Chapter 22: National Differences in Wages

Outline of Marx's Argument:


Marx's discussion of this subject is more of a cursory indication of what things should be taken into account than a systematic treatment. He starts off with a list of seven factors, but in his ensuing discussion he really only deals with two issues: variations in intensity and in productivity across countries. It's good that he does what he does, but it's unfortunate that he doesn't do more, because this subject has long been an extremely important one.

As recent work by historians Peter Linebaugh and Marcus Rediker has begun to document, along with the tendency of British capital to follow the Dutch lead in developing trade and foreign investment as international extensions of domestic operations went the internationalization of their labor force. "British" capital did not merely employ workers in England, Scotland, Wales and Ireland, but shipped them abroad and put them to work in colonies, hired polyglot crews from all nations to man their commerical and war fleets, entered the slave trade to redistribute African workers internationally and enslaved workers in every colonial area they could manage. In short, throughout virtually its entire history capitalism has been international, it has imposed work on people over as much of the world as it could conquer and has reorganized both itself and those workers in ways designed to maximize its profit and control.

With the extensive development of multinational corporations and rapid rebound of international trade in the post-WWII period such international organization and reorganization became evermore essential. The more capitalists came to operate production at a multinational level and the more international trade developed to redistribute that production globally, the more important this subject has become.

By the end of the 20th Century, capitalist attacks on higher paid workers in "developed countries" by shifting production overseas to lower paid labor pools and their drive for so-called "free trade" to facilitate the re-import of production that has been shifted abroad made consideration of international wage differentials of growing importance. The current growing use of offshore "outsourcing" of particular business operations has become a hot political topic as the slow growth of jobs during the recovery from the 2000-2001 recession has made any and all replacement of American jobs anathma to American workers and political fodder for Democratic politicians.

Therefore, we can see that Marx's interest in "national differences in wages" is not merely a casual interest in making international comparisons or constructing some United Nations-like index of development or standards of living, but in drawing attention to the unevenness of capitalist development and how that unevenness is the result of different circumstances.

"Price and Extent of the Necessities of Life"

Some of those circumstances, as his original list makes clear, may have to do with "natural" factors, e.g., the cost of reproducing labor in northern countries may be higher than that in the tropics because winters mean greater housing costs. But most of the factors involved are historically determined, and as we have seen throughout Capital at the core of that "historical determination is the class struggle.

For example, Marx was interested, and clearly amused, by the efforts by capitalist to reinstitute slavery in the British Carribean in the 19th Century because of the difficulty in getting free workers to work for them. There were at least two factors in this difficulty: first, the one Marx has noted in the Grundrisse, that free workers would only work enough to earn what little they needed for their own consumption without concern for capitalist profits, and second, the reason why such work so short as to aggrevate capitalists: because food was apparently plentiful and cheap. Marx's comment on this situation is worth quoting again:

"The Times of November 1857 contains an utterly delightful cry of outrage on the part of a West-Indian plantation owner. This advocate analyses with great moral indignation -- as a plea for the re-introduction of Negro slavery -- how the Quashees (the free blacks of Jamaica) content themselves with producing only what is strictly necessary for their own consumption, and, alongside this "use-value" regard loafing (indulgence and idleness) as the real luxury good; how they do not care a damn for the sugar and the fixed capital invested in the plantations but rather observe the planter's impending bankruptcy with an ironic grin of malicious pleasure."

The capitalist anger and racist hate inspired by this situation can be seen in comments by one of their best known apologists: Thomas Carlyle. Writing much earlier (1849), Carlyle penned an "Occasional Discourse on the Negro Question". Inspired by the renewed attention to the circumstances mentioned in The Times, Carlyle revised and reissued his essay as a pamphlet in 1853 as "Occasional Discourse on the Nigger Question." In that pamphlet we find Carlyle raving against the high price of labor in the presence of sun and rich soil that makes people largely autonomous of the labor market:

"Far over the sea, we have a few black persons rendered extremely 'free' indeed. Sitting yonder, with their beautiful muzzles up to the ears in pumpkins, imbibing sweet pulps and juices; the grinder and incisor teeth ready for ever new work, and the pumpkins cheap as grass in those rich climates: while the sugar-crops rot round them uncut, because labour cannot be hired, so cheap are the pumpkins . . . The West Indies, it appears, are short of labour; as indeed is very conceivable in those circumstances. Where a black man, by working about half-an-hour a-day (such is the calculation), can supply himself, by aid of sun and soil, with as much pumpkin as will suffice, he is likely to be a little stiff to raise into hard work!"

While there is much else in Carlyle's pamphlet worth reading because of what it reveals about capitalist racism, ideology, and strategy, the point here is simply the relevance to Marx's discussion of wages. What the situation in Jamaica revealed, once again, is how "natural" circumstances - untamed by the imposition of the social relationships of capitalist imposed work - may work against capital rather than for it. It is Wakefield (Chapter 33) all over again. Therefore, the need to re-impose those relationships. Carlyle discusses various strategies for doing so, from a dramatically increased importation of free labor to make land and "pumpkins" so scare so that free labor would have to bow to the labor market to the reimposition of slavery which would achieve the same results much more quickly.

Clearly what is required, whatever the strategy, is the capitalist monopoly over the land and its product. If that could be achieved then the very low cost of producing the means of subsistence ("pumpkins") would work to the capitalist advantage and whether the labor force was slave or "free" the cost of labor (whether the feeding of slaves by their masters or wages) would be low indeed - and oh, so profitable for the sugar-growers of Jamaica.

At the same time, it should be clear that whether slavery could be reintroduced or whether large numbers of workers could be brought to Jamaica would be determined by the class struggle - by the respective power of capitalists and workers, not just in Jamaica but in England (where both workers and people like John Stuart Mill opposed the reintroduction of slavery) or Africa (where short of slavery damned few Africans might be interested in moving to Jamaica, especially at near-slave wages.)

A serious survey of conditions throughout the colonial world of that period reveals again and again how a top priority for colonizers was mastery of the conditions of reproduction to take advantage of their low costs of production and where that was infeasible the imposition of some alternative method for overcoming its absense. Slavery was one such alternative. Another was the imposition of a "hut" tax was another - where colonized people were forced to pay taxes with the colonizer's money and the only way they could get such money was to work for their new overlords. Where the latter method was used, wages could and were kept low. They could be kept low because most of the workers' subsistence was produced by either the workers or their families. They would be kept low in order to force those who entered the labor force to earn the money necessary to pay the tax to work long hours.

Again and again we find similar situations in the post-colonial world - a world where, in general, when they were forced out by independence movements colonial powers left behind neo-colonial elites who continued the economic policies of their mentors. In every case, and across all cases, the pattern of "national differences in wages" was determined by the historical path of class struggle.

In the so-called "developed" countries - or what Marx in this chapter would call the "more developed" countries, the cost of the "necessities" of life was just as important in determining the value of labor power, and thus the level of wages. Never was this more obvious than in the debate over the "corn laws" in England. During the Napoleonic Wars of early 19th Century England was cut off from much continental trade and as a result there was a substantial drop in imports of "corn", i.e., wheat, and an increase in its price due to the restriction of supply. When the wars ended, landowners who's rents had benefited enormously were able to get parliament to pass protective tariffs on imported wheat in order to keep its price, and their rents high. The high price of wheat meant a high price of bread - the staple of much of the English working class - and therefore higher wages than would otherwise be necessary to sustain the reproduction of labor power. Not surprisingly capitalists who wanted to lower wages mounted a movement - which enlisted workers - to end the "Corn Laws", increase wheat imports, and lower the price of bread. (Of course, they didn't mention to the workers they sought to draft into their cause the fact that once the price of bread dropped they fully intended to lower wages!)

From the above discussion I think we can see three things. First, the particular "price and extent of the necessities of life" in each country depends only partly on "natural" circumstances and mainly on the "historical development" - especially of the class struggle. Second, "national" differences" are dependent upon not only local circumstances, both natural and historical, but international ones as well, i.e., the overall pattern of class struggle across countries. Third, that overall pattern of class struggle involves both capitalist strategies for controling labor and workers resistance to those strategies as well as their struggles to realize their own desires (e.g., good food and an easy, leisured life in Jamaica).

"The Costs of Training Workers"

This topic was discussed by Marx in Chapter 6 on labor market where he dealt with the value of labor power but, as he points out, deserves attention in dealing with wage differentials at the international level. The costs of training are determined, for the most part, by the character of work for which workers are trained. Clearly it costs more to train an engineer than an assembly line worker and if engineers tend to rear future engineers, and assembly line workers to rear future assembly line workers, then the former need higher wages than the latter. (Sociological studies show that despite the presence of some upward mobility, the wage hierarchy tends to reproduce itself.)

From the time of colonialism to the present global capitalism has been characterized by a global division of labor in which, for the most part, the colonized and then decolonized, yet still "less-developed" world mainly has produced raw materials (either MP or means of subsitence) while the so-called "developed world" has moved toward specializing in manufacturing and later service production. That means that, in general, those put to work by capitalists in the "less-developed" world have been employed throughout most of the modern history in such activities as mining and agriculture. Although both of those kinds of industry require some high-skilled labor, the bulk of the workers do not. Moreover, given the colonial and neocolonial history of such industries what skilled labor that has been required has often been drawn from the abroad. As a result the level and cost of training of the labor force in such countries has been low. It doesn't take a university education to learn how to pick up palm nuts, or dig peanuts, or shovel debris in diamond or gold mines. Thus insofar as the wages of such unskilled workers in those countries have been determined by the need to cover their education they could be kept low.

In the "more developed" capitalist countries where industries such as manufacturing (from tool making to computers) and more sophisticated services (from health care and finance to software development) are more common, the costs of training for many workers is greater. It does take a university education to train an electrical or software engineer as well as considerable on-the-job training. Obviously there are a great many unskilled or low skilled workers in those industries, workers who don't require little more training than their counterparts in the "less developed" world, but they are a smaller proportion of the labor force and therefore the average cost of training and level of wages tends to be higher in these countries.

"The Part Played by Women and Children"

Although he doesn't discuss this factor in this chapter, elsewhere in Capital it is clear enough that Marx's concern with the "part played by women and children" primarily involved the way they were being increasingly drafted into the labor force as cheap labor to undermine more highly paid male labor. (Much as one of the strategies Carlyle considered - that of bringing in more immigrant labor - was designed to undermine the wages of Jamaican workers.) In other words, the drafting of women and children was a capitalist strategy to hold down or even lower wages. Therefore, where such a strategy was feasible you would expect, ceteris paribus to find lower wages. This would be true within a country and across different countries. There can be little doubt that one reason some capitalists have embraced feminist demands for the removal of traditonal patriarchal obstacles to women obtaining waged jobs has been the desire to see an expansion of labor supply and downward pressure on wages. (The associated feminist demand for wage equality, however understandable and laudable, ignores this aspect of capitalist strategy. The feminist demand for "wages for housework" does not.)

The battle over child labor around the world has resulted in a much greater public awareness of such issues. The emphasis of those fighting to eliminate child labor has been on the low wages and execrable working conditions of children. The emphasis of those opposed to its elimination has been on the low wages of their parents and their families' need for the extra money, however little, the children bring in. In other words, whatever benefits to the children achieved by the elimination of child labor in many parts of the world, it is argued, would be offset by the increased poverty and suffering of their whole families. Clearly one issue in that debate should be the size of effects. The elimination of child labor would reduce family income from the children, but it would also reduce the labor supply which would, ceteris paribus, tend to raise wages. Would the rise in wages be enough to offset the fall in income? The answer to this question can not be given a priori but depends upon labor market condtions that may vary from place to place. (Nor, I hasten to add, is it necessarily a deciding issue; even if wages did not rise enough to offset the reduction of income caused by the elimination of child labor, some other offsetting mechanism might be divised.)

Beyond this kind of discussion, my comments on earlier chapters should have made clear that there is another dimension of the "part played by the labor of women and children" in the determination of average national wages and in the determination of national differences in wages. That other dimension is the labor of women and children in the home and community that contribute to the production and reproduction of labor power. Generally speaking, as I indicated in my discussion of the circuit of the reproduction of labor power, the more work done by women and children the lower the wage can be in order to obtain a given quality of reproduction. Two examples.

First: the housework of wives. The more wives in the typical patriarchal nuclear family do the work of cooking, the less wages have to cover the cost of eating out or of buying more expensive prepared food. Indeed, the more time and energy wives plough into gardening - the growing of food - the less food has to be bought out of the wage, and the lower the wage can be. (This is especially important in rural areas, but not negligible in suburban or even urban areas.) The more wives do the work of cleaning the house or clothes, the less need for wages to cover the higher costs of maids or laundry services. The more wives play truancy officer and keep their kids doing their homework the less need for teachers or expensive private tutoring. The more ego boosting and other psychological maintenance work done by wives at home, the less need for wages to cover shrinks. The same for health care: the more nursing, the more home care, the less need for doctors, nurses and hospitals - all high and growing costs of the reproduction of labor power. The more effort wives put into meeting the sensual and sexual needs of their partners the less money spent on prostitution and other commerical sex. All of this is also true with respect to whatever domestic labor is performed by husbands and by children.

Second: homework. Where children go to school (which is not everywhere) they are usually forced to work both in school and after school doing very appropriately labeled "homework" - appropriate because it is usually done in the home. Basically homework involves students imposing work on themselves with little minute-to-minute oversight of the sort they get in school classrooms. (Although as mentioned above, parents may play the role of truant officer or study hall supervisor in the home.) Clearly, the more children can be made to do such work outside of school, the less need to fund resources and teachers within the school. In some cases of resources it may just seem to be a matter of shifting the cost, say of a computer, from being covered by parent-paid taxes to direct parent payments. But there is an economy of scale advantage in buying computers for schools where many students may use a single computer over the cost of putting one in every student's home, or even room.

The cost of teachers is more important. The more students figure things out on their own, the lower the cost of hiring and employing teachers; the larger the feasible class size, the lower the teacher/student ratio, the lower the cost of teacher per student trained. This is true at all levels, though the most extreme examples are to be found in universities rather than in elementary and secondary schools. There, where those students who have been admitted have demonstrated their ability and willingness to impose work on themselves, one finds gigantic class rooms full of literally hundreds of students. Clearly the professor cost per student being trained is dramatically lowered by this method by this shifting of effort from teachers to students.

"The Productivity of Labor"

As mentioned at the outset of these comments, Marx deals more with the productivity than with those "factors" discussed above. The main reason why differences in the average level of national productivity is important in determining differences in the average level of national wages is revealed in Marx's chapters 12-15 discussion of relative surplus value. There we saw that increases in the productivity of the labor that produces the means of subsistence lowers their per unit value and when this is translated in the market into lower per unit prices, it lowers the nominal wage necessary to supply a given real wage. A similar, indirect, effect follows from increases in the productivity in the production of the means of production to the degree that those means of production directly (or indirectly) enter into the production of the means of subsistence.

Therefore, we should expect that to the degree that productivity is higher in one country than another, the lower the value per unit of subsistence goods in that country higher-productivity country. All other things equal, we should therefore expect the prices of those subsistence goods to be lower prices, and therefore lower wages to reproduce labor power. However, to the degree that the workers in higher-productivity, more developed countries are able to force capital to share the fruits of rising productivity, that rise makes it possible for capital to supply them with a higher real income. Depending on the size of the various forces, it is, paradoxically, possible that the higher nominal wages of workers in the higher-productivity countries actually buy a lower value package of consumer goods than the lower nominal wages of workers in less developed countries.

The second factor on which Marx dwells in this chatper - the relative average intensity of labor also can contribute, to the existence of an international scale or hierarchy of wages. Given his discussion in chapters 12-15 of the influence of capitalist organization and the use of machinery to set the rhythm of work, we might expect intensity to be higher in more developed capitalist countries. This may or may not, however, be the case because, as always, other things are not generally the same. For instance, it may be that the relative weakness of workers in a less developed area - say forced to work for extremely low piece wages - may drive them to the very limits of the intensity possible to any human being. It may also be the case that good self-organization of workers in the more developed areas may provide the means by which they are able to shift from piece to hourly wages and force up the level of those wages and impose enough work rules that they are able to work at a more leisurely pace. About all that can be said a priori is that capital always seeks the highest intensity that it can impose and that workers resist this. Given differnces in the balance of power between capital and workers across countries we can expect that the degree of intensity will vary and that that variation will play a part in the shaping of the global wage hierarchy.

Case Study #1: Spinning

Hines photo of little girl tending dozens of spindles with overseer
in background. Marx's example of differences in the spinning industry between England and the European continent and among countries on that continent could be generalized to the textile industry as a whole. As a general rule England was at the forefront of the development of textile production machinery at every stage of production, from the growing of the raw materials through the spinning of thread and weaving of cloth to the sewing of clothing. It is likely, therefore, that Marx's observation that English spinning labor was more intense was also applicable throughout the industry. The basis for his argument that spinning labor was more intense in England was the data upon which he drew, and which he supplies in the chapter, on the number of spindles per worker. The assumption was that the more spindles for which each worker was responsible, the more intense would be the labor of taking care of them. This may well have been the case. Although, it is worth noting, in the period in which spinning and weaving was being gathered from homes into factories and then automated with water and then steam power driving the machines, it is quite possible that the still-at-home handloom weavers who were struggling to survive in the face of factory competition and falling prices might well have been working not only longer hours but more intensely than factory operatives. Obviously while it is relatively easy to observe changes in the pace of work (speed-up or slow-down) it is not so easy to obtain any absolute value for intensity. One can imagine the use of modern scientific apparatus to measure something like BTU's burned per hour per worker, but I have never heard of such a thing being done, much less done systematically in such a way as cross industry or cross country comparisons were possible.

At any rate, the higher productivity and presumed higher intensity of labor in the English factories is presumed to follow from a higher organic composition of capital (more machinery per worker) and to allow for higher wages in England than on the continent. As we have seen above, this would be at least the tendency although other factors would have to be taken into account in a concrete historical analysis. In the photograph by Louis Hine to the left taken in 1909 you can see a small girl tending a very large number of spindles. This was the kind of high capital/labor ratio Marx was talking about.

Case Study #2: Railroad Construction in Eastern Europe and Asia

This case is of interest for several reasons. First, it is a case of British foreign investment: considerable British capital was invested in railroad construction not only in Eastern Europe and Asia but also in the United States. It was a major area of British overseas investment for quite a long time. One must suppose that such investment was undertaken on the basis of familiarity with production and cost conditions in the various areas and the estimates of those conditions and costs were expected to yield competitive profits. Chinese
coolie labor being overseen by white man.

Second, when Marx notes that British labor was more "intensive" than local labor and got paid higher wages he doesn't specify any differences in either job categories or work behavior. We may assume, however, that he was assuming that the British firms were sending dedicated careerists to oversee such production and those overseers would be hiring mostly unskilled peasant labor to cut through forests and mountains and lay track. Such was certainly the case in the United States where large numbers of Chinese immigrant workers were used by railroad robber barons like Charles Crocker (1822-1888) and Leland Stanford (1824-1893) to drive the Central Pacific Railroad eastward to and through the Sierra Nevada mountains. In the image to the right, from the historical archives of the Central Pacific Railroad we can see both Chinese workers and the well dressed white man overseeing their work. As research by historians such as Herbert Guttman has demonstrated such peasants drafted for industrial work brought with them agrarian habits of time and work that were much more leisurely than those demanded by industrialists. Extremely low wages and often brutal oversight were often required to inculcate into such workers the habits of punctuality and work intensity desired by their employers. Under those circumstances Marx's assertions seem likely to have been accurate.

Third, with the expansion of imperial investment during the colonial period and the post-colonial growth of multinational corporate investment alluded to at the beginning of this commentary, such differences in work habits (and consequent length and intensity of labor) have proved of decisive importance time and time again. On the one hand, there are a seemingly endless number of examples where multinational firms have displaced production facilities geographically to take advantage of lower wages (and other lower costs). This was true - to choose an example in line with Marx's exposition - in the American textile industry that moved first from New England to the US Sun-belt, and then later into Mexico and Asia. On the other hand, it is also true that not every country that has extremely low wages has been able to attract such foreign investment hell-bent on escaping rising labor costs at home. Among the reasons why many pools of labor have been bypassed by such movements are precisely the work habits (and other habits of struggle) of the people there. In India, for example, workers have the nasty habit of going on strike using a sit-in that surrounds their employers and refuses to let them out until they capitulate. The same was true in South Korea, but a repressive police-state apparatus - backed up by thousands of American troops and American-trained Korean troops - kept such tactics in check until recently, thus permitting a much higher level of direct foreign investment than India (This may be hard to believe, in as much as American "high-tech" investment in India is currently very much in the news. It becomes more believable, however, when we see that such "high-tech" investment involves the hiring not of fiesty blue collar Indian workers but of middle-class, relatively well educated and well trained/tamed Indians.)

Marx's overall treatment, of course, draws our attention not only to the question of the intensity of effort of such workers hired abroad but also to that of their productivity. Lack of skill at even low skilled jobs may result in lower productivity and even render such investment unprofitable. In the current period there are a number of cases where the productivity of outsourced workers has been so low as to lead to the abandonment of such foreign investment. One example is that of technical assistance "call centers" re-located abroad. Despite newsworthy efforts by Indians to relearn English pronunciation so they can sound like Americans on the phone, the impatience of many callers with both their accents and their skill has been so great as to lead more than one company to abandon their investment and repatriate the jobs. The costs of repeated hang-ups by impatient customers, irritation with the company and the resultant bad satisfaction ratings have outweighed the reduced cost of low foreign wages.

Critical Comments on Carey

Henry Charles Carey (1793-1879) was an American publisher and economist who supported protectionist measures by the United States against the "diabolical influence" of Great Britain. Marx mocks him in part because of the contradiction between his belief in free trade and his advocacy of protectionism and in part because he sees Carey's understanding of the determinants of wages, and relative wages accross countries, as simplistic.

Foreign Direct Investment and "Free Trade"

As mentioned at the outset of this commentary, Marx's interest in the differences among wages among various countries has lately become a fairly hot topic of discussion and debate. The current debate arose amidst a larger debate about the North American Free Trade Agreement (NAFTA). Negotiated in secret by the United States, Canada and Mexico, then leaked to the world when it had reached draft stage, the agreement was met with widespread opposition. Literally hundreds of grassroots groups mobilized against it and created a network of opposition among themselves to fight it. In short, these activists sought to overcome the capitalist strategy of pitting workers against workers by organizing across those same divisions. There was also dissent within the legislative branches of all three governments as the draft of the agreement was posted to the Internet and became available for anyone and everyone to read.

Among the arguments against the agreement was one based on existing "national differences in wages" between the United States and Canada (minor differences) and between those countries and Mexico (major differences). The fact that wages were so much lower in Mexico than in the United States or Canada led many to argue that successful passage of NAFTA would make it easier for Canadian and U.S. corporations to move, or threaten to move, their production operations south into Mexico. Third Party candidate Ross Perot became famous for his evocation of a possible "great sucking sound" as jobs were "sucked" out of the United States into Mexico.

This aspect of the debate, which focused on the same topic as Marx does in this chapter, was, however, only part of the larger debate. Those who were worried about U.S. or Canadian corporations shifting jobs into Canada also addressed many other dimensions that bore on the issue. For example, they pointed out how even though Mexico had reasonable environmental laws, the ease with which they could be bypassed through a little bribery (la mordida) added to the allure of low wages by further reducing the costs of production. Moreover, they also pointed to the organizational weakness of Mexican labor, how the only trade unions tolerated by the Mexico government were those that had sold out to the PRI - the then dominant party in that virtually one-party state. Yes, a growth of investment would mean more jobs and an expansion of the labor force, but political repression would prevent those new workers as well as the old from fighting for their rights, higher wages better working conditions, and so on. There were many other aspects to the debate all of which suggest important ways in which Marx's discussion in this chapter needs to be extended to provide a more complete understanding of "national differences in wages" and the implications for both capitalist and working class strategies.

The defeat of the opposition to NAFTA and it successful passage by the legislatures of all three countries was soon followed by the same debate on a much larger scale: namely the debate about the new World Trade Organization (WTO) spearheaded by the United States and aimed at accelerating the freedom of movement for multinational commodity capital. Because the WTO had dozens of members rather than just three, and because it amounted to the imposition of the same set of trading rules on all its members, opposition to it and to its rules and to the implementation of those rules was soon global in scope. As in the case of NAFTA opposition forces created networks to share information and organize against the WTO. The first sign of just how broad and serious was that opposition came with the besieging of WTO meetings in Geneva, Switzerland. That siege was made up of some 20,000 protestors from both North and South. It was followed by the much more reported siege of the WTO meetings in Seattle, Washington. The "Battle of Seattle" saw some 30,000 protestors from dozens of countries converge on Seattle and successfully shut down the WTO meetings. Among those protestors were a very large number of blue collar workers from the U.S. labor movement as well as environmentalists, Left-wing party members, anarchists, university students and so on.

Once again the issue of "national wage differences" was front and center for many protestors - most obviously the labor movement - for the same reason it had been during the debate over NAFTA: the fear that freer trade with countries with very low wage rates would make it easier for multinational corporations to undermine better paid workers elsewhere. Once again, that argument was buttressed by the consideration of many other issues.

The protests at Geneva and Seattle were the first of their kind. When Marx was writing in the mid-1800s, it was only with difficulty that workers and activists were able to collaborate across national boundaries. Even throughout most of the 20th Century this was also true. There were cases of collaboration - such as opposition in the United States to the War in Vietnam, or support around the world for the anti-aparthied struggle in South Africa - but creating and using networks was a slow process. Not in these or in any other trans-border collaboration is there any record of tens of thousands of networked protestors have the capacity to organize collective demonstrations of the sort that exploded in Geneva and Seattle.

There were two key factors in these anti-WTO mobilizations. First, was the gathering of some 3,000 grassroots activists in Chiapas, Mexico in the summer of 1996 for an "Intercontinental Encounter Against Neoliberalism and For Humanity" called by the Zapatista movement that had surged out of the forests and mountains of Chiapas at the beginning of 1994 and launched a challenge to the Mexican government and an affirmation of indigenous rights that swept round the world. That intercontinental encounter consisted of almost a week of discussions and networking among activists from over 40 countries. When the encounter was over and they went home they carried with them a vision of global networking and global collaborative moblization. They began working out that vision and among its fruits were the anti-WTO protests.

Beginning with the organizing that produced the Battle of Seattle, global grassroots networking accelerated and evolved new dimensions, especially the elaboration of Internet channels of communication of which the key new form was Indymedia - websites that could post news, from a grassroots perspective almost instantly, including audio, photographic imagery and streamed video. The possibilities were demonstrated during the confrontation with WTO in Seattle when for the first time dozens of independent reporters armed with camcorders could not only circulate amidst the demonstrations but then stream their filming directly onto the web bypassing the capitalist controlled mass media. The dramatic difference between the images broadcast by the media (generally emphasizing the breaking of McDonald windows by a few) and those broadcast by Indymedia (generally showing non-violent protestors and violent police actions) was dramatic. After that Indymedia operations sprang up on the net in country after country, city after city and as mass mobilizations were mounted against other capitalist organizations such as the International Monetary Fund, the World Bank, the World Economic Forum and the G-8 meetings, Indymedia would also converge to provide alternative coverage of events.

Alongside the issue of the uses to which capitalists try to put "national differences in wages" - pitting workers against workers - and the attempt to overcome that strategy by organizing across borders, the very success of such demonstrations made visible another way in which workers were divided by those wage differentials. Although in all these large-scale demonstrations it soon became obvious that most of the demonstrators were from countries high on the international wage and income hierarchy. Traveling intercontinentally to participate in such demonstrations was something the vast majority of the world's workers could hardly afford. A cluster of villages or a city might pool its resources to send a representative but the resources required is large and the numbers sent small.

One approach to overcoming this problem has been the diffusion of protests. Instead of gathering very large numbers of people in one spot, a la Seattle, even larger numbers of people moblize for the same purpose with the same kind of target at a multiplicity of easier to reach sites around the world. The issues are the same, although often mixed with purely local ones, but the message is the same: the unity of vast numbers of people in many different countries against capitalist policies. How to make such global mobilization more effective is an on-going subject of discussion in these early years of the 21st Century.


"Outsourcing" which has been widely attacked by workers in the wake of the recession of 2000-2001 and the relatively "jobless" recovery that has followed it, is not new. In the first place "outsourcing" can be either domestic or international, with the latter sometimes called "off-shoring". The term "outsourcing" has been used to refer to the phenomenon of a firm going "outside" its own structure to contract some specific function instead of doing it "in-house." It has, therefore, a micro-economic connotation. Such outside contracting has been around for a long time. If we generalize the term, as some now do, to any "going outside" then it can be, and has been, applied not only to business firms but to governments, or to any entity for which an "inside" and an "outside" can be identified.

Direct foreign investment, for example, to seek out and obtain raw materials, or the recruitment of foreign workers from outside a country (as in the case of Chinese laborers mentioned above) can be seen as kinds of "outsourcing."

The kind of outsourcing, however, which has been receiving the most attention in recent years is the off-shoring of any and all business operations in which workers are hired abroad instead of at home. This is the kind of outsourcing that has the United States labor movement up in arms, that has been facilitated by agreements such as NAFTA, organizations such as the WTO and policies such as those pursued by recent administrations both Democratic and Republican.

Central to the objections to outsourcing has been the perception of dramatic "differences in national wages" and the awareness that to a considerable extent business decisions to "off-shore" operations are based on the expectation of lower wages and lower labor costs more generally. Whether such off-shoring involves the replacement of jobs in the United States by jobs overseas, or the creation of new jobs overseas instead of new jobs at home, the process is seen as contributing not only to the joblessness of the recovery but to the general weaking of workers in the United States.

Defense of such off-shoring doesn't usually deny the wage differentials that motivate the movement, but point to the relatively small number of jobs effected, and to the way increased trade and income abroad by increasing the demand for U.S. exports tends to increase rather than decrease jobs in the U.S. Unfortunately for its proponents, there is not much data to support this quantitative argument, while the anecdotal evidence of job loss due to off-shoring is enough to keep the opposition mobilized.

There is also evidence that a certain amount of outsourcing is done not on the basis of lower wages (or other labor costs) but rather for reasons of ideology, politics or greed. This would seem to be the case for a great deal of recent government outsourcing. Even before the Bush administration's invasion of Iraq the ideology and politics of neoliberalism in that and previous administrations during the 1980s and 1990s had embraced "privatization" and the outsourcing that goes with it. With "privatization" the government either divests itself completely of some activity, handing it over to the private sector, or it contracts-out tasks that it had previously done in-house, with civil servants.

With the invasion of Iraq this issue came to the fore. First, the letting of no-bid contracts to private corporations (e.g., Halliburton) for the stabilization and reconstruction of Iraq was critiqued as a corrupt handing over of tax payer money, by the billions, to friends of the current administration (e.g., Halliburton was recently headed by Vice-president Dick Cheney). Second, the revelations of the abuses of prisoners in United States run prisons also brought the revelation that many of the abusers were guards or interrogators supplied under contract, not government employees. Instead of taking care of the people it had taken prisoner, the U.S. Army was using, at least part of the time, mercenaries to do its work for it. As the revelations of the abuse spread and deepened - profoundly irritating the Bush administration which did everything it could to keep the situation under wraps - the more the role of private guns in Iraq came to light. It soon turned that after the US and British military forces, the largest armed force in Iraq was the legion of mercenaries hired by both governments and private corporations. Further investigation revealed that this "outsourcing" was certainly not due to any attempt by the government to minimize its costs; the wages of the outsourced mercenaries were far, far higher than those of US army personnel. This recognition, of course, merely added fuel to the criticism of this kind of gravy-train outsourcing. It also suggests, once again, how many other factors need to be taken into account to extend Marx's analysis in this chapter to contemporary real-world cases.

Concepts for Review

    price & extent of necessities of life
    costs of training workers
    parts played by women & children
    translation of time to piece wages
    average intensity of labor
    average productivity of labor
    development of capitalism
    more developed
    less developed
    relative value of money
    technical composition of capital
    organic composition of capital
    intensity of labor and wages
    price of labor
    antagonisms and theory
    international dimension of capitalism
    nations and capital
    free trade
    outsourcing & offshoring
    government outsourcing
    natural factors
    the Nigger Question
    hut tax & work
    corn laws
    domestic labor
    labor of reproduction
    housework & the wage
    homework & cost of training
    measuring intensity of labor
    NAFTA, the WTO & wages
    global trade pacts & global protests

Questions for Review

An interesting case is offered by Jack London in his essay "The Scab" (1904) - that you were supposed to study in conjuntion with Elizabeth Gaskell's novel Mary Barton. He writes:

"As Mr. Casson has shown, an English nailmaker gets $3.00 per week, while an American nailmaker gets $30.00. But the English worker turns out 200 pounds of nails per week, while the American turns out 5500 pounds. If he were as "fair" as his English brother, other things being equal, he would be receiving, at the English worker's rate of pay, $82.50. As it is, he is scabbing upon his English brother to the tune of $79.50 per week."

The wage is here stated in terms of a weekly wage and I think we can assume that the length of the working week is the same for both English and American nailmakers. What differs is both the wage and the output of a given worker's effort. If we knew the number of hours in the week we could calculate the hourly wage, but we don't, so we can't. We can however calculate the difference in the piece wage for the workers in the two different countries ($3/200=$0.015/lb for the English and $30/5500=$0.0055/lb for the American). Clearly, the piece rate for the American worker is much lower, yet that worker makes tens times the weekly wage. Because London's theme is how one group of workers may scab on another by offering "more for less" he tends to attribute this wage difference to "superior energy, skill and willingness of the American worker." However, he does recognize that "a great part" of the difference may be due to "the more improved American machinery." So, two questions: First, assuming the wage differential reflects value differentials, to what degree do you think London, or anyone, can accurately differentiate between the effect on wages of differences in productivity and the effect of differences in the intensity of labor? Second, re-reading London's comments on English labor, on what basis do you think he thought it was reasonable to give greater weight to differences in intensity?