World Association for Political Economy

WAPE [2007] No.7

A Statement

On the Political Economy of the Contemporary Relationship between Capital and Labor in the World

(Approved at the 2^nd Session of the 2^nd Board of Directors of World Association for Political Economy on October 27, 2007 and announced at the Closing Plenary of the 2^nd Forum of World Association for Political Economy on October 28, 2007.)

The relation between labor and capital is the axis on which our entire present system of society turns. Marx pointed out that labor under capitalism has a dual character. Labor produces use-values under capitalism, as it does in all modes of production. However, under capitalism labor also generates value and surplus value. Capital appropriates the surplus value, a process referred to as exploitation of labor. The exploitation of labor by capital is the fundamental class contradiction of capitalism, although of course capitalism has other, related contradictions such as a tendency to destroy nature.

In contemporary society, not all labor is performed directly for private capital. Labor also takes place within other social relations, including labor in the domestic sphere, in state agencies, state-owned enterprises, worker-owned enterprises, collective enterprises, cooperatives, and individual labor by independent producers. The mode of production of private capital employing wage-labor is the dominant mode of production in the world today, and the capital-labor relation plays a central role in determining the character and evolution of the global politics, economy, and culture.

Bourgeois (mainstream) economics claims that there is no exploitation in a competitive capitalist private economy. According to that view, employers and employees both receive the equivalent of what they contribute to production and also just compensation for what they sacrifice in production. This claim, which has no sound basis, serves to obscure the exploitation upon which capitalism is based. It leads to the mistaken view that the route to improved conditions for the working class lies in individual actions such as getting more education and a willingness to work harder. While such pursuits can lead to advancement by individual workers relative to their fellow workers, they cannot end the manipulation and exploitation of the working class as a whole.

The basic tendency of capitalist private enterprise is to drive wages down toward the lowest possible level while increasing the length and intensity of working time to the greatest extent possible. This tendency, which operates freely in many areas of the world today, derives from capital's goal of maximizing profits. It can be checked by the struggles of workers to have time and energy for themselves and to satisfy socially generated needs. At the same time, the standard of living of the working class in developed capitalist countries is also influenced by other factors including unequal exchange between developed and developing countries.

Marxist political economy does not believe in any iron law of bare subsistence wages. Although workers have been able to improve their conditions within the capitalist private economy, this can only be realized through their own economic and political organization, because the proportion of what workers can get from what they have created depends on their economic and political power within the capitalist system.

While a high degree of inequality is inherent in capitalism because of exploitation of labor and other aspects of capitalism, in certain countries during certain periods the working class has made significant gains within the capitalist system. This includes high and rising real wages, reduced working hours, improved working conditions, comprehensive social programs, and significant economic and social rights guaranteed through the state and in direct capital-labor contracts. This was prevalent in many countries during the quarter-century following World War II. However, during that period the ability of workers in the industrialized countries to gain rising wages was also partly due to imperialist domination and unequal exchange.

During the past half-century, capitalism has witnessed a transformation in the role of female labor, as in much of the world female labor has shifted from predominantly domestic labor to wage labor. This transformation was partly a result of the struggle of women and is ultimately a progressive development, but the manner in which this transformation has taken place has caused problems for both female and male workers, particularly in relation to the conflicting demands of paid work and domestic responsibilities. In some countries state programs have eased this conflict, while in others little has been done about it.

Since around 1980, the start of the so-called neoliberal era , the general trend in capital-labor relations in the world has been one of backward movement rather than advance in workers' conditions. In many countries real wages have stagnated or declined; working hours have stopped falling or have increased in fact, at the same time that unemployment has increased; job security has declined; job safety and health have worsened; social programs that benefit workers have been cut back or eliminated; and hard-won economic and social rights have been undermined. These attacks on workers’ rights and benefits not only harm the working class directly but also contain the seeds of economic crises.

Some argue that these unfavorable developments for workers are necessary for economic progress. We reject such claims, which have no sound basis. We note that economic progress was more rapid in the capitalist world as a whole during the quarter-century following World War II than in the neoliberal era. However, the relatively faster economic progress in the former period does not mean that the state-regulated form of capitalism resolves all the contradictions of capitalism.

Marxist political economists must analyze the reasons for labor's deteriorating conditions in the neoliberal era and propose ways to reverse this process. Among the factors that bear further study in this regard are the following:

1) The particular capitalist form of increased global economic integration in this period, which has undermined workers' bargaining power.

2) The disappearance of most of the socialist countries, whose existence had exercised a check on capital's ability to drive down workers' conditions in capitalist countries.

3) The weakening of Communist, Socialist, and other left-wing groups in the capitalist countries, and in some cases the abandonment of the defense of workers' interests by formerly left-wing parties.

4) The weakening of the workers' movement in many capitalist countries.

5) Deregulation, privatization, cutbacks in or elimination of social programs, a shift from progressive to regressive forms of taxation, attacks on trade unions, and the “casualization” of labor -- all advocated by neoliberalism.

6) Renewal of the workers' movement and resistance to neoliberal policies by ordinary people.

While we support all reforms within all countries that would improve the conditions of the working class and other oppressed groups, we also support the final elimination of the exploitation of labor by replacing capitalism with socialism. Only in a socialist system can production be fully organized to meet the varied needs of human beings, which include the right to work, safe and healthy working conditions which are controlled by the workers themselves, reasonable work hours, a comfortable living standard, economic security from birth through old age, paid work that is flexible to accommodate the needs of raising children and caring for the elderly, and the elimination of all forms of discrimination at work and in society in general.

Marx wrote that, as the mass of misery, oppression, slavery, degradation, and exploitation grows, the revolt of the working-class also grows. As Marxist political economists, we are, corresponding with the modern real conditions, ready to use our scholarly training in support of movements and organizations that defend and advance the short-run and/or the long-run interests of the working class and other oppressed groups.