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Issue #1920      June 22, 2020

Capitalism, Socialism and Productivity

The trade union movement claims that wages should be increased to enable the workers to gain some benefit from the increase in the productivity of their labour.

Recently the waterside workers claimed £7 [pounds] an hour increase because of increased productivity, and other unions have made similar demands.

Such demands are entirely just (and indeed very moderate), for increased productivity is a result of new processes, between techniques and increased skills – all of which come from the labour of workers by hand and brain.

The sixty rich monopoly families who own Australia certainly make no contribution to increased productivity for they do not labour at all.

Yet they get most of the fruits of the increase, worsen the relative position of the workers, and are responsible for callously sacking thousands of workers made “redundant” by mechanisation and automation.

We illustrate as follows the movement of wages and profits with changes in productivity: –

Suppose the net value each year in manufacturing industries is £2,000 million of which £1,000 million goes in wages and £1,000 million in profits.

If productivity increases by two per cent (agreed by all as a conservative figure) the net value created becomes £2,040 million.

Wages could be increased four per cent to £1,040 million, leaving profits undiminished at the enormous figure of £1,000 million.

If wages are increased by two per cent they would take £1,020 million, leaving £1,020 million for profits.

If wages increased by one per cent they would take £1,010 million as against £1,030 million for profits.

If wages are frozen they remain at £1,000 million, while profits increase to £1,040 million. The workers’ “share” declines from fifty per cent to forty-nine per cent, the bosses’ increases to fifty-one per cent.

That is what is actually happening – on the grand scale.

In 1961-62 the new value created in manufacturing was £2,200 million of which the workers received in wages fifty-two per cent – ten years before however the workers received sixty per cent of the new value added!

The relative position of the workers has declined enormously because the monopolies have taken practically all the benefits of increased productivity in the last ten years.

The present just claim of the trade unions, which will still only partially restore the previous position, is however quite different from tying of wages to a “productivity index” as favoured by employers and the D.L.P.

This means committing the workers to the system of monopoly capitalism forever. For even if the relative position of the workers were restored to what it was ten years ago – which would mean a bigger increase than now claimed what worker would accept the conditions of 1952 as the highest possible goal at which to aim?

Tying wages to productivity would also mean tying wages to the ups and downs of the capitalist economy. Undercapacity operation is a normal feature of monopoly capitalism, but periodically it increases greatly due to recurring recessions.

Workers are sacked in large numbers during these recessions, so there are many workers without wages at all. But also, with the increased undercapacity operation productivity would fall (through no fault of the worker) and their wages would correspondingly fall.

This the boss tries to achieve in any case, utilising the over-supply on the labour market, but this meets with powerful resistance from the organised workers. If the T.U. movement agreed to wages being tied to a productivity index they would fall automatically which would be equivalent to the trade unions agreeing voluntarily that the workers should bear the burden of recession.

Stirring contrast

Under socialism the situation is entirely different. Instead of the division of the product according to a class struggle between capitalists and workers, in which the capitalists are in the box seat because they own the means of production, socialism can plan production and distribution in the interests of the working people.

In fact where the people own the enterprises’ social benefits claim about seventy-five per cent of the new value in production, while the remainder (apart from defence and administration) goes to a massive expansion of production such as capitalism cannot match.

This means a far greater increase in productivity (100 per cent increase in productivity is planned in the Soviet Union in the next ten years), which enables a very rapid and planned rise in living standards.

The rapid expansion according to plan, together with reduction in hours, means that there is no problem of recessions or so-called “technological unemployment” which is becoming chronic in all capitalist countries. In the United States for example there are four to five million unemployed even at the “peak” of prosperity, and 30 to 40 million live permanently below subsidence level.

Unions’ role

Furthermore in socialist countries workers and their trade unions have a direct and decisive say in matters from which they are entirely excluded under capitalism.

For example in the socialist countries the trade unions are consulted at all levels – national bodies and factory organisation on production plans, introduction of new machinery, and changed methods of production.

The Government’s economic plans and budget are submitted to the trade unions and their opinions and proposals carry great weight with the Government and Ministers.

In Australia the unions’ and workers’ views are not sought and when submitted they are ignored.

Wage rates – time wages, piece work rates and bonus – are determined entirely in agreement with the unions.

In Australia Arbitration tribunals can even wipe out unions from proceedings in relation to awards.

On February 4 this year the NSW Industrial Commission at the request of the B.H.P. suspended hearing claims by four unions for a new award. This says nothing off the other powers exercised over unions by the compulsory arbitration system.

ACTU’s goal

In socialist countries a worker cannot be dismissed without permission of the union.

Victimisation and wholesale “trampling” of workers is practised in Australia under the legalised right of bosses to “hire and fire.”

In socialist countries the Government hands over to the union the large sums allocated for social services and the unions directly administer the social service laws.

Since trade unions in those countries are organised on an industry basis and have their trade union committees in the work places the workers themselves participate directly in these activities associated with production, wage rates, and social services.

Fighting now to win higher wages and the right to work, the Australian trade union movement should also have its eye fixed on the socialist goal.

This goal is the objective of the A.C.T.U

This article originally appeared in Tribune February, 1964.

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