In the Communist Manifesto, Marx describes the result of economic crises: “an epidemic that, in all earlier epochs, would have seemed an absurdity - the epidemic of over-production”. Why is overproduction an “absurdity”? Because it is not overproduction in terms of actual human need but in terms of the market requirements of capitalist accumulation; real human beings may starve to death but where there is no profit, capitalism will not produce food.
Another commodity that suffers from this absurdity of overproduction in capitalism is that of labour power. This is expressed in the phenomenon of unemployment. While begging and vagrancy existed under previous modes of production (usually as a result of physical incapacity, war or famine), unemployment is a curiously capitalist phenomenon. Unemployment follows the needs of capitalist accumulation and plays an essential role in that process.
Capitalism needs unemployment to function
Unemployment is integral to capitalist accumulation, enabling the system to indirectly force the working class to accept the working conditions that cost capital the least. The oversupply of labour helps keep the price of labour down and helps the capitalist in the drive for profits. In the classical periods of depression during the nineteenth century the oversupply became particularly acute, forcing labour costs down rapidly and putting pressure on those still employed to increase productivity for fear of losing their jobs. In the nineteenth century periods of boom, surplus labour allowed expanding capitalism to take on workers quickly without poaching them from other parts of the economy or causing wages to rise to the point where they threatened the accumulation cycle.
As Marx (Capital, Vol 1, Chapter 25) put it “the industrial reserve army, during the periods of stagnation and average prosperity, weighs down the active labour-army; during the periods of over-production and paroxysm, it holds its pretensions in check. Relative surplus population is therefore the pivot upon which the law of demand and supply of labour works. It confines the field of action of this law within the limits absolutely convenient to the activity of exploitation and to the domination of capital”.
So for all the fine speeches of the capitalist class – in the US the state still has a legal requirement to work towards full employment – in the nineteenth century the bourgeoisie knew full well that their ability to accumulate depended on the perpetuation of unemployment. In the twentieth and twenty first centuries, with capitalism now a system in decline and in a permanent economic crisis (taking various forms) the bourgeoisie, even when it resorts to massive debt to stimulate the economy knows that levels of unemployment barely go down whatever the level of economic growth.
Unemployment and the welfare state
Unemployment has any number of serious consequences for those individuals and communities that are subjected to it: rising crime, drug abuse, ill-health. Studies suggest that long-term unemployment can reduce life expectancy typically by around seven years. These consequences often drive the working class to react. If out of work you don’t have the strike weapon, but the unemployed can organise themselves, and can unite with those who are still in work. The greatest fear of the ruling class is that such reactions will take on revolutionary forms but other forms of social unrest can unsettle the bourgeoisie.
In the period of capitalism’s historic decline the ruling class therefore does make some effort to limit as far as possible the impact of unemployment on the working class. It is no accident we have witnessed the creation of the so-called ‘welfare state’ in many of the advanced countries following World War II.
Nonetheless, since the end of the post-war boom, capitalism has been compelled to progressively shrink the benefits paid to the unemployed. In the UK, for example, in 1984 the ILO measure of unemployment and the claimant count were both roughly the same. By 2010 approximately a million people who are unemployed by the ILO measure were not in receipt of any unemployment benefits.
The ILO figure alone, however, does not paint the full picture of unemployment. It largely excludes the 2.7 million who receive sickness and disability benefits. The hypocrisy of the bourgeoisie is revealed in the fact that after years of deliberately shifting as many unemployed people as it could onto sickness benefits in the 80s and 90s, it is now launching a vicious attack on this benefit stream.
The media portrays the recipients of benefits as fraudsters and scroungers, but it doesn’t explain why their numbers are highest in those areas where employment chances are the most limited, namely those areas that have been most scarred by the collapse of traditional industries.
Although unemployment has not tended to fall with the fluctuations of the economy during the last twenty years there has been a rise in levels of employment. This can be accounted for by growing female participation in the labour market, especially younger mothers who work part-time and for generally lower wages. It is also important to remember the growing pressure on students and the retired to take up part-time work to support themselves. The number of part-time workers has grown from around 5 million in 1984 to nearly 8 million in 2010. A significant proportion of these part-time workers are involuntary part-timers – those who are forced to work part-time because they cannot get full-time work. Although the numbers of involuntary part-timers fluctuates, the lowest figure achieved since 2000 was still nearly 600,000. It now stands at over a million. Similarly, although the number of involuntary temporary workers also went down over the same period, it remained at roughly 400,000 at its lowest part.
Unemployment and crisis
Whatever can be read into the official figures it is clear that behind them the level of unemployment and underemployment in the economy is a growing problem for capitalism. The fact that real unemployment has persisted at a high level for decades shows that for capitalism the unemployed are less a reserve army and more a permanent reminder of the bourgeoisie’s inability to draw millions into productive (or even unproductive!) work.
Not only has real unemployment remained at consistently high levels but workers are experiencing increasing lengths in their periods of unemployment. For example, in the United States, the average length of a period of unemployment has been increasing, so that it is now 35 weeks, whereas in 1974 it was just over 15 weeks. The world’s largest economy is taking longer and longer to reintegrate those workers expelled from production. In addition to that there are all those who never return to the workforce, or do so only sporadically, or, in the case of many young workers, take literally years before they get their first job.
Paradoxically, the growing mass of the unemployed often takes place with a growth in skills shortages in key business and geographical areas which also stifles accumulation as capitalism is finding it harder and harder to equip its wage-slaves with the skills needed to make them productive. The relentless pressure on profits decreases the incentive for the bourgeoisie to train its workers – increasingly, this role has been passed onto the state and its increasingly under-resourced education system. Capitalists, meanwhile, also often insist only on employing workers who can ‘hit the ground running’; that is, who require minimum investment before they can be profitably exploited
These phenomena are clear examples of the remorseless decay at the heart of the profits system: the growing inability of capital to successfully exploit the labour power of the working class.