New Socialist Webzine

Workers in the Global North: A Labour Aristocracy?

Review of Zak Cope, Divided World, Divided Class: Global Political Economy and the Stratification of Labour Under Capitalism (Kersplebedeb, 2012)

By Charlie Post

A specter has haunted anti-capitalist radicals and revolutionaries for more than 150 years—the specter of working class reformism and conservatism in the global North of the capitalist world economy. Why have those who Marx called the “grave-diggers of capitalism,” the wage-earning majority of the industrialized societies, embraced politics that either seek to “balance” the interests of capital and labour (reformism) or blame other workers for falling living standards and working conditions (conservatism)? 

 

For most of the last century, the main explanation for working class reformism and conservatism has been the theory of the “labour aristocracy.” While there are several variants of the argument, all share the claim that the higher paid sections of the world working class have been “bribed” with “super-profits” accrued from the “super-exploitation” of lower paid workers.[1] Whether derived from profits from transnational investment in the global South, or from large firms’ “monopolistic” position in the markets of the global North, higher wages, more secure employment and social welfare benefits secure the loyalty of better-off workers for capitalism. The labour aristocracy’s embrace of reformist and, at times, openly reactionary (racist, xenophobic, sexist, heterosexist) politics is quite rational.

Unfortunately for the advocates of the labour aristocracy thesis, their claims that super-profits accrued either through imperialist investments in the global South or through monopolies in the global North has no factual, empirical basis. Even the most generous estimates of the profits transnational corporations based in the global North repatriate from their investments in the global South constitute a negligible portion of the total wage bill in the developed capitalist countries. Put another way, the super-profits from imperialist investment cannot account for the wage differentials either between workers in the global North and South or among workers in the global North. Nor does monopoly—the degree of concentration of capital in a given market—account for either profit or wage differentials in the global North. Instead, the relative capital-intensity of production—the ratio of capital-goods (that is, such things as machinery, physical plants and natural resources) to wages in a production process—is the most reliable predictor of wage differentials between industries. Finally, well paid workers in the global North have not only demonstrated a capacity to militantly confront capital in industrial struggles, but have been the backbone of revolutionary socialist and anarchist organizations for most of the last century.

The Labour Aristocracy Theory Revisited

Zak Cope’s Divided World, Divided Class attempts to overcome the empirical limitations of previous defenses of the labour aristocracy argument. Cope’s defense of the labour aristocracy thesis in some ways substantially radicalizes the argument. No longer is the labour aristocracy restricted, in Lenin’s terms, to a “small minority” of workers in the global North, but now it encompasses the majority of workers in the developed capitalist world. While immigrant and non-white workers in the global North are subject to super-exploitation (through mechanisms which are never specified), Cope claims that the vast majority of workers in these regions are not exploited. They are the equivalent of the original proletariat of the Ancient Roman world—a layer of parasites who live off the exploitation of workers in the global South. Any militancy on the part of these workers—like the strikes and demonstrations against employers and the state during the current global crisis—are merely a defense of their privilege. Put another way, militant actions by well paid workers in the global North seek to renegotiate the “division of spoils”—the division of super-profits pumped out of the global South—with their capitalist classes.

At the heart of Cope’s empirical defense of the labour aristocracy thesis is an innovative attempt to measure the effects of unequal exchange between the global South and North. Although he attempts to produce data showing that profits repatriated from foreign direct investment in the global South are greater than previous estimates, he primarily relies on unequal exchange as the main mechanism for transferring surplus-value (profits) produced in the global South to the pockets of workers and capitalists in the global North. 

Cope bases his analysis on that of the Greek Marxist, Arghiri Emmanuel’s Unequal Exchange: A Study of the Imperialism of Trade (Monthly Review Press, 1972). For Emmanuel, unequal exchange is not the result of market manipulation, but of the operation of Marx’s law of value—that socially average necessary labour-time regulates the production and exchange of commodities—on a global scale. Marx, in Capital III, argues that the tendency to equalize profit rates between industries results in commodities no longer being exchanged according to their value (the socially average necessary labour time required for their production). Rather, commodities are exchanged, he argues, according to their prices of production (the cost of means of production, raw materials and labour-power for each unit of output).

This means that if commodities were exchanged at their value, more labour-intensive (low organic composition of capital) producers would earn higher rates of profit—despite their less efficient use of labour—than more capital-intensive (higher organic composition of capital) producers. In other words, according to Marx’s law of value, less mechanized industries such as growing cocoa beans in Guatamala would generate a higher rate of return on investment than more technologically advanced industries such as car manufacturing in Detroit. But, he qualifies this general point by insisting that competition between branches of industry transforms values into prices of production. This is effectively a transfer of value from low organic composition of capital (labour-intensive) producers to high organic composition of capital (capital-intensive) producers. The result is a tendency to equalize profit rates across branches of production.

Emmanuel follows an insight of the Marxist economist Henryk Grossman.[2] As the mobility of capital across the world creates a global profit rate, goods are exchanged on the world market according to their prices of production, not their value. The result is unequal exchange—the transfer of value from low to high organic composition of capital producers internationally. Emmanuel believed that production in the global South has a uniformly lower organic composition of capital than production in the global North. As a result, there is a systematic transfer of value from the less to more developed parts of the capitalist world. Unequal exchange explains both the persistent underdevelopment of capitalist production in the global South, and the emergence of a reformist and conservative labour aristocracy in the global North.

Cope, following Emmanuel, assumes that production in the global South has a uniformly lower organic composition of capital than production in the North. He then estimates the transfer of value from South to North through a fairly rigorous comparison of the value added (his proxy for surplus-value) to exports from the South to the North, and that added to the exports from the North to the South. Cope concludes that approximately $20 trillion of surplus-value was transferred from the South to the North through unequal exchange in 2010. This transfer accounts, according to Cope’s calculations, for the vast majority of the value of labour-power (wages) and surplus-value (profits) earned by workers and capitalists in the global North. 

Global North Workers: Living off the Spoils of Empire?

Has Divided World, Divided Class presented an empirically grounded defense of the labour aristocracy thesis? Has its author successfully challenged anti-capitalist strategies that wager on the possibility of winning the majority of workers in the developed capitalist world to revolutionary politics? Are, instead, most workers in the global North a new Roman proletariat living off the spoils of empire? Is the only hope for anti-capitalist politics found in the struggles of low-paid workers in the global South, with the support of a minority of poorly paid workers in the global North?

Despite the sophistication of his estimation of value transfers from the global South to the North, Cope’s argument and evidence does not withstand critical examination. Clearly, the transformation of values into prices of production through the equalization of profit rates does involve a transfer of value, creating a potential for unequal exchange between low and high organic composition of capital producers. However, as Anwar Shaikh pointed out more than 30 years ago,[3] production in the global South does not have a uniformly lower organic composition of capital than production in the North. In fact, the global South is the site of some of the most capital intensive production in the world, in particular in natural resource extraction (oil, natural gas, mining, etc.).

Put simply, unequal exchange between the global South and North does not produce a one-way transfer of value from the South to the North. It also produces transfers of value from lower organic composition of capital producers in the North to higher organic composition of capital producers in the South. Without a rigorous analysis of the relative weight of labour- and capital-intensive exports from and to the global South, there is no evidence that workers in the global North benefit from unequal exchange and are, thus, a necessarily conservative or reformist social force. 

Clearly, the vast majority of workers in the global North—and in the global South—most of the time are not revolutionary, or even actively contesting the capitalist offensive. Rejecting the labour aristocracy thesis, even in a fairly sophisticated form, does not free the anti-capitalist left from explaining working class reformism and conservatism. However, the roots of these phenomena are not found in the sharing of super-profits derived from imperialist investment, unequal exchange or monopoly. Rather, they’re found in the objective structure of capitalist social property relations that make possible varied forms of working class conscious praxis—working class conscious behaviour and action.

While collective mass struggle against capital is the basis for working class political radicalization, the roots of reformism can be located in the separation of workers under capitalism from the means of production. Working class collective organization and activity is necessarily episodic, for the simple reason that workers must sell their labour power in order to survive, and thus cannot continually engage in struggle. The episodic character of the class struggle produces both a layer of full-time officials within the labour-movement and prolonged periods of working class passivity. And it is this that constitutes the social foundations of both the unconditional reformism of the officialdom and the conditional reformism of most workers. 

The roots of working class conservatism are found in the constant competition among workers as individual sellers of labour power. In the absence of effective, collective class organisation, workers are pitted one against another on the basis of race, gender, nationality for jobs, promotions, education and housing. This competition among workers provides the social environment for the development of racism, sexism, nativism and other conservative ideas among workers. 

Whether workers radicalize, accept reformism or embrace conservativism is not determined in “a sphere of mere contingency and subjectivity set apart from the sphere of ‘objective’ material determinations,” but shaped by “the complex and often contradictory historical processes by which, in determinant historical conditions, class situations give rise to class formations.”[4] In other words, which form of consciousness develops in which sections of the working class historically depends upon the presence, shape and strength of resistance and struggle.

Notes

[1] I surveyed the varieties of labour aristocracy theories and analyzed their theoretical and empirical weaknesses in “The Myth of the Labor Aristocracy,” Against the Current 123 (July-August 2006); “The "Labor Aristocracy" and Working-Class Struggles: Consciousness in Flux,” Against the Current, 124 (September-October 2006);  and “Exploring Working Class Consciousness: A Critique of the Theory of the ‘Labor Aristocracy,” Historical Materialism 18 (2010).

[2] The Law of Accumulation and Breakdown of the Capitalist System: Being Also A Theory of Crisis (London: Pluto Press, 1992).

[3] “Foreign Trade and the Law of Value: Part I” Science & Society, 43, 3 (Fall 1979) and “Foreign Trade and the Law of Value: Part II” Science & Society, 43, 4 (Spring 1980). 

[4] Ellen Meiksins Wood, Democracy Against Capitalism: Renewing Historical Materialism (Cambridge: Cambridge University Press 1995), pp. 81, 83.

Charlie Post teaches sociology at the City University of New York, is active in his faculty union and is a member of Solidarity, a revolutionary socialist organization in the United States. 

 

Comments   

 
0 #11 Koya 2013-01-10 22:09
Also do we really think this statement correct:
"The buying and selling of T-bills only circulates surplus value already produced. By reducing inflation, it actually tightens market discipline on capitalist producers in ALL segments of the world economy."

This buying-selling pops up (overvalue) the asset prices of the US. The FDI also enforces the global South to issue national bonds on which they have to pay interest. The overvalued dollar also creates high oil prices in terms of local currencies, thereby it helps increasing trade deficit. All these matters actually push inflation in the third world.
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+1 #10 Koya 2013-01-10 21:58
Also see this:

That's rich! Starbucks paying staff 25p an hour in new Indian cafes:
http://www.mirror.co.uk/news/world-news/starbucks-paying-staff-25p-an-hour-1429212

For barristas, Indian wages: 56p i.e. around 0.9 USD per hour (even from PPP, it comes around 2.1 USD per hour)
Chilean wages: around 2.5-3 USD per hour (PPP almost same)
US wages: 8-9 USD per hour

Price of small size coffee everywhere same: around 1.8 USD
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0 #9 Koya 2013-01-10 21:56
Also you are only insisting upon only one way of surplus value transfer -- low occ to high occ. But Smith borrows the concept of 'third form of surplus value increase' from Andrew Higginbottom. This means paying wages below the value of labor power.This is different than equalization of rate of profit. This causes huge differential in the rate of surplus value. Cope terms this also as 'unequal exchange' and tries to estimate this value according to equal wages. I am not sure about his full methodology which I have to look at carefully but its a good insight. On the other hand Smith leaves the subject there and tries to show the net difference in the rate of exploitation between global North and global South.
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0 #8 Koya 2013-01-10 21:54
Could you please let us know those literature that are challenging the notion that the share of global South in world manufactured products has increased? Also, you might be overlooking the growing reliance upon intermediate products in exports of the global North. The role of manufactured imports from global South has increased. By 2002, 44% of US manufactured imports came from ‘emerging economies’, up from 21% in 1980 and 7% in 1965 (Smith).
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-1 #7 Charles Post 2013-01-10 18:30
PART II: Again, there is little evidence that a wage differentials within the global North, or between the global North and South are the result of direct profit repatriation from foreign direct investment. Cope's attempt to calculate the effects of unequal exchange prove nothing because he fails to determine the relative weight of high and low organic composition of capital industries in global South exports to the global North.
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-1 #6 Charles Post 2013-01-10 18:28
First, Smith's data is constructed by assuming-- as you do-- that most manufacturing has moved from the global North to the global South. There is ample literature challenging this common sense notion, that is the subject of my current, on-going research project. The 14 million manufacturing workers produce as much, if not more manufactured goods in the US than ever before.

Second, the mechanism that both Emmanuel and Cope identify for the transfer of value is through the equalization of profit rates through prices of production. This transfers value from low to high organic composition of capital producers. "Cheap" labor industries-- which tend to be labor-intensive /low organic composition of capital-- fall within this category.

The buying and selling of T-bills only circulates surplus value already produced. By reducing inflation, it actually tightens market discipline on capitalist producers in ALL segments of the world economy.
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0 #5 Koya 2013-01-10 16:40
Cope also makes an interesting point based upon Emanuel observation: ""The avergae OECD wage in 2007 amounted to US $28,536. To pay the workers in the world at this level would require a global GDP of US $88.5 trillion, or US $26.3 trillion more than in 2010. Alternatively, if, as Emanuel hypothesizes, the entire bourgeoisie were appropriated on a world scale, all profits paid out as wages and no money set aside for investments and public infrastructure, each worker would receive no more than US $20,064, or 70% of the current average OECD wage."
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0 #4 Koya 2013-01-10 16:28
Profits from N-S FDI investment and then associated 'deflated' dollar because countries of the South buy US treasury bonds and securities to stave off the threat of inflation -- they are one more mechanism. And isn't it undeniable truth that the US has not more than 14 million manufacturing labor? Most of its labor is engaged in unproductive activities according to the Shaikh and Tonak's definition of productive and unproductive labor. 80% of real industrial workforce has shifted to the South. So it must be clear who is living on whom.
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0 #3 Koya 2013-01-10 16:26
Thanks for responding. But what is your basis of doubting the repatriated profit data that Smith relies upon? Second, that is only one mechanism for transferring value from low occ to high occ? Increasing reliance of US corporations on south cheap labor is another one. How will you explain the cheap consumer goods such as apparels, toys, electronic items and call center services? Various reports have been saying that firms are able to reduce their costs by 40-60% through offshoring to low wage countries. In the US, corporate profit share of national income in 2006 was 10%, and offshoring cost reduction contributed to around 3% of national income (Milberg, 2008).
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-1 #2 Charles Post 2013-01-08 14:56
I must disagree. Cope at various points did use Smith's questionable data on the repatriated profits from foreign direct investment in the global South. However, he argued that at least 75% of the "super-profits" extracted from workers in the global South were the result of unequal exchange. Unfortunately, his failure to determine the relative weight of high and low organic composition of capital exports from the global South to North makes all of his "data" besides the points.
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