The Falling Wage Trend and Population Growth
D. The Falling Wage Trend and Population Growth
In the earliest stages of capitalism, accumulation proceeds with organic composi- tion unchanged, so that the rate of labor demand is proportionate to the rate of accumulation (MECW 35: 608). Wage increases result from deviations between the growth rates of labor demand and labor supply, for “sooner or later a point must be
11 On this matter, see Section F. The significance of the closing reference to “exploitation of children” is taken up in Section G.
12 In Capital 1 we encounter a similar statement, though applied specifically to domestic industry: “ . . . not only the number of births and deaths, but the absolute size of the families stand in
inverse proportion to the height of wages, and therefore to the amount of means of subsistence of which the different categories of labourers dispose. This law of capitalistic society would sound absurd to savages, or even civilised colonists. It calls to mind the boundless reproduction of animals individually weak and constantly hunted down” (MECW 35: 637). On this matter, see below pp. 103–4.
95 reached, at which the requirements of accumulation begin to surpass the custom-
D. The Falling Wage Trend and Population Growth
ary supply of labour, and, therefore, a rise of wages takes place” (609). The same pattern is experienced in the colonies (755–6; also MECW 20: 146). There is noth- ing new in all this, since Marx followed orthodox reasoning that “it is neither the actual extent of social wealth, nor the magnitude of the capital already functioning, that lead to a rise of wages, but only the constant growth of accumulation and the degree of rapidity of that growth (Adam Smith, Book I, chapter 8)” (616–17).
Given labor productivity, rising wages imply, of course, a corresponding reduc- tion in the profit rate. Smith is again cited, now to the effect that any such reduction has no depressing effect on accumulation since “[a] great stock, though with small profits, generally increases faster than a small stock with great profits” (614); but Marx did not quite commit himself, allowing also for the possibility of a slowdown in accumulation since the “stimulus of gain is blunted,” such slowdown acting as
a corrective, with the result that “[t]he price of labour falls again to a level cor- responding with the needs of the self-expansion of capital, whether the level be below, the same as, or above the one which was normal before the rise of wages took place” (614–15). This is problematic for there is no patent reason why a decel- eration in accumulation due to the rise in wages should be able to force wages back to, and even below, its initial level. But Marx does later make the more reasonable allowance that the correction reduces the wage but to a level somewhat higher than at the start, thus allowing for an upward trend in wages. On this account any upward movement in the wage is held in check by the dampening effects on the rate of accumulation exercised by the falling return on capital: “But as soon as this diminution touches the point at which the surplus labour that nourishes capital is no longer supplied in normal quantity, a reaction sets in: a smaller part of rev- enue is capitalized, accumulation lags, and the movement of rise in wages receives
a check. The rise of wages therefore is confined within limits that not only leave intact the foundations of the capitalistic system, but also secure its reproduction on a progressive scale” (616). There is no talk here of excess labor supply; merely
a limit to the extent that the wage can rise. 13
I now introduce the complexity of changing organic composition of capital – Marx’s main preoccupation – or “that change in the technical composition of capital by which the variable constitutent becomes always smaller and smaller as compared with the constant” (620). Exogenous technical change seems to take precedence over wage-induced substitution against labor, Marx citing favorably
Ure and Ricardo on “machinery” (see above, p. 89). 14 Certainly much emphasis
13 In all this nothing is said of the effect of the higher wage on the growth rate of labor supply. A reference to “the customary supply of labour” (MECW 35: 609, cited above), suggests a given
growth rate. 14 Marx does, however, also recognize wage-induced substitution against labor, citing Ricardo’s
“machinery and labour are in constant competition” (MECW 35: 433n; 20: 147). One passage relating to the steam-engine is open to alternative readings, depending on the sense of “the growing claims of the workmen”: “According to Gaskell, the steam-engine was from the very
96 Economic Growth and the Falling Real-Wage Trend
is placed on innovations introduced by individual capitalists to raise productivity and cut costs in a scramble for markets – attempts sooner or later adopted by the industry as a whole – quite apart from any preceding wage increase: “The battle of competition is fought by cheapening of commodities. The cheapness of commodities depends, caeteris paribus, on the productiveness of labour, and this again on the scale of production” (621; also 455). And so machine-intensive technologies may be introduced even when wages have fallen to drastically low levels (473). Indeed, the “law” of the progressive increase in constant relative to variable capital, proceeds on the explicit (if provisional) assumption of constant, not rising, wages: “the increase or diminution of the variable capital corresponds rigidly with the increase or diminution of the number of labourers employed” (629). 15
We note further that it is not merely the additions to capital which embody the new technologies that entail altered composition; the entire capital stock ultimately comes to be transformed: “The additional capitals formed in the normal course of accumulation . . . serve particularly as vehicles for the exploitation of new inven- tions and discoveries, and industrial improvements in general. But in time the old capital also reaches the moment of renewal from top to toe, when it sheds its skin and is reborn like the others in perfected technical form, in which a smaller quan- tity of labour will suffice to set in motion a larger quantity of machinery and raw
materials. . . . ” 16 Even so, an absolute fall in the demand for labor in consequence of altered composition is not what Marx had in mind, as far as concerns the advanced industrial sector. That Marx presumed net expansion of labor demand (though not necessarily in individual industries; 451) is frequently reiterated: “In the cen- ters of modern industry – factories, manufactures, ironworks, mines, &c. – the labourers are sometimes repelled, sometimes attracted again in greater masses, the number of those employed increasing on the whole, although in a constantly decreas- ing proportion to the scale of production” (635; emphasis added). Similarly, in the 1865 speech: “In the progress of industry the demand for labour keeps . . . no pace with the accumulation of capital. It will still increase, but increase in a con- stantly diminishing ratio as compared with the increase of capital” (MECW 20: 148; emphasis added). And in Capital 3: “it is but a requirement of the capitalist mode of production that the number of wage workers should increase absolutely, in
first an antagonist of human power, an antagonist that enabled the capitalist to tread under foot the growing claims of the workmen, who threatened the newly born factory system with a crisis” (438–9; emphasis added). And substitution against labor is central to the case against Malthus. See further note 25. 15 But it is an essential part of Sweezy’s interpretation that the capital conversion process (and the generation of the reserve army of unemployed) does reflect substitution against labor in response to a preceding wage increase (1942: 87–8). The only citation given in support is a passage relating the response by employers during the decade 1849–59 to a sudden and unusual fall in the supply of agricultural labor (see below, p. 108). 16 The paragraph cited is from the fourth German edition of Capital 1 (1890) as printed by Progress Publishers, Moscow 1965: 628.
97 spite of its relative decrease” (MECW 37: 262; emphasis added); indeed, were it
D. The Falling Wage Trend and Population Growth
otherwise there would be a revolution – surely the most remarkable pronounce- ment in Capital: “A development of productive forces which would diminish the absolute number of labourers, i.e., enable the entire nation to accomplish its total production in a shorter time span, would cause a revolution, because it would put the bulk of the population out of the running.”
Agriculture is viewed differently. Absolute reduction in demand for agricultural labor is recognized, and sharply contrasted with the higher demand insisted on for industry. In the Capital 1 version: “As soon as capitalist production takes possession of agriculture, and in proportion to the extent to which it does so, the demand for an agricultural labouring population falls absolutely, while the accumulation of the capital employed in agriculture advances, without this repulsion being, as in non- agricultural industries, compensated by a greater attraction” (MECW 35: 636). And in the Capital 3 version: “The increase in the absolute number of labourers does not occur in all branches of production, and not uniformly in all, in spite of the relative decrease of variable capital laid out in wages. In agriculture, the decrease of the element of living labour may be absolute” (MECW 37: 262).
Absolute increase in the demand for industrial labor is thus confirmed. But what of its rate of growth? Marx at one point writes of a decline in labor demand “relatively to the magnitude of the total capital, and at an accelerated rate, as this magnitude increases. With the growth of the total capital, its variable constituent or the labour incorporated in it, also does increase, but in a constantly dimin- ishing proportion” (MECW 35: 623–4). But accumulation itself is accelerating – and at an increasing rate – leaving open the possibility that the growth rate of labor demand itself rises: “It is not merely that an accelerated accumulation of total capital, accelerated in a constantly growing progression, is needed to absorb an additional number of labourers, or even, on account of the constant metamor- phosis of old capital, to keep employed those already functioning. In its turn, this increasing accumulation and centralisation becomes a source of new changes in the composition of capital, of a more accelerated diminution of its variable, as com-
pared with its constant constituent” (624). 17 But the possibility that the growth rate of labor demand actually rises is not spelled out; and in fact Marx goes on to write of the “accelerated relative diminution of the variable constituent, that goes along with the accelerated increase of the total capital, and moves more rapidly than this increase” (emphasis added), strongly suggesting reduction in the rate of growth of labor demand.
It is certain that the absolute demand for industrial labor is envisaged as increas- ing, though apparently at a declining growth rate. But to appreciate the downward pressure on wages, we must also take account of labor-supply conditions. Here
17 Cf. “whereas formerly an increase of capital by 20 per cent. would have sufficed to raise the demand for labour 20 per cent., now this latter rise requires a tripling of the original capital”
(MECW 35: 619).
98 Economic Growth and the Falling Real-Wage Trend
we recall the fact of population expansion repeatedly referred to – the “addi- tional number of labourers” (624), or the “additional labour power, annually sup- plied by the working class in the shape of labourers of all ages” (580, cited above, pp. 93, 97). “What are set free” by capital conversion, Marx explains, “are not only the labourers immediately turned out by the machines, but also their future substitutes in the rising generation, and the additional contingent, that with the usual extension of trade on the old basis would be regularly absorbed ” (633; emphasis added). There is in brief, “the more difficult absorption of the additional labouring population through the usual channels” (624–5; emphasis added). And the conse- quence is the downward pressure on real wages encountered earlier:
The first word of this adaptation [of variable into constant capital] is the creation of
a relative surplus population, or industrial reserve army. Its last word is the misery of constantly extending strata of the active army of labour, and the dead weight of pauperism. . . . [The] higher the productiveness of labour, the greater is the pressure of the labourers on the means of employment, the more precarious, therefore, becomes their condition of existence, viz., the sale of their own labour power for the increasing of another’s wealth, or for the self-expansion of capital (638–9).
Absolute labor demand is thus expanding though at a decelerating rate. A fall in the wage can only be explained by too rapid a growth rate of labor supply. Rosdolsky – who ignores in this context the issue of population pressure – claims that Marx refers here only to the growing misery of the pauper or “lazarus layers of the working class,” not the general body of labor (1980: 302–3). We do not deny that Marx took account of growing misery of this category: “the greater this reserve army in proportion to the active labour army, the greater is the mass of a consolidated surplus population, whose misery is in inverse ratio to its torment of labour. The more extensive, finally, the lazarus-layers of the working class, and the industrial reserve army, the greater is official pauperism. This is the absolute general law of capitalist accumulation” (MECW 35: 638). But his reference to “the misery of constantly extending strata of the active army of labour” and the grow- ing “precarious[ness]” of “their condition of existence” – applying to “labourers” without qualification – indicates that the general body of labor is also subject to growing immizeration. And thus we can easily appreciate the generalization that “in proportion as capital accumulates, the lot of the labourer, be his payment high or low, must grow worse” (639). All categories of labor suffer the consequences of capitalist accumulation.
A falling growth rate of labor demand puts downward pressure on the wage rate even in conjunction with a constant growth rate of labor supply. But here we recall (above, p. 94) Marx’s proposition that growing poverty, should it lower “standards,” may actually stimulate population growth, thus adding to the downward pressure, though ultimately – at the (physiological) “subsistence” level – the growth rate falls to zero. But Marx had little to say about the approach to stationariness – whether
99 it is smooth or subject to discontinuity, and speculation regarding this matter is to
D. The Falling Wage Trend and Population Growth
little purpose.
Our argument has stressed the role of population pressure in appreciating Marx’s immizeration thesis. We must now address what at first sight appears to be mys- terious reference to “an apparently absolute increase of the laboring population,” when we know that Marx has presumed throughout an actual absolute increase in population and employment, considering the net expansion of labor demand:
This accelerated relative diminution of the variable constituent, that goes along with the accelerated increase of the total capital, and moves more rapidly than this increase, takes the inverse form, at the other pole, of an apparently absolute increase of the labouring population, an increase always moving more rapidly than that of the variable capital or the means of employment. But in fact, it is capitalistic accumulation itself that constantly produces, and produces in the direct ratio of its own energy and extent,
a relatively redundant population of labourers, i.e., a population of greater extent than suffices for the average needs of the self-expansion of capital, and therefore a surplus population (MECW 35: 624).
The mystery is resolved if we understand Marx as denying that the problem of excess labor supply was “due to” population growth as the operative cause. That ongoing population growth occurs is not in doubt. But the problem of excess labor supply has its immediate source in a falling rate of growth of labor demand reflecting the conversion process.
The apparent denial of an absolute increase in population emerges also during the course of a formal critique of Malthus – the complaint that while Malthus had recognized “overpopulation as a necessity of modern industry,” he had “after his narrow fashion” explained it “by the absolute overgrowth of the labouring pop- ulation, not by their becoming relatively supernumerary” (628). Marx’s position here may be appreciated as a denial of any problem of absolute population growth relative to land and manifested in diminishing agricultural productivity. This is precisely how the matter is summarized in Capital 3, in passages unambiguously allowing for ongoing population expansion:
. . . the possibility of a relative surplus of labouring people develops proportionately to the advances made by capitalist production not because the productiveness of social labour decreases, but because it increases. It does not therefore arise out of an absolute disproportion between labour and the means of subsistence, or the means for the production of these means of subsistence, but out of a disproportion occasioned by capitalist exploitation of labour, a disproportion between the progressive growth of capital and its relatively shrinking need for an increasing population (MECW 37: 220; last phrase, emphasis added).
... as the capitalist mode of production develops, an ever larger quantity of capital is required to employ the same, let alone an increased, amount of labour power. Thus, on a capitalist foundation, the increasing productive power of labour necessarily and
Economic Growth and the Falling Real-Wage Trend
permanently creates a seeming overpopulation of labouring people (221; emphasis added).
The fact of ongoing population growth is thus beyond doubt, as is the relatively slower growth of labor demand. And, to repeat (in terms of Marx’s speech of 1865), the consequence is a reduction in the value of labor power “to its minimum limit” (above, p. 88).