Friday 8 July 2016

Wages push down immigrants (and everyone else)!

This is an attempt to think through the phrase 'migrants exert downward pressure on wages' using Marxism in the context of how workers, migrants, governments and employers are today.

1. Workers sell labour power. Employers (and/or owners) treat this as if it were a commodity. Employers buy it. Workers sell it. The price of that commodity is what everyone else calls 'wages' or 'salaries'.

2. However, labour power is not like most other commodities. It is not inert like a sofa or a fridge. It is always in a relation to how it can be used by capital (that's to say the money that owners of businesses have to play with in running their businesses). That's because labour power helps produce capital. Capitalists hire it for that purpose. It can help produce capital and go on doing that because it is a living thing.

3. Capitalists are in competition with each other. They have two main responses to that:

a) invest in machinery to improve speed of production and/or cheapness of production and/or quality of production

b) pay workers less. (It is this competition between employers that is one main explanation for a 'downward push on wages'. The competition drives them to cutting costs.)

plus c) perhaps spend less on r and d for a while, perhaps spend less on marketing.

4. Capitalists make calculations about how much to pay workers and they always do this in relation to their capital. If 'how much to pay' is 'too much' (ie in relation to other businesses) they'll go bust. The only problem fixing how little they can pay are workers' resistance and/or their starvation. But the key point here is that it's capitalists fixing the rate, not workers.

5. Capitalists in modern economies do not work purely 'laissez-fair'. They work in tandem with governments. Together they exert a 'downward push on wages'. Governments and outfits like the CBI make this quite clear in their statements and have been doing this for decades.

6. If a country's regime or government is repressive enough, it's actually possible to pay workers very little even if there is a shortage of labour. I'm pretty sure (from memory), this happened in the post-war period in fascist Spain.

7. Workers - especially where trade unions are weak or complicit with governments - have no means to fix wages or 'exert downward pressure'. Even if there are thousands of extra workers, at the very best, all they can do is stand about in job centres hoping for work.

8. A crucial example of 'downward push on wages' ie wage-fixing has been 'austerity', done by the government (as employer) which helped fix wages for everyone else. This wasn't a result of 'supply and demand' but a result of the government acting on behalf of capital facing a) a crisis in credit and b) underlying this, a crisis in their ability to make profits out of the workers in called 'rate of profit' or 'profitability of labour'.

In 2015, Nick Clegg said that the government had recouped £12billion by exerting 'downward pressure on wages' of public sector workers. Andrea Leasdom has said this week that she would like it to be possible for small businesses to not pay the minimum wage. Again, this would be government exerting 'downward pressure on wages' and nothing to do with migrants. Or, the legislation which permits 'zero hour contracts' - this is a perfect example of governments acting with employers to exert 'downward pressure on wages' and has nothing to do with migrants.

9. When Marx was describing the relationship between capital and labour it was in a situation in which governments had little or no power over wage rates. His comments about the pressure coming from the 'reserve army of labour' (ie the unemployed) have to be put in the present context where governments and employers working in tandem have so much power to act on behalf of the owners of capital.

10. Many - not all - migrants will take jobs which have been fixed on the lowest wage rates. What we have to remember is that these lowest rates weren't fixed by migrants. They were fixed by governments acting in tandem with employers e.g. on fixing the minimum wage. So, many - not all - migrants find themselves in the lowest paid jobs. Rather than saying 'immigrants push down wages' we could say, 'wages push down immigrants - and in the process, everyone else's wages'!

11. The only solution to this from the perspective of fairness is to support active, strong trade unions for all.

12. Meanwhile we have to remember that whatever pressure is put on public services by sudden changes in population (ie by more people turning up at the point of provision in e.g. hospitals or schools) has to be put in the context of the free movement of money (capital). The crash of 2008 has caused millions worldwide to be thrown out of work. (That came about as a mix of capitalists' reaction (ie closing down businesses) and governments' attempt to pay off debts by cutting social services.) That wasn't caused by immigrants. It was caused by the freedom of movement of what workers help produce: ie 'capital'. The response by governments to that movement has been to cut public services. That's a government 'putting pressure on public services' not migrants. Meanwhile, many migrants are themselves working in the public services - thank goodness!

13. So long as there is freedom of movement of capital, it should be a minimum demand that there should be the freedom of movement of labour.

14. To sum up: it's employers who exert downward pressure on wages. They do that because they are in competition with each other. This makes them cut costs (ie pay workers less) partly because they have to increase costs through investment in new technology/automation etc. Governments act in tandem with employers to help them 'cut costs' ie pay workers less. Governments also exert downward pressure on wages through austerity programmes which were devised to take money from wage-earners to pay for the debts - much of which was caused by financial speculation. (This cure may just be a pretext for exerting downward pressure on wages for the bigger reason that employers are in difficulty making profits while having to spend so much on new technology in order to compete with each other.) Governments also cut public services. Public services are in effect a form of payment or pay-back to us in terms of our standard of living as paid for through our taxes. So cutting public services is a form of downward pressure too. It comes from government not from migrants.

15. But of 'the law of supply and demand'? This is something that people reach for as an explanation for what is really a set of decisions that people make. In fact, it's become almost mystical, some kind of invisible force, like gravity. Supposedly, if you apply this law, when labour supply goes up, wages will be 'forced down'. Therefore, import immigrants and wages will go down. Notice I said, 'wages will go down'. How? People have to put wages down. Who does that? Governments or employers or both acting together. They make the decisions and do it. We've seen over the last 50 years, a constant government-employer push to keep wages down. They announce 'freezes' and 'restraints'. They cut services (ie sack workers) thereby exerting the biggest downward push of all. They create 'zero hour contracts' which is a cunning way to exert downward pressure on wages. 

16. Instead of going along with a 'left-wing' argument about immigrants exerting 'downward pressure on wages', the left wing argument should be pointing out how e.g. austerity, zero-hour contracts, cuts in public services are what cause 'downward pressure on wages' and cause pressure to increase on our public services - same goes for plans like Andrea Leadsom's for abolishing the minimum wage.  These mechanisms are all devised to make it easier for 'capital' (businesses) to make profits.