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The Perverse Forces of Labor Competition

The U.S. Jobs Crisis and the Reserve Army of Labor

by BEN SCHREINER

The U.S. unemployment situation—despite Washington’s indifference—remains rather abysmal.  The November jobs report offers just the latest evidence.

Although the unemployment rate dipped to 7.7 percent in November, it did so due to a decline of 350,000 in the labor market.  In other words, the drop in the official unemployment rate was due to the fact that over a quarter million Americans simply gave up on finding a job.  In fact, the latest employment report found nearly 7 million Americans not counted as being in the labor force (and thus not counted as officially unemployed) actually desire work, but are simply too discouraged to search.

Meanwhile, the ongoing tragedy of the long-term unemployed shows no end, with the number of Americans having gone without work for 27 weeks or longer remaining near 5 million.  At the current pace of job growth it will take a full decade to attain full employment.  (This, of course, barring any return to recession over the next ten years.)

The squandered human potential, not to mention human suffering, behind all such numbers is, needless to say, truly immense.

In Washington, however, the jobs crisis remains off the agenda.  The bipartisan fetish of debt reduction, having been spurred by the orchestrated crisis of the so-called “fiscal cliff,” now trumps any concerns over the unemployment maelstrom.  And thus in lieu of a serious jobs program, the political elite busily ready a harsh dose of the austerity elixir to be administered in the name of “shared sacrifice.”

One might reasonable wonder, though, why Washington remains uninterested in the jobs crisis.  After all, a clear majority of Americans favor Congressional action on jobs over the deficit.

As Paul Krugman argues, the silence on jobs can’t be attributed to a matter ideology or a lack of resources, but instead boils down to a matter of class.  “Influential people in Washington aren’t worried about losing their jobs,” Krugman writes, “by and large they don’t even know who’s unemployed.”

There is no doubt some merit to this, as the offices on Capitol Hill are not only dominated by those willing to do the bidding of the financial elite, but are increasingly occupied by the very elite themselves.  That being said, the indifference to the jobs crisis isn’t simply a matter of an out of touch political class.  Don’t hate the players, we might say, hate the game.

Indeed, what Krugman (along with most other liberal commentators) fails to account for is the functional role of mass unemployment; namely, its ability to suppress wages and ensure continued profitability.  After all, without a mass reserve army of labor to decrease the demand for labor and bully the active workforce into a more pliant state of submission, profitability becomes imperiled by the threat of enhanced worker power and the ensuing demand for higher wages.  This is a process one can clearly see in the wake of the present crisis.

Since the crisis broke out in 2007, sending over 8 million Americans into the ranks of the reserve army of labor, corporate profits have not only rebounded, but soared to new heights.  In fact, the third quarter of 2012 saw corporate profits assume a greater percentage of GDP than ever before.  Conversely, as we are to expect, worker wages have fallen to historic lows.  Such are the true splendors of the “opportunity society” proffered by our “free enterprise system.”

Of course, the role of mass unemployment in suppressing wages and ensuring continued profitability necessarily extends to the global capitalist system as a whole.  And as John Bellamy Foster and Robert McChesney argue in their latest book, The Endless Crisis, a massive global reserve army of labor remains a defining feature of the world economy.

In 2011, for instance, Foster and McChesney report that the global reserve army of labor stood at some 2.4 billion people, as opposed to the 1.4 billion found in the active labor market.  That is, the global reserve army of labor stood 70 percent larger than the active world labor market.

“The existence of an enormous global reserve army of labor forces income deflation on the world’s workers,” Foster and McChesney explain, “beginning in the global South, but also affecting the workers of the global North, who are increasingly subjected to neoliberal ‘labour market flexibility’…labor everywhere is on the defensive.”

And where labor is on the defensive, capital is on the offensive.  Hence, amid rising corporate profits we see a vicious and varied global attack on labor—stretching from the state house in Lansing, Michigan to the garment factories of Bangladesh and beyond.

A serious effort to attain full and dignified employment in such a world, then, actually requires nothing short of an international struggle against the forces of capital.  Such a struggle must be international since failure to do so would necessarily expose one to the perverse forces of labor competition meted out by the global reserve army of labor.

Absent such a struggle, the jobs crisis in the U.S. and the world over shall continue forth.  The creative and productive potential of billions worldwide left to languish in the reserve army.

Ben Schreiner is a freelance writer based in Wisconsin.  He may be reached at bnschreiner@gmail.com or via his website.