Labor Theory for (Marxist) Dummies: Part 3

by Jehu

Labor reduction and the horrific conditions of the labor reserve

I have made several important points about hours of labor reduction in the first two parts of my series “Labor Theory for (Marxist) Dummies”

The first point is that, according to labor theory, a reduction of hours of labor can drive the rate of profit to zero without any impact on productive employment and wages. This is an extremely important point, because much of the objection by Marxists and other workers to reducing hours of labor rests on their assumption that reducing hours will reduce wages. In fact, of all economic theories, labor theory alone suggest this cannot happen. Labor hours reduction has no impact on employment of productive workers and their wages.

thuglifeSecond, I have shown in part two of this series that when there is significant waste in employment of labor power in the economy, a reduction of hours of labor should actually increase both the number of productively employed workers and wages generally. When a significant portion of the existing employment of labor is wasted, reducing hours raises the wages of the working class.

If labor hours reduction does not negatively affect labor that produces value and surplus value, and if labor hours reduction forces capital to reduce the unproductive employment of labor power, can labor hours reduction actually eliminate unemployment altogether? To be more specific, to what extent is unemployment, underemployment and an entire body of workers who are today “unemployable” solely the product of the present 40 hours work week?

Conditions of the lowest sections of the working class

This is a highly relevant question for communists today, because a huge mass of the working class has been condemned to the most horrific conditions of existence imaginable.

According to the Chicago Tribune, a recent report shows an astonishing 47% of black men between ages 18-29 are unemployed in that city and as much as 32% nation-wide. The levels of unemployment among young black men has reached catastrophic proportions:

“While declines in youth employment across all races have raised concerns for a number of years, the new report puts into stark focus the connection between unemployment and Chicago’s racially segregated neighborhoods that also are home to high rates of poverty and crime.

The report shows the highest concentration of youth unemployment is in neighborhoods on the city’s South and West sides, especially Fuller Park, Englewood, East Garfield Park and North Lawndale, each of which is more than 90 percent black. The lowest concentration is in mostly white neighborhoods on the North and Northwest sides.

‘Conditions of joblessness are chronic, concentrated and comparatively worse than elsewhere in the country,’ said Teresa Cordova, director of the Great Cities Institute. She called the prevalence of jobless among black males ‘definitely at crisis proportions.'”

The chance these workers will find jobs given the sort of stagnant job growth we have witnessed in the last eight years is dim. It is unlikely conventional bourgeois simpleton fascist state “full employment” policies will ever produce the employment growth necessary for them to find jobs. Moreover, beyond the huge body of black workers who have been locked out of employment for generations, official statistics (which are always misleading) show another 40% of workers who no longer even participate in the labor force. Additionally, each day thousands of migrant workers stream into the United States looking for work.

To be fair, however, the failure to address the plight of these workers does not simply lie with fascist state economic policy. Communists themselves have failed to raise any credible, measurable demands that really address the millions of black workers locked out of employment, the ten of millions more workers who form what Marx called the latent section of the reserve army, migrant labor, and those workers who might be considered altogether unemployable.

Can labor hours reduction address the needs of the lowest strata of workers?

Can reduction of hours of labor bring the huge population of the reserve army of labor into production and raise their conditions? This question is extremely important for communists, because those locked out of productive employment are, by and large, the parts of the working class — women, black and immigrant — who have suffered the worst effects of the capitalist mode of production.

It is fair to say communists have, at best, a spotty record of addressing the demands of these sections of the working class. This record includes a number of rather bizarre theories like privilege theory, which traces its background to a proposal by some communists not that unemployment should be abolished, but that white male workers should be required to accept an equal proportion of unemployment with black workers so as to guarantee equality of conditions within the working class. Other spurious theories argue historical materialism ignores the conditions of women or race in its analysis of bourgeois society. Still other Marxists insist historical materialism is outdated because it ignore so-called “affective labor” outside the work place.

Whether these “theories” have any merit is not my concern, since, in any case, women, black, immigrant pauperized workers continue to bear the brunt of the worst effects of capitalism. Even if we reject all of these specious theories, communists still have to explain how their aim of abolishing wage labor is not a sectional aim of the productively employed, but one that aims to improve the conditions of the entire class together.

If that is not bad enough, let me admit that even posing the problem of unemployment the way I have above (stagnant employment growth) falls for the fallacy that wage labor is a normal state of affairs. In my view, no one should have to sell themselves to secure the means to live. Communists reject the implicit assumption that the physical survival of human beings should rest on their ability to sell themselves into slavery one day at a time. Instead, we ask to what extent the existence of a huge industrial army of labor has already made it possible to abolish wage slavery entirely and for everyone.

If abolishing wage slavery will improve the conditions of even and especially the lowest, most destitute, sections of the working class, as I insist, progress in this direction through reduction of hours of labor should unambiguously result in an improvement of their conditions as well. If reducing hours of labor can be shown to bring the vast labor reserve into production, communists could reasonably claim to address the concerns of the entire class in their program and not just that of ‘privileged’ white male workers.

To restate my argument in a way that is more consistent with the communist aim of abolishing wage labor entirely: Can we reduce the need for labor to a minimum for everyone by bringing the women, black and immigrant workers into productive labor? From this viewpoint, the reduction of hours of labor is not intended primarily to create jobs; rather, we reduce hours in order to progressively abolish wage labor completely. While capital sees in the industrial reserve a means to extract more surplus value, we should see in it a means to reduce labor to an absolute minimum for all by bringing the vast labor reserve into productive employment.

Ambiguous empirical results of labor hours reduction

Can reduction of hours of labor bring the various strata of the labor reserve into productive labor and reduce the need for labor for all? To be perfectly honest, the literature on the subject is not that promising. The empirical case for how a reduction of hours of labor affects employment and wages is ambiguous at best and may actually be negative.

This is the conclusion Axel Börsch-Supan drew based on the experience of labor hours reduction in Germany in the 1990s:

“None of the few existing econometric studies could find a significant effect over various time periods and different degrees of aggregation. All studies use inter-industry differences in working hours as identifying instruments.  The econometric evidence rather unambiguously rejects the idea that reducing work hours will help decrease the unemployment problem.

Only two simulation studies predict a positive employment effect.  One uses a unit labor cost decrease as an engine to create employment (productivity increases faster than hourly wages), the other pays a high price for employment increases in the form of a GDP decline and an inflation increase.  Both models rest on counterfactual mechanisms in detail.

In summary – and this may come as a surprise given the subtlety of the issue, once the arena of prima facie arguments has been left behind – this old debate with equally old arguments has quite an unambiguous answer: the German experience provides no convincing evidence that reduced work hours will increase employment.  Reduced work hours probably have increased workers’ utility by providing them with more leisure at only slightly reduced income.  This is not a small achievement which labor unions can be proud of.  But there is simply no evidence that it can work as an instrument for the solution of the unemployment problem.”

Börsch-Supan’s study raises serious questions about the efficacy of reducing hours of labor. An equally ambiguous study by Kallis, et al, concluded “the results of reducing working hours are uncertain”. If hours of labor reduction does reduce unemployment, the authors of the study conclude, it is likely the impact is less than many advocates of labor hours reduction assert.

A reduction of hours of labor must be larger to improve the conditions of the labor reserve

However, the reason for the ambiguous results of the these studies is not surprising for labor theory. I have shown that a reduction of hours of labor has two immediate effects that are actually negative for reducing unemployment. First, reduction of hours of labor was shown by Marx to actually increase the productivity of the existing labor force owing to increased energy of the worker. According to Marx, “the mere shortening of the working-day increases to a wonderful degree the regularity, uniformity, order, continuity, and energy of the labour.” Thus, within limits, a shorter labor day may actually increase output so that net output after hours are reduced may exceed the aggregate output of the previous, longer, working day.

Second, a reduction of hours of labor compels the capitalist to reduce waste and inefficiency in the employment of labor power. The capitalist also employs speed up and deployment of improved means of production, science and technology to raise the rate of profit.

The net effect of the two influences means a reduction of hours of labor may actually reduce aggregate demand for labor power, rather than increase it.

To put this another way, a reduction that appears sufficient to draw the huge reserve army of labor into production may in fact be too small once we take into account how fewer hours of labor affect the efficiency and productivity of social labor. To give an example to illustrate my point: an unemployment rate of 10% may requires a reduction of hours of labor of 20% or even 40%. It is not at all the case that 10% unemployment can be eliminated by a 10% reduction of hours of labor.

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Moreover, as I will show next, this reduction cannot be a onetime thing: Once begun, the reduction must be continuous and progressive. As Marx showed, capital responds to a reduction in the absolute hours of labor by increasing the relative portion of the labor day that is unpaid.

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