The Real Movement

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Tag: wages

Empirical evidence that fewer hours of labor increases wages

As can be seen in the chart below, longer hours of labor does not increase the wages of the working class, nor do shorter hours of labor depress wages.


Empirical evidence for an inverse correlation between hours of labor and wages among euro-zone countries (Source: OECD)

In the euro-zone, as hours of labor fall (x axis), wages rise (y axis). The euro-zone is a good case study for the empirical relation between hours worked and wages, because the common currency means there is no need to adjust for currency exchange rates.

The data, provided by the OECD, shows that Greece, with the longest hours of labor, has among the lowest wages of the euro-zone countries, while Germany, with the shortest hours of labor, has among the highest wages in the euro-zone.

There is a definite inverse correlation between hours and wages.

Marxists who argue a reduction of hours of labor leads to a fall in wages have no empirical or theoretical evidence for their argument. They are just regurgitating the usual simpleton bourgeois nonsense that wage slavery is good for the working class.

Why reduction of labor hours cannot work as a ‘policy tool’

I have been rereading the paper by Kallis, Kalush, O’Flynn, Rossiter and Ashford, “Friday off”: Reducing Working Hours in Europe. I first learned of the paper when it was tweeted by Alex Tsipras on the night SYRIZA was elected to lead No_Known_Restrictions_A_little_spinner_in_Globe_Cotton_Mill._Augusta,_Ga.,_by_Lewis_W._Hine,_1909_(LOC)the government of Greece. I found it remarkable that this paper, which calls for a reduction of labor time, was being distributed by the head of that radical party on the eve of its victory. Did it signal his intention to pursue a new, radical, approach to the crisis in the European Union?

After that initial reaction, I’m now beginning to understand how the argument of Kallis, et al. was limited by a flawed approach to labor hours reduction in which labor hours reduction is essentially treated as just another tool of fascist state management of the economy. Many of the flaws relate to their poor (perhaps, non-existent) grasp of the basics of labor theory and reliance on neoclassical theory to make their argument. Those flaws can be broken down into three questions:

  1. Is labor hours reduction a policy tool?
  2. Can reducing hours of labor fix social ills created by capitalism?
  3. Is a reduction of hours of labor compatible with capitalism?

The following is my take on their approach.

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After Ferguson: Labor, competition and the long ugly history of American white working class racist mob violence

As expected, a mostly white Grand Jury declined to indict the murderer of Michael Brown, who was gunned down without provocation on the streets of Ferguson, Missouri. This is in keeping with 1599a long history of racist mob violence that has been directed at the black working class by their white counterparts dating back at least to the early 19th century. As Justice Taney argued in his Dred Scott decision nearly 160 years ago, the grand jury decided that African-Americans were “beings of an inferior order, and altogether unfit to associate with the white race, either in social or political relations, and so far inferior that they had no rights which the white man was bound to respect.”

The time for mere political protest is past, we are confronted by the necessity to overthrow the regime of white supremacy and the capitalist mode of production which daily, hourly, constitutes this white supremacy and provides the material basis for its continuing existence. Like any difficult venture, this effort must be undertaken based on a sober examination of how white supremacy is constituted by capitalist relations of production in order to demonstrate why nothing short of the abolition of the capitalist mode of production itself will put an end to white supremacy. I hope to demonstrate this very thing in the essay that follows and thus provide radical activists with material for agitation for the complete overthrow of capitalism and white supremacy.

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Hours, Wages and Poverty: On the introduction to Kathi Weeks’ “The Problem with Work”

I have been spending some time reading Kathi Weeks, “The Problem with Work”, and find myself unable to get beyond this sophomoric statement in her introduction:

“I focus on the demands for basic income and shorter hours for two reasons. First, like the demand for living wages and others, they represent important remedies for some of the problems with the existing system of wages and hours. A guaranteed and universal basic income would enhance the bargaining position of all workers vis-il-vis employers and enable some people to opt out of waged work without the stigma and precariousness of means-tested welfare programs. A thirty-hour full-time work week without a decrease in pay [my emphasis] would help to address some of the problems of both the underemployed and the overworked. The second reason for focusing on these demands—which I think distinguishes them from many other demands for economic reform, including the demand for a living wage—is their capacity not only to improve the conditions of work but to challenge the terms of its dominance. These demands do not affirm our right to work so much as help us to secure some measure of freedom from it.”

I am not going to argue this passage characterizes the whole of her book, but I find it bizarre that a Marxist like Kathi Weeks considers a demand for a 30 hour week utopian. She seems to have no clue that there is a relation between hours of labor, on the one hand, and wages and prices, on the other. Moreover, she never mentions the connection between hours of labor, competition among workers and racism, misogyny, anti-migrant sentiments.

186225ebe6_93261970_o2Coupling the demand for a six hour day with a demand for no decrease in wages or a demand for basic income actually shows why Marxists secretly fear the demand for fewer hours of labor is utopian: If there is the slightest danger the subsistence of the working class will fall if hours are reduced, no worker will ever support it. A very large section of the working class lives hand to mouth at a level where they would be homeless and hungry within a month. Another section would be in the same position within a couple of months, once they have exhausted the meager savings.

What compels the working class to sell their labor power is that they cannot live without doing this. But Weeks implicitly “admits” in her introduction that a reduction of hours will have a negative impact on their income, that it will further reduce their subsistence. How are you going to sell this “utopian” demand to the working class? Do you tell them that being idle, homeless and destitute is an improvement on their current position in society?

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“All Slaves Should Get Sundays Off”: Richard Wolff on the four day work week

Richard Wolff, clueless economist that he is, has even managed to fuck up a discussion of hours of labor reduction. He has written a very interesting piece in Truthout proposing a reduction of the workweek with no cut in pay. The idea is very attractive, and Wolff is a ‘celebrity’ Marxist who can give the issue wide circulation.

richard_wolff_photoIn principle I have no opposition to Wolff’s proposal, which at least raises the possibility that the present 40 hours work week was not handed down from Mt. Sinai on two tablets of stone. Wolff shows why we can set any number of hours of labor as the social norm that we want.

Unfortunately, almost from the first, Wolff mangles the discussion of hours of labor reduction in two important ways: First, by conflating his own reduction of hours of labor with several capitalist proposals to  ‘compress’ the work week into fewer days. Wolff never clearly distinguishes his proposal for a reduction of labor hours from the capitalists’ own proposal for a compression of the present 40 hours of labor into fewer days per week.

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V: How Peter Jones demolished Andrew Kliman’s book in 22 brief pages

Does the collapse of the gold standard and the switch to commodity money have any implications for labor theory? The Brazil labor theorist, Paulani argues it does not:

“when, historically, the umbilical cord that linked the money form to the commodity form was cut (in 1971), the dollar value of goods shifted in relation to other currencies, but they kept between themselves the relations which their labour values (prices of production) produced earlier, backed in gold…”

According to Paulani, then, the prices of commodities may have no longer been convertible into gold after 1971, but they did not shift relative to each other. If, before the collapse of the gold standard, four candy bars exchanged for one pair of teatssocks, this much remained unchanged afterwards. Whether this is true is not the point, since, stated in this simplistic form, it can easily be disproven; however, many such changes can be written off to supply and demand “shocks” of one sort or another. Since any such shock is accidental, Paulani’s argument can be reduced this: whatever change did occur, they were accidental and did not result from the collapse of the gold standard. In fact, since relative prices fluctuated constantly even before the collapse of the gold standard, this is a reasonable explanation.

However this argument by Paulani in her 2014 paper is directly challenged by Peter Jones in his 2013 paper, The Falling Rate of Profit Explains Falling US Growth”. Jones argues the collapse of the gold standard directly explains the difficulty labor theorists are having substantiating Marx’s falling rate of profit thesis.

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IV: Simon Mohun’s unproductive effort to identify productive labor

As I explained in my last post, substantiating Marx’s falling rate of profit as the cause of capitalist crises, and, in particular, as the cause of the so-called great financial crisis of 2008, runs into the difficulty that Marx made his argument on the basis of values. The difficulty this poses for analysis is that, since 1971, the various categories of analysis employed in measuring the rate of profit are denominated in inconvertible fiat dollars. Fiat dollars are not money in themselves, but tokens — 2007-10-20-77368474placeholders — for commodity money. Prices denominated in this inconvertible fiat, therefore, are not values in the sense Marx employs this term throughout Capital.

Thus, in order to construct an empirical proof of Marx’s thesis on the causes of capitalist crises using the empirical data, labor theorists are forced to convert inconvertible fiat prices into Marxian values. This is a new problem that did not exist before the period between 1933 and 1971 when the gold standard began to come unraveled. Since the dollar was pegged to some definite quantity of gold, dollars prices represented some definite quantity of gold as well. After the collapse of Bretton Woods in 1971, however, this relationship was severed and the dollar’s exchange rate with gold was allowed to float.

The question immediately arose whether Marx’s theory applied in the case where the currency used in daily transactions no longer had any fixed and definite relation to commodity money. Since the quantity of fiat in circulation has always been determined by the state, not by the values of the commodities in circulation, was it not the case that the socially necessary labor time required for production of commodities (value) no longer determined how a capitalistic economy functioned?

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III: How Fred Moseley MELTed Kliman’s argument on the falling rate of profit

One of the little discussed problem with Andrew Kliman’s attempt to empirically verify Marx’s falling rate of profit thesis is that he is working with inconvertible fiat dollars (dollars which no longer can be redeemed for gold) and dollar prices — in the form of GDP, wages, profits, etc. — and these prices are not labor values as Marx defined the term. How Kliman handled this problem in his analysis of the empirical data is a story in itself.

7351347-crisis-finance-the-dollar-symbol-in-melting-ice-devaluated-money-image-symbolizing-the-bankruptcy-1024x939In his paper, “The Law of the Tendential Fall in the Rate of Profit as a Theory of Crises”, Gugliemo Carchedi answered critics who argue the falling rate of profit thesis cannot be empirically substantiated because Marx was discussing values not prices in his thesis. Fiat prices, however, are not values and have no relation to the values or socially necessary labor times required to produce commodities.

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II: How Andrew Kliman crippled his own argument on the rate of profit

The phony debate over investment and the cause of crisis

One of the biggest controversies among labor theorists when it come to calculating the rate of profit is whether the profit rate should be calculated based on the original amount of capital laid out by the capitalists minus depreciation or the current cost of replacing this capital. For example, assume I bought a widget machine for 100 dollars last year. Assume also that since I bought this machine, the price of widget machines fell from 100 dollars to fifty dollars. When I calculate my profit do I do this based on my original investment of 100 dollars or on the basis of the current market price of fifty dollars?

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I: Critical weaknesses in Andrew Kliman’s argument on the falling rate of profit

I have been looking at the numbers in this very interesting paper by Carchedi: “The Law Of The Tendential Fall In The Rate Of Profit As A Theory Of Crises”. I decided to test his 12 reasons why the falling rate of profit is the best explanation for the financial crisis of 2008 — not because I disagree, but because I think he makes a poor case for it. I thought I might go over his material in order to get an idea of how far off his calculations are when measured against a commodity money as Marx used in Capital. The problem, however, is that, so far as I can tell, Carchedi has not published the source data he used to arrive at his conclusions in the paper. (It is possible he published it in a different place, but I just haven’t come across it yet.)

Fortunately, an argument similar to Carchedi’s is also made by Andrew Kliman in his 2011 book, ‘The Failure of Capitalist Production’. And, unlike Carchedi, Kliman generously published a comprehensive spreadsheet of his source material compiled while writing his book. So, with this post, I am going to kick off a comprehensive review of Kliman’s empirical argument for the falling rate of profit thesis.

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