Monday, November 20, 2017

Marx on The Reserve Army of Labor / Unemployed

     For wages to stay at the subsistence level, Karl Marx held that workers must be in a weak bargaining position in  relation to their employers.  A worker’s source of bargaining power is his or her ability to leave the employer and to go get a new job with someone else.  To Marx, under capitalism, the weak bargaining position of the workers would be maintained by a large supply of unemployed workers.  Workers would have to “obey” their employers because they would know that there were many other workers willing to take their jobs. And they could not quit their jobs because their chances of getting other jobs would be low.  This supply of unemployed workers was called “the reserve army of the unemployed”

     Three forces, according to Marx, would maintain this reserve army of the unemployed.  One was the high rate of population growth of the working classes, as noted above.  Another was what has been called “technological unemployment”.  When times are good and demand is increasing, companies desire to hire more workers.  This desire would tend to bid up wages.  In response to the higher wages, companies develop machines to replace people.  Those who are displaced by the machines become part of the reserve army. (See Part 7 below.)  A third force to maintain the reserve army was that, under capitalism, there is a persistent tendency for large companies to out-compete small companies.  The owners of the small companies (called the petit bourgeoisie) are then forced to become workers, swelling the numbers of people seeking employment.

     While Marx did not mention it, modern Marxists consider another factor that reduced the bargaining power of the workers.  This is called “deskilling”. Capitalists reduced the need for the skills of the craftsperson.  Instead, they created machines and job processes that required a low level of skill on the part of the workers.  One worker becomes interchangeable with another, losing any power that could be achieved by withdrawing labor from the employer.

     In Marx’s analysis of capitalism, this point may be the most relevant.  In the United States since the end of World War II, there have been only a dozen or so years of “full employment”.  When unemployment rates fall, the stock market typically declines!  Does capitalism indeed require a significant number of unemployed people?

For more on Karl Marx and Marxism:

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