High-tech, low pay and capitalist crisis

The following excerpt (pages 81-84) from the book “Low-Wage Capitalism” by Fred Goldstein, written in 2012, deals with Sam Marcy’s classic, groundbreaking work “High-Tech, Low Pay.” Marcy, the founder and theoretical leader of Workers World Party, wrote HTLP in 1986 in the midst of a furious technological restructuring carried out by the capitalist class during the presidency of Ronald Reagan. The book foreshadowed the development of capitalism into the 21st century. (HTLP can be read online at workers.org/marcy.)

Marcy’s central point was to explain the declining rate of profit as the driving force of capitalist competition, which pushes inevitably in the direction of economic crisis. It also dealt with the resulting problems facing the working class.

Also relevant is the recent article by Deirdre Griswold on how capitalist overproduction is behind the present stock market turmoil and ruling class fears of an impending economic crisis. 

The late Sam Marcy, chairperson and founder of Workers World Party, in a very important book entitled “High Tech, Low Pay: A Marxist Analysis of the Changing Character of the Working Class,” published in 1986, analyzed the early stages of the high-tech revolution and its effect on the working class in the United States.

In a section devoted to its impact on the unions, he traced the phases of development of the productive forces under capitalism from the manufacturing phase of simple cooperation to the industrial revolution and large-scale machinery to mass production — primarily assembly line production — in the early twentieth century. He then described the high-tech phase:

“This [mass production] stage has now given way to another phase of technological development. The mass production period which began with Ford and continued for a period of time after the Second World War was characterized by expansion. But the current stage, the scientific-technological stage, while continuing some of the earlier tendencies of development, contracts the workforce.

“Like all the previous stages of capitalist development, the current phase is based on the utilization of workers as labor power. But its whole tendency is to diminish the labor force while attempting to increase production. The technological revolution is therefore a quantum jump whose devastating effects require a revolutionary strategy to overcome.”

Marx’s studies had shown that the advance of capitalist technology subordinated the workers more and more to the machine, made work more and more monotonous, increased the division of labor, and reduced the skills of the workers. The final result was to lower the wages of more and more workers by setting them in competition with one another, all to increase the profits of capital. The high-tech revolution, Marcy showed, has accorded completely with Marx’s analysis.

Marcy noted the decline of manufacturing jobs and the growth of service jobs. But he did not simply talk about them as a bourgeois category. The main aspect of the shift from manufacturing to service was, for the vast majority of workers forced into this change, a shift from high-wage jobs to low-wage jobs.

Changed social composition of the working class

Marcy promoted various tactics and strategies for the struggle against the anti-labor assault, many of which are completely applicable today. But also important were the sociological observations he made and the political conclusions he drew.

“It is this highly significant shift from the higher paid to the lower paid which is dramatically changing the social composition of the working class, greatly increasing the importance of the so-called ethnic composition of the working class, that is, the number of Black, Latin, Asian, women and other oppressed groups, particularly the millions of undocumented workers.”

The changed social composition of the working class — both from the point of view of the growing numerical significance of the oppressed and the increasing preponderance of low-wage workers over the higher-paid, more privileged workers — “matters a great deal,” wrote Marcy, “because in terms of political struggle, the objective basis is laid for political leadership to be assumed by the more numerous segment of the class.”

Quoting from an earlier piece he had written on the effect of high technology
on the workers, Marcy wrote:

“What has happened, particularly in the last decade, is that the very speed of the introduction of high technology, the very sophisticated type, has undermined the privileged sectors of the working class (such as those in steel and auto) on a world scale and has begun a leveling process which has undermined the living standard of the working class as a whole. …

“While it continues to ravage the living standards of the workers, at the same time it lays the objective basis for the politicization of the workers, for moving in a more leftward direction and for organization on a broad scale. The political consciousness that ought to correspond to the new material conditions of life has lagged behind, as it almost always does.”

The tendency of imperialism to build up the privileged layers of the working class at home, which Lenin had observed, was already in the 1980s beginning to be counteracted by the application of automation, robotization, and new industrial processes, mini-mills, etc. The higher-paid workers in heavy industry — such as steel, auto, rubber, and electric, the bastions of the AFL-CIO — were being undermined by capitalist technology and pushed into the lower-paying service industries or long-term unemployment.

Marcy and other communists were rightfully anticipating that the high-tech assault on the workers would lead to an upsurge of the class struggle in the near period. The basis for this prognosis was both subjective and objective.

The process of pauperization of the working class would project forward the more militant sections of the workers, while the increase in the productivity of labor would turn out more and more commodities which would be harder and harder to sell in the limited world capitalist markets. This would intensify the classical capitalist malady of overproduction, accelerate an economic crisis, and stimulate the class struggle.

But the collapse of the USSR transformed the world situation and postponed the immediate prospects for class struggle in the United States and the imperialist camp as a whole.

Declining rate of profit and capitalist crisis

Marcy’s work was designed to show the destruction of working-class living standards wrought by the development of the productive forces, the subsequent change in the composition of the working class, and how these developments formed the basis for the revolutionary revival of the class struggle.

His focus was on the spread of technology by the ruling class inside the United States. He analyzed the internal restructuring of U.S. capitalism and charted the early stages of the widening pauperization of the proletariat.

Marcy shone a spotlight on new trends in the development of capitalism in the age of the scientific-technological revolution. He explained the laws of its development flowing from the innermost features of capitalism, as they had existed since its inception — the struggle to increase surplus value and to reduce labor. And he catalogued their effects on the workers and the oppressed, with an emphasis on how this affected the labor unions.

In analyzing the decline of the labor unions and the rise of technology,
Marcy invoked Marx’s law on the decline in the rate of profit. “The bourgeois press is full of the wonders of high technology and the introduction of robots in almost fully automated factories. But they neglect to mention an extremely important element in the economic laws of motion governing capitalist society: Robots do not produce surplus value.

“As Marx demonstrated long ago, machinery or constant capital is the result of past labor and past surplus value. Profit does not come from machinery itself. It is the labor of a worker, known in Marxist terms as variable capital, that produces surplus value, from which profit is derived. Workers produce a greater value than they receive back in wages, and it is the unpaid portion of their labor that produces surplus value. But a robot is not a worker. A robot is fixed or constant capital, which does not produce profit. Only unpaid human labor produces profit.”

The entire purpose of introducing new technology is to have fewer and fewer workers producing more and more commodities in shorter and shorter time. But new technology is usually very expensive and the high cost can outweigh the savings on labor. Since the rate of profit is calculated by dividing the total profit by the total investment in both constant and variable capital — that is, in machinery and raw materials as well as wages — costly new means of production reduce the rate of profit.

The capitalists who are willing to spend money on new technology before their rivals get it temporarily escape this problem. In fact, new technology produces a great leap in how much unpaid labor can be gotten from the workers. The capitalists who get it first garner super-profits, i.e., profits above the level of the rival capitalists using the older technology. The first capitalists using the new technology sell at or slightly below the general price of the commodity and still make extra profit.

Following Marx’s argument in “Capital,” Marcy wrote:

“With fewer workers and more constant capital, the organic composition of capital changes, resulting in a falling rate of profit. This is an invariable law of the capitalist process of production. It cannot be gotten around.

“The more dead or constant capital and the less human or variable capital used in production, the higher the organic composition of capital. This invariably leads to a decline in [the rate of] profit.

“Despite this, the individual capitalists are driven to substitute labor-saving machinery for workers because it gives them a competitive advantage. For a certain period, the capitalist who is able to utilize the new technology and lower the unit cost of his product can actually enjoy a greater profit because the market reflects a generalized cost still based on the old technology. Eventually, however, the new technology itself becomes generalized and the rate of profit falls.

“The advantage to a higher composition of constant capital [new technology — FG] is always temporary. It spurs on destructive competition, in which much equipment that could still be socially useful is made prematurely obsolete.

“In order to compensate for the falling rate of profit, the owners are forced to increase the volume of profit. This can only be done by further increasing production.”

This is what leads to capitalist overproduction and economic crisis. As Marcy pointed out, “automation does not solve the problem of the capitalist contradiction that leads to economic crisis. On the contrary, it exacerbates it precisely because of the decline in the rate of profit.”

Marcy was writing before the new phase of global restructuring, but the essence of his Marxist analysis applies completely to the current worldwide wage competition generated by the capitalists.