The Number of UK Wage Slaves Rises

At Prime Minister's Questions, yesterday, Theresa May opened her remarks by associating herself with opposition to slavery, and its persistence into the modern world. She did not seem to recognise the irony of almost immediately going on to welcome, and indeed praise the role of her government in facilitating, the fact that the latest employment data shows that the number of UK wage slaves has again risen. Everyone understands that those who benefit from more slaves being put to work are the slave-owners, who appropriate the surplus product produced by the slave, yet, the Tories continually expect us to bow down in gratitude that more wage slaves have been employed, in order for those wage slaves to produce a larger surplus product, and surplus value, for a handful of very rich capitalists. The irony of May's statements would not have been missed by economists, and MP's, such as David Ricardo, in the 19th century. Ricardo recognised that being a wage slave was a misfortune that as few people should be subjected to as possible.

The irony would also not have been lost on the author of “Black Swans”, Nicholas Nassim Taleb, who wrote in his book, “The Bed of Procrustes”,

“Karl Marx, a visionary, figured out that you can control a slave much better by convincing him he is an employee.” 

Adam Smith, following on from the Physiocrats, had recognised that value is labour, and that in all modes of production, other than the most primitive, the producers (workers) produce a greater quantity of new value by their labour than is required for the reproduction of their own labour-power, and physically this is reflected by the fact that they thereby produce a surplus product. For so long as these producers owned their own means of production, they were able to appropriate this surplus product/value themselves. It is what led Smith to understand the law of value as being one in which not only is the value of a commodity equal to the labour-time required for its production, but it is also equal to the amount of labour it can command. In other words, a peasant producer of a metre of linen that has a value of 10 hours of labour, can thereby exchange the metre of linen for other commodities with a value equal to 10 hours of labour, and thereby has command over this equal amount of labour used to produce say beer, or bibles.

However, Smith recognised that as soon as a small number of people in society are able to monopolise ownership of either land, or means of production, this law of value appears to break down, because it then becomes obvious that this small group of people is able to command labour for which they have given no equal amount of value/labour, in return. As soon as this situation arises, the owners of this land or means of production, are able to appropriate themselves the surplus labour/product of the producers, just as surely as is the slave owner who directly appropriates the surplus product created by the slave. This situation confused Smith, because he did not distinguish between the value created by labour, and the value of labour-power itself, and the fact that it is precisely because, under capitalism, the producer/worker, sells their labour-power as a commodity, and thereby becomes a wage slave, that the law of value by which the value of commodities is determined by the labour required for their production continues to operate, and yet the capitalist is able to get something for nothing, that the commodities in their possession commands a greater quantity of labour, than is required for their own production.

The reason for this is precisely because these commodities, wage goods, in the possession of the capitalist, do not act as commodities, but as capital. The capitalist only exchanges these commodities, that comprise their variable-capital, or their money equivalent, wages, with the worker on condition that the worker provides more labour, and thereby creates more new value, than those commodities themselves require for their production. In short, if the total economy were viewed, the producers/workers create a quantity of products that are immediately appropriated by capital, and capital only gives back a proportion of those products to the workers, just as the slave owner only gives back to the slave those things required for their subsistence, and capital then directly appropriates the surplus product/surplus value. The tiny number of owners of capital, thereby, can use this surplus product/value to create a lavish lifestyle for themselves as well as to use it to create more capital, and thereby to increase their command over labour, and ensure their ability to appropriate even more profits in future. It is this extension of wage slavery, and exploitation that Theresa May, and the Tories expect us to show our gratitude for!

Adam Smith recognised that the landed aristocracy was able to appropriate the surplus product produced by peasants simply as a result of the fact that their ancestors had been effective murderers and cutthroats, who had built up their ownership of landed property, throughout Europe, and that, on the basis of this ownership, they were able to demand that the surplus product that the peasant producers would previously have owned themselves, was paid, instead, as rent, to the landowner. It was why Smith was scathing of such parasitic elements in society such as the aristocracy, the clergy etc. Smith also recognised that it was the fact that the means of production had been monopolised by a small group of capitalists, and that as capitalist production replaced peasant production, and the old guild production, the labourers could only work, if they had access to these means of production.

It was the fact that there were many labourers seeking work, but a relative shortage of capital, which Smith believed explained the breakdown of the law of value, so that the owners of capital were able to command a greater quantity of labour with the commodities in their possession, than was represented by the value of those commodities. In other words, Smith believed that the law of value broke down because the relative oversupply of labour, pushed down its price, whilst the relative shortage of capital pushed up its price. Writing near the dawn of this capitalist production, Smith saw the rapid accumulation of capital, and the rapid growth in the number of people who were themselves becoming capitalists. On this basis, Smith mistakenly believed that this relative imbalance in the supply of labour and capital would be resolved, as the supply of capital was thereby increased, and the demand for labour increased along with it. The result would be that the ability of capital to appropriate the surplus value created by labour would then be diminished, so that the mass and rate of profit would continually be squeezed. 

This was Smith's explanation for the historical tendency for the rate of profit to fall, and he saw it as inevitably leading to a crisis for capitalism, as eventually the profit would disappear altogether. He was wrong, as Marx describes.

“A distinction must he made here. When Adam Smith explains the fall in the rate of profit from an over-abundance of capital, an accumulation of capital, he is speaking of a permanent effect and this is wrong. As against this, the transitory over-abundance of capital, over-production and crises are something different. Permanent crises do not exist.” 

(Theories of Surplus Value, Chapter 17, Footnote 1)

Marx recognised that although, there are indeed times when capital accumulates rapidly so that the demand for labour-power rises, pushing up wages, and squeezing profits, it is the very fact that capital will only employ wage slaves when those wage slaves hand over a portion of their labour gratis that ensures that this cannot be a permanent situation. It only arises exceptionally, although periodically, in temporary crises of overproduction. The response of capital to such situations is always to create for itself a relative surplus population, and it does this by investing in the development of new labour-saving technologies, so that the existing output can be produced with less labour, and increased output with the same amount of labour, so that the relative shortage of labour-power is overcome, wages are pushed down, and the rate of exploitation thereby pushed up.

As Marx puts it,

“Take, for example, the rise in England of agricultural wages from 1849 to 1859. What was its consequence? The farmers could not, as our friend Weston would have advised them, raise the value of wheat, nor even its market prices. They had, on the contrary, to submit to their fall. But during these eleven years they introduced machinery of all sorts, adopted more scientific methods, converted part of arable land into pasture, increased the size of farms, and with this the scale of production, and by these and other processes diminishing the demand for labour by increasing its productive power, made the agricultural population again relatively redundant. This is the general method in which a reaction, quicker or slower, of capital against a rise of wages takes place in old, settled countries. Ricardo has justly remarked that machinery is in constant competition with labour, and can often be only introduced when the price of labour has reached a certain height, but the appliance of machinery is but one of the many methods for increasing the productive powers of labour. The very same development which makes common labour relatively redundant simplifies, on the other hand, skilled labour, and thus depreciates it.”

(Value, Price and Profit) 

Rather than the amount of profit falling, as Smith believed, therefore, it is actually increased. Yet, as Marx also describes, it is these measures to overcome the crisis of overproduction, which then lead to the tendency for the rate of profit to fall, that Smith, and other economists had been struggling to explain. That is because, this rise in productivity means that more material is processed by the same amount of labour, which in turn means that the proportion of the value of the final output accounted for by material rises, whilst that of labour (divided into wages and profits) falls. This tendency for the rate of profit to fall, therefore, does not, as Smith and others believed, represent some existential threat to the system, but on the contrary, is the manifestation of its ability to continually overcome these periodic crises of overproduction, to raise productivity, and with it the mass of profit, and thereby to continue its upward path. It represents not an indication of decay, but of continued vibrancy, of the ability to continually be able to revolutionise the means and methods of production, so as to overcome those temporary shortages of labour.

If anything, therefore, the rise in UK employment of wage slaves, and fall in unemployment should be seen as a bad thing, when combined with the further fact that UK productivity has not just slowed, but is now falling, and with the fact that the wages of British workers are lower today, in real terms than they were ten years ago. It indicates that UK capital is suffering from decay, and a failure to revolutionise the means and methods of production, so as to increase the mass of profits via greater efficiency. Instead, it is relying on maintaining its existing levels of profits by reducing wages, and forcing workers thereby to sustain their level of subsistence by increasing resort to debt, not to mention the resort to food banks, and other forms of charity, reminiscent of the 19th century, and the novels of Charles Dickens.

The critique of the bourgeois-liberal view of the freedom of the labourer was also indicated by Linguet. Ricardo pointed out that it is better for a society to have only 200 labourers who are productive enough to be able to support a population of 300, than to have a society of 300 labourers that are able to support a population of 400. The gross product is greater in the latter case, but its net product, i.e. the product left over after the consumption of the labourers has been met, is only 33.3%, whereas in the former case, although the gross product is 25% less, the net product is 50%. Ricardo argued that the fate of the productive labourer is to produce a surplus product and surplus value always for someone else, and so the number of people placed in this unfortunate position should be kept to a minimum.

The Tories have tried to deflect criticism of the fact that real wages are lower today than ten years ago, by talking about the cuts in income tax, but those tax cuts primarily benefit those on higher incomes. Moreover, whilst they mention the raising of income tax thresholds, they fail to mention that, after 2010, they and their Liberal allies increased the rate of VAT by 20%, from 17.5% to 20%, and indeed in January 2010, VAT was only at 15%. Given that the lowest paid workers have to spend all their wages in buying goods and services, to live, the rise in VAT is far more burdensome on them than any relief given from a reduction in income tax. Moreover, lower paid workers are more reliant on public services provided by local councils, and it is again those, often free, services that have been cut, by the Tory policies of austerity, forcing those households now to have to pay for what were once free services, or else to do without them altogether.

The Tories also talk hypocritically about the need to make work pay, and that the way out of poverty is through work. Of course, the fact is that it is those in work who have seen their wages fall in real terms, and who are also the main recipients of benefits that have also been cut as a result of Tory austerity. But, as Ricardo and others point out, the idea that it is work that pays, or is the way out of poverty is itself a lie. It is not the workers who are the main beneficiaries of their labour, but the owners of capital, and, unlike in Ricardo's day, the main owners of that capital are not even functioning capitalists, but merely rentiers, people who own money-capital, and whose wealth is in the form of fictitious-capital, of shares and bonds, from which they can simply draw interest. They are no different to the useless parasitic, landed aristocracy that was criticised by Adam Smith, and who have no further useful role to play.

Take someone with £1 million, who even just puts it in a savings account that currently pays them even the measly 1% interest currently available. It would provide them with an income thereby of £10,000 a year, or just under half the national average wage, and about two-thirds the average wage in a place like Stoke. Yet, they have to do no work to obtain this £10,000, they have to own no business, or risk their capital in any way. By the same token, someone with £10 million would get an income from it of £100,000 a year, or four times the national average wage. So, how is it possible to argue that work is the means to riches, or that work is being made to pay as against not working? Its quite clear here that those who do not work, but who have even a modest amount of capital are the ones who are the ones that are benefiting, and the interest they are paid on their capital is the direct result of the surplus value being produced by those in work, whose wages amount to only a fraction of the unearned incomes of the rentiers.

But, then look at the situation that exists in Britain. There are 134 billionaires in the UK. Just 1% interest on a billion Pounds comes to £10 million a year! For that, you would need do no work, invest in no productive activity, simply sit back and draw the interest. And, where does that interest come from? It comes from millions of workers, paid minimum wage, doing jobs of varying degrees of security, who, like the slaves before them, produce all of the goods and services, but who only consume themselves a portion of those very same goods and services, the surplus product they produce thereby being appropriated by capital, and portions of it then being handed over in the form of interest to share and bondholders, rents to landlords, taxes to the capitalist state, as well as lucrative sinecures to all of the bureaucrats, lackeys, and executives who look after the interests of the capitalists, and ensure that the payment of these dividends, rents, and interest continues.  No wonder the Tories see the increase in the number of wage slaves as cause for celebration!

In between the £10,000 interest of the rentier with just £1 million of capital, and the £10 million of interest received by the billionaire rentier (and in fact, the yield they get on their ownership of shares is greater than 1%) there are thousands more who draw large huge incomes in this way without contributing anything of any value to society. The idea that in capitalist Britain work pays, is a cruel deception, perpetrated by the Tories.