“Capitalism needs economic coercion for its job market to function” (Ontario Coalition Against Poverty: OCAP)

In a previous post, I pointed out that the Ontario Coalition Against Poverty (OCAP) explicitly indicated that economic coercion or force is a basic condition for capitalism to continue to exist (Basic Income: A Critique of the Ontario Coalition Against Poverty’s Stance ).  The following quote agrees with OCAP in so far as economic coercion or economic blackmail characterizes modern capitalist society, but Kay implies that, as a consequence, it is necessary to redefine the nature of poverty. Many social-reformist organizations define poverty exclusively in terms of the level of income, with the poverty line (defined according to a certain level of income) separating those who are defined as poor by the social-reformist left and the rest, who are supposedly the middle class. Such a definition, according to OCAP’s own recognition of the economic coercion required in the job market, is inadequate.

Consequently, OCAP should, in accordance with its own recognition of the economic blackmail characteristic of capitalism, start to organize for the purpose of eliminating poverty conditions that require such economic blackmail. It should, in other words, start to engage in the formation of a movement for the abolition of the power of employers as a class and the corresponding economic, social and political structures.

From Geoffrey Kay, The Economic Theory of the Working Class. London: Palgrave Macmillan, 1979, pages 2-3:

The absolute poverty of the working class is visibly present in the conditions of work where everything the worker touches belongs to another. The means of production he uses, that is, the machines, buildings, materials, etc. all belong to the employer, who also owns the output. The only thing the worker owns is his capacity to work, and his economic welfare depends upon his being able to sell this at the best possible price. In the course of this [the twentieth) century, particularly during the period of the post-war boom, this price measured in terms of the commodities it can purchase, the real wage, has risen to unprecedented heights, at least in the advanced industrial countries of the west.

As a result of this and the maintenance of full or near full employment backed up by social welfare, the working class has enjoyed greater prosperity and security than at any time in history. In these circumstances it appears strange to talk of absolute poverty, and the old socialist claim that the working class has nothing to lose but its chains seems and archaic relic of the past when the working class did indeed live in dire poverty. Yet the fact remains that the working class today has no greater economic autonomy than its forbears a hundred years ago.

Consider the situation of a contemporary worker who loses his job. This has happened to several million workers in the industrialized world since the long boom faltered in 1973 not counting the other millions of young people who have never found jobs at all. Many of the workers who have recently suffered unemployment for the first time, earned wages that allowed them to enjoy all the trappings of ‘affluency’—decent housing, cars, television, refrigerators and so on. But the loss of the job puts the standard of living immediately in jeopardy, particularly if unemployment lasts for anything more than a few weeks. In the unlikely event of a working class family having a large private income, its initial response to unemployment is to cut back spending on marginal items, and attempt to maintain its lifestyle intact in the hope that new work will be found shortly. As the period of unemployment lengthens, it begins to eat into savings, but this does not hold out much hope.

Working class savings are notoriously low, and often take the form of insurance policies that can only be cashed in at a considerable loss. If the family decides to sell of its consumer durables, apart from reducing its standard of living immediately, it will invariably make further losses as second-hand prices are always far below prices for new articles. Moreover, many working class purchases are financial by hire purchase where the interest element makes the actual price higher than the market price, and the family that sells off relatively new times bought in this way often finds that, far from releasing cash, it lands itself in further debt. Working class affluence is entirely dependent upon wages: remove these—i.e., unemployment—and the absolute poverty of its social situation shows through very quickly. In the nineteenth century unemployment meant immediate destitution; the modern worker is clearly much better off than his forbears—for him and his family poverty is a few weeks, maybe even a few months away.

The social-reformist left, however, will probably not acknowledge the need for a redefinition of poverty that includes the economic coercion of the vast majority of workers. They prefer to deal in platitudes, such as calling the work characteristic of economic coercion “decent work,” or reforms in employment standards and increases in the minimum wages (all necessary, of course) “fair,” or claiming that they are fighting for “economic justice” (while not engaging in any activity that moves towards abolishing the economic coercion characteristic of the capitalist job market dominated by a class of employers).

Another post will briefly refer to a proposal of a radical basic income that may form part of a movement that does indeed question economic coercion and an economy dominated by a class of employers.


2 thoughts on ““Capitalism needs economic coercion for its job market to function” (Ontario Coalition Against Poverty: OCAP)

  1. It has been several years since I read anything by Kay but what he says about unemployment rings so immediately true for my personal situation and I am sure many others.


    1. Yes, unfortunately his analysis still resonates with the experience of many people, not just because of neoliberalism but because of capitalism.

      Social reformists, of course, criticize neoliberalism and appear to criticize capitalism, but they do not do any such thing. They would refuse to redefine their conception of poverty along the lines suggested by Kay. For example, when I volunteered for the Social Planning Council of Winnipeg (a supposedly anti-poverty organization), I pointed out the inadequate definition of poverty according only to the level of income to one of the heads of the organization. Her response was–silence and disregard for any other consideration except defining poverty according to the poverty line.


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