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Albert Gates

Wages Are a Poor Reward For Labor

(October 1943)

From Labor Action, Vol. 7 No. 43, 25 October 1943, p. 3.
From Incentive Pay, the Speed-Up, New Style, Chapter V.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Ever since the rise of capitalism there has been a sharp struggle between the bosses and the workers over wages. From the early days of this system, when machine production was still in its infancy, production and profits have depended on the direct exploitation of labor.

Profits of the capitalist class were based on the long working day, the seven-day week and the intense physical exploitation of men, women and children. To keep wages as low as possible – just enough to permit the working man and his family to live and reproduce in kind – meant high profits. Wage increases would lower profits. Since the capitalist is in business only for profit – he does not care whether his product is useful or not – he has ever sought to keep wages as low as possible.

The capitalist and the worker, throughout the existence of capitalism, have fought over wages and the conditions of labor. If the former kept wages low, hours long, without investing money to improve the conditions of work, he did well and had a profitable business. It mattered not to him if the workers suffered severely under this brutal system.

The development of technology, which permitted a tremendous rise in production and a corresponding rise in the productivity of the individual worker, saw a gradual rise in wages, a gradual-reduction of the work-day and work-week, and a gradual improvement of working conditions.

It is a fact of economic history that while the capitalist profited from every improvement in production, while his wealth mounted, his living standards rose higher and higher, his leisure increased manifoldly, and his general security was strengthened, the conditions of the working man remained, on the whole, far below what was warranted by industrial progress. It is also a fact of economic history that, for every improvement in the lot of the worker, he had to engage in heroic and violent struggles against his profiteering boss. The capitalist never gave anything to the worker voluntarily. Everything the worker has gained – higher wages, shorter hours of work and improved conditions of labor – was the result of intense struggle by the working class.

The bosses have always resisted wage increases because the granting of higher wages would come out of their profits. Usually they overcame this by increased production or increased prices and new markets. In the end, the capitalist saw to it that he lost nothing even in granting wage increases; he was always compensated for any concession which the workers wrung from him by sharp struggles.

But most important of all, wages have always lagged behind profits. They never rise simultaneously or in the same proportion as profits. It is only after the workers observe the increase in profits and life becomes increasingly unbearable that they are, willy-nilly, driven to fight for a greater share of the wealth produced by themselves.

For example, between 1924 and 1929, in the very midst of the prosperity period in which big business “earned” enormous profits, wages, that is money wages and real wages (what they will actually buy of the necessities of life) remained stationary. As a matter of fact, wages in this period were below the rates of 1920!

Lewis Corey, in his Decline of American Capitalism, vividly describes this situation when he says:

“Thus, in 1929, relative wages fell to the lowest point in American history in the midst of an extraordinary rise in the productivity of labor, surplus value, and profits.”

What are called high wages are in reality low when compared to the productivity of labor, and they are low in terms of the possibility of still higher wages.

High wages, so-called, are also low wages in terms of what they can provide in minimum requirements for living in a society where millions live in poverty on sub-standard wages.

Wages have always lagged behind dividends, interest and the salaries of officials of companies. As an example, between the years 1921 and 1932, wages declined by, twenty-five per cent while dividends and interest rose by fifty-five per cent.

In this discussion of wages and their relation to incentive pay, it must be borne in mind that even when wages’ rise, they fall in relation to profits; that profits are increased by forcing wages down and that profits represent “surplus value, unpaid labor.”

It is possible to say that, as a rule, during periods of prosperity, wages rise, but profits rise much faster, and the so-called “high wages” are low compared to the productivity of labor. During crises, profits may fall and do fall, but wages fall much lower, and for millions of workers they cease altogether.

In such periods, the bosses may not get so much, but all workers get still less, and many get nothing. It is the worker who becomes unemployed, who is found on the breadline, and who needs relief in order to live. The boss merely retires to his estates to live on his accumulated wealth, produced by labor but appropriated by the capitalists.

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