Making The Workers Pay? - Part 2

The drying up of the latent reserve, constituted upon the agricultural population, is addressed by Capital in a number of ways. Firstly, Capital has to recognise the limitations of a completely free market. It recognises the need for Regulation. That was manifest in the response of Capital, to the rapid wearing out of the working-class, which this initial period caused. In 1863 26 firms owning extensive potbanks in Staffordshire, including Wedgwood, petitioned the government for legislative action to limit working time, to set a maximum working day. And why did they need such legislation rather than voluntary agreement.

“Much as we deplore the evils before mentioned, (i.e. the length of the working day and poor conditions) it would not be possible to prevent them by any scheme of agreement between the manufacturers…Taking all these points into consideration, we have come to the conviction that some legislative enactment is wanted.” (Children’s Employment Commission Report 1. 1863 p 322)

The reason no voluntary agreement could be reached was precisely because free market competition would force each to cheat in order to gain an advantage. It was with this backdrop that the Factory Acts and the Ten Hours Bill were eventually introduced. In other words, the need to ensure the adequate reproduction of Labour Power causes Capital to have to accept that additional expenditure of social labour-time (that is a proportion of society's output) has to be devoted to meeting the needs of workers. So, in addition to things such as the Factory Acts, and the Ten Hours Act, a proportion of society's production is devoted also to improving Environmental Health, to reduce the spread of diseases. Other means of improving workers health, such as the introduction of Public Parks are also introduced.

Yet, the demand for workers who are particularly well educated is not yet sufficient to lead Capital to introduce schooling on a large scale. In fact, the first provision of both Education, and of Medical Care are introduced by workers themselves via their Co-ops. In China, today there is no provision of socialised healthcare, education and other welfare services. One reason that Chinese households save around 50% of their income is precisely to cover these kinds of costs. This illustrates a further problem for Capital. In China, and other developing economies, their development takes place under conditions where significant technological development has already occurred. This has a consequence for even the kind of unskilled Labour-power that is required. For workers just to function at any kind of basic level in such a society requires that they have a minimum level of education, which in turn implies the provision of other requirements, such as somewhere to study, the provision of educational materials, the existence of some minimal standards in which to live, a certain amount of free time, the provision of adequate levels of food and so on. In other words, the very process of Capitalist development itself operates into a feedback loop, which changes the nature of the Labour-Power required, and thereby changes the nature of the wage bundle required for the reproduction of this Labour-Power, with a consequent effect upon the Value of Labour Power itself.

But, what is clear is that they do form a necessary component of Labour Power. Society has to set aside a sufficient amount of Labour-time for their production, and allocate it to the Wage Fund. The workers wages do have to be sufficient to enable them to purchase these goods. As Marx puts it in the Grundrisse,

“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.”

The consequences of that, in relation to China, have been recognised by many economists. On one level of abstraction, in terms of the Capital-Labour relation, it does not matter whether the payment for the commodities of Healthcare, and Education etc. are done at an individual or collective level. In other words, it does not matter whether, as in China now, workers wages have to be high enough to enable them to save enough to cover the costs of education, healthcare, unemployment and retirement, or whether, as in the US, some combination of that with, what amounts to the same thing, the employer paying for those things, via some form of Insurance Scheme, or whether it is deducted from the working-class collectively, via some State run Insurance and Tax scheme.

In all these instances, a proportion of society's production (social labour time) is put aside to cover them, in order to ensure the necessary reproduction of Labour Power. They form an integral part of the Value of Labour Power, whether they are paid for out of wages or out of the Social Wage. The only question for Capital here is, what is the most efficient means of producing these commodities, how can the social labour-time, required for their production, be minimised, and thereby the Value of Labour Power be reduced, and the amount of Surplus Value be increased. So, for example, in the US, Big Capital, competing on a global stage has found that it is being undermined because of the inefficient and expensive nature of private health insurance. The costs of that, born by large employers, through union negotiated Employer run Health Insurance Schemes, has raised their costs, and made them uncompetitive, particularly with European Big Capital, which benefits from more efficient, Socialised Insurance schemes. This was illustrated in an article in the US Business Magazine, Fortune, some years ago, by Matt Miller. He wrote,

“WHAT DO GENERAL MOTORS' WOES, the Medicare prescription-drug law, the state and local health-care time bomb described in the previous story, and Congress's recent refusal to trim soaring state Medicaid subsidies have in common? They're all stones on the path toward the nationalization of health-care spending--an idea that's so easy to slam politically yet so sensible for business that only Republicans can sell it!”

By the same token, it is why Capital in the UK has been looking to largely maintain the current National Insurance, and tax system as a means of financing healthcare – as happens essentially in Europe – whilst moving the actual delivery of healthcare out of the hands of State Capitalism, and into the hands of private providers, Mutuals, Co-ops and so on, where again the experience from Europe demonstrates greater levels of quality and efficiency are possible.

Much of the Left sees such a move as part of “Making the workers pay for the crisis”, and certainly, to the extent that any such moves act as a cover for reducing the actual level of healthcare, education etc. provided, that would be true. But, as set out above, in an economy like Britain, where the reproduction of Labour-power requires that workers receive a relatively high level of provision of these commodities, any such reduction is ultimately damaging for capital, because it means a reduction in the quantity and quality of Labour Power available to it. That means that as the Supply of that Labour-power falls its price would rise. The alternatives for Capital are to either pay up sooner or later, in one form or another, for the Labour-power it requires, or to settle for a lower quality of labour-power, which in turn means accepting producing lower value production, and being less profitable and competitive. On the other hand, to the extent that any such improvement in efficiency reduced the cost of this provision, and raised its quality, experience suggests that it would, in fact, be beneficial both to Capital and Labour. That is so because, since the latter part of the 19th century, the social-democratic consensus, the compromise reached between Big Capital and Labour, has seen any increase in Relative Surplus Value, achieved by the reduction in the Value of Labour Power, shared with workers via an increase in real wages. That is one way in which Fordism has ensured a gradually growing market for the results of mass production.

The Left's objection has been based not on any real application of Marxist principles and analysis, but rather on its attachment to the ideas of Lassalleanism and Fabianism, which misleads the workers into beleiving that these forms of State Capitalism are in some sense “socialistic”, or concessions won from Capital. But, in fact, this has nothing whatsoever to do with Socialism, and certainly not Marxism. That can be seen from Engels' response to such ideas in his Critique of the Erfurt Programme of 1891. In the Draft Programme, Point 8 stated,

“Free medical care, including midwifery and medicines. Free burial”

Engels responded,

“8 and 9. Here I want to draw attention to the following: These points demand that the following should be taken over by the state: (1) the bar, (2) medical services, (3) pharmaceutics, dentistry, midwifery, nursing, etc., etc., and later the demand is advanced that workers’ insurance become a state concern. Can all this be entrusted to Mr. von Caprivi? And is it compatible with the rejection of all state socialism, as stated above?”

That re-confirmed Marx's rejection, set out in his Critique of the Gotha Programme, of the idea that Socialists should demand that the State be the vehicle by which the means of production were socialised, rather than the direct action of the workers themselves in setting up Co-operatives. Like Marx, Engels also rejects the idea that such nationalisation and State Capitalism could, in some way, be made “socialist” by the introduction of a demand for Workers Control.

In reality, there is nothing different going on, as far as Capital is concerned, here than where it seeks to reduce the Value of Labour Power, and thereby raise Relative Surplus Value, in the provision of other commodities required for the reproduction of Labour Power. For example, Marx and Engels analysed the drive of the industrial Capitalists for the abolition of the Corn Laws, in precisely those terms. The Corn Laws were a protectionist measure, introduced by the political representatives of the Landlords, which restricted the importation of agricultural products. By this means the price of food was kept artificially high, which in turn enabled the landlords to charge higher rents on land, paid for out of the higher profits of the farmers. But, as a consequence, this meant that the cost of food for workers was kept artificially high. In turn that meant that the Value of Labour Power was maintained at an artificially high level. Industrial Capitalists had to pay these higher wages to ensure the reproduction of the necessary Labour-Power, and consequently, this meant that their Surplus Value was reduced.

The abolition of the Corn Laws meant that the price of food fell. That meant that workers could buy the same amount, or slightly more food than previously, for less money. In Marxist terms, the amount of Labour-time they had to perform in order to produce the equivalent Exchange Value to cover the reproduction of their Labour Power, fell.

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