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:
I outline the nature of the rate of exploitation
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
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.”
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.
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.
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.
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.
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
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 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.
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
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:
There are 3 shifts. 9 hours a shift.
Typical 8 – 12 hours per shift.
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.
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
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:
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.
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.
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.
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:
changing the real wage (the absolute amount and variety of commodities consumed by workers);
changing the absolute amount of surplus value produced either by
changing the length of the working day intensity of labour or
changing the intensity of labour length of the working day
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 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.
Massive robots weld frames for trucks at Formet in St. Thomas. (File photo)
Article content
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.
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.
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.
On the other hand, the social-reformist or social-democratic left often commit the opposite error of practically ignoring union representatives’ assumption that the relationship of workers to a particular employer by means of collective bargaining, a collective agreement, labour legislation and local union democracy, can express something fair. Such a view ignores the fact that, although workers at any particular time work for a particular employer–yet when considering, on the one hand, the whole working class, they do work for a class of employers and, on the other, when considering the whole life of an individual worker.
Dependent Local Unions Versus Unions That Are Independent of a Particular Employer
This can be seen in reference to Herman Rosenfeld, a self-declared Marxist here in Toronto and former worker in the automobile industry. For example, he justly criticizes a clause in the collective agreement between Magna International and the Canadian Autoworkers Union (CAW) (now Unifor), but he one-sidedly idealizes CAW Local 88 and fails to analyze critically either the collective-bargaining process or the resulting collective agreement.
Mr. Rosenfeld rightly criticized the Canadian Framework of Fairness Agreement when it first came out (see Magna Is Not CAMI):
This “Framework of Fairness” is based on Stronach’s time-tested system of anti-union structures. Rooted in the human relations practises developed in the 1920s to keep industrial unionism out of mass workplaces, Magna’s paternalistic system attempts to build-in loyalty and dependence on management. It also seeks to individualize worker concerns and issues. All of this is institutionalized in the CAW-Magna framework. [CAW was the Canadian Auto Workers union; it is now Unifor.]
As has also been pointed out, any real effort to create an independent union presence and structure is stymied by the time frame involved in the deal and the commitments embedded in it: it would take about 10 years to organize the various plants in increments of 3 or 4 per year. If the CAW tries to subvert the process at any time, Magna could end the entire project. Besides, the agreement itself commits the union NOT to subvert the process and build an independent union structure.
Needless to say, the collective shop-floor struggles that built Local 88, culminated in the successful 1992 strike and paved the way for the strong union local they are today are not possible at Magna. Workplace struggle would be policed there (according to commitments made in the framework), rather than led by the union.
I will assume, for the sake of argument, that Mr. Rosenfeld’s comparison of (at the time) CAW Local 2009 AP and CAW Local 88’s union are accurate. In other words, I will not dispute the accuracy of Mr. Rosenfeld’s comparison of the two locals (and their collective agreements).
To understand why Mr. Rosenfeld opposes the “CAW-Magna framework,” I searched for the most recent collective agreement between Magna International and any union on the Web. Unfortunately, the most recent one I found was the collective agreement between Magna International and Unifor Local 2009 AP that has already expired:
NATIONAL COLLECTIVE BARGAINING AGREEMENT BETWEEN: MAGNA INTERNATIONAL INC. – AND – UNIFOR, and its Local 2009 AP
The collective agreement lasted four years:
This agreement shall remain in effect for a four-year period, from the date of ratification, November 7, 2013 until November 6, 2017 at 11:59 p.m.
The most recent collective agreement would, of course, have been preferable.
The 2007 Canadian Framework of Fairness Agreement is incorporated into the collective agreement. Some of this Framework is reproduced below to get a flavour of its nature:
A. Background and Principles
1. Introduction
Canada’s automotive assembly and parts industry is our country’s most important high-technology, value-added, export industry and employs thousands of people directly and indirectly. It makes a crucial contribution to family incomes, productivity growth, and foreign trade performance. Because of the high productivity of the industry and because of the strong linkages between assemblers, parts producers, and the thousands of companies which supply them (with everything from components to materials to services), every new job in an assembly or parts facility ultimately generates several additional jobs for Canadians. Automotive manufacturing is one of Canada’s only industrial “success stories,” and has made a crucial contribution to diversifying our economy away from an exclusive reliance on the production and export of natural resources and energy. For all of these reasons, the auto industry holds an immense economic and social importance to Canada.
Within this context, Magna and the CAW are motivated by the shared goal of not only preserving but expanding Canada’s automotive sector through high-performance work practices; investments in both capital and human resources; effective and just labour relations; world-class quality, productivity, and reliability; developing and renewing top-quality skilled trades; and continuing to support and enhance social and environmental sustainability.
…
As each stakeholder – companies, unions, employees, communities and government – shares in the benefits of a successful and prosperous automotive industry, each stakeholder must also contribute, in a meaningful way, to ensuring that continuing success.
This responsibility requires that all parties seek new and innovative ways to deal with the industry’s challenges, working cooperatively to achieve these goals. To this end, Magna and the CAW are committing with this Framework of Fairness Agreement (the “FFA”) to develop a new, innovative, flexible, and efficient model of labour relations. This model will combine the best features of union representation, with Magna’s established culture of workplace democracy and fair treatment (as embodied in the Magna Employee’s Charter). The model incorporates aspects of existing North American and European labour relations practices, yet will also reflect a uniquely Canadian attempt to combine industrial and financial success with principles of fairness and social responsibility.
Mr. Rosenfeld, from the point of view of the interests of workers, is thus right to criticize such a clause in a collective agreement.
By contrast, according to Mr. Rosenfeld, Local 88, unlike Local 2009 AP, developed as an independent union that emphasized the opposition between the workers which it represented and
CAMI [GM assembly plant in Ingersoll, Ontario, Canada) included an elected workplace committee of union representatives, a democratic structure independent of management, to defend workers’ interests. The CAW as a whole maintained a commitment to an independent union presence in the workplace, expressing a different ideology and set of interests than that of the employer. The CAW national representative who serviced the CAMI union was an experienced working class fighter, who helped to mentor the new union reps. (That was only made possible by the existence of the elected body of union representatives, independent of management and beholden only to the members who elected them).
That was reinforced by a CAW Statement on Work Reorganization that asserted:
As we mobilize against regressive taxation, the weakening of unemployment insurance or plant closure legislation, we are reminding our members that the “team” they are on is not the same as their employer, and the ‘adversary’ is not other workers but those who are on the other side of these issues. Similarly, as we take on other collective bargaining issues – like opposing profit-sharing, or demanding indexed pensions or insisting on some movement towards reduced worktime, the message that the needs of working people are quite different from those of management is constantly articulated.
Such a union–and a corresponding collective agreement that reflects such a union–is certainly much more preferable to the union established at Magna–and its corresponding collective agreement:
As has also been pointed out, any real effort to create an independent union presence and structure is stymied by the time frame involved in the deal and the commitments embedded in it: it would take about 10 years to organize the various plants in increments of 3 or 4 per year. If the CAW tries to subvert the process at any time, Magna could end the entire project. Besides, the agreement itself commits the union NOT to subvert the process and build an independent union structure.
A union that can oppose its particular employer is certainly much more preferable to one that cannot–and hence Local 88 and its structure serves much more the immediate interests of the workers than union represented by workers at Magna International:
Needless to say, the collective shop-floor struggles that built Local 88, culminated in the successful 1992 strike and paved the way for the strong union local they are today are not possible at Magna. Workplace struggle would be policed there (according to commitments made in the framework), rather than led by the union.
The CAW President of Local 88 at the time, Cathy Austin, wrote a letter to the editor, dated of the Toronto Star (a major newspaper in Toronto, Ontario, Canada), saying similar things:
The first collective agreement at CAMI was negotiated before production started. It offered the barest of guidelines of how ideas such as team concept were actually to be worked out in practice in a unionized environment. The agreement represented a tactical compromise. On the one hand, the contract departed from standard agreements in the auto industry. It committed the union to the principals of the Japanese Production System including team concept, substantial management flexibility and kaizen (continuous improvement). Additionally, the union agreed to an economic package on wages and benefits that fell below the industry norm. However, despite these tactical compromises the first contract contained provisions for important union principals such as union security, recognition of union elected and independent workplace representatives, union committee persons and a true grievance procedure.
Our local wasted little time in establishing an independent presence in the plant. Over time the union began to demand changes and workers fought back. By contesting CAMI policy and practice, the members increasingly came to see the local as an independent force that championed the cause of workers’ dignity and rights.
Fighting to Make Gains Against the Class of Employers?
Mr. Rosenfeld, however, then makes some assertions without explaining what he means:
Another major difference from CAMI is the larger role of the CAW. In the CAMI era, the union was clearly committed to challenging the ideology of partnership and competitiveness, fighting to make gains against employersand defending workplace rights as well as wages and benefits and embarking upon ambitious political projects that questioned the logic of competitiveness and globalization [my emphasis].
What does it mean to fight “to make gains against employers?” Since he did not elaborate, I searched further to see what he might mean. I found the following written by Mr. Rosenfeld, from Labour Notes, July 31, 2005, titled Reflections on the Birth of the Canadian Auto Workers :
This July marks the 20th anniversary of the founding of the Canadian Auto Workers. The CAW was created out of a split from the U.S.-based United Auto Workers, at the beginning of a difficult era that is still with us.
The CAW split with the UAW over a series of fundamental differences. The CAW’s leaders believed that unions—and the workers they represent—have interests that are independent and different from those of their employers; that the role of a union is to fight for workers’ interests—not to sell the agenda of employers; that the competitiveness of employers is a constraint on unions and workers, not something that unions should see as their goal.
The CAW’s birth marked a major shift in the Canadian labor movement. The split was seen both as a statement that Canadian workers can build their own union movement free of U.S. tutelage and as a bold challenge to the employer offensive that sought to change the very nature of unionism.
CONFLICT OVER CONCESSIONS
In the early 1980s, U.S. auto companies and the UAW agreed to radically change the role of unions. Accepting the Big Three’s argument that U.S. automakers’ success against offshore competitors could only be assured by worker concessions—like replacing wage increases with lump-sums and profit sharing—UAW leaders saw their role as selling this perspective to their members.
It began in 1979, with Chrysler on the verge of bankruptcy. Both the UAW and its Canadian leadership agreed to temporary concessions. But when the U.S. Congress demanded more concessions as the price of further aid, the Canadians balked.
In subsequent negotiations, as Chrysler’s outlook improved, the Canadian UAW demanded and won back the concessions in the face of opposition from UAW leadership.
When GM and Ford followed suit, calling on the union to re-open their collective agreements in 1982 bargaining, the UAW leadership accepted. But they had to organize a campaign to “sell” concessions to their own members, and quash or marginalize any opposition.
In fact, when GM and the UAW first tested the waters amongst GM workers in the United States, the workers rejected concessions. Traditions of resistance remained in the union and it took years of effort by the leadership to try and root it out.
Again, unions that are independent of particular employers, that oppose concession bargaining, that have a democratic structure, have the ability and willingness to strike, fight for more general rights (such as easier access to unemployment insurance, improved federal pensions and similar reforms) are certainly preferable to more conservative unions.
Independent Local Unions Need Not Oppose the Class of Employers
Nonetheless, there is a qualitative difference between such unions and efforts to go beyond the class power of employers. Mr. Rosenfeld does not address this issue at all; alternatively, he implies, without evidence, that unions that aim for certain general rights (outlined in the previous paragraph) somehow fight against the class of employers consciously as a class of employers.
Independent unions at the level of the particular company or firm need not be independent at the level of classes.
Actually, it is Ms. Austin’s letter to the editor which expresses in a compact manner, both what is right and what is wrong with Mr. Rosenfeld’s position. She specifies three aspects that are characteristic of what her and Mr. Rosenfeld would probably call progressive unions:
There are three fundamental differences between our ‘foot in the door’ collective agreement at CAMI in 1988 and the current Magna deal; first a democratically elected independent union representation directly elected by and accountable to the membership, secondly a grievance procedure, third the right to strike (which we did for 5 long weeks in 1992). The differences between the proposed Magna deal and CAMI are monumental in the lives of workers. At the October 28th membership meeting the members of Local 88 unanimously endorsed a resolution opposed to this flawed agreement. The workers at Magna need and deserve the royal blue colour of the CAW not the yellow of a company union. •
A union democratically elected by its membership may be independent of the influence of the particular employer, but the union itself, within the collective bargaining regime set up since 1944 in Canada (during the Second World War) hardly makes unions independent of the class power of employers. They operate on the basis of laws that establish their legitimacy and limits of action. Such laws and limits influence what unions do and how they act.
This limitation can be seen, for example, in how union representatives view collective agreements and how they justify them. On the Unifor Local 88 website, for instance, there is a history section, with the following (my emphasis):
1992-Strike
The 1992 Collective Agreement was a struggle to achieve. These set of negotiations were very tough. Both the Union and the Company had many differences that could not be settled. As a result the membership of CAW Local 88 endured a five week strike against CAMI Automotive. The membership grew up very quickly and was determined to negotiate a fair and respectful collective agreement. Shortly after the October 1992 Thanksgiving weekend a collective agreement was voted upon and ratified by the membership.
How can any collective agreement express “a fair and respectful agreement?” Since workers are exploited at work (see, for example, The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One) how can any union “negotiate a fair and respectful collective agreement?” Unions, by persistently referring to the negotiating process and the resulting collective agreement as somehow fair, are not independent of the class of employers. They become ideologues of the class of employers objectively even if they are unconscious of doing so.
Therefore, Ms. Austin’s three criteria for an effective union (and Mr. Rosenfeld’s likely agreement with such criteria)–an independent and democratically structured union, a grievance procedure and the right to strike–by no means necessarily make unions independent of the class of employers (although may well make the union independent of the particular employer they face during negotiations).
Either Mr. Rosenfeld, like many unionists and leftists, simply ignores the issue of the class power of employers and the need to consciously aim for the abolition of the power of such a class, or he falsely assumes that unions that fight for general rights of workers somehow also aim to abolish the class power of employers.
The Chairperson of the Organizing Committee of Local 88, Barry Smith, also expresses the limitations of the union point of view. Admittedly, the following quote is in the context of consultation by the Ontario government of employment-law reform, but there is no evidence that what he wrote was merely a tactical move:
“Changing Workplaces Review” London Consultation July 8, 2015
Dan Borthwick, President Colleen Wake, Chairperson Union In Politics Committee Barry Smith, Chairperson Organizing Committee Ingersoll, Ontario July 8, 2015
…
I believe that if those hard won protections were afforded to all, through improvements in the language of both these Acts, employers would have a stronger, more dedicated workforce that would improve the situation for all parties. It wasn’t until September 17/2013 after completing contract negotiations that the S.W.E.s [Supplement Workforce Employees] got the advantages we needed. Thanks to strong contract language, we got vacation, better benefits, a pension plan and almost equal treatment as any long term employee at CAMI and gained Full Time status.
I truly believe that if it wasn’t for Unifor and General Motors coming to a fair agreement at the Bargaining Table, I would still be a S.W.E. and having to worry on a daily basis about how I will be supporting my family next week. [my emphasis]
Indeed, a document by Unifor, submitted on September 2015, to the Ontario Changing Workplaces Consultation, was itself titled Building Balance, Fairness, and Opportunity in Ontario’s Labour Market. This document in its very title expresses the ideology that somehow the labour market can be fair–whereas the existence of a labour market is itself an expression of the unfair situation in which workers who work for an employer find themselves (see The Money Circuit of Capital).
This document, furthermore, implies that workers who work for employers cannot, somehow, be exploited–as if employment law (governing non-unionized workers), labour law (governing unionized workers) and collective bargaining legislation and collective-bargaining structures, along with unions, can somehow eliminate exploitation and oppression at work. From page 6 (my emphasis):
Yet the institutional bulwarks which are essential for working people to attain better outcomes from the labour market (such as ambitious and actively-enforced employment standards, strong and widespread collective bargaining structures, and even a positive common-sense understanding of fair practice in the world of work) have become less capable of moderating these trends, instead of being strengthened to meet these challenges. The result is a labour market marked by pervasive inequality, underemployment, and all too often hopelessness. [my emphasis]
What is this “positive common-sense understanding of fair practice in the world of work?” I guess I lack this “positive common-sense understanding of fair practice.” On page 104, they ask:
The Changing Workplaces Review must address a fundamental challenge for the future of labour market policy: what measures can effectively provide Ontario workers the dignity, security, and fair treatment they deserve, while maintaining the efficiency and success of Ontario’s economy?
An honest answer to that question–given the context of an economy structured according to the demands of a class of employers–is that only measures that aim to eliminate the power of the class of employers can achieve those twin goals. The dishonest answer is that the twin goals can both be achieved within the structure of the employer-employee relation.
Mr. Rosenfeld is therefore right when he affirms that unions, such as the original CAW Local 88. as a union that was independent of its particular employer, are much better than the union that represented Magna workers.
However, both sets of workers were exploited and oppressed locally at work due to their class situation, and their unions were not independent of the class of employers even in the case of the original CAW Local 88–unless Mr. Rosenfeld can show evidence to the contrary by showing that the local not only tried to become independent from its particular employer but from the class of employers (by, for instance, showing the limitations of the collective-bargaining process and the resulting collective agreement–and even then such a situation is only the beginning of a process towards becoming independent of the class of employers through the elimination of all classes). I doubt that he can. This is where Mr. Rosenfeld is wrong–a union independent of a particular employer does not mean that such a union is independent of the class of employers.
Finally, let us look at the collective agreement between CAMI Automotive and CAW Local 88. I could not find the 1992-1995 collective agreement (which would have been the most relevant since there is reference to the 1992 strike above), but I did find the collective agreement for 1995-1998, which has the following:
3. MANAGEMENT RIGHTS
The Union recognizes the right of CAMI to hire, promote, transfer, demote and lay off employees and to suspend, discharge or otherwise discipline employees for just cause subject to the right of any employee to lodge a grievance in the manner and to the extent as herein provided.
The Union further recognizes the right of CAMI to operate and manage its business in all respects, to maintain order and efficiency in its plant, and to determine the location of its plant, the products to be manufactured, the scheduling of its production and its methods, processes, and means of manufacturing. The Union further acknowledges that CAMI has the right to make and alter, from time to time, rules and regulations to be observed by employees, which rules and regulations shall not be inconsistent with the provisions of this agreement.
The Union recognizes the right of CAMI to formulate, revise and publish Personnel policies, which shall be administered in a fair, impartial and consistent manner to all members of the bargaining unit [bold in the original–although I am uncertain if that was intentional.]
Of course, unions may be forced to include such clauses in the collective agreement. If, however, they were really independent of the class of employers, they would question the legitimacy of such a clause openly to their members and promote discussion of the clause whenever they could. Does Mr. Rosenfeld have any evidence that CAW Local 88 did that? If not, his idea that CAW Local 88 was an independent union, though true in relation to its particular employer, was false in relation to the class of employers.
I predict that Mr. Rosenfeld will not provide any evidence to show that CAW Local 88 was an independent union at the level of the class of employers.
Social democrats like Mr. Rosenfeld do the opposite of what some Marxists and radical leftists do: social democrats correctly emphasize the need for unions do be independent of the particular employer, but they neglect how unions, at the level class, are not independent of employers.
Some Marxists and other radicals, on the other hand, neglect the importance of the independence of unions from particular employers by referring merely to workers working for the class of employers–as I tried to show in my previous post).
A Little Theory
To round off this post, I will refer to a book by a German author that may not appear to have much relevance to the issue of the independence of the working class, but nevertheless does address the issue indirectly (theoretically).
The quote is a very rough translation from the German of Maxi Berger (2012), Labour, Self-consciousness and Self-determination in Hegel: Towards the Interdependence of Theory and Praxis, page 23 (I include the German after the quote for those who read German):
In order to be able to understand that the individual cannot escape from economic coercion, it is crucial to emphasize the total social character of the capitalist mode of production. This total social character is manifest in social organization, that is to say, that the legal foundations and administrative institutions as well as the organization of the economic sphere as a whole are appropriate in the sense of accumulation for the sake of accumulation–not however in the sense of a reasonable organization of human life. As a result of this the action of the members is placed under constraint: Whoever wants to obtain his means of life, whoever therefore who wants to live, must accommodate themselves to the conditions of commodity and labour markets, not the opposite.
(Um verstehen zu können, daß sich Einzelne den ökonomischen Zwängen nicht entziehen können, ist es entscheidend, den gesamtgesellschaftlichen Charakter der kapitalistischen Produktionsweise zu betonen. Dieser gesamtgesellschaftliche Charakter ist in der gesellschaftlichen Organisation manifest. D. h. daß die juristischen Grundlagen und verwalterischen Institutionen ebenso wie die Organisation der ökonomischen Sphäre insgesamt zweckmäßig im Sinne der Akkumulation um der Akkumulation willen sind – nicht aber im Sinne einer vernünftigen Organisation menschlichen Lebens. Dadurch wird das Handeln der Mitglieder unter Sachzwang gestellt: Wer sich seine Lebensmittel beschaffen will, wer also leben will, muß sich den Bedingungen des Waren- und Arbeitsmarktes anpassen, nicht umgekehrt.)
Unions and the social-reformist or social-democratic left that fail to take into account the fact that the freedom of the worker to shift from one employer to another does not prevent economic coercion need to be criticized. Independent unions at the level of a particular employer go hand in hand with such economic coercion.
In another post, I presented the twenty largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada). One of those employers is Magna International Inc., a multinational corporation whose workers produce automobile supplies for inputs into car manufacturing.
This is a first attempt at calculating the rate of exploitation of one of the largest private employers in Toronto, Magna . It is undoubtedly imperfect in many ways, and I invite the reader to correct its gaps. Nonetheless, the lack of any attempt to determine the rate of exploitation at the city level by has undoubtedly reinforced social-reformist tendencies.
I am going to begin with a conclusion, and then explain what it means and how it is calculated so that the reader understands where I am headed in the calculations:
That means that for every hour worked that produces her/his wage, a worker at Magna International works around an additional 47 minutes for free for Magna International. In an 8-hour work day, the worker produces her/his wage in about 4.5 hours, and the remaining 3.5 hours works for free for Magna. In a 10-hour work day (both work days seem possible at Magna International—see https://www.indeed.com/cmp/Magna-International-Inc/faq/how-are-the-working-hours-at-magna-international-inc?quid=1at7gf6rrak7i9ff)–the worker produces her/his wage in about 5.6 hours and the remaining 4.4 hours works for free for Magna International.
But: What is the rate of exploitation? And why not use the usual rate of profit or the rate of return? The rate of profit is calculated as profit divided by investment. Since employers purchase both the means for work–buildings, computers, office supplies, raw material–and workers–we can classify investment into two categories: c, meaning constant capital, or the capital invested in commodities other than workers; and v, or variable capital, the capital invested in the hiring of workers for a certain period of time (wages and salaries).
The purpose of investment in a capitalist economy is to obtain more money (see The Money Circuit of Capital), and the additional money is surplus value when it is related to its source: workers working for more time than what they cost to produce themselves. The relation between surplus value and variable capital (or wages and salaries) is the rate of surplus value or the rate of exploitation, expressed as a ratio: s/v.
When the surplus is related to both c and v and expressed as a ratio, it is the rate of profit: s/(c+v).
In Marxian economics, you cannot simply use the economic classifications provided by employers and governments since such classifications often hide the nature of the social world in which we live. The rate of profit underestimates the rate of exploitation since the surplus value is related to total investment and not just to the workers. Furthermore, it makes the surplus value appear to derive from both constant capital and variable capital.
I decided to look at the annual report of some of the largest private companies in Toronto if they are available in order to calculate the rate of exploitation at a more local level. I begin with one company and invite others to provide criticisms or suggestions for improvement.
I have used some of the ideas from Thomas Ittelson (2019), A Visual Guide to Financial Statements: Overview for Non-Financial Managers and Investors, and Antonios Patidis (2016), “A Micro-Approach for Testing Marx’s LTRPF:Evidence from Greece, 2000 and 2009,” Review of Political Economy. Patidis “utilises data taken directly from company reports and accounts” in order to determine whether the rate of profit falls in the major corporations in Greece. My purpose, however, is not, initially at least, in determining whether the rate of profit has fallen but rather what the rate of exploitation is in diverse companies in Toronto.
I also asked Michael Roberts how to calculate the rate of exploitation; he graciously sent me a couple of articles (one of which I read). After that, I sent him the above, and he commented that it looked good.
Again, the following undoubtedly contains many limitations, but I will leave that for further discussion, should the issue arise.
The income statement is broken into the following categories for 2019 (in millions of US dollars): (pages 5, 36):
Sales $39,431 Costs and Expenses $37,208
Cost of goods sold $34,022
Material $24,585
Direct labour $2,815
Overhead $6,622
Depreciation and amortization $1,345
Selling, general and administrative $1,697
Interest expense, net $82
Other expense, net $240
Equity income ($178) [If you add up all the numbers–34,022; 1,345; … 82, then you get 37,286; if you subtract 178 from that, you get 37,208–the same amount as “Costs and expenses.” That is why the 178 is in parentheses–it is necessary to subtract it from expenses since it is really income.
Income from operations before taxes: $2,223 (profit or surplus value)
A couple of adjustments are probably necessary. On page 37, there is a reference to pension benefits. I assume that this category belongs to “direct labour” since it forms part of the deferred wages of workers that is paid in the current year (but then again, it is unclear whether the category of direct labour includes this, but since it is subtracted from net income, this leads me to believe that it is not included in that category). This should be added to direct labour. Hence, direct labour would be: 2,815+47=2,862, “Costs and expenses” would be $37, 255 “Costs of goods sold”would be $34,069, and “Income from operations before taxes” should be adjusted downward accordingly.
A second adjustment should probably be the treatment of the payment of interest; despite being an expense from the point of view of the individual capitalist, it probably forms part of the surplus value. Hence, it should be added to “Income from operations before taxes.” Adjusting “Income from operations before taxes,” we have 2,223-47+82=2,258.
So, with the adjustments in place: s=2,258; v=2,862. The rate of exploitation or the rate of surplus value=s/v=2,258/2,862=79%.
That means that for every hour worked that produces her/his wage, a worker at Magna International works around an additional 47 minutes for free for Magna International. In an 8-hour work day, the worker produces her/his wage in about 4.5 hours, and the remaining 3.5 hours works for free for Magna. In a 10-hour work day (both work days seem possible at Magna International—see https://www.indeed.com/cmp/Magna-International-Inc/faq/how-are-the-working-hours-at-magna-international-inc?quid=1at7gf6rrak7i9ff)–the worker produces her/his wage in about 5.6 hours and the remaining 4.4 hours works for free for Magna International.
This is not, however, the end of the story. Christopher Arthur, in his book The New Dialectic and Marx’s Capital, argues that there are two kinds of exploitation, one that occurs during the production of the wage by the workers (since they are subject to control by employers during that time), and the other kind of exploitation outlined above, where workers work for free for the employer. This issue, however, will be addressed in a follow-up post.
The Abolitionary 