“Solidarity Forever”: Robots, Workers, and Profitability

Don Sutherland (March 2018)

Everyone I know with any form in the Australian union movement loves the song “Solidarity Forever”. The song includes these 2 lines:

They have taken untold millions that they never toiled to earn 

But without our brain and muscle not a single wheel can turn

What do these words mean for real working lives in our times?

This is a relevant question amid the new wave of production and other technologies, including robots and “cobots”.

The introduction of robots and other automated or semi automated machines into work processes is nearly absolutely controlled by employers. The Fair Work Act 2009 prohibits new technology like robots from being a negotiated issue in enterprise bargaining. It is wrong but it is simply unquestioned that employers should have this absolute control and that, therefore, nothing of any import can go wrong.

The second point is that the introduction of robots and other automated machines is a capital investment. There is a consequence to this that can only be fully grasped by workers and their organisations by chewing over those beloved words in “Solidarity Forever”, and understanding their 21st century economic meaning from the standpoint of workers.

Without getting too technical about it, what those words say is that all accumulated and new wealth derives from the application of human labour by workers.

Therefore, from the standpoint of workers, capital investment does not create wealth, it is a part of the total wealth that is created by workers through their labour. Specifically, it is a part of the total “profit” that is taken by the boss after paying wages and associated benefits to workers. It’s application is intended to enable employer-controlled workers produce new wealth that can be expropriated.

Commonly, workers are “taken on” to use tools and machines in factories and other work sites, to transform raw material from nature, or partially finished products, into goods for exchange and sale in the market place. Nowadays these include algorithms embedded in software or that enable the function of machines. (Most of these algorithms originate in the knowledge and thought of workers that is acquired and applied during their work process …. a separte discussion.)

Connecting the dots: robots – investment – human labour – total profit – profitability

The product (or service) must be useful but to contain money wealth it must also be “saleable”: that is, it has a use value and an exchange value intertwined within it. Out of the sale, the human labour put in leads to a total money value that is new wealth, and inside that is total profit, and also total wages. The total wages must be less than the total value that has been created by the worker. The process of work is in its essence a process of exploitation of workers by their employers.

The owners of the machines etc, and for set periods every day also of the labour potential of the workers, obsesses over whether what they have taken, the “total profit”, is enough relative to “their” investment that has been made possible in the first place by the labour of the workers they have employed.

It’s hard to think of an employer who is not obsessed with his / her profit, especially relative to the investment made, and in relationship to their competitor(s). (Unfortunately and incorrectly, the importance of profits, and profitability, is skated over or ignored even by most ”modern” labour economists.)

In dollar terms, profitability is shown by the total profit relative to the investment put into it. As an equation, profitability = total profit / capital investment.

So, what does this mean for the introduction of “robots” or “cobots “?

Robots are a capital investment by the employer, that seek to reduce labour costs and increase profits.

They are meant to make an impact on productivity: the same or more output relative to the quantity of human labour hours required to make it happen. However, in contradiction, they are also an immediate and longer term threat to profitability, the primary obsession of every employer.

With robots the labour time of fewer workers is necessary to produce the total wealth that includes the profit share and the (reduced) wages share, thus the proportion of capital investment increases relative to the input of workers, and to total profit.

For example, in one “moment”, profitability might mean total profit of 150 units divided by total capital investment of 300 units. Profitability equals 0.5. In the next “robot moment” that follows, the new capital investment increases relative to the human labour hours required (hopefully, putting aside breakdowns for the moment). So 150 units is divided by, say, 320. Profitability falls.

This is a tendency, it is not absolute. To reduce or prevent the tendency, wages and associated labour costs must be driven down no matter what the productivity.

This is why the Fair Work Act 2009 is working well for employers. It provides employers with those controls across the economic system. Thus, under 21st century capitalism, there is no logic that enables it to provide for reduced working hours in general while improving and equalizing the standard of living. To make that happen would require more universal and more powerful workers’ struggles through their unions, or in other ways.

This is a real dilemma for employers (and their champions): in 21st century capitalism (just like all capitalism before it) increasing the productivity of labour through more automated machines – robots – tends to reduce the profitability that all employers crave, and may even cause or hasten a renewed economic crisis that causes more unemployment and income security for the 90% plus.

But that’s the “logic” of a capitalist system. Production is not for social needs and values but to provide profitability and the accumulation of wealth for the minority who own and control the machines. In this system robots and “cobots” drive more insecurity.

Interim and ultimate solutions?

If you have a problem with this logic, then “it’s time” to cease the hypocrisy of singing those key words in “Solidarity Forever”.

More seriously, “solutions” like the “universal basic income” will be naïve and ultimately impractical.

Nevertheless, the real potential of automation does lie in reducing and sharing more equally productive working time.

The new leisure time that goes with that must be rooted in zero poverty and shared access to a bounty of socially and personally enriching activities. However, for that to be realised the 90 per cent, or a much bigger part of it, must take the necessary actions in support of the specific demands towards replacing with their collective selves the current owners of the machines and the systems that produce the 21st century necessities of life.

It’s worth looking at what the Corbyn and Sanders movements are coming up with in this light (and others in other parts of the world). And what the ACTU, the ALP and the Greens have to say about it. For me, that’s for another time and a good deal more reading and discussion, some of which might be found in the submissions to the current Senate Enquiry into the Future of Work.

Common Action to Oppose the first budget of the Abbott- Hockey / Business Council Alliance

Common Action, starting in Sydney, is trying bring together the dozens of points of opposition to the Australian neo-liberal Agenda of the Abbott government. And out of that develop a common, comprehensive and independent alternative economics and programme.

For more on Common Action click here and also follow them at their Facebook page and Twitter account.

As part of their actions they are organizing a post budget activists meeting, details as follows:

Wednesday May 21, 6.30pm-8pm,
Sydney Mechanics School of Arts,
280 Pitt St, Sydney.
6.15pm for a 6.30pm start
$5

What an excellent idea!

We use to do this in Adelaide in the 70’s and it was a great opportunity for young activists to learn about the political economy of budgets, especially how to analyze a taxation or spending decision (or proposal) through the prism of what it would mean for working people, the unemployed, women, ethnic communities and so on.

Those post budget sessions analyzed the Liberal budgets of the Liberal Party’s Fraser governments.

The sessions and analysis was led by political economists who were committed to plain language and working class oriented perspectives. Economics was thus demystified and turned into the common property of workers and other activists who had not gained either secondary or post secondary economic learning opportunities.

The contributors ranged from Keynesian and the more powerful critical analysis of independent Marxist views. However, there was practically nothing in the line of ecological perspectives. Women activists insisted, sometimes but not always with support of men, that the specific discrimination against women in budget decisions, be brought into the analysis.

After a few years these events waned but not before a new popular economic concept evolved: the social wage. The social wage described the connected impact on the standard of living of BOTH the industrial wage (the outcome of industrial, union led wage bargaining) and taxation / government spending, ie the social wage. We could see therefore, that in the dominant framework of Australian capitalism, the possibility that industrial wage gains could be nullified by a bad outcome in the social wage, mainly delivered in budgets Federal and state level).

The connections between inequality, the industrial wage and the social wage were described in an outstanding pamphlet: Australia Ripped Off. Australia Ripped Off was produced by the National Council of then Amalgamated Metal Workers and Shipwrights Union (now the Australian Manufacturing Workers Union). Its foremost author was the recently late Ted Wilshire from the unions National Research Office.  (Australia Ripped Off followed close behind an earlier pamphlet, Australia Up Rooted, that dealt with the impact on manufacturing industry of the biggest mining boom (up till then) in Australian history. Australia Up Rooted sets the standard in Australia for plain language economic education and learning for workers. It featured the wonderful cartoons of Bruce Petty.)

There is an opportunity for this revived form of activist learning re-ignite this class based, critical analysis of the Budget, connect that to what is happening to the finance sector, and integrate a strong environmental / ecological dimension. We lay, then, a foundation for a strategy that can eat away at the dominant economic messages of neo-liberal capitalism.

On this point, we who attend must demand that this is what the Common Action organizers provide: pressure from below can prevent the tendency for economic analysis that is soft and founded on assumptions that accept the dominant economic framework.

The system, 21st century capitalism, is founded in two interacting and mutually depend exploitations: the exploitation of most humans by a minority, and the exploitation of NATURE by that same minority. Associated with this, the system can at best offer only a very stunted form of democracy, that is, a somewhat compromised parliamentary democracy.

Finally, we can – collectively – build a coherent and unifying ALTERNATIVE political economic dynamic: both in policy and also strategy for that policy and its underpinning principals to challenge and become dominant. The potential for this exists in the dozens of campaigns that are points of resistance already to the dominant destructive momentum that is in our face every day.

These resistance campaigns are fragmented but they can be brought together and harnessed in a new and dynamically democratic alternative. We then have class based struggle happening again in a 21 st century form, just as it is forming in many other places around the world.

G20 did not endorse Abbott government economics: the Australian government is NOT maxed out

In this article, Jim Stanford picks apart what really happened at the G20 Finance Ministers meeting in Sydney a couple of weeks ago. He does so by taking a close look at the documents produced by the meeting.

Click here: http://australianpe.wix.com/japehome#!The-G-20-Finance-Ministers-and-the-Coalitions-Agenda-Jim-Stanford/cohb/275192B6-2FCD-4527-89D0-C1EC5C410DA9 

He assesses these documents against the “claims” made by Joe Hockey (Australia’s Treasurer) and Tony Abbott (the Prime Minister) that the meeting outcomes endorsed the government’s wholesale attack on social services (especially health and welfare), unions and workers generally. He looks closely at their oft-repeated claim that Australia was living beyond its means and the government cannot afford things (repeated by other government leaders).

He identifies 4 key components of economic policy that are highlighted, one of which is investment. Well, since then we have the ABS report that business in Australia has gone on an investment strike, its fallen apart.

Jim concludes that “.. in no way can the G20 statement be interpreted as an endorsement of Abbott’s coming cutbacks”, nor as it turns out does it endorse their plans to gift greater powers and control to employers to be used against workers.

The last section addresses – concisely – the claim by Hockey and others that the government is broke, maxed out on credit. He shows that this is simply not true.

It’s all Abbott-Hockey- BCA-AIG spin. And why should we be surprised by that?

 

Jim is the chief economist for UNIFOR, and is visiting Australia for a short while.