Saturday, 11 September 2010

Money in your pocket? Think again


Gregor Gall


Leading US sociologist Michael Burawoy coined a good phrase many years ago. "The anarchy of the market leads to despotism in the factory."

What he meant by anarchy of the market was two things.

First, capitalism is an unco-ordinated and competitive fight between different capitalists to make profits. At any one point in time many capitalists are chasing the same market and would almost never countenance working together because that would mean having to share the spoils.

Second, over time the level of activity in the marketplace goes up and down depending on things like the confidence of the capitalists in the state of the economy and their willingness to invest.

Put both together and you have a recipe for economic and social instability.

What he meant by despotism in the factory was that these two things result in employers establishing regimes in the workplace by which try to exploit workers as much as possible.

Their goal is not simply to produce surplus value that can then be realised in the marketplace. It necessarily means creating regimes for controlling workers, whether through the iron fist or velvet glove.

But when it comes down to it the immediate goal of the capitalists is often to use workers as shock absorbers in this process.

Changes in the marketplace such as increasing competition or a slump in demand are likely to drive down a capitalist's profits. The best protection for them against these threats to their interests is to increase the level of exploitation of workers.

This leads to the tyranny of pay cuts, speed-ups, increased working hours and the like. Attacks on union activists and union organisation are part and parcel of this because collective organisation stands in the way of workers being shock absorbers.

When you think about it, a capitalist is individually able to control the costs of its labour in a way that they can't control the costs of raw materials, transport and exchange rates. The same is true when it comes to demand for a capitalist's good or services.

The pounds and pence of workers' wages can be varied by an employer, as can the number of workers that he or she employs.

By reducing the costs of the labour he or she employs relative to their productivity and efficiency, a capitalist can lower the price of their goods or services if need be while maintaining or even increasing the surplus value created. This is the surest way to be able to realise the value of the surplus - that is, to turn it into profit by selling it in the marketplace.

This ABC of capitalist economics is unfortunately not well understood. Many of the readers of the Morning Star will, like me, also buy The Big Issue. It is quite rightly seen by many as a progressive project for the homeless.

It uses the phrase "a help up not a handout" because the vendors have to go out and sell the magazine to the public. This helps them regain their motivation and self-respect. But every week without fail page three of The Big Issue shows it has no basic grasp of how economics works under capitalism.

On this page it states that "Vendors buy the magazine for 85p and sell it for £1.70, making a 85p profit on each copy."

Vendors do no such thing unless you think that there's no way you can calculate the cost of their labour - the time they spend standing there selling the magazine, which involves being out in all weathers for many hours and making sales pitches and chit-chat to customers.

Selling the magazine for £1.70 gives them 85p revenue per copy. But if you deduct anything like the minimum wage - currently £5.80 per hour for an adult over 21 - then it is clear that any "profit" they make is far less than 85p per sold copy.

And there must be days towards the end of the week when they sell many less than in the first few days of the new issue. This would see any notional hourly pay rate decline sharply.

The Big Issue confuses profit with income, ignoring the act of labouring.

What this means is that socialists have a mountain to climb in getting the wider populace to understand how, why and where capitalists steal labour from workers in order to make profits for themselves - and themselves only.

One way of countering this is to provide basic socialist and Marxist education through trade unions.

Another is to get our teachers to cover this approach to economics as part of the curriculum that children get taught at school.

One of the best, though, is simply to read The Ragged Trousered Philanthropists by Robert Tressell.

Gregor Gall is professor of industrial relations at the University of Hertfordshire g.gall@herts.ac.uk

No comments: