From satanic mills to shopping malls: towards a new era of struggle against insecurity

An invitation
In my last blog I argued that the left needed a theory of social change, and that the lack of one is at the heart of many of the deficiencies of the contemporary left. I will now try and elucidate a potential theoretical starting point for such a project. Before doing so it is important to be clear that a fully developed theory of social change must account for seven activity spheres: mental conceptions, relations to nature, daily life and reproductive practices, social relations, technological and organisational forms, labour processes and institutional structures¹. To account for all seven spheres and link them together in a coherent way will require a theoretical sophistication only achievable from combining diverse expertise; drawn from many disciplines and traditions. What follows could never be more than an attempt at positing some useful aspects of my own tradition: ‘Analytical Marxian Sociology’ which is, of course, limited to only a few of the spheres above. This then is an invitation for all of us to bring our wide expertise, experiences and knowledge together in the creation of theory of social change for the 21st century. Rather than just criticising this attempt, expand on it where it is lacking and correct it where it is wrong.

Reflexive science
Social theory can only be developed through reflexive science, unlike phenomena studied in natural sciences, social phenomena reflexively react to attempts to understand them. A chemical will not decide to change how it reacts with another chemical because it perceives that it is being studied – a person does (a famous example of this principle being the Hawthorne experiments). For example, by publishing the Communist Manifesto,Marx and Engels altered the processes of class struggle which they sought to understand. Therefore, it is inevitable that social theories can only provide a snapshot in time and are in need of constant revision and elaboration in order to account for the constantly changing reflexive laws which they attempt to describe. Laws such as gravity do not reflexively change and thus are well suited to positivism; social change requires a reflexive model of science, where the aim is not the refutation of bad theories but the reconstruction and elaboration of good theories within a coherent research programme². This is a brief attempt.

A general principle of capital accumulation
At the heart of capitalism there lies a fundamental dynamic: in order to realise a profit there must be people who are wanting and able to buy the goods produced – there must be effective demand. Since the end of the Second World War workers in advanced capitalist countries increasingly provided a source of effective demand for the goods produced by capitalists. Higher wages transformed workers from primarily producers into both producers and consumers. However, conversely, increased wages reduce the profit that can be realised from a good, profit being, as it is, the difference between the price of acquiring a commodity and the price of selling it. Therefore, individual firms must ensure that as many workers as possible employed by other firms spend their higher wages consuming their products and not those of their competitors. So far so good, as long as you’re a capitalist whose products are popular, competition will ensure that profit will circulate between firms and effective demand will be maintained.

Crises of overproduction
However, there are two complicating factors. Firstly, if wages were the only source of effective demand then at the macro level there would be no overall increase in profits – wages would equal costs and profit would rather simply circulate between individual capitalists and likely result in stagnant monopolies. This is not true of capitalism and, therefore, effective demand must also be created via other means. Historically, one common means was the plundering of non-capitalist wealth, especially through imperialism³. Yet since the 1970s this source of effective demand has steadily dried up as globalisation has incorporated non-capitalists societies into the capitalist economy. There is though another source of effective demand: capitalist investment. Accumulated capital must be held in some form and it makes sense to invest today, the capital accumulated yesterday – so as to increase the capital accumulated tomorrow. Yet there is no rule that ensures that capitalists will do so, especially if they lack confidence that their investment will yield returns and can instead hoard capital in money form. Moreover, nowadays there are many ways to invest capital which does not increase effective demand, such as buying stocks and shares, venture capital schemes, commodity trading and property. Therefore, the more reliant an economy is on capitalists’ reinvestment for effective demand, rather than on worker consumption, the more prone it is to crises of overproduction.

Crises of relative profitability
However, if effective demand is to be maintained through higher wages enabling worker consumption, a closed system in which all firms play by the same rules is necessary. Such a closed system is hard to achieve, and, therefore, there is a potential for a crisis of relative profitability. Firms unconcerned with maintaining effective demand can seek to undercut other firms by repressing the wages of their workers whilst selling their products to the worker-consumers being maintained by other firms’ high wages. This results in the higher paying firms, which are maintaining the effective demand, becoming uncompetitive and in turn necessitates wage repression of their own, in order to regain their competitiveness.

This principle and two forms of crisis described have shaped capitalist development throughout its history. Yet, how this shaping occurs depends on the specific arrangements within the seven spheres above, which constantly and dynamically co-evolve as capitalism develops. In the UK this has resulted in a specific geographically bound capitalist development highlighted in a simplified manner below.

From satanic mills to shopping malls by way of the factory

Michael Burawoy’s⁴ application of Gramsci’s theories of the state to the workplace allows the identification of four eras of production regimes in the UK:

• Market despotism (early-19th to mid-20th century)
• Hegemonic (mid-20th century to late 20th century)
• Hegemonic despotism (late-20th century onwards to early 21st century)
• Financialised insecurity (current)⁵

The workplace of the 18th century, which Marx so vividly describes⁶, was regulated by the ‘economic whip of the market‘. This early capitalism was marked by unregulated competition, absences of employer or state protection against job loss or unemployment (except for the workhouse) and workers dependency on employment for their daily bread. But although market despotism gave the employer extreme despotic power over individual workers it also inevitably created high levels of collective job insecurity. This, in turn, led to an intensification of the struggle between capital and labour as, according to Marx, as the “mass of misery, oppression, slavery, degradation and exploitation grows; but with this there also grows the revolt of the working class⁷.”

In contradiction to the commonly held view, it was not the material impoverishment of early capitalism which led to conflict between workers and capitalists, but insecurity. As Engels explains “far more demoralising than his poverty in its influence on the English working man is the insecurity of his position⁸.” In fact probably the two most famous historical studies of the development of the 19th century British socialist movement by Thompson⁹ and Polanyi¹⁰ both place the intensification of insecurity as a principal cause for its development, especially as this was actually a period of material improvement (however slight).

Burawoy¹¹ argues that this insecurity led workers to struggle for protection through collective representation within production, and through state social insurance outside of production. Simultaneously, regulation of class relations and the stabilisation of competition became appealing to the now enlarged industrial sector. Furthermore, greater worker purchasing power was needed to maintain effective demand for the ever expanding production capacity, and overcome the worsening crises of overproduction. Therefore, individual firms had an interest in increasing the wages of workers employed by all other firms, but not by themselves, in order to boost the market for their products. Only an external body, the state, could achieve this through maintaining a minimal social wage for all firms whilst also regulating conflict and competition. Thus both capital and labour had an interest in state interventions that would establish the conditions for more hegemonic production politics. This shift finally took place in the period after the Second World War, after previous attempts based on company paternalism in the 1920s collapsed due to the Great Depression.

If workers could no longer be kept under control via the ‘economic whip of the market‘ than they would have to be controlled through more sophisticated means, that of workplace hegemony. Hegemony was developed through the concrete coordination of interests between capital and labour. Collective bargaining, the seniority principle, strong contracts and grievance processes not only provided job security but also tied employees’ interests to those of their employer. For example, if a worker left one firm and moved to another they would be at the bottom of the hierarchy at their new firm.

But this security also laid the basis of another form of consent through the constitution of work as a ‘game’. Workplace games cause the ‘mystification‘ of domination. They are commonly entered into for their relative satisfactions: countering boredom and arduousness, making time pass faster and providing a greater sense of purpose, whilst social pressure forces everyone into playing the same game with the same rules. However, “the very act of playing the game simultaneously produce[s] consent to its rules. You can’t be serious about playing a game… if, at the same time, you question its rules and goals”¹². For example, McDonald’s service counter staff are encouraged through the use of low-value incentives such as free music albums and meals, to constitute the persuading of customers to increase the size of their order as a competition, in which the scores are discussed like those of a race. Even a great degree of routinisation still allows space for the exercising of discretion and thus creation of consent¹³ . Job security then not only reduces resistance directly by nullifying a major source of discontentment but also actively increases consent by enabling the ‘concrete coordination’ of interests and mystifying domination.

Although the hegemonic production regime helped to resolve the crisis of overproduction which had plagued capitalism before the Second World War and also effectively regulated conflict, it also laid the basis for a crisis of profitability. In the early 1970s, as the economy became increasingly globalised, a crisis of relative profitability struck the hegemonic production regimes of Western Europe and North America. Countries such as Japan were less restrictive in regulating business, whilst in developing countries, some combined economic and extra-economic coercion and others created export-processing zones resulting in an ample cheap labour supply outside of countries practicing hegemonic production. Improvements in transport and communication technology allowed this pool of cheap labour to be better utilised, as capital could move more easily and production could become more geographically fragmented. In order to increase their relative profit and maintain global competitiveness, therefore, Western corporations shifted their production regimes back towards despotism. However, this was only possible as hegemonic production regimes had undermined workers’ collective power – by tying their interests to the fortunes of their employer, focusing on workplace improvements rather than capturing the state, and reinforcing competition between workers.

This new and more despotic production regime was not simply a resurrection of the market despotism of the past, as capital and labour remained coordinated. – but rather than capital granting labour concessions, based upon expanding profits, this time instead it was labour making the concessions based upon the relative profitability of the firm. Despite this, unions engaged in concessionary bargaining rather than pressing for alternatives to job losses. Job insecurity became the basis for a hegemonic despotism, in the form of an ‘ideology of common interests’. Hegemonic despotism was, however, time-limited since it must be able to draw on the hegemonic apparatuses developed under the previous production regime.

Financialised insecurity
Since the 1970s the focus by firms on relative profitability, achieved through wage repression, and the incorporation of non-capitalist economies into a global economy has increasingly left the maintenance of effective demand reliant on capitalist investment. But conversely, there has also at the same time been a massive expansion in the potential for non-productive investments, the result being a structural lack of effective demand. This shortfall in demand could, for a while, be made up for by banks increasing effective demand through the unprecedented creation of credit. Though, as became clear in 2007, debt -financed demand is unsustainable in the long term.

Secondly, one of the chief mechanisms of unproductive investments is venture capital schemes such as private equity firms. The logic of private equity is simple: use your capital to leverage far larger sums of capital in order to buy up profitable but undervalued firms with valuable assets. Then, place this debt onto the firm’s books, whilst, keeping your shareholders happy by maximising the ratio of capital returned to share-holders to that invested. This is achieved by selling assets, plundering reserves, reducing investments and of course cutting labour costs. There are currently in the UK 2,700 private equity firms with half a trillion pounds of investment having been raised or pledge to them¹⁴. But the impact reverberates far further than the firms bought by private equity. In fact, the entire economy is affected, as all public firms have to ensure that they do not become the target of private equity bids. This is achieved through maintaining a high share price (by maximising returns to shareholders) and by making a firm unattractive to private equity through reducing reserves, assets and fixed labour costs. The result is an economy which is not only prone to crises of overproduction but also in which labour must be numerically flexible (or more accurately easily dumped). Rather than acting as a timely reminder of the need to rebalance effective demand, the 2007 financial crisis has allowed the logic of financialisation to be expanded into the public sector¹⁵ . The result is a contemporary economy which is becoming increasingly insecure.

Today there are massive levels of insecurity, since 2009 around 20 per cent of workers have thought it likely that they will lose their job as result of the crisis¹⁶. While real unemployment (unemployed + economically inactive wanting a paid job) is around 5 million people and is expected to peak at 5.3 million in 2013. Even without further crises, unemployment will remain above pre-crisis levels for many more years. The Office for Budget Responsibility predicts that even by 2017, unemployment will remain nearly 20 per cent higher than May 2008. Yet, we have seen that further crises are inevitable, as the root of the current crisis is a lack of effective demand and this has actually been exacerbated by austerity and financialisation of the public sector. Furthermore, neo-liberal ideology has rendered a number of other elements of the global economy highly unstable such as hyper mobile capital, vast trade imbalances, laissez-faire economic coordination, and unregulated commodity trading – none which have been significantly stabilised since the crisis. All of which points towards a prolonged period of intensified insecurity for working people.

Towards a new era of struggle against insecurity
We have seen that substantial levels of job insecurity cause an increase in resistance amongst workers, because job insecurity represents a major source of discontentment and inhibits mechanisms that create workplace consent. But questions remain in regards to the various forms that this resistance takes as well as the micro-processes which shape and constrain them. It is this which will be the subject of my next blog. But already we can see successful examples of insecure workers being mobilised by politically diverse actors such from Citizens UK’s living wage campaign amongst cleaners, Usdaw’s organising of thousands of insecure retail workers every year and the the smaller but also far more militant organising by the IWW of hundreds of London cleaners.

 

1 Harvey D, (2010). The Enigma of Capital. London: Profile Books Ltd.

2 Burawoy, M., 2009. The extended case method: four countries, four decades, four great transformations, and one theoretical tradition. University of California Press, Berkeley.

3 See Luxembourg R, (1913) The Accumulation of Capital: A Contribution to an Economic Explanation of Imperialism