Thursday, 14 March 2013

Capital I, Chapter 25 - Part 3

3) Progressive Production of a Relative surplus population or Industrial Reserve Army

The accumulation of capital appears at first as merely a quantitative phenomenon, but as Marx describes it is also a qualitative expansion, because it also involves a change in the organic composition of capital, as constant capital increases faster than the increase in variable capital.
The increase in capitalist production, the rise in productivity and the consequent change in the organic composition, proceeds more quickly than the rate of accumulation, because of the role of centralisation.

The consequence is that now, with the increasing social wealth in the form of a greater share of total capital, the demand for labour becomes progressively smaller in proportion to the growth of total capital. The total amount of labour employed continues to rise, but forms a proportionately smaller part of total capital. For periods, capital continues to expand on a purely extensive basis i.e. technology is not revolutionised. But, these periods become shorter. As a consequence, the total capital needs to expand by larger and larger amounts, not just to absorb new workers, but just to keep existing workers employed.

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 relativity 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.” (p 590)

The total social capital goes through a series of changes affecting sometimes all of it, and sometimes part of it. All of these changes affect the demand for labour, frequently in dramatic ways.

For years coal mining continued using
the same methods that relied on large
amounts of manual labour.  One reason
for it being nationalised was so the state
could provide the necessary capital to
produce the coal that industry needed
at a lower price.  After nationalisation,
machines were introduced, and the
majority of miners were sacked during
the 1950's and 60's.
Considering the social capital in its totality, the movement of its accumulation now causes periodical changes, affecting it more or less as a whole, now distributes its various phases simultaneously over the different spheres of production. In some spheres a change in the composition of capital occurs without increase of its absolute magnitude, as a consequence of simple centralisation; in others the absolute growth of capital is connected with absolute diminution of its variable constituent, or of the labour power absorbed by it; in others again, capital continues growing for a time on its given technical basis, and attracts additional labour power in proportion to its increase, while at other times it undergoes organic change, and lessens its variable constituent; in all spheres, the increase of the variable part of capital, and therefore of the number of labourers employed by it, is always connected with violent fluctuations and transitory production of surplus population, whether this takes the more striking form of the repulsion of labourers already employed, or the less evident but not less real form of the more difficult absorption of the additional labouring population through the usual channels.” (p 590-1)

A number of factors coincide. The increase in the total social capital; the rate at which it accumulates; the increase in the scale of production and masses of labour employed it brings; the development of the productivity of labour; the increased scope across the economy of capitalist production. All these things create the conditions not only for an increased attraction of labour, but also for its repulsion.

... the rapidity of the change in the organic composition of capital, and in its technical form increases, and an increasing number of spheres of production becomes involved in this change, now simultaneously, now alternately. The labouring population therefore produces, along with the accumulation of capital produced by it, the means by which it itself is made relatively superfluous, is turned into a relative surplus population; and it does this to an always increasing extent. This is a law of population peculiar to the capitalist mode of production; and in fact every special historic mode of production has its own special laws of population, historically valid within its limits and only in so far as man has not interfered with them.” (p 591-2)

This surplus population or reserve army of labour, is a product of capitalist production, but in turn it becomes a condition for capitalist production, and a lever for accumulation. Whatever the limits of population, capitalism always generates this surplus population, to meet its needs for expansion, by always having labour available for exploitation.

Wedgwood and other North Staffordshire industrialists
clubbed together, mobilising money hoards, to build the
Trent and Mersey Canal.  It meant they could bring in
large amounts of clay, salt, flint, iron ore etc. much more
cheaply, and could get their products to market much more
 cheaply.  It was the basis of the massive expansion of the
three industries of North Staffordshire - pottery, coal and steel.
Capital, through accumulation becomes capable of huge leaps in its size. It does so because of a number of factors. The productivity of labour is continually raised. As Marx pointed out earlier, after a certain point, capital becomes more “elastic”, that is it has a number of means of quickly expanding. It can employ more labour, employ it more extensively or intensively and so on. It can introduce more and/or better machines, use shift systems and so on. As social wealth increases, so capital as part of social wealth can increase rapidly. For example, capitalists can divert resources from revenue to accumulation. They can also mobilise money hoards, or wealth held in other forms as capital. That is also facilitated by the growth of credit, which enables the mobilisation of money hoards and borrowing against other forms of wealth. But, also at a certain stage, the technical basis of production facilitates the accumulation of surplus value into the expansion of machinery, transport and so on, that has a dramatic effect on increasing production.

The mass of social wealth, overflowing with the advance of accumulation, and transformable into additional capital, thrusts itself frantically into old branches of production, whose market suddenly expands, or into newly formed branches, such as railways, &c., the need for which grows out of the development of the old ones. In all such cases, there must be the possibility of throwing great masses of men suddenly on the decisive points without injury to the scale of production in other spheres. Overpopulation supplies these masses. The course characteristic of modern industry, viz., a decennial cycle (interrupted by smaller oscillations), of periods of average activity, production at high pressure, crisis and stagnation, depends on the constant formation, the greater or less absorption, and the re-formation of the industrial reserve army or surplus population. In their turn, the varying phases of the industrial cycle recruit the surplus population, and become one of the most energetic agents of its reproduction.” (p 592-3)

When it was short of labour during WWI, and during and
after WWII, Capital turned to women workers as
a Latent Reserve.
In the early stages of Capitalism this does not occur because the change in the organic composition is very gradual. As capital expanded, the demand for labour expanded with it. So even with the change in its organic composition, no surplus population is created, because population itself grew only slowly. This in itself had consequences for the ability of capital to expand, and for wages. Capital dealt with these consequences, in its infancy by other means i.e. the expulsion of the peasants from their land.

But, the more rapid growth of capital is only possible if it finds a sufficiently large quantity of exploitable labour available when it is required. The reserve army is then a necessary element for capitalist expansion. But, the same frenetic behaviour that leads to rapid expansion also leads to rapid contractions, which in turn throw workers back into the ranks of the reserve army.

So, the process of accumulation, which brings about changes in the composition of capital, continuously “sets free” workers that swell the ranks of the reserve army. During periods of rapid accumulation these are absorbed again by the extension of existing capitals, and the creation of new ones. Even some of the existing reserve can be absorbed during these periods. But, when contraction sets in, this process is reversed.

The whole form of the movement of modern industry depends, therefore, upon the constant transformation of a part of the labouring population into unemployed or half-employed hands. The superficiality of Political Economy shows itself in the fact that it looks upon the expansion and contraction of credit, which is a mere symptom of the periodic changes of the industrial cycle, as their cause. As the heavenly bodies, once thrown into a certain definite motion, always repeat this, so is it with social production as soon as it is once thrown into this movement of alternate expansion and contraction. Effects, in their turn, become causes, and the varying accidents of the whole process, which always reproduces its own conditions, take on the form of periodicity. When this periodicity is once consolidated, even Political Economy then sees that the production of a relative surplus population — i.e., surplus with regard to the average needs of the self-expansion of capital — is a necessary condition of modern industry.” (p 593)

Variable capital can increase even if the number of workers stays the same or even falls. That is the case if those workers perform more labour and receive more wages. So, Marx says, its always in the interests of capital to get more work out of fewer workers than to employ more workers.

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.” (p 595)

Once again this is a contradictory process. On the one hand, an increased variable capital here does not employ more workers. On the other, capitalist development replaces more skilled with less skilled workers, a larger number of whom can be employed for the same amount of wages. The same is true with replacing men with women or children.

The production of a relative surplus population, or the setting free of labourers, goes on therefore yet more rapidly than the technical revolution of the process of production that accompanies, and is accelerated by, the advance of accumulation; and more rapidly than the corresponding diminution of the variable part of capital as compared with the constant. If the means of production, as they increase in extent and effective power, become to a less extent means of employment of labourers, this state of things is again modified by the fact that in proportion as the productiveness of labour increases, capital increases its supply of labour more quickly than its demand for labourers. The overwork of the employed part of the working class swells the ranks of the reserve, whilst conversely the greater pressure that the latter by its competition exerts on the former, forces these to submit to overwork and to subjugation under the dictates of capital. The condemnation of one part of the working class to enforced idleness by the overwork of the other part, and the converse, becomes a means of enriching the individual capitalists, and accelerates at the same time the production of the industrial reserve army on a scale corresponding with the advance of social accumulation.” (p 595-6)

But, we shouldn't think that this means that there is any absolute tendency to unemployment. On the contrary, there is unemployment on one side of the coin, overwork on the other. Marx writes of England,

Her technical means for saving labour are colossal. Nevertheless, if to-morrow morning labour generally were reduced to a rational amount, and proportioned to the different sections of the working class according to age and sex, the working population to hand would be absolutely insufficient for the carrying on of national production on its present scale.” (p 596)

More years work to do yet?
We see the same thing today. On the one hand we have large scale unemployment and under employment. In addition to the 2.5 million unemployed, 3 million say they would like to work more hours, and this probably understates the degree of under employment. Yet, at the same time, workers are told they have to work until they are 67 or 70, rather than 65. The government has demanded an opt-out from the Working Time Directive and so on.

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.” (p 596)

Wages rise and fall in line with the demand for and supply of labour but not in the way the economists suggested. They put forward the idea that the demand for labour raises wages which causes workers to increase their procreation, increasing the population and supply of labour. This increased supply reduces wages, which in turn decimates population, reducing the supply of labour. On this basis, it is population not the needs of capital that is the determining factor. Marx has shown why this is wrong.

Marx refers to the rise of agricultural wages between 1849-59. They rose by almost 30%, as workers escaped the land for factories, mines, railways and the needs of war.

Everywhere the farmers were howling, and the London Economist, with reference to these starvation-wages, prattled quite seriously of “a general and substantial advance.” What did the farmers do now? Did they wait until, in consequence of this brilliant remuneration, the agricultural labourers had so increased and multiplied that their wages must fall again, as prescribed by the dogmatic economic brain? They introduced more machinery, and in a moment the labourers were redundant again in a proportion satisfactory even to the farmers. There was now “more capital” laid out in agriculture than before, and in a more productive form. With this the demand for labour fell, not only relatively, but absolutely.” (p 597-8)

This is not to be confused with the situation determining the actual supply of labour to specific branches of industry.

If, e.g., in consequence of favourable circumstances, accumulation in a particular sphere of production becomes especially active, and profits in it, being greater than the average profits, attract additional capital, of course the demand for labour rises and wages also rise. The higher wages draw a larger part of the working population into the more favoured sphere, until it is glutted with labour power, and wages at length fall again to their average level or below it, if the pressure is too great. Then, not only does the immigration of labourers into the branch of industry in question cease; it gives place to their emigration. Here the political economist thinks he sees the why and wherefore of an absolute increase of workers accompanying an increase of wages, and of a diminution of wages accompanying an absolute increase of labourers. But he sees really only the local oscillation of the labour-market in a particular sphere of production — he sees only the phenomena accompanying the distribution of the working population into the different spheres of outlay of capital, according to its varying needs.

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.” (p 598)

Productive Capital over the last 30 years has
moved from old style factory production towards
service production.  Industries such as health, education,
finance have become significant sources of Surplus Value
employing large and, increasing numbers of highly skilled
and highly paid workers.  But, alongside this expansion of
Capital it has introduced new machines, like surgical
robots, computers using neural nets to trade shares and so on.
Marx then returns to the discussion from earlier, once again attacking the economic apologists for their arguments claiming that capital is “set free” for the workers. The process of the increasing reserve army exposes this fallacy, Marx argues.

The impulse that additional capital, seeking an outlet, would otherwise have given to the general demand for labour, is therefore in every case neutralised to the extent of the labourers thrown out of employment by the machine. That is to say, the mechanism of capitalistic production so manages matters that the absolute increase of capital is accompanied by no corresponding rise in the general demand for labour.” (p 599)

Capital influences both the demand for and the supply of labour at the same time. On the one hand, its expansion creates an additional demand for labour. On the other, that same expansion, because it also calls forth additional machines, technology and techniques etc. which raise productivity, also creates an additional supply of labour from the existing number of workers.

When Capital could not acquire sufficient workers
at wages that enabled them to make profits, they
abandoned the laws of Supply and Demand, and their
 supposed commitment to the principles of freedom
and equality.
As soon, therefore, as the labourers learn the secret, how it comes to pass that in the same measure as they work more, as they produce more wealth for others, and as the productive power of their labour increases, so in the same measure even their function as a means of the self-expansion of capital becomes more and more precarious for them; as soon as they discover that the degree of intensity of the competition among themselves depends wholly on the pressure of the relative surplus population; as soon as, by Trades’ Unions, &c., they try to organise a regular co-operation between employed and unemployed in order to destroy or to weaken the ruinous effects of this natural law of capitalistic production on their class, so soon capital and its sycophant, Political Economy, cry out at the infringement of the “eternal” and so to say “sacred” law of supply and demand. Every combination of employed and unemployed disturbs the “harmonious” action of this law. But, on the other hand, as soon as (in the colonies, e.g.) adverse circumstances prevent the creation of an industrial reserve army and, with it, the absolute dependence of the working class upon the capitalist class, capital, along with its commonplace Sancho Panza, rebels against the “sacred” law of supply and demand, and tries to check its inconvenient action by forcible means and State interference.” (p 599-600) 

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