Reserve army of labor, also known as relative surplus population, is a concept initially coined by Friedrich Engels and further developed by Karl Marx. The German economist theorized and explained this notion in Chapter 25, on “The General Law of Capitalist Accumulation” of his famous work Capital. For Marx, capitalism’s logic as an economic and social construct is based on the hostile relations between workers and employers (capitalists) caused by the former’s continuous strive for capital accumulation. The labor force is seen as a variable cost of production that the bourgeoisie can control/manipulate in a way that exploits the proletariat (the working class). As a result, the entire capitalist history can be characterized as a class struggle.
First, definitions should be given to capital accumulation and the reserve army of labor that is its byproduct. Capital accumulation is understood as economic behavior aimed to increase wealth from profits or investments (Heubusch, 2018). Its main objective is to generate a value higher than the initial investment by all possible means. The capitalist class wants to accumulate as much money as possible in the world of aggressive competition. On the contrary, as a necessary tool of capital, the working class is engaged in capital accumulation only until they are needed. Machinery and technological development (constant capital) introduced by employers reduce the required labor (variable capital). The cyclical periods of economic activity (business cycles) progressively produce a relative surplus population. Hence, the reserve army of labor is “a mass of human material always ready for exploitation by capital in the interests of capital’s own changing valorization requirements” (Marx, 2017, p. 455). It is a general law of capitalist accumulation that makes it possible to absorb surplus labor value in sudden capital growth times.
Marx believed that every unemployed or underemployed worker enters this surplus population. The situation when the working population uses technological advancements to increase capital contributes to their superfluous status. In other words, in times of prosperity, the reserve army weighs down the active workers while remaining laid off in times of over-production (Heubusch, 2018). For this reason, the surplus population plays the role of mechanism (class function) regulating wages and maintaining profits. It is a tool in the hands of the capitalist class that brings them superiority. As a result, a reserve army disciplines active labor (workforce), restrains their wage demands and puts them under pressure. It creates a situation when underemployed and unemployed workers compete with employed ones for available jobs.
Nowadays, zero contract hours, over-employed, and sub-employed workers are exploited similarly by such business models as Uber, Amazon, Deliveroo, and Handy. The benefits of workers diminish day after day, while economies continue to grow (Merrifield, 2019). The pandemic shutdown contributed to a significant increase in the reserve army, as the unemployment rate skyrocketed to 14.7%. However, the U.S. Bureau of Labor Statistics (2020) revealed that the unemployment rate dropped to 6.9% (11.1 million) at the end of October. Although there are different approaches, one should total unemployed who are actively looking for a job and the number of underemployed individuals to estimate the current reserve army. Hence, the approximate estimate is 13.4 million workers, if not including an additional 26.2 million usually working part-time. The corporations that control hiring decisions will absorb the reserve army only when it is profitable. For that reason, the US government should devise jobs programs similar to those implemented during the Great Depression.
References
Heusbusch, M. (2018). Full employment, or a new reserve army? A Marxian critique of the employer of last resort [An abstract of a Master thesis, Buffalo State College]. Applied Economics. Web.
Marx, K. (2017) Capital, Vol. 1. Digireads.com Publishing.
Merrifield, A. (2019). Notes on Marx’s “General Law of Capitalist Accumulation.”Monthly Review. Web.
U.S. Bureau of Labor Statistics (2020). The employment situation – October 2020. Web.