7) REPULSION AND ATTRACTION OF WORKPEOPLE BY THE FACTORY SYSTEM. CRISES IN THE COTTON TRADE
Here, Marx describes, in more detail, the
contradictory nature of the effects of the introduction of machinery.
On the one hand, there is no doubt that, for it to be worthwhile, to
introduce a machine, the labour-time, required for its production,
must be less than the labour-time it replaces. As previously seen,
under capitalism, that is less than the labour-time that is paid for. To this extent
the effect can be no other than to reduce the amount of labour
employed to produce a given quantity of some particular commodity,
including that employed in producing the machine.
However, the machine has other consequences. It
raises relative surplus value, and it cheapens commodities so that an
increased level of demand for them may arise. In both these ways a
new demand for labour-power can arise. So, Marx writes,
“Nevertheless, in spite of the mass of hands
actually displaced and virtually replaced by machinery, we can
understand how the factory operatives, through the building of more
mills and the extension of old ones in a given industry, may become
more numerous than the manufacturing workmen and handicraftsman that
have been displaced. Suppose, for example, that in the old mode of
production, a capital of £500 is employed weekly, two-fifths being
constant and three-fifths variable capital, i.e.,
£200 being laid out in means of production, and £300, say £1 per
man, in labour-power. On the introduction of machinery the
composition of this capital becomes altered. We will suppose it to
consist of four-fifths constant and one-fifth variable, which means
that only £100 is now laid out in labour-power. Consequently,
two-thirds of the workmen are discharged. If now the business
extends, and the total capital employed grows to £1,500 under
unchanged conditions, the number of operatives employed will increase
to 300, just as many as before the introduction of the machinery. If
the capital further grows to £2,000, 400 men will be employed, or
one-third more than under the old system. Their numbers have, in
point of fact, increased by 100, but relatively, i.e., in proportion
to the total capital advanced, they have diminished by 800, for the
£2,000 capital would, in the old state of things, have employed
1,200 instead of 400 men. Hence, a relative decrease in the number of
hands is consistent with an actual increase.” (p 422-3)
In previous chapters, its also been seen, how
Capitalist development means that, as it expands, the amount of
constant capital grows relative to labour-power. But, again this is
a contradictory process. There are times when capital expands purely
quantitatively on the same technical basis i.e. just more factories
are built, more firms arise, and so the demand for labour grows in
the same proportion. But, at other times, of more feverish
development, that I would term a Long Wave Boom, a rash of new
technological developments are introduced rapidly. Capital expands
not just quantitatively but qualitatively. There may be a sharp
reduction in the amount of labour-power employed relatively, as new
technologies displace existing workers, some existing firms, or even
entire industries, which may disappear. (That was true e.g. about all
those people employed in industries related to horse-drawn carriages,
that disappeared as motor vehicles were introduced.) But, this
occurs simultaneously with a large increase in the absolute quantity
of labour-power employed, as whole new industries are developed, and
the total level of social production expands at a faster rate.
Marx wrote,
“This
first period, during which machinery conquers its field of action, is
of decisive importance owing to the extraordinary profits that it
helps to produce. These profits not only form a source of accelerated
accumulation, but also attract into the favoured sphere of production
a large part of the additional social capital that is being
constantly created, and is ever on the look-out for new investments.
The special advantages of this first period of fast and furious
activity are felt in every branch of production that machinery
invades. So soon, however, as the factory system has gained a certain
breadth of footing and a definite degree of maturity, and,
especially, so soon as its technical basis, machinery, is itself
produced by machinery; so soon as coal mining and iron mining, the
metal industries, and the means of transport have been
revolutionised; so soon, in short, as the general conditions
requisite for production by the modern industrial system have been
established, this mode of production acquires an elasticity, a
capacity for sudden extension by leaps and bounds that finds no
hindrance except in the supply of raw material and in the disposal of
the produce.” (p 424)
As I have set out elsewhere, the solution to the
last of these constraints – the disposal of the produce – can be
and is resolved, by the continual introduction of new types of Use
Values that can be sold as commodities. This is also what Marx talks
about in the Grundrisse, when he speaks about the “Civilising
Mission of Capitalism”, which forever has to create these new types
of Use Values, for that very reason, to be sold to workers, and by
that very process continually extends the workers horizons. The
limitation here essentially becomes a technical one of having
sufficient new Use Values to be introduced to absorb the Surplus
Capital, so as to avoid overproduction. Again, this is the essential
feature of the Long Wave. In periods of boom, technological
developments create sufficient new base technologies to allow that to
happen, in periods of Long Wave downturn, they do not.
It also has other consequences. In these periods,
when workers are thrown out of employment, it creates a drive towards
emigration, which was seen in to North America, India, and Australia.
Combined with the existing colonial empires, this provided an
impetus for these colonies to become mainly sources of the required
raw materials, as well as markets for the manufactured goods. In a
way, this replicates the previous division between town and country,
and the social division of labour built on it. But, it now creates
this social division of labour at a global level. I have described
elsewhere -
Imperialism, Industrialisation and Trade
– how the development of capital created yet another new
International Division of Labour, particularly after WWII.
The seeds of that development could, however, be
seen at the time Marx was writing. For example, he writes, of the
United States in 1866,
“The economic development of the United
States is itself a product of European, more especially of English
modern industry. In their present form (1866) the States must still
be considered a European colony.”
But, by the time of the Fourth German Edition,
Engels had appended to this note,
“Since then they have developed into a
country whose industry holds second place in the world, without on
that account entirely losing their colonial character.” (Note 2, p
425)
The same kind of development has occurred in many
former colonies, in the latter part of the 20th Century,
and continues to spread into the 21st Century. Today, it
is Africa's turn to experience rapid industrial development.
The reason for the scramble for sources of cheap
raw materials and for markets for goods stems directly from the
competition between relatively large numbers of companies, each
producing essentially homogeneous commodities (i.e. one yard of
cotton drill is essentially the same as any other), and each forced
to try to expand its market share on the basis of lower prices.
“The enormous power,
inherent in the factory system, of expanding by jumps, and the
dependence of that system on the markets of the world, necessarily
beget feverish production, followed by over-filling of the markets,
whereupon contraction of the markets brings on crippling of
production. The life of modern industry becomes a series of periods
of moderate activity, prosperity, over-production, crisis and
stagnation. The uncertainty and instability to which machinery
subjects the employment, and consequently the conditions of
existence, of the operatives become normal, owing to these periodic
changes of the industrial cycle. Except in the periods of prosperity,
there rages between the capitalists the most furious combat for the
share of each in the markets. This share is directly proportional to
the cheapness of the product. Besides the rivalry that this struggle
begets in the application of improved machinery for replacing
labour-power, and of new methods of production, there also comes a
time in every industrial cycle, when a forcible reduction of wages
beneath the value of labour-power, is attempted for the purpose of
cheapening commodities.” (p 425-7)
In contrast to Lenin's argument in
Imperialism: The Highest Stage of Capitalism,
it is, if anything, this pre-monopoly stage of capitalism which
explains the drive to secure colonial possessions, and indeed, as
Bill Warren has pointed out in “Imperialism: Pioneer of
Capitalism”, it was during this pre-monopoly stage of capitalism
that the world WAS divided up into colonial empires.
In fact, as Engels sets out in his
Critique Of The Erfurt Programme,
by the end of the 19th Century, the development of large
companies and corporations brings to an end this period of privately
owned capital, but also of the “planlessness” described here by
Marx. From the beginning of the 20th Century, with the
economy being dominated by a relatively small number of huge
corporations, the nature of competition within this more “planned”
capitalism changes. In place of destructive price competition, these
oligopolies seek to increase their profits by an increased focus on
innovation, as a means of reducing costs. They seek to defend and
extend their market share on the basis of a similar use of
innovation, to distinguish their own brand from other commodities, of
a similar type, by a focus on raising quality and choice, a
distinction they attempt to heighten via extensive use of advertising
and marketing.
The Fordist model, adopted by developed economies
in the 20th Century, particularly after WWII, attempts to
extend this planning principle, developed within the enterprise, to
the economy as a whole. Welfare States provide a high degree of
regulation of workers income and expenditure, so as to avoid large
swings in aggregate demand; central banks via monetary policy, help
prevent deflation, and falls in nominal prices, which are
destabilising and destructive of oligopoly profits; the incorporation
of the Trades Unions, via collective bargaining and mutuality
agreements, ensure continual rises in productivity and relative
surplus value, in return for annual real wage increases, thereby
creating stability, and steadily rising aggregate demand.
This is not to say that by these means capitalism
has become crisis free. Far from it. The same tendency towards
overproduction, that Marx indicates above, in relation to 19th
Century privately owned, competitive capitalism, applies even more to
20th and 21st Century, collectively owned,
monopoly capitalism, but the manifestation of that tendency is
necessarily different. In the former, it leads each enterprise to
seek to overcome the limitations of the market, by trying to win a
larger share of it, by even more production, and lower prices, which
acts to only accentuate the overproduction, and intensify the
collapse. In the latter, it leads to enterprises reducing their
output in a planned way, slowing their investments, and laying
workers off, in order to reduce their costs, and prevent falls in
prices.
Andrew Kliman in his book “The Failure of
Capitalist Production” is absolutely correct in this regard,
when he writes,
“This explanation of why prices fall has
nothing to do with the irredeemably flawed notion that technical
progress causes 'overproduction' – the production of too much
output in relation to demand which in turn forces companies to slash
their prices. Companies' decisions about how much output to produce
are based on projections of demand for the output. Since technical
progress does not affect demand – buyers care about the
characteristics of products, not the processes used to produce them –
it will not cause companies to increase their levels of output, all
else being equal.”(Note 4, P 16)
But, of course, this
very process of reducing the level of planned investment, and so on
has the effect of reducing aggregate demand, which in turn leads to a
downward spiral, unless checked by some form of action by the State
in the form of Keynesian fiscal, or Friedmanite Monetary stimulus, or
both. Yet, even the effectiveness of these measures, as was seen in
the 1970's and 80's, is limited by the Long Wave conjuncture. During
the Long Wave downturn, they are likely to lead to “crowding out”,
or to stagflation rather than robust growth. Where they do promote
growth, as happened in the 1990's, it is inflationary growth, leading
to its own problems, which are witnessed today, in the huge debt
overhang affecting Europe and North America.
The consequences of
this are even more severe for those sectors of the economy where
these 19th Century relations still persist i.e. in the
small business sector.
Marx continues,
“A necessary condition, therefore, to the
growth of the number of factory hands, is a proportionally much more
rapid growth of the amount of capital invested in mills. This growth,
however, is conditioned by the ebb and flow of the industrial cycle.
It is, besides, constantly interrupted by the technical progress that
at one time virtually supplies the place of new workmen, at another,
actually displaces old ones. This qualitative change in mechanical
industry continually discharges hands from the factory, or shuts its
doors against the fresh stream of recruits, while the purely
quantitative extension of the factories absorbs not only the men
thrown out of work, but also fresh contingents. The workpeople are
thus continually both repelled and attracted, hustled from pillar to
post, while, at the same time, constant changes take place in the
sex, age, and skill of the levies.” (p 427-8)
And, this uncertainty and disruption continues to
characterise capitalism today. Changes within the structure of
capital, and the uneven development of capital, and of the employment
of technology within it, continually change the nature of the demand
for labour-power.
The kinds of changes that occurred in the 19th
century, with large numbers thrown off the land, and into long hours
of factory work, have been mirrored over the last thirty years by the
large numbers thrown out of relatively stable employment in
manufacturing industry, into unstable, temporary, and casual
employment in service industry, as it has become dominant.
Marx describes the continual fluctuations between
prosperity and depression, in the years between 1815 and 1860 in the
textile industry. These fluctuations often occurred from one year to
the next as opposed to the more prolonged trade cycle witnessed in
later years. During this period, new businesses, often run by former
overlookers, would be set up, during periods of prosperity, only to
be crushed when it ended, partly due to being under capitalised. In
order to save money, capitalists would buy cheaper cotton, and use
cheaper ancillary materials, only to find this raised costs because
of the poorer quality, and because it caused the machines to break
down. They would try to recoup this cost from workers wages, pushing
them below the value of labour-power. This was abetted by the fact
that employers also owned workers' cottages, and deducted rent
directly from wages. This was also the period of the Truck System,
when employers paid wages in tokens only redeemable at the company
owned shop. It was in response to this, and the poor quality of
goods available to them, as a consequence of this monopoly, that
workers established their own Co-operative stores, and agitated for
laws against the Truck System. Ironically, today the Trades Unions
defend the modern Truck System operated by the Capitalist State in
the form of the Welfare State.
As Engels describes, in his later prefaces to “The
Condition of The Working Class in England”, another consequence of
the development of capital beyond these early small scale forms of
capital, was that the bigger capitalists abandoned these kinds of
“penny-pinching” measures as counter-productive. They embraced
the Factory Acts and even Trades Unions. In so doing they
strengthened their own position. As Engels put it,
“And in proportion as this increase took
place, in the same proportion did manufacturing industry become
apparently moralised. The competition of manufacturer against
manufacturer by means of petty thefts upon the workpeople did no
longer pay. Trade had outgrown such low means of making money; they
were not worth while practising for the manufacturing millionaire,
and served merely to keep alive the competition of smaller traders,
thankful to pick up a penny wherever they could. Thus the truck
system was suppressed, the Ten Hours’ Bill was enacted, and a
number of other secondary reforms introduced — much against the
spirit of Free Trade and unbridled competition, but quite as much in
favour of the giant-capitalist in his competition with his less
favoured brother. Moreover, the larger the concern, and with it the
number of hands, the greater the loss and inconvenience caused by
every conflict between master and men; and thus a new spirit came
over the masters, especially the large ones, which taught them to
avoid unnecessary squabbles, to acquiesce in the existence and power
of Trades’ Unions, and finally even to discover in strikes — at
opportune times — a powerful means to serve their own ends. The
largest manufacturers, formerly the leaders of the war against the
working-class, were now the foremost to preach peace and harmony. And
for a very good reason. The fact is that all these concessions to
justice and philanthropy were nothing else but means to accelerate
the concentration of capital in the hands of the few, for whom the
niggardly extra extortions of former years had lost all importance
and had become actual nuisances; and to crush all the quicker and all
the safer their smaller competitors, who could not make both ends
meet without such perquisites. Thus the development of production on
the basis of the capitalistic system has of itself sufficed — at
least in the leading industries, for in the more unimportant branches
this is far from being the case — to do away with all those minor
grievances which aggravated the workman’s fate during its earlier
stages.”
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