The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part Three, Updated, 2020

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 workers in several capitalist companies: Magna International, Bell Canada Enterprises (BCE), ScotiaBank (Bank of Nova Scotia), Bank of Montreal (BMO), Telus, Royal Bank of Canada (RBC), Suncor Energy, Toronto-Dominion Bank (TD Bank),Rogers Communications Inc., the Canadian Imperial Bank of Commerce (CIBC) and  Air Canada,  (see for example The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One).

I thought it might be useful to begin the comparison of rates of exploitation of the same capitalist employer for different years. Although this fails to capture the dynamic of capitalist relations of production and exchange (being two snapshots at different times), it may provide further insight into the nature of capitalist society.

The structure of the post is as follows:

  1. I outline the nature of the rate of exploitation
  2. I then provide “Conclusion first,”
    a. the 2020 rate of exploitation is indicated
    b. the 2020 rate of exploitation is compared with the 2019 rate and some possible explanations of the differences are provided
    c. a long quote of a discussion around tactics and strategies between Sam Gindin (former research director of the Canadian Autoworkers Union (CAW) (now Unifor) and me relating to  union ideology.
    d. Further brief criticisms of Mr. Gindin’s political position
    e. Consideration of an Integram Bargaining Report produced by Unifor Local 444 (Integram is a division of Magna International), dated November 8, 2020 in relation to Mr. Gindin’s views
  3. How I calculated the rate of exploitation (including adjustments) as well as a justification for interpreting the substantial decrease in the rate of exploitation in terms of “fixed costs.”
  4. The conclusions as stated in 2.

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.

The Rate of Exploitation

So, with the adjustments in place: s=1081; v=2,509. The rate of exploitation or the rate of surplus value=s/v=1081/2,509=43%.

I will first consider this rate in relation to the workers in 2020, and then compare this rate with the 2019 rate of exploitation.

That means that for every hour worked that produces her/his wage, a worker at Magna International works around an additional 26 minutes for free for Magna International. Alternatively, in terms of money, $1 of wage or salary of a regular Magna International worker produces around $0.43 (43 cents) surplus value or profit for free.

  1. In an 8-hour work day (480minutes), the worker produces her/his wage in 336 minutes (5 hours  36 minutes) and works 144 minutes (2 hours 24 minutes) for free for Magna International.
  2. In an 9-hour work day (540minutes), the worker produces her/his wage in 378 minutes (6  hours 18 minutes) and works 162 minutes (2 hours 42 minutes) for free for Magna International.
  3. In an 10-hour work day (600 minutes), the worker produces her/his wage in 420 minutes (7  hours) and works 180 minutes (3 hours) for free for Magna International.
  4. In an 12-hour work day (720 minutes), the worker produces her/his wage in 503 minutes (8  hours  23 minutes) and works 217 minutes (3 hours 37 minutes) for free for Magna International.

Comparison of the 2019 Rate of Exploitation with the 2020 Rate of Exploitation

2020: So, with the adjustments in place: s=1081; v=2,509. The rate of exploitation or the rate of surplus value=s/v=1081/2,509=43%.
2019: So, with the adjustments in place: s=2,258; v=2,862. The rate of exploitation or the rate of surplus value=s/v=2,258/2,862=79%.

The absolute decrease in s is substantial: 1,177, and the rate of decrease is 52% (1081-2,258)/2,258=-1,177/2,258).

By contrast, the absolute decrease in v is much less: 353, and the rate of decrease is (2509-2862)/=2509=-353/2862=12%.

The substantial decrease in the rate of exploitation is likely due to the treatment of workers as “fixed costs” as the pandemic forced employers to retain workers despite the relatively extra costs associated with it (partly offset by federal, provincial and municipal supports).

There may, of course, be other causes of the decrease in the rate of exploitation, such as problems pertaining to supply of inputs, but I will leave that issue aside.

It should be emphasized that the exploitation of workers pertains to the production of a surplus beyond the production of the value equivalent of their own costs of production. Even during the time the workers require to produce their wage, they are oppressed by employers since they are subject to the will of the employer (or her representatives) and to the control over their labour.

Political Considerations

The rapid decrease in the rate of exploitation of workers of Magna International with the onset of the pandemic will likely call for an opposite pressure to increase exploitation directly through intensification and an extension of the working day and changes in technology and organization of the production process. Pressures to increase tax breaks for such capitalist employers (and corresponding reduction in state expenditures for welfare measures) may also arise. Of course, some workers will not just lay down and accept such counter-pressures.

Why is it that workers have to put up with this situation? Should they not be organizing not only to resist exploitation and oppression and increased pressures related to those phenomena but also to abolish such pressures? Not according to the social-democratic or social-reformist left. Such organizational efforts, for them, are undoubtedly unrealistic. New structures are supposedly to arise without criticizing the old structures.

Thus, for social democrats like Sam Gindin (former research director for the Canadian Auto Workers (CAW) (now Unifor), challenging the ideology of “decent jobs or work,” “fair contract,” “fair collective agreement,” “fair deal,” “fair wages” and other abstract phrases (rhetoric) is relatively unimportant. New material structures more relevant to the lives and experiences of working people are somehow to arise without constantly challenging the existing social structures–and the corresponding ideology that justifies such structures.

Frankly, I doubt that such new material structures will arise without a persistent and constant challenging of the ideological rhetoric rampant among the left in general and unions in particular.

I will include a rather long quote from a previous post. It is a conversation between Sam Gindin (a self-claimed “leader” of radical workers here in Toronto despite his probable own explicit denial of such a title) and me:

Re: A Good or Decent Job and a Fair Deal
Sam Gindin
Sat 2017-02-18 8:05 AM
Something is missing here. No-one on this list is denying that language doesn’t reflect material realities (the language we use reflects the balance of forces) or that it is irrelevant in the struggle for material effects (the language of middle class vs working class matter And no one is questioning whether unions are generally sectional as opposed to class organizations or whether having a job or ‘decent’ pay is enough. The question is the autonomy you give to language.

The problem isn’t that workers refer to ‘fair pay’ but the reality of their limited options. Language is NOT the key doc changing this though it clearly plays a role. That role is however only important when it is linked to actual struggles – to material cents not just discourse. The reason we have such difficulties in doing education has to do with the limits of words alone even if words are indeed essential to struggles. Words help workers grasp the implications of struggles, defeats, and the partial victories we have under capitalism (no other victories as you say, are possible under capitalism).

So when workers end a strike with the gains they hoped for going in, we can tell them they are still exploited. But if that is all we do, what then? We can – as I know you’d do – not put it so bluntly (because the context and not just the words matter). that emphasize that they showed that solidarity matters but we’re still short of the fuller life we deserve and should aspire to and that this is only possible through a larger struggle, but then we need to be able to point to HOW to do this. Otherwise we are only moralizing. That is to say, it is the ideas behind the words and the recognition of the need for larger structures to fight through that primarily matter. Words help with this and so are important but exaggerating their role can be as dangerous as ignoring it.

What I’m trying to say is that people do, I think, agree with the point you started with – we need to remind ourselves of the limits of, for example, achieving ‘fair wages’. But the stark way you criticize using that word, as opposed to asking how do we accept the reality out there and move people to larger class understandings – of which language is an important part – seems to have thrown the discussion off kilter.

On Sat, Feb 18, 2017 at 7:00 AM, Frederick Harris <arbeit67@hotmail.com> wrote:

I was waiting to see whether there was any dispute concerning either the primary function of language or its material nature. Since there has been no response to that issue, I will assume that the view that the primary function of language is to coordinate social activity has been accepted.

What are some of the political implications of such a view of language? Firstly, the view that “But material conditions matter more” has no obvious basis. If language coordinates our activity, surely workers need language “to reproduce themselves.”

The question is whether coordination is to be on a narrower or wider basis.

Let us now take a look at the view that a contract (a collective agreement) is fair or just and that what workers are striving for is a decent or good job.

If we do not oppose the view that any collective agreement is fair to workers and that the jobs that they have or striving to have are decent jobs, then are we saying that a particular struggle against a particular employer can, in some meaningful sense, result in a contract that workers are to abide by out of some sense of fairness? Does not such a view fragment workers by implicitly arguing that they can, by coordinating their action at the local or micro level, achieve a fair contract and a good job?

If, on the other hand, we argue against the view that the workers who are fighting against a particular employer cannot achieve any fair contract or a decent job, but rather that they can only achieve this in opposition to a class of employers and in coordination with other workers in many other domains (in other industries that produce the means of consumption of workers, in industries that produce the machines and the raw material that go into the factory, in schools where teachers teach our children and so forth), then there opens up the horizon for a broader approach for coordinating activity rather than the narrow view of considering it possible to achieve not a fair contract and a decent job in relation to a particular employer.

In other words, it is a difference between a one-sided, micro point of view and a class point of view.

As far as gaining things within capitalism, of course it is necessary to fight against your immediate employer, in solidarity with your immediate fellow workers, in order to achieve anything. I already argued this in relation to the issue of health in another post.

Is our standard for coordinating our activity to be limited to our immediate relation to an employer? Or is to expand to include our relation to the conditions for the ‘workers to reproduce themselves’?

“They turn more radical when it becomes clear that the system can’t meet their needs and other forms of action become necessary -”

How does it become clear to workers when their relations to each other as workers occurs through the market system? Where the products of their own labour are used against them to oppress and exploit them? Are we supposed to wait until “the system can’t meet their needs”? In what sense?

I for one have needed to live a decent life–not to have a decent job working for an employer or for others to be working for employers. I for one have needed to live a dignified life–not a life where I am used for the benefit of employers. Do not other workers have the same need? Is that need being met now? If not, should we not bring up the issue at every occasion? Can any collective agreement with an employer realize that need?

Where is a vision that provides guidance towards a common goal? A “fair contract”? A “decent” job? Is this a class vision that permits the coordination of workers’ activities across industries and work sites? Or a limited vision that reproduces the segmentation and fragmentation of the working class?

Fred

I guess workers’ explicit consciousness of their own exploitation and oppression and their discussion of such experiences is to arise only after the emergence of “larger structures to fight through.” It is, however, likely that such “larger structures” will simply mimic the “narrower” structures if both are not criticized. How is the CLC (the Canadian Labour Congress)  substantially different from union structures in terms of challenging the class power of employers? Or is Mr. Gindin referring to the larger structures, such as the class power of employers?

My own experience with union reps has been that they assume the necessity and legitimacy of the class power of employers–and do not do anything to raise the issue of the legitimacy of the class power of employers, the exploitation of workers and their oppression among their own members; their aim is to improve the working conditions without questioning at all such class power, exploitation and oppression. I have been a union member, a union rep (union steward and member of a collective-bargaining committee), a member of the executive of a union and a rep for an Equity and Social Justice Committee. I have seen up close the assumptions and limitations and unions–and have tried to address such limitations when and where I could.

The false nature of Mr. Gindin’s political position stands out when he claims the following:

Which brings me back to the point that the problem is not [Wayne] Dealy [union director for the Canadian Union of Public Employees (CUPE) Local 3902] or Sean [Smith,  Unifor Local 2002 Co-Ordinator and Toronto Airport Workers Council (TAWC) activist”] or others but OUR Collective inability to provide them with an effective alternative politics…They can be criticized but only if we do so with humility and part of criticizing ourselves. [my emphasis] 

Is there evidence that Mr. Gindin criticizes his own views? Are union reps (and union members) really conscious of the exploitative and oppressive nature of the class power of employers as such? If so, what are they doing about it? I fail to see evidence of it. I also fail to see evidence of Mr. Gindin engaging in self-criticism. He implicitly assumes that he knows what workers need–and that is not an explicit and real consciousness of their exploitation and oppression–with or without unions, collective bargaining and collective agreements

Let us look at an Integram Bargaining Report produced by Unifor Local 444 (Integram is a division of Magna International), dated November 8, 2020 (see  https://d3n8a8pro7vhmx.cloudfront.net/uniforlocal444/pages/43/attachments/original/1604838387/Integram_Ratification_Bulletin.pdf?1604838387).

It contains such enlightening items as the following:

Our members are their most vital asset that sets the supplier bar in this industry and deserves proper compensation through pay and benefits that award them for their labour and aids the company in retaining their highly skilled workforce. [my emphasis]

I find this language both typical of union reps–and disturbing. As I pointed out above, it is likely that Magna International treated the workers as a “fixed cost” in order to retain them during the worst moments of the pandemic. However, to read a union rep write that Magna workers are “an asset” surely is both disturbing and in need of criticism. Should any human being be considered and treated as an “asset?” Consider any member of your family. Would you want them to be treated as “an asset?”

That they are “assets” is real enough–to be exploited by Magna International (and all other private companies)–but should we not be criticizing this? Is Mr. Gindin in any specific way? Apparently not–since radicals are supposed to only criticize such views in “material cents.” Perhaps Mr. Gindin can provide an example of this in his own concrete practice? I see no concrete examples of his recommendations–they are so vague.

Where is Mr. Gindin’s “humility?” Where is his “self-criticism?”

Let us continue with this Integram Bargaining Report:

deserves proper compensation through pay and benefits that award them for their labour

This is ideology frequently expressed by union reps. “Proper compensation” is a synonym for “fair wages” and, indirectly, a “fair contract.” The union rep clings to the appearance of workers selling their “labour” [labour is an activity that requires a material link between that labour and the means to be used–without those means, there is only a capacity for labour or labour-power. As Marx remarked, in Capital: A Critique of Political Economy, volume 1, page 277:

When we speak of capacity for labour, we do not speak of labour, any more than we
speak of digestion when we speak of capacity for digestion. As is well known, the latter process requires something more than a good stomach.

Workers lack the conditions for the realization of their capacity for labour–just as many in the world lack the conditions for the use of their digestive tract–they lack food. The Unifor union rep., by identifying labour with the commodity which the worker sells, simply ignores the difference between a capacity and the conditions for its exercise–and such neglect of the conditions is hardly in the interests of workers.

How workers sell “labour” that is already linked to the means of production owned by (Magna) Integram (and hence under the control of Integram is a mystery. Furthermore, by identifying compensation with labour, the exploitation of workers by Magna Integram is excluded, and the internal or necessary relation between the wage and the profit of Magna Integram becomes broken.

Does Mr. Gindin criticize this approach so typical of union reps? Not at all. Rather, he criticizes those who engage in such criticism. For him, radicals are to indulge such beliefs. After all, it is only “discourse” and has no “autonomy.” This dismissal of ideological struggles is itself arrogant and lacks humility. Mr. Gindin somehow knows what workers need without even considering in any detail how union reps aid to legitimate the existing class power of employers by constantly using such language.

Where has Wayne Dealy provided any criticism of collective agreements (not the particular provisions of collective agreements) publicly? Sean Smith? Frankly, I find it astounding that such arrogance displayed by Mr. Gindin in his assumption that we are not to engage in criticism of union reps’ views is paraded as “humility” and “self-criticism.”

Let us listen to what Mr. Gindin called “Our Tracy” (McMaster, a union steward for Local 561 of the Ontario Public Service Employees Union (OPSEU); who was also vice-president of the local union at one point):

Collective bargaining is limited and imperfect, but a fuck-ton better than none.

I have hardly denied that collective bargaining is better than none. I have belonged to several unions in my life, and I certainly would prefer to belong to a union when working for an employer than not belonging to one. However, I do not take seriously her claim that “Collective bargaining is limited and imperfect.” I see no evidence that Ms. McMaster takes such a view seriously. Where is the evidence that she has inquired into “the limitations and imperfections” of collective bargaining? Rather, for Ms. McMaster, collective bargaining provides an imperfect but ultimately fair contract.

Perhaps Mr. Gindin can provide evidence to the contrary it. I doubt that he will–or can.

Mr. Gindin’s tactics are as follows: Let us try to convince such union reps of our views. Frankly, I think such an effort is, for the most part, a waste of time. Of course, there are exceptions, and it is necessary to use one’s judgement under specific circumstances and in relation to specific union reps. However, my judgement was and is that it Ms. McMaster would never be really convinced of the “limitations and imperfections” of collective bargaining.

Rather than indulging such union reps, it is in the interests of workers to criticize them and to expose their lack of a critical approach to collective bargaining.

Let us continue to look at this Bargaining Report:

Your bargaining committee achieved Pay Raises, Benefits Improvements, Lowering the new higher grid, Buy-out packages, and Signing Bonus. A healthy contract that reflects a greater worth in our Integram members.

Such achievements, of course, are in the interests of the workers. But why call it a “healthy contract?” Apparently, this is a synonym for a “fair contract”–and I have shown that Canadian unions persistently use such language to justify both the collective-bargaining process and collective agreements (see, for example,   Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One: The Canadian Union of Public Employees (CUPE)  or Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada)). No collective agreement can express something legitimate–unless the necessary exploitation and oppression of workers by employers (including Magna Integram) is somehow legitimate.

In the Bargaining Report, there then follows a list of items that were obtained by the bargaining committee. Not one word of the “limited and imperfect” nature of the collective agreement or the collective-bargaining process. Not one word on the management rights clause, implicit or explicit in the collective agreement. Do not workers persistently experience the power of management in a variety of ways? Why the silence over such experiences? Does the collective agreement address such power? Or does it only address the limited areas defined by collective-bargaining legislation?

For Mr. Gindin, though, to question the “language” used by union reps, as well as the omission of any criticism of the limitations of collective bargaining and collective agreements, expresses merely “moralizing.”

I will leave Mr. Gindin with his fake humility and his fake self-criticism. I will continue to engage in “discourse analysis”–that is to say, with a criticism and exposure of the limited nature of unions, collective bargaining and collective agreements.

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 US dollars:

Sales $32,647
Costs and expenses $31,641

Cost of goods sold 28,207

Material $19,750
Direct labour 2,498
Overhead 5,959

Depreciation and amortization 1,366
Selling, general & administrative 1,587
Interest expense, net 86
Equity income (189)
Other expense, net 584
Income from operations before income taxes $1,006

[28,207+1,366+1,587+86+584=31,830; 31,830+1006=32,836; 32,836-189=32,647]

Adjustments

As I indicated in the 2019 post, a couple of adjustments are necessary.

Adjustment on Cost Side of Direct Labour and Corresponding Adjustment of Income  from Operations Before Taxes

I wrote in the 2019 post:

On page 37 [of the 2019 annual report], there is a reference to pension benefits. I assume that this category belongs to “direct labour” since it forms part of the deferred wages of workers that is paid in the current year (but then again, it is unclear whether the category of direct labour includes this, but since it is subtracted from net income, this leads me to believe that it is not included in that category). This should be added to direct labour. Hence, direct labour would be: 2,815+47=2,862, “Costs and expenses” would be $37, 255 “Costs of goods sold”would be $34,069, and “Income from operations before taxes” should be adjusted downward accordingly.

Now the 2020 “Pension and post-retirement benefits” is  (11).

This US $11 million should be added to “Cost and Expenses,” “Direct labour” and subtracted from “Income from operations before taxes.” Accordingly:

Temporarily Adjusted Costs and Expenses: $31,652
Temporary Adjusted Costs of Goods Sold: $28,218
Adjusted Direct Labour Costs: $2,509
Temporarily Adjusted income from operations before income taxes: $995

Adjustment of income from operations before income taxes due to interest expense, net

Another adjustment relates to interest. As I indicated in my post about the 2019 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.”

Accordingly, it is necessary to add $86 “Interest expense, net” to “Income from operations before income taxes” and subtract it from “Cost and expenses.”

(“Equity income” is already subtracted from costs since it is not really a cost at all but rather income.)

Adjusted Cost and Expenses $31,566
Adjusted Direct Labour $2,509
Adjusted income from operations before income taxes $1081

The Rate of Exploitation

So, with the adjustments in place: s=1081; v=2,509. The rate of exploitation or the rate of surplus value=s/v=1081/2,509=43%.

I will first consider this rate in relation to the workers in 2020, and then compare this rate with the 2019 rate of exploitation.

That means that for every hour worked that produces her/his wage, a worker at Magna International works around an additional 26 minutes for free for Magna International. Alternatively, in terms of money, $1 of wage or salary of a regular Magna International worker produces around $0.43 (43 cents) surplus value or profit for free.

The following provides information about the length of the working day:

  1. There are 3 shifts. 9 hours a shift.
  2. Typical 8 – 12 hours per shift.
  3. 8-12 hrs, 7 days a week, with very last minute overtime mandating, and i mean literally as your punching out theyll tell you that you have to stay for another 4+ hours. No work life balance and management could care less because theyre at home on the weekends. Better positions come with 100% more stress, more responsibilities that others pass off cause they dont want to do it, 1000s of strings attached and literally no way to avoid getting screwed by them. Constant harassment and belittling by management and engineers and if you report it, youre facing constant retaliation and impending termination. If your not part of the HR posse or the “good ol’ boys club”, youre nothing but a rug for them to walk across. So, if you value your sanity, health and family, this is not a place to work.
  4. I have been there for 3 years until i quit and half of the plant is doing either 10 or 12 hours 7 days a week
  5. Article 17 (page 51) of the collective agreement between Magna International and Unifor Local 2009AP: Employees normally work an eight-hour day, five days per week

Accordingly:

  1. In an 8-hour work day (480minutes), the worker produces her/his wage in 336 minutes (5 hours  36 minutes) and works 144 minutes (2 hours 24 minutes) for free for Magna International.
  2. In an 9-hour work day (540minutes), the worker produces her/his wage in 378 minutes (6  hours 18 minutes) and works 162 minutes (2 hours 42 minutes) for free for Magna International.
  3. In an 10-hour work day (600 minutes), the worker produces her/his wage in 420 minutes (7  hours) and works 180 minutes (3 hours) for free for Magna International.
  4. In an 12-hour work day (720 minutes), the worker produces her/his wage in 503 minutes (8  hours  23 minutes) and works 217 minutes (3 hours 37 minutes) for free for Magna International.

Comparison of the 2019 Rate of Exploitation with the 2020 Rate of Exploitation

2020: So, with the adjustments in place: s=1081; v=2,509. The rate of exploitation or the rate of surplus value=s/v=1081/2,509=43%.
2019: So, with the adjustments in place: s=2,258; v=2,862. The rate of exploitation or the rate of surplus value=s/v=2,258/2,862=79%.

The absolute decrease in s is substantial: 1,177, and the rate of decrease is 52% (1081-2,258)/2,258=-1,177/2,258).

By contrast, the absolute decrease in v is much less: 353, and the rate of decrease is (2509-2862)/=2509=-353/2862=12%.

Factors or Determinants of the Rate of Exploitation and Its Changes

Normally, when there is a change in the rate of exploitation, whether positive or negative, we should look at the general factors that govern the production of surplus value.  In general, there are three ways of changing the rate of exploitation:

  1. changing the real wage (the absolute amount and variety of commodities consumed by workers);
  2. changing the absolute amount of surplus value produced either by
    1. changing the length of the working day intensity of labour or
    2. changing the intensity of labour length of the working day
  3. changing (in fact, increasing) the relative amount of surplus value produced, generally through new technology, thereby decreasing the value of the commodities produced that form the real wage consumed by workers (with a fixed or constant working day and a constant amount of commodities consumed by workers, but with less labour time required to produce them, the amount of labour time required to reproduce the workers’ wages is reduced and more labour time constitutes surplus value).

As Ben Fine  and Alfredo Saad-Filho (2016) describe the factors with a view to increasing the rate of exploitation by employers in their book Marx’s Capital, pages 36-37:

Assume, now, that real wages remain unchanged. The rate of exploitation can be increased
in two ways….

First, e [the rate of exploitation[ can be increased through what Marx calls the production of absolute surplus value. On the basis of existing methods of production – that is, with commodity values remaining the same – the simplest way to do this is through the extension of the working day. …

There are other ways of producing absolute surplus value. For example, if work becomes more intense during a given working day, more labour will be performed in the same period, and absolute surplus value will be produced. The same result can be achieved through making work continuous, without breaks even for rest and refreshment. The production of absolute surplus value is often a by-product of technical change, because the
introduction of new machines, such as conveyors and, later, robots in the production line, also allows for the reorganisation of the labour process. This offers an excuse for the elimination of breaks or ‘pores’ in the working day that are sources of inefficiency for
the capitalists and, simultaneously, leads to increased control over the labour process (as well as greater labour intensity) and higher profitability, independently of the value changes brought about by the new machinery.

The desired pace of work could also be obtained through a crudely applied discipline. There may be constant supervision by middle management and penalties, even dismissal, or rewards for harder work (i.e. producing more value).

The above are general conditions for the determination of the rate of exploitation and its changes. The specific change observed in the rate of exploitation of workers at Magna International are unlikely due to these general conditions. Rather, the decrease in the rate of exploitation in 2020 relative to 2019 is likely due to the specific economic conditions that accompanied the pandemic.

One Possible Explanation for the Substantial Decrease in the Rate of Exploitation

Part of the explanation for the  substantial decrease in the rate of exploitation was probably the treatment of workers at Magna International, in part, as “fixed costs.”

Initially, Magna International laid off many of “its” workers, but it also sought to retain them by paying them additional money beyond that flowing from the government initially through federal  unemployment insurance (although it may have also been a function of provisions in the collective agreement concerning layoffs).

Magna International did lay off around 2,000 workers in Ontario during the initial wave of COVID. From https://lfpress.com/business/local-business/magna-cuts-production-2000-local-staff-amid-fallout-from-covid-19:

Magna cuts production, 2,000 local staff amid fallout from COVID-19

Magna, one of the largest automotive employers in the London region, has laid off about 2,000 workers locally as the fallout from the COVID-19 pandemic sweeps through the manufacturing sector.

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Magna, one of the largest automotive employers in the London region, has laid off about 2,000 workers locally as the fallout from the COVID-19 pandemic sweeps through the manufacturing sector.

The Canadian auto parts giant has closed its two St. Thomas plants, Presstran and Formet, employing a combined 1,500 to 2,000, as well as Qualtech in London, which employs about 275.

“Both Formet and Presstran will be temporarily suspending operations today . . . Qualtech will also temporarily suspend its operations,” read a statement from Scott Worden of Magna’s corporate communications department.

“Magna is committed to both the health and financial well-being of our employees. We will be providing additional payments to employees beyond the minimums provided under the federal Employment Insurance program.”

The closings are not unexpected, and may not last long, as the Detroit Three automakers, Toyota and Honda have all closed plants for up to two weeks across North America as a result of the coronavirus.

Presstran is a stamping plant and Formet supplies several different parts to many automakers, including truck frames to GM plants in the U.S. Qualtech supplies seating systems.

“Magna continues to closely monitor developments related to coronavirus (COVID-19) with a focus on the health and safety of our employees and our operations. In addition, we are in daily communication with our customers, many of which have recently announced partial or full temporary production suspensions at plants in Europe and North America,” read an additional statement from Tracy Fuerst, vice-president of corporate communications at Magna.

The automaker said it will continue to follow World Health Organization protocol on cleaning the workplace and limiting contact with between people.

“We continue to assess our operations on an individual basis and are beginning to temporarily suspend manufacturing operations at a number of our manufacturing divisions around the world . . . many of our facilities are expected to suspend operations with production status re-evaluated week to week,” said Fuerst.

Further evidence for treating Magna International workers as fixed costs comes from Annual Information Form, Magna International Inc., March 25, 2021, page A-17:

Despite inevitable temporary layoffs of employees in light of the suspension of production during the first half of 2020, we took a number of steps to minimize the impact felt by our employees, including: maintaining employee benefits coverages through the temporary layoff period; …

We also engaged emergency government support programs primarily for employees to maintain compensation levels and/or benefits for a certain period, where applicable. The countries in which Magna engaged such programs included Canada, the United States, the United Kingdom, Germany, Austria and China. These programs allowed participating employees to remain on our payroll while inactive or furloughed due to mandatory stay at home orders, with Magna receiving full or partial reimbursement for such inactive labour.

The view that workers were treated more as fixed costs (probably out of fear that Magna International would lose such workers to other employers if they were not treated as fixed costs) is supported by the relatively limited decrease in v when compared to s.

Treating workers as “fixed costs” under the conditions of the pandemic is understandable since workers are not linked politically or legally to particular employers; they can work for another employer (if they can find another employer who will hire them). See Do Workers Work for a Particular Employer or for the Class of Employers? Part One: A Limitation of Some Radical Left Critiques of Capitalist Relations of Production and Exchange (A.K.A. Capitalism) and  Do Workers Work for a Particular Employer or for the Class of Employers? Part Two: Critique of Unions and the Social-Reformist or Social-Democratic Left).

This treatment of workers as fixed costs (to retain them over the short term) and the resulting decrease in the rate of exploitation is consistent with abnormal conditions that capitalist employers generally try to avoid since, on the one hand, they own means of production (c) that fail to absorb surplus value and, hire relatively more workers (v) than can be exploited under given conditions. From Karl Marx, Capital: A Critique of Political Economy. Volume 2, The Process of , page 111:

The point is simply that under all circumstances the part of the money that is spent on means of production – the means of production bought in M-mp [money used to purchase means of production, such as computers and other machines, raw material, buildings and other produced commodities necessary for labour to be performed] means of production – must be sufficient, i.e. must be reckoned up from the start and be provided in appropriate proportions. To put it another way, the means of production must be sufficient in mass to absorb the mass of labour which is to be turned into products through them. If sufficient means of production are not present, then the surplus lahour which the purchaser has at his disposal cannot be made use of; his right, to dispose of it will lead to nothing. If more means of production are available than disposable labour, then these remain unsaturated with labour, and are not transformed into products.

In effect, in terms of the pandemic, Magna International purchased too much labour power (the capacity to use the means of production and to produce value–a capacity sold by workers) and too many means of production. Not all of the labour power purchased could be exploited, and not all the means of production owned by Magna International could absorb labour and hence surplus labour and surplus value.

There may, of course, be other causes of the decrease in the rate of exploitation, such as problems pertaining to supply of inputs, but I will leave that issue aside.

It should be emphasized that the exploitation of workers pertains to the production of a surplus beyond the production of the value equivalent of their own costs of production. Even during the time the workers require to produce their wage, they are oppressed by employers since they are subject to the will of the employer (or her representatives) and to the control over their labour.

Conclusion

The rapid decrease in the rate of exploitation of workers of Magna International with the onset of the pandemic is likely due to the temporary) overinvestment in the purchase of labour power relative to the inability of management to use the means of production to exploit the workers. This situation will likely now call for an opposite pressure to increase exploitation directly through intensification and an extension of the working day and changes in technology and organization of the production process. Pressures to increase tax breaks for such capitalist employers (and corresponding reduction in state expenditures for welfare measures) may also arise. Of course, some workers will not just lay down and accept such counter-pressures.

Why is it that workers have to put up with this situation? Should they not be organizing not only to resist exploitation and oppression and increased pressures related to those phenomena but also to abolish such pressures? Not according to the social-democratic or social-reformist left. Such organizational efforts, for them, are undoubtedly unrealistic. New structures are supposedly to arise without criticizing the old structures.

Thus, for social democrats like Sam Gindin (former research director for the Canadian Auto Workers (CAW) (now Unifor), challenging the ideology of “decent jobs or work,” “fair contract,” “fair collective agreement,” “fair deal,” “fair wages” and other abstract phrases (rhetoric) is relatively unimportant. New material structures more relevant to the lives and experiences of working people are somehow to arise without constantly challenging the existing social structures–and the corresponding ideology that justifies such structures.

Frankly, I doubt that such new material structures will arise without a persistent and constant challenging of the ideological rhetoric rampant among the left in general and unions in particular.

Where is there evidence that Mr. Gindin has contributed to the creation of material structures that question the fundamental economic, political and social structures characteristic of a society dominated by a class power of employers by indulging in the beliefs of union reps? Does the organization Green Jobs Oshawa, to which Mr. Gindin contributes, do so? Where is the evidence that it does?

What are Mr. Gindin’s fellow social democrats like Herman Rosenfeld (who worked in the education department of the Canadian Auto Workers (CAW) (now Unifor) doing to fight against the exploitation of workers and oppression of Magna workers? Mr. Rosenfeld wrote an article, criticizing the existence, practically, of a company union at Magna, CAW Local 88, comparing it to the independent union Unifor Local 2009 AP. The independent union is certainly preferable to a company union, but even an independent union at the local level of a particular employer in effect assumes the legitimacy of the power of employers as a class (see my criticism in the post    Do Workers Work for a Particular Employer or for the Class of Employers? Part Two: Critique of Unions and the Social-Reformist or Social-Democratic Left).

The false nature of Mr. Gindin’s political position stands out when he claims the following:

Which brings me back to the point that the problem is not [Wayne] Dealy [union director for the Canadian Union of Public Employees (CUPE) Local 3902] or Sean [Smith,  Unifor Local 2002 Co-Ordinator and Toronto Airport Workers Council (TAWC) activist”] or others but OUR Collective inability to provide them with an effective alternative politics…They can be criticized but only if we do so with humility and part of criticizing ourselves. [my emphasis] 

Is there evidence that Mr. Gindin criticizes his own views? Are union reps (and union members) really conscious of the exploitative and oppressive nature of the class power of employers as such? If so, what are they doing about it? I fail to see evidence of it.

I also fail to see evidence of Mr. Gindin engaging in self-criticism. He implicitly assumes that he knows what workers need–and that is not an explicit and real consciousness of their exploitation and oppression–with or without unions, collective bargaining and collective agreements.

:

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For Mr. Gindin, though, to question the “language” used by union reps, as well as the omission of any criticism of the limitations of collective bargaining and collective agreements, expresses merely “moralizing.”

I will leave Mr. Gindin with his fake humility and his fake self-criticism. I will continue to engage in “discourse analysis”–that is to say, with a criticism and exposure of the limited nature of unions, collective bargaining and collective agreements.

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Economics for Social Democrats–but Not for the Working Class, Part One: Critique of Jim Stanford’s One-Sided View of Job Creation in a Capitalist Society

Introduction

The title of this post–and the series of posts that will follow–comes from the title of Jim Stanford’s book (2008) Economics for Everyone: A Short Guide to the Economics of Capitalism. 

If I remember correctly, perhaps less than a year after I had came to Toronto (in 2013), I heard Mr. Stanford present at a  social-democratic leftist-sponsored workshop. I thought that his presentation assumed the legitimacy of the power of employers as a class. No one else questioned his point of view from the audience.

I was right.

One-Sided Presentation of Working for an Employer in a Purely Positive Light

Mr. Stafford wrote a piece that was published in the business section of the Toronto Star on January 18, 2020. In that piece, he claims that both the quantity and quality of work in 2019 has improved:

The news was undeniably positive….

On the quantity side, employment rose by 390,000 jobs in 2019, compared to 2018. That’s the biggest annual increment 1979. …

But I am more excited about evidence of a broad improvement in the quality of work.

By several indicators, jobs in Canada became better last year: more full-time jobs, less temporary work, growing unionization and rising wages. These improvements in job quality, if sustained, will underpin future improvement in income equality and social well-being.

This point of view is definitely social democratic and reformist.  At the quantitative level, an increase in the number of employed by employers is presented in a purely positive light. Of course, for many workers, working for an employer is better than being unemployed, but to present more jobs that involve working for an employer as purely positive expresses a definite one-sided view of the situation of workers in a society dominated by a class of employers.

Mr. Stanford nowhere shows any idea of just how degrading working for an employer as an employer can be (see for example  Employers as Dictators, Part One   and The Money Circuit of Capital). Furthermore, working full-time for an employer is presented as purely positive rather than as something that involves an increased length of time in which workers must subordinate their will not only  to the will of the immediate employer but to the impersonal and independent system of capitalist relations of production and exchange.

Of course, workers may prefer full-time work, ultimately, to part-time work since they may not be able to make ends meet otherwise. However, they may also find their lives to be worse off in that they have less of their life free from the direct dictates of the employer.

Mr. Stanford also implies that increased unionization will somehow magically make the world of work fulfilling work rather than something that must be endured. Unionized work settings are generally better than non-union work settings, but they do not involve the control of workers’ lives at work (see various management rights clauses on this blog as well as posts that indicate the oppression and exploitation of workers despite the existence of a collective agreement as, for example, in the post The Rate of Exploitation of Workers of Suncor Energy, One of the Largest Private Employers in Canada).

In addition, Mr. Stanford simply focuses on one moment in time in the capitalist economic cycle. Capitalist accumulation may involve a tighter market for workers as demand for such workers increases, but the overaccumulation of capital then throws workers out of work as an economic crisis follows.

It should not be surprising that Mr. Stanford’s article reflects a social-democratic bias. The limitations of Mr. Stanford’s article is linked to the limitations of his own theory.

Nationalist Idealization of Being a Canadian

Mr. Stanford is one among many social-democratic leftist economists who are in one form or another nationalist. He writes in his article (2008) “Radical Economics and Social Change Movements: Strengthening the Links between Academics and Activists,” (pages 205-219), Review of Radical Political Economics, Volume 40, Number. 3, page 206:

This year we will inaugurate a new biennial prize, named after John Kenneth Galbraith. It will be awarded at the CEA meeting to someone whose life work has combined economics with social justice. Many U.S. economists will not know this, but Galbraith was born and initially educated in Canada before coming to America to make his name. That is very Canadian of us. Sure, we Canucks have gone and set up our own little nationalist group of lefty economists. But then we name our prize after someone who only became famous after they moved south of the 49th parallel! As usual for us Canadians, we never let consistency stand in the way of being sanctimonious.

We must live in different countries. I remember living in Canada as: having a number of odd jobs that I quit because I could not stand the alienating conditions under which we worked: for example, a dishwasher at a restaurant at Saskatchewan River Crossing (a resort area in between Lake Louise and Jasper, Alberta, Canada) (I was called useless despite my efforts to work as hard as possible); having work extremely fast by piling up on wooden slats wood on wooden cut from an electric saw (I lasted three days–I was in extreme pain in my lower back from bending up and down–when I was in my early 20s); crushing coal for a steel company (breathing in coal dust despite having a mask, and a lunch room with coal dust on the table and benches–spitting up coal dust after work, in addition, having to dump coal into various kinds of chemicals rapidly in order to determine their quality (with some of the chemicals splashing back onto our legs, burning us momentarily)–lasted three weeks; working for one week before quitting at the Canada Safeway factory in Calgary: could not keep up with the fast pace of having to load loaves of bread onto carts with wired shelves. I finally did find a job that I could tolerate for some time–working at a brewery in Calgary, but when I got off in the morning in the summer and fall (I frequently worked the night shift in order to minimize having management around), the so-called beautiful sunrises held little interest because I was exhausted. Then of course there is my experience of being a Marxist father in Canada (see, for example, A Worker’s Resistance to the Capitalist Government or State and its Representatives, Part One).

I would say that my experiences are just as reflective of the “Canadian” experience as Mr. Stafford’s–but you would not know it from reading Mr. Stanford’s reference to “very Canadian of us.”

But who is Mr. Stanford?

Until 2016 Stanford was economist and policy director for Unifor (and formerly for the Canadian Auto Workers), and a regular economics panelist on CBC-TV’s The National. He is also Harold Innis Industry Professor of Economics at McMaster University, and a contributing columnist for the Toronto Star.

Given the social-democratic nature of Unifor, with its limitations (see, for example, Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada)), it is likely that Mr. Stanford shares some of the limitations of the organization for which he worked for a number of years.

Mr. Stanford, in addition to teaching at McMaster University, according to his biography:

Until 2016 Jim also served as Vice-President and Treasurer of the Canadian Centre for Policy Alternatives, Canada’s premiere progressive think tank, and he remains a member of the CCPA’s Members’ Council.  He was the founding chairperson of the Progressive Economics Forum (formed in 1998), Canada’s network of over 150 progressive economists.

The Canadian Centre for Policy Alternatives (CCPA) is a social-democratic organization that generally assumes the legitimacy of the power of the class of employers–for example, by referring to companies paying “their fair share of taxes,” which implies that, as long as companies do so, they are legitimate and should not be taken over by workers (see my critique in  Co-optation of Students at School Through We Day, Part Two: The Social-Democratic Left Share Some of We Day’s Assumptions).

I doubt that Mr. Stanford’s economics reflects an economics that is relevant for addressing the class interests of workers–although it appears to do so. His economics reflects more a social-democratic view than a view that challenges the class power of employers.

I will pursue the issue in further posts in this series. In particular, in the next post in this series, I will take a critical look at his definition of money as “purchasing power.”  As will be shown, this definition is a far from adequate one in the context of a society where commodities are produced to exchange for money–by workers who work for an employer.

Worker Resistance Against Management, Part Two

This is a continuation of a series of posts on worker resistance. The following was written by Herman Rosenfeld. Since it formed part of a course that he, Jordan House and I presented for workers at the Toronto Pearson International Airport, I am including the preliminary instructions and the subsequent questions so that others can modify and make use of it in similar courses.

Activity Sheet 3: Learning from Collective Resistance Experiences

This is a small group activity.
Read the story and answer the questions below together.
Be prepared to describe the collective struggle to the whole class, and report your answers.
You have 25 minutes to complete this exercise. [This exercise, initially, was combined with resistance against management at the brewery, so we permitted them 25 minutes for both.]

Clapping for Lisa Raitt

When CAW (Canada Auto Workers union] Air-Canada reservation and air ticket agents briefly went on strike over a series of contract concessions demanded by management, the Conservative government [of Stephen Harper, prime minister at the federal or Canada-wide level], though Labour Minister Lisa Raitt quickly introduced a law to legislate them back to work. (It would have been the 5th time in 5 years that the Harper government had taken away workers’ right to strike.) An agreement was reached between the union and Air Canada.

The workers who handle baggage, members of the IAM (International Association of Machinists) rejected the tentative agreement bargained by their leadership and demanded that they go back to the table and bargain improvements.

After the rejection, the workers started forming “Action Committees” to prepare co-workers to organize rallies at the airport, to pressure the employer to bargain seriously. The IAM workers had previously supported the actions of Reservation and Flight Attendants, who had protested the elimination of their right to strike.

A key action was to write a letter to the company president, complaining about endless demands for concessions and the culture of entitlement for the top executives.

Some quotes from the letter:

“It smacks of hypocrisy of the highest order to be led by Executives that continually demand we make sacrifices for the “viability” of the Company and then watch those same Executives pocket millions in bonuses and receive raises in pay and pension benefits in excess of 70% in a year.

A day doesn’t go by without us hearing about how we are the problem and how management is trying to find ways to replace us with “low cost” workers from senior Executives whoa are never replaceable and must be highly compensated in order to maintain their loyalty to the Company.

Over the past decade we have agreed to take wave after wave of concessions and have watched this goodwill allow Senior management to make hundreds of millions in payments of “special distributions” to their corporate backers or in golden parachutes to departing millionaire Executives.

It is time to lead by example. It’s time to end this culture of senior executives viewing us workers as a cost in which to be squeezed for more bonuses at the top.

This will require a major change in culture including management not using their friends in Ottawa to threaten our unions into concessionary agreements, ending the disastrous habit of unilaterally imposing policies on us (lie the unilateral changes to travel charges) and ending the out of control greed at the top.

The workers planned to present the letter to the president at the private management celebration of the 75th anniversary of Air Canada’s founding. They stormed into the meeting and, after a scuffle with the police, agreed to select 2 representatives to deliver the latter. Rovinescu, the company president, received the letter, but was not happy about it.

Shortly after this incident, Labour Minister Lisa Raitt, landed at Pearson Airport for a meeting. As she exited the plane, the worker who recognized her, started a slow, rhythmic clapping, as a kind of spontaneous protest against the attack on their collective bargaining rights, followed her through the terminal, as the crowd of clapping workers grew Raitt, who fancied herself as a kind of “friend of the workers” was angry, and called on the police to,” “arrest these animals!”

The police took no action, but Air Canada security guards sent 5 or 6 of the protesters home, in an action that usually signifies a discharge.

The word of the firings went viral. All of the IAM workers at Pearson stopped work and stayed out all night, demanding that the fired workers be reinstated, and that collective bargaining begin again. All 30 of the workers who went on the wildcat were promptly fired.

The morning shift workers refused to work. All workers in Vancouver, Montreal and in airports across Canada downed their tools as well. It made the national news.

The company and the union began talks, and agreed to send the issue of the wildcat to an arbitrator (one often used by Air Canada and its unions, but one not known for his friendliness to union and worker issues).

After heated debate, the workers decided to stay out until the workers were reinstated. The striking workers spent a lot of time talking with members of the other unions at the airport, building solidarity with their actions and issues. When the fired workers were reinstated (although further discipline was planned), the wildcat was ended. Bargaining on the contract began soon afterwards.

A few months later, after the contract was signed, Air Canada fired a number of activist workers using their private E-mail comments, as “incriminating” evidence against them.

Questions

  1. What were some of the plans and decisions that made this action successful?
  2. What were some of the limits of this action–and things that might hold the union back from moving forward after this action? How might these limits be addressed?
  3. What lessons can be learned from this experience for your own workplace, union and efforts to build the power of workers there?