A Short List of the Largest Swedish Employers by the Number of Employees, Profits and the Profits per Worker

The following provides a few statistics about the number of employees, the profit produced by the Swedish workers and the profit produced per worker of the largest employers in Sweden–often one of the idealized countries of the social-democratic left, where free public services are more extensive than in many other developed capitalist countries. 

It can be found at the following site: The Twenty Largest Swedish Employers by the Number of Employees, Profit and Turnover (Revenue).

Please note that the specific employers, the order of employers and the statistics may be different from those indicated below since the website is occasionally updated. Between the time I  started to work on this post and its posting, some of the employers had changed and so too had the numbers; I had to add some employers’ names and delete others as well as recalculate everything,

I will start with conclusions first and then proceed to the statistics and calculations on which the conclusions are based.

Conclusions First

The above workers in the last table, then, on average, produced $62,893 free of charge to the Swedish employers in one year. Sweden, despite greater access to free public services, is characterized by systemic exploitation of the working class. Furthermore, it is characterized by oppression of these workers even when workers are producing the equivalent of their own wage rather than producing a profit (or surplus value) for the employer (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation).  

The purpose of the above is mainly to highlight that the social-democratic heaven of Sweden is hardly the heaven painted by social democrats or social reformers. In Sweden, like other capitalist countries, workers are used as means to obtain more money (see The Money Circuit of Capital). They are both exploited (perform more work than is necessary to produce the equivalent of their own wage), and they are oppressed (subject to the dictates of their employer–both when they produce the equivalent of their wage and when they produce a surplus value for free for the employer (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation). 

The expansion of free public services and systematic exploitation of workers can go hand in hand. Social democrats, however, often present the expansion of free public services as the solution to the social problems that we face (see, for example, A Basic Income Versus the Expansion of Public Services? Part One: Critique of the Social-democratic Idea that the Expansion of Public Services is Socialist). However, the expansion of free public services could form part of the solution–if it is linked to a movement for the abolition of the power of the class of employers and not just as the solution to the problems we face. 

Data on Swedish Employers

The Largest Employers in Sweden According to the Number of Employees

 
  Company       Number of employees  
 

1

Securitas AB   302 055 ChangeValue
 

2

H & M Hennes & Mauritz AB   126 376 ChangeValue
 

3

Ericsson, Telefon AB LM     94 503 ChangeValue
4 Volvo, AB   93 731 ChangeValue
5 Assa Abloy AB   48 992 ChangeValue
6 Electrolux, AB   48 652 ChangeValue
7 Scania CV AB     47 489 ChangeValue
8 Scania AB     47 489 ChangeValue
9 Essity AB   45 980 ChangeValue
10 SKF, AB   41 559 ChangeValue
11 Volvo Car AB     41 517 ChangeValue
12 Sandvik AB   41 120 ChangeValue
13 Atlas Copco AB     37 805 ChangeValue
14 Skanska AB   34 756 ChangeValue
15 Carl Bennet AB     28 825 ChangeValue
16 PostNord AB   28 627 ChangeValue
17 Loomis AB   24 895 ChangeValue
18 ICA Gruppen AB     23 125 ChangeValue
19 Trelleborg AB   22 952 ChangeValue
20 Axel Johnson Holding AB   22 291 ChangeValue

Some explanations are in order since some of the companies seem to be repeated.

  1. From Wikipedia: “The heavy truck and construction equipment conglomerate AB Volvo and Volvo Cars have been independent companies since AB Volvo sold Volvo Cars to the Ford Motor Company in 1999.”
  2. According to Prospectus Scania (1999): “The principal subsidiary of Scania AB is Scania CV AB. It is a wholly-owned subsidiary of Scania AB and comprises all Scania operations outside Latin America.” Hence, it would seem that for the purposes of the statistics Scania CV AB and Scania AB are identical. That is why I included 21 companies–they ar

A further measure is according to profit on the same webpage: I modify it somewhat to make it more meaningful for Canadian workers.

The Largest Employers in Sweden According to the Amount of Profit

 
  Company       Net profit (×1000) SEK (SEK is the Swedish Krona or unit of money,  around $0.14 Canadian, $0.11 US,  $0.10 Euro-, 0.08 pounds, -so roughly divide by 7, 9, 10, or  12.5, respectively, to get a Canadian, US, Euro or pound  equivalent), Net profit, billions of Canadian dollars  (dividing net profit in kronas by 7 and x 1000)
 

1

Investor AB   102 650 000 $14.664286ChangeValue
 

2

Volvo, AB   46 832 000 ChangeValue$6.6690286
 

3

AstraZeneca AB   37 436 000 ChangeValue$5.348000
4 Industrivärden, AB   29 930 000 $4.275714ChangeValue
5 L E Lundbergföretagen AB   23 335 000 ChangeValue$3.333571
6 Kinnevik AB   21 573 000 ChangeValue$3.081857
7 Atlas Copco AB     21 572 000 ChangeValue$3.081714
8 Melker Schörling AB   20 013 000 ChangeValue$2.859000
9 Melker Schörling Tjänste AB   20 013 000 $2.859000ChangeValue
10 SCA, Svenska Cellulosa AB   19 539 000 ChangeValue$2.791286
11 Lundin Energy AB   18 885 500 ChangeValue$2.697929
12 Arrow AB   18 725 220 ChangeValue$2.675031
13 Vattenfall AB     18 322 000 ChangeValue$2.617429
14 H & M Hennes & Mauritz AB   17 391 000 ChangeValue$2.484429
15 Scania CV AB     16 476 000 ChangeValue$2.353714
16 Scania AB     16 476 000 ChangeValue$2.353714
17 Erik Selin Fastigheter AB     16 289 589 ChangeValue$2.327084
18 Assa Abloy AB   13 571 000 ChangeValue$1.938714
19 Volvo Car AB     13 168 000 ChangeValue$1.881143
20 Essity AB   13 040 000 $1.862857ChangeValue
 

If we combine the two tables and add some readily available data from the website that is not indicated in the two tables above–that is to say, look at companies where information is readily available both for the number of employees and for the net profit (some of the companies lack data for both the number of employees and the amount of net profit)–we can get an idea of the extent of exploitation in terms of the amount of profit generated per worker for each company as well the average amount of net profit produced (or appropriated) per worker.

I address some objections to this calculation after the tables. I calculated the Canadian equivalent (far right).

The Largest Employers According to Profit Produced or Appropriated Per Worker in Sweden

 
  Company Net profit (×1000) SEK   Number of employees Net Profit per worker SEK  Net Profit per worker (in Canadian dollars) (dividing net profit in Kronas by 7)
 

1

Investor AB 102 650 000 15,560 6,597,000ChangeValue ChangeValue$942,429
 

2

AstraZeneca AB 37 436 000 6,150 6,087,000ChangeValue ChangeValue$869,571
 

3

SCA, Svenska Cellulosa AB 19,539,000 4,253 4,594,000ChangeValue ChangeValue$656,286
4 Vattenfall AB 18,322,000 19.997 916,000ChangeValue ChangeValue$130,857
5 Atlas Copco AB 21,572,000 37,805  571,000ChangeValue ChangeValue$81,571
6 Volvo, AB 46,832,000 93,731 500,000ChangeValue ChangeValue$71,429
7  Scania CV AB 16,476,000   47,489 347,000 ChangeValue$49,571
8 Volvo Car AB 13,168,000 41,517  317,000ChangeValue ChangeValue$45,286
9  Sandvik AB 12,150,000 41,120 295,000ChangeValue ChangeValue$42,143
10 Essity AB 13,040,000 45,980 284,000ChangeValue ChangeValue$40,571
11 Assa Abloy AB 13,571,000  48,992  277,000ChangeValue ChangeValue$39,571
12  Skanska AB 7,340,000 34,756 211,000ChangeValue ChangeValue$30,143
13  SKF, AB 8,469,000   41,559 204,000ChangeValue ChangeValue$29,143
14 ICA Gruppen AB 4,402,000 23,125 190,000ChangeValue ChangeValue$27,143
15 Carl Bennet AB 5,,124,000   28,825 178,000ChangeValue ChangeValue$25,429
16 H & M Hennes & Mauritz AB 17,391,000    126,376 138,000ChangeValue ChangeValue$19,714
17 Axel Johnson Holding AB 2,237,000 22,291 100,000 ChangeValue$14,286ChangeValue
18 Ericsson, Telefon AB LM 8,762,000 94,503 93,000ChangeValue ChangeValue$13,286
19 Loomis AB 2,210,000   24,895

89,000

ChangeValue

ChangeValue$12,714
20 Electrolux, AB 2,456,000 48,651  50,000 ChangeValue$7,143

In terms of total profit per worker for all the above workers, if we sum up total profits and total employees and divide total profits by total employees, we obtain: 

Total profit: 373,147,000×1000 SEK; /7=$53.306714290 billion Canadian dollars 
Total #Employees: 847,575
Total profit per worker: 53.30671429/847,575=$62,893 per worker. The above workers in the last table, then, on average, produced $62,893 free of charge to the Swedish employers in one year. Sweden, despite greater access to free public services, is characterized by systemic exploitation of the working class. Furthermore, it is characterized by oppression of these workers even when workers are producing the equivalent of their own wage rather than producing a profit (or surplus value) for the employer (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation).  

Some Marxists will claim that this is unscientific since many factors are excluded from consideration(such as the difference between values and prices of production, a difference that I addressed, in a preliminary way, in my comment to the post The Rate of Exploitation of Workers at Air Canada, One of the Largest Private Employers in Canada. Given the large difference in profit per worker in the first and twentieth company, divergences may be great, but without further data (the level of investment in means of production, raw materials, auxiliary materials and the like), any further refinement is impossible.

Objections to the limited nature of the data are valid.

However, my answer to its limited nature is; it is better to estimate profit per worker than not provide anything. If more accurate calculations are then provided later on, all the better. But in the meantime, at least we have an idea of the extent of exploitation of workers. Calculation of the rate of exploitation, which involves profit divided by wage, of course, would require data on wages in these companies. More accurate statistics and more refined analyses would be most welcome.

The purpose of the above is mainly to highlight that the social-democratic heaven of Sweden is hardly the heaven painted by social democrats or social reformers. In Sweden, like other capitalist countries, workers are used as means to obtain more money (see The Money Circuit of Capital). They are both exploited (perform more work than is necessary to produce the equivalent of their own wage), and they are oppressed (subject to the dictates of their employer–both when they produce the equivalent of their wage and when they produce a surplus value for free for the employer (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation). 

The expansion of free public services and systematic exploitation of workers can go hand in hand. Social democrats, however, often present the expansion of free public services as the solution to the social problems that we face (see, for example, A Basic Income Versus the Expansion of Public Services? Part One: Critique of the Social-democratic Idea that the Expansion of Public Services is Socialist). However, the expansion of free public services could form part of the solution–if it is linked to a movement for the abolition of the power of the class of employers and not just as the solution to the problems we face. 

The Rate of Exploitation of the Workers of Toronto-Dominion Bank (TD Bank), One of the Largest Private Employers in Canada

Introduction

In two others posts I presented the twenty largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada) and the twenty largest employers in Canada according to profit (see A Short List of the Largest Private Employers in Canada, According to Profit).

I have tried to calculate the rate of exploitation of workers of Magna International in an earlier post (see The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One); Magna International is one of the largest employers in Toronto. I also calculated the rate of exploitation of workers at the Canadian Imperial Bank of Commerce (CIBC) (see ???).

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 Toronto and 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.

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.

We have the following:

Adjusted income before income taxes=s= $13,570
Adjusted total salaries and employee benefits=v=$10,997

The rate of exploitation or the rate of surplus value of Toronto Dominion Bank workers is =s/v=13,570/10,997=123 percent.

That means that for every hour worked that is equivalent to her/his wage, a worker at TD Bank works around an additional 74 minutes for free for TD Bank. Alternatively, this means that, in terms of money, $1 of wage or salary of a regular TD Bank worker results in $1.23 surplus value or profit for free (calculated on the basis of the procedure outlined in the post on the rate of exploitation of Canadian Imperial Bank of Commerce bank workers).

It also means the following (I use minutes as well as hours):

  1. For a 6.5 hour working day (390 minutes), TD Bank workers spend 174 minutes (2 hours 54 minutes) to obtain their wage for the day, and they spend 216 minutes (3 hours 36 minutes) in obtaining a surplus value or profit for TD Bank.
  2. For a 7.5 hour working day (450 minutes), TD Bank workers spend 201 minutes (3 hours 21 minutes) to obtain their wage for the day, and they spend 249 minutes (4 hours 9 minutes) in obtaining a surplus value or profit for TD Bank.
  3. For an 8-hour working day (480 minutes), TD Bank workers spend 214 minutes (3 hours 34 minutes) to obtain their wage for the day, and they spend 266 minutes (4 hours 26 minutes) in obtaining a surplus value or profit for TD Bank.
  4. For an 8.5 hour working day (510 minutes), TD Bank workers spend 228 minutes (3 hours 48 minutes) to obtain their wage for the day, and they spend 282 minutes (4 hours 42 minutes) in obtaining a surplus value or profit for TD Bank.
  5. For a 9-hour working day (540 minutes), TD Bank workers spend 241 minutes (4 hours 1 minute) to obtain their wage for the day, and they spend 299 minutes (4 hours 59 minutes) in obtaining a surplus value or profit for TD Bank.
  6. For a 10-hour working day (600 minutes), TD Bank workers spend 268 minutes (4 hours 28 minutes) to obtain their wage for the day, and they spend 332 minutes (5 hours 32 minutes) in obtaining a surplus value or profit for TD Bank.
  7. For a 17-hour working day (1020 minutes), TD Bank workers spend 455 minutes (7 hours 35 minutes) to obtain their wage for the day, and they spend 565 minutes (9 hours 25 minutes) in obtaining a surplus value or profit for TD Bank.

TD Bank workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract” and “decent work?” I think not. 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.

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 left.

Data on Which the Calculation Is Based

The annual report has both statistics on revenue and expenses, but there are also reported statistics in the annual report modified by an adjustment that is specific to the Toronto Dominion Bank; the adjustment in the annual report is not a standard adjustment. I have omitted any reference to such an adjustment since it would probably make the posts on the rate of exploitation in other posts less comparable.

The calculation of the rate of exploitation is undoubtedly imperfect, and I invite the reader to correct its gaps.

In millions of Canadian dollars:

page 15:

(millions of Canadian dollars, except where noted) 2019
Results of operations
Total revenues $ 41,065
Provision for credit losses $3,029
Insurance claims and related expenses $2,787
Non-interest expenses $22,020
Income before income taxes and equity in net income of an investment in TD Ameritrade $13,229

Page 23:

NON-INTEREST EXPENSES

Salaries and employee benefits
Salaries $ 6,879
Incentive compensation 2,724
Pension and other employee benefits 1,641
Total salaries and employee benefits 11,244

Occupancy
Rent 944
Depreciation and impairment losses 405
Other 486
Total occupancy 1,835

Equipment
Rent 245
Depreciation and impairment losses 200
Other 720
Total equipment 1,165

Amortization of other intangibles 800
Marketing and business development 769
Restructuring charges 175
Brokerage-related fees 336
Professional and advisory services 1,322
Other expenses 4,374 }

Total expenses $ 22,020

Adjustments

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 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.

Before entering into the issue of adjustments according to Marxian theory, however, it is necessary to address one of the categories that I did not include in the above calculation. It is a reference to Income before income taxes and equity in net income of an investment in TD Ameritrade,” which is equal to the $13.229 billion reported above. The inclusion of the term “equity” seems to refer to assets, but the following led me to believe that it was referring to net income rather than to assets as such (https://seekingalpha.com/news/3507506-td-bank-expects-230m-net-income-from-td-ameritrade-in-q4):

TD Bank expects ~$230M net income from TD Ameritrade in Q4

TD Bank Group (NYSE:TDexpects TD Ameritrade’s fiscal Q4 net earnings to translate to ~C$301M (~US$230M) reported equity in net income of an investment in fiscal Q4.

I therefore leave the category “Income before income taxes and equity in net income of an investment in TD Ameritrade” as is, except that I shorten it now to just “Income before income taxes.”

In the annual report, the category of “Non-interest expense” is subtracted from total revenue, to yield the category “Income before income taxes.” However, to calculate the rate of exploitation according to the principles of Marxian economics, it is necessary to make certain adjustments. To that end, we need to look in more detail at the category “Non-interest expense.”

In the category “Salary and employee benefits,” there is the subcategory “Incentive compensation.” A one-page TD document indicates what this involves for all employees:

TD’s Approach to Compensation

TD provides employees with a comprehensive total rewards package that includes a combination of base salary, incentive compensation, benefits, and retirement and savings plan

Further, for executives:

Executive Compensation

We have a balanced approach to executive compensation that is intended to attract, retain and motivate high-performing executives to create sustainable value for shareholders over the long term. … This compensation is tied to the bank’s share price and promotes decision-making that is in
the best long-term interests of the bank and its stakeholders.

There is thus additional compensation called incentive compensation, but the issue is whether such additional compensation is a result of workers being exploited or exploiting workers.

As I wrote in the post on the exploitation of Canadian Imperial Bank of Commerce (CIBC) workers:

Most employees, whether executive or not, seem to be eligible to some support of bonus as a function of performance. However, the gap between executive pay and the pay of regular employees has widened over the years, so it is reasonable to infer that the category “Performance-based compensation” is divided into two parts: one part is a function of the number of hours worked by regular employees as well as the intensity of that work; the other is based on the extent to which bank managers and senior executives are successful in exploiting those regular employees.

Without further information, it is impossible to determine the proportion that is derived from exploiting bank workers and being exploited. I will assume, as I did in the case of the CIBC, that 10 percent of the “Incentive compensation” originates from the exploitation of TD bank workers. This 10 percent is equal to $247 million and must be subtracted from the subcategory “Total salaries and employee benefits” and added to the category “Income before income taxes.”

Another expense category is also relevant for making adjustments–the category “Rent.” The rent of buildings, like the rent of equipment, is an expense both at the level of the firm and at the level of the economy as a whole. However, in the case of occupancy, rent also includes the capitalized value of land, and this capitalized value of land is derived from surplus value (see Jorden Sandemose (2018), Class and Property in Marx’s Economic Thought: Exploring the Basis for Capitalism). Again, without further information, it is impossible to tell or determine the proportion that is paid for the rental of buildings and the rental of land. I will assume that 10 percent of rent is due to the exclusive ownership of land (a non-produced means of production). This 10 percent is equal to $94 million and must be subtracted from the subcategory and added to the category “Income before income taxes.”

Adding $94 million to $247 million gives $341 million.

“Income before income tax” must thus be increased by $341 million, and “Total salaries and employee benefits” must be decreased by $247 million.

This gives us the following:

Adjusted Results

Adjusted income before income taxes $13,570
Adjusted total salaries and employee benefits $10,997

The Rate of Exploitation of TD Bank Workers

To calculate the rate of surplus value, we need to relate “Income before income taxes” to “Total salaries and employee benefits.” So, with the adjustments in place:, s=13,570; v=10,997. The rate of exploitation or the rate of surplus value=s/v=13,570/10,997=123 percent.

That means that for every hour worked that produces her/his wage, a worker at TD Bank works around an additional 74 minutes for free for TD Bank.

According to a few people who have worked at TD Bank, the length of the working day is:

I worked 7.5 hrs each day, some overtime is required. but not so often.

I normally am scheduled to work 8 1/2 hours a day Monday to Thursday. On fridays i am scheduled for 6 1/2.

It depends on the activity but can vary from 10 hours to 17+ hours

8 hours a day

Nine hours

I will calculate the division of the working day from the shortest to the longest in the above quotes accordingly. I use minutes rather than hours.

  1. For a 6.5 hour working day (390 minutes), TD Bank workers spend 174 minutes (2 hours 54 minutes) to obtain their wage for the day, and they spend 216 minutes (3 hours 36 minutes) in obtaining a surplus value or profit for TD Bank.
  2. For a 7.5 hour working day (450 minutes), TD Bank workers spend 201 minutes (3 hours 21 minutes) to obtain their wage for the day, and they spend 249 minutes (4 hours 9 minutes) in obtaining a surplus value or profit for TD Bank.
  3. For an 8-hour working day (480 minutes), TD Bank workers spend 214 minutes (3 hours 34 minutes) to obtain their wage for the day, and they spend 266 minutes (4 hours 26 minutes) in obtaining a surplus value or profit for TD Bank.
  4. For an 8.5 hour working day (510 minutes), TD Bank workers spend 228 minutes (3 hours 48 minutes) to obtain their wage for the day, and they spend 282 minutes (4 hours 42 minutes) in obtaining a surplus value or profit for TD Bank.
  5. For a 9-hour working day (540minutes), TD Bank workers spend 241 minutes (4 hours 1 minute) to obtain their wage for the day, and they spend 299 minutes (4 hours 59 minutes) in obtaining a surplus value or profit for TD Bank.
  6. For a 10-hour working day (600 minutes), TD Bank workers spend 268 minutes (4 hours 28 minutes) to obtain their wage for the day, and they spend 332 minutes (5 hours 32 minutes) in obtaining a surplus value or profit for TD Bank.
  7. For a 17-hour working day (1020 minutes), TD Bank workers spend 455 minutes (7 hours 35 minutes) to obtain their wage for the day, and they spend 565 minutes (9 hours 25 minutes) in obtaining a surplus value or profit for TD Bank.

It should be noted that I have used the verb “obtain” rather than “produce.” In Marxian economics, bank workers, as well as sales workers do not produce surplus value but rather transfer the surplus value already produced. This does not mean that these workers are not exploited capitalistically; they are used impersonally by the employer to obtain surplus value and a profit. Furthermore, things produced by others are used by employers such as TD Bank to control their working lives in order to obtain surplus value or profit.

TD Bank workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract” and “decent work?” I think not. 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.

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 left.

The Rate of Exploitation of the Workers of Rogers Communications Inc., One of the Largest Private Employers in Toronto

Introduction

In two others posts I presented the twenty largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada) and the twenty largest employers in Canada according to profit (see A Short List of the Largest Private Employers in Canada, According to Profit). 

I have tried to calculate the rate of exploitation of workers of Magna International in an earlier post (see The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One); Magna International is one of the largest employers in Toronto. I also calculated the rate of exploitation for Air Canada workers and the Canadian Imperial Bank of Commerce (CIBC) workers. 

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 Toronto and 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.

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.

Income before income tax expense s=$3.773 billion or $3773.5 million and
Employee salaries, benefits, and stock-based compensation v=$1.8045 billion or $1804.5 million

The rate of exploitation or the rate of surplus value=s/v=3773.5/1804.5=209%.

That means that for every hour worked that produces her/his wage, a worker at Rogers Communications works around an additional 125 minutes or 2 hours 5 minutes for free for Rogers Communications. Alternatively, in terms of money, $1 of wage or salary of a regular Rogers Communications worker produces $2.09 surplus value or profit for free. 

  1. In a 4.5-hour work day (270 minutes), the worker produces her/his wage in about 87 minutes (1 hour 27 minutes) and works 183 minutes (3 hours 3 minutes) for free for Rogers Communication.
  2. In a 7.5-hour work day (450 minutes), the worker produces her/his wage in about 146 minutes (2 hours 26 minutes) and works 304 minutes (5 hours 4 minutes) for free for Rogers Communications.
  3. In an 8-hour work day (480 minutes). the worker produces her/his wage in about 155 minutes (2 hours 35 minutes) and works 325 minutes (5 hours 25 minutes) for free for Rogers Communications.
  4. In an 10-hour work day (600 minutes). the worker produces her/his wage in about 194 minutes (3 hours 14 minutes) and works 406 minutes (6 hours 46 minutes) for free for Rogers Communications.

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 also unfree during that time (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation and   Employers as Dictators, Part One).

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? 

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.

Now, the calculation:

In millions of Canadian dollars:

The data are taken from Rogers Communications Inc. Annual Report.

Total revenue 15,073

Operating Expenses

Operating Costs

Cost of equipment sales 2,254
Merchandise for resale 242
Other external purchases 4,360
Employee salaries, benefits, and stock-based compensation 2,005

Total operating costs 8,861
Depreciation and amortization 2,488
Restructuring, acquisition and other 139

Total operating expenses 11,488
Finance costs 840

Interest on borrowings  746
Interest on post-employment benefits liability  11
Interest on lease liabilities  61
Capitalized interest (19)
Loss on repayment of long-term debt 19
(Gain) loss on foreign exchange (79)
Change in fair value of derivative instruments 80
Other 21

Total finance costs 840
Other income  (10)
Income before income tax expense 2,755

Total revenue therefore=11,488+840-10+12,318+2,755=15,073 (as above)

To calculate the rate of surplus value, the key categories are “Employee salaries, benefits, and stock-based compensation,” which is equivalent to wages/salaries (=v) and “Income before income tax expense” (surplus value (s) or profit).

Adjustments

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 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.

Adjustment of Stock-Based Compensation

The subcategory “stock-based compensation” in the category “Employee salaries, benefits, and stock-based compensation” includes two further subcategories (sub-sub categories, so to speak): 1. Options to purchase Class B Non-Voting Shares on a one-for-one basis (granted to employees, directors, and officers) and 2. Performance options (granted to certain key executives). It may seem unnecessary to adjust for the second sub-sub category since there were ” nil performance-based options” in 2019. However, there are at least two reasons for making adjustments. Firstly, payment for some of the stock-based compensation is due to stock-based compensation acquired in previous years: “These options vest on a graded basis over four years provided that certain targeted stock prices are met on or after each anniversary date. As at December 31, 2019, we had 1,068,776 performance options outstanding.”

Secondly, some of the stock options  in the first sub-sub category are based on “performance-based options” on the part of middle and senior management: “We granted 180,896 performance-based RSUs [restricted share units] to certain key executives in 2019.” 

I use the following logic from my post on the rate of exploitation of Canadian Imperial Bank of Commerce Workers to justify shifting 10 percent of the amount from the category ” (I change the wording slightly to make the quote apply to Rogers Communications workers): 

Most employees, whether executive or not, seem to be eligible to some support of bonus as a function of performance. However, the gap between executive pay and the pay of regular employees has widened over the years, so it is reasonable to infer that the category “Stock-based compensation” is divided into two parts: one part is a function of the number of hours worked as well as the intensity of that work by regular employees; the other is based on the extent to which managers and senior executives are successful in exploiting those regular employees. 

It is impossible to determine the proportion of stock options that form part of salaries and bonuses that represent the exploitation of Rogers Communications regular workers. 

It is probably reasonable to assume that a minimum of 10 percent of the “Stock-based compensation” comes from the exploitation by middle and senior Rogers Communications executives of regular workers.

It would be necessary to have more detailed information to determine whether more or less of the money obtained in this category were distributed between regular bank workers and management executives. If regular bank workers received more, then the rate of exploitation would be less than the rate calculated below. If management executives received more, then the rate of exploitation would be more than the rate calculated below.

On the assumption of 10 percent, this means that 10 percent of the total “Stock-based compensation is reduced by 10 percent, or $200.5 million dollars, and that amount is added to “Income before income tax expense.” This gives, so far: 

Employee salaries, benefits, and stock-based compensation $1804.5 billion
Income before income tax expense $2955.5 billion

Adjustment of Finance Costs

Another adjustment relates to interest. As I indicated in my post about the rate of exploitation of workers at Magna International:

An adjustment should probably be the treatment of the payment of interest: despite being an expense from the point of view of the individual capitalist, it probably forms part of the surplus value. It should be added to “Income before income tax expense.”

As for the category “Interest on post-employment benefits liability,” from the point of view of Rogers Communications, it is an expense or cost because, presumably, Rogers Communications had to borrow money (and pay interest) to meet its financial obligations to its retired workers; this interest comes from the surplus value produced by the workers and is therefore included as part of profit.

I treat the category “Interest on lease liabilities” like other interest categories: it is paid out of the surplus value produced by Rogers Communications workers.

The interest charges so far that must be subtracted from “Finance costs” and added to “Income before income tax expense” is $818 million. 

That leaves $22 million for Finance Costs so far. 

As I explained on my post on the rate of exploitation of Air Canada workers:

Some explanation of “interest capitalized” is in order. I have had difficulty in understanding the nature of “Interest capitalized.” As far as I can tell, interest that is normally paid and is an expense for the particular employer is treated, in Marxian economics, as part of surplus value because, at the macro level, it comes from the surplus value produced by the workers.

Interest capitalized seems to be different since the interest charged on money borrowed for the purpose of the construction of fixed assets (with a specific interest rate attached to it) is “capitalized,” or not considered part of interest expenses until the construction is finished and the fixed asset is ready to use. This accounting distinction, however, from the macro point of view, is irrelevant since both interest expenses and interest capitalized are derived from the surplus value produced by workers (or appropriated from them in another industry). Accordingly, both interest expenses and interest capitalized should be added to the amount of “Income before income taxes” category.

In the case of Air Canada, capitalized interest was positive (not in parentheses), and I therefore added it to the amount of surplus value produced by the workers. In the case of Rogers Communication, it is negative (since it is in parentheses). Accordingly, I have subtracted it from “Finance Costs” (as the accountants have done). Whether that it is legitimate I will leave for those who more adequately understand modern accounting principles and their relation to Marxian economics. I have found no guidance in the literature so far to aid me in dealing with such issues. 

The three categories, “Loss on repayment of long-term debt,” “(Gain) loss on foreign exchange,” and
“Change in fair value of derivative instruments” seem to have nothing directly to do with interest payments and therefore I leave them as part of “Finance Costs.”

Since the category “Other” remains unspecified, I also leave it as part of “Finance Costs.”

Accordingly, adjusted Finance Costs are:

Adjusted Finance Costs

Loss on repayment of long-term debt 19
(Gain) loss on foreign exchange (79)
Change in fair value of derivative instruments 80
Capitalized interest (19)
Other 21

Total finance costs 22

The category “Other income” is somewhat misleading since, in a note, the category is really “Other (income) expense.” The subcategories are as follows: 

Losses from associates and joint ventures 18 
Other investment income (35) 
Total other income (10)

The $10 million is actually additional investment income, but since it is placed in an expense category, it is put into parentheses. Normally, when an amount is placed in parentheses, it is subtracted, but since it is additional income rather than an expense, it is added. It therefore is already accounted for in the original “Income before income tax expense,” it is already accounted for. 

The remaining 818 in so-called finance costs (which are hidden surplus value) are transferred to the adjusted “Income before income tax expense” category, so that the adjustment for the total of the category is 2,955.5.+818=3773.5. 

So, with the adjustments in place:

Income before income tax expense s=$3.773 billion or $3773.5 million and
Employee salaries, benefits, and stock-based compensation v=$1.8045 billion or $1804.5 million

The Rate of Exploitation

The rate of exploitation or the rate of surplus value=s/v=3773.5/1804.5=209%.

That means that for every hour worked that produces her/his wage, a worker at Rogers Communications works around an additional 125 minutes or 2 hours 5 minutes for free for Rogers Communications. Alternatively, in terms of money, $1 of wage or salary of a regular Rogers Communications worker produces $2.09 surplus value or profit for free. 

The length of the working day at Rogers Communications, like most places, varies. Here are a sample of working days from the Internet:

  1. 7 days a week. 32 hours a week.
  2. Varying 8hr shifts depending on dept. two paid 15 minutes break and 30mins unpaid lunch
  3. 37.5 a week
  4. 7.5 to 8 hrs
  5. 8 – 10 hours per day depending on projects etc. There is a great deal of flexibility in how you work
  1. In a 4.5-hour work day (270 minutes), the worker produces her/his wage in about 87 minutes (1 hour 27 minutes) and works 183 minutes (3 hours 3 minutes) for free for Rogers Communication.
  2. In a 7.5-hour work day (450 minutes), the worker produces her/his wage in about 146 minutes (2 hours 26 minutes) and works 304 minutes (5 hours 4 minutes) for free for Rogers Communications.
  3. In an 8-hour work day (480 minutes). the worker produces her/his wage in about 155 minutes (2 hours 35 minutes) and works 325 minutes (5 hours 25 minutes) for free for Rogers Communications.
  4. In an 10-hour work day (600 minutes). the worker produces her/his wage in about 194 minutes (3 hours 14 minutes) and works 406 minutes (6 hours 46 minutes) for free for Rogers Communications.

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 also unfree during that time (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation and   Employers as Dictators, Part One).

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? 

The Rate of Exploitation of the Workers of the Canadian Imperial Bank of Commerce (CIBC), One of the Largest Private Employers in Toronto and in Canada

Introduction

In two others posts I presented the twenty largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada) and the twenty largest employers in Canada according to profit (see A Short List of the Largest Private Employers in Canada, According to Profit). The largest employer, in terms of employment, is the Canadian Imperial Bank of Commerce.

I have tried to calculate the rate of exploitation of workers of Magna International in an earlier post (see The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One); Magna International is one of the largest employers in Toronto.

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 Toronto and 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.

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.

We have the following:

Income before income taxes: $6,656=s
Employee compensation and benefits: $5,539=v

The rate of exploitation or the rate of surplus value is s/v; therefore, s/v is 6,656/5,539=120 percent.

This means that, for every hour worked that enables her/his to obtain a wage, a CIBC worker works 72 minutes (or 1 hour 12 minutes) for free for CIBC. Alternatively, in terms of money, $1 of wage or salary of a regular bank worker results in $1.20  surplus value or profit for free.

  1. in a 5.75 hour working day, CIBC workers spend 157 minutes (2 hours 37 minutes) to obtain their wage for the day, and they spend 188 minutes (3 hours 8 minutes) in obtaining a surplus value or profit for CIBC.
  2. For a six-hour working day, follow the same procedures as above, but replace 345 by 360: result: in a 6-hour working day, CIBC workers spend 164 minutes to obtain their wage for the day, and they spend 196 minutes in obtaining a surplus value or profit for CIBC.
  3. 7-hour working day: 420 minutes: in a 7-hour working day, CIBC workers spend 191 minutes to obtain their wage for the day, and they spend 229 minutes in obtaining a surplus value or profit for CIBC.
  4. 7.5-hour working day: 450 minutes: in a 7,5-hour working day, CIBC workers spend 205 minutes to obtain their wage for the day, and they spend 245 minutes in obtaining a surplus value or profit for CIBC.
  5. 8-hour working day: 480 minutes: in an 8-hour working day, CIBC workers spend 218 minutes to obtain their wage for the day, and they spend 262 minutes in obtaining a surplus value or profit for CIBC.
  6. 10-hour working day: 600 minutes: in a 10-hour working day, CIBC workers spend 273 minutes to obtain their wage for the day, and they spend 327 minutes in obtaining a surplus value or profit for CIBC.

CIBC workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract” and “decent work?” I think not. 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.

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 left.

Data on Which the Calculation Is Based

Now, the calculation:

In millions of Canadian dollars:

Revenue:  $18,611

Net interest income $ 10,551
Non-interest income $8,060

Provision for credit losses $1,286
Non-interest expenses $10,856

Employee Compensation and Benefits:

Salaries: $3,081
Performance-based compensation: $1,873
Benefits: $772

Total employee compensation: $5,726

Other expenses:

Occupancy costs:  $892
Computer, software and office equipment: $1,874
Communications: $303
Advertising and business development: $359
Professional fees: $226
Business and capital taxes: $110
Other: $1,366

Total other expenses: $5,130

Income before income taxes (Revenue minus provision for losses minus non-interest expenses): $6,469 ($18,611-$1,286-$10,856=$6,469).

Adjustments

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 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.

It is necessary, however, to make adjustments on the revenue side; From  https://www.payscale.com/research/CA/Employer=Canadian_Imperial_Bank_of_Commerce_(CIBC)/Bonus :

How much does Canadian Imperial Bank of Commerce (CIBC) pay in bonuses?

Canadian Imperial Bank of Commerce (CIBC) pays an average of C$4,962 in annual employee bonuses. Bonus pay at Canadian Imperial Bank of Commerce (CIBC) ranges from C$1,014 to C$30,521 annually among employees who report receiving a bonus. Employees with the title Information Technology (IT) Director earn the highest bonuses with an average annual bonus of C$30,521. Employees with the title Customer Service Representative (CSR) earn the lowest bonuses with an average annual bonus of C$1,014.

Although there is no direct evidence to indicate whether such bonuses form part of “Performance-based compensation,” there is indirect evidence.

Bloomberg notes the following (https://www.bnnbloomberg.ca/canada-s-bankers-face-the-bleakest-bonus-year-in-almost-a-decade-1.1358606):

The Canadian banks pay bonuses based on performance, with most of the variable compensation going to capital-markets employees such as investment bankers, research analysts and those in sales and trading. …

Senior investment bankers will see a 10 per cent decline in compensation from last year, hurt by fewer financings and a decline in mergers-and-acquisitions activity, according to Vlaad & Co. Junior investment bankers will see little change in their payouts following three years of increases, while those in sales, trading and research will see compensation fall 15  per cent to 25  per cent, and fixed-income employees will face a similar decline, the firm said.

Most employees, whether executive or not, seem to be eligible to some support of bonus as a function of performance. However, the gap between executive pay and the pay of regular employees has widened over the years, so it is reasonable to infer that the category “Performance-based compensation” is divided into two parts: one part is a function of the number of hours worked by regular employees as well as the intensity of that work; the other is based on the extent to which bank managers and senior executives are successful in exploiting those regular employees. Evidence for such exploitation is indirect, via the level of compensation of some senior executives. For example, Victor Dodig, president and CEO,  received $9,017,000 in total compensation in 2019 (salary, $1,000,000; share-based awards, $4,806,420; option-based awards, $1,201,560; Non-equity GPS awards, $1,501,950; Pension value, $505,000; all other compensation, $2,250) (CIBC Proxy Circular 2020, page 79).

It is impossible to determine the proportion of bonuses that form part of salaries and bonuses that represent the exploitation of bank workers. Some facts may, however, be relevant. From   https://www.comparably.com/companies/cibc/executive-salaries:

The average CIBC executive compensation is $270,917 a year. The median estimated compensation for executives at CIBC including base salary and bonus is $253,828, or $122 per hour. At CIBC, the lowest compensated [executive] makes $52,000.

It is probable that even middle-level bank executives receive some surplus value or profit through the exploitation of regular bank workers. This means that part of their compensation is a function of how much work regular bank workers work for nothing or for free.

Given that the level of income for top executives is far beyond the level of income of even the lowest executive, as well as the fact that the average executive compensation is almost five times the level of the lowest executive (not even taking into account additional compensations for senior executives), it is probably reasonable to assume that a minimum of 10 percent of the “Performance-based compensation” comes from the exploitation by senior bank executives of regular workers.

It would be necessary to have more detailed information to determine whether more or less of the money obtained in this category were distributed between regular bank workers and management executives. If regular bank workers received more, then the rate of exploitation would be less than the rate calculated below. If management executives received more, then the rate of exploitation would be more than the rate calculated below.

On the assumption of 10 percent, though, this means that 10 percent of the total of “Performance-based compensation, ” is reduced by 10 percent, or $187,300,000, and that amount is added to “Income before income taxes.” As a consequence, we have the following:

Adjusted Results

Income before income taxes: $6,656=s
Employee compensation and benefits: $5,539=v

The Rate of Exploitation of CIBC Workers

The rate of exploitation or the rate of surplus value is s/v; therefore, s/v is 6,656/5,539=120 percent.

This means that, in terms of money, $1 of wage or salary of a regular bank worker results in $1.20 cn surplus value or profit for free (calculated as follows–you can skip this calculation if not interested in how the result was obtained). Alternatively, for every hour worked, a CIBC worker works 72 minutes (or 1 hour 12 minutes) for free for CIBC.

  1. s/v=1.2
  2. multiplying  s/v and 1.2 by v (multiplying both sides by v does not change the equation), we have (s timesv)/v=1.2v;
  3. Dividing v by itself in the left-hand part of the equation in 2 above results in 1 (any number divided by itself except 0 is equal to 1, and any number multiplied by 1 is the same number), so we have: s=1.2v
  4. We can use this equation to calculate the division of the working day into time required to obtain the equivalent of the wage for workers at CIBC and the time they provide free of charge to obtain surplus value for CIBC.

According to a few people who have worked at CIBC, the length of the working day is:

8 hours a day

Work hours are manageable and flexible. The company is accommodating with every schedule.

They vary – just like it does anywhere.

8 hours in a day, 1 hour for break and lunch.

8-10 hours

I work 7.5 hours each day.

6 – 5.75 hours a day, 4 days a week. for the last 1.5 years

Evidently, the length of the working day varies for workers at CIBC. I will calculate the division of the working day from the shortest to the longest in the above quotes accordingly. I use minutes rather than hours. I provide more detail for the calculation for the first one so that others can more easily calculate similar rates in the cities where they live.

  1. A 5.75- hour working day: 345 minutes;
  2. We can use this information to create an equation:
  3. v+s=345;
  4. We also have the equation s=1.2v from above;
  5. We can therefore replace, in equation 3 above, s by 1.2v since they are the same.
  6. We now have: v+1.2v=345;
  7. From 6, we have 2.2v=345
  8. Dividing both sides by 2.2 does not change the equation, so the result is: v=345/2.2=157 minutes (rounded to the nearest minute).
  9. Since v+s=345, we have 157+s=345;
  10. Subtracting 157from both sides does not change the equation, so now we have s=345-157=188 minutes
  11. So, in a 5.75 hour working day, CIBC workers spend 157 minutes (2 hours 37 minutes) to obtain their wage for the day, and they spend 188 minutes (3 hours 8 minutes) in obtaining a surplus value or profit for CIBC.
  12. For a six-hour working day, follow the same procedures as above, but replace 345 by 360: result: in a 6-hour working day, CIBC workers spend 164 minutes to obtain their wage for the day, and they spend 196 minutes in obtaining a surplus value or profit for CIBC.
  13. 7-hour working day: 420 minutes:i n a 7-hour working day, CIBC workers spend 191 minutes to obtain their wage for the day, and they spend 229 minutes in obtaining a surplus value or profit for CIBC.
  14. 7.5-hour working day: 450 minutes: in a 7,5-hour working day, CIBC workers spend 205 minutes to obtain their wage for the day, and they spend 245 minutes in obtaining a surplus value or profit for CIBC.
  15. 8-hour working day: 480 minutes: in an 8-hour working day, CIBC workers spend 218 minutes to obtain their wage for the day, and they spend 262 minutes in obtaining a surplus value or profit for CIBC.
  16. 10-hour working day: 600 minutes: in a 10-hour working day, CIBC workers spend 273 minutes to obtain their wage for the day, and they spend 327 minutes in obtaining a surplus value or profit for CIBC.

It should be noted that I have used the verb “obtain” rather than “produce.” In Marxian economics, bank workers, as well as sales workers do not produce surplus value but rather transfer the surplus value already produced. This does not mean that these workers are not exploited capitalistically; they are used impersonally by the employer to obtain surplus value and a profit. Furthermore, things produced by others are used by employers such as CIBC to control their working lives in order to obtain surplus value or profit. (I leave the issue of how banks exploit workers as consumers to others more competent to deal with the issue; the point here is to focus on the exploitation of bank workers as workers and not as consumers.)

CIBC workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract” and “decent work?” I think not. 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.

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 left.

The Rate of Exploitation of Workers at Air Canada, One of the Largest Private Employers in Canada

The following applies to Air Canada workers before the COVID-19. The situation undoubtedly has changed since then since the airline industry has suffered disproportionately an economic crisis relative to some other industries (such as food production).

In another post, I presented the twenty largest employers in Canada according to level of profit (see A Short List of the Largest Private Employers in Canada, According to Profit). One of those employers is Air Canada, a privatized airline company (that used to be under public ownership).

I have tried to calculate the rate of exploitation of workers of Magna International in an earlier post (see The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One); Magna International is one of the largest employers in Toronto.

I decided to look at the annual report of some of the largest private companies in Toronto and 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.

Conclusions First

I am going to begin with a conclusion, and then explain what it means and how it is calculated so that the reader understands where I am headed in the calculations:

For every hour worked that produces her/his wage, a worker at Air Canada works around an additional 42 minutes for free for Air Canada.

In a 6-hour work day, the worker produces her/his wage in about 3.5 hours and works 2.5 hours for free for Air Canada. 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  also unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario and Employers as Dictators, Part One).

In an 8-hour work day, the worker produces her/his wage in about 5 hours 36 minutes and works for 2 hours and 24 minutes free for Air Canada.

In a 12-hour day, the worker produces her/his wage in about 8 hours 24 minutes and works for free for 3 hours 36 minutes for Air Canada.

Of course, social democrats refer to this situation, in one way or another, as “fair.” They do so by using such terms as “fair contract,” “free collective bargaining,” “fairness,” “economic justice,” “good contract,” “decent work,” “companies paying their fair share of taxes” and similar rhetoric. Such rhetoric, rather than enlightening workers about their situation, actually hide it. The working class deserves better than this ideology.

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.

How I Calculated the Rate of Exploitation of Air Canada Workers

I calculated the conclusion as follows:

The income statement is broken into the following categories for 2019 (in millions of Canadian  dollars) :

Total revenue: $19,131
Total operating expenses: $17,481

Wages, salaries and benefits: $3,184
Aircraft fuel: $3,862
Regional airlines expense:

Aircraft fuel: $485
Other: $1,95

Depreciation and amortization: $1,986

Aircraft maintenance: $1,004

Airport and navigation fees: $990

Sales and distribution costs: $874

Ground package costs: $627

Catering and onboard services: $445

Communications and information technology: $397

Other: $1,671

Operating income: $1,650
Non-operating income (expense) [if it is income according to standard accounting practices, it has no parentheses; if it is an expense, it is within parentheses and needs to be subtracted–but see below): $125

Foreign exchange gain (loss): $499
Interest income: $164
Interest expense: ($515)
Interest capitalized: $35
Net financing expense relating to employee benefits: ($39)
Gain (loss) on financial instruments recorded at fair value: $23
Gain on debt settlements and modifications: $6
Gain (loss) on disposal of assets: $13
Other: ($61)

Income before income taxes: $1,775 (adding operating income and non-operating income (expense) together)

Some explanation of “interest capitalized” is in order. I have had difficulty in understanding the nature of “Interest capitalized.” As far as I can tell, interest that is normally paid and is an expense for the particular employer is treated, in Marxian economics, as part of surplus value because, at the macro level, it comes from the surplus value produced by the workers. Interest capitalized seems to be different since the interest charged on money borrowed for the purpose of the construction of fixed assets (with a specific interest rate attached to it) is “capitalized,” or not considered part of interest expenses until the construction is finished and the fixed asset is ready to use. This accounting distinction, however, from the macro point of view, is irrelevant since both interest expenses and interest capitalized are derived from the surplus value produced by workers (or appropriated from them in another industry). Accordingly, both interest expenses and interest capitalized should be added to the amount of “Income before income taxes” category.

The adjusted “Income before income taxes” therefore is: ($1775 +$515)=$2,290 (interest capitalization has already been added to income so there is no need to add it here).

Another necessary adjustment relates to the category and amount “Net financing expense relating to employee benefits: ($39)”. Pension-related expenses should probably form part of wages and hence should be shifted to “operating expenses.” This shift does not change the surplus value produced nor the “Income before income taxes” category; it just changes the distribution of expenses, from “Non-operating income (expense) to “Total operating expenses” by way of increasing the category “Wages, salaries and benefits” by $39; the category “Wages, salaries and benefits” are therefore $3,223.

The final calculations with adjustments before determining the rate of surplus value are:

Total revenue: $19,131
Total operating expenses: $17,520
Operating income: $1611
Non-operating income: $640
Income before income taxes: $2251

To calculate the rate of surplus value, we need to relate “Income before income taxes” to “Wages, salaries and benefits.” So, with the adjustments in place:, s=2251; v=3223. The rate of exploitation or the rate of surplus value=s/v=2251/3223=70%.

That means that for every hour worked that produces her/his wage, a worker at Air Canada works around an additional 42 minutes for free for Air Canada.

In a 6-hour work day, the worker produces her/his wage in about 3.5 hours and works 2.5 hours for free for Air Canada. 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 work day, the worker produces her/his wage in about 5 hours 36 minutes and works for 2 hours and 24 minutes free for Air Canada.

In a 12-hour day, the worker produces her/his wage in about 8 hours 24 minutes and works for free for 3 hours 36 minutes for Air Canada.

I have used the lengths of the working day as 6, 8 and 12 because the length of the working day varies. According to one source:

As a customer service agent, you ll work from 3:00 am, 4:00 am and 5:00 am morning shifts, or 11:00 am, 12:00 pm, 2:00 pm. Afternoon shifts. Not sure about night shifts as I never work any of them. Part time is 6 hrs per day and full time can be 8-16 hrs. per day. You can exchange shifts, give away shifts, trade, pick or even parcial shifts. That part helps a lot when you need a day or 2 off.

Social-Democratic Rhetoric Neglects the Wider Context that Reveals the Exploitation of Workers

Of course, social democrats refer to this situation, in one way or another, as “fair.” They do so by using such terms as “fair contract,” “free collective bargaining,” “fairness,” “economic justice,” “good contract,” “decent work,” “companies paying their fair share of taxes” and similar rhetoric. Such rhetoric, rather than enlightening workers about their situation, actually hide it. The working class deserves better than this ideology.

By neglecting the fact of exploitation, other social democrats draw incorrect political conclusions. Thus, there are social democrats who try to claim that we need to reform the police rather than abolish it (see, for example, Reform versus Abolition of Police, Part Two) because workers have property. Some workers in the more developed capitalist countries do indeed have property (and fewer, of course, in the less developed capitalist countries), but they obtain that property by being exploited in the first place. If they understood that, would they support the police, whose main function is to protect the power of the employer to exploit them (and, only secondarily, to protect them and their own property)?

If the above calculations can be improved in any way, please comment on the above. I have been unable to find many guideposts about how to calculate the rate of exploitation or the rate of surplus value at the level of particular companies.

The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation

As I argued in the last post on this topic  (see  The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One), Christopher Arthur, in his The New Dialectic and Marx’s Capital, claims that there are two forms of exploitation (pages 55-56):

It is obvious here that this exploitation time to which I refer comprises the whole of the working day, not just the so-called ‘surplus labour time’. It is not the case in reality that the workers first supply themselves and then check into the factory to work the extra. On the contrary, the accounting of necessary and surplus labour time is the outcome of the struggle at the point of production over exploitation; and the unremitting pressure of capital’s representatives on the workforce is present the whole day from the first minute. Since capital ‘takes charge’ of production, the ‘pumping out’ of surplus labour cannot be distinguished on the ground from the pumping out of labour generally because during the whole working day its use value is exploited. So there is a conceptual distinction hidden here, between exploitation in this sense, and the sense in which exploitation is identified with only the extension of the working day beyond its necessary part.

I would be inclined to reverse Marx’s emphasis when he said: ‘Capital is not only command over labour, as Adam Smith thought. It is essentially command over unpaid labour.’48 Instead I would write: ‘Capital is not only command over unpaid labour, as Karl Marx thought. It is essentially command over labour, i.e. of the entire working day.’ (Of course Marx knew perfectly well that it is only because capital acquires ‘command over labour’ that this ‘coercive relation . . . compels the working class to do more work than would be required by the narrow circle of its own needs’.)

… My view allows for a ‘traditional’ measure of exploitation if we distinguish
two kinds of exploitation. Exploitation in production is in effect not dissimilar
to alienation in that it involves the subjection of workers to alien purposes;
it goes on throughout the day. Exploitation in distribution arises from
the discrepancy between the new wealth created and the return to those
exploited in production.

Arthur has a point: too often those who refers to Marx’s theory of exploitation emphasize surplus production and surplus value while neglecting to note how workers experience the situation: they do not produce their wage first independently of the employer or her/his representatives (forewomen/men, supervisors and managers) and then produce a surplus. The time that they spend producing their wage or salary is subject to the power and will of the employer–and not just the surplus labour and surplus time that the workers provide for free. This fact is too often neglected.

Nonetheless, there is a good reason for distinguishing the time that workers require to produce  their own wage or salary an the surplus time that they devote free of charge to employers: this has to do with the accumulation of capital.

I referred to this situation in an earlier post when criticizing the views of the social democrat David Bush (see Basic Income: A Critique of the Social-Reformist Left’s Assumptions and Analysis: Part Two).

Essentially, the question needs to be asked: Where does the investment funds come from that Magna International (or any other capitalist employer) uses to purchase c (constant capital, or the machines, raw material, desks, buildings, etc.) and v (the variable capital, or the labour power or capacity that workers sell to the employer)? From the surplus produced by workers in former years and, eventually, an “original investment” that does not come from the exploitation of workers by capitalist employers. (How this “original investment” arose is an historical question which Marx addressed in part 8 of Capital, volume 1: “The Secret of Primitive Accumulation.).

I quoted from Marx in the earlier post:

From Capital: A Critique of Political Economy, volume 1, pages 727-728:

Let us now return to our example. It is the old story: Abraham begat Isaac, Isaac begat Jacob and so on. The original capital of £10,000 brings in a surplus-value of £2,000, which is capitalized. The new capital of £2,000 brings in a surplus-value of £400, and this too is capitalized, transformed into a second additional capital, which in its turn produces a further surplus-value of £80. And the process continues in this way.

We leave out of account here the portion of the surplus-value consumed by the capitalist. We are also not interested, for the moment, in whether the additional capital is joined on to the original capital, or separated from it so that it can valorize itself independently. Nor are we concerned whether the same capitalist employs it who originally accumulated it, or whether he hands it over to others. All we must remember is this: by the side of the newly formed capital, the original capital continues to reproduce itself and to produce surplus-value, and this is true of all accumulated capital in relation to the additional capital engendered by it. The original capital was formed by the advance of £10,000. Where did its owner get it from? ‘From his own labour and that of his forefathers’, is the unanimous answer of the spokesmen of political economy.4 And, in fact, their assumption appears to be the only one consonant with the laws of commodity production. But it is quite otherwise with regard to the additional capital of £2,000. We know perfectly well how that originated. There is not one single atom of its value that does not owe its existence to unpaid labour. The means of production with which the additional labour-power is incorporated, as well as the necessaries with which the workers are sustained, are nothing but component parts of the surplus product, parts of the tribute annually exacted from the working class by the capitalist class. Even if the latter uses a portion of that tribute to purchase the additional labour-power at its full price, so that equivalent is exchanged for equivalent, the whole thing still remains the age-old activity of the conqueror, who buys commodities from the conquered with the money he has stolen from them.

If the additional capital employs the person who produced it, this producer must not only continue to valorize the value of the original capital, but must buy back the fruits of his previous labour with more labour than they cost. If we view this as a transaction between the capitalist class and the working class, it makes no difference that additional workers are employed by means of the unpaid labour of the previously employed workers. The capitalist may even convert the additional capital into a machine that throws the producers of that capital out of work, and replaces them with a few children. In every case, the working class creates by the surplus labour of one year the capital destined to employ additional labour in the following year.5 And this is what is called creating capital out of capital.

The accumulation of the first additional capital of £2,000 presupposes that a value of £10,000 exists, advanced by the capitalist, and belonging to him by virtue of his ‘original labour’. The second additional capital of £400 presupposes, on the contrary,
only the prior accumulation of the £2,000, of which the £400 is the capitalized surplus-value. The ownership of past unpaid labour is thenceforth the sole condition for the appropriation ofliving unpaid labour on a constantly increasing scale. The more the capitalist has accumulated, the more is he able to accumulate. The surplus-value that makes up additional capital no. 1 is the result of the purchase of labour-power with part of the original capital, a purchase which conformed to the laws of commodity exchange and which, from a legal standpoint, presupposes nothing
beyond the worker’s power to dispose freely of his own capacities, and the money-owner’s or commodity-owner’s power to dispose freely of the values that belong to him; equally, additional capital no. 2 is merely the result of additional capital no. 1, and is therefore a consequence of the relations described above; hence each individual transaction continues to conform to the laws of commodity exchange, with the capitalist always buying labour power and the worker always selling it at what we shall assume is its real value. It is quite evident from this that the laws of appropriation or of private property, laws based on the production and circulation of commodities, become changed into their direct opposite through their own internal and inexorable dialectic. The exchange of equivalents, the original operation with which we started, is now turned round in such a way that there is only an apparent exchange, since, firstly, the capital which is exchanged for
labour-power is itself merely a portion of the product of the labour of others which has been appropriated without an equivalent; and, secondly, this capital must not only be replaced by its producer, the worker, but replaced together with an added surplus. The relation of exchange between capitalist and worker becomes a mere semblance belonging only to the process of circulation, it becomes a mere form, which is alien to the content of the transaction itself, and merely mystifies it. The constant sale and purchase of labour power is the form; the content is the constant appropriation by the capitalist, without equivalent, of a portion of the labour of others which has already been objectified, and his repeated exchange of this labour for a greater quantity of the living labour of others.

The immediate exchange between workers and employers is an exchange of equivalents, so that workers receive the value of their cost of production. However, when considering the larger context of previous production, then the immediate exchange between employer and workers is a semblance or appearance. The employer uses a part of the surplus produced by the workers in a previous round as means of production (machines, raw material, buildings, etc.) and another part (socially as money and physically as means of consumption, such as food, clothing, shelter) to further employ them (in addition to the initial investment).

As “costs,” the workers’ previous products are used against them to further exploit them.

Of course, the workers’ previous products are not only used to further exploit them but to further control their lives even when they are producing the equivalent value of their own wage. In other words, when we consider the accumulation process, the power of capital–produced by workers–has increased and is used to intensify the weight of the control of their past labour over their present lives.

That is why we need to distinguish the concept of exploitation as the production of surplus value from the concept of oppression, which is what occurs during the control of workers during the time they reproduce their own wage–that is to say, during the time in which workers produce an equivalent in value for their own wage.

Although Arthur recognizes that, when considering accumulation of capital in time, the wage that is paid in the present year is influenced by the previous rounds of the accumulation of surplus value, he does not consider the importance of this situation for the changing level of power that private employers (capitalists) have over workers. It is not just a question of the workers lacking power of controlling their work during the time that they reproduce the value of their wage; it is also the degree to which employers have the past power produced by workers at their disposal in the present (via the production of previous rounds of surplus value and their investment).

To call both parts of the oppression experienced in capitalist society “exploitation” would confuse the issue of the increasing power of capitalists or private employers over worker by means of the increasing power of past investment over the present lives of workers.

In the case of Magna International, the rate of exploitation, as noted in the previous post on this topic, is 79%. That means that in an 8-hour work day, Magna workers produce their wage in 4.5 hours, and they work for free for 3.5 hours. However, in addition to working for free for 3.5 hours for Magna International, and being subject to the control of the supervisors and managers, they are also subject to such control during the 4.5 hours that they produce their own wage.

The social-democratic left have little to say about either the exploitation of such workers or about the control of workers not only during this time but also during the time when they produce their wage. If Magna workers belong to an independent union (one that can engage in collective bargaining independently of the particular employer), then for the social-democratic left, such workers have decent work and have “fair contracts,” “fair collective agreements,” “fair wages,” and other such expressions.

My position has always been that both the exploitation of workers and the time when workers produce the value of their own wage, since they are both subject to the power of employers, involve treating human beings as things to be used for inhuman purposes (see  The Money Circuit of Capital) need to criticized and abolished. Given the social-democratic rhetoric of fairness and decent work, is there really any wonder that I was insulted by them in Toronto?

What do you think of workers at Magna International being exploited? What do you think of the time during which they produce the value of their wage? What do you think about whether the power of employers to exploit such workers and to control their lives during that time and during the time they produce their wage? Is either justified? What of the increasing power of the accumulated capital–and therefore the collective power of employers–over the present life of workers?

 

The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One

In another post, I presented the twenty largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada). One of those employers is Magna International Inc., a multinational corporation whose workers produce automobile supplies for inputs into car manufacturing.

This is a first attempt at calculating the rate of exploitation of one of the largest private employers in Toronto, Magna . It is undoubtedly imperfect in many ways, 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 by has undoubtedly reinforced social-reformist tendencies.

I am going to begin with a conclusion, and then explain what it means and how it is calculated so that the reader understands where I am headed in the calculations:

That means that for every hour worked that produces her/his wage, a worker at Magna International works around an additional 47 minutes for free for Magna International. In an 8-hour work day, the worker produces her/his wage in about 4.5 hours, and the remaining 3.5 hours works for free for Magna. In a 10-hour work day (both work days seem possible at Magna International—see https://www.indeed.com/cmp/Magna-International-Inc/faq/how-are-the-working-hours-at-magna-international-inc?quid=1at7gf6rrak7i9ff)–the worker produces her/his wage in about 5.6 hours and the remaining 4.4 hours works for free for Magna International.

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 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 and salaries).

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 Toronto if they are available in order to calculate the rate of exploitation at a more local level. I begin with one company and invite others to provide criticisms or suggestions for improvement.

I have used some of the ideas from Thomas Ittelson (2019), A Visual Guide to Financial Statements: Overview for Non-Financial Managers and Investors, and Antonios Patidis (2016), “A Micro-Approach for Testing Marx’s LTRPF:Evidence from Greece, 2000 and 2009,” Review of Political Economy. Patidis “utilises data taken directly from company reports and accounts” in order to determine whether the rate of profit falls in the major corporations in Greece. My purpose, however, is not, initially at least, in determining whether the rate of profit has fallen but rather what the rate of exploitation is in diverse companies in Toronto.

I also asked Michael Roberts how to calculate the rate of exploitation; he graciously sent me a couple of articles (one of which I read). After that, I sent him the above, and he commented that it looked good.

Again, the following undoubtedly contains many limitations, but I will leave that for further discussion, should the issue arise.

The income statement is broken into the following categories for 2019 (in millions of US dollars): (pages 5, 36):

Sales $39,431
Costs and Expenses $37,208

Cost of goods sold $34,022

Material $24,585

Direct labour $2,815

Overhead $6,622

Depreciation and amortization $1,345

Selling, general and administrative $1,697

Interest expense, net $82

Other expense, net $240

Equity income ($178) [If you add up all the numbers–34,022; 1,345; … 82, then you get 37,286; if you subtract 178 from that, you get 37,208–the same amount as “Costs and expenses.” That is why the 178 is in parentheses–it is necessary to subtract it from expenses since it is really income. 

Income from operations before taxes: $2,223 (profit or surplus value) 

A couple of adjustments are probably necessary. On page 37, there is a reference to pension benefits. I assume that this category belongs to “direct labour” since it forms part of the deferred wages of workers that is paid in the current year (but then again, it is unclear whether the category of direct labour includes this, but since it is subtracted from net income, this leads me to believe that it is not included in that category). This should be added to direct labour. Hence, direct labour would be: 2,815+47=2,862, “Costs and expenses” would be $37, 255 “Costs of goods sold”would be $34,069, and “Income from operations before taxes” should be adjusted downward accordingly.

A second adjustment should probably be the treatment of the payment of interest; despite being an expense from the point of view of the individual capitalist, it probably forms part of the surplus value. Hence, it should be added to “Income from operations before taxes.” Adjusting “Income from operations before taxes,” we have 2,223-47+82=2,258.

So, with the adjustments in place: s=2,258; v=2,862. The rate of exploitation or the rate of surplus value=s/v=2,258/2,862=79%.

That means that for every hour worked that produces her/his wage, a worker at Magna International works around an additional 47 minutes for free for Magna International. In an 8-hour work day, the worker produces her/his wage in about 4.5 hours, and the remaining 3.5 hours works for free for Magna. In a 10-hour work day (both work days seem possible at Magna International—see https://www.indeed.com/cmp/Magna-International-Inc/faq/how-are-the-working-hours-at-magna-international-inc?quid=1at7gf6rrak7i9ff)–the worker produces her/his wage in about 5.6 hours and the remaining 4.4 hours works for free for Magna International.

This is not, however, the end of the story. Christopher Arthur, in his book The New Dialectic and Marx’s Capital,  argues that there are two kinds of exploitation, one that occurs during the production of the wage by the workers (since they are subject to control by employers during that time), and the other kind of exploitation outlined above, where workers work for free for the employer. This issue, however, will be addressed in a follow-up post.