Elements of a Growth Model: Productivity Increase, Population

D. Elements of a Growth Model: Productivity Increase, Population

Growth, and the Reserve of Unemployed

Our Section B refers to “necessary labour” in terms of the “reproduction of . . . labour capacity,” a sort of subsistence wage determined (so it there appeared) by one-sided diktat on the part of employers, which – though not necessarily a physiological minimum – allowed no element of surplus to the worker (above, pp. 238–9). Now a real wage sufficient to assure only “the reproduction” of labor power pertains specifically to a stationary economy; for the “necessary” wage nec- essarily exceeds that minimum in a system with scope for population growth. The problem can be overcome by retaining the long-run real wage unchanged at sub- sistence, but allowing for population expansion by way of reactions to short-run deviations of the market wage from subsistence: “With the accumulation of capitals, wages rise, unless population grows simultaneously; the worker marries, stimulus is given to propagation or his children live better, do not die prematurely, etc. In short the population grows” (MECW 28: 277). But to this Marx adds: “its growth leads to competition among the workers, and thus compels the worker once again to sell his labour capacity to the capitalist at, or even for a time below, its value.” Why in the case supposed there should occur a reversal of the wage is unclear. Moreover, the qualification “unless population grows simultaneously” is also problematic, for why should there be ongoing population growth with the long-run wage at “subsistence”? Yet the putative expansion of population with wages at subsistence is spelled out thus:

Wages include not only the worker, but also his reproduction – so that when this specimen of the working class dies, another replaces him; when the 50 workers are dead, there are 50 new ones to replace them. The 50 workers themselves – as living labour capacities – represent not only the costs of their own production, but the costs that had to be paid to their parents over and above their own wages as individuals in order to replace themselves in 50 new individuals. Therefore the population grows even without a rise in wages (278).

The conclusion does not follow since Marx has just described a constant population. Fortunately, this is not the end of the matter. For Marx qualifies his proposition that population growth proceeds even with wages at subsistence, observing that any such population growth is inadequate – that “it does not grow quickly enough,” and requires a “special stimulus” – which effectively concedes the unsatisfactory nature of the initial proposition. That population increase requires further stimulus is explained by the circumstance that “it is of no use to capital merely to obtain more ‘wealth’ in Ricardo’s sense” – he intends increase in physical output; rather, capital “wants to command more value, more objectified labour,” that is a larger aggregate work force. The proper approach is thus one that has population expanding along with capital – with the real wage at a level high enough to generate such expansion.

Marx’s fuller analysis of population expansion takes account of ongoing technical progress, and several of the problems mentioned above fall away. The account

D. Elements of a Growth Model: Productivity Increase, Population Growth 247 accords strategic significance to “the variable proportion (the day itself is a constant

magnitude) of the fraction of the necessary hours of labour to that of the hours of surplus labour,” identifying – as far as concerns the “living working day” – the case of an individual working (say) a total of 50 days of 12 hours with that of 50 workers each engaged for a 12-hour day (278). This transition from the individual to the aggregate “workday” proves to be more than a mere formality. Consider the two means of increasing surplus that Marx intended – reductions in “necessary labor time” and expansion of “simultaneous working days” or in later terminology increase in relative and in absolute surplus value: “Surplus time exists [firstly] as the excess of the working day over and above that part of it which we call necessary labour time. It exists secondly as the multiplication of simultaneous working days, i.e. of the

working population.” (325). 18 “The first ratio of the surplus time to the necessary time in the working day” – s/v in later terminology – “can be and is modified by development of the production forces, so that necessary labour is restricted to an ever smaller fractional part. The same is then true relative to the population. A working population of say, 6 million can be considered as the working day of 6 ×

12, i.e., 72 million hours; so that the same laws are applicable here” (325–6). The second means of producing surplus labor – expansion of the number of workdays – Marx treats as a “tendency” on a par with the first: “It is the law of capital . . . to produce surplus labour, disposable time. It can do this only by setting in motion necessary labour, i.e. by entering into exchange with the worker. It is therefore the tendency of capital to produce as much labour as possible, just as it is its tendency to reduce necessary labour to a minimum. It is therefore as much the tendency of capital to enlarge the working population, as well as constantly to make a part of that population surplus – that is useless, until such time as capital can utilise it” (326). This, he adds, showed “the correctness of the theory of surplus population

and surplus capital. . . . 19 Capital must therefore constantly posit necessary labour in order to posit surplus labour; it must increase . . . the simultaneous working days, in order to increase the surplus; but, equally, it must transcend it as necessary labour in order to posit it as surplus labour.”

The allusion above to rendering “useless” part of the working population “until such time as capital can utilise it” implies the notion of a Reserve Army of Unem- ployed. We shall turn shortly to this matter, noting first Marx’s important elab- oration of the two means of expanding surplus wherein reductions in necessary labor (a fall in v in effect) itself encourages enlargement of the working population “by rendering the production of workers . . . cheaper”: “ . . . capital solicits the increase

18 Marx adds: “It can also be produced – but this to be mentioned here only allusively, as this point belongs to the chapter on wage labour – by a feasible extension of the working day

beyond its natural limits; or by the addition of wives and children to the working population” (MECW 28 : 325). 19 The “correctness of the theory of surplus population and surplus capital” – evidently referring to Malthusian doctrine – may be less a positive commendation than the positing of a sort of analogy, not to be pushed too far, between that doctrine and his own.

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of population, and the very process by which necessary labour is reduced, makes it possible to set to work new necessary labour (and hence surplus labour). That is to say, the production of workers becomes cheaper, more workers can be produced in the same time . . . ” (327). The mechanism whereby reduction in the cost of a given wage basket brings about population expansion is not fully elaborated; but it is likely that Marx here applied to labor power the analysis of improved technology in the case of any commodity produced under “constant cost” conditions, with aggregate demand for labor higher at the new, lower, cost level: “capital . . . set[s] to work new necessary labour.”

One might, of course, fill in the transition between equilibria in terms of the demographic response to a temporary real-wage increase that immediately fol- lows a reduction in the cost of producing wage goods. But this is to proceed in comparative-static terms. If technical change is an ongoing process one arrives at on-going population growth, such growth satisfying the condition that the real (commodity) wage is continuously above the “subsistence” level which allows only for the “reproduction” or maintenance of population not its expansion.

That this perspective is an accurate representation is supported by the emphasis Marx placed on the mutually reinforcing forces at play. Thus not only does technical change, by reducing the cost of v, encourage population growth; but conversely “increase of population increases the productive power of labour, by making greater division and greater combination of labour, etc.,” which amounts to endogenous organizational change. The significance of absolute population size for technology including science – and a further allusion to surplus labor – is also found in a later passage of the highest interest:

Generally speaking, when we look at production based on capital, an essential condition appears to be the combination of the greatest absolute quantity of necessary labour with the greatest relative quantity of surplus labour. Hence as basic condition the greatest possible growth of population – of living labour capacities. If we further look at the conditions for the development of both productive power and exchange, we find that they are the division of labour, cooperation, observation in all directions, which can only be the work of many heads, science, as many centres of exchange as possible – and all these are identical with the growth of population (527).

We turn now to the pool of unemployed. The argument turns on the aggregate rather than the individual workday, reductions in hours of “necessary labour” pertinent to the individual manifesting itself in the aggregate as the “elimination” of workers from the production process and their relocation to a “reserve.” This process is said to turn primarily on net population expansion – “the increase of population is itself the chief means for a reduction of the necessary part” (327). The process involves the effect of a large population on organizational and technological progress, described above, and thereby on the demand for labor – an implicit illusion to increasing organic composition with its labor-displacing effects: “it is the

D. Elements of a Growth Model: Productivity Increase, Population Growth 249 tendency of capital . . . to reduce to a minimum the many simultaneous necessary

working days (which, so far as value alone is concerned, may be considered as one working day), i.e. to posit as many of them as possible as not necessary. As previously in the case of the single working day, it was the tendency of capital to reduce the hours of necessary labour, so now it tends to reduce the necessary working days in relation to the total of objectified labour time. . . . ” However, there is the countervailing fact that “the newly created surplus capital can be valorised as such only by being exchanged for living labour. Hence the tendency of capital just as much to increase the working population as constantly to diminish the necessary part of it (constantly to reallocate a part of it as a reserve).” Marx does not here comment on the balance of the labor-displacing and labor-attracting forces, that is whether or not aggregate labor demand tends to expand on balance.

Marx explains that by his reference to the “idle surplus population” he intends a reserve of productive labor: “it is inherent in the condition for the appropriation of alien surplus labour that necessary population – i.e. the population representing necessary labour, labour necessary for production – is matched by a surplus popula- tion, which does not work. . . . The expression ‘surplus population’ refers exclusively to labour capacities, i.e. to the necessary population; surplus labour capacities. This arises simply from the nature of capital. Labour capacity can only perform its nec- essary labour if its surplus labour has value for capital, if it can be valorised by capital . . . ” (527–8). 20

The reserve of unemployed “is maintained, not out of the wages fund, but out of the income of all classes. . . . society [as a whole] in various proportions takes on for Mr. Capitalist the job of maintaining his virtual instrument of labour – defraying its wear and tear – keeping it in reserve for later use by him. . . . ” (528), or as expressed earlier “until such time as capital can utilise it” (above, p. 247). 21 Here Marx reverts to the two-fold requirement for successful capital accumulation: “(1) It needs a growing population in order to be set in motion. . . . (2) It needs an unemployed (relatively, at least) part of the population, i.e. a relative surplus

20 The significance of the “non-productive” sector, living on revenue, is recognized but not entered into in detail: “It does not belong here yet, but can already be mentioned here, that the

creation of surplus labour on the one side corresponds to a creation of minus-labour, relative idleness (or at best non-productive labour) on the other. This goes without saying, to start with, as regards capital itself; but it applies equally to the classes with which it shares, i.e. to the paupers living on the surplus product, flunkeys, Jenkinses, etc., in short the whole train of retainers; the part of the serving class which does not live on capital but on revenue” (MECW

28 : 328). Scientific and artistic labor is mentioned apart: “In relation to the whole of society, the production of disposable time [can] also [be considered] as the creation of time for the production of science, art, etc.” A question Marx neglects to address is why capitalists would follow a path that generates reductions in necessary labor in order to increase their surplus, only to finance therewith – or allow society as a whole to finance – such unproductive forms of labor rather than productive workers who would generate further surplus value for them. 21 There is the qualification: “In all this discussion, we have purposely abstracted entirely from the vicissitudes of the market, its contraction, etc., in short from everything which presupposes the process of many capitals” (MECW 28 : 529).

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population, in order to have the population necessary for its growth immediately available” (529).

Let us focus on the function of the Reserve. Two revealing expressions in the preceding paragraphs suggest that Marx may not have intended a source of labor for secular expansion. I refer to the availability of labor “for later use” by the capitalist, or “until such time as capital can utilise it.” Considered by themselves it would

be unsafe to read too much into these expressions, but in the light of the explicit attribution elsewhere to the reserve of accommodating capitalists’ requirements at or near the peak of the cycle (see Chapter 7, pp. 222, 230), they are highly suggestive.

For all that, there is no hard and sharp division between the active and the reserve labor force. For a second function is specified, in effect that of increasing mobility : “The speed with which a particular capital can reconvert itself from its form as money into the conditions of production . . . depends both on the speed and continuity of the production sustained by the other capitals which supply this particular capital with its raw material and instrument, as well as on the availability of workers. With regard to the latter, a relative surplus population is the most favourable condition for capital” (443). 22

To recapitulate the main theme: population growth is accorded a central role in the growth process in that effective accumulation is dependent thereupon. It is in fact a “tendency of capital” itself to stimulate such growth by lowering the cost of labor power, while the magnitude of population reinforces the impetus to further growth of population by way of organizational change and scientific advance relating to scale. At the same time, population increase is represented as mainly responsible for the generation of a Reserve Army – “the chief means”(above, p. 248)– again by way of its effect on organization, the function of which is to assure a labor supply “immediately available” for capital’s needs, which we suggest refers to cyclical needs.

The foregoing analysis with its emphasis on the role of absolute population size – that it is chiefly responsible for (labor-displacing) technological and organizational change – seems to pose a problem in the light of other passages in the Grundrisse focusing on relative rather than absolute population size. Thus in specifying the so-called “moments” in the entire production-circulation process we read: “The exchange of a part of capital for the living labour capacity can and must be consid- ered a special moment of the process, since the labour market is regulated by other laws than the produce market, etc. In the labour market, population is the main factor, not absolute but relative population” (444; emphasis added). A partial reso- lution emerges when we take account of Marx’s objections to Malthus, specifically

22 It is interesting to see the same point made (using the same military analogy) from a modern “bourgeois” perspective: “It is impossible to achieve mobility with an army, almost every able-

bodied member of which is already committed to action. So the necessity of adaptation to changing circumstances must involve, for those who are changing jobs, a brief period in which in the statistical sense they are not employed; and experience seems to show that this degree of adaptability is not to be secured with a use of the labour force much over 97.7 per cent or

D. Elements of a Growth Model: Productivity Increase, Population Growth 251 to an alleged concern with population size relative to “means of subsistence”:

“[Malthus] foolishly relates a certain number of men to a certain quantity of means of subsistence. Ricardo straight away countered this by correctly pointing out that the quantity of available grain is quite immaterial for the worker if he is without employment; that it is therefore the means of employment and not of subsistence which determine whether or not he belongs in the category of surplus

population . . . ” (526). 23 Now the denial that surplus population had meaning rel- ative to “subsistence” is extended “more widely” to all social structures – slavery, feudalism, and tribal arrangement: “Nowhere [overpopulation] relative to a non- existent absolute quantity of means of subsistence, only relative to the conditions of reproduction, of the production of these means. But this includes the condition of the reproduction of human beings, of the total population, of relative surplus pop- ulation. This surplus purely relative: in no way related to the means of subsistence as such, but only to the mode of their production. Hence also a surplus only given this state of development” (527). It is not then that absolute population size – and with it excess population size – is irrelevant, but that it only had meaning in relation to the particular “mode of production” of the means of subsistence – the state of agricultural organization and productivity – under investigation. 24

We close this section by pointing out that Marx’s insistence on a growth process entailing ongoing population growth has much in common with Ricardo’s anal- ysis. For Ricardo’s view of population increase occurring in response to a wage raised above subsistence by increased accumulation constitutes no more than a pedagogical simplification often set aside in favor of a view of continuous popula- tion growth: “Notwithstanding the tendency of wages to conform to their natural rate, their market rate may, in an improving society, for an indefinite period, be constantly above it; for no sooner may the impulse, which an increased capital gives to a new demand for labour be obeyed, than another increase of capital may produce the same effect; and thus, if the increase of capital be gradual and constant, the demand for labour may give a continued stimulus to an increase of people” (Ricardo 1951–73 1 : 94–5). Marx unfortunately failed to do justice to the full-fledged “canonical” classical model, and focused rather on the simplifying assumption whereby “[t]he dividend of the worker = the price of the necessary means of subsistence,” implying that “the rate of profit is at its maximum and that of wages at its minimum” (MECW 28 : 478). And there is this significant differ- ence between Ricardo and Marx, that the former treats productivity improvement as a discrete or random disturbance whereas Marx envisages ongoing productivity increase as a function of scale, very much a Smithian orientation.

23 The reference may be to Ricardo’s complaint that Malthus was “too much inclined to think that population is only increased by the previous provision of food . . . ” (1951–73 1 : 406).

24 That Marx was justified in ascribing to Malthus a sort of universalist problem of excess popu-

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