In our 21st Century many western governments have contracted to pay benefits that they cannot afford. In their relentless search for more money without raising the rates of taxes, such governments promote innovation to increase the production per man hour worked. More production means more profits and more profits means more taxes will be paid. Therefore government, business and labor have a joint interest. More production increases incomes, increased incomes pay more taxes, more tax income means more benefits can be paid to the population. You would think that most everyone would be on board with that, especially, the owners and managers of businesses and the labor that works for them. Alas, too many owners and managers and labor unions still maintain a 19th Century view of the functions of profits and wages.
Too many owners and managers and labor unions, especially those operating in North America and the United Kingdom, still view profit as the value of labor not paid for. They falsely believe that more profits flow from less paid to labor. The aim of owners and management of those businesses is to keep production up and pay for it as little as possible. How can this be right? How did we get to this? Is there a better way?
To understand how we got to this we need look no further than 19th Century history when the industrial revolution went into full swing. Before the industrial revolution people worked their own plots of land and kept all they did not have to pay to their overlord. This was by no means a good living. But when the people left the land and started to work in factories they had to work for the pittance that was being paid. It was never enough. The plight of the working poor did not improve and several people thought deeply about that problem. Karl Marx was one of them. To understand where Marx was coming from we have to examine the ideas that Marx was building on. And what Marx was building on were the ideas of G.W.F. Hegel.
Bear with me here. It is complicated and to put Hegel’s ideas in simple terms does him a grave injustice. But let’s give it a try. Hegel thought that history showed that humanity was making progress. He also thought that such progress was towards individual freedom. He believed that such progress came in waves throughout history. There would be a state of affairs that Hegel called “the thesis”. A change would come to challenge the thesis and that change he called the anti-thesis. There would be struggle between those two forces and eventually the two would blend to form a synthesis. That synthesis would become a new thesis until another anti-thesis came along to form yet another synthesis. And so on and so on.
Marx adapted Hegel’s idea. However, he substituted for thesis the class structure of the 19th Century. They were the nobility, the bourgeois and the laboring classes. Marx said that the nobility was the thesis, the bourgeois the antithesis. When the bourgeois became the dominant economic force, the nobility and the bourgeois allied and formed a new synthesis. Sometimes referred to as the Merchant Princes. That synthesis was the new thesis during the 19th Century. But Marx went further and contended that labor would be the new anti-thesis and it would become the dominant economic force. Once labor would be the dominant force the process would stop as the ideal state of affairs had been achieved. Once labor would be the dominant economic force the best of all possible worlds would be realized and all material goods would be equally shared. “From each according to their abilities, to each according to their needs”.
To all of us living in the 21st Century, Marx’s ideas were pipe dreams and nonsense. History subsequent to Marx has shown time and time again that his fanciful dream of a worker’s paradise does not work and likely cannot work. In any event capitalism works much better and has shown that the economic benefits of industrial production are distributed much more fairly amongst the people. Not fair, but more fair than the alternatives. Indeed it can fairly be said that the ideas of Marx impoverish people rather than enrich them. Consequently, in the 20th and 21st Centuries Marx’s idea of a perfect worker’s world are vilified as not only unworkable but tantamount to evil.
It is therefore surprising that the basic tenets of Marxism still exist in our capitalist economic system. Today many business owners and managers often abhor and, frequently treat, their workforce as the enemy. Their view is that wages curtail profits. Lower wages mean more profits. But more to the point, our labor laws are framed in such a way so as to confirm that the struggle between owners and managers and labor is perpetual. In other words the labor laws assume that owners and managers will always be at odds with labor. The Labor codes set out rules of labor relations and the aim of the rules is to balance the powers of the owners managers with the powers granted to labor. But the assumption is that greater profits flow from labor that is paid less and that higher wages have to be paid from reduced profits. Consequently, the assumption is that the two sides will constantly fight to divide up the pie. Sometimes owners and management get more than what is fair, mostly, and sometimes labor gets more than fair wages, rarely.
But in the real world the two sides are not antagonists. The owners and managers and labor are in fact on the same team. Business enterprises function better with all working towards a common goal. And there are many examples of co-operative businesses that earn good profits and pay fair wages. This is especially true for businesses owned and managed by women. Often, in woman run enterprises, owners, management and labor organize their forces as a team. In Europe it is normal to have corporate directors from the labor force participate in corporate board meetings. There is a recognition that co-operation works better for everyone. Smart business decisions are not the sole province of the owner and managers. If every person interested in the success of the business participates in all the decisions, the decisions by and large are better because more factors have been considered. Better decisions result in more profits and more profits pay higher wages and more benefits. It is well past time to reform our labor laws and structure the relations between owners, managers and labor as a common enterprise. The business will be better run, the profits will be greater and the wages and benefits will increase. Such reform may even help government collect more taxes without raising the tax rates. More taxes pay more benefits to everyone. It could be a win-win or a paradise for everyone, not just the workers.