Labour market management: Controlling the ‘surplus population’

Managing the labour market is a major function of bourgeois governments in a capitalist economy. This means maximizing the rate of exploitation of the working class while mitigating resistance, rebellion or disruption to capitalist accumulation.

In a monopoly capitalist economy, high rates of unemployment and underemployment are considered normal and desirable. Unemployment has an active function, operating as a downward pressure on wages and a fetter on the rate of inflation. The rich want inflation kept low because when it rises it erodes their accumulated wealth. Moreover, monopoly capitalism as a system tends not to reinvest the surplus (profit) extracted from the working class in job generating activity, instead sinking a high proportion of the surplus into socially harmful activities like advertising, speculative financial activities, real-estate and the war economy.[1] Monopoly capitalism therefore generates high rates of unemployment and, particularly in its neoliberal form, fewer and fewer stable, ‘well-paid’ jobs.

Under neoliberal capitalism the real rate of unemployment has increased substantially, especially since the ‘great recession’ of 2008-9. The official unemployment rate does not reflect the experience of millions of working class people: ‘discouraged’ workers no longer looking for work; the vast increase in contract, temporary and part time work ; and most importantly those who are considered ‘unemployable’ under capitalism. The latter group are those who are not considered good candidates for extraction of surplus value and would require social supports in order to participate in social production under capitalism – people with physical differences (‘disability’), ‘mental illness,’ with addictions or with dependent family members. This is the vast pool of labour energy and talent that capitalism not only cannot absorb but actively seeks to marginalize and contain.

Under capitalism these portions of the working class are played off each other in order to keep wages down and keep workers insecure. But the large ‘surplus’ population also creates problems for capitalism. People who are too poor or hopeless, and who lose any sense of faith in or connection to the system, will eventually become rebellious.

The Welfare State had a certain way of containing discontent and the potential of militancy and rebellion among the working class:

i. Redistributive programs like unemployment insurance, public health insurance, welfare and public education paid for by a ‘progressive’ income tax regime. These programs did not challenge the basic capitalist principles of private ownership and control of the economy, operating instead through progressive taxation, where those who make more money pay a higher proportion in taxes.

ii. A relatively high union density, including business unions who play a dual function representing workers in the collective bargaining system but also disciplining workers and ensuring that they continue to play within the rules of the ‘the game.’ This role has been very evident in the period of transition where the union leadership has acted as a break on working class militancy and resistance to austerity, i.e. ‘Operation Solidarity’ in B.C. in 1983, the ‘Days of Action’ against Mike Harris in Ontario in the 1990s, and the the Hospital Employees Union strike in B.C. in 2004.

iii. The “Canadian Dream” – the promise that if you work hard your children will have opportunities for upward mobility and a better life (materially). This promise has historically been real for the white working class and farmers based on settler privilege in the colonial system and the super profits of imperialism. During the welfare state period this ‘dream’ was extended to many immigrants and refugees from non-European countries as well, although the levels of exploitation and self-sacrifice demanded from these groups was higher.

Under neoliberalism the economic basis for these containment strategies has been dismantled or evaporated:

i. Adaptation to ‘globalization’ and debt hysteria were used to justify slashing social spending and re-configure the taxation regime in favour of the rich. Redistributive programs that remain have been restructured to increase their control function while reducing their use function for working class people.

Unemployment Insurance (ideologically rebranded as ‘Employment Insurance’) is one very good example of this shift. While benefits have been cut back and made harder to access for the workers who pay into the program, the rules have been changed to force workers into whatever crappy, sub-standard jobs are available. Examples of this include changing the definition of ‘suitable employment,’ as well as new punitive and patronizing measures to ensure that unemployed workers are engaged in a ‘job search.’ Meanwhile tens of billions of dollars in surplus from the program have been rolled into general revenues, essentially comprising a new regressive tax on workers.

ii. Unionization rates have decreased significantly dropping from 38% of all workers in 1981 to 30% in 2012. Some of this is due to the shift of industrial production to the South in response to free trade agreements and liberalization of international trade. Individual capitalists also take advantage of their relative strength to bust unions or prevent them from starting altogether in order to maximize profits. While unions still play an important mediating role – especially in the remaining industrial economy and the public sector – their relative weakness is demonstrated by the willingness of governments to use legislation to send striking workers ‘back to work,’ no-strike clauses in collective agreements, and the rolling back of benefits and pension plans. Amidst shrinking union density and ineffectiveness of the unions that remain, the union bureaucracy can no longer credibly claim to represent the working class, nor sell their ability to ‘manage’ the class as a whole.

iii. Under neoliberal monopoly capitalism the “Canadian Dream” is a fantasy, even for the white working class, but especially for new immigrants and refugees. Canada’s immigration policies have always been shaped by the labour requirements of Canadian capitalism. Under welfare state capitalism there was a sense that, after a certain period of super-exploitation, immigrants or their children would eventually reap the benefits of Canadian citizenship – albeit within a profoundly racist and colonial state.[2] Under the neoliberal capitalism this ‘reward’ is no longer on offer, as exploited workers from the South are forced into a state of permanent precariousness, vulnerable to criminalization and deportation even after having ‘achieved’ citizenship. Individually these workers are super-exploited under Temporary Foreign Worker Programs, which hugely ramp up the power of capital and management. This  exploitation by Canadian capital extends to whole oppressed nations because the cost of reproduction of these workers (childcare, education, health care and elder care) are born by those countries of origin, particularly by poor women in those countries. Meanwhile Canadian capitalists exploit their labour power during the period of their life when they are the most ‘productive’ in the conventional capitalist sense. Thus, it is fair to say that the record profits of Canadian banks are based in a very real way on exploiting the ‘women’s work’ of working class and peasant women of the ‘Third World.’ This dynamic, which has always existed within the patriarchal and racist framework of imperialism, is heightened in this period of neoliberalism.

The neoliberal strategy for managing monopoly capitalism has definitely eclipsed the welfare state strategy of a previous era. Today the elements of the welfare containment state dissolve, giving way to a strategy of neoliberal containment rooted in police, prisons, and criminalization. The increased capacity for the exploitation of the working class relies on the increased repressive capacity of the neoliberal containment state.

Criminalization and Mass Incarceration as a tactic of colonial control

In addition to the their national oppression under Canadian settler-colonialism large numbers of Indigenous people in Canada have historically been exploited as workers. In 19th-century British Columbia, Indigenous workers were super-exploited within a (formal) racialized labour structure in numerous industries. In the first half of the 20th Century Indigenous workers played a vital role in key ‘resource’ industries as skilled and ‘semi-skilled’ workers. Indigenous workers have also acted as special ‘reserve army of labour’ in the capitalist labour market, employed in large numbers seasonally or in times of economic boom, returning to traditional or communal economies in the offseason or in periods of economic ‘downturn.’ Under neoliberalism the ‘last hired, first fired’ integration of Indigenous people into the capitalist labour force continues, with Indigenous workers having a lower labour market participation rate and much higher rates of unemployment. Thus the numerous ways in which the neoliberal control apparatus is used to discipline and control working class people generally also applies to working class Indigenous people.

However the massive disproportionate number of Indigenous people incarcerated and cycled through the criminal justice system cannot be explained exclusively by their place within the Canadian class structure. This is especially the case when we see that historically the disproportionate incarceration of Indigenous people begins to escalate only in the 1940s – prior to that the proportion of Indigenous people incarcerated roughly reflected the proportion of Indigenous people in the population generally. To understand this change and massive disproportion in incarceration rates we have to understand the neoliberal containment state as also being linked to a new regime of colonial control.

Image from residential school.

One way to understand the disproportionate incarceration of Indigenous people in Canada is as a ‘successor system’ to residential schools. Residential schools, with the stated objective to ‘kill the Indian in the child’ were a central tactic of the genocidal Canadian colonial strategy going back to at least 1874 when the federal government took up a role in financing and administering residential schools. The kidnapping, indoctrination and torture of Indigenous children in these institutions was conducted within the main Canadian colonial strategy of forced assimilation. The number of children in residential school peaked in 1931 and declined steadily until the closure of the last school in the 1990s. But during the period of decline the number of Indigenous children in ‘foster care’ began to steadily increase and beginning in the 1940s the disproportion of Indigenous people incarcerated also begins to steadily increase.

Therefore mass incarceration is referred to as a successor system to residential schools because so many Indigenous people who are incarcerated are survivors of residential school or the children and grandchildren of survivors. It is not surprising that these survivors would be concentrated in the most highly criminalized sectors of society (the homeless, extremely poor, drug users, and the chronically ill) given their experience of family and cultural disruption and social, physical and sexual abuse in residential schools.

But it is not as though the mass incarceration of Indigenous people is just a colonial hangover of a previous ‘bad policy’ as many progressive-liberal narratives would have it. Mass incarceration is also a successor system because the “prison pipeline” (child apprehension –> foster care –> group home –> youth detention –> prison) has replaced residential schools as a key colonial instrument for disrupting, dividing and controlling Indigenous populations. The mass incarceration of Indigenous youth – 41% of federally incarcerated Indigenous people are under 25 years of age – is a pretty good indicator of who the Canadian state and Canadian ruling class view as the greatest danger to ‘stability’ and ‘order’ in Canada. The colonial mechanisms of child apprehension, foster care, criminalization and incarceration of youth are a highly effective disruption of Indigenous families and communities, and a barrier to youth becoming connected to their communities, history of struggle, and militant resistance to Canadian colonialism. Thus the mass incarceration of Indigenous people is a main instrument of colonial containment.[3]

A historical materialist analysis of the emergence of the neoliberal containment state

The transition from welfare state containment to the neoliberal containment state has been described as capitalism switching from it’s left hand to it’s right. This description is apt in the sense that the same basic mechanisms of capitalist exploitation endure, based on racist colonial domination, and on the patriarchal super-exploitation of women, especially women’s reproductive labour.

However, it is inaccurate in the sense that Capitalism cannot easily switch back and forth between regimes of containment. These regimes are historically shaped by underlying economic, political and ideological factors. The neoliberal containment state adapts existing state institutions and practices to better support and perpetuate the economic and political superstructures of neoliberalism.

Looking at the the 30-year development of the neoliberal project in Canada it becomes evident that the dismantling of the monopoly capitalist welfare state in Canada and its replacement with monopoly capitalist neoliberal state has been carried out by successive governments with different leaders and members and under different political labels:

1984 – 1993, Progressive Conservative Party (PMs Brian Mulroney & Kim Campbell): free trade agreements  – liberalization of international trade in the interest of capitalists; privatization (Air Canada/ Petro Canada); beginnings of debt hysteria and austerity;

1993 – 2006, Liberal Party (PMs Chretien and Martin): debt panic; austerity  – dismantling of redistributive and social wage programs; restructuring of tax regime;

2006 – Present, Conservative Party (PM Harper): neoliberal containment state; restructuring of immigration policy to increase exploitation of immigrant workers from the Third World; aggressive development of extractive industries (oil, gas); militarization of foreign policy.

To whatever extent there was a debate within the ruling class class about whether Canadian capitalism would adopt a neoliberal economic framework it would have been during the ‘great free trade debate’ of the 1988 election and was decided decisively in favour of neoliberalism.

To understand the ideological roots of neoliberalism – not it’s intellectual roots, but the historical factors shaping the outlook and worldview of the ruling class – we have to go back  farther and look at the actual class experiences of the ruling class that generated the welfare state, versus those of the ruling class who generated the neoliberal state. The great historical events of the 20th century – inter-imperialist war; the Russian Revolution and the wave of working class militancy and rebellion that followed it; the collapse of the global capitalist economy and the failure of fascism as a reliable option for capitalist rule -– had a profound ideological impact on all classes. For the capitalist ruling class in particular these experiences undoubtedly created a fertile ground for the ideas of Keynesianism and an approach to managing capitalism that could mitigate some of the most destabilizing and potentially explosive class contradictions. On the other hand the ruling class that gave rise to neoliberalism has a very different class experience: U.S. hegemony; the postwar economic boom; division and weakness of the International Communist Movement; and the success of State sponsored anti-communism.

	Welfare State (1940s to 70s)	Neoliberal State (1980s to now)
Containment regime	Business unionism, social democracy & Canadian “left” nationalism/ public education/ official anti-communism	Police, prisons & security/ market fundamentalism/ individualism / “anti-terrorism”
Economic policy framework	State mediation of class conflict/ redistributive programs in ‘core’ capitalist countries/ neo-colonization and plunder of the ‘Third World’	Privatization, liberalization & deregulation/ imperialist globalization/ ‘free’ trade/ export of capital and exploitation of the ‘Global South’
Ideological orientation of the ruling class	Keynesianism/ managed capitalism/ anti-communism	Neoliberalism/ laissez-faire capitalism/ anti-welfarism
Historical period & balance of forces	inter-imperialist war/ Russian revolution/ economic crisis/ great depression	U.S. hegemony/ post war economic boom/ division and weakness in ICM
Economic base	Monopoly capitalism/ imperialism	Monopoly capitalism/ imperialism

The containment regime is built to complement the economic policy of a given historic period. This economic policy is determined by the ruling class, whose consciousness is shaped by their material reality and experiences – the balance of class forces, degree of economic boom or crisis, and the potential of revolution and defeat.

There is an ahistoric and eurocentric view that seeks to detach the (supposed) accomplishments of social democracy and the welfare state from:

1) the massive global impact of the Russian and Chinese revolutions (and the profound impact they had on the political consciousness of both the ruling class and the oppressed classes, throughout the world), and

2) the economics of post-war imperialism and the degree to which super-profits based on military and economic domination of the Global South and super-exploitation of the internal colonies provided an economic basis for the post war ‘welfare state.’

The idea that the ruling class would go ‘back’ to the welfare state absent a threat of losing much more presumes a degree of substance to bourgeois ‘democracy’ inconsistent with all historical experience. This position ignores the conjunctural nature of post-war ‘class compromise’ and the welfare state, a conjuncture shaped by two major (world) inter-imperialist wars, a decade of depression, and the first wave of socialist revolutions encompassing roughly ⅓ of the world’s population at the time.

We should also keep in mind that the ‘golden age of the welfare state’ may have been less golden for colonized and nationally oppressed people throughout the world. This was also the age of massive U.S. war crimes in Indochina; of imperialist orchestrated coups in Iran (1953) and Chile (1973); mass murder of communists and progressives in Indonesia; the ‘ethnic cleansing’ of Palestine and establishment of Israel as an outpost of imperialism in the Arab heartland; U.S. proxy wars throughout Latin America; Indian residential schools; the Bhopal disaster; the beginning of the ‘war on drugs’ and escalating mass incarceration of Black people in the U.S.A.; apartheid in South Africa; and the generalized plunder of the non-Euro-American world.

Pick a bigger weapon…

An imagined retreat to the welfare state remains the explicit objective of many liberal-progressive forces in Canada including trade union federations, the Canadian Centre for Policy Alternatives, and the ‘left’ of the New Democratic Party. It is also implicit in many of the demands put forward by activists and radical reform groups who view these reforms as the only ‘achievable’ option in the current context.

As radicals we need challenge the false promise of a return to the welfare state. ‘Socialism or barbarism’ (or maybe its ‘Liberation or annihilation’) is a much more accurate summation of what is on the menu for working class and oppressed people. The post-war ‘class compromise’ did not come about as a result of demands for a kinder and friendlier capitalism but as a result of the real threat of revolution and the final overthrow of capitalism. We therefore need to challenge the movements we participate in to develop demands that challenge the power and control of the ruling class, and move us in the direction of transformative social change.

The sheer violence and reach of the neoliberal containment state creates the possibility for an alliance between poor people, super-exploited and criminalized immigrant and refugee communities, drug war survivors and Indigenous people. Such an alliance would connect currently disparate practices of resistance and create a broad base calling for de-incarceration and reparations. It would be organically and politically connected to Indigenous struggles for sovereignty and self-determination, and to the struggles for im/migrant rights, economic justice and drug user liberation.

But its not good enough that we demand a less violent and more comfortable form of containment. If we want liberation, if we want to dismantle the racist and patriarchal order of the Canadian settler colonial state, if we want a world where every human being has the opportunity to realize their full potential, then we need to put revolution back on the agenda.  Without this discussion the best we can do is to stretch and test the limits of the Capitalist containment state. If we want to break it wide open, and create the possibility of liberation, we need to start talking about a revolution.

NOTES

[1] I focus on the exploitation of the working class as a class rather than the extraction of surplus value from individual workers because this better captures the critical role played by the exploitation of unpaid reproductive labour, mostly from women, and from the super exploitation of colonized people, including the plunder of their land and resources.

[2] As discussed below this was not based on any benevolence of Capitalists but on the formidable revolutionary, anti-colonial and working class struggles of the first half of the 20th Century.

[3] In the 21st Century the mass incarceration of indigenous populations can be understood as a ‘normal’ part of settler-colonial societies as is clearly indicated by the disproportionate incarceration of Indigenous people  in New Zealand , Australia and the U.S.A. and the massive incarceration of Palestinians by Israel .