Are First World “workers” more productive?

Dear Leading Light Communist.. are First World “workers” more productive?ccc.0021.tif
(llco.org)

Recently, a comment was left regarding Comrade Serve The People’s rough estimate for the value of labor. Read the original comment here.

Matthijs Krul asks the Leading Lights:

“I find this calculation very interesting, thanks. However, it seems to me the question of differing productivity is too easily dismissed. Indeed we can all reject the bourgeois economic idea that people actually get wages proportional to their productivity, but nonetheless it seems to me quite possible that the productivity of First World workers is significantly higher than Third World ones. Not because they work harder (as said, the labor intensity is vastly higher in the Third World), but because of technology. Isn’t it possible that skilled labor on high tech machinery is significantly more productive than Third World unskilled labor in handicraft or simple manufacture? That would lessen (though probably not eliminate) the difference in the wage/value ratio. Apologies if I am making a reasoning error, I’d just like this clarified.”

This question is answered by two MSH comrades. Serve The People responds for MSH:

“For years we have been waiting for someone to prove to us that First World ‘workers’ are more productive than Third World workers, and that this alleged difference in productivity is great enough to account for the vast discrepancy in wages between the Third World and the First World. No one yet has come forward with a scrap of evidence in support of this claim.

Elsewhere we have proven, using data from the US government itself, that not even 20% of American ‘workers’ are in, or even close to, the productive sector. Most American ‘workers’ deliver services of various kinds: sales, marketing, clerical work, education, health care, law, accounting, finance, repairs, maintenance, cleaning, food preparation, transportation, security, management, media, engineering, government, consulting, art, recreation, advertising, personal services, child care, research, etc.–not to mention the state’s big oppression industry, which includes the police, the military, and the prisons. None of that is in the productive sector; it produces no value. Some of it helps to *realize* value, but none of it *produces* any.

Things are different in the Third World. In India, for example, more than 80% of workers are in manufacturing, agriculture, fishing, or mining. Those are productive-sector occupations.

Since the unproductive sector produces no value but does consume value, it is somewhat parasitic: the unproductive sector lives at the expense of the productive sector. In the United States, if (let’s be generous) 20% of the ‘working’ population is productive, then one productive worker has to produce enough for himself and four unproductive-sector workers. In India, if 80% (an underestimate) is productive, then each productive worker has to produce enough for herself and 1/4 of an unproductive-sector worker. Quite a difference! (And we haven’t yet considered the very different standards of living of India and the United States.)

If technology were sufficiently advanced, perhaps one worker could produce enough value to support five workers and their dependents. Currently this is not possible. The size of the US unproductive sector by itself supports a good argument that the US is parasitic: that value cannot all be produced by the small productive sector, so much of it is coming from somewhere else–namely, the Third World. A comparison of Third World and First World standards of living only strengthens this argument.

But let us return to the question of technology. American productive-sector workers may push buttons in an automated factory while Indian workers toil away with more primitive tools. Does the higher output per worker of the automated factory imply that American workers are more ‘productive’ than Indian workers?

The first thing to notice is that this situation rarely exists. Production tends to be specialized: the United States produces cars while India produces garments. Naturally, the labor-intensive work (such as sewing) gets sent to India, where labor is cheap (thanks to imperialist superexploitation). Also, India does have technology. The assumption that India has no modern technology is simply a manifestation of ignorance coupled with First World chauvinism.

One big area in which this is not true is agriculture. American farms are highly mechanized and employ many inputs (mainly petrochemicals), while much Indian agriculture uses primitive tools and few inputs. So the question above might be rephrased in terms of agriculture. If a corporate farm in the United States yields far more per worker than a village in semi-feudal India, does that mean that American farm workers are more “productive” than Indian peasants?

No, because the comparison is unreasonable. It is tantamount to a race in which the Indian contestant is hobbled while the American contestant gets to use a car. Of course a worker can get more done with a tractor than with a hoe. That’s no credit to the worker.

The labor theory of value states that the value of a commodity is the amount of average socially necessary labor that went into its production. It is not socially necessary for Indians to use hoes when tractors are available. If Indians have only hoes to use, it is because of national oppression, not social necessity. Capitalism and semi-feudalism squander Indian labor-power by depriving Indian peasants of agricultural technology.

In addition, the labor that goes into a commodity includes not just living labor but also dead labor–the labor embodied in the equipment and inputs employed in production. Grain produced in India may contain very little dead labor, but grain produced in the United States contains a lot: oil, fertilizers, pesticides, a share of expensive equipment. That dead labor represents a large amount of the value of American agricultural products; consequently, the living labor of the American worker represents only a small amount.

If we assume that the American worker is of average productivity for a tractor-driver and that the Indian worker is of average productivity for a peasant under conditions of semi-feudalism, then their labor is of equal value, hour for hour.

In this writer’s experience, the intensity of labor in the United States and other First World countries is decidedly lower than than of the Third World. For this reason, it is likely that typical First World labor is worth less per hour than typical Third World labor.

One other comment. As technology improves, production becomes more efficient. That means that less labor is needed to produce a commodity, and therefore the value of labor-power DECLINES as technology improves.”

MSHC1 responds for MSH:

“The First World worker using a great deal of technology to perform productive labor is only as productive as that technology allows him to be, neither more nor less. That is to say, the average ‘productivity’ (defined as volume of output) of a First World productive worker is determined largely by the technology he is using, not by the labor he is performing. If a machine plus one worker can churn out a million widgets per hour, but a human alone can only make ten, does that mean that the former worker is far more productive than the latter? No. In fact it means that much more capital must be laid out in the production process, and hence less value can accrue to the product of such.

It is vital to stress that labor is the only value creating substance in the world: technology is only as ‘productive’ as it is designed to be. The Third World worker’s productivity is, unfortunately, because of imperialist capitalism, largely produced by the intensity of her labour.

There is also, of course, the question of closed borders: if Third World workers, willing to work for a much lower wage than lazy First World workers, were allowed to work and travel freely, then Third World workers in the First World would be a great deal more productive than First World workers in the First World! In fact, this is precisely the reason that imperialists want Third World laborers working for them in their home country. The main reasons for the inflated wage packets of First World workers are closed borders, militarily repressive working conditions in the Third World, and the politico-economic functionality of a mAss First World parasitic bourgeois ‘working class’.”

Matthijs Krul responds on September 19,2008:

“Thank you for the expansive answer. I now understand better what you mean. I did of course not mean to imply India has ‘no technology’, just that the labor intensive industry tends to be concentrated there and the capital-intensive (and thereby more of the high tech) industry in the First World.

The only part I do not understand is this part of ‘Serve the People’’s answer: ‘If we assume that the American worker is of average productivity for a tractor-driver and that the Indian worker is of average productivity for a peasant under conditions of semi-feudalism, then their labor is of equal value, hour for hour.’

As ‘Serve the People’ says, the conditions of semi-feudalism themselves imply that ‘it is not socially necessary for Indians to use hoes when tractors are available’. Wouldn’t one therefore say that the peasant working under conditions of semi-feudalism works such that the labor time expended is _more_ than socially necessary? In which case the Labor Theory of Value would state that the difference between the socially necessary time and the ‘excess’ time is not value-producing? Then hour for hour, the value produced by the American tractor driver and the Indian peasant are not equal. I suppose this depends though on whether ‘socially necessary’ applies globally or per society.

After all, Marx himself wrote in ‘Value, Price and Profit’, Chapter VI:
’When, in England, the power-loom came to compete with the hand-loom, only half the former time of labour was wanted to convert a given amount of yarn into a yard of cotton or cloth. The poor hand-loom weaver now worked seventeen or eighteen hours daily, instead of the nine or the hours he had worked before. Still the product of twenty hours of his labour represented now only ten social hours of labour, or ten hours of labour socially necessary for the conversion of a certain amount of yarn into textile stuffs. His product of twenty hours had, therefore, no more value than his former product of ten hours.’

Not, of course, that this would invalidate the other points, but I am unsure about this specific part.’

MSHC1 responds for MSH on September 19, 2008:

Thank you for your very incisive questions, Matthijs.

Your quote from Marx is correct. However, Marx was writing in a competitive age, when capital which was invested in a less profitable industry would be withdrawn and reinvested in a more profitable one. Nowadays, in the age of global-imperialist monopoly capitalism, capital is overwhelmingly concentrated in the banks, corporations and governments of europe, north America and japan, with which it is impossible for Third World capitalists to compete.

The imperialists monopolize the means of high technological production and ensure that Third World producers must engage in low-wage labor-intensive industry, whether as a link in the Multinational Corporation’s commodity production chain or as “independent” producers. As a consequence of this archaic mode of production imposed on the Third World by the First World, it is only necessary for monopoly capital to make a small investment in order to obtain a massive return or, indeed, to sit back and reap the superprofits from unequal exchange.

Where technology is fully utilized in the Third World production process (which it often is, as Serve the People points out), the low wages of the Third World industrial worker compensate for any comparative shortfall between First World and Third World average socially necessary labor time. This website, for instance, claims that labor productivity in Mexican export industries is 80-100% of US levels while wages are 10-15% of US levels. (1)
Nowadays, Third World industry is largely controlled by Multinational Corporations which offload their outmoded technology for inflated prices on to the Third World and guarantee that all of the value-creating production is concentrated there. Meanwhile, in the First World the accumulated dead labor of exploited Third World workers (workers paid less than the value of labor) is converted into advanced technology, mostly implemented in production of decadent luxury junk for the bourgeois First World ‘working class’ and/or weapons of mass destruction.

Through mechanisms of superprofit allocation (e.g. trade and minimum wage laws, job market protectionism, commercial retail accessibility, etc.) First World workers can purchase the necessities of life at bargain basement prices and, lo and behold, they are left with a fat chunk of surplus from their wages. The First World ‘productive’ workers then happily ignore the source of all of the profits that go into their high-tech employment, and imagine that their superwages result from their productivity. ‘Forget class struggle, forget the need to strike for higher wages, those nice capitalists pay us high wages because, fortuitously, we happen to use a lot more technology in our production than those primitive Third World workers.’

In sum, the labor time of, for example, the Indian agricultural worker precisely is average socially necessary labor under conditions of imperialist oppression of nations and capitalist monopoly. This situation is one which we communists seek to overturn, because we know that is it an unnecessary and (outside the First World and the guarded living spaces of the comprador bourgeoisie) unwanted social arrangement responsible for murder, starvation, disease and death on a historically unprecedented scale.

Notes
1. http://home.alltel.net/bsundquist1/gcib.html”

Joseph Ball on September 21, 2008 wrote:

“The exploitation of Third World labour takes forms other than the ‘classic’ form of a First World worker in a capital intensive industry exploiting products with a Third World worker in a labour intensive industry-which is what is being discussed here.
However, it’s important to stress that this ‘classic’ form is exploitation not simple exchange.

The fact is that when products with a high ratio of constant capital (c) to variable capital (v)
are exchanged with products with a high proportion of (v) compared to (c) then there is a transfer of surplus value from the second producer to the first (c stands for the raw materials, machinery, premises and so on needed for production, v is the outlay on labour). This is because labour is the source of surplus-value, therefore the second type of producer tends to produce more surplus-value (s) with their outlay than the first. However, the forces of the market lead to a single rate of profit between low and high surplus value producer.

How is the exchange between products of low and high ratios of c to v exploitation of one worker by the workers of another country, one may ask. Well, if you have a single, open labour market it isn’t as in this case labour is only paid its rate of reproduction so no worker can be said to be benefiting from the exploitation of another.

When you have exchange of these products between two different countries with high levels of wage inequality between them it’s a different matter.

Basically what happens is that the workers producing the product with a high proportion of c compared to v in the imperialist country are paid above the level of reproduction of labour because restrictions in supply of labour (due to immigration controls mainly but also trade union action and some other factors) force the price of labour up. These higher wages are paid for out of the additional s that is extracted from the lower paid workers in the oppressed country producing the product with the higher v in relation to c.

In practical terms, lets say the UK exports high-tech, specialist medical equipment to the Chinese and they export Barbie dolls in return. Specialist medical equipment and the other types of products we might sell to the Chinese would tend to contain only a fairly small amount of living labour v and a large amount of c. But by exporting such products we can import the products of tens or hundreds of millions of Chinese and other Third World workers working in labour intensive industries. Therefore our huge advantage in the amount of capital our products embody means we can set to work tens or hundreds of millions of wretchedly paid, exploited workers.

How do First World workers benefit?(As opposed to the capitalists who benefit directly from the trade.)

By two ways. Firstly lower wages in the countries we import from makes their goods relatively cheaper. This means that the wage paid to the First World worker can buy more-the amount of wage necessary to reproduce the First World workers existence is reduced and therefore the amount of the wage the worker can spend on luxuries increases. Secondly, the s produced by the Barbie doll producer can finance the higher wages of the First World worker fairly directly. Marketing and retail are fairly large employment sectors in the UK. None of them involve productive labour-they don’t involve a change of state of the commodity just its circulation. The wages of those in the retail and marketing sectors are paid out of the surplus value produced by manufacturing workers whose product those in these sectors are retailing or marketing. If the retailers and marketers were based in China, arguably, this wouln’t involve exploitation. But when, e.g. the UK retail worker earns seven times the wage of the Chinese industrial worker (I’m not exaggerating) due to the far more favourable labour market conditions, then the huge transfer of surplus value from the Chinese worker to the wage of the UK worker can only be exploitation. (The same principle applies to many others in the First World such as those who design or transport the goods produced in the Third World. These are actually productive workers but their wages are still boosted by labour market conditions in the First World, therefore their wages involve transfer of s from the manufacturing worker in the Third World.)

The fact is that all the additional capital that exists in the UK and other imperialist countries, compared to the poor countries is what can effectively set all this labour to work in the Third World. The UK accumulated all this capital by forcibly suppressing the development of Third World countries, a process that continues to this day through IMF and WTO conditionality, for example (and outright blockade and military attack when that fails).

Therefore the exploitation of Third World labour by First World labour is the result of unequal endowments of capital. The solution to the problem is the ’socialisation’ of the capital that has accumulated in the First World, mainly by the Third World masses.”

EndofAmerikkka wrote on September 23, 2008:

Having access to technology does not justify one’s consumption of a greater percentage of the global social product. Just because a person is located in a region that has technology does not mean that person is entitled to more of the global social product. Under a rational economic order, someone should not be penalized within the global economy for not having been born in the First World. To argue, as First Worldists do, that Third World workers should starve and First World workers should live the Western lifestyle because the former do not have access to technology and the latter do have access goes against the spirit of communism.

It makes even less sense today, in this increasingly globalized economy, to ague that Americans should make bloated wages. It boils down to arguing for a distribution principle that states Americans have a right to consume more of the global social product simply because they are Americans.

Socialism is supposed to be a more rationally ordered economy. Under a socialist system, American workers would make substantially less than they do now. To argue otherwise is straight up chauvinism, even if it is disguised under Marxist rhetoric. The distribution principles that follow from First Worldist theories serve as reductios to their whole approach — at least from the stand point of the world’s vast majority.

Serve the People of MSH wrote on September 24, 2008:

It seems to me that Matthijs Krul is trying to liken Third World proletarians to the Luddites of England, who wanted to go on working with their manual looms after the power loom had taken over. Weavers with their own equipment made good money until the power loom came along; then their capital (looms, shuttles, etc.) became almost worthless, and they were completely unable to compete with mechanized textile mills (except perhaps in a tiny niche market). They were thrown out of work. Many petty-bourgeois weavers ended up being proletarianized when they took jobs as operators of the new power looms in big industrial factories.

The reactionary Luddite movement sought to restore the weavers’ petty-bourgeois privilege by destroying machinery and otherwise preventing industrialization. It didn’t work. People who tried to go on making a living with their manual looms quickly found out that their project wasn’t viable. Why? Because the amount of average socially necessary labor required to produce cloth had fallen dramatically as a result of industrialization. Just as an example, if a new process can produce cloth in 1 labor-hour that took 5 labor-hours in the past, then workers who go on using the old technology produce only 1/5 the value, hour per hour, that workers using the new technology produce. This is an illustration of what Matthijs Krul was talking about.

Are Indian peasants comparable to the Luddites of yesteryear because they use hoes rather than tractors? The answer is NO, because they do not CHOOSE to work with outmoded technology; they are DEPRIVED of superior technology by imperialism and semi-feudalism. The Luddites had lost a favorable situation and wanted to turn back the wheel of progress rather than finding a place in the world as it was; the peasants in India would go with better technology if they could, but they are kept down. It was NOT socially necessary for the Luddites to go on working with their manual looms; it IS socially necessary–thanks to national oppression–for the Indian peasants to work with obsolete technology. Indians don’t get the option to use tractors, nor yet to take $7/hour unproductive-sector jobs at a doughnut shop in the United States.

So we do NOT say that the Indian peasants produce less value than First World tractor drivers. Most Indians living on a few hundred dollars a year would leap at the chance to get paid $7/hour or much more, as is usual in the United States (where the minimum wage is $6.55/hour and is going to go up to $7.25/hour in less than a year). But those jobs are not open to them: they are offered only in imperialist countries, which effectively close their borders to the Third World proletariat. If you removed the oppressive conditions that limit the Indians’ options, you’d see that they could easily compete with their First World counterparts.

If a fucked-up imperialist-dominated society forces some workers to slave away in conditions of superexploitation for the benefit of other populations, the oppressed workers cannot be charged with producing little value; the blame for their plight belongs on the system that oppresses them. Hour for hour, they produce the same value as average workers in the imperialist countries, if not more.”

Joseph Ball wrote on September 24, 2008:

“I think there’s a confusion here between the semi-feudal sectors of the Third World economy and the globalised capitalist sectors. Many farmers across the Third World live on a semi-subsistence basis, despite the growth in urbanisation and manufacturing. (I met some semi-subsistence farmers in China who led wretched lives although the government had kindly supplied them all with electricity and a TV so they would get their daily dose of state propaganda-a real example of unbalanced development.) For such semi-subsistence farmers, the fact that western farmers are more productive is not relevant. Their ability to grow their own food is almost a kind of minimum income guarantee as well as social security for when they cannot sell cash crops, get taxed ruinously by oppressive local officials, relatives in the city lose their jobs and stop sending money back etc.

I don’t have much first hand experience of India but I suspect it’s much the same there.
Outside this sector which is partially autonomous from the globalised sector, Third World farmers and industrial workers must compete with First World workers in their ability to make profits for capitalists, if they want employment. As I said in my last post, ‘classically’ the Third World worker produces a product that is competitive due to low labour costs, the First World producer competes on the basis of high productivity due to a high-tech, more capital intensive mode of production. This is the process I described in my last post, in reply to Matthias. In this, globalised sector of the economy, both the labour-intensive product of the Third World worker and the capital intensive product of the First World worker are produced under the market discipline of global capitalism, in the context of a great deal of labour immobility and grossly unequal wages as a result of this immobility (NOT primarily as a result of differences in skill and education levels, although these are a fairly important factor).

Therefore, as the other people who posted suggested, the Third world worker producing in a labour-intensive context produces their product, on average, in the socially necessary labour time, when seen on a global scale. This is because ’society’ or the global labour market dictates that it is ’socially necessary’ (i.e. most profitable) for them to produce in a more labour-intensive way, as their labour is so cheap. On the other hand it is ’socially necessary’ for the more expensive First World labour to work in capital intensive production processes as it is worth the capitalist paying out the money to buy the labour-saving machinery in order to reduce the wage bill.

Anyway, that’s how it was in the 1970s and 1980s. Now, I suspect finance capital is getting so dominant in the West (except in Germany where manufacturing is still relatively strong) that it rather covers up the role of ‘unequal exchange’ in the super-exploitation of the Third World masses. However, I would suggest unequal exchange is still the material basis of the wealth of the First World as opposed to pure exploitation by finance capital, but this needs to be investigated further.”

Matthijs Krul wrote on September 26, 2008:

“Thank you for the answers.

If I understand it correctly then from these responses, the issue is that “socially necessary” is here to be read as following from the _specifics_ of the current world system, so to speak, rather than in the more abstract sense of capital’s “ideal” movement as described by Marx in the essay I quoted? Because I could definitely agree with that. Joseph Ball’s answer seems to imply it is to be understood at global level, with “socially necessary” as it would be understood within one society (which Marx was talking about) being modified globally by factors such as the immobility of labor, and Serve the People’s observations about forced use of less than optimal technology. I certainly would not pretend to know the correct theoretical formula for all this, but I definitely think it would help Third-Worldism, and science in general, if a clear theoretical formulation of labor theory as it applies worldwide could be undertaken in light of these issues we have discussed, in particular the question of the meaning of technology and productivity differences on value production.

In any case I would want to emphasize to ‘Serve the People’ that statements on the production of value are not meant normatively, and that nobody is accusing Indian workers of being stupid or lazy or somesuch! Similarly, I agree with ‘EndofAmerikkka’ that any normative conclusions based on analyzing these differences in technology definitely point in favor of Third World workers. After all, the entire point of Marxism was, among other things, the use of technology in favor of man’s full development, rather than against him.”

Serve The People of MSH wrote on September 27, 2008:

“Matthijs Krul may not have meant to imply that Third World workers are stupid, lazy, or otherwise inferior to First World workers. But that is exactly what many ‘Marxist’ parties in the First World have been saying for years. A major precept of Trotskyism is the idea that the West is more “advanced” than the rest of the world and that therefore it is Western ‘workers’ that will lead the movement for socialism. We say just the opposite: Western ‘workers’ benefit materially from imperialism and have every short-term reason to support imperialism. The international proletariat has no use for Trotskyism (as is demonstrated by the complete absence of Trotskyist revolutions in world history), yet numerous ‘communist’ leaders uphold the lie of the ‘proletarian’ nature of the First World ‘working’ class.

Capital’s ‘ideal’ movement doesn’t happen anymore (if it ever did). ‘Free trade’ is a lie. Capitalist society today falls short of the capitalist ideal in that competition is not free. True capitalists would favor eliminating the borders, as indeed a few libertarians claim to do.

We are improving our theoretical formulation of Leading Light Communism. On the particular question of the effects of differences in technology and throughput, we follow in Comrade Marx’s footsteps. Answering that question is just a matter of applying the labor theory of value.”

Joseph Ball wrote on October 1, 2008:

“As Marx says, productivity gains allow for a smaller amount of v to work up the same amount of c to produce the same mass of product. This means that in a production process as a whole you can increase the amount invested in c, while reducing the amount invested in v (or keeping it the same or expanding it less quickly than c) in order to produce a proportionally greater mass of product than the investment has cost in value terms. Thus automation in a factory may half the number of workers necessary (reduce v by half) while doubling the cost of c. Let’s imagine c and v were equal before (a bit unrealistic admittedly). It might seem like the company concerned is only producing the same value as before. Yes, but the effect of the automation may be to double the mass of production in physical terms (while reducing the value of each product produced by half). As long as the market price of the product remains the same, the innovating capitalist is coining it in, though as other capitalists follow suit, this advantage is competed away.

The point that Matthijs seems to be making is that the First World capitalist tends to have an automated production process and thus higher productivity than the Third World capitalists with their labour-intensive production processes.

If this meant that the Third World manufacturer was expending more than the socially necessary labour time on production, then this would lead to the Third World manufacturer going bust due to competition from automated First World producers.
Actually, the opposite is what tends to happen as manufacturing relocates from First World to Third. This is because production is now global. Given the cheapness of labour in the Third World, it may not be socially necessary on a global scale for the Third World producer of, say Barbie dolls, to automate. Given the expense of the equipment that might be involved and the relative cheapness of paying a Chinese worker to do the work the machine would be doing, it is more profitable in the global system to produce the Barbie doll by labour intensive methods. Therefore the value of the Barbie doll is determined by an hour of socially necessary labour using the labour-intensive method in the Third World. The First World worker could maybe produce more Barbie dolls in an hour using more advanced machinery but this would probably cost more, due to their higher labour costs and the cost of the machine. This extra cost dictates that the socially necessary labour time is determined by the work-time of the Third World worker.

To get slightly off Matthijs’s immediate question, the fact that the First World worker exchanges a product that embodies far more c per hour of their labour than the product of the Third World worker is the secret of the First World worker’s wage advantage. It means that a small amount of First World labour (in terms of labour hours) can appropriate the product of the labour of a much larger amount of Third World labour in terms of labour hours. Ironically, for Marxists, the First World worker’s advantage in this regard is due to the unequal endowment of capital owned by the First World worker’s capitalist. Thus capitalism tends to work in the First World worker’s favour.

So to recap, the higher c embodied in an hour of First World worker’s labour means that the product of the much smaller amount of labour time expended in the First World can exchange for a vast mass of Third World labour hours. The First World worker gains advantage from this, as much as the First World capitalist, because labour market conditions in the First World allow their wages to go much above the level of the reproduction of labour. This is due mainly to immigration controls in the First World but also trade union action and other factors such as the existence of minimum wage legislation.”

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