Reserve army of labour
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Reserve army of labour is a concept in Karl Marx's critique of political economy. It refers to the unemployed and under-employed in capitalist society. It is synonymous with "industrial reserve army" or "relative surplus population", except that the unemployed can be defined as those actually looking for work and that the relative surplus population also includes people unable to work. The use of the word "army" refers to the workers being conscripted and regimented in the workplace in a hierarchy, under the command or authority of the owners of capital.
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Marx did not invent the term "reserve army of labour". It was already being used by Friedrich Engels in his 1845 book The condition of the working class in England. What Marx did was to theorize the reserve army of labour as a necessary part of the capitalist organization of work.
Before the start of the capitalist era in human history (i.e. before the 1500s), structural unemployment on a mass scale rarely existed, other than that caused by natural disasters and wars. Indeed, the word "employment" is linguistically a product of the capitalist era. A permanent level of unemployment presupposes a working population which is to a large extent dependent on a wage or salary for a living, without having other means of livelihood, as well as the right of enterprises to hire and fire employees in accordance with commercial or economic conditions. The expression "unemployed" in English, in the sense of "temporarily out of work", dates back to the 1660s; reference to "the unemployed" as a group was first made in 1782; and reference to "unemployment" as a general condition is first attested in 1888.
Marx argued that there are no substantive laws of population that hold good for all time; instead, each specific mode of production has its own specific demographic laws. If there was "overpopulation" in capitalist society, it was overpopulation relative to the requirements of capital accumulation. Consequently, demography could not simply just count people in various ways, it also had to study the social relations between them as well. If there are enough resources on the planet to provide all people with a decent life, the argument that there are "too many people" is rather dubious.
Marx's discussion of the concept 
Although the idea of the industrial reserve army of labour is closely associated with Marx, it was already in circulation in the British labour movement by the 1830s. The first mention of the reserve army of labour in Marx's writing occurs in a manuscript he wrote in 1847 but did not publish:
"Big industry constantly requires a reserve army of unemployed workers for times of overproduction. The main purpose of the bourgeois in relation to the worker is, of course, to have the commodity labour as cheaply as possible, which is only possible when the supply of this commodity is as large as possible in relation to the demand for it, i.e., when the overpopulation is the greatest. Overpopulation is therefore in the interest of the bourgeoisie, and it gives the workers good advice which it knows to be impossible to carry out. Since capital only increases when it employs workers, the increase of capital involves an increase of the proletariat, and, as we have seen, according to the nature of the relation of capital and labour, the increase of the proletariat must proceed relatively even faster. The... theory... which is also expressed as a law of nature, that population grows faster than the means of subsistence, is the more welcome to the bourgeois as it silences his conscience, makes hard-heartedness into a moral duty and the consequences of society into the consequences of nature, and finally gives him the opportunity to watch the destruction of the proletariat by starvation as calmly as other natural event without bestirring himself, and, on the other hand, to regard the misery of the proletariat as its own fault and to punish it. To be sure, the proletarian can restrain his natural instinct by reason, and so, by moral supervision, halt the law of nature in its injurious course of development." - Karl Marx, Wages, December 1847
"capitalistic accumulation itself... constantly produces, and produces in the direct ratio of its own energy and extent, a relatively redundant population of workers, i.e., a population of greater extent than suffices for the average needs of the valorisation of capital, and therefore a surplus-population... It is the absolute interest of every capitalist to press a given quantity of labour out of a smaller, rather than a greater number of labourers, if the cost is about the same... The more extended the scale of production, the stronger this motive. Its force increases with the accumulation of capital."
His argument is that as capitalism develops, the organic composition of capital will increase, which means that the mass of constant capital grows faster than the mass of variable capital. Fewer workers can produce all that is necessary for society's requirements. In addition, capital will become more concentrated and centralized in fewer hands.
This being the absolute historical tendency, part of the working population will tend to become surplus to the requirements of capital accumulation over time. Paradoxically, the larger the wealth of society, the larger the industrial reserve army will become. One could add that the larger the wealth of society, the more people it can support who do not work.
However, as Marx develops the argument further, it also becomes clear that, depending on the state of the economy, the reserve army of labour will either expand or contract, alternately being absorbed or expelled from the employed workforce. Thus,
"Taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army, and these again correspond to the periodic changes of the industrial cycle. They are, therefore, not determined by the variations of the absolute number of the working population, but by the varying proportions in which the working-class is divided into active and reserve army, by the increase or diminution in the relative amount of the surplus-population, by the extent to which it is now absorbed, now set free."
Marx concludes that: "Relative surplus-population is therefore the pivot upon which the law of demand and supply of labour works." The availability of labour influences wage rates, and the larger the unemployed workforce grows, the more this forces down wage rates; conversely, if there are plenty jobs available and unemployment is low, this tends to raise the average level of wages - in that case workers are able to change jobs rapidly to get better pay.
Composition of the relative surplus population 
Marx argues the relative surplus population always has three forms: the floating, the latent and the stagnant.
- The floating part refers to the temporarily unemployed ("conjunctural unemployment").
- The latent part consists of that segment of the population not yet fully integrated into capitalist production - for example, part of the rural population. It forms a pool or reservoir of potential workers for industries.
- The stagnant part consists of marginalised people with "extremely irregular employment". Its lowest stratum (excepting criminals, vagabonds and prostitutes) "dwells in the sphere of pauperism", including those still able to work, orphans and pauper children, and the "demoralised and ragged" or "unable to work".
Marx then analyses the reserve army of labour in detail, using data on Britain where he lived.
Five controversies 
There are five main controversies about the concept of the reserve army of labour.
Immiseration: what does Marx actually say? 
Some writers have interpreted Marx's argument to mean that an absolute immiseration of the working class would occur as the broad historical trend. Thus, the workers would become more and more impoverished, and unemployment would constantly grow. This is of course not really credible in the light of the facts, because in various epochs and countries, workers' living standards have definitely improved rather than declined. In some periods, unemployment had been reduced to a very small amount. In the Great Depression, about one in four workers became unemployed, but towards the end of the post-war boom unemployment in richer countries reduced to a very low level. Other writers (e.g. Ernest Mandel and Roman Rosdolsky) however argued that in truth Marx had no theory of an absolute immiseration of the working class; at most one could say that the rich-poor gap continues to grow, i.e. the wealthy get wealthier much more than ordinary workers improve their living standards. In part, the level of unemployment also seems to be based on the balance of power between social classes and state policy. Governments can allow unemployment to rise, but also implement job-creating policies, which makes unemployment levels partly a political result.
If chapter 25 of Marx's Capital, Volume I is read carefully, it is plain that Marx does not actually say what critics accuse him of. Marx himself says that the "absolute general law of capitalist accumulation" is that the more that capital grows in size and value, the bigger the working class becomes, and the larger the pauperized sections of the working class and the industrial reserve army become. He does not say however that the whole working class becomes pauperized, but rather that the part of it which is pauperized grows in size. He then carefully qualifies this argument, by saying that the absolute general law is "like all other laws... modified in its working by many circumstances." Next, Marx says that in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse." It is quite clear here though that by "worse" Marx does not primarily mean poverty. He means instead, as he says himself explicitly, that "all means of development of production undergo a dialectical inversion so that they become means of domination and exploitation of the producers." He is talking about "worse" in the sense of "inhuman" or "alienated".
Another dispute concerns the notion of "overpopulation". In Marx's own time, Malthus raised dire predictions that population growth enabled by capitalist wealth would exceed the food supply required to sustain that population. As noted, for Marx, "overpopulation" was really more an ideologically loaded term or social construct, and Marxists have argued there is no real problem here, as enough food can be produced for all; if there is a problem, it lies in the way that food is produced and distributed.
People cannot help being born and being there, but the concept of overpopulation can easily suggest that part of the people do not really deserve to be there, or that they should not exist. From there, it is only another step to hating part of the human race, and to feel justified in wiping that part out (or at least subject people to compulsory sterilization). If people believe that each human being has a right to be there and enjoy life, there cannot be "overpopulation". At most one could say that there are too many people living in a particular area. Even so, people can get used to living with remarkably little personal space.
Forced or voluntary? 
In the social welfare area, there are also perpetual disputes about the extent to which unemployment is voluntarily chosen by people, or involuntary, whether it is forced on people or whether it is their own choice. In the Great Depression of the 1930s, when unemployment rose to 20-30% of the working population in many countries, people generally believed it was involuntary. But if unemployment levels are relatively low, the argument that unemployment is a matter of choice is more often heard..
Measures of frictional and structural unemployment 
There are endless debates about the best way to measure unemployment, its costs and its effects, and to what extent a degree of unemployment is inevitable in any country with a developed labour market. According to the NAIRU concept, price stability in market-based societies necessarily requires a certain amount of unemployment. One reason a reserve army of the unemployed exists in market economies, it is argued, is that if the level of unemployment is too low it will stimulate price inflation. However, the validity of this argument depends also on state economic policy, and on the ability of workers to raise their wages. If for example trade unions are legally blocked from organizing workers, then even if unemployment is relatively low, average wages can be kept low; the only way that individual workers have in that case to raise their income, is to work more hours or work themselves up to better-paying jobs.
Hidden unemployment 
There are also many controversies about hidden unemployment. Hidden unemployment means that people are not counted or considered as unemployed, although in reality they are unemployed. For example, young people will stay in the family home, in schooling, or in some make-work scheme, because they can't find a paid job. People might also have a job, but they might be under-employed, because they cannot get more working hours or they cannot get a job for which they are qualified. People might also drop out of the official labour force, because they are discouraged, and no longer actively looking for work - they are no longer counted as unemployed although they are. Governments can also subsidize employment of people who would otherwise be unemployed, or put people on benefits even although they could be working. It may be that workers are hired, but that they do nothing while at work. On the one side, governments often try to make unemployment seem as low as possible, because that is politically desirable. On the other side, governments also often provide "broader" and "narrower" measures of unemployment.
A global reserve army of labour? 
Marx was writing in the mid-19th century, and his discussion of unemployment may therefore be, in part, out of date, particularly when viewed only at the national level. However, his analysis may continue to be valid if considered globally. The ILO reports that the proportions of world unemployment are steadily increasing.
- Half of all workers in the world - some 1.4 billion working poor - currently live in families that survive on less than US$2 a day per person. They work in the vast informal sector - from farms to fishing, from agriculture to urban alleyways - without benefits, social security or health care. 633 million workers and their families were living on less than USD 1.25 per day in 2008, with as many as 215 million additional workers living on the margin and at risk of falling into poverty in 2009.
- Unemployment in terms of actual people out of work is at its highest point ever and continues to rise. In the last ten years, official unemployment has grown by more than 25% and now stands at 212 million worldwide, or 6.6% of the global workforce. Unemployed and under-employed together total about a billion people. "Underemployed" means generally that workers are unable to find enough paid work to earn sufficient money to live on, i.e. that they work part-time or in casual jobs. This is sometimes called precarious work or contingent labor. But some underemployment concerns skilled workers, who prefer to work less hours because their relatively high salary enables them to do so.
- Among the world's unemployed, the ILO estimates that about half the global total are young people aged 15 to 24. In the rich countries, it often does not matter so much if young people are unemployed at that age, but in the Middle East, Asia, Africa and Latin America, where most of the unemployed youths are, it is often a much more serious problem.
Modern academic usage 
While Marx's terms are now lost, their referents have been topics of notable examination in modern economics. Sir Arthur Lewis, for example, cites only one specific contribution to Economics in his Nobel Prize acceptance speech: his work on the (to Marx) "latent" non-employed. Lewis, in this discussion, uses the terms "an unlimited supply of labor" and "a reserve of cheap labor" in his rejection of the neoclassical treatment of the matter. And although non-employed people who are unable or uninterested in performing legal paid work are not considered among the "unemployed," the concept of conjunctural unemployment is used in economics today (now called "frictional unemployment"). Although Marx's work was earlier, there is no stated link between it and similar modern study.
See also 
- Guaranteed minimum income
- Labour supply
- Full employment
- Job guarantee, and associated concept of "buffer stock"
- Labour power
- Wage slavery
- Working class
- Roman Rosdolsky, The making of Marx's Capital. Pluto, 1977, chapter 18, p. 250 note 19.
- John A. Garraty, Unemployment in history : economic thought and public policy. New York: Harper and Row, 1978.
- Online Etymological Dictionary, entry "unemployed".
- Michael Denning (2010) "Wageless life" New Left Review. 66: 79-97
- “Wages,” Works of Karl Marx 1847; Source: MECW Volume 6, p. 415; Written: at the end of December 1847; First published: in Russian in the journal Sotsialisticheskoye khozyaistvo, 1924 and in German in the journal Unter dem Banner des Marxismus, 1925.
- *Karl Marx, Das Kapital, chapter 25
- E. Germain [pseud. Ernest Mandel] "Gibt es eine Marx'sche Verelendungstheorie?" in: Die Internationale : theoretisches Organ des revolutionären Marxismus (Vienna) [ISSN 0535-4005]. Issue 3, February 1957, pp. 25–35.
- Roman Rosdolsky, The making of Marx's Capital. Pluto, 1977.
- Capital, Volume I, Penguin ed., p. 798.
- Capital, Volume I, Penguin ed., p. 799. emphasis added.
- Frank Furedi, Population and Development: A Critical Introduction. St. Martin’s Press. 1997.
- Tom Brass and Marcel Van Der Linden (eds.), Free and Unfree Labour: The Debate Continues (International and Comparative Social History, 5). New York: Peter Lang AG, 1997.
- Michel de Vroey, Involuntary Unemployment; The Elusive Quest for a Theory. Routledge, 2004.
- *Göran Therborn, Why Some Peoples Are More Unemployed than Others. Verso, 1986.
- John Bellamy Foster, Robert W. McChesney and R. Jamil Jonna, "The Global Reserve Army of Labor and the New Imperialism", Monthly Review (New York), Volume 63, Issue 06, November 2011.
- Navtej Dhillon & Tarik Yousef (eds.), Generation in Waiting: The Unfulfilled Promise of Young People in the Middle East. Brookings Institution Press, 2009.
- Sir Arthur Lewis, “Autobiography,” From Nobel Lectures, Economics 1969-1980, Editor Assar Lindbeck, World Scientific Publishing Co., Singapore, 1992
- Ben Fine, Labour Market Theory: A Constructive Reassessment. Routledge, London, 1998.