In the present crisis, orthodox economics has been thrown to the wind and long forgotten ideas have re-emerged in debate over the nature and limits of free-market capitalism. John Maynard Keynes and even Karl Marx have been rehabilitated. Heresy has turned to common sense, seemingly overnight.
Governments across advanced capitalist economies have eased fiscal policy in an attempt to combat recession. Recently, there is even talk of a modern New Deal to counter rising unemployment. Nationalisation and public works programmes, once thought of as relics of a distant past, have been revived as possible remedies for present economic ills. Big government, it seems, is needed to save capitalism from itself.
However, policy debate has yet to turn to other, equally important, economic remedies. Keynes’ emphasis on demand-management policies has rightly been highlighted. But there are other aspects of Keynes’ policy proposals. In 1945, he suggested that unemployment could be lowered by the reduction in working time. Indeed for Keynes this was the „ultimate solution” to the unemployment problem. Reducing work time not only extended the time during which workers could spend income and hence generate employment, but it also allowed jobs to be spread out more evenly across the available workforce, thereby reducing unemployment.
The perversity of the present situation is that while many people work very long hours, others languish in unemployment. A readjustment of work time would help to reduce the jobless rate. It would also provide a necessary boost to the quality of work and life for many workers.
Orthodox economic theory teaches that those who argue for shorter working time succumb to the „lump of labour fallacy”. This is the idea that there is a fixed amount of work to be done in society, so any reduction in work hours must increase the number of available jobs. It is argued by orthodox economists that the amount of work is not fixed and that reductions in work time will simply add to firms’ costs. But the above fallacy is not wholly persuasive. If reduced hours encourage people to work more efficiently, then the effect may be to lower prices and to increase the demand for goods and services and in turn the demand for labour.
The talk now is about what governments can do to counter recession once other policy options have been exhausted. A former economic heresy – the reduction of working hours – may offer policy- makers an additional tool to prevent the economic downturn turning into a depression.
We start with the supposition that labour-power is bought and sold at its value. Its value, like that of all other commodities, is determined by the working-time necessary to its production. If the production of the average daily means of subsistence of the labourer takes up 6 hours, he must work, on the average, 6 hours every day, to produce his daily labour-power, or to reproduce the value received as the result of its sale. The necessary part of his working-day amounts to 6 hours, and is, therefore, caeteris paribus a given quantity. But with this, the extent of the working-day itself is not yet given.
The working-day is thus not a constant, but a variable quantity. One of its parts, certainly, is determined by the working-time required for the reproduction of the labour-power of the labourer himself. But its total amount varies with the duration of the surplus-labour. The working-day is, therefore, determinable, but is, per se, indeterminate.
The capitalist has bought the labour-power at its day-rate. To him its use-value belongs during one working-day. He has thus acquired the right to make the labourer work for him during one day. But, what is a working-day?
At all events, less than a natural day. By how much? The capitalist has his own views the necessary limit of the working-day. As capitalist, he is only capital personified. His soul is the soul of capital. But capital has one single life impulse, the tendency to create value and surplus-value, to make its constant factor, the means of production, absorb the greatest possible amount of surplus-labour.
Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks. The time during which the labourer works, is the time during which the capitalist consumes the labour-power he has purchased of him.
If the labourer consumes his disposable time for himself, he robs the capitalist.
The capitalist then takes his stand on the law of the exchange of commodities. He, like all other buyers, seeks to get the greatest possible benefit out of the use-value of his commodity. Suddenly the voice of the labourer, which had been stifled in the storm and stress of the process of production, rises:
The commodity that I have sold to you differs from the crowd of other commodities, in that its use creates value, and a value greater than its own. That is why you bought it. That which on your side appears a spontaneous expansion of capital, is on mine extra expenditure of labour-power. You and I know on the market only one law, that of the exchange of commodities. And the consumption of the commodity belongs not to the seller who parts with it, but to the buyer, who acquires it. To you, therefore, belongs the use of my daily labour-power. But by means of the price that you pay for it each day, I must be able to reproduce it daily, and to sell it again. Apart from natural exhaustion through age, I must be able on the morrow to work with the same normal amount of force, health and freshness as to-day.
We see then, that, apart from extremely elastic bounds, the nature of the exchange of commodities itself imposes no limit to the working-day, no limit to surplus-labour. The capitalist maintains his rights as a purchaser when he tries to make the working-day as long as possible, and to make, whenever possible, two working-days out of one. On the other hand, the peculiar nature of the commodity sold implies a limit to its consumption by the purchaser, and the labourer maintains his right as seller when he wishes to reduce the working-day to one of definite normal duration. There is here, therefore, an antinomy, right against right, both equally bearing the seal of the law of exchanges. Between equal rights force decides. Hence is it that in the history of capitalist production, the determination of what is a working-day, presents itself as the result of a struggle, a struggle between collective capital, i.e.,the class of capitalists, and collective labour, i.e.,the working-class.
To understand the foundations of the capitalist state it is essential to understand the iron law of competitiveness. By capital, we mean the private ownership of such means of production that enable the employment of wage labor. Competitiveness is the precondition of the reproduction of capital with sufficient profit. Reproduction of capital with sufficient profit allows new investments with the purpose of either increasing production on the same technological level or upgrading technology – investments, which are the preconditions of preserving competitiveness. New investments result in the accumulation of capital.
Accumulation of capital is the essence of capitalism. Market competition, competitiveness, reproduction of capital with sufficient profit, accumulation of capital – are different approaches to the same thing, namely capitalism. So the iron law impacts upon all these factors. Profit is the right of capital and is a part of the value added, as created by employees (wage labor) in the process of production. Whether a capitalist wants it or not, in the long run, profit has to be increased within the value added as well as relative to the invested capital.
To increase the share of profit in value added, the share of labor compensation has to decrease. If a capitalist does not succeed in doing that, those competitors who manage to do so, will be able to push him or her out of the market, by means of their better/cheaper products. The basis of competition is the isolation of producers, their individual “company” form, so that each and every unit of production is “self-interested”: the root of the selfishness is the private property of means of production. It is the competition based on the isolation of properties that presses capital to reinvest profit, to accumulate capital and by these, to achieve growth. The way and key to growth – the iron law of capitalism – is the downward pressure on wage share in value added, additionally accompanied by either increasing, decreasing or stagnating amount of wages. (It is the share of wages that counts, not their absolute level).
Of course, one could imagine a world in which no company undertakes development, thus not threatening other companies’ activities, and does not even start any innovation – a world where market structures show no signs of changes at all – but it would not be capitalism. The essence of capitalism and the basis of its historical merit (the revolutionary development of means of production) is just competition based on the freedom for selfish profiteering.
The basic rule of the corporate competitiveness is to produce more value at minimizing the cost of the product. The central factor of the costs is the (living)labor, so the less people have to produce the more (value) product. Therefore, if a more productive method is introduced the redundant workers are laid off. The rest – under pressure of the reserve army – are forced to more (intensive) work. With the development of the productive forces the time liberated from the production turns towards society in a hostile manner, piling up cumulatively on the side of the unemployed mass. This leisure time instead of a true „life” acts as an enemy of life, a working time-guzzling small dumpling. The laid off workers do not only produce anything but – similarly to the workers forced to increased performance – decay of the stress and the hardship and their medical condition deteriorates, deviances (drugs, crime) are on the rise. To eliminate or to treat these effects, the society should set aside income and working time be spent (for law enforcement, health care, drug prevention, etc.). This development is embodied and partly called by the mainstream as the sphere of the „second labor market” and the „social economy”. (Social, home beautification, environmental and youth protection programs and organisations supported by public money, broadening the local service sector, etc.) However, these do not prevent the deterioration of physical and mental state. The reserve army means that older people’s labour is no longer needed so it does not matter if they wear out faster and their place – as the quick obselescence of technology – are filled with younger workers anyway …
Due to the lack of community education of the youth and as a result of the reserve army of the unemployed the main productive force, the manpower works far below its possibilities, its capabilities lie unused and wasted.
The wastefulness is due to the dotted ball effect
After this little empirical illustration kaleidoscope we need to answer the question: what does all this wastefullness come from?
The cause of all-embracing capitalist wasting is the efficiency of dotted ball method, namely the isolation conditions that also can give birth and nurture individualism. The white spots of the dotted ball represent the isolated units of management (i. e. the companies), the red „base” symbolizes the different resources of the society. The basis of the isolation in capitalism is the private property of productive forces. The (private) company (white spots) served to produce profit manages only the resources necessary in its production processes, while it ejects the savings as a „space garbage” to the dead water of the society (in red).
Regarding cost management basis, by comparing the socialist state enterprises and the private capitalist enterprises only the latter may be the winner. The difference is basically due to the enumaration. From the company’s point of view efficiency is considered, if less people are working as much as possible. But from a social point of view, the situation is just the opposite: the more effective use of social labour fund is when the more people work the less.
In Hungary, for example, if all of the working age people could work, the same amount of GDP would be reached if all worked only five and a half (!) hours a day. More time would remain for relaxation, cultural activities or education, which could lead to an increase in output per hour. Not just as much, but more would be produced, ceteris paribus, if everybody worked only six hours a day. Partly because six hours working is less tiresome, than 8 hours and secondly because working spirits were higher. In addition, it would be less stress, disease, crime, deviance, etc., that would reduce spending on the social level as well. The fairer burden-sharing and smaller workloads would strengthen the community spirit of the people’s sense of responsibility to each other and their environment, increase empathy, tolerance and generosity. In the meantime, it would do less damage.
However, all of this isolation conditions do not allow the companies to manage the labour fund of the society (the whole red area), because only a part of it is at their disposal (their white spots). If more people were employed in less working hours, it would increase their costs and lead to a deterioration of competitiveness. They can not afford it.
It is important to emphasize that the key question here is the isolation. The basic form of separation is the private property, of course, but the situation can also be imitated by corporate autonomy, self-management, employee ownership, municipal ownership, etc. These are exactly the same types of separation. The Community objective is to create the welfare (the needs) of the whole society and to manage the social labour fund (the productive force).
Artner, Annamaria: The relevance and dilemmas surrounding Unconditional Basis Income under Capitalism, USBIG Discussion Paper Series No 268 – September 2015
U.S. Basic Income Guarantee Network http://www.usbig.net
Artner, Annamaria: A pöttyös labda és a kapitalizmus pazarlása (The dotted ball and the wastfulness of capitalism), Eszmelet Vol. 77. pp. 161-168. Budapest, 2008.
Budapest, 19th November 2015.
Matyas Benyik, Chairman
ATTAC Hungary Association