Who Loses from Unemployment

By Darity, William, Jr. | Journal of Economic Issues, June 1999 | Go to article overview

Who Loses from Unemployment


Darity, William, Jr., Journal of Economic Issues


It is both useful and tantalizingly disruptive to reconsider unemployment from the standpoint of Karl Marx's mid-1860s construction categories of surplus population under capitalist accumulation. Marx [1967, 6411 refers first to the floating surplus or the cyclically unemployed, who also are subject to a secular reduction in their relative importance due to the nature of technical change under capitalism:

In the centres of modern industry - factories, manufactures, ironworks, mines, &c. - the labourers are sometimes repelled, sometimes attracted again in greater masses, the number of those employed increasing on the whole, although in a constantly decreasing proportion to the scale of production. Here the surplus population exists in the floating form.

Marx also refers to the stagnant surplus and the paupers, both categories conforming to modern notions of the broadly construed "underclass," while the latter also includes the "hard-core unemployed." The stagnant surplus, according to Marx [1967, 643], "forms a part of the active labour army, but with extremely irregular employment, . . . furnish[ing] to capital an inexhaustible reservoir of disposable labour-power."

As for the paupers, Marx [1967, 643] observes:

Exclusive of vagabonds, criminals, prostitutes, in a word, the "dangerous" classes, this layer of society consists of three categories. First, those able to work. One need only glance superficially at the statistics of English pauperism to find that the quantity of paupers increases with every crisis, and diminishes with every revival of trade. Second, orphans and pauper children . . . Third, the demoralised and ragged, and those unable to work, chiefly people who succumb to their incapacity for adaptation due to the division of labour; people who have passed the normal age of the labourer; the victims of industry, whose number increases with the increase of dangerous machinery of mines, chemical works, &c., the mutilated, the sickly, the widows, &c. Pauperism is the hospital of the active labour-army and the dead weight of the industrial reserve army . . .

Marx [1967, 642] describes another category of surplus population associated with potential workers released from the demise of precapitalist modes of production, particularly as capitalist/commercialization seizes the agricultural sector. Labeled the latent surplus by Marx, this category is largely irrelevant today in a world where exposure to capitalist social relations is universal. Indeed, what is relevant is the relationship between postcapitalist modes of production and unemployment, a relationship I explored in an earlier paper published in the mid-1980s [Darity 1986].

The central point that Marx makes is that a permanent degree of unemployment is associated with capitalism due to the nature of technical progress and due to the functionality of unemployment under capitalist dynamics. Unemployment serves two objectives. First, it disciplines those with work; they are continuously faced with the living images of the consequences of pauperization:

The industrial reserve army, during the periods of stagnation and average prosperity, weighs down the active labour-army, during the periods of overproduction and paroxysm, it holds the pretensions in check. Relative surplus-population is therefore the pivot upon which the law of demand and supply of labour works. It confines the field of action of this law within the limits absolutely convenient to the activity of exploitation and to the domination of capital [Marx 1967, 639].

Second, the reservoir of jobless persons - the "industrial reserve army" - always is available to be put to work, so that the cost to capital of moving large numbers of persons into newly emerging lines of industry is minimal:

But if a surplus labouring population is a necessary product of accumulation or of the development of wealth on a capitalist basis, this surplus-population becomes, conversely, the lever of capitalistic accumulation, nay, a condition of existence of the capitalist mode of production. …

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