Sunday 21 July 2019

The Week That Was: Economic Parasitism.

Slavery was profitable to the slaveholder because slaves produced more for him than what he spent in their maintenance. Masters didn’t pay slaves their labour. Of what slaves produced in their labour time, a fraction went to their maintenance; the master kept the rest for himself. That much is evident, even to economists.

Things are evident, too, in the case of medieval serfs (although here I wouldn’t be surprised one had to draw a picture for economists, usually ignorant of history). During a part of their working week serfs worked the land his lord allocated to their maintenance; the rest of the week they worked the land the lord reserved for himself.

Those remarks are useful to understand contemporary Australia.

Specifics aside, both situations have in common that some (slaves and serfs) worked longer than their needs required in order to produce for others (masters and feudal lords, respectively). Exploitation is the word Marxists use to describe situations like those. [*]

To reiterate: feudal lords didn’t pay their serfs at all, anymore than slaveholders did their slaves. But both classes only gained from part of that unpaid labour: that which produced in excess of slaves’ and serfs’ needs.

With the introduction of wage labour under capitalism things may look different, but in essence the situation is the same: just like slaves and serfs, in a day’s work workers produce more than enough to cover both their own needs and to replenish whatever capital was consumed. Unlike slaves and serfs, workers are not given a ration or the use of land, but money with which to buy their needs from … the capitalists. Meanwhile, the excess output they produced in the shape of commodities, appropriated by capitalists, once sold becomes the capitalists’ money profits.


That’s precisely what the statement “unpaid surplus labour is the origin of capitalist’s profits”, central to Marxists, means. Nowhere the truth in that statement is clearer than in Australia.

In Australia, not even that notion of exploitation is enough to satisfy capitalists. On top of getting less than they produce, Australian workers are robbed even the wages they should get: wage theft is as typically Australian as vegemite and has been in the news constantly for at least four years now, when the 7-Eleven case was revealed. Since then an endless string of scam cases came to public attention, involving employers from big firms like Woolworths, to vocational education providers, farmers and small businesses.

Just last week the case of celebrity chef and MasterThief cooking show star George Calombaris caused sensation, although cases like his are common place in the hospitality industry. It turns out his upmarket restaurant chains (plural) underpaid workers, for years on end, to the tune of at least $7.8 million. The case didn’t go to court, which may explain why the office of the Fair Work Ombudsman fined him only $200K. In his defense Calombaris claims that was just an oversight. His accountants -- I guess -- must be extraordinarily incompetent; hopefully the food his restaurants serve is more competently prepared.


While I understand the interest, I think two other cases, much less talked about, offer more insight on issues such as immigration and public attitudes to it. My interest, however, lies somewhere else: their relationship to Marxist claims about wages.

Last Wednesday it was reported that a Sydney wealthy couple imported a Filipino woman to work as their live-in nanny. (Australia has an active skilled temporary migration scheme). Allegedly the woman was made to work between 80 and 106 hours a week for a whole year, in which time she had two days off … only. Her duties included cooking and cleaning, in addition to looking after the couple’s children. And she was paid $2.33 per hour. (Cases like this are not unheard of).

Unlike in the Calombaris case, the FWO and the worker are taking the case to the Federal Court, claiming a back pay between $85,834 and $155,178, estimated on the basis of different hourly wages: between $17.29 and $17.70 per hour if she was covered only by the national minimum wage prevalent at the time (it currently amounts to $18.93); between $17.92 and $37.82, if the court finds she was covered by the Miscellaneous Workers Award.

Those details are worth mentioning because it’s obvious that $2.33 per hour -- as she was effectively paid -- not only breach the law, but are ridiculously low. In other words, it’s evident what the wage is not. However, the fact itself that her final pay will depend on a judicial decision highlights the fact that hourly wages set by administrative decisions do not necessarily imply a complete and accurate appraisal of the value her labour added. To put this differently: there is no reason to believe $17/$18 really account for the value her labour added.


Last week, a third story, in many ways similar, shows that cases like that are neither isolated, nor imply trivial amounts: after two years’ legal dispute, last Tuesday the Queensland State Government agreed to pay 10,000 Aboriginals and Torres Straight Islanders the amount of $190 million to settle out of court a class action for unpaid wages during 3 decades. The real amount owed could have reached $500 million.

Surprisingly, the COALition’s Christian Porter, Attorney General and federal Industrial Relations minister, who vociferously demonstrated his outrage over the heights of unlawfulness John Setka reached for being a jerk, has said nothing about those cases of wage theft.

[*] At least one other form of economic parasitism is well known: as David Ricardo and others discovered in the early 19th century, landholders exploited tenant farmers. Since then the term “rent” has been associated to unearned income.

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