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Historical Materialism #152
Persistent Inequalities: Wage Disparity under Capitalist Competition
Economists generally assume that wage differentials among similar workers will only endure when competition in the capital and/or labor market is restricted. In contrast, Howard Botwinick uses a classical Marxist analysis of real capitalist competition to show that substantial patterns of wage disparity can persist despite high levels of competition. Indeed, the author provocatively argues that competition and technical change often militate against wage equalization. In addition to providing the basis for a more unified analysis of race and gender inequality within labor markets, Botwinick's work has important implications for contemporary union strategies. Going against mainstream proponents of labor-management cooperation, the author calls for militant union organization that can once again take wages and working conditions out of capitalist competition.
This revised edition was originally published under the same title in 1993 by Princeton University Press.
This revised edition was originally published under the same title in 1993 by Princeton University Press.
386 pages, Hardcover
First published August 1, 1993
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June 25, 2019
Neoclassical and 'radical' economists argue that uneven remuneration among workers of relatively similar skill is generally down to a number of factors removed from the intrinsic dynamics of capitalist competition (which, being perfect and tending towards equilibrium in the long run, should tend to equalise wage rates): average worker productivity, monopoly power (whether of capital or labour), non-remunerative factors, and so on. Any attempt to push up wages beyond these limits is simply self-defeating, leading to price increases or rising unemployment elsewhere in the economy. Whether neoclassical or 'radical', both approaches tend to ultimately conclude that union organisation is useless at best and harmful at worst.
And yet the empirical evidence supports none of these claims.
Instead, in this book Howard Botwinick sets out an argument - drawing on Marx's chapters on 'the general laws of capital accumulation' in Volume 1 of Capital, and equalising profit rates in Volume 3 - that these wage differentials are entirely consistent with the operation of *real* capitalist competition, which is always about aggressive build-ups of fixed capital seeking to minimise labour costs per unit produced, under-sell rivals, and seize their market share. The 'regulating' capitals in any industry - those with the most efficient production techniques - thus are able to incorporate increased wage costs in their cost structure without unduly cutting into profit rates, at least while that industry as a whole is healthy and experiencing the 'average rate of profit' across the economy.
Yet for this concession to occur the 'costs of obstruction' have to be raised by labour organisation and militancy, to squeeze these wage increases out of employers, who - regardless of their relatively privileged position within an industry - still have every incentive to resist on an individual basis any higher wage claim. Moreover, in order to avoid an 'exit hatch' for capital, even the sub-dominant and inefficient capitals with higher wage costs also have to be organised. Of course specific industries and national economies have specific political, geographical, spatial, environmental, or organisational attributes that makes them easier (e.g. transportation, mining) or harder (retail, agriculture) to organise but this is clearly not down to a LACK OF COMPETITION or market concentration, as commonly claimed, but is entirely consistent with an analysis that expects uneven profit rates (and thus wage rates) across the economy and within industries as a whole due to ceaseless competitive capitalist accumulation.
Some historical examples from the book: the CIO's successes in the '30s were down to organising regulating capitals *across entire industries* (auto, steel, trucking), the collapse of American unionism was in turn linked to their aversion or inability to organise southern firms from the late '50s onwards, Sweden's extraordinary wage compression was due to the 'solidaristic wage policy' and unique levels of class-wide organisation; the shift of 'regulating capitals' in various industries (Germany - auto / Japan - consumer electronics / China - Steel / Asia - textiles) outside the national boundaries of the US that have combined lower labour costs with more efficient methods in turn drove American capital out of business or on the offensive against their employees from the '70s onwards.
For the author the solution remains fundamental: effective labour organisation, even on an international scale, is necessary to impose the necessary 'costs of obstruction' industry-wide on healthy capitals that could see any return to rising real wages, and the book ends with a new afterword offering his thoughts on how that daunting project might be undertaken. A really excellent radical primer on the necessity of labour organisation, and probably one of the most important works of Marxist economics released in the past 30 or so years.
And yet the empirical evidence supports none of these claims.
Instead, in this book Howard Botwinick sets out an argument - drawing on Marx's chapters on 'the general laws of capital accumulation' in Volume 1 of Capital, and equalising profit rates in Volume 3 - that these wage differentials are entirely consistent with the operation of *real* capitalist competition, which is always about aggressive build-ups of fixed capital seeking to minimise labour costs per unit produced, under-sell rivals, and seize their market share. The 'regulating' capitals in any industry - those with the most efficient production techniques - thus are able to incorporate increased wage costs in their cost structure without unduly cutting into profit rates, at least while that industry as a whole is healthy and experiencing the 'average rate of profit' across the economy.
Yet for this concession to occur the 'costs of obstruction' have to be raised by labour organisation and militancy, to squeeze these wage increases out of employers, who - regardless of their relatively privileged position within an industry - still have every incentive to resist on an individual basis any higher wage claim. Moreover, in order to avoid an 'exit hatch' for capital, even the sub-dominant and inefficient capitals with higher wage costs also have to be organised. Of course specific industries and national economies have specific political, geographical, spatial, environmental, or organisational attributes that makes them easier (e.g. transportation, mining) or harder (retail, agriculture) to organise but this is clearly not down to a LACK OF COMPETITION or market concentration, as commonly claimed, but is entirely consistent with an analysis that expects uneven profit rates (and thus wage rates) across the economy and within industries as a whole due to ceaseless competitive capitalist accumulation.
Some historical examples from the book: the CIO's successes in the '30s were down to organising regulating capitals *across entire industries* (auto, steel, trucking), the collapse of American unionism was in turn linked to their aversion or inability to organise southern firms from the late '50s onwards, Sweden's extraordinary wage compression was due to the 'solidaristic wage policy' and unique levels of class-wide organisation; the shift of 'regulating capitals' in various industries (Germany - auto / Japan - consumer electronics / China - Steel / Asia - textiles) outside the national boundaries of the US that have combined lower labour costs with more efficient methods in turn drove American capital out of business or on the offensive against their employees from the '70s onwards.
For the author the solution remains fundamental: effective labour organisation, even on an international scale, is necessary to impose the necessary 'costs of obstruction' industry-wide on healthy capitals that could see any return to rising real wages, and the book ends with a new afterword offering his thoughts on how that daunting project might be undertaken. A really excellent radical primer on the necessity of labour organisation, and probably one of the most important works of Marxist economics released in the past 30 or so years.
January 13, 2024
perhaps the best book I will read in 2024. amazingly clear for marxist econ; both in terms of clarifying marx (it's 40% summarizing capital i and iii) and clarifying econ (really nice use of normal language, easy equations). the 2018 afterword in some ways undermined the project of the book, which is not just to restore the argument in favor of unions, but to point out their limitations under capitalism.
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