Should We Discuss the Potholes on China’s Road to Socialism?

One can admire the Chinese revolution as one of the great setbacks to the imperialist and colonial undertakings of Europe, Japan, and the US. One can hail the extraordinary sacrifices and deep dedication of members of the Chinese Communist Party to both liberate the peoples of China from foreign domination and advance the people toward a better life.  

At the same time, one can recognize the errors, the missteps, and the failed campaigns that unsurprisingly went with establishing and developing the New China.

As with other previous revolutionary projects like the Americas and France -- in their times-- and the Soviet Republic, the European Peoples’ Democracies, Peoples’ Democratic Korea, Cuba, and Vietnam in our time, Peoples’ China’s fate will and must be decided by its own people and their leading forces. And we are obligated to defend their right to make that choice, whether we agree with it or not.

Those of us who are on the outside looking in need to demonstrate humility and reserve in assessing the progress of the Chinese revolution. We should make neither hasty critiques nor unqualified defenses. We should not rush to judgement on a job that is, by all accounts, unfinished. Even as late as February of 1952, Stalin was reminding us that commodity production still existed in the Soviet Union. At the same time, the goal of Communists remained, in Engels’ words from Anti-Duhring as cited by Stalin, “the seizure of the means of production by society” and putting “an end to commodity production, and therewith to the domination of the product over the producer.”

While conceding that the Soviet Union had yet to secure this aim, Stalin was unequivocal about how the Soviet Union and Soviet Communists pursued this goal: 

The specific role of Soviet government was due to two circumstances: first, that what Soviet government had to do was not to replace one form of exploitation by another, as was the case in earlier revolutions, but to abolish exploitation altogether; second, that in view of the absence in the country of any ready-made rudiments of a socialist economy, it had to create new, socialist forms of economy, "starting from scratch," so to speak. Economic Problems of Socialism in the USSR [my emphasis]

For Stalin, the socialist project in the USSR was to hinge on eliminating exploitation and developing socialist economic forms.

Undoubtedly, there are many ways to target these objectives. Every country embarking on the revolutionary path faces a different set of circumstances determined by unique historical, geographical, national, and social features. These circumstances foreclose a “one-size-fits-all” program to secure socialism. Yet, ending capitalist exploitation-- the buying and selling of labor power and the private appropriation of surplus value-- and developing new non-capitalist forms of economic life stand as the common goals of the Communists. 

As Marx and Engels attest in Part III of The Communist Manifesto, there are many kinds of “socialisms.” Those “socialisms” compete with the socialism of the Communists, where the “distinguishing feature of Communism is not the abolition of property generally, but the abolition of bourgeois property. But modern bourgeois private property is the final and most complete expression of the system of producing and appropriating products that is based on class antagonisms, on the exploitation of the many by the few.” (The Communist Manifesto [my emphasis])

It is significant that the grand debates raging over whether The People's Republic of China is socialist or capitalist so rarely invoke the “exploitation of the many by the few.” Reaching for relevance, the Western left-- Marxist and non-Marxist-- rarely couch the struggle for socialism in the language of exploitation, despite its centrality in the classics.

Consequently, the debate over China frequently has one side celebrating the impressive alleviation of extreme poverty in China’s recent history, while the other side decries the vast wealth and income inequality produced over the last decades. Both claims are true, seemingly leading to contradictory conclusions. 

A recent Jacobin article takes a different tact, provocatively arguing that “the greatest stretch of growth and poverty alleviation in human history [achieved by China]” was “made possible by the brutal exploitation of millions of workers.” Daniel Cheng’s article is a review of a book by Xiao Hai allegedly recounting his experience working in five different Chinese enterprises. The book's unabashedly anecdotal character-- vividly brutal, yet only one man’s experience-- may carry little weight in the larger picture. 

But even the most fervent friend of “Socialist China” will not deny that millions of rural Chinese migrated to the cities and special economic zones to work under similar harsh, capitalist conditions of exploitation. 

Certainly, the accumulation of the vast sums of capital by an emergent Chinese capitalist class (as well as by welcomed foreign capitalists) contributed greatly to the rapid growth of the Chinese economy. 

Undoubtedly, a “rich” China might better afford to provide a humane economic floor to a more and more stratified Chinese society. And surely, under the leadership of a seasoned Communist Party, the provision of such a guaranteed standard of living would be more likely than under a regime dominated by hidebound monopoly capitalists.

But in today’s China, the exploitation of the many by the few remains-- after nearly fifty years-- a central driving force in the country’s economic advance. Cheng’s article reminds us of that fact.

Into this conversation steps Carlos Martinez, a leading leftist supporter of “socialism with Chinese characteristics,” the direction Chinese Communists embraced after 1978. His response to Cheng argues that “[e]xploitation must be contextualized.” Rather than addressing the fact that Chinese socialism encourages the exploitation of workers under capitalist conditions of labor, Martinez suggests that the ends justify the means; suffering capitalist exploitation will result ultimately in gains for the Chinese people. This may seem to some to be an uncomfortable counterpart to the Western capitalist promise that growth will “trickle down” to the least advantaged or that “a rising tide lifts all boats.” After all, life expectancy under capitalism in the UK has more than doubled since 1800 and average male height has increased by four inches. Caloric intake, access to ever-advancing medical care, improved sanitation, public goods, etc. all benefitted the people, while the UK working class continued to be profoundly exploited, generating a greater concentration of capital into the hands of monopoly corporations and the obscenely rich. The capitalist development of productive forces generally enables an increase in the relative costs of successfully reproducing labor power extracted from a restive, organized, and resistant working class.

Enduring exploitation has never been simply a matter of the classic Reagan-era rubric of “are you better off now than you were before?”. The recognition of a new meaning to exploitation-- labor exploitation-- traces its origins to early European industrialization and its adoption of capitalist social relations. Even before Marx and Engels, observers were cognizant of the injustices of capitalist exploitation, of using humans as instruments of capital accumulation, of compensating workers according to their sustainable cost of reproduction, of forcing them into the universe of commodities.

Conditions of labor were brutal and difficult in early Soviet industrialization as well. Life was hard. But the conditions were not exploitative because all of the wealth produced by working people promised a better future for everyone. Some of the accumulated wealth may have been squandered, misdirected, even stolen, but it was not systematically and methodically directed to the few and denied to the many. Sacrifice was voluntary because workers believed that it was destined to help the many. Martinez cynically seems to dismiss this experience as “an imagined socialist utopia.”

One easily forgets some of China’s early successes while following a model more congruent with the experiences in the Soviet Union and the Peoples’ Democracies. For example: 

The success of early land reform meant that at the founding of the PRC in 1949, China could credibly claim that for the first time since the late Qing period that it had succeeded in feeding one fifth of the world's population with only 7% of the world's cultivable land… By 1953, China had rapidly recovered its economy…  Its industrial outputs grew by 31% in 1955 and a further 10% in 1956… The collectivization process began slowly but accelerated in 1955 and 1956. In 1957 about 93.5 percent of all farm households had joined advanced producers' cooperatives. Although the agriculture sector only received 6.2% of the budget during the first five-year plan, agricultural gross outputs increased by 24.7%. The industrial working class grew from 6 million to 10 million.  Industrial work places organized as danwei (work units) provided subsidized housing, permanent jobs, education, and medical care.  In the early 1950s, China established a social security system covering workers at SOEs [state-owned enterprises], collectively owned enterprises, government administrative units (such as Ministries) and operative units (such as public universities and state-owned hospitals) ... Throughout the 1950s, a major challenge for the large-scale economic modernization was the relative lack of managerial talent.  Promotion of ordinary workers to management roles was intended to address this challenge while also serving the larger political goal of placing the proletariat in control. 

Thus, by including some ideas inspired from earlier Communist experiences and with help from the socialist community, People’s China achieved remarkable success in its first decade.

Unfortunately, this path was interrupted by The Great Leap Forward, an excessively idealist departure in the direction of what Martinez might more appropriately view as “an imagined socialist utopia.” Despite the disaster of the GLF (combined with a brutal famine), growth was restored in its wake, only to be disrupted again by the equally chaotic Cultural Revolution of the 1960s and beyond. 

The Communist Party’s ultra-leftist, voluntarist excesses of the time derailed the economic successes fostered by rational, reality-based projects. The notion that a collective will could overcome all material limitations-- a notion alien to Marxism-- led the Party to many policy dead ends, while exhausting the enthusiasm for socialism among many. 

Accompanying these twists and turns was a break with the Soviet Union, a break resulting in closer cooperation with US imperialism, friction and actual aggression against the Democratic Republic of Vietnam, and a shameful alliance with South African apartheid in the anti-colonial wars against Portugal’s African colonies. 

The Chinese Cold War anti-Soviet posture and the metaphysical romance of creating socialism by sheer collective will appealed to far too many in the New Left and with other anti-Communist “leftists.”

With the death of Mao, the Party leadership made an extremely sharp turn away from ultra-leftist adventurism, embracing the Deng capitalist-friendly reforms in 1978. Pragmatism replaced wild idealism.

When Martinez insists on “contextualizing” exploitation in the People’s Republic, he should be as enthusiastic in contextualizing the turn toward allowing capitalism in through the front door. It has its historical roots in the rejection of the mechanical, shock-troop socialism of the Mao era that delayed a planned, efficient march to a society without exploitation. Despite the chaos of the era, the PRC enjoyed an average growth rate of 6.2% from 1952 until 1978, according to Lin Chun in The Transformation of Chinese Socialism, an accomplishment achieved without relying on capitalist relations of production.

Martinez seizes upon Cheng’s comparison of emergent capitalism in nineteenth-century Manchester and the more recent emergent Chinese capitalism in Shenzhen. Indeed, it is an imperfect comparison in many ways. Cheng would have been better served by comparing the number of billionaires in Shenzhen (132) to the number of billionaires in New York City (146). There were no billionaires in Shenzhen in 1978. Billionaires in both places are the direct or indirect product of capitalist exploitation. From a Marxist perspective, what is the social utility of a billionaire? How does the existence of billionaires advance the cause of socialism in China or anywhere else?

Rather than contextualizing exploitation, Martinez succeeds in relativizing and-- consequently-- rationalizing the exploitation of the many by the few. He urges a comparison between today’s China and low-wage countries in the Global South. Indeed, the same changes in the mobility of capital, lowering of export and transportation costs, and trade liberalization that allowed China to offer up millions of low-wage workers to manufacturing is now shifting manufacturing to even lower-wage countries. Ironically, many Chinese companies are now taking advantage of these lower costs and shifting production to these new “Chinas.” In a race to the bottom, workers will always lose, as they have even outside of the global economy. Few on the left would celebrate the "prosperity" of the US South, when jobs migrated from the unionized North to non-union cheaper labor areas.

What Martinez fails to understand or chooses to ignore is that capitalism has a unique, focused logic that accumulates vast sums of capital into the hands of the few. Marx’s proclamation in Capital that accumulation is “Moses and the Prophets” is made to vividly, emphatically acknowledge that accumulation is a never-ending process. The existence of masses of capital in private hands commands that the owners of capital invest, reinvest, and reinvest again to grow their capital. China’s billionaires cannot escape that logic.

From 1978 on, the imperative of capital accumulation was expressed through investments in manufacturing and the turning of China into an enormous commodity-exporting engine. As capital has accumulated, China has become-- following the logic of capital-- more and more an exporter of capital to capital-poor countries, accumulating assets, financing projects, and expanding demand for its products. 

Whether or not China’s Belt and Road Initiative was intentionally meant for this purpose, it well serves as a vehicle for the exportation of the accumulated capital of China’s billionaires. 

As capitalist apologists have faithfully maintained since the dawn of the era of imperialism, global trade, the “reasonable” export of capital, and “a rules-based international order” are supposedly the road to mutual prosperity. Today, the Chinese government is the leading exponent of this “Moses and the Prophets” doctrine, while the rest of the capitalist world is increasingly engaging in protectionism, tariffs, and sanctions to cling to a tenuous hold on its place in a global economy more and more dominated by China and other Global South success stories.

Is this class struggle in today’s world or something else entirely? Is the clash for market share, stock market success, and capital accumulation a twenty-first-century class battle or a revisit of twentieth-century great-power rivalry for markets and spheres of interest? It is not enough to answer these questions by pointing to the glitzy cities, the incredible fast trains, and stunning technology of China, without discussing the status of the 400,000,000 workers and their relationship to Chinese private capital. 

Keen observers have noted China’s unexpected behavior in recent international conflicts, behavior more in step with a capitalist country, a country putting economic interests ahead of political principle. China has maintained strong economic ties with Israel during the ongoing genocide in Gaza, speaking with a loud oppositional voice at international forums, but actively doing next to nothing to stop Israel or break the blockade of Gaza. Similarly, China’s reaction to an unprovoked attack on Iran-- a BRICS partner-- by the US and Israel is best described as fence-sitting (apart from finding ways to continue economic activity with all parties). For arguably the most powerful potential counterforce to US imperialism to step aside from serious resistance to a rabid US administration is not what many of us would expect from a socialist country. 

With Cuba facing an extortionate, existential crisis imposed by the empowered North American gusanos, China’s response has been less than inspired.

Establishing a useful balance sheet on China’s “socialism with Chinese characteristics” may prove to be a daunting, even misguided challenge for Western leftists, but blindness to legitimate questions like those raised by Daniel Cheng and others serves neither the cause of the Chinese working class nor exploited workers in other countries.

After nearly fifty years of riding the capitalist tiger, China’s chosen road to socialism remains foggy and fraught with danger. Nonetheless, it is China’s road. 

Greg Godels

zzsblogml@gmail.com

 

A Return to Basics: Rasmus, the “Neoliberal” Turn, and Exploitation

Instead of the conservative motto, 'A fair day's wage for a fair day's work!' they ought to inscribe on their banner the revolutionary watchword: 'Abolition of the wage system!' Karl Marx, Value, Price, and Profit

Today, the point that Marx made in his 1865 address to the First International Working Men’s Association is largely lost on the trade unions and even with many self-styled Marxists. The distinction between the goal of “a fair day's wage” and the goal of eliminating exploitation-- the wage system embedded in capitalism-- is lost before a common, but unfocused revulsion to the exploding growth of inequality. It is one thing to deplore the growth of inequality, it is quite another to establish what would replace the logic of unfettered accumulation.

Marx offered no guidelines for a “fair wage”. Indeed, his analysis of capitalism made no significant use of the concept of fairness. Instead, he made the concept of exploitation central to his political economy. He used the concept in two ways: First, he employed “exploitation” in the popular sense of “taking advantage of” -- the sense that the capitalist takes advantage of the worker. “Exploitation of man by man” was a nascent concept, arriving in discourse with the expansion of mass industrial employment and borrowed from an earlier, morally-neutral usage regarding the exploitation of non-humans. Its etymology, in that sense, arises in the late eighteenth century.

Marx also uses the word in a more rigorous sense: as a description of the interaction of the worker and the capitalist in the process of commodity production. Even more rigorously, it appears in political economic tracts like Capital as a ratio between the axiomatic concepts of surplus value and variable capital.

As a worker-friendly concept, exploitation is most readily grasped by workers in the basic industries, especially in extractive and raw-material industries. Historically, an early twentieth century coal miner-- bringing the tools of extraction with him, responsible for his own safety while risking a more likely death than a war-time soldier, and accepting the “privilege” of going into a cold, damp hole to dig coal for someone else’s profit-- intuitively understood exploitation. A reflective miner would recoil from the fact that ownership of a property could somehow-- apart from any other consideration-- confer to someone the right to profit from a commodity that someone else had faced mortal danger to extract from the earth. What is a “fair day’s wage” in such a circumstance?

Organically, from its intuitive understanding by workers, and theoretically, from class-partisan intellectuals like Marx and Engels, as well as their rivals like Bakunin, exploitation became the central idea behind anti-capitalism and socialism.

Today, most workers’ connection to the exploitation relation appears far removed from the direct relation of a coal miner to the coal face and to the owner of the coal mine. The immediacy of labor and labor’s product in extraction is often of many removes in service-sector or white-collar jobs. Moreover, the division of labor blurs the contribution of the individual’s efforts to the final product.

Well into the twentieth century, “labor exploitation” fell out of the lexicon of the left, especially in the more advanced capitalist countries, where Marx thought that it would be of most use. Left thinkers, as well as Marxists, rightly attended to the colonial question, focusing on the struggle for independence and sovereignty; they were discouraged by the tendency for class-collaboration in many leading working-class organizations; Communist Parties correctly felt a primary duty to defend the gains of the socialist and socialist-oriented countries; and the fight for peace was always a paramount concern.

Exploitation was attacked from the academy. The Humanist “Marxist” school trivialized the exploitation nexus to a species of the broad, amorphous concept of alienation. The Analytical “Marxist” school congratulated itself by proving that given an inequality of assets, a community of exchange-oriented actors would produce and reproduce inequality of assets, a proof altogether irrelevant to the concept of exploitation, which the school promised to clarify. Both schools influenced a retreat from Marxism in the university, followed by a stampede after the collapse of the Soviet Union.

Liberal and social-democratic theory revisits the “fair day's wage” with the explosion of income inequality and wealth inequality of the last decades of the twentieth century that was too impossible to ignore. But what is a “fair wage”? What level of income or wealth distribution is just, fair, socially responsible, or socially beneficial? The questions are largely unanswerable, if not incoherent. 

Thanks to the empirical, long-term study of inequality shared in Thomas Piketty’s Capital in the Twenty-first Century, we learn that capitalism’s historical tendency has been to always produce and reproduce income and wealth inequality, a conclusion sobering to those who hope to refashion capitalism into an egalitarian system and making a “fair wage” even more elusive. Piketty’s work offers no clue to what could constitute a “fair wage.”

Others point to the productivity-pay gap that emerged in the 1970s, where wage growth and productivity took entirely different courses at the expense of wage gains. Researchers who perceptively point to this gap as contributing to the growth of inequality often harken back to the immediate postwar era, when productivity growth and wage growth were somewhat in step, when the gains of productivity were “shared” between capital and labor. But what is magical about sharing? Why shouldn't labor get 75% or 85% of the gain? Or all of the gain? Is maintaining existing inequalities the optimal social goal for the working class?

Where the concept of a “fair wage” offers more questions than answers, Marx’s concept of exploitation suggests a uniquely coherent and direct answer to the persistent and intensifying growth of income and wealth: eliminate labor exploitation! Abolish the wage system!

Thus, the return to the discussion of exploitation is urgent. And that is why a serious and clarifying account of exploitation today is so welcome.

*****

Jack Rasmus takes a step toward that end in a carefully argued, important paper, Labor Exploitation in the Era of the Neoliberal Policy Regime. I have followed Rasmus’s work for many years, especially admiring his respect for the tool of historical inquiry and his scrupulous research, interpretation, and careful use of “official” data. On the other hand, I thought that his work failed to fully consider the Marxist tradition, unduly drawn to engaging with the pettifoggery of academic “Marxists.”

However, his new work proves that assessment to be mistaken. Indeed, his latest work reflects an admirable reading of Marx’s political economy and offers an important tool in the struggle to end the wage system.

Rasmus understands that we are in a distinct era of capitalism, forced by the failure of the prior “policy regime” and typified by several features: intensified global penetration of capital and trade expansion (“globalization”), a massively growing role for financial innovation and notional profits (“financialization”), and most significantly, the restoration and expansion of the rate of profit (“the intensification of labor exploitation in both Absolute and Relative value terms that has occurred from the 1980s to the present”). 

It should be noted that Rasmus does not discuss why a new “policy regime” became necessary in the 1970s. Both the stagflation that proved intractable to the reigning Keynesian paradigm and the attack on the US profit rate by foreign competition (see Robert Brenner, The Economics of Global Turbulence, NLR, 229) necessitated a sea change in the direction of capitalism.

I might add that while so-called globalization was an important feature of “the neoliberal policy regime,” the 2007-2009 economic crisis has diminished the growth of global trade. Indeed, its decline has fostered the rise of economic nationalism, the latest wrinkle on the “neoliberal policy regime.”

Rasmus carefully and methodically documents and explicates the intensification of labor exploitation in commodity production (what he calls “primary exploitation”) over the last fifty years. He recognizes the important and growing role of the state in enabling this intensification. This is, of course, the process that Lenin foresaw with the fusing of the state and monopoly capitalism-- a process associated in Marxist-Leninist theory with the rise of state-monopoly capitalism. Today’s advanced capitalist states fully embrace the goal of defending and advancing the profitability (‘health’) of monopoly corporations (‘a rising tide lifts all boats’), including intensifying labor exploitation.

Just how that intensification is accomplished is the subject of Rasmus’s paper.

*****

Rasmus is aware that Marx expressed the exploitation nexus in terms of labor value. He avoids the scholasticism that side-tracks academically trained economists who obsess over the price/value relationship-- the so-called transformation problem. Value-- specifically a labor theory of value -- is central to Marx because it explains how commodities can command different, non-arbitrary exchange values and how the different proportionalities between the exchange values of commodities are determined. That is the problem Marx sets forth in the first pages of Capital, and value-- as embodied labor-- is the answer that he gives.

Using labor value as his theoretical primitive enables Rasmus to discuss exploitation in Marx’s framework of absolute and relative surplus value-- exploitation by extending the working day or intensifying the production process. While Rasmus offers a persuasive argument that his use of “official” data couched in prices can legitimately be translated into values, it is unnecessary for his thesis. The relations are preserved because the proportionalities are, in general, preserved. It is a reasonable and adequate assumption that prices and values run in parallel, though a weaker claim than that prices can be derived from values.

Methodological considerations aside, Rasmus sets out to show-- and succeeds in showing-- that exploitation has accelerated in the “neoliberal” era in terms of both relative and absolute surplus value:

Capitalism’s Neoliberal era has witnessed a significant intensification and expansion of total exploitation compared to the pre-Neoliberal era. Under Neoliberal Capitalism both the workday (Absolute Surplus Value extraction) has been extended while, at the same time, the productivity of labor has greatly increased (Relative Surplus Value extraction) in terms of both the intensity and the mass of relative surplus value extracted.

Regarding Absolute Surplus Value, he demonstrates: 

[I]t is true the work day was reduced during the first two thirds of the 20th century—by strong unions, union contract terms, and to some extent from government disincentives to extend the work day as a result of the passage of wages and hours legislation. But that trend and scenario toward a shorter work day was halted and rolled back starting in the late 1970s and the neoliberal era. The length of the Work Day has risen—not continued to decline—for full time workers under the Neoliberal Economic Regime.

Through a careful combing and analysis of government data, as well as original arguments, Rasmus shows how capital has succeeded in extending the workday. His discussion of changes in mandatory overtime, in temporary employment, in involuntary part-time employment, in paid leave, in changing work culture, in job classifications, in work from home, internships, and other practices form a persuasive argument for the existence of a trend of the lengthening of the average workday. 

Similarly, Relative Labor Exploitation has accelerated in the “Neoliberal” era, according to Rasmus:

Rising productivity is a key marker for growing exploitation of Labor. If real wages have not risen since the late 1970s but productivity has—and has risen at an even faster rate in recent decades—then the value reflected in business revenues and profits of the increased output from that productivity has accrued almost totally to Capital.

In this regard, the numbers are widely recognized and non-controversial. Labor productivity has grown significantly, while wages have essentially stagnated. Rasmus tells us that it is even worse than it looks:

So, wages have risen only about one-sixth of the productivity increase.  But perhaps only half of that total 13% real hourly wage increase went to the top 5% of the production & nonsupervisory worker group, according to EPI 10 (Economic Policy Institute, February 2020). That means for the median wage production worker, the share of productivity gain was likely 10% or less. The median wage and below production worker consequently received a very small share in wages from productivity over the forty years since 1979. It virtually all accrued to Capital…

According to the US Labor Department, there were 106 million production & nonsupervisory workers at year end 2019—out of the approximately 150 million total nonfarm labor force at that time. Had they entered the labor force around 1982-84, they would have experienced no real wage increase over the four decades.

Rasmus notes that the US maintained the same share of global manufacturing production through the first two decades of the twenty-first century, but doing it with six million fewer workers. This, of course, meant a rising rate of exploitation and a greater share of surplus value for the capitalists. Though the job losses struck especially hard at an important section of the manufacturing working class relegated to unemployment, the remaining workers lost further from concessionary bargaining promoted by a business-union leadership. Thus, they were unable to secure any of the gains accrued by rising productivity. They experienced a higher rate of exploitation.

*****

Demonstrating that labor exploitation has increased in the last 45-50 years in terms of absolute and relative surplus value does not, according to Rasmus, close the book on labor exploitation. Drawing on a suggestive quote in Volume III of Capital, he develops an original theory of “secondary exploitation.” Marx writes:

That the working-class is also swindled in this form [usury, commerce], and to an enormous extent, is self-evident… This is secondary exploitation, which runs parallel to the primary exploitation taking place in the production process itself. Capital, Volume III, p. 609 

Rasmus explains secondary exploitation this way: “Secondary Exploitation (SE) is not a question of value being created in exchange relations. It’s about capitalists reclaiming part of what they paid initially in wages. It’s about how capitalists maximize Total Exploitation by manipulating exchange relations as well as production relations.” 

To be clear, Marx is not using the technical sense of “exploitation” here, but the popular sense. However, the fact that the worker has “earned” a measure of value and that capitalists can wrest some of it away in various ways is exploitation and important and worthy of study. 

Here, however, Rasmus digresses, reverting back to the price form in his explanation of secondary exploitation. He seems to assume, without elaboration, that systemic “taking advantage of workers” outside of the production process must be explained in terms of prices and not values. He also seems to believe that all means of secondary exploitation must be within the exchange nexus. And he seems to believe that all secondary exploitation must be systemic. It is not clear why these assumptions should be made.

These methodological questions, however, bear little relevance to his fresh and original insights on secondary exploitation. Rasmus presents five mechanisms for capital to “claw back” from the working people the variable capital captured by the class in the value-producing process: credit, monopolistic price gouging, wage theft, deferred or social wages, and taxes. Importantly, Rasmus connects much of this exploitation to the active intervention of the state on behalf of capital.

Credit: Allowing workers to acquire commodities through deferred payment is not a sympathetic act by the capitalist, but a method of furthering accumulation in an environment where demand is restricted by the inequalities of income and wealth. The capitalist extracts additional value from the worker through interest charges. Additional value is “swindled” from the worker through the credit mechanism. Rasmus points out that interest-bearing loans to working people have expanded from $10 trillion-plus in 2013 to $17 trillion-plus in 2024, with dramatically higher interest rates in the last few years.

Monopolistic price gouging: Rasmus is fully aware that when prices go up, they are the result of decisions by capitalists to secure more revenue-- that action is not to benefit society, not to help the workers, but to secure more for investors. Insofar as they succeed, their gains are at the expense of workers-- a form of secondary exploitation.

Our current run of inflation is the result of a cycle of price increases to capture more of the consumers’ (in the end, the workers’) value and to catch up with competitors. But the impression must not be left unchallenged that this price gouging is painlessly left to the capitalist at his or her whim or that it is without risk. The impression must not be left, as it was in the 1960s with Sweezy/Baran, Gillman, and others, that monopoly concentration meant a sharp decline in the power of competition to retard and even thwart monopoly power to do as it liked. That lesson was sharply brought home in the 1970s with humbling of the US big three automakers and the US electronics industry. Monopoly and competition play a dialectical role in disciplining price behavior around labor values.

Wage theft: While theft is not exploitation, when it is common, frequent, and rarely sanctioned, it resembles exploitation more than theft! Rasmus provides an impressible list of common ruses-- “The methods [of wage theft] have included capitalists not paying the required minimum wage; not paying overtime wage rates as provided in Federal and state laws; not paying workers for the actual hours they work; paying them by the day or job instead of by the hour; forcing workers to pay their managers for a job; supervisors stealing workers’ cash tips; making illegal deductions from workers’ paychecks; deducting their pay for breaks they didn’t take or for damages to company goods; supervisors arranging pay ‘kickbacks’ for themselves from workers’ pay; firing workers and not paying them for their last day worked; failing to give proper 60-day notice of a plant closing and then not paying workers as required by law; denying workers access to guaranteed benefits like workers’ compensation when injured; refusing to make contributions to pension and health plans on behalf of workers and then pocketing the savings; and, not least, general payroll fraud.”

Deferred or Social wages: Rasmus shows how the government mechanisms that are meant to socially meet needs are skewed to draw more from workers proportionally while benefiting them less proportionally. He has in mind retirement, health care, and welfare programs that politicians persistently demand more sacrifices from working people to fund, while restricting their ability to draw the benefits through various tests of eligibility.

Taxes: Rasmus reminds us that the dominant political forces espousing the “Neoliberal policy regime” have dramatically increased the tax burden on workers:

Since the advent of Neoliberalism, the total tax burden has shifted from capitalists, their corporations, businesses, and investors to working class families.

In the post-World War II era the payroll tax has more than doubled as a share of total federal tax revenues, to around 45% by 2020. During the same period, the share of taxes paid by corporations has fallen from more than 20% to less than 10%. The federal individual income tax as a percent of total federal government revenues has remained around 40-45%. However, within that 40-45%, another shift in the burden has been occurring—from capital incomes to earned wage incomes…

Not just Trump, but every president since 2001 the US capitalist State has been engaged in a massive tax cutting program mostly benefiting capital incomes. The total tax cuts have amounted to at least $17 trillion since 2001: Starting with George W. Bush’s 2001-03 tax cuts which cut taxes $3.8 trillion (80% of which accrued to Capital incomes), through Obama’s 2009 tax cuts and his extension of Bush’s cuts in 2008 for another two years and again for another 10 years in 2013 (all of which cost another $6 trillion), through Trump’s massive 2017 tax cuts that cost $4.5 trillion, and Biden’s 2021-22 tax legislation that added another $2 trillion at minimum—the US Capitalist state has reduced taxes by at least $17 trillion!

Reducing capital’s taxes, as a proportion of tax revenue, increases future national obligations-- national debt-- that will ultimately be paid by working-class taxes. Or, if that proves unfeasible, it will be met by a reduction of social spending, which reduces social benefits for workers. Either way, the working class faces secondary exploitation through ruling-class tax policy.

Interestingly, Rasmus acknowledges that the state plays a big role in what he deems “secondary exploitation.” Yet, he also suggests that the proper province of secondary exploitation is in the bounds of exchange relations. This seeming anomaly can be avoided if we understand the increasing role of the state in engaging, broadly speaking, in the arena of exchange, as well as regulation. It is precisely this profound and broad engagement that many twentieth-century Marxists explained as state-monopoly capitalism.

*****

Jack Rasmus’s contribution is most welcome because it argues that returning to the fundamentals-- the concept of exploitation-- can be a fruitful way of looking at contemporary capitalism. It establishes a firm material base for an anti-capitalist politics that addresses the interests of working people as a class, the broadest of classes. 

Further, the theory of exploitation unites people as workers, but allows for the various ways and degrees of their exploitation. And it links the material interests of the protagonists in the class struggle to the many forms of social oppression and their contradictory interests in promoting or ending those oppressions: the capitalist sows oppressive divisions to gain exploitative advantage; the worker disavows oppressive divisions to achieve the unity necessary to defeat exploitation. That is, exploitation motivates the capitalist to divide people around nationality, race, sex, culture, social practices, and language. Ending exploitation motivates the worker to refuse these divisions.

In an age where capitalism owns a decided, powerful advantage because of the splintering of the left into numerous causes and where capitalism elevates individual identity to a place superseding class, the common goal of eliminating exploitation is a powerful unifying force.

Today’s left has too often interpreted anti-imperialism as simply the struggle for national sovereignty, rather than through the lens of exploitation. Consequently, the dynamics of class struggle within national borders is often missed. 

Of course, for Lenin and his followers, an advanced stage of capitalism-- monopoly capitalism-- was the life form of imperialism. And its beating heart was exploitation.

The vital tool that Marx, Engels, and Lenin brought to the struggle for workers’ emancipation was the theory of exploitation. 

Greg Godels

zzsblogml@gmail.com

Socialism, Democracy, and the Division of Labor

Professor Richard Wolff is a prominent, influential intellectual, with a big following on the left. He is an erudite, clear, and passionate speaker and writer. He is well-regarded for his exposition of Marx’s ideas-- a “go to” when the media tolerates a conversation critical of capitalism, one even advocating “socialism.”

For all of that, he does not represent Marx’s thought well, nor does he offer a viable, serious alternative to capitalism.

It is not a question of Wolff’s scholarship or his commitment to justice. It is, instead, a deep-seated, unwavering hostility to the real existing socialism of the twentieth century and the century’s leading Marxist exponents, the Communists. Of course, Wolff is not alone in this prejudice-- and it is a prejudice and not a reasoned conclusion. Since the intense US Red Scare of the 1950s, since the demonization of everything even vaguely linked to Soviet power or Communist and Workers’ Parties, this prejudice has contaminated social, cultural, and political life in this country. Every radical upsurge was forced to or willingly submitted to ABC: Anything But Communism. 

In its place, US leftists embraced a kind of radical democracy: the view that bringing the furniture of formal democracy-- “one person, one vote, full participation, and majority rule,” quoting Wolff-- into every institution, every practice, every activity-- would in due time sweep away the exploitation, the inequalities, the indignities of capitalism. Radical, comprehensive democratic practices would be necessary and substantially sufficient to trigger the march to socialism.

There is evidence that Marx and Engels once also believed that universal suffrage alone (as advocated by the Chartist movement in England) would be an adequate measure on the road to overcoming capitalism. Their practical experience in the 1848 revolutions and the lessons of the Paris Commune dispelled that illusion. They concluded that a revolutionary defeat of the existing order and the replacement of that order with a democracy in the service of the working class would be necessary for moving beyond capitalism. The furniture of formal democracy was sometimes useful, but often unreliable elements in that endeavor. Marx and Engels did not presume that bourgeois democracy would advance those interests or protect them.

But with anti-Communism established as the national religion of the US, generations of US leftists, from the sixties’ SDS to Occupy and DSA, were hostile to Soviet socialism and repelled by Communist ideology. As a result, a “rethought” Marxism became the nourishment for young activists and the sustenance of veteran Cold War radicals. The expansion of certain democratic practices served and serves as the lodestar of these movements.

Professor Wolff rose to prominence in this milieu and it is reflected in his thought. 

A recent brief and commendably clear statement of Wolff’s views on the presumed shortcomings of real, existing twentieth-century socialism appears in the article, Socialism’s Self Criticism and Real Democracy. Originally appearing in City Watch, the piece has achieved wide currency: Economy for All, CounterPunch, LA Progressive, NewsClick, Countercurrents, Eurasia Review, and many others.

Because he takes it as a settled truth that the socialist countries lacked “real democracy,” Wolff poses the following challenge:

A certain irony of history made the absence of real democracy in socialist countries an ongoing target of many socialists in those countries…

Because this time it is many socialists who make the encounter, they ask why modern socialism, a social movement critical of capitalism’s lack of real democracy, would itself merit a parallel criticism. Why have socialist experiments to date produced a self-criticism focused on their inability to create and maintain authentic democratic systems??

Wolff searches for an explanation for this presumed lack of democracy in “socialist experiments.” The search takes him to a common feature of capitalism and socialism (and he sometimes seems to suggest in previous social formations): “The answer lies in the employer-employee relationship.”

The employer-employee relation is indeed often a feature of capitalist and socialist enterprises. Soviet enterprises had managers who presumably hired individuals at state-owned enterprises. No doubt, it could have reflected a hierarchical relationship; it could have reflected a relation of dominance; and, further, it could have reflected the exploitation relationship. But it need not do so simply because of the existence of an employer/employee relationship. That can easily be shown with a simple, mundane hypothetical example:

Faced with a plumbing catastrophe, Jones engages the Smith Plumbing Company. Jones hires Smith’s firm to fix the kitchen sink. Jones employs Smith and company; Smith sends a worker, an employee (but not an employee of Jones), to make the repair. Jones is the employer and Smith’s company is his/her employee. Yet there is no hierarchy, no dominance, nor any exploitation by Jones.

Further, Smith has five employees, who Smith lords over, dominates, and exploits. Here, the employer-employee relationship generates entirely different, negative socially-significant outcomes. 

We have one innocuous, one exploitative employer/employee relationship. 

Why does the employer/employee distinction fail to reveal anything relevant regarding real democracy or the struggle for socialism?

The character of employment, the nominal expression for the employer/employee relationship, is historically determined by the division of labor. Under capitalism, its character is tied to the exploitation relationship. That is, given that ownership of enterprises resides with private individuals or groups, owners establish employer/employee relations as hierarchical, dominating, and exploitative to secure surplus value. Capitalists engage this particular division of labor to secure their ends.

But, presumably, under socialism, with social ownership of enterprises, a non-antagonistic, non-exploitative employer/employee relationship could be established strictly based on the division of labor. The “employer”/manager could be determined by credentials, test-results, past experience, past performance, seniority, or a host of other relevant, merit-based terms. 

Formal democratic procedure is, thus, no unique, magic elixir. In these circumstances, Wolff’s democratic procedure-- election of “employer” -- might well clash with merit and/or efficiency.

That is surely why Marx and Engels placed exploitation and the relations between capitalists (owners of enterprises) and the proletariat (the workers) at the center of their analysis. They attend little specifically to the employer/employee relationship, except when it is shorthand for this exploitation nexus. 

Moreover, Marx and Engels (and many of their successors) believed that a revolution was the most democratic expression of the popular will-- what Wolff might want to call “real democracy.” While they would undoubtedly find setbacks to democracy in the historical trajectory of twentieth-century socialism, they would also have seen the removal of the power of the capitalist class and the end of labor exploitation as marking the most broadly democratic advance since the French revolution. 

Where Wolff sees a surfeit of democracy (“socialism’s self-criticism”), others see a harbinger of a far more democratic future. Wolff says correctly: “Democracy is incompatible with class-divided economic systems.” I would add that democracy is only possible with the elimination of class-divided economic systems. 

Fixated on democratic form, Professor Wolff is led away from the democratic content of Marxist socialism and its realization in real, existing socialism. Further, he fixates on a particular democratic form associated with the capitalist republic that may or may not be the best mechanism for exercising the will or interests of the working class. Every revolutionary generation is faced with a different set of challenges. Nation-states typically suffer or gain from uneven development, as Lenin always stressed. The advance of industrialization, the degree of poverty, the levels of education, external and internal opposition, complex social strata, national conflict, and a host of other factors make the choice of democratic form a test for the first and later generations of revolutionaries.

Western Marxists, often quick to measure all by the democratic forms established by the bourgeois revolutions of past centuries, just as often fail to grasp these complexities. They are willing to forgo pressing the socialist project for the “purity” of so-called “real democracy.”

In Wolff’s case, he chooses to secure this purity by basing his anti-capitalism around the idea of worker-owned cooperatives. To be sure, they could meet the cherished standards of “one person, one vote, full participation, and majority rule” in ways that the ultimate class conflict-- the overthrow of capitalism-- might not. It is possible that cooperatives can and do establish and survive on the margins of the capitalist system, but only a dreamer believes that these worker utopias will ever seriously challenge the behemoth of monopoly capitalism. 

Wolff is not alone in retailing a polite version of Marxism rather than the radical ideas that the working class so desperately needs.

Greg Godels

zzsblogml@gmail.com