Beyond Capital

Polemics, Critique and Analysis

The Standpoint of the Unemployed

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Our task in this note is to locate the unemployed in the social structure of capitalism and its dynamics. We cannot undertake this without simultaneously identifying them as forming a social subject that contributes in the critique of capitalist political economy. It essentially means relating the subject position with what it does. In a more sophisticated language, it means deciphering in this particular case the locus of the unemployed in the dialectic of the technical and political composition and recomposition of the working class. It is our contention that the standpoint of the unemployed as a social subject provides to the critique of political economy and labour politics access to the darkest and invisible corners of capital relations. This standpoint emerges from the unemployed’s apparent marginality in the capitalist system, their peculiar positioning within capital relations – their compulsion to sell their labour power, but inability to do so. (Dinerstein 2001)

The Marxist treatment of unemployment goes much deeper than the economics of unemployment which treats it at the level of appearance as cyclical and a problem of market clearance. Marx relates it to the logic of capitalist accumulation and treats it as “a condition of existence of the capitalist mode of production.” Here we rely on Marx’s analysis of “the reserve army of unemployed paupers” and relative surplus population. Through our deliberation upon the informal economy, we seek to demonstrate that the informalisation of work processes in the era of globally dispersed Fordism has brought the unemployed to the centre of labour politics.


Much of what is called the informal economy is constituted by processes and institutions built upon labour or activities that are termed self-employment, and whatever workers do to survive in the absence of what they consider decent jobs according to their skills. That is why these activities were considered transitory jobs or no jobs at all. And they still exist so in the minds of workers at least. Materially, too, the transitoriness is evident, which was never the character of the jobs themselves, but of labour that undertakes them, whose footlooseness these jobs re-enforced and productively channeled. Workers undertake these activities to reproduce themselves so that they are able to continue hunting for “jobs”. It is this tentativeness, casualness and ephemerality of informal labour that when disciplined becomes a positive economic virtue called flexibility.

Labour flexibility is among the most significant features of the informal economy that sanitises informality of its hideousness. By all standards flexibility sounds better than rigidity, which now comes to encapsulate the chief characteristics of formal employment and welfarism. Isn’t it interesting, insecurity is called flexibility, while security is dubbed rigidity? Flexibility is adventurous and forward looking, while rigidity is, of course, boring and conservative.

Labour is flexible here in all its possible senses – no standard wage, no insurance, no stability, use and throw policy etc. As clear from above, this feature is actually the nurturing and harnessing of alienation and homelessness or nomadism that workers experience in these economic engagements.

What dispersed Fordism or post-Fordism has accomplished is to mainstreamise or formalise this informality. Interestingly, this formalisation does not do away with the specificities that characterise this informality, rather the informal gets embedded in the formal network of production and distribution. This embedding incidentalises the labour intensive nature of the informal sector which was considered necessary in the pre-neoliberal phase of capitalism. The processuality that informality acquires destroys its dualistic separation from the formal. In fact, it loses its phenomenal nature. Thus, informalisation grips even the most skilled work and technologically advanced sectors of the whole economic system. The network economy that this process builds is not between the formal and the informal, which are losing any meaning as separate phenomenal entities, but between diverse levels of labour intensive and capital-intensive work processes, where insecurity dubbed labour flexibility or informalisation is the general tendency of the economy. Only this could allow requisite technological rationalisation of the production process to garner competitive advantages from available resources. As Marx had identified a hundred fifty years ago, the principle behind this rationalisation is quite simple, i.e., “the difference between the value of the machine and the value of the labour power replaced by it.” Harvey (2006:124) explains this,

“At times when the industrial reserve army becomes massive, capital will have abundant incentives to go back to labour-intensive techniques (hence the contemporary revival of the sweatshop even in advanced capitalist countries). The stimulus for more complex forms of technological and organisational change is certainly blunted at times of chronic labour surplus.”

However, what we see today is networking and complex layering of work processes involving multiple levels of technological and organisational forms in every economic activity. An extreme, but significant example, comes from the electronic industry. This industry today has attained a very high level of automation. However, almost every significant and sophisticated electronic device needs tantalum capacitor to control current flow inside miniature circuit boards. This metallic tantalum is made from the ore called columbite-tantalite or coltan, which is mined in African countries, especially Congo, through extremely primitive mechanisms. So we find a simultaneity of different degrees of labour/capital intensity forming a chain of exploitation that makes globalisation sensible, which is actually nothing more than the globalisation of the whole circuit of capital. This is not the simultaneity of non-simultaneous which defined the unevenness in the history of modern capitalism, and which could be mapped as vestiges or temporal and social lags. Non-simultaneous have been reduced to cosmetic shades. Now, “everything has reached the same hour on the great clock of development or rationalization.” The diverse work processes are homogenised as the realisation of capitalist expediency that is dependent on “the difference between the value of the machine and the value of the labour power replace by it.” And this difference is regulated on the basis of the extent and composition of the industrial reserve army or surplus population.


Capitalism is a system of intensification and expansion. The intensity and expansion increase what Marx calls surplus population. This surplus forms a reserve army from which workers are drawn whenever needed. The intensity of accumulation leads to what Marx calls floating reserve. The technological changes that produce this intensity make skills and the skilled redundant. Similarly, the expansion of commodity relations erodes the autonomy of modes and regimes of production redefining them within the logic of capital relations. It is not that this internal redefinition is anywhere accomplished without resistance. In fact, this resistance itself is instrumentalised to assign its ground a place value within the system. Even the refusal is taken care of, if not as criminal, then as exotic or erotic. Whatever be its face value, howsoever it is holy, capitalist valorisation profanes it by placing it in systemic relations. Primitive or original accumulation (re)produces the essential conditions for capitalist accumulation to take place. And among these the most important is the abundant supply of living labour to be subsumed.

“But if a surplus labouring population is a necessary product of accumulation or of the development of wealth on a capitalist basis, this surplus population becomes, conversely, the lever of capitalistic accumulation, nay, a condition of existence of the capitalist mode of production. It forms a disposable industrial reserve army, that belongs to capital quite as absolutely as if the latter had bred it at its own cost. Independently of the limits of the actual increase of population, it creates, for the changing needs of the self-expansion of capital, a mass of human material always ready for exploitation.” (M&E, Vol 35 [Capital 1]:626)

The relative surplus population includes every unemployed and half-employed. Though it can have many “periodically recurring forms” generated during the ups and downs of a business cycle, there are some permanent forms, which Marx identifies as floating, latent and stagnant. The floating surplus consists of those workers who are pushed and pulled in the normal operation of the supply and demand in the labour market. They float with the regular movement of capital, they emigrate where capital emigrates.

The latent surplus population is what feeds the flows between agriculture and non-agricultural sectors, between the countryside and towns. It is this surplus that supplies for the peripheral industrial employment and infrastructure building. With the progressive capitalisation of agriculture, the whole countryside is slowly transformed into a labour reserve. The latent character of this population is derived from the fact that it is hidden under the “half-employment” or self-employment in rural (agrarian and forest) activities. On the other hand, the “surplus” nature of this population is ensured by keeping their “one foot already [and always] in the swamp of pauperism”, by allowing depressed remunerations in these employments, whether as agricultural wages or as returns in exchange of services and produces. “The extent of [latent surplus population] becomes evident only when its channels of outlet open to exceptional width.” (M&E, Vol 35 [Capital 1]: 636-37)

Then comes the stagnant surplus which consists of all those are engaged in “extremely irregular employment,” toiling in the ‘domestic industry’ and under “the system of middlemen and sweaters.” “Its conditions of life sink below the average normal level of the working class; this makes it at once the broad basis of special branches of capitalist exploitation. It is characterised by maximum of working time, and minimum of wages.”(M&E, Vol 35 [Capital 1]: 637) It is worth quoting Marx’s words at length to define these forms of organising production. Marx describes the ‘domestic industry’,

“as one of the most dreadful forms of production existing, a form which is only brought to an end by the introduction of machinery, and in comparison with which the formal subsumption of labour under capital appears as a redemption. The immense surplus POPULATION created by large-scale industry in agriculture and the factory system is exploited here in a way which saves the “capitalist” a part of the production costs of capital, and allows him to speculate directly upon the misery of the workers. It is so in JOBBING WORK, the system under which some of the tailors, cobblers, NEEDLEWOMEN, etc., are employed in London. The surplus value created here depends not only on overwork and the appropriation of surplus labour, but also directly on deductions from wages, which are forced down far below their normal average level.

“The system of MIDDLEMEN and SWEATERS follows on from this one. The actual “capitalist” distributes among the MIDDLEMEN a certain quantity of raw material which is to be worked on, and they in their turn distribute these materials among those unfortunates, living in cellars, who have sunk down below the average level of the normal workers who are combined together in TRADE UNIONS, etc., etc. Thus the profit of these MIDDLEMEN, among whom there are often in turn further MIDDLEMEN, consists exclusively of the difference between the normal wage they let themselves be paid, and the wage they pay out, which is less than normal. Once a sufficient number of workers of the latter kind is organised through this system, they are often directly employed by capitalist No. I on the same conditions as those under which the MIDDLEMEN employed them.” (M&E, Vol. 34 [Marx’s Economic Manuscripts of 1861-63]:120)

These forms are what we today define as the system of sub-contracting or outwork and dispersed factory system. It will not be an exaggeration to claim that post-Fordist informalisation actually mainstreamises this, while neoliberalism justifies it as market expedient. In fact, even at the level of public policy design, the issue of its “abolition” is transcended, and what are actually sought are politics that can “foster the informal sector to mainstream, without loosing its inherent advantages.” (GDRC,

Besides these three categories of surplus population, Marx identifies a section dwelling in the sphere of pauperism, which he defines as “the hospital of the active labour army and the dead weight of the industrial reserve army.” Exclusive of the dangerous class of actual lumpen-proletarians, this category includes, firstly, those who are pushed into employment only at the time of prosperity; secondly, “orphans and pauper children,… candidates for the industrial reserve army”; and, thirdly, “the demoralised, ragged, and those unable to work, chiefly people who succumb to their incapacity for adaptation, due to the division of labour; people who have passed the normal age of the labourer; the victims of industry, whose number increases with the increase of dangerous machinery, of mines, chemical works, &c, the mutilated, the sickly, the widows, &c.” (M&E, Vol. 35 [Capital 1]:637-38)

The resemblance of the experience of the informal economy in late capitalist economies like India with Marx’s analysis and description of the relative surplus population and unemployment is not accidental. It only evidences the cruciality of Marx’s analysis of the logical structure of capitalism and its rounding up of socio-historical resources for its realisation to comprehend the developmental specificities of these economies and their integration in the capitalist globality. However, we must assert that the difficulties that Marx confronted, due to many aspects of the logic of capitalist accumulation still unrealised during his time, led him to indulge in descriptivism leading to ambiguities in his expressions. Essentially, it led to a blurring of the division and relationship between the logic and history of capitalism. A sociologistic and evolutionary reading of Marx’s critique of political economy led to its normalisation as Marxian economics and another policy framework. In politics, it sustained reformism and class collaborationism.

Many later readers have not been able to grasp the conceptual centrality of primitive accumulation and the industrial reserve army in the logic of capital. A historicist reading of Marx’s Capital leads to the dilution of the richness of these concepts and reduces these categories to specific teloses of capitalism – to describe the development and/or underdevelopment of national and regional economies. The teleological understanding of capitalist development served well in the formative periods of the labour movement when the erosion of pre-capitalist relations seemed to have a redemptive value, allowing workers to focus on the requirements of the class struggle and organise themselves into a class. It exposed the reactionary socialisms of “Narodism” and Proudhonism that rampantly infested anti-capitalism – one wanting to bypass capitalism and the other “beneath the cloak of freedom and anti-governmentalism or anti-authoritarian individualism …are in actuality preaching vulgar bourgeois economics”, wanting to have capitalism without capitalists. This helped in battling the hegemony of those workers “who as workers in luxury trades are, without realising it, themselves deeply implicated in the garbage of the past.” (M&E, Vol.42 [Marx to Ludwig Kugelmann In Hanover, 9 October 1866] :326) It freed the labour movement from the dominance of the petty-bourgeois economism and directed it toward the political struggle against capital for reform and revolution.

But the teleological fallacy in later periods led to the reproduction of the same ideologies that it successfully combatted initially. The epithets of “vestiges”, “backwardness” etc bestowed upon various forms of social relations eventually became hurdles in grasping how these forms were instrumentalised in grounding and specifying capital relations in concrete locations. Although as the teleology had to fail and capitalism did not seem to proletarianise the labouring masses and sweep away the non-capitalist relations, with the teleology the primacy of class struggle too had to be abandoned. The working class became another identity and hence, the discourses of intersectionality and relativism. What has left of the teleology as capitalist development fails to adhere to the timeline is mere state fetishism and welfarism.

It is our contention here that the analysis of surplus population and reserve army that Marx’s make in his writings is crucial to understand the technical composition of the working class, providing an insight into the constitution and processes of different regimes of accumulation. Hence, its cruciality for understanding the possibilities and processes in the political recomposition of the working class. Marx already hints at this when he says:

“The demand for labour is not identical with increase of capital, nor supply of labour with increase of the working class. It is not a case of two independent forces working on one another. Les dés sont pipés [The dice are loaded]. Capital works on both sides at the same time. If its accumulation, on the one hand, increases the demand for labour, it increases on the other the supply of labourers by the “setting free” of them whilst at the same time the pressure of the unemployed compels those that are employed to furnish more labour, and therefore makes the supply of labour, to a certain extent, independent of the supply of labourers. The action of the law of supply and demand of labour on this basis completes the despotism of capital. As soon, therefore, as the labourers learn the secret, how it comes to pass that in the same measure as they work more, as they produce more wealth for others, and as the productive power of their labour increases, so in the same measure even their function as a means of the self-expansion of capital becomes more and more precarious for them, as soon as they discover that the degree of intensity of the competition among themselves depends wholly on the pressure of the relative surplus population; as soon as, by Trades’ Unions, &c, they try to organise a regular co-operation between employed and unemployed in order to destroy or to weaken the ruinous effects of this natural law of capitalistic production on their class, so soon capital and its sycophant, political economy, cry out at the infringement of the “eternal” and so to say “sacred” law of supply and demand. Every combination of employed and unemployed disturbs the “harmonious” action of this law. But, on the other hand, as soon as (in the colonies, e.g.) adverse circumstances prevent the creation of an industrial reserve army and, with it, the absolute dependence of the working class upon the capitalist class, capital, along with its commonplace Sancho Panza, rebels against the “sacred” law of supply and demand, and tries to check its inconvenient action by forcible means and State interference.” (M&E, Vol 35 [Capital 1]:634, emphasis ours)


Despite its alleged “backwardness”, informality has not just survived but has infiltrated the formal spaces, and is still spreading its tentacles. The institutionalised labour movement started by taking it as a transient phenomenon, attesting to its understanding of unevenness as “the simultaneity of non-simultaneous” and as a problem of insufficient development or underdevelopment, which capitalism would overcome in due course by its expansion or by the agency of the state, which was externalised and considered autonomous from capital relations (and many a times as a mere neutral instrument or agency which behaved according to who wielded it).

Informal workers being of transient identity, therefore, never became a concentration of trade unions, because their job profiles did not comply with the legalist definition of “workmen” whom trade unions organised. It is not that this was just a result of their choice, but was mainly due to their legal-structural accommodation which shaped their understanding and activities. Of course, these trade unions have always supported the struggles for the demand of “employment”, but organising on this issue never became a concern for them as these struggles were outside the purview of industrial relations. They could organise sporadic demonstrations to petition the state demanding employment or some social scheme to support the unemployed, but organising the unemployed and half-employed in their daily struggles for survival and as workers could never become one of their concentrations.

However, this drastically changed with the crises of Keynesianism in the 1960s, when the distance between informal and formal economies was eroded. They were not only networked together, informalisation became internal to factory work processes. The employment of casual and contract workers challenged the old school organising of industrial unions that based itself on stable, even if not permanent, workforce. The obvious and initial reaction of course was to assert privileges as qualifications that came with particular job profiles, experience and struggles. A part of this “new” unstable workforce was viewed as apprentices, still in a transitional stage, who would perhaps gain these qualifications with experience and become part of the regular workforce. Others would remain disqualified. These underprivileged would revert back to the reserve, as they didn’t have the core skills required for particular industries. In India, this industrial structure was codified through various legislations that established various kinds of filters segmenting the jobs and workers. But the telos was still there as the defining legal, political and economic ideology which saw everything moving towards the goal, the centre.

It was the Contract Labour Act of 1970 that recognised the crisis of this teleological structure in India. The division between jobs of the perennial nature and the incidental nature, between regular and temporary workforce were not just codified in this Act, but more importantly it sought to curb the centripetal teleology of welfarism by relativising the centre itself as another zone of difference, perhaps a privileged one, but not a goal. It might be surprising why the Act was celebrated among trade unionists, given what it demolished, but the competitive anxieties of the stable workforce that were increasing got some definite respite in the Act.

In 1960, the Supreme Court in The Standard Vacuum Oil Refinery Company v their Workmen (1960 AIR 948) sought to discourage and even abolish contractualisation especially in the public sector. This triggered a spate of cases brought before industrial tribunals to regularise workers. The Indian state was understandably rattled, as the verdict seemingly strengthened the existing labour institutions and curbed any capital-friendly flexibility in the labour market. The state was very much aware of the emergence of the new regime of accumulation based on labour informalisation and flexibilisation that started in the 1960s. This new regime sought to take advantage of the growing labour reserves to counter the economic downturn. Post-colonial India saw an increase in all types of labour reserves, and it would be inexpedient to be unable to use this as an advantage. The Contract Labour Act that the Indian State brought in1970 tried to address the crisis posed by the judiciary. It sought “to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances.” But instead of any provision clearly directed towards the abolition of contract labour, the Act provided time filters for post-performance determination of the nature of work. It provided for specific welfare measures too. But the essential purpose was to alienate the conflict over contract labour from regular industrial relations, and empower the state and its bureaucracy to decide upon the characterisation of a particular work, whether it is of perennial or intermittent/casual nature.

This act was of course a recognition of the system of contract labour, but not so much to abolish it, which it couldn’t, given the changes in the regime of accumulation globally. It definitely had provisions for the regularisation of the workforce, but the same provisions in effect secured the system, which could not be trespassed but could be extended unlimitedly. The provisions of the Act did not apply to establishments employing less than twenty workmen, and those establishments “in which work only of an intermittent or casual nature is performed.” If in an establishment some work “was performed for [less than] one hundred and twenty days in the preceding twelve months” and in case of a seasonal work if it was “performed for [less than] sixty days in a year” then they were unambiguously considered to be of an intermittent nature. But most importantly, the Act clearly said, “if a question arises whether work performed in an establishment is of an intermittent or casual nature, the appropriate Government shall decide that question after consultation with the Central Board or, as the case may be, a State Board, and its decision shall be final.” Period. It codified and institutionalised a caste like division among labourers.


The Contract Labour Act definitely recognised the rights of the permanent employees as undisputed privileges and thus garnered the support of the trade unions. These trade unions remained and kept their members under the grip of the myth of teleology and state fetishism. They thought themselves to be the future of the insecure youthful mass worker, when in reality they were being “implicated in the garbage of the past.” The telos has long been reversed; nay, in fact, it has been demolished.

As labour reserves – unemployed and underemployed – surviving in the informal sector found fending for themselves in everyday politics and economics of work, they found the philanthropic patronising attitude of the shrinking mainstream useful sometimes to access privileged entries. The funded NGOs and social organisations mushroomed to take care of the volatile nature of this section. They dignified these workers by organising them as positive identities, as self-employed and in self help groups – a world of the third: neither capitalists, nor workers.

As the sense of permanence and stability was diminished, anxieties increased, leading to an open struggle – to defend privileges. Of course, side by side the issue of “organising the unorganised” was definitely posed. They have to be organised separately was the view of the new unions, who saw the specificities of the new “industrial” workforce in contradiction to the old stable workforce. On the other hand, old unionism stressed on the unity, and considered any new attempt to be divisive. In its opinion, the new unionist attempts displayed the immaturity of the informal workforce (perhaps due to its incomplete proletarianisation). It wanted these “new” workers to be subsumed in the established organisational setups. Overall the two sides stood united in taking the segmentation within the working class for granted.

They are unable to comprehend the process of informalisation that brings various segments together and binds them in hyper competition for redistributive claims. But it is thus that the caste boundaries too become porous. Capitalism has brought labour reserves in the centre of working class politics by generalising precariousness which today all segments of the society face. All segments within the working class have their one foot in the surplus population. In other words, with the informalisation of labour and associated precarisation becoming the general tendency of the economy, the intensity and seamlessness of the production and circulation networks trans-personalises the confrontation among labour and with capital. Even though we find precarisation and instability intensifying identity conflicts, leading to rampant violence over competitive redistributive claims, the trans-personalised cooperation against capital once achieved to a degree, which essentially politically recomposes the technical composition that capital has mobilised, becomes relatively immune to such conflicts.

When Marx says that every combination of employed and unemployed disturbs the harmony of capitalism, he is clearly referring to trade unions as self-organisations, where they were not agencies to accumulate claims, but to organise day to day cooperation against capital. At the time when these forms have been legally incorporated, they acquire defining legal roles which can only straightjacket or police these cooperations – so that they are systemically “productive” cooperation, not destructive. Organising the unemployed has to be an anathema for the system and its apparatuses, except to mitigate their plight in such a manner that the unemployed are reproduced and the system is perpetuated. Let us end this note with a quote from Ana Dinerstein (2001:223) who has worked extensively on Argentina’s unemployed workers movement,

“Rather than a lack, unemployment is an intensified form of capitalist work where the dematerialisation of labour becomes apparent. Although invisible, this dimension of dematerialisation is a dimension of struggle which is problematic for capital not because it separates subject from object, but because… it asserts itself in the form of the unrealised, the ‘unborn’. The subjectivity of labour emerges not as the means to unifying what has been separated, but as a disruption of the arrangement between the abstract and the concrete aspects of labour. Subjectivity recomposes and redefines the forms of the concrete and the abstract and thus opens the possibility for the unborn to be born, for the unrealised to be realised. The struggle over subjectivity is as much a struggle over the concrete and visible forms of domination-resistance as it is a struggle over the invisible aspects of that relation. In the condition of unemployment, the struggle over subjectivity appears to be a struggle over a non-relationship, therefore, it asserts itself mainly as a refusal to be made invisible.”



Ana C Dinerstein (2001) Regaining Materiality: Unemployment and the Invisible Subjectivity of Labour. In The Labour Debate: An Investigation into the Theory and Reality of Capitalist Work, Ana C Dinerstein & Michael Neary (eds). Ashgate.

David Harvey (2006 [1982]) Limits to Capital. London: Verso.

Karl Marx & Friedrich Engels, Collected Works. Vols. 34, 35 & 42.Moscow: Progress Publishers.


Written by Pratyush Chandra

January 15, 2016 at 10:13 am

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