Socialism, What It May Look Like: The Series

I have written a number of posts as series rather than just one long post. This is due to a number of reasons. To work out a view requires elaboration and time, and posting as a series permits such elaboration over a longer period of time. Also, I have many interests (which correspond in part to my own experiences as an oppressed and exploited worker, oppressed father and so forth).

However, I thought it may be useful to some readers to string series that I may not expand further into one long post in order to present more content on the same theme. I will not edit the series to make it more like one long essay; readers can pick and choose the posts that interest them.

I will probably do this with various other series on this blog.

Socialism, Part One: What It May Look Like

“My wife asked me what other kind of society could we live than the one we are living now. I suspect that most people have the same kind of question. It is difficult to imagine another kind of life than the life that we have experienced all our lives.

There are, of course, no magic answers. The answers will be experimental, with some failures and some successes, and not in ideal circumstances, of course.

However, some ideas can still be provided about some possible ways of living that provide an alternative vision–a vision so obviously lacking among the so-called left these days.

Tony Smith, in his book Globalisation: A Systematic Marxian Account (2006. Boston: Brill), provides a description of some aspects of a possible future kind of society. He borrows his model largely from David Schweichart’s model of economic democracy in After Capitalism (2002) (which I have not read). He adds three modifications of his own.

I will cut and paste short pieces from this work. He paints various aspects of a socialist society that need to be incorporated into a socialist society. There are undoubtedly other aspects, and his own account may have to be modified.

I will not pursue the topic week after week after week until the topic is exhausted since there are other topics which I consider relevant–above all a critique of the power of the class of employers, but also a critique of the social-reformist left and the so-called radical left that do not question the power of employers as a class.

From Smith’s book, page 303:

The model Schweickart defends has the following essential elements:

(i) Production and distribution are primarily undertaken within worker
collectives. Workers are not hired as wage-labourers by capital; they instead
join worker collectives as fellow members. There is a basic right to employment,
with state enterprises providing jobs for those unable to find positions in
collectives.

This condition is to initiate a reduction in economic coercion as an essential move towards an increase in economic and individual freedom.

There is, of course, a possible problem of increased inefficiency, but Smith addresses this issue in further democratic socialist measures.

 Socialism, Part Two: What It May Look Like

The following is a continuation of an earlier post (Socialism, Part One: What It May Look Like) about the nature of socialism–which is a solution to problems that capitalism, characterized by the domination of a class of employers, cannot solve. Socialism is not something that emerges from a utopian view independently of the nature of capitalism but requires a critical approach to capitalism.

In the following, Tony Smith elaborates on the democratic nature of the workplace, which is subject to control not only by the workers at the particular workplace electing managers but also by certain community organizations that represent specific community interests. From  Globalisation: A Systematic Marxian Account (2006. Boston: Brill), page 303:

(ii) Managers of worker collectives are democratically accountable to those
over whom they exercise authority, either through direct elections or through
appointment by a workers’ council that is itself directly elected. These
enterprises are required to have representatives from a range of social
movements (environmental groups, consumer groups, feminist groups, and
so on) on their boards of directors, accountable to those movements.

What do you think of such proposals? How do they relate to democracy? To the lack of democracy in your life? Do you think that such proposals are worth fighting for?

Socialism, Part Three: What It May Look Like, or Visions of a Better Kind of Society Without Employers

The following is a continuation of an earlier post (Socialism, Part Two: What It May Look Like) about the nature of socialism–which is a solution to problems that capitalism, characterized by the domination of a class of employers, cannot solve. Socialism is not something that emerges from a utopian view independently of the nature of capitalism but requires a critical approach to capitalism.

In the following, Michael Perelman contrasts what many people experience in their lives: their own contrast between an activity which they enjoy doing and their experience working for an employer, which they often enough find to be draining.

From Michael Perelman, The Invisible Handcuffs of Capitalism: How Market Tyranny Stifles the Economy by Stunting Workers (New York: Monthly Review Press, 2011),

Just What Is Work?

To understand the potential for transforming the economy, consider a simple example that does not require much of a stretch of the imagination. Just think of the enormous contrast between farm work for wages and gardening as a hobby. Farm work is considered to be so abhorrent in the United States that we regularly hear that only foreign-born workers are willing to perform it. Supposedly, upstanding citizens of the United States would never subject themselves to the life of a farm worker for poverty wages.

While farm labor may be among the hardest, most dangerous work in our society, many people regard gardening as a pleasant diversion. While the United Farm Workers Union represents mostly downtrodden workers, a good number of wealthy people are proud affiliates of their blue-blood garden clubs. Over and above the time they spend in their gardens, many gardeners enthusiastically devote considerable leisure time to conversing or reading in order to become better gardeners. In addition, many gardeners also willingly spend substantial sums for equipment and supplies to use in their gardens.

What, then, is the underlying difference between farm work and gardening? Farm work typically entails hard physical labor, but many gardeners also exert themselves in their gardens. The difference lies in the context of gardening. Gardeners, unlike farm workers, freely choose to be gardeners. During the time they work in their gardens, they want to be gardening. Nobody tells them what to do. Gardeners are producing for themselves rather than for someone else who will benefit from their work.

As the psychologist John Neulinger says: “Everyone knows the difference between doing something because one has to and doing something because one wants to.”43 We should also keep in mind that society respects gardeners. Our newspapers regularly print features of interest to gardeners. Some even have special sections to appeal to their affluent gardening readers. All the while, the lives of farm workers pass virtually unnoticed. In our society, farm work is never “respectable” work; well-to-do families would not approve of their children becoming farm workers.

Of course, gardeners are not entirely free to follow their whims. The rhythms of the seasons and the sudden shifts in the weather dictate some of what the gardeners do, but gardeners generally accept these demands beforehand. …

As suggested earlier, the key to the Procrustean trap is not the threat of physical force but rather the inability to imagine anything outside of the constrained present circumstances. The willingness to take seriously Margaret Thatcher’s preposterous claim—“There is no alternative”—perfectly sums up this state of mind.

A writer for Bloomberg.com reminisced about Thatcher’s Procrustean destructive success:

Of course, it’s possible to change a society and to drag it into the global economic monoculture. Mrs. Thatcher showed how: Break up collectives and make people feel a little bit more alone in the world. Cut a few holes in the social safety net. Raise the status of money-making, and lower the status of every other activity. Stop giving knighthoods to artists and start giving them to department-store moguls. Stop listening to intellectuals and start listening to entrepreneurs and financiers.
Stick to the plan long enough and the people who are good at making money acquire huge sums and, along with them, power. In time, they become the culture’s dominant voice. And they love you for it.46

Thatcher’s scheme actually worked. Her acolytes were so convinced that the mere utterance of Thatcher’s acronym TINA seemed sufficient to cut off any debate with skeptics.

The social-democratic or social-reformist left in Toronto certainly has reinforced the TINA principle. The so-called radical left, by keeping silent out of fear of becoming isolated, themselves becomes part of the social-democratic left. They, like the social-reformist left, provide no real alternative vision to the oppressive and exploitative nature of work characteristic of the power of employers as a class.

In fact, through their silence and their lack of criticism, they contribute to the perpetuation of class rule. They are, practically, social reformists who will never go beyond the existing class system despite their rhetoric of class struggle and struggle from below.

Socialism, Part Four: What It May Look Like, or Visions of a Better Kind of Society Without Employers


The following is a continuation of previous posts on the possible nature of socialism that excludes the power of employers as a class.

In the following, Tony Smith elaborates on the democratic nature of the workplace, which is subject to control not only by the workers at the particular workplace electing managers but also by certain community organizations that represent specific community interests. From Globalisation: A Systematic Marxian Account (2006. Boston: Brill), page 303:

(iii) Worker collectives produce public goods, inputs into the production process, or final consumption goods. Funds for the first are directly allocated to collectives by the relevant planning agencies (see below). The latter two categories of products are offered for sale in producer and consumer markets. In Schweickart’s view, attempts to centrally plan all inputs and outputs in a top-down fashion are simply not feasible, at least not in a complex and dynamic economy. But it does not follow that capitalist market societies are the only acceptable forms of economic organisation. It is possible to imagine a feasible and normatively attractive society combining markets with the socialisation of the means of production, that is, a society making use of producer and consumer markets after abolishing both capital markets and
labour markets.

In addition to the elimination of a market for workers and management of work enterprises being accountable to work councils and community councils, capital markets in the sense of an investment process owned by a minority would no longer exist. There would, nonetheless, be markets that produced means of production and markets that produced consumption goods. For example, at the brewery where I worked, the workers who produced the soaker or the filler that the brewery workers used would be subject to competition from other workers who produce soakers or fillers. Workers in the brewery would be subject to competition from workers in other breweries.

Unfortunately, Smith does not elaborate much on what he means by the abolition of capital markets. His reference to David Schweickart’s work Against Capitalism, however, gives a clue to what he means. Schweikart has the following to say (page 172):

First, we issue a decree abolishing all enterprise obligations to pay interest or stock dividends to private individuals or private institutions.

This decree will need no enforcement, since enterprises are not going to insist on paying what they are no longer legally obligated to pay.

But Schweickart sees a flaw in the abolition of all capital markets, at least immediately (page 173):

6.3.2 Once More, This Time with Feeling (for the Stockholders)

Too Simple? Of course. The above is not meant to be a realistic scenario. Above all, it fails to take into account the fact that millions of ordinary citizens (not only capitalists) have resources tied up in the financial markets. People with savings accounts or holdings in stocks and bonds have been counting on their dividend and interest checks. (Nearly half of all American households have direct or indirect holdings in the stock market, mostly in pension plans.) Eliminating all dividend and interest income-which is what Radical Quick does-will not strike these fellow citizens as a welcome reform. Let us run through our story again, this time complicating it to take into account their legitimate concerns.

Schweickart, realistically, recognizes that workers have investments in capital markets and hence are in some ways tied to such markets. His solution is to imagine a situation where at least the key corporations, due to the circumstances of a crisis, would be subject to elimination from capital markets (pages 173-174):

Let me first set the stage a little more fully than I did with Radical Quick. Let us suppose that a genuine counterproject to capitalism has developed, and that, gradually gaining in strength, it has been able to elect a leftist government that has put most of the reforms outlined earlier in this chapter on the table and has secured the passage of some of them. Suppose investors decide they’ve had enough and begin cashing in their stock holdings. A stock-market crash ensues. In reaction, the citizenry decide that they too have had enough-and give their leftist government an even stronger mandate to take full responsibility for an economy now tumbling into crisis.

Our new government declares a bank holiday, pending reorganization (as Roosevelt did following his election in 1932). All publicly traded corporations are declared to be worker-controlled. Note: This control extends only to corporations, not to small businesses or even to privately held capitalist firms. It is decided that it will be sufficient  to redefine property rights only in those firms for which ownership has already been largely separated from management. (With the “commanding heights” of the economy now democratized, most other firms can be expected to come under increased pressure from their own workers, over time, to follow suit.)

The exact way in which capital markets would be reduced and eventually abolished would vary across time and place, depending on circumstances.

As I have emphasized throughout this blog, though, it is much less likely that workers will be receptive to a call for the elimination of capital markets and markets for workers unless they find the situation to be unfair. The ideology of the social-reformist left consistently makes reference to fairness within the limits of the employer-employee relation. We need to break with such ideology if we are to initiate such a process without having to respond erratically when a crisis hits.

Or are there alternatives? What do you think?

Socialism, Part Five: What It May Look Like, or Visions of a Better Kind of Society Without Employers


The following is a continuation of previous posts on the possible nature of socialism that excludes the power of employers as a class.

In the following, Tony Smith elaborates on the right of use by workers of the places, machinery and so forth where they work, but with the local community being the owner of local resources (and regional and national communities being the owners of regional and national enterprises of regional or national scope). From Globalisation: A Systematic Marxian Account (2006. Boston: Brill), page 304:

(iv) Workers in enterprises are granted use rights to facilities and other
means of production. But ultimate ownership rights remain with the local
community. Workers cannot use their enterprise as a cash cow and then walk
away; they have a legal duty to maintain the value of the community’s
investments. If sufficient depreciation funds cannot be appropriated from
revenues to maintain the value of these investments, it is the responsibility
of community banks to shut down an enterprise. Once depreciated funds
have been deducted, the remainder of the revenues from public allocations
or sales in consumer/producer markets (apart from the taxes to be considered
below) are then distributed among the members of the collective according
to formulae set by the democratically accountable management

Since the workers are the trustees of the workplaces and not their owners, each year, the workers in the sector that produces either consumer goods for the market or the raw material, machines and so forth required to produce both themselves and consumer goods, have to set aside a certain amount of the proceeds from sales to purchase worn out means of production. The workers must also include in that depreciation fund a fund for repairs.

Workers have a responsibility to the present community and to future communities to maintain the general conditions for the continued livelihood of the community. This means that any cooperative that fails to maintain the value of the means of production must be closed down, and workers in such cooperatives must find work in another, more viable cooperative.

The sales revenue will be distributed generally into three parts: (1) the depreciation fund, (2) a tax on capital assets (which will be explained in another post), and a residual of what is called profits, to be distributed to the members of the cooperative as their personal income according to distribution rules created by themselves. (There also may be income tax and consumption tax, but I will not address that).


Socialism, Part Six: What It May Look Like, or Visions of a Better Kind of Society Without Employers

The following is a continuation of previous posts on the possible nature of socialism that excludes the power of employers as a class.

In the following, Tony Smith elaborates on the capital-assets tax, which is the basis for the generation of new investment and the supply of public goods. From Globalisation: A Systematic Marxian Account (2006. Boston: Brill), pages 304-305:



(v) The origin of funds for new investment and public goods is a flat tax
on the non-labour assets of all enterprises.16 In Schweickart’s proposal, the
rate of this tax is initially set by a democratically elected legislature, operating
on the national level. This legislature also decides on the appropriate division
of revenues between funding for national public goods and funds that are
allocated to democratically elected regional and local legislative bodies. Each
of these assemblies, in turn, must also decide upon the level of funding for
public goods to be supplied in the relevant geographical area vis-à-vis the
level of funds set aside for distribution to the level below it. These legislative
bodies can also set aside a percentage of funds for investment in areas of
pressing social needs.


(vi) After all decisions have been made regarding the general level of new
investment and the order of social priorities, and after funds required for
public goods on the national, regional, and local levels have been allocated, the remaining revenues are distributed to local communities on a per capita
basis (at least this should be the presumption in the absence of compelling
reasons to do otherwise, such as the need to temporarily favour historically
disadvantaged regions). Community banks would then undertake the actual
allocation of new investment funds to worker collectives. The boards of
directors of these banks would include representatives of a broad range of
social groups affected by the banks’ decisions. New enterprises would be
formed, and existing ones expanded, through allocations by community banks
rather than private capital markets.


The capital-assets tax assumes that the workers have right of use of most of the means of production of our lives (there may be some room for independent businesses, but they do not form the bulk of economic activity). If they do, then instead of new investment being derived from the private decisions of boards of directors of corporations, it is derived from a democratically-elected national legislature which sets the rate of the capital-assets tax.

There are two general aspects to the tax (like any tax): the flow from a source to the government and the flow of the tax to institutions. The source is the capital assets used by democratic worker cooperatives. It is a flat-rate tax based on the value of the means of production that is applied to capital assets used by workers.

The flow of the revenue generated by the tax to people only arises after deductions from revenue required for investment in projects at the national level. Once this has been deducted, then the revenue is distributed to the regional communities on a perc capita (per person) basis; the regional democratic bodies which in turn allocate investment funds for investment in projects at the regional level. The remainder is then allocated to the local community via public banks, likewise on a per capita (per person) basis.

This principle of distribution of the revenue generated from the capital-assets tax on a per capita basis means that, in areas where there is a concentration of means of production relative to the number of people who live in the area, the outflow of taxes paid will be relatively greater than the inflow of revenue from taxes when compared to areas where the concentration of means of production is relatively smaller.

The capital-assets tax is to replace interest and dividend payments. As noted in the previous post on this topic, since many workers in the more industrialized capitalist countries have at least some investments in the stock market or hold bonds, GICs, and so forth and, furthermore, pension funds are generally linked to investment, a policy that at one sweep sought to abolish interest and dividend payments may well be opposed by the working class, initially. Consequently, some form of transitional program may be necessary, one where interest and dividend payments are gradually phased out, or one where compensation for nationalization occurs. In any case, the ultimate goal is to abolish interest and dividend payments and replace them with a flat capital-assets tax.

Socialism, Part Seven: What It May Look Like, or Visions of a Better Kind of Society Without Employers

The following is a continuation of previous posts on the possible nature of socialism that excludes the power of employers as a class.

In the following, Tony Smith elaborates on the criteria to be used in the distribution of the flat-rate capital-assets tax, which is the basis for the generation of new investment (and which was outlined in the last post on this topic). From Globalisation: A Systematic Marxian Account (2006. Boston: Brill), page 305:

(vii) When allocating investment funds for new worker collectives and the
expansion of existing ones, community banks must take three main questions
into account. Is there likely to be sufficient demand for the output of the given
enterprise for it to maintain the value of the community’s investment and
provide adequate income for its members? Will the investment provide stable
employment? And is the investment consistent with the set of social priorities
democratically affirmed on the national, regional and local levels? Extensive
external financial and social audits can be regularly imposed on all enterprises
and community banks to assess their performances in terms of these criteria.
These independent social audits are a crucial component of the socialist version
of the principle of transparency, institutionalising a level of accountability
and transparency far beyond the limited neoliberal version of the principle.17
Community banks can then be ranked on the basis of the results of these
audits. The level of income of the staff of a particular bank, and the amount
of funds allocated to this bank for distribution in the future, are determined
by the bank’s place in this ranking.

The distribution of investment funds to existing and new worker collectives through community banks would be controlled by taking into account:

  1. Whether the level of demand would likely be sufficient to not only maintain the value of the means of production (machinery, buildings and so forth) but to ensure a reasonable income for the working members of the cooperative.
  2. Whether the investment would result in unemployment of the members, or would there be sufficient work for all members (without jeopardizing efficiency, presumably).
  3. Whether the investment would result in effects that contribute to the realization of plans democratically decided on at the local, regional and national levels.

To ensure that these criteria for lending to worker cooperatives via public banks were satisfied, social audits could be carried out systematically and transparently. Since the revenue of workers in public banks would be a function of their success in extending loans based on the three criteria (and subject to social audits), workers in public banks would be motivated to more likely extend loans to worker cooperatives that were most likely to meet these three criteria.

Socialism, Part Eight: What It May Look Like, or Visions of a Better Kind of Society Without Employers

This is a continuation of earlier posts on the subject of the nature of socialism–a society that aims at the abolition of the power of employers as a class and the initial appropriation of the necessary requirements for us to control our lives as a collectivity and as individuals.

In the following, Tony Smith elaborates on some kinds of relations that may emerge between a nation that is socialist and other nations (whether socialist or not). From Globalisation: A Systematic Marxian Account (2006. Boston: Brill), pages 305-306:

(viii) In Schweickart’s model, there are no markets for capital assets, and
so there will be no capital flight in the form of cross-border investments in
capital assets. There will also be little foreign direct investment, since worker
collectives are unlikely to outsource their own jobs, and community banks
are assessed according to the extent they create employment in their own
communities. But there will still be trade across borders. For a period of time,
this may include trade with regions that have not institutionalised a version of economic democracy. In such circumstances, regions committed to socialist
globalisation should follow the principle of fair trade rather than ‘free’ trade.
To ensure that this occurs, Schweickart calls for a ‘social tariff’.18 If oppressive
labour practices hold down wage levels in a given region, the prices of imports
from that region will be raised to what they would have been had worker
income been comparable to the level prevailing in the importing country. A
social tariff will also be imposed to compensate for a lack of adequate spending
on the environment, worker health and safety, or social welfare in the exporting
nation. The revenues collected by this tariff will then be distributed to the
groups in the exporting country with the best record of effectively implementing
anti-poverty programmes, whether or not they are agencies of the government

There will little if any flow of capital investment beyond the borders of the socialist nation (hence little or no capital flight); workers are unlikely to invest abroad rather than locally since this would result in loss of employment. Furthermore, community banks would prevent such investment through its enforcement of the criteria of employment creation (see previous post).

It is possible that trade between socialist and non-socialist nations would still occur. In trade between a socialist nation and a capitalist nation, the socialist nation would create a social tariff, imposing it to prevent unfair competition on the basis of capitalist ways of producing wealth (such as reduced wages or lack of health and safety measures).

This social tariff, rather than being used for the benefit of the socialist workers and community members, would flow back to workers in the non-socialist world as an expression of solidarity with them via agencies or organizations of the exporting non-capitalist country that have proven to be effective enforcers of anti-poverty measures in the non-capitalist country.

Smith adds three other measures that have an international focus: (1) the creation of international monetary clearing units, which would serve as world money that would function, among other things, to ensure that excessive trade imbalances would not arise, especially for the more vulnerable parts of the world economy; (2) a global representative assembly that would legislate and oversee issues between nations in a much more democratic manner than the current United Nations model; and, finally, (3) a democratically accountable international planning agency that would ensure equitable investment funding for the provision of international public goods, distributed according to the number of people (per capita), with provisions for exceptions on the basis of past historical biases of economic development.

All these measures refer to what has come to be known as “market socialism.” Such a system, if democratically organized, would likely not only be more efficient than a capitalist economy but definitely superior in terms of ethics. However, before addressing that issue in further posts, I will, in a future post, consider whether the idea of market socialism is an adequate model for a future society without capitalism, or whether it leaves out of consideration some essential aspects that need to be considered if we are to resolve our social problems on this planet.

Socialism, Part Nine: An Inadequate Conception of the Nature of Freedom and Necessity, or Free Time and Necessary Time, Part One

The class formal principle of employers–that workers receive from society what they contribute (contradicted at a practical level through systematic exploitation of workers necessarily in a capitalist context–that is why it is a formal principle that contradicts reality–see  for example The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One) would be realized in a socialist society on average since exploitation of one class by another would be eliminated. However, the principle of relating individual life to labour is still a bourgeois or capitalist principle that needs to targeted because it still reduces human beings to merely one criterion–labour. From  Karl Marx, Critique of the Gotha Programme, pages 86-87 of Marx-Engels Collected Works, volume 24):

Hence, equal right here is still in principle bourgeois right, although principle and practice are no longer at loggerheads, while the exchange of equivalents in commodity exchange only exists on the average and not in the individual case.

In spite of this advance, this equal right is still constantly encumbered by a bourgeois limitation. The right of the producers is proportional to the labour they supply; the equality consists in the fact that measurement is made with an equal standard, labour. But one man is superior to another physically or mentally and so supplies more labour in the same time, or can work for a longer time; and labour, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal  abour. It recognises no class distinctions, because everyone is only a worker like everyone else; but it tacitly recognises the unequal individual endowment and thus productive capacity of the workers as natural privileges. It is, therefore, a right of inequality, in its content, like every right. Right by its nature can exist only as the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable by an equal standard only insofar as they are made subject to an equal criterion, are taken from a certain side only, for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Besides, one worker is married, another not; one has more children than another, etc., etc. Thus, given an equal amount of work done, and hence an equal share in the social consumption fund, one will in fact receive more than another, one will be richer than another, etc. To avoid all these defects, right would have to be unequal rather than equal.

But these defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birthpangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development which this determines.

Neither Tony Smith nor Schweickart, both advocates of market socialism, refer to this. For Schweickart at least, any elimination of the market economy will lead to various negative effects, such as authoritarian conditions. Sam Gindin, similarly, does not take into consideration the inadequacy of markets as an expression of human freedom.

This model so far is a market-socialist model. Rather than conceiving it as a definitive model of how future society will work, however, we should consider it as a transition society that may last for longer than Marx thought but, nonetheless, is itself inadequate.

This inadequacy can be seen in the omission by Smith and Schweickart of any consideration of the need to transform the division of labour. In Schweickart’s book, for example, there is no discussion at all of the division of labour. If we are to live in a full life, though, we need to reduce or eliminate the gap between labour that is predominantly physical and labour that is predominantly intellectual.

Another aspect over which both Smith and Schweickart are silent is the implication for human beings if prices are to continue to exist. Schweickart does not directly address the question, but his assumption that prices will always exist fails to address the problem of the continued valuation of objects ultimately in terms of labour. Marx’s theory of exploitation is not just a critique of exploitation but a critique of the form of exploitation–through the mediation of relations between objects instead of a conscious connection with other human beings. Human beings, via ultimately money, are related to each other via objectified labour measured externally as money.

Market socialism may well be needed for some time, but it is inadequate as a form of society for human beings. At first, it is necessary to create a society where the reality of labour time being the measure of human wealth corresponds to the principle of determination by labour time: what workers contribute to society and what they receive from it do not differ quantitatively (workers are not exploited).

However, the principle of the life process is still based on one principle–labour and its measure, time. The human life process, however, is much more than this process, and the need for human beings will be to surpass this principle and to break the link between contribution and the flow of goods and services based on that contribution.

Now, let us listen to a person who claims to aim at realistic socialism–Sam Gindin, head of the Toronto Labour Committee (and former research director for the Canadian Auto Workers (CAW) (now Unifor). Mr. Gindin implies that, due to what he calls scarcity, we will always need a market form of socialism:

Scarcity — the need to make choices between alternative uses of labor time and resources — is unlikely to end outside of utopian fantasies because popular demands, even when transformed into collective/socialist demands, are remarkably elastic: they can continue to grow. Think especially of better health care, more and richer education, greater care for the aged, the expansion of art and of cultural spaces — all of which require labor time and generally also complementary material goods. That is, they demand choices.

Furthermore, the calculation of scarcity can in particular not ignore leisure, with leisure representing the “realm of freedom.” Even if we produced enough of what we wanted, as long as some of that labor isn’t completely voluntary but instrumental, then effective scarcity of either labor time or the good/service remains. Workers may even like their jobs and see them as a source of creative expression and satisfaction, but as long as they’d periodically prefer to not show up or leave early, some further inducement is needed to offset the sacrifice of providing those labor hours. That inducement is a measure of the persistence of effective scarcity. And once scarcity is acknowledged as an inherent and essentially permanent frame in the restructuring of society, the question of structured incentives becomes paramount. This is not just a matter of motivating adequate hours of work, but of affecting its intensity and quality, and influencing where that work is best applied (i.e., determining society’s overall division of labor).

Mr. Gindin, it is clear, identifies the need to make choices of “labour time and resources” with scarcity. There is an identity between the need to make choices in the realm of labour and the continued existence of scarcity. 

The counterpart of this is the implicit denial of the need to make choices in “leisure,” which is identified with the “realm of freedom.” Mr. Gindin, of course, fails to justify this identity and fails as well to explore the nature of “leisure.” 

Mr. Gindin follows neoclassical economics (which justifies capitalism in various ways) by arguing that “scarcity” in the abstract (eternally or forever, without qualification) characterizes human life. Consider the following quotation from a typical textbook on neoclassical (or capitalist) economics (Steven A. Greenlaw, Timothy Taylor, Principles of Microeconomics, page 8:

Economics is the study of how humans make decisions in the face of scarcity. These can be individual decisions, family decisions, business decisions or societal decisions. If you look around carefully, you will see that scarcity is a fact of life. Scarcity means that human wants for goods, services and resources exceed what is available. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply. Of course, the ultimate scarce resource is time- everyone, rich or poor, has just 24 hours in the day to try to acquire the goods they want. At any point in time, there is only a finite amount of resources available.

People live in a world of scarcity: that is, they can’t have all the time, money, possessions, and experiences they wish.

Mr. Gindin argues, then, that scarcity arises objectively when there are alternative possibilities that exist for the use of resources and labour time. Choices must be made, and the choices necessarily involve the realization of some projects and the exclusion of others. We can never have our cake and eat it simultaneously.

This idea seems valid, and yet it is really superficial. Mr. Gindin practically wants to ridicule those who believe that work can be itself a realm of freedom–despite the need to make choices and despite the need to engage in the production of food, shelter, clothing, health care, education and so forth. To be realistic for Mr. Gindin is to believe in the necessity of drudgery throughout human history. What else does he mean when he writes “And once scarcity is acknowledged as an inherent and essentially permanent frame in the restructuring of society, the question of incentives becomes paramount.”

Mr. Gindin’s implicit assumption is that all incentives are external or instrumental in nature. There is, for this social democrat, no such thing as an intrinsic incentive (or motivation). Such an assumption needs to be questioned.

Rather than addressing the issue of scarcity (pure necessity for Mr. Gindin) directly, let us look at the so-called opposite realm of leisure (pure freedom for Mr. Gindin).

He claims that leisure is somehow the “realm of freedom.” What leisure is that? Leisure is a concept that is purely non-instrumental, it would seem, for Mr. Gindin. All leisure.

As an aside: Mr. Gindin borrows his concepts from current experiences and then generalizes them throughout history. Thus, leisure in the current context of work life characterized by the power of employers using people as things for their own ends is often a compensation for the drudgery of such daily life. Such an uncritical use of the concept of leisure will be addressed in another post.

Thus, Mr. Gindin separates completely labour and leisure. Leisure is purely non-instrumental, and labour can be to a certain extent enjoyable but, ultimately, is tainted with instrumentality by its very nature. Since leisure is identified with the “realm of freedom” and non-instrumentality, and labour is tainted with instrumentality by its very nature, scarcity must arise by necessity since workers by their very nature would prefer leisure (freedom) over work (necessity and instrumentality). To engage in work, workers must be externally motivated to do so (since their default mode is to prefer leisure (pure freedom) over work (pure necessity).

Mr. Gindin’s assumption concerning the so-called identity of leisure with the realm of freedom and a lack of instrumentality is questionable. Many so-called leisure activities have an instrumental aspect to them. For example, I “leisurely” drove my daughter, Francesca, to the Royal Tyrrell Museum summer camp in Alberta some time ago, from Winnipeg, Manitoba, Canada (about a distance of 1,300 kilometers). It took a “leisurely” time of around 18 hours (stopping along the way for lunch and supper). For me, the activity was stressful though enjoyable (when compared to working for an employer) since Francesca was with me. The leisure activity of driving, though, was instrumental since it was a means to the end of developing my daughter’s capacities–that was the real end.

I had a choice to make in whether I was going to ask Francesca whether she wanted to go to the camp at all and, given that choice, what means I would use to achieve that goal. 

It cannot be said that the act of driving the car was secondary to the end of developing her capacities in a certain direction since she could not do so without attending the camp. The act of driving the car, though instrumental, was an essential condition for achieving that end (of course, it was not the only means by which to achieve that end–taking a plane, bus or train were possible alternatives). Furthermore, the end of developing Francesca’s capacities motivated me to drive for long periods of time in the first place, so the end itself formed an instrumental aspect of my activity of driving the car–it formed an ideal or motivating aspect of the physical aspect of driving the car.

My drive to Drumheller was thus instrumental for Francesca, my daughter, despite being a leisure activity. I had to make choices, of course. I could have taken a bus with her. We could have flown. The goal of the trip, for me, though constrained by certain means, was non-instrumental as an ultimately intrinsic end and yet was instrumental, ideally, in guiding my own activity in the present (driving the car towards Drumheller, Alberta, where the Royal Tyrrell Museum is located). I had an internal incentive or intrinsic incentive.

Of course, human life is finite, but who would deny that? However, Mr. Gindin draws false conclusions from that fact not only in relation to leisure but also to “education” and “art.” These issues will be dealt with in another post or posts.

Mr. Gindin’s assumption, then, that leisure is the pure realm of freedom is simple nonsense. Mr. Gindin’s hidden assumption of the mutual exclusion of instrumentality and intrinsic ends–that they are separate–remains an unproven assumption.

But some may say that this is an example from the realm of leisure (which does not exclude the realm of necessity despite Mr. Gindin’s implicit assertion to the contrary). What of the realm of work? Does it need external incentives because alternatives arise and choices must be made?

In a follow-up post, I will shift to Mr. Gindin’s opposite view concerning work. Since leisure is supposedly the pure realm of freedom that lacks instrumentality, work, according to Mr. Gindin, if in any way instrumental (which it must be for Mr. Gindin), involves a lack of freedom, which is expressed in the concept of scarcity and thus requires external or extrinsic motivation. Just as leisure is supposed to be the pure realm of freedom, so too the realm of work is supposed to be always tainted by the realm of necessity. 

This issue has to do with the two main divisions of labour: academic or intellectual and practical (or manual or physical). I referred briefly to such a division when I provided a critique of such a division in schools and the school curriculum (see Critical Education Articles Placed in the Teacher Staff Lounge While I Was a Teacher, Part Three). 

(As an aside: Mr. Gindin probably follows his colleague, Leo Panitch (they wrote a book together), in rejecting (without understanding) Marx’s so-called labour theory of value (really a theory of commodities and capital). (I attended Mr. Panitch’s class on globalization in the winter of 2014. Mr. Panitch explicitly stated that he considered Marx to have taken a wrong turn in Capital, especially Marx’s use of some of the dialectic of the German philosopher, G.W.F. Hegel, who, among other things, argued for the need to reconcile opposite relations, such as freedom and necessity)


Socialism, Part Nine: Inadequate Conception of the Nature of Freedom and Necessity, or Free Time and Necessary Time, Part Two

This is a continuation of a previous post.

In a previous post, I criticized Mr. Gindin’s view that leisure is the pure realm of freedom. (Sam Gindin is (or was) head of the Toronto Labour Committee and former research director for the Canadian Auto Workers (CAW) (now Unifor)). In this post, I will criticize his view that work, being a world of necessity, requires external incentives.

Let us look at part of a previous quote from Mr. Gindin’s writing on socialism:

Furthermore, the calculation of scarcity can in particular not ignore leisure, with leisure representing the “realm of freedom.” Even if we produced enough of what we wanted, as long as some of that labor isn’t completely voluntary but instrumental, then effective scarcity of either labor time or the good/service remains. Workers may even like their jobs and see them as a source of creative expression and satisfaction, but as long as they’d periodically prefer to not show up or leave early, some further inducement is needed to offset the sacrifice of providing those labor hours. That inducement is a measure of the persistence of effective scarcity. And once scarcity is acknowledged as an inherent and essentially permanent frame in the restructuring of society, the question of structured incentives becomes paramount. This is not just a matter of motivating adequate hours of work, but of affecting its intensity and quality, and influencing where that work is best applied (i.e., determining society’s overall division of labor).

Mr. Gindin’s superficial imagination leads him to apply the current poverty of work relations, implicitly, as the standard for determining the so-called “realm of necessity.” Like leisure, which is supposed to be the pure realm of freedom, he separates freedom and necessity at work.

Consider my work at the brewery in Calgary, Alberta, Canada. When I worked at the brewery, we were obliged to work to produce not only beer, but beer for the market, and not only for the market but for the ultimate goal of more profit. We were things to be used by the employer (see https://theabolitionary.ca/the-money-circuit-of-capital/).

The riveting of material production to the goal of profit as the ultimate goal prevents workers who produce beer from reorganizing their lives both inside and outside the brewery in such a way that they can integrate their working lives with other aspects of the process of producing beer. For example, at the brewery in Calgary, there was a chemist who probably, among other things, tested the quality and properties of the beer being produced (being “only a bottling worker,” I really did not understand what the chemist did when I worked at the brewery).

Mr. Gindin tips his hand by referring to “scarcity” as somehow requiring incentives. He fails to explore what is meant by “incentives,” but implicitly assumes that all incentives are external and cannot be internal to the process which produces beer–a mechanical materialist point of view.

Under a socialist way of life, initially, workers would produce beer for others via the market. Even at this stage, here is no reason why workers could not begin to integrate a study of chemistry with the production of beer. The same could be said of the mechanics, physics and mathematics of beer production. For example, the filler–a machine for the filling of beer bottles rotated in a circular motion, with spouts attached to the machine. The velocity of rotation, the speed of the incoming bottles and so forth could be calculated and adjusted to attain certain specific rates of output and qualities of beer production (rather than being externally specified by managers as the representatives of employers).

John Dewey, an American philosopher of education, pointed out somewhere that there is no such thing as a purely biological human experience, a purely mathematical human experience, a purely physical human experience and so forth. Human experience is all those aspects and more. The apparently most mundane human act or experience contains a rich variety of potentially worthwhile pursuits that can be analyzed and pursued in ever greater depth and breadth. The production of beer can be integrated into the study of chemistry, physics, mechanics, biology, mathematics, history, geography and other sciences. Despite beer production being instrumental for the production of beer as a consumer good, it could be the point of departure for the infinite expansion of the capacities of workers who produce beer–with the only limit being their own capacities for the pursuit of such sciences and the finite period of time in which they live on this planet before dying. Workers could thus freely expand their intellectual and physical horizons even when they produce beer.

Mr. Gindin’s superficial separation of freedom and necessity at work, like his superficial separation of freedom and necessity during leisure hours (as pointed out in the previous post), leads him to false conclusions concerning the nature of work in a socialist society. This should not surprise anyone.

Mr. Gindin’s false conclusions concerning the nature of the relationship of freedom and necessity under socialism go beyond the issue of leisure and work. He claims the following in relation to education and art, among other areas of human life:

Scarcity — the need to make choices between alternative uses of labor time and resources — is unlikely to end outside of utopian fantasies because popular demands, even when transformed into collective/socialist demands, are remarkably elastic: they can continue to grow. Think especially of better health care, more and richer education, greater care for the aged, the expansion of art and of cultural spaces — all of which require labor time and generally also complementary material goods. That is, they demand choices.

In another post, I will show that Mr. Gindin’s reference to “more and richer education” can integrate–contrary to Mr. Gindin’s mechancial separation of the two–both elements of necessity and freedom. I may also address in a future post his claim that the demand for the expansion of art somehow involves the separation of necessity and freedom.


Socialism, Part Nine: Inadequate Conception of the Nature of Freedom and Necessity, or Free Time and Necessary Time, Part Three: Education

This is a continuation of a previous post.

In a previous post, I pointed out that Mr. Gindin claimed that the expansion of educational services would involve scarcity and therefore would require external or extrinsic motivation of some sort. (Mr,. Gindin is head of the Toronto Labour Committee and former research director for the Canadian Auto Workers (CAW) (now Unifor) union.

Let us look at part of a previous quote from Mr. Gindin’s writing on socialism:

Furthermore, the calculation of scarcity can in particular not ignore leisure, with leisure representing the “realm of freedom.” Even if we produced enough of what we wanted, as long as some of that labor isn’t completely voluntary but instrumental, then effective scarcity of either labor time or the good/service remains. Workers may even like their jobs and see them as a source of creative expression and satisfaction, but as long as they’d periodically prefer to not show up or leave early, some further inducement is needed to offset the sacrifice of providing those labor hours. That inducement is a measure of the persistence of effective scarcity. And once scarcity is acknowledged as an inherent and essentially permanent frame in the restructuring of society, the question of structured incentives becomes paramount. This is not just a matter of motivating adequate hours of work, but of affecting its intensity and quality, and influencing where that work is best applied (i.e., determining society’s overall division of labor).

Mr. Gindin’s use of “scarcity” is meant to show that he is being realistic. He claims the following:

Scarcity — the need to make choices between alternative uses of labor time and resources — is unlikely to end outside of utopian fantasies because popular demands, even when transformed into collective/socialist demands, are remarkably elastic: they can continue to grow. Think especially of better health care, more and richer education,

Mr. Gindin prides himself on being realistic (his reference to “utopian fantasies” is meant to show this). In reality, he is a most conservative “socialist” (really a social democrat) who operates in terms of the capitalist economy and its social institutions.

He converts the relation between necessity and freedom in a socialist society into a false relation of mutual exclusivity. Thus, for him in the educational sphere an expansion of educational services necessarily leads to a diminution of resources in other areas. If, however, freedom and necessity are united and reinforce each other in the educational sphere and in other spheres (an internal relation of freedom to necessity), there need not arise such a diminution since human activity in other areas will, in turn, be enriched.

Mr. Gindin does not explore how educational institutions may change under a socialist system and how this might effect the relationship between necessity and freedom both in work and outside work.

John Dewey, an American philosopher of education, certainly did not believe that education excluded either necessity or freedom. Operating between 1896 and 1904 in Chicago, the University Laboratory School (commonly known as the Dewey School) used the common needs or common necessities of most of humanity for food, clothing and shelter as the point of development for children’s physical, intellectual, emotional, ethical and aesthetic development. By having children try to produce food, clothing and shelter in various historical epochs through the occupations associated with these needs, Dewey hoped to bridge the gap between intellectual and physical life that deeply divided American capitalist society.

Children started with purposes that they understood (the need or necessity for food, clothing and shelter) and were to come to understand the natural and social roots of varying the means for satisfying such common needs or common necessities.

Of course, the need for food and shelter (and, in most environments, the need for clothing), are given by the natural conditions of humans as living beings. They did not choose these conditions. However, through varying the means used by diverse historical societies, children can gradually come to learn about the potentialities of the natural world in diverse geographical areas and the diverse means by which human beings have come to produce their own lives. They learn increasingly how to control their own basic lives by experiencing diverse environments and diverse means by which to address problems associated with the satisfaction of the basic needs or necessities.

What of the learning of science? Does learning how to produce our basic necessities exclude the learning of science? Is there some sort of opposition between learning how to produce such basic necessities and the need to make choices about the learning of science? Does learning how to produce basic necessities in various environments involve a waste of time since the time could be spent learning about science? Mr. Gindin, with his false dichotomy of identifying the need to make choices with scarcity, would probably consider it necessary to choose between the learning how to produce the basic necessities and learning science.

Dewey, however, did not believe that learning how to produce the basic necessities and learning science were mutually exclusive. Human beings naturally focus on ends since they are living beings; means are secondary to the ends of life. Dewey repeats in a number of works his contention that human beings naturally are more concerned with ends than with means: “For men are customarily more concerned with the consequences, the “ends” or fruits of activity, than with the operations by means of which they are instituted” (Logic: The Theory of Inquiry, 1938/1986, page 253). However, consideration of means is just as essential to the life process.

If intelligent action (which is what education needs to develop) involves the coordination and means and ends, then education needs to have children learn to shift from their concern or interest or natural proclivity towards ends to a concern with the conditions for the creation of those  ends and the coordination of the two.

Through engagement with the occupations linked to basic needs or necessities, the child gradually becomes conscious of the steps  required a as well as the material means necessary for the basic ends to be achieved. A shift in attitude gradually emerges, as means and their perfection become more important—but always-in relation to the end to be achieved.

The shifts from ends to means and their eventual coordinate relation can lead to the habit of ensuring that the ends desired are placed in the broader context of the means required to achieve them, and the choice of means to achieve ends be placed in the wider context of the total process of their impact on oneself and others.

A shift from concern from ends to means as a temporary end in itself can thus form the basis for the development of science.

Analytic categories characteristic of the diverse sciences are to emerge gradually. For
instance, the study of chemistry emerged from the process of cooking as well as from the metallurgical processes associated with the basic occupations. Similarly, physics emerged from the processes of production and use of tools.

The basic occupations  provide a bridge between common-sense inquiry and scientific inquiry. Without such a bridge, science would remain vague and would likely be resisted. Moreover, hose who do tend towards an interest in scientific work as such would likely become remote from the concerns of the common person, and would fail to understand how science is, ultimately, instrumental to-the human life process.

On the other hand-, the common, person could fail to appreciate how science can enrich her life and how it does affect her life in the modern epoch. For instance, Dewey mentions how metallurgical operations performed by human beings to transform metals into something useful resulted in the identification of about half a dozen metals (Logic: The Theory of Inquiry). By abstracting from the immediate relation between human beings and substances of the Earth, science has enabled human beings to identify over 60 metals. Through scientific inquiry, differentiation of metals and their diverse uses have expanded substantially in a relatively short period of time. The common person needs to understand the, need, (or scientific inquiry in relation to the limitations of common-sense inquiry as the scientist needs to understand that scientific inquiry may be an end for her but instrumental for many people.

The point of this is to show that the allocation of resources to the expansion of educational services need not entail some sort of “scarcity” merely because the allocation of resources to schools entails the non-allocation of resources in other areas. The allocation of resources in one area can result in the transformation of individuals into individuals with expanded horizons. The expansion of horizon can, in turn, lead to enhancement of experiences in other areas in a qualitative feedback loop that enhances the totality of live experiences.

As long as the resources allocated to schools involve the enrichment of both the living and social nature of human beings in a coherent fashion (taking into account both their nature as living beings and as social beings), the allocation of resources need not involve some sort of limit to other social activities; the necessity of producing food, clothing and shelter can lead to an expanded horizon and thereby to enhanced freedom.

Schools, if they contribute to the growth of children, would form one of many institutions that would contribute to the qualitative enhancement of our lives as individuals and as social individuals in a unique way.

An analogy may help. Look at your own body. You need your own kidneys in order to clean your blood of impurities and excrete them in the form of urine.  The energy allocated to this function limits the energy that can be allocated to your other organs. However, your other organs should not have all your energy allocated to them; there must be a balance between the allocation of your total energy to the diverse organs and their functions, with some organs requiring more energy, others less, depending on a number of circumstances (level of current activity, age, gender and so forth). Merely because each organ has a limited amount of energy and resources allocated to it does not mean that there is some sort of “scarcity” of energy and resources. Your freedom to move about in an effective–and graceful–manner depends on the varying allocation of resources and energy to diverse parts of the body.

If schools develop individuals who can appreciate the continuity (and difference) between their common-sense experiences and scientific experience, the resources allocated to it will feed back into other institutions in a coherent fashion.

Furthermore, individual children will gradually discover what unique contributions they can make to others, and they will come to appreciate the unique contributions of others to their lives.

This process of receiving something unique from others and contributing something unique to others defines the nature of true individuality. True individuality means the impossibility of substitution of function. Individuality is not only unique existentially—all existences are unique–but also functionally; structure and function meld into each other. Means and ends become one unique event that persists as unique in its actualization.

Modern human relations need to “capture” individual variations since modern human nature can advance only through such variations. These variations are unique. From John Dewey, Democracy and Education (1916/2004, page 96):

… he [Plato) had no perception of’ the uniqueness of individuals. … There being no recognition that each individual constitutes his own class, there could be no recognition of the infinite diversity of active tendencies and combinations of tendencies of which an individual is capable.

Plato also did not recognize that stability or harmony could arise through unique changes. From Democracy and Education, page 97:

But it is true that lacking the perception of the uniqueness of every individual, his incommensurability with others, and consequently not recognizing that a society might change and yet be stable, his [Plato’s] doctrine of limited powers and classes came in net effect to the idea of the subordination of individuality.

The emergence of distinct .or unique individuals arises from the process of acting
within a social environment; individuality is an achievement and not a presupposition. From John Dewey (1922), Human Nature and Conduct: An Introduction to Social Psychology, page 84:

This fact is accentuated and made fundamental by the fact of infancy— the fact
that each human being begins life completely dependent upon others. The net outcome accordingly is that what can be called distinctively individual in behavior
and mind is not, contrary to traditional theory, an original datum.

The development of a unique function and the reception of unique functions from others constitutes an essential element of freedom, and the development of such unique functions can only arise in conjunction with the realm of necessity and not apart from it. From Jan Kandiyali (2017), pages 833-839, “Marx on the Compatibility of Freedom and Necessity: A Reply to David James,”  European Journal of Philosophy, volume 25, page 837:

The key point is that Marx is describing a communist society as one in which individuals achieve self‐realization through labour—by helping others to satisfy their needs. Thus, … Marx claims that in non‐alienated production, I would enjoy an individual expression of life during production and in knowing my personality to be manifest in the product I create. However, … Marx emphasizes how my production satisfies another’s need, and how that production for another contributes to my own, as well as the other’s, self‐realization. Thus, when you consume my product, I experience the enjoyment of knowing that my activity has satisfied your need. Because I have satisfied your need, you recognize me as the ‘completion’ of your essential nature. And finally, because I recognize that you appreciate my production for you, my cognizance of your appreciation completes my self‐realization.

What I want to emphasize is that this account of self‐realization through labour that meets the needs of others, labour that characterizes production in a communist society, involves a distinctive conception of the relationship between freedom and necessity. According to this conception, freedom is not merely compatible with necessity. Rather, the necessity of labour is part of the explanation for why labour is a free and self‐realizing activity. For it is only in labour that ‘I would have the direct enjoyment both of being conscious of having satisfied a human need’, and it is only when I have satisfied another’s need that I can be recognized as completing another’s ‘essential nature’.

Mr. Gindin, with his talk of scarcity, has a mechanical conception of human nature and of human relations. It is a conception which splits human beings into beings of necessity (beings of nature) and beings of freedom (social beings).

This mechanical conception if human nature and human relations is shared by his colleague, Herman Rosenfeld (see Reform Versus Abolition of the Police, Part Five: More Philosophical Considerations). There seems to be a pattern emerging here: social democrats or social reformers view other people and human relations as external to each other–like ping pong balls rather than living and breathing beings with the capacity to engage in conscious and organized self-change.

Mr. Gindin also has a mechanical view of the relation of art in a socialist society since it, too, is restricted by “scarcity.” A critical analysis of such a view will be posted in the future.

Socialism, Part Nine: Inadequate Conception of the Nature of Freedom and Necessity, or Free Time and Necessary Time, Part Four: Art

This is the conclusion of a series of previous posts on the subject.

In a previous post, I criticized Mr. Gindin’s claim that the expansion of educational services would involve scarcity and therefore would require external or extrinsic motivation of some sort. (Mr,. Gindin is (or was) head of the Toronto Labour Committee and former research director for the Canadian Auto Workers (CAW) (now Unifor) union. See Socialism, Part Ten: Inadequate Conception of the Nature of Freedom and Necessity, or Free Time and Necessary Time, Part Three: Education.

Let us look at part of a previous quote from Mr. Gindin’s writing on socialism:

Furthermore, the calculation of scarcity can in particular not ignore leisure, with leisure representing the “realm of freedom.” Even if we produced enough of what we wanted, as long as some of that labor isn’t completely voluntary but instrumental, then effective scarcity of either labor time or the good/service remains. Workers may even like their jobs and see them as a source of creative expression and satisfaction, but as long as they’d periodically prefer to not show up or leave early, some further inducement is needed to offset the sacrifice of providing those labor hours. That inducement is a measure of the persistence of effective scarcity. And once scarcity is acknowledged as an inherent and essentially permanent frame in the restructuring of society, the question of structured incentives becomes paramount. This is not just a matter of motivating adequate hours of work, but of affecting its intensity and quality, and influencing where that work is best applied (i.e., determining society’s overall division of labor).

Mr. Gindin’s use of “scarcity” is meant to show that he is being realistic. However, just as Mr. Gindin does not criticize the particular form of education in modern society, he does not consider the limitations of the particular form of art in modern society. He writes the following:

Scarcity — the need to make choices between alternative uses of labor time and resources — is unlikely to end outside of utopian fantasies because popular demands, even when transformed into collective/socialist demands, are remarkably elastic: they can continue to grow. Think especially of … the expansion of art and of cultural spaces — all of which require labor time and generally also complementary material goods. That is, they demand choices.

Mr. Gindin seems to consider the “expansion of art and cultural spaces” in purely quantitative terms. The existing “art and cultural spaces” are supposed to be “expanded” rather than qualitatively transformed. Given the specific class nature of modern society dominated by a class of employers and the general class nature of human history after the agricultural revolution, the view that art and culture needs mere expansion rather than qualitative transformation reflects an impoverished view of the nature of socialist society. If socialist society is characterized by the abolition of classes, and classes involve exploitation and oppression, then the nature and development of art and culture should accordingly change qualitatively.

The issue can be approached from different angles. One issue is the question of the form of art (something which Mr. Gindin does not even adddress). John Dewey’s philosophy of art can aid us in understanding the limitations of Mr. Gindin’s characterization of “scarcity” and art in a socialist society.
Dewey points out that the form of modern art is isolated from common human experience. It is this isolated form itself that prevents a proper understanding of the nature of art as a refined development of common-sense human experience. From John Dewey (1934), Art as Experience , pages 3-4:

BY ONE of the ironic perversities that often attend the course of affairs, the existence of the works of art upon which formation of an esthetic theory depends has become an obstruction to theory about them. For one reason, these works are products that exist externally and physically. In common conception, the work of art is often identified with the building, book, painting, or statue in its existence apart from human experience. Since the actual work of art is what the product does with and in experience, the result is not favorable to understanding. In addition, the very perfection of some of these products, the prestige they possess because of a long history of unquestioned admiration, creates conventions that get in the way of fresh insight. When an art product once attains classic status, it somehow becomes isolated from the human conditions under which it was brought into being and from the human consequences it engenders in actual life experience.

When artistic objects are separated from both conditions of origin and operation in experience, a wall is built around them that renders almost opaque their general significance, with which esthetic theory deals. Art is remitted to a separate realm, where it is cut off from that association with the materials and aims of every other form of human effort, undergoing, and achievement. A primary task is thus imposed upon one who undertakes to write upon the philosophy of the fine arts. This task is to restore continuity between the refined and intensified forms of experience that are works of art and the everyday events, doings, and sufferings that are universally recognized to constitute experience. Mountain peaks do not float unsupported; they do not even just rest upon the earth. They are the earth in one of its manifest operations. It is the business of those who are concerned with the theory of the earth, geographers and geologists, to make this fact evident in its various implications., The theorist who would deal philosophically with fine art has a like task to accomplish.

If one is willing to grant this position, even if only by way of temporary experiment, he will see that there follows a conclusion at first sight surprising. In order to understand the meaning of artistic products, we have to forget them for a time, to turn aside from them and have recourse to the ordinary forces and conditions of experience that we do not usually regard as esthetic. We must arrive at the theory of art by means of a detour. For theory is concerned with understanding, insight, not without exclamations of admiration, and stimulation of that emotional out burst often called appreciation. It is quite possible to enjoy flowers in their colored form and delicate fragrance without knowing any thing about plants theoretically. But if one sets out to understand the flowering of plants, he is committed to finding out something about the interactions of soil, air, water and sunlight that condition the growth of plants.

The isolation of art from ordinary human experience distorts an understanding of the nature of art. Such a distortion is like a mirror, in which we only see the reflection offered to us and not the background material (and social) conditions for the mirror to function as a mirror. From Thomas Nail (2020), Marx in Motion: A New Materialist Marxism, page 149-150:

A mirror is something that reflects almost all the light that it receives within a certain limited frame. A mirror, however, also actively changes the light it receives and limits the range of light returned based on the limits of its frame. The danger of the mirror, as the myth of Narcissus reminds us, is mistaking the mirror for nothing other than the image it reflects. The mirror is thus a tricky kind of object because it so easily conceals its own quality, use- value, or sensuous materiality: the frame, the tain (silver backing), as well as the agency of light itself. Narcissus dies because he mistakes the sensuous agency of nature (water, light, air) as nothing other than himself.

The isolation of art in a socialist society from the rest of human experience would proceed to break down as the power of the class of employers was superseded and as the objectified power of workers is abolished and the human life process comes under the workers’ and the diverse communities’ control.

Mr. Gindin simply ignores any qualitative transformation of art and culture and refers to the (quantitative) expansion of arts and culture–as if the integration of the domain of art with other domains of life would not in itself involve “an expansion of art and culture.” Mr. Gindin fails to see that the modern art form itself expresses oppressive conditions, where art is relegated to an isolated activity by a relative minority. He succumbs to the ideology of the mirror, seeing only the reflected form of the alienated art form as a permanent form that merely requires–“mechanical” elements rather than organic elements that grow from the common source of human daily life experience.

Art in modern capitalist society would undergo a qualitative change–it would be freed of the exploitative and oppressive conditions that give rise to it as something separate and divorced from everyday living and working. From Piotr Hoffmann (1982), The Anatomy of Idealism: Passivity and Activity in Kant, Hegel and Marx, page 98:

In effect, since human labor is guided by conception and imagination, the Marxian “architect” from Capital is always capable of embodying in the material an original vision of things; he can tear the veil of banality and commonplace which stifles the potential of our sensibility. Needless to say, according to Marx this aesthetic potential of human senses must be stifled and repressed under the prevailing conditions of commodity production and of alienation of labor in general. 54 But it is the same conditions – the increasing sophistication of the labor-process – which both create the new potential of human senses and needs and repress its emerging claims and requirements. Indeed the whole process of labor, such as we know it in its past and present form, has that double, paradoxical function: at the same time that it creates those new and higher qualities of human life it also represses them by creating a mode of human intercourse which prevents their realization. “Certainly, labor obtains its measure from outside, through the aim to be attained and the obstacles to be overcome in attaining it. But [ …] this overcoming of obstacles is in itself a liberating activity [ …] the external aims become stripped of the semblance of merely external natural urgencies, and become posited as aims which the individual himself posits – hence as self-realization, objectification of the subject, hence real freedom, whose action is, precisely, labor. ” It is in

Grundrisse, not in

Pans Manuscripts, that Marx writes these words. His intention couldn’t be clearer: labor is not only a response to need and dependency upon external objects, but a truly creative and (as Marx put it) “liberating” process through which man gives a higher form to his life-activity, a form where his senses, needs and tastes become refined and stripped of their crude utilitarian functions.

In societies before the emergence of capitalism, art was not as divorced from daily life as it is now. Art forms were closely related to utility and daily living, with art expressing more, initially, an assumed magical function related to survival than some sort of separate form expressing emotion and aesthetic refinement. From Arnold Hauser (1951), The Social History of Art, Volume 1: From Prehistoric Times to the Middle Ages, page 3:

When the Palaeolithic artist painted an animal on the rock, he produced a real animal. For him the world of fiction and pictures, the sphere of art and mere imitation, was not yet a special province of its own, different and separate from empirical reality; he did not as yet confront the two different spheres, but saw in one the direct, undifferentiated continuation of the other. He will have had the same attitude to art as Lévy- Bruhl’s Sioux Red Indian, who said of a research worker whom he saw preparing sketches: ‘I know that this man has put many of our bisons into his book. I was there when he did it, and since then we have had no bisons.’ The conception of this sphere of art as a direct continuation of ordinary reality never disappears completely despite the later predominance of a conception of art as something opposed to reality.

Later on, emotional expression and aesthetic concerns emerged with the development of agriculture. Here art and aesthetics (the appreciation of art from the side of consumption) now became somewhat divorced from daily life–with the emergence of class society. Religious rite took the place of magic. However, even then the degree of separation of art from daily life characteristic of modern capitalist society, with art appearing to be a separate realm from the realm of human life and its self-reproduction, was much less. In feudal society, for example, production and consumption were not as separated since they were still closely linked to daily life and utility. Page 93:

‘Urban economy’ in the sense of Buecher’s theory of economic stages signifies, in contrast to the earlier production for own use, a production for the customer, that is, of goods that are not consumed in, the economic unit in which they are produced. It is distinguished from the following stage of ‘national economy’ in that exchange of goods still takes the ‘direct’ form—i.e. the goods go direct from the producing to the consuming unit, production as a rule not being for stock or the free market, but to the direct order of definite customers personally acquainted with the producer. We are thus at the first stage of the separation of production from consumption, but still far removed from the completely abstract method of modern production by which goods have to pass through a whole series of hands before they reach the consumer. This difference of principle between the medieval ‘town economy’ and the modern ‘national economy’ still remains, even when we pass from Buecher’s ‘ideal type’ of town economy to the actual historical facts; for although pure production to order never existed by itself, the relationship between the tradesman and consumer in the Middle Ages was far closer than nowadays; the producer was not yet faced with a completely unknown and indefinite market as he was later. These characteristics of the ‘urban’ way of production showed themselves in medieval art in a greater independence of the artist, on the one hand, as compared with the artist of Romanesque times, but, on the other hand, in a complete absence of that modern phenomenon, the unappreciated artist working in a total vacuum of estrangement from the public and remoteness from actuality.

The abolition of classes in a socialist society, undoubtedly, would revolutionize the relation between art and daily life–just as the agricultural revolution and the emergence of class societies also revolutionized the relation between art and daily life. The abolition of classes would mean that even in work relations there would be the possibility of expressing ourselves without exploitation and oppression preventing us from doing so. The relation between freedom and necessity would change accordingly. There would be a qualitative change in the nature of art as it became integrated into the daily lives of individuals–but this time on a higher, more refined plane than earlier.

Mr. Gindin, though, just sees “an expansion of art”–undoubtedly in purely quantitative terms. He has an impoverished view of the nature of a socialist society and the relation between freedom and necessity in a socialist society.

The Rate of Exploitation of Workers at Bombardier, 2018, One of the Largest Private Employers in Quebec and in Toronto, Ontario: Or: How Unionized Jobs are Not Decent or Good

Introduction

In two others posts I presented a list of some of the largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada)  and Quebec (see  A Short List of the Largest Employers in Quebec According to the Number of Employees). 

I have tried to calculate the rate of exploitation of workers in various companies for these two areas, including  Air Canada  (The Rate of Exploitation of Workers at Air Canada, One of the Largest Private Employers in Canada) and the Royal Bank of Canada (Banque Royale du Canada)  (The Rate of Exploitation of the Workers of the Royal Bank of Canada (RBC), One of the Largest Private Employers in Toronto and in Canada). 

Bombardier, the aircraft manufacturer, is also on both lists for Toronto and Quebec. I will calculate the rate of exploitation for this capitalist company not only for this reason. In the documentary Company Town, one worke Jennifer Akkermanr, who was going to lose her job at the General Motors (GM) plant in Oshawa when it was to close on December 18, 2019) indicated that she liked her job when working for GM but that she was going to work for Bombardier. I calculated, using fairly rough data, the rate of exploitation of GM workers in order to show that workers who claim that they enjoy their jobs at GM, in effect (even if they are unconscious of it) are claiming that they enjoy their exploitative jobs at GM. 

I thought it appropriate to calculate the rate of exploitation of Bombardier workers to see to what extent the rates of exploitation of workers at GM and at Bombardier differed, if at all. 

I used data from 2018 rather than 2019 to calculate the rate of exploitation of Bombardier workers because, in 2019, there seemed to be no calculable rate of exploitation since in 2019 there was an actual profit loss. Unless there are specific reasons for including abnormal years, it is better to calculate the rate of exploitation using more normal data. Besides, any company that operates at a constant loss by failing to exploit workers will cease to exist after a certain period of time.

Of course, if the rate of exploitation is calculated for a number of years, then losses need to be included. I have not found any books or articles that deal with how to handle such losses in calculating the rate of exploitation for such a year. It is, in any case, probably better to include such years in a multi-year calculation of the rate of exploitation in order to gain a more accurate view of the rate of exploitation in the medium- and long-term. Perhaps some readers can provide suggestions on how to do so. 

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.

Surplus value (s) or Adjusted EBIT $969 million
Variable capital (v) or Adjusted Employee benefit costs $5,432 billion

To calculate the rate of surplus value, we need to divide “Surplus value (s) or Adjusted EBIT” by “Variable capital (v) or Adjusted Employee benefit costs.” 

So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=969/5,432=18%. 

That means that for every hour worked that produces her/his wage, a worker at Bombardier works around an additional 11 minutes for free for Bombardier.

In an 8-hour (480 minutes) work day, the worker produces her/his wage in 6 hours 47 minutes (407 minutes) and works 1 hour 13 minutes (73 minutes) for free for Bombardier. Of course, during the time that the worker produces her/his own wage, s/he is subject to the power of management and hence is unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario and Employers as Dictators, Part One).

In an 8.67 hour or 8-hour 40 minutes (520 minutes) work day, the worker produces her/his wage in 7 hours 38 minutes (458 minutes) and works 1 hour 19minutes (79 minutes) for free for Bombardier.

In a 9-hour (540 minutes) work day, the worker produces her/his wage in 7 hours 38 minutes (458 minutes) and works 1 hour 22 minutes (82 minutes) for free for Bombardier.

In an 10-hour (600 minutes) work day, the worker produces her/his wage in 8 hours 28 minutes (508 minutes) and works 1 hour 32 minutes (92  minutes) for free for Bombardier.

In a 10.67 -hour or 10-hour 40 minutes (640 minutes) work day, the worker produces her/his wage in 9 hours 2 minutes (542 minutes) and works 1 hour 38 minutes (98  minutes) for free for Bombardier.

In a 12-hour (720 minutes) work day, the worker produces her/his wage in 7 hours 21 minutes (610 minutes) and works 1 hour 50  minutes (110 minutes) for free for Bombardier.

Again, the rate of exploitation measures the extent to which workers work for free, producing all the surplus value and hence all the profit for employers. However, even during the time when they work to produce their own wage, they are hardly free. They are subject to the power and dictates of their employer during that time as well. 

Do you think that these facts contradict the talk by the left and unionists of “”fair contracts” (see  Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One and  Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada) for this rhetoric of the largest unions in Canada, the Canadian Union of Public Employees (CUPE) and  Unifor) , “fair wages” and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized? If exploitation and oppression of workers is a constant in workers’ lives, even if they are only vaguely aware of it, should this situation not be frankly acknowledged by their representatives? Do such representatives do so? Do the left? If not, why not?  Do workers deserve better than neglecting the social context within which they live and work? Should such problems be addressed head on rather than neglected? 

Even if workers were not exploited, they would still be oppressed since they are used as things (means) for purposes which they as a collectivity do not define (see The Money Circuit of Capital). Does that express something fair? Management rights clauses (implied or explicit in collective agreements give management as representative of employers–and as a minority–the power to dictate to workers what to do, when to do it, how to do it and so forth–and is not the imposition of the will of a minority over the majority a dictatorship? (See  Employers as Dictators, Part One). Is that fair? Do union reps ever explain how a collective agreement somehow expresses something fair? Is that fair?

Is the following an example of what union reps mean by a “fair contract?”

COLLECTIVE AGREEMENT (2019-2022) BETWEEN Bombardier Inc. hereinafter referred to as “the Employer” AND Unifor

ARTICLE 3 MANAGEMENT RIGHTS

3.01 No provision of the Collective Agreement shall be interpreted as limiting the Employer in any way in the exercise of its management functions. These functions are performed in a manner consistent with all the provisions of this Agreement. It is the function of the Employer to administer and manage the company and lead the workforce. Without restricting the generality of the foregoing, its rights and functions include:

a) The responsibility for the management, operation, extension and curtailment of business and operations; the authority to direct, transfer, promote, demote, discipline and discharge employees for proper cause; the right to organize and supervise the work to be performed by the employees, to direct them in the course of their work, to maintain discipline, order and efficiency, to determine the products to be manufactured and their design, the methods, processes and means of manufacturing and operating, the type and location of machines and tools to be used, to determine production standards and the type and quality of materials to be used in manufacturing. Notwithstanding the above, these rights and functions do not prevent any employee who considers himself to have been unfairly treated to lodge a grievance in accordance with the provisions stated in this Agreement

Should workers not be discussing why management has these rights? Should workers not be discussing whether an unelected management should have such rights? Should workers not be discussing how to organize to abolish this dictatorship? Should workers not be criticizing any union rep who claims that a collective agreement somehow expresses a “fair contract?” A “good contract?” A “decent job?” A “good job?” All other such platitudes? 

Comparison of the Rate of Exploitation of Bombardier Workers to the Rate of Exploitation of Other Workers

The rate of exploitation of Bombardier workers is quite low relative to other workers (see the comparison of the rate of exploitaiton of various sets of workers in The Rate of Exploitation of Workers at WestJet Airlines Ltd.). Although there are other factors or determinants in establishing whether a private-sector employer is viable or not, a relatively low rate of exploitation is certainly one possible indication of its possible bankruptcy; there is little wonder that in 2019 Bombardier faced a loss of profit. Its efforts to restructure itself as a consequence undoubtedly involved possible attempts to increase the rate of exploitation. Perhaps a comparison of the 2018 rate and the 2022 or 2023 rate of exploitation would be appropriate at some point to see if such restructuring is reflected in an increased rate of exploitation. 

In relation to the rate of exploitation of General Motors (GM) workers, Bombardier workers are exploited less since the rate of exploitation of GM workers is 40 percent. Does that mean that Bombardier workers experience substantially more freedom than GM workers? Hardly. From the point of view of the continued existence of the workers at a certain standard of living (it does not mean that the standard of living that they receive is adequate). Higher rates of exploitation mean, among other things, that the need to work for a certain relative proportion of the working day is relatively unnecessary when compared to another set of workers in order to produce the value of the workers’ consumer goods (means of consumption). 

A low rate of exploitation means that the particular employer may be threatened with bankruptcy–and hence the workers may be threatened with unemployment. From Nick Potts (2009), “Trying to Help Rescue Value for Everyone,” in pages 177-199, Critique: Journal of
Socialist Theory, Volume 37, Issue Number 2, 177-19  page 192: 

Clearly if exploitation were to drop too low a crisis of profitability would occur.

This is hardly in their own immediate or short-term interests since they, in general need to work for an employer if they are to continue to live at a certain standard of living, This is a dilemma which private-sector workers and unions face (and, indirectly, public-sector workers and their unions) since attempts to change working conditions (such as the level of intensity or the length of the working day)  and pay may well have negative effects on the rate of exploitaiton and the rate of profit, leading to bankruptcy. Workers cannot resolve such dilemmas without challenging the class power of employers–and unions cannot either, despite all the chatter of “fair contracts,” “decent wages,” “good jobs,” “decent work,” and other such cliches. 

On the other hand, a high rate of exploitation does not mean that workers’s immediate interests are somehow met. In addition to having a greater proportion of labour or work going to the employer relative to the worker, the higher rate of exploitation may imply greater unemployment for workers since the issue of how this high rate of exploitation is achieved arises. If it arises due to massive increases in investment in constant capital relative to variable capital (and thereby increased in the productivity of labour), it may well occur that workers may become unemployed as the proportion of relative investment in c crowds out investment in v. 

Nonetheless, in the short term, a higher rate of exploitation in a particular company may initially result in somewhat stable employment as the company may be able to compete more effectively against other capitalist companies. To that extent, Jennifer Akkerman’s reference to ‘loving her job’ may contain a grain of truth–short-term employment stability. 

Alternatively, if the higher rate of exploitation occurs more or less throughout the economy, the workers who produce consumer goods (such as cars and trucks, as do GM workers), may find themselves unemployed as the commodities they produce remain unsold. 

It is ironic that it may be in the workers’ short-term interests to want a high rate of exploitation in order to achieve some form of employment stability; that this may clash with their long-term interests does not change the situation. The dilemma of not being exploited at all and being unemployed, of being highly exploited with some employment stabiity and being little exploited (but still oppressed) with the threat of unemployment hanging over workers’ heads hardly makes for a “good job” or “fair contracts.” 

It is time to challenge unions that persistently present, unconsciously if not concsiously, claims that they can somehow achieve any fair settlement, whether wages or working conditions, and whether through legislation or through collective bargaining and the resulting collective agreement. Thus, should not leftists persistently criticize such views as the following (

https://www.newswire.ca/news-releases/unifor-reaches-tentative-agreement-with-bombardier-aviation-851709617.html):

TORONTOJuly 30, 2021 /CNW/ – Unifor Local 112 and 673 have reached a tentative agreement with Bombardier Aviation. “I would like to congratulate the Local 112 and 673 bargaining teams for their hard work and dedication throughout these negotiations,” said Jerry Dias, Unifor National President. “Reaching a settlement with Bombardier brings us one step closer to resolving the labour dispute at Downsview. Our union can now focus all of its efforts on reaching an agreement with De Havilland.”

The three-year agreements cover approximately 1,500 union members employed by Bombardier Aviation at the Downsview plant.

“We could not have reached a fair settlement that addresses the union’s key priorities at Bombardier without the support and solidarity of our members throughout the bargaining process and on the picket lines,” said Scott McIlmoyle, Unifor Local 112 President. [my emphasis]

Have you ever read any justification by union reps for such terms as a “fair settlement,” “fair contract,” “fair collective agreement,” ‘fair wages,” and so forth? If not, why not? 

Should not union reps be obliged to answer such questions? 

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.

In the case of Bombardier, I have had some difficulty in reconciling numbers related to interest. I will show this below. 

But first, let us look at the general calculation: 

Surplus Value (Profit)

EBIT: Earnings before interest and taxes (or: Profitability: Revenues-Costs or Expenses) 
Revenues$ 16,236
Cost of sales 13,958
Gross margin 2,278 [16,236-13,958]
SG&A (Selling, General and Administrative Expenses) 1,156
R&D (Research and Development) 217
Share of income of joint ventures and associates (66)
Other expense (income)  (58)
EBIT before Special Items (Earnings before Interest and taxes) (2) 1,029 [2,278-1156-217+66+58=1029]
Special items 28
EBIT 1001 (1029-28=1001) 

Non-adjustment of EBT by Excluding Special Items from the Calculation

Clarification of the nature of the category “Special Items” in the Annual Report is as follows: 

Special items

Special items comprise items which do not reflect our core performance or where their separate presentation will assist users in understanding our results for the period. Such items include, among others, the impact of restructuring charges and significant impairment charges and reversals.

There exists several items in this category. To go over each item and decide whether it should be excluded or included (without further information) seems an exercise for those with accounting skills–I invite them to provide a rational for including any or all of the items; I exclude the category in its entirety from the calculation. 

Consequently, so far the EBIT is 1,001. Now, particular employers treat the need to pay interest as an expense–which it is from the point of view of the particular employer. Accordingly, there is an additional category: EBT, or Earnings Before Taxes: 

EBT (Earnings before taxes)
Interest
Financing expense 712
Financing income (106) [This is actual income received and hence is in parentheses since it is not really an expense but the opposite and must be subtracted from “Financing expense”.)
Net financing expense 606 (712-106=606)
EBT (Earnings before taxes) (EBIT (1001)-Net financing expense (606)) 395

Adjustments

I will treat, theoretically, the two categories “Financing expense” and “Financing income” separately, and only then will I make the necessary adjustements. 

Financing Expense

In Marxian theory, it is necessary to question whether some expenses are expenses for both the individual employer and for the class of employers (and fractions of their class, such as those who live on interest). When they are expenses at the macro level of the class of employers and not just at the micro level of the particular employer, the expense is deducted from total revenue. On the other hand, there are expenses that are expenses for the individual employer but are not expenses when looked at from the point of view of the class of employers; in such an instance, they are paid out from the surplus value produced or obtained by workers and are to be included in income before taxes.

For example, interest is such a category. 

As I wrote in another post: 

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

Accordingly, it is EBIT and not EBT that should form the basis for determining the surplus value produced since interest is derived from surplus value–although it is an expense from the point of view of the particular employer. 

Financing Income 

The category “Financing Income” is income that is a result of, among other things, investment in securities. Since, as I explained in the post on the rate of exploitation of General Motors workers,

Since the idea of calculating the rate of exploitation of particular employers is to determine the extent to which the particular employer exploits its workers, income derived from the exploitation of workers other than its workers should be excluded.

Accordingly, the amount included in this category does indeed need to be subtracted from EBIT since it is surplus value arising from the exploitation of workers other than Bombardier workers. 

Temporary Adjusted Earnings Before Income Taxes 895 (1001-106)

Further adjustments of EBIT must await the calculation of variable capital, or the total cost of producing the commodity labour power, or the capacity of labour power.

Variable Capital

Presumably, the following data form part of the category “Cost of Sales.” 

EMPLOYEE BENEFIT COSTS
Wages, salaries and other employee benefits $ 4,919 
Retirement benefits 464 
Share-based expense 74
Restructuring, severance and other involuntary termination costs 46 
Total $ 5,503

To explain the nature of the category “Share-based expenses.” it is first necessary to indicate the word form of the acronyms PSU, RSU and DSU:

PSU Performance share unit
RSU Restricted share unit
DSU Deferred share unit

The annual report indicates the nature of these: 

SHARE-BASED PLANS

PSU, DSU and RSU plans
The Board of Directors of the Corporation approved a PSU and a RSU plan under which PSUs and RSUs may be granted to executives and other designated employees. The PSUs and the RSUs give recipients the right, upon vesting, to receive a certain number of the Corporation’s Class B Shares (subordinate voting). The RSUs also give certain recipients the right to receive a cash payment equal to the value of the RSUs. The Board of Directors of the Corporation has also approved a DSU plan under which DSUs may be granted to senior officers. The DSU plan is similar to the PSU plan, except that their exercise can only occur upon retirement or termination of employment. 

It seems clear that the money allocated to the category is limited to select employees–unlike some annual reports, where it was unclear whether regular workers had access to share-based programs or not (see for example The Rate of Exploitation of Workers at WestJet Airlines Ltd.). The reasoning for including some (if not all) of it as part of surplus value is that this compensation is not mainly for the coordination of the work of others but for the exploitation of others–it is pure surplus value. 

If it was unclear whether the category was limited to those who exploit other workers, I merely calculated 10 percent of the total as forming surplus value, leaving 90 percent to form part of variable capital. In the case of Bombardier, though, the total amount of 74 million seems to be earmarked exclusively for key employees who exploit other workers. 

Accordingly, it is necessary to subtract 74 from “Employee benefit costs” and add it to EBIT: 

Adjusted EBIT or Surplus Value (Profit) 969 (895+74)
Temporarily Adjusted Employee benefit costs (variable capital, v) 5,429 (5,503-74)

Further Adjustment of Variable Capital (Wages and Benefits)

There is a list of items in the category “Other expense (income).” One of the items needs to be shifted to be included in the calculation of variable capital:

“Severance and other involuntary termination costs (including changes in estimates)” 3.

Since the shift is within the general category of “Expenses,” it does not affect the calculation of surplus value and hence profit; the category “Cost of sales” would increase by 3, from 13,958 to 13,961, and the category “Other expense (income)  (58)” would decrease by 3, from (58) to 55, with the result that the EBIT would not change. 

However, it does affect the calculation of variable capital and hence the rate of surplus value or the rate of exploitation. We now have sufficient information to calculate the rate of exploitation or the rate of surplus value.

Final Calculation (Based on Adjustments) of Surplus Value, Variable Capital (Salaries or Wages and Benefits) and the Rate of Surplus Value 

The result of all of these adjustments is: 

Surplus value (s) or Adjusted EBIT $969 million
Variable capital (v) or Adjusted Employee benefit costs $5,432 billion

To calculate the rate of surplus value, we need to divide “Surplus value (s) or Adjusted EBIT” by “Variable capital (v) or Adjusted Employee benefit costs.” 

So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=969/5,432=18%. 

That means that for every hour worked that produces her/his wage, a worker at Bombardier works around an additional 11 minutes for free for Bombardier.

In an 8-hour (480 minutes) work day, the worker produces her/his wage in 6 hours 47 minutes (407 minutes) and works 1 hour 13 minutes (73 minutes) for free for Bombardier. Of course, during the time that the worker produces her/his own wage, s/he is subject to the power of management and hence is unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario  and   Employers as Dictators, Part One).

In an 8.67 hour or 8-hour 40 minutes (520 minutes) work day, the worker produces her/his wage in 7 hours 38 minutes (458 minutes) and works 1 hour 19minutes (79 minutes) for free for Bombardier.

In a 9-hour (540 minutes) work day, the worker produces her/his wage in 7 hours 38 minutes (458 minutes) and works 1 hour 22 minutes (82 minutes) for free for Bombardier.

In an 10-hour (600 minutes) work day, the worker produces her/his wage in 8 hours 28 minutes (508 minutes) and works 1 hour 32 minutes (92  minutes) for free for Bombardier.

In a 10.67 -hour or 10-hour 40 minutes (640 minutes) work day, the worker produces her/his wage in 9 hours 2 minutes (542 minutes) and works 1 hour 38 minutes (98  minutes) for free for Bombardier
In a 12-hour (720 minutes) work day, the worker produces her/his wage in 7 hours 21 minutes (610 minutes) and works 1 hour 50  minutes (110 minutes) for free for Bombardier.

I have used the lengths of the working day as 8, 8.67, 9, 10, 10.67 and 12  because the length of the working day varies. According to different sources:

Working hours are 8:00am – 4:40pm

12hr shifts

The hours that I worked were from 7:00 am to 7:00 pm Friday Saturday & Sunday and possibly coming in 2 hours early on Saturday & Sunday and or possibly staying late Friday thru Sunday depending whether or not we had a customer who had to leave early or late in the evening.

8-9 hours per day.

8 to 10 hours a day

I worked eight hours a day

The 2019-2022 collective agreement between Bombardier and Unifor Local 62 states:

ARTICLE 14 WORK SCHEDULES

14.01 The Employer determines the use of the different work schedules provided in article 14.08 according to the operational needs.

14.02 Unless otherwise stipulated in this Agreement, the normal work week is forty (40) hours.

14.03 The work week for employees on the first (1st) shift (schedule 1-A and 1-B) is of forty (40) hours distributed on five (5) consecutive days of eight (8) hours from Monday to Friday

The work week for employees on the first (1st) shift (schedule 1-C and D) is of forty (40) hours distributed over four (4) consecutive days of ten (10) hours from Monday to Thursday or Tuesday to Friday

… 

14.05 The work week for employees on the third (3rd) shift (schedule 3) is of thirty-six (36) hours, distributed on four (4) consecutive nights of nine (9) hours from Monday night to Friday morning, paid as forty (40) hours.

… 

14.06 The work week for employees on the weekend day shift (schedule 4-A et 4-B) is of thirty-six (36) hours, distributed on three (3) consecutive days of twelve (12) hours, as follows: Saturday, Sunday and Friday Saturday, Sunday and Monday, paid for forty-two (42) hours.

… 

14.07 The work week for employees on the weekend night shift (schedule 5) if of thirty-two (32) hours, distributed on three (3) consecutive evenings as follows: twelve (12) hours on Saturday and Sunday, and eight (8) hours on Friday [32 hours divided by 3=10.67 hours or 10 hours 40 minutes]. The employees are paid for forty (40) hours including the night premium.

Political Considerations and Conclusion 

Again, the rate of exploitation measures the extent to which workers work for free, producing all the surplus value and hence all the profit for employers. However, even during the time when they work to produce their own wage, they are hardly free. They are subject to the power and dictates of their employer during that time as well. 

Do you think that these facts contradict the talk by the left and unionists of “fair wages,” “fair contracts” (see  Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One for the rhetoric of the largest union in Canada, the Canadian Union of Public Employees (CUPE)) and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized? If exploitation and oppression of workers is a constant in their lives, even if they are only vaguely aware of it, should this situation not be frankly acknowledged by their representatives? Do such representatives do so? If not, why not?  Do workers deserve better than neglecting the social context within which they live and work? Should such problems be addressed head on rather than neglected? 

Even if workers were not exploited, they would still be oppressed since they are used as things (means) for purposes which they as a collectivity do not define (see The Money Circuit of Capital). Does that express something fair? Management rights clauses (implied or explicit in collective agreements give management as representative of employers–and as a minority–the power to dictate to workers what to do, when to do it, how to do it and so forth–and is not the imposition of the will of a minority over the majority a dictatorship? (See  Employers as Dictators, Part One). Is that fair? Do union reps ever explain how a collective agreement somehow expresses something fair? Is that fair?

Is the following an example of what union reps mean by a “fair contract?”

COLLECTIVE AGREEMENT (2019-2022) BETWEEN Bombardier Inc. hereinafter referred to as “the Employer” AND Unifor

ARTICLE 3 MANAGEMENT RIGHTS

3.01 No provision of the Collective Agreement shall be interpreted as limiting the Employer in any way in the exercise of its management functions. These functions are performed in a manner consistent with all the provisions of this Agreement. It is the function of the Employer to administer and manage the company and lead the workforce. Without restricting the generality of the foregoing, its rights and functions include:

a) The responsibility for the management, operation, extension and curtailment of business and operations; the authority to direct, transfer, promote, demote, discipline and discharge employees for proper cause; the right to organize and supervise the work to be performed by the employees, to direct them in the course of their work, to maintain discipline, order and efficiency, to determine the products to be manufactured and their design, the methods, processes and means of manufacturing and operating, the type and location of machines and tools to be used, to determine production standards and the type and quality of materials to be used in manufacturing. Notwithstanding the above, these rights and functions do not prevent any employee who considers himself to have been unfairly treated to lodge a grievance in accordance with the provisions stated in this Agreement

Should workers not be discussing why management has these rights? Should workers not be discussing whether an unelected management should have such rights? Should workers not be discussing how to organize to abolish this dictatorship? Should workers not be criticizing any union rep who claims that a collective agreement somehow expresses a “fair contract?” A “good contract?” A “decent job?” A “good job?” All other such platitudes? 

The collective agreement fosters the illusion that the workers are paid for the whole working day. Workers may indeed receive more wages under certain circumstances, but that means that the cost of production of their capacity for working for an employer increases (perhaps due to an accelerated use of their labour power). This consideration, however, is irrelevant here since the total wages, salaries and benefits is what matters, and any increase in v due to such considerations are included in the data.

Comparison of Rates of Exploitation 

The rate of exploitation of Bombardier workers is quite low relative to other workers (see the comparison of the rate of exploitaiton of various sets of workers in The Rate of Exploitation of Workers at WestJet Airlines Ltd.). Although there are other factors or determinants in establishing whether a private-sector employer is viable or not, a relatively low rate of exploitation is certainly one possible indication of its possible bankruptcy; there is little wonder that in 2019 Bombardier faced a loss of profit. Its efforts to restructure itself as a consequence undoubtedly involved possible attempts to increase the rate of exploitation. Perhaps a comparison of the 2018 rate and the 2022 or 2023 rate of exploitation would be appropriate at some point to see if such restructuring is reflected in an increased rate of exploitation. 

In relation to the rate of exploitation of General Motors (GM) workers, Bombardier workers are exploited less since the rate of exploitation of GM workers is 40 percent. Does that mean that Bombardier workers experience substantially more freedom than GM workers? Hardly. Higher rates of exploitation mean that the need to work for a certain length of the working day is relatively unnecessary when compared to another set of workers from the point of view of the continued existence of the workers at a certain standard of living (it does not mean that the standard of living that they receive is adequate). 

A low rate of exploitation means that the particular employer may be threatened with bankruptcy–and hence the workers may be threatened with unemployment. From Nick Potts (2009), “Trying to Help Rescue Value for Everyone,” in pages 177-199, Critique: Journal of Socialist Theory, Volume 37, Issue Number 2, page 192: 

Clearly if exploitation were to drop too low a crisis of profitability would occur.

This is hardly in their own immediate or short-term interests since they, in general need to work for an employer if they are to continue to live at a certain standard of living, This is a dilemma which private-sector workers and unions face (and, indirectly, public-sector workers and their unions) since attempts to change working conditions (such as the level of intensity or the length of the working day)  and pay may well have negative effects on the rate of exploitaiton and the rate of profit, leading to bankruptcy. Workers cannot resolve such dilemmas without challenging the class power of employers–and unions cannot either, despite all the chatter of “fair contracts,” “decent wages,” “good jobs,” “decent work,” and other such cliches. 

On the other hand, a high rate of exploitation does not mean that workers’s immediate interests are somehow met. In addition to having a greater proportion of labour or work going to the employer relative to the worker, the higher rate of exploitation may imply greater unemployment for workers since the issue of how this high rate of exploitation is achieved arises. If it arises due to massive increases in investment in constant capital relative to variable capital (and thereby increased in the productivity of labour), it may well occur that workers may become unemployed as the proportion of relative investment in c crowds out investment in v. 

Nonetheless, in the short term, a higher rate of exploitation in a particular company may initially result in somewhat stable employment as the company may be able to compete more effectively against other capitalist companies. To that extent, Jennifer Akkerman’s reference to ‘loving her job’ may contain a grain of truth–short-term employment stability. 

Alternatively, if the higher rate of exploitation occurs more or less throughout the economy, the workers who produce consumer goods (such as cars and trucks, as do GM workers), may find themselves unemployed as the commodities they produce remain unsold.

From Guglielmo Carchedi and Michael Roberts, “The Long Roots of the Present Crisis: Keynesians, Austerians, and Marx’s Law,” in World in Crisis: A Global Analysis of Marx’s Law of Profitability. Edited by Carchedit and Roberts: 

The question is whether an increase in the rate of profit due to a sufficiently high rate of exploitation is a step toward recovery.

A recovery presupposes the rise in the new value generated within the context of a rising ARP [average rate of profit]. A pro-capital distribution of value within the context of a falling ARP can revive the ARP, but this does not denote a recovery. This higher profitability hides the decreasing production of value and surplus value—that is, it hides the deterioration of the economy.

A more detailed way to approach this is is by considering the two basic sectors of the economy. Sector 1 produces means of production [Bombardier primarily belongs to this sector since it produces jets] , and sector 2 produces means of consumption [GM primarly produces in this sector–although a smaller proporition of vehicle production undoubtedly serves as means of production as well]. If one or both sectors innovate, usually the OCC rises and the ARP falls. All sectors realize tendentially the same, but lower, rate of profit. The capitalists might react to the lower ARP by lowering the level of wages, that is, by increasing the rate of exploitation across the board. This upsets the initial tendential equalization of the profit rates. But this equalization presupposes full realization [full sale of the commodities produced], which is impossible if stopping or reversing the fall in the ARP is to be achieved by raising the rate of exploitation.

Suppose wages are reduced by the same percentage, Δ symbol for a change in something], both in sector 1 and in sector 2, represented by the equation –Δv1 = –Δv2 [the percentage change decrease in variable capital is the same in both sectors 1 and 2]. Then, sector 1 gains Δs1 (corresponding to the fall in wages, –Δs1 [sic–which means that the quoter quotes exactly as written despite a possible error in the original: this should be the negative percentage change in v1]) [the percentage change increase in surplus value in sector 1 . Sector 2 on the one hand gains Δs2 (corresponding to the fall in wages, –Δv2) but on the other loses –(Δs1 + Δs2), the loss due to the unsold means of consumption to the workers both of sector 1 and of sector 2 [sector 2 loses because the levels of v1 and v2 have decreased with the result that they cannot purchase means of consumption equal to their loss]. On balance, sector 2 loses –Δs1, which is sector 1’s gain. Means of consumption for a value of Δs1 are unsold. This is overproduction in sector 2.

The ARP is unchanged (what is lost by one sector is gained by the other), but the two rates of profit differ: that in sector 1 has risen by Δs1, while that in sector 2 has fallen by the same quantity. The greater the fall in wages, the greater the fall of profitability in sector 2. This spells crisis in sector 2. Sector 1’s rate of profit rises. But this is not a sign of recovery in that sector. Sector 1’s rate of profit rises not because more value and surplus value is produced in it, but because surplus value is appropriated from sector 2 within the context of a hidden fall in the ARP. Wage cuts can, at most, postpone the crisis.

(I have some doubts about the theoretical accuracy of the above quote. The assumption of equal percentage increases in s and equal percentage decreases in v seems to assume a 100 percent rate of exploitation; if, however, the rate of exploitation is, say, 400 percent, s:v=4:1, so if s is 100, v is 25. If s increases in percentage terms by 25% to 125, a decrease in percentage terms of v by 25 percent is 6.25 (25 percent of 25 is 6.25). I will leave the issue to those who are better equipped in mathematics to determine its accuracy. Perhaps others can enlighten us by providing critical commentary.)

It is ironic that it may be in the workers’ short-term interests to want a high rate of exploitation in order to achieve some form of employment stability; that this may clash with their long-term interests does not change the situation. The dilemma of not being exploited at all and being unemployed, of being highly exploited with some employment stabiity and being little exploited (but still oppressed) with the threat of unemployment hanging over workers’ heads hardly makes for a “good job” or “fair contracts.” 

Conclusion

It is time to challenge unions that persistently present, unconsciously if not concsiously, claims that they can somehow achieve any fair settlement, whether wages or working conditions, and whether through legislation or through collective bargaining and the resulting collective agreement. Thus, should not leftists persistently criticize such views as the following (

https://www.newswire.ca/news-releases/unifor-reaches-tentative-agreement-with-bombardier-aviation-851709617.html):

TORONTOJuly 30, 2021 /CNW/ – Unifor Local 112 and 673 have reached a tentative agreement with Bombardier Aviation. “I would like to congratulate the Local 112 and 673 bargaining teams for their hard work and dedication throughout these negotiations,” said Jerry Dias, Unifor National President. “Reaching a settlement with Bombardier brings us one step closer to resolving the labour dispute at Downsview. Our union can now focus all of its efforts on reaching an agreement with De Havilland.”

The three-year agreements cover approximately 1,500 union members employed by Bombardier Aviation at the Downsview plant.

“We could not have reached a fair settlement that addresses the union’s key priorities at Bombardier without the support and solidarity of our members throughout the bargaining process and on the picket lines,” said Scott McIlmoyle, Unifor Local 112 President. [my emphasis]

Have you ever read any justification by union reps for such terms as a “fair settlement,” “fair contract,” “fair collective agreement,” ‘fair wages,” and so forth? If not, why not? 

Should not union reps be obliged to answer such questions? 


The Rate of Exploitation of General Motors Workers

I thought it would be politically relevant to try to estimate the rate of exploitation of General Motors (GM) workers for 2019 (since annual reports starting in 2020 would distort the picture because of the pandemic). I say politically relevant because of the closure of the GM Oshawa plant on December 18, 2019 and the subsequent making of the document Company Town, which dealt with the coming closure, the attitude of Jerry Dias, president of Unifor (the union that represents the workers at Oshawa) and the consequences of the closing of the factory.

However, GM annual reports (like many annual reports based in the United States), provide insufficient information to calculate the rate of exploitation. For example, there are no data on wages and salaries paid out (although there are for benefits).

Nonetheless, I searched for substitutes for the data. Undoubtedly, such calculations will be even more imperfect than the rates of exploitation I calculated for various large employers in Canada. It will undoubtedly only include bare statistics, without much refinement and with few adjustments. Still, such estimates may provide a ballpark figure of the extent of exploitation.

I invite others to criticize the data used and the manner of determining the rate of exploitation–by providing more accurate data and a more accurate manner of determining the rate of exploitation.

Where possible, I provide the website addresses where I found the information if the information is not drawn from the Annual Report.

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 (if they are available) in order to calculate the rate of exploitation at a more micro level than aggregate rates of surplus value at the national or international level. Politically, this is necessary since social democrats here in Toronto (and undoubtedly elsewhere) vaguely may refer to exploitation–while simultaneously and contradictorily referring to “decent work” and “fair contracts.” Calculating even approximately the rate of exploitation at a more micro level thus has political relevance.

Conclusions First

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

We now have sufficient information to calculate the rate of exploitation of GM workers.

Adjusted Income before income taxes: $7.383 billion=s
Total wages and benefits $18.597 billion=v

To calculate the rate of surplus value or the rate of exploitaiton (they are the same thing), we need to divide “Adjusted Income before income taxes” (s) by “Total wages and benefits” (v).

So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=7.383/18.5976=40%.

That means that for every hour worked that produces her/his wage, a worker at GM works around an additional 24 minutes for free for GM.

In a 7-hour (420-minute) work day , the GM worker produces her/his wage in about 300 (5 hours) and works 120 minutes (2 hours) for free for GM. Of course, during the time that the worker produces her/his own wage, s/he is subject to the power of management and hence is unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario  and   Employers as Dictators, Part One).

In an 8-hour (480 minute-work day), a GM worker produces her/his wage in 343 minutes (5 hours 43 minutes) and works for 137 minutes (2 hours 17 minutes) free for GM.

In an 9-hour (540-minute) day, a GM worker produces her/his wage in 386 minutes (6 hours 26 minutes) and works for free for 154 minutes (2 hours 34 minutes) for GM.

In a 10-hour (600-minute) day, a GM worker produces her/his wage in 429 minutes (7 hours 9 minutes and works for free for 171 minutes (2 hours 51 minutes) for GM.

In a 11-hour (660-minute) day, a GM worker produces her/his wage in 471 minutes (7 hours 51 minutes) and works for free for 189 minutes (3 hours 9 minutes) for GM.

In a 12-hour (720-minute) day, a GM worker produces her/his wage in 514 minutes (8 hours 34 minutes) and works for free for 206 minutes (3 hours 26 minutes) for GM.

Of course, during these times that the worker works to obtain an equivalent of her/his own wage, s/he is subject to the power of management and hence is also unfree during that time (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation and   Employers as Dictators, Part One).

Many GM workers in the United States (and in Canada) belong to a union. The Annual Report states:

At December 31, 2019 approximately 48,000 (50%) of our U.S. employees were represented by unions, a majority of which were represented by the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (UAW).

Despite belonging to a union, the GM workers are exploited–but to a relatively low extent–much lower than many other union workers. The highest calculated rate of exploitation so far has been Rogers Communications’ workers, at 209 percent (see the comparative rates in the post The Rate of Exploitation of Workers at WestJet Airlines Ltd.). Why that is would be a good area for research.

Political Questions

Do you think that these facts contradict the talk by the left and unionists of “fair wages,” “fair contracts” (see  Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada) for the rhetoric of the largest Unifor as the largest private-sector union in Canada, and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized?

What of the following, drawn from the November 5, 2020 collective agrement between General Motors of Canada Company and Unifor Local No 199 St. Catharines, Local No. 222 Oshawa and Local No. 636 Woodstock? Page 7:

Section IV

Management

(4) The Union recognizes the right of the Company to hire, promote, transfer, demote and lay off 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 the Company to operate and manage its business in all respects, to maintain order and efficiency in its plants, and to determine the location of its plants, the products to be manufactured, the scheduling of its production and its methods, processes, and means of manufacturing. The Union further acknowledges that the Company 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.

This power of management is not mentioned at all in the National Unifor Bargaining Report. Like most union bargaining reports, it omits all negative aspects of working for General Motors (including being exploited and oppressed):

HIGHLIGHTS
• $1.1B to $1.4B in investments
• General wage increases
• $7,250 Productivity and Quality Bonus
• Inflation Protection Bonuses
• Improved New Hire Program
• Skilled Trades Adjustment
• Benefit improvements
• Three-year term
• Lump sum payment for pre-1994 retirees

A written summary also omits the continued power of GM management to exploit and oppress workers (page 1):

JOINT MESSAGE TO ALL GENERAL MOTORS MEMBERS

SECURING A MADE IN CANADA FUTURE

If there is a lesson learned from 2020 Auto Talks, it is that the future of Canada’s auto sector is bright and on a clear forward path.

Thanks to the hard work and determination of the Unifor-GM Master Bargaining Committee, we are proud to present a new collective agreement that follows the economic pattern negotiated at both Ford and FCA. This agreement includes a 5 per cent increase to hourly wages, a 4 per cent lump sum payment in 2021, along with $11,250 in bonuses.

The deal makes major improvements to the New Hire Program, including an accelerated path to full rate, and returns key benefits like the Legal Services Plan and the afternoon (5%) and midnight (10%) shift premium.

Skilled trades workers will see their 20% wage differential restored, new apprentices hired, and the pre-apprenticeship program re-instated for future hires. The new agreement also includes significant improvements to the benefits plan, modest (but still important) pension improvements, along with health and safety gains, retirement allowances and equity gains including 10 days of paid domestic violence leave and a new Racial Justice Advocate.

Along with these contractual improvements are commitments by the company to maintain and expand work at current Unifor facilities. GM will continue V6 engine and 6-speed transmission production over the life of the contract, and forecasted beyond.

Also, in a stand-alone letter GM has committed to explore new potential product programs and investment opportunities for St. Catharines, with input from them union[my emphasis. When I formed part of a negotiating team for Operating Engineers Local 858, in Prince George, British Columbia, the management team were able to shuffle off many items on the negotiating table by referring to a “consultation process” between the union and management–in effect eliminating such items for negotiations. The verb “explore” and the noun “input” are euphemisms for the right of management to simply do what it wants, with the proviso that it “consults” the union.] 

St. Catharines is well regarded as a leader in the GM powertrain division and will receive $109 million to in-source new transmission work for the Corvette, adding jobs, and make
upgrades to the small block V8 engine program. GM will continue V6 engine and 6-speed transmission production over the life of the contract, and further commits to seek out new
programs that sustain the facility over the long term.

The Woodstock PDC will receive $500,000 in additional upgrades. Aftermarket parts work at Oshawa will also continue, maintaining hundreds of jobs.

In addition, and pending ratification, GM has committed to invest up to $1.3 billion to restart pickup truck assembly at the Oshawa Assembly Complex, with an expected two-shift operation in the first half of 2022 (and the potential for a third).

These “highlights” teach the workers nothing about the limitations of collective bargaining and  collective agreements. They are designed to hide the concentration of major decision-making power in the hands of General Motors (such as the “right of the Company to determine the location of its plants” and the lack of such power by unionized workers.

The same could be said of the Local 222 Bargaining Report, which recommended voting for the collective agreement without any explicit indications of its limitation as indicated in the management rights clause of the collective agreement. Thus, the Report indicates among other things, the following (page 3):

Commitment to settling the 2020 GM/Unifor Master Agreement and Oshawa Local Agreement
•The production allocation is for the current life cycle. Currently, there is no future product commitment but the Company has expressed that the life cycle will be a minimum of three (3) years and that is well into the new Collective Agreement 2023.

•There will be no retirement incentives offered at the Oshawa Assembly Plant during the current life cycle of the product. In the event of a permanent reduction in force, the new hires at the Oshawa Assembly Plant will be laid off. Any employees hired prior to the 2020 Collective Agreement will flow back into the Oshawa OEM Stamped Products and Service Operation based upon Seniority.

Of course, workers have to subordinate their will to the will of employers in a society dominated by a class of employers, and so no union representatives can overcome this limitation; such a limitation is a class limitation, and it is at this level that such limitations need to be addressed. However, the class level is hardly a level that excludes the particular sections of the working class. Those particular sections are included in that general level, so at the local, regional or national level, the class issue can certainly be indicated and not simply ignored–which is what union reps do often enough these days. At the least, they could explicitly indicate the limitations of the collective-bargaining process and the collective agreements that result from that process.  Better yet, they could not only include such limitations, but they could point to ways in which such limitations might be overcome through regional, national and international tactics and stragegies. Most modern union reps, however, have no intention of doing so; indeed, they are likely unaware of the need to do so.

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. (in millions of U.S. dollars)

Total net sales and revenue  137,237

Total costs and expenses 131,756

Operating income 5,481 [137,237-131,756=5481]

Adjustments of Surplus Value (Profit)

It is necessary to make some adjustments to this since the annual report also refers to the following additional categories:

Automotive interest expense 782
Interest income and other non-operating income, net  1,469
Equity income (Note 8) 1,268

Starting with the category “Automotive interest expense,” it is necessary to make an adjustment.  It is necessary to add 782 (Automotive interest expense) to “Operating income” since (as I explained in another post):

In Marxian theory, it is necessary to question whether some expenses are expenses for both the individual employer and for the class of employers (and fractions of their class, such as those who live on interest); in such a case, the expense is deducted from total revenue. On the other hand, there are expenses that are expenses for the individual employer but are not expenses when looked at from the point of view of the class of employers; in such an instance, they are paid out from the surplus value produced or obtained by workers and are to be included in income before taxes.

Accordingly:

Temporarily adjusted income before taxes 5,481+782=6,263

Moving to the next category, “Interest income and other non-operating income, net,” since the idea of calculating the rate of exploitation of particular employers is to determine the extent to which the particular employer exploits its workers, income derived from the exploitation of workers other than its workers should be excluded. I did not think this through or consider this when I calculated the rate of exploitation of some other employers (such as Air Canada); I may or may not recalculate the rate of exploitation of such employers in the future–that depends on how much time I have to dedicate to writing other posts and engaging in my own research as well as my own personal commitments to my daughter and wife.

In the particular case of General Motors, I will exclude such income from the calculation since the income is derived from workers other than the workers of GM.

The last category, “Equity income,” seems to reflect net surplus value after expenses are subtracted from revenue. Note 8 elaborates:

Note 8. Equity in Net Assets of Nonconsolidated Affiliates

Nonconsolidated affiliates are entities in which we maintain an equity ownership interest and for which we use the equity method of accounting due to our ability to exert significant influence over decisions relating to their operating and fmancial affairs. Revenue and expenses of our joint ventures are not consolidated into our financial statements; rather, our proportionate share of the earnings of each joint venture is reflected as Equity income.

Since “Equity income” reflects the “proportionate share of the earnings of each joint venture,” it constitutes the net result of GM exploiting workers in joint ventures. Accordingly, it is necessary to make an adjustment. It is necessary to add 1,268 to Income before income taxes. The final adjustment is:

Adjusted income before taxes 7,531

Wages and Salaries (v)

Although there are statistics in the annual report for employee benefits, there are no statistics in it for wages or salaries.

I failed to find any direct information of total salaries, wages and benefits on the Net. The best that I could do was to find data about the total number of employees and then try to find data on the average wage/salary as well as average benefits and multiply the sum of the average wage/salary and benefits by the total number of employees.
To improve such calculations, I invite Sam Gindin, former research director to the Canadian Auto Workers (now Unifor) or Jim Stanford, former economist for the same union, to provide more accurate data (perhaps insider data?).
In 2019, there were 164,000 employees:
Employees At December 31, 2019 we employed approximately 95,000 (58%) hourly employees and approximately 69,000(42%) salaried employees.
This is consistent with the following:
This number, as I argued above, needs to be multiplied by the average cost of a GM worker, including benefits.  According to some, the average cost to use a GM worker in 2019 was about $63 US an hour. From   https://www.spglobal.com/marketintelligence/en/news-insights/trending/Fic7Dwvvxuh14hs9rmjwJw2, dated January 15, 2020:
GM’s average hourly labor costs are estimated to be … $63 in 2019.
I assume that this includes benefits. This amount is less than the amount estimated in 2006 (or perhaps 2009–it is unclear). From
Average Hourly Compensation 2006 (US Wages and Benefits)
Last updated on: 1/21/2009 6:47:00 AM PST
“The calculations show, accurately enough, that for every hour a unionized worker puts in, one of the Big Three really does spend about $73 on compensation. So the number isn’t made up. But it is the combination of three very different categories.

The first category is simply cash payments, which is what many people imagine when they hear the word ‘compensation.’ It includes wages, overtime and vacation pay, and comes to about $40 an hour. (The numbers vary a bit by company and year. That’s why $73 is sometimes $70 or $77.)

The second category is fringe benefits, like health insurance and pensions. These benefits have real value, even if they don’t show up on a weekly paycheck. At the Big Three, the benefits amount to $15 an hour or so.

Add the two together, and you get the true hourly compensation of Detroit’s unionized work force: roughly $55 an hour. It’s a little more than twice as much as the typical American worker makes, benefits included. The more relevant comparison, though, is probably to Honda;s or Toyota’s (nonunionized) workers. They make in the neighborhood of $45 an hour, and most of the gap stems from their less generous benefits.

The third category is the cost of benefits for retirees. These are essentially fixed costs that have no relation to how many vehicles the companies make. But they are a real cost, so the companies add them into the mix — dividing those costs by the total hours of the current work force, to get a figure of $15 or so — and end up at roughly $70 an hour.”

As to be expected, the estimated $63 an hour ($US) is certainly much higher than the estimated hourly wage of American auto workers. From Automotive Industry Labour Market Analysis: Wage Report (Canadian Skills Training and Employment Coalition, Prism Economics and Analysis, and the Automotive Policy Research Centre, October 2019), page 30:
Research done by the Center for Automotive Research (CAR) found that nominal wages for U.S. workers in the auto manufacturing sector increased by just over 6% from $28.49 in 2002 to $30.20 in 2018 but real wages fell by 23.5% (as cited in Haglund, 2019).

Think tank says UAW deals increased automakers’ labor costs

New contracts between the United Auto Workers union and Detroit’s three automakers substantially increased the cost gap between Detroit and foreign automakers with U.S. factories

ByThe Associated Press
January 15, 2020, 3:40 PM

Total labor costs include wages, health care, pensions and other expenses.

Center Vice President Kristin Dziczek calculated that GM’s labor costs would rise from $63 per hour before the new contract to $71.

GM’s average hourly labor costs are estimated to be $71 in 2023, up 12.7% from $63 in 2019 and up 29.1% from $55 in 2015, Dziczek said during a Jan. 15 webcast. Ford’s hourly labor costs would be $69 in 2023, up 13.1% from $61 in 2019 and up 21.1% from $57 in 2015. Fiat Chrysler’s costs would go up to $66 in 2023, up 20% from $55 in 2019 and up 40.4% from $47 in 2015.
Given the above, $63 an hour seems to be the average cost of a GM employee whereever s/he works. There will be no adjustments for this category despite the above calculated reduction of 173.5 from “Tranformation activities” due to some of that category involving separation benefits received by workers since, presumably, the $63 an hour includes such separation benefits.

Jim Stanford’s Disagreement with the Estimate of $63 an Hour Cost of Variable Capital V)

However, Jim Stanford would dispute such an hourly cost since he disputes the hourly cost of $75 (see How Much do Autoworkers REALLY Make? Surprise: It’s NOT $75 Per Hour!  http://unifor584retirees.ca/caw_retirees/pdf/hourly_labour_costs_09.pdf). He argues that workers receive between $43 and $44 hour.
Before I delve into this issue, let me preface it with the purpose of calculating the rate of exploitation. It is supposed to determine the proportion of hours worked that produce the value of the wage received by the workers in relation to the hours worked for no compensation and thus free for the employer. The wage is a composite of the actual wage rate and benefits and cannot be limited to the given wage rate.
Generally, the rate of exploitation is a class phenomenon, and the value of labour power or variable capital (v) and surplus value as its components are also class phenomenon. As Ben Fine states, in relation to the value of labour power, pages 104-105:
… for Marx the value of labour power is the consequence of an exchange between capital and labour, confronting each other as the two major economic classes. It is not simply the wage earned on the labour-market by one individual as opposed to another. …
the value of labour power is a more complex concept than the wage rate or earnings
of the typical worker.
Some of the costs of variable capital for employers are class costs, or the costs to the class of employers and apply across the board to all employers (or at least to a section of employers in a particular industry). Workers may not individually receive them, but some workers do; which workers depends on various conditions, such as the level of unemployment, the age of the workers, their health and so on. They need to be included in the value of labour power or variable capital even if no specific set of workers receive them as a benefit since they are costs for the employer being an employer of any set of workers whatsoever.
Stanford, however, excludes several categories which is included in the above $63 an hour–a category called “All-in Active Hourly Labour Cost.” The subcategories of this category and the corresponding amounts are: 
Overtime and shift premiums $3
Cost per hour worked of paid time off $8-9
Impact on hourly cost of layoffs & downtime $1-3
Cost per hour worked of SUB $1-3
Statutory taxes $3-4
Overtime and shfit premiums
Stanford excludes this subcategory from his calculation on the basis of the following:
Occasionally companies will require their workers to stay overtime, beyond normal working hours. Overtime is worked ins response to surges in consumer demand, to make up for production problems or bottlenecks, or in some cases because employers have decided it’s cheaper to work its existing staff extra hours than to hire new workers. In every case, it is the employer’s choice when overtime is worked.
Workers required to work overtime are paid a wage premium (usually 50%) for those hours. To a large extent (depending on the specific hours involved), overtime pay is mandated by labour law (although a labour contract can require overtime to be paid in some circumstances when it is not legally required).

In addition, in the auto industry and other manufacturing settings, it is standard practice to pay a shift premium for workers who staff evening and night shifts. (In CAW-represented auto plants, there is a 5% premium paid for evening shifts, and a 10% premium for overnight shifts, to reflect the added stress on family life of those working hours.)

Is the overtime premium part of one’s “hourly wage”? Few Canadians would conceive it that way – although those working overtime certainly appreciate the extra money. And remember: overtime is
something that occurs because employers desire it. 
According to Statistics Canada, in 2007 (most recent data), auto assembly workers in Canada worked an average of about 3.5 hours of overtime per week. This increased total average wage payments (weighted across all hours worked in the year) by around $2. Shift premiums added, on average, about another dollar per hour.
This argument is unconvincing. Overtime is supposed to not constitute compensation, he implies,  because it is not voluntary. Being voluntary or involuntary has nothing directly to do with the cost of workers. How workers conceive overtime also hardly determines whether it is a cost. As for shift premiums, the same logic applies; they too are costs. Stanford never indicates what overtime payments and shift premiums objectively are.
We can, however, get some idea of what they are by referring to the value of labour power as subject to a normal working day under average conditions. Since overtime work in effect extends the working day beyond the norm, it involves abnormal consumption of the labour power of workers. As Marc Linder (2000) argues ( “Moments are the elements of profit”: overtime and the deregulation of working hours under the Fair Labor Standards Act, pages 5-6):
Marx also furnished a general framework for understanding struggles over the length of the workday or workweek. On the surface, this struggle centers on the conflict between the buyer and the seller of a commodity which generates special problems because, unlike the situation with a general run-of-the-mill commodity, the body and mind of the human seller of labor power cannot be separated from its daily use by the buyer. Since the law of exchange of commodities, however, does not recognize any special rules for this particular exchange, the capitalist buyer tries to extract the greatest possible profit from the use of the worker’s labor power for the day’s or week’s worth he has bought. The question then becomes: how long is a workday or workweek? Since the human seller lives beyond the day, he must make sure that he sells his only commodity for a price high enough to enable him to reappear at work the next day with his labor power in a condition of strength and health that meets the standards set by his competitors. But the worker as a rational labor market participant must also exercise sufficient foresight to husband his only economic asset for a lifetime—or at least the standard working life of his type of labor. If the daily value of his commodity equals its lifetime value divided by 30 years or approximately 10,000 workdays, then he must make sure that overlong workdays and workweeks do not force him to expend so much additional energy that he uses up 1/5,000 or 1/3,333
of his lifetime supply for only 1/10,000 of its lifetime value. For this reason socialist unions regarded eight-hour laws as “life lengthening” acts.The worker therefore regards such overwork as crossing the line from the capitalist’s rightful use to plundering of his labor power and, as such, a breach of their contract and of the law of the exchange of commodities. His demand for a workday or workweek of normal length—defined by its compatibility with a healthy 30-year worklife—is as rightful as the capitalist’s demand that the worker work as long as possible each day and week. Because the capitalist is not a slaveholder, he has no (capital-) invested interest in the length of the worklife of his individual employees: “A quick succession of unhealthy and short-lived generations will keep the labour market as well supplied as a series of vigorous and long-lived generations.” Thus as long as the employer can find equivalent replacements in the labor market when he needs them, this private contractual dispute cannot be resolved between individual buyer and seller. The resulting “antinomy” of right against right27 must, Marx argued, be decided by “the respective powers of the combatants.” But since “in its merely economic action capital is the stronger side,” a class-wide settlement of the hours issue was possible only through “general political action,” which meant “legislative interference” under pressure from the working class.2* Consequently, the normalization of the workday and workweek appears historically as a struggle between the “aggregate capitalist, i.e., the class of capitalists, and the aggregate worker, or the working class.”
Overtime and shift work can be conceived as compensatory costs for abnormal consumption of workers–but they are costs of hiring workers, exploiting them and oppressing them.
Cost per hour worked of paid time off 
Stanford has the following to say on the matter in order to justify excluding this subcategory:
Now here is where it starts to get more complicated. “All-in hourly labour cost,” in the auto industry, is not calculated by dividing total compensation by the number of normal working hours in a year (as we have done above: 40 hours per week
times 52 weeks in a year equals 2080 working hours in a year).
Let us pause here. What Stanford calls “normal working hours” is not the statistic that can be used to calculate the rate of exploitation since it is not the number of actual hours worked. It is the actual hours worked that produces the equivalent of the total compensation received by workers that is relevant–and not some “normal working hours” that no workers actually work.
From Anwar Shaikh and E. Ahmet Tonak (1994), From Measuring the wealth of nations: The political economy of national accounts, page 178: 

By definition, Marxian labor value added is simply the number of hours worked by productive workers
Let us continue with Stanford’s views.
Instead, all-in hourly labour costs are calculated over a much smaller base of hours. Total
compensation costs are divided by the numbers of hours actually worked in a year. Actual hours worked, the denominator of this fraction, differs from the number of standard working hours in a year (2080) for several reasons:
  • Paid time off (for vacation and holidays)
  • Sick leave (CAW autoworkers do not receive any pay during the first days of
    an illness, after which they are compensated under a sickness and accident
    insurance scheme)
  • Time not worked due to layoffs or downtimeIt is simple mathematics that the lower is the number of hours actually worked,
    the higher is the apparent “all-in hourly labour cost.”

    The CAW has placed great emphasis over the years on negotiating more paid time off, as a deliberate strategy to try to protect employment levels against the effects of technological change and productivity growth, and to provide for needed time away from the physical and mental stresses of assembly line work. However, in recent contracts the amount of paid time off has been reduced by 80 hours per year (in the face of intense cost-cutting pressure from the employers). Today a CAW production worker with maximum seniority (over 20 years) qualifies for 6 weeks of paid time off (for vacation, scheduled mandatory vacation or “SPA,” and personal leave). A new hire qualifies for 2 weeks (the legal minimum). A worker with 5 or more years seniority qualifies for 4 weeks.

    Holidays (including regular statutory holidays and a week-long Christmas shutdown) reduce working time by another 15 days per year.

    Paid time off can be considered a form of compensation. It can also be considered a basic human and labour right – one that workers have fought for over the centuries, and that is essential to the quality of life of working people and their families. Of the paid time off received by CAW autoworkers, about half is required by law. The rest reflects additional time negotiated by the union. I doubt, however, that many Canadians consider their paid time off as part of their hourly wage. They conceptualize it separately, as time. Someone who earns $15 per hour, but is allowed to take a total of five weeks off per year (3 weeks vacation, and 10 days of statutory holidays), actually earns $16.60 for each hour they work (assuming they had no other time off the job for illness or layoff). But I have never heard someone adjust their hourly pay in that manner to reflect their entitlement (legal and otherwise) to paid time off.

    According to the methodology of all-in hourly labour cost, paid time off (since it reduces the denominator over which all-in labour costs are calculated) directly increases all-in hourly labour costs. Each week of paid time off (including the two weeks of vacation required per year under Canadian law, and the roughly two weeks of statutory holidays also required by Canadian law) translates into a roughly 2% increase in hourly labour cost.

Again, his argument is unconvincing. Although undoubtedly, for example, workers who receive a minimum wage, unionized workers and other workers are unlikely to conceive of paid holidays as part of their compensation, this hardly means that the paid holidays and vacaction do not form part of their compensation. Stanford himself admits this: “Paid time off can be considered a form of compensation.” Actual hours worked and the total amount of compensation received by workers are the relevant statistics for determining variable capital costs and not imputed hours worked during holidays and vacation (when workers are not subject to the direct power of employers).
Furthermore, even some union reps in the auto industry conceived vacation pay and other fringe benefits as part of the compensation package. From Frank Lovell (May-June 1968), “The Reuther-Meany Split,” in pages 36-58, International Socialist Review, page 51:
Reuther accurately reported the new wage scales as follows:”The average production worker will receive a 20-cents-an-hour wage increase upon his return to work plus a three per cent annual wage increase in the second and third years of the contract. These wage increases, together with the impact of the ‘roll up’ factor, will amount to an average of 58 cents an hour over the three-year period of the contract.”The average skilled trades worker will receive a 50-cent-an-hour wage increase upon his return to work plus a three per cent annual wage incrase in the second and third years of the contract. These wage increases, together with the impact of the ‘roll up’ factor, will amount to an average of $1.02 an hour over the three-year period of the contract.” (“Roll up” consists of increases in wage-related fringe benefits such as holiday pay, vacation pay, shift premiums, etc.[my emphasis]

Let us look at vacation pay and holiday pay. Essentially, it means that workers receive payment without having to work for their employer during that specific time. The amount of labour performed is thereby reduced to that extent than otherwise would be the case, with a flow of money (and indirectly commodities) going to the workers. The wage is not reproduced during that time, and no surplus value is produced either since no labour is performed.
Holiday pay and vacation pay are tied to work performed because those who do not work for the particular employer simply do not receive such holiday pay and (more obviously) vacation pay– but this condition seems too often to be overlooked. The payment of holiday pay and vacation pay is tied to the need for the worker to have actually worked for the particular employer.
The payment is tied to labour having been  performed, but not from any labour performed during the holiday or vacation. Since the workers receive the money and not the employer, the money represents the equivalent of higher wages and less surplus value available for the employer.
There is no logical reason why, when calculating the rate of exploitation, vacation pay, sick leave pay and holiday pay should not be included in the calculation.
The issue is not clear cut, but some Marxian works also include vacation pay, etc. as forms of compensation. From Edward Wolff (1987), Growth, accumulation, and unproductive activity: An analysis of the postwar U.S. economy, pages 61-62: 

Mean real labor compensation seems the most direct measure of the costs of reproducing labor power. Employee compensation is the sum of wages, salaries, and tips; fringe benefits such as health insurance, pension contributions, vacation pay, and the like;
Shaikh and Tonak also consider them to form part of compensation. From page 304: 
We use employee compensation (EC) because it includes wages and salaries of employees as well as employer contributions to social security. This is the appropriate base for estimates of variable capital, since it represents the total cost of labor power to the capitalist.
They reiterate their view on page 322:
Employee compensation being the sum of supplements and wages and salaries.
Impact on hourly cost of layoffs & downtime
Stanford reasons as follows in order to exclude this subcategory from the determination of the costs of employing workers:
The Impact of Downtime and Layoffs Even more far-fetched is the notion that time away from work resulting from illness, layoff, or plant shutdown should also be reflected in your “hourly wage.” Time off due to illness or layoff is not a contractual benefit; it is clearly beyond the control of both workers and their union. Suppose that workers are laid off for 8 weeks in a year because of slow sales. This reduces annual hours worked by 320 hours. That’s a reduction of as much as 20% in hours worked (after adjusting for paid time off) – causing a corresponding increase in the apparent hourly cost of fixed annual benefits (like the pensions, health premiums, and other benefits listed above). Based on the level of benefits described earlier, this amount of downtime (not unusual given recent experience) would add $3 per hour to all-in costs. A longer six-month layoff would add over $10 to the all-in hourly cost!
This seems like a double penalty: first workers experience the income loss and insecurity of being laid off for significant amounts of time. And then they are “charged,” in the form of a higher apparent “wage,” for the fact that they didn’t work for the complete year.
Differences in the number of hours worked account for a significant portion of differences in the all-in hourly labour costs between different companies. Chrysler Canada’s all-in labour cost calculation for 2008 (which has been widely debated in the course of current restructuring discussions) was based on a very low average level of hours worked per worker that year (just 1550 hours). That was significantly lower than the number of hours worked per worker at GM and Ford that year – and far, far lower than average hours worked at Toyota and Honda plants (which until recently have been running flat out). This difference in assumed hours worked accounts for about $2 per hour in all-in labour cost differences between Chrysler and the other two North American producers in Canada. And it accounts for $4 or more per hour of the all-in hourly labour cost differences between Chrysler and the non-union Canadian facilities.
Is a worker really “more expensive” because he or she didn’t work the full year, due to downtime associated with slow sales? Not really. This is not an issue of compensation. This is an issue of capacity utilization – a variable which is clearly a responsibility of management to optimize, and is beyond the control of workers and their union.
The hours not worked do not involve exploitation, and the hours not worked do involve payment without being under the direct control of the employer due to fixed costs, such as health insurance premiums. They are like vacation pay, holiday pay and sick-leave pay.
As for the decrease in hours worked, of course, if the number of hours decreases, with fixed benefit costs, the cost per hour employed will increase for the capitalists in general. This was seen indirectly when I calculated the rate of exploitation of Magna Internaitonal workers for 2020, during the pandemic (The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part Three, Updated, 2020). As I wrote in that post:
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).
The substantial decrease in the rate of exploitation for Magna International workers was likely largely due to a decrease in the production of surplus value, although there was also a decrease in the costs of workers for Magna International:
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%.

Surplus value decreased by 1,177, or 52 percent ((1081-2258)/2258×100); variable capital decreased by 353, or ((2509-2862)/2862×100)=12 percent.
The substantial decrease in the rate of exploitation for Magna International workers is likely due to the fixed costs associated with keeping them on payroll while not exploiting them (because they did not work or perform labour).
Stanford’s justification or logic for discounting the increased costs of workers per hour worked seems to be: because the relation of payments to workers and hours actually worked is independent of the workers and their unions, these increased costs should not be calculated that way, he reasons:
Time off due to illness or layoff is not a contractual benefit; it is clearly beyond the control of both workers and their union.
The rate of exploitation is hardly to be calculated on the basis of what workers and their unions are able to control. The issue is: What does it cost for the workers to produce the value of the labour power or the capacity of workers to perform work relative to the value they produce for free?
I reject Stanford’s reason for excluding this subcategory.
Cost per hour worked of SUB $1-3
Standord reasons as follows for rejecting this subcategory:
Over the years auto unions have negotiated a range of income security programs to protect against the effects of the layoffs (which are regularly incurred in the auto industry due to market swings, new model launches, and other factors inherent to the auto industry). These are called supplementary unemployment benefits (SUB), and they top up the benefits received from public unemployment insurance programs.SUB costs are incorporated into all-in labour cost by attributing them to the hours which were actually worked (by those workers who were not laid off). Are SUB benefits a form of compensation? Yes, in a form. But it is not compensation received by the workers who are still working. SUB benefits are received by the workers who are laid-off (as a partial compensation for the cost they incur as a result of the lay-off). And by far the best way to reduce labour costs, in this context, is to put autoworkers back to work: they enjoy more income and security, the company pays out less SUB costs, and the cost per hour worked of all other benefits declines by several dollars.
Because of the extensive downtime experienced in most auto plants in recent years, SUB and related programs can add $3 or more to all-in hourly labour costs in CAW facilities.
The Canadian government website reads:

Supplemental Unemployment Benefit Program

Overview

Employers can use a Supplemental Unemployment Benefit (SUB) plan to increase their employees’ weekly earnings when they are unemployed due to a temporary stoppage of work, training, illness, injury or quarantine.

It is certainly true that those who continue to be exploited directly by GM do not receive the benefits of SUB-but exploitation is hardly just an affair of temporary changes in the distribution of work such that only those workers who happen to have seniority are exploited throughout the year. Layoffs in the auto industry have occurred often enough for unions to attempt to address the issue. From Robert Albritton (2022), A Japanese Approach to Stages of Capitalist Development: What Comes Next?:
For this reason, the continuation of even the partial commodification of labour-power, requires that the labour market be supported by all sorts of protections, guarantees, and stabilizing mechanisms. The auto industry in general took the lead in this respect with “productivity deals” that ensured wage increases in line with productivity increases and with “supplementary unemployment benefits” (SUBS) that protected worker’s income during the annual lay-offs in the auto industry, and with pension plans, early retirement, medical benefits, etc.
Unions obliged GM to pay laid off GM workers (not fired GM workers) a top-up to unemployment benefits. This is a condition for GM to exploit the collective labour of the particular bargaining unit and forms part of the cost of employing GM workers. To exclude this cost from variable capital would exclude the flow of additional money (and commodities) that temporarily unemployed workers receive from GM. Since variable capital is supposed to measure the amount of labour required to produce the equivalent of labour power as a commodity available on the market, and SUB is a condition for such availability in this situation, it should be included as part of variable capital that GM pays.
One historian has interpreted SUB as resulting in a “greater share of the pie” going to workers. From David Noble (1984), Forces of Production: A Social History of Industrial Automation, page 253:
Reuther embraced wholeheartedly the tempo of technology and the gospel of growth, and sought to halt job erosion through industrial expansion which would presumably raise the level of aggregate demand for labor. At the same time, he strove to secure for workers a larger share of the expanding pie, through guaranteed wage agreements and so-called progress-sharing agreements (as with American Motors), and to ease the plight of displaced workers, through supplementary unemployment benefits, advance notification clauses, and company-financed retraining programs (as with General Motors). [my emphasis]
I also reject Stanford’s reason for excluding this subcategory; SUB forms part of the costs of production of GM workers.
Statutory taxes $3-4
Stanford notes the following:

The all-in hourly labour cost methodology also considers various employmentrelated
taxes paid by employers to governments. In Canada, these statutory
costs include four major items:

  • Employer CPP premiums (up to a maximum of about $2050 per year
  • Employer EI premiums (up to a maximum of about $1000 per year)
  • Employer Health Tax (equal to about 2% of earnings)
  • WSIB premiums (variable rates, usually about 3% of earnings)These government payments amount to around $3-4 per normal working hour in
    Canadian auto plants.
He makes the following comment to justify excluding them from the cost of workers to GM:
These tax payments, while they fund important public programs, obviously do not
constitute compensation for workers.
If by compensation is meant “not received in the current year,” then it is true. However, costs in the present for employers can be deferred revenue for workers; in the case of the Canadian Pension Plan (CPP), Canadian employers must pay the same amount paid by employees, up to a maximum of contributions per year. I fail to see why this should not be included in the cost of variable capital to GM. Furthermore, if pension benefits paid out by GM or deferred government pension benefits are excluded from the current year, when would they ever be included in the calculation of the value of labour power?
Unemployment insurance is a little more difficult to assess (in Canada, the Canadian government euphemestically calls it employment insurance). Some if not the majority of GM workers may not access unemployment insurance benefits at all during their life. It may not ever therefore be a deferred form of revenue for them. However, it should be remembered that GM workers can access unemployment insurance if they are laid off (and they also can receive SUB) and thus the same logic applies as the subcategory for SUB.
(By the way, the unemployment insurance that workers receive should also be included in the calculation of variable capital, but this would require more detailed information about the absolute amounts, the number of GM workers laid off, the average period of time laid off and other data which I doubt is readily available. Perhaps those with more skill or with better access to data could provide details.)
Furthermore, the nature of insurance in general is such that payments or costs may not result in any flow back in the form of services rendered. How many reading this post have purchased insurance of one form or another (such as car insurance or travel insurance) only not to use it? It is a cost that may never be recouped and is grounded in the nature of the capitalist society–which is subject to unemployment in various sectors at different times. Costs paid by employers associated with unemployment insurance is a charge on the class of employers for funding former workers who have had their relationship to any particular employer severed (or who severed it themselves by quitting–although here in Canada workers must prove “just cause” for quitting in order to be eligible and must not have been fired for “just cause”).
For GM workers who are never laid off, unemployment insurance is obviously not a form of compensation for any GM worker–but it is still a cost of reproducing the value of labour power as a commodity (if not the particular set of workers called GM employees). It is part of the cost for GM of being able to exploit this particular set of workers.
The Employer Health Tax, according to the Ontario government website, is:

The Employer Health Tax (EHT) is a payroll tax on remuneration (for example, salaries, wages, bonuses, taxable benefits, stock options etc.) that employers in Ontario provide to current and former employees.

The purpose of this tax is to assist in providing the government with revenue to fund health care in Ontario.

The provision of certain services by the government without workers having to pay for them constitute part of the “social wage” of workers. In this particular case, sufficiently large employers are forced to pay for part of those services (smaller capitalist firms are exempt). These costs for the employer are necessary to ensure a certain level of health services and health of workers. I fail to see why they should not be considered part of the necessary costs that Ontario employers must pay if they are to exploit Ontario employees.
An indirect argument for including the EHT in the calculation of variable capital is provided by Wolff (cited above), page 78:
One further refinement should be added. Not only private consumption but also publicly provided consumption is required to reproduce the labor force. In particular, part of the government’s expenditures on education, health, fire protection, roads, and the like
contributes directly to the welfare of workers. Thus, in order to correctly estimate the necessary consumption of workers, government expenditures on productive goods and services, Gp, must be distributed among the beneficiaries of the expenditures.
As for Workers’ Compensation premiums paid by GM, although Shaikh and Tonak (1994) do not directly address this specific category, they do generally include “employer contributions to social security” in their calculation of the value of labour power. Page 108:
for wages we use “employee compensation” (EC), which includes wages and salaries of employees as well as employer contributions to social security. Employee compensation is the appropriate measure upon which to base our estimates of variable capital, since it represents the total cost of labor power to the capitalist.
Rodrigo Finkelstein (2015) more specifically argues that workers’ compensation premiums constitute the exchange value of workers’ injuries,”The Commodity Form of Safety Information,” in pages 610-623, triple C, Volume 13, Number 2, page 622:
Through injuries, diseases and deaths, workers transfer to the premium the value they themselves lose during the labour process by the destruction of their own use-value. Workers’ use-value—i.e. labour-power—uure [sic–this term indicates that something is quoted exactly as written despite it likely being an error]-appears in the value of every commodity as the premium.
Like shift premiums and overtime, workers’ compensation premiums can be conceived as compensation for accelerated use of workers’ labour power; unlike shift premiums and overtime, the money is not appropriated directly by individual workers but is mediated through a bureuacratic appropriation and distribution process that pools the accelerated use of  workers’ labour power at the provincial level in Canada.
(These premiums should not, however, be considered the accurate costs of accelerated use of the labour power of workers. Premiums are based on claimed employer-dictated work-related diseases, injuries and deaths, but actual employer-dictated work-related diseases, injuries and deaths is much higher (see Working and Living in a Society Dominated by a Class of Employers May Be Dangerous to Your Health).
It should come as no surprise that Stanford ignores workers’ compensation as a cost. Firstly, he considers the view that what is healthy for “the economy” is somehow also healthy for workers. This correspondence may to a certain extent arise because capitalists, ultimately, must rely on human bodies if they are to exploit them, and unhealthy bodies may be detrimental to their exploitation.
On the other hand, there obviously is a counter-tendency for employers to create working conditions that are dangerous for workers in one way or another (see my critique of Stanford’s attempt to treat the capitalist economy as if it were an economy primarily based on the production of products that workers, citizens, immigrants and migrants need–rather than a capitalist economy designed to obtain as much surplus value as possible–at the expense of workers in the posts Economics for Social Democrats–but not for the Working Class, Part Three: The Health and Safety of Workers and an Economy Dominated by a Class of Employers Are at Loggerheads and Economics for Social Democrats–but not for the Working Class, Part Four: Is There Such a Thing as a Responsible Employer in Relation to the Health of Workers?).
Stanford’s analysis of the real cost of the value of labour power matches his economics for social democrats. His economics of capitalism for “everyone” (the main title of a book he wrote) is really an economics for social reformists–and is hardly expressive of the interests of the working class.
Stanford’s dismissal of workers’ compensation premiums as part of the cost of the value of labour power reflects his social-democratic views.  Workers’ compensation premiums are linked to the determination of the value of the loss of various parts of the body, for example–equating money and the loss of human body parts. As Nate Holdren (2020),in Injury Impoverished: Workplace Accidents, Capitalism, and the Law in the Progressive Era remarks, page 5:
I remarked that it felt a little creepy that my hand had a dollar value. The lawyer laughed and agreed that it was creepy. He told me that there were tables that listed the value of all the different body parts. …  I repeated that it was a creepy idea that my body parts in particular had a dollar value, and that in general there were tables written down with the value of body parts calculated in advance. The lawyer replied that a lot of people got hurt at work and that the injuries and the payments for them were all a regular process.That meeting with the lawyer is where I first encountered what I now think of as the “tyranny of the table,” but it is both more and less than  tyranny. What I mean by the tyranny of the table is that within compensation laws human lives and human suffering have the fixed monetary values ascribed – no more than that, and not subject to discussion. What doesn’t fit into the values of the table? Nearly everything. All of the elements of a human being other than our paychecks.
Behind the numbers lie real human beings, with histories linked to other human beings in various ways. Workers’ compensation itself hides this reality behind the numbers, and Stanford’s cavalier dismissal of the payment of premiums by employers as part of the cost of the value of labour power reflects his own dismissal of the real and necessary experiences of many workers working for employers–and the diseases and injuries they experience that they suffer–and the deaths (the ending of any possibility of further human experience or any possibility of further human progress).
In Stanford’s haste at being a “progressive economist,” (he is the founder of the Progressive Economic Forum), he dismisses too hastily various costs that are relevant for characterizing the experience of workers in a capitalist society (such as the premiums paid to the Workers’ Compensation Board).
Although this post is about the rate of exploitation, it should never be forgotten that this rate of exploitation is linked to real people being used as things for the benefit of employers, with real negative consequences for members of the working class. Holdren points out how workers who work for an employer are often under the threat of being injured in one way or another, and if they are, their lives are often changed forever, page 1:
Nettie Blom worked in the laundry of a hotel in Yellowstone Park. On June 30, 1900, Blom was operating a machine called a mangle, which used steam-heated and steam-powered metal rollers to iron flat linens. The wet cloth stuck to her hand for a moment too long, and she was pulled into the machine. Blom’s hand was crushed and burnt. When a co-worker managed to free her from the machine, Blom’s hand looked like “boiled meat.” Three of her co-workers fainted at the sight. Blom suffered terrible pain and lost the use of her hand due to her injuries.
Stanford’s dismissal of workers’ compensation premiums as part of the value of labour power also hides the shift from what Holdren calls the tyranny of the trial to the tyrranny of the tables. The (unlikely) possibility of workers suing and winning a case against their employer constituted part of the tyranny of the trial historically, but gradually governments shifted the issue of health and safety compensation from the courts to government bureaucracies–Worker’s Compensaiton Boards. This shift from the workers’ financial point of view had the advantage that compensation would be forthcoming for proven injuries, disease or death–but it had the major disadvantage of eliminating any exposure of the real human damage and suffering that is so often connected to workplace injuries, diseases and death–an exposure that was at least minimally possible during a trial. In its place arose what Holdren calls the “tyranny of the table,” which depersonalized human injury and suffering at work. This is an important issue that the social-democratic left simply ignore or sidestep through the use of such euphemisms as “decent work,” “decent jobs,” “fair contracts” and the like. It is appropriate here to quote Holdren here more extensively about some of the implications of what the paying of premiums has involved for silencing workers’ grievances. Pages 115-118:
MORAL THINNING AND IMPOVERISHED INJURYIn order to standardize payments and thus create predictability for employers, compensation laws removed from the law arguments about injustice and narration of the individual effects of injury. This loss of deliberation changed the ethical grammar of the law, so to speak, deepening the eclipse of recognition, further impoverishing injury. The human meaning of injury had no place in the law. I call this phenomenon moral thinning: from murder to statistics. Non-financial harms also had no place under compensation laws. Pain and loss became newly worthless as the law provided no more space for people to narrate what it meant to lose a limb or a family member in an industrial accident. Injured wage earners became conceptually disembedded from their social and interpersonal contexts.

There is an element of moral thinning involved whenever the commodification of persons begins to occur, because commodification must ignore differences and particularities, setting aside whatever is unique or nonequivalent about them. Commodification tramples on singularity. This makes no difference when singularity makes no difference: the uniqueness of my morning cup of coffee does not matter; what matters is its instrumental use in my struggle toward wakefulness. The uniqueness of human beings, however, does matter: the reduction of human beings to abstract instrumental objects should trouble us. Recognition and commodification co-exist at best uneasily.

The moral thinning of injury under the tyranny of the table is more apparent when juxtaposed to the tyranny of the trial. Despite the many limits of the court-based system of employee injury law, that system did allow some space for fragments of the experiential truths of injury, which made possible elements of justice as recognition. As historian Kimberly Welch has put it, “[s]torytelling is omnipresent in human discourse.. . . Telling stories in court is an attempt to organize, interpret, and direct the world in which one lives, and the stories told in adversarial processes signal the narrator’s interpretation of how the world ought to operate.” The contending oughts embedded in legal stories made courts into places of normative deliberation, places where the contest of stories had explicitly moral and political stakes.

Access to that site of deliberation, and the recognition that came through that access, is likely part of what working-class people wanted from the court-based system of employee injury law. As historian James Schmidt has put it, injured plaintiffs and their families “came to court with a desire to talk about the miseries that had befallen them.” That telling intersected with other actors in court to produce what Schmidt calls “judicial morality plays.” Going to court was one kind of ritual through which people processed and, in important respects, produced the meaning of what Schmidt rightly calls industrial violence. There was, then, some space for this ritual use of law under the tyranny of the trial. With compensation laws, employee injury law was deritualized, no longer made available to working-class people in the same way.

To be clear, compensation laws never said that no other framework for valuing human beings existed in society, but these laws did not allow any other such framework to touch the legal response to employee injury. In the court system multiple systems of valuation could intersect, while under compensation laws non-pecuniary valuations of people, their experiences, their relationships, and their bodies had no legal space. The point is absolutely not to celebrate the tyranny of the trial, but to use the courts’ narrative and value plurality to highlight the moral thinning of injury under the tyranny of the table. In the court-based system of injury law at least it was possible to pose the questions of whether or not an injury was a wrong, and what it meant in the lives of the persons affected. There was no more space for these questions or for the answering stories of injury and its effects under the tyranny of the table.

Workers’ compensation premiums serve in part to hide the viciousness of a society dominated by a class of employers–a viciousness hidden by such social-democratic phrases as “decent jobs,” “decent work,” “fair contracts” and other euphemisms accepted by many on the so-called left these days. After all, they imply, working for an employer is not really all that bad; such is the moral thinning of social democrats these days. This is a class cost–Stanford’s dismissal of it notwithstadning.
Returning to the issue of the cost of workers, this cost of $63, of course, is probably less since GM workers in other parts of the world (such as in Mexico) would receive substantially less. However, without access to such detailed statistics, I will assume that the $63 per hour is still the average hourly wage for GM workers; perhaps Mr. Stanford (and Mr. Gindin) could provide more detailed statistics. Such statistics would be most welcome. 
Given a wage of $63 U.S. an hour, and given an estimated 1,800 hours of actual work per employee (see page 2 of Stanford’s article), and given 164,000 employees, the result is:

Total wages and benefits: $18.5976 billion

Calculation of the Rate of Exploitation

We now have sufficient information to calculate the rate of exploitation of GM workers (in billions of U.S. dollars)

Adjusted Income before income taxes: $7.383 billion=s
Total wages and benefits $18.5976 billion=v

To calculate the rate of surplus value or the rate of exploitaiton (they are the same thing), we need to divide “Adjusted Income before income taxes” (s) by “Total wages and benefits” (v).

So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=7.383/18.5976=40%.

That means that for every hour worked that produces her/his wage, a worker at GM works around an additional 24 minutes for free for GM.

In a 7-hour (420-minute) work day , the GM worker produces her/his wage in about 300 (5 hours) and works 120 minutes (2 hours) for free for GM. Of course, during the time that the worker produces her/his own wage, s/he is subject to the power of management and hence is unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario  and   Employers as Dictators, Part One).

In an 8-hour (480 minute-work day), a GM worker produces her/his wage in 343 minutes (5 hours 43 minutes) and works for 137 minutes (2 hours 17 minutes) free for GM.

In an 9-hour (540-minute) day, a GM worker produces her/his wage in 386 minutes (6 hours 26 minutes) and works for free for 154 minutes (2 hours 34 minutes) for GM.

In a 10-hour (600-minute) day, a GM worker produces her/his wage in 429 minutes (7 hours 9 minutes and works for free for 171 minutes (2 hours 51 minutes) for GM.

In a 11-hour (660-minute) day, a GM worker produces her/his wage in 471 minutes (7 hours 51 minutes) and works for free for 189 minutes (3 hours 9 minutes) for GM.

In a 12-hour (720-minute) day, a GM worker produces her/his wage in 514 minutes (8 hours 34 minutes) and works for free for 206 minutes (3 hours 26 minutes) for GM.

I calculated the division between v and s according to the following:

I have used the lengths of the working day (and the corresponding division between v and s) as 7, 8, 9, 10, 11 and 12 and because the length of the working day varies. According to one source:

8 hours is normal. Many will average 7 or 9 per day.

8 hours per, except for the new models introduction period.The working hours varies depending upon the targeted productions orders.

Salaried, so come in between 6 and 9, leave within 8 or 10 hours.

Typical from 7:00am to 6:00 pm M-F with weekend work typical.
One week work over 70 hours

The hours where long 10-12 sometimes

I organized the division of the working day into v and s from the shortest working day to the longest.

Of course, during these times that the worker works to obtain an equivalent of her/his own wage, s/he is subject to the power of management and hence is also unfree during that time (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation and   Employers as Dictators, Part One).

Many GM workers in the United States (and in Canada) belong to a union. The Annual Report states:

At December 31, 2019 approximately 48,000 (50%) of our U.S. employees were represented by unions, a majority of which were represented by the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (UAW).

Despite belonging to a union, the GM workers are exploited–but to a relatively low extent–much lower than many other union workers. The highest calculated rate of exploitation so far has been Rogers Communications’ workers, at 209 percent (see the comparative rates in the post The Rate of Exploitation of Workers at WestJet Airlines Ltd.). Why that is would be a good area for research.

Political Questions

Do you think that these facts contradict the talk by the left and unionists of “fair wages,” “fair contracts” (see  Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada) for the rhetoric of the largest Unifor as the largest private-sector union in Canada, and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized?

What of the following, drawn from the November 5, 2020 collective agrement between General Motors of Canada Company and Unifor Local No 199 St. Catharines, Local No. 222 Oshawa and Local No. 636 Woodstock? Page 7:

Section IV

Management

(4) The Union recognizes the right of the Company to hire, promote, transfer, demote and lay off 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 the Company to operate and manage its business in all respects, to maintain order and efficiency in its plants, and to determine the location of its plants, the products to be manufactured, the scheduling of its production and its methods, processes, and means of manufacturing. The Union further acknowledges that the Company 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.

This power of management is not mentioned at all in the National Unifor Bargaining Report. Like most union bargaining reports, it omits all negative aspects of working for General Motors (including being exploited and oppressed):

HIGHLIGHTS
• $1.1B to $1.4B in investments
• General wage increases
• $7,250 Productivity and Quality Bonus
• Inflation Protection Bonuses
• Improved New Hire Program
• Skilled Trades Adjustment
• Benefit improvements
• Three-year term
• Lump sum payment for pre-1994 retirees

A written summary also omits the continued power of GM management to exploit and oppress workers (page 1):

JOINT MESSAGE TO ALL GENERAL MOTORS MEMBERS

SECURING A MADE IN CANADA FUTURE

If there is a lesson learned from 2020 Auto Talks, it is that the future of Canada’s auto sector is bright and on a clear forward path.

Thanks to the hard work and determination of the Unifor-GM Master Bargaining Committee, we are proud to present a new collective agreement that follows the economic pattern negotiated at both Ford and FCA. This agreement includes a 5 per cent increase to hourly wages, a 4 per cent lump sum payment in 2021, along with $11,250 in bonuses.

The deal makes major improvements to the New Hire Program, including an accelerated path to full rate, and returns key benefits like the Legal Services Plan and the afternoon (5%) and midnight (10%) shift premium.

Skilled trades workers will see their 20% wage differential restored, new apprentices hired, and the pre-apprenticeship program re-instated for future hires. The new agreement also includes significant improvements to the benefits plan, modest (but still important) pension improvements, along with health and safety gains, retirement allowances and equity gains including 10 days of paid domestic violence leave and a new Racial Justice Advocate.

Along with these contractual improvements are commitments by the company to maintain and expand work at current Unifor facilities. GM will continue V6 engine and 6-speed transmission production over the life of the contract, and forecasted beyond.

Also, in a stand-alone letter GM has committed to explore new potential product programs and investment opportunities for St. Catharines, with input from them union[my emphasis. When I formed part of a negotiating team for Operating Engineers Local 858, in Prince George, British Columbia, the management team were able to shuffle off many items on the negotiating table by referring to a “consultation process” between the union and management–in effect eliminating such items for negotiations. The verb “explore” and the noun “input” are euphemisms for the right of management to simply do what it wants, with the proviso that it “consult” the union.] 

St. Catharines is well regarded as a leader in the GM powertrain division and will receive $109 million to in-source new transmission work for the Corvette, adding jobs, and make
upgrades to the small block V8 engine program. GM will continue V6 engine and 6-speed transmission production over the life of the contract, and further commits to seek out new
programs that sustain the facility over the long term.

The Woodstock PDC will receive $500,000 in additional upgrades. Aftermarket parts work at Oshawa will also continue, maintaining hundreds of jobs.

In addition, and pending ratification, GM has committed to invest up to $1.3 billion to restart pickup truck assembly at the Oshawa Assembly Complex, with an expected two-shift operation in the first half of 2022 (and the potential for a third).

These “highlights” teach the workers nothing about the limitations of collective bargaining and  collective agreements. They are designed to hide the concentration of major decision-making power in the hands of General Motors (such as the “and the lack of such power (such as the “right of the Company to determine the location of its plants.”

The same could be said of the Local 222 Bargaining Report, which recommended voting for the collective agreement without any explicit indications of its limitation as indicated in the management rights clause of the collective agreement. Thus, the Report indicates among other things, the following (page 3):

Commitment to settling the 2020 GM/Unifor Master Agreement and Oshawa Local Agreement

•The production allocation is for the current life cycle. Currently, there is no future product commitment but the Company has expressed that the life cycle will be a minimum of three (3) years and that is well into the new Collective Agreement 2023.

•There will be no retirement incentives offered at the Oshawa Assembly Plant during the current life cycle of the product. In the event of a permanent reduction in force, the new hires at the Oshawa Assembly Plant will be laid off. Any employees hired prior to the 2020 Collective Agreement will flow back into the Oshawa OEM Stamped Products and Service Operation based upon Seniority.

Of course, workers have to subordinate their will to the will of employers in a society dominated by a class of employers, and so no union representatives can overcome this limitation; such a limitation is a class limitation, and it is at this level that such limitations need to be addressed. However, the class level is hardly some level that excludes the particular sections of the working class. Those particular sections are included in that general level, so at the local, regional or national level, the class issue can certainly be indicated and not simply ignored–which is what union reps do often enough these days. At the least, they could explicitly indicate the limitations of the collective-bargaining process and the collective agreements that result from that process.  Better yet, they could not only include such limitations, but they could point to ways in which such limitations might be overcome through regional, national and international tactics and stragegies. Most modern union reps, however, have no intention of doing so; indeed, they are likely unaware of the need to do so.

What do you think? Are union reps looking after the needs of the working class? If not, what can be done about it?

Once Again on the General Strike that Almost Was in Ontario, Canada, Part Two: Sam Gindin’s Analysis

Introduction

For some of the context of the strike, see a couple of earlier posts (The Case of the Possible General Strike of Ontario Unionized Workers: Critique of Conservative Radicalism or Radical Conservatism and The CUPE Education Workers Strike: A Lesson on the Nature of the Public Sector). 

A few more leftists have made commentary on the initial strike of 55,000 education workers and the possibility of a general strike in Ontario. I looked at the debate between Adam King and Abdul Malik and in the online newsletter Passage  https://readpassage.com/should-cupe-have-kept-education-workers-on-strike/) in my last post.  Then there is Sam Gindin’s analysis on the Socialist Project’s website  https://socialistproject.ca/2022/12/education-workers-lead-but-come-up-short/. I will now look at his article. 

The title of his article–Education Workers Lead But Come Up Short: What Lessons for Labour?–indicates that workers and the left can and should draw lessons from the strike. His article is organized as follows (using his headings as guides): 

Introduction
Threats of Fines and Legislation
Context: When a Strike is More Than a Strike
Organize, Organize, Organize!
General Strike?
Why Didn’t CUPE Stay on Strike?
Did the Education Workers Win or Lose?

Gindin then lists and explains a number of points. In his own words: 

Of the various indicators of whether labour is, at long last, turning the corner, four challenges/tests seem especially pivotal.

1. Organizing
2. Coordination
3. Addressing Class
4. Union Transformation
5. Politics

Introduction

In the introduction, Gindin rightly emphasizes the unique nature of the situation which the education workers faced. Unlike the typical scenario of the government legislating striking workers back to work and union reps grumbling about its anti-democratic nature but complying with the legislation–and the workers also complying with the legislation–Ford passed the legisaltion before the workers even went out on strike: 

The divergence from earlier experiences began with the way the Ford administration tried to end the strike. Rather than wait until the strike was actually on, Ford used his parliamentary majority to pass legislation that criminalized the right of these workers to strike even before they actually went out (in the infamous Bill 28, Keeping Students in Class Act). With inflation running just under 7%, the legislation imposed a collective agreement offering 2.5% for workers earning under $43,000 annually and 1.5% for those earning above that princely sum. (The distinction the government made between low-paid and less low-paid workers was perhaps intended to push 1.5% as the standard for future collective bargaining in the public sector with the additional sum for lower-paid workers an ‘exceptional’ add-on for this sector alone.)

Threats and Fines

In the section on Threats of Fines and Legislation, Gindin points out to the second difference from the typical union scenario–the use of the notwithstanding clause, which reverberated not only within the union movement but beyond it: 

and, in addition, [the Ford government] invoked the notwithstanding clause to prevent a legal challenge to such legilsation.

Gindin then points out that the workers (not the union reps) did not follow the typical script: they refused to comply with the legislation and walked off the job: 

The main break with past collective bargaining came next. Unlike earlier labour responses, the education workers rejected the script. Across the province, school custodians, maintenance workers, education assistants, early childhood educators, lunchroom and safety monitors, librarians, and office staff ignored the legislation and walked out.

The audacity of the education workers galvanized the larger labour movement against Ford’s authoritarian over-reaction. On the ensuing weekend, after the first day of the strike, rumours spread of an imminent escalation of the conflict. A press conference was called for Monday morning (Nov. 6) where unions leaders were to announce a ‘general strike’. What was so recently unthinkable – a province-wide shut-down – seemed to have become an actual possibility.

This led to Ford backtracking and to an improved wage offer at the bargaining table: 

With this, the government’s once definitive ‘final offer’ also became flexible. In response to the union’s demand to ’put more money on the table’ Ford conceded that the government would indeed increase the wage offer if the workers ended the strike and returned to the bargaining table. The union complied and on November 20, the two sides announced a tentative agreement. It included monetary gains, though short of workers’ hopes, but no gains on staffing. More than two weeks later, 76% of members voted on the tentative agreement with 73% voting for ratification (it’s unclear why ratification took more than two weeks).

Context: When a Strike is More Than a Strike

In the section “Context: When a Strike is More Than a Strike,” Gindin outlines why Ford acted as he did and why the wildcat strike likely happened whereas it had not happened earlier for many years among other workers: 

Like other public sector workers, the education workers had suffered under the 1% cap on wages in their last agreement. Over the past decade (2012-2021), their real wages had fallen by some 10% as prices increased by 19% while wage increases were under 9%. Moreover, while all workers have been hard hit over this period, Ontario’s education workers’ wages fell further behind the province’s broader public sector, where average wages had increased by 12.2%. Federally regulated workplaces had seen their wages increase by 18.6%, municipal unions by 19.1%, and private sector workers by 20.3%.

The education workers’ 1% wage cap had expired with the end of their previous collective agreement, ‘freeing’ CUPE to bargain without that cap – the first major agreement to be in that position. This set the stage for the face-off with the government. For the Ford administration the demands of the education workers were not just about one sub-sector but a Trojan Horse for gains across the public sector. They had to be aggressively contained.

He then claims that CUPE OSBCU faced, however, definite obstacles to engaging in a fight with the Ford government; it was only one union that faced the Ford government head on despite the significance for the public sector; he also claims that the significance for privat-sector bargaining was less directly affected: 

This morphed a ‘normal’ conflict with a set of employers (the school boards) into what was essentially a political strike against the government. The dilemma for the union was that in spite of the conflict’s significance for the entire public sector (and less directly, for private sector bargaining), the battle was being led and fought by only a sub-sector of the union movement.

This underestimates union reps’ perceived threat that the use of preemptive legislation and the use of the notwithstanding clause by Ford threatened their own economic, political and ideological interests, as I argued in an earlier post on this topic (see  The Case of the Possible General Strike of Ontario Unionized Workers: Critique of Conservative Radicalism or Radical Conservatism). To quote from that post: 

Union bureaucrats themselves realized the potential threat to their ideology of free collective bargaining so often expressed by them. At the press conference, we hear the following from Mark Hancock: 

National Secretary Treasurer, Candace Renick [of CUPE], Fred Hahn, the Ontario division president, and many CUPE leaders from all across the country. Friends who have joined him from the labour movement today up front. We have leadership from the Canadian Labour Congress, the Ontario Federation of Labour, ATU Canada, the Elementary Teachers Federation of Ontario, the Ontario English Catholic Teachers Association, the Ontario Secondary Schools Teacher Federation, the AEFO, the United Steel Workers, UFCW, Unifor, the Ontario Building Trades, the United Association of Plumbers and Pipefitters, the Sheet Metal Workers, Unite Here, IATSE, the National Union of Public and General Employees, the Public Service Alliance of Canada, the Canadian Union of Postal Workers, the Ontario Public Service Employees Union, the Ontario Nurses Association, SEIU Health Care, the Canadian Office and Professional Employees Union, the Society of United Professionals, the Toronto and York Regional Labour Council. Today we represent millions of private and public sector workers all across the country.

This is an unprecedented gathering of labour leaders because the attack against workers’ rights that we’ve seen from this government—the attack on the rights of all Canadians which has been unprecedented. Bill 28 was a direct threat to workers’ rights and to the Charter rights of all Canadians. It invoked the notwithstanding clause to undermine some of our most fundamental rights. That regressive attack on workers united the labour movement like never before.

Gindin, like his ally Herman Rosenfeld, underestimaes the extent to which Ford’s move threatened the interests of not only public-sector unions but also private-sector unions. This underestimation then permits him to neglect the potentiality of uniting the union movement and workers in unions due to the pecularities of that situation–a peculiarity which Malik rightly emphasizes: 

Continuing to organize is important, but the massive groundswell of support and mobilization is already dwindling. I believe it’s doubtful we’ll see this degree of action again anytime soon, and we’re all worse off for it.

Gindin’s pessimism is reinforced by his view that only sporadic lights of hope have emerged in unions’ fights in recent years: 

Further militating against the aspirations of the education workers was that the prevailing mood of labour as a whole was characterized by a dispiriting passivity. It is true that there were some hints of a reawakening within the labour movement. OPSEU’s (Ontario Public Sector Union) college strike and ATU’s (Amalgamated Transit Union) GO bus strike had generated some optimism. So too did progressive changes in union leadership in OPSEU, Unifor, and the Toronto elementary teachers. But the grumbling across unions over the 1% caps on wages included little or no substantive resistance. Strikes in the public and also private sectors were at an ebb. Tentative agreements were rarely rejected. Wildcats were almost unheard of.

Gindin’s pessimism reminds me of of-quoted remark by Marx. From The Eighteenth Brumaire of Louis Bonaparte, in Marx-Engels Collected Works, Volume 33, page 103: 

Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly encountered, given
and transmitted from the past. The tradition of all the dead generations weighs like a nightmare on the brain of the living.

Yes, let us be cautious when the situation warrants it, but the situation which not only the education workers faced but also the entire Canadian working class faced because of Ford’s authoritarian actions hardly warranted a conservative stance. By looking towards the past rather than the potential of the present and thus the future, Gindin, like his fellow conservative radical Rosenfeld, thereby urges the gradual approach of step-by-step organization–without any consideration of possible situations that may potentially accelerate organization and class consciousness. 

In addition, Gindin, like Rosenfeld, underestimates the potential the situation had for unifying the labour movement not only in Ontario but also in Canada since Ford’s use of the withstanding clause had the potential to threaten the collective-bargaining process across Canada if other premiers used it to prevent legal challenges to their own anti-labour legislation. Gindin, like Rosenfeld, positions himself as a radical conservative or a conservative radical by failing to take into account the potentialities of the situation. 

On the other hand, we certainly need to look at the limitations of past leftist actions in contributing to limitations on the potentials of unique situations. Gindin and his ally Rosenfeld, as well as the left here in Toronto in general, have done nothing to undermine the idealization of collective bargaining and collective agreements. Gindin, for example, justified unions’ use of the ideological phrase “decent work” in the context of working for employers because unions were acting defensively–as if unionized settings consitute decent work when workers are still used as means or things for    employers’  own purposes–see The Money Circuit of Capital for the objective situation of workers in both the private and public sectors). Bullshitting the workers with such rhetoric is hardly in the class interests of workers–and yet Gindin justifies such rhetoric. Go figure. 

What is needed when such potentially radical situations are not on the horizon is to undermine union rhetoric by exposing, on the one hand, the actual relations of workers to their employers and, on the other hand, exposing and underming directly the union rhetoric of “decent jobs,” “fair contracts,” and other such euphemisms that hide the reality of class oppression and class exploitation. 

Gindin also refers to parents as players in the scenario.Undoubtedly, parents are a player in determining the level of public support for such a strike: 

Of concern as well to the union was the likely response of parents. Parents had experienced the negative impact of COVID on their kids’ education and with their kids at home, they faced interruptions in their own work. Even though the union had prioritized its concern for kids and their parents in its emphasis on improving badly-needed school services, and there had been very impressive organizing among parents by the Ontario Parents Action Network, Ford would no doubt try to position himself as the defender of in-school learning against its ‘disrupters’.

Gindin probably underesitmates the level of parent support for the striking education workers; at the picket line and the rally that I attended on November 4, there were a number of parents who had signs that supported the workers. The use of the notwithstanding clause probably angered not just unionized workers and represenatives but also parents. 

Organize, Organize, Organize!

In the section “Organize, Organize, Organize!,” Gindin argues that the education workers’ strike was largely successful in beating back Ford’s authoritarian legislation because of the eight-month lead in organizing workers up to the strike, using Jane McAlevey’s model of organizing. Although McAlevey’s organizing model is certainly innovative, focusing on using organic leaders who are the recognized leaders at the workplace (and not necessarily union or political activists) as well as “structured tests” as mini-tests to determine whether there is indeed power to back up demands). 

This emphasis on the need to engage in “deep organizing” is certainly relevant, but as I pointed out in my critiques of McAlevey’s books (see my review “Review: Jane McAlevey’s No shortcuts: Organizing for power in the new gilded age,” in the section “Publications and Writings” on this blog and the posts Review of Jane McAlevey’s “A Collective Bargain: Unions, Organizing, and the Fight for Democracy”: Two Steps Backward and One Step Forward, Part One  and  Review of Jane McAlevey’s “A Collective Bargain: Unions, Organizing, and the Fight for Democracy”: Two Steps Backward and One Step Forward, Part Two), McAlevey’s approach does little to address the larger class problem of the class power of employers–and such power concentrated in the government or state. 

General Strike?

The next section addresses the issue of whether a general strike was a viable option. Unfortunately, Gindin then hands over the ball to his ally, Herman Rosenfeld, by referring to an article written by Rosenfeld, who argues that a general stike was not realistically on the table: 

These are hopeful sentiments. But we need to be sober about the state of the labour movement and what it takes to pull off even a partially successful general strike (see especially the account by Herman Rosenfeld). If we credit the pre-strike organizing by education workers for their illegal walk-out, a corollary is that since labour as a whole generally has done so little of such organizing, it could not have successfully pulled off much of a general strike. The above optimism over what might emerge from a general strike does not tell us how to actually achieve a general strike.

As I have argued against Rosenfeld’s position in another post, I refer the reader to that post (    ). 

Gindin provides further arguments that it would have been unrealistic to call for a general strike under existing circumstances: 

Consider. The teachers, as noted earlier, were not supportive of the education workers’ disruption of classes and this didn’t bode well for other sectors walking out. Would public sector workers who suffered the 1% cap without their own unions putting up much of a fight take the sudden call for a general strike seriously? Ditto private sector workers, whose unions often defended and even sold concessions such as two-tier wages to their members. Moreover, would we expect – or even want – workers to go on a general strike when they haven’t been consulted, the strategy hasn’t been debated, no education has occurred, and no larger plan articulated?

Firstly, were teachers not supportive, or were teachers’ unions not supportive? Gindin assumes there is an identity between the two. Whether there were such an identity would have to be proven, not assumed. Secondly, even if teachers themselves opposed supporting the striking workers, would other “public sector workers who suffered the 1% cap without their own unions putting up much of a fight take the sudden call for a general strike seriously?” That would have remained to have been seen. Given Ford’s authoritarian fist of using the notwithstanding clause, they may or may not have done so; this would have been a test to see who had more power. Even if the other public-sector workers were not organized on the basis of McAlevey’s approach, they could at least have been partially organized in order to support a general strike. We will never know, of course. But there could have been partial mobilization in support of a general strike that could have provided further pressure on the Ford government and not, as Gindin implies, some long-drawn out process that requires the step-by-step gradualism that he and his ally Rosenfeld evidently advocate.

Furthermore, this would have been an appropriate occasion for bringing up explicitly the issue of the adequacy of “free collective bargaining” and what union reps mean by that. Gindin remains silent over this issue. 

Of course, strategy should be debated–but part of what is interesting about the situation is the open-endedness of the situation, as even Mark Hancock, the president of CUPE National stated: 

I think part of it is: Nobody really knew. That was the beauty of what’s happened over the last number of days leading into the legislation being enacted that…this grew a movement of its own in some ways. And you heard very clearly from private-sector unions and public-sector unions that everybody was very serious on that. And what that looked like on Saturday at the rally and on Monday, I think we had a pretty good idea. But beyond that I have no idea. This has got legs of its own.

For Gindin, like Rosenfeld, what is needed is–debate, debate and more debate! and not the translation of even imperfect debates into action (and even then, the debate must occur within limits deemed relevant by Gindin–see below concerning his belief that it is irrelevant to debate whether union rhetoric that unionized work is decent).. Like his fellow ally, Rosenfeld, his approach reminds me of one part in the Monty Python’s The Life of Brian, where a woman indicates that Brian is going to be crucified  (see   https://www.youtube.com/watch?v=55fqjw2J1vI ). Chatter, chatter and more chatter. 

Gindin also opposes the advocacy of a general strike because it was unclear what the term meant: 

Nor was it even clear what the union leaders intended by a ‘general strike’. Did they mean an indefinite strike or – more likely – a one, perhaps two-day strike which, though of consequence would essentially amount to another protest rather than a fundamental challenge to authority (protests had preceded the talk of a general strike; they were spirited and not insignificant, but far from overwhelming).

Note the downplaying of around 10,000 workers and supporters at the picket line/rally on November 4 in the context of the head of a government legislating workers back to work before they even had begun a strike and using the notwithstanding clause to prevent any legal challenge to such legislation. For Gindin, it would seem, only if hundreds of thousands of workers were organized and out on the streets should any realistic talk of a general strike be attempted.  Let us not risk anything; let us be 99 percent certain of victoy before we act. Gindin, apparently idealizes the Days of Action in the 1990s, when about 200,000 people in Toronto alone participated in a city general strike that formed part of a rolling provincial general strike (shifting from one city to another, such as from London or Hamilton–see the interview with Gindin (https://podcasts.apple.com/ca/podcast/so-you-want-to-have-a-general-strike-feat-sam-gindin/id1472061764?i=1000463838625). 

If there were 200,000 Sam Gindin’s in Toronto participating in a strike, I doubt that the Ford government would have to worry; even if organized, they would seek a very slow, very cautious path that would not upset the status quo–except perhaps in 200,000 years. 

Gindin’s cautious attitude also reminds me of a parliamentary attitude towards mass actions–despite Gindin’s own undoubtedly sincere acknowledgement of the importance of mass action. From Johannes Agnoli, Collected Works, Volume 2, page 70 (my loose translation): 

… exactly herein lies the point of divergence between attempted communism and  conformist social democracy. There will surely be many comrades at the base and in the top committees, who (without knowing that they are therewith repeating the watchword of narrow-minded German conservatism) will say: We will make no experiments, we will not stake our organization and our methods of struggle,  which are well tried and function well, in favour of a new path whose outcome  we do not know. The German social democrats had already proclaimed, when faced with the rise of Nazism: “Let’s not risk too much in order not to lose everything.” Yet one day comrades will in fact begin to think about a somewhat currious phenomenon, that the organizations and methods tried and tested by history in the western capitalist countries have not only never led in any particular case to revolution but also have not not even been good enough to stop the counter-revolution. [Werner Bonfeld, in “Constitutional Norm versus Constitutional Reality in Germany:  A Review Article on Johannes Agnoli’s Die Transformation der Demokratie und andere Schriften zur Kritik der Politik
(The Transformation of Democracy and other writings on the Critique of Politics),” in pages 65-88, Capital & Class, Volume 16, Issue No. 1, page 66). By “counter-revolution” Agnoli means, as Werner Bonefeld explains, “Agnoli understands the political integration, and thus reformulation, of social struggles for social emancipation as being bound up with a merely political emancipation which characterises the constitution of power in bourgeois societies.”

Gindin fails to take into account the effective nature of the capitalist state in co-opting or integrating  social movements in general and union movements in particular into the capitalist system (backed up, when necessary, by the iron fist of the police and, at times, the military). 

Thomas Mathiesen saw this danger to which Gindin is blind. Mathiesen calls the state absorbent when it has a refined capacity for neutralizing radical and revolutionary movements and demands. Mathiesen calls being co-opted “being defined in” and being shuffled to the side as irrelevant extremists “being defined out.” He calls “finished” the impossibility of contributing to the overcoming of the economic, political and social structures that characterize the dominance of the class of employers. From Mathiesen (1980), Law, Society and Political action: Towards a Strategy Under Late Capitalism ,page 252:

The strongly absorbent late capitalist society has in fact managed, by the process of defining in, to absorb large parts of the Left into political work of a structure maintaining kind, while at the same time, through the process of defining out, it has managed to neutralize the remaining part of the Left as so-called extremists. By an interchange of the forces which define in and define out, on the one hand, and internal organizational reactions to these forces on the other, the parties of the Left have to a large degree either become ossified organizations which are defined in, or ossified organizations which are defined out. In any case they are, in our sense, finished.

On the other hand, Gindin does accurately assess the union reps’ likely response to Ford’s backing down over Bill 28: 

In any case, the proposed general strike wasn’t actually over the workers’ demands, but the Premier’s especially authoritarian legislation. Once that law was repealed, so too was talk of a general strike. And based on what we saw in the media and heard from other channels, while the labour leadership was rightly proud of getting Ford to step back, it seemed quite universally relieved that their threat of a total provincial walk-out would not be tested.

Yes, the union leadership was probably relieved. However, that does not mean that the rank-and-file necessarily were.

The underestimation of the co-optive capacity of the capitalist state leads Gindin to fail to support the potential opposition to the government arising from various sources–a lost opportunity. 

Bill 24, as a specific piece of  authoritarian legislation, was the continuation of earlier authoritarian legislation, such as Bill 5, which had changed–in 2018 mid-municipal elections–ward boundaries. In 2021, when the Ontario Supreme Court judged parts of Bill 254 (which pertained to doubling the length of time a third party could run pre-election ads) to be unconstitutional,  Ford used the notwithstanding clause to pass Bill 307–which contained those parts judged unconsttutional; the use of the notwithstanding clause to quash a judges rulings should be seen in the context of provincial elections the following year–which Ford won. More directly relevant was Bill 124, which capped public-sector wage increases to one percent per year for three years. Just recently, on November 29, the Ontario Supreme Court judged the Bill unconsitutional; Ford’s government is appealing the decision. 

There has been plenty of evidence that Ford has used the political system to quash even liberal political democracy when he can. Given that only about 43.5 percent or, to put it the other way, about 56.5 percent did not bother to vote in the 2022 provincial elections, this in itself indicates that actual support for Ford was probably quite a bit lower. Given the historical record of Ford’s authoritarian administration, and the use of the notwithstanding clause to break not only the union but also set a precedent that could be used to block “free collective bargaining” in the future not only in Ontario but across Canada, the potential for substantial opposition to Ford’s government was there. Furthermore, given the pent-up lives of many during the COVID pandemic, the potential was probably even greater. 

Gindin ignores this potential. 

And what did Gindin do before this situation to call into question the typical union model of “free collective bargaining?” His advocacy of Jane McAlevey’s approach to organizing as deep organizing (with stress tests to see how much power workers have) is a start, but he vastly underestimates the need to engage in ideological struggle if micro-organizing is going to be linked effectively with macro organizing with the aim of overcoming and abolishing the class power of employers. His own defence of unions’ use of such rhetoric as “decent work,” fair contracts” and so forth hardly prepared workers for a grasp of the inadequacy of collective bargaining and collective agreements as vehicles for realizing their interests. 

Gindin then provides a rather weak explanation of why Ford backed down by agreeing to repeal Bill 28: 

And yet Ford did back down in the shadow of labour’s threat of an all-out war with his government. What are we to make of this? Though speculative, it seems that it was not so much the fear of a successful general strike that moved Ford, but a growing web of contradictions. He had been trying to carry the populist banner of representing ‘the little man’ and nurturing labour leaders to his side. But the chain of events that the education strike set off exposed his true anti-worker colours and lost him the seven endorsements, primarily from unions in the construction trades, that he had previously recruited.

I will not explore further Gindin’s speculation except to speculate that it was indeed probably “the fear of a successful general strike that moved Ford.” Gindin wants to play down the possibility of such a successful strike and thus provides a speculative account of why Ford backed down that does not involve evidence that a general strike might have achieved more than Gindin is willing to admit. 

He then paints a geneal strike as somehow useful at times but not the only or even the most appropriate weapon workers can use to accomplish their goals: 

None of this denies that general strikes can be a crucial instrument in labour’s arsenal in the struggle to make our society more democratic and equal and our lives more secure and meaningful. But ill-prepared general strikes may also expose the weakness of the labour movement rather than showcase its potential. And general strikes are not necessarily the strategic pinnacle of labour opposition.

Consider the contrast with the Days of Action in the mid-1990s. In that earlier period the labour movement understood that it didn’t have the strength to call and sustain a general strike. The alternative chosen was to turn to a series of community shut-downs. This allowed labour to start with communities where it was stronger, concentrate their best organizers there, spend a good deal of time to prepare for each action, and ultimately sustain the protest over eleven one-day regional strikes over two and a half years.

Firstly, there are undoubtedly times when the call for a general strike would be ill-advised. When I attended a second rally in Toronto in support of the education workers on November 11, 2022, there were perhaps only 300 protesters when compared to the 10,000 a week earlier. Despite this, Socialist Action, a far-left political organization here in Toronto, had a poster that called for a general strike; it was evident that such a call for a general strike would fall mostly on deaf ears at this stage. However, before the calling off of the strike on November 7, the potential for a successful strike was much greater to at least force Ford to repeal Bill 28 before workers were to go back to work. It also had the potential to snowball into a call for the repeal of Bill 124 (the legislation that limited public-sector workers’ wages to one percent per year–which a court has recently declared invalid, a decision which Ford has appealed). 

Secondly Gindin refers to the Days of Action and the lack of a general strike but rather eleven one-day regional strikes over two and half years.” What was accomplished by such a tactic? Gindin fails to specify what was gained. Was it a further advance in the organizational capacity of workers? A further understanding of the class nature of our society? A further weakening of the legitimacy of government? When I came to Toronto at the end of August 2013. the left was dominated by social democrats or social reformers–and Gindin reinforced their dominance by failing to engage in any real criticism of their political position. 

Why Didn’t CUPE Stay on Strike?

This section tries to answer the question in the heading: 

Why Didn’t CUPE Stay on Strike?

The most vexing question emerging out of the education workers’ strike is how it ended. Rather than following the common union practice of staying on strike until there was a concrete offer on hand and ratified by the membership, the leadership ended the strike, returned to negotiations, and also accepted a blackout on information.

The practical point here is that the return to work took the pressure off the employer. Even if talks broke down and picket lines returned, in the interim the momentum of the strike will likely have been eroded. The democratic point is that staying on strike until workers have seen and ratified a deal gives concrete expression to the promise that ‘the union belongs to the workers’. Furthermore, the labour movement seemed to be solidly behind the strike and polls showed the workers had the support of more than six parents in ten. Why, after all the preparations and this apparently favourable moment, would the union end the strike?

As for the media blackout on information, usually justified as allowing the bargaining to ‘go more smoothly’, this generally comes from employers more concerned with trying to freeze the union’s on-going mobilization. For the union, on the other hand, keeping the members informed was a matter of respecting the wisdom of workers and of the commitment to continuous organizing. Transparent bargaining could also facilitate getting a better read on where the members were at as the conflict progressed.

Moreover, in light of Ford’s recent embarrassed retreat, the union had some leverage in rejecting a bargaining blackout. Anxious to quickly end the strike, Ford would have had trouble delaying bargaining so as to control and block information flows. (The obvious compromise was to put any blackout on hold; if bargaining did seem at some point to demand a blackout this could, through mutual agreement be reconsidered.)

Gindin is right to point out the unusual backing down of the reps for the education workers in calling off a strike until demands had been met. The lack of transparency in negotiations is also of concern since this reflects typical anti-democratic behaviour of many union reps. 

Gindin further argues: 

Yet, there were two factors making the continuation of the strike problematic. First, Ford’s eating humble pie changed the dynamics of the bargaining conflict. The labour movement’s prime concern had been Ford’s removal of the right to strike and once that was defeated, the use of that right became secondary. For the labour movement, the negotiations between the education workers and the government drifted towards becoming a more or less ‘normal’ labour-management confrontation.

Ford’s “eating humble pie” did indeed change “the dynamic of the bargaining conflict”–for union reps. Their focus was on defending “free collective bargaining,” and once that had been achieved by a written guarantee by Ford that he would appeal the law, they “drifted towards becoming a more or less ‘normal’ labour-management confrontation. This should have been met by a radical critique of not only this shift but the obvious earlier idealzing of the whole collective-bargaining process and the resulting collective-bargaining agreements as inadequate expressions of the interests of workers. Gindin has done no such thing. 

The radical left needs to explicitly address the inadequacies of the collective-bargaining process, critizing union rhetoric at every turn. It needs to use every opportunity to open up debate about the legitimacy of that process–and such a debate has not been opened up since I moved to Toronto in 2013. Should not socialists be addressing this explicitly whenever they can? 

The second factor to which Gindin refers is parent support: 

Along similar lines, the support of parents could not be indefinitely counted on. After Ford had shown some ‘flexibility’ in annulling his legislation and expressing a readiness to modify his final offer, parents could be expected to pressure the union to show a parallel flexibility by ending the strike and returning to negotiations.

It is true that parents cannot be the determining factor for union strategies – the first consideration must be the workers affected – but neither can the reaction of parents be easily dismissed. Parent attitudes can affect the morale of workers and are critical to any future alliance for improvements in school conditions and funding. And with a good number of parents themselves workers, a relationship to parents is also critical to the building of a more coherent working class. Still, risking the loss of parent support might have been the route to go if it weren’t for the second factor.

Continuing the strike demanded a strike-able issue but in moving to a wage settlement, the union undermined both the staffing issue and the possibility of continuing the strike to win more. This clearly requires some unpacking. In doing so, the point isn’t to make judgements with the benefit of hindsight, but to explore some of the dynamics of bargaining to the end of rethinking future tactics/strategies.

It is true that parent support would likely not last indefinitely–short of much more radical measures. Gindin’s point is that the union could have tried to shift the central issue in bargaining from wages to the other issue of staffing levels–which would resonate more with parents than wage increases. This was perhaps a tactical error even for union reps–they could have achieved more at the bargaining table if they could sustain parent support.

Gindin then, interestingly enough, suggests an alternative scenario that would have addressed the staffing issue even if it were not a priority for the bargining committee: 

When they did, any pressure on the government moving on staffing was essentially gone. The union could not sustain a strike on staffing alone, which would have been a hard task in any case but certainly after wages, the workers main issue, was settled. Like wages, the call for more staffing went against Ford’s determination to continue reductions in expenditures across the public sector. What was distinct about staffing was that it challenged employers’ sacred ‘management right’ to rule the workplace. Getting the government to bend on staffing would be especially difficult and uncertain.

To have escaped this dilemma, the union would likely have had to concentrate on the staffing issue before getting to wages. This may seem peculiar given that wages were the obvious priority. But there is a distinction between priorities and the tactics of putting a package together. Unions in fact commonly try to address critical workplace and management rights issues before turning to wages, even when wages increases are the main goal.

When Ford offered to modify the government’s final offer in exchange for the union ending the strike and returning to the table, what if the union had responded not by pointing to wages but by leaving the wages to the side – knowing they would in the end return to the centre – and demanding some movement on staffing before they ended the strike? If Ford bit and offered something – anything – that in itself would give the workers a breakthrough to build on. If he didn’t, then twinning wages and staffing (unlike staffing alone) could sustain the continuation of the strike.

This indeed could have been done. Pressing for an inroad into what is traditionally management rights would have opened up the possibility of further politicizing the issue. However, such a possibility would have to be built on and not just swept under the rug–which is what the social-democratic or reformist left do so often. 

In addition, Gindin does not question the adequacy of addressing staffing levels–which have to do with adequate services under the existing school system. Adequate staffing levels appears then to assume that the school system is itself adequate and what is needed is an expansion of money and current services–and public education will be adequate. Public education, however, is riveted with contradictions and inadequacies, such as the rhetoric of addressing the educational needs of children while simultaneously using grades or marks to control, oppress and stream students (see in general the series of posts titled “Critical Education Articles Placed in the Teacher Staff Lounge While I Was a Teacher” and for the partiular criticism of the use of grades or marks in schools see  Critical Education Articles Placed in the Teacher Staff Lounge While I Was a Teacher, Part Fifteen: Progressive Versus Regressive Grading Systems in Schools). 

Did the Education Workers Win or Lose?

This final section before drawing up lessons learned is a summing up of whether the education workers won or lost. 

Did the Education Workers Win or Lose?

It’s hard to claim a victory when wages will fall even further behind inflation and staffing remains as is. But what can be said is that the internal organizing among the education workers and their readiness to strike illegally mattered. In a mere two days, the education workers had, remarkably, forced an aggressive Premier to back off a law dangerous to the labour movement as a whole, pushed the employer to drop concessionary demands like the erosion of paid sick days, and in spite of Ford’s absolute ‘final offer’, raised wages by a dollar across the workforce in each year of the agreement (a near doubling of the earlier offer).

Beyond this, the education workers were a showcase for implementing systematic member organizing into union strategy and demonstrating that workers can fight back even in the worst of circumstances. The education workers tried to derail the grim austerity agenda the Ford government has been pursuing but fell short. This poses a challenge to the larger labour movement to acknowledge its decades long internal crisis and start to confront seriously what reversing that crisis will mean.

It will take time to assess whether, considering everything, this strike is deemed a win or not. It will take some time to get a read on whether the education workers and the labour movement as a whole came out of this stronger or weaker. Time to learn about the impact on the consciousness and confidence of the education workers and time to see how the union deals with lingering disappointment. Time, that is, to see whether the example of the education workers affects the orientation and culture of the labour movement.

The education workers did indeed gain something–an increase in wages that they would otherwise have not gained, They also gained in organizing themselves and in learning to organize themselves. These positive gains also must include the negative gain of defeating Bill 28. However, largely what was gained was–a return to the status quo without any real questioning of the premises of the class power of employers. There is little indication that the workers drew any radical conclusions about the nature of working for an employer, the limitations of collective bargaining and collective agreements or the nature of class oppression and class exploitation.

Why is that? 

My prediction is that what transpired will have little effect on “the orientation and culture of the labour movement.” It had the potential to do so–but the potential was wasted–and Gindin, ultimately, is in agreement with such waste even if he is not conscious of his implicit agreement.

Gindin then refers to what he claims is needed for the labour movement: 

Of the various indicators of whether labour is, at long last, turning the corner, four challenges/tests seem especially pivotal.

He actually refers to five, not four, “challenges/tests”: 

1. Organizing

Activists should be pressing the parent union of the education workers CUPE, the largest union in the country, to extend the education/training carried out with such success in its education sector to the rest of CUPE. And activists everywhere should push their union to emulate the internal organizing the education workers did, adapted of course to their own circumstances. Among other things this would require setting up a cross-union school for training instructors. and essentially adding ‘organizing schools’ to the characterization of what unions are.

Yes, internal organizing and organizing schools should be created–but they should be combined with a critical part of such education–on the one hand, the critical determination of the nature of the kind of society in which we live and, on the other hand, a critical discussion of the limits of collective bargaining and collective agreements. 

The second challenge/test: 

2. Coordination

It is stunning that in the face of the 1% caps on public sector wage agreements, no systematic coordination occurred across unions. There have been ad hoc attempts to coordinate bargaining in some sectors like health, but it has been limited. Any broader coordination across unions will be difficult, yet with the public sector facing common attacks from the state, it’s surely time for the creation of a permanent council of public sector unions to strategize and build solidarity for the confrontations that we know are sure to come.

Yes, this too should arise. However, coordination across the public sector that fails to be crticial of union rhetoric is likely to result in the same kind of business union concerns that individual unions address. For example, when I attended a meeting of the Toronto Airport Workers Assembly (TAWC), an organization where union reps from various local unions whose jurisdiction is Toronto Pearson Airport workers, the meeting seemed like an enlarged union meeting, with the concerns of union reps being addressed without any critical larger issues being addressed (for addtional information on TAWC, see the posts  The Toronto Airport Workers’ Council (TAWC): One Step Forward and Two Steps Backward?    and  The Pearson Survey of the 50,000 Employees at the Toronto International Airport: A Document Expressing the Ideology of Employers  as well as TAWC’s Facebook page https://www.facebook.com/search/top?q=tawc%3A%20toronto%20airport%20workers%27%20council. What we also need is not just defensive coordination but offensive coordination. Unions have not engage in offensive tactics and strategies for a long time–and that does not just mean going on strike to achieve better contracts; it also means coordinating efforts with the explicit purpose of challenging the class power of employers in various ways, such as economic, political and ideological struggle. 

Gindin refers to the third challenge/test–and it sounds radical: 

3. Addressing Class

While organizing at the base and coordinating at the top complement each other, both need a clear strategic vision. What are workers being educated and trained for? What struggles would coordination prepare workers for? Some four decades ago Doug Fraser, then president of the UAW, clearly identified the emerging reality: “A class war is being waged in this country but only one class is fighting.” This remains true today and workers have suffered immensely for it. If this is to change, workers must come to grips with who they are, who is there with them, and where they ‘fit’ in the system. Class penetrates every aspect of workers’ lives and unless workers integrate class into how they think and act, the future will, if anything, be even worse than the past and present.

There is evidence that  what Gindin means by “class” is quite different from what I understandin by class. Thus,  part of the nature of class is to criticize slogans that hide the real nature of oppression and exploitation at work. As Gindin wrote on  November 24, 2017: 

Debating whether a job is ‘decent‘ is a misdirection.  Everyone pretty much knows, I think, that workers are exploited even if their conditions improve. ‘Decent jobs’ or a ‘good contract’ are a way of expressing defensive gains when radical gains are not even on the table and we – those on this exchange – don’t have the capacity tooter [to offer?] them any kind of alternative jobs. So criticizing them for this hardly seems an effective way to move them to your view – which is not to say you shouldn’t raise it but that you shouldn’t be surprised when they don’t suddenly act on your point.

Gindin’s approach is far from Marx’s approach. From a letter written by Marx to Arnold Ruge, September 1843 (Marx-Engels Collected Works, Volume 3, page 142): 

But, if constructing the future and settling everything for all times are not our affair, it is all the more clear what we have to accomplish at present: I am referring to ruthless criticism of all that exists,
ruthless both in the sense of not being afraid of the results it arrives at and in the sense of being just as little afraid of conflict with the powers that be.

“Everyone pretty much knows … that workers are exploited even if their conditions improve.” Really? I doubt that. Where is the evidence that workers or even the so-called radical left here in Toronto take seriously the nature of exploitation in Toronto? It is nowhere to be found.  Who is this everyone?

Indeed, it is one of the basic features of capitalist relations (class relations in a capitalist society) that they take the form of a relation between things and thus hide the nature of class exploitation. Social relations between workers become an objective relation that controls the workers rather than vice versa.  From Nicholas Gray (Winter 2012), “Against Perversion and Fetish: The Marxian Theory of Revolution as Practical Demystification,” in pages 13-24, Studies in Social and Political Thought, Volume 20, page 19: 

Thus, in bourgeois society, although individuals hold their “social power in their pocket” or “in the shape of a thing” (Marx, 1973, p. 157), in fact it is they who are beholden to it, or under its sway: they are “ruled by abstractions” (their own social relations which have become abstracted from them – i.e. alienated from them) (1973, p. 164). The alienation of social power goes hand in hand with an ontological inversion characteristic of the money form of value: money is transformed from means of exchange to a relation of power which subjugates individuals; a social relation alienated such that
it becomes autonomous, self-standing, and an end in itself.

These objective relations between workers results in their exploitation–but such exploitation is not visible–unlike earlier kinds of society. From Meghnad Desai (1974), Marxian Economic Theory, page 16: 

The contradiction between the juridically free status of the labourer and his exploitation is the original contradiction of capitalism. It is original since it appears at the origin in capitalism. In  no other society does exploitation take the value form [objective form of the relations between producers] since in no society does it have to be masked from visible relationships.

Class relations are hidden by relations of exchange, or relations of buying and selling commodities. Desai, page 23: 

The difference lies not in the characterization of the productive process, similar for all schools of
economics, but in the process of buying and selling labour power,  which lies at the beginning of the productive process and leads to appropriation of surplus value by one class. Throughout all the participants perceive only legitimate exchange relations and not unequal relations of class and
exploitation.

Exploitation is hardly evident in a class society characterized by capitalist relations of production, distribution, exchange and consumption. Quite to the contrary. The capitalist process of exploitation appears in the form of its opposite. From Desai, page 55: 

In Neoclassical economic theory, preferences and technology are the structural relations which explain the observed pricequantity data. Marx would reject these Neoclassical relations as not
penetrating beneath the surface of exchange relationships to the relations of production and the forces of production. But Marx went further than this. He also emphasised that the observed reality was the inverse or mirror image of the true social relationship. Thus, exchange shows equality where the true relationships are of exploitation. In this sense, observed reality is upside down, and empirical data unless approached within a value theoretic framework would lead to conclusions which will contradict the predictions of the value theory.

Exchange relations appear as what they are–formal relations of equality between buyer and seller. No one threatens through the use of physical violence for workers to work for a particular employer. This formal exchange relation, however, conflicts with the exploitation and oppression of workers when they are working.

In addition to exchange relations hiding the real nature of exploitation, distribution relations also hide the nature of exploitation. Although I have tried to calculate the rate of exploitation of specific workers working for specific employers (see for example The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One), the amount of surplus value or profit particular employers receive need not and indeed rarely coincides with the surplus value that their workers produce. The amount of surplus value (s) or profit employers receive is mediated through the distribution of the surplus value produced according to the rule of equal rates of profit for equal amount of total capital invested (for an example of this complicating issue, see my response to a comment made by Biswadip Dasgupta on my post  The Rate of Exploitation of Workers at Air Canada, One of the Largest Private Employers in Canada). As Desai remarks, page 56: 

The role of price mechanism and exchange in Marx’ s theory is to mask surplus value and make it appear legitimate as profit. The profit of anyone particular firm, industry or Department does not equal the surplus value produced by it. … The link between profits and surplus value becomes complex and in fighting against exploitation workers cannot fight against their own industry’s owners in isolation; they have to fight the whole system.

What workers face immediately, however, is a particular employer so that the fight has its point of departure there but has class exploitation as its background and supposition.

Given the nature of capitalist reality, exploitation is hardly evident to workers. An ideological struggle is thus necessary to expose such a reality–but Gindin obviously considers such struggle to be secondary to the magic of “organization.” As I wrote in another post: 

Mr. Gindin fails to see the need to combine a specific kind of organization with ideological struggle. To be sure, without organization workers cannot gain power, but workers will unlikely gain power without engaging in organization and ideological struggle simultaneously. Mr. Gindin minimizes the importance of ideological struggle and exaggerates the importance of mere changes in organizational struggles (such as Ms. McAlevey’s innovations in organizing). Both are required simultaneously, and that means engaging in an ideological battle with the traditional left. Mr. Gindin, however, indulges the social-democratic left and panders to them by avoiding an ideological struggle. Any organization that emerges as a consequence will unlikely be more than an organization that accepts the power of employers as a class.

Gindin ignores the specific nature of exploitation in a capitalist society–its hidden nature. 

Or is Gindin referring to some union reps being aware of exploitation, such as Wayne Dealy (executive director of CUPE local 3902) or Tracy McMaster (union steward, former president of the Greater Toronto Area Council, to which are affiliated 35 local unions of the Ontario Public Service Employees Union (OPSEU)), and former vice president of the Ontario Public Service Employees Union (OPSEU)? 

Perhaps Dealy plays lip service to the existence of exploitation (although I have never seen any evidence of this), but does he take such exploitation into account when formulating a plan of action? There is no evidence that he does so. Let Gindin provide evidence to the contrary. 

As for Tracy McMaster–“Our Tracy,” as Gindin once called her–her views are linked to Dealy’s response to her email sent to those on the listserve of the Toronto Labour Committee: 

Hello all,
 
Sean,  It was great hearing you on CBC this morning talking about   TAWC!  In case you haven’t heard, our neighbours the Molson’s   workers from Local 325 CUBGE are on the picket line. Representing  airport & airline workers I spoke at their Solidarity BBQ last week   at the International Drive/Carlingview entrance. They are in a tough battle with a huge corporate (and American) giant in Coors and could  really use our support. Please boycott Molsons products for the  duration of the strike, and feel free to drop by the picket line  -honking support is also welcome! The workers just want a fair deal, good jobs, pension security and fair benefits [my emphases] but the employer won’t even bargain.  I hope you all   will join me in showing solidarity with the brewery workers from   Local 325! 
 
In solidarity,

 

Tracy
Since I wanted to open up debate on such an issue, I responded thus: 
Hello everyone,
 
 
I would like to respond to Tracy’s reference to a “fair deal” and  “good job.”
 
These workers do certainly deserve to be supported in various   ways–it is a question of solidarity.
 
However, I do hear often enough such terms by those who support  unions. I too support unions, but the use of such terms needs to be  debated.
 
Having worked in a brewery for about four years, I do have some  experience in the area. I fail to see how what workers at a brewery  do is considered to be a good job. They are used as means to obtain  
more money for investors. Is being used to obtain more money for investors something to be proud of?
 
Would a parent sincerely want her or his child to be used to obtain   more money for others? To be treated as a means to that end?
 
Yes, brewery workers may receive higher wages than some, and they  may receive benefits as well (if they fight for them through  organizing themselves). However, is this adequate compensation for  
being treated, ultimately, as things to be used by investors and  their representatives in order to obtain more money? Do we not   deserve better–much better?
 
But let us assume that these workers have whatever is called a good  job and are not used by others (a cooperative could be such a  situation where workers have more control over their immediate  working lives). Firstly, what of the other workers in other  industries, or those who work in the public sector?Are their lives  not a means for obtaining a profit (the private sector), or for  realizing the mission of the particular public sector (without much  control over their own working lives). Even on the assumption that a particular group of workers have somehow a “good” job involves other  workers lacking control over their working lives. Such a situation  contradicts the principle of solidarity among workers,does it not?
 
Unless of course there is a growing movement for all workers to  control their working lives–which involves the conscious intent to  do so and the practical effort to realize such a goal.
 
The same logic applies to a “fair” deal.
 
What is meant by a “good job,” a “decent job,” or a “fair deal?”
 

Fred

Dealy responded thus: 
Is this meant to be a serious intervention or are you taking the piss?
 
 
Wayne G. Dealy
Ph.D. Candidate
Department of Political Science
University of Toronto
My response: 
It is meant to be a serious intervention. If Wayne Dealy has  something against the intervention–apart from emotional venting and insults-he is welcome to debate the issue.
 
Social democrats, unionists and others who consider themselves to be progressive often refer to good or decent jobs and fair contracts  (deals). This is an assumption that is rarely questioned. Indeed,  the tone of Wayne’s response is indicative of the lack of real  concern over the issue of the power of employers as a class in  relation to employees as a class. In other words, Wayne’s response  itself shows just how much the issue needs to be debated. That topic will start to be addressed at the next Toronto Labour Committee on  March 9, from 7:00-9:00 at 31 Wellesley.
 
Fred Harris, Ph. D., philosophy of education, former brewery worker
By the way, the topic was never addressed by the Toronto Labour Committee at the date and time indicated–and never while I was a member of that organization. 
 
Dealy’s response: 

wayne.dealy@utoronto.ca

Deepest apologies. Those fourteen words have been buried deep inside me for years and they could no longer be contained. I regret that you suffered so for their ill-timed appearance.
 
Apologies too for not showing more gratitude for the fact that you deigned to use Tracy’s call for picket-line support to explain to us in plain language how wage labour is exploitative. Sam, David, Tracy et al, I hope you all were taking notes. All of us on this list are obviously and sorely in need of simple explanations of such things; fortunately Fred is here to fill that void.
 
On a more personal note, thanks to your second intervention, my consciousness has been raised even further: I now see the problem all along was my “lack of real concern over the issue of the power of
employers as a class in relation to employees as a class”.
 
And the fact that you were able to suss me out from my fourteen ill-chosen words? Mind. Blown.
 
Thanks again, truly, for sharing your insights. This group is extremely fortunate to have a Promethean figure like yourself who so selflessly kept the ember of class analysis alive so that it could be shared with all us sinners.
 
Wayne.
 
p.s. If I had wanted to insult you I would have called you a condescending prick
Gindin’s intervention involves his cavalier dismissal in the quote above of my concerns, beginning with: “Debating whether a job is ‘decent‘ is a misdirection.”
 
Further evidence that McMaster does not take exploitation and oppression seriously is one of her emails, a response to an email I sent, part of which is reproduced below: 

On Feb 2, 2018, at 4:32 PM, Frederick Harris <arbeit67@hotmail.com> wrote:

The idea that 20,000 new members have been organized as part of a collective-bargaining unit is certainly better than not belonging to a collective-bargaining unit. One has to wonder, though, what Jane McAlevey would think about such an accomplishment. Is it the old model of a union engaging in collective bargaining while the membership grieve mainly through legal means (the grievance procedure) and, otherwise, remain passive? Is it the model where at best 2,000 of those members attend union meetings (probably substantially less, if the number who attended UNITE HERE Local 75 meetings is any indication)? Where union really means an objectified social structure that fails to really unify the workers against management on a day-to-day basis?

Of course, since there are no details provided about what organizing 20,000 part-time workers actually means for the lives of these 20,000 workers, it is difficult to determine how significant this is.

What is needed, instead of merely citing numbers (purely quantitative considerations), is an opening into a qualitative debate and conversation about the goals of the labour movement and of the union movement and their relation to the power of employers as a class–unless of course we already have fairness, economic justice and fair contracts–in the best of all possible worlds.

Fred

McMaster responded as follows: 

Tracy MacMaster
Fri 2018-02-02 7:33 PM
 
Hi Fred,
I don’t normally repsond to your emails, but I feel compelled.  20,000 workers, who for 50 years had almost no protections in the workplace, since they were excluded from many of the most basic protections of the Employment Standards Act, will now have a voice in the workplace.  The potential to improve their material circumstances, as well as their health – precarious workers are at greater risk for negative health outcomes, due to uncertainty, and of course poverty – gives me hope.
 
Having worked alongside numerous activists on this project for the past 13 years, I can only express delight that they finally have come this far.  Collective bargaining is limited and imperfect, but a fuck-ton better than none [my emphasis]. I hope you can attend the meeting to hear what’s going on with them, particularly in the context of the pressure being put on their employer through the recent faculty strike. Theory is a marvelous thing, but we need to acknowledge concrete gains and losses if we have any hope of affecting change.
 
In solidarity,
Tracy
In the first place, I had already recognized that collective bargaining that results in a collective bargaining is better than no collective agreement. In the second place, her claim that “collective bargaining is limited and imperfect” sounds like more union rhetoric. If it is limited and imperfect, in what way? If so, what is McMaster doing about it? The reference to “limited and imperfect” is union rhetoric that hides any real consideration of such limits and imperfections and taking them to heart. The only way to convince Ms. McMaster, as far as I can see, is to–agree with her. She idealizes collective bargaining and fails to address its limitations.
 
I sincerely doubt that McMaster takes seriously the limitations and imperfections of collective bargaining. If there is such evidence, others should provide us. If she did, she would have discussed such limitations and imperfections as well as what needs to be done to overcome such limitations and imperfections. She merely pays lip service to such limitations and imperfections. In practice, she operates entirely in terms of collective bargaining.
 
Gindin’s claim that “Everyone pretty much knows, I think, that workers are exploited even if their conditions improve” rings hollow both at the level of working class in general and at the level of so-called trade-union activists. 

The fourth “challenge/test” also seems to be radical: 

4. Union Transformation

Carrying out the above projects is not just a matter of adding certain functions to unions. To deal with them seriously is to recognize that what is at stake is transforming our unions. Truly addressing all of the above means changing union structures and priorities, how unions allocate their funds, the role of the staff, the leadership’s relationship to their members, the unions’ approach to bargaining, and its orientation to ‘politics’.

Given Gindin’s position in point three above (unless he has changed his position in the meantime), his call for transforming unions is insufficient. When faced with a challenge by me of a typical union position, he defended the union position and criticized my position without a thought. His meaning of what union transformation involves and what I mean are obviously quite different. 

Furthermore, in Gindin’s article, he implies above that going out on strike 

It is true that there were some hints of a reawakening within the labour movement. OPSEU’s (Ontario Public Sector Union) college strike.

How was the college strike an indication “of a reawakening within the labour movement?” Gindin fails to explain how this was so. Going out on stike as a means to obtain a collective agreement has formed part of the union scene even during the Second World War and has formed a part of that scence during the post-War settlement. That strikes have decreased in frequency does not mean that a resurgence in strikes questions the premises of the class power of employers in any way. It may just be a tactic to obtain a better collective agreement. 

How is this change to arise if not through criticism? Through open debate? I withdrew from the Toronto Labour Committee and started this blog in large part because of the lack of open debate in the Toronto Labour Committee over issues that I consider important. I fail to see how Gindin’s position has changed in the meantime. Perhaps he can enlighten his readers on this point. 

The only change that Gindin seems to propose concretely is to follow Jane McAlevey’s model of organizing. He fails to address how the macro issue of the class power of employes is to be addressed (McAlevey fails to address it). He nowhere takes into account how the nature of capitalist economic, political, legal and ideological relations hide the nature of exploitation and oppression. He also fails to address the issue of how unions are to be transformed when they persistently define the limits of their actions in terms of collective bargaining. Even McAlevey repeatedly refers to “good contracts”–as if there were such a thing. 

Fifth challenge: Politics

5. Politics

The problems workers face go beyond any workplace, union, or sector. And at some point we need to clearly address why things are the way they are: Why do inequalities keep rising? Why is there unemployment and why is there inflation? Why do we have a looming environmental crisis? Politics is not so much about good policies as about building the social base so we have the power to see those policies implemented. At the centre of building such a base is the making of a working class with the understandings, coherence, individual and collective capacities, and confidence to make change. At this moment in time, the over-riding political question is how we to organize ourselves so as to build that kind of working class. The Ontario CUPE education workers gave us a glimpse of what is needed and what is possible. Will the labour movement in Canada build on this? There is much more to be done. •

Note Gindin’s focus here: increasing inequalities, unemployment, inflation, the environmental crisis. All of these are real enough and of concern for workers, but there is also the daily politics of subordinating billions of workers’ lives and wills to the power of employers. No mention of exploitation here. I guess we never really need to make exploitation an essential aspect of any critical approach to class politics. 

Gindin seems also to asusme that what is needed is to develop the social power of workers–so that they can push through policies that the state will then implement–why else refer to “have the power to see those policies implemented”? Who does the implementing of policies is vital. It is crucial that workers not only “have the power to see those policies implemented” but that they have the power to implement them as well and to oversee such implementation–the democratisation of the state through the abolition of its hierarchical, separate and objective nature (see the post The CUPE Education Workers Strike: A Lesson on the Nature of the Public Sector for an elaboration of this)–in effect abolishing the nature of the state as an oppressive feature in our lives and self-government through an a great expansion of who is elected (administrators and judgeds would themselves be elected) and a great expansion of control over those elected through the right to recall elected officials–real accountability, not the pseudo-accountability of the present neoliberal state. 

Conclusion

On the positive side,  he rightly emphasizes the unique nature of the situation–especially Ford’s use of the notwithstanding clause. Gindin also emphasizes the need for deep organizing as suggested by Jane McAlevey–and how the education workers used that principle to organize their own strike. In addition, he correctly assesses the probable desire of union leaders to return to the status quo of “free collective bargaining” as soon as possible. Furthermore, Gindin also usefully refers to the need to consider tactical considerations (and public support) when emphasizing certain bargaining demands, Finally, he justifiably indicates that the education workers did make some gains

,  -but . He certainly does not really engage with the issue of how working for an employer is oppressive and exploitative nor how collective-bargaining and collective agreements cannot adequately address this common situation of workers

There are nontheless many problems with Gindin’s analysis. Gindin’s approach clings to caution, caution and more caution. His underestimation of the uniqueness of the situation to unify the union movement not only in Ontario but also in Canada leads him, in part to be overly cautious. This cautious attitude is reinforced by his underestimation of the probable level of public support for the striking workers. He also downplays the probabe real fear that Ford experienced of a possible general strike.

Despite his recognition of the need to fashion bargaining demands that take into account likely public reaction (especially in the public sector) while making inroads in management rights, he does not consider the larger qualitative issue of the adequacy of the social services provided in the public sector (such as the adequacy of the grading system to meet the learning needs of students). 

Gindin leaves open the impact of the education workers’ strike on the union and labour movement. My assessment is that there will be little impact of what occurred on the larger labour movement. Gindin ignores both the specific hidden nature of exploitation and the co-optive capacity of the modern capitalist state. 

Organizing will continue on the same basis, and “free collective bargaining” will continue to be idealized. Even deep organizing will fail to address the wider class issues. So too will coordination within the public sector unless it addresses the exploitative and oppressive nature of the employment relaitonship and the inadequacies of “free collective bargaining.” 

Gindin’s call for making class central sounds radical, but his understanding of class does not come to grips with the specific nature of capitalist exploitation and oppression. Given the nature of class exploitation and oppression in modern capitalism, his call for union transformation, accordingly, has a hollow ring to it since he fails to address the economic, political and ideological obstacles to such a transformation. Similarly, his call for class politics sounds radical, but he apparently conceives the modern government, with its hierarchy and anti-democratic executive structure, to be the vehicle for the realization of the social power of the working class. Class politics, however, also needs to involve a radical breaking down of the hierarchy through the expansion of the election of administrators and judges and the closer control of them by workers and the general public. 

Now that the opportunity for a general strike or at least a more unified union and labour movement–along with advanced in the repeal of repressive Bills (such as Bill 124) through workers’ own initiative rather than through the courts–has been lost, what will Gindin do? Probably continue to engage in his slow, social-reformist approach that will not serve the interests of the working class as a whole. 

All in all, Gindin’s article, like Rosenfeld’s article, expresses conservative radicalism or radical coservativism.

 

The Rate of Exploitation of Workers at Metro, One of the Largest Private Employers in Quebec, or: How Unionized Jobs Are Not Decent or Good Jobs

Introduction

In three others posts I presented a list of some of the largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada), Calgary  (see  A Short List of the Largest Employers Based in Calgary, Alberta, Canada, Based on the Number of Employees)  and Quebec (see  A Short List of the Largest Employers in Quebec According to the Number of Employees). Metro was the largest employer in terms of the number of employees in Quebec. 

What is Metro? 

The nature of Metro is set out in its Annual Report: 

COMPANY PROFILE

METRO INC. is a food and pharmacy leader in Québec and Ontario. As a retailer, franchisor, distributor, and manufacturer, the company operates or services a network of 950 food stores under several banners including Metro, Metro Plus, Super C, Food Basics, Adonis and Première Moisson, as well as 650 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy and Food Basics Pharmacy banners, providing employment directly or indirectly to almost 90,000 people.

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

In this post, I calculate the rate of exploitation of Metro workers. 

The Nature of the Rate of Exploitation

But what is the rate of exploitation? And why not use the usual rate of profit or the rate of return? The rate of profit is calculated as profit divided by investment. Since employers purchase both the means for work–buildings, computers, office supplies, raw material–and hire workers–we can classify investment into two categories: c, meaning constant capital, or the capital invested in commodities other than workers; and v, or variable capital, the capital invested in the hiring of workers for a certain period of time (wages, salaries and benefits).

The purpose of investment in a capitalist economy is to obtain more money (see The Money Circuit of Capital), and the additional money is surplus value when it is related to its source: workers working for more time than what they cost to produce themselves. The relation between surplus value and variable capital (or wages and salaries) is the rate of surplus value or the rate of exploitation, expressed as a ratio: s/v.

When the surplus is related to both c and v and expressed as a ratio, it is the rate of profit: s/(c+v).

In Marxian economics, you cannot simply use the economic classifications provided by employers and governments since such classifications often hide the nature of the social world in which we live. The rate of profit underestimates the rate of exploitation since the surplus value is related to total investment and not just to the workers. Furthermore, it makes the surplus value appear to derive from both constant capital and variable capital.

I decided to look at the annual report of some of the largest private companies (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.

Adjusted Results

Adjusted earnings before income taxes (surplus value, or s) $1110.62 (in millions of Canadian dollars–in all calculations unless otherwise indicated)
Wages, fringe benefits and employee benefits expense: $966.4 

The Rate of Exploitation of Metro Workers

To calculate the rate of surplus value, we need to relate “Adjusted earnings before income taxes” to “Wages, fringe benefits and employee benefits expense” So, with the adjustments in place:, s=1110.62; v=966.4. The rate of exploitation or the rate of surplus value=s/v=1110.62/966.4=115 percent.

That means that for every hour worked that produces her/his wage, a worker at Metro works around an additional 69 minutes (1 hour 9 minutes) for free for Metro. Alternatively expressed, for every hour worked that produces her/his wae, a worker at Metro works 28 minutes that produces her/his wage and 32 mintues for free for Metro. 

I calculate the division of the working day according to various lengths of the working day.  I use minutes rather and not just hours.

  1. For a 4 hour working day (240 minutes), Metro workers spend 112 minutes (1 hour 52 minutes) to obtain their wage for the day, and they spend 128 minutes (2 hours 8 minutes) in obtaining a surplus value or profit for Metro. 
  2. For a 5 hour working day (300 minutes), Metro workers spend 140 minutes (2 hours 20  minutes) to obtain their wage for the day, and they spend 160 minutes (2 hours 40 minutes) in obtaining a surplus value or profit for Metro. 
  3. For a 7 hour working day (420 minutes), Metro workers spend 195 minutes (3 hours 15 minutes) to obtain their wage for the day, and they spend 225 minutes (3 hours 45  minutes) in obtaining a surplus value or profit for Metro. 
  4. For an 8 hour working day (480 minutes), Metro workers spend 223 minutes (3 hours 43  minutes) to obtain their wage for the day, and they spend 237 minutes (3 hours 57 minutes) in obtaining a surplus value or profit for Metro. 
  5. For a 9 hour working day (540 minutes), Metro workers spend 251 minutes (4 hours 11 minutes) to obtain their wage for the day, and they spend 289 minutes (4 hours 49 minutes) in obtaining a surplus value or profit for Metro. 

Of course, during the time that the worker works to obtain an equivalent of her/his own wage, s/he is subject to the power of management and hence is also unfree during that time (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation and   Employers as Dictators, Part One).

Most Metro workers belong to a union. This is what the annual report has to say about labour relations: 

LABOUR RELATIONS

The majority of our store and distribution centre employees are unionized. Collective bargaining may give rise to work stoppages or slowdowns that could impact negatively the Corporation. We negotiate agreements with different maturity dates and conditions that ensure our competitiveness, and terms that promote a positive work environment in all our business segments. We have experienced some minor labour conflicts over the last few years but expect(3) to maintain good labour relations in the future.

Do you think that these facts contradict the talk by the left and unionists of “fair wages,” “fair contracts” (see  Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One for the rhetoric of the largest union in Canada, the Canadian Union of Public Employees (CUPE)) and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized?

If exploitation and oppression of workers is a constant in their lives, even if they are only vaguely aware of it, should this situation not be frankly acknowledged by their representatives? Do such representatives do so? If not, why not?  Do workers deserve better than neglecting the social context within which they live and work? Should such problems be addressed head on rather than neglected? 

Even if workers were not exploited, they would still be oppressed since they are used as things (means) for purposes which they as a collectivity do not define (see The Money Circuit of Capital). Does that express something fair? Management rights clauses (implied or explicit in collective agreements give management as representative of employers–and as a minority–the power to dictate to workers what to do, when to do it, how to do it and so forth–and is not the imposition of the will of a minority over the majority a dictatorship? (See  Employers as Dictators, Part One). Is that fair? Do union reps ever explain how a collective agreement somehow expresses something fair? Is that fair?

Is the following an example of what union reps mean by a “fair contract?”

Between METRO ONTARIO INC. C.O.B. AS METRO RIDEAU
and
UNIFOR AND ITS LOCAL 414 UNIFOR Union Canada
Effective from: February 18, 2017 to February 17, 2020

ARTICLE 6: MANAGEMENT RIGHTS

6.01 The union acknowledges the right of the company to manage and operate its business in all respects, to direct the working force and to establish and maintain reasonable rules and regulations.

6.02 The union acknowledges further that it is the function of the company to hire, promote, demote, transfer and lay-off employees and to suspend, discipline and discharge employees for just and sufficient cause. Any exercise of these rights in conflict or inconsistent with the provisions of this agreement shall be subject to the provisions of the grievance procedure set forth in Article 4.

How does the existence of a collective agreement turn the exploitative and oppresive situation of workers into one where they have a “fair contract” and “decent work?” Unions can limit exploitation and can control some aspects of their working lives, but in principle workers are things to be used by employers even with unions. This does not mean that a non-unionized environment is the same as a unionized environment. With unions that are independent of particular employers, that is to say, are real unions, there is an opportunity for workers to develop organizations of resistance against the power of particular employers.

Workers and not just unions, however, cannot resist the power of the employers as a class unless workers organize as a class, and furthermore they cannot change the situation unless they themselves realize the limitations of their own local, regional and national organizations when faced with the power of the class of employers (and the government that supports them), teach that to their members and are open persistently to criticism from below. In addition, unless they start to organize as a class with the aim of eliminating the class power of employers, they will be subject to a back-and-forth movement of reform and counter-reform (see Anti-Neoliberalism Need Not Be Anti-Capitalist: The Case of the Toronto Radical John Clarke, Part Four: The Welfare State and Neoliberalism, or The Infinite Back and Forth Movement of Capitalism). 

The ideology of unions–that somehow they can produce a “fair contract” and “decent work”–needs, though, to be constantly criticized. Workers deserve better than the acceptance of such ideology by the social-democratic or social-reformist left.

Data on Which the Calculation Is Based

The calculation of the rate of exploitation is undoubtedly imperfect, and I invite the reader to correct its gaps. Nonetheless, the lack of any attempt to determine the rate of exploitation at the city level has undoubtedly reinforced social-reformist tendencies.

I initially try to outline how the annual report calculates the Earnings Before Income Taxes (EBIT) and then makes some adjustments according to Marxian theory and on the basis of certain quantiative assumptions. 

Now, the calculation (in millions of Canadian dollars)

Sales 16,767.5 
Cost of sales (13,438.8) 
Gross margins 3,328.7 [16,767.5-13,438.8=3,328.7]

Operating expenses
Wages and fringe benefits (880.6)
Employee benefits expense (note 23) (85.8)
Rents and occupancy charges (529.2)
Retail network restructuring expenses (36.0)
Gain on divestiture of pharmacies 6.0
Others (481.6)
Total operating expenses 2007.2 (Add all the numbers in parentheses and subtract the 6.0 that is not=2007.2)

Since wages and benefits constitute variable capital (v), we should add them together:
Wages, fringe benefits and employee benefits expense: 966.4

Income net of operating expenses $1,321.5 [Gross margins-Total operating expenses=3,328.7-2007.2=1,321.5]

Depreciation and amortization

Fixed assets (note 11) (210.3) 
Investment properties (note 12) (0.7) 
Intangible assets (note 13) (75.4) 
Total (286.4) (=210.3+0.7+75.4)

Income net of depreciation and amortization 1035.1 [1,321.5-286.4=1035.1]

Financial costs, net
Current interest (2.9) 
Non-current interest (103.5) 
Interests on defined benefit obligations net of plan assets (note 23) (2.1) 
Amortization of deferred financing costs (2.9) 
Interest income 7.8 
Passage of time (0.2) 

Total net financial costs (103.8) (numbers in parentheses mean that the numbers were deducted from income as they are considered an expense from a particular capitalist’s point of view; those without parentheses are income and need to be subtracted since they are income) (2.9+103.5+2.1+2.9+0.2=111.6; 111.6-7.8=103.8)
Earnings before income taxes 931.3 (1035.1-103.8=931.3). 

The annual report, though, has “Earnings before income taxes” as 969.2. However, this number includes the following: 

Gain on disposal of a portion of the investment in an associate 36.4 (note 10)
Gain on revaluation and disposal of an investment at fair value 1.5 (note 10)

Note 10 indicates the following:

During the first quarter of 2019, the Corporation finalized the disposal of the entire investment at fair value in Alimentation Couche Tard Inc. (ACT).

It cannot be assumed that the value of property disposed of has nothing to do with the exploitation of Metro workers; the profit obtained from their exploitation might have been reinvested in the acquisition of ACT in the first place.

However, since such possible exploitation would have occurred earlier, I will exclude it from the calculations since the issue is the current rate of exploitation in 2019. 

36.4+15.=37.9; 969.2-37.9=931.3
Earnings before income taxes and before adjustments 931.3

Adjustments 

Adjustments of Surplus Value (Profit)

In Marxian theory, it is necessary to question whether some expenses are expenses for both the individual employer and for the class of employers (and fractions of their class, such as those who live on interest); where there is a coincidence of expenses for individual employers and the class of employers, the expense is deducted from total revenue.

Adjustment of Interest

On the other hand, there are expenses that are expenses for the individual employer but are not expenses when looked at from the point of view of the class of employers; in such an instance, they are paid out from the surplus value produced or obtained by workers and are to be included in income before taxes. For example, interest is such a category. 

As I wrote in another post: 

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

In addition, there are some so-called expenses that are allegedly salaries and other forms of income that are likely derived from surplus value; they have the form or appearance of wages or salaries but are really surplus value in disguise (such as the “salary” of CEOs). They need to be subtracted from expenses and added to “Earnings before income taxes.”  

Since interest forms part of surplus value, the total interest paid, 111.6, needs to be added to “Earnings before incomes taxes.” Accordingly: 

Temporality adjusted earnings before income taxes 1042.9 (931.3 + 111.6=1042.9)

Adjustment of Various Managerial Benefits

Various forms of income are available for senior managers and key employees that likely are derived exclusively from exploiting the rest of the workers. There are three categories in particular that apply here: stock option plan, peformance share unit plan and deferred share unit plan. Below, I quote from the annual report to show the nature of each plan as a plan for upper managerial employees of one form or another:

Stock option plan
The Corporation has a stock option plan for certain Corporation employees providing for the grant of options to purchase up to 30,000,000 Common Shares. As at September 28, 2019, a balance of 4,189,336 shares could be issued following the exercise of stock options.

Performance share unit plan (PSU)
The Corporation has a PSU plan. Under this program, senior executives and other key employees (participants) periodically receive a given number of PSUs. The PSUs entitle the participant to Common Shares of the Corporation, or at the latter’s discretion, the cash equivalent, if the Corporation meets certain financial performance indicators. 

Deferred Share Unit Plan (DSU)
The Corporation has a DSU plan designed to encourage stock ownership by directors who are not Corporation officers. Under this program, directors who meet the stock ownership guidelines may choose to receive all or part of their compensation in DSUs. 

Conveniently, the money for these managers is separately calculated for each category: 

Stock options: $2 million; PSUs: $6.6 million; DSUs: $6.2 million. Total: $14.8 million. This must be added to Earnings before income taxes. 

Temporarily adjusted earnings before income taxes 1057.7 (1042.9+14.8)

Adjustment for Rents and occupancy charges

As I wrote in another post: 

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

This 10 percent is equal to $52.92 million and must be added to the category “Earnings before income taxes.” Accordingly:

Adjusted Results

Adjusted earnings before income taxes 1110.62 (1057.7+52.92)
Wages, fringe benefits and employee benefits expense: 966.4

The Rate of Exploitation of Metro Workers

To calculate the rate of surplus value, we need to relate “Adjusted earnings before income taxes” to “Wages, fringe benefits and employee benefits expense” So, with the adjustments in place:, s=1110.62; v=966.4. The rate of exploitation or the rate of surplus value=s/v=1110.62/966.4=115 percent.

That means that for every hour worked that produces her/his wage, a worker at Metro works around an additional 69 minutes (1 hour 9 minutes) for free for Metro. Alternatively expressed, for every hour worked that produces her/his wae, a worker at Metro works 28 minutes that produces her/his wage and 32 mintues for free for Metro. 

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

you will work up to 9 hrs or 4hrs

On a average day you work 8 hours

5-8hours/day

7 hours a day and 4 hours on weekdays.

I will calculate the division of the working day from the shortest to the longest in the above quotes accordingly. I use minutes and not just hours.

  1. For a 4 hour working day (240 minutes), Metro workers spend 112 minutes (1 hour 52 minutes) to obtain their wage for the day, and they spend 128 minutes (2 hours 8 minutes) in obtaining a surplus value or profit for Metro. 
  2. For a 5 hour working day (300 minutes), Metro workers spend 140 minutes (2 hours 20  minutes) to obtain their wage for the day, and they spend 160 minutes (2 hours 40 minutes) in obtaining a surplus value or profit for Metro. 
  3. For a 7 hour working day (420 minutes), Metro workers spend 195 minutes (3 hours 15 minutes) to obtain their wage for the day, and they spend 225 minutes (3 hours 45  minutes) in obtaining a surplus value or profit for Metro. 
  4. For an 8 hour working day (480 minutes), Metro workers spend 223 minutes (3 hours 43  minutes) to obtain their wage for the day, and they spend 237 minutes (3 hours 57 minutes) in obtaining a surplus value or profit for Metro. 
  5. For a 9 hour working day (540 minutes), Metro workers spend 251 minutes (4 hours 11 minutes) to obtain their wage for the day, and they spend 289 minutes (4 hours 49 minutes) in obtaining a surplus value or profit for Metro. 

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

Furthermore, some Metro workers do produce surplus value in that their labour involves transportation services; storage workers may perhaps also produce surplus value (this is a grey area for me). 

Of course, during the time that the worker works to obtain an equivalent of her/his own wage, s/he is subject to the power of management and hence is also unfree during that time (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation and   Employers as Dictators, Part One).

Most Metro workers belong to a union. This is what the annual report has to say about labour relations: 

LABOUR RELATIONS

The majority of our store and distribution centre employees are unionized. Collective bargaining may give rise to work stoppages or slowdowns that could impact negatively the Corporation. We negotiate agreements with different maturity dates and conditions that ensure our competitiveness, and terms that promote a positive work environment in all our business segments. We have experienced some minor labour conflicts over the last few years but expect(3) to maintain good labour relations in the future.

Do you think that these facts contradict the talk by the left and unionists of “fair wages,” “fair contracts” (see  Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One for the rhetoric of the largest union in Canada, the Canadian Union of Public Employees (CUPE)) and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized?

If exploitation and oppression of workers is a constant in their lives, even if they are only vaguely aware of it, should this situation not be frankly acknowledged by their representatives? Do such representatives do so? If not, why not?  Do workers deserve better than neglecting the social context within which they live and work? Should such problems be addressed head on rather than neglected? 

Even if workers were not exploited, they would still be oppressed since they are used as things (means) for purposes which they as a collectivity do not define (see The Money Circuit of Capital). Does that express something fair? Management rights clauses (implied or explicit in collective agreements give management as representative of employers–and as a minority–the power to dictate to workers what to do, when to do it, how to do it and so forth–and is not the imposition of the will of a minority over the majority a dictatorship? (See  Employers as Dictators, Part One). Is that fair? Do union reps ever explain how a collective agreement somehow expresses something fair? Is that fair?

Is the following an example of what union reps mean by a “fair contract?”

Between METRO ONTARIO INC. C.O.B. AS METRO RIDEAU
and
UNIFOR AND ITS LOCAL 414 UNIFOR Union Canada
Effective from: February 18, 2017 to February 17, 2020

ARTICLE 6: MANAGEMENT RIGHTS

6.01 The union acknowledges the right of the company to manage and operate its business in all respects, to direct the working force and to establish and maintain reasonable rules and regulations.

6.02 The union acknowledges further that it is the function of the company to hire, promote, demote, transfer and lay-off employees and to suspend, discipline and discharge employees for just and sufficient cause. Any exercise of these rights in conflict or inconsistent with the provisions of this agreement shall be subject to the provisions of the grievance procedure set forth in Article 4.

How does the existence of a collective agreement turn the exploitative and oppresive situation of workers into one where they have a “fair contract” and “decent work?” Unions can limit exploitation and can control some aspects of their working lives, but in principle workers are things to be used by employers even with unions. This does not mean that a non-unionized environment is the same as a unionized environment. With unions that are independent of particular employers, that is to say, are real unions, there is an opportunity for workers to develop organizations of resistance against the power of particular employers.

Workers and not just unions, however, cannot resist the power of the employers as a class unless workers organize as a class, and furthermore they cannot change the situation unless they themselves realize the limitations of their own local, regional and national organizations when faced with the power of the class of employers (and the government that supports them), teach that to their members and are open persistently to criticism from below. In addition, unless they start to organize as a class with the aim of eliminating the class power of employers, they will be subject to a back-and-forth movement of reform and counter-reform (see Anti-Neoliberalism Need Not Be Anti-Capitalist: The Case of the Toronto Radical John Clarke, Part Four: The Welfare State and Neoliberalism, or The Infinite Back and Forth Movement of Capitalism). 

The ideology of unions–that somehow they can produce a “fair contract” and “decent work”–needs, though, to be constantly criticized. Workers deserve better than the acceptance of such ideology by the social-democratic or social-reformist left.

The Rate of Exploitation of Workers at WestJet Airlines Ltd.

Introduction

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

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

I also calculated the rate of exploitation of Air Canada workers (see The Rate of Exploitation of Workers at Air Canada, One of the Largest Private Employers in Canada). This time I calculated the rate of exploitation of another airline: WestJet. 

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.

I took the data from the 2018 annual report–the most accessible annual report. 

Conclusions First

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

We have the following:

The rate of exploitation or the rate of surplus value=s/v=232,658.7/997,313.3=23%. 

That means that for every hour worked that produces her/his wage, a worker at WestJet works around an additional 14 minutes for free for WestJet. 

In a 5.2 hour work day, the worker produces her/his wage in 4 hours 14 minutes (254 minutes) and works 58 minutes for free for WestJet.

Of course, during the time that the worker produces her/his own wage, s/he is subject to the power of management and hence is unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario  and   Employers as Dictators, Part One). The same applies to the following. 

In an 8-hour work day, the worker produces her/his wage in 6.5 hours and works for 1.5 hours free for WestJet.

In an 8.5-hour day, the worker produces her/his wage in  6 hours 55 minutes and works for free for 1 hour 35 minutes for WestJet.

In a 10-hour day, the worker produces her/his wage in 8 hours 8 minutes and works for free for 1 hour 42 minutes for WestJet. 

Given this rate of exploitation and oppression, what are we to make of the following management rights clause in the collective agreement between WestJet and the Canadian Union of Public Employees (CUPE) Local 4070 (or, in French, Syndicat canadien de la fonction publique (SCFP))? 

ARTICLE 3 – MANAGEMENT RIGHTS

3-1.01 Except to the extent expressly limited or modified by a specific provision of this Agreement, the Company reserves and retains, solely and exclusively, all of the inherent rights, powers and authority to manage the business and direct its workforce and all the matters relating thereto. These rights, powers and authority include, but are not limited to hiring, assigning, promoting, demoting, classifying, transferring, lay-off, recall, suspending, discharging or otherwise disciplining Cabin Personnel; establishing and enforcing rules of conduct; maintaining order and efficiency; requiring Cabin Personnel to observe reasonable rules and regulations which may be promulgated by the Company, introducing new equipment; determining the location(s) of the workforce, operations, and facilities; planning, scheduling, directing and controlling operations.

3-1.02 The Union shall be advised of any changes to policies governing Cabin Personnel at least five (5) Days before such policies become effective unless the Parties mutually agree to a shorter advance notification period. This five (5) Day requirement will not apply when the Company is required by law to make immediate changes or in the event of emergency circumstances that reasonably require immediate change.

Is this management rights clause an example of the nature of “fair contracts” according to the major Canadian unions (such as CUPE, Unifor and NUPGE)? See  Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One: The Canadian Union of Public Employees (CUPE)Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada)  and Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Four: The National Union of Public and General Employees (NUPGE)(The Second Largest Union in Canada).      

Should not unions, even in the public sector, be teaching the limitations of collective agreements and collective bargaining? In the private sector, should they not also be teaching the workers that no collective agreement and no collective-bargaining process can abolish the exploitation of the workers–without driving the company out of business?

Or are unions silent on such limitations? Moreover, do they try to sell the idea to their members that the collective agreement is fair? 

What do you think? Given what you think, what should you be doing? Are you doing it? Why or why not? 

Data on Which the Calculation Is Based

I will calculate the rate of exploitation or the rate of surplus value for each approximate variation of the length of the working day (a more detailed explanation of how to calculate the rate of exploitation is provided in the post The Rate of Exploitation of the Workers of the Canadian Imperial Bank of Commerce (CIBC), One of the Largest Private Employers in Toronto and in Canada).

(in thousands of Canadian dollars)

Revenue 4,733,462
Operating expenses 4,578,235
Earnings from operations 155,227
Earnings before income taxes (EBT) 135,882

There is a difference of 19,345 between the category “Earnings from operations” and “Earnings before income taxes” (155,227-135,882=19345).

This difference can be accounted for on the basis of the category “Non-operating income (expense)”. 

Non-operating income (expense):
Finance income 29,421
Finance cost (57,027)
Gain (loss) on foreign exchange 2,966
Gain on disposal of property and equipment 4,049
Gain (loss) on derivatives 1,246

When you add the numbers that are without parentheses (that is to say, considered to be income) and subtract the numbers that are in parentheses (that is to say, considered to be an expense), then the net result is an expense of (19,345). 

Operating expenses need to be broken down further since expenses for maintaining workers as wage workers form one of the two considerations for the calculation of the rate of exploitation.

Expenses ($ in thousands)
Aircraft fuel 1,231,632
Salaries and benefits 999,381
Rates and fees 691,293
Sales and marketing 440,292
Depreciation and amortization 429,906
Maintenance 232,053
Aircraft leasing 139,703
Other 398,038
Employee profit share 15,937
Total operating expenses 4,578,235

Adjustments

In Marxian theory, it is necessary to question whether some expenses are expenses for both the individual employer and for the class of employers (and fractions of their class, such as those who live on interest); where there is a coincidence of expenses for individual employers and the class of employers,  the expense is deducted from total revenue.

On the other hand, there are expenses that are expenses for the individual employer but are not expenses when looked at from the point of view of the class of employers; in such an instance, they are paid out from the surplus value produced or obtained by workers and are to be included in income before taxes. For example, interest is such a category. 

As I wrote in another post: 

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

In addition, there are some so-called expenses that are allegedly salaries and other forms of income that are likely derived from surplus value; they have the form or appearance of wages or salaries but are really surplus value in disguise (such as the “salary” of CEOs). They need to be subtracted from expenses and added to “Earnings before taxes.”  

Adjustments of Non-operating income (expense) and Surplus Value (s)

I will treat this subcategory and its amount “Finance cost (57,027)”  as part of the surplus value produced by WestJet workers but paid out as interest to loan capitalists (banks, for example). The same applies to the other amounts within this category. The result is an additional $94,709 thousands (29,421+57,027+2,966+4,049+1,246=94,709). This amount needs to be added to “Earnings before income taxes (EBT),” 135,882, with the result: 

Temporarily adjusted Earnings before income taxes (surplus value (s) $230,591 thousands. 

Adjustments of Salaries and Benefits: Variable Capital (v)

Salaries and benefit plans can be further broken down:

Salaries and benefits plans 880,701
Employee share purchase plan 102,692
Share-based payment plans 15,988
Total salaries and benefits 999,381

The category “Employee share purchase plan” does not need any adjustment since it does indeed form part of the benefits of WestJet workers.

A note provides additional information:

Employee share purchase plan (ESPP)

The ESPP encourages employees to become owners of WestJet and provides employees with the opportunity to significantly enhance their earnings. Under the terms of the ESPP, employees may, dependent on their employment agreement, contribute up to a maximum of 10 per cent, 15 per cent or 20 per cent of their gross salary to acquire voting shares of WestJet at the current fair market value. The contributions are matched by WestJet and are required to be held within the ESPP for a period of one year. For the year ended December 31, 2018, our matching expense was $102.7 million.

The above $102,692 million is thus WestJet’s contribution to the purchase of WestJet stock.

I will assume that the employee share purchase plan forms part of the total income of WestJet workers. This assumption is justified since such a plan is designed, apparently, to replace a pension plan (and I have treated pension plans when calculating the rate of exploitation as part of salaries and benefits). From The Globe and Mail (May 14, 2019):

The questions from employee groups on the call quickly focused on the employee share-purchase plan. Instead of a pension plan, workers can invest as much as 20 per cent of their pay in WestJet stock and the company will match it. 

The employee share purchase plan amount does not change the calculation of v, but it does clarify why it should be included in the category “Total salaries and benefits.”

If the $102,692 is added to the amount of salaries and benefits, we obtain $983,393. 

Adjustments for Share Based Payment Plans

The same could only partially be said of the other category “Share based payment plans.” 

The following note elaborates on the nature of “Share-based payment plans”:

Share-based payment plans
We have three equity-settled share-based payment plans whereby either stock options, restricted share units (RSUs) or performance share units (PSUs) may be awarded to pilots, senior executives and certain non-executive employees. For the year ended December 31, 2018, share-based payment expense totaled $16.0 million.

“Share-based payment plans” is further broken down as follows:

Stock option plan 10,428
Key employee plan 5,039
Executive share unit plan 521
Total share-based payment expense 15,988

With no further detailed information about “Stock option plan,” and since pilots undoubtedly produce surplus value (they are exploited), I will assume that only ten percent of 10,428 is surplus value appropriated by senior management; this is also justified since pilots are likely to form most of the personnel in this category (although it is impossible to determine this with precision). Consequently, 10 percent of 10,428 is 1042.8 and is subtracted from “Total share-based payment expense” and added to “Earnings before income taxes (EBT).” The remaining 9,385.2 million is added to the category “Salaries and benefits plans” and the added amount from “Employee Share

Adjustments for Stock Option Plan

Temporarily adjusted Earnings before income taxes (surplus value (s): $231,633.8 thousands. 
Temporarily adjusted salaries and benefits: variable capital (v): $992,778.2 

Adjustments for Key Employee Plan

A note indicates the nature of the “Key employee plan”:

(d) Key employee plan
The Corporation has a key employee plan (KEP), whereby restricted share units (RSU) are issued to senior management and pilots of the Corporation.

Since pilots form part of this group, I will follow the same logic as for the group who receive stock options–10 percent of 5,039 is 503.9 and is subtracted from “Total share-based payment expense” and added to “Earnings before income taxes (EBT).”  The remaining $4535.1 ]  is added to the category “Salaries and benefits plans.

Accordingly: 

Temporarily adjusted Earnings before income taxes (surplus value (s): $232,137.7 thousands. 
Temporarily adjusted salaries and benefits: variable capital (v): $997,313.3

Final Adjustments: Executive Share Unit Plan

The category “Executive share unit plan” is different from the other two share-based payment plans.

A note indicates the nature of “Executive share unit plan”: 

(e) Executive share unit plan
The Corporation has an equity-based executive share unit (ESU) plan, whereby RSUs [restricted share units] and performance share units (PSU) may be issued to senior executive officers.

“Executive share unit plan” is probably compensation, not mainly for the coordination of the work of others but for the exploitation of others–it is pure surplus value. Accordingly, 521 is therefore completely subtracted from “Total share-based payment expense” and added to “Earnings before income taxes (EBT).” 

With this, final adjustments are possible and the rate of surplus value or the rate of exploitation can be calculated. 

Final Calculation (Based on Adjustments) of Surplus Value, Variable Capital (Salaries or Wages and Benefits) and the Rate of Surplus Value 

The result of all of these adjustments is: 

Adjusted earnings before income taxes (surplus value (s): $232,658.7 thousands. 
Adjusted total salaries and benefits: variable capital (v): $997,313.3

To calculate the rate of surplus value, we need to divide “Adjusted earnings before income taxes” (s) by “Adjusted total salaries and benefits” (v).

So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=232,658.7/997313.3=23%. 

That means that for every hour worked that produces her/his wage, a worker at WestJet works around an additional 14 minutes for free for WestJet. 

In a 5.2 hour work day, the worker produces her/his wage in 4 hours 14 minutes (254 minutes) and works 58 minutes for free for WestJet. Of course, during the time that the worker produces her/his own wage, s/he is subject to the power of management and hence is unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario  and   Employers as Dictators, Part One).

In an 8-hour work day, the worker produces her/his wage in 6.5 hours and works for 1.5 hours free for WestJet.

In an 8.5-hour day, the worker produces her/his wage in  6 hours 55 minutes and works for free for 1 hour 35 minutes for WestJet.

In a 10-hour day, the worker produces her/his wage in 8 hours 8 minutes and works for free for 1 hour 42 minutes for WestJet. 

I have used the lengths of the working day as 5.2, 8 8.5 and 10 because the length of the working day varies. According to one source:

They have a flexible schedule for part time. Full time is required 40 hours. They do permit shift trading.

In my last role 8.5hrs, in prior roles it depended on my shifts etc.

8 to 10 hours per day

26 hours a week. Everyone starts out a part time.

The above lengths of the working day, translated into hours per day (assuming a five-day work week) are:

  1. 5.2 hours per day or 312 minutes
  2. 8 hours per day or 480 minutes
  3. 8.5 hours per day or 510 minutes
  4. 10 hours per day or 600 minutes 

Comparison of the Rate of Exploitation of WestJet Workers with Other Workers

The rate of exploitation of WestJet workers is quite low relative to other workers. Below I organize the rates of exploitation that I have calculated so far, from lowest to highest: 

  1. WestJet workers: 23%
  2. Telus workers: 58% 
  3. Air Canada workers: 70%
  4. Magna International workers: 79% (2019); 43% (2020) 
  5. Bank of Montreal (BMO): 92% 
  6. Bell Canada Enterprises (BCE): 100% 
  7. Canadian Imperial Bank of Commerce (CIBC): 120%
  8. Toronto-Dominion Bank (TD Bank): 123% 
  9. Royal Bank of Canada (RBC): 124% 
  10. ScotiaBank (Bank of Nova Scotia): 147% 
  11. Suncor Energy workers: 148% 
  12. Rogers Communication: 209% 

The divergences in the rate of exploitation are substantial: the absolute percentage difference between the rate of exploitation of WestJet workers and the rate of exploitation of Rogers Communications workers is 186%. 

Factors That Determine the Rate of Exploitation in Relation to Divergences in the Rates of Exploitation 

The rate of surplus value has three main factors which determine its level: 

1. The real wage (basket of commodities consumed by workers at non-changing prices). In the short term, the real wage is undoubtedly influenced by the class struggle–the level of organization of workers, the aims of such organization, the extent of the elimination of competition among workers and so forth. Even in the long run, it may be influenced through the incorporation of more and qualitatively more diverse commodities (historical and moral influence)–but this should not be exaggerated since real wages ultimately are limited by the rate of accumulation.

2.  The absolute level of the production of surplus value, determined by such factors as

a. the length of the working day. For example, if workers work 7 hours a day, with a rate of exploitation of 100%, then the worker produces her/his wage in 3.5 hours and produces a surplus value of 3.5 hours. If the working day increases to 7.5 hours, then the rate of exploitation increases, from 100% to 114% (s=4; v=3.5; s/v=4/3.5=1.14=114%). 

b. the intensity of work (which itself can be a function of other factors, such as the level of managerial organization, the principles of managerial supervision and technological conditions that force workers to work at an intensified level). The same number of hours may contain, relative to before, more labour. With a constant real wage, more surplus value is produced and hence a higher rate of exploitation. 

3.  Relative surplus value, determined by changes in technology (which alter the value of the commodities consumed by workers, reducing the value of the commodities consumed by workers, thereby increasing the remaining value as surplus value. For example, at the brewery where I worked, when I first started to work there, we could produce a maximum of 550 bottles of beer per minute, and when I quit, we could produce a maximum of 1,400 bottles per minute. The value of the bottles of beer undoubtedly decreased (although the price did not reflect this proportionately–taxes form a substantial portion of price). With lower values–and prices–for commodities consumed by workers, the workers perform less time producing the equivalent value of their wage and hence more time producing a surplus value, which therefore raises the rate of exploitation, s/v. Thus, with the technological change in beer production, the value of beer decreased. With the same level of worker beer consumption as before (the same real wage), the value of the commodity the workers sell (labour power–the capacity to perform labour for a certain period of time) decreases, leading to more value remaining for the employer–hence more surplus value and a higher rate of exploitation.  

To explain the divergences in the rate of exploitation at this micro level according to the above three factors or variables would require much more empirical work (and probably theoretical work to make required connections). I lack the capacity for this. If others can in any way improve on the calculation of the rate of exploitation, feel free to do so.

In any case, other factors undoubtedly influence the perceived or empirical rate of exploitation (as calculated by me). Thus, one major factor that would need to be included is the difference between the surplus value initially produced (or received by commercial and banking institutions) and the final distribution of surplus value. The production of surplus value and its distribution are unlikely to be the same since the proportion of investment in constant capital (c) and variable capital (v) will vary according to the kind of industry and level of technological development. I explain this in a comment to the post The Rate of Exploitation of Workers at Air Canada, One of the Largest Private Employers in Canada.  

Static Versus Dynamic Considerations of the Rate of Exploitation

The above comparative analysis definitely has limitations since it provides only a snapshot picture of rates of exploitation for different employers. When we consider the mobility of workers within and between industries, however, there may be a tendency towards an equalization of the rate of exploitation. This would require further empirical research, of course, as well as further theoretical considerations.

One author argues that there is a tendency towards equal rates of exploitation via worker mobility (he sometimes calls it labour mobility). He refers to Adam Smith’s theory of worker mobility. Adam Smith was a political philosopher and political economist who published the book The Wealth of Nations in 1776.

From Jonathan Cogliano (2021), “Marx’s Equalized Rate of Exploitation,” Working Paper Series, University of Massachusetts, page 20: 

One implication of the view put forward in sections 4 and 5 is that Marx fully adopts [Adam] Smith’s theory of the turbulent equalization of the whole of the advantages and disadvantages and re-purposes it into a turbulently equalizing rate of exploitation is that workers then know the degree to which they are exploited and move between sectors accordingly. Marx discusses how workers understand that they are exploited in his discussion of the struggle over the length of the working day, but he does not state explicitly that workers know their rate of exploitation (Marx 1976, pp.342-344). However, the wholesale adoption of Smith’s balancing whole of the advantages and disadvantages of labor implies that workers do know the degree to which they are exploited and migrate across sectors in response to changes or differentials across sectors.

Workers making decisions of how to allocate their labor across industries in this way does not require that workers base the decision on magnitudes measured in labor values— i.e. basing the decision on surplus value and the value of labor power. Workers’ movement across sectors as informed by money prices still induces the EQRE. As Foley (2016, pp.378- 380) discusses, surplus value captures overall surplus labor effort in the money form and if workers base their mobility decisions on the effort they expend and the wage they are paid then these movement decisions will tendentially induce the EQRE. This rests on some notion of a connection between labor effort and money value added

It would be necessary to consider both theoretically and empirically the dynamics of worker mobility in relation to the rate of exploitation to determine whether such a tendency in fact holds. Unfortunately, there is little research here in Toronto or indeed in Canada, as far as I can tell, concerning anything having to do with the rate of exploitation at the micro level and its interface with tendencies at the macro level.


Economics for Social Democrats–but not for the Working Class, Part Three: Critique of Jim Stanford’s Theory of Money, Part Three, or How Commodities and Money Dominate Our Lives

Introduction

I have already criticized Mr. Stanford’s definition of money as purchasing power in two previous posts (see Economics for Social Democrats–but Not for the Working Class, Part Two: Critique of the Social Democrat Jim Stanford’s Theory of Money, Part One   and Economics for Social Democrats–but not for the Working Class, Part Two: Critique of Jim Stanford’s Theory of Money, Part Two). I turn now to the social effect of commodity and money production as commodity fetishism and money fetishism. 

Mr. Stanford’s definition of money fails to connect it to the peculiar kind of social labour that produces commodities and how this peculiar kind of social labour necessarily gives rise to money as the monopolizer of purchasing power. To repeat his definition of money (from Economics for Everyone: A Short Guide to the Economics of Capitalism, 2008, page 189: 

Very broadly, money is anything that allows its holder to purchase other goods and services. In other words, money is purchasing power.

We can compare this with Marx’s views on money. From pages 168-169: 

The forms which stamp products as commodities and which are therefore the preliminary requirements for the circulation of commodities, already possess the fixed quality of natural forms of social life before man seeks to give an account, not of their historical character, for in his eyes they are immutable, but of their content and meaning. Consequently, it was solely the analysis of the prices of commodities which led to the determination of the magnitude of value, and solely the common expression of all commodities in money which led to the establishment of their character as values. It is however precisely this finished form of the world of commodities – the money form – which conceals the social character of private labour and the social relations between the individual workers, by making those relations appear as relations between material objects, instead of revealing them plainly.

Since money as simply given hides the “social character of private labour and the social relations between the individual workers,” it is necessary to analyze how it arises theoretically (and practically through the actual exchange process)–which is what Stanford precisely fails to do. From Capital, page 139: 

Everyone knows, if nothing else, that commodities have a common value-form which contrasts in the most striking manner with the motley natural forms of their use-values. I refer to the money-form. Now, however, we have to perform a task never even attempted by bourgeois economics. That is, we have to show the origin of this money-form, we have to trace the development of the expression of value contained in the value-relation of commodities from its simplest, almost imperceptible outline to the dazzling money-form. When this has been done, the mystery of money will immediately disappear.

For Stanford, however, there is no mystery to money. It is simply the power of a specific thing to purchase other things. How and why money permits its owner to purchase other things–including the capacity of workers to perform human labour–remains a mystery on the basis of Stanford’s definition. Stanford, in fact, merely assumes the power of money to purchase commodities. At least eighteenth and nineteenth century political economists were able to infer from exchange relations that labour formed their basis as value (although they also assumed that the kind of social labour that produced value was concrete labour). From pages Capital, 173-175: 

Political economy has indeed analysed value and its magnitude, however incompletely,  and has uncovered the content concealed within these forms. But it has never once asked the question why this content has assumed that particular form, that is to say, why labour is expressed in value, and why the measurement of labour by its duration is expressed in the magnitude of the value of the product.  These formulas, which bear the unmistakable stamp of belonging to a social formation in which the process of production has mastery over man, instead of the opposite, appear to the political economists’ bourgeois consciousness to be as much a self-evident and nature-imposed necessity as productive labour itself.

The above quote links up to the theme of commodity fetishism and money fetishism, or the loss of power by workers over their own life process (the production process of their own lives) and the positive acquisition of power of the things they produce–commodities, money and, ultimately, capital. 

Mr. Stanford’s definition of money as “purchasing power” fails miserably to address something which is very relevant for members of the working class: Why does the ownership of money by employers confer so much power over the workers at work? 

By severing the connection between the positive monopoly of immediate purchasing power of money from the negative lack of such power of commodities, Stanford fails to grasp the organic or internal connection between the difference in power between commodity power–especially the commodity called labour power–and money power (represented by the employer)

Part of the answer to the question of the asymmetry in power relations between the owner of commodities and the owner of money is found in Marx’s theory of commodity fetishism, and the associated theory of the money fetish, which is really a development from commodity fetishism. By fetishism is not meant some kind of personal fetish, such as a fetish for a particular part of the human body or a particular item of clothing. Rather, it is a fetish in that human powers appear as the power of things, whether as commodities (commodity fetishism) or as money (money fetishism), or indeed as a thing called capital (capital fetishism). As Elena Lange (2021) notes, Value without Fetish Uno Kōzō’s Theory of ‘Pure Capitalism’ in Light of Marx’s Critique of Political Economy, page 225: 

The inversion of the problem – money is not to be explained on the basis of the fetish character of the commodity, but the commodity is to be explained on the basis of the fetish-character of money – however leaves open the question how money is capable of paradigmatically representing general social exchangeability.

Stanford, with his one-sided positive definition of money as purchasing power, cannot link the power that ownership of money confers to the employer. He cannot do so since he fails to link the nature of money in a capitalist society to the nature of the kind of labour that requires money as an external power (“purchasing power”).  Money for Stanford  just has purchasing power–it appears to have this active power independently of the way in which the producers’ own labour (the labour of the working class) is organized and how they relate to each other by way of the topsy-turvy relation between things (commodities and money).

The Nature of Commodity Fetishism–and the Domination of Workers 

Stanford cannot understand the nature of commodity fetishism since he simply assumes that a thing called money has purchasing power by nature. He obviously rejects connecting the nature of money to the peculiar social labour that produces commodities. In fact, I doubt that he is even aware of the connection (since he interprets Marx’s labour theory of value as some sort of moral theory that is applicable throughout history). 

Commodity fetishism arises because the labour performed by the workers is not social labour as it is being performed and, as a consequence, the relations between the labours of workers who work for different and independent employers lack direct social connections. Materially, though,  they form, interdependent relations. At the brewery where I worked, for example, brewery workers did not produce the bottles that they needed to produce the beer, nor the barrels of soap needed to make the bottles move smoothly along the line, nor the chains on which the bottles moved, nor the machines, such as the soaker, the filler or the labeler. There was thus a material dependence of the workers in the brewery on the workers who produced the bottles, the barrels, the soap, the chains, the soaker, the filler and the labeler. 

The labour performed by us to produce the beer, though materially dependent on other labour processes, did not express its dependent nature directly by means of those who produce beer, along with the whole set of other workers jointly communicating and deciding on what to produce, how much to produce and how to produce according to the diverse productive and personal needs of the producers (and other members of society). Rather, the dependent (and interdependent) nature is only expressed indirectly, through the relations of commodities to each other in the exchange relation and the exchange process–since the labour performed during production in a society characterized by a class of employers is only social labour indirectly. The commodities themselves then obtain human characteristics that appear to arise from the nature of the commodities as natural things (such as beer) rather than through their nature as social things. Thus, beer having a price seems to arise from the nature of beer  whereas price in fact arises in the first place because of the organization of production as private, isolated production.  This attribution of social relations between humans as an attribute of commodities and their relations is what Marx calls commodity fetishism. From Capital, Volume 1, pages 164-166: 

The mysterious character of the commodity-form consists therefore simply in the fact that the commodity reflects the social characteristics of men’s own labour as objective characteristics of the products of labour themselves, as the socio-natural properties of these things. Hence it also reflects the social relation of the producers to the sum total of labour as a social relation between objects, a relation which exists apart from and outside the producers. Through this substitution, the products of labour become commodities, sensuous things which are at the same time suprasensible or social. In the same way, the impression made by a thing on the optic nerve is perceived not as a subjective excitation
of that nerve but as the objective form of a thing outside the eye. In the act of seeing, of course, light is really transmitted from one thing, the external object, to another thing, the eye. It is a physical relation between physical things. As against this, the commodity form,
and the value-relation of the products of labour within which it appears, have absolutely no connection with the physical nature of the commodity and the material relations
arising out of this. It is nothing but the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things. In order, therefore, to find an analogy we must take flight into the misty realm of religion. There the products of the human brain appear as autonomous figures endowed with a life of their own, which enter into relations both with each other and with the human race. So it is in the world of commodities with the products of men’s hands. I call this the fetishism which attaches itself to the products of labour as soon as they are produced as commodities, and is therefore inseparable from the production of commodities.

As the foregoing analysis has already demonstrated, this fetishism of the world of commodities arises from the peculiar social character of the labour which produces them.

Objects of utility become commodities only because they are the products of the labour of private individuals who work independently of each other. The sum total of the labour of all these private individuals forms the aggregate labour of society. Since the producers do not come into social contact until they exchange the products of their labour, the specific social characteristics of their private labours appear only within this exchange. In other words, the labour of the private individual manifests itself as an element of the total labour of society only through the relations which the act of exchange establishes between the products, and, through their mediation, between the producers. To the producers, therefore, the social relations between their private labours appear as what they are, i.e. they do not appear as direct social relations between persons in their work, but rather as material relations between persons and social relations between things.

It is only by being exchanged that the products of labour acquire a socially uniform objectivity as values, which is distinct from their sensuously varied objectivity as articles of utility.

Stanford, by assuming as given that money has purchasing power, fails to derive such power from human relations characteristic of a society where the workers lack the power to direct their own lives and–therefore–money arises as a result that permits others to direct their lives.

Stanford presents the purchasing power of money as natural to money–it is (“that is the way it is” attitude–with a shrug of the shoulders). The purchasing power of money, however, derives from the lack of such power by commodities, and the lack of such power is in turn derived from the nature of the labour that produces value–abstract labour, or labour that is not social as it is being performed but requires a further process–a process of exchange–if it is to form part of the labour of society. 

In a society characterized by the production of commodities and their expression in money (with its immediate power to purchase), the power of workers to produce their social lives (reciprocal production of human life) assumes the form of a relation between things produced. The origin of commodity and money fetishism is thus in production–the way production is organized. From Guido Schulz (2012), “Marx’s Distinction between the Fetish Character of the Commodity and Fetishism,” in pages 25-45, Studies in Social & Political Thought, Volume 20, page 26: 

The fetish character of the commodity, which Marx also calls “mystic character”, originates in the “peculiar social character of the labour” that gives products their commodity form. Therefore, the fetish originates in production. Although production is ultimately social under capitalism, it is privately organized and carried out by atomised producers. Capitalist production thus entails a conflict between sociality and asociality. An objective mediation between the two extremes of sociality and asociality is established through the process of commodity exchange. The social relation between the producers is thereby established. Instead of consciously creating immediate links between the
producers, in place of “rationally regulating [production], bringing it under […] common
control“, the social link gets reified and externalized in commodities.

Abstract labour as labour that is not yet social assumes the form of a relation between commodities, things with physical and supersensible (social) qualities that regulate the participants in exchange rather than the participants regulating the process. From Guide Schulz, page 27: 

But value relations objectified in commodities do not only establish the socializing link between producers. From the viewpoint of the individual producer, these objectified value relations even gain autonomy and regulative social power. This non-imaginary regulative social power is twofold: “[R]elations based on the exchange-value of commodities (‘social relations of things’) come to control the distribution of labour-products and the distribution of the labourers themselves within the production process” (Carver 1975, p.51).

All human production is social in character in that, if we are to produce our lives and continue to live as a species, we must in one way or another work for each other in even a temporary social division of labour. This “working for each other,” however, in a situation where labour is not social as it is being performed, assumes the form of a relation between produced commodities, with the social nature of the labour expressed not in the immediate or material form in which it exists but in another use value (as I have already explained in an earlier post–see  Economics for Social Democrats–but Not for the Working Class, Part Two: Critique of the Social Democrat Jim Stanford’s Theory of Money, Part One). If there are two commodities produced, say beer and a pair of pants, the social nature of beer production is not expressed in the beer but in the pair of pants. From Samezo Kuruma (2018), Marx’s Theory of the Genesis of Money How, Why, and Through What is a Commodity Money? page 144:

How, exactly, is the value of a commodity indicated? Given that a commodity cannot indicate its value on its own, it is indicated instead by another commodity with which it is in a relation of exchange. Yet in the case of that other commodity as well, its natural form is its use value (not value), and it does not, on its own, have a form of value in addition to its natural form. The natural form of that other commodity must therefore become the form of value. This is indeed what happens … he [Marx] traces the development of the
form itself, and in so doing thoroughly solves the riddle of money.

The pair of pants in this case is immediately exchangeable or convertible into the beer since it represents objectified social labour–objectified labour that is freely convertible into any useful form. Similarly, the  labour that produces the pair of pants represents general social labour, or labour that can assume many different forms. The pair of pants is immediately exchangeable with the beer (its “purchasing power”) despite the concrete labour that produces the pair of pants being separated off and being produced independently of the other commodities  because this particular labour represents general social labour. 

This power of immediate exchangeability, or its purchasing power, is derived from the negative way production is organized in a capitalist society; there is no unity of workers with each other as human beings who produce for each other. The unity arises through the emergence of a special commodity that functions as an external unifier of producers who are socially external to each other despite their material interdependence. 

It is through the development of this simple expression or form of value–the value of the beer being expressed in another use value, the pair of pants or what have you–that there arises the money form, as the final form where value achieves a uniform and general expression in just one commodity that then becomes money as the monopolizer of general exchangeability or purchasing power ultimately emerging from the nature of abstract labour and embodied in one particular use value (and hence one particular form of concrete labour). 

The property or characteristics of commodities as social products requires a form different from their immediate use value as the product of concrete labour. This form–ultimately the money form or money–then has the social characteristic of being immediately exchangeable or convertible into any particular commodity or use value.

This social power is transferred to commodities, but only potentially, not immediately since commodities cannot immediately express their value in their own use value. In turn, this social power becomes concentrated in one commodity–which becomes money.

Stanford, by ignoring completely the process by which money acquires the immediate power to purchase all other commodities, himself contributes to commodity fetishism since he fails to link the property of money of having immediate purchasing power with the lack of such power of commodities and, in turn, their lack being due to the peculiar social nature of the labour that produces the value of commodities. 

The Nature of Money Fetishism

The fetish character of commodities is a simpler form than the money form since the relations between producers is still expressed as a relation–although a relation between things. From Marx, Capital, Volume 1,  page 176: 

As the commodity-form is the most general and the most undeveloped form of bourgeois production, it makes its appearance at an early date, though not in the same predominant and therefore characteristic manner as nowadays. Hence its fetish character is still relatively easy to penetrate. But when we come to more concrete forms, even this appearance of simplicity vanishes. Where did the illusions of the Monetary System come from? The adherents of the Monetary System did not see gold and silver as representing money as a social relation of production, but in the form of natural objects with peculiar social properties.

Does Mr. Stanford enlighten workers on how money has the property of “purchasing power?” Not at all. He assumes such a property as given without explaining it. The money form, however, is a form that hides its own nature. From Marx, Capital, Volume 1, pages 168-169: 

It is however precisely this finished form of the world of commodities – the money form – which conceals the social character of private labour and the social relations between the individual

Commodity fetishism, as a social relation between workers as exchangers that assumes the form of a relation between things, is converted into a money fetishism as money emerges as the unique power of a commodity to be converted immediately into any commodity form.  Money thereby assumes the form of a thing that has–“purchasing power”–by its very nature, apparently  independently of the nature of commodities and commodity production. Money fetishism is a development of commodity fetishism. From Desmond McNeill (2021), 
Fetishism and the Theory of Value: Reassessing Marx in the 21st Century, pages 61-2: 

There is a similar important passage later in the same volume [of Marx’s book A Contribution to the Critique of Political Economy, published in 1859]:

A social relation of production appears as something existing apart from
individual human beings, and the distinctive relations in which they enter
in the course of production in society appear as the specific properties of a
thing. … This perverted appearance manifests itself merely in a more striking
manner in money than it does in commodities. (Marx 1970: 49)

Here, Marx is making the point that money fetishism is a developed form of commodity fetishism.

As Georgios Daremas (2018) says, “The Social Constitution of Commodity Fetishism, Money Fetishism and Capital Fetishism,” in pages 219-249, Judith Dellheim Frieder Wolf, Editors, The Unfinished System of Karl Marx Critically Reading Capital as a Challenge for our Times  page 226: 

An inversion has taken place: money—instead of being seen as a reflector of a commodity’s value (as the universal equivalent or representative, as the passive agent of reflection)—is perceived as the active agent positing the value of the commodities. From a logical point
of view, the basis of money fetishism is the collapse of a relationship of reflection/representation to that of an identity. The inner connection of the commodity’s value represented by the money form is reduced to a social feature inherent in money per se that appears to hold an external, contingent connection to the multiplicity of commodities bestowing value upon them.

Stanford, by assuming the purchasing power of money without explaining it, reinforces the fetishism of money. This is hardly in the interest of workers. 

Probably in a follow-up post, I will in future elaborate on the further development of commodity fetishism and money fetishism as capital fetishism (I have already hinted at such a fetishism in referring several times to the domination of workers’ lives by their own actions and by the products of their labour). 

Conclusion

The way in which the labour process is organized in a society characterized by a class of employers involves the relations between workers assuming the absurd form of a relation between things leads to the mystery of why a particular commodity–money–has the magical ability to purchase all other commodities whereas they, on the contrary, lack such power. 

Commodity fetishism is easier to understand than money fetishism since it relates more directly to the production process and involves the expression of value in a not-yet fixed form. With money fetishism, on the other hand, money seems to have purchasing power capacity immediately, independently of the organizational structure of labour. Stanford, by simply accepting the purchasing power of money without linking it to that structure, contributes to hiding the real nature of money and the real nature of commodities as alienated forms of human social labour. 

It is instructive of how dominant social democracy and social reformism are here in Toronto (and undoubtedly in many other capitalist cities) is the lack of any criticism of Stanford’s definition of money. 

I will conclude this post in anticipation of a possible future post on capital fetishism by quoting from Thomas Hodgskin’s book (1825), Labour Defended against the Claims of Capital: 
Or the Unproductiveness of Capital proved with Reference to the Present Combinations amongst Journeymen, pages 71-73: 

Betwixt him who produces food and him who produces clothing, betwixt him who makes instruments and him who uses them, in steps the capitalist, who neither makes nor uses them, and appropriates to himself the produce of both. With as niggard [stingy] a hand as
possible he transfers to each a part of the produce of the other, keeping to himself the large share. Gradually and successively has he insinuated himself betwixt them, expanding in bulk as he has been nourished by their increasingly productive labours, and separating them so widely from each other that neither can see whence that supply is drawn which each receives through the capitalist. While he despoils both, so completely does he exclude
one from the view of the other that both believe they are indebted him for subsistence. He is the middleman of all labourers … Not only do they appropriate the produce of the labourer; but they have succeeded in persuading him that they are his benefactors and employers. At least such are the doctrines of political economy; and capitalist may well be pleased with a science which both justifies their claims and holds them up to our admiration, as the great means of civilising and improving the world.

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.

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.

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.

:

.

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.

.

Economics for Social Democrats–but not for the Working Class, Part Two: Critique of Jim Stanford’s Theory of Money, Part Two

Introduction

In a previous post (Economics for Social Democrats–but Not for the Working Class, Part Two: Critique of the Social Democrat Jim Stanford’s Theory of Money, Part One), I questioned Mr. Stanford’s theory of money as purchasing power, as well as his implied reduction of Marx’s critical dual or twofold theory of commodities to a labour theory of value. I showed that Mr. Stanford fails to explain why money has a monopoly power of immediate purchasability.

In a subsequent post, I also showed how Stanford’s inadequate theory of money leads him to assume a “real economy” that is somehow independent of the process of producing value (and surplus value) and consequently his false conclusion that there is not a trade-off between the economy and the health of workers (in the context of the pandemic, but this trade-off applies generally in the context of a society dominated by a class of employers). (See Economics for Social Democrats–but not for the Working Class, Part Three: The Health and Safety of Workers and an Economy Dominated by a Class of Employers Are at Loggerheads). 

In this post, I will further develop the importance of the nature of money as “purchasing power,” in particular how this power (and the lack of such power at the level of commodities) involves or entails a process that escapes the control of the participants in the exchange process.  

The Expression of the Dual Nature of the Commodity Requires a Double Movement of Sale and Purchase 

I will assume the reader has read the first post on money and therefore is familiar with the dual nature of both the labour that produces commodities and the dual nature of commodities.

The real expression of the dual nature of commodities is expressed in a dual movement, from commodities (represented by C) exchanged for money (represented by M), which is the realization of the value of the commodity, and the opposite movement of the conversion of M into C, which is the realization of the use value, not of the original commodity, but of use values for the original owner of the commodity. The whole movement is thus: C-M, and M-C, or C-M-C, where the dash represents an exchange.

From Capital: A Critique of Political Economy. Volume 1:Capital, pages 199-200:

Let us now accompany the owner of some commodity, say our old friend the linen weaver, to the scene of action, the market. His commodity, 20 yards of linen, has a definite price, £2. He exchanges it for the £2, and then, being a man of the old school, he parts for the £2 in return for a family Bible of the same price. The linen, for him a mere commodity, a bearer of value, is alienated in exchange for gold, which is the shape of the linen’s value, then it is taken out of this shape and alienated again in exchange for another commodity, the Bible, which is destined to enter the weaver’s house as an object of utility and there to satisfy his family’s need for edification. The process of exchange is therefore accomplished through two metamorphoses of opposite yet mutually complementary character – the conversion of the commodity into money, and the re-conversion of the money into a commodity. The two moments of this metamorphosis are at once distinct transactions by the weaver- selling, or the exchange of the commodity for money, and buying, or the exchange of the money for a commodity – and the unity of the two acts: selling in
order to buy.

The end result of the transaction, from the point of view of the weaver, is that instead of being in possession of the linen, he now has the Bible; instead of his original commodity, he now possesses another of the same value but of different utility. He procures his other means of subsistence and of production in a similar way. For the weaver, the whole process accomplishes nothing more than the exchange of the product of his labour for the product of someone else’s, nothing more than an exchange of products.

The process of exchange is therefore accomplished through the following changes of form:

Commodity-Money-Commodity
C-M-C

As far as concerns its material content, the movement is C-C, the exchange of one commodity for another, the metabolic interaction of social labour, in whose result the process itself becomes extinguished.

The Escape of the Whole Process of Simple Circulation from the Control of the Participants with the Emergence of Money 

In the external measure of the value of commodities via money as measure, there is, indeed, all commodities on one side and money on the other side, but in the actual exchange of commodities with money (money as a means of purchase or as a means of circulation) this is not the case; on the contrary, there is necessarily a separation in space and time between the act of sale (realization of the value of the commodity in money) and the realization of money in various use values (purchase).

The unity of value and use value, hidden in the commodity, is expressed as mutually exclusive and external forms of sale and purchase so that crisis becomes a possibility as the gap between the realization of the value of a commodity and the realization of use values of an equivalent value becomes intensified. The whole process is what Marx calls simple circulation, and this process escapes the control of the participants in the exchange process.

To make the following a little easier to follow, we can consider the following: 

  1. The owner of linen wants to sell the linen in order to buy a Bible.
  2. The owner of money who buys the linen obtained the money by selling wheat. 
  3. The owner of the Bible sells the Bible to the former linen owner in order to buy brandy (but the brandy does not directly figure in the total metamorphosis or total exchange of the linen for the Bible since we end with the Bible owner possessing money and the linen owner possessing the Bible.
  4. At the beginning of the total exchange process, the linen owners owns the linen (a use value for others) but does not want it.
  5. At the end of the total exchange process, the former linen owner now owns a use value useful to her (and the linen also is useful for the farmer, the former owner of wheat). 
  6. The money stops circulating for the moment at the end of the process with the former owner of the Bible aiming to purchase some brandy (but not yet doing so). 

Pages 207- 209: 

The circulation of commodities differs from the direct exchange of products not only in form, but in its essence. We have only to consider the course of events. The weaver has undoubtedly exchanged his linen for a Bible, his own commodity for someone else’s. But this phenomenon is only true for him. The Biblepusher, who prefers a warming drink to cold sheets, had no intention of exchanging linen for his Bible; the weaver did not know that wheat had been exchanged for his linen. B’s commodity replaces that of A, but A and B do not mutually exchange their commodities. It may in fact happen that A and B buy from each other, but a particular relationship of this kind is by no means the necessary result of the general conditions of the circulation of commodities. We see here, on the one hand, how the exchange of commodities breaks through all the individual and local limitations of the direct exchange of products, and develops the metabolic process of human labour. On the other hand, there develops a whole network of social connections of natural origin, entirely beyond the control of the human agents. Only because the farmer has sold his wheat is the weaver able to sell his linen, only because the weaver has sold his linen is our rash and intemperate friend able to sell his Bible, and only because the latter already has the water of everlasting life is the distiller able to sell his eau-de-vie. And so it goes on.

The process of circulation, therefore, unlike the direct exchange of products, does not disappear from view once the use-values have changed places and changed hands. The money does not vanish when it finally drops out of the series of metamorphoses undergone by a commodity. It always leaves behind a precipitate at a point in the arena of circulation vacated by the commodities. In the complete metamorphosis of the linen, for example, linen-money-Bible, the linen first falls out of circulation, and money steps into its place. Then the Bible falls out of circulation, and again money takes its place. When one commodity replaces another, the money commodity always sticks to the hands of some third person.  Circulation sweats money from every pore.

Circulation bursts through all the temporal, spatial and personal barriers imposed by the direct exchange of products, and it does this by splitting up the direct identity present in this case between the exchange of one’s own product and the acquisition of someone else’s into the two antithetical segments of sale and purchase. To say that these mutually independent and antithetical processes form an internal unity is to say also that their internal unity moves forward through external antitheses. These two processes lack internal independence because they complement each other. Hence, if the assertion of their external independence proceeds to a certain critical point, their unity violently makes itself felt by producing – a crisis. There is an antithesis, immanent in the commodity,
between use-value and value, between private labour which must simultaneously manifest itself as directly social labour, and a particular concrete kind of labour which simultaneously counts as merely abstract universal labour, between the conversion of things into persons and the conversion of persons into things*; the antithetical phases of the metamorphosis of the commodity are the developed forms of motion of this immanent contradiction.

A Limitation of Stanford’s Definition of Money as Purchasing Power: A Lack of Control Over the Total Social Process of Exchange

Stanford, by not linking the purchasing power of money to the dual oppositional nature of labour and commodities characteristic of a capitalist society, fails to address the loss of control over the total process of exchange by the participants in exchange. This loss of control is linked to what Marx called commodity fetishism, where things produced by workers gain independent power over the producers. 

The issue of commodity fetishism will, however, be addressed in another post in this series. Commodity fetishism is both a process of the exchange process becoming independent of the participants in that process and the resulting independence not only appearing to be attributes of things rather than social attributes originating from the producers themselves but actually being social attributes. The issue also has to do with the further development of commodity fetishism in the forms of money fetishism and  capital fetishism, where the process increasingly takes on an independent form that not only escapes the control of workers but increasingly controls their lives. The internal opposition between abstract labour and concrete labour then becomes a nightmare for workers as their own working lives are used against them to exploit and oppress them.

This commodity fetishism  is a process of the products of social labour coming to dominate the producers rather than vice versa. This appears to be and in some senses is independent of the workers.

Hence, Stanford, by failing to link his definition of money to a dual theory of labour and commodities, fails, in other words, to understand the essential relation between the nature of money as purchasing power and the domination, oppression and exploitation of workers on the basis of their own social labour becoming independent of them in exchange and ultimately controlling them at work. 

Conclusion

Mr. Stanford’s theory of money as “purchasing power” is inadequate because it fails to deal with the dual nature of labour and the dual nature of commodities, and this dual nature generally involves a temporal and spatial split between the realization of the value of the commodity and the realization of the use value of the commodity (in the form of many use values). This split leads, in the first instance, to the creation of an exchange process that escapes the control of the participants in that process; it also leads to the possibility of an economic crisis.

Ultimately, it leads to a production process that not only escapes the control of the participants in exchange but also of the producers, leading to their domination and exploitation. That may be  shown in further posts, however. 

The Rate of Exploitation of Workers at Bell Canada Enterprises (BCE), One of the Largest Private Employers in Toronto

Introduction

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

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

The Nature of the Rate of Exploitation

But what is the rate of exploitation? And why not use the usual rate of profit or the rate of return? The rate of profit is calculated as profit divided by investment. Since employers purchase both the means for work–buildings, computers, office supplies, raw material–and hire workers–we can classify investment into two categories: c, meaning constant capital, or the capital invested in commodities other than workers; and v, or variable capital, the capital invested in the hiring of workers for a certain period of time (wages, salaries and benefits).

The purpose of investment in a capitalist economy is to obtain more money (see The Money Circuit of Capital), and the additional money is surplus value when it is related to its source: workers working for more time than what they cost to produce themselves. The relation between surplus value and variable capital (or wages and salaries) is the rate of surplus value or the rate of exploitation, expressed as a ratio: s/v.

When the surplus is related to both c and v and expressed as a ratio, it is the rate of profit: s/(c+v).

In Marxian economics, you cannot simply use the economic classifications provided by employers and governments since such classifications often hide the nature of the social world in which we live. The rate of profit underestimates the rate of exploitation since the surplus value is related to total investment and not just to the workers. Furthermore, it makes the surplus value appear to derive from both constant capital and variable capital.

I decided to look at the annual report of some of the largest private companies in Toronto and Canada if they are available in order to calculate the rate of exploitation at a more micro level than aggregate rates of surplus value at the national or international level. Politically, this is necessary since social democrats here in Toronto (and undoubtedly elsewhere) vaguely may refer to exploitation–while simultaneously and contradictorily referring to “decent work” and “fair contracts.” Calculating even approximately the rate of exploitation at a more micro level thus has political relevance.

Conclusions First

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

Adjusted Net Income: 5587.3=s
Adjusted Total labour Costs: 5611.7=v

The rate of exploitation or the rate of surplus value=s/v=5587.3/5611.7=100% (after rounding).

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

In terms of varying lengths of the working day: 

  1. In a 7.5-hour work day (450 minutes), the worker produces her/his wage in 225 minutes (3 hours  45 minutes) and works 225 minutes (3 hours 45 minutes) for free for BCE.
  2. In an 8-hour work day (480 minutes), the worker producer her/his wage in 240 minutes (4 hours) and works 240 minutes (4 hours) for free for BCE.
  3. In a 10-hour work day (600 minutes), the worker producers her/his wage in 300 minutes (5 hours) and works 300 minutes (5 hours) for free for BCE.
  4. In a 12-hour work day (720 minutes), the worker produces her/his wage in 360 minutes (6 hours) and works 360 minutes (6 hours) for free for BCE.

Of course, during the time that the worker produces her/his own wage, s/he is subject to the power of management and hence is also unfree during that time (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation and   Employers as Dictators, Part One).

Do you think that these facts contradict the talk by the left and unionists of “fair wages,” “fair contracts” (see  Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One for the rhetoric of the largest union in Canada, the Canadian Union of Public Employees (CUPE)) and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized? If exploitation and oppression of workers is a constant in their lives, even if they are only vaguely aware of it, should this situation not be frankly acknowledged by their representatives? Do such representatives do so? If not, why not?  Do workers deserve better than neglecting the social context within which they live and work? Should such problems be addressed head on rather than neglected? 

Even if workers were not exploited, they would still be oppressed since they are used as things (means) for purposes which they as a collectivity do not define (see The Money Circuit of Capital). Does that express something fair? Management rights clauses (implied or explicit in collective agreements give management as representative of employers–and as a minority–the power to dictate to workers what to do, when to do it, how to do it and so forth–and is not the imposition of the will of a minority over the majority a dictatorship? (See  Employers as Dictators, Part One). Is that fair? Do union reps ever explain how a collective agreement somehow expresses something fair? Is that fair?

Is the following an example of what union reps mean by a “fair contract?”

COLLECTIVE AGREEMENT
BETWEEN
UNIFOR
AND
BELL CANADA

CRAFT AND SERVICES EMPLOYEES
EFFECTIVE FEBRUARY 23, 2017 

ARTICLE 8 – MANAGEMENT RIGHTS

8.01 The Company has the exclusive right and power to manage its operations in all respects and in accordance with its commitments and responsibilities to the public, to conduct its business efficiently and to direct the working forces and without limiting the generality of the foregoing, it has the exclusive right and power to hire, promote, transfer, demote or lay-off employees, and to suspend, dismiss or otherwise discipline employees.

8.02 The Company agrees that any exercise of these rights and powers shall not contravene the provisions of this Agreement.

Should workers not be discussing why management has these rights? Should workers not be discussing whether an unelected management should have such rights? Should workers not be discussing how to organize to abolish this dictatorship? Should workers not be criticizing any union rep who claims that a collective agreement somehow expresses a “fair contract?” A “good contract?” All other such platitudes? 

Data on Which the Calculation Is Based

The calculation of the rate of exploitation is undoubtedly imperfect, and I invite the reader to correct its gaps. Nonetheless, the lack of any attempt to determine the rate of exploitation at the city level has undoubtedly reinforced social-reformist tendencies.

Now, the calculation: 

In millions of Canadian dollars:

Page 113:

Operating revenues 23,964

Costs
Operating costs 13,858
Severance, acquisition and other costs 114
Depreciation 3,496
Amortization 902
Finance costs
Interest expense 1,132
Interest on post-employment benefit obligations 63
Other expense 13
Total costs: 19,578

Net income: 4386 [23,964-19,578=4386] [the 3253 is after taxes; if you add taxes, you get 4386 as well]

Operating costs need to be broken down further since costs for maintaining workers as wage workers form one of the two considerations for the calculation of the rate of exploitation.

Labour costs
Wages, salaries and related taxes and benefits 4,303
Post-employment benefit plans service cost (net of capitalized amounts) 247
Other labour costs 1,005
Less:
Capitalized labour 1,032
Total labour costs: 4,523

Adjustments

In Marxian theory, it is necessary to question whether some expenses are expenses for both the individual employer and for the class of employers (and fractions of their class, such as those who live on interest); in such a case, the expense is deducted from total revenue. On the other hand, there are expenses that are expenses for the individual employer but are not expenses when looked at from the point of view of the class of employers; in such an instance, they are paid out from the surplus value produced or obtained by workers and are to be included in income before taxes.

Adjustment of Total Labour Costs

Capitalized Labour

It is necessary to consider the category “Capitalized labour” since it is not treated as a labour cost by BCE whereas here it will be so treated. Capitalized labour involves the following:

CAPITALIZED LABOR means all direct costs of labor that can be identified or associated with and are properly allocable to the construction, modification, or installation of specific items of capital assets and, as such, can thereby be written down over time via a depreciation or amortization schedule as capitalized. 

I have chosen to treat capitalized labour as part of labour costs since it is current labour that is involved in the operations of BCE; the work performed by workers in installing and assembling machinery includes surplus value.

Temporarily Adjusted Total labour Costs: 5555

Severance, acquisition and other costs

It is necessary to make adjustments for this category since part of the money expended relates to costs destined to be received by workers. To take this into account, it is necessary to break the category down further.

Severance 63
Acquisition and other 51
Total severance, acquisition and other costs 114

I assume that “Acquisition and other” are non-labour expenses.
In a note, it states:

Severance costs consist of charges related to involuntary and voluntary employee terminations. In 2018, severance costs include a 4% reduction in management workforce across BCE.

Given that the severance package for management is likely to be much higher than for regular employees, the 4 percent reduction in the management workforce likely results in a higher percentage of severance pay to that 4 percent. It is impossible to determine with precision how much higher. I will assume 10 percent. The reason for taking into consideration such a difference is that the severance for management is likely to be a function of its exploitation of other workers and not its own exploitation.

Ten percent of 63 is 6.3; therefore, this 6.3 needs to be added to net income and subtracted from 63.
Temporarily adjusted Net income: 4392.3

This shift from considering part of severance pay from a cost to a part of net income also changes the total costs by reducing it by 6.3. Therefore:

Temporarily adjusted Total Costs: 19,571.7

The remaining severance is 56.7. This needs to be added to the category “Post-employment benefit plans service cost” since it forms part of the income of workers and costs for BCE. Accordingly:
Adjusted Total labour Costs: 5611.7

Adjustment of Finance Costs

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

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

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

Accordingly, both “Interest expense” and “Interest on post-employment benefit obligations” are deducted from “Total costs” and added to “Net income,” and “Total costs” are therefore also adjusted.

Operating revenues 23,964
Adjusted Total Costs: 19,571.7- 1,132 – 63=18,376.7
Adjusted Net Income: 5587.3=s
Adjusted Total labour Costs: 5611.7=v

The Rate of Exploitation

The rate of exploitation or the rate of surplus value=s/v=5587.3/5611.7=100% (after rounding).

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

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

I worked, on average, twelve hours a day.
I worked about 8 hours a day on the average.
10 hours per and about 50 hours weekly and was paid for only 37.5 weekly.

The collective agreement between Bell Canada and Unifor Atlantic CommunicationLocals (Unifor ACL) states: 

(c) Employees whose standard hours of work are eighty (80) hours in a scheduling period, will normally work either ten (10) scheduled tours of eight (8) hours. Employees whose standard hours of work are seventy-five (75) hours in a scheduling period, will normally work ten (10) scheduled tours of seven and one-half (7.5) hours. …

(d) Tours can be scheduled for a maximum of ten (10) hours with mutual agreement between the employee and their direct supervisor.

(e) Longer tours, to a maximum of twelve (12) hours per tour, may be scheduled with the mutual agreement of the employee(s), their direct supervisor, Labour Relations and the Council. Such special
arrangements must be committed to in writing and signed by the parties prior to implementing. These arrangements can be cancelled by any party with eight (8) weeks notice.

Since Bell workers are exploited 100 percent, the calculation of the number of hours they work to produce the equivalent value of their wage and the number of hours they work for free for Bell is relatively easy.

  1. In a 7.5-hour work day (450 minutes), the worker produces her/his wage in 225 minutes (3 hours  45 minutes) and works 225 minutes (3 hours 45 minutes) for free for BCE.
  2. In an 8-hour work day (480 minutes), the worker producer her/his wage in 240 minutes (4 hours) and works 240 minutes (4 hours) for free for BCE.
  3. In a 10-hour work day (600 minutes), the worker producers her/his wage in 300 minutes (5 hours) and works 300 minutes (5 hours) for free for BCE.
  4. In a 12-hour work day (720 minutes), the worker produces her/his wage in 360 minutes (6 hours) and works 360 minutes (6 hours) for free for BCE.