properly so-called ; and this small property or means of exploitation is that by means of which they hope to climb into the select and secure section of the exploiters and so save themselves from the proletarian abyss which ever threatens to engulf them. Hence this section of lower capitalists is not only reactionary in that it fights against industrial advance, but also is most unscrupulous in defending its right to exploit, in sweating, and in conserving its monopoly of education or position against the interests of the workers. A small section, it is true, would “organise” the workers, on condition that it be given (under title of “the expert”) all the well-paid jobs and the right to govern the masses; but in face of a genuine proletarian advance all of these stand by the reaction and bitterly oppose genuine industrial democracy.

It is therefore seen that as economic categories reflecting politically their fundamentally opposing interests, there are, in reality, but two classes: those who live by labour and those who live upon those who labour; so that the workers in their task ot abolishing all privilege and exploitation, stand alone, and must rely only upon themselves.

J.T.T.—Thanks for information. We are always pleased to receive local papers with interesting articles or reports. Your query will be dealt with next month.

Cooking the Books: What is productivity? (2023)

The Cooking the Books column from the November 2023 issue of the Socialist Standard

‘Productivity — the amount we produce per worker or per hour worked — is very important’, wrote David Smith, the economics editor of the Sunday Times. ‘It is the ultimate driver of living standards, a key determinant of real wages and a vital component of competitiveness’ (Times, 20 September).

On the face of it, this makes sense. If society can produce a larger surplus over and above current consumption then some of it can be used to increase what is consumed, whether by individual persons or as improved collective services and amenities. That is what would happen if the aim of production was to directly meet people’s needs. But it isn’t. It’s to make profits to re-invest to make even more profits. It is this that drives the economy.

But how is the productivity Smith talks about measured? He states specifically that productivity at the level of the whole economy is measured by GDP per total hours worked or GDP per total number of workers. In other words, you take GDP and divide it by the number of workers or by the number of hours they worked. In 2021 the increase was 2 percent per worker and 2.8 per hours worked.

Leaving aside how accurate (or not) GDP is as a measure of ‘what we produce’ over a period such as a quarter or a year, what about the divisor, the number of workers or the total hours they worked over the same period?

Smith’s namesake pointed out 250 years ago that there were two kinds of work and workers.

‘There is one sort of labour which adds to the value of the subject upon which it is bestowed: there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour. Thus the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his master’s profit. The labour of a menial servant, on the contrary, adds to the value of nothing’ (Wealth of Nations, Book II, chapter III).

Marx inherited this distinction between productive and unproductive labour but modern economists and statisticians have abandoned it; they regard all workers as productive. To divide the value added in a year by total number of workers is absurd as a measure of productivity. It is as if in Smith’s day the new value produced was divided by the number of ‘manufacturers’ (productive workers) plus the number of ‘menial servants’. Whatever this measured, its increase would not be a measure of the extra wealth available to improve living standards.

To measure productivity and its increase properly total value added should be divided by the number only of productive workers. This involves making a distinction between productive and unproductive workers. It is something national income statisticians are capable of doing but don’t because it is not considered useful for capitalism. For a start, they could take out the number of ‘menial’ servants employed by the rich and then the not-so-menial servants who work for the government and parastatal organisations at national and local level. Most of them are essential to the operation of capitalism (and some would be in any society); they are part of the incidental running costs of capitalism and are paid out of capitalist income taxed by the state. They work but they don’t add any new value.

What the statisticians call ‘productivity’ is still useful under capitalism as it is ‘a vital component of competitiveness’. In fact that, basically, is what it is measuring, a vital statistic for capitalism. It can be increased not just by making the productive workers more productive but also by spending less on ‘unproductive’ work. An additional reason why using any extra surplus to provide more and better public services cannot be a priority. Competitiveness is more important.

Capitalism’s structural waste (2023)

From the November 2023 issue of the Socialist Standard

One reason why we continue to work comparatively long hours, despite the labour-saving potential of modern technology, is the proliferation of many paid jobs that essentially contribute nothing whatsoever to our material well-being. They are, nevertheless, required simply to keep the money-based market economy ticking over on its own terms.

David Graeber in his 2018 book, Bullshit Jobs defines these loosely as jobs that, if you were to scrap them completely tomorrow, it would hardly make any discernible difference to the real world or to our standard of living. He noted in an interview that there is a certain delicious irony in the fact that while a Soviet-style system has often been held up by mainstream economists as grossly inefficient because of all those make-believe jobs it created to maintain the pretence of full employment, in a so-called free-market economy that is supposed to root out such inefficiencies, exactly the same thing has been happening.

In that book, Graeber invents a rather amusing and colourful lexicon of terms to describe the different categories of jobs he has in mind. These jobs are everywhere and multiplying like wayward bacterial spores in a Petri dish. There are ‘flunkies’, paid to hang around, like doormen or receptionists, simply to make their superiors feel important; ‘goons’ to harm or deceive others for some nefarious commercial interest like the ubiquitous lobbyists or telemarketers; ‘duct tapers’ to temporarily fix jobs that would be better, and more efficiently, fixed permanently; ‘box tickers’ that go through the motions of doing paperwork that appears important but is decidedly not; and, last but not least, ‘taskmasters’ who are either completely superfluous in the guise of superiors telling you what needs to be done when you already know what needs to be done or are otherwise known as ‘bullshit generators’ whose job it is to create yet more bullshit jobs and so keep themselves employed in their own bullshit jobs.

A great many of these bullshit jobs fall within the services or tertiary sector. This sector now comprises the great bulk of the workforce at least in the more economically developed countries and as stated, its growth has been linked to the concept of deindustrialisation. Some workers in the services sector – like nurses or teachers – of course, perform socially useful tasks but many others clearly do not.

The ‘tertiarisation’ of the economy strongly associated with the growth of such socially useless industries as commerce, finance and retailing is an expression of the evolving (and expanding) systemic needs of capitalism itself. However, tertiarisation in itself does not capture the full extent of capitalism´s structural waste since many apparently useful jobs in the secondary or manufacturing sector (and, by extension, the primary sector) have to do with providing products or physical infrastructure that are then used for socially useless purposes within the services sector itself.

These jobs don’t actually make us ‘better off’ in real terms. They don’t result in more socially useful wealth being produced and distributed around. However, the fact that more and more of us are doing them means that more and more of us are, in effect, dependent on economic transfers from the steadily shrinking part of the economy concerned with producing socially useful wealth to maintain what might be called our ‘real standard of living’.

Money is the mechanism by which these economic transfers are effected, but money is also the reason why they are needed in the first place. Bank employees shuffling around bits of paper called money (although these days this is largely digitalised) can’t live on the stuff. They have to exchange it for ‘real’ stuff – like pairs of shoes, takeaway pizzas, or a Toyota to drive to work.

This is equally true whether you possess a wad of cash or an electronic wallet of bitcoins. In both instances what we are talking about is just a symbolic claim to wealth, not wealth itself. Indeed, for all the current hullabaloo over the latter – the cryptocurrency of choice of money launderers and shady operators everywhere – society as a whole is not one jot better off. On the contrary, according to data supplied by the University of Cambridge and the International Energy Agency, bitcoin ‘mining’ consumes around the same amount of energy annually as the Netherlands did in 2019 (tinyurl.com/3yk9w3zw).

What an astounding waste of energy! And to achieve precisely what? Nothing except to boost some individuals’ symbolic claim to wealth at the expense of others. For that is all that it can ever logically amount to when you think about it. In themselves, bitcoins – or fiat money, for that matter – are completely worthless. How long would Robinson Crusoe survive on his island if that was all he had to live on?

Actually, the ‘Robinson Crusoe’ acid test is not a bad starting point for determining what we mean by a real ‘human need’ as opposed to a fake. We don’t ‘need’ money. What we need in this society is only (some of) the things money can buy – though a lot of other things our money can also buy we don’t really need at all either – what the counter-cultural philosopher Herbert Marcuse called ’false needs’ in his 1964 book, One Dimensional Man. These are systematically and subconsciously instilled in us as a way of better integrating us into a capitalist ‘consumer society’ that is then able to more efficiently repress and control us by manufacturing our consent, manipulating our inner desires, and generally soliciting our compliance with its core values.

Of course, banking or cryptocurrency transactions and the like are only a tiny visible tip of a veritable iceberg of structural waste that we are talking about. With fewer and fewer people involved in producing shoes, pizzas and cars and more and more people engaged in ‘socially useless’ (but capitalistically indispensable) work within the economy, it is not surprising that society’s overall workload has not diminished but increased. More and more people are employed today than ever before but, at the same time, more and more of these are engaged in work that contributes absolutely nothing to our material well-being. Consequently, from the standpoint of meeting our needs, we are in effect, as a society, having to run faster and faster just to stand still. That is, to maintain our real “standard of living”.

Indeed, this is the core argument that runs through Ken Smith’s thought-provoking book, Free is Cheaper (1988). According to him, capitalism or the ‘market economy’, from small beginnings at the end of the Middle Ages, has come to dominate life in every corner of the world. However, it has brought with it increasingly unacceptable costs:

‘The crime industry, war preparation, bureaucracy, the ”sales effort”, these and other non-productive activities absorb the efforts of nine-tenths of the working population and are growing faster than productivity itself’.

On the basis of evidence supplied by commentators such as Thorold Rogers (Six Centuries of Work and Wages, 1884) and Sir William Beveridge et al (Prices and Wages in England from the Twelfth to the Nineteenth Century, 1939), Smith came up with some quite startling conclusions. For instance: ‘it takes longer today for a carpenter or a bricklayer to earn the price of a pound of meat or a house brick than it did five centuries ago’. What accounts for this, he argued, is the ever-increasing on-costs – or transactional costs – imposed by the market system itself.

Smith arrived at a figure of 90 percent of the working population being engaged in one or other form of socially useless activity (from the standpoint of meeting human needs) by carrying out a fairly comprehensive sectoral analysis of the British economy as it was back then in the 1980s. A roughly similar figure has been reached by other commentators such as Buckminster Fuller.

That figure of 90 percent is probably on the high side. Most people who have looked into the matter would put the figure at, conservatively speaking, roughly half the working population or perhaps a bit more.

Much depends, of course, on how stringently you want to define ‘socially useless activity’. A luxury good, for instance, might be considered ‘socially useless’. Yet it is undeniable that ‘consuming’ it can afford us pleasure. The problem arises when the production of luxury goods reaches a scale that jeopardises the satisfaction of our more mundane and pressing basic needs by diverting resources and labour away from the latter to the former. So the question of opportunity costs – how much of a given resource should you devote to producing this particular product at the expense of producing more of some other product – needs to be factored into the equation. Additionally, there is the question of how you define a luxury good. Some goods that were once considered a luxury – like a car or a refrigerator – have over time come to be considered a necessity.

Nevertheless, the basic thrust of Smith’s argument is unquestionably on the right track. Even setting aside the example of the production of luxury goods, there is a very large number of occupations that can be unequivocally and categorically classed as ‘socially useless’ and, therefore, wasteful of society’s human and material resources. In fact, the full extent of capitalism’s ‘structural waste’ is truly massive, all-pervading, and steadily growing. However, it will remain completely invisible to the naked eye, so to speak, as long as the viewer adopts a standpoint that simply takes this money-based capitalist system for granted.

To really appreciate the enormity of this iceberg of structural waste, you have, as it were, to step outside of that standpoint, or way of looking at the world, and adopt instead, a standpoint external to the system itself. You have to imaginatively presuppose a hypothetical society in which money itself, as an institution, has completely ceased to exist.

Needless to say, in such a society a great many of the jobs bound up with the existence of money today – or what that existence entails –would likewise cease to exist. They would simply serve no purpose.

Robin Cox

Blogger's Note:

David Graeber's Bullshit Jobs was reviewed in the December 2019 issue of the Socialist Standard.

Ken Smith's Free is Cheaper was reviewed in the December 1988 issue of the Socialist Standard.

Letter: Initiative & Incentive (1959)

Letter to the Editors from the October 1959 issue of the Socialist Standard

Dear Sir,

The August edition of the Socialist Standard fell into my hands, and, being more than slightly interested in Socialism I read it closely. Naturally the article “To a New Reader” caught my eye. In this article you make certain claims and statements on which I would like to pose some questions.

“It (the owning class) takes no part in social production and is unnecessary to it." From the context it would appear that by owning class, you mean anyone who owns property. If you must pigeonhole everyone into a “class," I am, 1 suppose, of this class, as my father, by saving, has bought the house in which we live. But the income of the household (I am a chartered accountant's articled clerk) is far, far less than that of many what is laughingly termed “working class" households which exist in rent subsidised houses. Why then are we evil to the Socialist? As to being socially unproductive, my friends of this drone class include one chemical engineer (B.Sc.), one electrical engineer (B.Sc.), one agriculturist (B.Sc.) and two capitalists, one of whom arrived in this town four years ago with 30s. and a kitbag of dirty washing. By way of working an eighty-hour week he now has a thriving timber business employing seven men. Very much the same applies to my other capitalist friend except that he has a plastics factory. Yet you also say “Initiative and inventiveness will have a chance to thrive." Has initiative no chance now?

“Production will expand to correspond to the people's needs." Surely production is vastly in excess of the people's needs as it is. I think “wishes" should be substituted for “needs." But then this would be nonsense because production cannot expand to give everyone what he wants.

"Cut-throat competition for jobs will no longer exist." But does it exist now? Surely the best man gets the job? Does Socialism mean that any incompetent can get any job? Besides which the above statement would appear to contradict “Initiative and inventiveness will have chance to thrive, etc."

Finally, on page 121 you are appealing for funds. On page 116, under “Wages by Cheque," you say “Snatching the payroll could, by present ethical standards, be considered more a transfer of property than theft." Your problem solved?

Yours faithfully,

A. L. A.

Horsham, Sussex.

Reply:

The “class who own the means of production" does not include everyone who owns property; buying a house does not change the class of the buyer. The working class consists of men and women who own nothing—or so little—in the means of wealth production that they must sell their abilities to an employer in order to live. This includes people like chartered accountants, engineers and agriculturalists and people who own a house, whose economic interests are the same as other workers. The capitalist class are people who—although many of them do work—own enough of the means of wealth production to live without working for a wage or a salary. Because one of these classes buys labour power from the other, their interests are in conflict. Neither the capitalist nor the working class is evil, for they are both inevitable products of the historically necessary capitalist social system.

Of course, initiative and inventiveness have some sort of a chance under capitalism. So has dishonesty. But not everyone can be an employer—the majority must remain in the working class, where a person's initiative and inventiveness only find expression if he can sell his energies to an employer.

Modern society is capable of satisfying human needs, which include lots of things which our correspondent would call “wishes." But capitalist production is regulated to exploit the market, which need have no relation to people's needs. That is why the National Coal Board is reducing output, whilst pensioners are in need of coal. Socialist society will have no market to take into account,  "production will expand to correspond to the people's needs,”—the only sane productive motive.

Because the size of a person’s wage limits his access to wealth, workers compete among themselves for the better paid jobs. Sometimes they indulge in the "cut throat competition” of toadying to the boss and so on. In 1938. when To a New Reader was first published, this competition was often for employment regardless of the wage. It is naive to think that, in these conditions, the best person always gets the job. Indeed, a lot of people are doing work which is quite unsuited to human abilities. Our correspondent must be familiar with the monotonous employment which healthy young men are doomed to in chartered accountants’ offices. And what about servicemen? Are they actually suited to killing and being killed?

Socialists think that we are capable of better than this. We want a world where only socially useful work is done, producing the very best to enrich the world’s common pool of wealth for the benefit of humanity and not for some ephemeral personal advantage.

Editorial Committee.

Human energy and capitalist inefficiency (1978)

From the July 1978 issue of the Socialist Standard

The Concise Oxford Dictionary defines efficiency as “the ratio of useful work performed to the total energy expended” meaning the greater the amount of energy input required to produce a given output the less efficient the work. So efficiency is a measure enabling us to compare different ways of achieving something with a view to minimizing energy input (including labour) and maximizing output. Such a comparison can be made between capitalism and socialism which would demonstrate how vastly more efficient would be the latter social system in utilizing the mental and physical energies of people to satisfy social needs.

This however prompts the question: what are social needs? From a human standpoint the answer is obvious: adequate and decent shelter, food, social amenities. What does not appear to be obvious to many outraged and idealistic observers of the appalling toll of human misery is that the worldwide capitalist mode of production is not and cannot be directly geared to the satisfaction of social needs. Under capitalism, wealth is produced as commodities for sale on a market with a view to profit. The fulfilment of human needs is incidental and secondary to this basic motivation. To sell his commodities the capitalist has to find buyers and people can only buy as much as they can afford. Thus the working class are condemned to poverty and to a permanent insufficiency of purchasing power which cannot be redressed by income redistribution (redistribution of poverty) or inflationary policies of printing more money.

Such deprivation is quite unnecessary. For decades the world has technically been capable of producing a superabundance of wealth to satisfy all mankind’s needs. The gap between this accelerating potential and actual output has widened immensely during this time. Experts compute that the world can comfortably support a population many times its present level with existing technology and “known” resource reserves. Patrick Moyniham, ex US Ambassador to the UN, has stated that India alone could feed the world. Historically capitalism has during its brief existence developed the forces of production immensely on the one hand and on the other, has increasingly restrained their application with insurmountable economic barriers.

Since capitalism artificially restricts production we can directly attribute to it the widespread poverty and its effects. One such effect is malnutrition. The magnitude of this problem was illuminated by a UN Food and Agricultural Organisation report in 1974, which revealed that an estimated conservative figure of 460 million people suffered from severe malnutrition prior to 1972 and this number has rapidly increased since then. The consequences are pervasive and profound as Professor Jean Mayer explained:

The child of a malnourished mother is more likely to be born prematurely or small and is at greater risk of death or of permanent neurological and mental dysfunction. Brain development begins in utero and is complete at an early age (under two). Malnutrition during this period when neurons and neural connections are being formed may be the cause of mental retardation that cannot be remedied by later corrective measures. The long term consequences not only for the individual but also for the society and the economy need no elaboration. (Scientific American Sept. 1976).

Moreover, millions are killed or maimed by stress and appalling cost-effective work conditions generated by the commercial rat-race. The resultant wearing and tearing of the fabric of social existence necessitates costly social services. Thus capitalism deliberately vitiates the quality and potential of human labour-power which might otherwise be efficiently expended in the production of wealth. Capitalism is incapable of efficiently applying existing technology to produce even the sort of conditions and requirements favourable to the reproduction and development of efficient labour- power on a satisfactory scale. Instead it creates a vicious circle of poverty and incompetence — as the social scientist, the late Oscar Lewis wrote: “Once the culture of poverty has come into existence it tends to perpetuate itself”.

But not only is capitalism wasteful in stifling its prodigious productive potential: the way in which it organizes manpower within its productive apparatus is itself an inherently inefficient process. This is because it generates priorities which stem directly from the way in which it functions as a mode of production. From the standpoint of actually improving the material wellbeing of society these priorities are socially useless and the rifulfilment engages a considerable and growing proportion of productive effort. Thus capitalism has spawned a gigantic administrative- bureaucratic edifice which has mushroomed in size and complexity in response to the developing economic requirements of the profit machine.

Economists refer to this process as tertiarization. A nation’s occupational structure can be divided into three broad categories: Primary or extractive sector, secondary or manufacturing sector and tertiary or services sector. According to one theory, the Clark-Fisher thesis, tertiary employment increases relative to total employment chiefly at the expense of primary employment in the course of development. The tertiary sector, which is the most advanced economies is the largest, includes a huge proportion of jobs which would be eliminated in socialism such as those in advertising, finance, government and retailing industries. The Clark-Fisher thesis has the qualified support of research findings. The growing proportion of socially useless employment is yet another indictment of capitalism’s obsolescence.

But waste does not end there. In an article in the Economist (30/7/76) it was revealed that office equipment makers predicted that by 1980 annual spending on office machinery will reach $3 billion at 1974 prices or £300 outlay for each of the 10.5 million office workers in Britain . . . who are largely concerned with the mechanics of capitalist finance and commerce. This is only the tip of the iceberg.

World military expenditure at £122,000m in 1976 is equal to the entire income of the poorer half of mankind. Nearly 30 per cent. of worldwide aluminium production is allocated to military usage. Yet war, for which armaments production is a preparation, is merely an inevitable extension of the normal commercial rivalries inherent in capitalism. Such examples represent an enormous drain of human energy and resources in primary and secondary sectors into activities which are socially useless but essential to the maintenance of capitalism—energy and resources which is socialism could be constructively applied to the betterment of society.

Even when workers are available capitalism is incapable, because of its finite markets, of assimilating them into its productive apparatus and yet a considerable amount of energy is expended in their maintenance through the “welfare state” machine (not that this is done out of charitable concern). Millions of even skilled workers with years of costly training invested in them are not permitted to make use of their abilities because they are unemployable or pensioned. This is a grossly inefficient use of available labour power.

Even the wasteful framework of capitalism’s production priorities workers are inefficiently used in relation to the technology at their disposal. Underemployment, as this is called, and unemployment in the so-called third world is flickering between 25 and 30 per cent and still rising according to the New Internationalist May 1974. Another dimension of this problem is the phenomenon of square-pegs-in-round-holes — workers economically compelled to work in particular jobs when their inclinations and skills lie elsewhere. A worker will be industrious and efficient when his interest is in his work. The alienation, drudgery and lack of variety which workers confined within the straitjacket of a “job” experience generally under capitalism must contribute immensly towards inefficient work performance.

What more could be said of capitalism, its planned obsolescence, its status-conscious meretricious trash, its coals-to-Newcastle phenomena, its rotting mountains of unsaleable food? It is a panorama of stupendous waste, of wasted human endeavour. Less obvious examples of waste emerge from a shadowy background of interacting factors congruent with and expressive of property society. Such examples are legion but one will suffice.

In many parts of North West Europe the cultivated land is fragmented into a mass of patches so that one man’s “farm” could consist of a number of plots interspersed among other farmers’ holdings and separated by long distances. As a result the efficiency of movement between plots is seriously impaired. Chisholm in Rural Settlement and Land Use calculated that in Europe “one third or even one half of the agricultural land is fragmented and in need of consolidation” (p. 46). Even without altering land use patterns — although the size and shape of properties can prohibit the use of efficient mechanised techniques for example the subdivision of inherited properties amongst third world peasants into tiny plots — the total transformation of the agrarian landscape on the basis of common ownership is the obvious solution to facilitate the most efficient utilization of the land.

There are many reformist groups who concern themselves with the problem of waste but who in fact employ an extremely narrow definition of waste which they invest with a sense of horror-stricken incredulous alarm as if all this pollution and rape of the land is something new in capitalism. Theirs is a hypothetical world of scarce resources, of exploding populations, of mounting insurmountable pollution levels. Where they circumscribe their notion of waste to what they see as just the excesses of the social system, socialists see waste as something integral to and ineradicable within the framework of commodity production. The destiny of the world has not been pre-programmed. Given the necessary socialist consciousness coupled with the latent productive potentialities imprisoned within the structure of the capitalist economy, the exhilarating vision of an efficient world without waste or want can become a reality.

Robin Cox

Fifty Years of “Progress” ! (1925)

From the December 1925 issue of the Socialist Standard

The Economic Position of the Workers.

(Concluded from last issue)

We have now seen how pauperism has grown over the last 50 years and how the workers have become poorer during the latter half of that period, and it is time to ask whether the capitalist class have shared that poverty. On the contrary we find that in respect of the wealth produced this country has grown continually richer up to 1914. Sir W. Beveridge (Econ. Journal, Dec., 1923) gives the following figures of Real Income per head of the population, after allowing for the movement of prices. The figures represent, therefore, a statement of the production of “real” wealth, not merely money prices :—

1860 £26.0

1870 £29.6

1880 £34.1

1890 £40.0

1900 £45.9

1910 £46.9

He clearly explains that while more wealth was being produced it was only the workers who suffered, their loss being the gain of the propertied class.

“From 1900-1913 we lived on a rising tide. This also is an element favouring capital as against labour, profits, rather than wages.”

And again :

“The smooth development of Victorian days was broken, but the characteristic of the time was inequality of fortune rather than general misfortune ; discontent rather than poverty; a gain by capital in relation to labour, by profits in relation to wages, by some classes of workmen at the expense of others, even more than a check to our progress as a nation.”

Least of all was the poverty of the workers due to natural causes:

“Europe on the eve of war was not threatened with a falling standard of life because nature’s response to further increase in population was diminishing. It was not diminishing; it was increasing. Europe on the eve of war was not threatened with hunger by a rising real cost of corn ; the real cost of corn was not rising ; it was falling.”

A. L. Bowley (“The Change in the Distribution of the National Income, 1880-1913”) estimates the division of the national income as between “Property” and “Wages” at 37½ per cent, and 62½ per cent, respectively; and, further, that this percentage was nearly constant over the period. In this he differs from Mulhall (“Dictionary of Statistics”), who considered that in 1881 the percentage going to property was only 21 per cent. Sir Josiah Stamp (Statistical Journal, July, 1919) estimated the then percentage of “Property” at 32 per cent.

It is, however, necessary to point out how misleading is the classification used by all the above. An enormous number of workers are not engaged in the production and distribution of wealth at all, but are simply employed as personal servants or as profit “snatchers” out of the field of production proper.

Thus the services of the cook and the gardener and the valet are obviously enjoyed only by their employer, the property owner.

Yet in the above classification their wages go to swell the proportion of the “workers.”

If we follow the more useful method adopted by Sir Leo Chiozza Money, the picture is presented in another light. He shows how much of the wealth produced actually goes to the workers who produce it.

He estimates the wealth produced in 1913 at £2,150 millions, and says :—

“The manual workers, who, with their dependents, accounted for about two-thirds of the entire population, took about one-third of the entire national income, while the income-tax payers, with their dependents, forming only about 5,000,000 of the population, drew nearly as much as the remaining 41,000,000.” (Fifty Points about Capitalism, p. 13.)

The remaining portion went to the 4,000,000 clerks, shopkeepers and assistants, small farmers, etc. He considers that the division remained in 1924 approximately what it had been in 1913.

The exploitation of the workers is well illustrated from another angle by the statement made by Mr. Spencer. Liberal M.P. for Bradford, and quoted from the Daily News (New Leader, October 19th, 1923) : —

“If you look at the returns of the profits of this firm (Saltaire, Ltd.), you will find that by good management and skill they made a profit of £137 per head on each of their workpeople. Sir Isaac Holden,. Ltd., the woolcombers, made a profit of £140 per head of their workpeople last year. …”

Here we see how the workers’ wages could be doubled out of the wealth they produce.

We may notice here how the same process of declining real wages and increasing profits has gone on in America.

“In the period from 1897 to 1915, when real wages were falling in spite of an enormous increase in national production, business profits far outran the rise in the general price level. . . . From 1897- 1913 railroad and industrial stocks advanced about 100 per cent. . . . Moreover, this was a period in which huge corporate surpluses were being set aside out of profits.”—(American Economic Review, March, 1925.)

WHO OWNS “YOUR COUNTRY”?

As for the distribution of capital (as distinct from that of annual income), Professor Henry Clay (Times, March 24th,1925) wrote : “It is probably safe to say that over two-thirds of the national capital is held by less than 2 per cent, of the people.” As he also pointed out, such inequality was unknown in eighteenth century England.

WASTE OF WEALTH.

Last of all we come to the question of our wasted powers of production. While the workers grow poorer, it is becoming ever easier to produce the things they lack. Labour, land, machinery, etc., exist in excess of society’s needs, and only capitalism forbids the production of wealth for the use of those who do not possess legal rights to property in the means of life.

Sir Leo Chiozza Money estimates that 1923 production was from 15 per cent. to 20 per cent. less than that in 1913 (New Leader, January 4th, 1924), and shows (“Fifty Points,” p. 44) that in 1907

“counting as a man a male worker aged 18 years and upwards, there were only 4¼ million engaged in producing. . . . The remaining 10,000,000 workers were engaged in transport, or commerce, or professions. When allowance is made for the useful workers amongst these, it is clear that the nation has to support millions of persons condemned by the capitalist system to be non-producers.”

To this add the enormous increase in numbers of unemployed and the still greater increase in powers of potential production due to inventions, etc., and we can then realise how the workers’ actual position compares with what economic conditions would permit it to be under another system of society.

If we take a few typical industries we shall see how great the development is, and also what are the effects of greater efficiency under this system. Thus Mr. Coppock, giving evidence in March, 1925, before the Court of Inquiry presided over by Lord Bradbury, stated that whereas 3,000 million bricks were laid in 1914 by 73,671 bricklayers, in 1921 5,000 million bricks were laid by only 57,170 bricklayers. More efficiency and its accompanying less employment are threatened in still greater degree should a proposed bricklaying machine prove commercially profitable.

“The Triangular Construction Company, of Imber Court, Surrey, have given the first public trial to a simple piece of machinery, invented by Major W. H. Smith, its managing director, which, worked by one skilled bricklayer and a labourer, can erect the walling of houses at a rate equivalent to the laying of 15,000 bricks a day.”—(Daily News. October 21 si, 1925.)

In the agricultural industry of America, it is stated by T. G. Risley, Solicitor of the U.S. Department of Labour, that :—

“the American farm labourer produces an average of 12 tons of cereals per year, while the foreign farm labourer only produces 1½ tons of cereals per year. … In 1920 there were 1,500,000 fewer men on farms in America than in 1910, yet the crops produced were one-third greater in 1920.(O.B.U. Bulletin, Winnipeg, October 1st, 1925.)

In the automobile factories in the U.S.A. the following startling progress has occurred. The figures represent the average number of cars produced per worker per

annum in the various years : —

1899 1.66

1904 1.80

1909 2.47

1914 7.17

1919 8.97

1921 11.15

1923 16.11

They are taken from a report to the Department of Labour submitted by M. W. La Fever.

Almost every capitalist country and every industry could furnish evidence of like developments, and were the achievements of the most advanced countries applied all round, the task of producing all the reasonable requirements of the world’s peoples would be incredibly simple. Our powers of production are, in fact, as Sir Leo Chiozza Money puts it:—

“Our working power is not less, but far greater than our needs.”—(Triumph of Nationalisation, p. 18.)

ABOLISH CAPITALISM.

But these powers cannot be used to the full and freed from the hindrance of periodic crisis and depression, and the unemployed cannot be allowed to produce because the machinery of production is in the hands of the capitalist class or Governments and Municipalities controlled by them. Only the abolition of private ownership can remedy the evil for the workers. Failure to take this necessary step, and every year’s delay in doing so, leaves the workers faced with certain increase of unemployment, certain increase of insecurity, and certain worsening of their condition relative to that of the employing class, because of the inevitable growth of society’s powers of producing wealth. Although for a time, during the early expansion of capitalism, the workers were able to secure a rising standard of living, the tendency in all the leading capitalist nations, including the Colonies of the British Empire, has been for “real” wages to fall since the opening years of this century. While the level in this country may still be higher than that of 1870 (The L.R.D. figures would place it at about the level of 1880), there is no prospect of an improvement in any but the most backward areas of the capitalist world. Furthermore, unemployment and pauperism, “speeding up” and insecurity, have definitely operated to worsen the workers’ condition in relation to what it was fifty years ago. Lastly, and most important of all, while the workers have been getting worse off, the means of producing wealth have developed by leaps and bounds. If poverty in 1870 was a phenomenon which many well-meaning observers found incomprehensible, its existence in 1925 is a crime absolutely indefensible, and if only the workers realised, absolutely unnecessary.

Edgar Hardcastle

Who benefits from lower ‘Third World’ wages? (2021)

From the March 2021 issue of the Socialist Standard

We conclude our series refuting the view that workers in the developed capitalist parts of the world exploit workers living in the ‘Third World’.

Third Worldist ‘anti-imperialism’ basically contends that the interests of workers in the Global North are objectively aligned with the capitalists there in seeking to perpetuate the ‘super-exploitation’ of the Global South. Allegedly, this super-exploitation has the effect of raising these workers above the status of an exploited class by enabling them, via a process of ‘unequal exchange’, to receive the full value of their labour contribution.

As Jason Hickel explains:

‘It was the Egyptian economist Samir Amin – a well-known critic of neo-colonialism – who first articulated this argument in the 1970s. He noticed that that if we look at the labour that goes into producing goods for trade between the south and north, we see that workers in the south are paid much less than their northern counterparts – even when adjusted for productivity or units of output per hour. This means that when the north buys goods from the south, they pay far less than those goods would otherwise be worth. In other words, the north effectively siphons uncompensated value out of the south’ (Guardian, 18 May 2017).

While this explanation might seem superficially plausible, there is an intrinsic problem (as we saw last month) with trying to quantify the magnitude of this global transfer of value – let alone quantify the extent to which workers, as opposed to capitalists, in the north allegedly benefit from this transfer – due to value being based on the elusive notion of ‘abstract labour’. Hence the use of price as a surrogate measure. But while the sum of all values must equate with the sum of all prices, for any given commodity, value and price must necessarily diverge under conditions of disequilibrium resulting from the continual adjustment of supply and demand to each other.

Take the commodity, labour power – the skills the worker sells to the capitalist. Its price is the wage that worker receives. However, this transaction is conditional upon the capitalist expecting to make a profit by employing the worker. A business is not a charity. It is not concerned with the well-being of its workforce as such. Competition between businesses pushes such sentiments aside and imposes on all the overriding need to secure a profit.

Without profit the business risks being bankrupted. This is as true in the Global North as in the Global South and it is surely significant that the overwhelming bulk of capital – even foreign direct investment – originating in the North is invested there and not in the South. That wouldn’t happen without the prospect of profit.

Profit is the money form of the economic surplus the worker produces in exchange for a wage. She produces more value than she receives in her wage. Hence she is ‘exploited’. It doesn’t matter whether she is ‘well paid’ or not. Whether she can ‘purchase the product of ten hours of another worker’s labour through one hour of her own’ as Zac Cope puts it, is simply not relevant (Divided World Divided Class: Global Political Economy and the Stratification of Labour Under Capitalism, 2012, p.173) Her means of purchasing that product – her wage – is conditional upon her producing a surplus for her employer in the first instance and, thus, being exploited.

Wage levels and the rate of exploitation

What determines the ‘rate of exploitation’ cannot simply be inferred from the level of wages paid to workers; it must take into account, also, their productivity. Paradoxically, higher paid workers can be subject to a higher rate of exploitation if the ratio of the surplus they produce compared to the size of their wage packet is higher than in the case of a low-paid worker. However, this can change if you reduce the wages of the low-paid worker thereby increasing his rate of exploitation.

Commentators, like John Smith, argue that depressing wages below their value in the Global South – super-exploitation – is now the primary mechanism under capitalism for increasing the rate of exploitation (Imperialism in the Twenty-First Century, 2016). Capital is highly mobile today while labour, hemmed in by national borders, is relatively immobile. This obstructs the equalisation of international wage rates (but not the equalisation of profit rates whereby surplus value is siphoned out of the Global South). Multinational corporations can play one poor country off against another in their quest for lower production costs while a corrupt ‘comprador bourgeoisie’ running these countries assists in this race to the bottom by imposing political repression and banning trade unions.

This argument has merit but, still, we cannot overlook differential rates of productivity. According to Hickel:

‘Southern workers are probably at least as productive since these days many of them work in foreign-owned factories (think of Apple’s iPad factories with highly efficient technology and rigid Taylorist rules, designed to extract as much as possible from every movement).’

Clearly, this is just cherry-picking. The vast majority of Southern workers don’t work in foreign-owned factories. Some do and, doubtless, productivity in these cases matches Western levels. But you have to look at the situation across the country as a whole to get a more realistic picture.

Even in an emerging industrial powerhouse like India, the formal sector accounts for only 10 percent of the workforce, the rest working in the informal sector. Globally ‘a staggering 2 billion workers are in informal employment, accounting for three in five (61 per cent) of the world’s workforce’ (ILO, World Employment Social Outlook: Trends 2019).

These are overwhelmingly concentrated in the Global South. Given the paucity of formal sector jobs and the lack of unemployment benefits, workers here often have little option but to eke out a living in the low-paid informal sector. This is characterised by rampant ‘underemployment’ and relatively inefficient small-scale ‘involutionary’ forms of activity.

There is some truth in Hickel’s claim that ‘wages are not somehow naturally low in the south – they have been made low by design. Wages are an effect of power’. But his explanation is incomplete. The bargaining power of those workers is, in turn, undermined by the depressing effect on wages caused by mass unemployment and, even more, underemployment, which is much more pronounced in the South.

The much larger ‘industrial reserve army’ also helps to explain the persistence of generally more labour-intensive forms of production there and, by extension, the significantly lower per capita productivity. According to the ILO there is a strong correlation between output per worker and international variations in wage rates (bit.ly/2OhfIK2).

Indeed, Marx himself maintained that ‘The more productive one country is relative to another in the world market, the higher will be its wages as compared with the other’ (Theories of Surplus Value, Ch. 8). Key to this is raising the ‘organic composition of capital’ via mechanisation thereby bringing about a fall in the rate of profit.

Ironically, Cope himself contends that ‘the capitalist system has been able to maintain itself in recent decades’ only because, among other things, ‘industrialisation of large parts of the Third World have ensured the entry of millions of (super-)exploited workers into the global workforce. This has undoubtedly raised the rate of profit by reducing the rate of growth of the organic composition of capital’ (ibid p.201). So he is effectively conceding that production there is more labour-intensive and we can assume this means less productive in per capita terms.

There is a further point to consider. As we saw earlier, part of Cope’s argument rests on the claim that most Northern workers are ‘unproductive’ in the sense that they do not produce, but are financed out of, surplus value. But what of the Global South? While some workers in the small formal sector could be classed as unproductive – for example state employees – in the much larger informal sector the predominant form of labour – 70 percent in sub-Saharan Africa – is ‘self-employment and unpaid family work’. Strictly speaking, this does not constitute productive labour either since it does not involve what Marx called the ‘exchange of capital for labour’ which is a precondition for such labour being considered ‘productive’.

However, to reiterate – being ‘unproductive’ does not mean not being exploited. ‘Being exploited’ does not depend on you being directly involved in producing surplus value but rather on your functional contribution to a wider system of surplus extraction.

Furthermore, even if 80 percent of the world’s productive labour is ‘performed in the Third World by workers earning less than 10% of the wages of First World workers’, as Cope claims, one should bear in mind that at least 80 percent of the world’s population lives in the Third World anyway.

As for workers there earning less than 10 percent of the wages of First World workers we need to relate this to international differences in price levels. In this regard, the position of Third Worldists comes across as muddled.

On the one hand, we find Cope suggesting that workers in the Global North benefit from the ultra-cheap prices for goods produced by super-exploited workers in the Global South; on the other we are told by him that ‘as soon as these goods enter into imperialist-country markets, their prices are multiplied several fold, sometimes by as much as 1,000%’(p. 159). This is because the capitalists there can ‘afford’ to pay their workers higher wages to buy these goods which presumably means they are making a profit by employing them.

Who benefits from lower import prices?

Wages, being the price of labour power, will tend to adjust to changes in the prices of other commodities. Cheapening the price of imports into the North by intensifying the exploitation of Southern workers will not materially benefit workers in the North. Actually, if anything, it has induced capitalists to outsource production to the South and close down factories in the North at the expense of northern workers.

Like water finding its own level wages will ultimately tend to gravitate towards the value of labour power. Marx’s observations on the early nineteenth-century struggle to repeal the Corn Laws which restricted food imports to boost domestic prices are pertinent here:

‘The English workers have very well understood the significance of the struggle between the landlords and the industrial capitalists. They know very well that the price of bread was to be reduced in order to reduce wages, and that industrial profit would rise by as much as rent fell’ (bit.ly/2LvHt0p).

While it is undeniable that there are marked differences in wage rates between the North and South there are some suggestions that the gap may be closing. A report in the Economist noted that while wage growth in the advanced countries has been slight or stagnant: ‘The crucial change that has taken place over the past decade or so is that wages in low-cost countries have soared’ (19 January 2013). Ironically this has encouraged a limited ‘reshoring’ of manufacturing back to the US where wage stagnation has made US manufacturing slightly more competitive.

Of course, we are still quite a long way off from the ‘equalisation of international wage rates’ but current developments seem to be tending in that direction. In Asia, for example, wages have been growing annually nearly ten times faster than in the world’s richest nations (Nikkei Asian Review, 28 November 2018).

Moreover, if you apply ‘purchasing power parity’ exchange rates to reflect the varying costs of buying an identical basket of goods in different countries, the gap between rich and poor countries narrows considerably. Cope himself notes that ‘according to calculations based on data compiled by the Union Bank of Switzerland, OECD wages have an average 3.4 times more purchasing power than non-OECD wages’ (p.163).

This is far less than the cited ratio of 1:11. This difference can be adequately explained in terms of factors already discussed such as differential productivity rates. But compared to the difference in purchasing power between capitalists and workers everywhere in the world, it is pretty negligible.

It is this fundamental class division that the proponents of Third Worldist ‘anti-imperialism’ wilfully obscure in their pointless pursuit of a reactionary nationalist agenda in an age of global capitalism.

Robin Cox

Capitalism and Automation: Progress Perverted (2021)

Book Reviews from the February 2021 issue of the Socialist Standard

We discuss two recent books on the effects of automation under capitalism.

Aaron Benanav’s Automation and the Future of Work (Verso) is one of a significant number of books published in recent years offering serious critiques of modern capitalism that tend to have one thing in common. While usually describing themselves as ‘anti-capitalist’, in the solutions to the problems they point to in the capitalist system they almost always end up with recommendations not on how to end the system but on how to improve it, how to make it run more ‘caringly’, more ‘fairly’, more ‘equitably’. Lacking a vision of a wholly different kind of world than the current one based on buying and selling, money and wages, and profit, these books advocate action to achieve various reforms, for example – in the most recent popular thinking among authors and activists – what is usually called Universal Basic Income. This idea has been discussed in this journal on a number of occasions and rejected for its inability to bring about any qualitative change in social organisation and for constituting at best a way of redistributing poverty and at worst a sure-fire way of exerting downward pressure on wages and salaries.

Now, however, we have a book that does something different. Not only does it offer an original and thoroughgoing critique of the current social system, but to the never-ending problems it throws up it proposes a truly radical solution: the abolition of the wages system and a ‘post-scarcity’ society of abundance. Readers of this journal will of course know that this is the very non-market-based remedy advocated by socialists such as Marx and William Morris towards the end of the 19th century and which the Socialist Standard has kept alive uninterruptedly since 1904. The author of this book recognises this idea’s pedigree in stating that the ‘vision of post-scarcity was what “socialism” and “communism” had come to mean before later identification with Stalinist central planning and breakneck industrialisation’, and, in his final chapter, entitled ‘Necessity and Freedom’, he describes it variously as, ‘the abolition of private property and monetary exchange in favor of planned cooperation’, ‘a world of fully capacitated individuals … in which every single person could look forward to developing their interests and abilities with full social support’, ‘a world in which democratic associations of women and men replaced the rule of the market with competitive production – and taking advantage of capitalist technologies – reduced the common labors of necessity to expand a realm of individual freedom’, ‘a new form of life that does not organize itself around wage work and monetary exchange’, a society in which ‘everyone can go to the social storehouses and service centers to get what they need’, and finally ‘for most people (…) the first time in their lives that they could enter truly voluntary agreements – without the gun to their heads of a pervasive material insecurity’. In such a society ‘dis-alienating community life – by taking that life under democratic control and collective care – becomes the way to ensure that individual freedom is shared by all’.

While consistently advocating just such arrangements, the Socialist Party has never sought to put forward detailed plans of how the new society of free access will be organised, since we would not seek to dictate now to the majority of socialist-minded workers at the time how to put into practice the plans they will have previously worked out about how to organise production and distribution cooperatively and democratically. Benanav, while not proposing detailed plans either, does, however, have some interesting insights as to how this could be organised or, as he puts it, ‘how the pieces of this defunct world can be reassembled into a new mode of social existence’. For example: ‘We would divide up responsibilities while taking into account individual aptitudes and proclivities. Some tasks would need to be performed locally, but many could be planned on a regional or global scale, using advanced computer technologies.’ Further: ‘The realm of freedom would be the one giving rise to all manner of dynamism: that is where human beings would invent new tools, instruments, and methods of accounting, as well as new games and gadgets, rapidly reallocating resources over time and space to suit changing human tastes (…). The world would then be composed of overlapping partial plans, with interrelated necessary and free activities, rather than a single central plan.’ He concludes, nevertheless, in a way that echoes closely the approach the Socialist Standard has taken in dealing with this subject over the years, by saying: ‘But these issues, as well as the related question of what counts as necessity and what as freedom, would be matters for a free humanity to resolve for itself, politically.’

Much of this follows from the ‘Future of Work’ element in the book’s title. Benanav’s argument about work in capitalism is that the ‘rise of the robots’ discourse common to those he terms ‘automation theorists’ is overblown and that the reason why workers of all kinds, whether in countries of advanced capitalist production or in less developed ones, are seeing increasing pressure on pay, job security and work conditions is not principally that the work is being done by automation (so-called ‘long-run technological unemployment’) but that capitalism in recent decades has experienced ‘deindustrialisation’, that is the number of jobs in the service sector consistently outstripping those in manufacturing side by side with global industrial over-capacity, ongoing wage stagnation, rising inequality and a proliferation of ‘bad jobs’. He sees this, together with the ‘angry ethnonationalisms’ it tends to bring with it, as an inevitable feature of the system’s trajectory leading to increasingly worse conditions for workers at all levels, incapable of remedy by vogue ideas such as Universal Basic Income and only capable of resolution by a movement of new social consciousness uniting ‘around a new emancipatory social project’ to bring in the kind of non-market post-scarcity society outlined above.

Theories of capitalist decay are of course debatable. Capitalism in its history has gone through numerous phases and crises and on the whole has managed, even if in an extremely uneven and irregular way, to improve living standards and conditions for large numbers of its wage slaves. What is not debatable, however, is that, under the current system, as the author puts it, ‘even in the richest countries most people are so atomized, materially insecure and alienated from their collective capacities that their horizons are stunted’ and that the kind of society he recommends to replace capitalism would be far superior to anything that has so far existed or that capitalism could promise in the future. In addition, though it would be, unlike capitalism and as socialists have always maintained, a society of abundance, it would not be – and would not need to be – a society of super-abundance, and this is something that Benanav captures effectively by stating that ‘a literal cornucopia is not required’. He goes on to explain that ‘it is only necessary that scarcity and its accompanying mentality be overcome’ and how ‘abundance is not a technological threshold to be crossed’ but ‘a social relationship, based on the principle that the means of one’s existence will never be at stake in any of one’s relationships’.

The sources drawn upon by Benanav in writing this book are wide and diverse with a good number of charts, graphs and tables and almost 40 pages of extensive documentation. Yet none of this weighs heavily on the reader, since both the thrust and the details of his arguments are laid out in a clear, engaging fashion making them easy, indeed pleasurable, to follow and take in, and causing the whole to hang together in a way that makes it a highly satisfying and persuasive read both for socialists and for anyone open to radical ideas about social development.

Howard Moss

Why no abundance or more free time?

One thing that has puzzled academic economists is why, given the spread in recent years of IT, AI and automation generally, productivity has hardly gone up. In Smart Machines and Service Work: Automation in an Age of Stagnation (Reaktion Books) Jason E. Smith offers an explanation which also challenges those like Paul Mason who see a society of abundance and leisure as in the process of gradually evolving.

Productivity should mean physical output divided by the amount of labour-time required to produce it. Thus, if output increases while the amount of labour-time remain the same or if output remains the same while the amount of labour-time falls, then productivity goes up. This works for a particular factory or industry producing the same product but can’t work for the economy as a whole because what is produced is so different. To get round this, economists measure productivity by dividing the money value of total production by the total number of hours worked. For them, productivity at this level is GDP divided by the hours worked by all workers; which is a pretty meaningless figure, not least because it does not distinguish between hours worked to produce the output and hours worked by workers paid out of the output. It is, however, how ‘productivity’ is defined in this context.

Smith’s explanation as to why the increase in productivity in this sense has been so sluggish in recent decades is that, while productivity has gone up in the sector of the economy producing material goods, it has not gone up by anything like the same amount in the service sector which now accounts for as much as 80 percent of economic activity in the advanced capitalist parts of the world. Most services are labour-intensive and involve personal attention and inter-personal skills that can’t be replicated by machines. In addition, many of these jobs are low-paid, which reduces the incentive for employers to automate them.

Automation since the 1960s, or ‘cybernation’ as it was called, led neither to the mass unemployment nor to the leisure society that was variously predicted but, says Smith, to the growth of the service sector, many of whose jobs are unskilled and low-paid. Smith expects this to continue to be the trend despite all the hype about AI.

That increased productivity in the sense of physical output per hours of productive labour worked should result in the growth of low-paid service jobs is a perverse outcome. Marx had already noted this in the 1860s as, in a passage, Smith quotes from chapter 15 of Volume I of Capital:

  ‘[T]he extraordinary increase in the productivity of large-scale industry, accompanied as it is by both a more intensive and a more extensive exploitation of labour-power in all other spheres of productions, permits a larger and larger part of the working class to be employed unproductively. Hence it is possible to reproduce the ancient domestic slaves, on a constantly extending scale, under the name of a servant class’.

Today the ‘servant class’ is composed not of domestic servants (these still exists and their number is growing) but of those employed by the state – the appropriately called ‘civil servants’ and others – some of whom are engaged in very socially useful work such as teaching and health care but who are nevertheless still paid out of taxes levied on the output of the productive sector of the economy.

Taking less and less time to produce material things and the means to produce them does open up the possibility of a world of plenty, better and more extensive public services and amenities, and free time for people to develop their talents or pursue what interests them. However, this is not achievable on the basis of the present-day class ownership of the means of life and their use to produce wealth for sale with a view to profit. It requires what Smith calls ‘a non- or post-capitalist society’ (and we call ‘socialism’) in which production is directly geared to satisfying people’s needs on the basis of the common ownership and democratic control of society’s productive resources.

Adam Buick