Introduction
In another post I presented the twenty largest employers in Calgary, Alberta, Canada, according to the number of employees (see A Short List of the Largest Employers Based in Calgary, Alberta, Canada, Based on the Number of Employees). I also presented some posts where I calculated the rate of exploitation of such workers (see, for example, The Rate of Exploitation of Workers of Suncor Energy, One of the Largest Private Employers in Canada).
In this post, I will calculate the rate of exploitation of workers at another large private employer in Calgary, Husky Energy Inc..
What is Husky Energy? The nature of Husky Energy is set out in its Annual Report:
Corporate Profile
Husky Energy is an integrated energy company based in Calgary, Alberta and its common shares are publicly traded on the Toronto Stock Exchange under the symbol HSE. The Company operates in Canada, the United States and the Asia Pacific region.
Husky has two business segments:
The Integrated Corridor includes the production of thermal bitumen, natural gas and associated liquids in Western Canada, the marketing and transportation of production, the Lloydminster upgrading and refining complex, a 35% working interest and operatorship of the Husky Midstream Limited Partnership, the Lima, Superior and Toledo refineries in the U.S. Midwest and the marketing of refined petroleum products.
The Offshore includes operations and exploration in the Asia Pacific region, offshore China and Indonesia, and in the Atlantic region offshore Newfoundland and Labrador.
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 in various cities in Canada 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.
I used data from 2018 rather than 2019 to calculate the rate of exploitation of Husky Energy workers because, in 2019, there seemed to be no calculable rate of exploitation since in 2019 there was an actual profit loss. Unless there are specific reasons for including abnormal years, it is better to calculate the rate of exploitation using more normal data. Besides, any company that operates at a constant loss by failing to exploit workers will cease to exist after a certain period of time.
Of course, if the rate of exploitation is calculated for a number of years, then losses need to be included. I have not found any books or articles that deal with how to handle such losses in calculating the rate of exploitation for such a year. It is, in any case, probably better to include such years in a multi-year calculation of the rate of exploitation in order to gain a more accurate view of the rate of exploitation in the medium- and long-term. Perhaps some readers can provide suggestions on how to do so.
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 Husky Energy Workers
Final Calculation (Based on Adjustments) of Surplus Value (Profit), Variable Capital and the Rate of Surplus Value
To calculate the rate of surplus value, we need to relate “Adjusted surplus value (s) or Earnings before income taxes” to “Total salaries and benefits or total employee costs.” So, with the adjustments in place:, s= $2,513, and v=1,094. The rate of exploitation or the rate of surplus value=s/v=2,513/1094=230 percent.
This means that, in terms of money, $1 of wage or salary of a regular Husky Energy worker results in $2.30 Cn surplus value or profit for free. Alternatively, that means that for every hour worked that produces her/his wage, a worker at Husky Energy works around an additional 2 hours 18 minutes (138 minutes) for free for Husky Energy. Or, for every hour worked, a worker at Husky Energy works 18 minutes that produces her/his wage and 42 mintues for free for Husky Energy.
In a 3-hour (180 minutes) work day, the worker produces her/his wage in 55 minutes and works 2 hours 5 minutes (125 minutes) for free for Husky Energy.
In an 8-hour (480 minutes) work day, the worker produces her/his wage in 2 hours 25 minutes (145 minutes) and works 5 hours 35 minutes (335 minutes) for free for Husky Energy.
In a 10-hour (600 minutes) work day, the worker produces her/his wage in 3 hours 2 minutes (182 minutes) and works 6 hours 58 minutes (418 minutes) for free for Husky Energy.
In a 12-hour (720 minutes) work day, the worker produces her/his wage in 3 hours 38 minutes (218 minutes) and works 8 hours 22 minutes (502 minutes) for free for Husky Energy.
In an 14-hour (840 minutes) work day, the worker produces her/his wage in 4 hours 15 minutes (255 minutes) and works 9 hours 45 minutes (585 minutes) for free for Husky Energy.
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).
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 of private-sector workers in Canada, Unifor) 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?
There exists a collective agreement, not specifically with Husky Energy, but with a consortium of capitalist companies, with Husky Energy as the leader of that consortium. The collective agreement pertains to the West White Rose Project. Here is some information about this project:
Husky Energy, on behalf of the West White Rose Project (WWRP) proponents, Husky, Suncor Energy Inc. (Suncor) and Nalcor Energy – Oil and Gas Inc. (Nalcor), is leading the development of the WWRP. The White Rose field and satellite extensions are located in the Jeanne d’Arc Basin, 350 km east of Newfoundland and Labrador in approximately 120 m of water.
The collective agreement is between WWRP Construction Employers’ Association and Council of Construction Trades (Council of Trade Unions), dated September 6, 2017 until “the mechanical completion of the project.”
On page nine of the collective agreement, we read the following:
Article5–Management Rights
51. The Contractors retain [sic] full and exclusive authority for the management of their business in all respects, subject to the provisions of this Agreement.
5.2 Without restricting the generality of the foregoing, it is agreed that it is the exclusive function of the Contractors:
a) To determine qualifications, skills, abilities and competencies of employees;
b) To determine the required number of employees;
c) to hire, assign work, monitor and manage productivity, promote, demote, lay-off, discipline and discharge employees for just cause and to increase or decrease the workforce from time to time;
d) to determine job competence, materials to be used, design of products, facilities and equipment required, to prescribe tools, methods of performing work and the location of equipment, the location of work is to occur, and the scheduling of work;
e) to establish, implement, monitor and enforce reasonable policies, procedures, rules and regulations to be observed by employees, and non-compliance may involve discipline, including dismissal, providing it doesn’t conflict with the Agreement.
It is agreed that the above list is not to be deemed to exclude other management functions and rights.
The above management rights clause undoubtedly expresses the democratic way of life–for employers. For workers, it expresses a dicatorship (see, for example, the above post on employers as dicators ), modified by but not alterning in any essential way the dictatorial power of employers to oppress and exploir “their” workers.
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?
I have not been able to find any specific information about the Council of Construction Trades, but I did find information about a similar organization, Canada’s Building Trade unions (CBTU), with various construction union affiliated to it. Its website contains the ususal union rhetoric and ideology about “fair treatment” and “decent pay and benefits,” “safe jobs and “respect and fair treatment.”
We are also active in the American Federation of Labor – Congress of Industrial Organizations (AFL-CIO), which works to ensure decent pay and benefits, safe jobs, respect and fair treatment for more than 12 million members of 56 unions throughout North America. [my emphasis]
What does the left do about such union rhetoric and ideology? Not much, it seems. Indeed, I had a so-called debate or discussion on a Marxist listserve with a supposed anti-capitalist. He implied that ideological criticism was a waste of time.
Other leftists often refer to union bureaucrats and their betrayal of the workers, but they do not provide any concrete basis for criticizing union ideology. Should not radical leftists try to create such a basis?
In a radical organiztion called Fightback, on May 26, 2021 (during the Covid pandemic) for example, we read the following:
The union bureaucracy, safely working from home with pay far higher than the workers they represent, has actively resisted any talk of work refusals. There have been waves of spontaneous refusals amongst teachers, transit, construction, and postal workers, but they have overwhelmingly been independent of the union structures. Often the bureaucracy unites with management to get workers back into an unsafe workplace while relegating the concerns to a committee that will take months to act.
Due to pressure from below, union leaders are belatedly coming to support demands for mass testing, increased physical distancing, sick days, and other reforms. But what is notable by its absence is any support for militant actions that could successfully achieve these reforms. The Canadian labour movement finds itself behind US labor where there have been teachers’ strikes against unsafe school openings and a wave of other disputes. In Britain, the teachers threatened to strike and forced the government into a humiliating climbdown.
This failure to support direct action has absolutely nothing to do with a supposed low level of class consciousness amongst the workers [my emphasis]. The workers are increasingly angry and willing to act. But this is hard to do while any mobilization is suppressed by the leadership. In the pandemic there has been a notable increase in class consciousness amongst the working class. Union density is up for the first time in a generation. This is partially due to the fact that lay-offs have been more pronounced in non-union workplaces, but there is also anecdotal evidence of union drives being more successful. The successful Toronto Aquarium drive is one example of this trend. During this drive management launched a textbook anti-union intimidation campaign. Usually this results in workers being scared into voting no, but this time it angered the workers so that more of them voted yes than signed union cards. Workers are more and more likely to want to join a union given the opportunity.
This pressure from below is sure to lead to an explosion in the labour movement, but for the present time the bureaucracy is doing everything it can to tighten the screws on the pressure cooker of the class struggle.
It is certainly true that union bureaucrats often experience working conditions different from rank-and-file union members, and this partially explains the behaviour of union bureaucrats. However, why is it that such union bureaucrats generally keep on getting elected as–union bureaucrats? The general nature of the relationship between unions and the collective-bargaining regime certainly has more to do with the situation than the working conditions of union bureaucrats. If members of Fightback beccame elected union representatives, they would be subject to the pressure to conform to the requirements of that regime. Is there any evidence that Fightback members who assume leadership roles in unions would act substantially differently than union bureaucrats?
Note also the idealization of the rank-and-file–it is the union bureaucracy that suppresses worker radicalism. Although there is undoubtedly some truth in this view, it does not address the limitations of many union members; most union members, at least in my experience, do not question their class situation. Many certainly have some bitter experiences that enable them to gain a sense that there is something wrong with the way they are treated, but it is rarely articulated into a more conscious and systematic form.
Furthermore, as I argued in another post (Amazon’s Exploitation and Super-exploitation of Workers: Both are Exploitation), many rank-and-file union members probably share a similar attitude towards working for an employer as Anna Luxemburg, a “seasonal” worker at Amazon does:
The two-tier system of workers at Amazon is primarily separated into ‘blue badges’ or permanent employees, and ‘white badges’ or seasonal ones, the latter of which make up over 70% of the workforce. Both categories perform the same tasks, yet the benefits they receive vary drastically. Full-time permanent workers enjoy a comprehensive package that includes dental and health insurance, education trainings, paid time off (PTO), job security, and more. Part-time permanent workers receive some, but not all, of these benefits. And seasonal employees? We get none.This is her primary complaint, it seems. She, like many other workers, implicitly uses the standard of better paid workers or workers with better benefits to point out that she and other “seasonal” workers are exploited:Seasonal, part-time, full-time – titles that seemingly distinguish different categories of workers in Amazon’s warehouses in Montreal. However, delve deeper and you’ll find that these labels, particularly the ‘seasonal’ one, often serve as a smokescreen to mask an exploitative labour system.Yes, Amazon’s use of the seasonal label undoubtedly is quite useful to exploit one set of workers to an een greater extent than is the case with the permanent workers (whether full-time or part-time). However, Ms. Luxemburg’s attitude is such that she neglects to consider that the permanent workers are themselves exploited. How else could she write the following? (emphases in bold are mine):It is through organized efforts, be it in the form of labor unions, collective bargaining, or even simply fostering a sense of solidarity and understanding, that we can shed light on the exploitative practices and press for fair treatment.
Collective action can not only ensure a fairer distribution of benefits and opportunities, but also create a more equitable and sustainable work environment. Together, we can challenge the precariousness of ‘seasonal’ employment, demand appropriate job security, and push for fair pay for all.
Are not permanent workers at Amazon also exploited? If so, how can they ever be treated fairly? How can they receive fair pay?
What is being done to develop working-class consciousness so that workers have a clearer view of their real situation? Marxists often refer to the exploitation of workers–but in a very vague manner. To counter the ideology of unions, it is necessary to develop more concrete analyses that indeed can counter such ideology. Are Marxists doing this to any significant sense?
Initial Data for the Calculation of Surplus Value (s) or Profit
I will first focus on the calculation of surplus value (s) or profit as far as possible and make adjustements as far as possible with the available data. I will then shift my focus to the calculation of variable capital (wages or salaries and benefits).
($million)
Revenue
Gross revenues 21,919
Royalties (335))
Marketing and other 668
Revenues, net of royalties 22,252 [21,919-315+668]
Expenses
Purchases of crude oil and products 14,555
Production, operating and transportation expenses (note 20) 2,803
Selling, general and administrative expenses (note 20) 654
Depletion, depreciation, amortization and impairment (note 9) 2,591
Exploration and evaluation expenses (note 8) 149
Gain on sale of assets (note 9) (4)
Other – net (note 9) (591)
20,157 [14,555+2,803+654+2,591+149-4-591=20,157]
Earnings from operating activities 2,095 [22,252-20,157=2,095]
Share of equity investment gain (note 11) 69
Financial items (note 21)
Net foreign exchange gains (losses) 14
Finance income 64
Finance expenses (314)
(236) [14+64-314=(236)]
Earnings before income taxes 1,928 [2095+69+14+64-314=1,928] [or: 2095+69-236=1,928]
Adjustments to Calculations
Why make any adjustments to the calculations used by the authors of the annual report? Marxian economics distinguishes between the actual situation–its essence, if you like–and appearances, which in a capitalist society often differ from the actual situation. can be very deceptive. Capitalist relations objectively distort the real nature of the kind of situation in which people find themselves. We need to adjust the calculations to transform the deceptive appearances into the actual situation.
I will make adjustments according to the order of the above data, with adjustments taking firstly into account only the main categories and then some of the subcategories.
First Adjustment of Surplus Value (s) (Profit)
The category “Royalties” involves a needed adjustment. According to one source on the Internet, the meaning of the category is:
| Business activity | Income statement presentation | Other comments |
| Royalty on product sold. Entity A pays in kind 30% of the sales proceeds to the government for each litre of product sold | The royalty should be excluded from the revenue recognised by the entity [IAS18.8] i.e., if gross sales were C100, and the royalty was C10, the reported revenue would be C90. | The royalty collected by the entity is received on behalf of the government. Entity A is acting as agent for the government. |
Accordingly:
First adjustment of Earnings before income taxes 2,263 [1,928+335]
No Need to Make an Adjustment to Surplus Value (s) (Profit) for Various Categories and Subcategories
Marketing and other
The category “Marketing and other” would require adjustment if it involved only the sale or purchase of commodities since in Marxian economics such expenses are costs from the point of the particular capitalist but really are paid out of surplus value from the class point of view. (I will go further into this issue further on). However, the annual report states the following about this category:
Any changes in commodity trading inventory fair value are included as gains or losses in Marketing and Other in the consolidated statements of income, during the period of change.
This category does not seem to reflect the commercial activities of workers; therefore, I leave it as is.
Other–net
The category “Other–net” could hide actual surplus value produced, so I looked a little further into this category. The category has a note associated with it, which reads:
As at December 31, 2018, the Company derecognized $56 million of assets damaged in the incident in the U.S. Refining and Marketing segment. In addition, the Company accrued pre-tax recoveries for property damage, rebuild costs, business interruption and clean-up costs associated with the Superior Refinery incident of $468 million for the year ended December 31, 2018, which is included in other-net in the consolidated statements of income.
I searched on the Internet for clarification concerning how losses due to damages that are covered by an insurance policy are recorded. I did not find anything that clarified it for me in a satisfactory manner, but I did find the following:
When faced with property damage and other losses that an entity has insured itself against, questions often arise with respect to the accounting for that property damage and any related insurance recoveries. Specifically, where a loss is sustained in one fiscal period, but the related insurance recovery is not received until the next fiscal period, questions arise about the timing and amount of potential insurance recoveries to be recorded.
It seems that Husky Energy sustained losses due to an incident at Suprior Refinery, and it claimed these losss (actual loss due to damage and ascribed loss due to loss in production and profits) as an expense during the year, and presumably it will in future receive funds from an insurance policy, which will be recorded when the funds are received–but not in 2018.
Although the actual and ascribed losses due not account for all of the amount of this category (56+468=524 when compared to 591), since there is no further information concerning this category, I will make no adjustements based on this category.
The next category–“Share of equity investment gain”–I excluded from any need for adjustment despite the need for such adjustments at times; the category refers, to joint ventures, and if it is impossible to distinguish the surplus value that arises due to the exploitation of workers by a particular company, then it should be excluded since the purpose of trying to calculate the rate of exploitation at the company level is to determine that rate for the specific workers which it exploits. In the case at hand, Husky Energy has a substantial controlling interest in such joint ventures even if not controlling interest.
The Note 11 is attached to this category. Here is part of what this note states:
Note 11 Joint Arrangements
Joint Operations
BP-Husky Refining LLC
The Company holds a 50 percent ownership interest in BP-Husky Refining LLC, which owns and operates the BP-Husky Toledo Refinery in Ohio.Sunrise Oil Sands Partnership
The Company holds a 50 percent interest in the Sunrise Oil Sands Partnership, which is engaged in operating an oil sands project in Northern Alberta.Joint Venture
Husky-CNOOC Madura Ltd.
The Company currently holds 40 percent joint control in Husky-CNOOC Madura Ltd., which is engaged in the exploration for and production of oil and gas resources in Indonesia.Husky Midstream Limited Partnership
On July 15, 2016, the Company completed the sale of its ownership interest in select midstream assets in the Lloydminster region of Alberta and Saskatchewan. The assets are held by a newly-formed limited partnership, HMLP, of which Husky owns 35 percent, Power Assets Holdings Ltd. (“PAH”) owns 48.75 percent and CK Infrastructure Holdings Ltd. (“CKI”) owns 16.25 percent.
Share of equity investment gain
The first subcategory under the category “Financial items”–“Net foreign exchange gains (losses)” –does not seem to require any adjustment in this instance. If more information were available, a case could be made to exclude it: It is unclear whether the change in the value of currency is due to the exploitation of its own workers or other workers–a very complicated issue that would require much more work and skill to address properly. It would be very difficult to separate out the exploitation of Husky workers and the exploitation of the class of workers.
Second Adjustment of Surplus Value (s) (Profit)
Finance income
The second subcategory under the category “Finanacial items”–“Finance income”–on the other hand requires an adjustment. Finance income is income that derived from the general exploitation of other workers and not specifically from Husky Energy’s own workers. Consequently, it must be deducted from “Earnings before taxes”:
Second adjustment of Earnings before income taxes 2,199 [2263-64]
Third Adjustment of Surplus Value (s) (Profit)
Finance expenses
The category “Finance expenses” needs to be transferred from an expense to actual surplus value produced but paid out as interest. I explained the reasoning for this in another post:
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); in such a case, the expense is deduced 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.
Accordingly, the $314 million paid out as interest needs to be added to $2.199 billion (“Earnings before income taxes”), with the following result (in millions of dollars, to make it consistent with the table above):
Earnings before income taxes $2,513.
Data for the Calculation of Variable Capital (v) or Salaries and Benefits
The category “Production, operating and transportation expenses” is broken down further into subcategories in the annual report and is relevant for determining variable capital (wages or salaries and benefits):
Production, Operating and Transportation Expenses
($ millions)
Services and support costs 1,039
Salaries and benefits 762
Materials, equipment rentals and leases 243
Energy and utility 405
Licensing fees 191
Transportation 24
Other 139
Total production, operating and transportation expenses 2,803 [1,039+762+243+405+191+24+139=2,803]
Hence, the initial data for variable capital is the following:
Salaries and benefits 762
The category “Selling, general and administrative expenses” is also further broken down into subcategories, one of which appears to be relevant for determining variable capital (wages or salaries and benefits).
Selling, General and Administrative Expenses
($ millions)
Employee costs(1) 332
Stock-based compensation expense(2) 44
Contract services 104
Equipment rentals and leases 39
Maintenance and other 135
Total selling, general and administrative expenses 654 [332+44+104+39+35=654]
Notes
(1) Employee costs are comprised of salary and benefits earned during the year, plus cash bonuses awarded during the year. Annual bonus awards settled in shares are included in
stock-based compensation expense.
(2) Stock-based compensation expense represents the cost to the Company for participation in share-based payment plans.
I will deal first with the subcategory “Share-based compensation expense;” it will involve a further adjustment in surplus value (s) or profit I will deal next with the subcategory “Employee costs” because this subcategory is much more difficult to treat–as we will see.
Fourth Adjustment of Surplus Value (s) (Profit)
Share-based compensation expense
I have been unable to reconcile the $44 million reported here with other numbers reported for items within this subcategory. Thus, the annual report also indicates the following, which contradicts the above $44 million:
Compensation of Key Management Personnel
($ millions)
Short-term employee benefits(1) 17
Stock-based compensation(2) 33
50
(1) Short-term employee benefits are comprised of salary and benefits earned during the year, plus cash bonuses awarded during the year. Annual bonus awards settled in shares
are included in stock-based compensation expense.
(2) Stock-based compensation expense represents the cost to the Company for participation in share-based payment plans.
I will assume that $44 million is the correct number without further argument; perhaps those with accounting skills can reconcile the two numbers.
This income needs to be transferred to surplus value (profit) as I argued in another post (see The Rate of Exploitation of Workers at Bombardier, 2018, One of the Largest Private Employers in Quebec and in Toronto, Ontario: Or: How Unionized Jobs are Not Decent or Good):
It seems clear that the money allocated to the category is limited to select employees. … The reasoning for including some (if not all) of it as part of surplus value is that this compensation is not mainly for the coordination of the work of others but for the exploitation of others–it is pure surplus value.
Accordingly:
Adjusted surplus value (s) or Earnings before income taxes $2, 557 (2,513+44)
Difficulties with the Calcuation of Variable Capital (v) or Salaries and Benefits
We see that there are two numbers that refer to the costs for the purchase of the labour power of workers: “Salaries and benefits” and “Employee costs.” It would seem that we could simply add the two together to obtain total variable. We will indeed do this, but there is also a logic for keeping the two separate–with implications for calculating the amount of surplus value; hence the reference above to a final adjustment of surplus value pertains only to the method that combines the two numbers into one total amount.
Since I will calculate variable capital both as a sum of the two parts and as composed only of “Salaries and benefits,” I will use two methods for calculating it.
Method I will simply combine the two–and that is all. I use the results from this method in order to retain some consistence in comparing the various rates of exploitation; other annual reports that I have used do not make any accounting distinction about the costs of production workers and the costs of workers involved in Selling, General and Administrative Expense.”
Method 2, by contrast, will include only “Salaries and benefits”and exclude “Employee costs” from the calculation of variable capital and, in fact, will be transferred to surplus value. The reason for doing so requires a detour into Marxian theory, but I will reserve that for two appendices. The first appendix discusses some theory concerning which workers produce surplus value. The second appendix is a compilaiton of some quotes from the third volume of Capital that may be relevant for addressing the issue; the appendices are not meant either to be exhaustive nor definitive.
Let us proceed to calculate variable capital and the rate of exploitations using the sum of “Salaries and benefits” and “Employee costs.”
Method 1 for the Calculation of Variable Capital (v) (Wages or Salaries and Benefits) and the Rate of Exploitation
Total salaries and benefits or Total employee costs 1094 [762+332]
The Rate of Exploitation of Husky Energy Workers, Method 1
To calculate the rate of surplus value, we need to relate “Adjusted surplus value (s) or Earnings before income taxes” to “Total salaries and benefits or total employee costs.” So, with the adjustments in place:, s= $2,513, and v=1,094. The rate of exploitation or the rate of surplus value=s/v=2,513/1094=230 percent.
This means that, in terms of money, $1 of wage or salary of a regular Husky Energy worker results in $2.30 Cn surplus value or profit for free. Alternatively, that means that for every hour worked that produces her/his wage, a worker at Husky Energy works around an additional 2 hours 18 minutes (138 minutes) for free for Husky Energy. Or, for every hour worked, a worker at Husky Energy works 18 minutes that produces her/his wage and 42 mintues for free for Husky Energy.
In a 3-hour (180 minutes) work day, the worker produces her/his wage in 55 minutes and works 2 hours 5 minutes (125 minutes) for free for Husky Energy.
In an 8-hour (480 minutes) work day, the worker produces her/his wage in 2 hours 25 minutes (145 minutes) and works 5 hours 35 minutes (335 minutes) for free for Husky Energy.
In a 10-hour (600 minutes) work day, the worker produces her/his wage in 3 hours 2 minutes (182 minutes) and works 6 hours 58 minutes (418 minutes) for free for Husky Energy.
In a 12-hour (720 minutes) work day, the worker produces her/his wage in 3 hours 38 minutes (218 minutes) and works 8 hours 22 minutes (502 minutes) for free for Husky Energy.
In an 14-hour (840 minutes) work day, the worker produces her/his wage in 4 hours 15 minutes (255 minutes) and works 9 hours 45 minutes (585 minutes) for free for Husky Energy.
I have used the lengths of the working day as 3, 8, 10, 12 and 14 hours because the length of the working day seems to vary:
I work from 8:00am till 4:00 PM
Full time at least 12 hours
10 hr days
Everyday 14 hours
8 to 10 hrs daily,
I’ve worked as little as 3 hours up to 12 hours. Variable as they need.
Nine hours a day with an hour unpaid lunch break.
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).
Method 2 for the Calculation of Variable Capital (v) (Wages or Salaries and Benefits) and the Rate of Exploitation
Adjusted surplus value (s) or Earnings before income taxes 2,845 [2,513+332]
Total salaries and benefits 762
The Rate of Exploitation of Husky Energy Workers, Method 2
To calculate the rate of surplus value, we need to relate “Adjusted surplus value (s) or Earnings before income taxes” to “Total salaries and benefits” So, with the adjustments in place:, s=2,845 and v=762. The rate of exploitation or the rate of surplus value=s/v=2,845/762=373 percent.
This means that, in terms of money, $1 of wage or salary of a regular Husky Energy worker results in $3.73 Cn surplus value or profit for free. Alternatively, that means that for every hour worked that produces her/his wage, a worker at Husky Energy works around an additional 3 hours 44 minutes (224 minutes) for free for Husky Energy. Or, for every hour worked, a worker at Husky Energy works 14 minutes that produces her/his wage and 46 mintues for free for Husky Energy.
In a 3-hour (180 minutes) work day, the worker produces her/his wage in 38 minutes and works 2 hours 22 minutes (142 minutes) for free for Husky Energy.
In an 8-hour (480 minutes) work day, the worker produces her/his wage in 1 hour 41 minutes (101 minutes) and works 6 hours 19 minutes (379 minutes) for free for Husky Energy.
In a 10-hour (600 minutes) work day, the worker produces her/his wage in 2 hours 7 minutes (127 minutes) and works 7 hours 53 minutes (473 minutes) for free for Husky Energy.
In a 12-hour (720 minutes) work day, the worker produces her/his wage in 2 hours 32 minutes (152 minutes) and works 9 hours 28 minutes (568 minutes) for free for Husky Energy.
In an 14-hour (840 minutes) work day, the worker produces her/his wage in 2 hours 58 minutes (178 minutes) and works 11 hours 2 minutes (662 minutes) for free for Husky Energy.
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).
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 of private-sector workers in Canada, Unifor) 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?
There exists a collective agreement, not specifically with Husky Energy, but with a consortium of capitalist companies, with Husky Energy as the leader of that consortium. The collective agreement pertains to the West White Rose Project. Here is some information about this project:
Husky Energy, on behalf of the West White Rose Project (WWRP) proponents, Husky, Suncor Energy Inc. (Suncor) and Nalcor Energy – Oil and Gas Inc. (Nalcor), is leading the development of the WWRP. The White Rose field and satellite extensions are located in the Jeanne d’Arc Basin, 350 km east of Newfoundland and Labrador in approximately 120 m of water.
The collective agreement is between WWRP Construction Employers’ Association and Council of Construction Trades (Council of Trade Unions), dated September 6, 2017 until “the mechanical completion of the project.”
On page nine of the collective agreement, we read the following:
Article5–Management Rights
51. The Contractors retain [sic] full and exclusive authority for the management of their business in all respects, subject to the provisions of this Agreement.
5.2 Without restricting the generality of the foregoing, it is agreed that it is the exclusive function of the Contractors:
a) To determine qualifications, skills, abilities and competencies of employees;
b) To determine the required number of employees;
c) to hire, assign work, monitor and manage productivity, promote, demote, lay-off, discipline and discharge employees for just cause and to increase or decrease the workforce from time to time;
d) to determine job competence, materials to be used, design of products, facilities and equipment required, to prescribe tools, methods of performing work and the location of equipment, the location of work is to occur, and the scheduling of work;
e) to establish, implement, monitor and enforce reasonable policies, procedures, rules and regulations to be observed by employees, and non-compliance may involve discipline, including dismissal, providing it doesn’t conflict with the Agreement.
It is agreed that the above list is not to be deemed to exclude other management functions and rights.
The above management rights clause undoubtedly expresses the democratic way of life–for employers. For workers, it expresses a dicatorship (see, for example, the above post on employers as dicators ), modified by but not alterning in any essential way the dictatorial power of employers to oppress and exploir “their” workers.
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?
I have not been able to find any specific information about the Council of Construction Trades, but I did find information about a similar organization, Canada’s Building Trade unions (CBTU), with various construction union affiliated to it. Its website contains the ususal union rhetoric and ideology about “fair treatment” and “decent pay and benefits,” “safe jobs and “respect and fair treatment.”
We are also active in the American Federation of Labor – Congress of Industrial Organizations (AFL-CIO), which works to ensure decent pay and benefits, safe jobs, respect and fair treatment for more than 12 million members of 56 unions throughout North America. [my emphasis]
What does the left do about such union rhetoric and ideology? Not much, it ssems.
In a radical organiztion called Fightback, on May 26, 2021 (during the Covid pandemic) for example, we read the following:
The union bureaucracy, safely working from home with pay far higher than the workers they represent, has actively resisted any talk of work refusals. There have been waves of spontaneous refusals amongst teachers, transit, construction, and postal workers, but they have overwhelmingly been independent of the union structures. Often the bureaucracy unites with management to get workers back into an unsafe workplace while relegating the concerns to a committee that will take months to act.
Due to pressure from below, union leaders are belatedly coming to support demands for mass testing, increased physical distancing, sick days, and other reforms. But what is notable by its absence is any support for militant actions that could successfully achieve these reforms. The Canadian labour movement finds itself behind US labor where there have been teachers’ strikes against unsafe school openings and a wave of other disputes. In Britain, the teachers threatened to strike and forced the government into a humiliating climbdown.
This failure to support direct action has absolutely nothing to do with a supposed low level of class consciousness amongst the workers [my emphasis]. The workers are increasingly angry and willing to act. But this is hard to do while any mobilization is suppressed by the leadership. In the pandemic there has been a notable increase in class consciousness amongst the working class. Union density is up for the first time in a generation. This is partially due to the fact that lay-offs have been more pronounced in non-union workplaces, but there is also anecdotal evidence of union drives being more successful. The successful Toronto Aquarium drive is one example of this trend. During this drive management launched a textbook anti-union intimidation campaign. Usually this results in workers being scared into voting no, but this time it angered the workers so that more of them voted yes than signed union cards. Workers are more and more likely to want to join a union given the opportunity.
This pressure from below is sure to lead to an explosion in the labour movement, but for the present time the bureaucracy is doing everything it can to tighten the screws on the pressure cooker of the class struggle.
It is certainly true that union bureaucrats often experience working conditions different from rank-and-file union members, and this partially explains the behaiour of union bureaucrats. However, why is it that such union bureaucrats generally keep on getting elected as–union bureaucrats? The general nature of the relationship between unions and the collective-bargaining regime certainly has more to do with the situation than the working conditions of union bureaucrats. If members of Fightback beccame elected union representatives, they would be subject to the pressure to conform to the requirements of that regime. Is there any evidence that Fightback members who assume leadership roles in unions would act substantially differently than union bureaucrats?
Note also the idealization of the rank-and-file–it is the union bureaucracy that suppresses worker radicalism. Although there is undoubtedly some truth in this view, it does not address the limitations of many union members; most union members, at least in my experience, do not question their class situation. Many certainly have some bitter experiences that enable them to gain a sense that there is something wrong with the way they are treated, but it is rarely articulated into a more conscious and systematic form.
Furthermore, as I argued in another post (Amazon’s Exploitation and Super-exploitation of Workers: Both are Exploitation), many rank-and-file union members probably share a similar attitude towards working for an employer as Anna Luxemburg, a “seasonal” worker at Amazon does:
The two-tier system of workers at Amazon is primarily separated into ‘blue badges’ or permanent employees, and ‘white badges’ or seasonal ones, the latter of which make up over 70% of the workforce. Both categories perform the same tasks, yet the benefits they receive vary drastically. Full-time permanent workers enjoy a comprehensive package that includes dental and health insurance, education trainings, paid time off (PTO), job security, and more. Part-time permanent workers receive some, but not all, of these benefits. And seasonal employees? We get none.This is her primary complaint, it seems. She, like many other workers, implicitly uses the standard of better paid workers or workers with better benefits to point out that she and other “seasonal” workers are exploited:Seasonal, part-time, full-time – titles that seemingly distinguish different categories of workers in Amazon’s warehouses in Montreal. However, delve deeper and you’ll find that these labels, particularly the ‘seasonal’ one, often serve as a smokescreen to mask an exploitative labour system.Yes, Amazon’s use of the seasonal label undoubtedly is quite useful to exploit one set of workers to an een greater extent than is the case with the permanent workers (whether full-time or part-time). However, Ms. Luxemburg’s attitude is such that she neglects to consider that the permanent workers are themselves exploited. How else could she write the following? (emphases in bold are mine):It is through organized efforts, be it in the form of labor unions, collective bargaining, or even simply fostering a sense of solidarity and understanding, that we can shed light on the exploitative practices and press for fair treatment.
Collective action can not only ensure a fairer distribution of benefits and opportunities, but also create a more equitable and sustainable work environment. Together, we can challenge the precariousness of ‘seasonal’ employment, demand appropriate job security, and push for fair pay for all.
Are not permanent workers at Amazon also exploited? If so, how can they ever be treated fairly? How can they receive fair pay?
What is being done to develop working-class consciousness so that workers have a clearer view of their real situation? Marxists often refer to the exploitation of workers–but in a very vague manner. To counter the ideology of unions, it is necessary to develop more concrete analyses that indeed can counter such ideology. Are Marxists doing this to any significant sense?
Appendix I
A Theoretical Interlude Concerning Productive and Unproductive Labour
Not all labour perfrmed in a capitalist society produces value and surplus value. For example, state workers, unless they form part of state operations that involve the sale of output, produce value. In that sense, they are unproductive workers, not because they do not produce something useful, but because, on the one hand, they do not produce any value or surplus value and, on the other hand, the source of their wages is not reproduced in the performance of their labour but is derived from another source–in the case of state workers, from taxes.
For commercial and administrative workers, who engage in the work of buying and selling (and related work such as accounting and bookeeping), similarly, their function is to transfer already produced value and surplus value or to record such transfers, and their salary or wages and benefits are derived from surplus value–it is a deduction from the total surplus value produced from the class or aggregate point of view. From the commercial capitalist’s point of view, of course, the salary or wages and benefits of its workers constitute a cost, but just like interest, it is necessary to treat the category from the macro or class point of view and not the distorted micro point of view of the commercial capitalist.
We can look at it from another point of view. Workers who work for the government, unless they work for a commercial state enterrprise, do not produce something that results in the recouping of their wage through the sale of the commodity (whether a product or service). Some other source must be found to continuously pay for their wages. That source in this instance is taxes.
The same applies to commercial and administrative workers. Their work accomplishes something–the transfer of property from one person to another–but their work does not change the value of what is produced. Another source must be found to pay continuously for their wages. That source in this instance is surplus value.
Thus, although they are wages from the point of view of the workers and indeed from the point of view of the commercial capitalists who hire them (whether as pure commercial capitalists or, as in this instance, as part of operations that involve the production of surplus value), they need to be added to surplus value. Of course, the capitalist has an interest in reducing such an expense since such a reduction in costs or expenses increases the amount of net surplus value available; hence, the capitalist acts towards commerical workers in a similar manner to workers who produce surplus value.
There is an objection to this line of reasoning, of course. Thus, Edward N. Wolff (1994), in his article “Is a Discussion of Unproductive Labor Still Productive? (pages 204-210, Science & Society, Volume 58, Number 2), argues the following on page 208:
My argument for its [unproductive capital and labour] inclusion is that from the capitalist’s point of view, payment for unproductive labor constitutes a cost just as much as wages paid to productive labor.
Yes, from the point of view of the individual capitalist, it is indeed a cost. His justification for including salary or wages and benefits relates to the calculation of the rate of profit, which requires consideration of the organic composition of capital (simplified, the proportion of constant capital to variable capital (c/v) or, sometimes, the proportion of constant capital to total capital invested (c/(c+v). As Wofff says:
The issue of whether to include unproductive capital and labor in the definition of the organic composition is the debatable point.
Since I am trying to calculate the rate of exploitation (which excludes constant capital from consideration since it is the ratio s/v) and not the rate of profit (which includes it since the rate of profit is calculated as s/(c+v), the issue seems to be moot. I will leave the issue there for now except to object to Wolff’s reasoning for its inclusion. He states the following, pages 208-09:
Forces of competition necessitate that the capitalist obtain the average rate of return on the capital advanced to unproductive labor. Moreover, unproductive constant capital, the inputs and capital stock employed in unproductive activity, should likewise be included in the definition of the organic composition, since the capitalist expects the normal rate of return on this capital. Thus, from the point of view of the capitalist rate of profit, the wages paid to unproductive labor and the expenditures on unproductive capital should enter cost, not surplus value, and thus unproductive wages should be included in variable capital and unproductive capital in constant capital.
I remain unconvinced by this argument. Considerations of the normal rate of profit relate, not just to the production of surplus value but to its distribution of surplus value as well. Capitalists whose workers produce surplus value may have some of their surplus value transferred to other capitalists or, alternatively, may receive additional surplus value, depending on whether the organic composition of capital is lower than average or higher than average if there is to be an average rate of profit. This issue has to do with the distribution of surplus value and not its production. and the issue in the first instance is the production of surplus value, with its distribution being at a different level of analysis.
However, in the case of pure bank workers or commercial workers, who are all unproductive workers, there would be 0 exploitation since all of their wages derive from surplus value (although that too is debatable given that banks extend credit to workers as well). In such a case, capitalists exploit their workers to the extent that they use them to obtain part of the surplus value produced elsewhere. They do not produce surplus value, but they probably perform surplus labour (it is both in the interests of capitalists in these sectors to obtain as much labour as possible at a minimum cost, and there are competitive pressures to do so).
Given that the workers who are represented by the subcategory “Employee costs” do not produce surplus value but are nevertheless probably exploited, I have decided to calculate the rate of exploitation by both excluding them from the calculation (primary exploitation) and including them (secondary exploitation). The justirication for excluding them is as above: the focus should be in the first instance on the production of surplus value. The justification for including their costs as part of variable capital is both that they are costs for this particular capitalist company and that they are probably exploited by it (even if they do not produce surplus value). (Merely being a cost at the micro level is obviously insufficient since interest is a cost at this level.) Furthermore, by including them and excluding them, we can note the impact of doing so on the calculation of the rate of exploitation.
A final justification for including such costs in the rate of exploitation is the nature of exploitation: it is a class phenomenon and not just a phenomenon limited to a particular capitalist. From George Panichas (1981), “Vampires, Werewolves and Economic Exploitation,” in pages 223-242, Social Theory and Practice, Volume 7, Number 2, pages 235-36:
But Marx’s conviction is that the capitalist mode of production is economically exploitative precisely becausc of socioinstitutional roles–that is, the class affiliations of the persons involved. Thus the phrase “economic exploitation” in Marx is descriptive of a set of institutional relationships at a different level of generalization than when the phrase is used to descrihe what happens between thieves and their victims. To expand on what was stated earlier, it is workers as members of the working class who are economically exploitcd by capitalists as members of the capitalist class and this makes economic exploitation descriptive of relationships which are “qualitatively different” from
the relationships of simple exchange bctween frecly consenting individuals. Economic exploitation in the capitalisl mode of production is class exploitation and thus thief/victim or actor/agent models arc inappropriate to it because these models arc meaningfully
applied to cases where the class affilitation of the involved parties is irrelevant to the fact of economic exploitation. And these models arc misleading because their inapplication to class exploitation creates the false impression that the only kind of economic cxploitation which is possible is that which occurs between isolated, autonomous individuals. Thus to speak of economic exploitation of one worker (or even one group of workers) by one capitalist is to misunderstand Marx’s concept of economic exploitation and its application.
I have tried to calculate the rate of exploitation of workers in specific companies while excluding consideration of the necessary exploitation of workers by other capitalists (hence–I have excluded surplus value derived from joint ventures where the particular company does not share a substantial share of investment). The focus has indeed been the exploitation of a particular set of workers to the exclusion of workers exploited by other companies and sectors since the purpose of calculating the rate of exploitation at the micro level has been political–to challenge the social-democratic rhetoric of “decent work,” “fair contracts” and the like. This should not be interpreted as excluding the wider issue of class exploitation. Indeed, one of the reasons for including these workers in the calculation of a secondary rate of exploitation is that they are likely exploited by performing surplus labour even though they do not produce surplus value. both work for the same company. Another reason is that they work for the same employer as the productive workers.
One of the logical reasons for not considering exchange relations as relevant for determining the rate of exploitation is Marx’s denial that we can explain surplus value on the basis of exchange (or indeed on distribution), as Panichas points out:
Marx believes economic exploitation under capitalism to be fundamentally a phenomenon of production, not of exchange or distribution.
Although that is generally correct in terms of the source of surplus value but the issue is more complicated than that since workers who work in exchange may not produce surplus value (and this is why Marx focused on production in volume one of Capital, workers who work in exchange can certainly be exploited in that the capitalist obtains a surplus labour, but this surplus labour serves to reduce the costs to the particular capitalist and to the capitalist class as a whole in terms of exchange costs–but these exchange costs are all deductions economically from the value (including surplus value) produced in production.
If exploitation only occurred in the production of surplus value, then peasants in the Middle Ages who worked for a feudal lord would never be exploited since peasants did not necessarily produce anything for sale–what they produced had no value in the Marxian sense.
One final point: Another issue arises from part of the quote of Wolff above:
Moreover, unproductive constant capital, the inputs and capital stock employed in unproductive activity, should likewise be included in the definition of the organic composition, since the capitalist expects the normal rate of return on this capital.
I also remain unconvinced by this argument. Merely because the particular “capitalist expects the normal rate of return on this capital” hardly justifies including “in the definition of the organic composition” objectively; such an approach simply identifies the subjective views of capitalist with the objective process of producing value and surplus value and converting it into the form of money and the conversion of money into commodities; it is to collapse production and exchange into one uniform category.
Consequently, logically, as far as I can see, if I calculate the rate of exploitation by only considering the exploitation of workers who produce surplus value, then I should only include the means of production which they use and exclude other means that are used to either convert money into commodities or commodities into money.
If I include workers who do not produce surplus value in the calculation of the rate of exploitation, then I should include the means used by such workers in the calculation of the rate of exploitaition.
I will not, however, consider–with the already accounted-for exception of the subcategory “Stock-based compensation expense”–the other subcategories of the category “Selling, General and Administrative Expenses.”
The subcategories “Contract services” and “Maintenance and other” do not, it seems to me, involve in any obvious way the means used by unproductive workers; to make such a conclusion would require more detailed data; I will not consider them to be a deduction from surplus value.
As for the subcategory “Equipment rentals and leases,” the annual report does not elaborate on what that involves. There could be made a case to exclude this subcategory from consideration since they may be unproductive means used by workers who work to purchase or sell commodities (and related work, such as bookkeeping), but it is unclear whether that is so. Consequently, I will not consider this subcategory either as a deduction from surplus value.
Appendix II
I have compiled some quotes from volume three of Capital in pagination order without comment that may be relevant for the issue of whether commercial and adminsitrative workers produce value and surplus value. It is not meant to be definitive for that volume nor for Marx’s work in general. Marx’s Theories of Surplus Value in particular would also be relevant.
Page 406:
From one point of view, a commercial employee of this kind is a wage-labourer like any other. Firstly, in so far as his labour is bought with the merchant’s variable capital, not with money that he spends as revenue; it is bought, in other words, not for a personal
service but for the purpose of valorizing the capital advanced in it. Secondly, in so far as the value of his labour-power, and therefore his wage, is determined, like that of all other wage labourers, by the production and reproduction costs of this particular labour-power and not by the product of his labour. But there is necessarily the same difference between him and the workers directly employed by industrial capital as there is between
industrial capital and commercial capital, and consequently between the industrial capitalist and the merchant. Since the merchant, being simply an agent of circulation, produces neither value nor surplus-value (for the additional value that he adds to
commodities by his expenses is reducible to the addition of previously existing value, even though the question still arises here as to how he maintains and conserves the value of this constant capital), the commercial workers whom he employs in these same functions cannot possibly create surplus-value for him directly.
Pages 407-408:
It is only by way of its function in the realization of values that commercial capital functions as capital in the reproduction process, and therefore draws, as functioning capital, on the surplus-value that the total capital produces. For the individual
merchant, the amount of his profit depends on the amount of capital that he can employ in this process, and he can employ all the more capital in buying and selling, the greater the unpaid labour of his clerks. The very function by virtue of which the commercial capitalist’s money is capital is performed in large measure by his employees, on his instructions. Their unpaid labour, even though it does not create surplus-value, does create
his ability to appropriate surplus-value, which, as far as this capital is concerned, gives exactly the same result; i.e. it is its source of profit. Otherwise the business of commerce could never be conducted in the capitalist manner, or on a large scale.Just as the unpaid labour of the worker creates surplus-value for productive capital directly, so also does the unpaid labour of the commercial employee create a share in that surplus-value for commercial capital.
The difficulty is rather as follows. Since the labour-time and labour of the merchant himself is not value-creating labour, even though it procures him a share in the surplus-value already produced, what is the situation with the variable capital that he lays out on the purchase of commercial labour-power? Should this variable capital be included as part of the cost of the outlay of the commercial capital the merchant has advanced? If not, this
would seem to contradict the law of the equalization of the profit rate; what capitalist would advance 150, if he could reckon only 100 of it as capital advanced ? If it is included, however, this would seem to contradict the very nature of commercial capital, since this kind of capital does not function as capital by setting the labour of others in motion, in the manner of industrial capital, but rather by itself working, i.e. itself performing the functions of buying and selling, and it is precisely in this way that it transfers to itself a part of the surplus-value the industrial capital has created.
Page 413:
It is necessary therefore to employ commercial workers who make up a proper commercial office. The expenditure on this, even though incurred in the form of wages, is distinct from the variable capital laid out on the purchase of productive labour. It increases the outlays of the industrial capitalist, the mass of capital he has to advance, without directly increasing the surplus-value. For this is an outlay for labour employed simply in realizing values already created. Just like other outlays of the same kind, this too reduces the rate of profit, because the capital advanced grows, but not the surplus-value.
Page 414:
The commercial worker does not produce surplus-value directly. But the price of his labour is determined by the value of his labourpower, i.e. its cost of production, although the exercise of this labour-power, the exertion, expenditure of energy and wear and tear it involves, is no more limited by the value of his labourpower than it is in the case of any other wage-labourer. His wage therefore does not stand in any necessary relationship to the amount of profit that he helps the capitalist to realize. What he costs the capitalist and what he brings in for him are different quantities. What he brings in is a function not of any direct creation of surplus-value but of his assistance in reducing the cost of realizing surplus-value, in so far as he performs labour (part of it unpaid). The commercial worker proper belongs to the betterpaid class of wage-labourer; he is one of those whose labour is skilled labour, above-average labour. His wage, however, has a tendency to fall, as the capitalist mode of production advances, even in relation to average labour.
Page 416:
To industrial capital, the costs of circulation appear as expenses, which they are. To the merchant, they appear as the source of his profit, which – on the assumption of a general rate of profit – stands in proportion to the size of these costs. The outlay that has
to be made on these circulation costs is therefore a productive investment as far as commercial capital is concerned. For it, therefore, the commercial labour that it buys is also directly productive.
The Abolitionary 