The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Unemployment:
The Permanent Reserve Army of Capital

Sep 7, 2020

The following article was translated from one that first appeared in Lutte de Classe (Class Struggle), Issue #210, September-October 2020, the magazine of Lutte Ouvrière (Workers Struggle), the revolutionary workers group active in France.

The COVID-19 pandemic has accelerated and intensified the crisis of the capitalist economy and thrown a large share of the exploited classes into unemployment. Tens of millions of workers lost their jobs in the United States, the biggest imperialist power. How many others who have never had a job will be unable to find one in the period we are entering? The same thing is playing out in the European Union, despite most of its member states having adopted partial unemployment compensation, which slightly softened the immediate effects. At the global level, an incalculable number of workers, self-employed, shopkeepers, and small farmers face rapidly developing threats to their means of existence.

Unemployment in the Capitalist Mode of Production

In the period when the productive forces of capitalism were expanding, Marx and Engels observed that large contingents of people remained unemployed, thrown out of workplaces or left at their doors. They described an industrial reserve army at the disposal of the bourgeoisie in its struggle against the working class. This term underscored how much the relations between the classes were marked by violence and could have no outcome other than a fight to the death. It also highlighted a series of major problems for the proletariat. How to confront the competition between workers imposed by the bourgeoisie? How to stop the most isolated, the least conscious, and the hungriest from being used by the ruling classes? And how to win over this fraction of the proletariat to a common struggle against capitalism and for communism?

The founders of scientific socialism demonstrated that, far from being an accident—an unpredictable or marginal phenomenon—unemployment is inseparable from capitalist production. It is inherent to the regime of wage labor to have eliminated whatever barriers may have existed to the capitalists’ freedom to hire and fire workers. In The Condition of the Working Class in England (1845), Engels was the first to describe the role of this “unemployed reserve army of workers.”

On the one hand, it allowed for production to ramp up in periods of heavy growth by supplying workers looking for a job, all while leaving the bosses with a free hand to cut back later by throwing part of the workforce into the street. This reserve army, Engels specified, “is the ‘surplus population’ … which keeps body and soul together by begging, stealing, street-sweeping, collecting manure, pushing hand-carts, driving donkeys, peddling, or performing occasional small jobs.”

On the other hand, the existence of this reserve army allowed the bourgeoisie to exert a constant pressure on the workers, threatening to get rid of all those who resisted and replacing them with workers eager to be able to put food on the table again. The bourgeoisie could push down wages close to the absolute minimum needed for the labor force to reproduce itself. The workers’ movement had to wage a long struggle in order to neutralize or win over strikebreakers and the lumpen proletariat reduced to great material, physical, and moral distress whom the “kings of mine and rail” launched against the workers.

This reserve army also grew from the rural exodus that emptied the countryside in those countries where industrialization took place at a forced march. The abolition of serfdom in Russia in 1861 under the pressure of Western capitalism, just like the abolition of slavery in the United States four years later, in turn liberated millions of laborers who had until then been chained to the land and subjected to the yoke of big landowners. The continued arrival and circulation of migrant workers in the countries where industry tightened its grip constituted yet another source that fed this reserve army. Once again, socialist militants and their organizations succeeded, not without difficulties and struggles, in gradually imposing the idea that proletarians formed one class, the cohesion of which, backed by a revolutionary political program, would make it invincible.

“A Regular Mainspring for the Production of Wealth”

In Chapter XXV of the first volume of Capital (1867), Marx elaborates on this mechanism of a “progressive production of a relative surplus population or industrial reserve army.” He sees it as one of the laws of capitalist accumulation, “a regular mainspring for the production of wealth.” Marx shows that this surplus population, linked to the growth of big capitalist industry, is indispensable to the bourgeoisie at different stages of the cycle of reproduction of capital—to the point that it has formed “a condition of existence of the capitalist mode of production,” “an industrial reserve army that belongs to capital quite as absolutely as if the latter had bred it at its own cost,” supplying “a mass of human material always ready for exploitation.”

Its presence is partially explained by technical reasons, such as the growth of mechanization and productivity, but above all by the anarchic character of the capitalist economy itself. The existence of a mass of the unemployed was indispensable for big capital in developing new branches of production, in replacing skilled workers with less skilled workers, and in following the chaotic movements of the markets that after the fact regulate production and competition among capitalists at a national and increasingly international level.

The underemployed mass, Marx noted, has always coexisted with “the over-work of the employed part of the working class” and increases the pressure to force the workers “to submit to over-work and subjects them to the dictates of capital.” Without working-class resistance, the non-exploitation of some workers, rendered idle, mechanically creates and amplifies the over-exploitation of the working proletarians.

In the same chapter of Capital, Marx cites a tract from 1863 written by workers of the textile factories of Blackburn, in the Manchester region. They were protesting against the local bosses’ attempts to increase their workdays from 12 to 13 hours, at the same time that thousands of their comrades were left without work: “Those who are worked overtime feel the injustice equally with those who are condemned to forced idleness. There is in the district almost sufficient work to give to all partial employment if fairly distributed. We are only asking what is right in requesting the masters generally to pursue a system of short hours, particularly until a better state of things begins to dawn upon us, rather than to work a portion of the hands overtime, while others, for want of work, are compelled to exist upon charity.”

Faced with the cries of “you must work harder” from the bourgeois of the time, they responded with the sensible demand to divide up the work among everyone.

But for Marx, and all those who remained faithful to the communist perspectives which they set out, the only way to put an end to unemployment along with all the other ills stemming from capitalist exploitation was the abolition of wage labor. Demands which aimed to slightly loosen the grip of exploitation were goals of struggle which were impossible to separate from this perspective.

Unemployment in a Capitalist System in its Death Throes

Over the course of the twentieth century, unemployment and all the forms of underemployment that go with it remained semi-permanent traits of the capitalist economy. Revolutionary communist militants have always had to confront this problem.

In 1917, faced with the collapse of the capitalist economy and the threat of starvation, the working class of Russia responded by imposing its control by means of its organizations, factory committees and soviets: workers’ control over the length of the workday, hiring, layoffs, and production in general. This was in effect in the majority of big workplaces before the working class even took power in October under the leadership of the Bolshevik Party.

During the crisis of the 1930s, mass unemployment affected as much as one-third of all workers. It became the most concrete and the most brutal symptom of the degree of decay of an economy based on private property in the means of production and the law of profit.

Like all crises of capitalist overproduction, this Great Depression took the form of the destruction (or the halt) of vast productive forces, with goods and harvests failing to find buyers on the markets. State control came to the rescue of the bourgeoisie, under the brutal form of fascism and militarism in several European countries, especially in Germany, and under the form of the New Deal public works policy and massive injection of funds into the banking system in the United States. But on the eve of the second imperialist World War, unemployment remained high in the U.S. According to the official figures, more than ten million workers were unemployed, or about 17% of the working population. Only the march to war and the militarization of society would provide some sort of remedy. But this solution plunged humanity into a barbarism more murderous than that which had devastated the world a quarter century earlier.

The relative growth of production that followed the Second World War brought about the relative disappearance of unemployment in the main bastions of imperialism. In several countries, the bourgeoisie was even forced to resort once again to an immigrant workforce playing the role of the reserve army of labor. This included France, Great Britain, and the United States, where the influx of immigration had been halted in the 1920s. All the more so since the countryside, already drained of its lifeblood, could no longer supply the workers which it was lacking. But the U.S. was also able to count on the black population, legally restricted in both the South and the North, as a reserve labor force: “last hired-first fired.”

Many economists had believed that bankruptcies and layoffs had been relegated to the past, never to be seen again. But starting in the 1970s, the crisis of overproduction struck once more, with its procession of closures and firings.

Since then, despite the short periods when production and exchange pick up, which are mainly tied to a new phase of globalization, mass unemployment and under-employment have never ceased weighing on the condition of labor. In the main imperialist power, the United States, the official statistics have masked, at least until the last few months, the growing impoverishment of a large share of workers. This promoted the illusion of full employment, which the economists define as the unemployment rate falling below 3%, or even 5%.

All governments essentially have a large array of instruments at their disposal which they can use to pretend to “solve” the problem of unemployment or to “bend the curve.” The highest seniority workers have been forced into early retirement or spared from having to find a new job, while others have been qualified for disability, or shifted from retraining to retraining and removed from the unemployment data.

This statistical camouflage has accompanied repeated attacks against workers: drastic cuts in unemployment rights and benefits, attacks on job protections and on legal restrictions on layoffs, including in the public sector, flexibility of scheduling, part-time work being increasingly imposed, freezing of wages, etc. In the absence of a massive reaction from the workers, the same tendency can be observed everywhere. It is in the United States where this policy has been pushed the furthest. But all those developed countries where the official unemployment figures have declined followed its example—particularly Great Britain, Germany, and the Netherlands—in most cases with the passivity or even active complicity of the union bureaucracies.

A few symbols of this evolution stand out. One is the zero-hour contracts in the United Kingdom, according to which the worker must remain at the employer’s disposal without any expectation of a minimum number of hours assigned. Another is the Hartz reforms in Germany that began in the early 2000s, which allow the bosses to profit from a workforce paid as low as one euro per hour, thrusting more than 10 million active workers into poverty.

In France, this employment insecurity has taken the form of the explosion of temporary labor contracts. These have gradually brought millions of workers, especially the youngest, into a new reserve army for the bosses, always available as well as disposable. In this way, the share of temporary contracts has increased to the point of representing 87% of all new hires in 2017. About one-third of these contracts only lasted for a single day!

Then there are those new forms of modern slavery which, following the lead of the United States, have appeared everywhere: freelancers, self-employed or micro-entrepreneurs, and “Uberized” workers. These are just other expressions for the decline in the condition of labor, which poorly mask a growing level of under-employment.

Essentially, the relative full employment of the 1950s and 1970s, following the destruction caused by World War Two and the deaths of tens of millions of proletarians, only appears as an intermediary period which prepared the next crisis. Afterwards, the few barriers to exploitation which had been temporarily accepted by the most prosperous bourgeoisies of the imperialist world fell to pieces one after the other.

Towards Generalized and Permanent Partial Unemployment?

These attacks have also taken the form of a sort of institutionalization of the procedure of temporary furloughs. In France, the first steps in this direction were reactions to the “interruptions in the supply of industrial establishments with raw materials or coal” at the time of the First World War. Despite several reforms to loosen the conditions under which these furloughs can be applied, and the creation of the “long-term partial employment” status in 2009, for a long time it remained uncommon for companies to resort to temporary layoffs. At the time of the financial crisis which began in 2007, partial furloughs affected only about 300,000 workers, compared with some 12 million at the height of the pandemic in the spring of 2020, the date at which the government guaranteed all the costs of benefits, including those which had until then fallen to the bosses.

This has not been the case in Germany and Italy. In Germany, the top European economic power, the creation of a partial unemployment compensation system dates back to the end of the 19th century, starting in the tobacco industry and then becoming reinforced and generalized in every branch of industry by the end of World War One, after which it was incorporated into the 1927 labor and unemployment insurance law. When the economy collapsed two years later, 20% of all workers were affected by these measures. This was true on a large scale once again at the time of German reunification in 1990, and then again during the subprime crisis of 2008. However, workers on partial unemployment receive no more than 60% of their net wages (67% for those with children), except where there is a branch agreement (in the chemical industry, 90% of wages are covered). This is accompanied by an increased flexibility of work hours and pay, an explosion of part-time work and so-called “atypical” jobs (temping or “mini-jobs”), the creation of paid time-off accrual accounts which allow the bosses to avoid paying overtime, etc. From its origins, the bosses have made “compromise” after “compromise” with the union bureaucracies at each stage. During the crisis of 2008–2009 alone, it has been estimated that these measures, the cost of which is placed at 5 billion euros, allowed the bosses to save 44 billion euros!1

In Italy, the partial unemployment system was integrated from the beginning into the unemployment compensation system. Provisionally set in place by the fascist regime in 1941, the Cassa integrazione guadagni (CIG), or wage guarantee fund, became a part of the economic structure in the aftermath of World War Two. One of its goals was to help the capitalists to keep their workforces and to deal with the chaotic functioning of production. After Germany, Italy has in recent decades, and especially since the 1980s, been the country that has relied the most on partial unemployment, in both its “ordinary” form (limited to one year) and its “extraordinary” form (which can last for several years).

The tradeoff for maintaining the labor contract, which nevertheless does not protect one from a mass layoff, has been a reduction in wages (of about 20%, with a monthly limit roughly equivalent to the French minimum wage). Flexibility has become generalized, including the practice of labor leasing, in the name of workers’ “external mobility.” Many of them have been placed in phony training programs which are supposed to offer them a path to another job.

Partially financed out of workers’ own contributions, partial unemployment in Italy was once again generalized by collaborating with the union apparatuses. They played an active role in the referendums organized in workplaces to make workers go along with disguised layoff plans. Their leaders presented these measures as the lesser evil for the workers, allowing them to be “more attractive in the labor market,” thanks to better “employability.” The exemptions allowed the bosses to benefit from a very cheap workforce. Despite the growing impoverishment and the explosion of unemployment, they continue to pretend that lower wages guarantee jobs for a greater number of workers. This is how hundreds of thousands of workers were thrust into semi-permanent unemployment, the oldest waiting to be able to collect retirement without being crossed off the official list of employees.

To End Unemployment, the Rule of the Bourgeoisie Must Be Overthrown

Fighting against unemployment in itself makes no sense in reality, other than to position oneself as a manager of the bourgeois social order, just like every left-wing politician. The main task of the propaganda of revolutionary militants is to convince others that there is no reformist way out of the crisis, no solution within the framework of the capitalist economy.

It is in this perspective that for years we have put forward the slogan of banning layoffs. Such a measure to stop the hemorrhage of jobs which struck in the 1990s could only have been imposed by a massive and powerful mobilization of the working class, challenging the bosses’ power in the workplaces and the very domination of the bourgeoisie.

The Communist Party and the CGT [General Confederation of Labor, the main union federation] take up this idea in part, but only in limiting it to “stock market layoffs” or to companies that take public subsidies or pay dividends. Above all, they avoid explaining how to impose it on the bourgeoisie. In a 2012 proposal for a law, the French Communist Party hoped to confer this authority on the government health and safety inspection office. A “ban on layoffs” became an electoral slogan with no content or a plea to the bourgeoisie’s state.

It has returned in the past few months in these same organizations’ speeches, as well as those of the France Insoumise party, which now mixes in a bunch of nationalist nonsense calling for a “strategist state” to relaunch national production. The Minister of Labor, Muriel Pénicaud, went so far as to evoke the idea of a temporary ban on layoffs in mid-March … before quickly abandoning it. The left-wing government of Spain, by means of its Minister of Labor Yolanda Díaz, a member of the Communist Party, passed a decree to this effect on March 27. But this text did nothing to stop the avalanche of job destruction in Spain, and it could not be otherwise. Nothing will stop the disaster which is unfolding—except for the collective force of the workers and their fight to take power from the bourgeoisie.

To a certain extent, dividing up the work among everyone is not in itself a slogan which challenges the law of profit and the domination of the bourgeoisie.

In 1938, a discussion between Trotsky, in exile in Mexico, and the U.S. leader of the International Ladies’ Garment Workers Union, Abraham Plotkin, illustrates the extent to which the demand for dividing up work, which Trotsky had called for as a response to unemployment, could be emptied of its revolutionary content and be used as a weapon against workers:

Plotkin: Our union’s policies are aimed at preventing complete unemployment. We’ve got the work spread out among all the members of the union with no reduction in the hourly rate of pay.

Trotsky: And what percentage of their former total wages do your workers now get?

Plotkin: About 40%.

Trotsky: Why that’s monstrous! You’ve won a sliding scale of working hours with no change in the hourly rate of pay? But that only means that the full burden of unemployment falls with all its weight on the workers themselves. You free the bourgeoisie from the need of spending its resources on the unemployed by having each worker sacrifice three-fifths of his total wages.

Plotkin: There’s a grain of truth in that. But what can be done?

Trotsky: Not a grain, but the whole truth! American capitalism is sick with a chronic and incurable disease. Can you console your workers with the hope that the present crisis will have a transitory character and that a new era of prosperity will open in the near future?

Plotkin: Personally, I don’t allow myself such illusions. Many in our circles understand that capitalism has entered an era of decline.

Trotsky: But of course this means that tomorrow your workers will get 30% of their former wages; the day after, 25%; and so forth. Episodic improvements, it is true, are possible, even inevitable; but the overall curve is toward decline, degradation, impoverishment. Marx and Engels predicted this even in the Communist Manifesto.2

Dividing up work among everyone makes sense only when combined with keeping wages at the same level, indexed to prices, in order to prevent inflation from eroding them. This idea can become a tool for revolutionaries and the working class only if it is placed among a set of measures, under the active control of the workers, aiming at the only possible solution: the overthrow of the bourgeoisie.

It is still in this sense that this demand finds all of its power and relevance and that it can allow workers to resist and go on the counter-offensive.

A Question of Life and Death

In The Class Struggle (1892), Kautsky explained that the reserve army of the unemployed was invaluable for the capitalists, since it allowed them to “curb the army of the employed.” And he added: “What, then, is the full significance of lack of work? It signifies not only want and misery to the unemployed, not only intensified servitude and exploitation to the employed; it signifies also uncertainty of livelihood for the whole working class.” The current explosion of unemployment revives this uncertainty, even in the main imperialist powers, threatening all those “social shock absorbers” which have until now softened the most dramatic consequences of the functioning of the capitalist economy. No category of worker can consider itself safe or protected by its trade, its status, or its skills, even though the union bureaucracies continue to put forward these illusions. In the absence of an upsurge of struggle, the working class will see its condition brought into line with that of its most populous and poorest segment in Asia, Africa, and the Americas.

In the rich countries, tens of millions of workers and poor families are waiting for decent housing, transportation, and infrastructure, while bridges and highways are at the point of collapse due to lack of maintenance and investment; there are not enough hospitals nor enough staff to make them function, and there is a shortage of establishments to take in the elderly and treat them with dignity, of childcare facilities, of schools, of seats at the university, etc. And it is in this society where the needs to be met are countless that mass unemployment, not only has not disappeared, but is getting worse, while the big bourgeoisie is choking on its wealth! This simple list is enough to condemn capitalism and to justify the fight of revolutionaries to build a communist society, rid of this parasitic class and of the profit which degrades every part of society.

The bourgeoisie’s domination is also accompanied by the systematic plunder of the entire planet, and the current phase of the crisis of capitalism has already taken the form of the rule of chaos and misery. In India, in Brazil, and in many African countries, hunger threatens the big majority of the population, deprived of work and of the slightest income. This situation could lay the groundwork for the revolts and revolutions of tomorrow, on the condition that the workers succeed in becoming conscious of their common interests and of their strength, in turning toward and rediscovering the path of class struggle and of revolutionary communist ideas. It falls on the militants and organizations who defend this perspective to work toward helping them toward this goal.

In the absence of this, other social forces, other political currents, all hostile to the working class and to all of the exploited, will not hesitate to impose themselves.

The army of the proletariat, to use Marx’s terms, which is made up of the forces of the working class around the world that today are scattered or divided, is the only one capable of bringing humanity out of the barbarism into which capitalism is now inexorably plunging it.


1 Thomas Koch, Joël Massol, “Le chômage partiel en Allemagne: le ‘remède miracle’ dans la crise?”, Allemagne d’aujourd’hui, 2014/4 (no. 210), pp. 67–85.

2 Leon Trotsky, “Trade Unions and the Social Crisis,” September 29, 1938. Leon Trotsky Archive (www.marxists.org) 2015.