Part 1

CHAPTER XI.

THE NATURAL CONFLICT BETWEEN CAPITAL AND LABOUR
PROFIT AND WAGES.

 
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As we have seen, labour power is subjected to the law of demand and supply; but the worker, as a Human being, cannot bear to be subjected to, and demeaned by such ruthless and impersonal law.

We find in Adam Smith's analysis a basic and clear explanation of how this law is supposed to work in respect to the laborers - the Human commodity in capitalist production: The cost of labour is the cost of producing a labourer; it is the cost of his subsistence or the expense of maintaining the labourer alive while he is working.

When the society is expanding there is more demand for labour, this causes a rise in wages (the price of labour) and in the standard of living for the worker, consequently, his children are better fed, and more survive to become laborers themselves. When there is an oversupply of laborers, or the society is in decline, the real wages and the standard of living of the workers start to fall; therefore, children are undernourished and their mortality increases. Eventually laborers become scarce; if the demand for labour increases, then their wages and conditions will start to rise again until the time when they become too numerous, and so on. Obviously this is pertinent to Adam Smith's eighteen century.

If it was not for social services and modern medicine, by this law the number of laborers would naturally and automatically adjust to the requirements of capitalist economy. In this way, wages were supposed to fluctuate sometime above and sometime below the level of subsistence. But a concession had to be made, eventually, for the propagation of the race of laborers. Adam Smith in his analysis stated that

"...there is however a certain rate below which it seems impossible to reduce for any considerable time, the ordinary wages even of the lowest species of labour. A man must always live by his work and his wages must at least be sufficient to maintain him. They must even, upon most occasions be somewhat more; otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation ..."

This was probably the first tampering with the law of demand and supply in consideration of the worker.

Nobody could deny that the mass media, in most capitalist societies, is directly or indirectly influenced by business. All we hear from comments and editorials about our continuous industrial troubles is a persistent cry of surprised dismay about workers' greed and unions' disregard for the public, the Nation and the economy. These complaints give the impression that antagonism between labour and capital, or workers and employers, is something alien to the capitalist system.

They Create the impression that antagonism is something imposed from outside and that it could be easily overcome with a bit of common sense.

The fact is never mentioned that our socio-economic system is based on competition, permeated by selfishness, aggressiveness and, evidently, also hypocrisy. Conflict and antagonism are integral part in the nature of Capitalism.

Since the beginning there has been hardly a day without confrontation and conflict in one place or another. Veiled or naked force, blackmail and repression are the main features in the history of capitalist development; it would be enough to mention the excesses of the Industrial Revolution in Europe, and the savagery of the slave trade that went on for centuries.

What are the main reasons for this conflict between capital and labour?

The most important reason for this conflict lays in the core of the system, in the nature of capital and labour. Both profits and wages must ultimately come from the price of the commodities sold. Because of competition, the capitalist will try to lower the cost factor of wages and maintain the margin of profit in the price of the commodities he sells. Quite naturally, the wage earner will resist this pressure and will try to maintain the level of wages rather than profits; consequently, there has been a continuous struggle between capital and labour, profit and wages.

Adam Smith explains the principal reason for this antagonism. In his analysis of the system he states that the price of a commodity is composed by three main parts: the cost of labour, the cost of rent or interest, and profit. In the same way, the total sum of the prices of all commodities produced in a country (the Gross National Product) is also divided in three parts: wages, rent, and profit. These are "....parceled out among different inhabitants of the country, either as the wages of their labour, the profit of their stocks or the rent of their land..." From this basic situation derives the never ending squabble about the division of the 'national cake' amongst the classes of society.

Adam Smith gives us a classical description of employer - labour relations as they were two and a half centuries ago; in essence they were the same as they are today:

".....What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workers desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour...."

He continues describing the factors that have determined industrial relations to this day: employers have the sympathy of the law and the police, they can combine easier, they can last longer in a dispute, and they can influence public opinion. The laborers seldom have the support of the law, the police and the media, their associations are restricted or prohibited, they cannot last very long in a dispute and, therefore, "... in order to bring the point to a speedy decision, they always recourse to the loudest clamour, and sometimes to the most shocking violence and outrage. They are desperate, and act with the folly and extravagance of desperate men, who must either starve, or frighten their masters into an immediate compliance with their demands...."

Generally these conflicts end in stalemate or compromise, and eventually they erupt again. The battles and skirmishes continue but the war is never completely won by either side. When the economy expands and the demand for labour increases, the workers have a certain advantage, which they promptly lose as soon as the economy slows down and there is unemployment.

Since the capitalists have a commanding position in the economy and the society, they have different ways to depress the real wages of labour. When a wage rise has cut into their profits they can raise their prices, and the rise in wages is nullified. The government can raise direct and indirect taxes, it can cut social services, and it can raise the price of public utilities. Seldom there have been laws and tribunals to control prices, but there always have been plenty of controls on wages.

Some sections of the workforce that are employed in vital or privileged positions in the economy can take advantage of their situation and obtain for themselves good wages and conditions. They should not be blamed for being selfish in a system in which individual selfishness and aggressiveness are considered to be virtues without which there can be no success.

But the majority of the workforce is not so lucky. Ours is a free for all and everyone for himself socio­economic system in which everyone must take full advantage of any opportunity to grab a piece of the 'national cake', or be left with the crumbs. There should be no surprise that those who have strong elbows and those who have knives get the bigger slices.

Another cause of conflict between capital and labour is the contention about how much the capitalist is supposed to get, and how much the labourer is supposed to give in return for his wages. There always has been a contention about the quantity of flesh blood and soul that the capitalist employer believes he has bought from the worker, and the quantity that the worker believes he has sold to the capitalist.

As these quantities and values can never be defined and priced, the capitalist, under the pressure of competition, and the worker trying to survive and improve his life, have endeavored to get as much as possible from each other and give each other the least they can. Another important reason for conflict is that the majority of wage earners are and feel alienated; even in the developed industrial countries where the material standard of living of the workforce has dramatically improved since the Second World War. There was a great economic expansion during this time, and the workers of these countries were already well organised to take full advantage. Moreover, with the advent of consumerism, they became consumers in a consumer society.

It is evident that families with more than one income, and those people employed in privileged industries and services, enjoy a high standard of living in capitalist society, comparable with that of the middle class. But at present an increasing number of the workforce is being pushed backwards as the economy is contracting, the unemployed being excluded from a meaningful participation in the life of the society. These people are becoming more and more alienated even if they are not conscious and do not clearly understand the real causes of their predicament.

In the ancient slave economies slaves were the personal property of a slave owner; therefore, he had an interest to keep them alive, whether they were working or not, as long as they had a market value. In the feudal system, the serfs had their plots of common land therefore they were self sufficient. But in capitalist society the workers when out of work become real paupers. They have to be maintained by public funds. The capitalist employer must keep them alive only while they are in his employment; when they are not, he has no interest in them nor any responsibility towards them.

Thus could be described the general situation of many workers in capitalist society: they labour ( if they have a job ) with tools that do not belong to them, on materials that do not belong to them, to produce goods that do not belong to them and often will never be able buy; they have no real say on what they produce or on matters which affect their lives and that of their families; no matter how much they are doing, they have never done enough; they have no security for the present or for the future; when they become old, sick or redundant they are dumped as a burden to society. They feel that they are expendable, but they cannot get away because they are fenced in by the private ownership of the land and of the other means of production. Like gray donkeys, they are forced to work day in day out, and they are lucky if they happen to like the jobs they are doing.

If one has a family, one seldom has any money left for relaxation and enjoyment. No matter how much his employers through the media exhort him to work harder, and talk to him about teamwork, the Nation, the Economy, etc. one has a feeling that he is only a number, and that he is just kept alive so that he can go back to work the next day, if one is lucky to have a job, and so that he can raise a few children to replace him when he is too old to work.

Alienation is more accentuated in some countries than in others The reason is that each nation has developed in different circumstances and environments. There are different combinations of temperamental and historical backgrounds. Each case could be explained.

Japan is one example: there the relations between employers and employees, mainly in the bigger companies, is more close and cooperative than in the West (1970). In Japan, during the last century, the feudal establishment consciously and willingly decided to transform their feudal economy into a capitalist system of production.

Therefore, Capitalism in Japan still has some of the features of the Japanese feudal system: some paternalistic relations remnants of the feudal hierarchy and social castes with their reciprocal covenants and responsibilities.

In Europe, the capitalist class evolved mainly from the often despised class of merchants, usurers and artisans of the Middle Ages, who often were bonded serfs themselves and had no such feelings of paternalism or responsibility towards the rest of their countrymen.

For many reasons the attitudes of employers and workers of different countries may be different, but the pressures of capitalist economy are the same, and in the end will produce similar results. Competition on the world's market will naturally tend to reduce the working conditions of the workers in most countries to the minimum denominator.

Because labour power in capitalist economy is considered a commodity, the capitalists must try to keep its cost to the minimum. Therefore, from the beginning they had to suppress all workers' organisations; their leaders were sent to the gallows or to penal colonies. Many laws were enacted to regulate labour relations, to tie the hands of the workers, to punish employers for raising wages above set levels, to punish workers even harder for accepting such rises.

In the industrial countries it took a long and hard struggle for the workers to improve their conditions. But in many capitalist dictatorships labour repression is still the same or even worse than in the early stages.

The necessity to keep wages down is ever present; it is all we hear in the capitalist media.

It seems evident that, no matter how many times the capitalist has promised to the 'working poor' the benefits and leisure that should come from hard work and technology, he is impotent to fulfill this promise, notwithstanding all his best intentions. Any improvement has to be seized from him. He is pressed by competition, the law of the market, and the drive to maximise his profits. Moreover, he cannot remove the element of want and necessity completely from the majority of the workforce. This element is an essential part of the mechanism of capitalist production: it is mainly necessity that drives the worker to seek employment under any conditions. If he is well paid, as soon as he can afford he will slow down, he may become insubordinate, he may retire or stop working for a master.

These forces compel the capitalist in the course of his business, no matter how gentle and good natured person he may be in private life, to resist the attempts of his employees to obtain better wages. He is compelled to prefer, and sometimes to create, a situation in which the supply of people in search of work is in excess of the demand for their services, even if this may mean a slower economic growth and a lot of misery for a lot of people.

The capitalist, therefore, must oppose labour unions and workers' political parties that give strength to the laborers. He must also be unsympathetic towards social schemes and unemployment benefits that diminish the workers' necessity to seek employment under the worst wages and conditions ­ unemployment benefits interfere with the law of demand and supply in favour of the worker.

The capitalist must also prefer a situation in which the basic commodities, like food and rent, essential for the subsistence of the labourer, are dearer; this lower the real wages of labour and gives the capitalist an advantage, as Adam Smith observed two centuries ago

"...wages are high in cheap years, and low in dear years, so that masters commend dear years. Masters of all sorts, therefore, frequently make better bargains with their servants in dear than in cheap years, and find them more humble and dependent in the former than in the latter. They naturally, therefore, commend the former as more favourable to industry....."

Part 1