If we have seen anything from the history of capitalism, it has been the increase in the efficiency of labour. Productivity has been on a steady climb for decades in advanced industrialized countries. Automation of labour, more efficient means of applying labour, and all-around higher levels of exploitation.
The Marxist principle is simple: the less human labour required to complete a task using more advanced constant capital is called a rise in the organic composition of capital. This has been the almost exclusive trend since the beginning of the industrial revolution.
However, the productivity of labour in the United States has now fallen for the first time since 1947. Last week the Department of Labor published data that shows U.S. labour productivity decreased by 7.5% in the first quarter of 2022.
In addition, “The report also showed that unit labor costs, or how much workers are paid per unit of output, surged by 11.6% during the quarter. That reflects a 3.2% increase in hourly compensation and a 7.5% decrease in productivity.”
“Analysts polled by Refinitiv had projected a 5.4% decline in productivity and a 9.9% rise in labor costs.”
The primary cause of this, according to bourgeois analysis, is a market where firms have to compete for workers’ labour-power. Obtaining and retaining the relevant labour to a job has increased in difficulty. “In March, job openings and quits set all-time highs at 11.5 million and 4.5 million, respectively.”
What we are witnessing is a reversal of the usual trend that demonstrates quite well a contradiction of capitalism: capital vs. labour. Instead of labour essentially becoming cheaper over time due to the increase in automation, reducing the necessary amount of education needed for most labour tasks, and reducing the number of people needed per task, the cost of socially necessary labour has increased.
What does this mean? It means the current reduction in productivity is not due to laziness or some other intangible factor of the working class – the working class is seeing an increase in their compensation for performing labour.
Traditionally the increase in productivity has been an increase in the sophistication of constant capital in relation to variable capital. The rate of exploitation (or efficiency if one prefers the term) is the ratio of C/V to surplus value.
Out current situation is an increase in V, or the cost of labour. The worker hasn’t done less to make the process less efficient, they’ve managed to struggle back a part of their value creation from the capitalist.
The bourgeois view is to simply rail at the increased cost of labour, or merely attack the working class as being “lazy” and “not wanting to work”. Retail giants have bemoaned the necessity of increasing hourly wages.
“Walmart raised hourly pay twice in 2021, bringing the average wage for its 1.4mn workers to $16.40 an hour. Target has raised wages even higher and in March said it would spend $300mn to boost pay and benefits for its 409,000 employees, with starting wages at between $15 and $24 an hour based on location.”
This is another way of saying the worker has increased effectiveness when negotiating for a wage. In the tug-of-war over value created by labour and collected by the capitalist - the worker is flexing muscle in keeping more of that value.
An increase in workers’ wages is a threat to capitalist profitability. Not merely in the most immediate sense, that being the increased cost – but that it also has a larger economic phenomenon which affects the economy as a whole: a wage-price spiral.
“The wage-price spiral is an economic term that describes the phenomenon of price increases as a result of higher wages. When workers receive a wage hike, they demand more goods and services and this, in turn, causes prices to rise. The wage increase effectively increases general business expenses that are passed on to the consumer as higher prices.” (Investopedia)
As the bourgeoise see it:
‘“We can’t allow a wage-price spiral to happen, and we can’t allow inflation expectations to become unanchored,” Fed chair Jay Powell said on Wednesday, though noted that this dynamic has not taken hold so far.’
“It’s a good time to be a worker looking to either change jobs or get a wage increase in your current job,” he added after the central bank raised interest rates by half a percentage point and signalled more such moves to come this year. According to estimates, there were roughly 1.9 job openings for every unemployed person as of March.’
To put it bluntly, in capitalism, increasing worker wages (remuneration) is detrimental to the capitalist system as a whole. Doing the opposite though decreases the ability of the worker to consume, which is vital for the reproduction of the capitalist system. It is literally in the interest of the capitalist class to reduce the amount the working class can consume to increase profit but paradoxically requires that consumption to have profitability.
In other words, one big contradiction in the capitalist system. If only some philosopher and economist had written about that!
What nonsense the capitalist system is, as if we didn’t have enough of a reason to abolish it. This subject extends into the tendency of the rate of profit to fall. But that’s a story for another day.
Sources:
https://www.wyff4.com/article/us-worker-productivity-fell-at-the-fastest-rate-75-years/39915859
https://wellsfargo.bluematrix.com/links2/html/8761b37c-dceb-43f8-be7d-a54af13d0425
https://www.ft.com/content/f4e73bdb-3f1c-4970-80b9-b8065d76faff
Can you have communism and freedom at the same time? It seems like whoever is in power does fine for themselves but what about personal drive for success. Antropanures for example I run a farm in an unconventional way and I would hate it if the government tried to tell me what to do. In Canada they do just that but they still call it capitalism.