Reserve army of labour
Encyclopedia
Reserve army of labour is a concept in Karl Marx
's critique of political economy
. It refers basically to the unemployed in capitalist society. It is synonymous with "industrial reserve army" or "relative surplus population", except that the unemployed can be defined as those actually looking for work and that the relative surplus population also includes people unable to work. The use of the word "army" refers to the workers being conscripted and regimented in the workplace in a hierarchy
, under the command or authority of the owners of capital
.
Prior to the capitalist era in human history, structural unemployment
on a mass scale rarely existed, other than that caused by natural disasters and wars. Indeed, the word "employment" is linguistically a product of the capitalist era. A permanent level of unemployment presupposes a working population which is to a large extent dependent on a wage or salary for a living, without having other means of livelihood, as well as the right of enterprises to hire and fire employees in accordance with commercial or economic conditions.
Marx argued that there are no substantive laws of population that hold good for all time; instead, each specific mode of production
has its own specific demographic laws. If there was "overpopulation
" in capitalist society, it was overpopulation relative to the requirements of capital accumulation
. Consequently, demography could not simply just count people in various ways, it also had to study the social relations between them as well. If there are enough resources on the planet to provide all people with a decent life, the argument that there are "too many people" is rather dubious.
Marx introduces the concept in chapter 25 of the first volume of Das Kapital
, which he did publish twenty years later in 1867, stating that:
His argument is that as capitalism develops, the organic composition of capital
will increase, which means that the mass of constant capital
grows faster than the mass of variable capital. Fewer workers can produce all that is necessary for society's requirements. In addition, capital will become more concentrated and centralized in fewer hands.
This being the absolute historical tendency, part of the working population will tend to become surplus to the requirements of capital accumulation
over time. Paradoxically, the larger the wealth of society, the larger the industrial reserve army will become. One could add that the larger the wealth of society, the more people it can support who do not work.
However, as Marx develops the argument further, it also becomes clear that, depending on the state of the economy, the reserve army of labour will either expand or contract, alternately being absorbed or expelled from the employed workforce. Thus,
Marx concludes that: "Relative surplus-population is therefore the pivot upon which the law of demand and supply of labour works." The availability of labour influences wage rates, and the larger the unemployed workforce grows, the more this forces down wage rates; conversely, if there are plenty jobs available and unemployment is low, this tends to raise the average level of wages - in that case workers are able to change jobs rapidly to get better pay.
Marx then analyses the reserve army of labour in detail, using data on Britain
where he lived.
The ILO
reports http://www.ilo.org/global/About_the_ILO/Media_and_public_information/Press_releases/lang--en/WCMS_120465/index.htm that the proportions of world unemployment are steadily increasing.
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
's critique of political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...
. It refers basically to the unemployed in capitalist society. It is synonymous with "industrial reserve army" or "relative surplus population", except that the unemployed can be defined as those actually looking for work and that the relative surplus population also includes people unable to work. The use of the word "army" refers to the workers being conscripted and regimented in the workplace in a hierarchy
Hierarchy
A hierarchy is an arrangement of items in which the items are represented as being "above," "below," or "at the same level as" one another...
, under the command or authority of the owners of capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
.
Prior to the capitalist era in human history, structural unemployment
Structural unemployment
Structural unemployment is a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment...
on a mass scale rarely existed, other than that caused by natural disasters and wars. Indeed, the word "employment" is linguistically a product of the capitalist era. A permanent level of unemployment presupposes a working population which is to a large extent dependent on a wage or salary for a living, without having other means of livelihood, as well as the right of enterprises to hire and fire employees in accordance with commercial or economic conditions.
Marx argued that there are no substantive laws of population that hold good for all time; instead, each specific mode of production
Mode of production
In the writings of Karl Marx and the Marxist theory of historical materialism, a mode of production is a specific combination of:...
has its own specific demographic laws. If there was "overpopulation
Overpopulation
Overpopulation is a condition where an organism's numbers exceed the carrying capacity of its habitat. The term often refers to the relationship between the human population and its environment, the Earth...
" in capitalist society, it was overpopulation relative to the requirements of capital accumulation
Capital accumulation
The accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...
. Consequently, demography could not simply just count people in various ways, it also had to study the social relations between them as well. If there are enough resources on the planet to provide all people with a decent life, the argument that there are "too many people" is rather dubious.
Marx's discussion of the concept
Although the idea of the industrial reserve army of labour is closely associated with Marx, it was already in circulation in the British labour movement by the 1830s. The first mention of the reserve army of labour in Marx's writing occurs in a manuscript he wrote in 1847 but did not publish:Marx introduces the concept in chapter 25 of the first volume of Das Kapital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
, which he did publish twenty years later in 1867, stating that:
His argument is that as capitalism develops, the organic composition of capital
Organic composition of capital
The organic composition of capital is a concept created by Karl Marx in his critique of political economy and used in Marxian economics as a theoretical alternative to neo-classical concepts of factors of production, production functions, capital productivity and capital-output ratios. Marx first...
will increase, which means that the mass of constant capital
Constant capital
Constant capital , is a concept created by Karl Marx and used in Marxian political economy. It refers to one of the forms of capital invested in production, which contrasts with variable capital...
grows faster than the mass of variable capital. Fewer workers can produce all that is necessary for society's requirements. In addition, capital will become more concentrated and centralized in fewer hands.
This being the absolute historical tendency, part of the working population will tend to become surplus to the requirements of capital accumulation
Capital accumulation
The accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...
over time. Paradoxically, the larger the wealth of society, the larger the industrial reserve army will become. One could add that the larger the wealth of society, the more people it can support who do not work.
However, as Marx develops the argument further, it also becomes clear that, depending on the state of the economy, the reserve army of labour will either expand or contract, alternately being absorbed or expelled from the employed workforce. Thus,
Marx concludes that: "Relative surplus-population is therefore the pivot upon which the law of demand and supply of labour works." The availability of labour influences wage rates, and the larger the unemployed workforce grows, the more this forces down wage rates; conversely, if there are plenty jobs available and unemployment is low, this tends to raise the average level of wages - in that case workers are able to change jobs rapidly to get better pay.
Composition of the relative surplus population
Marx argues the relative surplus population always has three forms: the floating, the latent and the stagnant.- The floating part refers to the temporarily unemployed ("conjunctural unemployment").
- The latent part consists of that segment of the population not yet fully integrated into capitalist production - for example, part of the rural population. It forms a pool or reservoir of potential workers for industries.
- The stagnant part consists of marginalised people with "extremely irregular employment". Its lowest stratum (excepting criminals, vagabonds and prostitutes) "dwells in the sphere of pauperism", including those still able to work, orphans and pauper children, and the "demoralised and ragged" or "unable to work".
Marx then analyses the reserve army of labour in detail, using data on Britain
United Kingdom of Great Britain and Ireland
The United Kingdom of Great Britain and Ireland was the formal name of the United Kingdom during the period when what is now the Republic of Ireland formed a part of it....
where he lived.
Controversy
- Some writers have interpreted Marx's argument to mean that an absolute immiseration of the working class would occur as the broad historical trend. Thus, the workers would become more and more impoverished, and unemployment would constantly grow. This is of course not really credible in the light of the facts, because in various epochs and countries, workers' living standards have definitely improved rather than declined. In some periods, unemployment had been reduced to a very small amount. In the Great DepressionGreat DepressionThe Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, about one in four workers became unemployed, but towards the end of the post-war boom unemployment in richer countries reduced to a very low level. Other writers (e.g. Ernest MandelErnest MandelErnest Ezra Mandel, also known by various pseudonyms such as Ernest Germain, Pierre Gousset, Henri Vallin, Walter , was a revolutionary Marxist theorist.-Life:...
and Roman RosdolskyRoman RosdolskyRoman Rosdolsky was an important Marxian scholar and political activist. He was born in Lviv in Galicia, at that time in the Austro-Hungarian empire, now in Ukraine, and died in Detroit, MI...
) however argued that in truth Marx had no theory of an absolute immiseration of the working class; at most one could say that the rich-poor gap continues to grow, i.e. the wealthy get wealthier much more than ordinary workers improve their living standards. In part, the level of unemployment also seems to be based on the balance of power between social classes and state policy. Governments can allow unemployment to rise, but also implement job-creating policies, which makes unemployment levels partly a political result.
- Another dispute concerns the notion of "overpopulationOverpopulationOverpopulation is a condition where an organism's numbers exceed the carrying capacity of its habitat. The term often refers to the relationship between the human population and its environment, the Earth...
". In Marx's own time, Malthus raised dire predictions that population growthPopulation growthPopulation growth is the change in a population over time, and can be quantified as the change in the number of individuals of any species in a population using "per unit time" for measurement....
enabled by capitalist wealth would exceed the food supply required to sustain that population. As noted, for Marx, "overpopulation" was really more an ideologicallyIdeologyAn ideology is a set of ideas that constitutes one's goals, expectations, and actions. An ideology can be thought of as a comprehensive vision, as a way of looking at things , as in common sense and several philosophical tendencies , or a set of ideas proposed by the dominant class of a society to...
loaded term or social construct, and Marxists have argued there is no real problem here, as enough foodFoodFood is any substance consumed to provide nutritional support for the body. It is usually of plant or animal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals...
can be produced for all; if there is a problem, it lies in the way that food is produced and distributed.
- In the social welfare area, there are also perpetual disputes about the extent to which unemployment is voluntarily chosen by people, or involuntary, whether it is forced on people or whether it is their own choice. In the Great DepressionGreat DepressionThe Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
of the 1930s, when unemployment rose to 20-30% of the working population in many countries, people generally believed it was involuntary. But if unemployment levels are relatively low, the argument that unemployment is a matter of choice is more often heard.
- Finally, there are endless debates about the best way to measure unemployment, its costs and its effects, and to what extent a degree of unemployment is inevitable in any country with a developed labour market. According to the NAIRUNAIRUIn monetarist economics, particularly the work of Milton Friedman, on which also worked Lucas Papademos and Franco Modigliani in 1975,NAIRU is an acronym for Non-Accelerating Inflation Rate of Unemployment, and refers to a level of unemployment below which inflation rises.It is widely used in...
concept, price stability in market-based societies necessarily requires a certain amount of unemployment. One reason a reserve army of the unemployed exists in market economies, it is argued, is that if the level of unemployment is too low it will stimulate price inflation. However, the validity of this argument depends also on state economic policy, and on the ability of workers to raise their wages. If for example trade unions are legally blocked from organizing workers, then even if unemployment is relatively low, average wages can be kept low; the only way that individual workers have in that case to raise their income, is to work more hours or work themselves up to better-paying jobs.
A global reserve army of labour?
Marx was writing in the mid-19th century, and his discussion of unemployment may therefore be, in part, out of date, particularly when viewed only at the national level. However, his analysis may continue to be valid if considered globally.The ILO
International Labour Organization
The International Labour Organization is a specialized agency of the United Nations that deals with labour issues pertaining to international labour standards. Its headquarters are in Geneva, Switzerland. Its secretariat — the people who are employed by it throughout the world — is known as the...
reports http://www.ilo.org/global/About_the_ILO/Media_and_public_information/Press_releases/lang--en/WCMS_120465/index.htm that the proportions of world unemployment are steadily increasing.
- Half of all workers in the world - some 1.4 billion working poorWorking poor- Definition in the United States :There are several popular definitions of "working poor" in the United States. According to the US Department of Labor, the working poor "are persons who spent at least 27 weeks [in the past year] in the labor force , but whose incomes fell below the official...
- currently live in families that survive on less than US$2 a day per person. They work in the vast informal sector - from farms to fishing, from agriculture to urban alleyways - without benefits, social security or health care. 633 million workers and their families were living on less than USD 1.25 per day in 2008, with as many as 215 million additional workers living on the margin and at risk of falling into poverty in 2009.
- Unemployment in terms of actual people out of work is at its highest point ever and continues to rise. In the last ten years, official unemployment has grown by more than 25 % and now stands at 212 million worldwide, or 6.6% of the global workforce. Unemployed and under-employed together total about a billion people. "Underemployed" means generally that workers are unable to find enough paid work to earn sufficient money to live on, i.e. that they work part-time or in casual jobs. This is sometimes called precarious workPrecarious workPrecarious work is a term used to describe non-standard employment which is poorly paid, insecure, unprotected, and cannot support a household. In recent decades there has been a dramatic increase in precarious work due to such factors as: globalization, the shift from the manufacturing sector to...
or contingent labor. But some underemployment concerns skilled workers, who prefer to work less hours because their relatively high salary enables them to do so.
- Among the world's unemployed, the ILO estimates that about half the global total are young people aged 15 to 24.
Modern academic usage
While Marx's terms are now lost, their referents have been topics of notable examination in modern economics. Sir Arthur Lewis, for example, cites only one specific contribution to Economics in his Nobel Prize acceptance speech: his work on the (to Marx) "latent" non-employed. Lewis, in this discussion, uses the terms "an unlimited supply of labor" and "a reserve of cheap labor" in his rejection of the neoclassical treatment of the matter. And although non-employed people who are unable or uninterested in performing legal paid work are not considered among the "unemployed," the concept of conjunctural unemployment is used in economics today (now called "frictional unemployment"). Although Marx's work was earlier, there is no stated link between it and similar modern study.See also
- Full employmentFull employmentIn macroeconomics, full employment is a condition of the national economy, where all or nearly all persons willing and able to work at the prevailing wages and working conditions are able to do so....
- Job guaranteeJob guaranteeA job guarantee is an economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment. Its aim is to create full employment and price stability...
, and associated concept of "buffer stock" - Labour power
- UnemploymentUnemploymentUnemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
- Wage slaveryWage slaveryWage slavery refers to a situation where a person's livelihood depends on wages, especially when the dependence is total and immediate. It is a negatively connoted term used to draw an analogy between slavery and wage labor, and to highlight similarities between owning and employing a person...
- Working classWorking classWorking class is a term used in the social sciences and in ordinary conversation to describe those employed in lower tier jobs , often extending to those in unemployment or otherwise possessing below-average incomes...