How Capitalism Has Transformed Labor

How Capitalism Has Transformed Labor

In the current era of globalization, the markets are increasingly integrated. Liberal economic principles adhered to by governments and cheaper and more efficient means of transportation have allowed companies to take their operations to the international level. Capitalism coupled with globalization has driven a change in the labor practices of nations that are participating in the global market place. While there was a big shift in political ideology in the 20th century towards rejecting capitalist norms and practices based on writings of Marx and Angels, those ideals have largely been dismissed as impractical in the 21st century. While the capitalist ideas have improved economic indicators for many nations around the world, the cost of those improvements was the labor exploitation that Marx and Angels warned the world about.

Marx, in Das Kapital, defines critical terms to help the reader understand the relations between the labor market and the individuals. He first speaks of human nature and defines commodities. He states that humans have needs and wants and in a capitalist society they are taught to satisfy them with commodities. The value of the commodity is determined in qualities and quantities, by its usefulness at the place of exchange, not by the amount of labor used to produce it (Marx 27). Capitalism integrates human labor into the means of production. Labor’s value is determined not by the hours worked but by the price of the commodity produced (Marx 28). The labor is evaluated as a whole, not in the matter of individual contributions. “As values, all commodities are only definite masses of congealed labour time” (Marx 29). The relationship between commodities and money is reciprocal. Commodities are produced and sold for money and then that money is used to produce commodities (Marx 30).

Division of labor exists for the necessary production of commodities. Money was invented as a uniform denomination of values of commodities (Marx 67). “A general rise in the prices of commodities can result only, either from a rise in their values – the value of money remaining constant – or from a fall in the value of money, the values of commodities remaining constant.”  Money used to correspond to the value of precious metals. When the pound was first instituted in Great Britain, it was represented by the pound of silver. Such is no longer the case. (Marx 69).

How Capitalism Has Transformed Labor
How Capitalism Has Transformed Labor

In a Capitalist society money hoarding often occurs where the seller is no longer interested in selling goods to get money and then to buy other goods, but is motivated to sell goods in order to acquire more money. The prevalence of such practice caused an increased concentration of wealth in the hands of the few. 71 percent of people in the world hold only 3 percent of the global wealth. 78 percent of the world’s millionaires reside in Europe or North America, with nearly half of these millionaires calling United States home. “Ultrahigh net worth individuals” — the wealth management industry’s term of art for deep pockets worth more than $30 million — hold an astoundingly disproportionate share of global wealth. These wealth owners own 12.8 percent of total global wealth, yet represent only 0.004 percent of the world population.” The world’s 10 richest billionaires, according to Forbes, own $505 billion in combined wealth, a sum greater than GDP of Nigeria, Belgium, Iran, or Norway (“Global Inequality”).

In a Capitalist economy, everything is a commodity. Workers exchange their labor for money, just like capital is exchanged in the market place. Capitalists use the workers’ labor to create goods. The capitalist then takes the product and sells it and decides on the appropriate level of compensation for the worker. The product does not belong to the worker (Marx 117).

Since capitalists spends money on labor, they want to make the labor force as productive as possible so they can increase their profits. The proletariat is exploited in such a system. The worker is forced to work a certain set of hours so the capitalist, after paying the living expenses of the worker, is guaranteed to generate surplus value. Commodities must be competitive in the market; therefore, the bourgeoisie will pay only as much to the worker as required to meet their basic needs. They will keep the wages as low as possible to keep their products competitive and to usurp the profits (Marx 118).

Before labor regulations, factories in England operated 24 hours a day, 7 days a week. Workers were expected to work 12-hour shifts. No one was exempt from labor: men, women, and children as young as six years old (Marx 175). “After capital had taken centuries in extending the working day to its normal maximum limit, and then beyond this to the limit of the natural day of 12 hours. All bounds of morals and nature, age and sex, day and night, were broken down” (Marx 184). The Act of 1833 reformed such horrific working conditions. Factories no longer could operate around the clock and were restricted to working hours of 5:30am to 8:30pm. Child labor was also restricted. No one under the age of nine could work. Those who were 13-18 years old could work for eight hours. By 1836, Parliament made it illegal for any child under the age 13 to be employed at a factory. The capitalists were outraged, since they considered childhood to end at the age of ten, and pressured the government to lower the minimum working age to 12, but the measure did not pass (Marx 185-186).

The British were on the track to labor reform. They did not stop at the 12-hour work day. In 1810, Robert Owen led the movement demanding the 10-hour work day, but the idea did not become law until 1847 and it only applied to women and children (Marx 187).

Meanwhile in United States, an eight-hour work day movement was taking off in Chicago and turned into a city-wide strike that shut down the city for a week and nearly collapsed its economy, causing the city legislature to pass the law right away. The Chicago state legislature extended the eight-hour work day law to the entire state in 1867 (Hirsh 113). A year later, the US Congress followed the Illinois example and extended the 40-hour work week to federal employees and contractors (“United States v. Martin”). Non-government workers protested and struggled to obtain the same rights from city to city and from industry to industry until Fair Labor Standards Act (“29 USC Ch. 8”).

Fair Labor Standards Act was signed into law on Saturday, June 25th, 1938, nine days after Congress was adjourned. President Franklin D. Roosevelt signed 121 bills that day to avoid Congressional veto. In his fire-side chat that evening, the president addressed the nation with the following message: “Do not let any calamity howling executive with an income of $1,000 a day, … tell you … that a wage of $11 a week is going to have a disastrous effect on all American industry” (Grossman 22). Since that day, Americans have seen 22 increases of minimum wage and a law that was once seen as extreme, even though it only covered 20% of the population, is now perceived as a normal reoccurrence, affecting 84% of Americans (“What is the History of Minimum Wage?).

Marx’s ideas about labor exploitation were very applicable to the time. Once the workers realized the compensation they were receiving was not proportional to the labor they performed they stood up and demanded reform. In a period of a century operating hours were adjusted, maximum working hours were instituted and enforced, child labor was eliminated, and minimum just compensation laws were passed.

Marx’s framed his ideas about the working class and the bourgeoisie-proletariat relationship into a political theory in his collaborative brochure with Frederick Engels-The Communist Manifesto. This tiny but revolutionary work starts out with a powerful statement: “The history of all hitherto existing society is the history of class struggles.” Since the time of lords and serves and the masters and their slaves, there has always been the oppressor and the oppressed (Marx and Engels 14).

Marx and Engels proceeded to describe the creation of the capitalist order. They point to the bourgeoisie shaping the world into one big market exchange where small intimate connected communities are destroyed and replaced with cities, filled with masses connected to the bourgeoisie. No matter where they turn, the modern working class are forced to sell their labor. They are coerced to accept stagnant wages while taking on increasing job responsibilities as the means of production grow more sophisticated. Worldwide trade has further expanded and solidified the capitalist networks (Marx and Engels 16). More and more people fall easy prey to cheap products. The allure of the wealth they think they can achieve makes them buy into the system without realizing the costs. The competition propagated by the bourgeoisie divides the working class from within, but Marx and Engels call for unity in a revolution. They stated that only the united proletariat can stand up against the capitalists and destroy the system (Marx and Engels 18). The authors call for a time where the interests of the majority will finally be served.

The Manifesto lays out a solution to bring the proletariat together- Communism- a theory that aims to completely transform labor relations. It is based on several principles: abolition of private property, centralization of means of transport and communication in the arms of the state, centralized government financial system, equal labor obligation, delegation of resources based on needs, de-urbanization, combination of industrialization and agricultural production, abolition of child labor, and promotion of education (Marx and Engels). Despite the brochure’s small size, it had a wide impact on labor relations around the world with rejection of capitalist principles and adoption of Communism, with Russia being the first country to embrace the brochure’s teachings.

Vladimir Lenin entered into politics as part of the Bolsheviks and transformed the party to adhere to the Marxist Communist ideology. After the 1917 Revolution, he created a one-party state that adhered solely to the Communist principles with the goal to establish an order of the working class which was enforced by the government (Daniels xx).

Marxism was first embraced in Russia by the intellectual elite. The country was not on a path to Capitalism therefore its principles were not engrained into the country’s institutions, leaving a clear path for new ideas. The Communist Party was entirely composed of Marxism-persuaded intellectual elites. Lenin, however, had an almost religious devotion to the German author’s Communist principles and drove the revolution. He used the Marx and Engel’s terms as a means of propaganda, even though the Russian case was nothing like what Marx and Engel described. Russia was not Capitalist and the people did not rise up voluntary to reform the system. Lenin believed that the course of history was shaped by leaders, therefore, he took an active role in guiding the Russian people during the 1917 Revolution (Daniels xxii).

Lenin’s commitment not only awakened the masses and drove the revolution, but instilled the belief in the Bolsheviks that change was inevitable. Lenin used the party to make the revolution occur. He transformed the party to have a rigid hierarchical structure and ran it with military precision (Daniels xxiii). Lenin and his party were so involved in driving the revolution that they completely ignored Marx and Engel who stated that it must be the people themselves who need to cause the change from Capitalism to Communism.

After the revolution, Lenin and the Communist Party had a strong grip on power and it was time for reform. The first reform was land collectivization. Lenin took the first tenant of Communism and proceeded to abolish private property. He first took the land away from the Orthodox church and distributed it to the peasants. Then he established a system of agricultural collectivization and promoted de-urbanization by creating collective farms in rural areas. The people were required to give up their land and farm animals to the collective and everyone was responsible for laboring the lands and tending to the animals. The products of people’s labor were then collected and redistributed within the community based on family size and other relevant factors (Fisher 75).

The means of communication became highly centralized and censorship mechanisms were implemented to reduce resistance to the new reforms. By the time Stalin came to power, the means of suppressing dissent have become severely more brutal. Stalin sent military personal to take food away from Ukrainians who refused to give up their land and cattle to collective farms or criticized his rule. Neighbors were actively encouraged to tell on each other and people lived in fear that anything that they said can be misconstrued as opposition rhetoric addressing the regime. Stalin’s obsession with compliance to Communist principles created a Holocaust in Ukraine which lasted from 1932 to 1933, killing five million people (Graziosi 97).

To enforce equal labor obligations, Lenin implemented the eight-hour work day (Service 321). Unlike England, Russia did not go through the Industrial Revolution and therefore did not experience child labor. The shift to Communism greatly influenced the labor structure in Russia. It emphasized Communist party membership to nearly a compulsory degree and did not have a uniform level of compensation. There was a shortage of labor due to soft budget constraints and paternal managing patterns. There was no consistent adherence to protocols, near absence of production targets, and lack of innovation in the workplace, inadequate good outputs and poor quality products (Gerber 631).

Lenin followed the Marx and Engel’s Communism principles and offered universal and free schooling to children (Service 321). The leader placed a heavy emphasis on increasing literacy in both adults and children (Service 95). To centralize the government financial system, Lenin nationalized the banks and returned the currency to the gold standard (Volkogonov 128). Major Russian industries dealing with resource extraction as well as the transportation industry were also nationalized. Even small enterprises were brought under state control (Pipes 596).

Despite fulfilling all the tenants inscribed in the Manifesto, Communism in Russia was not a success story. The state quickly started to realize how government control of major industries brought gross resource mismanagement and corruption (Service 297). The agricultural industry was in the greatest despair. The drought in combination with poor management and distribution protocols and large emphasis on grain exports caused a massive famine in Russia, killing over five million people (Service 87).

Despite Communism’s crashing failure when it was first tried by Russia, other countries followed suit and adopted similar policies. The Communist regime overthrew the military dictatorship in the Cambodian Civil War and established its own government, appointing Pol Pot as the leader of the Communist Party in 1975. De-urbanization immediately took place with forceful relocation of millions to rural areas (Etcheson 4). Those who did not comply were severely punished.

On the outskirts of the capital of Cambodia-Phnom Penh, among shacks and up a road that is in such desperate need of an asphalt cover that the vehicles are forced to drive on its very edges, there is a tall tower. Its golden peaks stretch into the clear blue skies and glisten under the scorching hot sunlight. The three-story tower is filled with skulls of those murdered in the Cambodian genocide. A few steps away from it is a tree that leans slightly to the right. Against it the officers of the Khmer Rouge regime smashed children’s skulls. Nearly two million people, 25 percent of the total Cambodian population, were killed as a result of the government trying to create a perfect national identity adhering to Communism principles (Heuveline 60). The Khmer Rouge’s Communism was even further from Marx and Engel’s ideas than the system created by Lenin. It did not spring up from a proletariat uprising, but was initiated by the state. It was not concerned with transforming labor relations, but was focused on depressing dissent. Pol Pot was only concerned with creating a loyal following and was willing to utilize any means necessary to ensure his success, no matter how cruel.

It took Communism just over half a century to transform from a clear set of theoretical principles meant to fight oppressive rule to be used to support oppressive rule. While Marx and Engels were worried about worker exploitation in the hazardous factories in England, they would have never imagined a leader claiming to adhere to their ideals and using Communism to kill workers for speaking up against the regime. Marx and Engels believed in the power of the collective and freeing of the individual from the shackles of the commodity-driven world. They pictured the workers rising up to oppose their oppressors and succeeding, not being killed or starved to death.

Modern-day Communist China however has seen the greatest transformation in its labor force. After the Great Opening-up in 1980 Chinese industries were able to operate in the global marketplace. As more special economic zones followed the example of Shenzhen in the Guangdong province, more people started migrating from rural to urban areas to work in factories and earn a higher income. “From 1978 to 2005, the share of labor employed primarily in agriculture fell from 71 percent to 45 percent, the share of labor working in urban areas increased from 24 percent to 36 percent (Cai 1). The migration was incentivized by temporary work permits issued to rural dwellers to migrate to the cities (Cai 6).

The old Communist principles fell away as wages, bonuses, and job titles started to be determined by business performance instead of government assessment. Businesses were not allowed to operate for profit (Cai 7). Regulations were established requiring a 40-hour work week, limits on overtime were set, and certain holidays were designated as uniform around the country. Workers have also gotten access to social security and unemployment (Cai 11). The Chinese labor market started to look at lot like that of its capitalist neighbors across the ocean.

But it was United States unquenchable thirst for commodities that gave rise to transformation of labor practices in China. Companies, desperate to reduce costs and increase their competitiveness in the global marketplace, were looking for sources of cheap labor. American law required employers to pay a minimum wage to their workers which corresponds with the cost of living. Additionally, unions made a practice of providing health insurance to workers customary, costing employers even more every time they issued a paycheck. The entrepreneurs started looking abroad for labor where salaries were lower, labor rights were weak, and regulations were largely absent. “3.4 million jobs were lost between 2001 and 2015, including 1.3 million jobs lost since the first year of the Great Recession in 2008. Nearly three-fourths (74.3 percent) of the jobs lost between 2001 and 2015 were in manufacturing (2.6 million manufacturing jobs displaced” (Scott). However, many Chinese companies like Lenovo, Huawei and WH Group opened offices in US and hired thousands of local staff.

When Marx first called out the ruling class on their exploitative labor practices in 1867 and formulated a theoretical framework to overthrow the oppressive system, Angels and Marx never thought that their ideas will be used as tools of coercion and oppression by regimes that chose to call themselves Communist. As Communism failed in different corners of the world, first being Russia, the globe returned to the Capitalist ideal. Workers in Capitalist countries managed to mediate labor exploitation by pushing for a 40-hour work week and minimum wage. However, according to Marx and Engels as long as the Capitalist regimes persists the proletariat will always be exploited by the bourgeoisie.

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