[OPE-L:2954] Re: Value of labour power and real wage

Hans Ehrba (ehrbar@marx.econ.utah.edu)
Tue, 3 Sep 1996 23:31:41 -0700 (PDT)

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Here is my answer to your responses to my postings [OPE-L:2862] etc. You
will find that I am unrepentant.

Here is a passage in my [OPE-L:2862] which raised your eyebrows:

> If the capitalists introduce
> new machinery, so that the workers see that they are producing more,
> and at the same time real wages are not rising, then this will be
> taken as such an affront by the workers that they will simply not go
> for it. Just as they would not go for slavery. No unions are
> necessary, no organization is necessary, they will oppose this *as
> one man*.

After citing this passage, Jerry wrote in [OPE-L:2872]:

>Atomized individual
>workers (especially assuming that the relative surplus population > 0), do
>not automatically demand higher wages following increases in productivity.

By "relative surplus population" you apparently mean the unemployed.
Your argument seems to be: there is already downward pressure on wages
because of unemployment, which the workers can only resist because
nominal wages are sticky; but they can certainly not move wages up.

In other words, you refute my argument that the workers' sense of
equity is an economic force by citing a case in which there is another
economic force, unemployment, counteracting it. Every economic force
can of course be counteracted by other forces, this does not mean it
does not exist.

But since you started about unemployment, let me add a few more
thoughts about this:

(a) What is the story behind downward sticky nominal wages? Although
this is Keynes and not Marx, the story seems to be the same again that
a nominal wage decrease will trigger the concerted and concentrated
resistance of all workers, will cause all workers to act
*as one person*, something a cut in real wages due to
inflation cannot. And I am not aware that anybody argued that nominal
wages are sticky downward only if the workers are unionized.

(b) And under the gold standard, in which
increases in productivity lead to falling prices,
workers would have the sticky wages on their side?
Would you go so far with your argument?

(c) Of course sticky nominal wages are not the only reason why
unemployment may coexist with constant or even rising wages. There
is also the theory of quantity constrained equilibria (Malinvaud's
Keynesian unemployment), and Marx says in the accumulation chapter
that unemployment may lead to more investment, a possibility which
modern economics students can no longer entertain because of the
stock-flow hoax that is being perpetrated on them.

The concrete interaction between the workers' sense of equity and
unemployment can be seen in labor actions. There was a series of
wildcat strikes in 1969 in West Germany. There had been a mini
recession in 1968 which had negatively affected the collective
bargaining round. Workers had agreed to forego the wages hikes they
had been used to because business was bad. But very quickly, business
went good again and in 1969 the firms swam in profits. Since they
still tried to continue their hard line on wages, the workers went out
on strikes not authorized by the union leadership. This was somewhat
a historic event, because workers in West Germany had not been on
strike since the early 50s. I think similar examples can also be
given in recent US history; I know that when Chrysler started making
money again after its near-bankruptcy the workers whose sacrifices had
helped Chrysler survive expected higher wages and were very angry that
they did not get them. I don't know if it actually came to strikes or

Jerry continues:

>While workers are "free" to attempt to sell their labor power to other
>capitalists, they also (regardless of whether they view it as "fair")
>*fear* unemployment (and fear is frequently just as important, and in some
>cases greater, in determining workers' responses as are ideas concerning

Fear alone is a very bad motivator; it may work in the short run, but
it breeds resentment and resistance in the long run. Modern business
management methods are very aware of this. Workers in capitalism are
oppressed by much more than fear. The school system is designed to
convince them that they are stupid and do not deserve better. And it
is the task of the economists to tell them that they are paid what
they produce, that there is not more to go around.

>Also, while workers generally understand that slavery is unfair (a belief
>also supported by bourgeois ideology), they do not necessarily view
>constant wages as productivity increases as being unfair. That realization
>is not something that comes to workers automatically, but is the result of
>class struggle.

I would hope that class struggles would lead them to the recognition
that there is no link between wages and productivity, but that the
bosses hog most of the surplus product and that the workers through
their fights can force the bosses to give up a part of their booty.
All this productivity bargaining stuff is the reinforcement of
false ideologies in the working class.

>Indeed, one should remember that many workers have
>illusions about becoming capitalists themselves and accept the rights of
>private property and profit as self-evident. To the extent that workers
>"*as one man*" (I would prefer, person) won't go for it, this would be
>most likely the result of collective action and trade union organization.

What you say here makes me wonder whether you understand that the
consciousness which leads them to demand part of the benefits of
technical advancements is false consciousness. Correct class
consciousness would know that the level of wages is only determiend by
the organization of the working class, because wages are just a living
allowance out of the total product produced, and bear no relationship
to the product as a whole. Only false consciousness will say: oh
there is more to go around, therefore we should get some of it. The
correct consciousness does not have to wait for technical progress in
order to demand more of the product. Therefore your evidence that
workers have false consciousness does not refute the case I am trying
to make.

>> All the time the capitalists told them: we cannot pay you
>> more because there is not more to go around. Now they see that there
>> is more to go around, and they will demand at least a part of it.
>In the post-WW2 period, this scenario has frequently been seen (especially
>in advanced capitalist nations with strong labor unions). In the US, it is
>part and parcel of what some have called the "labor accord" whereby as a
>result of "labor-management cooperation" (=class collaboration), the trade
>union "leaderships" frequently agreed to give up certain rights related to
>grieving the nature of the labor process and the effects of technological
>change (including potential job loss) in exchange for automatic increases
>in wages that would accompany productivity increases. Probably the
>clearest example of this was the "Annual Improvement Factor"
>negotiated by the United Auto Workers under Walter Reuther which
>guaranteed 3%/yr. wage increases for productivity gains in exchange
>for the inclusion of a "management prerogatives" clause in contracts.

>The "concessions movement" of the 1980s demonstrated, among many other
>things, that it could not be expected that workers will automatically
>fight back when they view management actions as "unfair" (of course, the
>trade union "leadership" had a lot to do with this as well).

The fact that the consensus around productivity bargaining crumbled so
easily when the profit rate fell is reinforcement of my thesis that it
was based on false consciousness.

>In OPE-L Solidarity,

Thanks again for letting me in. Glad to have a chance to talk to you all.

>Gil in [OPE-L:2878]
>Hi, Hans. I'm glad you've joined us. You write:

Hi Gil. Yes I thought you needed some Marxists here.

>>(1) The capitalist class cannot afford to cream off all the benefits
>>of rising technology for themselves because capitalism depends
>>on the system appearing fair in some way to the workers, and this
>>would be considered patently unfair. (Remember, the workers think
>>they are paid for their labor, not their labor power).

>This statement appears to take as given a premise I find doubly problematic.
>First, it's far from obvious that "capitalism depends on the system
>appearing fair in some way to the workers," although the latter may be
>sufficient to preclude proletarian revolution. To name just three
>counter-hypotheses with support from public opinion surveys, workers may
>find income distribution unfair but oppose redistributive mechanisms like
>highly progressive taxes in the absurd hope that they will "hit the jackpot"
>some day; or believe "you can't fight city hall"; or believe the problem is
>illegal immigration, imports, or the current administration rather than
>capitalism per se.

The system makes a lot of people very unhappy. They cannot properly
care for their children. There is a lot of rage. If you think that
the belief the workers will "hit the jackpot" keeps them from
rebelling, a belief which you yourself call "absurd", you must
consider the workers quite stupid.

>Second, even granting the necessity of workers perceiving capitalism as
>"fair", I don't see that the perception of fairness turns on whether
>"workers think they are paid for their labor, not their labor power), and to
>suggest otherwise is to reify Marxian theoretical concepts without
>justification. For example, even if there were a powerful Public
>Broadcasting System, narrated by Walter Cronkite, watched by all workers,
>which clearly showed based on Marx's reasoning in Vol. I that workers were
>paid for their labor power rather than their labor, I doubt highly that
>workers would then rise up in a body to overthrow capitalism.

In order to overthrow capitalism, workers would need to build an
organization. But it is my firm belief that if workers clearly
understood the thing with labor power, they would not sit around
playing poker or "check pool", they would instead sit in their
basements and plot about how to overthrow the system.

>For example, since the so-called Fundamental Marxian Theorem is *entirely
>consistent* with a Smithian conception of profit as a return to risk or the
>neoclassical conception of interest as a return to impatient time
>preferences, workers hearing the program envisioned above could be pacified
>by these justifications for capitalist appropriation of surplus value.

If the workers understood clearly that they are producing much more than
what they get paid in their pay checks, and if the economists
explained them exactly how the flow of surplus value from production
makes everybody rich but them, that risk and impatience business
would be laughed out of the door.

>>A related situation was pointed out I think first by Burawoy: The
>>capitalist production process has not embraced Taylorism as Marx had
>>predicted because Taylorism makes it too obvious to the workers
>>that they sell their labor power and not their labor.

>Again, this seems to take as gospel an explanation I see as at least
>problematic, and in this particular case at least one step removed from what
>actually happened. There is a much more direct explanation for why
>Taylorism failed: it didn't work, and agency theory provides a direct
>explanation why: if workers have superior information about how production
>actually works, they can easily circumvent attempts to force them to reveal
>this information (especially once they learn from the infamous Schmidt's
>negative example). And workers *did* circumvent Taylorist interventions:
>they did slowdowns, they broke machines, they created costly political and
>industrial unrest, etc. (P.S.: so far as I can tell no workers testifying
>before Congress said anything like, "I found to my horror that we were
>actually paid for our labor power, not our labor")

Why did they get so mad at Taylorism, and not at all other forms
of exploitation? Do you really believe this madness was only set
in scene in order to prevent the time study people to find out how
quickly they could do their jobs?

>This is why Taylorism was supplanted by so-called scientific management and
>other technologically and bureaucratically oriented forms of labor extraction.
>>But this need to maintain rising real wages with rising technology
>>clashes with the immiseration tendency, which I am not willing
>>to throw overboard.
>Neither am I, as a hypothesis about a sufficiently developed stage of
>(globalized) capitalism. But it seems clear that either the immiseration
>hypothesis or that of the tendentially falling rate of profit must go.

I don't follow you on this one, but I am sure it will come up
again in the OPE discussions.

>Gil in [OPE-L:2881]
>Hans writes:
>>Excuse my exuberance, I am so happy to be on this list. I will try to
>>be more serious and also more specific. If the capitalists introduce
>>new machinery, so that the workers see that they are producing more,
>>and at the same time real wages are not rising, then this will be
>>taken as such an affront by the workers that they will simply not go
>>for it.
>Hans, I share the exuberance over your presence on the list, but not your
>conclusions. You state this claim as if it were a theorem, but I don't see
>it. Capitalists in the US have been introducing new machinery right along,
>and real wages have been falling since the late 1970s. If workers have
>taken this as an "affront", it has been on strictly individual terms and not
>as a self-conscious class, and they have most certainly "gone for it" for
>almost 20 years. In 1994 they helped elect a Congress (as we have now seen)
>sure to make the situation even worse.

This only shows how long it takes for workers to change their views
about capitalism. Right now the working class is as restless as ever.
It is a communist's dream. Marx's theories haven't been as obviously
true in a long time. And the academics are sitting around deconstructing
or neoclassifying or overdeterminationing Marx's theories, instead of
helping the workers to organize.

>> Just as they would not go for slavery.
>I don't see the claimed equivalence.

If someone were to reintroduce slavery today in the United States,
they would have the same problem with everybody which the original
slave holders had only with the American Indians: people would rather
die than live in slavery.

>> No unions are
>>necessary, no organization is necessary, they will oppose this *as
>>one man*.
>But they haven't.

As I wrote in my answer to Jerry's post, there may be other influences
at work which may prevent them from doing it. But the tendency is
clearly there.

>> All the time the capitalists told them: we cannot pay you
>>more because there is not more to go around. Now they see that there
>>is more to go around, and they will demand at least a part of it.
>But they haven't.

Capitalism has lost a lot of the goodwill and admiration of the
population here in the US. The best and brightest no longer
automatically go to business school. Being rich is no longer
considered equivalent to being meritorious.

>In puzzlement, Gil

Keep on puzzling. That is what you are being paid for. Hans.

>Andrew Kliman in [OPE-L:2889]:
>In addition to the objections raised by Gil in ope-l 2878 to what Hans said
>(hi, Hans!)

hi, Andrew!

>in ope-l 2847, I have another.
>Hans wrote: "----------
>(Remember, the workers think they are paid for their labor, not their labor
>Hans did not present any evidence in support of this claim. From my personal
>experience, all the evidence indicates that it isn't correct. For instance, I
>once worked in a factory job in which we could punch in up to 7 minutes late
>without being docked a quarter-hour's pay, and most of us took advantage of
>this when possible. And we all knew exactly why we were doing so: we could
>get the same pay without doing as much work. In that job and every other
>nonacademic one I've had, people have worked slower or not at all when the
>supervisor or foreperson wasn't around, knowing that their pay and especially
>their employment wasn't in jeopardy.

I know these situations. People feel like kings if they can
cheat a dime out of the capitalist, and they don't see the
hundreds of dollars which the capitalists systematically extract
out of them without having to cheat.

>For more systematic evidence, workers' strictures against "rate-busting" have
>been thoroughly studied and documented in the industrial relations and
>industrial psychology literature for a long time. Workers try not to exceed
>piece-rate quotas because they have the same "theory" of the determination of
>piece-rates as Marx did: the pay per piece will be lowered if they do. They
>explain this to newcomers who bust rates and, if explanation fails, they shun
>them and perhaps move to more severe disincentives. The struggle against
>rate-busting was documented early on by Taylor, who called it "systematic
>soldiering." In the 1930s, I believe, a massive study entitled _Output
>Restriction Among Unorganized Workers_ discussed this in more depth. I
>believe the author's last name was Matthewson.

This is a defense against being worked to death. Newcomers often
jsut don't know if they work at unsustainable rates, and the older
workers tell them. This does not mean they know they are being paid
for labor power.

>There's a lot more evidence of a similar nature, such as workers' opposition
>to piece-rates.
>But even if Hans were correct on this point, I think it is an evasion
>continually to blame working people for the survival of capitalism. I suggest
>we look closer to home, and seriously rethink the nature of OUR
>responsibilities and tasks. Let's examine the impact of the apologetics for
>Stalinism most of the Left has engaged in, and at the impact of what Duncan in
>a recent post has referred to as its "inversion" of the political implications
>of Marxism. (The thread is called "Zapatista encuentro"; Duncan posted
>Sunday, and Jerry and I responded yesterday.) And maybe let's do some class
>analysis of the Left in order to come to grips with its separation from
>working people, and why its notions don't readily win acceptance (e.g., the
>notion of a "socialist democracy" that exploits slave labor was advanced on
>this list not long ago). What is the proof that it is the consciousness of
>the masses that is false, and not the consciousness of most of the Left?

I agree with you that the consciousness of most of the Left is false
too, Andrew.

>Andrew Kliman

Thanks to everyone for all your feedback.