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Capital, the system and jobs chaos

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Millions of people have been thrown onto the jobs scrapheap this year. Tomáš Tengely-Evans looks at how the capitalist system uses unemployment
Issue 2734
Millions of workers have been dealt a devastating blow during 2020

For working class people there’s one thing worse than being exploited by their boss. And that’s not being exploited under capitalism. 

This is the situation vast swathes of people across Britain have suddenly been thrust into. 

Young people have been particularly badly hit by unemployment this year, and had their futures dramatically torn away. 

For the older generation sacked during the coronavirus pandemic, many will never work again.

Millions of workers across the world face mass unemployment as bosses try to make them pay for the coronavirus crisis. 

More than 1.6 million people are already out of work in Britain—and that number could surge to 2.6 million by the middle of next year. 

Redundancies are at a record high—some 314,000 people were laid off in the three months to September. Many more are suffering on zero hours or casual contracts. 

Some 25,000 jobs went at just two retailers last week, as Arcadia entered into administration and Debenhams announced it was shutting up shop.

While unemployment means poverty and wasted lives for working class people, ­capitalists such as Arcadia boss Philip Green sun ­themselves on multimillion pound yachts. 

It’s the sort of situation Karl Marx observed when he wrote that capitalism “establishes an accumulation of misery, corresponding with accumulation” of profits.”

He said that “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil, ignorance, brutality, mental degradation, at the opposite pole.” 


Marx argued unemployment wasn’t just down to “violent fluctuations”, such as a volatile stock market, problems within a particular sector or an economic downturn. 

It’s rooted in “capitalist accumulation itself” which “constantly produces a relatively redundant working population, a population which is superfluous to capital’s average requirements” for more growth.

He called this a “reserve army of labour”, made up of unemployed and underemployed people who want to work. But the reason they’re jobless isn’t because there’s a lack of socially-useful work to be done. 

This situation would be totally irrational in a society based on planning to meet human need. Yet it’s perfectly logical under capitalism, where rival bosses compete to accumulate as greater a chunk of capital as possible. 

Mainstream economists claim profit is a “reward” for the risk capitalists take by making investments. But what’s become clearer throughout the lockdowns, is that bosses rely on workers’ labour for profits.

While workers’ labour is the source of value, they don’t get paid back in wages the full value of what they create. Marx called this process exploitation and the gap “surplus value”, which capitalists’ profits are based on. 

Today capitalism relies on large numbers of workers who aren’t directly producing value. But they are still crucial to keeping the system running and they are exploited. 

NHS or state school workers, for instance, are still necessary to maintain a healthy and skilled workforce.

So if bosses need to exploit workers to grab profit, why does their system create and rely on unemployment? 

Bosses don’t exploit workers just because they’re greedy. 

They are locked into competition with one another and this forces them to plough their profits into new technology and more efficient methods of production. If they didn’t do it, they would be driven out of business by their competitors.

This leads to a system, as Marx put it, of “accumulation for accumulation sake”. 

It means firms invest more into new machinery, technologies or infrastructure than into employing workers.

The new technologies are likely to lead to higher productivity—how much workers produce per hour. 

This should mean less work and more leisure time for ordinary people. But under capitalism, it means layoffs and making those who remain in the job work harder.

This mechanisation, automation and overworking of the employed contribute to creating a reserve army of labour.

Bosses are locked into a brutal game of competition—and workers pay the price (Pic: ILO Asia-Pacific/Flickr)

Today some sections of big business are looking at coronavirus as an opportunity to invest into robot technologies, shedding large parts of their workforces. 

One survey by the EY consultancy found 41 percent of businesses worldwide were speeding up plans to replace jobs with new technologies. 

Another forecast from the consultants McKinsey predicts that automation could replace 53 million jobs in Europe by 2030, which is around 20 ­percent of the workforce. 

Retail, manufacturing and hospitality are set to see the biggest reductions in workers. 

To restore profitability and set capitalism up for the next boom, huge chunks of capital have to go to the wall during crisis. If this happens, working class people pay the price with their jobs and livelihoods. 

For capitalists, it’s also a crisis if there’s mass unemployment across the economy. But at the same time, unemployment gives them flexibility to restructure capitalism at ­workers’ expense, and lay the ground for future growth. 

Firstly, a reserve army of labour can help smooth the cycle of boom and bust.

Marx argued that, having been created by capitalist accumulation, the reserve army of labour becomes “the lever of capitalist accumulation”. 

Capitalist production isn’t based on planning to meet social needs—it’s left up to the anarchy of the market to allocate labour and resources. 

Bosses don’t just invest profits into their own firm or industry. If another sector looks more lucrative, they’ll invest into it in order to get a slice of the action. 

A reserve army means bosses have a readily available pool of workers to exploit as more profitable bits of the economy expand. 

Secondly, a large number of unemployed people allows capitalists to discipline employed workers. 

The threat of unemployment helps bosses keep workers scared of asking for a pay rise or better terms and conditions. 

If they do, the bosses’ argument goes, someone else will happily take their place. 

The Tories are clearly using that divide and rule strategy between the public and private sectors. When ministers announced a public sector pay freeze last month, they could point to tens of thousands of job losses in retail. 


And private sector bosses can also use the jobs massacre to keep down their own workers’ wages. 

Even when there isn’t a crisis, unemployment can have a negative impact on pay. There are big differences in wage levels across sectors. Other factors, such as sexism and racism, play an important part in pay gaps. 

And workers’ struggles can force bosses to concede pay rises. But a reserve army of labour still helps to drag down average wages. 

Today, all the flaws of the capitalist system are on show. 

Coronavirus was the trigger for the slump, but global capitalism was already weak and headed for a recession before the pandemic.

The financial crisis of 2008-10 was rooted in a crisis of profitability. But unprofitable bits of capital weren’t cleared out. Governments, central banks and bosses feared allowing big companies to collapse would result in a depression. 

So instead, they pumped cheap credit into the system.

But cheap credit led to a growth of “zombie companies”—heavily indebted firms which only survived because of easy loans. And this time the burden of debt and lockdowns has pushed some of the zombies over the edge, helping to fuel the mass unemployment crisis.

The scale of the crisis helped to destroy the weak recovery that took place in the 2010s.  

In the US, for instance, all the jobs created after the 2008-10 recession were wiped out by the coronavirus crisis.

Yet there’s no need for mass unemployment. For instance, we need to see a rapid shift to renewable energy and decarbonisation of the economy. 

And at the same time many workers in the crisis-hit aviation sector have skills that could be used in a green transition.

A socialist solution seems obvious. But it’s not happening because under capitalism everything is subsumed to the logic of capital accumulation and maximising profits.

Faced with the jobs massacre, we need to resist job cuts and make the bosses pay for the coronavirus crisis. 

But to stop the misery and waste of unemployment, we also need to break from the profit system. 

The alternative is a socialist society, based on a democratically-planned economy focused on meeting human need.

Read more

The crisis deepens

International Socialism article by Joseph Choonara

Can workers stop job cuts?

Socialist Worker article by Sadie Robinson

A Reader’s Guide to Marx’s Capital

By Joseph Choonara, £10

Available at Bookmarks, the socialist bookshop. Phone 020 7637 1848 or go to

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