Modern New Zealand unions – “fighting blindfold”?

Philip Ferguson

It’s not often that leading trade union officials in New Zealand speak openly about the exploitation of the working class, let alone about the surplus-value created by workers and expropriated by employers. Therefore, when such speeches are made, it’s useful to analyse what is being said, why, and what the political implications are for trade union activism.

Last November, Robert Reid, the national president of the National Distribution Union, one of the few left-leaning unions, made such a speech at a gathering organised by the Trade Union History Project to commemorate the life of the late Rona Bailey, a longtime New Zealand communist.

In the speech, Reid recalled being part of Marxist study groups with Rona Bailey and learning about surplus-value. Reid then rightly noted that “without an appreciation of Marxist economics or political economy, we have no understanding of how wealth is created and expropriated in the 21st century. This leaves, in many cases, the modern trade union movement fighting blindfolded.”

The speech contains other useful points about the way in which exploitative relations have been obscured by the establishment of layer upon layer of capitalists. For instance, in the hotel industry a set of hotels may be owned by a company which is then owned by another company, which is a part of some greater conglomerate, etc, etc, etc. It can be hard to find out exactly who the ultimate owner is, and this can make effective struggle more difficult. As Reid also noted, “The new global reorganisation of business has achieved the impossible of being able to expropriate more surplus value than ever imaginable without having to engage in employment relationships with those whose surplus labour is being expropriated.” This kind of comment is certainly a useful rejoinder to the postmodernists and Third Way advocates who, (at best) confused by the surface appearances of capitalism, suggest categories such as “worker”, “capital”, “surplus-value” and “exploitation” are no longer meaningful.

Non-exploitative capitalists?

However, there are also some serious problems with the analysis made by Robert Reid. After noting that changes in the New Zealand and global economy since those study groups of the 1970s mean that it is very hard today to work out who is expropriating what amounts of surplus-value, he argued that the factory owner is now a mere “price taker”. That is, instead of simply expropriating the surplus-value of their workers, the factory owners in New Zealand now merely sell their products at a price determined by “designers, retailers (and) brand owners”. Not surprisingly, Reid drew the conclusion that factory owners in New Zealand are not really expropriating much surplus-value any longer. He wrote:

If, as does happen, the CMT (Cut Made and Trim) factory owner is only getting 30 cents a minute from designers, retailers or brand owners, that means he receives $18 per hour to manufacture the clothing. Even at a low $12 an hour to the worker, the cost of the wage he pays is around $14 if you include smoko and toilet down-time, holiday and sick pay. And we haven’t even started to include supervisory or management time, factory overheads such as rent, power and cost of machinery, etc. Is the factory owner, the capitalist, appropriating much surplus value? The answer has to be no.


Indeed, according to Reid, our supposedly hard-done-by New Zealand capitalist, in order to compete with cheap imports, “may even be subsidising his factory through making no return on his ownership of the land, buildings and machinery and even funding the odd loss from the surplus that was expropriated two or three decades ago.”

One wonders exactly who these kind NZ capitalists are who use up past profits to keep their factories running and workers in employment!

His training in Marx’s critique of political economy should have allowed Reid to understand that capitalists who don’t make profits by exploiting their workers shut down their businesses and put workers on the scrap heap. They don’t use past profits to keep their loss-making business afloat.

Moreover, they don’t aim to just make any kind of profit; they aim to maximise profit. If there is more profit to be made in the non-productive sphere, industrial or “productive” capitalists will shift investments there. That is precisely what happened in New Zealand in the 1980s, creating a huge, artificial boom-bubble, which burst in 1987.

The idea that there are good industrial capitalists and bad finance and speculative capitalists was demolished by Lenin almost 100 years ago when he established that one of the characteristics of the imperialist epoch is the merging of industrial and banking capital to form finance capital. Since then the general trend, broken only partly by the 25-year boom in industry after World War II, has been the growth of the artificial economy and increasing investment by supposedly good, honest, industrial capitalists in the artificial economy.

The logic of Robert Reid’s position that New Zealand industrial and manufacturing capitalists are being hard done by was spelled out further: “The employment and bargaining relationships are established between the employer and the union. But, as we have seen, the value created by the workers in the factory has been expropriated from the factory owner as well.”

He gave a number of further examples of this. For instance, in malls, the owners set the rents to be paid by retailers, even the biggest retail chains. High rents force retailers to make the highest mark-ups possible on what they are selling. Reid gave the instance of a clothes shop in a mall which may wish to sell a NZ-made item but, even with a large mark-up, the retailer is not going to be able to make enough money to pay the rent for the shop and turn a profit. Therefore they are forced by economic necessity to stock clothing made in China, which costs them much less, and so, with a large mark-up, they can pay their rent and turn a profit.

In relation to the retail workers, he argued, “Only a small part of the surplus created by the retail worker is actually appropriated by her employer. Most is expropriated by the retail brands and the mall development companies.”

However, both of his examples – the industrial worker and retail worker – have turned Marx’s analysis about-face by working backwards from the end product and value instead of starting with the formation of surplus-value and then looking at how it is – and always has been – divided among different capitalists.
Marx’s analysis

In capitalist society, workers can only live by selling their ability to work. Workers are paid at the value of their own labour-power – that is, at the value of the commodities they need to purchase each week to live, to be able to work for an employer and also to reproduce the species. This value takes the money-form of the wage.

Working together and using machines and technology, however, workers not only recreate the value of their own labour-power, they also create new, expanded value (surplus-value). For instance, a worker is employed to work, say, 40 hours. She or he recreates the value of their own labour-power (say $500 a week) in 20 hours in the form of products (commodities), but they can’t then just go home or to the beach. They have to work a further 20 hours (surplus-labour) in which they create an additional value (surplus-value).
That surplus-value has never, however, simply gone in toto to the capitalist who employs the worker. Surplus-value is created by the working class as a class and expropriated by the capitalists as a class. Surplus-value is divided out among the various sets of capitalists – the industrial capitalist (profit), the banks (interest), the owner of the land or buildings (rent).

The one thing in capitalist society that is equal is capital in relation to other capital. The division of the total surplus-value of society is thus done on the basis of the share of total capital that is in the hands of each capitalist. This takes place through the mechanism of what Marx called prices of production and the formation of an average rate of profit. A capitalist firm that has 5% of the total capital of society will be able to lay claim to 5% of the total surplus-value.

Thus, from the Marxist standpoint that Reid claimed to represent in his speech, it is nonsense to say, “As we have seen, the value created by the retail worker has been expropriated from the retail owner as well.” In fact, Marx argued that retail workers do not create surplus-value, although they are necessary for its realisation in the form of profit.

In any case, no value is expropriated from the retail owner. The retail owner expropriates a share of the surplus-value created by the workers who produce the products being sold in the store. The mall owner expropriates another share of the surplus-value created by those production workers. And the owner of the business in which the commodity is produced expropriates a share of the surplus-value, as does the bank to which any of these capitalists owe money. All of these, as capitalists, are involved in the exploitation of the workers, although only one is the direct employer-exploiter.

Whether Reid hasn’t absorbed volume three of Capital, and therefore hasn’t understood that surplus-value has always been divided in this manner (Marx doesn’t deal with the division of surplus-value until volume three), or whether he is fitting his economic analysis to an already-planned political position, is not clear from the speech. However, analysis always has a logical follow-on in terms of political positions and practical activity. It is important to consider the implications of his position that smaller productive capitalists and even retail store capitalists are now having surplus-value expropriated from them by mall owners, designers, big chains and so on.

From theory to practice

Marx’s analysis that the problem is not individual capitalists and their exploitation of their own workers, but capital per se, points logically to the need to expropriate the capitalist class as a whole. By contrast, politics which shy away from this position and seek to limit their scope to mere reform of the worst features of the system always try to come up with a theory in which some capitalists are “good”, or less exploitative, and can even be allied with. In doing so, as Rosa Luxemburg noted, such people are choosing to defend the system by making it run better, rather than choosing to abolish it.

In New Zealand, there is a history of not only right-wing but also left-wing trade unionism that is centred on this approach. It differentiates between “good” and “bad” employers when, in fact, being an employer means that you exploit your workforce. It differentiates between New Zealand and “foreign” capitalists when, in fact, all capital is foreign to workers because it is an alien power standing over them and expropriating the goods and value which they produce.

Left unionism in New Zealand has also typically been nationalist. Instead of promoting the idea that the main obstacles to the emancipation of workers in New Zealand are the New Zealand ruling class and their state, it suggests that New Zealand workers and employers should unite against foreign capital. Instead of promoting the idea that New Zealand workers are one detachment of an international working class, it promotes the ideas of protectionism and tariffs. Such measures work against workers in other countries and help perpetuate nationalist divisions among the working class globally. That’s why Marxists oppose such measures in countries like New Zealand.

Lastly, while Robert Reid’s speech pointed up the increasingly global nature of capital, it is important to remember that most capital still has a national home and is protected by a national state. Capital cannot actually make the world one, even in a purely capitalist sense. But to the extent that globalisation is real, the task facing workers is organising globally and building solidarity globally. Petty New Zealand nationalist responses, including calls for more tariffs and protectionism, which are an integral part of the left trade union programme, are completely useless – indeed, dangerous – responses to the expanded power of capital.

What we need instead are a union movement that fights unreservedly for workers as a class against the capitalists as a class, and a revolutionary-political movement that can analyse the system in its entirety, educate workers in that analysis, and lead a struggle for the end of exploitation and oppression. With that understanding, we can succeed in creating a new world order based on using the vast productive capacity of human beings and the planet to meet human needs rather than the rapacious and destructive greed of private profit.

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