- Capitalism and Alternatives -

Why capitalism cannot 'raise all boats'

Posted by: Barry Stoller on January 10, 19100 at 10:39:57:

Much has been said about how capitalism 'raises all boats.' According to the hype, increased capital productivity translates into more wealth for capitalists as well as higher wages for workers. To put it in the vernacular of Reaganomics, the more wealth there is for the rich, the more will trickle down to the poor.

As popular as this notion may be, it is NOT POSSIBLE for capitalist accumulation to 'raise all boats.'

Division of labor---specifically, the Babbage Principle---prevents that. Machinery---which is a means of reducing employees---also prevents that. And division of labor and machinery are basic PREDICATES of increased productivity.

The Babbage Principle is the practice of splitting jobs into separate component tasks. For example, once upon a time, the corner grocer ordered products, cut meat, rang sales and stocked shelves. Then the store expanded. The grocer hired a manager to order products, a butcher to cut meat, a cashier to ring sales, and a stock person to stock shelves. Things ran smoother in the grocery store. AND, ultimately, the grocer saved on employee costs, too.

Hiring a staff to do various tasks in the store enabled the grocer to pay each employee commensurate with the level of skill---and lack of skill---involved in each separate task. The manager earns $10 an hour, the butcher $7, the cashier $6, and the stock person $5. When the grocer did all those jobs, the rate of pay was $10 an hour no matter was the particular task was. That's the Babbage Principle---atomizing multi-task jobs into simpler ones SO THE RATE OF PAY CAN BE REDUCED.

Add to that a food scanner---which obviates the need to hire a cashier who even understands math---and the cashier wage drops to $5.

With that in mind, let us now check in with everyone's favorite economist, Karl Marx:

Are growth of capital and rise of wages really so inseparably connected as bourgeois economists maintain?...

[T]he productive power of labor is raised, above all, by a greater division of labor, by a more universal introduction and continual improvement of machinery...

[A]s the division of labor increases, labor is simplified. The special skill of the worker becomes worthless. He becomes transformed into a simple, monotonous productive force that does not have to use intense bodily or intellectual faculties. His labor becomes a labor that anyone can perform...

[T]he more simple and easily learned the labor is, the lower the cost of production needed to master it, the lower do wages sink, for, like the price of every other commodity, they are determined by the cost of production.(1)

Since increased productivity is begot by division of labor and machinery, it is IMPOSSIBLE for wages to rise as capital profits rise. Division of labor and machinery are used expressly to lower labor costs---which, in turn, yields higher profits. Some boats rise but most slowly sink.



1. Marx, 'Wage Labor and Capital' [1849], Marx & Engels Selected Works, Progress 1968, pp. 87-91.

Follow Ups:

The Debating Room Post a Followup