The Rate of Exploitation of AB (Anheuser-Busch) InBev NV (Including Labatt) Workers

I was, in part, inspired to start this blog because of the incredible lack of criticla thinking on the part of the pro-union left here in Toronto. In particular, when I tried to bring up the issue of whether striking brewery workers could ever except to obtain “a fair deal, good jobs, pension security and fair benefits” (verbatim by Tracy MacMaster, (union steward, former president of the Greater Toronto Area Council, to which are affiliated 35 local unions of the Ontario Public Service Employees Union (OPSEU)), and former vice president of the Ontario Public Service Employees Union (OPSEU)), I was met with hostility.

This post looks at the rate of exploitation of AB InBev NV workers. AB InBev is a Belgium-based multinational corporation, which owns controlling interest in the Labatt brewery in London, Ontario. I wanted to, initially, calculate the rate of exploitation of Molson Coors workers here in Toronto, but unfortunately the annual reports for that capitalist company do not contain data on wages or salaries–a vital piece of information for calculating the rate of exploitation.

Since I could not find specific data limited to Labatt brewery workers, the rate of exploitation of AB InBev NVworkers will have to serve as a substitute or proxy for such exploitation.

I chose the year 2019 since the capitalist economy undoubtedly was still feeling the effects from the Covid pandemia for 2022.

An aside: I have tried to calculate the rate of exploitation of particular Canadian capitalist companies for around three years. Not one self-declared Marxist has lifted a finger to either correct the methods used or the specific numbers used. Indeed, there has been general silence. I can understand such a situation from those who focus on macro issues and who try to determine the rate of surplus value (among other variables) at that level. However, I find it interesting that for Marxists, who allegedly are supposed to be for cooperative forms of production, there has been zero cooperative efforts to improve the methodology and accuracy of the calculations that I have made. Does this not say something about the nature of the so-called self-proclaimed Marxists these days?

The Nature of the Capitalist Company AB InBev NV

What is AB InBev NV?

According to Wikipedia,

Anheuser-Busch InBev SA/NV, commonly known as AB InBev, is a Belgian multinational drink and brewing company based in Leuven, Belgium. AB InBev has a global functional management office in New York City, and regional headquarters in São Paulo, London, St. Louis, Mexico City, Bremen, Johannesburg and others. It has approximately 630 beer brands in 150 countries.

The Nature of the Rate of Exploitation

But what is the rate of exploitation? And why not use the usual rate of profit or the rate of return? The rate of profit is calculated as profit divided by investment. Since employers purchase both the means for work–buildings, computers, office supplies, raw material–and hire workers–we can classify investment into two categories: c, meaning constant capital, or the capital invested in commodities other than workers; and v, or variable capital, the capital invested in the hiring of workers for a certain period of time (wages, salaries and benefits).

The purpose of investment in a capitalist economy is to obtain more money (see The Money Circuit of Capital), and the additional money is surplus value when it is related to its source: workers working for more time than what they cost to produce themselves. The relation between surplus value and variable capital (or wages and salaries) is the rate of surplus value or the rate of exploitation, expressed as a ratio: s/v.

When the surplus is related to both c and v and expressed as a ratio, it is the rate of profit: s/(c+v).

In Marxian economics, you cannot simply use the economic classifications provided by employers and governments since such classifications often hide the nature of the social world in which we live. The rate of profit underestimates the rate of exploitation since the surplus value is related to total investment and not just to the workers. Furthermore, it makes the surplus value appear to derive from both constant capital and variable capital.

I decided to look at the annual report of some of the largest private companies (if they are available) in order to calculate the rate of exploitation at a more micro level than aggregate rates of surplus value at the national or international level. Politically, this is necessary since social democrats here in Toronto (and undoubtedly elsewhere) vaguely may refer to exploitation–while simultaneously and contradictorily referring to “decent work” and “fair contracts.” Calculating even approximately the rate of exploitation at a more micro level thus has political relevance.

Conclusions First

As usual, I start with the conclusion in order to make readily accessible the results of the calculations for those who are more interested in the results than in how to obtain them.

The Rate of Exploitation of AB InBev Workers

Final Calculation (Based on Adjustments) of Surplus Value (Profit), Variable Capital and the Rate of Surplus Value

The result of all of these adjustments is:

Surplus value (s) or Adjusted Profit (loss) $16,589 million or $16.589 billion US
Variable capital (v) or Adjusted Total payroll benefits $6,218 million, or $6.218 billion US

To calculate the rate of surplus value, we need to divide “Surplus value (s) or Adjusted “Profit/loss” by “Variable capital (v) or Adjusted “Total payroll benefits.”

So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=16,589/6.218=267%.

That means that for every hour worked that produces her/his wage, a worker at AB InBev works around an additional 160 minutes (2 hours 40 minutes) for free for AB InBev. It also means that, within an hour worked, a worker at AB InBev works 16 minutes to produce her/his wage or salary and 44 minutes for free for AB InBev.

Of course, during the time that the worker produces her/his own wage, s/he is subject to the power of management and hence is unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario and Employers as Dictators, Part One).

In an 8-hour (480 minutes) work day, the worker produces her/his wage in 2 hours 8 minutes (128 minutes) and works 5 hours 52 minutes (352 minutes) for free for AB InBev.

In a 9-hour (540 minutes) work day, the worker produces her/his wage in 2 hours 24 minutes (144 minutes) and works 6 hours 36 minutes (396 minutes) for free for AB InBev.

In a 10-hour (600 minutes) work day, the worker produces her/his wage in 2 hours 40 minutes (160 minutes) and works 7 hours 20 minutes (440 minutes) for free for AB InBev.

In a 12-hour (720 minutes) work day, the worker produces her/his wage in 3 hours 12 minutes (192 minutes) and works 8 hours 48 minutes (528 minutes) for free for AB InBev.

In a 14-hour (840 minutes) work day, the worker produces her/his wage in 3 hours 44 minutes (224 minutes) and works 10 hours 16 minutes (616 minutes) for free for AB InBev.

Of course, during the time that the worker works to receive an equivalent of her/his own wage, s/he is subject to the power of management and hence is unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario and Employers as Dictators, Part One).

I have used the lengths of the working day as 8, 9, 10, 12 and 14 because the length of the working day varies.

Political Considerations and Conclusion: Does the Existence of a Union and a Collective Agreement Abolish the Exploitation and Oppression of Workers?

Again, the rate of exploitation measures the extent to which workers work for free, producing all the surplus value and hence all the profit for employers. However, even during the time when they work to produce their own wage, they are hardly free. They are subject to the power and dictates of their employer during that time as well.

Do you think that these facts contradict the talk by the left and unionists of “fair wages,” “fair contracts” (see Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One for the rhetoric of the largest union in Canada, the Canadian Union of Public Employees (CUPE)) and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized?

If exploitation and oppression of workers is a constant in their lives, even if they are only vaguely aware of it, should this situation not be frankly acknowledged by their representatives? Do such representatives do so? If not, why not? Do workers deserve better than neglecting the social context within which they live and work? Should such problems be addressed head on rather than neglected?

Even if workers were not exploited, they would still be oppressed since they are used as things (means) for purposes which they as a collectivity do not define (see The Money Circuit of Capital). Does that express something fair? Management rights clauses (implied or explicit in collective agreements give management as representative of employers–and as a minority–the power to dictate to workers what to do, when to do it, how to do it and so forth–and is not the imposition of the will of a minority over the majority a dictatorship? (See Employers as Dictators, Part One). Is that fair? Do union reps ever explain how a collective agreement somehow expresses something fair? Is that fair?

Are the following examples of what union reps mean by a “fair contract?” “Good jobs?” “Decent work?” Other such cliches?

On page 6 of thecollective agreement, we read:

SECTION 4 – MANAGEMENT FUNCTIONS

4.01 The Union acknowledges that it is the exclusive function of the Company to:

a. Maintain order, discipline and efficiency.

b. Hire, discharge, transfer, promote, demote or discipline employees provided that the claim that a seniority employee has been discharged, transferred, demoted or disciplined without just cause may be dealt with as hereinafter provided.

4.02 It is understood that in exercising these functions the Company must conform to
all other clauses of this Agreement.

Should workers not be discussing why management has these rights? Should workers not be discussing whether an unelected management should have such rights? Should workers not be discussing how to organize to abolish this dictatorship? Should workers not be criticizing any union rep who claims that a collective agreement somehow expresses a “fair contract?” A “good contract?” A “decent job?” A “good job?” All other such platitudes?

How does the existence of a collective agreement turn the exploitative and oppresive situation of workers into one where they have a “fair contract” and “decent work?” Unions can limit exploitation and can control some aspects of their working lives, but in principle workers are things to be used by employers even with unions. This does not mean that a non-unionized environment is the same as a unionized environment. With unions that are independent of particular employers, that is to say, are real unions, there is an opportunity for workers to develop organizations of resistance against the power of particular employers.

Workers and not just unions, however, cannot resist the power of the employers as a class unless workers organize as a class, and furthermore they cannot change the situation unless they themselves realize the limitations of their own local, regional and national organizations when faced with the power of the class of employers (and the government that supports them), teach that to their members and are open persistently to criticism from below. In addition, unless they start to organize as a class with the aim of eliminating the class power of employers, they will be subject to a back-and-forth movement of reform and counter-reform (see Anti-Neoliberalism Need Not Be Anti-Capitalist: The Case of the Toronto Radical John Clarke, Part Four: The Welfare State and Neoliberalism, or The Infinite Back and Forth Movement of Capitalism).

The ideology of unions–that somehow they can produce a “fair contract” and “decent work”–needs, though, to be constantly criticized. Workers deserve better than the acceptance of such ideology by the social-democratic or social-reformist left.

The collective agreement–like any employment agreement between workers and employers–fosters the illusion that the workers are paid for the whole working day and hides the economic coercion behind the “agreement” or contract.

Should not the left be constantly exposing this? Is it? What do you think?

Data on Which the Calculation Is Based

The calculation of the rate of exploitation is undoubtedly imperfect, and I invite the reader to correct its gaps. Nonetheless, the lack of any attempt to determine the rate of exploitation at the city level has undoubtedly reinforced social-reformist tendencies.

(in millions of U.S. dollars)

Surplus Value (Profit)

Revenue 52 329
Cost of sales (20 362)
Gross profit 31 967 [52,329-20,362=31,967]
SG&A (16 421)
Other operating income/(expenses) 875
Normalized profit from operations (Normalized EBIT (Earnings Before Interest and Taxes) 16 421 [31,967-16,421+875=16,421]
Non-recurring items (323)
Profit from operations (EBIT) (Earning Before Income Tax) 16 098 [16,421+875-323=16,098]
Net finance income/(cost) (3 473)
Share of results of associates and joint ventures 152
Income tax expense (2 786)
Profit from continuing operations 9 990 [16,098-3,473+152-2,786=9991: The discrepancy may be due to rounding in the annual report, but I am unsure of this.]
Discontinued operations 424
Profit/(loss) 10 414 [9,991+424=10,415]

Adjustments to Surplus Value (Profit)

I will address some of the items in the account above in order.

Net finance income/(cost) (3,473)

In Marxian theory, it is necessary to question whether some expenses are expenses for both the individual employer and for the class of employers (and fractions of their class, such as those who live on interest). When they are expenses at the macro level of the class of employers and not just at the micro level of the particular employer, the expense is deducted from total revenue. On the other hand, there are expenses that are expenses for the individual employer but are not expenses when looked at from the point of view of the class of employers; in such an instance, they are paid out from the surplus value produced or obtained by workers and are to be included in income before taxes.

For example, interest is such a category.

As I wrote in another post:

As explained in another post, interest in many instances can be treated as part of the surplus value produced and therefore added to net income since, although from the point of view of the individual capitalist it is an expense, from the capitalist economy as a whole it is derived from the production of surplus value.

Accordingly, it is necessary to add 3,473 to “Profit (loss)” since interest is derived from surplus value–although it is an expense from the point of view of the particular employer.

First Temporary Adjusted Profit (loss) 13,887 [10,414+3,473]

Share of results of associates and joint ventures 152
This category presents a problem only when the amount is not in a separate account that is attributable to the exploitation of workers by the specific capitalist company. Since this item is kept separate, it need not involve any adjustment.

Income tax expense (2 786)
I included this category only to show how the annual report obtained other numbers. Income tax paid by a capitalist company is derived from the exploitation of workers and forms part of surplus value. Consequently, it is necessary to add back 2,786 to “Profit (loss).”

Second Adjusted Profit (loss) 16,673 [13,887+2,786]

Discontinued operations 424
This category refers to the sale of already owned property; the money flowing from their sale does not derive from the direct exploitation of AB InBev workers. Consequently, it needs to be subtracted from “Profit (Loss).”

Third Adjusted Profit (loss) 16,249 [16,673-424]

This has not completed the adjustments needed to determine the surplus value produced by AB InBev workers. A further adjustment pertains to the calculation of variable capital (wages or salaries and benefits).

I will not address issues concerning the category “SG&A” (Selling, General and Administrative Expenses.” For a discussion of the subcategory “Selling” (=”Marketing,” see the appendix in the post The Rate of Exploitation of Workers of Suncor Energy, One of the Largest Private Employers in Canada).

Variable Capital (V)

Payroll and related benefits
Wages and salaries (4 563)
Social security contributions (683)
Other personnel cost (678)
Pension expense for defined benefit plans (193)
Share-based payment expense (340)
Contributions to defined contribution plans (101)
Total payroll and related benefits (6 558)

The category “Share-based payment expense”is largely limited to select employees.

Justification for excluding the $340 million US from the calculating “Total payroll and related benefits” (variable capital) (subtracting it) and adding it to “Profit (loss) is grounded in the nature of the employees who receive this amount (at least middle managers): this compensation is not mainly for the coordination of the work of others but for the exploitation of others–it is pure surplus value. I exclude any further detailed references that justify its inclusion unless someone provides a rational argument that part or all of this amount should be included.