The final element of the Reserve Army of Labour is the stagnant reserve. It is made up of those workers who have essentially, for one reason or another, dropped out of the labour market. It is what today might be called the under-class. For Capital, this element of the reserve army is, in a modern welfare state, simply a cost, a drain on Surplus-Value. It does not even effectively press down on the rest of the workers, to push down their wages, because, this element of the working-class, is not effectively an alternative Supply of Labour-Power. At best, it can achieve this function, only marginally, by operating within the black market, providing occasional, unrecorded labour-power to top up its other sources of income. In so far as the other sources of income are related to criminal activity, this means a further cost for Capital. Even some of the black market activity, whilst providing profits for those involved – for example, smuggling and distribution of cigarettes, booze etc. - represents a drain for Capital as a whole, because these activities press down on the prices charged for these goods sold through official channels, and impose a cost in trying to prevent the activity.
But, the stagnant reserve plays another role for Capital. Because, it is separated from the other sections of the working-class, and even more from the more advanced sections of the class, whose class consciousness is raised through their activities in the Trades Unions, or other Labour Movement organisations, the stagnant reserve is more likely to be prone to reactionary ideas. On the one hand, dependency on the Capitalist, Welfare State, reduces its members to atomised individuals, rather like medieval serfs, dependent upon the good grace of their Lord, or Squire. On the other, their atomised condition encourages extreme individualism, reflected in the solutions chosen for their problems, including petty crime.
But, as Marx points out, its not just these elements of the working-class that have these characteristics. In the 18th Brumaire of Louis Bonaparte, he talks about similar elements from other social classes, the dissolute Aristocrats, the Bohemian petit-bourgeois, and so on, all of whom go to make up the “dangerous class”.
“Finally, the scum of bourgeois society forms the holy phalanx of order and the hero Crapulinski [a character from Heine’s poem “The Two Knights,” a dissolute aristocrat.] installs himself in the Tuileries as the “savior of society.””
In other words, it is these elements who make up the shock troops of Capital in a crisis. Its from these kinds of elements that Capital looked to recruit strike breakers during the General Strike, and other such events. In the most extreme cases, it is these elements that make up the ranks of the stormtroopers of fascism, when Capital has no other resort. In that case, the cost of maintaining them can be counted as a kind of faux frais of production for Capital, something it would prefer not to spend money on, but a necessary expense, to cover such eventualities.
So, it can be seen from all these instances of the Reserve Army that its existence i.e. the phenomena of unemployment, has nothing to do with the idea of “making the workers pay”, in any meaningful sense of that phrase. In every instance, Capital would prefer that the existence of this Unemployment could be avoided. It would even prefer that the frictional unemployment that affects the Latent Reserve could be avoided or reduced if possible, because that would mean that workers had to set aside less of their wages in insurance to cover such eventualities, which means the Value of Labour-Power would fall further, and consequently Surplus Value would rise. Ultimately, as Marx points out, Capital seeks to reduce the amount of Labour-Power it uses proportionately i.e. it seeks to reduce Variable Capital as a proportion of the total capital laid out, but seeks to increase the amount of Labour-Power it employs absolutely, precisely because it is Labour-Power, living labour which is the source of its profits! High unemployment is not in the interests of Capital, for this very reason. It exists not as an alternative to Capital paying the costs of the crisis, but as a necessary (within the realms of Capitalism) corollary to the fact that Capital is itself paying the cost of that crisis. Capital is a social relation, unemployment increases because Capital shrinks, or does not expand fast enough.
There is no profit for Capital in impoverishing the workers for the sake of it. On the contrary, as Marx points out in the Grundrisse,
“Every capitalist knows this about his worker, that he does not relate to him as producer to consumer, and [he therefore] wishes to restrict his consumption, i.e. his ability to exchange, his wage, as much as possible. Of course he would like the workers of other capitalists to be the greatest consumers possible of his own commodity.”, and
“the wage worker as distinct from the slave is himself an independent centre of circulation, someone who exchanges, posits exchange value, and maintains exchange value through exchange. Firstly: in the exchange between that part of capital which is specified as wages, and living labour capacity, the exchange value of this part of capital is posited immediately, before capital again emerges from the production process to enter into circulation, or this can be conceived as itself still an act of circulation. Secondly: To each capitalist, the total mass of all workers, with the exception of his own workers, appear not as workers, but as consumers, possessors of exchange values (wages), money, which they exchange for his commodity. They are so many centres of circulation with whom the act of exchange begins and by whom the exchange value of capital is maintained. They form a proportionally very great part -- although not quite so great as is generally imagined, if one focuses on the industrial worker proper -- of all consumers. The greater their number -- the number of the industrial population -- and the mass of money at their disposal, the greater the sphere of exchange for capital. We have seen that it is the tendency of capital to increase the industrial population as much as possible.”
As a consequence, and particularly nowadays when the wage worker is a much greater part of consumption than in Marx's day, the solution to Capitalist crisis cannot be to reduce wages below the Value of Labour Power, precisely for the reasons previously set out. It implies a reduction in the quality and quantity of Labour Power available, and it means demand for commodities falls, thereby acting to limit the ability of Capital to realise Surplus Value. As Marx says,
“For example, the spinner's worker exchanges his wages for so many bushels of grain. But in the price of each bushel, the profit of the farmer, i.e. of capital, is already included. So that the price of the consumption goods which are bought by necessary labour itself already includes surplus labour time. It is clear, first of all, that the wage paid by the spinner to his workmen must be high enough to buy the necessary bushel of wheat, regardless of what profit for the farmer may be included in the price of the bushel of wheat; but that, likewise, on the other side, the wage which the farmer pays his workers must be high enough to procure for them the necessary quantity of clothing, regardless of what profit for the weaver and the spinner may be included in the price of these articles of clothing.”
But, the underconsumptionists are equally wrong in assuming that a crisis can be resolved by simply increasing wages above the Value of Labour-Power, because this fails to recognise the fundamental driving force of capitalism, which is not to meet consumers needs, but to maximise profits. If wages rise above the Value of Labour-power, then this will mean a reduction in Surplus Value, and a consequent reduction in accumulation, and the demand for Labour-power. The under-consumptionists are wrong for another reason. That is they assume that the workers are the only possible consumers of commodities. But, of course, they are not. Capitalists, Landlords, and the State are also consumers. A fall in wages, which results in higher Profits, Rents and Taxes need not result in a fall in aggregate demand, if additional demand is created from these other forms of income.
But, it has to be remembered what the driving force of Capital is. Higher Rents and Taxes, both involve a deduction from Surplus Value, which is why Capital will always attempt to minimise these deductions. Capitalists may spend some of their profits on unproductive consumption, not just commodities needed for their reproduction, but luxury goods – Department III. Once again this unproductive consumption represents a drain on accumulation. Nor can the deficit of aggregate demand be made up, simply by ever expanding amounts of investment in Producer Goods. Although, the aim of Capitalism is not to meet Consumer's needs, but to maximise profits, as Lenin points out, it is not possible ultimately to maximise profits without giving consideration to the needs of consumption. A coal producer can produce coal to be sold to a steel producer, and exchange between the two can continue for some time on this basis. But, ultimately, it is the demand for steel by the car manufacturer, the white goods producers etc. which lead the steel producer to invest to produce more steel. If demand for cars, and white goods stalls or falls, then this feeds through to the steel producer. Consequently, it is the role of the wage worker in this consumption, which plays a crucial role. If wages are cut dramatically, or if the social wage is slashed, forcing workers to direct funds from alternative consumption as a consequence, then this has a corresponding effect on the ability of Capital to realise profits, and to accumulate capital.
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