Material interests, class conflict, and capitalism

Focus on material interests as they arise within the economy raises the fol­lowing questions:

1. Are those material interests best served, or under certain circumstances served at all, under capitalism?

2.

3. Do the material interests of individuals within the classes of workers and capitalists converge or conflict; do they reinforce or undermine the per­ception of a common class interest?

4. Does the conflict that arises over material interests lead to a challenge to the social order of capitalism, or merely involve a shifting of power and benefit within capitalism?

The first two questions direct our attention primarily to the implications of capitalist economic organization for profits, wages, and employment. Marx’s own views on these subjects are somewhat complex (Levine, 1988b). At considerable risk of oversimplification we advance the following summary.

Marx sets out from the idea of the “subsistence” wage. This subsistence wage, or “value of labor-power” depends on the “value of the means of subsistence necessary for the maintenance of the laborer” (1967a: 171). While this subsistence may depend upon “historical” and “moral” factors, it does not vary with profits, employment, or accumulation. In Marx’s view, capi­talism does not enhance the subsistence (though for a period it may allow the worker to demand and receive more than his subsistence). In other words, the fact that the worker acquires his subsistence by first selling his labor­power in the market and then using the money received (his money wage) to purchase his means of subsistence does not affect the amount or compo­sition of that subsistence. This makes the wage contract a purely formal condition so far as the worker is concerned.

Given the subsistence, what remains makes up surplus-value, the most important part of which goes to the capitalist as his profit. The greater the cost of subsistence, the less the surplus-value remaining to fund profit for the capitalist. In this simple scheme, profits and wages are inversely related: When one side gains, the other loses.

Marx argues that the profit motive drives capitalists to seek ways of in­creasing their share of output given the subsistence wage. They are able to do so either by increasing the value of output given the value of the subsistence or by reducing the value of the subsistence given the material needs of the workers and value of the output. He terms these respectively production of “absolute” and “relative” surplus-value (1967a:parts III and IV). Marx ar­gues that capitalists attempt to find ways to make workers work harder, longer, and more efficiently without altering their subsistence. As a result, profit increases, the real wage (subsistence) remains the same, the worker works harder and longer while his share of the product declines. If true, this means that capitalism advances the material interests of capitalists, leaves unaffected or even harms the material interests of workers, and sets the interests of the two in opposition.

Marx believes that class interests are opposed under capitalism. He also believes that there is a causal link - though a mediated one - between material condition (class interest) on the one side and politics on the other. The validity of this claim depends upon the validity of two kinds of arguments: (1) the argument that establishes how capitalism affects the material condition of workers, and (2) the argument that material conditions determine class con­sciousness. In the remainder of this section we deal with the first argument. In the next section we deal with class consciousness.

The first of these two arguments has been the subject of extensive debate since Marx (for summaries see Sweezy, 1942). Marx clearly recognizes the crucial difficulty, although he does not deal with the way it undermines a core element of his political economy. This difficulty is the following: The economic growth process under capitalism takes place through the compe­tition of capitals. In Marx’s theory, competition operates on the price system. Capitalists seek to expand their markets at the expense of their competitors by reducing prices. This process tends to offset the tendency for profits to rise with increases in productivity. Under these circumstances, we can hardly

avoid the conclusion that competition among capitalists, through its effect on prices, tends to assure that workers benefit from gains in productivity in the form of rising real wages.

Furthermore, rapid economic growth can assure maintenance of employ­ment in the face of technical innovation. This follows from the fact that the primary determinant of employment is the rate of investment. Marx did not adequately take into account the way that expansion of capital and growth in the scale of production offset the effect of technical change on the demand for labor (see Levine, 1988b).

Sympathetic critics of Marx have investigated the relationship between investment, employment, and wages (see Steindl, 1952); they do not find compelling support for the conclusions Marx presents under his “General Law of Capitalist Accumulation” ([Capital, Vol. I, 1867], 1967a). Problems arise not only for those conclusions involving wages and employment, but also for the central argument concerning “leveling” of the working class. Historical studies of labor market segmentation (Edwards, Reich, and Gor­don, 1973) and theoretical studies of uneven growth (Levine, 1986) suggest that capitalism differentiates the circumstances of workers as much as it tends to homogenize those circumstances. Forces work in both directions.

Clearly, the more the worker gains from the accumulation of capital, the less does the appropriation of profit by capitalists conflict with the interest of workers so long as those profits are invested rather than consumed. This last issue is precisely the one raised by Keynesians who argue that capitalist economic organization works in the general interest (understood here as the material interests of both workers and capitalists) so long as capitalists main­tain a high level of investment.

Marxists have responded to the challenge to Marx’s framework for political economy in three ways. Some Marxists attempt to sustain or ressurect Marx’s argument, denying the facts and arguments just cited. Other Marxists have sought to recast Marx’s argument in a way that takes seriously its weaknesses and yet allows for certain of its important claims to be supported. A third approach redefines the unit of analysis as the global system. This third ap­proach focuses on the ways in which important groups of workers have been excluded from the benefits of capital accumulation. Here, we restrict our­selves to a brief summary of the second approach.

As we observed, capitalism benefits the workers so long as capitalists main­tain a high level of investment. It follows that should they fail to invest adequately, they undermine the interest of workers in supporting a social order dedicated to private profit making. Economists working in the Marxian tradition have argued that as capitalist economies mature, the incentives for capitalists to act in a way that sustains growth of the system diminish (Steindl, 1952; Kalecki, 1965; Baran and Sweezy, 1966). It turns out that this is due to a weakening of competitive forces. As Marx himself points out, competition tends to be self-limiting when its effect is to drive the weaker producers out of business. As competition weakens, the process that translates productivity gains into rising wages also weakens. But this means that effective demand does not expand at a pace adequate to maintain investment.

When the economy stagnates, capitalists make little profit and accumulate Little capital. Productivity stagnates. Wages do not improve and workers suffer from high levels of unemployment. This situation characterizes an economic crisis of the system. Since Marx, reference to economic crisis has provided the linchpin in arguments by Marxists for the development of a political challenge to capitalism. This approach conforms to Marx’s method, which connects political consciousness to economic conditions. But, how exactly does this connection operate? The discovery of a compelling answer to this question provides Marxian political economy with one of its great challenges. With regard to this link between politics and economics, the distinguished French Marxist Charles Bettelheim observes:

[T]his - it must be acknowledged - is not really developed. In effect, even if what Marx writes on this really corresponds to the laws of capital’s movement, nothing proves that the operation of these laws will ideologically and politically strengthen the proletariat, pushing this class in a “necessary fashion” to rise up against the bourgeoisie, to impose itself as the dominant class, and to make use of its dictatorship to establish a classless society. Marx’s “economic” arguments are incapable of pro­viding the demonstration of such an historical tendency of class struggle. (1985:17, italics in original)

This “historical tendency of class struggle” presumes that individuals and classes articulate, commit themselves to, and pursue a broader (class or po­litical) interest. It also presumes that this broader interest, while rooted in economic relations, rises above material interest to counterpose conceptions of the common good or well-ordered society only one of which (that of the capitalist class) is consistent with capitalist economic organization.

While these broader interests may have material roots in the narrower interests discussed previously, they must not be equated with them. Since these broader interests are inherently political in nature and since they derive from the circumstances of classes within the system of economic relations of capitalism, they constitute a vital part of Marxian political economy. We will therefore consider them in somewhat greater detail.