Vol. 72/No. 42      October 27, 2008

The capitalists’ falling average rate of profit results not only in “surplus” plant, “surplus” food, and other “surplus” capital and commodities, but also in what Marx described as a “relative surplus population.” The layoffs of wageworkers and dispossession of agricultural producers proceed at an accelerating pace and outstrip capitalism’s capacity to absorb this surplus labor power into new employment. The expanding reserve army of the unemployed becomes a source of pressure used by the capitalists to intensify the labor and hold down the wages of employed workers, and to increase competition among all workers.

“The over-work of the employed part of the working class swells the ranks of its reserve,” Marx explained, “while, conversely, the greater pressure that the reserve by its competition exerts on the employed workers forces them to submit to over-work and subjects them to the dictates of capital. The condemnation of one part of the working class to enforced idleness by the overwork of the other part, and vice versa, becomes a means of enriching the individual capitalists.”1

This process has accelerated not just in each imperialist country but worldwide since the onset of the capitalists’ accumulation crisis in the late 1960s and early 1970s. In the United States, Washington boasts about having reduced unemployment to under 6 percent from its peak of more than 10 percent in 1982, the highest level since 1938. What government spokespeople fail to mention is that this “low” figure remains substantially higher than the average of 4.8 percent for the entire quarter century between 1948 and 1973. Since 1973 joblessness has averaged 7.3 percent. While the annual unemployment rate went above 6 percent only twice between 1948 and 1973, it has dipped below 6 percent only twice for the fifteen years since 1973.

Moreover, the “official” government jobless figure that makes its way into the headlines does not include either the growing numbers of part-time workers seeking fulltime employment or the so-called discouraged workers who have given up hope of ever finding a job. The government does issue such figures, however; as of December 1987 unemployment measured in this way was 8.8 percent according to government sources. Adding in immigrant workers, layers of women and young people who would look for jobs if the prospects were better, and others overlooked in government figures, the true unemployment picture at the top of the “Reagan boom” is much grimmer than portrayed in official statistics.

Laid-off workers today are also condemned to spend more time off the job than in the past. The average duration of each spell of unemployment rose from eleven weeks during the twenty-seven years prior to 1974; to thirteen weeks from the 1974-75 world recession through 1981; and to sixteen and a half weeks since the 1981-82 recession. Today more than a quarter of those counted in government jobless figures are out of work more than fifteen weeks, compared to only 15 percent in 1967; and nearly 15 percent today are out work more than half a year, compared to only 6 percent in 1967. Even these figures on the average duration of each spell of unemployment understate the evolving picture, since in recent years workers more frequently have several bouts of unemployment over the course of a single year. Of the 10.8 million workers laid off between January 1981 and January 1986, nearly one-third were still jobless at the end of that period and another 30 percent were working for 80 percent or less of their previous wage.

The official unemployment rate for Japan was 2.6 percent in April 1988, well below that of most other imperialist powers. But when part-time workers looking for full-time jobs and the so-called discouraged workers are added in, the figure jumps to more than 8 percent, the same as for the United States. Moreover, in Japan the legal workweek remains forty-eight hours.

Prior to the 1974-75 world recession unemployment was below 5 percent in Spain, below 4 percent in Italy and Britain, below 3 percent in France, and below 1 percent in West Germany. In stark contrast, throughout the upturn in the capitalist business cycle since 1982 joblessness across Europe has hovered around 11 percent. In April and May 1988 official jobless figures stood at 19.9 percent for Spain; 15.6 percent for Italy; 13.9 percent for the Netherlands; 10.8 percent for Belgium; 10.3 for France; and 8.8 percent for Britain. In Canada, New Zealand, and Australia unemployment is running at more than 7 percent.

The most devastating effects of capitalism’s production of a relative surplus population is in the Third World. Official unemployment rates, while themselves very high, conceal the true enormity of the numbers of human beings who live on the knife-edge of existence without any way to make a living. Major cities throughout the semicolonial countries are surrounded by makeshift neighborhoods of peasant families who have been driven off the land and eke out a meager existence as vendors or doing odd jobs when they can get them. These dispossessed toilers are both peasants who would pour back to the countryside in their millions if arable land and cheap credit were available to them, but at the same time are unemployed workers in the growing ranks of capitalism’s relative surplus population.

In India, for example, there are 25 million employed wage-workers, and tens of millions are officially registered as unemployed. But this is out of a population of 800 million! The immensity of unemployment and underemployment in India, both in countryside and city, is completely obscured by official statistics, since the vast majority of its toilers are not even counted in government employment figures.

In Latin America official unemployment across the continent rose by nearly 50 percent between 1980 and 1987, from 47 million to 70 million out of a population of 400 million. According to the International Labor Organization, the percentage of Latin America’s toilers who are not even counted on the jobless rolls and scrape by on the margins of economic life jumped from 29 percent in 1980 to 39 percent in 1985.

Given unemployment levels already at a post-1930s high during an upturn in the business cycle, the next international recession will have grave economic and social repercussions throughout the capitalist world. Interimperialist rivalry for dwindling markets will intensify. Price competition will sharpen. Capitalist overproduction and excess capacity will be exacerbated, leading to a new wave of plant closings and layoffs. Investment in expansion of plant and equipment will drop even more steeply than over the past decade. With government and private indebtedness already at an all-time high, bank and business failures will accelerate and defaults on mushrooming corporate and Third World debt will increase. Finance capital will be pushed to greater borrowing and speculation in an effort to pull out of the trough.

Government intervention in this destabilizing process will grow by leaps and bounds. But no alternative economic policies followed by the employing classes or by their states and political parties can avert these consequences of the evolution of the falling average rate of industrial profit. The capitalists are not refraining from major new capacity-expanding investment because they are choosing to divert too much capital into securities markets, real estate speculation, loan sharking, and speeding up production in outmoded factories. The cause and effect are the other way around. The exploiters are sinking their capital into “labor-saving” retooling and speculative paper claims on values because they can get a better rate of return there than from investments in building new factories, installing major new technologies, and hiring on large amounts of additional labor power.
 
 
Related articles:
Bailouts fail to halt capitalist world crisis  
 
 
Front page (for this issue) | Home | Text-version home