Labor Supply: Population Growth and the “Reserve Army”

D. Labor Supply: Population Growth and the “Reserve Army”

Our primary concern here is population growth and the so-called “Reserve Army” as sources of increased labor supply to satisfy the expanding demand for labor characterizing capitalist development as a whole – if not in particular sectors – outlined in Section C. Before proceeding to substance we note that various supple- mentary sources are also allowed for. Consider a comment on the Ricardian analysis according to which “machinery does not deprive the labourers of bread,” as shown by the fact that after a shock . . . machinery once again employs more people than were employed before it was introduced – and therefore once again increases the number of ‘productive labourers’” (MECW 31: 128). Now Marx accepts all this: “This is in fact what happens.” But, in elaborating his position, the net increase in the labor force is said to derive from transfers from the unproductive sector into

18 Marx cites Ure to the effect that the rate of pay decreases per unit of output generated by the spinning machine, but not in proportion to the higher productive power (MECW 34: 40).

He himself adds that “[i]t is possible for wages to stand, e.g. higher in England than on the Continent, and yet be lower relatively, in proportion to the productivity of labour.” 19 See also the further citation from Ure on the spinner’s obligation to pay something out of higher earnings for “additional juvenile aid ” (MECW 34: 41). 20 Marx objected to Ure’s allegedly apologetic attempt – despite all his concessions – to “prove that the system is favourable to the working class”: “Ure’s grounds for consoling the factory workers are in fact that the agricultural workers of large-scale agriculture, which originates from the same system, are still worse off; that the children who work in the mines and in industries which have not yet developed to the stage of the mechanical workshop are still worse off; and particularly that workers in branches which have been ruined by machinery or have to compete with it, or into which machinery throws its displaced surplus workers, are still worse off than the workers employed directly in the mechanical workshop” (MECW 34: 41).

D. Labor Supply: Population Growth and the “Reserve Army” 369 the proletariat rather than from population increase as such: “And so in spite of the

growing productivity of labour the labouring population could constantly grow not in proportion to the product, which grows with it and faster than it, but propor- tionately [to the total population], if, for example, capital simultaneously becomes concentrated, and therefore former components of the unproductive classes fall

into the ranks of the proletariat.” 21 This passage is consistent with an unchanged total population. There is too increase in the participation rate, but this issue we postpone for the moment (see below, p. 378).

The significance of the absolute magnitude of the working population emerges very clearly in the discussion of surplus value: “The amount of surplus value evi- dently depends not only on the surplus value performed by an individual worker above and beyond the necessary labour time; it depends just as much on the num- ber of workers employed simultaneously by capital, or the number of simultaneous working days it makes use of, each of these = necessary labour time + surplus

labour time” (MECW 30: 185). 22 One source of increase in the workforce is natural population growth: “the amount of surplus value – its total amount – will depend on the number of labour capacities available and present in the market, hence on the magnitude of the working population and the proportion in which this population grows. Hence, the natural growth of population, and, therefore, the increase of the number of labour capacities present in the market, is a productive power of capital, since it provides the basis for the growth in the absolute amount of surplus value (i.e. of surplus labour)” (187–8). In some contexts, we encounter “natural” rate of population growth quite generally, independently that is of socio-economic orga- nization, as in the reference to that part of “surplus labour time, which even without the existence of capital, must constantly be performed by society, in order to have at its disposal, so to speak, a fund for development, which the very increase of

population makes necessary”(412). 23 Marx notes the possibility that “variable and constant capital can grow in equal degree with the natural, annual increase in pop- ulation while the productivity of labour remains the same. In this case . . . capital

21 Marx goes on to allow that a “small part of the latter rises into the middle class.” 22 As far as concerns the reductions in “necessary labour time” due to machinery, Marx identified the work day and total working population: “The ratio of the part of the individual working day . . . which constitutes surplus labour to the part which consists of necessary labour time is modified by the development of the productive forces, so that the necessary labour is restricted to an ever smaller fractional part. But the same is then true for the population. A working population of, say, 6 millions can be considered as one working day of 6 × 12, i.e. 72 million hours of labour; so that the same laws are applicable here” (MECW 34: 16). On this identification, see Chapter 8, p. 247. 23 For references to the “rapid development of population” 1797–1815, and also to the period 1780–1815 “when the population suddenly grows significantly . . . ,” see MECW 31: 362, 367. No explanation is here offered, but see below, p. 381. At one place Marx does, however, assert as a general proposition that a “high level of productive power of labour, of natural origin” – referring to “the natural fertility of the soil, the waters, etc.” – “is connected with a rapid increase in the population – in labour capacities – and therefore in the material out of which the surplus value is cut” (MECW 34: 94).

1861–1863 III: The Labor Market

will accumulate in volume and in value” (MECW 32: 166). The notion is implicit in statements to the effect that population growth is a free good from the per- spective of the capitalist: “The natural growth of population is one of the results of reproduction; it is firstly itself accumulation (of human beings) and secondly the prerequisite of the process of accumulation (within certain limits). It costs the capitalist nothing” (MECW 34: 323). 24

Now we must be cautious since our concern is with advanced capitalism charac- terised by adoption of “machinery” – capital conversion – and not the manufactur- ing system where demand for labor rises proportionately with accumulation and productivity increase reflects organizational change rather than labor-displacing technical change proper. Certain of Marx’s comments on population increase apply to some extent to the simpler system. Thus, he was troubled by the cause-effect direction in this context, the fact that while “the population must grow, to allow the amount of surplus value, hence the total capital, to grow under the given conditions . . . it is presupposed that capital has already grown so that population may grow” (MECW 30: 189; emphasis added). This apparent vicious circle he adds “should be left open at such at this point and not explained.” Yet we do have an elaboration, and it is one that follows the orthodox canonical practice of assuming

a commodity wage exceeding the subsistence rate in the standard sense of this term. The analysis of capitalist production, is indeed said to require this assumption of above-subsistence wages: “If one assumes that the average wage is sufficient not only for the preservation of the working population but for its constant growth, in whatever proportion, an increasing working population is given in advance for growing capital, while a growth of surplus labour, hence also an increase of capital through the growth of population, is simultaneously given. In analysing capitalist production one must actually proceed from this assumption; for it implies constant increase in surplus value, i.e., in capital.”

Marx attributed this perspective to Adam Smith: “Of course it would be of no use to have the fund ‘to purchase or command ’ a ‘much greater quantity of labour’ than in the previous year unless a greater quantity of labour was on the market. . . . Adam Smith knows, however, that an increasing quantity of labour will

be available” (MECW 31: 155). He was right to do so (see Hollander 1973: 156–63), but he also might have appealed to Ricardo or Malthus. The passage conveniently lists various other sources of increased labor supply to accommodate accumulation: “Partly [due to] the annual increase of the population (though this is supposed to

be provided for in the old wages), partly unemployed paupers, or half-employed labourers, etc. Then the huge numbers of unproductive labourers, part of whom can be transformed into productive labourers by a different way of using the surplus produce. Finally the same number of labourers can perform a greater quantity of labour” (155–6).

24 Similarly, population increase is, like “scientific power . . . a further productive force which costs [the capitalist] nothing” (MECW 34: 18).

D. Labor Supply: Population Growth and the “Reserve Army” 371 Another formulation of the process of capital accumulation sets out by assum-

ing, “to simplify the question,” unchanged labor productivity, that is to say a “given organic composition of capital, since the mode of production remains unaltered and also the proportional value of both parts [constant and variable capital]” (MECW 32: 109). Here Marx lists various sources of increased labor supply includ- ing population growth stimulated by sufficiently high real wages; and again here too such growth is said to be “a necessary condition” for accumulation, in contrast to extension of the workday: “ . . . a portion of the surplus value (and the correspond- ing surplus produce in the form of means of subsistence) has to be transformed into variable capital, that is to say, new labour has to be bought with it. This is only possible if the number of labourers grows or if the labour time during which they work, is prolonged . . . [which] cannot be regarded as a method of accumulation which can be continuously used. . . . If accumulation is to be a steady, continuous process, then [the] absolute growth in population – although it may be decreasing in relation to the capital employed – is a necessary condition” (109–10). It is also allowed that “[t]he labouring population can increase, when previously unproduc- tive labourers are turned into productive ones, or sections of the population who did not work previously, such as women and children, or paupers, are drawn into the production process” (110). But these supplements did not alter the conclusion that an “increasing population appears to be the basis of accumulation as a continu- ous process,” and this, he spells out, “presupposes an average wage which permits not only reproduction of the labouring population but also its constant growth ” (emphasis added), in short a wage exceeding the subsistence level.

But what if allowance is made for machinery? Some passages may suggest that net population growth is then no longer a necessary feature of capitalist expansion: “As a result of the introduction of machinery, a mass of workers is constantly being thrown out of employment, [a section of] the population is thus made redundant; the surplus produce therefore finds fresh labour for which it can be exchanged without any increase in population, and without any need to extend the abso- lute labour time” (377). Similarly, the following passage which concerns rising c/v refers to increasing labor redundancy – and also emphasizes expansion of the workday as source of increasing labour supply – possibly playing down increase in “the number of workers”: “The more developed capitalist production is, the smaller is the part of the surplus produce which is reconverted into variable capital, and the greater is the part of the population which is constantly made redun- dant by the production process. The greater too is the quantity of labour which is consumed without increasing the number of workers. The supply of labour, be it noted, depends . . . not only on the number of workers but on the length of the

working day” (MECW 34: 324). 25 (Marx added that “large-scale industry, while

25 Marx here refers to evidence given by Lauderdale before the House of Lords as reported in Torrens 1815, to the effect that “the supply of labour can rise without any increase in the number

of workers” (MECW 34: 317).

1861–1863 III: The Labor Market

on the one hand it constantly creates an artificial redundancy of population, on the other hand creates a situation of the working class in which it reproduces itself on a mass scale as a tas de mis´erables,” a reference to immizeration that is not explicitly related to absolute population growth.) But since in all this Marx was focusing on sources of an expanding labor force other than population growth,

it is not clear that the latter was dismissed as an unnecessary condition. 26 In any event, we have also found in section C the presumption that secularly expanding labor demand – incorporating the full effects on employment of labor-saving technical change – is satisfied in part by population growth. We shall review that evidence.

We recall in particular that where reemployment falls short of displacement – a temporary situation considering the likelihood of expansion in labor demand in the longer run – the pool of unemployed will be fed not only by the displaced workers themselves but by a fraction of the “new entrants” into the work force whose entry is now “debarred”; and that where full reabsorption is countenanced it is not the displaced individuals who benefit but their rempla¸cants or young entrants into the work force (above, pp. 362–3, 364–5). And that net population growth is taken for granted is apparent, for reabsorption due to capital accumulation affects “the workers who were dismissed and pauperised, or at least that part of the population increase which replaces them . . . ” (above, pp. 365–6; emphasis added).

It is also conspicuous that even where labor demand remains steady or increases, there yet occurs an inflow into a pool of unemployed – those individuals who have been displaced “become paupers” or at best “find employment in branches of industry where a lower grade of labour is employed” (cited above, p. 363). That there is a “mass of semi-employed or completely unemployed . . . for ever crawling around at the bottom of [capitalist] society” (MECW 32: 186; emphasis added) should therefore be understood as holding good despite long-run expansion of employment opportunities.

Implied by all this is a bifurcated or dual work force – “while one section of the workers starves, another section may be better fed and clothed” (187) – since the pool of unemployed may be added to by displacement even when the “new entrants” find no obstacles to absorption into the work force at relatively high wages. After all, “ it is not so much the displaced labour as, rather, the new supply of labour – that part of the growing population which was to replace it – which, by the new accumulations, gets for itself new fields of employment opened” (199; emphasis added.) Similarly: “It is in the nature of capital to overwork one section of the working population while it turns another into paupers” (438); “[c]apitalist pro- duction provides for unexpected contingencies by overworking one section of the labouring population and keeping the other in petto, as a reserve army consisting of partially or entirely pauperised people” (110); and capitalist development “results in one part of the population being made redundant . . . ” (439; emphasis added).

26 After all, extensions of “absolute labour time” are also said to be unnecessary in our earlier passage (MECW 32: 377; above, p. 371), and yet such extensions are emphasized.

D. Labor Supply: Population Growth and the “Reserve Army” 373 This bifurcation, however, should not be understood as watertight. For example,

we read regarding overtime and overwork: “In this way an artificial supply of labour is created, with the result that the supply of those rendered unemployed by this overworking forces down wages altogether (and also those of the employed)” (MECW 33: 386; see also 34: 23). This corresponds to the “general law” of 1847 according to which the wage is “determined” not by those who are employed but by those unemployed (Chapter 7, p. 218).

The function accorded the “reserve army” we have just noted, is to allow capitalists to meet “unexpected contingencies.” Capitalist requirements for labor at cyclical peaks provides the prime instance – indeed, the pool may then be entirely emptied: “The constant artificial production of a surplus population, which disappears only in times of feverish prosperity, is one of the necessary conditions of production of modern industry” (MECW 32: 186). But we must be cautious. The secular expansion in labor demand upon which Marx also insisted, is not met by that pool but rather by the continuous inflow into the active work force of the replacements of those displaced and by net population growth. It is easy enough to fall into error on this point as we shall now see.

Consider one of the discussions of net expansion of employment occurring in the course of capital accumulation. “[T]he accumulation of capital, is a condition for the development of the capitalist mode of production, of the scale of production, of the growing amount of labour which is exploited, and of the material conditions for the development of the productive powers of social labour” (MECW 34: 186). Now the requisite labor supply is said to be drawn both from labor displaced by tech- nical progress and net population growth: “ . . . the capitalist mode of production continuously produces a relative surplus population, i.e. it sets free, renders disposable

a definite number of labour capacities, ejects them from the different spheres of production as superfluous labour power. Capitalist accumulation, therefore is not conditioned by the purely natural progress of population; it produces a larger or smaller quantity of disposable labour capacities for the already available new capital and the capital which is constantly being formed.” Similarly, there is reference to “a continuous expulsion of workers, a releasing of workers, a rendering of them available, with the result that the increasing number of workers attracted by cap- ital is created by an increasing mass of expelled, released workers; a circumstance through which accumulation itself holds in reserve and continuously produces an available surplus population – living material for a still greater accumulation of cap- ital – over and above the natural increase of population” (206; emphasis added). 27 Now it is easy enough to think of labor requirements as deriving from the pool of unemployed (in addition to population growth). But that this is not what Marx

27 Similarly, we have encountered Marx’s insistence that “[m]achinery always creates a relative surplus population, a reserve army of workers, which greatly increases the power of capital”

(MECW 32: 180; above, p. 363).

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had in mind is suggested by his repeated insistence on continuous reabsorption as applying specifically to the replacements in the new generation of those actually dismissed and rendered unemployed, and not to the latter who remain in the pool until recalled to service exceptional requirements at cyclical peaks. The concept of a “reserve” holds good only of those displaced who reemerge periodically; on Marx’s own terms it is inappropriate if applied to the secular trend where absorption into the work force relates to the new generation of laborers.

An assertion that “the mass of the population made redundant or the surplus pop- ulation constantly created by the capitalist mode of production itself increases with the development of the productive forces associated with accumulation” (230), renders it all the more important to keep in mind Marx’s own insistence on net population growth both in the passages just given and elsewhere. In fact, all major accumulation programs – financed from the higher purchasing power generated by productivity increase – depend on net population growth: “the increased pop- ulation – apart from the artificially created surplus population – is already there to absorb that part of the revenue which is transformed into variable capital” (MECW

32: 189; emphasis added). 28 Or again: “wage labour . . . will be reproduced on an ever growing scale, growing absolutely, even though decreasing relatively to the growing total capital which employs it” (197). Those passages which seemed to play down population growth (above, pp. 371–2) must be appropriately qualified by recalling their specific context and purpose.

Noteworthy then, in summary, are the following features of Marx’s analysis: First, a more or less permanent pool of unemployed – added to by labor-displacing technical change – a category entailing what today would be termed long-term or structural unemployment, that may be temporarily exhausted at cyclical peaks. Second, secular “reabsorption” of labor entailing the rempla¸cants or substitutes of the individuals displaced by technical change out of the new generation of

28 One formulation relating to population growth – it occurs in an account of Barton 1817 – is particularly difficult to grasp.

The accumulation of capital by itself raises the demand for labour only slowly, because each increase in this demand, if [labour is] scarce, causes [the price] of labour to rise rapidly and brings about a fall of profit which is ten times greater than the rise in wages. Accumulation can have a rapid effect on the demand for labour only if accumulation was preceded by a large increase in the labouring population, and wages are therefore very low so that even a rise of wages still leaves them low because the demand mainly absorbs unemployed workers rather than competing for those fully employed. (MECW 32: 206)

Marx accepts this, but only “cum grano salis, correct as far as fully developed capitalist produc- tion is concerned.” What he intended by the qualification is unclear. But taken at face value the implication is that population increase first enters the pool of unemployed and is then absorbed into the work force. This notion can be reconciled with the notion recorded in our text that “the increased population . . . is already there. . . . ” The difficulty is that it assumes the necessity for an initial fall in the real-wage as stimulus for increased labor demand, whereas the impression throughout had been that ongoing population growth occurs even with no such reduction provided the real wage exceeds subsistence.

E. The Mechanics of Population Growth and the Falling Wage Trend 375 wage workers – not those workers actually dismissed – coupled with net pop-

ulation growth as an essential source of labor supply to satisfy ongoing capital accumulation.