Post by Stallit 2 de Halfo on Dec 18, 2007 17:37:40 GMT
Poverty
Appearances can be Deceptive
Many people when they hear or read the word poverty will automatically think of poverty as being simply a lack of money. This is partly true but for a better understanding of poverty it is necessary to go beyond this simple, or commonsense, definition of poverty. Poverty is much more than a simple lack of money. For example, if you were stranded on a desert island and you had several thousand dollars or pounds in cash, while those around you had things such as food, clothing and shelter who would be in poverty? You could not eat your money, nor could you go to the local grocery store and buy some food. Your fellow inhabitants might not even want your money, particularly if they believe that a rescue is not eminent. In such a situation a lack of money need not equal poverty. This is, however, only part of the story with regard to poverty yet in order to understand poverty, and inequality, we must probe beneath surface reality and go beyond the commonsense explanation which is simply another word for cliché.
Definitions of Poverty
There are two different ways in which researchers define poverty: absolute poverty and relative poverty.
Absolute poverty refers to the situation in which a person lacks those things that help to sustain human life. The lack basic human needs, such as food, shelter and clothing. This form of poverty was once quite common in countries such as Britain and America but has since declined, particularly since the introduction of the Welfare State. This form of poverty is still prevalent in many Third World countries.
Relative poverty refers to the situation in which a person lacks the necessary resources to enable them to participate in the normal and desirable patterns of life that exist within a given society at a given time. For example, if you cannot afford to have a cooked meal then you may not be in absolute poverty but you are certainly in relative poverty.
Individualistic theory
This theory contains the following ideas, that the causes of poverty and even inequality are rooted in individual failings of some sort or another. You are, to put it bluntly, poor because you deserve to be poor. Individualistic theories were extremely popular in the 19th century and can still be seen in the articles of certain tabloid newspapers. Pick up any newspaper and you will more than likely find some letter sent to the Editor about how the poor are a load of lazy spongers who should go out and get some work, or as one Conservative MP put it "Get on their bike". This is very much the basis of the whole individualistic theory of poverty, it is the morality of the individual that is causing their poverty, it is their laziness. Herbert Spencer, one of the early British sociologists (who coined the term survival of the fittest) said of the poor:
"…good for nothings…vagrants and sots (drunks), criminals…men who share the gains of prostitutes; and less visible and less numerous there is a corresponding class of women.."
Spencer believed, very much in keeping with the dominant beliefs of the time, that the poor should be given no assistance whatsoever (laissez faire). They were after all engaged in an immoral style of life he argued so why should they be helped. One can’t help but wonder that if they were engaged in prostitution and criminal activities why they were so poor in the first place? I will, however, waste no more time and space with this theory as it is so evidently untrue. There is no evidence to back it up in the slightest and is held only by those who are prejudiced or by those who pretend to believe it in order to uphold the capitalist system. Most studies have found that the poor are more than willing to work, also, many of those in work can also said to be in poverty. Blaming the poor for their poverty is like blaming the homeless on being homeless, rather illogical. Poor people no more want to be in poverty than homeless people want to sleep on freezing cold streets.
Cultural Theories
This is a slightly more sophisticated version of the individualistic failings theory. This time it is not the individual that is to blame for their own poverty but the individuals culture. Their culture (their beliefs, values, attitudes and general patterns of behaviour and language) are what causes their poverty, or at least, what helps to keep them in their poverty. Perhaps the most famous advocate, and the man who first came up with the idea, was Oscar Lewis who was an anthropologist working in slum areas, shanty towns, in South America. He observed these people in their environment and believed that they exhibited a different culture, a sub culture, to that of the rest of society. This he called a culture of poverty. The main characteristics of this culture of poverty were as follows: people held an attitude of fatality (they believed that it was hopeless to try and improve their situation) and a present time oreintation (they lived for today instead of for tomorrow). As a result they were less likely to see school and education as a way out of their poverty, also, they were less likely to see the point in saving money. This he argued helped to keep the poor in their state of poverty. Its something of a teleological argument. The poor are poor because of their culture yet how did they become poor in the first place, how did they get this culture? Also, is not their culture an accurate reflection of the situation in which they find themselves? Perhaps they do not do things like save money because they have no money to save. Perhaps they think it is hopeless to try and get out of their poverty through education because the chances of them doing so are quite small. Lastly, some would argue that this culture of poverty simply does not exist and that those in poverty by and large share the same culture as the wider society.
Marxist Theory
The Marxist theory of poverty and inequality is a radical departure from the theories we have so far outlined. Marxists do not blame the poor for their poverty nor do they blame their culture. Ralph Miliband writes:
"The basic fact is that the poor are an integral part of the working class - its poorest and most disadvantaged stratum. They need to be seen as such, as part of a continuum, the more so as many workers who are not deprived in the official sense live in permanent danger of entering the ranks of the deprived; and that they share...many of the disadvantages which afflict the deprived..."
Instead Marxists look for explanations in the structure of the society in question, in the economic arrangements present and in the functions that poverty performs for capitalism and the capitalist class. To put it simply the reason for poverty and inequality lies in the market based capitalist economy and the fluctuation that all such economies periodically go through.
But first, what is capitalism?
Robert Tressell answers this question very succinctly in his famous socialist novel "The Ragged Trousered Philanthropist"
"Plenty of materials - Plenty of labour - Plenty of machinery - and nearly everybody going short of nearly everything…"
While this outlines the main features of capitalism we must add a little more to our definition of capitalism. Capitalism is an economic system in which the means of production are owned and/or controlled by private individuals. These people, Marxists call them capitalists, then employ wage labourers in their factories to make various articles and in turn pay their workers a wage.
Inequality and Surplus-Value
On face value this state of affairs would tend to suggest that capitalism and the capitalist class no more cause poverty than the man on the moon. Indeed, Marx argues in his most influential work, "Das Capital", that what takes place in the sphere of exchange is an exchange of equals. But as we will recall, in the example of the ship wreck with the money on the desert island, appearances can be very deceptive. On face value it appears that the capitalist buys the labour of the worker, in which case they would pay if Marx is correct, the value of what that labour produces. Thus, if the worker in the course of their labour produces ten chairs at £10 each then they would be paid £100 for their labour. But that leaves the curious situation in which the profit of the capitalist disappear, something which does not happen often in capitalist society. What the worker is paid for is not their labour, which no more belongs to the capitalist after it has been expended than to the worker but the workers labour-power, that is, their ability to labour. The value of labour-power approximates to what is necessary to sustain the workers labour-power, and its future reproduction through the next generation of workers, as well as enough to purchase certain other things, and participate in certain patterns of life, that have been won over the years by struggle. Here we have the basis of inequality. The exchange between workers and capitalist is not one of equality. The capitalist is left with a surplus value, the difference between the value of the commodities produced by the workers and the wages paid for their labour power. From this is derived profit.
The Mighty Market
Capitalist economies are also market economies. We in Britain having recently endured a decade of Thatcherite economics know all too well about the Market yet I will explain what is meant to our lucky neighbors who are ignorant of this term. What is basically meant is that supply and demand determine what is made, when it is made and how much is its price. To put it simply, big demand and limited supply equals big price. This same principle also applies to the labour market. Certain types of labour-power have a higher exchange-value than others. For example, unskilled manual labour commands the lowest monetary reward, then semi-skilled manual, then skilled manual, then routine clerical, then higher clerical, then professions, then higher professions and so on. Because it is a market economy those in the labour market receive differential rewards. It is not unusual now for the directors of big British companies to earn £700, 000 a year (not including fringe benefits) while the worker in the factory or shop may get as little as £140 a week, compare this to the £13,500 a week that the aforementioned company directors get.
It could be said that some get a much bigger share of the pie than others. Those at the top are the capitalist class who get paid dividends for owning the means of production, then come those who manage the assets of the capitalist class (company directors), then come higher professionals (lawyers, civil servants). Those who occupy the bottom rungs of this ladder, the unskilled manual labourer and the semi-skilled manual labourer, tend to be paid less, many of these households live in what might be called relative poverty. Thus, poverty and most certainly inequality derive in part from the unequal distribution of wealth in capitalist society that results from the unimpeded operations of the market.
Full Employment?
The capitalist system also causes poverty and inequality because ,quite simply, it cannot provide full employment. There has hardly been a time in British history when the capitalist system has allowed for full employment. The closest that Britain came in recent times to full employment was in the 1950s. This full employment only came about because of increased state expenditure on such things as armaments and the fact that many thousands of men died in the Second World War. This is not to say that a country such as Britain could not achieve full employment but by doing so it would probably impoverish some other country. For example, when British trade was at its zenith, and Britain had its protected colonial markets, countries like India were underdeveloped, that is, their textile industry was destroyed and replaced by British imports. Since such "grand" times it has very much been a case of economic decline for Britain and increasing unemployment. By the 1980s the unemployment total was three million, upon which the Conservative government promptly changed the definition of unemployment (about 30 times in all).
Profit Before People
Capitalism is a system of production, an economy, in which some own the means of production while the vast majority must sell their labour-power. The capitalist class, those who own the means of production, only take on workers so long as they augment capital, that is, increase their profit. Sometimes there is a loss of confidence, that is, capitalists don't think that they can sell a given amount of products and so cut back on production. What they cut back on is labourers who are made redundant. As a result the labourer they must fall back upon the "safety net" of the Welfare State, which to their dismay they find isn’t quite so generous as the tabloid journalists tell them. They are out of work for the simple reason that their labour-power does not at present help to increase capital, that is, it does not make a profit for the capitalist. There is the machinery, there is the raw materials yet because the conditions for the expansion of capital are not present they are not able to work. Anyone who attempts to work, by simply going into some factory and proceeding to labour, will soon find out one of the functions of the Police, to protect private property and uphold the interests of the capitalist class.
Boom and Bust
So far we have established two reasons for the poverty and inequality that exist within all capitalist societies to a greater or lesser extent. Many people are in poverty simply because the capitalist class do not desire their services, do not wish to purchase their labour-power. Others are in poverty because they happen to be on the receiving end of the Market, that is, their labour power does not get the same return as that of the Lawyer or Doctor despite the fact that they are just as essential. There is, however, yet another reason and it is to be found in the fluctuations of the capitalist economies of the world. All capitalist economies go through periods of "boom" and "bust", or , growth and recession. Sometimes industry will be fired up, the factories will be buzzing, and those who are unemployed will be slowly but surely entering the labour market. Then, all of a sudden there will be an economic crash, a sudden grinding halt to trade and thereby to production. Sometimes this will be more severe than others. In Marxs time such economic crises were extremely severe and recurrent. The last great economic crash occurred during the 1930’s and engulfed many capitalist societies. During these economic crises there is often a poverty of overproduction. This seems like a contradiction in terms but we must remember that the commodities produced in capitalist societies are exchange-values, not just use-values. Marx writes:
"The last real cause of all crises always remains the poverty and restricted consumption of the masses as compared to the tendency of capitalist production to develop the productive forces in such a way that only the absolute power of consumption of the entire society would be their limit."
During these economic crises too much is produced, this is because of the unplanned nature of capitalist production. During such crises those who were employed, what Marxists refer to as the reserve army of labour, are now got rid off. Their labour-power no longer helps to expand capital. And so we see how these fluctuations help to foster unemployment and thereby poverty.
Functions of Poverty
The last reason given by Marxists for the existence and persistence of poverty, and perhaps the most important, is that poverty performs certain functions. This seems at first like a contradiction, what possible function can poverty play? By function what is meant is simply what poverty does, in particular, what it does for the capitalist class. There are numerous functions that poverty performs all of which help to meet the needs of the capitalist system and the interests of the capitalist class.
1st function: capitalism requires a highly motivated workforce. Workers must be willing, indeed almost enthusiastic, to get into the factory and work. The reason being that capitalists must compete against other capitalists and against capitalists in other countries. Also, if none of the working-class came to work for their employers who would do the work, certainly not the capitalist class. By giving different members of society differential monetary rewards so workers are motivated to work. As a result it is necessary to give those such as the unemployed, elderly and sick less money than that received by the workforce or workers would not be motivated to work. Why slog your guts out if you can get the same for sitting at home watching TV? What worker would choose going to work for perhaps 10 or 12 hours a day when they can get the same reward for sitting at home.
2nd function: the low wage sector which exists to greater of lesser extent in all capitalist economies serves to lower the wage demands on those in paid employment. The working class tend to judge their wages not in terms of how they compare to the capitalist class but how they compare to their poorer co-workers and neighbours. Poverty thus helps to keep a check on the wage demands of the working class. Also, if there are large numbers of unemployed people, and even those in poorly paid jobs, then there is always plenty of competition for jobs and so the employer can pay less. It is after all a market economy and the workers labour-power is a commodity just like all the others.
3rd function: those who are in poverty form what Marx called a reserve army of labour. This reserve army of labour, which may consist of ethnic minorities and those in the labour force who are least desirable, for whatever reason, to the employer. This reserve army of labour performs the function of keeping the pretensions of the working-class in check during periods of "boom" in the economy. During such times, when demand for labour is high, the reserve army will be called up and so any delusions of grandeur held by the working-class are torn asunder.
Globalisation
To end this essay I will discuss what is an emerging process, and also quite a topical issue, that of globalisation. At present globalisation is something of a buzz word and like many buzz words, such as post-modern, there is little clarity at present over meaning. Yet it is the belief of many that globalisation will result in poverty and increased inequality for workers of many countries. For me globalisation refers to a number of changes, economic and cultural, that are happening at a global level. Increasingly industry is ripping free of its national boundaries. Over the last 50 years or so huge multi-national corporations have grown in size and in number, carving up world markets between them. Production is taking on an increasingly global dimension as companies locate capital in different countries. Not only do they locate capital in different countries they also locate different parts of various industrial stages in different countries. This is known as the global division of labour. World-systems theorists believe that a global division of labour now exists, most of them divide the countries of the world into three categories: core, semi-core and periphery. Each category is defined by its place in the international division. The core consists of countries such as America which monopolise high tech industries and technology. The periphery consists of those countries who produce mainly foods and raw materials, and perhaps some basic productive tasks, for the core countries. The result of this globalisation is that whole nations are being impoverished, their development stunted. But also, the bargaining position of the workers of all countries is being eroded.
At one time the workers of a given country or region could use the weapon of the strike to gain concessions from their employers, they still can, but it is becoming increasingly less effective. When companies and indeed industries were based in one country or region the prospect of work stoppage, particularly for a prolonged period, increased the bargaining power of the workers involved. For the employer the relocation of capital was an impossibility, too expensive and impractical. Now with increasing globalisation companies can switch production from one plant to another, they can relocate capital. How many times over recent years have we seen despondent workers on our TV screens bemoaning the fact that they have been made redundant because their employers have relocated in some Third World country. In nearly all cases there is not a strike to be seen, for the simple reason that it would not work. If anything the strike would only hasten the withdrawal of the company involved as it would cut its losses and run.
The power of business vis-à-vis government is also increased by this process of globalisation. These huge multi-nationals are able to play government against government in order to get the most attractive deals. Their was the recent example of a car company in Britain, the British government and other governments competed against one another to attract its capital. Eventually, in all such cases, the side that offers the most attractive deal wins. Baran and Sweezy sum up the activities of these multi-national monsters as follow:
"What they want is monopolistic control over foreign sources of supply and foreign markets, enabling them to buy and sell on specially privileged terms, to shift orders from one subsidiary to another, to favour this country or that depending on which has the most advantageous tax, labour and other policies - in a word they want to do business on their terms…"
Such power as now rests with these multi-nationals means that they not only can dictate terms with trade unions but also with governments. The result may well be that in certain countries there is increasing inequality and erosion of workers rights in order to attract foreign capital. Perhaps the future will see a more internationally based workers movement that transcends national boundaries and "national interests"?
Appearances can be Deceptive
Many people when they hear or read the word poverty will automatically think of poverty as being simply a lack of money. This is partly true but for a better understanding of poverty it is necessary to go beyond this simple, or commonsense, definition of poverty. Poverty is much more than a simple lack of money. For example, if you were stranded on a desert island and you had several thousand dollars or pounds in cash, while those around you had things such as food, clothing and shelter who would be in poverty? You could not eat your money, nor could you go to the local grocery store and buy some food. Your fellow inhabitants might not even want your money, particularly if they believe that a rescue is not eminent. In such a situation a lack of money need not equal poverty. This is, however, only part of the story with regard to poverty yet in order to understand poverty, and inequality, we must probe beneath surface reality and go beyond the commonsense explanation which is simply another word for cliché.
Definitions of Poverty
There are two different ways in which researchers define poverty: absolute poverty and relative poverty.
Absolute poverty refers to the situation in which a person lacks those things that help to sustain human life. The lack basic human needs, such as food, shelter and clothing. This form of poverty was once quite common in countries such as Britain and America but has since declined, particularly since the introduction of the Welfare State. This form of poverty is still prevalent in many Third World countries.
Relative poverty refers to the situation in which a person lacks the necessary resources to enable them to participate in the normal and desirable patterns of life that exist within a given society at a given time. For example, if you cannot afford to have a cooked meal then you may not be in absolute poverty but you are certainly in relative poverty.
Theories of Poverty
It is possible to outline three broad theories of poverty
> individualistic
> cultural
> marxist
It is possible to outline three broad theories of poverty
> individualistic
> cultural
> marxist
Individualistic theory
This theory contains the following ideas, that the causes of poverty and even inequality are rooted in individual failings of some sort or another. You are, to put it bluntly, poor because you deserve to be poor. Individualistic theories were extremely popular in the 19th century and can still be seen in the articles of certain tabloid newspapers. Pick up any newspaper and you will more than likely find some letter sent to the Editor about how the poor are a load of lazy spongers who should go out and get some work, or as one Conservative MP put it "Get on their bike". This is very much the basis of the whole individualistic theory of poverty, it is the morality of the individual that is causing their poverty, it is their laziness. Herbert Spencer, one of the early British sociologists (who coined the term survival of the fittest) said of the poor:
"…good for nothings…vagrants and sots (drunks), criminals…men who share the gains of prostitutes; and less visible and less numerous there is a corresponding class of women.."
Spencer believed, very much in keeping with the dominant beliefs of the time, that the poor should be given no assistance whatsoever (laissez faire). They were after all engaged in an immoral style of life he argued so why should they be helped. One can’t help but wonder that if they were engaged in prostitution and criminal activities why they were so poor in the first place? I will, however, waste no more time and space with this theory as it is so evidently untrue. There is no evidence to back it up in the slightest and is held only by those who are prejudiced or by those who pretend to believe it in order to uphold the capitalist system. Most studies have found that the poor are more than willing to work, also, many of those in work can also said to be in poverty. Blaming the poor for their poverty is like blaming the homeless on being homeless, rather illogical. Poor people no more want to be in poverty than homeless people want to sleep on freezing cold streets.
Cultural Theories
This is a slightly more sophisticated version of the individualistic failings theory. This time it is not the individual that is to blame for their own poverty but the individuals culture. Their culture (their beliefs, values, attitudes and general patterns of behaviour and language) are what causes their poverty, or at least, what helps to keep them in their poverty. Perhaps the most famous advocate, and the man who first came up with the idea, was Oscar Lewis who was an anthropologist working in slum areas, shanty towns, in South America. He observed these people in their environment and believed that they exhibited a different culture, a sub culture, to that of the rest of society. This he called a culture of poverty. The main characteristics of this culture of poverty were as follows: people held an attitude of fatality (they believed that it was hopeless to try and improve their situation) and a present time oreintation (they lived for today instead of for tomorrow). As a result they were less likely to see school and education as a way out of their poverty, also, they were less likely to see the point in saving money. This he argued helped to keep the poor in their state of poverty. Its something of a teleological argument. The poor are poor because of their culture yet how did they become poor in the first place, how did they get this culture? Also, is not their culture an accurate reflection of the situation in which they find themselves? Perhaps they do not do things like save money because they have no money to save. Perhaps they think it is hopeless to try and get out of their poverty through education because the chances of them doing so are quite small. Lastly, some would argue that this culture of poverty simply does not exist and that those in poverty by and large share the same culture as the wider society.
Marxist Theory
The Marxist theory of poverty and inequality is a radical departure from the theories we have so far outlined. Marxists do not blame the poor for their poverty nor do they blame their culture. Ralph Miliband writes:
"The basic fact is that the poor are an integral part of the working class - its poorest and most disadvantaged stratum. They need to be seen as such, as part of a continuum, the more so as many workers who are not deprived in the official sense live in permanent danger of entering the ranks of the deprived; and that they share...many of the disadvantages which afflict the deprived..."
Instead Marxists look for explanations in the structure of the society in question, in the economic arrangements present and in the functions that poverty performs for capitalism and the capitalist class. To put it simply the reason for poverty and inequality lies in the market based capitalist economy and the fluctuation that all such economies periodically go through.
But first, what is capitalism?
Robert Tressell answers this question very succinctly in his famous socialist novel "The Ragged Trousered Philanthropist"
"Plenty of materials - Plenty of labour - Plenty of machinery - and nearly everybody going short of nearly everything…"
While this outlines the main features of capitalism we must add a little more to our definition of capitalism. Capitalism is an economic system in which the means of production are owned and/or controlled by private individuals. These people, Marxists call them capitalists, then employ wage labourers in their factories to make various articles and in turn pay their workers a wage.
Inequality and Surplus-Value
On face value this state of affairs would tend to suggest that capitalism and the capitalist class no more cause poverty than the man on the moon. Indeed, Marx argues in his most influential work, "Das Capital", that what takes place in the sphere of exchange is an exchange of equals. But as we will recall, in the example of the ship wreck with the money on the desert island, appearances can be very deceptive. On face value it appears that the capitalist buys the labour of the worker, in which case they would pay if Marx is correct, the value of what that labour produces. Thus, if the worker in the course of their labour produces ten chairs at £10 each then they would be paid £100 for their labour. But that leaves the curious situation in which the profit of the capitalist disappear, something which does not happen often in capitalist society. What the worker is paid for is not their labour, which no more belongs to the capitalist after it has been expended than to the worker but the workers labour-power, that is, their ability to labour. The value of labour-power approximates to what is necessary to sustain the workers labour-power, and its future reproduction through the next generation of workers, as well as enough to purchase certain other things, and participate in certain patterns of life, that have been won over the years by struggle. Here we have the basis of inequality. The exchange between workers and capitalist is not one of equality. The capitalist is left with a surplus value, the difference between the value of the commodities produced by the workers and the wages paid for their labour power. From this is derived profit.
The Mighty Market
Capitalist economies are also market economies. We in Britain having recently endured a decade of Thatcherite economics know all too well about the Market yet I will explain what is meant to our lucky neighbors who are ignorant of this term. What is basically meant is that supply and demand determine what is made, when it is made and how much is its price. To put it simply, big demand and limited supply equals big price. This same principle also applies to the labour market. Certain types of labour-power have a higher exchange-value than others. For example, unskilled manual labour commands the lowest monetary reward, then semi-skilled manual, then skilled manual, then routine clerical, then higher clerical, then professions, then higher professions and so on. Because it is a market economy those in the labour market receive differential rewards. It is not unusual now for the directors of big British companies to earn £700, 000 a year (not including fringe benefits) while the worker in the factory or shop may get as little as £140 a week, compare this to the £13,500 a week that the aforementioned company directors get.
It could be said that some get a much bigger share of the pie than others. Those at the top are the capitalist class who get paid dividends for owning the means of production, then come those who manage the assets of the capitalist class (company directors), then come higher professionals (lawyers, civil servants). Those who occupy the bottom rungs of this ladder, the unskilled manual labourer and the semi-skilled manual labourer, tend to be paid less, many of these households live in what might be called relative poverty. Thus, poverty and most certainly inequality derive in part from the unequal distribution of wealth in capitalist society that results from the unimpeded operations of the market.
Full Employment?
The capitalist system also causes poverty and inequality because ,quite simply, it cannot provide full employment. There has hardly been a time in British history when the capitalist system has allowed for full employment. The closest that Britain came in recent times to full employment was in the 1950s. This full employment only came about because of increased state expenditure on such things as armaments and the fact that many thousands of men died in the Second World War. This is not to say that a country such as Britain could not achieve full employment but by doing so it would probably impoverish some other country. For example, when British trade was at its zenith, and Britain had its protected colonial markets, countries like India were underdeveloped, that is, their textile industry was destroyed and replaced by British imports. Since such "grand" times it has very much been a case of economic decline for Britain and increasing unemployment. By the 1980s the unemployment total was three million, upon which the Conservative government promptly changed the definition of unemployment (about 30 times in all).
Profit Before People
Capitalism is a system of production, an economy, in which some own the means of production while the vast majority must sell their labour-power. The capitalist class, those who own the means of production, only take on workers so long as they augment capital, that is, increase their profit. Sometimes there is a loss of confidence, that is, capitalists don't think that they can sell a given amount of products and so cut back on production. What they cut back on is labourers who are made redundant. As a result the labourer they must fall back upon the "safety net" of the Welfare State, which to their dismay they find isn’t quite so generous as the tabloid journalists tell them. They are out of work for the simple reason that their labour-power does not at present help to increase capital, that is, it does not make a profit for the capitalist. There is the machinery, there is the raw materials yet because the conditions for the expansion of capital are not present they are not able to work. Anyone who attempts to work, by simply going into some factory and proceeding to labour, will soon find out one of the functions of the Police, to protect private property and uphold the interests of the capitalist class.
Boom and Bust
So far we have established two reasons for the poverty and inequality that exist within all capitalist societies to a greater or lesser extent. Many people are in poverty simply because the capitalist class do not desire their services, do not wish to purchase their labour-power. Others are in poverty because they happen to be on the receiving end of the Market, that is, their labour power does not get the same return as that of the Lawyer or Doctor despite the fact that they are just as essential. There is, however, yet another reason and it is to be found in the fluctuations of the capitalist economies of the world. All capitalist economies go through periods of "boom" and "bust", or , growth and recession. Sometimes industry will be fired up, the factories will be buzzing, and those who are unemployed will be slowly but surely entering the labour market. Then, all of a sudden there will be an economic crash, a sudden grinding halt to trade and thereby to production. Sometimes this will be more severe than others. In Marxs time such economic crises were extremely severe and recurrent. The last great economic crash occurred during the 1930’s and engulfed many capitalist societies. During these economic crises there is often a poverty of overproduction. This seems like a contradiction in terms but we must remember that the commodities produced in capitalist societies are exchange-values, not just use-values. Marx writes:
"The last real cause of all crises always remains the poverty and restricted consumption of the masses as compared to the tendency of capitalist production to develop the productive forces in such a way that only the absolute power of consumption of the entire society would be their limit."
During these economic crises too much is produced, this is because of the unplanned nature of capitalist production. During such crises those who were employed, what Marxists refer to as the reserve army of labour, are now got rid off. Their labour-power no longer helps to expand capital. And so we see how these fluctuations help to foster unemployment and thereby poverty.
Functions of Poverty
The last reason given by Marxists for the existence and persistence of poverty, and perhaps the most important, is that poverty performs certain functions. This seems at first like a contradiction, what possible function can poverty play? By function what is meant is simply what poverty does, in particular, what it does for the capitalist class. There are numerous functions that poverty performs all of which help to meet the needs of the capitalist system and the interests of the capitalist class.
1st function: capitalism requires a highly motivated workforce. Workers must be willing, indeed almost enthusiastic, to get into the factory and work. The reason being that capitalists must compete against other capitalists and against capitalists in other countries. Also, if none of the working-class came to work for their employers who would do the work, certainly not the capitalist class. By giving different members of society differential monetary rewards so workers are motivated to work. As a result it is necessary to give those such as the unemployed, elderly and sick less money than that received by the workforce or workers would not be motivated to work. Why slog your guts out if you can get the same for sitting at home watching TV? What worker would choose going to work for perhaps 10 or 12 hours a day when they can get the same reward for sitting at home.
2nd function: the low wage sector which exists to greater of lesser extent in all capitalist economies serves to lower the wage demands on those in paid employment. The working class tend to judge their wages not in terms of how they compare to the capitalist class but how they compare to their poorer co-workers and neighbours. Poverty thus helps to keep a check on the wage demands of the working class. Also, if there are large numbers of unemployed people, and even those in poorly paid jobs, then there is always plenty of competition for jobs and so the employer can pay less. It is after all a market economy and the workers labour-power is a commodity just like all the others.
3rd function: those who are in poverty form what Marx called a reserve army of labour. This reserve army of labour, which may consist of ethnic minorities and those in the labour force who are least desirable, for whatever reason, to the employer. This reserve army of labour performs the function of keeping the pretensions of the working-class in check during periods of "boom" in the economy. During such times, when demand for labour is high, the reserve army will be called up and so any delusions of grandeur held by the working-class are torn asunder.
Globalisation
To end this essay I will discuss what is an emerging process, and also quite a topical issue, that of globalisation. At present globalisation is something of a buzz word and like many buzz words, such as post-modern, there is little clarity at present over meaning. Yet it is the belief of many that globalisation will result in poverty and increased inequality for workers of many countries. For me globalisation refers to a number of changes, economic and cultural, that are happening at a global level. Increasingly industry is ripping free of its national boundaries. Over the last 50 years or so huge multi-national corporations have grown in size and in number, carving up world markets between them. Production is taking on an increasingly global dimension as companies locate capital in different countries. Not only do they locate capital in different countries they also locate different parts of various industrial stages in different countries. This is known as the global division of labour. World-systems theorists believe that a global division of labour now exists, most of them divide the countries of the world into three categories: core, semi-core and periphery. Each category is defined by its place in the international division. The core consists of countries such as America which monopolise high tech industries and technology. The periphery consists of those countries who produce mainly foods and raw materials, and perhaps some basic productive tasks, for the core countries. The result of this globalisation is that whole nations are being impoverished, their development stunted. But also, the bargaining position of the workers of all countries is being eroded.
At one time the workers of a given country or region could use the weapon of the strike to gain concessions from their employers, they still can, but it is becoming increasingly less effective. When companies and indeed industries were based in one country or region the prospect of work stoppage, particularly for a prolonged period, increased the bargaining power of the workers involved. For the employer the relocation of capital was an impossibility, too expensive and impractical. Now with increasing globalisation companies can switch production from one plant to another, they can relocate capital. How many times over recent years have we seen despondent workers on our TV screens bemoaning the fact that they have been made redundant because their employers have relocated in some Third World country. In nearly all cases there is not a strike to be seen, for the simple reason that it would not work. If anything the strike would only hasten the withdrawal of the company involved as it would cut its losses and run.
The power of business vis-à-vis government is also increased by this process of globalisation. These huge multi-nationals are able to play government against government in order to get the most attractive deals. Their was the recent example of a car company in Britain, the British government and other governments competed against one another to attract its capital. Eventually, in all such cases, the side that offers the most attractive deal wins. Baran and Sweezy sum up the activities of these multi-national monsters as follow:
"What they want is monopolistic control over foreign sources of supply and foreign markets, enabling them to buy and sell on specially privileged terms, to shift orders from one subsidiary to another, to favour this country or that depending on which has the most advantageous tax, labour and other policies - in a word they want to do business on their terms…"
Such power as now rests with these multi-nationals means that they not only can dictate terms with trade unions but also with governments. The result may well be that in certain countries there is increasing inequality and erosion of workers rights in order to attract foreign capital. Perhaps the future will see a more internationally based workers movement that transcends national boundaries and "national interests"?