Reserve army of labour: Difference between revisions

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In one of Lenin's earliest published political works, [[The Development of Capitalism in Russia|The Development of Capitalism in Russia (1899)]]<ref name=":8">[https://www.marxists.org/archive/lenin/works/cw/pdf/lenin-cw-vol-03.pdf V.I. Lenin, Collected Works Volume 3, The Development of Capitalism in Russia, Fourth Printing 1977 Progress Publishers Moscow, Digital Reprint 2009 www.marx2mao.com, hosted at www.marxists.org]</ref>, he comments on the reserve army of labour on several occasions. Lenin quotes a local agricultural investigator in Novorossia (modern day [[Ukraine]]) by the the name of Tezyakov:<blockquote>As regards Novorossia, local investigators note here the usual consequences of highly developed capitalism. Machines are ousting wage-workers and creating a '''capitalist reserve army in agriculture'''. “The days of fabulous prices for hands have passed in Kherson Gubernia too. Thanks to . . . the increased spread of agricultural implements . . .” (and other causes) ''“the prices of hands are steadily falling”'' . . . "The distribution of agricultural implements, which makes the large farms independent of workers the workers in a difficult position”<ref name=":8" /><ref>Tezyakov, ''Agricultural Workers and the Organisation of Sanitary Supervision over Them, in Kherson Gubernia, Kherson'', 1896 [no digital copy currently available]</ref>
In one of Lenin's earliest published political works, [[The Development of Capitalism in Russia|The Development of Capitalism in Russia (1899)]]<ref name=":8">[https://www.marxists.org/archive/lenin/works/cw/pdf/lenin-cw-vol-03.pdf V.I. Lenin, Collected Works Volume 3, The Development of Capitalism in Russia, Fourth Printing 1977 Progress Publishers Moscow, Digital Reprint 2009 www.marx2mao.com, hosted at www.marxists.org]</ref>, he comments on the reserve army of labour on several occasions. Lenin quotes a local agricultural investigator in Novorossia (modern day [[Ukraine]]) by the the name of Tezyakov:<blockquote>As regards Novorossia, local investigators note here the usual consequences of highly developed capitalism. Machines are ousting wage-workers and creating a '''capitalist reserve army in agriculture'''. “The days of fabulous prices for hands have passed in Kherson Gubernia too. Thanks to . . . the increased spread of agricultural implements . . .” (and other causes) ''“the prices of hands are steadily falling”'' . . . "The distribution of agricultural implements, which makes the large farms independent of workers the workers in a difficult position”<ref name=":8" /><ref>Tezyakov, ''Agricultural Workers and the Organisation of Sanitary Supervision over Them, in Kherson Gubernia, Kherson'', 1896 [no digital copy currently available]</ref>


— Tezyakov, 1896 (as quoted by Lenin)</blockquote>Having referenced the creation of a reserve army of agricultural wage workers in semi-feudal 1890s Novorossia, and having cited local economic authorities in Novorossia who openly use this term, Lenin comments, "The same thing is noted by another [[Zemstvo]] Medical Officer, Mr. Kudryavtsev, in his work."<ref>Kudryatsev'', Migrant Agricultural Workers at the Nikolayev Fair in the Township of Kakhovka, Taurida Gubernia, and Their Sanitary Supervision in 1895'' (Kherson, 1896) [no digital copy available]</ref> and proceeds to quote said work:<blockquote>"The prices of hands . . . continue to fall, and a considerable number of migrant workers find themselves without employment and are unable to earn anything; i.e., there is created what '''in the language of economic science''' is called '''a reserve army of labour—artificial surplus-population'''” The drop in the prices of labour caused by this reserve army is sometimes so great that “many farmers possessing machines preferred” (in 1895) “to harvest with hand labour rather than with machines”<ref name=":8" />
— Tezyakov, 1896 (as quoted by Lenin)</blockquote>Having referenced the creation of a reserve army of agricultural wage workers in semi-feudal 1890s Novorossia, and having cited a local economic authority in Novorossia who openly used this term, Lenin comments, "The same thing is noted by another [[Zemstvo]] Medical Officer, Mr. Kudryavtsev, in his work."<ref>Kudryatsev'', Migrant Agricultural Workers at the Nikolayev Fair in the Township of Kakhovka, Taurida Gubernia, and Their Sanitary Supervision in 1895'' (Kherson, 1896) [no digital copy available]</ref> and proceeds to quote said work:<blockquote>"The prices of hands . . . continue to fall, and a considerable number of migrant workers find themselves without employment and are unable to earn anything; i.e., there is created what '''in the language of economic science''' is called '''a reserve army of labour—artificial surplus-population'''” The drop in the prices of labour caused by this reserve army is sometimes so great that “many farmers possessing machines preferred” (in 1895) “to harvest with hand labour rather than with machines”<ref name=":8" />


— Kudryatsev, 1895 (as quoted by Lenin)</blockquote>In contrast with the bourgeoisie of the early 21st century, who often cover up the reserve army of labour<ref name=":5" /> or reference the reserve army of labour without using the term itself<ref name=":9" />, the bourgeoisie of [[Tsarist Russia|Imperial Russia]], where Lenin grew up, were perfectly comfortable with using scientific socialist terminology to diagnose certain features of the development of capitalism in Russia. Having quoted Tsarist officials Tezyakov and Kudryatsev on the reserve army of labour developing in Imperial Russian agriculture, Lenin further comments:<blockquote>More strikingly and convincingly than any argument this fact reveals how profound are the contradictions inherent in the capitalist employment of machinery!<ref name=":8" />
— Kudryatsev, 1895 (as quoted by Lenin)</blockquote>In contrast with the bourgeoisie of the early 21st century, who often cover up the reserve army of labour<ref name=":5" /> or reference the reserve army of labour without using the term itself<ref name=":9" />, the bourgeoisie of [[Tsarist Russia|Imperial Russia]], where Lenin grew up, were perfectly comfortable with using scientific socialist terminology to diagnose certain features of the development of capitalism in Russia. Having quoted Tsarist officials Tezyakov and Kudryatsev on the reserve army of labour developing in Imperial Russian agriculture, Lenin further comments:<blockquote>More strikingly and convincingly than any argument this fact reveals how profound are the contradictions inherent in the capitalist employment of machinery!<ref name=":8" />

Revision as of 07:22, 7 October 2023

Introduction

Definition

The Reserve army of labour consists of the chronically unemployed or underemployed surplus working class population whose existence benefits the capitalist class by driving down down wages, (the market price, as opposed to natural price, of labour-power) and thereby driving up rates of profit. This surplus population is created by changes in the organic composition of capital, and the tendency of the class-conscious bourgeoisie to act collectively in their own class interests. The reserve army of labour is also used for procuring scabs to use against labour strikes.

Context

In Capital: Critique of Political Economy, Volume I, Chapter 25, Section 3, titled "Progressive Production of a Relative surplus population or Industrial Reserve Army"[1], Karl Marx develops the idea of an reserve army of labour, also sometimes called an industrial reserve army, or reserve army of unemployed, or relative surplus population. Marx did not invent the term "reserve army of labour". It was already being used by Friedrich Engels in his 1845 book The Condition of the Working Class in England[2]. What Marx did was theorize the reserve army of labour as a necessary part of the capitalist organization of labour-power.

History and development of the idea of the reserve army of labour

Pre-Marxist use, before 1845

According to Michael Denning, writing for the New Left Review, Issue #66, in December 2010, in an article titled "Wageless Life"[3], the concept of a reserve army of labour was used before Engels by the Chartist labour leader Bronterre O’Brien as early as 1839:

Radicals, particularly the Chartists and Fourierist associationists, imagined the new factory workers as great industrial armies, and this common trope led the Chartist leader [James] Bronterre O'Brien to write of a reserve army of labour in the Northern Star in 1839. The young Engels picked up that image in The Condition of the Working Class in England in 1844, and Marx would invoke the metaphor occasionally, distinguishing between the active and reserve armies of the working class. By the end of the nineteenth century, it was part of the commonsense understanding of unemployment: by 1911, even the Massachusetts Bureau of Statistics of labour could conclude that, ‘however prosperous conditions may be, there is always a “reserve army” of the unemployed’ —  Michael Denning, New Left Review, 2010, issue 66, article entitled "Wageless Life"[3]

First socialist use of the idea by Engels, 1845

In The Condition of the Working Class in England[2], in the chapter titled "Competition," Engels introduces the idea of the "reserve army of workers" in the following passage:

[...]English manufacture must have, at all times save the brief periods of highest prosperity, an unemployed reserve army of workers, in order to be able to produce the masses of goods required by the market in the liveliest months. This reserve army is larger or smaller, according as the state of the market occasions the employment of a larger or smaller proportion of its members. And if at the moment of highest activity of the market the agricultural districts and the branches least affected by the general prosperity temporarily supply to manufacture a number of workers, these are a mere minority, and these too belong to the reserve army, with the single difference that the prosperity of the moment was required to reveal their connection with it. When they enter upon the more active branches of work, their former employers draw in somewhat, in order to feel the loss less, work longer hours, employ women and younger workers, and when the wanderers discharged at the beginning of the crisis return, they find their places filled and themselves superfluous – at least in the majority of cases. This reserve army, which embraces an immense multitude during the crisis and a large number during the period which may be regarded as the average between the highest prosperity and the crisis, is the “surplus population” of England, which keeps body and soul together by begging, stealing, street-sweeping, collecting manure, pushing hand-carts, driving donkeys, peddling, or performing occasional small jobs. In every great town a multitude of such people may be found. It is astonishing in what devices this “surplus population” takes refuge. —  Friedrich Engels, The Condition of the Working Class in England, 1845[2]

Summary

In the above passage, Engels gives the prototype of the idea, establishing:

  • The reserve army of unemployed workers is sought after precisely because of their unemployment. This unemployment makes them available for the "liveliest" months of market activity, during which "greater masses of goods are required," (i.e. are more demanded by consumers) compared with the rest of the year. A modern example of this principle in action might be the type of a chronically unemployed person who gets a low-paying part-time job at a Halloween store, selling costumes during the month of October.
  • These "liveliest months" of market activity constitute a form of economic crisis in miniature. Engels refers to the reserve army as "the wanderers discharged at the beginning of the crisis."
  • The reserve army of workers includes not only the chronically unemployed, but the chronically under-employed, who belong to the "districts and the branches least affected by the general prosperity[...]", i.e. the internal colonies, those parts of a given geographical region which have a lower standard of living than their surroundings.
  • when the chronically under-employed [men] return to their original jobs after being used as part of the reserve army of workers, they find their positions have been taken workers who, owing to their social position, are even more desperate and marginalized than themselves, usually women and children, in the historical context in which Engels was writing. This marginalizes the men further, and makes them part of a "surplus population."
  • This "surplus population" often becomes part of the lumpenproletariat, or homeless, and must keep itself alive through crime, begging, and unpleasant odd jobs. This makes them more subject to death, disease, imprisonment, and exploitation above and beyond what is usual even for the average proletariat.
  • This "surplus population" can be found "in every great town" of England, and by extension, every geographical region in which the capitalist mode of production prevails.

Development of the idea by Marx in Capital

The first mention of the reserve army of labour in Marx's writing occurs in a manuscript entitled "Wages"[4], which he wrote in 1847, but did not publish:

Big industry constantly requires a reserve army of unemployed workers for times of overproduction. The main purpose of the bourgeois in relation to the worker is, of course, to have the commodity labour[5] as cheaply as possible, which is only possible when the supply of this commodity is as large as possible in relation to the demand for it, i.e., when the overpopulation is the greatest. Overpopulation is therefore in the interest of the bourgeoisie, and it gives the workers good advice which it knows to be impossible to carry out. Since capital only increases when it employs workers, the increase of capital involves an increase of the proletariat, and, as we have seen, according to the nature of the relation of capital and labour, the increase of the proletariat must proceed relatively even faster. The above theory, however, which is also expressed as a law of nature, that population grows faster than the means of subsistence, is the more welcome to the bourgeois as it silences his conscience, makes hard-heartedness into a moral duty and the consequences of society into the consequences of nature, and finally gives him the opportunity to watch the destruction of the proletariat by starvation as calmly as any other natural event without bestirring himself, and, on the other hand, to regard the misery of the proletariat as its own fault and to punish it. To be sure, the proletarian can restrain his natural instinct by reason, and so, by moral supervision, halt the law of nature in its injurious course of development. — Karl Marx, Wages, 1847[4]

The idea of the labour force as an "army" (independent of the "reserves") occurs also in Chapter 1 of The Manifesto of the Communist Party[6], written by Marx and Engels in 1848:

Modern Industry has converted the little workshop of the patriarchal master into the great factory of the industrial capitalist. Masses of labourers, crowded into the factory, are organised like soldiers. As privates of the industrial army they are placed under the command of a perfect hierarchy of officers and sergeants. Not only are they slaves of the bourgeois class, and of the bourgeois State; they are daily and hourly enslaved by the machine, by the overlooker, and, above all, by the individual bourgeois manufacturer himself. The more openly this despotism proclaims gain to be its end and aim, the more petty, the more hateful and the more embittering it is. — Karl Marx & Friedrich Engels, Manifesto of the Communist Party, 1848[6]

19 years later, in 1867, Marx introduced a more fleshed-out concept of the reserve army of labour in chapter 25 of the first volume of Capital: Critique of Political Economy[1]. Marx stated the following:

It is not merely that an accelerated accumulation of total capital, accelerated in a constantly growing progression, is needed to absorb an additional number of labourers, or even, on account of the constant metamorphosis of old capital, to keep employed those already functioning. In its turn, this increasing accumulation and centralisation becomes a source of new changes in the composition of capital, of a more accelerated diminution of its variable, as compared with its constant constituent. This accelerated relative diminution of the variable constituent, that goes along with the accelerated increase of the total capital, and moves more rapidly than this increase, takes the inverse form, at the other pole, of an apparently absolute increase of the labouring population, an increase always moving more rapidly than that of the variable capital or the means of employment. But in fact, it is capitalistic accumulation itself that constantly produces, and produces in the direct ratio of its own energy and extent, a relatively redundant population of labourers, i.e., a population of greater extent than suffices for the average needs of the self-expansion of capital, and therefore a surplus population. [...] The number of labourers commanded by capital may remain the same, or even fall, while the variable capital increases. This is the case if the individual labourer yields more labour, and therefore his wages increase, and this although the price of labour remains the same or even falls, only more slowly than the mass of labour rises. Increase of variable capital, in this case, becomes an index of more labour, but not of more labourers employed. It is the absolute interest of every capitalist to press a given quantity of labour out of a smaller, rather than a greater number of labourers, if the cost is about the same. In the latter case, the outlay of constant capital increases in proportion to the mass of labour set in action; in the former that increase is much smaller. The more extended the scale of production, the stronger this motive. Its force increases with the accumulation of capital. — Karl Marx, Capital: Critique of Political Economy, Volume I, Chapter 25 (1867)[1]

However, as Marx develops the argument further it also becomes clear that, depending on the state of the economy, the reserve army of labour will either expand or contract, alternately being absorbed or expelled from the employed workforce:

Taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army, and these again correspond to the periodic changes of the industrial cycle. They are, therefore, not determined by the variations of the absolute number of the working population, but by the varying proportions in which the working-class is divided into active and reserve army, by the increase or diminution in the relative amount of the surplus-population, by the extent to which it is now absorbed, now set free. — Karl Marx, Capital: Critique of Political Economy, Volume I, Chapter 25 (1867)[1]

Marx concludes as such:

The industrial reserve army, during the periods of stagnation and average prosperity, weighs down the active labour-army; during the periods of over-production and paroxysm, it holds its pretensions in check. Relative surplus population is therefore the pivot upon which the law of demand and supply of labour works. It confines the field of action of this law within the limits absolutely convenient to the activity of exploitation and to the domination of capital. — Karl Marx, Capital: Critique of Political Economy, Volume I, Chapter 25 (1867)[1]

Summary

In the above passages, Marx gave the idea its fleshed-out form, still used today, establishing:

  • Even though total capital increases, the mass of constant capital grows faster than variable capital.
  • Fewer workers can produce all that is necessary for society's requirements.
  • Capital will become more concentrated and centralized into fewer hands.
  • This is an absolute historical tendency under capitalism.
  • Part of the working population will tend to become surplus relative to the requirements of capital accumulation.
  • This surplus part of the population will grow proportionately to the part of the population still necessary for capital accumulation.
  • The larger the wealth of society, the larger the reserve army of labour will become.
  • The larger the wealth of society, the more non-working people it can support .
  • The larger the wealth of society, the more unproductive labour it can support (i.e. labour which does not produce surplus value).
  • The availability of labour influences wage rates and the larger the unemployed workforce grows, the more this forces down wage rates
    • conversely, if there are plenty jobs available and unemployment is low, this tends to raise the average level of wages.

After Marx and Engels

Many theorists, activists, and revolutionaries in the labour movements of the world commented upon and contributed to the idea of the reserve army of labour after Marx and Engels.

Lenin

In one of Lenin's earliest published political works, The Development of Capitalism in Russia (1899)[7], he comments on the reserve army of labour on several occasions. Lenin quotes a local agricultural investigator in Novorossia (modern day Ukraine) by the the name of Tezyakov:

As regards Novorossia, local investigators note here the usual consequences of highly developed capitalism. Machines are ousting wage-workers and creating a capitalist reserve army in agriculture. “The days of fabulous prices for hands have passed in Kherson Gubernia too. Thanks to . . . the increased spread of agricultural implements . . .” (and other causes) “the prices of hands are steadily falling” . . . "The distribution of agricultural implements, which makes the large farms independent of workers the workers in a difficult position”[7][8] — Tezyakov, 1896 (as quoted by Lenin)

Having referenced the creation of a reserve army of agricultural wage workers in semi-feudal 1890s Novorossia, and having cited a local economic authority in Novorossia who openly used this term, Lenin comments, "The same thing is noted by another Zemstvo Medical Officer, Mr. Kudryavtsev, in his work."[9] and proceeds to quote said work:

"The prices of hands . . . continue to fall, and a considerable number of migrant workers find themselves without employment and are unable to earn anything; i.e., there is created what in the language of economic science is called a reserve army of labour—artificial surplus-population” The drop in the prices of labour caused by this reserve army is sometimes so great that “many farmers possessing machines preferred” (in 1895) “to harvest with hand labour rather than with machines”[7] — Kudryatsev, 1895 (as quoted by Lenin)

In contrast with the bourgeoisie of the early 21st century, who often cover up the reserve army of labour[10] or reference the reserve army of labour without using the term itself[11], the bourgeoisie of Imperial Russia, where Lenin grew up, were perfectly comfortable with using scientific socialist terminology to diagnose certain features of the development of capitalism in Russia. Having quoted Tsarist officials Tezyakov and Kudryatsev on the reserve army of labour developing in Imperial Russian agriculture, Lenin further comments:

More strikingly and convincingly than any argument this fact reveals how profound are the contradictions inherent in the capitalist employment of machinery![7] — Lenin, 1899

Lenin wanted his readers in 1899 to understand that the reserve army of labour sometimes causes the market price of the commodity labour-power to drop so low that capitalists will temporarily forgo taking advantage of the latest developments in the means of production, because they are too expensive compared with the market price of the labour-power commodity sold by the wage workers. This sacrificing of productivity and efficiency in order to take advantage of a temporary depression of wages is a contradiction of capital which Lenin saw as inherent to the development of productive technology under capitalism. Later in the same work, Lenin says:

if we presuppose the maximum development of capitalism, we must also presuppose the maximum facility for the transfer of workers from agricultural to non-agricultural occupations, we must presuppose the formation of a general reserve army from which labour-power is drawn by all sorts of employers.[7] — Lenin, 1899

Lenin wanted his readers in 1899 to understand that this reserve army of labour applied not merely to the agricultural sectors the Tsarist officials Tezyakov and Kudryatsev were writing about, but to all industries:

. . . it is quite wrong to discuss the freeing of the farmer’s winter time independently of the general question of capitalist surplus-population. The formation of a reserve army of unemployed is characteristic of capitalism in general, and the specific features of agriculture merely give rise to special forms of this phenomenon. — Lenin, 1899

Bourgeois Ideology

Regarding the reserve army of labour, the bourgeoisie have taken various strategic and ideological positions. These positions can typically be divided into the forms they take, which are denialist, obscurantist, and apologetic.

Bourgeois Denialism

The bourgeoisie often denies...

  • ...the very existence of a reserve army of labour, or surplus population of unemployed workers.
  • ...that they use the reserve army of labour as scabs.
  • ...that the reserve army of labour has a significant effect on the economy.
  • ...that it is possible to give all able-bodied adults meaningful employment doing productive labour, and that therefore the reserve army of unemployed is entirely beyond their control.
  • ...that it is in their class interests to maintain a reserve army of labour.
  • ...that there is a high rate of unemployment.

Bourgeois Obscurantism

The bourgeoisie will undertake a number of strategies to hide or obscure the reserve army of labor and its effects. This strategy is different from outright denialism, in that it centers on the action of obscuring, excluding or restricting access to available information, rather than the rhetoric of denying the truth of available information once it has been revealed. The forms bourgeois obscurantism often takes with respect to the reserve army of labor often include...

  • ... removing people who have stopped looking for work from official unemployment statistics (even if they would accept a job if offered one). [10]
  • ... ignoring under-employed workers who require more hours since they are not making enough money to subsist. [10]

Bourgeois Apologia

Bourgeois individual advocating expansion of the reserve army of labour
Real estate CEO Tim Gurner advocating expansion of the reserve army of labour (without using the term itself) during an onstage appearance at the Australian Financial Review's Property Summit.[12]

Contrary to the above two strategies, there exists a third strategy which does not seek to deny or obscure the reserve army of labour, but rather to acknowledge, justify, and embrace the reserve army of labour, sometimes even going so far as to suggest that the reserve army of labour is good for society as a whole and not merely good for the bourgeoisie, thereby conflating the class interests of the bourgeoisie with the interests of the proletariat.

  • Originally GATT was set up as a temporary body to facilitate trade negotiations. The International Trade Organisation (ITO) had instead been created to break down trade barriers, govern trade during negotiations, and resolve trade disputes. The ITO Charter, adopted at the U.N. Conference on Trade and Development (UNCTE) in 1948, included (among other "leftist" principles) a provision that all nations should maintain full employment. This provision outraged the U.S. and U.K.; both calling it socialistic and a violation of national sovereignty. In 1950, the U.S. government refused to ratify the agreement, and the ITO died [13]
    • Here, we can see a blatant instance of the international bourgeoisie colluding to frame the full employment of the proletariat of all nations as somehow being harmful to society (specifically the bourgeois ideal of national sovereignty).
  • Real estate CEO Tim Gurner openly advocated for a reserve army of labour during an onstage appearance at the Australian Financial Review’s Property Summit[12]:

    I think the problem that we’ve had is that people have decided they really didn’t want to work so much anymore through COVID, and that has had a massive issue on productivity. . . . They have been paid a lot to do not too much, and we need to see that change. We need to see unemployment rise. Unemployment needs to jump 40-50 percent, in my view. We need to see pain in the economy. We need to remind people that they work for the employer, not the other way around. There’s been a systematic change where employees feel the employer is extremely lucky to have them, as opposed to the other way around. So it’s a dynamic that has to change. We’ve got to kill that attitude, and that has to come through hurt in the economy.[12]

  • The Economist, a bourgeois magazine, published a thinkpiece on November 24th, 2022, titled "Why American unemployment needs to rise," openly advocating for an increase in the size of the reserve army of labour[14]:

    As the tightest corner of the ultra-taut American labour market, Minnesota bears watching. Its unemployment rate has started to tick up, rising from 1.8% in June to 2.1% last month. It might seem perverse to call that good news, but one lesson from the past year is that excessively low unemployment really does hurt: it constrains and corrodes the services offered by hospitals, schools, restaurants and more. In Northfield there is at least one tiny hint that relief might be at hand. After a difficult dry spell, the HideAway, a downtown café, received four job applications over the past two weeks. From those it hired two sorely needed baristas. “We just got lucky,” reckons Joan Spaulding, its owner.

  • The Wall Street Journal, a bourgeois magazine, published a thinkpiece on July 31, 2022, titled "Lower Inflation Likely Requires Higher Unemployment; How High Is the Question," also openly advocating for an increase in the size of the reserve army of labour.[15] In that piece, former United States Treasury Secretary Lawrence Summers was quoted as saying the following:

    [in order to lower inflation] we need two years of 7.5% unemployment, or five years of 6% unemployment, or…one year of 10% unemployment[15]

  • CNN, a bourgeois news network, published a thinkpiece on September 2, 2022, titled "Yes, the unemployment rate rose. Here’s why that’s good news." In that piece, United States Secretary of Labor Marty Walsh was quoted as saying:

    Increasing the supply of available workers is positive for the economy, even if it does increase the official jobless rate[11]

  • CBS, a bourgeois news network, published an article on September 30, 2022, titled "Buckle up, America: The Fed plans to sharply boost unemployment." In that piece, it is suggested that wage increases cause inflation, because wage increases cause the bourgeoisie to hike prices. In short, it is suggested that the prices of commodities are determined or regulated by wages.

    Here's the idea behind why boosting the nation's unemployment could cool inflation. With an additional million or two people out of work, the newly unemployed and their families would sharply cut back on spending, while for most people who are still working, wage growth would flatline. When companies assume their labor costs are unlikely to rise, the theory goes, they will stop hiking prices. That, in turn, slows inflation.[16]

    The above idea, the bourgeois dogma that “The prices of commodities are determined or regulated by wages." was firmly argued against by Marx in Chapter 5 of Value, Price and Profit (1865):

    The dogma that “wages determine the price of commodities,” expressed in its most abstract terms, comes to this, that “value is determined by value,” and this tautology means that, in fact, we know nothing at all about value. Accepting this premise, all reasoning about the general laws of political economy turns into mere twaddle. It was, therefore, the great merit of Ricardo that in his work on the principles of political economy, published in 1817[17], he fundamentally destroyed the old popular, and worn-out fallacy that “wages determine prices,” a fallacy which Adam Smith and his French predecessors had spurned in the really scientific parts of their researches, but which they reproduced in their more exoterical and vulgarizing chapters.[18]

References and Footnotes

  1. 1.0 1.1 1.2 1.3 1.4 Marx, Capital, Chapter Twenty-Five, The General Law of Capitalist Accumulation, archive
  2. 2.0 2.1 2.2 Friedrich Engels, The Condition of the Working Class in England, 1845, section titled "Competition"
  3. 3.0 3.1 Michael Denning, New Left Review, Issue 66, Article titled "Wageless Life", archived
  4. 4.0 4.1 Karl Marx, Unpublished 1847 manuscript titled "Wages", preserved on marxists.architexturez.net, archived
  5. Footnote: Marx here would have said labour-power, not labour, had he written this at a later date. Marx had not yet developed his theoretical distinction between labour and labour-power in 1847. In their works of the 1840s and 1850s, prior to Marx having worked out the theory of surplus value, Marx and Engels used the terms “value of labour”, “price of labour”, “sale fof labour” which, as Engels noted in 1891 in the introduction to Marx’s pamphlet Wage Labour and Capital, “from the point of view of the later works were inadequate and even wrong”. After he had proved that the worker sells to the capitalist not his labour but his labour power Marx used more precise terms. In later works Marx and Engels used the terms “value of labour power”, “price of labour power”, “sale of labour power.”, archive
  6. 6.0 6.1 Manifesto of the Communist Party (1848), Chapter 1, Bourgeois and Proletarians
  7. 7.0 7.1 7.2 7.3 7.4 V.I. Lenin, Collected Works Volume 3, The Development of Capitalism in Russia, Fourth Printing 1977 Progress Publishers Moscow, Digital Reprint 2009 www.marx2mao.com, hosted at www.marxists.org
  8. Tezyakov, Agricultural Workers and the Organisation of Sanitary Supervision over Them, in Kherson Gubernia, Kherson, 1896 [no digital copy currently available]
  9. Kudryatsev, Migrant Agricultural Workers at the Nikolayev Fair in the Township of Kakhovka, Taurida Gubernia, and Their Sanitary Supervision in 1895 (Kherson, 1896) [no digital copy available]
  10. 10.0 10.1 10.2 https://www.theguardian.com/business/2021/oct/10/us-unemployment-rate, archived
  11. 11.0 11.1 CNN Business, article titled "Yes, the unemployment rate rose. Here’s why that’s good news" (September 2022), archived
  12. 12.0 12.1 12.2 https://jacobin.com/2023/09/tim-gurner-capitalists-neoliberalism-unemployment-precarity, archive, video
  13. General Agreement on Tariffs and Trade (GATT) at Marxists.org Economic Glossary, archived
  14. https://www.economist.com/finance-and-economics/2022/11/24/why-american-unemployment-needs-to-rise,archive
  15. 15.0 15.1 1. Lower Inflation Likely Requires Higher Unemployment; How High Is the Question from The Wall Street Journal, archive2. Larry Summers Says US Needs 5% Jobless Rate for Five Years to Ease Inflation from Bloomberg, archive3. 5 years at 6% unemployment or 1 year at 10%: That’s what Larry Summers says we’ll need to defeat inflation from Fortune, archive4. 5 years at 6% unemployment or 1 year at 10%: That’s what Larry Summers says we’ll need to defeat inflation from Yahoo!, archive5. Column: Should we raise unemployment to fight inflation? No, we need to protect jobs no matter what from Los Angeles Times, archive6. U.S. may need 7.5% unemployment to curb inflation -research from Reuters, archive7. Larry Summers says Americans will have to lose jobs to ease inflationfrom Fox Business, archive8. Is high unemployment inevitable?from Econlib.org, archive
  16. Buckle up, America: The Fed plans to sharply boost unemployment, archived
  17. David Ricardo, On The Principles of Political Economy and Taxation (1817), archived
  18. Karl Marx, Value, Price and Profit (1865), Chapter 5: Wages and Prices, archived