‘The Trade Unions in the Theoretical System of Karl Marx’ by N. Auerbach from Workers Monthly. Vol. 5 Nos. 8 & 9. June & July, 1926.

I. Trade Unions in the Economic Theory of Marx.

EVERY trade union policy is, in the first place, a wage policy; every trade union theory must therefore emerge from some wage theory. What is the Marxian wage theory?

Wages are the price of labor, said the classical national economy; it is determined exactly as is the price of all other commodities—thru supply and demand or thru the cost of production of labor. Even Ricardo, that greatest genius of the classical school, who opposed the optimistic beliefs of the English Manchestrians in the harmony of interests with the pessimistic picture of a national economy torn apart by irremediable antagonistic interests, even Ricardo could not succeed in crystallizing out the specific character of the wage relations. And so, for Ricardo also, wages remained the price of labor depending on its cost of production; he does not look upon labor itself as the standard of value.

Wages and Labor Power.

Marxian analysis leads to quite other conclusions. Before, therefore, we answer the question as to. the role of the trade unions in the Marxian system, we must formulate very briefly this theory of value, of surplus value, and of wages.

1. “Labor is the substance and the immanent measure of value but has itself no value.” (1) Hence the expression “value of labor” is entirely irrational; it only serves to veil the true laws of the capitalist economy. Were there really a “value of labor” and did this value lie at the basis of the price of labor paid for in wages, then the existence of capital, the essential constituent of present day economy would be rendered impossible. (2)

What the worker is paid for in his wages is in no sense his “labor” but his labor-power that exists in the person of the worker and that cannot be conceived as apart from its bearer. What then is the value of labor-power? It is determined—since the value of every commodity is in proportion to the labor-time necessary for its social production—by the labor-time necessary for its maintenance and reproduction. This value and solely this value is accounted for in the wages. In no sense does the worker receive the equivalent of his “labor,” by which are to be understood his efforts or his products. On the contrary, it is rather a prerequisite of capitalist production that wages must always remain lower than the value of the product since the commodity labor-power possess this peculiarity (in which it is fundamentally to be distinguished from all other commodities) that not only does it create value but in continually creates surplus-value, i.e., more value than corresponds to its own reproduction value. This surplus-value, however, falls not to the wage worker as the owner of labor-power but to the capitalist as the owner of the means of production since the capitalist when he bought the commodity labor-power, naturally bought its use value along with it. Since, however, the use-value of labor-power consists in the fact that it gives rise to exchange value, the buyer naturally has the right to use the labor-power as he pleases and then to take possession of the surplus-value created by it. Indeed, the production of this surplus-value is the “immediate aim and the determining motive of capitalist production’, (3) and only on condition that he realizes surplus-value will the capitalist carry on his production at all. Hence it follows: The value (V) is of a commodity made up, outside of the equivalent for the constant capital used up in production (c), of separate components—the value-equivalent of the used up labor-power or variable capital (v) and the surplus value that corresponds to the unpaid labor-time (s).

It therefore follows that the wages of the worker in capitalist society is the expression of the price of the commodity labor-power; its height is determined by its value, i.e., “by the value of the necessary means of life used to produce labor-power, to develop it, to maintain it, and to perpetuate it.” (4)

The “Iron Law of Wages” and the Marxian Wage Theory.

2. The question now immediately arises: Is the Marxian wage theory equivalent to the so-called “Iron Law of Wages,” the basis for which was already laid by Ricardo and other writers of the classical school but which was formulated in all its sharpness by Lassalle. “The confinement of the average wage to a level necessary for the maintenance of existence at a level customary to the people and for its reproduction— this is therefore. the cruel iron law that rules the wages of labor under the relations of today.” (5)

At the first glance it may appear that a certain similarity exists. When, however, we penetrate beyond the sound of these words and reach their sense and their context, we note striking contradiction between both of these basic views.

What does Marx understand by the “value of labor-power”? He analyses this value into two separate components, of which one is determined physically—by that total of the means of life that is absolutely essential for the barest existence and reproduction. The other component, on the contrary, is socio-historical. This includes all the means of subsistence that satisfy the so-called necessary demands that are in themselves dependent upon the natural needs of a country, upon the cultural] level of a people, upon the habits and customs of the working class, and upon the actual force it can muster in the struggle against the capitalists. This so to speak historical-moral element varies according to the country and period but, for a definite country and a definite period, the extent and circle of the average needs are given. (6)

The extent of these needs must, according to Marx, always be greater than the mass of commodities necessary daily to renew the life-process of the bearer of the labor-power, the human being, i.e., it must be greater than the lower limit or the minimum of the value of the labor power. “If the price of labor-power falls to this minimum, it falls below its value, since under such circumstances, it can be maintained and developed only in a crippled state. But the value of every article is determined by the labor-time requisite to turn it out so as to be of normal quality.” (7) Nor is there any contradiction between this determination of value and the fact that the wages of labor show a continual tendency to approach its minimum. Indeed, it may be possible for the capitalists to raise the rate of exploitation to such an extent as to repress temporarily the price of labor below its value. (8)

Lassalle bases his Iron Law of Wages on purely biologic facts: as soon as wages rise temporarily above the average minimum for the barest maintenance of life, in other words as soon as the condition of the workers shows signs of improvement, then marriage becomes easier and marriages multiply, more children are thrown into the world; thru this increase in the toiling population the supply of laborers grows so that wages again sink to the previous level or even below it. On the other hand, a lasting fall of wages below the average is prevented thru the fact that the growth of the misery of the poor, the lessening of marriages, restraint in the matter of bearing children, emigration, etc., lowers the number of hands and so forces wages up again. This biologic regulator that traces the social fact of the wages of labor to purely natural relations is the essential characteristic that brands the Lassallean law as an “Iron Law.”

How utterly different are the foundations and the views of the Marxian conception. This conception has, thru the correlation of wages with labor-power and not with labor, opened the way to an understanding of the essence of the relations of capitalism and thereby dealt a heavy blow to the liberal economy that is satisfied with a defense of appearances. Such a conception certainly cannot remain satisfied with a law of population that holds as permanent and absolute the historical appearances of a definite epoch. In his investigations on the process of the accumulation of capital, Marx rejects every “abstract” law of population for human beings and maintains that every economic and social form has its own law of population based upon the specific conditions of production. For capitalism the following correlations are valid.

Every reproduction on a capitalist basis is an extended reproduction or accumulation; it therefore continually demands an increased proletariat. This accumulation, conditioned on the rise of productivity (9) the development of which is again dependent upon the extent of accumulation, accomplishes, however, not only quantitative but also qualitative changes in social capital. Changes in its composition (10) set in that manifest themselves in the relative decrease of the variable component. The more therefore the productivity of labor rises, the more does the demand for labor decrease. This relative decrease in variable capital is hastened with the progress of development thru the fact that the accumulation is accompanied by the concentration of great masses of capital in a few hands and thru the centralization of the already existing capital which is not at all limited by the absolute growth of social capital. “With the widening of concentration and of the technical efficiency of the means of production, decreases the extent to which they are the means of occupation for the workers,” says Marx, and to make the antagonistic character of capital capitalist production still clearer he formulates the law of population corresponding to it still in a sharper form—”The laboring population therefore produces, along with the accumulation of capital produced by it, the means by which itself is made relatively superfluous, is turned into a relative surplus population; and it does this to an always increasing extent.” (11) The over-population resulting therefrom, expressing itself in a permanent industrial reserve army, is in itself the consequence and the lever, yes, the condition of existence, of capitalist accumulation, whose mark is the growth of the social capital of a country. The essence of the capitalist economic form is revolutionary, its sense is continual change, transformation of its own basis of production. The continual growth of capital and the raising of the productive power of labor thru this, the sudden power of expansion of capital, the great mobility of the available and functioning capital, the high development of credit—all this demands the possibility for sudden great changes in the productive structure of society. And this can be accomplished thru the industrial reserve army that is continually at the service of capital but has cost it nothing to raise. And it continues to maintain itself at the cost of the workers, the employed as well as the unemployed. In the hands of the capitalists it is the best weapon to force those who are working to work longer hours and thus to hasten still more the relative decrease of variable capital called forth by the accumulation process. For extended hours of work, an increased intensity of labor, has always become transformed, on the capitalist basis, into a sinking of the value of labor-power, while a rise in the rate of exploitation of the toilers means to the entire proletariat a decrease in the demand not so much for labor as for laborers.

Upon this theoretic basis we must strictly reject the wages-fund theory of the liberals; for, according to Marx, there does not exist any fixed size for social capital, even when this is given in its material composition. Above all there does not exist a fixed size for the variable component since, outside of the degree of efficiency of the functioning constant capital, this is dependent upon the degree of exploitation of the individual labor-power, upon the price of labor, of which at most only the very flexible minimum limit is given. Least of all, can the number of employed workers be designated by a constant number. And so the quotient, wages-fund divided by number of workers, yields no fixed magnitude from which the wages can be extracted.

In the same way must we reject the “Iron Law of Wages” of Lassalle which, in essentials, is based on the same errors of method of such liberals as Malthus, Mill, McCulloch. We have bourgeois economists who believe in the “wagesfund,” that has its existence only in the “material of variable capital, i.e., the mass of the means of subsistence it represents for the laborer, fabled as a separate part of social wealth, fixed by natural laws and unchangeable.” (12) And similarly we have here Lassalle operating with unchangeable wage determinants based only on natural laws. Marx shows, to the contrary, that it is a matter of manifold social forces, one of which can at the same time be the cause and the result of another and which therefore stand in a dialectic relation to each other. If we wish to retain the determinants put forward by the classical writers, then we must transform them into social powers. The “law of supply and demand” Marx accepts, not as determining value or price, but only as regulating it, but for wages it loses even this possibility. For we have seen that it is not the absolute increase or decrease of the laboring population that determines the rate of wages but the relation of that section of the laboring population that is condemned to overwork to that other section that is condemned to unemployment, in other words, the industrial reserve army. “Relative surplus-population is therefore the pivot upon which the law of supply and demand of labor works.”’ (13)

II. The Tasks of the Trade Unions.

LET us now return to our original question:

Can we find in the Marxian system—as far as we are able to judge from our present knowledge—a justification for the existence of economic organization? The answer is very brief: No, only are such organizations possible but they are necessary for the regulation of the sale of the commodity labor-power so that in the constant fluctuations of the markets it will be sold at its value in spite of the counter-acting tendencies of capitalist production.

The necessity of trade unions within the capitalist wage-system is emphasized by Marx again and again in his writings and speeches touching on the subject, above all in “Value, Price and Profit,” and “The Poverty of Philosophy.” Repeatedly he defends the role of the trade unions as against the liberal and “socialist” economists who cry out against the “threat” these organizations hold out for the “pure” play of the “holy” law of supply and demand. (14) “As soon, therefore, as the laborers learn the secret, how it comes to pass that in the same measure as they work more, as they produce more wealth for others, and as the productive power of their labor increases, so in the same measure even their function as a means of the self-expansion of capital becomes more and more precarious for them; as soon as they discover that the degree of intensity of the competition among themselves depends wholly on the pressure of the relative surplus-population; as soon as by Trades’ Unions, etc., they try to organize a regular co-operation between employed and unemployed in order to destroy or to weaken the ruinous effects of this natural law of capitalistic production on their class, so soon capital and its sycophant, political economy, cry out at the infringement of the eternal and so to say sacred law of supply and demand.”

As a consequence of the double role of the “free” worker (the prerequisites of every form of capitalist production) as well as of the monopolistic position of the capitalist owing to the industrial reserve army, it naturally follows that the commodity labor-power can become really a commodity on the plane with other commodities only when its sellers are no longer forced to get rid of it at any time or under any conditions whatever. Expressed paradoxically: Only the abolition of free competition renders free competition possible.

From an understanding, therefore, of the basic elements of the capitalist economy it follows that the regulation of the labor supply is the foundation for every form of trade union activity. A rational distribution of work, unemployment support of various kinds, in short, any sort of benefits that help to prevent demoralization of the workers—all these are valuable features that enrich the basic activity of the trade unions. Only when the antagonisms between the employed and the unemployed sections of the working class, only when the competition among individual workers are removed and transformed into solidarity against the common enemy, only then can the trade unions take up the competitive struggle with the capitalists, a struggle for the most favorable sale of labor power. The aim of the trade unions is therefore the substitution of the collective labor contract for the individual and this reaches its highest point in “collective bargaining.” In this connection it must be remembered that we can speak of a labor contract only when there exists some organization to take part in the formation of the contract; for, as long as the individual worker stands defenceless at the mercy of capital, he must necessarily give in to every demand of the boss under pain of destruction. The special field of activity of coalitions is therefore, the struggle for the stabilization or the raising of the price of labor-power, that is. the wage struggle.

Such activity is generally mostly a matter of reacting to previous actions of capital, as Marx showed in his speech to the general council of the International. (15) The most important of these cases will be mentioned here.

The value of labor-power can be changed thru changes in any of the three factors that determine it: Length of the working day, intensity, of labor (16), productive power of labor. If the working day is increased, the other factors remaining the same, the workers must necessarily strive for a corresponding increase in wages; unless the price of the labor-power is to sink below its value there must be an increase in wages not merely corresponding to the increase in the working day but even exceeding it for “man, on the contrary, decays in a greater ratio than would be visible from the mere numerical addition of work.”(17) If the increase in the working day reaches a certain stage no making up thru wage increases is possible since the degree of exploitation of the labor-power destroys all possibility for normal conditions of reproduction. These methods of increasing the absolute surplus-value, such favorites in early times, retreat to the background in the period of highly developed capitalism in comparison with the extraction of relative surplus value which can be submitted to no legal limitations. The most common of these forms the increase in the density of labor, also implies an increase in the daily value of labor-power and thus calls for a corresponding wage increase.

The most complicated, but also the most profitable method of increasing the surplus value at the expense of the worker—a method that plays a particularly prominent role in developed capitalism—is the increase of the productive power of labor. This may be the cause as well as the result of wage movements and has the great advantage, from the point of view of private capitalism, that it is the lever for technical progress. In the end this, of course, redounds to the advantage of the working class since “it provides the necessary material conditions for the economic reconstruction of society.” (18)

The increase in the productivity of labor brings with it effects and counter-effects of many kinds, depending upon the particular branch of production dealt with. A decrease in productivity in agriculture means an increase in the value of labor-power and therefore wage increases if the condition of the worker is not to be worsened. On the other hand, an increase however, the mass of the products as well as in productivity means a decrease in wages; as, the mass and rate of surplus value have increased, it becomes the task of the trade unions to take a stand against the lowering of wages and to attempt to maintain the former position of the worker in the social scale thru obtaining a Share in his increased productive power, that is, thru preventing the sinking of his “relative’”’ wages. (19) Increases in the productive power of labor in industry play a different role according to whether the commodities in question are directly or indirectly involved in the consumption of the worker or not. In the former case they have the same effects as changes in productive power in agriculture; in the latter case they have no effect at all upon the relations of the paid and unpaid portions of labor and therefore, upon the rate of wages.

Alongside of these occasions for changes in wages, all to be traced to changes in the value of labor-power, there is a special form of exploitation that plays a great role in the trade union struggle—that is the “graduated wage.” The necessity for fighting against this type of wage is very clear for it is the aim of the capitalist to limit in every way any increase of the total daily or weekly wage thru diminishing the piece work rate as soon as the quantity of products passes beyond the average. The decrease of piece work wages demands the most energetic resistance on the part of the trade unions, particularly in view of the fact that any increase of production is possible only thru the intensification of labor which, unless it is equalized thru a wage increase, means the sinking of the price of labor-power below its value.

As a general rule, all these factors operate simultaneously and so the changes that result are the consequences of all of them together. To unaccustomed eyes it is difficult indeed to grasp the casual relations—and so the wage movements themselves are often looked upon as the original factor. Essentially, however, it is almost always a case of the resistance of the workers to the exploitation tendencies of capital which, were it not for such successful resistance, would permanently depress the price of labor-power much below its value—as indeed was the case before the rise of labor organizations.

Trade unions must not, however, remain satisfied with realizing the full value of labor power. They must always strive to raise its value. And here the fundamental differences between the Marxian conception and the Lassallean theory of the “iron law” become especially evident. Of course, even Lassalle could not help note the real differences in the “necessary” wages in certain epochs of history and in the various periods of capitalism; but his system provides no explanation whatever for this phenomenon. For who is able to stop the iron natural law from—in the end— automatically wiping out every rise in wages that may arise from the advantage of the moment? What power is there that can smash this principle of nature and cure the workers of their “cursed lack of desires?” (20) But these things take on quite a different aspect when examined from the point of view we used as the basis for understanding the economic activities of labor organizations. Here there is no talk of any mechanically “regulating” natural law. Just as a social relation —the capital relation—lies at the basis of the economy of today, so also are wages determined socially. For wages contain not only the physiologically determined element but also the element determined socio-historically. Marx emphasized this latter element (the socio-historical). Only in unfavorable circumstances do wages reduce to the minimum, their proportion to the surplus value being in general determined “by the relative weight that capital on the one hand and the resistance of the workers on the other can throw in to the scale.”

It is thru emphasizing this element that Marx shows us the possibility for and also the way to increasing the value of labor-power.

The most usual case is the one noted above. If labor succeeds in counter-acting or at least in limiting to a certain point the sinking of wages resulting from an increase in productivity in agriculture and in mass production— which really means that it succeeds in maintaining the price of labor-power above its mew (lower) value—and if it is successful in maintaining this wage level for a considerable time, then the value of labor-power is really raised as a result of the expansion of the moral-historical element. But this does not exhaust all practical possibilities. The greatest field of activity of the trade unions in this connection is presented in the periodical crisis of capitalism, the theoretical and practical significance of which will be presented in another connection. In the last analysis everything helps increase the value of labor-power that tends to extend the needs of the workers and so we must include here many types of educational and cultural institutions and organizations.

Notes.

1. Karl Marx: Capital, I, 588.
2. Karl Marx: Capital, I, 592.
3. Karl Marx: Capital, III, 225.
4. Karl Marx: Value, Price and Profit, p. 76.
5. Lassalle: Offenes Antwortschreiben, p. 39.
6. Karl Marx: Capital, I, 189; III, 295,
7. Karl Marx: Capital, I, 192.
8. Compare Engels’ note to Marx’s Poverty of Philosophy, German edition, page 24: “The formulation that the ‘natural,’ i. e., normal Price of labor power coincides with the wage minimum, that is, with the value equivalent of the necessities for the life and reproduction of the worker—this formulation was first drawn up by me in the ‘Umrissen zur einer Kritik der Nationalékonomie’ (Deutsch-franzésische Jahrbiicher, Paris 1844) and in the ‘Condition of the Working Class in England.” As is evident Marx accepted the idea. Lassalle took it from both of us. Even tho, however, it is true that wages tend continually to approach their minimum, yet the above formulation is false. The fact that labor-power is paid for on the average and as a rule below its value cannot change its value.”
9. “Increases in the productiveness of labor’ means “an alteration in the labor-process of such a kind as to shorten the labor-time socially necessary for the production of a commodity.” Capital, I, 345.
10. It is assumed here that the reader knows that, according to Marx, capital is composed of a constant part (machinery, buildings, raw material, etc.) and a variable portion (sum of the advanced wages); the relation c:v is called the “organic composition of capital,” the higher c is, the higher is the “organic composition,” the lower c is, the lower, etc.
11. Karl Marx: Capital, I, 692.
12. Karl Marx: Capital, I, 669.
13. Karl Marx: Capital, I, 701.
14. Capital, vol. I, p. 702.
15. Published by Bernstein in 1907 as “Lohn, Preis und Profit” (in English as “Value, Price and Profit.”)
16. Increase in the density of labor, increased intensity of labor, means a greater expenditure of labor power per time interval. This results in an increase in the value of labor-power in contradiction to increases in productivity that are followed by decrease in the value of labor-power.
17. Value, Price and Profit, page 108.
18. Value, Price and Profit, page 126.
19. Value, Price and Profit, page 103.
20. This slogan of the “cursed lack of desires” was thrown forth by Lassalle in the struggle of the workers without any consideration of its consequences.

The Workers Monthly began publishing in 1924 as a merger of the ‘Liberator’, the Trade Union Educational League magazine ‘Labor Herald’, and Friends of Soviet Russia’s monthly ‘Soviet Russia Pictorial’ as an explicitly Party publication. In 1927 Workers Monthly ceased and the Communist Party began publishing The Communist as its theoretical magazine. Editors included Earl Browder and Max Bedacht as the magazine continued the Liberator’s use of graphics and art.

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