I’ve come across an oft repeated phrase. It’s become a favourite refrain used for decades by notable politicians, bureaucrats, policy-makers, analysts, and mirrored by the mass media.
As one, they repeat the phrase, country after country, year after year, in a multitude of languages. They use this phrase to succinctly garner support for economic transformation, to support cuts to social programmes, to justify reducing business regulations, to applaud labour law reforms, to introduce new taxation strategies, and permit capital to move across borders with greater ease. The term is used in conjunction with governments that promote a belief in ‘private responsibility’ (you’re on your own) for the mass of people and clamour for expanding worker dependence on competition for wages in an increasingly liberalised labour market. People were and are told that the bundle of policies should increase their wages and reduce their costs.
For the past decades, inequality between the very wealthy and the rest has risen almost everywhere on the planet. In Europe, Canada and the USA combined for the years 1980 to 2016:
- The bottom 10% income group had their income decrease in that time span; and
- The top 1% saw their income grow by 100%.
- In Europe, “the top 1% captured as much growth as the bottom 51%”; and
- In the USA and Canada, “the top 1% captured as much growth as the bottom 88% of the population”. (These findings are from the World Inequality Report of 2018)
The magic words
Make work pay. This phrase appears again and again. I’ll provide some rough snapshots, but people in many Western countries hear these words as a regular background noise, uttered now for at least a couple of generations. Political parties from across the spectrum promote the associated logic and phrase as key components of their campaigns and policies.
1996, USA: President Bill Clinton wants to “make work pay”. He signs a law transforming welfare and taxation. This law does things such as limit the length of time people may receive social assistance. In the president’s own words, it also advances “tough personal responsibility”. This bill doesn’t stand alone, it’s embedded in a general political and economic reform carried out by multiple agencies and governments.
1999: The Organisation for Economic Co-operation and Development (OECD) writes about a bundle of policies that claim to “make work pay”, and that these have led to some increases in employment rates. Nearly twenty years later, in 2018, the OECD’s secretary-general mentions that structural problems have generally resulted in “wageless growth” despite employment.
2000, European Union: The European Commission’s representative responds to an Italian counterpart, writing that “making work pay” as outlined by the 1999 OECD report is of interest. The report studies “the role of eligibility criteria for unemployment benefits”. The EC representative also suggests other sources for information on “labour market and related social benefit” reforms.
2003, EU European Commission: This multinational body published a report and guideline intending to “make work pay through incentives to enhance work attractiveness”.
2006 Sweden: The government of the time introduced new policies that included tax cuts and cuts to social programmes under an austerity plan. They did this to “make work pay”.
2013, UK: The government’s chancellor charged with economic affairs, George Osborne, says that his government will be “making work pay” as a result of economic, taxation, and welfare reforms.
2015, UK: David Cameron, then prime minister, promised that the broad programme of austerity would eventually “make work pay”.
2016, EU European Commission: They persist to want to “make work pay”, as outlined in a ‘conceptual paper‘. The paper is introduced by the following statement: “Boosting the incomes of poor families while simultaneously enhancing the incentive to take up a job (if currently out of work), or to work longer hours (if currently employed part-time), is a key policy goal in Europe and beyond”.
2017, Austria: In January, the leader of the FPÖ (Freedom Party) attacks his social democratic opponent and says the German language equivalent of his desire to “make work pay”. In August, the SPÖ’s (Socialist Party) then minister of health and women and current designate for party leader, Pamela Rendi-Wagner, also stated a desire to “make work pay” for women.
2017, Germany: The AFD (Alternative for Germany) party plasters the German language version of “make work pay” on campaign posters. The SPD (Social Democratic Party of Germany) uses similar “make work pay” posters.
2018, France: There’s a striking similarity in the French government of Emmanuel Macron’s labour, welfare, state, and economy reforms. Bloomberg news published an article in 2018 in which is written that “Macron’s second budget as French president will hammer home an economic strategy that’s becoming increasingly unpopular: make work pay, whatever the cost.”
Each example given is a drop in the downpour of similar mentions made within a public relations campaign intended to convince the general public that deepening commodification of labour is a good thing. It’s also code for business and capital to recognise the speaker as an ally that shares their interest.
Overall, the promise is that wage workers should be incentivised to work and to work longer hours. In return, they’re supposed to receive better pay than previously. There’s been a long enough application of policies generally associated with enforced marketability of labour in order for us to see the outcome. Inequality has sky rocketed, and many people are indeed working longer hours on average while many other individuals are stuck with marginal and precarious contracts. Workers are “incentivised” to work under such conditions by dependency and lack of security.
Adam Smith, one of the earliest theorists on capitalism, clearly identified the vulnerability of wage workers relative to the employing capitalist. He states the following, in his 1776 landmark book, An Inquiry into the Nature and Causes of the Wealth of Nations:
What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.
The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. […] In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.
He adds, that when commodified labour is made to enter into pitched market competition in order to work and pay for the necessities of life, then the situation tends “to reduce the wages of labour to the most miserable and scanty subsistence of the labourer.” Work does not automatically provide adequate pay for the labourer; therefore, we must not simply accept contemporary strategies that ‘incentivise’ workers in this manner.
David Harvey’s critical and in-depth analysis of that other famous theorist of capitalism, Karl Marx, leads him to conclude the following:
Money, in the first instance, is a means whereby I can make a claim on the social labour of others.
[…] It is the social value of all that activity, of all that labouring, that underpins what it is that money represents. ‘Value’ is a social relation established between the labouring activities of millions of people around the world.
The above is from the book, Seventeen Contradictions and the End of Capitalism. He later adds:
That some human beings have appropriated and exploited the labour power of others has been a long-standing feature of human organisation. The exercise of the power to do so has entailed the construction of different social relations […] But what capital deals in, and this is what makes this mode of production distinctive, is labour power as a commodity. The labourer is the bearer of that commodity and sells it to the capitalist in a supposedly ‘free’ labour market.
[…] The remarkable thing about this system is that it does not appear to rely on cheating, theft, robbery or dispossession because labourers can be paid their ‘fair’ market value (the ‘going rate’) at the same time as they can be put to work to generate the surplus value that capital needs to survive. This ‘fairness’ rests on the conceit that labourers have an individualised private property right over the labour power they are capable of furnishing to capital as a commodity (a commodity which has the use value to capital of being able to produce value and surplus value) and that they are ‘free’ to dispose of that labour power to whomsoever they like. It is most convenient for capital, of course, that labourers be ‘freed’ of any access to the land or even to any means of production. They then have no option except to sell their labour power in order to live. When put to work, capitalists can see to it that labourers produce more in commodity values than the market value of their labour power. Labourers, in short, must add more value than they get if capital is to be created and reproduced. Capital pockets the added value as profit and can store that added value as an ever-increasing concentration of money power.