By MH. A continued serialisation of a chapter from the new book 'Capitalism's Endgame', which is an attempt to deepen the understanding of capitalist decadence in the 21st century from a left communist perspective.
Before examining this surplus population, we first want to quickly look at what for Marx is a key driver of the ‘general law’: the growth of labour productivity.
The growth of labour productivity
Is there any empirical evidence for the tendency identified by Marx for the demand for labour to diminish in proportion to the growth of capital, even as the size of the working class increases?
In fact the share of workers employed in manufacturing has been declining at a global level for at least two decades. In the capitalist heartlands of western Europe and North America this trend began in the 1960s and accelerated from the 1970s (Fig 2). But since the 1980s we can see that it has also been falling rapidly in newly industrialising economies like Singapore, Korea and Taiwan (Fig 3).
Fig 2 Share of manufacturing employment in Europe and North America
Fig 3 Share of manufacturing employment in selected Asian countries
(R Rowthorn & K Coutts, ‘De-industrialisation and the balance of payments in advanced economies’, United Nations Conference on Trade and Development Discussion paper no. 170, May 2004)
From the 1990s China also saw a fall in the share of manufacturing employment; it recovered in the 2000s but started to fall again from 2013, when the actual number of workers in manufacturing also began to fall (Fig 4).
Fig 4 Share of manufacturing in total Chinese employment, 2000-17
(R S Lawrence, ‘China, Like the US, Faces Challenges in Achieving Inclusive Growth Through Manufacturing’, Peterson Institute for International Economics Policy Briefing, August 2019)
Globally, this trend does not imply a decline in manufacturing output, which despite a slowdown due to the 2007-8 economic crisis has continued to grow (Fig 6).
Fig 5 World Manufacturing Output 1997-2022
The growth of the service sector
The decline in the share of workers employed in manufacturing must be seen in the wider context of the increasing share of the service sector, which began to grow in the capitalist heartlands in the 1960s and now accounts for over 70 percent of employment in the OECD countries. While the growth of the service sector partly reflects an increase in low wage, precarious work, especially in the weaker ‘Third World’ economies – a trend we will examine in more depth below – it also performs functions that are vital to manufacturing, including those that may have been previously carried out ‘in-house’, like design, catering, transport, training, p, together with functions vital to enabling capitalist accumulation as a whole, like health care and education, which are delivered in some cases by very large, industrial-scale workforces; the UK’s National Health Service, for example, is one of the world’s largest employers with 1.5 million workers.
So we cannot simply conclude — as those associated with ‘communisation’ theory tend to do – that the decline in manufacturing employment and the growth of the service sector in themselves prove that the working class as a whole is becoming superfluous to capitalist accumulation.
The primary reason for the decline in manufacturing employment does indeed appear to be the growth of labour productivity, which has been led by the manufacturing sector, with newly industrialising economies tending to rapidly adopt the highest existing level of technical innovation. In the case of industrialising economies like China, whose rapid growth originally depended on very low wages, the growth of labour productivity has been spurred by the tendency for wages to rise in the long term, prompting the move of foreign exporting firms to other, even lower wage economies (like Vietnam, Bangladesh and Ethiopia), and a resulting push towards rapid automation.
To understand the full impact of these trends – the decline in manufacturing employment and the growth of the service sector – on the condition of the working class as a whole, we also need to examine changes in capitalism since the 1960s, which have resulted in the growth of precarious, low paid work and the creation of a global ‘industrial reserve army’.
The growth of precarious, low paid work
Of the 3.3 billion people in employment, some two billion work ‘informally’; that is, outside the formalities of state regulation, without contracts or benefits. In the weakest capitalist economies, informal jobs now account for up to 90 percent of employment, but they are also growing as a proportion in the traditional capitalist heartlands.
Informal workers are more likely to be working for low pay in poor conditions and to live in poverty. The largest portion are self-employed, who in ‘Third World’ economies are likely to be street vendors, taxi drivers, market traders and others trying to survive in the absence of jobs in the ‘formal’ sector. The other main group of informal workers are those, mostly women in the ‘Third World’, working unpaid for family members.
But around 680 million wage and salaried workers also have ‘informal’ jobs – 40 percent of the total. Although some might be relatively well paid, this indicates that almost half of the global working class is now in precarious work.
A substantial portion of this informal workforce approximates to Marx’s description of the ‘stagnant’ segment of the surplus population, while the emergence in the traditional capitalist heartlands of a supposedly new class – the ‘precariat’ – can more accurately be seen as the growth of the pauperised sector of the proletariat in the centres of the system.
A ‘global reserve army of labour’
The breakdown of attempts at national autarky in the 1980s, which led to the collapse of the Stalinist regimes and the integration of China and India into global markets, in effect doubled the size of the pool of labour at the disposal of global capital, from around 1.4 billion workers to almost 3 billion. This huge new supply of low wage labour enabled capital to shift production to lower cost areas, and to use the threat of doing so to cut workers’ wages in the capitalist heartlands. It also enabled the bourgeoisie to create what is in effect a ‘global reserve army of labour’, the total size of which in 2011 was estimated at some 2.4 billion people.
The ‘global reserve army’ includes the majority of the informal workforce described above, the officially unemployed (Marx’s ‘floating’ surplus population), and a portion of the working-age population that is not in employment for a variety of reasons described above (the ‘discouraged’ etc). Allowing for differences in definition, the total size of the global reserve army today is probably between 2.5 and 3 billion people, although it could be more. As a reminder, this compares to 1.7 billion wage and salaried workers in the active workforce, 40 percent of whom are in precarious jobs. The largest part is as we would expect in the weaker capitalist economies, but it is also growing in the capitalist heartlands.
Marx envisaged that, as capitalism developed, it would acquire the ability to exploit cheap foreign labour or transfer production to low wage countries, to ensure its domination. The breakdown of autarky in the 1980s finally allowed capitalism to realise this objective at a global level.
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