Information Technology and the rise of New Zealand’s modern servant class

Posted: December 10, 2014 by Admin in At the coalface, capitalist crisis, Capitalist ideology, Class Matters, Economics, Fast food and cafe workers, Information technology, Marxism, New Zealand economy, New Zealand politics, Unions - NZ, Workers history, Workers' rights

imagesThis article first appeared on Redline back in May 2013; because of the importance of the increasing precarious workforce, we’re running it again

by O’Shay Muir

Five years on from the height of the global financial crises in 2008 there has been much talk in the media of what is being referred to as the jobless recovery (http://www.nbr.co.nz/article/business-mood-turns-upbeat-%E2%80%93-its-jobless-recovery-wb-134532). During the crises business learnt how to better manage and organise their labour force more effectively, learning how to do more with less. This improved organisation of labour combined with greater investment in technology has led to what many experts believe is a jobless recovery, greatly affecting middle class jobs (http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10861554).  One of the main drivers behind this phenomenon has been vast improvements in computer technology, most especially computer software, with many experts noting that such technological advancements are replacing human labour at a pace never before witnessed in history (http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10861554).

Technology replacing human labour is nothing new, however, most especially under capitalism.  One of the best ways to understand this phenomenon is to use Marx’s concept of relative surplus-value. In volume one of Capital, Marx notes that there are two ways in which capitalists can increase their rate of surplus-value. The first is absolute surplus-value, which involves a lengthening of the working day and the second is relative surplus-value, which involves improved organisation of the labour process and investment in new/better technologies to increase production, allowing one to produce at a lower cost than the competition. While both, especially relative surplus-value, give bosses a competitive advantage for an initial period of time, sooner or later the competition will catch on and what was once competitive advantage will become the new social average.

The other drawbacks are that the gains employers can make from absolute surplus-value are limited, as there are physical limits to how long workers can work, while the production of relative surplus-value leads to a fall in the rate of profit (see here).

While absolute surplus-value production has an obvious effect on workers’ well-being, Marx’s investigation into relative surplus-value indicated the impact that new technologies have on replacing labour-power. In Section Six of Chapter 15, Marx introduces us to The Theory of Compensation as Regards the Workpeople Displaced by Machinery. In this section Marx critiques the bourgeois economic theory that people replaced by machinery will eventually find employment in new areas of the economy thanks to new areas of opportunity opened up by these same new technologies.  He writes, “James Mill, MacCulloch, Torrens, Senior, John Stuart Mill, and a whole series besides, of bourgeois political economists, insist that all machinery that displaces workmen, simultaneously and necessarily sets free an amount of capital adequate to employ the same identical workmen” (Marx, 1867, p 289).

In this section Marx discovers that there is a correlation between people displaced by machinery and a rise in people employed as domestic servants, which he refers to as the ‘Servant Class’.  He reports how “the extraordinary productiveness of modern industry, accompanied as it is by both a more extensive and a more intense exploitation of labour-power in all other spheres of production, allows of the unproductive employment of a larger and larger part of the working-class, and the consequent reproduction, on a constantly extending scale, of the ancient domestic slaves under the name of a servant class, including men-servants, women-servants, lackeys, &c.” (Marx, 1867. p 293).

Marx’s theory that the displacement of human labour by improvements in the means of production correlates to a rise in the employment of domestic services has led me to investigate if such a correlation exists within the modern New Zealand economy.  In order to make such an investigation relevant to our modern conditions, I have replaced Marx’s definition of a domestic servant class (think Downtown Abbey) with a more up-to-date definition which involves people employed in low-waged, low-skilled, service sector jobs which will be focused on trade (wholesale and retail), restaurants and hotels. Instead of machinery in general, I will be focusing on computer technology and communication (internet). This investigation will analyse the relationship between advances in computer technology (including the internet) and changes in the New Zealand labour force (with a strong focus on the service sector) from the years 1976 to 2007.

New Zealand’s first computer was introduced in November 1960. It was an IBM 650, leased by the Treasury. By 1962 the Treasury considered its IBM 650 outdated (Beardon 1985). The state being the first purchaser of a computer in New Zealand should come as no surprise if we remember what Marx wrote in volume two of Capital regarding about the turnover time of fixed capital.  This is capital in the form of factories and machines.  During the production process they transfer value to the commodity through their wear and tear, meaning that the capitalist always needs a hoard of money to replace them. An important problem for the capitalists arise, especially in the case of major infrastructural projects, in that it may take many years before their investment is returned.

At the same time, however, competition (better machines/cheaper run factories) means that fixed capital has to be replaced before it is fully worn out and before the capitalists have made a return on investment from it to begin with.

These inherent risks of fixed capital means that, compared to the private sector, the state is more likely to undertake large projects such as the laying of fibre optic cables and investment in expensive new technologies.  The short-time span in which the Treasury considered its computer outdated is also a reminder of why the private sector can be reluctant/slow to invest in such expensive examples of fixed capital.

Although the Griffins biscuit factory purchased a computer within a year of the Treasury (Beardon 1985), it was not until the 1970s that computers were being slowly introduced into the New Zealand workplace (www.nzhistory.net.nz/media/photo/personal-computer-workplace).  During this same time another breakthrough in computer technology and communications was taking place, the Internet. Although New Zealand’s first overseas online link was a part of American Express’ hotel booking network, once again our own private sector mostly took a backseat as our universities led the way in experimenting with this new technology (Beardon, 1985; Hine, 1987).

Now since we are focusing on computer technologies’ relationship to the rise of this country’s own ‘servant class’ it would be important to look at labour statistics during this time in which the private sector was still slow to catch on.  According to the 1976 census 16.9% of the labour force was employed in trade, restaurants and hotels (the largest areas of employment for our servant class). While using relative surplus-value as our vantage point it is also important to remember that relative surplus-value not only includes advances in the means of production, but also changes in the organisation of labour.

Due to the slow pace of the introduction of computer technology in the private sector in the 1970s, New Zealand was still dominated by a Fordist organization of labour. This approach to production was categorized by mass production in both manufacturing and primary production with the help of state protectionism through subsidies and tariffs. (Spoonley 2004). This method of large scale production was mostly dependent on a hierarchical system of overseers, giving rise to a managerial class. According to the 1976 census this managerial class made up 4.1% of our labour force. On another note the common bourgeois economic argument regarding advances in the means of production and its relationship to changes in the organization of labour is that although it results in job losses, these losses are offset by an increase in higher skilled labour needed to create, maintain and manage new technologies. On this note it is also important that we analyze the percentage of professional and technical workers in our labour force. Once again using the information provided by the 1976 Census the percentage of those categorised as professionals and technicians (including associates) was 14.6%. But those most likely to be affected by advancing computer technologies would have to be clerical workers who stood at 16.8% of the labour force according to the 1976 Census (www.stats.govt.nz/New_Zealand_Official_Yearbooks/1979/NZOYB_1979.html#idchapter_1_249353).

By the 1980s computer technology advanced even further, revolutionizing how we live our lives today. The Personal Computer was born. One of the earliest innovators in this field of computers was once again IBM, who launched their first Personal Computer, the IBM 5150, in 1981 (http://www-03.ibm.com/ibm/history/exhibits/pc25).  In New Zealand breakthroughs in communication and information technology were also taking place. In 1983 John Hine, Professor of Computer Science at Victoria University made New Zealand history by sending our first international email. (Watson 2001). Amongst this technological revolution that was beginning to take place in New Zealand and around the globe, there was another ”revolution”, an economic revolution, ”Neo-Liberalism”. Although we are not too focused on this economic ideology, it is important to remember that changes in the labour force during the 1980s will also be largely influenced by this factor. In brief Neo-Liberalism, Rogernomics and Ruthanasia, symbolized a move away from post-war government interventionism and towards a more liberal free-market economy.  (For an analysis of the role that Neo-Liberalism plays today in New Zealand, see https://rdln.wordpress.com/2013/01/31/keys-vision-managing-the-malaise-of-new-zealand-capitalism/).

Once again we will be looking at first and foremost those employed in trade, restaurants and hotels (which will be categorized as our ”Servant Class”), followed by our managerial class (managers and administrators), then professionals and technicians (including associates). According to the Household Labour Survey in March 1986 those employed in trade, restaurants and hotels (full-time equivalent) made up 15.7% of the labour force. Although this is a 1.2% decrease from the figures provided during the 1976 census it is important to note that the 1976 figures included both part-time and full-time. Trying to get consistent categories of measurement was a difficult task due to the changing nature of which Statistics New Zealand publishes their information in their Official Year Books. In the 1988-89 Yearbook there was no categories for employment in trade, restaurants and hotels, so instead I got the information from a report by the New Zealand Planning Council Wellington (Haines 1989). Our managerial class, according to the 1986 census, stood at 5% of the labour force (http://www.stats.govt.nz/New_Zealand_Official_Yearbooks/1988-89/NZOYB_1988-89.html#idsect2_1_84801). This is a 0.9% increase from the figures provided during the 1976 census. In regards to this increase it is important to remember that during the 1980’s there was also a shift away from the vertical Fordist model of management towards more horizontal structures of management. During this transition managers were greatly affected by rapid changes in organizational structures of labour.   This has led to a contradiction within the managerial class: although they increased as a percentage of those in paid employment, their authority and importance has decreased (Spoonley 2004).

More horizontal structures of labour means a spreading out of the labour process. In order for the capitalists to manage a more decentralized process of labour requires an increase in managers to oversee the labour process, but although managers are more likely to view their interests as aligned to the capitalist class their decentralization prevents them from having the influence they once had, subjecting them to the same conditions of insecurity as the workers they oversee.  However this growing insecurity still does not prevent them from viewing their interests as aligned to the capitalist class, as false and delusional as this view may be.

In 1986, professionals and technical workers stood at 15.1%, a 0.5% increase from 1976. This increase, although small, still shows that advances in the means of production usually results in a needed increase for skilled workers. Clerical workers, those most likely affected by advances in computer technology made up 17.6% of the labour force, a 0.8% increase compared to 1976. Although this increase runs counter to the argument that advances in computer technology (especially in terms of office based computers) are most likely to replace certain office-based workers such as clerical workers, it is important to take into account that compared to today’s computers used for office based work, computers in the 1980s were still fairly basic and not quite yet able to replace human labour in certain tasks, e.g. filing etc.

Despite the lack of differences between 1976 and 1986, in terms of changes in the labour-force, from the 1990s onwards the pace of change really does start to pick up, both in terms of advances in computer technology and also changes in the labour force. The 1990s witnessed a revolution in computer software most notably made by Microsoft. In 1990 they launched Windows 3.0, the first widely successful version of Windows, changing the face of computer technology and most significantly how we interact with them (www.windows.microsoft.com/en-NZ/windows/history). No longer were computers either things that dwelled in an office or restricted to the personal use of software hobbyists (PCs during the 1980s required a knowledge of software coding); they were now in the domain of the general public both in terms of access/affordability and ease of use.

The impact that these advances in computer technology made on the New Zealand labour force is significant. For the first time we are able to see the face of our modern ”Knowledge” (for some) / Service- (for most) based economy begin to emerge.  According to the 1996 census our servant class made up 21.3% of the labour force, an increase of 4.4% from 1976 (http://www.stats.govt.nz/New_Zealand_Official_Yearbooks/1997/NZOYB_1997.html#idchapter_1_99782). The age of ”McJobs” was well and truly underway.

During this same period our managerial class was 12.2%, an increase of 8.1% from 1976, confirming the need for an increased managerial class due to a more decentralised labour process, despite a decrease in its importance and influence over the labour process. Professionals and technicians reached 24.5%, an increase of 9.9% from 1976, and clerical workers made up 13.6%, a decrease of 3.2% from 1976. (http://www.stats.govt.nz/New_Zealand_Official_Yearbooks/1997/NZOYB_1997.html#idchapter_1_99782). At last computer technology reached the level of proficiency that it was finally able to start replacing living human labour-power (clerical workers) with dead labour in the guise of fixed capital.

By the 2000s the importance that computer technology played in the economy was finally beginning to be taken notice of by the government. During 2001 it launched a one-off Business Practices Survey to measure the use of IT in the private sector.  The survey found that 36% of New Zealand businesses had a website with online sales estimated to make up 0.3% of the total operating income of New Zealand businesses. 79% of businesses regularly used email and 80% of businesses used IT technology for accounting systems (I originally intended to research the percentage of accountants from 1976, but by 1986 they were no longer being included in the New Zealand Official Year Books as their own distinct category) (www.stats.govt.nz/browse_for_stats/businesses/business_growth_and_innovation/BusinessPracticesSurvey_HOTP01.aspx).

By 2006 the government decided to make a regular measurement of the use of computer and internet use in New Zealand with the Information and Communication Technology in New Zealand Survey. The 2006 survey found the following results: 93% of businesses used computers, 91% used the internet and 46% of staff had access to the internet. On page 23 of the survey under the heading “Outcomes of ICT implementation”, the following was noted: ”For businesses, the top three outcomes of ICT implementation were improved responsiveness to customers (53 percent), improved efficiency of work flow processes (52 percent) and better coordination of staff and business activities (48 percent)” (http://stats.govt.nz/browse_for_stats/industry_sectors/information_technology_and_communications/information-commucation-technology-in-nz-2006.aspx).

These top three outcomes of ICT implementation can easily be understood within a Marxist framework by drawing upon the ideas that Marx laid out in volumes one and two of Capital.  The first outcome spells out the need for a continuous speed-up of the Turnover of Industrial Capital (volume 2). Industrial Capital is continuously working within two distinct spheres, production and circulation.  Value, and most importantly surplus-value, can only be created in production; however, in order for surplus-value to be realized and returned to the capitalist in the form of money, it needs to enter the sphere of circulation where the commodity that is created in production can be exchanged for the universal commodity (money). This, however, creates a slight dilemma for the capitalist because the time spent in circulation limits the expansion of capital-value.

This need to speed up circulation time leads to the necessary evil of what Marx refers to as the Costs of Circulation.  The result is what spokespeople for capitalism love to call our ”Knowledge economy” but the actual role that ICT plays in it is simply meeting the need to speed up circulation.  More and more of our economy is nothing but services (Costs of Circulation) designed to play this role. Despite the adoring admiration that is given to this ”Knowledge economy”, the fact of the matter remains that value and surplus-value can only be made in production.  Aside from primary production and a dying manufacturing sector, New Zealand’s place in the world market, like many developed nations, is increasingly about helping to speed up the time of circulation, while creating new, expanded value through production is left to the more unfortunate countries.

The second top two outcomes, ”improved efficiency of workflow processes (52 percent) and better coordination of staff and business activities (48 percent)”, once again show the role that more efficient organization of labour plays in creating relative surplus-value (volume one).

In terms of business use of the internet, the survey found that 34% of business reported using the internet to receive orders for goods or services. The highest proportion was recorded in the transport and storage industry (48%) and manufacturing was 43%. 19% of all businesses reported that up to 10% of their total sales were acquired online, and only 2% of businesses had online sales of more than 50% of their total income. Overall 51% of businesses said they had a website, an increase of 15% from the 2001 Business Practises Survey. On page 27 of the 2006 Information and Communication Technology in New Zealand survey under the heading Business website features the following was reported: ”The most common website feature was goods and services information (91 percent). Customer information collection was next (32 percent), followed by ordering of goods and services (28 percent)” (http://stats.govt.nz/browse_for_stats/industry_sectors/information_technology_and_communications/information-commucation-technology-in-nz-2006.aspx).

This once again highlights the role that ICT plays in speeding up the time industrial capital resides in the sphere of circulation, enabling it to return to production at a much quicker rate where it can continue its journey of the augmentation of surplus-value. The influence that advances in computer technology and communications has had on our labour-force by the 2000s has now come to maturity.  According to the 2007 census our ”Servant class” has risen to 22.4% of our labour-force, an increase of 5.5% from 1976. Our managerial class has risen to 12.9%, an increase of 8.8% from 1976. Our professionals and technicians have risen to 28.5%, an increase of 13.9% from 1976 and clerical workers were 12.1%, a decrease of 4.7% from 1976 (http://www.stats.govt.nz/New_Zealand_Official_Yearbooks/2008/NZOYB_2008.html).

Overall the rise in our ”Servant class” has not been that significant and neither has the fall in clerical workers, what has been of significance has been the increase in both our managerial class and professionals and technicians. It is also important to take into account that by 1976 the service sector already made up 55.4% of the labour-force with our servant class making up 30.5% of that figure (16.9% total proportion of the labour-force) (http://wwww.stats.govt.nz/New_Zealand_Official_Yearbooks/1979/NZOYB_1979.html).

While the majority of increases in the service sector would mostly be in emerging areas, there was an increase nonetheless proving the theory that there is a relationship between advances in the means of production and an increasing servant class.  I would have liked to (and originally tried) to broaden the definition of who falls into our modern servant class, so it would include cleaners and caregivers, but I had to make do with the stats at hand. On this note my choice of including wholesale workers was a difficult decision as wholesale is mostly used by businesses rather than consumers, but since the statistics mostly measured wholesale and retail together I had little choice but to include them under the definition of servant class.

Despite of the small increase in our ”Servant class” from 1976 to 2007 the proportion it makes of the labour-force is in itself still significant (22.4% in 2007) and the proportion that our professionals and technicians make (28.5% in 2007) shows the hollowing out of our labour-force, where more and more middle level jobs are disappearing. In terms of our servant class and professionals and technicians we have a contradiction between advances in technology deskilling labour on one hand and on the other creating the need for highly-skilled labour in order to create and maintain the very technologies needed to deskill the labour process. Along with the contradiction in our managerial class (increased size, decreased importance) these contradictions all contribute to the state of ”Low Horizons” that currently plague our working class. Due to better job security, professionals and technicians are more likely to see their interests aligned with the capitalist class, despite growing job insecurity managers are also more likely to see their interests aligned with the capitalist class, leaving our servant class alienated and too busy dealing with day-to-day struggles of survival, preventing them from connecting with any larger sense of class consciousness.

Despite this pessimistic sounding conclusion it is important to remember that capitalism’s long-term tendency is towards the deskilling of all labour which not even our professionals and technicians are safe from. This process can, over time, lead our professionals and technicians to become what Marx refers to as ”friends of the working class.”  The important word to remember however is ”can”.  This process does not lend itself to any definite outcomes, but there are things we can do to ensure that when the time and conditions are right, professionals and technicians will realise that their interests are best served by aligning themselves with the working class instead of being misled by a fog of false consciousness that would have them believe in the absurd idea that the bourgeoisie accept them as one of them.

Developing a revolutionary consciousness within the professionals and technicians (which is no easy task) suggests doing the same within the ”Servant class”, enabling them to view themselves as part of a much wider class struggle.  (It’s interesting to note, for instance, that when Unite union began organising in fast food they often found lower managers keen to join and quite militant.)

Although organising the new servant class is in itself no easy task, the poor working conditions that many service sector workers find themselves in has the potential for these workers to come to the conclusion that capitalism is not in their interests and only revolutionary socialism can ultimately free them from the alienation that they face on a day-to-day basis.  In order to achieve these outcomes the best practical action to take is to focus on developing a hegemony of revolutionary class consciousness within New Zealand youth.

The reason for this is that not only are youth mostly employed in low-waged service sector jobs, but many of them will also become professionals and technicians (especially with the current push by government to encourage greater tertiary enrolment in science, engineering and IT).  Ultimately this means going beyond basic union-style education and, instead, teaching workers from as early as possible that the system depends on the exploitation of their labour along with teaching those aspiring to become professionals and technicians that they can either become tools of an oppressive system or use their knowledge and skills to create a better world.

So I end this investigation with a quote from Marshall McLuhan’s,The medium is the Massage: ”When this circuit learns your job, what are you going to do?”

References

Beardon, C. (1985). Computer Culture: the information revolution in New Zealand.  Reed-Methuen, Auckland, New Zealand.

Condon, B & Wiseman, P. (2013). Millions of Middle-Class Jobs Killed By Machines In Great Recession’s Wake: The Huffington Post, viewed 15 April 2013, http://www.huffingtonpost.com/2013/01/23/middle-class-jobs-machines_n_2532639.html

The NZ Herald article Technology: The silent job killer is no longer appearing on their website, but a summary can be accessed here http://nzherald.newspaperdirect.com/epaper/viewer.aspx; I originally came across this article in the Weekend Herald on 26 January 2013 and it inspired me to start this investigation (it was an on and off again project). The Herald article is based upon the research by Condon nonetheless.

Haines, L. (1989). Work Today: Employment Trends to 1989. Wellington: New Zealand Planning Council.

Hosking, R. (2013). Business mood turns upbeat – but it’s a jobless recovery: The National Business Review, viewed 20 March 2013, http://www.nbr.co.nz/article/business-mood-turns-upbeat-%E2%80%93-its-jobless-recovery-wb-134532

IBM. The IBM PC’s debut. http://www-03.ibm.com/ibm/history/exhibits/pc25/pc25_intro.html

Marx, K. Capital: A Critique of Political Economy: Volume One: Book One: The Process of Production of Capital. Progress Publishers. Moscow, USSR. (First published 1867)

Marx, K. Capital Volume Two: The Process of Circulation of Capital. Progress Publishers. Moscow, USSR. (First published, 1885)

McLuhan, M. (1967). The Medium is the Massage. United Kingdom. Penguin Books.

Microsoft. (2013), A History of Windows. http://windows.microsoft.com/en-NZ/windows/history

Ministry for Culture and Heritage. (2012), Computers in the Workplace: NZ History, New Zealand history online. http://www.nzhistory.net.nz/media/photo/personal-computers-workplace

Spoonley, P., Dupuis, C and de Bruine, A.(Eds.) (2004). Work and working in twenty-first century New Zealand. Palmerston North, NZ: Dunmore Press

Statistics New Zealand. (1979). The New Zealand Official Yearbook, 1979. http://www.stats.govt.nz/New_Zealand_Official_Yearbooks/1979/NZOYB_1979.html

Statistics New Zealand. (1989). The New Zealand Official Yearbook, 1988 – 1989. http://www.stats.govt.nz/New_Zealand_Official_Yearbooks/1988-89/NZOYB_1988-89.html#idsect2_1_84801

Statistics New Zealand. (1997). The New Zealand Official Yearbook, 1997. http://www.stats.govt.nz/New_Zealand_Official_Yearbooks/1997/NZOYB_1997.html#idchapter_1_99782

Statistics New Zealand. (2008). The New Zealand Official Yearbook, 2008. http://www.stats.govt.nz/New_Zealand_Official_Yearbooks/2008/NZOYB_2008.html

Statistics New Zealand. (2001). Business Practices Survey: 2001. http://www.stats.govt.nz/browse_for_stats/businesses/business_growth_and_innovation/BusinessPracticesSurvey_HOTP01.aspx

Statistics New Zealand. (2006), Information and Communication Technology in New Zealand: 2006. http://stats.govt.nz/browse_for_stats/industry_sectors/information_technology_and_communications/information-commucation-technology-in-nz-2006.aspx

Watson, D. (2001). Early NZ internet a different beast. Computerworld New Zealand. http://computerworld.co.nz/news.nsf/news/FF15770964C40D3ECC2572360033395B

Further reading: Bending over backwards: NZ’s temp economy and capital’s growing need for ‘flexible labour’

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