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May Day

May 1st, 2011

It’s the evening of May Day, though as it falls on a Sunday we will (in Queensland at least[1]) celebrate it with that great Australian institution, a long weekend. Last year, I went on the march, this year I ran a triathlon instead[2]. My somewhat confused attitude is, I think, pretty characteristic of the position labour movement more generally.

Updated below

I’m a worker and a union member, but on a higher income than many employers, and (thanks to research grants) effectively an employer myself. Where Marx and others in the 19th century foresaw a sharpening of the divide between capitalists and proletarians, the actual outcome has been that the lines have been increasingly blurred. A term like ‘working class’ is more of a cultural and occupational label than a statement about economic position – I read somewhere that ‘working class’ households in the US have about the same average income as households in general.

At the same time, there clearly exists a boss class which has become increasingly self-assured (in fact, bossy) over recent decades and is grabbing a steadily growing share of the economic pie. The top 1 per cent of income earners receive something like 25 per cent of total income and Paul Krugman has pointed out that 10 per cent of all capital gains in the US accrued to just 400 individuals. The recent attacks on public sector workers in Wisconsin and elsewhere reflect the political power of this class, and the resistance to those attacks reflects the possibility of a more general movement to protect the interests of workers against the claims of the bosses.

Given the decades of retreats and defeats we have experienced, it seems somewhat quixotic to call for a revival of traditional trade unionism. On the other hand, there is no apparent alternative, and unions have managed to carry on the struggle with at least some success (for example, the defeat of WorkChoices in Australia).

The debate over austerity provides one possible way of linking these issues. The demand for austerity has been pressed primarily by the same financial corporations that caused the crisis in the first place. They, and not public sector workers, or workers in general, are the ones who should pay. But only with strong unions and a political movement openly supportive of workers against the top 1 per cent can this be achieved.  The political case is there, and would, I think attract plenty of support, but the political movement is not.

I’d welcome suggestions of a way forward, pointers to positive developments around the world and so on.

Update. Commenters at Crooked Timber and elsewhere have reminded me that much of the labour that used to be done by the working class in developed countries is now done in factories in China[3] and other developing countries, along with the same oppression and class conflict and at least some of the resistance we celebrate on May Day. In this context, can I give a plug to <a href=”http://www.labourstart.org/”>Labourstart</a>, which links to labour struggles all around the world, and links today to a great <a href=”http://www.care2.com/causes/politics/blog/may-day-belongs-to-the-workers-and-their-songs-come-sing-along/”>collection of May Day songs</a>.

fn1. Most Australian states celebrate Labour Day on a different day, usually commemorating the achievement of the eight-hour working day in the 19th century. In the subsequent hundred years of so, we managed to whittle that down to 7.6 hours, and get Saturdays off, but for many, the reduction in the standard working week has been snatched back since about 1990.

fn2. 1:32 for a sprint (750/20/5) – not competitive, but a personal best

fn3. The fact that the “committee for managing the common affairs of the whole bourgeoisie” in this instance is by far the world’s largest and most politically successful communist parties is one of those ironies that make history a depressing study.

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  1. May 1st, 2011 at 23:33 | #1

    You’ve lost the plot! (to put it simply)

  2. TerjeP
    May 2nd, 2011 at 04:40 | #2

    A term like ‘working class’ is more of a cultural and occupational label than a statement about economic position

    So plumbers are working class but the local optometrist isn’t? I’m glad we have that cleared up.

    Now that we have cleared up that “working class” has no economic meaning then we can simplify economic discussions and talk about producers. Small producers, large producers, individuals who produce, corporations that produce. And we can focus on the various government created disincentives to production and trade.

  3. Freelander
    May 2nd, 2011 at 07:06 | #3

    @TerjeP

    The local optometrist is a member of the guild class whose ability to harvest massive premiums from their restrictive practices have always more than compensated for any ‘work’ they do.

  4. Ikonoclast
    May 2nd, 2011 at 08:01 | #4

    Point 1.

    I protest once again that Steve at the Pub’s icon is advertising a product and a very harmful product at that. I request that Steve’s comments by deleted until he removes the advertising icon. Also, his comment is an ad hominum which makes no other point.

    Point 2.

    Confusion of the Labour Movement in Australia appears to be due to the Labor Party’s betrayal of the Labour Movement. This betrayal in turn flows from the power of corporate mining capital to suborn democratic government in this country, essentially by buying politicians with party donation monies and retirement parachutes into the big end of town.

    Point 3.

    The line between capitalists and workers is as clear as ever for most people. If you can substantially live off unearned* income you are a capitalist. If you substantially live off a wage or salary, you are a worker. The boss class (capitalists and corporate managerialists) has indeed become more in control again and wages are being driven down in real terms (relative to cost of living increases).

    The USA is close to crisis as most states and cities are broke and the Federal Government is running a massive deficit whilst failing to tax the capitalist class adequately. China and India are being turned into manufacturies to exploit their low wages. However, the transition of India to full fledged capitalism and China to state managed capitalism cannot be completed due to the limits to growth. This will provoke a crisis in these countries equal or greater in severity to the looming crisis in the USA.

    Capitalism is entering its final crisis not only because of the conflict between capitalist and worker but also because of the conflict between endless growth capitalism and earth’s finite nature. This crisis will take the form of catastrophic collapse. This can be predicted with a higher degree of certainty than the current climate change predictions by the IPCC. It is not at all certain that some form of socialism will develop following on from this crisis. The looming future is too chaotic and fractured for any predictions of the shape of political systems.

    *Unearned as in not earned by personal effort but coming from returns on capital.

  5. Freelander
    May 2nd, 2011 at 08:25 | #5

    More important than returns from capital are returns from market power. Capital getting returns is fine. Executives, the bonus class in finance, members of professional guilds, those who manage to create monopolies or businesses with considerable market power, what they get is another matter. They are the ones who pillage workers and the ordinary suppliers of capital – the mom and dad investor, the bank depositor and, more importantly in recent times, superannuation funds.

  6. John Quiggin
    May 2nd, 2011 at 08:47 | #6

    Steve, Ikonoklast has a point – this is an ad-free site.

    As was pointed out last time, a criticism of the form “this post is silly, so you must be silly” is not ad hominem, if anything the reverse. It is, however, content-free snark, and should be avoided, unless you have something more substantial to offer.

  7. Jarrah
    May 2nd, 2011 at 09:39 | #7

    “If you can substantially live off unearned income (unearned as in not earned by personal effort but coming from returns on capital) you are a capitalist. If you substantially live off a wage or salary, you are a worker. ”

    The more I think about this, the less sense it makes.

    Capital has to be earned in the first place. Subsequent benefits have therefore been ‘pre-earned’. This might be clearer to you if you think of capital goods, or physical investments you make with capital. If I have money and buy a widget machine, are you going to say I didn’t earn the widgets?

    Any income from capital derives from the utility that it provides. Like the widget machine, or by lending the capital to another person. Strictly speaking, there is no unearned income. The closest you can get is capital that is gifted to you and therefore not earned by you, but by someone else.

    Lastly, by your definition all retirees are capitalists. That just sounds weird.

  8. JamesH
    May 2nd, 2011 at 09:52 | #8

    In America at least, there is a pretty clear economic causal difference between the top ~5% whose income correlates with the stock market performance, and the bottom 95% whose income correlates with wage rates and GDP growth. But the distribution isn’t clearly bimodal because there’s a fair degree of overlap (high paid workers, small businesses) in the income distribution.

  9. JamesH
    May 2nd, 2011 at 10:02 | #9

    Jarrah, the “utility” of capital can’t be measured independently of the income/profit that it supposedly causes; the argument that income from capital is a return on its “utility” is circular and hence vacuous. This was conceded by all sides during the Cambridge Capital Controversy.
    Capital does not have to be “earned” in the first place. The historically popular ways of accumulating capital are various forms of “primitive accumulation”, or theft (enclosure, appropriation, colonisation, war, slavery, taxation, etc), then (chronologically) charging rent on the proceeds of theft, then handing that down to your heirs. The self-made millionaire who started down in the coal mines as a boy is a popular fictional character, and does occur very occassionally in real life, but he is far outweighed by golden spoons, landlords and speculators.

  10. Freelander
    May 2nd, 2011 at 10:03 | #10

    @Jarrah

    Have to agree with you, Jarrah. Unearned income from capital, assuming fair returns, is ‘earned’ by forgoing current consumption and through bearing the risk of losing that capital and not getting any returns at all.

    Of course, some have capital due to the efforts of others. Some inherit wealth and some accumulate wealth through undesirable activities. That said, forgoing consumption to supply capital and to bear risk ought to earn a return because the activities confers benefits generally. Inheritance and undesirable activities are separate issues.

  11. Chris Warren
    May 2nd, 2011 at 10:22 | #11

    Jarrah is again wading into territory he does not understand.

    All retirees are not capitalists. And the logic of Ikonoklast does not lead to such a conclusion.

    However, living off unearned income, does not make you a capitalist, as there are other types of such exploitation, fuedal, colonial etc.

    You are only a capitalist if you use money to purchase factors of production, but then expropriate the income these factors of production create – and (more to the point) this expropriation becomes the goal of your effort.

    Uhnder fuedalism, the expropriation only created a high living standard for nobles.

    Under colonialism, the expropriation only created a high living for plantation owners.

    Under merchantilism, the expropriation only created a high living for merchants.

    Under market socialism, capital is obtained by savings, and the increased productivity lifts wages for all.

  12. Christopher Dobbie
    May 2nd, 2011 at 10:22 | #12

    @Jarrah

    That might be the case in a stagnate capital state but in our present endogenous credit expansionary economies where banks can create capital from their legalised ability to use the double entry ledger, thus subsequently making your logic flawed.

  13. Ikonoclast
    May 2nd, 2011 at 10:24 | #13

    @Jarrah

    My statement is a simplification. Yet, as JamesH illustrates in his post, the simplification is basically right except for a grey area in the overlap area he mentions. The simplification is particularly apt for the approx. 90% of work force age people who receive the great bulk of their income from wages or salaries.

    Your statement, “capital has to be earned in the first place” is fallacious. First, there is the question of surplus value. The capitalist takes surplus value from the workers by not paying the full value of the workers’ work. The capitalist appropriates (or steals) this surplus value. This is clearly illustrated (in practical terms) by the counter example of workers’ cooperatives where wages can be much higher (two or three times higher) than in capitalist enterprises. (It will take me some time to again track down the evidence on this. I had a link some time ago.) The case in question was a large workers’ cooperative bakery in Calilfornia. With all profits going to workers wages (after cooperative capital requirments), the wages were much higher than standard US wages for such work. The workers also manage the cooperative. Successful cooperatives explode the myth that we need those two parasite classes, capitalists and specialist managers. Second there is the issue of inheritance. Inherited capital is not earned either. Most capital is accrued in the above two ways and is unearned.

    The issue of pensioners is not difficult. They receive a government pension from consolidated revenue. This revenue exists because they, as workers, built the economy to its current position. The issue of self-funded retirees, like myself, is more difficult. In some ways we are parasites living off capital. However, that capital was (in most cases and certainly in my case) put by from wages by foregoing consumption. Again however, that capital now functions like all capital and starts accruing unearned income on an ongoing basis. This puts self-funded retirees in that grey area mentioned by JamesH.

  14. Sam
    May 2nd, 2011 at 12:56 | #14

    I didn’t march this year. Sorry Paul Howes, but until you’re ready to have a grown-up discussion about carbon taxes, you’ll get no support from me. Refusing to support any economic change that involves the loss of one single job is not a serious position.

  15. may
    May 2nd, 2011 at 14:59 | #15

    silver over $40 oz ,gold around $1500 oz.

    just a thought but
    the tax shelter and money laundering and bank regulatory laws that seem to have come into existence world(ish)wide lately makes the ancient value holders safer for huge asset owners?

    my father said for as long as he lived,1 oz of gold held the equivalent value of the average working mans wage.
    he lived for over ninety years.

    silver hasn’t been around these levels since the hunt bros of tayexas 30 odd yrs ago.

    and May Day,Labor Day?whassat,when,where?

  16. May 2nd, 2011 at 15:05 | #16

    Sam, don’t throw the baby out with the bathwater! A few rats in the ranks is nothing new and doesn’t mean we’re doomed, just that there’s likely to be a few cases of the plague…

    To answer the question from the good professor on a way forward for the Union movement: Paul Howes, Shorten and the other “protected” USA goverment informants like Arbib (as per Wikileaks) that have co-opted the Union movement are part of the problem, sure.
    That has been quite obvious to anyone that really was paying attention. Remember, the great pro-uranium womaniser poster boy of the ALP: Bob Hawke was refered to as “Our man in Canberra” by various US administrations since he was the head of ACTU.
    I’m guessing Beasley and a few others (like the speech writers or even the partner of our current PM) will soon be shown to also have been working for “the American Bosses” and not the Australian working class. Again, nothing new.
    So, that might be the place to start good professor. An INDEPENDENT and capable leadership for the Union movement is crucial.
    The current stoush between Jeff (fucking useless!) and Ged (too new to know) means that we continue the ACTU paralysis. Sharan Burrow was a capable talking head, but way too rusted on politically to the ALP to be effective against them in government, totally incapable to bother anyone other than hoWARd.
    A few good people from the ACTU (most now gone!) and Unions NSW (again most gone also!) were really behind the “Your Rights @ Work” campaign. Robbo was one of the few real active head kickers, but he’s now become another cog in the machine: a deal with the NSW Right has given him a safe ALP seat in Blacktown (just!). Who knows, the stupidity of the NSW Liberals might give him another chance to shine.
    To anyone who doubts the stakes here: just remember the last USA elections. Where were Clinton and Obama’s campaigns before the primaries, before the Unions and the Youth vote became involved?
    Just like Globalisation and WorkChoices showed the Union movement: not being forward looking and prepared for change, when change doesn’t come from within it is likely to come from without. And when it finally kicks you in the arse, it will likely be doing the bosses bidding and wearing steel capped boots!
    So, watch this space: we need Unions like never before. Fiercely independent proactive Unions will be crucial to help transition our economies and jobs.
    Just don’t expect the “protected sources” of ALP working for the US government to help in this!!

  17. Alice
    May 2nd, 2011 at 16:32 | #17

    Prof says “At the same time, there clearly exists a boss class which has become increasingly self-assured (in fact, bossy) over recent decades and is grabbing a steadily growing share of the economic pie. ”

    In fact downright bossy Id say. Even worse bossing and bullying our politicians around through the media.

  18. Sam
    May 2nd, 2011 at 16:36 | #18

    @CarlitosM
    Agree one hundred percent. Still in favour of the movement, but kind of sickened by the leadership. Actually that sentence could apply to politics generally.

  19. Alice
    May 2nd, 2011 at 18:25 | #19

    @CarlitosM
    Carlitos – I agree totally with what you say re leadership but the union movement leadership is also completely blind to the fact that they have been kneecapped and hobbled by flexible wotrkchoices laws, ever so mildly watered down (not enough to make any difference at all) by Ms Neolabor Gillard.
    Half their once stronger membership, which gave employees more protection from bossy bosses, are working as casuals and wont pay because the unions cant, wont and dont do anything for them because they are not members because the union cant, wont and dont do anything for them..

    This song sounds like another “ask your mother for sixpence…etc” but while membership continues to bleed out of the veins of the labor movement what can unions do about that? Nothing with the likes of Howes in the business.

    They could try charging casuals the 50 cents a year worth of protection the unions provide casuals. Fix the casualisation problem and you fix union powerlessness.

  20. Jarrah
    May 2nd, 2011 at 23:18 | #20

    “All retirees are not capitalists. And the logic of Ikonoklast does not lead to such a conclusion.”

    That’s precisely what his definition implies, Chris. Retirees are, by definition, not earning a wage. Their income necessarily comes from capital. QED.

    “The capitalist takes surplus value from the workers by not paying the full value of the workers’ work.”

    Wrong, Ikonoclast. The ‘full value’ is not solely a product of the workers’ work, but the combination of labour and capital. They each take more from this cooperation than they would otherwise get alone (if they are economically sustainable, ie profitable, but sometimes they are not and the capitalist risks his/her capital in that case).

    “Second there is the issue of inheritance. Inherited capital is not earned either.”

    No question. But then the policy implication of your argument is that people should not be allowed to provide for their children. That strikes me as going against very basic drives in human nature. I can, if I squint, see a possible argument for inheritance taxes, but not a moral case against inheritance itself couched in terms of ‘earning’.

    “However, that capital was (in most cases and certainly in my case) put by from wages by foregoing consumption. ”

    Exactly my point. You earned that capital, and have a right to its benefits.

    Also, you are citing JamesH favourably – didn’t you notice he called taxation ‘theft’? ;-)

  21. Chris Warren
    May 3rd, 2011 at 00:10 | #21

    @Jarrah

    Their income necessarily comes from capital. QED.

    Again you have picked on an irrelevancy. People have income from capital without being capitalists.

    If someone’s income flows from earnings of capital, then this by itself does not make them into a capitalist.

    Robinson Crusoe is a useful example. He increased his income as he increased his capital (tools). But he was not a capitalist and generated no capitalist crisis.

    A capitalist must accumulate wealth from others. Ikonoklast has already made this point w.r.t. workers collectives (who have every right to use capital to boost their incomes).

    In general, if retiree’s only receive an income from ongoing production from the roads, bridges, farms, and factories they built in their working lives, they are not capitalists. These payments are an income they have a right to obtain due to their past socially-useful work. No capitalist crisis emerges from this arrangement.

    At equilibrium, capital by itself earns nothing, it only increases the earnings due to labour.

  22. Jarrah
    May 3rd, 2011 at 12:56 | #22

    “People have income from capital without being capitalists.”

    Take it up with Ikonoclast, he’s the one who said it. I was the one disagreeing with it!

    “A capitalist must accumulate wealth from others.”

    Not true.

    “capital … increases the earnings due to labour.”

    I’m glad to see we also agree that Ikonoclast is also wrong about surplus value.

  23. Ikonoclast
    May 3rd, 2011 at 15:13 | #23

    @Jarrah

    No point my debating with you further, Jarrah. I’ve already laid out the clear position re capital and labour and backed it by referral to the higher income of workers in collectives. I really think that you are arguing in an area where you have done no basic reading. I suggest you at least read Adam Smith (Wealth of Nations) and Karl Marx (Das Kapital Vols 1 & 2).

    Keynes’s “General Theory..” I need to read as much as you do. So we both have some reading to do.

  24. Ernestine Gross
    May 3rd, 2011 at 19:09 | #24

    The world is a relatively big place when viewed from where I am sitting. Looking closer to home, it seems to me the unions have become ineffective with the introduction of enterprise bargaining in Australia. Without wishing to repeat myself too often, enterprise bargaining entailed an important change of the basic unit of analysis. The basic unit of analysis under centralised wage fixing (or something organised along trade lines) is the type of service (work) provided (awards). By contrast, the basic unit of analysis under enterprise bargaining is the enterprise. I don’t understand why anybody is surprised about the shift in power and wealth toward those who, by corporate law, are at the top of the enterprise, the directors and their senior managers.

    The involvement of unions in enterprise bargaining may benefit some people. But not necessarily all. For some people the involvemet of unions amounts to having 2 ‘bossy bosses’ who make decisions (rules) for the ‘working class’ while trying to get the best deal for themselves. (Substituting the phrase ‘working families’ for ‘working class’ does not change anything.)

    Consider a university. There are 2 broad categories of ‘working class’ people, academics and non-academics (all of them being non-voting disenfranchised capitalists by decree via superannuation). This would not be a problem under an industrial relations system where wages and conditions are determined along types of work. But it is a huge problem under the enterprise bargaining system. One enterprise branch of a union, which I shall not name here, insists on having one Enterprise Agreement for both categories of ‘working class’ people at the university, to prevent ‘second class employees’. This is nonesense but it brings out very nicely the brake-down of society into sub-national units, called enterprises. The unions, wittingly or unwittingly, play their assigned role in managerialism which brought forth a particular type of ‘bossy boss’ which I call wannabe boss (they want to be paid twice, once in the form of their income and a second time in the form of a bonus if they have come close to doing for which they have been paid and they substitude a reference to managerial prerogative for bossy decision making by people who at least have an idea as to what their business is about)

  25. Jarrah
    May 3rd, 2011 at 19:46 | #25

    ” I’ve already laid out the clear position re capital and labour and backed it by referral to the higher income of workers in collectives.”

    What an odd thing to say. You’ve made sweeping theoretical claims about “clear divisions” that are anything but, and are claiming that you’ve ‘backed’ them with a vague unsourced anecdote about some collective some time somewhere.

    You’ve regurgitated some bits of Marx’s political economy that were not correct or insightful even in his time, and have become less so as capitalism marched on. I’ve tried to show how his nostrums are debunked, but you haven’t even tried to respond to my criticisms.

    Now you have the gall to suggest I go and read a book I’ve read already, suggesting that I can’t engage with the issues (in unwitting irony). So you’re right – there is no point you going on (because it can in no way be described as ‘debating’) about things that you don’t appear to have thought about in anything but a superficial, confirmation-bias-type manner.

  26. May 4th, 2011 at 15:48 | #26

    Apologies, the first post disappeared from my screen, & I thought it’d been lost in a crash/freeze. Being too bushed at the time to type all over again, I allowed the It was meant to expand on the opening sentence, which in isolation looks a tad on the outlandish side.

    Short version:
    Lost the Plot = Uni Professors do not, by any stretch, fit into the definition of “workers”. They are an elite, professional class, and can be members of many things, but a trade union?

  27. May 5th, 2011 at 23:03 | #27

    Ikonoclast says:”I protest once again that Steve at the Pub’s icon is advertising a product and a very harmful product at that. I request that Steve’s comments by deleted until he removes the advertising icon.”

    It would seem Ikonoclast doesn’t know heritage listed stuff when he/she sees it. I am not responsible for your lack of historical knowledge or of Qld culture. The sign in my gravatar is a historical one, and is synonymous with “Pub”, having been painted onto all pubs for decades. That sign’s almost total removal (note that word) statewide is due to some poor decisions by the owners of the corporation, however this does not change the historical reference, nor the heritage listing.

    “Harmful product”? Now we really DON’T know our class from our elbow do we? I have news for you wowser: Not everybody is a Presbyterian, & in fact my industry is VERY top heavy with Irish stock, always has been. Can’t stand the though that somewhere someone is having fun? Deal with it! The product is actually beneficial, nyeh nyeh nyeh.

    I don’t try in this forum to proselytize you away from the Qld Temperance League. It would seem the courtesy isn’t returned. You are all class.

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