The labour market is not a charity auction

Capitalism, at its most basic and unbridled, is a system that says: okay, the king is dead and therefore no longer owns all this stuff; take what you can … if you can hold onto it, it’s yours. Oh yeah, and you can pay the people who don’t manage to hang onto any stuff to work yours … because if they don’t they will starve.

On your marks, get set … go!

The system is extraordinarily productive, driven as it is by those gargantuan twin-thrust engines: human greed and human fear (you can keep what you can take/failure means death).

One of the great political achievements of the last 300 years has been the refining, softening and regulating of this system so that it maximises the good it can produce for as many as possible.

But note this: it can’t produce the same amount of good for everybody – because its fundamental driver is that it allows the hungriest, cleverest, most creative and most intelligent to keep what they can take. That’s why those people build the enterprise. So they can keep what they can get out of it. That’s the creative heart of the system.

(One of the many flaws of capitalism is it also allows those who have become powerful for reasons other than those listed in the last sentence to “keep what they can take”. Thus both Apartheid apparatchiks and New Elite cronies are (still) living high on the hog for reasons that have nothing to do with the unleashing of their creative spirit and more to do with their ability to cheat and steal. But that is another story.)

The point I wanted to make, is that in its most basic and unregulated form capitalism will allow the owner of the factory or mine to extract the last drop of blood from the worker – and the last drop of blood from his children, his old mum and his maiden aunt.  Without regulation the only thing that will stop the capitalist working the worker to death is the need to have him come to work tomorrow and for his children to come to work in ten years time. The history of capitalism has demonstrated this unfortunate truth about humans time and time again.

Thus we have labour market regulations: minimum wages, basic working conditions, rights to dignity, rights to organise and strike. These are amongst our greatest achievements – and they are all there on the law books of the new South Africa.

But there is a line over which we must not cross.

When the law, in effect, demands that the capitalist share equally the profits of the enterprise with the workers, the enterprise is over.

If local regulation means the capitalist can’t make sufficient profit here he (or she) will go elsewhere or will spend his or her time doing something else. That’s it; end of factory, end of jobs and end of story.

Michael Spicer, as CEO of Business Leadership South Africa, is the perfect person to listen to if you want to get an average signal of what South African capitalists are feeling.

His comment in today’s Business Day about the conflict between the flood of proposed changes to labour and employment equity laws and government’s job creation agenda is well worth a read. Catch it here.

It seems to me we are carelessly testing for the “tipping point”, the point beyond which the capitalists mechanise their plants or leave.

4 thoughts on “The labour market is not a charity auction

  1. Umm, yes, so far so Marxism 101. Capitalism exploits workers, this is not a fair thing. What I’d really like to see is some analysis comparing
    a) what “decent work” would cost, across the economy; and
    b) what the cost of maintaining management is, everything above a rate of say, R 1 million per year
    Hypothesis: b > a

    1. ¿Qué no? I rather thought is was Capitalism 303 … the “thesis”, if it could be called such a thing, is the system’s unfairness is what makes it work – in both the good and the bad way that it does … but without the unfairness it’s just a charity auction where nobody comes.

      But if we look at the hypothesis:

      If we take the number of people who find work through labour brokers (900 000) combined with expanded definition of the number of unemployed at between 5 and 6.5 million … and the unreported millions who are scraping a living doing piece work on the side of the road … (i.e. all the people for whom “decent work” does not exist) then the question, surely, we must ask is: is there a trade off between creating “decent jobs” and any jobs? I am firmly with Gwede Mantashe on this one.

      Does the hypothesis suggest that the actual trade off is between what managers earn and the creation of 7 million new “decent jobs?” and, I assume the maintenance of the 7 million that exist already? How could such a trade off be affected? In what way (as in your point ‘a’) could we estimate what “decent work” would cost, across the economy”?

      In what way could we limit what management earns and apply the “saving” to “decent work” “across the economy”?

      I don’t want to end up defending a Hurray for Free Markets! kind of position, but I cannot see what mechanism we could use to make the kind of choices suggested by the hypothesis … which are the kind of choices motivated in the New Growth Path framework.

      You very clearly and succinctly (in an earlier comment) made the point about the amazing incapacity of this state … I think the danger of the combination of an overly ambitious state with an overly incompetent one is that the markets will find a way around the overambitious legislation to the detriment of of the people that enjoy some protection now .. a also, if I am honest, I do not believe we can allocate resources more effectively than the market … it sometimes a close call, but the kind of intervention implicit in the hypothesis always, it seems to me, lead to greater costs, greater waste, greater miss allocation

      I just glanced over what I have written and suspect I might be talking straight passed you … with me wanting to argue against socialist romanticism and therefore forcing your points into that paradigm … sorry about that.

  2. Harald came back on my facebook site and said:

    “My point was that your Capitalism303 is a lesson in an approach devoid of any social contract. It blames COSATU and presents it as a labour aristocracy. Aristocrats earning R3000 / month … I agree that there’s a debate about ‘decent job…s’ and ‘any jobs’. But if it is framed in this one-sided way, and blaming only the relatively poor), I disagree. The notion of the hypothesis was therefore to present – in rather pseudo-scientific and -mathematical way – a conceptual framing. Start a conversation about a social contract in which ALL (incl University profs) who are employed make a concession. And I’m simply interested in the empirical question, whether the money that is needed to make all jobs decent is the big cost issue, or whether excessive over-consumption costs more.”

    1. Hey Harald, thanks for that – got me thinking. I think I do tend to dump on Cosatu – I get irritated that they present themselves as the voice of the poor and unemployed when their interests are obviously and overtly in contradiction to the… interests of these groups. At the same time they have been brilliant (again, directly following their ‘class interests”) on corruption and state functionality and, (following their ideology), on HIV/AIDS, Zimbabwe, Sushi eaten off women’s bodies, energy … you name it. I always try to correct for my overcorrection (if you like) by acknowledging that Cosatu does what it has to do to represent the interest of its members and it does it well, effectively and honourably (unlike almost any other major political group in this country) … it is just that those “interests” are necessarily sectional … nothing wrong with that, just don’t take them seriously on labour legislation – it locks the poor and unemployed out of the market and this is what Costu MUST do.

      I have no doubt that you are correct that a major social compact is the only possible way of assembling the resources necessary to create “decent jobs” and also, frankly, to migrate to global energy platform away from oil, to preserve biodiversity, to redress poverty and hunger, to produce AND distribute enough food/water/energy/housing/healthcare/education and any other major challenges that face us (and our environment) as a species. I do tend to be overly pessimistic about our ability to do this … I have definitely become something of a misanthrope (although I suspect that is just to protect my sensitive and shmaarmy sentimentality… but that’s another story). Thus I tend to look to the energy provided by “markets” – the forms of social organisation that arise around the imperative to produce, exchange and accumulate – for solutions. We have to build those outcomes into the price of everything that is exchanged … to do that we need a strong and effective global “state” and, yes, a basic agreement between all groups that these are the desirable, crucial objectives and an agreement to share the costs of the endevour… in other words the social compact to which you refer. Keep well and love to your family. (and make sure you have put this on my blog! Thanks for doing that with your first comment – I really appreciate it.

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