Why the Wage Labor System Is Inherently Exploitative
By Nate Hawthorne and Matt Kelly / recomposition.info

“A fair day’s wage for a fair day’s work” has been the motto of the mainstream labor movement since at least the beginning of the 20th century. On the face of it, this general demand for workers sounds like a good thing. We have to work for a living, and so long as that’s the case, we should be paid a fair wage for our efforts. We don’t want to be exploited. We want our fair share of the pie.

However, what is a fair day’s wages, and what is a fair day’s work? To answer this we have to think about the specifics of how our economy—a capitalist economy— operates. We can’t simply ask what feels morally fair or what the law says is fair, whether that be the federal minimum wage or the often discussed and calculated “living wage.” What is morally fair, and what is even fair by law, may be far from being socially fair. Social fairness or unfairness is determined by the material facts of production and exchange.

First we can ask, from the perspective of a boss—a capitalist—what are a fair day’s wages? The answer from this perspective is pretty simple. The labor market defines the capitalist’s role as a buyer of workers’ ability to work, and the employee’s role as the seller. The employee sells her time to the employer who in turn pays the employee in wages. The capitalist pays his version of a “fair wage”—the amount required for a worker with average needs to survive and keep coming back to work each day. Some bosses might pay a little more, some a little less, but on average this is the base rate of “fair” pay.

From this same perspective of a capitalist, then, what is a fair day’s work? A fair day’s work to the boss is the maximum amount of work an average worker can do without exhausting herself so much that she can’t do that same amount of work the next day. You, the worker, gives as much, and the capitalist gives as little, as the nature of the bargain will allow. As is probably obvious, this is a very strange sort of “fairness,” and probably not how any rational person would define the word. Let’s look a little deeper into this issue.

People who praise the great “free market” would say that wages and working conditions are fixed by competition between the buyers, the capitalists. Supposedly, capitalists are all competing for workers, so that competition inevitably leads to fair wages and working conditions. After all, the seller—the worker—theoretically has several options of employers to choose from. If a buyer doesn’t offer a price that a worker thinks is fair for her labor, then she can look for another job that pays better. By agreeing to the prevailing wage, so goes this line of argument, workers have essentially made the statement: “We think this is fair.”

One problem with this “logic” is that workers and bosses do not start on equal terms when they are buying and selling. It’s not like you’re selling an iPod on Craigslist, in which you can wait until someone pays the price you want. For most of us, if we don’t have a job, we can’t pay our bills, feed ourselves and our families, or heat our homes. Having employment is a life or death issue. It may not be life or death in the short term, but eventually if you can’t find a job or someone with a job who will help you out financially, you will not be able to buy the things you need to live, let alone the things you need in order to be happy and fulfilled.

It’s a very different story for the owners of the companies we work for. They have money in the bank, and if they don’t get employees tomorrow or even this month, they might be severely inconvenienced. Although their companies might take a hit in profits, they won’t risk anything like the consequences workers do. Their worst case scenario is far better than ours, so the free market lover’s idea of an “even playing field” is, in reality, a sick joke.

This isn’t the worst part of it. Bosses lay off workers when they develop new technology to replace employees and they lay people off when their profits plunge, as is the case in the current recession. As a result, workers lose their jobs way faster than they can be absorbed into other jobs. Today, there is a massive pool of unemployed workers and the capitalists, as a class, use unemployed working-class people against the rest of the class. If business is bad and there are few jobs for those of us who find ourselves out of work, some of us can collect a meager amount of unemployment money, while some turn to stealing and some lose their homes and are forced to beg for money on the street. If business is good and jobs appear, then unemployed people are immediately ready to take those jobs. Until every single one of those unemployed workers has found a job, capitalists will use desperate job seekers to keep wages down. The mere existence of this pool of unemployed workers strengthens the power of the bosses in their struggle with workers. Anyone who has ever heard a boss say, “If you don’t like it here, there are 10 other people I could hire to do your job,” will know how this plays out in terms of respect on the job. In the foot race against the capitalist class, the working class has to drag an anvil chained to its ankle—but that is “fair” according to a free market economist.

Now let’s take a look at how bosses pay their workers. Where does a capitalist get the money to pay our very “fair” wages? He pays them from his capital, his stored up funds from all the business he’s done, from all the goods or services his company has sold. Where did those goods and services come from in the first place? They came from the workers. The employees are the ones who worked to create those products or services that were then sold to consumers. The boss doesn’t do any work—he might oversee some of the workings of the company, but for the most part he sits on his ass watching as the work takes place. So we can say clearly the workers created the value that built the fund that they get paid from—a worker’s wage is paid from the product of her own work. Now, according to common fairness, you should get out what you put in, your wage should be equal to the value that you have created for the company through your work—but that would not be fair according to the values of a capitalist economy. On the contrary, the wealth you have created goes to the boss, and you get out of it no more than the bare necessities of life—a wage as low as the boss can get away with paying. So the end result of this supposedly “fair” race is that the product of the working class’s labor gets accumulated in the hands of those that do not work, and in their hands it becomes the most powerful means to enslave the very people who produced it.

A fair day’s wages for a fair day’s work! There’s a lot to be said about the fair day’s work too, the fairness of which is about as fair as these “fair” wages. It is also worth examining the role that unions play in affecting the rate of wages, but rarely the fairness of the wage process. We’ll be talking about this in part 2 below. From what has been stated so far though, it’s pretty clear that the old slogan has outlived any usefulness, and no one should take it seriously. The “fairness” of the market is all on one side—the side of the capitalist class. So let‘s bury that old motto forever and replace it with a better one: “Abolish the wage system!”

 

The Wages System (Part 2)
By Nate Hawthorne and Matt Kelly

We talked in part 1 about the slogan “A fair day’s wages for a fair day’s work.” In capitalism, we can’t get many things we need unless we have money. There are really only two basic ways to get money: Hire someone to produce something which you try to sell for a profit, or get hired by someone to produce something, which they will try to sell for a profit. This is why no wages under capitalism can be truly fair. This is because the basic arrangement is already unfair. Under capitalism we are required to spend our time working for other people. Furthermore, the stuff that capitalists sell…workers made it. The capitalists’ profits generally come from the difference between the price they charge for the stuff we produce and what they paid us to produce the stuff. That difference is inherently unfair.

But it’s important to note that capitalists are constrained by the capitalist system, too. These constraints are often more powerful than the actual laws on the books. Whatever the laws on paper, the real law of the land in capitalist society is the law of profits. When the official laws line up with that law, then the official laws tend to be followed. When the official laws no longer line up with the law of profits, then the law of profits tends to win out. This is because the capitalist system rewards employers who reduce costs while keeping prices up. For workers this means that companies that pay employees less (and that spend less on having a safe, sanitary work environment) than their competitors will be more profitable. The system punishes employers who pay employees more than competitors. This will always happen under capitalism. That’s another reason why “a fair day’s wage” is always going to be limited.

Sometimes liberal or progressive capitalists, and more generally people who are in favor of capitalism, will become concerned that wages are too low and conditions are too bad. This is because capitalists need workers. The capitalist class needs there to be workers tomorrow, and in 10 and 20 years. Smarter capitalists and people who support capitalism sometimes realize that if wages get too low then workers may have a hard time coming back to work. You may know this from your own life if you have ever dug through the couch cushions to find bus fare to get to work, or if you’ve had to work long enough hours or in bad enough conditions that your immune system crashes and you get sick and have to miss work. And if wages get too low then in the long term workers might not have enough kids and provide their kids with the sorts of education and training that will make them be what employers will want in 10 or 20 years. Sometimes capitalists behave in ways that maximize profits in the short term but which have the potential to undermine the stability of the company or of capitalism as a whole in the long term. The recent global economic meltdown triggered by financial markets is another version of individual capitalists putting the short term goal of maximum profit ahead of the long term interests of the capitalist class as a whole.

Liberal or progressive capitalists and their supporters recognize that capitalists overall will be better off if there is a balance between the short term profits of individual capitalists and the long term interests of the capitalist class. This leads these progressives to call for fair wages. Capitalist “fair wages” means that individuals get paid enough that they can support themselves in order to keep on working. In the long term, “a fair day’s wage” means that the working class gets paid enough to keep having kids and raising them up so that there continues to be a working class. From our perspective, the perspective of workers, we want more money for our work. But we also need to recognize that wages and improving working conditions for some workers is often in the long-term interests of the capitalist class. This is why there are minimum wage laws and health and safety laws. This also accounts for the motivation of some capitalists to support initiatives like universal health care. They want to ensure that healthy and productive workers are available for the production of profit.

The labor movement has a long history of fighting against the constraints that capitalism imposes on humanity. There have been important changes in the specifics of the constraints imposed by capitalism. At the same time, obviously capitalism still exists and it still constrains humanity—working-class people especially. The AFL-CIO, Change To Win and other unions have always based their struggles on the goal of “a fair day’s wage for a fair day’s work.” They have never once lifted any section of the working class out of wage slavery, nor have they ever tried. Similar to what we’ve seen with the liberal wing of the capitalist class, the improvements the labor movement has won have often helped to stabilize capitalism. Individual capitalists are often willing to work against the interests of their class if it means they can individually profit, which can make individual capitalists or small groups of capitalists into a threat to the system. Unions can sometimes function as a sort of immune system within capitalism. When unions organize to check particularly greedy capitalists who put their short term needs above the needs of their class, they reduce the extreme behavior of some capitalists who threaten to destabilize capitalism.

That doesn’t mean these unions are worthless or that we should not support their struggles. The labor movement has fought for and won very important changes in working-class people’s lives. To put it another way, the labor movement is a name for working-class people struggling to improve their lives, against the constraints imposed by capitalism, and there are very important successes that have been achieved. Many people would have a much lower standard of living without those successes. These improvements in standards of living apply mainly to union members, but to some extent there are improvements that have been shared with non-unionized workers as well. The eight hour day, regulations on child labor, the right to organize, workers’ compensation laws—for these things and more we owe a debt of gratitude to the brave men and women of the labor movement.

The improvements in working-class life won by the labor movement show that the constraints imposed by capitalism are not inevitable, demonstrating that the artificial limits that capitalism imposes on humanity can be pushed back and challenged. Obviously, organized workers will generally have better wages and benefits under capitalism. But the degradation of the entire working class is not about having better or worse wages, better or worse benefits. The degradation of workers stems from the fact that the working class doesn’t receive the full value that we produce by our labors and we have to be satisfied with a fraction of that value called “wages.” The AFL-CIO and the rest of the traditional labor movement is blind to this reality, and so can only ever help to make an inherently exploitative system a little easier to live in.

In the IWW, a union where our eyes are open to recognize this stark reality, we should recognize that some improvements, even hard-fought ones, can result in more stable versions of capitalism. Being aware of this can help us plan for what comes after a short-term victory. We especially need to make connections between our fights for improvements now and the fight to end capitalism. This means we must never really settle for any improvements. We don’t simply want a better life under capitalism, because “a fair day’s wages” is still unfair. We must always point this out and educate ourselves and each other about the ways capitalism limits working class people’s lives. We must also recognize that there is a ceiling on how much things can improve in a capitalist society.

The IWW organizer Big Bill Haywood once said, “Nothing is too good for the working class.” This echoes other radical slogans: “We demand everything!” and “everything for everyone!” Whatever we win, we’ll take it. We won’t feel grateful to anyone on high who “gave” it to us. As soon as we can we’ll fight for more, and we’ll join with our brothers and sisters elsewhere in the working class who are fighting, until we take it all.

These two pieces originally appeared in the Workers Power column of the Industrial Worker newspaper in June and July of 2012. These pieces were based on a pair of articles by Friedrich Engels which are available online here and here.

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Why the Wage Labor System Is Inherently Exploitative