Unemployment is an inevitable consequence of capitalism!

Presentation made by Mazdoor Ekta Committee in a meeting organized on June 27, 2021

Whenever you are travelling to work in the morning, you see workers in clusters at different labour hubs (places where unskilled and semi-skilled workers gather to seek daily work). Painters, plumbers, carpenters, masons et al with their tools, stand there, waiting to sell their labour power.

In rural areas, people have to organize protest marches, even to be allowed to enroll their names in a government scheme like MNREGA. Despite these protests, it is not guaranteed that all those who are able to enroll themselves will get work under MNREGA scheme.

Similarly, well-educated youth, equipped with high-tech training, are searching on the Internet, for the first job of their life. There are so many resumes waiting on different digital platforms which are promising job opportunities to the youth. For example, platforms like Indeed, Monster, Glassdoor, LinkedIn, Naukri.com, etc. provide leads for employment on the internet. A large number of those who send their resumes to these platforms, are those who have lost their jobs.

According to the Centre for Monitoring Indian Economy (CMIE), nearly 15 million jobs were lost in one stroke during the month of May this year. The total number of people who have lost their jobs in just two months of April-May this year alone, is 22.3 million (2.23 crores).

The largest number of those seeking jobs, are daily wage workers. Their number is 17.2 million. During two months May-June 2021, 5.7 million businessmen and more than 3.2 million salaried workers have lost their jobs.

According to CMIE data, the rate of unemployment, was 8 percent in April this year and it has gone up to to 11.9 percent in May. On 23rd May, in the third week of the month, the weekly rate of unemployment had gone up to 14.7 percent.

According to the CMIE report, those who were of 40 years plus age constitute the maximum proportion of those who have lost jobs in these two months. These are probably the only bread-winners in their family.

These figures show the enormity of the crisis of unemployment we are facing today.

It is obvious that the problem of unemployment is not only a problem for the individual who has lost the job, but it also affects adversely, every member of the family dependent on him. That means, the number of people affected by unemployment is four to five times more than the number of unemployed persons.

Even as the lockdown was announced in 2021, based on their own life experience of not getting any guarantee of relief from the state during the first lockdown in March 2020, lakhs of workers started back again literally overnight towards their villages.  All those who were just beginning to return to the cities in search of jobs again after leaving for their villages under extremely harsh conditions during the first lockdown, which had been announced suddenly without any notice last year, had to return again to their village since the announcement of the second lockdown. This series of lockdowns – one after another is expected to continue.

Whatever be the data on unemployment and the basis of its estimation, it never fully reveals the reality on the ground – the extent and the enormity of suffering, our fellow humans are going through.

Unemployment has very little to do with the policy of this or that party in power and running the government of the day. It is important to recognize that the iron laws of the capitalist system are responsible for forcibly keeping hundreds of millions of workers unemployed, destitute and/or idle.  The Indian state wants to preserve and defend this capitalist system and is, in fact, striving to develop capitalism further, in our country.

About 6.83 lakh posts were vacant in various departments of the Central Government, as on 1st March 2018. This information was given by the Minister of State for Personnel, Jitendra Singh in the Lok Sabha on 5th February  2020 last year. He said that out of a total 3.83 million sanctioned posts, only 3.1 million) posts have been filled.

In the case of Indian Railways, the largest employer in the country, around 2.5 lakh posts were lying vacant as on 1st March 2018. This number is increasing year by year. Since the announcement of the new economic policy of globalization through liberalization and privatisation of  the Indian state,  all efforts have been made to hand over Indian Railways to private companies. Therefore, it is no surprise that irrespective of which party or coalition has been in power, from the Congress led UPA government to the present BJP government, the process of not filling the sanctioned posts in the Indian Railways continues.

Why does unemployment increase in the capitalist system?

Capitalism, concomitant with its development, gives rise to an army of unemployed. Karl Marx calls this army of unemployed, the ‘Industrial Reserve Army’. This army of unemployed is always present in addition to the employed workers. It includes both unemployed and partially unemployed workers.

The ‘Industrial Reserve Army’ comprises three categories of unemployed workers – the first category being ‘temporary’ unemployment, the second category being ‘hidden’ unemployment and the third category being “stagnant” unemployment.

In the category of ‘temporary’ unemployed are those workers who have employment, but it is not regular employment. For example, in the garment industry, workers get only seasonal employment. Apart from this, a large proportion of our youth get employment in the service industry such as call centres, courier service and delivery service, etc. After a certain age they lose their jobs. The capitalist system super-exploits the youth engaged in such jobs. Secondly, with technological advancements, their skills and experience tend to become obsolete.

The second category of unemployment is called ‘hidden’ unemployment. This includes hundreds of millions of people living in rural areas, who are being ruined by the development of capitalist relations of production in agriculture. The continuous migration of people from villages to cities exposes this grim reality. Many people who continue to live in villages are forced to live in extreme poverty. These people keep waiting for employment opportunities in some industry or service sector. Their number is very large in our country. This large proportion of our population in the country is struggling to make both ends meet, by doing small jobs in the nearby areas surrounding the village.

The ‘stagnant’ section comes in the third category of unemployment. This section has work, but it is very irregular. This form of labour power is a everlasting source of profit for the capitalist. Workers who have lost their jobs due to old age, migrant laborers from rural areas and ruined artisans, are included in this stagnant section. The standard of living of these workers falls below the general level of the working class. These workers are forced to work long hours and are paid less than the minimum wage. These workers become the basis of a special branch of capitalist exploitation, such as in the construction industry of our country.

Karl Marx had pointed out that at the lowest level of the industrial reserve army, there are people who are totally destitute. For example, workers injured in factories and mines, orphaned children, widows and elderly workers and those who have been forced to live and die on the streets, away from society.

The capitalists hire workers to extract maximum surplus value from human labour, make more profits and thus aggrandize their capital. Along with the process of accumulation of capital, the concentration of capital increases concurrently, and it necessarily gives rise to a periodic crisis of capitalist over-production. Capitalism goes through cycles of boom and bust (growth and recession). In times of boom/growth, the demand for workers increases, whereas in times of recession/bust/overproduction, the demand for workers collapses.

Along with capitalist development, there is technological development. The productivity of labour increases as a consequence of technological development. For example, with more advanced technology, a worker, who used to take 2 hours to make a thousand soaps, can now make the same number of soaps in less time than that – let us say in 1 hour only. That is to say, workers can produce goods of much higher value in much shorter time, compared to what they produced before the introduction of the new technology. That is, there is a continuous expansion of capital, but instead of increasing employment, it decreases as a consequence of technological development.

At the same time, advances in technology in any field of production force all capitalists to either accept the new technology or get destroyed by other capitalists who will have an edge over them.

For example – replacement of film cameras with digital cameras, use of email instead of fax, telegram or letter to send messages, etc. have destroyed lakhs of jobs. Digital newspapers and books may not have completely eliminated the workers engaged in printing, but they have certainly adversely affected millions of jobs in this sector. Similarly, workers in textile mills had to face a similar experience in the 1980s. In the future, it is possible that the car will run without a driver, which may eliminate or reduce the need for drivers.

There is no doubt that the development of science and technology is necessary for the progress of the society. However, instead of using technology for the benefit of society as a whole, the bourgeoisie uses it to increase its private profits. Due to this, an atmosphere of anarchy is created in the society and in the field of production. Workers are the victims of this anarchy. What is needed is to plan for this technological transition, in the production process. The workers involved in the production process should be trained appropriately for this impending transition. Workers who have lost their jobs in one sector, should be appropriately trained for other sectors.

The more capitalism develops, the more rapidly the number of unemployed grows in the society.

Capitalist economists, bourgeois organizations and political parties of the bourgeoisie spread the false propaganda that the growth of capitalism creates more jobs. They hide the fact that with the development of capitalism, the army of the unemployed expands.

Today when capitalism has reached the stage of imperialism, it has become totally parasitic. In such a situation, the destruction of any industry or any sector of service happens in one stroke. An excellent example of this transition is the growth of e-commerce companies. This has brought old retail business to the brink of ruin. An increasing number of small and medium sized companies are forced to wind up their business. With the growth of large and huge monopoly companies, the number of new jobs created is far less than the old jobs lost.

In the words of Marx, “Forcing one part of the workers to work excessively and forcing the other part to remain idle; forcing one part of the working class to sit idle and the other part to work overtime – this becomes the means of increasing the wealth of the individual capitalists.

  • Lakhs of workers who are unemployed are being used to super-exploit the workers currently employed. The workers currently employed are being forced to work for longer hours.
  • The “unemployed reserve force” is being used to reduce the wages of employed workers and they are ready to work even at these reduced wages since they fear losing their jobs.
  • This “unemployed reserve force” is being used to crush or limit workers’ rights – those rights which they have won after years of sustained life and death struggle including the right to 8-hour work, and the right to secure employment and social security.

At the same time, the ruling class is increasingly dividing the people and especially the youth, on various pretexts. For example, the ruling class makes them fight among themselves on the basis of caste-based reservation for government jobs. It only proves that capitalism is not capable of providing happiness and security to all.

We believe that, without eliminating the source of the problem, it is not possible to solve the problem of unemployment. In other words, without abolishing the capitalist system, unemployment cannot be eradicated.

We will have to establish worker-peasant rule in which the ‘needs of society’ will be the motive force of all economic activity, instead of “private profits”, which is at the centre of the present capitalist system and its economic activities. The direction of the economy in the new system, will be to meet the growing needs of the workers, peasants and all working people. This is the only way by which all the basic needs of the people like education, health, food, housing, drinking water, etc. can be met. And we need crores of workers to meet these needs of our people.  Unemployment will end, if the direction of the economy is towards satisfying the rising needs of the people and not the maximization of private profit.

At present, labour-power, remains the source of the ‘profit’ for the capitalist class. Under worker-peasant rule, the same labour power will become a source of prosperity for the entire society.

The working class must aim to establish workers-peasant rule in the country. Freedom from unemployment is possible only under the rule of workers and peasants.


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