Wage scaling, exploitation, and class analysis

Social Clashes in America

The wealth gap between the developed core nations and the maldeveloped periphery is difficult to ignore. However, the nature of this inequality is not static and determined like neo-classical economics would seem to indicate. Rather, this inequality is the continuing result of the imperialist processes of superexplotiation in the Third World.

Understanding the global processes of imperialism and its relationship to wage scaling between the core and periphery is pivotal to a correct analysis of the present social reality and therefore is key to the correct application of correct theory.

So what is wage scaling? Wage scaling is the process by which the average wage for a specific form of labor or abstract labor is priced from region to region. For example, the average textile worker in the United States makes around USD 17.70/hr while his Latin American counterpart makes only USD 1.21/hr [1]. One can find similar examples in nearly all professions but also in abstract labor. Where the average worker in the world receives an income of about USD 1250/yr, his american equivalent receives about USD 29000/ yr [2]. This difference in wage scaling can be attributed to the imperialist relationship between the core and periphery nations. For the last five centuries most of Asia, South America, and Africa have been colonies of the wealthier core regions (e.g. US, Europe, Japan). Even now with nominal independence these ‘free’ nations remain entirely subservient to the Global North. Efforts by neoliberals and their functionaries in the IMF to ‘promote domestic growth’ have only created desperate material conditions and reinforced the Western monopsony (where there is only one buyer of goods) in underdeveloped periphery markets.

This incredible wealth built through centuries of imperialist domination and the export of capital (including labor in slaves) and continuing processes have created an environment of decadence in much of the First World. Where privileged world minorities live royally off the value extracted from the international proletariat located mostly in the periphery. All of this contributes towards the exploitative scaling of wages that occurs between the core and periphery [3].

Now many Core-Centric Marxists will point to the observable fact that low profits can be produced in low wage production and high profits produced in high wage production. Clearly no one should deny this. As profit is derived from the movement of surplus value, and surplus value is determined by the value of the labor minus the wage paid. Therefore a worker who produces USD 20/hr of value and is paid USD 10/hr creates more surplus value than a worker paid USD 5/hr who produces USD 8/hr.

This model is true; however, this model is a false equivalent to the relationship between core and periphery wage scaling. The reason is because on average core ‘workers’ do not produce enough value to cover the difference in wage and produce a similar rate of exploitation. Because the productivity is so similar and the wage scaling so unequal we see that many core ‘workers’ produce less value than they are compensated for in wages. This is what has begun to be termed imperialist rent as the core ‘worker’ becomes an indirect if not direct beneficiary of the global imperialist system. The reason is because of superexploitation taking place in the periphery. As Marx points out the market is a zero-sum realm[4]. In the global capitalist economy we observe what can be termed the redistribution of value through exchange. Contrary to popular belief not all exchange is between two equals and especially so between the core and periphery [5].

This global phenomena can be termed the difference between value added and value captured. The difference between the sum of value added by a nation to the world social product and the value realized in profits, wages, etc.[6]

A common response of course is that if many core ‘workers’ are not exploited, why is the enterprise and the capitalist still extracting a profit?

It’s false to suggest that there has to be exploitation in that process for there to be profit. There needs to be exploitation in the social process and circulation for profit to be derived. Profit does not necessitate exploitation in every part of the social process [7]. The national competitive capitalism of the early 19th century has produced the modern global and monopolist form of capitalism where the labor process and division of labor has been realized up on a global scale.

For example, the average multinational CEO is paid millions of dollar a year yet he does not directly own the company but is employed by the shareholders who make a profit from his running of the enterprise. He is paid a massive sum and profit is still derived from his contribution in the social production. Is the CEO exploited? Is the value of his labor really worth that much?

In a more popular example, is Justin Bieber exploited? His record label grosses hundreds of millions of dollars from the combined labor of he and his team of performers, producers, etc. Yet, Justin Bieber lives with such incredible material wealth few can truly imagine the level of decadence he engages in. Is he also exploited?

The moral of the story is that profit does not necessitate exploitation or the extraction of surplus value in that stage of the social process.

Marx also references the process by which ‘labour exploits labour’ [8].

Since the quality and intensity of the work are here controlled by the form of wage itself, superintendence of labour becomes in great part superfluous. piece wages therefore lay the foundation of the modern “domestic labour,”… piece wages facilitate the interposition of parasites between the capitalist and the wage-labourer, the “sub-letting of labour.” The gain of these middlemen comes entirely from the difference between the labour-price which the capitalist pays, and the part of that price which they actually allow to reach the labourer. [6] In England this system is characteristically called the “sweating system.” On the other hand, piece-wage allows the capitalist to make a contract for so much per piece with the head labourer — in manufactures with the chief of some group, in mines with the extractor of the coal, in the factory with the actual machine-worker — at a price for which the head labourer himself undertakes the enlisting and payment of his assistant work people. The exploitation of the labourer by capital is here effected through the exploitation of the labourer by the labourer.

(Emphasis added)

The footnote for this selection adds,

Even Watts, the apologetic, remarks: “It would be a great improvement to the system of piece-work, if all the men employed on a job were partners in the contract, each according to his abilities, instead of one man being interested in over-working his fellows for his own benefit.”

Understanding all of this, completely factual conclusions can be drawn using Marxist methodology [9].

The level of exploitation depends on the actual ratio between the “necessary labour” (the wages) and the “surplus labour”… If you can secure more surplus-value for your wages than you have created, you are not being exploited, but you are exploiting.

(Emphasis added)

To speak even more specifically one must realize the obvious division of labor that has taken place around the globe where the core regions have become the “cities of the world” in contrast to Africa, Asia, and South America: “the rural areas of the world” [10]. An observable qualitative change has been the creation of a consumerist and retail oriented economy in the core that allows for a high rate of value captured. In 2009, retail, strictly understood, made up directly USD 1.2 trillion in economic activity: 8.5% of the national GDP. However, when incurring indirect and induced economic activity, the retail industry made up a whopping 17.6% of total GDP, or USD 2.48 trillion in total economic activity [11]; which is significantly more than the total GDP added by the durable/non-durable, construction, and mining sections of the economy, combined, two years later [12].

With so much of the GDP hinging on this form of economic activity how might this affect the analysis of a modern Communist? Well, Marx tackled the issue of retail when he answered the question of merchant capital which is the equivalent to  the retail economy today [13].

In one respect, such a commercial employee is a wage-worker like any other. In the first place, his labour-power is bought with the variable capital of the merchant, not with money expended as revenue, and consequently it is not bought for private service, but for the purpose of expanding the value of the capital advanced for it. In the second place, the value of his labour-power, and thus his wages, are determined as those of other wage-workers, i.e., by the cost of production and reproduction of his specific labour-power, not by the product of his labour. However, we must make the same distinction between him and the wage-workers directly employed by industrial capital which exists between industrial capital and merchant’s capital, and thus between the industrial capitalist and the merchant. Since the merchant, as a mere agent of circulation, produces neither value nor surplus-value (for the additional value which he adds to the commodities through his expenses resolves itself into an addition of previously existing values, although the question here poses itself, how he preserves this value of his constant capital?) it follows that the mercantile workers employed by him in these same functions cannot directly create surplus-value for him.

(Emphasis added)

In short, Marx describes retail value as labor that is unproductive; labor which produces no surplus-value for the capitalist.

So does this mean that all First Worlders are net-exploiters? Not necessarily. In fact much of the International Proletariat resides in the core regions. Sub-sections of the working class such as oppressed blacks, chicanos, and native laborers and the lumpenproletariat. People who are not only exploited materially but also remain victims of the White social hegemony and racist ideology that First Worldist economism has undertaken; an ideology which ostracizes, alienates, and neglects racial minorities and scapegoats them for the purpose of core-centric economism. For example, many First Worldists, even “left” organizations argue against Chicano Liberation on the basis of economism; arguing that supporting migrant workers disrupts the economic status of the White proletarian [14].

What is crucial to understand here is that a Maoist (Third-Worldist) is not periphery-centric in the way that a Euro-Marxist is core-centric. The primary course of action for any Communist is to support the international proletariat and oppressed peoples of the world in global people’s war and class struggle. It is not biased to say that the vast majority of the world’s working class resides in the periphery, it is factually accurate when applying correct Marxist theory. Therefore supporting the victory global people’s war and proletarian internationalism is parallel to a Maoist (Third-Worldist) understanding of imperialism and its processes.

Moreover, our concrete analysis of the present social realities should translate into correct conclusions about the nature of the First World ‘worker’.By now it should be obvious that members of the net-exploiting classes in the core have a material interest in preserving capitalism and imperialism [15]. While its entirely true that a socialist revolution would materially benefit the vast majority of the world, this select group of privileged individuals who make up what some still consider the “working class” in the core would not benefit materially. Their class interests are hedged towards supporting imperialism which we see manifested not directly, through direct exploitation, but indirectly through political support of capitalism and global hegemony. It is for this reason that we cannot hope to ally ourselves with this class of net-exploiters. The duty of the Communist is to support the international proletariat and global people’s war, not preserve the privilege of a select minority or exempt some from the reality of expropriation.

So the question then arises: what if I am a member of this class but support global people’s war and the class struggle? Many readers and Communists residing in the core are no doubt in this position. The answer is simple. Class suicide [16]Clearly not in the literal sense but in the concrete struggle against the privilege of your class. To be a class traitor. Obviously more will be said about this form of struggle in the future but for now the important part is realizing how are material relations are influencing this social reality. That by being middle class in the First World, one is no doubt benefiting from the exploitation of workers in the periphery. After realizing this, one must begin to take the correct position and advocate for socialism. World socialism. Not simply socialism to benefit this specific nation above the interests of another oppressed group. But an international socialism that brings all power to the people.

Until we recognize the proper analysis of the present social realities and accept the subsequent responsibilities, we cannot take proper action. For proper action requires proper theory. The question then is, are we Euro-Marxists, or are we Marxists? Are we eurocommunists or are we Communists? That question seems yet to be answered.

References:

[1] CorpWatch. Maquiladoras at a Glance

[2] US Census Bureau. Median Income for Total Labor Force.

[3] Cope, Zak. 2012. Divided World Divided Class: Global Political Economy and the Stratification of Labour Under Capitalism.

[4] Ibid. p. 167-8

[5] Ibid. p. 198-200

[6] Smith, John. The GDP Illusion: Value Added versus Value Captured

[7] Cope. p. 176

[8] Marx. Capital, Vol. I Chap. 21 Piece Wages

[9] Communist Working Group. 1986. Unequal Exchange and the Prospects of Socialism 

[10] Lin Biao. Long Live the Victory of People’s War!

[11] National Retail Federation. August 2011. The Economic Impact of the US Retail Industry.

[12] U.S. Bureau of Labor Statistics. Consumer Price Index 2011, Detailed Report

[13] Marx, Engels. Capital Vol. III Chap. 17 Commercial Profit

[14] Cope. p. 270-74

[15] Ibid. p. 329

[16] Brown, Nick. 2013. Amilcar Cabral’s Theory of Class Suicide and Revolutionary Socialism.

2 comments

  1. > Now many Core-Centric Marxists will point to the observable fact that low profits can be produced in low wage production and high profits produced in high wage production. Clearly no one should deny this.

    Yet I, for one, find this erroneous or at least misleading. The core workers are highly productive only due to the high amount of capital each of them sets in motion by their labor, transferring piece by piece the value created by the past labor and embodied in the means of production, onto the new product. So most of the value they “produce” is old value, sort of “renewed” in the new form. But the new value added by the living labor of the core workers is on average the same per unit of labor time as that of the low productivity periphery workers. And even if in absolute numbers the profit shows still higher, at some factory in the core, the rate of profit there is much lower. That’s the reason why capital loves unskilled workforce so much and runs for it at every opportunity. Only competition and the necessity to maintain the turnover of the accumulated capital makes it be invested into highly valuable means of production and skilled labor. But if they could, capitalists would have all their capital in the form of variable capital (basically making as many people as they could work with their bare hands), because that’s where surplus value really comes from. Skilled labor is only for the upkeep of the value that’s already there.

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