Productive and unproductive labour

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In the 1980s there was a debate within the Marxist tendency about productive and unproductive labour. Here we provide a contribution to that debate by Mick Brooks. Although this is archive material, we believe it will help today’s generation to better understand capitalism in order to overthrow it.

Introduction

In the 1980s there was a debate within the Marxist tendency about productive and unproductive labour. Two of the comrades who participated in this debate were Andrew Glyn and Mick Brooks. Here we provide an article by Mick Brooks, written at the time. Although this is archive material, we believe it will help today’s generation to better understand capitalism in order to overthrow it.

The difference between productive and unproductive labour is crucial for Marxist economic analysis. By productive labour Marx means labour that produces surplus value, whether or not it produces material products. So a programmer who writes a computer programme or a chef who cooks a meal can be regarded as productive, providing they perform their tasks in order to produce surplus value for the boss.

What happens to this surplus value? Part is accumulated while the rest is spent on unproductive expenditures (“luxuries”). Workers in luxury industries produce surplus value for their boss, of course. But the unproductive sector, including the workers who make their living there, is subsidised from the surplus value raised in the capitalist economy as a whole.

What sort of unproductive expenditures are there? What has been happening to them since the Second World War? These issues are investigated in Fred Moseley’s The falling rate of profit in the postwar United States economy, Macmillan 1991). Moseley argues that the runaway rise in unproductive expenditures has been the second great factor levering profit rates down. At the time of writing, for instance, there are four million workers in the shop and distribution sector in Britain compared with 3 ½ million employed in industry.

Moseley sums up his results for the USA: “Commercial labour... accounted for almost two thirds of the total increase of unproductive labour. The other two types of unproductive labour, financial labour and supervisory labour, each accounted for approximately half the remaining increase of unproductive labour.” (Moseley, p.150-151). Let’s take a look at what he regards as the most important unproductive sectors for capitalism as a whole:

- Supervisory labour (supervision of inventories – stocks – and of labour)

“The ratio of supervisory labour industries increased 86% from...1950 to...1980.” (Moseley p.139)

- Circulation labour. This in turn can be divided into:

Commercial circulation...

“Commercial labour increased 134% from 1950 to 1980, while productive labour increased only 44%, thus resulting in a 63% increase in the ratio of commercial trade labour to productive labour.’ (Moseley, p.127)

...and Financial circulation

“Financial labour” (in the Finance, Insurance and Real Estate industry) “increased 173% from 1950 to 1989, while productive labour increased only 44%, so the ratio of financial labour to productive labour increased 91%”. (Moseley, p.133-134)

Moseley argues, and we agree, the present epoch of capitalism is characterised by a huge increase in unproductive expenditure. He finds this a dead weight on the system, acting as an involuntary levy upon the profits of individual capitalists. And he shows unproductive spending exploding out of control over the past fifty years. He assesses this effect as significant as the rise in the organic composition of capitalism in causing the secular decline of profits since the War.

How will the distinction between productive and unproductive labour affect our analysis of the economy? National income accounting typically lumps all workers together. For bourgeois economics, there is no notion of productive and unproductive labour. But Marxists argue that some are producing surplus value, while the unproductive are being supported from a part of surplus value (that does not mean that they don’t work hard or are “parasites”, of course). Economists such as Andrew Glyn, who use aggregate consumption figures from employment to work out wages share, are likely to get a completely misconceived picture of wages biting into profits, when the reality is unproductive spending cutting into profits.

Mick Brooks began to open up a second front on Andrew Glyn’s position by publishing a paper on Productive and unproductive labour to explore similar territory to Moseley, but by this time Andrew Glyn had abandoned the debate.

May 2005


Productive and unproductive labour

By Mick Brooks


The concept of productive labour, like the labour theory of value of which it is an integral part, was originally a weapon in the arsenal of the bourgeoisie, later turned against them by Marx.

“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 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.”

This quote from Adam Smith shows the revolutionary significance of the concept of productive labour in its original form. Adam Smith regarded both the capitalists and the working class as productive labourers.

In Marx’s time, unproductive workers were mainly flunkeys of the rich. When he wrote Capital there were actually more domestic servants than industrial workers in the country.

What is the point of discussing this today? Hackles are often raised when your hard work is described as “unproductive” in Marxist terms. The definition is not a moral appraisal of whether you are doing a good job for society generally – productive labour means productive labour for capital.

“To be a productive labourer is therefore not a piece of luck but a misfortune” as Marx puts it (Capital, vol. 1, page 477)

“Productive labour... is wage labour which... produces surplus value for the capitalist.” (Theories of surplus value, vol. 1, page 152)

On this definition workers who produce 245T or H-Bombs are productive workers, while useful jobs like nurses and teachers are unproductive. That is the way it is under capitalism—and that is an indictment of the system.

Note that factory workers are productive not because they produce things (whether bread or H-Bombs) but because they produce surplus value. Surplus value can even be produced without producing a material thing at all. (Adam Smith wrongly confined productive labour to production of things since in his time most unproductive workers simply provided personal services). “An actor, for example, or even a clown... is a productive labourer if he works in the service of a capitalist to whom he returns more labour than he receives from him in the form of wages; while a jobbing tailor who comes to the capitalist’s house and patches his trousers for him, producing a mere use-value for him is an unproductive labourer. The former’s labour produces a surplus value; in the latter’s, revenue is consumed.” (ibid page 157)

So when the capitalist sets out with his money he can either invest it to exploit the workers and get surplus value (in which case productive labour is performed), or spend it on wine, women and song (unproductive labour).

Note that what is unproductive labour for one is productive for another capitalist. There are long established and honoured branches of industry where workers toil productively to produce all kinds of useless fripperies for capitalists to waste their money on. The capitalist who produces these commodities, like any other, does so to make surplus value. Likewise, the clown is a productive worker for the capitalist who employs him – he makes money for him. The clown’s labour is not productive for those who spend out to watch it at the circus.

In the cycle of reproduction capitalists may exploit the workers to produce elements of constant capital (plant and raw materials, etc.), variable capital (spent by the work force on wage goods) or ‘luxury’ goods (elements of uncapitalised surplus value). The labour of these last capitalists’ workforce is productive in so far as they produce surplus value. For the system as a whole, however, surplus may either be ploughed back into production or consumed as revenue. Again: “The former’s labour produces surplus value;” (is productive) “in the latter’s, revenue is consumed” (unproductive consumption).

So the nature of the use-value produced and the nature of the work activity is neither here nor there. If I make beds in a capitalist’s mansion, my labour is unproductive. If I work in a Holiday Inn making beds my labour is productive, since the capitalist sells my services for a profit. If I make my own bed at home, my labour is neither productive or unproductive since it lies outside the capitalist economy.

Who in a factory is a productive worker? What about the maintenance engineer? The only reason they are employed is because if they weren’t there the line would be continually breaking down and surplus value would be lost. The Coventry Tool Room Agreement recognises engineers as productive workers by cutting them in on the assembly line bonus.

What about the person who sweeps up? If he or she wasn’t there the whole factory would have to stop while the workforce cleaned – and the surplus value would be lost. The same is also true of the tea boy.

In general no one person produces completed products under capitalism. There exists a division of labour which enormously increases the productivity of labour. So we have to look at the factory’s collective labour – all the workers doing their bit towards the joint production of the factory.

“Adam Smith treats services in so far as they directly enter into production, as materialised in the product, both the labour of the manual labourer and the manager clerk, engineer and even the scientist in so far as he is an inventor, an indoor or outdoor labourer for the workshop. In dealing with the division of labour, Smith explains how these operations are distributed among different persons; and that the product, the commodity, is the result of their co-operative labour, not of the labour of any individual among them” (Theories of surplus value, vol. 1 page 295).

Isn’t the boss part of the collective labour? Here we have to distinguish between work physically necessary to produce the output and activity made necessary by the class divided and anarchic nature of capitalist society. In big factories there is the need for overall planning of output and to that extent management is entitled to wages of superintendence as reward for productive labour. On the day after the social revolution there will continue to be managers. Later, as the working class educates itself to run society, the tasks of management will be exercised collectively or by delegation to members of the workforce who will be held to account.

Most of the work of boss and supervisor however consists of financial jiggery-pokery and trying to keep the workers down. This cannot be recognised as productive labour. Likewise, most of their money is a concealed share of surplus value going in the form of a salary.

Most state spending must be regarded as elements of uncapitalised surplus value. The capitalists decide, or rather it is decided for them by the state, to spend a portion of the surplus on the collective requirements of their system rather than ploughing back into production.

So taxation generally falls upon the surplus. Don’t workers pay tax? We have to remember that the capitalists have to keep the workers and their children (the future generations of workers) alive. Of course, workers’ wages are not just a physical subsistence minimum but include a historical and moral element. When taxation upon the working class is increased they will respond by formulating wage claims which defend their living standards.

It would be lifeless formalism to say that workers never bear the brunt of taxation. If VAT is increased our journal won’t say, “This makes no difference to workers since the value of their labour power must remain the same.” On the contrary, the general standard of wages is only established through class struggle. One major prong of capitalist attack over the past thirty years has been to increase the burden of taxation upon the working class, either directly through increases in tax rates or indirectly through not raising thresholds in line with inflation. This causes short term hardship to all workers, and for already low paid, badly organised sections, has been a major lever to reduce their living standards permanently, and so to subsidise capital. We know that though value is the axis around which day to day prices fluctuate, commodities only actually sell at their value occasionally. This is still more the case with the value of labour power.

Some benefits workers receive from the state they actually paid for in instalments like in the case of National Insurance. The majority of the social wage however is paid for out of general taxation. The mushrooming of state spending since the war has been on arms and other tied markets, handouts to big business in various forms, and not on the social wage.

That is not to say that the social wage – state spending which does benefit the working class—is not an enormous gain wrested from capital. To say that is not to define the workers who produce these services as productive for capital, even though their services may be indispensable in maintaining the system which produces surplus value.

Not all state spending is on unproductive labour. The nationalised industries in the main made a loss. We must not confuse the formal accounting procedure of capitalism with the real process of appropriating surplus value. The workers in those industries were still exploited – they still got less value than they produced. The surplus was siphoned away in the form of interest payments to the banks, compensation to former owners and artificially low prices which subsidise private industry.

But nurses and teachers, no matter how much they enhance the value of labour power and no matter how much their work contributes to the wealth of society, are unproductive labourers when they are employed by the state. “A schoolmaster is a productive labourer when, in addition to belabouring the heads of his scholars, he works like a horse to enrich the school proprietor. That the latter has laid out his capital in a teaching factory, instead of in a sausage factory, does not alter the relation.” (Capital, vol 1 page 477). So a teacher is productive when they work in Eton to inflict on future generations the brats of the ruling class, because they are producing surplus value for their boss.

The social wage is an expense of capitalist production, one that is objectively necessary for the system, but one that does not directly produce surplus value.

To show this, Marx gives the following example: “Let us assume that wages and profits fell simultaneously in total value... If in such conditions capitalist and workman wanted to consume the same amount of value in material things as they did before, they would have to buy less of the services of the doctor, schoolmaster, etc. And if they were impelled to continue the same outlay for both these services, then they would have to restrict their consumption of other things.” (Theories of surplus value, vol 1, page 167)

This is the real point of the definition. It gives us a guide as to how the capitalist will behave towards the different categories of workers. Of course, productive workers are also threatened with the sack in times of crisis. But redundancy is a last resort to their employer as, despite the apologetics of bourgeois economics, they know that their labour is the source of his or her ill-gotten gains. The definition of unproductive labour explains features of the class struggle like the cuts – an attempt to stop the drain on surplus value provided by the state spending.

The idea of the social wage (health and education facilities etc.) is that workers are paid wages which they either spend directly on the elements of their subsistence or are taxed to provide facilities collectively through the agency of the state. In fact the social wage is not part of the real wage. We defend the social wage because it is a reform wrested from the ruling class.

State spending is in the main paid for from the surplus extorted from the workers; over recent years however the boss class has striven to pass the burden of taxation back onto the workers. Though the state defends, in the last analysis, the interests of the ruling class, a struggle is also waged between the capitalists and their state over the disposal of a portion of the surplus product.

“Taxes. A matter that interests the bourgeoisie very much but the worker only very little. What the worker pays in taxes goes in the long run into the cost of production of labour power and must therefore be compensated by the capitalist.” (F. Engels, Housing Question, Page 38)

Not all capitalists who make money can be said to employ productive labour. In addition to producing surplus value, the capitalist class has to circulate what it has produced before it can lay its hands on the money. Circulation is thus a cost of the capitalist system, paid for from the surplus-value as a whole. A certain section of capital arises which specialises in the circulation process. Naturally they expect the average rate of profit or they would not be in business.

Though the manufacturer has his goods “marked up” by the wholesaler and the latter is in turn “marked up” by the retailer, what is really happening is obviously that they are making the average rate of profit by cutting themselves a share in the surplus value produced in society as a whole.

The manufacturer knows his goods have to be sold after they are produced. He knows the distribution network will get as much as they can out of him. In effect he sells the commodities to the wholesaler below their value so that they are only actually sold at a price fluctuating around their value to the final customer. None of the participants are aware of the actual significance of this process. As in so many cases they are mere atoms of the capitalist market, whose consciousness of events is limited by their position in society.

The capitalist involved in distribution will tend to make the average rate of profit on his invested capital, say 10%. But there is a fundamental difference with capital invested in production. Given that the organic composition of capital (ratio of dead to living labour – usually v/[v + C]) in any industry is fixed for the individual capitalist, if the capitalist invested in production employs twice as many workers he will make twice as much profit. If the capitalist investing in circulation employs twice as many warehousemen and till operators as his competitors he will just lose money. In other words, his profit is related to his turnover of stock, not his labour force. The wages he pays out are just a cost to him, like the cost of filing cabinets or warehouse shelving. The same is true of bank workers. They may work hard, but the banks’ profits are based on the rate of interest, not their unpaid labour. So workers employed in circulation are not productive.

Here we have to differentiate between labour which is physically necessary to transport goods and provide them in a form available for consumption and the costs of capitalist circulation. Transport of goods is as much productive labour as actual production. Coal is no more use to the consumer at the pithead than it is at the bottom of the mine. Thus the transport industry exploits its workforce as much as mine owners do miners.

Many jobs combine elements of productive and unproductive labour. A milkman, for instance, carries milk to people’s door. The customers pay money for the privilege and the likes of Unigate make money from the milkman’s unpaid labour. On Friday or Saturday, the milkman goes round with the ledger collecting money – unproductive labour. Shop workers may spend time wrapping goods for consumption – productive labour – while another part of their time is spent on accounting procedures made necessary by the capitalist system. Similarly book- keeping may be productive or unproductive depending on whether accounting is a necessary part of the recording of expenditure of labour time necessary to any society or just recording the passage of ownership between capitalists.

The definition of productive labour is a guide to understanding the material basis of conflicts within the capitalist class and of the dynamics of the system as a whole. It is purely a definition of what is productive for capital. The definition will disappear with the capitalist system.

[Note: Marx defines productive labour on pages 476-477 of Capital, vol 1. He goes into much more detail in Theories of Surplus Value, vol 1, pages 152 – 304 and pages 389 – 413. Supplementary points on circulation capital are included in Chapter 6 of Capital, vol, 2 and chapters 16-19 of Capital, vol 3. (all page numbers refer to old Lawrence & Wishart editions).]

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