The Political Economy of Labour Market Reforms

Greece, Turkey and the Global Economic Crisis

Kenneth A. Loparo

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137382627
• Topic: Politics & International Relations
• Subtopic: Trade & Tariffs
• Index: Politics & International Relations

Duman examines the transition from Keynesianism to monetarism by presenting an analysis of labour market reforms in Greece and Turkey - questioning the role of class struggle on the implementation process. She also scrutinises the influence of the global economic crisis and the execution of reform policies in these two countries.

Part I

Theoretical and Historical Foundations of Labour Market Reforms

1

Theorising Labour Market Reforms

The capitalist mode of production is based on the surplus-value accumulated by the worker selling his or her labour-power to the capitalist and producing more than required for him or her to live. In this process, labour is detached from the means of production and the labour-power is sold as a commodity in the market. The capital aims to produce more surplus-value in less time, with a smaller amount of labour-power and lower labour cost, whereas the labour intends to improve his or her working and living conditions, decrease working time and increase wages. Hence, capitalism has class antagonism at the core of the production process.

The state as a form of capitalist social relations and the area of class struggle secures both the sustainability of the capitalist mode of production and the reproduction of capitalist relations and class antagonisms. It represents an indirect political reflection of the economic relations. In this respect, the class character of the capitalist state is indispensable for social reproduction.

Based on the Marxist definitions of class, capitalist state, labour and class struggle, this chapter aims to analyse the transition from the Keynesian economic policy to the monetarist economic policy with specific reference to the crisis of Keynesianism, the tendency for the rate of profit to fall and the disobedience of labour. Monetarism is defined in terms of an attempt of capital to free itself from labour and, hence, an endeavour to end or limit class antagonism to the advantage of capital. In this respect, labour market reforms are interpreted as an initiative to confine the dependency on labour and to turn the production process into a more profitable and efficient one.

The classes and the state

Conceptualisation of class

The common ground of historical materialist analyses is the need for the concept of class in explaining the capitalist society and the capitalist mode of production. Accordingly, social analyses are found on the relations of production, and social transformation is evaluated by ‘the changes in the essence of class relations’ (Öngen, 1996: p. 44).

Marx defines three great classes of modern society as wage-labourers, capitalists and landowners (1981: p. 1025). In view of that, classes were formed at the phase of primitive accumulation, which was the beginning of the capitalist development. They became more evident with the separation of labour from the means of production and the expropriation of both the means of production and the surplus-value by capital. Hence, classes are defined ‘in line with their location within the system of social production and their relation with the means of production’ (Öngen, 1996: p. 59).

In the modern capitalist society, the three-class model is replaced by a new model based on two main classes: ‘the working class’ and ‘the class of capitalists’ (Marx, 2007: p. 61). In this context, the capitalist society and the capitalist mode of production of today will be analysed within the framework of this dual model of the owners of labour-power and the owners of capital. As highlighted by many Marxist scholars, ‘the history of all hitherto existing society’ will be scrutinised as ‘the history of class struggles’ (Marx and Engels, 2008: p. 33).

However, this dual model does not present a homogeneous outlook. Marx argues that the social division of labour but not the technical division of labour is decisive in the examination of inter-class segmentations and contradictions (Öngen, 2002: p. 22). Therefore, the distribution of wealth within the society has priority over wage and living standards of the working class in class analysis (Öngen, 2002: p. 22). Within this framework, the differentiation between productive labour and unproductive labour is not an eligible criterion in class analysis since productive labour directly contributes to the accumulation of capital whereas unproductive labour indirectly facilitates the expropriation of surplus-value by capital (Öngen, 1996: p. 194). For this reason, the forms of unproductive labour should also be considered as an integral part of the working class (Carchedi, 1977: p. 68).

Another significant issue in Marx’s class analysis is the differentiation between class in itself and class for itself, which are distinct-in-unity. These are different moments of the same category, and represent the working class as an economic category and the working class as a political category (Öngen, 2002: p. 23). The working class can be evaluated as a class in itself with regard to its economic terms or as a class for itself with regard to its socio-political terms.

Within this framework, alienation of labour also provides an efficient standard in defining the boundaries of the working class. Alienation represents the objectivisation of the relation between labour and its product, and has a negative impact on social relations. Accordingly, ‘the external character of labour for the worker’ appears in the fact that labour ‘is not his [sic] own, but someone else’s, that it does not belong to him [sic], that in it he [sic] belongs, not to himself [sic], but to another’ (Marx, 1964: p. 111). In this respect, alienation is pertinent for both productive labour and unproductive labour, and represents the wide extent of the working class.

Based on these theoretical discussions in the first pages, this book will engage a very comprehensive definition of the working class. It will presume that workers who do not have the ownership of the means of production, selling his or her labour in exchange of wage, under economic pressure, working in the public sector or the private sector, and producing commodity or services belong to the working class (Öngen, 1996: p. 213).

The understanding of class struggle

Based on this comprehensive definition of the working class, understanding the functioning of the capitalist mode of production also requires the comprehension of the interrelation between both worker and capitalist and labour and capital within the framework of the relations of exploitation and class struggle.

At first glance, the worker and the capitalist are in an exchange relationship in society that ‘the worker sells its commodity, labour, which has a use value, and, as commodity, also a price, like all other commodities’ (Marx, 1973: p. 274, emphasis in original). That is to say, it initially seems like a free relation of exchange between capital and labour. Capital purchases labour’s use value for a certain price, and it has a right of disposition on the use value, that is, labour. The labour ‘which the worker sells as a use value to capital is, for the worker, his [sic] exchange value which he [sic] wants to realise’, but it is ‘determined like the value of every other commodity by supply and demand’ or ‘by the cost of production, the amount of objectified labour, by means of which the labouring capacity of the worker has been produced and which he [sic] therefore obtains for it’ (Marx, 1973: p. 306, emphasis in original).

Capital purchases labour to produce surplus-value, and ‘the only use value, therefore, which can form the opposite pole to capital is labour’ (Marx, 1973: p. 272, emphasis in original). Since capital has to accumulate surplus-value, the price of commodity is always higher than its cost of production (Marx, 1973: p. 315). Value preserves itself through increase, that is, ‘it preserves itself precisely only by constantly driving beyond its quantitative barrier, which contradicts its character as form, its inner generality’ (Marx, 1973: p. 270).

The capitalist mode of production is primarily based on the principle that capital accumulates surplus-value by the exploitation of labour through its means of production. Within the capitalist mode of production, ‘the worker sells his or her labour-power to the capitalist who sets that labour-power to work with his means of production and then appropriates the entire product, the increased value that has resulted from the extension of the working day beyond the time socially necessary to produce commodities equivalent to the labourer’s means of subsistence constituting the surplus-value, which is then distributed among the capitalist class in the form of profit, rent and interest’ (Clarke, 2002: p. 54).

In this respect, the reproduction of the capitalist mode of production is only attainable by ‘the development of generalised commodity production, which makes available the means of production and subsistence as commodities’ and ‘the separation of the labourer from the means of production and subsistence’ (Clarke, 2002: p. 46). In this process, the law of development of the capitalist mode of production is ‘to divorce the means of production ever more from labour and to concentrate the fragmented means of production more and more into large groups, i.e. to transform labour into wage-labour and the means of production into capital’ (Marx, 1981: p. 1025).

The relation between capital and labour in the capitalist mode of production is realised in the following form:

In abstract terms, the capital-labour relation operates as follows. Workers exchange their capacity to work for a wage and accept capital’s right to (attempt to) control their labour-power in the production process and to appropriate any profits (or absorb any losses) that result from its effort to produce goods or services for sale. Workers spend their wages on means of consumption according to the prevailing social norms of consumption and thereby reproduce their labour-power so that it can be sold once more. In this way the wage serves as a cost of production (for all capitals), a means of self-reproduction and a source of demand (in the first instance, for those capitals that produce consumer goods and, indirectly, for those capitals that produce capital goods). (Jessop, 2002: pp. 12–3)

Labourer sells his or her labour-power to capitalist, and the relation of exploitation between labour and capital becomes the determinant of the capitalist social formation. Commodity and money turn into capital, and the separation of labour from the means of production presupposes not only the relation between capital and wage-labour but also the transformation of money into capital (Marx, 1972: p. 89). The product of labour is transformed into a commodity and the commodity appears as the product of capital (Bonefeld, 2002: p. 72). Hence, in the production process, capital and labour ‘each reproduces itself, by reproducing its other, its negation’ (Marx, 1973: p. 458).

Social antagonism in forms is ‘the mode of existence of the class antagonism between capital and labour’ that ‘labour is present in the concept of capital’ (Bonefeld, 1995, p. 199). In other words, capital and labour are ‘mutually dependent and inseparable elements of the social process of production in bourgeois society’ (Bonefeld, 1995: p. 199). They ‘do not oppose each other simpliciter’ in the labour market that capital ‘is the product of labour’s alienated existence’ and ‘exists only in and through labour’ (Bonefeld, 1995: p. 189).

The exchange relation between labour and capital initially seems to be a trade relation that both parties are free and equal. Capital buys the use value of labour for a certain price and has control on this use value and, hence, on labour. In this respect, labourer loses control over his or her labour-power, and hence, the relation of labour and capital is only ostensibly free and equal.

There are certain elements and social mechanisms preventing labour from realising that this ostensibly free and equal relation is actually a relation of exploitation. The most important of these elements are the intra-class divisions and contradictions. Integration of the middle class with the economic and political ideals of the capitalist class, the impact of ideological means of production that belong to the capital and alienation also play a significant role in intra-class divisions and contradictions (Öngen, 2002: p. 25). In this regard, ‘as an organized movement the working class is completely within the organization of capital’ and ‘its watchwords and its ideological and bureaucratic apparatuses are all elements that are situated within the dialectic of bourgeois development’ that ‘the relationship ... between the working class and its organized movement is double and ambiguous, just like the relationship between the working class and capital’ (Hardt and Negri, 1994: p. 60).

To put it bluntly, the capitalist mode of production is based on the accumulation of surplus-value by capital. However, expanded reproduction depends not on the exploitation of labour but rather on the exploitation of labour at an increasing rate (Marx, 1976: pp. 725–61). The emergence of the capitalist ‘from the circuit of capital with a larger capital’ generates the conditions for the reproduction of the capitalist mode of production (Clarke, 2002: p. 46). In this process, profit ‘appears as determined only secondarily by the direct exploitation of labour, in so far as, given market prices are seemingly independent of this exploitation’ (Marx, 1981: p. 967).

The exploitation of labour is the pre-condition for the accumulation of surplus-value and the sustainability of the capitalist production. Therefore, any study on the capitalist mode of production and the capitalist social formation should ‘start from a view of labour as an active subject of the reproduction of capitalist social relations and so as the actual or potential agent of the transformation of those relations and even of the transformation of the form of society itself’ (Clarke, 2002: p. 41). In the framework for a critique of labour by Marx, ‘the peculiar nature of labour is the object of the critique and not the merely the subject of his analysis’ (Postone, 1993: pp. 5–6, quoted by Neary, 2002: p. 164).

An analysis of the labour market

As labour-power is sold as a commodity in the market and the labour itself is commodified, there exists a labour market that is based on the exchange relation between labour and capital. However, functionality of the labour market has certain preconditions: first of all, ‘labour-power can appear on the market as a commodity only if, and in so far as, its possessor, the individual whose labour-power it is, offers it for sale or sells it as a commodity’ (Marx, 1976: pp. 270–1). In this respect, the owner of labour and the owner of capital should appear as equal in the market. Secondly, ‘the possessor of labour-power, instead of being able to sell commodities in which his [sic] labour has been objectified, must rather be compelled to offer for sale as a commodity that very labour-power which exists only in his [sic] living body’ (Marx, 1976: p. 272). In other words, the worker must be ‘a free individual [who] can dispose of his [sic] labour-power as his [sic] own commodity’ and must not have any ‘other commodity for sale’ (Marx, 1976: pp. 272–3).

It is also crucial to define how the price of labour-power is determined in the labour market. As any other commodity, the value of labour-power is also determined ‘by the labour-time necessary for the production, and consequently also the reproduction, of this specific article’ (Marx, 1976: p. 274). But, the determinant of the price of labour-power is not its exchange value but its use value in the exchange relationship between the owner of labour and the owner of capital. Therefore, this exchange relationship is different from any other simple exchange relationship valid for other commodities.

In the labour market, the worker aims not to gain wealth but only to secure his or her daily needs for survival. Hence, wage earned in exchange of labour-power is exchanged with other commodities and consumed in the process of the reproduction of labour. For this reason, ‘the value of labour-power is the value of the means of subsistence necessary for the maintenance of its owner’ (Marx, 1976: p. 274).

In the labour market, ‘the relative magnitudes of surplus-value and of price of labour-power’ are determined by ‘the length of the working day, ... the normal intensity of labour, ... and the productivity of labour’ (Marx, 1976: p. 655). In other words, the value of a commodity is determined by the criteria of the length of the working day, the intensity of labour and the productivity of labour. For this reason, Marx underlines the significance of the length of the day in the production process by his statement that ‘what exclusively determines the magnitude of the value of any article is ... the amount of labour socially necessary, or the labour-time socially necessary for its production’ (Marx, 1976: p. 129). But, the necessary labour-time is inversely correl...

Table of contents

• Cover
• Title
• Introduction
• Part I  Theoretical and Historical Foundations of Labour Market Reforms
• Part II  Labour Market Reforms in the Monetarist Era
• Part III  Crisis of Monetarism?
• Notes
• Bibliography
• Index