Public Sector Workers and the Crisis

by Barry Finger

[1] This analysis derives from the approach of Marx, according to whom "all economy is finally reducible to the economy of time." All class relations, in the end, constitute varying means of expropriating the material surplus of the productive classes by those who possess a monopoly over the means or conditions of work. That is, all class societies are based on the division of the working day between that needed to replenish the capacity to work (necessary labor time), and that over and above which can be appropriated by the socially dominant class (surplus labor time). Where that line is drawn under capitalism is determined not physiologically but sociologically through the interaction of productivity change with class struggle. Under capitalism, the atomized structure of independent productive units is unified into a system of social organization by means of marketplace structures. Class relations take the form of specific market relations — wages and profits — concretized in terms of exchange values or prices. The monetary units in which these prices are expressed have an implicit labor time content insofar as the price of the net annual product is, at the same time, the outcome of a specific quantity of collective labor time productively worked. The ratio between the two is the labor time expression of the monetary unit. It is how an hour of simple, average labor — labor of average skill and intensity — is concretely represented. This reduction allows for the quantitative relationship between qualitatively different use values to be expressed in homogeneous invariable units of embodied labor time. The theory of value however is not a theory of relative prices, but rather an instrument for the analysis of capital accumulation that centers social conflict in terms of exploitation. Changes in productivity — in output per unit of labor time — make possible in turn changes in time relations between the labor required to sustain and reproduce workers and the surplus labor time that falls to capital in the form of additional exchange value realized in profits. But changes in productivity require investment decisions that necessitate plowing back capitalized surplus value (profits) into the system as labor-saving innovations. This is not to deny that there are other ways to derive a theory of capitalist exploitation. But without the "labor theory of value" such insights have ethical connotations alone and cannot be extended to investigate the material connections that regulate the accumulation process.

[2] Liberal economists deny this. They point out that deficit spending — the borrowing of unused liquidity to prime the pump of economic activity —has a multiplier effect on income, which can turn around an economic downturn and change the shape of capitalist crises. Paul Krugman and others attribute the anemic showing of the Obama program not to a fault in the theory, but to the insufficiency of the undertaking. But unless profit expansion resulting from the economic stimulus can be shown to exceed the input of funds withdrawn from the private sector, the entire undertaking makes no sense from the point of view of capital accumulation, whatever the scale of the operation. Incomes and employment can expand, but only within the context of a state that has grown at the expense of the private sector. This is precisely what the business community fears and what liberals- — despite their sincere commitment to the free-market system — side step. The experience of the second world war has, nevertheless, given rise to a great misunderstanding widely shared by socialists, that Keynesian intervention ultimately "saved" capitalism in the form of a war economy. But a war economy is a nonaccumulating economy. Idle resources are put into play; output, however, is used not for capital formation, but for armaments. It is not the private sector, but the state that is enlarged. What was changed was the shape of the crisis, not its underlying causes. Capitalism was ultimately "saved" by the massive increase in the rate of exploitation carried through by means of forced savings during the war years, that was later available for capitalization when the need for a fully fledged war footing receded. In the 1930s, the growth of the bureaucratic state bought the system a modicum of social peace, pacifying a militant trade union movement that, otherwise unchecked, threatened to develop in a socialist direction. This is not a current political imperative. The evisceration of working class institutions in the past 40 years has diluted the urgency of such aggressive counter cyclical activities, which explains to no small extent why liberals have capitulated so seamlessly to the business call for deficit reduction. This capitulation is, in effect, a call to deepen the crisis by ramping up the offensive against the working class until the necessary rate of exploitation can be restored. Liberals cannot acknowledge this. They do not have the ideological or theoretical framework to do so; socialists must.

[3] President Reagan slashed SSI, and Congress still whittles away at it. They would like to turn Social Security into a means-tested program. That would get a lot of public support because there is a certain logic in not giving it to the rich, but that would be the beginning of the end for the program because as soon as a program loses its universal status, it is doomed to get cut.

[4] The term "state workers" is used here in the generic sense of government workers. Most studies however are confined to state and local workers and exclude federal government workers. State and local employees comprise approximately 17 out of 20 million civilian government employees. Moreover, the state and local budget crises are largely attributed to excesses in worker pay and benefits. On the federal level, the public debt "crisis" is a crisis not of employee pay and benefits, but of "entitlements." That is, on the federal level, the cost of maintaining a working class as it ages out of employment and sheds its commodity character — that is, has lost its usefulness to capital — is considered the source of the projected "crisis". There is always some element of additional confusion because a great deal of federal benefits are administered by state workers, whose pay is first deducted from the federal coffers and then transferred to the states as general revenues. But the difference in the character of the so-called crises between the two sectors of government — state and federal — is one between operating costs and program costs. The combination of the two is what is meant by "runaway government spending."

[5] Ever smaller portions of wage workers under modern capitalism are employed in production including the production of services, compared to retail and wholesale trade, commerce, and finance. To the extent that the production process is not continued in the packaging and display of items, such work that purely involves the exchange of titles of ownership — bookkeepers, accountants, cashiers, etc., create no new value for capitalism. In this limited sense, these nonproductive workers — not productive, that is, of surplus value — belong to the same broad category as government workers. They are exploited, in the same sense that public sector workers are exploited, because they are paid not for the entirety of the working day, but only for that time socially determined for the reconstitution of their ability to work. The difference is this. The wages of nonproductive private sector workers are carried over into the price of the final product analogously to the cost of fuel and raw materials, that is, as circulating constant capital. For unlike government workers, their efforts facilitating the purchase and sale of commodity values are part of the total process of capital accumulation. Their purpose is to reduce the turnover time of productive capital and thereby minimize the total amount of time that would be otherwise lost to production in the process of marketing and selling commodities. The wages of these private sector nonproductive workers are nevertheless an additional cost of production made good out of sales, rather than a deduction from surplus value as are the wages of civil servants.