Workers in the Global North: A Labour Aristocracy?

Published on New Socialist, by Charlie Post, 24 December 2012.

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? … //

… (full long text).

Links:

Solidarity or Exclusion? British Columbia Unions and Chinese Mineworkers, on New Socialist, by David Camfield, Nov. 23, 2012;

Shopping Paradise: Rich Chinese and Russians Flock to Germany to Spend, on Spiegel Online International, by Maximilian Popp, Fidelius Schmid and Andreas Ulrich, Dec. 27, 2012  (Photo Gallery).

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