A series of 3 excerpts on commonifying the fictitious commodities identified by Karl Polany, i.e. land, money and labor, from an essay by Gary Flomenhoft:

Labor as a false commodity in the financial crisis

The third of Polanyi’s false commodities, labor, is a special case. Without unionization or government intervention, labor is generally at a disadvantage to the owners of business, except in the case of highly skilled labor, as labor is normally overabundant, and easily reproducible by a very enjoyable process. In Polanyi’s words, “Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime, and starvation (Polanyi, p. 73). As a factor of production, it is in the interest of business to minimize wages to labor. As consumers, laborers benefit from low prices resulting from reduced labor costs, which act directly against their interests as employees seeking higher wages.

There are several specific results of labor as a market commodity. During bust cycles, labor is hit with unemployment, leading to many of the social consequences pointed out by Polanyi. Due to globalization, labor has not been compensated for its increased productivity contribution since 1975 in the US. Also, as a result of treating labor as a market commodity, Polanyi predicted starvation and crime would result, without social intervention. We can evaluate these results in light of the 2008 financial crisis.

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Since 1975 workers have received almost none of the gains of increased productivity, which has increased by 143% since around 1975 (figure 14). In other words, productivity has more than doubled, while workers received none of the gains. This can be explained by the deindustrialization of the US economy, as heavy industries followed by manufacturing in general were exported to Asia. Due to this trend there was a huge decrease in unionization which went from 39% in 1940 to around 10% in 2014. During the same period there was a trend toward part-time work and contract labor, mergers and acquisitions, with downsizing and layoffs. The Reagan revolution and Republican “Contract with America” both served to remove power from the working class and transfer it to corporations. One of Reagan’s first acts as President was to break the Pilots and Air Traffic Controllers strike (PATCO), replacing them all with military personnel. That was the final nail in the union coffin. The Democratic Party in 1992 through the Democratic Leadership Conference chose to seek the same corporate and Wall St. money as the Republicans, and from that point on effectively stopped serving the working class. All these factors led to the reduction of bargaining power and political power on the part of labor, and can help explain the stagnating real wages during this period of time.

Solutions to commodity labor

One of the responses to critiques such as Polanyi’s of labor as a market commodity was Marx’s prescription of a “dictatorship of the proletariat”, and state ownership of the “means of production”. It turns out that one dictatorship is no better than another. Also owning the means of production does not necessarily eliminate land or money as commodities, although presumably putting labor in charge of managing industrial production would give them more sovereignty over their work lives. In reality during Soviet communism, laborers remained commodities ruled by party elites. More recently the Mondragon cooperatives have demonstrated a more cooperative form of labor management, still within the market system, but with good results. In the US Louis Kelso originated the idea of Employee Stock Ownership Plans (ESOPs), which would ideally turn all employees into capitalists by giving them a share of stock in the company. This has had limited success. Many ideas for returning power to workers have been proposed in recent years. Community land trusts often employ development and construction companies for housing construction and renovation. Therefore, combining community land trusts with worker-owned construction companies is feasible. Gar Alperovitz has promoted many structural reforms including, “the traditional radical principle that the ownership of capital should be subject to democratic control” (Alperovitz, 2013). This refers to worker ownership or participation in their own workplaces, a very different proposition than state communism or state capitalism. Democratizing the workplace is a great unfinished business of society.

What few reformers have advocated directly is to remove labor as a factor of production sold in labor markets. It is probably a lack of imagination that prevents us from imagining an economy where labor consists of human beings doing meaningful work in alignment with their skills and interests. Aboriginal and tribal people managed to do it, through non-simultaneous reciprocity. Even in feudal times according to Polanyi, labor was tied to feudal estates and was remunerated according to social relationships, not according to labor markets. Surely we can find an approach embodying something like Sen’s capabilities approach that respects the humanity of labor, while still remunerating them for their work. We need to find a way for laborers to gain control of their lives and work according to their capabilities, instead of simply selling their labor in markets.”