12: The Price of Labour Power

The price of labour power (i.e., the level of wages) fluctuates in a competitive labour market like the price of any other commodity around its value in accordance with relation of supply and "demand" on the market:

"Wages will rise and fall (in a competitive labour market -- WBB) according to the relation of supply and demand, according to the turn taken by competition between the buyers of labour power, the capitalists, and the sellers of labour power, the workers.... Within these variations, however, the price of labour (power -- WBB) will be determined... by the labour time necessary to produce this commodity -- labour power" (K. Marx: "Wage-Labour and Capital", in: "Selected Works", Volume 1; London; 1943; p. 262).

As has been said, wage levels in the contemporary Soviet Union continue to be regulated by the central state apparatus. But, as in orthodox capitalist countries, this state regulation of wage levels is intended to bring the power of the state to the assistance of enterprise managements in resisting pressure from their organised workers to force up the level of wages in contradiction with the aim of ensuring that real wages grow more slowly than productivity of labour. It is intended, in other words, to resist the "monopoly" power of the workers in so far as this may be brought about by genuine trade union organisation (in the case of the contemporary Soviet Union this means, as will be shown in the section entitled "Corporatism", organisation outside the official "trade union" channels). it is not intended to -- and does not -- eliminate competition between buyers and sellers of labour power and the resultant fluctuation of the price of labour power around its value in accordance with the relation of supply and "demand" on the labour market.

Thus, enterprises compete with one another for labour power:

"Circumstances prompt new enterprises to entice personnel, especially skilled personnel, from old enterprises. Such a practice is widespread".

(E.G. Antosenkov: "The Availability of Housing and Personnel Turnover", in: "Izvestia sibirskogo otdelenya Akademy Nauk SSSR: Seriia obshchestvennykh nauk" (Journal of the Siberian Section of the Academy of Sciences of the USSR; Social Science Series), No. 11. 1972, in: "Problems of Economics", Volume 16, No. 3; July 1973; p. 65).

In this competition for labour power, enterprises use, of course, not only the attraction of higher wages, but also those of higher bonuses and higher welfare services. This will be discussed in later sections.

On the other hand, contemporary Soviet economists admit that the high mobility of Soviet workers is primarily due to the competitive search for such higher wages and better living conditions.

"In 1967 5.5 million persons moved from one city to another, 3.1 million moved from villages to cities, and 1.5 million moved from cities to villages. In addition, several million persons moved from one village to another".

(V. Perevedenstev: "Migration of the Population and the Utilisation of Labour Resources", in: "Voprosy ekonomiki" (Problems of Economics), Volume 13, No. 1; March 1971; p. 40).

"Manpower turnover is influenced by a number of factors that are basically connected either with working conditions or with differences in levels of material well-being...

Approximately 50% of all persons leaving their jobs at their own volition do so for these reasons (i.e., level of earnings, housing and social conditions -- WBB)...

At the Altai Tractor Plant... 11.3% of the total number leaving their jobs did so because of dissatisfaction with their wage level. In Leningrad and Ufa... 20-21% of the workers left their jobs for this reason".

(L. Kuprienko: "Influence of the Standard of Living on the Movement of Labour Resources", in: "Voprosy ekonomiki" (Problems of Economics), No. 3, 1972, in: "Problems of Economics", Volume 15, No. 5; September 1972; p. 63-4, 65).

"Of late the scale of variable migration has been increasing with ever greater intensity in the USSR".

(L. Lugovskaia: "Current Problems of Urbanisation", in: "Planovoe khoziaistvo" (Planned Economy), No. 8, 1972, in: "Problems of Economics", Volume 16, No. 1; May 1973; p. 96).

"Some workers repeatedly switch one job for another in search of maximum advantages, including advantages in housing".

(E.G. Antonsenkov: ibid.; p. 65).

"In the course of a year 59.1% of all personnel in the national economy take part in real transfers (i.e., change their jobs either within the same enterprise or to a different enterprise -- WBB)...

Every year in the national economy several tens of millions of persons make transfers, their overall number exceeds 100 million. Approximate calculations show that not more than half of this movement is associated with the interests of the development of production and of the work force".

(V.S. Nemchenko: "Mobility of Labour Resources", in: "Vestnik Moskovskogo universiteta: Seriia ekonomika" (Journal of Moscow University: Economic Series), No. 1, 1974, in: "Problems of Economics", Volume 17, No. 6; October 1974; p. 81, 88).

"A study of migrants in regions of new industrial development in the West Siberian lowlands, with a relatively unfavourable climate, revealed that over 50% of the migrants came in quest of higher earnings... Approximately 70% of those persons who have quit their jobs to take positions in new places receive higher wages than they did in the old places".

(A. Sukhov: "Labour Mobility and its Causes", in: "Nauchnye doklady vysshei shkoly: Ekonomicheskie nauki" (Scientific Reports of Higher Schools: Economic Science), No. 4, 1974, in: "Problems of Economics", Volume 17, No. 7; November 1974; p. 26, 31).

"Personnel turnover .. was 19.8% in industry in 1972".

(V. Korshagin & V. Filippov: "Labour Activity of the population"", in: "Planovoe khoziaistvo" (Planned Economy), No. 8, 1974, in: "Problems of Economics", Volume 17, No. 9; January 1975; p. 99).

Thus, there is, in the contemporary Soviet Union, competition between buyers and sellers of labour power. And since the labour market is a competitive one, the price of labour power fluctuates around its value in accordance with the relation of supply and "demand" on that labour market.

The Soviet labour market was, in 1967, given concrete form by the establishment of labour exchanges, called "Manpower Utilisation Agencies":

"In 1967 Republic Manpower Utilisation Agencies were established. They are responsible for the job placement of workers and employees".

(V. Korshagin: "Utilisation of Manpower Resources in the New Five-Year Plan", in: "Planovoe khoziaistvo" (Planned Economy), No. 4, 1971, in: "Problems of Economics", Volume 14, No. 6; Ocotber 1971; p. 46).

Under the socialist system formerly in operation in the Soviet Union, workers' wages were based, in all spheres where this was practicable, on piece-work in accordance with the principle of socialism that a worker's remuneration should be proportional to the quantitiy and quality of the work performed:

"In... socialism,.. termed by Marx the first phase of communism,... we.. have.. the distribution of articles of consumption 'according to the amount of work performed' (V.I.Lenin: "The State and Revolution", in: "Selected Works", Volume 7; London; 1946; p. 84-5).

"The basic system for the remuneration of labour in our country is the piece-work system, pure and simple".

(N. Shvernik: Report to the 9th. Congress of Trade Unions (1932), cited in: S. & B. Webb: "Soviet Communism: A New Civilisation"; London; 1935; p. 704).

In a capitalist economy, there is, of course, pressure from management to cut piece-work rates as workers increase productivity; in a socialist economy this pressure does not exist:

"Where profit-making is the recognised object of industrial undertakings, there is a constant danger of the employer taking advantage of the worker's increased output by 'cutting the rate'.... Where the profit-making motive has been swept away, the danger of the rate being cut in order to increase the owner's profits is eliminated".

(S. & B. Webb: ibid.; p. 706).

Since the "economic reform" and the reintroduction of profit as the motive and regulator of social production in the Soviet Union, pressure to cut piece-work rates with increased productivity occurs, just as in an orthodox capitalist country:

"The introduction of new technology... involves the downward revision of piece-rates".

(E.G. Liberman: "Economic Levers for Fulfilling the Plan for Soviet Industry", in: M.E. Sharpe (Ed.): "Planning, Profit and Incentives in the USSR", Volume 1; New York; 1966; p. 59).

Further, Marx points out that in an orthodox capitalist economy where there is strong resistance on the part of the workers to downward revision of piece-rates in such circumstances, managements often prefer to switch from piece-work to time-rates as the basis of wage payments:

"Where a particular rate of piece-wage has for a long time been fixed by tradition, and its lowering, therefore, presented especial difficulties, the masters.. sometimes had recourse to its compulsory transformation into time-wages".

(K. Marx: "Capital", Volume 1; London; 1974; p. 520).

Contemporary Soviet economists urge that the same process be adopted in the Soviet Union:

"Piece-work remuneration sometimes hinders the introduction of new technology...Neither the shop superintendents, nor the foremen, nor the workers themselves have sufficient inducement for corresponding reductions in the rates of payment. The time-and bonus system of payment is free from these shortcomings. The more our industry is mechanised and automated, the more reason there is to pay the worker a fixed rate".

(E.G. Liberman: ibid.; p. 59).

"The piece-rate system will gradually be used less and less because of the spreading of comprehenisve mechanisation and automation."

(Y.L. Manevich: "Wages Systems", in: "The Soviet Planned Economy"; Moscow; 1974; p. 254).

and, in fact, there has been, in recent years, a decrease in the proportion of industrial workers pain on the basis of piece-work rates and an increase in the proportion paid on the basis of time rates:

% of industrial workers paid on the basis: of

piece-work rates or time rates

1962: 60.5% 39.5%

1965: 57.6% 42.4%

1969: 56.6% 43.4%

(Y.L. Manevich: ibid.; p. 246).

As has been said in the previous section, Marx held that in a capitalist society real wage levels tend to rise with the development of the productive forces. The aim of a capitalist class, however, is to try to ensure that, even if real wages grow, they grow more slowly than the growth of the productivity of labour. In these conditions, the proportion of total national income received by the working class falls despite the rise in real wages, i.e., its exploitation increases.

This is, naturally, also the policy of the Soviet capitalist class:

"An important condition for development of the economy of the enterprise is a growth in labour productivity that outstrips the growth of wages. Only in such a case can the enterprise achieve a systematic drop in its production costs and an increase in accumulations".

(V. Sokolov, M. Nazarov & N. Kozlov: "The Firm and the Customer", in: "Ekonomicheskaya gazeta" (Economic Gazette), No. 1, 1965, in: M.E. Sharpe (Ed.): "Planning, Profit and Incentives in the USSR", Volume 1; New York; 1966; p. 265).

"The priority growth of labour productivity over the growth in wages must be strictly observed".

("Soviet Economy Forges Ahead"; Moscow; 1973; p. 18-19).

"Besides the general laws inherent in the socialist economy as a whole, there are a number of regularities which appear in different forms in each separate sector of the economy... Among them.. may be mentioned:... the faster growth of labour productivity as compared with the rise in averge wages".

(S. Kamenitser: "The Experience of Industrial Management in the Soviet Union"; Moscow; 1975; p. 19-20).

This aim was achieved during the period of the "9th Five Year Plan" (1971-75), when the average wages of workers rose by 20%, while the productivity of labour rose by 23%.

(A.N. Kosygin: "Guidelines for the Development of the National Economy of the USSR for 1976-1980", 25th. Congress CPSU; Moscow; 1976; p. 13, 18).

It is planned to accentuate this trend during the period of the "10th Five Year Plan" (1976-80), when it is envisaged that the average wages of workers will rise by 16-18%, while the productivity of labour will rise by 27%. (A.N. Kosygin: ibid.; p. 24, 35).

Naturally, therefore, most contemporary Soviet economists agree that the one aspect of "centralised economic planning" which ought to be retained is state control of wage levels:

"In drafting a plan an enterprise must, of course, adhere to established nation-wide standards, such as official salaries, rates of basic wages for manpower".

(E.G. Liberman: "Planning Production and Long-term Operation", in: "Voprosy ekonomiki" (Problems of Economics), No. 8, 1962, in: M.E. Sharpe (Ed.): op. cit., Volume 1; p. 71).

"The introdcution of a unified state wage rate system... (has) created the requisites for raising the economic level of planning labour productivity and wages".(B. Sukharevsky: "On Improving the Forms and Methods of Material Incentives",in: "Voprosy ekonomiki" (Problems of Economics), No. 11, 1962, in: M.E. Sharpe (Ed.): op. cit., Volume 1; p. 115).

"Some comrades thought that it would be expedient to do away with the system of centrally determined wage rates and salaries and allow each enterprise to solve this problem in its own way. Such a view is incorrect... The socialist system of economy cannot do without the state regulation of wages".

(A. Volkov: "A mighty Stimulus for the Development of Production", in "Pravda" (Truth), November 14th., 1965, in: M.E. Sharpe (Ed.): op. cit., Volume 2; p. 169).

"Centrally established basic rates and salaries constitute, as before, the basis of wages.... State regulation of wages is necessary....The new system of economic stimulation of production preserves the state regulation of wages".(B. Sukharevsky: "The Enterprise and Material Stimulation", in: "Ekonomicheskaya gazeta" (Economic Gazette), No. 49, 1965, in: M.E. Sharpe (Ed.): op. cit., Volume 2; p. 216, 217).