Exploitation Soars, Unemployment Jumps!

This sure is some recovery! The first week in November brought remarkable results for an economy widely held to be on the mend. Earnings of corporations are on the rise, the stock market is perking up, and the Administration is claiming credit for pulling the economy back from the brink and setting it well on the course to health.

But in the other world, the world outside of Wall Street, gated communities, and the political elite, the news is catastrophic, pushing the misery index dramatically higher.

Exploitation

The rate of exploitation, as measured by output per hour of labor has increased by 9.6% in the third quarter of this year, more than four times its average growth over the last 25 years. This increase comes on the heels of a 6.9% rise in the second quarter. Put simply, these numbers mean that for every worker engaged in some form of productive activity, on average, he or she produced almost 10% more in the third quarter of this year over the same quarter last year. Intuitively, this means that the capitalist system has squeezed another dollar in value from workers who produced ten dollars in value last year. Or, put another way, for every hour of labor, workers were forced to do 10% more productive work.

Some might respond that it doesn’t follow that workers necessarily worked harder for these productivity gains. That may well be true in some cases, but we have other Labor Department data that bear on this matter. We also know that total employment is on the decline (see below). In addition, the Labor Department reports that the hours worked were down again for the ninth straight quarter. Combine that fact with a 4% rise in output, and it’s pretty clear that workers were squeezed harder.

Capitalist apologists would be quick to point out - and they always do – that other factors may contribute to productivity increases besides worker effort such as technological innovations and investment in more efficient equipment and techniques. This response evaporates in the face of the dramatic decline in investment brought on by the broad economic crisis.

Of course it would be possible that workers worked harder because they wanted to make more money, producing more because they wanted to earn a commensurately larger compensation. This, however, is belied by the fact that unit labor costs were down 5.2% in the third quarter: every unit of value produced earned the workers 5.2% less than it did in the third quarter of 2008.

We have then a stubborn fact: workers worked a lot harder most of this year than they did last year with a smaller share of the value produced.

This stubborn fact goes unacknowledged and unexplained. It will not be discussed on the Sunday morning talk shows. The media – from The New York Times to the organs of the labor movement – will pass over this fact, often hailing it as a harbinger of recovery. Academic and working economists assign it no special place, no event of great consequence.

It is only in the Marxist tradition that this fact occupies a central role and is properly explained. In fact, it is the fundamental notion in the political economy of Karl Marx and Frederick Engels, exposing the primary mechanism of profit generation in the capitalist mode of production. In the end, they argued, increases in the rate of profit come from workers getting a smaller portion of the product of their labor. They labeled this measure the rate of exploitation. From the Marxist perspective, the capitalist class intensifies exploitation – raises its rate – to restore or increase the rate of profit. Indeed, this is axiomatic in the Marxist system.

While mainstream economists strain to explain the rise in profits and the stock market in the face of climbing unemployment and slack consumption, they refuse to attend to the role of labor exploitation in this development.

In our time, this sharp increase in labor exploitation signals two disturbing truths:

1. The relative strength and privilege of capital. Monopoly capital wields sufficient power, unrestrained by the organs of popular sovereignty – the government, to extract dramatically more effort from the working class.

2. The relative weakness of labor. The labor movement lacks sufficient strength, determination, or government influence to at the very least retain a proportionate share of the product of its efforts.

Thus, the burden of the capitalist recovery – profits and stock equity values – is borne squarely by the working class.



Unemployment

It is not just that workers are working harder; fewer are also working. The October official unemployment rate rose to 10.2%, the highest rate since 1983 and only the second time since records have been kept (1948) that the unemployment rate topped 10%! When workers without full-time work or those discouraged from working are counted, the actual rate is 17.5%, a rate nearly equal to or greater than all but the four peak years of the Great Depression. Where the Roosevelt Administration resorted to public jobs programs to restore employment after 1934, the current Administration, guided by its dogmatic neo-liberal economic team, has largely relied upon restoring the health of the private sector with generous bailouts and massive loan guarantees, furthering shifting the burden of recovery onto the future tax obligations of the working class.

The impact upon families of working people – saddled with escalating health care and education costs, massive debt, and uncertainty – is devastating. With nearly one out of five US citizens without a secure, sustainable job, the economic crisis is far from over for the overwhelming majority.

As Doug Henwood has pointed out (Left Business Observer, #122), even with women entering the work force in very great numbers, the percentage of people in the work force (employment/population) has fallen to within striking distance of the level when the Government first kept statistics (1948).

For the unemployed, the prospect of getting a job has diminished to unprecedented levels: the median length of unemployment now stretches to nearly five months. Therefore, the average worker, out of desperation, will likely consider employment at a wage and benefit level well below their former rate. This downward pressure on wages contributes to the willingness of those with employment to accept increased exploitation in order to retain a job. With the unemployed willing to work for less, it is likely that those with jobs will fear for the loss of theirs.

Conclusions

The numbers, the reports from the Government’s Labor Department, are stark, yet they fail to convey the pain, the misery, the desperation that underlies increasing exploitation and expanding unemployment. Their impact will appear later in poverty figures, suicides, broken families, crime statistics, child malnutrition, avoidable illnesses and deaths, and other measures of neglect and human suffering.

It is irresponsible and dishonest not to locate their cause in policy decisions. It doesn’t have to be this way.

The decisions taken by the new Administration, decisions taken to address a profound economic crisis, did not have to place the burden upon the vast majority of our fellow citizens. History shows other responses: Roosevelt’s second term – also hailed as an endorsement of transformational change and a rebuke of past approaches – strove to place many of the resources of government directly for the benefit of those most harmed by economic catastrophe. But this is not the approach that this Administration chose. Instead it hewed to the corrupted line that extending a helping hand to corporate USA – the perpetrators of the crisis – would pull everyone up, a bankrupt return to the cynical approach of the Reagan gang.

Looking forward, this approach will only encourage more corporate irresponsibility and more pain for the vast majority. We, on the left, cannot continue to shirk our duty to speak loudly for a new policy that will put the future of working people at the top of the agenda. It is time to return to a vigorous oppositional stance and cast aside the misplaced, naïve trust in the Democratic Administration. The season of childish fantasy is over.

Zoltan Zigedy

zoltanzigedy@gmail.com