Critique of the Limited Aim (Solution)–Decent Wages–of a Radical Social Democrat: The Case of the Toronto Radical, John Clarke: Part One

Introduction

There are some people among the social-democratic left whom I can respect more than others. John Clarke, former leader of the Ontario Coalition Against Poverty (OCAP), is one of them. Here is what one reads on Wikipedia about him:

John Clarke is an anti-poverty activist who lives in TorontoOntarioCanada. As of 2019, he was teaching at York University.

Activism

A native of Britain, he moved to Toronto, Ontario and became an organizer there.[1] He was a leading figure of the Ontario Coalition Against Poverty (OCAP) group until he retired from it in January 2019.[2] The Globe and Mail reported in the year 2000 that Clarke’s “guerrilla activism has pitted him against police countless times during the past decade.”[3]

Clarke was arrested with three other activists and charged with inciting a riot for his role in an OCAP protest at Queen’s park in June 2000. Clarke appealed his restrictive bail conditions in August 2000.[3] In 2003, a judge stayed the charges and Clarke walked free.[4]

The Sudbury Star described Clarke in 2016 as “a 25-year veteran of activism.”[1] In 2019, he announced an online fundraiser asking people to contribute $25,000 for his retirement.[5]

Teaching

In 2019, Clarke took on the post of Packer Visitor in Social Justice in the faculty of Liberal Arts and Professional Studies at York University. The position is for two years.[2]

References

  1. Jump up to:ab Keenan Kusan, Workers being held down, activist says in SudburySudbury Star (March 26, 2016).
  2. Jump up to:ab Levy, Sue-Ann (26 November 2019). “Poverty warrior teaching Activism 101 at York University”Toronto Sun. Retrieved 21 March 2020.
  3. Jump up to:ab Margaret Philp, Activist to fight bail termsGlobe & Mail (August 10, 2000).
  4. ^ Clarke, John (28 October 2003). “RIOT CHARGES AGAINST OCAP ORGANIZER STAYED BY TRIAL JUDGE – Statement by John Clarke, OCAP Organizer”OCAP. Archived from the original on 1 June 2005. Retrieved 21 March 2020.
  5. ^ Levy, Sue-Ann (28 January 2019). “Poverty activist John Clarke wants help funding retirement”Toronto Sun. Retrieved 21 March 2020.

Although I can admire not only Mr. Clarke’s activist stance but his willingness to engage in civil disobedience despite the possible consequences for himself, his writings persistently fall short of a socialist stance. This limitation is evident in his aims (which are, generally, solutions to specific problems). 

The Aim or Goal of His Intervention 

What is the aim or goal of his intervention? What is he seeking to achieve?

On Mr. Clarke’s blog, on June 15, 2021, he has written a post titled “A Basic Income in Waiting?” (https://johnclarkeblog.com/node/65). 

Surprisingly, Mr. Clarke’s goals are very similar if not identical to those of  Simran Dhunna and David Bush’s views.  He writes:

During the pandemic, struggles have broken out across the world, from Minneapolis to New Delhi to East Jerusalem. As the global health crisis subsides, there will be a strong determination to fight for something better. As we challenge, not just the ‘economic scarring’ left by the pandemic, but the impact of decades of austerity, we shouldn’t settle for a commodified form of social provision that makes its peace with the neoliberal order. We need to fight employers to win decent wages and to take to the streets to demand massively expanded social housing, greatly improved public healthcare, free public transit, universal child care and much else beside.

His reference to “much else beside” is in reference to an article written by Ms. Dhunna and Mr. Bush (if you click on the the “else beside,” you will be taken to their article). The “much else beside” probably refers to the following list (the social-democratic or reformist left frequently have a grocery list of demands that rarely if ever are realized in practice since they lack the power to realize them):

  1. free dental care
  2. strengthening and regularizing the new changes to EI (employment insurance–which I still call unemployment insurance)
  3. raising social assistance rates
  4. status for all (meaning presumably that immigrants and “illegal” migrants would have the same legal rights as Canadian citizens)
  5. paid sick days
  6. improving tenants’ rights
  7. universal public services.

Of course, I support such efforts, but such efforts hardly make a socialist society since they are likely compatible with some form of capitalism and not with its abolition and with the abolition of all classes; they seek to humanize capitalism and not abolish it. Those who advocate such policies are anti-neoliberal but not necessarily anti-capitalist. To be anti-capitalist, such policies would have to be linked to other policies that push beyond what is acceptable to a capitalist society–such as a radical or robust basic income–which Mr. Clarke opposes. 

I have criticized Dhunna and Bush’s article in several posts on this blog (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 SocialistThe Strawman of a Minimal Universal Basic Income by the Social-democratic Left in Toronto or  A Robust or Ambitious Universal Basic Income: An Impossible Dream for Some Among the Social-democratic Left), and Mr. Clarke’s uncritical reference to it is indicative of Mr. Clarke’s lack of critical distancing from his social-democratic compatriots; his rubber stamping of other social democrats’ position is quite typical of social democrats in general, it would seem (see Exposing the Intolerance and Censorship of Social Democracy, Part Two: Critique of the Standard of Canadians and Landed Immigrants Working for an Employer). 

The way in which Ms. Dhunna and Mr. Bush refer to articles written by others on the subject of basic income, for instance, gives the impression that the authors of some of the articles to which they refer find basic income to be impractical–whereas it is often the case that it is only certain forms of basic income that such authors find impractical; other forms they find feasible–but Ms. Dhunna and Mr. Bush (and Mr Clarke) neglect to acknowledge this. By referring to the article Dhunna and Bush wrote without further ado, Mr. Clarke in effect rubber stamps uncritically their own distortion of the views of others. This is hardly what the working class needs today. Mr. Clarke, despite his apparent anti-capitalist rhetoric, is anti-neoliberal but not anti-capitalist. 

Let us, however, see what Mr. Clarke himself actually proposes as an alternative–what his aims are.  The following is almost a verbatim report of the third section of Mr. Clarke’s presentation on YouTube, presented on June 21, 2021, titled Basic Income Is a Neoliberal Trap  (https://www.youtube.com/watch?v=r40D6fU760s&t=4s):

Alternative Directions

The alternative is to rejuvenate our unions and fight for decent wages, to fight to increase minimum wages, to fight for workers’ rights–rather than extend the cash benefits and extend the reach of the marketplace. It is far better to put considerable effort into the struggle for public services.

Now, Mr. Clarke fully acknowledges that there are income-support programs that are vital and needed, and we cannot let these supports become a kind of poor cousin. We need unemployment insurance that provides adequate coverage and secure coverage. We need the disgusting attack on injured workers that has taken place to be reversed and decent benefits be provided. We need a fight to ensure that disability benefits are adequate and meet people’s needs and that they are secure. We need to challenge the intrusion and moral policing that goes on within these systems.

But to extend the cash benefit widely out into the workforce is a huge mistake. And we could do so much better. Rather than try to get what in practice would be a meager cash benefit, it would be so much better to struggle to challenge the commodification of housing, the neoliberal city, the blighting of urban space with this agenda of greed by fighting for a massive extension of social housing. So that’s a benefit that goes to working-class people and does not go into the pocket of landlords. There’s a need to fight for increases in the adequacy of healthcare. The pandemic has made that absolutely clear. We need pharmacare, dental care, a unviersal childcare program that is not an empty perennial liberal promise. We need post-secondary education to be free; we need free public transport systems. On all of these fronts, we need to take up a fight.

But people will say: We have suffered defeats. We cannot win these things. Mr. Clarke argues that the left has for a very long time forced on the defensive. The class struggle has not gone in our favour for a considerable period of time. But there is no alternative but to rebuild and to fight back and to win what we can. And to challenge this society but to fight for a different society. That’s absolutely indispensable. There in fact is not some social policy ruse that can just put things right.

Basic income is not going to solve the problem. Our lack of strength, our lack of ability to fight in the way we need to fight is the problem we have to address. We need to build that movement now more than ever. In this situation of global crisis we need more than ever to fight back, and we can do so much better in focusing our struggles than to fight for the commodification of social provision and basic income.

There is little difference between Dhunna and Bush’s call for a refurbished welfare state and Mr. Clarke’s vision of a “different society.” The society he envisions is an improved version of the welfare state established after the Second World War; it is hardly a vision of a society without classes, without exploitation and without oppression. 

I will, however, restrict my criticism of Mr. Clarke’s position in this post to his reference to decent wages–and will continue with my criticism of Mr. Clarke’s views on economic coercion–the first part of his presentation in the YouTube video in another post by referring to his apparent acknowledgement that economic coercion forms an essential element of a capitalist society–all the while ignoring the significance of that for formulating policies to counter such economic coercion.  

Decent Wages and Exploitation 

Mr. Clarke does not subject the concept of decent wages to any critical scrutiny. Ironically, Mr. Clarke often refers to exploitation as an essential aspect of a society dominated by a class of employers (and I agree with him on this view), as a basis for criticizing the impracticality of a proposal for universal basic income (see his Youtube presentation)–which I will address in relation to basic income in another post), but he isolates the concept of “decent wages” from any consideration of exploitation. 

The concept of “decent wages” in effect justifies the exploitation of workers and their continued economic coercion. That does not mean, of course, that I would criticize workers for seeking to increase their wages–increasing the standard of living does have the potentiality of improving the quality of life for those who work for employers, and I also have sought to increase my wages or salary to improve my quality of life. However, seeking to increase wages does not make the wages “decent”–given exploitation. 

By referring to “decent wages,” Mr. Clarke, despite his references to exploitation, implicitly uses the standard of working for an employer as a standard for determining what is decent work. This limitation of the left has been noted by others. Kathleen Millar (2017) has argued just that in her critique of the isolation of a set of individuals as the “precariat”. From “Toward a critical Politics of Precarity,” Sociology Compass, Volume 11,  pages 6-7: 

At the same time, translating the concept of precarity to different parts of the world has also meant recognizing that precarity is originary to capitalism. The very condition of having to depend on a wage to sustain one’s life is what makes a worker precarious—not just the specific structures of this or that job (Barchiesi, 2012a; Denning, 2010). From this perspective, precarity is capitalism’s norm, not its exception, and is shared by all workers whether employed or unemployed. We usually think of the worker with a stable, full‐time job as the model of capitalist labor—against which the numerous unemployed, informal, or wageless workers (largely in the global South) are compared. But the latter
reveal the latent precarity of all workers who must sell their labor‐power for a living. This means that the precarity of labor, far from being the exception in capitalism, is the necessary condition for the creation of capital.

To see insecurity at the heart of wage labor (rather than a condition of its absence) is to complicate the current denunciatory discourse of precarity. Critiques of precarity—whether explicitly or as another element of what Thorkelson (2016) describes as its political unconscious—uphold full‐time, wage‐labor employment as an ideal. One problem with this politics of precarity is that it ignores how wage labor can itself be an experience of insecurity, degradation, exploitation, and abuse. For example, Franco Barchiesi (2011) makes this argument through his study of wage labor as a technique of governance in both colonial and postcolonial South Africa. He shows how colonial administrators emphasized the “dignity of work” as a way to use wage labor to discipline African populations seen as “uncivilized” and “unruly.” Many African workers refused waged employment, instead opting for various forms of
subsistence labor or self‐employment that, while insecure, allowed them to avoid the discipline and indignity experienced when working in factories and mines. In this historical context, Barchiesi argues, “precarious employment was not a condition of disadvantage but enabled opposition to the labor‐centered citizenship of Western modernity” (15). Barchiesi goes on to show how today, the continued emphasis on “decent jobs” and “job creation” in postapartheid South Africa fuels the precariousness of workers by continuing to link social citizenship to full‐time wage labor at
the same time that stable employment is increasingly scarce (see also Barchiesi, 2012b). The emphasis on decent jobs also reinforces forms of masculinity, nationalism, and inequality that a social order structured around wage labor produced. In short, the demand for decent jobs, as a solution to precarity, generates a conservative politics attached to the valorization of wage labor. It also precludes the “political potentials of precarity” (Barchiesi, 2012b, 248) or what I have described elsewhere as the possibility that forms of work beyond wage labor might open up other ways of fashioning work and life (Millar, 2014).

This brings me back to the question that began this article: what are we holding onto through the ubiquitous, denunciatory discourse of precarity? One answer to this question is certainly wage labor. Or more precisely, many critiques of precarity remain attached to what Kathi Weeks (2011) has described as the taken‐for‐granted valorization of waged work as an economic necessity, social duty, and moral practice. This attachment to waged work is part of a broader response to precarity that has reaffirmed normative modes of life. For example, Lauren Berlant (2011) argues that conditions of precarity have led to deepened aspirations for and reinvestments in the normative good life—a
stable job, middle‐class home, guaranteed rewards for hard work, and the promise of upward mobility. These forms of attachment, she suggests, paradoxically become obstacles to fulfilling the very desires that are wrapped up with the aspiration for a good life. This produces what Berlant calls a “relation of cruel optimism” (170).

Alternatively, we could see the denunciation of precarity through the lens of “left melancholy.” Drawing on Walter Benjamin’s use of this term, Wendy Brown (1999) reflects on the ways leftist politics remains mournfully committed to ideals, categories, and movements that have been lost, preventing the possibility of radical change in the here and now.4 To cling to the ideal of full employment and decent jobs, rather than to question waged work as a social and economic requirement, could certainly be an example of left melancholy. But Brown is less interested in specifying the objects of attachment than in showing how the very state of melancholia replaces a political commitment to disruption with an unacknowledged pernicious traditionalism. In other words, perhaps it matters less what one is holding onto, just that one is holding on. Or as Dorothy Day (1952) insisted in her decades‐old article on precarity, “The thing to do is not to hold on to anything.”

Mr. Clarke, like so many social-democratic or social-reformist leftists, implicitly clings to working for an employer as the standard for his own goals. 

This implicit standard is kept separate from Mr. Clarke’s rhetorical references to exploitation, which serve to hide his social-democratic or social-reformist political position. 

Let me make a categorical statement: There is no such thing as a decent wage. To work for an employer is in itself degrading, exploitative and oppressive. The concept of a decent wage serves to hide this exploitative situation (see The Money Circuit of Capital). 

Mr. Clarke, apparently, only aims at refurbishing the welfare state rather than abolishing exploitation. Like Mr. Bush’s own references to exploitation, Mr. Clarke uses the concept as a rhetorical flourish (in his case, to criticize a radical policy of basic income) while conveniently “forgetting” the concept when it comes to the issue of whether wages can ever be decent.

Thus, on Mr. Clarke’s blog, on March 7, 2021, in a post titled http://WHEN YOUR ENEMY’S ENEMY IS NOT A FRIEND we read: 

  In a world based on exploitation and oppression, resistance is ever present. … 

 The US and its junior partners compete with their major rivals and pose a terrible threat to the poor and oppressed countries they seek to dominate and exploit. However, we can’t forget that those countries are themselves class divided societies and that not all the exploitation and oppression that their populations face comes out of Washington. Domestic capitalists are also the enemy and the governments of those countries, even where they clash with US objectives, still represent the interests of these home grown exploiters. [my emphases]

Despite his reference to exploitation, Mr. Clarke conveniently forgets the concept when it comes to referring to a “decent wage.” Nowhere does Mr. Clarke justify his view that there is such a thing as a decent wage. There are undoubtedly better wages and worse wages, but how any wage is decent is something that Mr. Clarke merely assumes rather than demonstrates.

The reference to “decent wages” is a social-democratic trick to hide the fact that there is no such thing as “decent wages” in a society dominated by a class of employers. How can any wage be decent when it involves at a minimum economic coercion and oppression of workers by treating them as things or means for purposes not defined by them (see The Money Circuit of Capital  and  Employers as Dictators, Part One)  but by a minority and, in addition, exploitation that involves producing a surplus (see for example  The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One )?

Furthermore, in the case of workers in the private sector, in the case of both oppression and exploitation, the results of the previous labour of workers is used to further oppress and exploit the workers by means of previous acts of oppression and exploitation–an intensified form of oppression and exploitation (something Mr. Clarke entirely ignores). Mr. Clarke simply ignores this additional feature of exploitation and oppression.

Mr. Clarke thus uses the concept of exploitation for social-democratic purposes–an anti-neoliberal purpose and not an anti-capitalist purpose. Advocating for decent wages while using the word “exploitation” is contradictory–but exploitation is really just a word for Mr. Clarke. Alternatively, Mr. Clarke believes that workers are exploited–but that such exploitation cannot be abolished. He certainly never advocates the abolition of exploitation, and his aim of achieving decent wages simply ignores the issue. 

What I wrote in another post relation to Ms. Dhunna and Mr. Bush’s political position applies as much to Mr. Clarke:

Dhunna and Bush’s first aim–to “meaningfully improve the material realities of working class and oppressed people”–sounds both practical and radical. It is actually conservative since its focus is entirely on distributional struggles rather than struggles over control of working conditions at both the micro and macro levels. Indeed, since this is their primary goal, they practically define a socialist society as an enhanced welfare state–capitalism with a more human face.

By focusing on distributional struggles, they imply, without ever saying it, that wider struggles to control working conditions are impractical and utopian. They, the realists, know what “bread and butter issues” are relevant for the working class, and such “bread and butter issues” are purely distributional struggles. Such a stance is conservative–its aim is not to end class rule, but to perpetuate it–though in a more humanized form than at present.

Wages, Exploitation and the Accumulation of Capital 

This  becomes even more evident when we consider, not only the immediate exchange between workers and employers and the subsequent exploitation but also the antecedent processes of exploitation. When we consider the process of exploitation and oppression of workers as a process, the immediate exchange between workers and employers (whether through collective or individual bargaining) is actually the use of surplus value (symbolized by “s” produced by workers in earlier rounds of exploitation to further exploit them. I referred to this process in my critique of Dhunna and Bush’s conservative use of Marx’s theory of exploitation. From Karl Marx, Capital: A Critique of Political Economy, volume 1, pages 727-730:

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. 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 of living 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 . 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). 

If this is the case, how can anyone who believes in the existence of class exploitation refer to wages as decent wages? There is no such thing. Wages used to control the working class and to exploit them in the present, when conceived in the continuous process of production and exchange, are derived from surplus value produced in antecedent rounds of production so that the wage they receive today is the result of past exploitation and oppression.

The present domination of workers at work by employers is a consequence of past accumulation of surplus value and its investment in the further exploitation of workers.  How anyone who is anti-capitalist could refer to wages as “decent” is beyond me–unless they are really only anti-neoliberal (a particular form of capitalism but not capitalism as such) and not anti-capitalist, despite the rhetoric to the contrary. 

Again, the issues of exploitation and the accumulation of capital need to be linked together when determining whether there is such a thing as a decent wage. The following couple of long quotes by  Teinosuke Otani (2018) points to this need –a need that Mr. Clarke ignores by referring to decent wages as a primary aim without even engaging into inquiry into the nature of capitalist relations of production and exchange.

The first long quote has to do with what is called simple reproduction, where the private employer exploits workers by obliging them to work for more time than they themselves cost to produce, thereby enabling the private employer or capitalist to appropriate and then consume the entire surplus value (profit) produced. Since the entire surplus value (profit) is consumed, each year the same level of investment arises–simple reproduction. 

From  Teinosuke Otani (2018),  A Guide to Marxian Political Economy: What Kind of a Social System Is Capitalism?, pages 218-224 ( emphases in the original):   

8.4 Capital as the Materialisation of Unpaid Labour of Others

Under simple reproduction, it is assumed that the capitalist consumes the entirety of the surplus-value appropriated from the worker year after year. Now let’s assume that during a period of 5 years, a capital value of 1000 brings the capitalist a surplus-value of 200 every year and that the capitalist consumes this entire amount. At the end of the 5 years, he still has the 1000 in capital value that he possessed at the outset, but over the 5 years, he has appropriated 1000 in surplus-value from the worker and consumed this 1000 in value.

The capitalist would likely say: «It is precisely because I initially possessed 1000 in value, as the fruit of my own labour, that I was able to appropriate and consume 200 in value every year. The 1000 in value that I advance each year—no matter how many years this is repeated—is the initial value created by my labour».

The situation appears quite different, however, if we carefully observe the process as repeated reproduction.

Let’s take our capitalist at his word here and assume that the 1000 in value he started off with was appropriated through his own labour, so that it is the materialisation of his own labour.

During the 5-year period, the capitalist consumes a sum of value equal to the value he initially possessed. Yet after the 5 years, he is still in possession of a sum of value equal to what he started off with. Why? What is clear is that it is precisely because the capitalist has received the 1000 in surplus value for free that he can still have 1000 in value despite having consumed that amount. The 1000 that he holds after 5 years is thus the result of the 1000 in surplus-value appropriated during the 5 years, merely representing the total sum of 1000 in surplus-value obtained for free. This point can be well understood if we consider what would happen to the capitalist, who consumes 200 in value every year, if he did not appropriate any surplus-value during those years. In such a case, even if he had 1000 the first year, he would have no alternative but to consume 200 every year, reducing by that amount the sum of money that could be advanced as capital. After 5 years, the sum would reach zero and he would cease to be a capitalist. The fact that he is able to still exist as a capitalist at the end of 5 years, with 1000 in capital, is clearly the outcome of appropriating 200 surplus-value every year over the course of that period.

The capitalist in our example has appropriated the materialisation of 1000 in value from another person’s labour during a 5-year period. Since the capitalist is still in possession of 1000 in value after 5 years, having lived by consuming 200 per year, his 1000 is nothing but the materialisation of the labour of others. Even if the capital value the capitalist initially possessed was the materialisation of his own labour, the capital value he is now in possession of after 5 years is the materialisation of the worker’s surplus-value, which is to say, thematerialisation of the labour of others. Starting from the sixth year, the capitalist appropriates further surplus-value that is the materialisation of others’ labour by means of capital value that is also purely the materialisation of the labour of others. 

8.5 Reproduction of Capital-ownership Through Appropriating the Labour
of Others

At first glance, the capital relation, which is the relation of production between capitalists and workers, seems to continue to exist, as is, year after year. In particular, it seems that the pivot of this continuity is the capitalist’s continued possession of capital, which he owned from the outset. In fact, however, as noted in the previous section, the capital relation is not an inorganic entity like a cornerstone, which cannot collapse once put in place unless some outside force is applied, but rather is maintained by being constantly reproduced and formed through the labour of labouring individuals within the production process. This is similar to how the human body is maintained by the infinite number of cells that compose it being replaced every day by newly created ones.

… 

Now let’s imagine that a person with no money borrows 1000 in value from someone (assuming that the loan is free of interest) and makes it function as capital for a 5-year period, during which he appropriates 200 in surplus-value every year and that after 5 years he repays the 1000. Once the loan had been repaid, he would return to his penniless state and cease to be a capitalist. In this case, the fact that he was able to exist as a capitalist for 5 years was not because he held on to 1000 in value during the 5 years. Indeed, if the 1000 had not functioned as capital, he would have consumed the 1000 during the 5 years, leaving him with nothing but the debt for that amount. The reason the capitalist is instead able to still have 1000, and was able to consume 200 in value every year, is that during those 5 years, he made the 1000 in value function as capital and was thus able to appropriate 200 in surplus-value from workers each year. It is precisely because of appropriating this unpaid labour that the capitalist is able to exist as a capitalist for a period of 5 years.

Even if, during the 5-year period, he had been able to live without consuming the 200 of surplus-value or had somehow been able to procure a separate consumption fund to last the 5 years, so that even after repaying the 1000 by the end of that period he would have a total of 1000 in value appropriated from workers, it would still be clear that this value is the mass of surplus-value appropriated from the workers.

In short, the capital value owned by the capitalist must sooner or later, through the progression of reproduction, be transformed into the materialisation of the appropriated labour of others, so that the ownership of capital value by the capitalist (even if initially the result of his own labour) is transformed into the outcome of the appropriation of others’ labour, i.e. transformed into the outcome of exploitation carried out in the production process.

In simple reproduction, it is assumed that the original investment came from the labour of the purchaser of the labour power of workers and of the means of production (machinery (such as computers), buildings, raw material, and other such products), but on the basis of that assumption the preservation of the same initial investment arises through the constant exploitation of workers.

In simple reproduction the preservation of the original value of the investment year after year, therefore, is due to the continued exploitation of workers year after year. Can the wages the workers receive then be considered in any way decent under such circumstances? Let Mr. Clarke and other social democrats explain this. 

When we consider the real accumulation of capital, where part of the surplus value (profit) produced for free by workers and appropriated by private employers (capitalists) for no equivalent is not consumed but ploughed back into further investments, not only is the original value of original capital preserved through the continued exploitation of workers but the relation between the original capital invested and the new capital invested due to the exploitation of workers increasingly becomes smaller and smaller relatively as the accumulation of capital and the continuous exploitation of workers proceed. From Otani, pages 228-234:  

Our assumption here again will be that a capitalist has advanced 1000 in value and then appropriates 200 in surplus-value, all of which is subsequently advanced as additional capital.

Where does the capitalist get this 1000 in capital? The capitalists and the economists who defend their interests respond in unison that this capital was the fruit of the capitalists’ own labour or that of their forbearers. But we have already seen that, even seen from the perspective of simple reproduction, all capital is transformed into a mass of unpaid labour of others through the recurrence of reproduction and that capital-ownership is also reproduced through the appropriation of unpaid labour. But, for now, let us accept the capitalist’s view of the situation.

… commodity holders in the sphere of commodity exchange recognise each other as private owners, but in so doing, they do not concern themselves with how the other person came to possess his commodity. Instead, they can only assume that this other person obtained it through his own labour. This socially accepted assumption that a private owner’s property title stems from own labour is the property laws of commodity production.

When the capitalist initially appears on the market with 1000 and purchases means of production and labour-power at their value, those involved in the commodity and labour markets do not care how he came into possession of the 1000 in value, provided he is the proper owner of that sum. Those involved in the transaction all assume with regard to each other that commodities and money were obtained through their own labour, with each quite content to declare: «I worked to save up this 1000» or «It was obtained through my parents’ hard work». And it seems that this is the only assumption that could be made, according to the property laws of commodity production.

The situation is completely different, however, in the case of the 200 that the capitalist seeks to advance as additional capital. We are perfectly familiar with the process that generates this sum of value, knowing that it was originally surplus-value. This means that the 200 in its entirety is the objectification [materialisation] of the unpaid labour of others. The additional means of production and additional labour power purchased with this sum are nothing more than a new form taken by this value qua [as] objectification of unpaid labour.

Viewed as a transaction between the capitalist class and working class, we have a situation where the working class, through its surplus-labour in the current year, creates the new capital that becomes the additional means of production and additional labour-power the following year.

Now let us assume that the 200 is advanced in the second year as additional capital and yields 40 in surplus-value [the same rate of profit as the initial investment of 1000 with a surplus value of 200: 200/1000=40/200=1/5=20 percent]. Since the original capital also generates 200 in surplus-value in the second year, by the third year, there is 440 (in addition to the 1000) that can be advanced as capital [First year: 200s from the initial exploitation of workers+ second year, an additional 200s  from the 1000 again invested and used to exploit the workers +the 40s produced in the second year by the workers and used for further investment in the third year=440]. Not only is 400 unmistakably the objectification of unpaid labour, 40 is the objectification of unpaid labour appropriated through the additional capital, which itself is the objectification of unpaid labour. If this process of accumulating all the surplus-value is repeated for the subsequent 4 years, by the end of that period the capitalist will have—in addition to his original capital of 1000, which we could call the «parent»—the surplus-value appropriated through the parent capital during the 4 years… Together this forms an «offspring» of 1074. So if the capitalist advances the aggregate capital in the fifth year, there will be 2074 of capital («parent» and «offspring») in operation that year. [The capitalist is assumed to exploit workers to the extent of 20 percent per unit. At the end of the first year, 1000×1.2=1,200; this is invested in the second year, and at the end of the second year, 1,200×1.2=1,440; this is invested at the beginning of the third year, and at the end of the third year, 1,440×1.2=1,728; this is invested at the beginning of the fourth year, and at the end of the fourth year, 1,728×1.2=2074, which again can be invested at the beginning of the fifth year…]. 

Even if we assume that the capitalist possessed the 1000 of the 2074 to begin with, he certainly cannot claim that the remaining 1074 in value was created through his own labour. As long as it is recognised that the 200 in surplus-value appropriated every year from the 1000 in capital is the objectification
of surplus-labour, then this 1074 in value is, from top to bottom, the surplus-value transformed back into capital and thus the objectification of labour of others. … In other words, we are dealing with a mass of surplus-labour appropriated through a mass of surplus-labour.

The more the reproduction of capital is repeated, the smaller the original capital advanced, until it becomes an infinitesimal amount. The surplus-value transformed back into capital, whether it is made to function as capital in the hands of the person who accumulated it or in the hands of someone else, comes to represent the overwhelming part of the capital that currently exists.

The capitalist every year buys the means of production and labour-power on the commodity market and labour market in accordance with the property laws of commodity production in order to repeatedly carry out production. The result of this is that the capitalist appropriates unpaid living
labour on an increasingly large scale by making the unpaid surplus-labour of others function as capital. Marx refers to the capitalist’s appropriation of unpaid labour in this manner as the laws of capitalist appropriation.

In the market, which is the surface layer of capitalist production, the property law of commodity production operates. But if we consider the production of capital that underlies this in terms of social reproduction, it becomes clear that the law of capitalist appropriation is in operation. Where the capital relation exists, the law of capitalist appropriation is the necessary consequence of the property laws of commodity production. Marx expresses this reality by referring to the inversion of the property laws of commodity production in the laws of capitalist appropriation.

The surplus-value qua ]as] objectification of the surplus-labour of another person, which the capitalist appropriates in the production process, is turned into capital; and the ownership of this capital value is thus the result of the appropriation of surplus-value in the production process. The capitalist’s
appropriation of surplus-value in the production process precedes, and brings about, his ownership of capital. Here it is precisely the production of surplus-value by the labouring individuals first. Rather, it is precisely the behaviour of the labouring individuals within the production process that is always generating the ownership of the means of production by the capitalist within the production process that generates capital ownership.

At first glance, there seemed to be a vicious circle with regard to capitalist ownership of the means of production by the capitalist and his appropriation of surplus-value, wherein the latter is only possible through the former, but the latter always generates the former. However, within this relation,
the active determining moment that continues capitalist production as such is the constant reproduction of products within the production process by the labouring individuals and the constant production of surplus-value. Labouring individuals are the active subject of continual production,
regardless of the form of society, but under capitalist production, we have a situation where labouring individuals completely separated from the conditions of labour come into contact with the means of production in the production process as things belonging to others, which means that the resulting
surplus-labour always belongs to others as well, and through this there is the continual reproduction of capital and wage-labour and the relation between them. Thus, in terms of the
capitalist ownership of the means of production, and the capitalists’ appropriation of surplus-value, it cannot be said that the former is the immovable premise or even that it is a vicious circle where it cannot be said which of the two comes first. Rather, it is precisely the behaviour of the labouring individuals within the production process that is always generating the ownership of the means of production by the capitalist.

When conceived as a continuous process of exploitation and accumulation of capital, the idea of “decent wages” sounds and is hollow. The idea of “decent wages” completely ignores the whole process of exploitation founded on previous exploitation. Mr. Clarke, practically, by referring to “decent wages,” converts his references to exploitation into mere words, emptied of content. 

What is necessary is to criticize the claims of capitalist society’s own ideologues. From Elena Lange (2021),  Value without Fetish: Uno Kōzō’s Theory of ‘Pure Capitalism’ in Light of Marx’s Critique of Political Economy, page 33: 

… Marx was less interested in contrasting the capitalist mode of production with the utopias of socialism, but in contrasting the bourgeois mode of production with its own claims.

Mr. Clarke, despite his nod towards Marx’s theory of exploitation, seems to have little interest in critiquing the claims of the ideologues of employers when he refers to decent wages. 

The Parallel of Decent Work and Decent Wages: The Case of the Social-Democratic International Labour Organization (ILO) 

Mr. Clarke has more in common with the social-democratic rhetoric of the International Labour Organization (ILO) than with any Marxian critique of capitalist society. The ILO talks about “decent work” and the like, and it claims that labour should not be treated as a commodity–but workers need to treat themselves necessarily as commodities, and euphemisms about “decent wages” and “decent work” serve to hide that fact. From Gerry Rodgers, Eddy Lee, Lee Swepston and Jasmien Van Daele (2009),  The International Labour Organization and the Quest for Social Justice, 1919–2009, page 7: 

Key passages from these documents are reproduced in Appendix II. Together, they identify the principles, issues and means of governance that lie at the heart of the ILO ’s work.

Five basic principles can be distinguished in these texts.

  • Lasting peace cannot be achieved unless it is based on social justice, grounded in freedom, dignity, economic security and equal opportunity.
  • Labour should not be regarded merely as a commodity or an article of commerce.
  • There should be freedom of association, for both workers and employers, along with freedom of expression, and the right to collective bargaining.
  • These principles are fully applicable to all human beings, irrespective of race, creed or sex.
  • Poverty anywhere constitutes a danger to prosperity everywhere, and must be addressed through both national and international action.

These moral and political principles guide the action of the ILO , and provide the cognitive framework for its work – the spectacles through which the ILO sees the world. The first of these, that peace must be based on social justice, has been considered above. It lays out the overriding reason for the existence of the Organization. The second provides the fundamental principle guiding its action. It expresses the dignity of labour and the recognition of its value, in contrast to the Marxian notion that, under capitalism, labour becomes a commodity. In the ILO ’s vision, all forms of work can, if they are adequately regulated and organized, be a source of personal well-being and social integration. Of course, labour is bought and sold, but market mechanisms are subordinate to higher goals. The original 1919 Constitution states that “labour should not be regarded merely as a commodity”. By the time of the Declaration of Philadelphia, the same idea is expressed more strongly: “Labour is not a commodity.”

Labour in Marxian economics is certainly not a commodity, but labour power is–the capacity to work or to use means of production to produce a product. The ILO simply denies that it labour (power) should be a commodity–all the while denying the reality that it is in fact a commodity and must be a commodity if capitalist society is to emerge and to continue to exist. (Of course, unfree forms of labour (so that workers cannot freely choose a particular employer) can exist side by side with free labour–but the existence of free labour power as a commodity is still necessary. It may not be very pleasant to think about the social implications of the necessary existence of labour power as a commodity, but it is necessary to do in order to enable the working class to formulate policies that will more likely enable them to control their own lives by abolishing all class relations. 

Just as the ILO places a veil over the eyes of workers by arguing that labour (power) should not be a commodity–whereas it is necessarily a commodity in a society dominated by a class of employers, with the associated economic, social and political structures–so too do Mr. Clarke’s references to decent wages place a veil over our eyes by implicitly denying that workers are necessarily and continuously exploited. 

I would like to know what Mr. Clarke means by decent wages. Are the wages received by the unionized workers for Magna International, Air Canada, Rogers Communication, Suncor Energy or Telus decent wages? (see various posts that attempt to calculate the rate of exploitation for these unionized workers). If so, how does Mr. Clarke square such a view with the fact of exploitation? If not, then the concept of decent wages has no relevance for workers other than as an ideological cloak for their continued exploitation.

Or are the wages that I received as a brewery worker in the early 1980s decent wages? For example, at the brewery where I worked in Calgary, Alberta, Canada, in the collective agreement between the Brewery Employers Industrial Relations Association (BEIRA) (for Carling O’Keefe) and the Western Union of Brewery, Beverage, Winery and Distillery Workers, Local 287, dated April 1, 1980 to March 31, 1983, bottling operators received a base wage of $13.20 on April 1, 1982. Sick pay was 12 days per year, a guaranteed wage plan, life insurance up to $20,000, a long-term disability plan, paid basic Alberta Health Care Insurance Plan, hospital expenses to a maximum, major medical expenses (with a yearly deductible of $10 for an individual and $20 for a family)), a dental plan, etc. In fact, many of the benefits specified by Mr. Clarke in his reference to Dhunna and Bush’s article (“much else beside”) are included in the collective agreement. ,

(I ended up operating a machine, at first part of the soaker from the end where the cleaned bottles come out of the soaker as well as the EBI (electric bottle inspector), and then when there was technological change, just the EBI unit (and maintaining the line going into the filler free of glass).

Did I receive a decent wage? What of the surplus value that had been used in previous rounds of accumulation that were used to further exploit us? Should not these facts be  taken into account when judging whether there is anything like a decent wage? Apparently not. 

Conclusion

Mr. Clarke refers to exploitation and capitalism often enough, but he then conveniently forgets about it when he refers to “decent wages.” Mr. Clarke is anti-neoliberal but not really anti-capitalist–despite the rhetoric to the contrary. A real anti-capitalist perspective would never refer to any wage as decent–or for that matter any work that involves working for an employer as decent work. 

In a follow-up post, I will critically analyze Mr. Clarke’s references to “economic coercion.” I may or may not integrate such  an analysis with a critique of Mr. Clarke’s criticisms of a basic income. 

 

The Rate of Exploitation of Telus Workers , One of the Largest Private Employers in Toronto, Ontario, and Vancouver, British Columbia

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  Vancouver according to revenue (see A Short List of the Largest Employers in Vancouver, British Columbia, Canada, Mainly Based on Revenue). Telus is on both lists.

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, the Canadian Imperial Bank of Commerce (CIBC) workers, Rogers Communications, Toronto Dominion (TD) Bank and Suncor Energy. 

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:

The rate of exploitation or the rate of surplus value=s/v=2485.3/4258.7=58%.

That means that for every hour worked that produces her/his wage, a worker at Telus works around an additional 35 minutes for free for Telus. Alternatively, in terms of money, a regular Telus worker who receives $1 of wage or salary produces $0.58 surplus value or profit for free. 

Assuming either a 7.5 hour working day  or an 8 hour working day: 

  1. In a 7.5- hour working day (450 minutes), a Telus worker produces her/his wage in about 285 minutes (4 hours 45 minutes) and works 165 minutes ( 2 hours 45 minutes) for free for Telus. 
  2. In an 8-hour working day (480 minutes), a Telus worker produces her/his wage in about 304 minutes (5  hours 4 minutes) and works 176 minutes (2 hours 56 minutes) for free for Telus. 

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).

Let us look at the management rights clause of the collective agreement between Telus and United Steel Workers (USW) Local 1944 (Telecommunications Workers Union Local 1944), for the period between November 27, 2016 and December 31, 2021.

From page 6 of the collective agreement:

ARTICLE 8 – MANAGEMENT RIGHTS
8.01  Unless otherwise explicitly agreed to in this Agreement, management retains the
exclusive right to manage its operations in all respects including the direction of the
working forces. The Company agrees that any exercise of these rights shall not
contravene the provisions of this Agreement.

8.02  Management and excluded employees shall not normally do bargaining unit work, unless
such work has traditionally been performed by management and excluded employees.

8.03  Although not normal operating practice, occasions may arise when management and
excluded employees may perform bargaining unit work for reasons of training, on-going
familiarization, emergency, other unforeseeable or unpreventable circumstances, or the
correction of minor deficiencies on a customer’s premises which can be completed within
fifteen (15) minutes in the normal course of management performing quality inspections.
No Regular employees will lose their employment as a result of management and
excluded employees performing bargaining unit work for the aforementioned reasons.

8.04  While managers will attempt as far as possible to assign an employee to work for which
the employee has been trained, no part of this Agreement shall be construed as meaning
that an employee shall do only work of the classification for which they are employed, nor
shall any part of this Agreement be construed as meaning that certain work shall be
performed by only certain classified employees.

This management rights clause at least sets explicit limits on the right of management to engage in certain kinds of work reserved for union members–a superior managements rights clause that workers could be used to harass management under certain circumstances (as we did in the brewery in Calgary where I worked–the collective agreement had a similar limiting clause that enabled us to monitor the actions of foremen if they pressured us too much).

Nonetheless, despite the explicit limits on the right of management, the general power of management to direct operations as it sees fit and thus to use workers for purposes over which workers have little say remains intact.

Not only does the collective agreement give management the right to direct workers’ lives in many, many ways in such a fashion that they produce more value than they themselves cost, leading to the workers working for free for a certain period of time, but even during the time when they produce the value of their own wage, they are subject to the dictates of management (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation).

Ideologues of unions and social democrats or social reformers simply ignore this double situation of workers–of having to work for free and having to work throughout the day under the power of unelected managers (see Employers as Dictators, Part One).

Given this conclusion, how can any collective agreement express in any way the cliches used by many ideologues of unions–such as “fair contracts,” or “decent work?” Is it possible for a collective agreement to be fair from the workers’ point of view? It is certainly possible to be fairer, of course, but no collective agreement questions the right of employers and their representatives (management) to exploit workers and to use them for purposes foreign to their own lives.

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.

I first give revenue and expenses figures according to the Telus Annual Report (2020), and then indicate some needed adjustments so that they accord more with Marxian economics. Amounts are in millions of Canadian dollars, unless otherwise indicated.

Revenue

Operating revenues and other income $ 15,463 million or $15.463 billion

Income before income taxes $1,711 million, or $1.711 billion

Operating expenses

Goods and services purchased 6,268
Employee benefits expense 3,701
Depreciation 2,107
Amortization of intangible assets 905

Total operating expenses=12,981


[Operating Income (Operating revenues and other income – operating expenses)=2482]
Financing costs 771
Income Before Income Taxes 1,711 [2482-771=1711]

Adjustments

Adjustments must be made both at the level of total expenses and at the level of total revenue.

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.

Total Expenses Adjustments

Adjustment of Total Labour Costs (Expenses) 

There seems to be an inconsistency in the calculation of purchasing the capacity to work (labour power) of workers at Telus. Above, the category “Employee benefits expense” is $3.701 billion. However, the annual report also states the following, in more detail: 

Employee benefits expense – gross
Wages and salaries $ 3,668 
Share-based compensation 173 
Pensions – defined benefit 102
Pensions – defined contribution  94 
Restructuring costs 49 
Employee health and other benefits 190 
4,276

We can reconcile these numbers by looking at the category “Capitalized internal labour costs, net”:

Capitalized internal labour costs, net

Contract acquisition costs

Capitalized (74) 
Amortized 55

Contract fulfilment costs

Capitalized (2) 
Amortized 4

Property, plant and equipment (350) 
Intangible assets subject to amortization (208)

(575)

Numbers in parentheses need to be subtracted, and numbers without parentheses are added. The subtracting and adding results in a negative 575. If we subtract 575 from 4,276, we obtain 3,701. 

Let us look at the category “Capitalized internal labour costs, net.” The category refers to the following (  https://smallbusiness.chron.com/accounting-rules-internal-capitalization-labor-37119.html): 

Capitalizing Labor Costs

The IRS and standardized accounting rules allow for the cost of putting property and equipment into service to be added to the direct cost of purchasing the property and equipment for the purpose of capitalization. After all, the equipment is not usable until it is properly set up and in working order. Common labor costs that you can capitalize include the cost of assembly, construction and architecture.

The key to including the labor as part of the fixed asset cost is that the labor must be directly related to putting the property or equipment into service, and the labor costs are tracked separately from any other work that may be done by the employee or contracted labor personnel.

The difference seems to have to do with the purchase of turn-key machinery and equipment versus in-house production (including setting up and physical adjustments to ensure proper working order) versus in-house production (although it is unclear what is meant by “Property, plant and equipment.” Are these purchased externally or produced in-house? 

However, I will ignore these adjustments in the annual report since the nature of the category “Capitalized internal labour costs” in effect excludes Telus workers who perform work directly for Telus.

Therefore, I treat the whole category of “Capitalized internal labour cost” as a cost for the employment of Telus workers and hence include it in the calculation of variable capital. This does not change anything in terms of total operating expenses, as far as I can tell, since I assume that capitalized labour costs are included in the category “Goods and services purchased.” There is a shift in the internal distribution of operating expenses but no change in the absolute amount of operating expenses in this case.

The two adjusted operating expense categories would be, for now: 

Goods and services purchased 5,693
Employee benefits expense 3,701

There is another category that at least needs some possible explanation: 

Employee-related information
Total salaries and benefits6 (millions) $ 4,200

I have been unable to account for this except in the following manner: the difference between 4,276 and 4,200 is 76. If we subtract capitalized “Contract acquisition costs” (74) and capitalized “Contract fulfilment costs” (2) from 4,276, we obtain 4,200. However, I still use 4,276 for variable capital for the same reasons as I used 4,276 rather than 3,701. 

On the other hand, an adjustment needs to be made in total labour costs or expenses due to “Share-based compensation.” In other posts, I have generally treated some of this as a form of surplus value since some share-based compensation is compensation due to managers being able to meet or exceed specified targets and thus is a function of exploiting other workers. I have conservatively used 10% of share-based compensation as a basis for calculating the amount of surplus value obtained through exploiting other workers. That this is a conservative amount can be seen when we look at the subcategories of the category: 

Restricted share units $131
Employee share purchase plan $33
Share option awards $9
Total: $173 

Restricted share units seems to be a function of how well targets are met: 

(b) Restricted share units
General
We use restricted share units as a form of retention and incentive compensation. 

We also award restricted share units that largely have the same features as our general restricted share units, but have a variable payout (0%–200%) that depends upon the achievement of our total customer connections performance condition.

The distribution of share units according only to performing certain services versus meeting performance (target) conditions is as follows: 

Number of non-vested restricted share units as at December 31

Restricted share units without market performance conditions

Restricted share units with only service conditions 5,718,328
Notional subset affected by total customer connections performance condition 298,957

Subtotal: 6,017,285

Restricted share units with market performance conditions

Notional subset affected by relative total shareholder return performance condition 896,870 

Total: 6,914,155

“Total customer connections performance condition” seems to refer to the absolute number of customers (although I am unsure of this). In any case, if we only include the “restricted share units with market performance conditions” as originated from the exploitation of other workers, we have 896,870/6,914,155=13%. Hence, my use of 10 percent as an estimate of the percentage of share-based compensation that really has its source in surplus value is conservative, but I use it to be consistent with other posts. Ten percent of 173 is 17.3. This amount is added to the categories “Operating revenues and other income” and  “Income before income taxes” and subtracted from “Total labour costs.” 

We now have the following: 

Temporarily adjusted Income before income taxes (surplus value (s) $1728.3 million or $1.7283 billion 
Final adjusted total labour costs (variable capital (v) $4258.7

Adjustments of financing costs or expenses 

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

Let us look at more detail at financial expenses. 

Financing costs or expenses 

Interest on long-term debt, excluding lease liabilities – gross 676
Interest on long-term debt, excluding lease liabilities – capitalized (37)
Interest on lease liabilities 70
Interest on short-term borrowings and other 5
Interest accretion on provisions 16
Long-term debt prepayment premium 18

Total Interest expense 748 (adding all the above and subtracting 37)
Employee defined benefit plans net interest 16
Foreign exchange losses 14
Interest income (7)

Financing costs 771 [748+16+14-7]

In relation to the category “Interest on long-term debt, excluding lease liabilities–capitalized,” (that is to say, “Capitalized interest”) as I explained in my post on the rate of exploitation of Air Canada workers and Rogers Communications 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.  

Accordingly, like Rogers Communication, I treat “Interest on long-term debt, excluding lease liabilities–capitalized,” (as the accountants have done) as a real expense for the purposes of calculation because it is negative (in parentheses).

As for the category “Interest accretion on provisions,” as I wrote in another post, the category of “accretion” means the following, according to Wikipedia:

In accounting, an accretion expense is a periodic expense recognized when updating the present value of a balance sheet liability, which has arisen from a company’s obligation to perform a duty in the future, and is being measured by using a discounted cash flows (“DCF”) approach.

I treated accretion as a real expense; however ,”interest on accretion on provisions” seems to be a different category. From the Internet: 

Accreted Interest means Interest accrued on a Loan that is added to the principal amount of such Loan instead of being paid as it accrues.

Accrued interest seems to form part of the surplus value at the macro or aggregate level and hence is treated accordingly. 

I had some initial problems when dealing with the category “Employee defined benefit plans net interest.” I debated whether it should form part of variable capital (wages, if you like) since presumably it was used to fund Telus workers’ pension, or whether it should form part of surplus value produced since it presumably was interest paid on meeting pension fund liabilities. I opted for treating it as part of surplus value rather than variable capital. I used an analogy: if a capitalist borrowed money to pay wages and salaries, and had to pay interest, then the interest paid would be derived from surplus value produced. 

I treat the category “Foreign exchange losses” as a real expense. If there are reasons for treating it as part of surplus value, feel free to provide such reasons. I certainly would like to make the calculations of the rate of exploitation as accurate as possible.

In relation to the category “Interest income,” in the annual report, is accurately depicted as income (and hence is not really an expense) and is therefore in parentheses (it is subtracted from financing costs or expenses, or reduces the level of expenses). Hence, this way of presenting interest income is identical to the way it really is at the macro level–as income. Accordingly, I treat it as part of surplus value and actually add it to the other forms of interest.

Interest charges considered part of surplus value

Interest on long-term debt, excluding lease liabilities – gross 676
Interest on lease liabilities 70
Interest on short-term borrowings and other 5
Interest accretion on provisions 16
Long-term debt prepayment premium 18
Employee defined benefit plans net interest 16
Interest income 7
Total: 808

With these adjustments, real financing costs are as follows:

Adjudged Financing costs or expenses 

Interest on long-term debt, excluding lease liabilities – capitalized (37)
Foreign exchange losses 14

Total adjusted financing costs or expenses 51

If we subtract 51 from 808, we obtain 757, which is considered additional surplus value

Total Revenue Adjustments and Final Adjustment 

The adjustments in financing costs or expenses to 757 (808-51=757) means that this amount is shifted to the category “Temporarily adjusted income before income taxes.” Accordingly, we have the following final amounts that are relevant for establishing the rate of exploitation of Telus workers:

Final adjusted Income before income taxes (surplus value (s) $2485.3 million or $2.4853 billion 
Final adjusted total labour costs (variable capital (v) $4258.7

The Rate of Exploitation 

The rate of exploitation or the rate of surplus value=s/v=2485.3/4258.7=58%.

That means that for every hour worked that produces her/his wage, a worker at Telus works around an additional 35 minutes for free for Telus. Alternatively, in terms of money, a regular Telus worker who receives $1 of wage or salary produces $0.58 surplus value or profit for free. 

The length of the working day at Telus varies somewhat, but less so than for some other employers. According to one collective agreement, the basic working day is 7.5 hours and the working week is 37.5 hours: 

Basic Hours of Work

A5.03 (a) (i)

The basic hours of work per day for a Regular full-time employee will be 7.5 hours. The basic hours of work per week for a Regular full-time employee will be 37.5 hours over one (1) week or 75 hours over two (2) weeks provided that in any given calendar week, basic hours of work will be assigned on consecutive days, unless another arrangement is mutually agreed to by the employee and management. Notwithstanding the above, in any given calendar week, up to 20% of the Regular full-time employees in an appropriate work group may be assigned to a work week in which the basic hours are not scheduled on consecutive days. 

Searching on the Internet, I also found the following:

They are good, but capped at 37.5 hrs/week which is entirely reasonable.

Flexible 9-5

Assuming either a 7.5 hour working day  or an 8 hour working day: 

  1. In a 7.5- hour working day (450 minutes), a Telus worker produces her/his wage in about 285 minutes (4 hours 45 minutes) and works 165 minutes ( 2 hours 45 minutes) for free for Telus. 
  2. In an 8-hour working day (480 minutes), a Telus worker produces her/his wage in about 304 minutes (5  hours 4 minutes) and works 176 minutes (2 hours 56 minutes) for free for Telus. 

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).

Let us look at the management rights clause of the collective agreement between Telus and United Steel Workers (USW) Local 1944 (Telecommunications Workers Union Local 1944), for the period between November 27, 2016 and December 31, 2021.

From page 6 of the collective agreement:

ARTICLE 8 – MANAGEMENT RIGHTS
8.01  Unless otherwise explicitly agreed to in this Agreement, management retains the
exclusive right to manage its operations in all respects including the direction of the
working forces. The Company agrees that any exercise of these rights shall not
contravene the provisions of this Agreement.

8.02  Management and excluded employees shall not normally do bargaining unit work, unless
such work has traditionally been performed by management and excluded employees.

8.03  Although not normal operating practice, occasions may arise when management and
excluded employees may perform bargaining unit work for reasons of training, on-going
familiarization, emergency, other unforeseeable or unpreventable circumstances, or the
correction of minor deficiencies on a customer’s premises which can be completed within
fifteen (15) minutes in the normal course of management performing quality inspections.
No Regular employees will lose their employment as a result of management and
excluded employees performing bargaining unit work for the aforementioned reasons.

8.04  While managers will attempt as far as possible to assign an employee to work for which
the employee has been trained, no part of this Agreement shall be construed as meaning
that an employee shall do only work of the classification for which they are employed, nor
shall any part of this Agreement be construed as meaning that certain work shall be
performed by only certain classified employees.

This management rights clause at least sets explicit limits on the right of management to engage in certain kinds of work reserved for union members–a superior managements rights clause that workers could be used to harass management under certain circumstances (as we did in the brewery in Calgary where I worked–the collective agreement had a similar limiting clause that enabled us to monitor the actions of foremen if they pressured us too much).

Nonetheless, despite the explicit limits on the right of management, the general power of management to direct operations as it sees fit and thus to use workers for purposes over which workers have little say remains intact.

Not only does the collective agreement give management the right to direct workers’ lives in many, many ways in such a fashion that they produce more value than they themselves cost, leading to the workers working for free for a certain period of time, but even during the time when they produce the value of their own wage, they are subject to the dictates of management (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation).

Ideologues of unions and social democrats or social reformers simply ignore this double situation of workers–of having to work for free and having to work throughout the day under the power of unelected managers (see Employers as Dictators, Part One).

Given this conclusion, how can any collective agreement express in any way the cliches used by many ideologues of unions–such as “fair contracts,” or “decent work?” Is it possible for a collective agreement to be fair from the workers’ point of view? It is certainly possible to be fairer, of course, but no collective agreement questions the right of employers and their representatives (management) to exploit workers and to use them for purposes foreign to their own lives.

The Rate of Exploitation of the Workers of the Royal Bank of Canada (RBC), 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).

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 as well as the rate of exploitation of workers at the Canadian Imperial Bank of Commerce (CIBC) (see 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 ), among others.

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 if they are available in order to calculate the rate of exploitation at a more local level.

Conclusions First

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

The rate of exploitation or the rate of surplus value of RBC workers is s/v; therefore, s/v is 16,903/13,611=124 percent.

This means that, in terms of money, $1 of wage or salary of a regular bank worker results in $1.24 cn surplus value or profit for free (calculated on the basis of the procedure outlined in the post on the rate of exploitation of CIBC bank workers). Alternatively, for every hour worked, a Royal Bank of Canada worker works 74 minutes (or 1 hour 14 minutes) for free for RBC.

It also means the following:

  1. For a 5.75- hour working day (345 minutes), RBC workers spend 154 minutes (2 hours 34 minutes) to obtain their wage for the day, and they spend 191 minutes (3 hours 11 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, RBC workers spend 161 minutes to obtain their wage for the day, and they spend 199 minutes in obtaining a surplus value or profit for RBC.
  3. 7-hour working day: 420 minutes:i n a 7-hour working day, RBC workers spend 188 minutes to obtain their wage for the day, and they spend 232 minutes in obtaining a surplus value or profit for RBC.
  4. 7.5-hour working day: 450 minutes: in a 7,5-hour working day, RBC workers spend 201 minutes to obtain their wage for the day, and they spend 249 minutes in obtaining a surplus value or profit for RBC.
  5. 8-hour working day: 480 minutes: in an 8-hour working day, RBC workers spend 214 minutes to obtain their wage for the day, and they spend 266 minutes in obtaining a surplus value or profit for RBC.
  6. 10-hour working day: 600 minutes: in a 10-hour working day, RBC workers spend 268 minutes to obtain their wage for the day, and they spend 332 minutes in obtaining a surplus value or profit for RBC.

As in the post for the determination of the rate of exploitation of workers at Canadian Imperial Bank of Commerce, I have the same questions for social democrats.

Royal Bank workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract,” “decent wages,” 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,” “decent wages” 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 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 by has undoubtedly reinforced social-reformist tendencies.

In millions of Canadian dollars:

Total revenue $ 46,002
Provision for credit losses (PCL) 1,864
Insurance policyholder benefits, claims and acquisition expense (PBCAE) 4,085
Non-interest expense 24,139 [add the first three: 1,864+4,085+24,139=30,088; subtract this from 46,002 gives you 15,914)
Income before income taxes 15,914

Provision for credit losses is explained in Investopedia (James Chen (2019) as:

The provision for credit losses (PCL) is an estimation of potential losses that a company might experience due to credit risk. The provision for credit losses is treated as an expense on the company’s financial statements. They are expected losses from delinquent and bad debt or other credit that is likely to default or become unrecoverable. If, for example, the company calculates that accounts over 90 days past due have a recovery rate of 40%, it will make a provision for credit losses based on 40% of the balance of these accounts.

It is an expense in the sense that loans and other financial services may lead to defaults, or it may be due to the decreased value of collateral for such loans and it is an estimate of the loss of revenue due to defaults. It is therefore subtracted from total (or gross) revenue.

RBC issues insurance in various areas, and the category of “PBCAE” reflects expenses associated with fulfilling its obligations in paying out for insurance policies. It too is subtracted from total revenue.

In the annual report, the category of “Non-interest expenses” 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.”

Non-interest expense (before adjustments)

(Millions of Canadian dollars)
Human resources $ 14,600
Salaries $ 6,600
Variable compensation 5,706
Benefits and retention compensation 1,876
Share-based compensation 418
Equipment 1,777
Occupancy 1,635
Communications 1,090
Professional fees 1,305
Amortization of other intangibles 1,197
Other 2,535
Total non-interest expense $ 24,139

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 issues are related to the category “Human resources.” The category “Variable compensation” is difficult to determine. Should it be categorized as part of salaries or as part of surplus value? Without more information, it is impossible to tell how much is received due to exploitation of regular bank workers and how much is due to being exploited by management. It can, however, be assumed that some of the compensation is due to the exploitation ow regular bank workers. For example, in the proxy circular of the RBC, it is stated (page 52):

A significant portion of variable compensation (at least 70% for the CEO, at least 65% for members of group executive and at least 40% for other material risk takers) is deferred with a vesting period of three or four years, consistent with our compensation principles and relevant regulatory guidelines.

The guidelines used are based on the Financial Stability Board standards (FSB standards). On page 3 of FSB Principles for Sound Compensation Practices: Implementation Standards (2009), it is stated:

Subdued or negative financial performance of the firm should generally lead to a considerable contraction of the firm’s total variable compensation, taking into account both current compensation and reductions in payouts of amounts previously earned…

Accordingly, as in the case of another Canadian bank (CIBC), I have decided to allocate 10 percent of such variable compensation to surplus value or profit and the rest to wages and benefits.

Of course, I may be wrong. Variable compensation for bank workers could be directly tied to the number of hours worked (just as the level of income varies for workers who work by the piece is tied to the number of hours worked and to the intensity of the work). However, counterarguments (and, perhaps, further data) would have to be provided to justify including it as part of “Human resources.”

On the other hand, the category “Benefits and Retention Compensation” is probably, for the most part, costs for employing bank workers and therefore should be included in calculating variable capital. Benefits include such items as

medical; prescription drug; dental; life and accident insurance; and short-term and long-term
income protection. Employees also have access to a number of health and wellness initiatives including our Employee Care program, which provides 24 hour a day access to information and confidential consultation on a wide range of work/life issues.

The category “Share-based compensation” is limited “to certain key employees and to our non-employee directors.” These are probably not “salaries” as payment for working at RBC but form part of compensation for exploiting the rest of the workers at RBC. Unlike the “Performance-based compensation” category in the case of the Canadian Imperial Bank of Commerce (CIBC), this category seems independent of work-based compensation. Hence, I include “Share-based compensation” as part of surplus value (s).

Treating share-based compensation purely as surplus value increases the total “Income before income taxes” results in a greater level of adjustment than was the case for the calculations for CIBC and TD Bank workers, but it perhaps reflects a more accurate calculation of surplus value obtained since it involves a somewhat more detailed categorization of the distribution of compensation.

I accept the other categories without adjustments (unless someone can provide reasons for adjusting them).

Ten percent of the amount in the category “Variable compensation”(ten percent of 5,706=571)) and “Share-based compensation” (418) are added to the revenue category “Income before income taxes,” (15,914) to yield the following accounts:

Adjusted Results

Income before income taxes (surplus value or s): 16,903

Human resources (total variable capital, or total v) $ 13, 611
Salaries $ 6,600
Variable compensation 5, 135
Benefits and retention compensation 1,876

The Rate of Exploitation of RBC Workers

The rate of exploitation or the rate of surplus value is s/v; therefore, s/v is 16,903/13,611=124 percent.

This means that, in terms of money, $1 of wage or salary of a regular bank worker results in $1.24 cn surplus value or profit for free (calculated on the basis of the procedure outlined in the post on the rate of exploitation of CIBC bank workers). Alternatively, for every hour worked, a Royal Bank of Canada worker works 74 minutes (or 1 hour 14 minutes) for free for RBC.

To translate this into the number of hours RBC workers work free for RBC and how many hours they would have produced an equivalent value to their own cost of production (if they worked in a sector that produced value rather than just transferred it), to it would be necessary to know the length of time that they work per day, or the length of the working day. Unfortunately, I was unable to find that information. Consequently, I used the information I found on the length of the working day for the workers at the Canadian Imperial Bank of Commerce (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

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 5.75- hour working day (345 minutes), RBC workers spend 154 minutes (2 hours 34 minutes) to obtain their wage for the day, and they spend 191 minutes (3 hours 11 minutes) in obtaining a surplus value or profit for RBC.
  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, RBC workers spend 161 minutes to obtain their wage for the day, and they spend 199 minutes in obtaining a surplus value or profit for RBC.
  3. 7-hour working day: 420 minutes: in a 7-hour working day, RBC workers spend 188 minutes to obtain their wage for the day, and they spend 232 minutes in obtaining a surplus value or profit for RBC.
  4. 7.5-hour working day: 450 minutes: in a 7,5-hour working day, RBC workers spend 201 minutes to obtain their wage for the day, and they spend 249 minutes in obtaining a surplus value or profit for RBC.
  5. 8-hour working day: 480 minutes: in an 8-hour working day, RBC workers spend 214 minutes to obtain their wage for the day, and they spend 266 minutes in obtaining a surplus value or profit for RBC.
  6. 10-hour working day: 600 minutes: in a 10-hour working day, RBC workers spend 268 minutes to obtain their wage for the day, and they spend 332 minutes in obtaining a surplus value or profit for RBC.

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.

As in the post for the determination of the rate of exploitation of workers at Canadian Imperial Bank of Commerce, I have the same questions for social democrats.

RBC workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract,” “decent wages” 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,” “decent wages” 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 of Suncor Energy, 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). 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:

The rate of exploitation or the rate of surplus value=s/v=5,396/3,641=148%.

That means that for every hour worked that produces her/his wage, a worker at works around an additional 89 minutes or 1 hour 29 minutes for free for Suncor Energy. Alternatively, in terms of money, a regular Suncor Energy worker who receives $1 of wage or salary produces $1.48 surplus value or profit for free. 

Assuming either an 8-hour shift or a 12-hour shift:

  1. In an 8- hour work day (480 minutes), a Suncor worker produces her/his wage in about 194 minutes (3 hours 14 minutes) and works 286 minutes (4 hours 46 minutes) for free for Suncor Energy.
  2. In a 12-hour work day (720 minutes), a Suncor worker produces her/his wage in about 290 minutes (4 hours 50 minutes) and works 430 minutes (7 hours 10 minutes) for free for Suncor Energy.

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?

Let us look at the management rights clause of the collective agreement between Suncor Energy Products Partnership and Unifor Local 27, for the period between april 1, 2016 and March 31, 2019.

From pages 4-5 of the collective agreement:

ARTICLE FIVE – MANAGEMENT RIGHTS

5.01 The Union recognizes and acknowledges that management of the operations and direction of the working force are fixed exclusively in the Employer and without restricting the generality of the  foregoing, the Union agrees and acknowledges:

(a) The Employer has, retains and shall possess and exercise all rights and functions, powers, privileges and authority that the Employer possessed prior to the signing of a contract with the Union, excepting only those that are clearly and specifically relinquished or restricted in this Agreement.

(b) That it is the exclusive function of the Employer to maintain order, discipline and efficiency and in connection therewith to make, alter and enforce from time to time reasonable rules and regulations, policies and practices to be observed by its employees.

(c) The Employer’s right to determine the number of employees to be  employed and the right to hire, transfer, assign, promote, demote, retire at age 65, schedule and classify, layoff or recall employees, discipline, suspend or discharge employees for just cause, and the right to plan, direct and control its operations;

(d) The Employer’s right to determine the location and extent of its operations and their commencement, expansion, curtailment or discontinuance; the work to be done; the services to be rendered; to subcontract or transfer work; to establish, change or abolish job classification; to shut down permanently or by day or week or for any other periods; to determine

Not only does the collective agreement give management the right to direct workers’ lives in many, many ways in such a fashion that they produce more value than they themselves cost, leading to the workers working for free for a certain period of time, but even during the time when they produce the value of their own wage, they are subject to the dictates of management (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation).

Ideologues of unions and social democrats or social reformers simply ignore this double situation of workers–of having to work for free and having to work throughout the day under the power of unelected managers (see Employers as Dictators, Part One).

Given this conclusion, how can any collective agreement express in any way the cliches used by many ideologues of unions–such as “fair contracts,” or “decent work?” Is it possible for a collective agreement to be fair from the workers’ point of view? It is certainly possible to be fairer, of course, but no collective agreement questions the right of employers and their representatives (management) to exploit workers and to use them for purposes foreign to their own lives.

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.

I first give revenue and expenses figures according to the Suncor Annual Report (2019), and then indicate some needed adjustments so that they accord more with Marxian economics. Amounts are in millions of Canadian dollars, unless otherwise indicated.

Revenues and Other Income (millions of $)

Gross revenues 39 866
Less: Royalties (1 522)
Operating revenues, net of royalties 38 344 [subtracting 1522 from 39 866 gives: 38 344]
Other income (loss) 645
Total revenues 38 989

Expenses
Purchases of crude oil and products 12 562
Operating, selling and general 11 244
Transportation 1 442
Depreciation, depletion, amortization and impairment 10 572
Exploration 256
(Gain) loss on asset exchange and disposal of assets (253)
Financing expenses 633

Total expenses 36 456 [sums up to this when adding all expenses]

(Loss) earnings before Income Taxes 2 533 [add this to 36 456 gives you 38 989, which is unadjusted total revenues]

At the level of expenses, it is necessary to further break down expenses. The second category in Total Expenses, “Operating, selling and general,” needs to be broken down further:

Operating, Selling and General OperatingExpenses

Contract services 4 380
Employee costs 3 641
Materials 869
Energy 1 129
Equipment rentals and leases 345
Travel, marketing and other 880
Total Operating, Selling and General Operating Expenses 11 244

The category “Contract services,” without further information, will be accepted as is–an expense different from “Employee costs.”

On the Suncor website, it does indicate the following: https://www.suncor.com/en-ca/contractors-suppliers-carriers

At Suncor, the term “contractor,” “supplier” and “carrier” refer to any organization, company or individual who provides goods and/or services to Suncor. We use the term “contractor” to indicate a supplier that provides services at one of our sites.

Contractors, suppliers and carriers play a critical role in helping us achieve our business objectives. To work with us, you must pre-qualify prior to performing work or providing services to Suncor.

Some contract services may in fact be a form of employment contract. For example, I worked temporarily for an oil company in Calgary in the late 1980s, labeling and organizing files–and was categorized as an independent contractor , undoubtedly, in order to reduce the costs to the employer since employers do not have to pay unemployment insurance premiums, etc. for independent contractors. However, without further, more detailed information, it is impossible to determine who is a real contractor and who is an employee.

The category of “Employee costs” is key since it represents, on the one hand, the wage costs to the employer and, on the other hand, the value added by Suncor workers to the commodities they produce that is equivalent to their wage. It also represents variable capital, which is used to calculate the rate of exploitation of workers and is related to total surplus value, thereby enabling us to calculate the rate of exploitation.

The category “marketing” cannot be practically separated from “travel” and “other” and therefore is not used to make any adjustments. If “marketing” were a completely separate category, though, both the wages paid for marketing and the constant capital used in marketing would be added to the surplus value produced by Suncor workers. Work performed in the sector that transforms already produced commodities into money (and money into capital) does not produce surplus value (though it may well involve the performance of surplus labour). Since, for the purpose of the particular calculation of the rate of exploitation of Suncor the issue of how to treat marketing is irrelevant since there is insufficient information, I place a short discussion of a possible way to treat marketing in Marxian terms as an appendix for those who are interested in such matters (and such matters may be relevant for other firms with data with more refined categories, such as a separate marketing account).

So far, we have:

(Loss) earnings before Income Taxes 2 533
Employee costs 3 641

Adjustments

Adjustments must be made both at the level of total revenue and at the level of total expenses.

n 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.

Total Revenue Adjustments

At the level of total revenue, the payment of royalties, from the point of view of the individual employer, is an expense (like taxes), but the source for payment of such royalties is the workers directly exploited. It says in the annual report:

Suncor is subject to royalties and taxes imposed by governments in numerous jurisdictions

Consequently, I use the initial “Gross revenues.”

Adjusted total revenue $40,511, or

Gross revenues 39,866 +
Other income (loss) 645.

Accordingly,

Adjusted Earnings before Income Taxes $4,055 (=2,533+1522)

I have accepted “Other income (loss)” as is since there is nothing explicitly obvious that would require adjustments. If someone has further information that would justify making adjustments on the basis of this category (or any category) for that matter, feel free to make suggestions or comments.

Other income (loss)
Risk management and trading activities 155
(Losses) gains on valuation of inventory held for trading purposes (7)
Investment and interest income 89
Insurance proceeds 431
Other (23)
645 [this is the sum of the above.]

The adjusted earnings constitute surplus value, or the value produced by Suncor workers without any equivalent in return. It represents the additional value the workers produce for free.

“Earnings before Income Taxes” will still undergo an adjustment, but to do so, it will be necessary to consider expenses. The amount of calculated surplus value is often not just specified from the adjusted total revenue side; the calculation of total surplus value is also often a function of making adjustments to the calculation of total expenses.

Total Expenses Adjustments

Some adjustments still need to made, based on the subcategory “Financing expenses” under the category “Expenses” (see above).

The category “Financing expenses” is broken down as follows:

Financing expenses
Interest on debt 825
Interest on lease liabilities 172
Capitalized interest at 5.3% (122)
Interest expense 875 [this is calculated by summing first two and subtracting the last one: 825+172-122]
Interest on partnership liability 55
Interest on pension and other post-retirement benefits 59
Accretion 270
Foreign exchange (gain) loss on U.S. dollar denominated debt (624)
Operational foreign exchange and other (2)
633 [=875+55+59+270-624+2]

As explained in another post, interest in many instances can be treated as part of the surplus value produced and therefore added to net income since, although from the point of view of the individual capitalist it is an expense, from the capitalist economy as a whole it is derived from the production of surplus value. The same could be said of all the other categories of interest, with the exception of “capitalized interest,” which I subtract (and which I will explain below).

If we add up the interest considered to be an expense but derived from the surplus value produced by Suncor workers, we have the following:

Interest Charges
Interest on debt 825
Interest on lease liabilities 172
Interest on partnership liability 55
Interest on pension and other post-retirement benefits 59
Total interest charges 1,111

These interest expenses, since they are only expenses from the point of view of Suncor Energy but in reality are paid out from the surplus value produced by Suncor workers, must be added to “Adjusted Earnings before Income Taxes.”

Despite the use of the term “interest” in the term “Capitalized interest,” this category needs to be considered in more detail.

In relation to the category “Capitalized interest,” as I explained in my post on the rate of exploitation of Air Canada workers and Rogers Communications 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.  

Accordingly, like Rogers Communication, I treat “Capitalized interest” (as the accountants have done) as an expense for the purposes of calculation because it is negative (in parentheses).

As for the category “Accretion,” I treat it also as a real expense. Accretion is defined (from Wikipedia):

In accounting, an accretion expense is a periodic expense recognized when updating the present value of a balance sheet liability, which has arisen from a company’s obligation to perform a duty in the future, and is being measured by using a discounted cash flows (“DCF”) approach.

I treat the remaining categories as real expenses, but I leave it to others to criticize this (and any other calculation) if it is incorrect.

A word should also be said about the category “Foreign exchange (gain) loss on US dollar denominated debt.” There is no explanation in the annual report for this category.

Searching the Web, I found the following general explanation:

What is a Foreign Exchange Gain/Loss?

A foreign exchange gain/loss occurs when a company buys and/or sells goods and services in a foreign currency, and that currency fluctuates relative to their home currency. It can create differences in value in the monetary assets and liabilities, which must be recognized periodically until they are ultimately settled.

The basic idea seems to be that, due to the changes in exchange rates between the Canadian dollar and the US dollar, there was actually a gain for 2019 (it is in parentheses–if it were a loss, it would not be).

Accordingly, the adjusted “Financing expenses” is:

Capitalized interest (122) (to be treated as an expense)
Accretion 270
Foreign exchange (gain) loss on U.S. dollar denominated debt (624) (to be treated as a gain this is a gain since it is in parentheses and hence a “negative expense”)
Operational foreign exchange and other (2)
Total Adjusted Financing Expenses: -230 (122+270-624+2)

Yes–a negative $230 million. That means that the indicated expenses are actually a gain. It is easier to understand this by personalizing it (when possible). Imagine you have various expenses and a bank account in US dollars. Let us say you are calculating your expenses. Let us say that you have $500 US dollars and $600 in Canadian expenses. If the US dollar increases in value by one half (exaggerating, of course, to make the calculation easier), then you have a net expense of negative $150 Canadian since $500 US dollars=$750 Canadian dollars (500×1.5=750). $600-750=-150.

This result means that there were not, in fact, any real financing expenses in 2019 after interest is treated as surplus value and after taking into account the gain in foreign exchange dominated in US dollar denominated debt. The $230 million, in addition to the $1,111 million in interest, need to be subtracted from “Total expenses” $36 456 million. and added to “Adjusted Earnings before Income Taxes” $4,055 million.

Accordingly,

Adjusted Total Revenue $40,511
Adjusted Total Expenses $35,115 (=36,456-1111-230)

So, with the adjustments in place:

Final Adjusted Earnings before Income Taxes: s=$5,396 million or $5.396 billion
Employee costs: v=$3, 641 million or $3.641 million

The Rate of Exploitation

The rate of exploitation or the rate of surplus value=s/v=5,396/3,641=148%.

That means that for every hour worked that produces her/his wage, a worker at works around an additional 89 minutes or 1 hour 29 minutes for free for Suncor Energy. Alternatively, in terms of money, a regular Suncor Energy worker who receives $1 of wage or salary produces $1.48 surplus value or profit for free. 

The length of the working day at Suncor Energy varies somewhat, but probably less so than for some other employers. According to one collective agreement. the average work week is 40 hours, but it does not specify how that is distributed over the week. From COLLECTIVE AGREEMENT
BETWEEN: SUNCOR ENERGY PRODUCTS PARTNERSHIP and Unifor Local 27. APRIL 1, 2016 TO MARCH 31, 2019, page 15:

ARTICLE FIFTEEN- HOURS OF WORK/OVERTIME/PREMIUM PAY
15.01 The regular work week shall not consist of more than forty-hours (40) per week.

Another collective agreement implies 8-hour and 12-hour work days. From Collective Agreement
Between Suncor Energy Products Partnership, Sarnia Refinery and Sunoco Employees’ Bargaining Association, March 1, 2017 to February 28, 2021, page 22:

Permanent shift changes will not be made which will result in an employee working more than ten (10) consecutive calendar days while on 8-hour shifts or more than six (6) consecutive calendar days while on 12-hour shifts.

According to the Suncor Energy website:

Most unionized jobs at Suncor also result in shift work. The most common shift pattern is a 12-hour shift, working three days and three nights, followed by six days off.

Assuming either an 8-hour shift or a 12-hour shift:

  1. In an 8- hour work day (480 minutes), a Suncor worker produces her/his wage in about 194 minutes (3 hours 14 minutes) and works 286 minutes (4 hours 46 minutes) for free for Suncor Energy.
  2. In a 12-hour work day (720 minutes), a Suncor worker produces her/his wage in about 290 minutes (4 hours 50 minutes) and works 430 minutes (7 hours 10 minutes) for free for Suncor Energy.

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?

Let us look at the management rights clause of the collective agreement between Suncor Energy Products Partnership and Unifor Local 27, for the period between april 1, 2016 and March 31, 2019.

From pages 4-5 of the collective agreement:

ARTICLE FIVE – MANAGEMENT RIGHTS

5.01 The Union recognizes and acknowledges that management of the operations and direction of the working force are fixed exclusively in the Employer and without restricting the generality of the  foregoing, the Union agrees and acknowledges:

(a) The Employer has, retains and shall possess and exercise all rights and functions, powers, privileges and authority that the Employer possessed prior to the signing of a contract with the Union, excepting only those that are clearly and specifically relinquished or restricted in this Agreement.

(b) That it is the exclusive function of the Employer to maintain order, discipline and efficiency and in connection therewith to make, alter and enforce from time to time reasonable rules and regulations, policies and practices to be observed by its employees.

(c) The Employer’s right to determine the number of employees to be  employed and the right to hire, transfer, assign, promote, demote, retire at age 65, schedule and classify, layoff or recall employees, discipline, suspend or discharge employees for just cause, and the right to plan, direct and control its operations;

(d) The Employer’s right to determine the location and extent of its operations and their commencement, expansion, curtailment or discontinuance; the work to be done; the services to be rendered; to subcontract or transfer work; to establish, change or abolish job classification; to shut down permanently or by day or week or for any other periods; to determine

Not only does the collective agreement give management the right to direct workers’ lives in many, many ways in such a fashion that they produce more value than they themselves cost, leading to the workers working for free for a certain period of time, but even during the time when they produce the value of their own wage, they are subject to the dictates of management (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation).

Ideologues of unions and social democrats or social reformers simply ignore this double situation of workers–of having to work for free and having to work throughout the day under the power of unelected managers (see Employers as Dictators, Part One).

Given this conclusion, how can any collective agreement express in any way the cliches used by many ideologues of unions–such as “fair contracts,” or “decent work?” Is it possible for a collective agreement to be fair from the workers’ point of view? It is certainly possible to be fairer, of course, but no collective agreement questions the right of employers and their representatives (management) to exploit workers and to use them for purposes foreign to their own lives.

Appendix

The issue of how to treat marketing workers (sales work in wholesale and retail trade) and the machines, buildings and equipment they use is relevant to calculating the rate of exploitation of workers who produce surplus value (such as Suncor workers), because it complicates the calculation.

From Fred Moseley (1997), “The Rate of Profit and the Future of Capitalism,” pages 23-41, in Review of Radical Political Economics, Volume 29, Number 4, pages 26-27:

Circulation labor is labor related to the exchange of commodities and money, including such functions as buying and selling, accounting, check processing, advertising, debt-credit relations, insurance, legal counsel, and securities exchange. Marx argued that circulation labor does not produce value and surplus-value because exchange is essentially the exchange of equivalent values. Circulation labor only transforms a given amount of value from commodities to money, or vice versa. …

Capitalist enterprises must of course pay unproductive labor to carry out these necessary functions, even though, according to Marx’s theory, these functions do not produce value and surplus-value. Therefore, the costs of this unproductive labor cannot be recovered out of value which it produces. Instead, these unproductive costs are recovered out of the surplus-value produced by productive labor employed in capitalist production.

This means that the source of the money to pay for the workers in marketing is, ultimately, the surplus value produced by Suncor workers (and other workers who produce surplus value). This does not mean that workers in marketing are not exploited; they too undoubtedly perform surplus labour as well–but they do not produce surplus value, which is the surplus performed and transformed into money form by means of the process of buying and selling (whether that occurs simultaneously with the activity as in the case of services or subsequently as, for example, in the production of beer).

The means of trade or selling and buying used in marketing also would probably be calculated as part of surplus value since, although they are a cost from the point of view of the individual capitalist, they are paid out of value produced by Suncor workers and other workers who produce surplus value. From Moseley (1997), page 27:

The rate of profit being analyzed here is by definition equal to the ratio of the amount of profit (P) to the total stock of capital invested (K). According to Marx’ theory, profit, the numerator in the rate of profit, is the difference between the annual flow of surplus-value (S) and the annual flow of unproductive costs (Uf) (almost entirely the wages of unproductive labor, but also includes a small part (about 5%) of the costs of materials and the depreciation costs of buildings, machinery, etc. used in unproductive functions): (1) P = S – Uf.

Or again, in the work by Anwar Shaikh and E. Ahmet Tonak (1994), Measuring the Wealth of Nations: The Political Economy of National Accounts, pages 45-46, when discussing a hypothetical total production of value of $2000, with c=$400, v=$200 and s=$1400, they assume that the total value of $2000 is sold to wholesalers for a price of $1000, and the wholesalers (and, eventually, retailers), mark up the price to consumers to the level of total value of $2000:

From the Marxian point of view, nothing has changed in the production process, so that constant capital C*, variable capital V*, and surplus value S* are unchanged. But whereas the total surplus value S* = $1400 previously accrued entirely to the production sector as profits, it is now divided between the profits of the production sector (Pp = $400) and the trading margin of the trade sector
(TM = Mt + Wt + Pt = $1000).

where TM=trade margin, Mt=intermediate inputs (c for trade, such as building rentals or purchases, sales counters, registers, forklifts, storage facilities, etc.), Wt=wages for trading activities and Pt=profit for trading activities. The value of inputs (c+v) for the sector that produces value is 600, with the distribution between c and v and s as follows: c=400, v=200, s=1400. However, since it is sold only for 1000, the actual s received for the sector that produces surplus value is 400. For the trade sector (indicated by t in parentheses), the distribution of the $1000 in s is c(t)=200, v(t)=400 and s(t)=400.

Note, however, that c(t) and v(t), though expenses from the point of view of the individual trading employer, is paid from the surplus value produced by workers in the production sector.

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 hides 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?