Workers in the Global North: A Labor Aristocracy?

by Charlie Post, Solidarity (U.S.) on January 10, 2013

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 labor (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 “labor 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 labor aristocracy’s embrace of reformist and, at times, openly reactionary (racist, xenophobic, sexist, heterosexist) politics is quite rational.

Unfortunately for the advocates of the labor 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 Labor Aristocracy Theory Revisited

Zak Cope’s Divided World, Divided Class attempts to overcome the empirical limitations of previous defenses of the labor aristocracy argument. Cope’s defense of the labor aristocracy thesis in some ways substantially radicalizes the argument. No longer is the labor 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 theirprivilege. 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 labor 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 labor-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 labor 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 labor-power for each unit of output).

This means that if commodities were exchanged at their value, more labor-intensive (low organic composition of capital) producers would earn higher rates of profit—despite their less efficient use of labor—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 (labor-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 labor 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 labor-power (wages) and surplus-value (profits) earned by workers and capitalists in the global North.

Global North Workers: Living off the Spoils of Empire?

Has Divided World, Divided Class presented an empirically grounded defense of the labor aristocracy thesis? Has its author successfully challenged anti-capitalist strategies that wager on the possibility of winning the majority of workers in the developed capitalist world to revolutionary politics? Are, instead, most workers in the global North a new Roman proletariat living off the spoils of empire? Is the only hope for anti-capitalist politics found in the struggles of low-paid workers in the global South, with the support of a minority of poorly paid workers in the global North?

Despite the sophistication of his estimation of value transfers from the global South to the North, Cope’s argument and evidence does not withstand critical examination. Clearly, the transformation of values into prices of production through the equalization of profit rates does involve a transfer of value, creating a potential for unequal exchange between low and high organic composition of capital producers. However, as Anwar Shaikh pointed out more than 30 years ago,[3] production in the global South does not have a uniformly lower organic composition of capital than production in the North. In fact, the global South is the site of some of the most capital intensive production in the world, in particular in natural resource extraction (oil, natural gas, mining, etc.).

Put simply, unequal exchange between the global South and North does not produce a one-way transfer of value from the South to the North. It also produces transfers of value from lower organic composition of capital producers in the North to higher organic composition of capital producers in the South. Without a rigorous analysis of the relative weight of labor- and capital-intensive exports from and to the global South, there is no evidence that workers in the global North benefit from unequal exchange and are, thus, a necessarily conservative or reformist social force.

Clearly, the vast majority of workers in the global North—and in the global South—most of the time are not revolutionary, or even actively contesting the capitalist offensive. Rejecting the labor aristocracy thesis, even in a fairly sophisticated form, does not free the anti-capitalist left from explaining working class reformism and conservatism. However, the roots of these phenomena are not found in the sharing of super-profits derived from imperialist investment, unequal exchange or monopoly. Rather, they’re found in the objective structure of capitalist social property relations that make possible varied forms of working class conscious praxis—working class conscious behaviour and action.

While collective mass struggle against capital is the basis for working class political radicalization, the roots of reformism can be located in the separation of workers under capitalism from the means of production. Working class collective organization and activity is necessarily episodic, for the simple reason that workers must sell their labor power in order to survive, and thus cannot continually engage in struggle. The episodic character of the class struggle produces both a layer of full-time officials within the labor-movement and prolonged periods of working class passivity. And it is this that constitutes the social foundations of both the unconditional reformism of the officialdom and the conditional reformism of most workers.

The roots of working class conservatism are found in the constant competition among workers as individual sellers of labor power. In the absence of effective, collective class organisation, workers are pitted one against another on the basis of race, gender, nationality for jobs, promotions, education and housing. This competition among workers provides the social environment for the development of racism, sexism, nativism and other conservative ideas among workers.

Whether workers radicalize, accept reformism or embrace conservativism is not determined in “a sphere of mere contingency and subjectivity set apart from the sphere of ‘objective’ material determinations,” but shaped by “the complex and often contradictory historical processes by which, in determinant historical conditions, class situations give rise to class formations.”[4] In other words, which form of consciousness develops in which sections of the working class historically depends upon the presence, shape and strength of resistance and struggle.

Notes

[1] I surveyed the varieties of labor aristocracy theories and analyzed their theoretical and empirical weaknesses in “The Myth of the Labor Aristocracy,” Against the Current 123 (July-August 2006); “The “Labor Aristocracy” and Working-Class Struggles: Consciousness in Flux,” Against the Current, 124 (September-October 2006);  and “Exploring Working Class Consciousness: A Critique of the Theory of the ‘Labor Aristocracy,” Historical Materialism 18 (2010).

[2] The Law of Accumulation and Breakdown of the Capitalist System: Being Also A Theory of Crisis (London: Pluto Press, 1992).

[3] “Foreign Trade and the Law of Value: Part I” Science & Society, 43, 3 (Fall 1979) and “Foreign Trade and the Law of Value: Part II” Science & Society, 43, 4 (Spring 1980).

[4] Ellen Meiksins Wood, Democracy Against Capitalism: Renewing Historical Materialism (Cambridge: Cambridge University Press 1995), pp. 81, 83.

Charlie Post teaches sociology at the City University of New York, is active in his faculty union and is a member of Solidarity, a revolutionary socialist organization in the United States. 

Originally posted at New Socialist.

  • Aaron Aarons

    Whatever the theoretical rationalizations for ignoring it, no reasonable person can believe that the tremendous difference between the levels of material consumption of workers in the imperialist countries and those of workers in the subordinate countries, often while doing similar types of labor for the same global market, has no effect on the difference in consciousness between one group of workers and the other. Moreover, it should be clear that, even if all capitalist profit were eliminated, it would be impossible to increase the levels of consumption of all workers, including those in the informal and peasant economies, to those of the higher-consuming workers in the imperialist countries, so that the latter would lose, in a strictly quantitative material sense at least, from a global socialist revolution that equalized the conditions of workers across the world.

  • Brian S.

    I haven’t read the Cope book , so can’t comment on that. But Arghiri Emmanuel’s argument does not rest primarily on the differences in the organic composition of capital between developed and third world countries, but on the difference in WAGE RATES (with the organic composition playing a minor secondary role). This is based on the fact that while capital is internationally mobile labour is far less so. It seems difficult to object to this argument, and whereas the differences in the organic composition of capital have very likely narrowed since he published his views over 40 years ago, the wage differentials (or at least their overall weight in the international economy) have probably widened. These can differ by a factor of 10 times to 20 times between workers in the developed countries and those even in middle income third world countries working in the same industry (and making similar products.)
    It strikes me that classical Marxist theory is not well equipped to deal with this factor, in either economic or in moral terms. AaronAarons expresses the problem quite clearly above – but where I would disagree with him (and presumably with Cope) is in the suggestion that class consciousness and political attitudes flow directly from such factors.

  • http://lefteyeonbooks.com Steve

    I don’t really understand this business about low and high rates of organic composition of capital. What exactly is the different between a car factory in Kentucky, South Africa, and Mexico these days? There is a big difference in wages. The US has a giant military machine and vast global networks to maintain its advantages in trade, among other things, regardless of what the organic composition of capital says it should be. Are we to believe that none of the advantage secured ever appears in workers’ lifestyles? However, it is worth adding that when unions were stronger in the US, the terms of the bargain workers entered into were far more stable. Now that deal has been torn to shred, basic aspects of life (housing, education, health care) result in massive accumulations of debt… There are possibilities for new alliances to replace the old. One other thing–workers get a strong psychological wage from living in powerful countries. This is the source of the “Archie Bunker mentality” strong in much of the working class not only in the US but also much of Western Europe.

    • Brian S.

      @Steve. I think you’re partially right – organic compositions of capital are certainly converging, but I don’t think they are there yet. The examples you give relate to the assembly of vehicles, but we also need to ask where the components are manufactured, and where research and design functions are carried out. That may produce a very different picture – even in your Kentucky example, which is likely to be a Toyota plant.
      But you hit the nail on the head when you refer to wage rates – as I said in my post above, for Emmanuel’s “Unequal Exchange” theory the organic composition takes back seat to the issue of wages.
      We also need to keep in mind that things are constantly changing – the Emmanuel argument is rather weak at the moment with regard to automobiles, because there’s limited export of cars from low wage economies to high wage ones: but this is changing, both with expanding manufacture in Mexico for the North American market; and growing Chinese manufacture for the Asian market (and probably beyond in the near future).
      While its true that this has significance for working class living standards (my example of textiles is probably the best example in this respect), I’m not so sure that it has the “Archie Bunker” effect that you suggest. Unequal exchange results from the isolation of labour markets; but that also produces a compartmentalisation of working class reference points: western workers don’t evaluate their position by how much better off they are than e.g. Malaysian workers, but by how much poorer off they are than they were five years ago, or (at least potentially) how much less well off they are than “the 1%”.

  • http://lefteyeonbooks.com Steve

    Brian–I don’t think the Archie Bunker effect is based on economic comparisons. It is instead based on the conviction that “we’re number one”, or that Western civilization/the white race/France/the UK etc represent the pinnacle of human civilization. It is quite real, not only in the US, where white workers, including some in unions, often vote Republican (even if nowhere near as much as in the liberal imagination) but even in France, where Marie Le Pen probably had a point when she taunted Melenchon that she has a genuine working class base, while the far left that supports him is rather like what in the US is called “latte sipping liberals.” There are national and religious chauvinists everywhere in the world; but outside the wealthiest countries, a little reflection on things leads them to identify more with the poorer countries than the wealthier ones, although I can think of exceptions (notably India, where anti-Muslim sentiment among the right converges with US goals of the last ten years or so).

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