My partner and I were driving home and needed a coffee break. It was late Sunday night. Only motorway stops were on offer. We opted for a McDonald’s. As I walked over to the store I checked my mail: an update from Marxist economist Michael Roberts to read whilst I waited for our order. I was about to learn something.
The update reminded readers that Marx foresaw the rise of a new kind of underclass, combining wage earners and most of the salaried workers: the proletariat. This class was at the mercy of company owners whose goals for their businesses included replacing them and/or driving down their wages to maximize profit. The way Marx thought this might happen was through replacing knowledge and people with technology. I think you must remember that this was 1867 and the modern corporation wasn’t invented yet, and people like me who worked with organizational development weren’t around. According to Michael Roberts, in Marxist terms, the organic composition of capital (the amount of machinery and plant relative to the number of workers) will rise secularly.
This was not the vision I bought into during the 80s when I worked with management consulting. Business was the highest expression of human development, the way for people to have fulfilling livelihoods, avoid toil and stress, and replace it with jobs that people competed with other to get because they were so fulfilling. In fact, some of what we worked with was making firms attractive to talented people. Trading with each other (the vision of the EU) was the mechanism to create peace, too.
Through the entrance a new thing confronted me: a screen on which to place my order. I made my selection, and chose to pay at the till. I got a number, a bit of paper and went in. A screen above the counter showed which numbers were being processed. Mine wasn’t on it but there was an animated character to the right of the list giving encouraging little messages like my order was being taken care of and I was being looked after. The computer was talking to me! Back to Marx. Company owners (these owned the infrastructure, or means of production) would work to standardize the quality of the end product through automation, by taking the requirement of skill from the worker, using skill of those who designed the equipment and processes. The skilled craftspersons of the 1800s, with their tools, knowledge, guilds, constellations etc would be replaced with people on production lines, each doing a small piece of the work and unable to leave and compete as they could never lift the knowledge and capital out of the firm. In this way they kept wages down too.
As Marx writes, every individual capitalist has an interest to invest in more capital-intensive processes in order to undersell other capitalists, but when they all do that, the rate of profits decreases for all. They thus work ultimately to drive themselves “out of business” (more exactly they drive themselves to a zero rate of profit).
My number didn’t show up. I realized that I had to go and PAY for my order before I could get it. (I could almost see the workflow steps in this new system. Getting payment first reduces risk of refused orders.) So I stood in line at the cash desk. A long line. People in front of me were ordering as one used to do (alternative workflows, part of customer satisfaction). At the counter next to the cash desk numbers were called out and meals served. I showed my slip with the number and paid. And waited again. I noticed that the workflow is now shared between workers: one guy takes payment and another guy serves. That meant no one person took responsibility for me and my order. The computer system did. And so I went back to Marx.
Knowledge is capital too, not just the machines. One of the early proponents of this insight was Leif Edvinsson. He called It intellectual capital and his insights informed much of my own earlier work when I worked at Ericsson. Intellectual capital development would be ingrained in the way we ran the organization. Learning all the time. Not individuals learning, but the company as a whole. Processes, learning loops, prototyping, working in small teams on specific tasks, training – all tools of my trade. Added to that was measurements. Developing intellectual capital was a way of raising standards of employee competence to enhance competitiveness and job satisfaction. At least that was the story.
But Marx pointed out that jobs become rather repetitive and boring when intellectual capital is chopped up into narrow specializations. And now in McDonald’s servers don’t even get to take care of the whole loop – from an expectant customer choosing from a set list to paying to being given their meal. I mean, they serve food and coffee but the people there have no skill in cooking, no skill in coffee roasting, grinding, or as a barista. And they serve but have no skill in restaurant service. It’s cheap and OK, though.
According to Michael Roberts, profits all around the globe are generally falling, and have been almost ever since capitalism was invented. All companies are competing hard with each other, transforming what people know and do into automated, standardized steps and pressing wages down. And they are using the power of investment to lock smaller players out. (The motorway system locks out small entrepreneurs with coffee carts for example, and the capital cost of a motorway stop means there are five large players dominating.)
However, with all this pressure on wages and labour replacement it is getting to the stage where workers do not have enough money to buy products – that drives more effectivisation, wage pressure, reduces taxes and undermines public service and the whole thing is locked into a dark spiraling way down with no way out. This is kind of what Marx predicted.
Michael Roberts thinks there is “hope” for capitalism though….
Capitalism could .. begin a new lease of life, exploiting yet more millions in ‘emerging economies’ as cheap labour and introducing new technologies that shed labour ….. that will mean even more destruction of the natural world, its ecology and possibly its very existence, as the world heats up.
We drove off, feeling a bit guilty we helped corporate Sweden promulgate a pale copy of what business once thought itself to be, both by buying the coffee and having been in the corporate development business. The coffee tasted OK but the whole experience felt a bit empty. That’s what capitalism is I guess: OK although a bit of an empty experience, and on its way down, taking us with it.
- Micheal Roberts at the next recession. https://thenextrecession.wordpress.com
- My essay on capitalism re-designed to mimic nature.
- Leif Edvinsson...genius or proletariat engineer?
- Invest in Peace, a rather different idea.
- Maito, Esteban – The historical transience of capital. The downward trend in the rate of profit since XIX century)
- McDonald’s plans for the future