Socialist Party congress 2006
Appendix: A brief discussion on productive and unproductive labour
'Comments on the significance of the distinction between productive and unproductive labour for understanding capitalism in Britain', was written by comrade Michael Fisher for discussion in his branch (Southwark branch). The text is accompanied by a response from Socialist Party General Secretary Peter Taaffe.
These texts were not voted on at the congress, nor were they key issues for debate during the session on British perspectives, as there were many issues that had priority. Rather they were presented as supplementary reading to stimulate further reading and discussion on the issues raised.
Comments on the significance of the distinction between productive and unproductive labour for understanding capitalism in Britain
Michael Fisher, Southwark Branch
1. The current British Perspectives document (Members Bulletin, November 2005) raises the important theoretical issue of the distinction between productive and unproductive labour. It is argued that manufacturing industry and related firms are the main source of productive labour, and that the destruction and relocation of such labour within and from a country such as Britain can result in the loss of ‘real economic strength’ (paras 19-21). In Britain, this loss has been particularly acute. Manufacturing has experienced drastic decline, with the demise of Rover symbolising ‘the collapse of British capitalism’ (paras 31-33).
2. The theoretical and political issues raised by the problems confronting British capitalism are many and complex, and only so much can be said in the context of a document that covers much important ground. The purpose of these brief comments is to contribute to the discussion of these issues by attempting to clarify what the significance of the productive/unproductive labour distinction is for understanding the crisis of capitalism in Britain.
3. There are two questions raised by the distinction that need to be clarified: which groups of workers are productive, and at what level of geographical abstraction should the distinction be applied.
4. Firstly, productive labour under capitalism is labour that produces surplus value. More specifically, it is waged labour employed by productive capital for the purposes of commodity production. Most Marxists agree that the following groups of workers are therefore unproductive in surplus value terms: most employees of the state; workers paid out of revenue; workers employed in circulation.
5. The key issue, given the enormous growth in business and consumer services over the past 20 years, is whether workers in the private services sector are productive. If some are, then the decline in manufacturing industry may be less immediately significant than it first appears.
6. In his introduction to the Penguin edition of the second volume of Capital, Ernest Mandel argued that services were not productive on the basis that if a commodity by definition must combine concrete and abstract labour, anything produced that is not a free standing material object cannot be a commodity. Therefore labour, such as service labour, involved in the production of ‘nonmaterial goods’ cannot be productive.
7. The point turns on the question of what is ‘concrete labour’. For Mandel, ‘concrete labour’ is only that labour applied to a material thing. For Marx, ‘concrete labour’ refers to actual labour – all really existing labour that is expended in social reproduction. What defines a commodity is that such labour is expended in pursuit of the production of things that have use values (or have a ‘useful effect’) and an exchange value. This is why, in the second volume of Capital, Marx proceeds to define the services offered by the transport industry as having a ‘useful effect’ and so, in the context of being exchanged against productive capital, the labour of transport workers should be considered to be productive. In volume one of Capital he similarly defines the work of a privately employed ‘schoolmaster’ as productive. The key issue is not the materiality of the product, but the extent to which the waged labour employed by such capital adds to the usefulness of the good or service, and so offers the prospect of generating surplus value through exchange.
8. All consumer and business services cannot be simply defined as productive, but nor can they be assumed a priori to be unproductive. The extent to which they are productive has to be established on the basis of research and a detailed assessment of the degree to which each industry sector and sub-sector meets given criteria. It seems probable that most financial services will emerge as unproductive, but that some or most of the labour employed in the expanding logistics, human resources and training industries may be productive. Until that work is done, the full extent to which the growth of such services acts as an unproductive burden on the productive economy remains unknown. It follows that the extent to which a decline in manufacturing employment signifies a weakening of ‘real economic strength’ must remain uncertain. The Perspectives document is right to note that not all new value is created by manufacturing – but the implications of this point need to be more fully assessed before drawing strong conclusions about an alleged ‘collapse of British capitalism’.
9. The second question raised by the productive/unproductive labour distinction is the level of geographical abstraction at which it should be applied to understanding the ‘strength’ or ‘weakness’ of capitalism: the national or global economy.
10. Marx was clear that the magnitude of surplus value (founded in the effective exploitation of productive labour) is determined prior to its distribution among capitalists, workers and states by means of competition and class struggle: ‘The profit of the capitalists as a class, or the profit of capital as such has to exist before it can distributed, and it is extremely absurd to try to explain its origin by its distribution’ (Grundrisse, p. 684). The magnitude of surplus value is determined at a global level, prior to its distribution as profit, interest and rent between classes and between nations. It follows that the significance of the productive/unproductive distinction must also be understood at a global scale.
11. Ultimately, what matters for the ‘strength’ or ‘weakness’ of capitalism is not the balance of productive/unproductive labour in each nation state, but the balance across the whole global capitalist economy. The presence of a given quantity of productive labour within each nation indicates the potential contribution of that labour to the generation of a given total of global surplus value. The extent to which individual capitals in any nation then profit from the value they have contributed to producing will depend on the relations of distribution through which those capitals and states are integrated into the world economy.
12. How the forms of surplus value are distributed among classes and states is a very complex matter, subject to a large number of historically and geographically specific determinations. These include: the value and management of national currencies; the regulations governing the circulation of financial capital; the unevenness of technological change; the balance of class forces; state policy, and so on. The main point is that there is not a necessary relationship between the location of a particular quantity of productive labour and where the profit generated by that labour is distributed. The fact that some productive labour is being relocated to China, while a matter of great concern to many workers in Britain, does not necessarily mean that all or even some of the resulting profits will remain and be reinvested there for productive purposes.
13. Assessing the position of the British economy in general, and British manufacturing in particular, within the global relations of capitalist distribution is beyond the scope of this brief document. Such an assessment would be difficult to undertake in Marxist terms because government and company-level statistics are calculated on the basis of bourgeois definitions of profit, value and capital. However, the available official statistics suggest that while British manufacturing has undoubtedly suffered a severe crisis in terms of the quantity of productive labour it employs, on other criteria the crisis is somewhat less acute.
14. While the question of the quantity and quality of employment is of fundamental importance to workers, and to a lesser extent the state, from the point of view of capital all that matters is profitability. While declining levels of employment may indicate that an industry is suffering falling profitability, such declines may disguise the fact that many companies are reaping an increasing share in the distribution of global surplus value by such means as reducing the number of workers they employ, intensifying labour, and/or moving some parts of their production to lower cost nations. Therefore, in assessing the ‘health’ of capitalism in Britain, data on profitability is of fundamental importance.
15. The most recent study of international comparisons of company profitability by the Office for National Statistics found that in terms of aggregate company profitability (defined as the ratio of profits to capital employed), UK companies (manufacturing and services combined) ranked fifth among the 17 surveyed nations – above the USA, Canada and Germany. In terms of ‘services’, UK companies were ranked third, behind the USA and Finland. UK manufacturing was ranked at eleven.
16. In terms of assessing the ‘health’ of manufacturing it is worth noting that while some commentators (including some trade unions) have been warning of the immanent demise of UK manufacturing for at least the last decade, pointing to massive falls in employment levels as evidence, output is now higher than at any point in the 1980s and 1990s (although it has fallen slightly since peaking in 2000).
17. Furthermore, while employment was falling rapidly during the 1990s, the profitability of UK manufacturing was increasing. In every year from 1994 to 1999, the profitability of manufacturing industry was higher than at any time during the previous thirty years. (Of course, these aggregate figures mask significant differences between sub-sectors such as textiles, which is suffering terminal decline, and pharmaceuticals, which is not.)
18. This appears to suggest that while the quantity of productive labour in UK manufacturing was falling, many British manufacturing firms were successful in maximising the distribution of global surplus value to themselves and their owners by such means as cutting costs, the intensification of work, the development of new production technologies, and exploiting low wage labour in parts of Eastern Europe and Asia.
19. In sum, the distinction between productive and unproductive labour is vital to understanding the dynamics of contemporary capitalism. However, it is applicable at the level of global capitalism in general, not individual nation states. An analysis of the production of surplus value by labour must be complemented by an analysis of the economic and political relations through which such value is then distributed to classes and states. Only on that basis can we understand the apparent contradiction between reductions in the quantity of productive workers in particular places and the increasing profitability of some of those firms that employ them.
Productive or unproductive? Reply to Michael Fisher
The comments of Michael Fisher on the issue of productive and unproductive labour are to be welcomed. If the points on this issue in the British Perspectives document and Michael’s comments can stimulate a discussion and this in turn leads comrades to examine or re-examine Karl Marx’s ideas on this subject this will be of benefit.
Marx’s economic ideas are set out in the three volumes of Capital and in ‘Theories of Surplus Value’ (what Engels called the fourth volume of Capital). There are also important passing comments in Grundrisse. We have to recognise that it is not easy, for new and inexperienced comrades in particular, to ‘digest’ at one go even the first volume of Capital let alone the rest. However, as Marx himself pointed out, there is "no royal road to science" and it is necessary to prepare the theoretical ammunition for the next era by encouraging those comrades who are interested to go through this material, learn about the method of Marx and seek to apply it to contemporary capitalism.
In the British Perspectives document we made some very general comments about ‘productive and non-productive labour’, related this to the decline of manufacturing and drew some tentative conclusions, both in relation to Britain and China, particularly the latter’s role in the world economy vis-à-vis the US, the economic Atlas of world capitalism at the present time. While Michael agrees with Marx’s general approach on this issue, with which we would concur, he nevertheless questions our analysis of the decline of manufacturing industry and seems to suggest that this can be countered at a "global level", where the significance between productive and unproductive labour "must also be understood".
He states in his concluding paragraph: "In sum, the distinction between productive and unproductive labour is vital to understanding the dynamics of contemporary capitalism. However, it is applicable at the level of global capitalism in general, not individual nation states. An analysis of the production of surplus value by labour must be complemented by an analysis of the economic and political relations through which such value is then distributed to classes and states. Only on that basis can we understand the apparent contradiction between reductions in the quantity of productive workers in particular places and the increasing profitability of some of those firms that employ them." The clear implication is that while manufacturing and productive labour can be on the decline in Britain, the US and many other countries, and with it the production of surplus value in these countries, that would not signify their decline because of the greater exploitation of the working class elsewhere.
In one sense we can agree with him on this, because this is what is happening at this moment in time, emphasised by, for instance, the re-location of manufacturing capacity to these countries, which allows the capitalists in the ‘home’ countries to maintain and boost their profitability. We have commented on this on a number of occasions in the journal and in the paper. However, the crucial question we posed is whether or not this arrangement will be changed by the rise of China. An attendant question is whether the transferral of some productive potential, and productive labour, together with the production of surplus value, will also have catastrophic consequences for the developed countries in the medium and long terms, particularly of Britain which has undergone the most dramatic and rapid decline in this sphere. There are a number of other questions posed on profitability: is the manufacturing decline in Britain all that crucial? A number of other issues are also raised by Michael’s paper.
To begin with, it is necessary to try and indicate, in Marx’s own words, the distinction between productive and non-productive labour. We need to issue a health warning, above all not to take isolated comments by Marx out of context, understand the time in which he was writing when he is dealing with nuances. There are also some "contradictions" in Marx’s writings on this issue in different works. Moreover, we should not engage in a hair-splitting discussion over narrow ‘job descriptions’, whether a particular job is ‘productive’ or not. It is possible, I believe, to classify some as "productive" and others as "unproductive" but a discussion can be had about the character of some jobs. Some Marxists in the past indulged in an abstract discussion on this issue. We are dealing with general aggregate labour in specific fields. Most jobs in the state sector, for instance, are "unproductive" but not all. The same applies to "service industries".
This does not mean that we cannot decide in general and, specifically, through analysis what constitutes productive or non-productive labour. Marx certainly did and considered it a vital subject for understanding political economy. In the ‘Theories of Surplus Value’, and volumes one and two of Capital, Marx goes into some detail on productive and non-productive labour. This is what Marx says about productive labour: "Only that wage labour is productive which produces capital." He goes on to say: "This is the same as saying that it reproduces on an enlarged scale the sum of value expended on it, or that it gives in return more labour than it receives in the form of wages. Consequently, only that labour-power is productive which produces a value greater than its own." [Theories of Surplus Value, p152.] Trotsky later commented: "Where labour has created no new value, there even Rockefeller can get nothing." [Marxism in our Time, p12.]
Marx further states that if a worker expended labour which was not just to keep him alive, produced just wages, "speaking in an absolute sense his labour would be productive because it would be reproductive; that is to say, because it constantly replaced the values (equal to the value of its own labour-power) which it consumed. But in the capitalist sense it would not be productive because it produced no surplus-value. (It produced in fact no new value, but only replaced the old; it would have consumed it – the value – in one form, in order to reproduce it in the other. And in this sense it has been said that a worker is productive whose production is equal to his own consumption, and that a worker is unproductive who consumes more than he reproduces.)" [TSV, p153.]
So, Michael Fisher is right when he says that "productive labour under capitalism is labour that produces surplus value". Marx goes on further: "Only labour which produces capital is productive labour." He underlines this when he writes: "The aim of capitalist production is the surplus, not the product. The labourer’s necessary labour-time, and therefore also its equivalent in the product with which it is paid for, is only necessary as long as it produces surplus labour. Otherwise it is unproductive for the capitalist." [TSV p213.]
He goes on to make the important additional point: "Included amongst these productive workers, of course, are all those who contribute in one way or another to the production of the commodity, from the actual operative to the manager or engineer (as distinct from the capitalist)." He goes further when he states: "Even the latest English official report on the factories ‘explicitly’ includes in the category of employed wage-labourers all persons employed in the factories and in the offices attached to them". [TSV, pp156-7.]
What is unproductive labour then? It is, says Marx, following the great bourgeois classical economist Adam Smith, "labour which is not exchanged with capital, but directly with revenue, that is, with wages or profit (including of course the various categories of those who share as co-partners in the capitalist’s profit, such as interest and rent)." Marx makes the further comment that "this critical differentiation between productive and unproductive labour remains the basis of all bourgeois political economy". He credits Adam Smith with having got to "the very heart of the matter, hit the nail on the head". [TSV, p157.]
Marx drew on all the positive features of "bourgeois political economy". In relation to unproductive labour and Adam Smith’s contribution to this issue, Marx writes: "The unproductive labourer produces for him [the buyer of his labour] a mere use-value, not a commodity; an imaginary or a real use-value. It is characteristic of the unproductive labourer that he produces no commodities for his buyer, but indeed receives commodities from him." [TSV, p160.]
He gives a very telling quote showing the brutal honesty of Adam Smith when the latter writes: "The labour of some of the most respectable orders in the society is, like that of menial servants, unproductive of any value… The sovereign, for example, with all the officers both of justice and war who serve under him, the whole army and navy, are unproductive labourers. They are the servants of the public and are maintained by a part of the annual produce of the industry of other people… In the same class must be ranked… churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera singers, opera dancers, etc." [TSV, p160, from Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, pp94-95.]
Trotsky reinforced this point when he wrote: "Great as may be the divergences between the prices and the values of commodities in individual instances, the sum of all prices is equal to the sum of all values, for in the final reckoning only the values that have been created by human labour are at the disposal of society, and prices cannot break through this limitation, including even the monopoly prices of trusts". [Marxism in our Time, p12.]
This is not to say that "unproductive labour" is not "useful" and necessary for humanity and for capitalism. At one stage Marx wittily dismisses the arguments of the economist and apologist for the rich, Nassau Senior, who attempted to argue that the capitalists are "productive". He writes: "These people are so dominated by their fixed bourgeois ideas that they would think they were insulting Aristotle or Julius Caesar if they called them ‘unproductive labourers’. Aristotle and Caesar would have regarded even the title ‘labourers’ as an insult." [TSV, p287.] We could add that today the great majority of "unproductive" workers are socially and politically part of the proletariat, and those like teachers and civil servants are increasingly forced into factory-like conditions.
The crucial difference between the two categories of labour is: "In the one case the labour is exchanged with capital, in the other with revenue. In the one case the labour is transformed into capital, and creates a profit for the capitalist; in the other case it is an expenditure, one of the articles in which revenue is consumed." Marx then gives the example of a piano maker who is a "productive labourer". He states: "His labour not only replaces the wages that he consumes, but in the product, the piano, the commodity which the piano maker sells, there is a surplus-value over and above the value of the wages. But assume on the contrary that I buy all the materials required for a piano (or for all it matters the labourer himself may possess them) and that instead of buying the piano in a shop I have it made for me in my house. The workman who makes the piano is now an unproductive labourer, because his labour is exchanged directly against my revenue." [TSV, P160.]
What is clear from this is that all labour which does not produce capital, surplus value, from which comes interest, rents and profit, is unproductive labour. Michael Fisher writes: "All consumer and business services cannot be simply defined as productive, but nor can they be assumed a priori to be unproductive." He then adds that the "extent to which they are productive has to be established on the basis of research and a detailed assessment of the degree to which each industry sector and sub-sector meets given criteria." We would agree with this.
However, care has to be taken, as Marx did in most examples, to seek to classify productive and non-productive labour, and we do not have an arbitrary approach. There are some clues in Marx’s writings as to the approach that should be adopted. At one stage he quotes Adam Smith who describes productive labour in the following way: "The labour of the manufacturer [worker] fixes and realises itself in some particular subject or vendible commodity, which lasts for some time at least after that labour has passed. It is, as it were, a certain quantity of labour stocked and stored up to be employed, if necessary, upon some other occasion." As far as unproductive labour is concerned this "does not fix or realise itself in any particular subject or vendible commodity. His services generally perish in the very instance of their performance, and seldom leave any trace of value behind them, for which an equal quantity of service could afterwards be procured." [TSV, p161, from Wealth of Nations, pp93-94.]
This question of a "vendible" object to be sold or "exchanged" Marx uses to describe productive labour as opposed to unproductive labour. He makes the important point: "Adam Smith naturally includes in the labour which fixes or realises itself in a vendible and exchangeable commodity all intellectual labours which are directly consumed in material production. Not only the labourer working directly with his hands or a machine, but overlooker, engineer, manager, clerk , etc. – in a word, the labour of the whole personnel required in a particular sphere of material production to produce a particular commodity, whose joint labour (co-operation) is required for commodity production. In fact they add their aggregate labour to the constant capital, and increase the value of the product by this amount." He then adds in brackets the pointed remark, "How far is this true of bankers, etc?" [TSV, p164.] Applied in general to capitalists as a whole this does not mean that all "ancillary" labour is "productive". Timekeepers, stockbrokers and their like who are part of "modern capitalism" are not "productive", according to Marx.
He also makes an important ‘modern’ comment in relation to the "cost of labour power" that is the maintenance or reproduction of the working class. Marx writes: "As to the purchase of such services as those which train labour-power, maintain or modify it, etc., in a word, give it a specialised form or even only maintain it – thus for example the schoolmaster’s service, in so far as it is ‘industrially necessary or useful; the doctor’s service, in so far as he maintains health and so conserves the source of all values, labour power itself – these are services which yield in return ‘a vendible commodity, etc.’, namely labour power itself, into whose costs of production or reproduction these services enter." He goes on: "They can be counted as the cost of repairs for labour-power." However, doctors and teachers do not by themselves create new value, as indicated by Marx when he states a little later: "It is therefore clear that the labour of the doctor or the schoolmaster does not directly create the fund out of which they are paid, although their labours enter into the production costs of the fund which creates all values whatsoever – namely, the production costs of labour power." [TSV, p167.]
The fact that doctors do not create value, in the strict sense defined by Adam Smith and by Marx following him, in no way diminishes their "use value", their absolute necessity from the point of view of society and humanity as a whole. The same applies to salaried workers in the state sector – which as comrades know is an important base for our party at the present time. These workers are absolutely essential and "useful" from the point of view of society as a whole but the majority do not add value, produce a commodity which produces capital or surplus value. Therefore their wages and incomes must be paid for, as with doctors, out of the "fund" provided by the mass of surplus value created by the productive workers as a whole. What are the "productive workers" and what are "unproductive" does have to be established on the basis of Marx’s criteria and a detailed assessment of jobs in each industry. But Michael is wrong when he draws the conclusion that until this detailed work "is done" we cannot draw conclusions, no matter how tentative, about the general position and the tendencies and processes at work in capitalism today.
Moreover I think he is mistaken in arguing that the decline in manufacturing employment does not weaken "real economic strength" but must remain uncertain. The bourgeois as a whole historically have been concerned – more consciously in the case of Adam Smith and unconsciously in the case of the economic epigones that followed him – about the "unproductive" sector swallowing too much of the surplus generated solely by the productive working class. This has manifested itself, even today, in concerns about the size of the state, the way it allegedly "crowds out" investment into industry and therefore, following from this, the necessity from a capitalist point of view to cut down on the share of gross domestic product swallowed by the state. Of course, part of this is an attempt by the bourgeois to cut the "social wage" in other words part of the share which goes to the working class.
In the perspectives document we do not talk about a bald "collapse" of British capitalism in the sense of a deep recession or a slump at the present time. It is a relative decline which is reflected in the collapse of the manufacturing basis of British capitalism, as manifested in the share of manufacturing in British capitalism as a whole as well as the number of workers now employed in this sector.
Mike Fisher suggests that the balance of productive and unproductive labour in each nation state is not crucial because of what may exist among the two sectors from a world point of view. This is a mistaken approach because capitalism has developed a world market but in a contradictory fashion through nation states which still exist and fight each other for a greater share of this surplus. Trotsky pointed out: "The class struggle is nothing else than the struggle for surplus-product. He who owns surplus-product is master of the situation – owns wealth, owns the state, has the key to
the church, to the courts, to the sciences and to the arts." [Marxism in our Time, p13.] What applies in one state applies even more so on a world scale. US imperialism’s dominance historically has been founded on its crushing economic weight in the world capitalist system. That is now challenged in the long term by China partly because of the "hollowing out" of the US economy, the relocation of productive capacity to China and elsewhere.
It is true that "Ultimately, what matters for the ‘strength’ or ‘weakness’ of capitalism is not the balance of productive/unproductive labour in each nation state, but the balance across the whole global capitalist economy." That is true if one takes capitalism on a world scale. But the balance between productive and unproductive labour is important in the relative strength of a nation state vis-à-vis other rivals. It can mean even in the short term the falling behind of a country compared to its rivals with serious consequences for living standards even relatively. Moreover, in the event of an economic contraction, downturn, recession or slump, this relative decline could result in a catastrophic plunge in national income which in turn would lay the basis for a ferocious struggle between the classes.
This has not happened up to now, in Britain, because of the fortuitous discovery of North Sea oil which cushioned British capitalism through softening the social conflict which otherwise would have resulted from this in the last 20 years. Marx commented on the "slow and inglorious decay of Spain". The full consequences of this were not decisively felt in the nineteenth century but decades later, particularly after the First World War, leading to a ferocious outburst of the class struggle, which culminated in the Spanish revolution of 1931-37 and the civil war. Something similar happened in Britain in the post-first world war situation which led to the massive clash between the classes during the 1926 General Strike.
Another factor allowing British capitalism to avoid the full effects of manufacturing decline has been the development of "services", particularly the financial sector, in which Britain occupies an important role and the tribute extracted through this by British capitalism as well as from its investments abroad. But even bourgeois economists like Hamish McRae of The Independent, echoed in some of the speeches of Gordon Brown, fear that the disappearance of the manufacturing base in the former "workshop of the world" and the jobs that went with this will not be replaced by industries which would fill the gap by producing goods which could be sold on the world market. Behind it is a fear that those industries which "add value" – a dim although unconscious recognition of the labour theory of value – will not be found on a sufficient scale to compensate for the diminishing of value-producing industries, particularly of manufacturing. The "service industries" will not offer sufficient compensation as we have pointed out in the British perspectives documents in facts and figures.
From a world point of view in his comments on the "global surplus" and thereby of profitability, Michael Fisher seems to indicate that the relationship between productive and non-productive labour is not something that the capitalists are particularly worried about. That is not true. The former industrialised countries have in many cases become "post-industrialised" – at least relatively in the decline of industry – and the trend is obvious everywhere. However, the capitalists, typified by The Economist journal, take some solace in the fact that two billion workers (in China, India, Eastern Europe, etc.), at least potentially, have entered the world capitalist labour market as a seemingly abundant source of exploitation and superexploitation by the capitalists in the developed countries.
The increased investment in China and Eastern Europe, etc. has compensated to some extent for the loss of value producing industries in the old capitalist countries but the extent and the long-term implications are not at all certain. We pointed out in the 1990s in an answer to the proponents of "new technology" that, at that stage, manufacturing, metal-bashing industries, from a world point of view had not declined but had been maintained and possibly increased. However, even taking into account the big investments in China and Eastern Europe, that may not be the case today.
Capitalism worldwide has assumed an increasingly parasitic character, giving up to some extent its historical "mission" to develop the productive forces. This is manifested in the colossal swindling, corruption, false accounting, drug trafficking, etc, that one recent estimate put at 10 per cent of world gross product. In addition to this, we have the unprecedented speculative character of finance capital, manifested in derivatives, hedge funds, accounting for £20 billion of profits in Britain, fraud, etc.
Perhaps the sharpest expression of this parasitism is the fact that the major manufacturing companies, flush with huge profits, have piled up cash mountains, often used for speculation in hedge funds, etc., rather than reinvest the surplus back into production. Ford, for instance, which has just announced a massive redundancy package, has a huge cash reserve. On the issue of profitability, they are, it is true, at historically high levels but it is striking that for manufacturing industry in Britain while profits have increased it is not at the same rate or proportion as in other sectors.
The reference to productive and non-productive labour in the British Perspectives document was mentioned specifically in relation to two issues: one is Britain, and the other, the implications of the transfer of productive capacity to China and what this could ultimately mean in the relationship of forces worldwide, particularly between China and the US. On the issue of Britain Michael Fisher doubts the effect on its economy of the demise of manufacturing industry. He makes this clear in paragraphs 17 and 18: "Furthermore, while employment was falling rapidly during the 1990s, the profitability of UK manufacturing was increasing. In every year from 1994 to 1999, the profitability of manufacturing industry was higher than at any time during the previous thirty years. (Of course, these aggregate figures mask significant differences between sub-sectors such as textiles, which is suffering terminal decline, and pharmaceuticals, which is not.)
"This appears to suggest that while the quantity of productive labour in UK manufacturing was falling, many British manufacturing firms were successful in maximising the distribution of global surplus value to themselves and their owners by such means as cutting costs, the intensification of work, the development of new production technologies, and exploiting low wage labour in parts of Eastern Europe and Asia."
In the British Perspectives document we point out the "rentier" character of British capitalism today, particularly manifested in the reliance on "services", in which the financial sector plays a key role, as well as the tribute extracted from abroad by investments. In a sense, British capitalism is trying to repeat what the French bourgeois did after the collapse of the Paris Commune. Frightened by the rise of the proletariat, as Lenin pointed out, industry was held back in France as French imperialism extracted greater and greater tribute – surplus – from its protected colonies.
Thatcher did something similar in the smashing of the miners and the decimation of 13 per cent of manufacturing industry between 1979 and 1981. The British working class has not yet fully recovered from this attack, even up to today. However, the position of British capitalism is far more precarious today than that of French imperialism in the past. It has no protected market, its investments abroad are therefore much more precarious, and moreover, they are diminishing in importance as Britain’s trade gap with the rest of the world grows, particularly in manufacturing.
This is taking place even before the onset of a serious recession or slump and is worrying the serious bourgeois economists, as well as Gordon Brown. There is a frantic wringing of hands in these quarters as to where the "new" value-producing industries will come. Losing its traditional manufacturing base, the economists of British capitalism believe that the gap can be filled by concentrating on "high quality boat building", tourism, education and ‘luxury’ commodities. This will be incapable of absorbing the numbers of workers who previously were employed by manufacturing industry.
Michael Fisher also states: "The fact that some productive labour is being relocated to China, while a matter of great concern to many workers in Britain, does not necessarily mean that all or even some of the resulting profits will remain and be reinvested there for productive purposes." The same arguments could be applied to all of these capitalist countries, including the US, which have seen the relocation of productive labour to China in particular. However, this could ultimately have a big impact on the former advanced industrial countries if the surplus extracted in China is not "relocated" back to the companies based in Europe, Japan and the US but is retained by growing Chinese capitalism. That is not the case at the present time but the tension between the US and China on economic issues is partly motivated by the fear of a section of the American bourgeois that this could indeed take place in the future.
Crucial here is the question of "technology transfer", which has taken place in the past in some of the Asian ‘tigers’ and ‘little tigers’ such as Malaysia. It was almost entirely dependent on foreign direct investment to develop its industry. But at a certain point a "crossover" took place and an indigenous industrial Malaysian bourgeois and with it a home market developed. In the case of the ‘Tigers’, the American bourgeois permitted this to happen up to a point because of the competition with Stalinism and the need to build up a number of "success stories" for capitalism in the Asian region.
Can something similar develop in China? The American bourgeois perceive that, if this takes place in the future, it could alter the economic relationship of forces to the detriment of US imperialism. This was a factor in the US vetoing the export of arms technology to China from the EU. It is reflected in the ferocious denunciations of China in the US – in which university professors are lining up with one another – to advocate a veto on all technology transfers to China. Behind this is the battle on so-called "intellectual property rights", the use of patents etc. Incidentally, a discussion amongst economists has taken place over the "value" of intelligence and ideas.
Marx gave an indication of how to approach this issue today when he wrote: "A writer is a productive labourer not in so far as he produces ideas, but in so far as he enriches the publisher who publishes his works, or if he is a wage-labourer for a capitalist." He goes on: "The use-value of the commodity in which the labour of a productive worker is embodied may be of the most futile kind. The material characteristics are in no way linked with its nature which on the contrary is only the expression of a definite social relation of production. It is a definition of labour which is derived not from its content or its result, but from its particular social form." [TSV, p158.]
In the particular example mentioned by Michael Fisher, transport, Marx writes: "But circulation of commodities can also take place without their physical movement, as can the transport of products without commodity circulation, even without direct exchange of products. A house that is sold by A to B circulates as a commodity, but it does not get up and walk. Movable commodity values, such as cotton or pig-iron, can remain in the same warehouse while they undergo dozens of circulation processes, and are bought and re-sold by speculators. What actually moves here is the property title to the thing and not the thing itself. In the realm of the Incas, on the other hand, the transport industry played a major role, although the social product neither circulated as a commodity nor was distributed by means of exchange.
"If the transport industry therefore appears as a cause of circulation costs on the basis of capitalist production, this particular form of appearance in no way alters the substance of the matter.
"The quantity of products is not increased by their transport. The change in their natural properties that may be effected by transport is also, certain exceptions apart, not an intended useful effect, but rather an unavoidable evil. But the use-value of things is realised only in their consumption, and their consumption may make a change of location necessary, and thus also the additional production process of the transport industry. The productive capital invested in this industry thus adds value to the products transported, partly through the value carried over from the means of transport, partly through the value added by the work of transport. The latter addition of value can be divided, as with all capitalist production, into replacement of wages and surplus-value." [Capital, Volume 2 pp226-7.] Therefore the workers involved in the transport of goods do contribute to adding value. However, those involved in the transport of people do not, although the passenger transport industry is absolutely vital for the workings of capitalism and the workers in those industries are part of the proletariat. Paradoxically, the workers who build the trains, buses, etc, are ‘productive’, produce goods which are exchanged and create new value.
To sum up, it is to be welcomed that Michael Fisher has been prompted into writing about the issue of productive and non-productive labour by the comments in the British Perspectives document. There is much we can agree with in his paper but there are things, as indicated, on which we do not agree, as to what is happening, the trends within capitalism, on this key question of productive and non-productive labour today. These issues might appear to be "economic hair-splitting" but they are not. They ultimately go to the heart of the character of capitalism, the production of value through exchange and the relationship between productive and non-productive labour in the modern era.
We are, at the same time, dealing with broad processes and not primarily a discussion on every specific job and whether it meets the criteria of "productive" or "non-productive" labour but on the general proportions between the two types of labour. The big question is what the relationship between productive and non-productive labour means in aggregate for capitalism as a whole on a world scale, the specific relationship between different capitalist powers as they struggle to garner for themselves a greater portion of the surplus produced by the working class, and how this applies to Britain. It is hoped that these few remarks together with Michael Fisher’s paper will provoke comrades to take more of an interest in Marxist economic ideas, thereby hopefully providing a generation of Marxist economists who will face up to and analyse the processes developing in capitalism today and in the future.