Exploitations, Primary and Secondary, in the Capitalist Mode of Production

What follows is a rough draft of an essay that will appear in the Labor Day issue of the Washington Socialist. 

Labor day should invite conversation on the state of labors movement and market; my aim today is to focus on what Marx called “exploitation upon expropriation” from the latter.

Criticism of Uber and the gig economy for the potential long-term structural changes it could bring about to the supply and demand for labor, a deepening of the “precariat”, might be misdirected. Kim Moody, in a recent essay in Against the Current, analyzed the long term trends of the labor market and found that there are cyclical increases in self-employment, and in fact there has not been a greater number of self-employed or gig-workers since the 1990s, rather, workers are finding work through internet applications rather than in the classifieds and through temp agencies. The gig-economy does not constitute the epochal shift in the labor market that it is made out to be, though it remains a profoundly exploitative externalization of costs onto workers that deserves our condemnation.

The area where the gig-economy might have the greatest influence for the rest of the labor force in the long-term is in the payment of wages. It becomes clear when speaking with Uber drivers that one of the strongest pulls of the model is the same day payout. A friend who drives for Uber exclaimed that it was “easy money”, and that he could decide that he needed $60, get in his car, do several rides and receive his pay. One of my students noted this as a principal reason for looking at Lyft, which is now renting Lyft cars to Lyft drivers and paying the insurance and upkeep costs for the fleet, suggesting that the model of pushing off costs onto workers is malleable, and gives further weight to the point that this trend in exploitation is limited in time.

The same day payout phenomenon, along with a confluence of factors, the most important of which is growing public awareness of the wide usage of payday lending services, seems to have caused employers of wage workers to offer advances on pay. PayActiv and FlexWage have ATMs in employee areas that either advance their own money which is paid back directly from the employer on payday, or pull directly from the employer’s account, respectively. As an article in the New York Times made clear though, “FlexWage and PayActiv charge rates that typically cost $3 to $5 per transaction. A worker who pays $3 to withdraw $100 a week before payday is effectively paying an annual percentage rate of 156 for the money”.

In the case of FlexWage, which pulls money from the employer’s account, the worker is paying to have the pay they have already earned. There can be no mistaking how remarkably exploitative this is and how rooted this exploitation is in capitalist social relations. In virtue of his labor having use value for the employer as labor power and yet only exchange value for himself due to his lack of possession of the means of production, the worker must sell his labor power as a commodity. As put so succinctly by Ernest Mandel in The Formation of the Economic Thought of Karl Marx, “it is this juxtaposition of two social classes, one of which is obliged to sell its labor power to the other, that transforms labor power into a commodity, and the means of production into capital. And this transformation is sufficient to explain both the exchange value of this labor power and the necessary difference between the value produced by labor power and its own value, the difference that constitutes surplus value.”

It is precisely the workers’ lack of ownership or possession of the means of production that creates the social conditions of his class that allow him to be doubly exploited – first in his not receiving the equivalent in wages to the actual use value for the capitalist of his labor power, and second, because he does not receive this equivalent, he must surrender wages (in fees) in order to have a portion of the wages he has already earned, the exchange value of his labor power, due to the adherence to the practice of bi-weekly and semi-monthly payouts, a practice that is in place for the cost efficiency of the owners of production.

It is important to emphasize the essential nature of this exploitation and not be too molded to this example, which throws this manner of secondary exploitation localized in wages into greatest relief. What is important is not the specific dollar value of the fees for advance, but that there are costs at all when a worker is receiving pay for work they have already completed but are not set to receive because they are paid when it is convenient to owners of productions. What is important is not that the work always have already been completed when they ask for an advance, but that the exchange value of their labor power is low enough as to oblige them to accept the costs of an advance on pay.

Rather than raise wages, the owners of the means of production are deepening indebtedness to meet the needs of household consumption. Marx observed in volume III of Capital that, “it is plain enough that the working class is swindled in that form too [the renting of housing], and to an enormous extent; but it is equally exploited by the petty trader who supplies the worker with the means of subsistence. This is a secondary exploitation, which proceeds along the original exploitation that takes place directly within the process of production itself.” While not a new development beyond the private debt stage that succeeded the inflation and public debt stages in the legitimization crisis of post-war capitalism, per Wolfgang Streek’s Buying Time: The Delayed Crisis of Democratic Capitalism, the owners of production expanding their surpluses by loaning their workers their own wages would be a remarkable development. Yet the reign of financialized monopoly capitals, which are increasingly concentrating and centralizing capital make it increasingly likely that the operations of Marx’s petty trader, or today’s FlexWage will be performed by a subsidiary firm of the same monopoly capital.

Secondary exploitation of this sort provides an opportunity for more critical discussions of capitalism with the reformist left and petty-bourgeois “liberals”. Payday lending operations are broadly condemned by this grouping, as evidenced by the variety of sources of criticism of such operations, ranging from left think-tank criticisms of Debbie Wasserman-Schultz’s inept reforms of payday lenders in Florida, to New York Times Editorial Board pieces on the general practice. Per this line of argument, we can regulate those modes of production that are capitalist in ways that prevent gross injustice done to the proletariat (and that growing strata of the proletariat that is the precariat); we need not seek to abolish capitalist social relations in general. That secondary-exploitation is evolving internal to capitalist firms elucidates the point that capitalist exploitation is the fundamental form of exploitation. Payday lending, in its various forms, is a secondary form of exploitation that proceeds from the primary form of exploitation that is constitutive of the capitalist mode of production. Check-cashing operations can be regulated out of existence, but without abolishing the fundamental exploitation of capitalist modes of production, exploitation upon expropriation will reemerge in new forms.

The capitalist mode of exploitation must be the primary focus of critique and condemnation for the Left. Payday lending schemes and the ire they provoke in progressives and liberals provide a great opportunity for Marxists to engage said groups and foster a broader anti-capitalist Left.

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