Home > Disarticulation Series > The disarticulation of the US working class: The value chain

The disarticulation of the US working class: The value chain

The concept of the value chain

The concept of the value chain derives, per Wikipedia, from the “science” of business management; it was popularized by Harvard Business School poobah Michael Porter. That should be enough to make any thinking person suspicious; and indeed, the bourgeois theory of the value chain cannot possibly be well-founded, given that bourgeois economics has no credible theory of value. The broad notion, however, is intrinsically attractive to Marxists, who do have a scientific framework for understanding the creation, translation, and metamorphoses of value through the circuits of capital. There is a body of Marxist research on (global) value chains and “commodity studies,” with which I am sadly mostly unfamiliar. In any event, for the purposes of this piece, a very rudimentary instantiation of the concept will suffice.

Fix some commodity in your mind–a wool coat, say–and imagine all the stages in its production and circulation, from being worked up from raw materials, transported through different stages of production, warehoused, shipped, and finally sold to the consumer. The creation, augmentation, movement, and conversion of this value proceeds through a series of stages, easily visualized as the links in a chain; ie, the value chain. The chain metaphor is particularly useful since it is easy to think of distinct value chains “linking” to one another; the value chains for wool and buttons clearly link to the coat’s chain, for instance. Value chains have complex interconnections in any developed capitalist society, and when finance capital is introduced, the chains become even more entangled.

Now in truth the value chain is a cycle, since the proceeds from sale flow back to the capitalist for (expanded) reproduction. Abstractly, then, it is possible to “start” the chain wherever one wants. However, the capitalist system is actually dominated by the circuit M-C-M’ (where M’ > M) so the natural start or “top” of the value chain is the advance of money capital for the next production cycle, with the sale to the final consumer at the end or “bottom” of the chain. Thus it is possible to naturally orient each value chain and speak of moving “up” and “down” along it.

As mentioned above, a commodity that is itself a means of production for another commodity can have the end of its value chain attached to the chain of the other commodity. By repeating this procedure, we can create “long” value chains that terminate in the sale of means of consumption to final consumers. Furthermore, the set of chains tends to “spread out” at the bottom, as one means of production (eg, wool) enters into several means of consumption (eg, coats, socks, blankets).

Let’s turn to the question of how workers are distributed along the value chain. Here the bourgeois conceptualization of the value chain has a useful moment, since it stresses how all staff interact with the chain, whether or not they labor productively (ie, increase the quantity of value). Safety inspectors, for instance, are not productive workers, but they can break the value chain by ordering a halt to production. Bourgeois management has little sense of whence value comes–capitalists think of themselves as “value-creators,” after all–but it does study carefully how employees “touch” the value chain.

My argument here is that, under neoliberalism, an increasing proportion of US workers have been “pushed down” the value chain, with the bulk of employment growth occurring in jobs “close” to the final consumer of means of consumption (servers, fast food workers, health care providers, etc). Although workers in such jobs are by no means devoid of power, their position low on the chain restricts their ability to affect the whole chain; consider, for instance, how franchise arrangements protect the parent corporation from “labor trouble” at the shop level. Additionally, action by these workers tends to disrupt only one or a few value chains, since action higher in the chain has a greater chance of cascading into other chains via links. For example, a strike at one Starbucks can be “gotten around” by walking one block to the next Starbucks; a strike at that Starbucks can be elided by walking another block to Dunkin Donuts. By way of contrast, a recent strike of office clerks at the Port of LA shut down a major transshipment hub, to the loss of an estimated one billion dollars per day.

In other words, all other things being held equal, workers’ economic power decreases as one proceeds down the value chain. I contend that this has contributed to the disarticulation of the US working class since, as a consequence, fewer workers feel powerful in their workplace context. Of course this does not imply that the working class has lost its social power as a whole: since workers create all value, the relatively smaller groups of workers higher on the value chain have retained their power–indeed, in a more concentrated form. Nevertheless, it is the movement of the workforce down the chain that “sets the tone,” especially given the deterioration of organizations spanning the whole class.

Towards an empirical case

To fully establish the empirical case that the American workforce has shifted down on the value chain is beyond what this essay can hope to accomplish; for now we will have to settle for some fairly rough, albeit unambiguous, analysis that suggests the correctness of the thesis.

First, let us consider that workers in goods production, transportation, and utilities (GTU) are on average situated higher on the value chain than the average service worker. This is not always the case, as the example of the port clerks shows, but this must be true on the whole since 1) goods never proceed “directly” to consumers under capitalism, but have their circulation mediated by sales, the fact of which always adds “end links” onto the value chain; 2) transportation intercedes all along the value; and 3) likewise with utilities.

The relative and even absolute decline in US GTU employment in the neoliberal period is shown in the table below, which is drawn from the Bureau of Labor Statistics (BLS) Current Population Survey.

US employment, non-supervisory (figures in thousands)
Jan 1980 Jan 1990 Jan 2000 Jan 2010
GTU 21,887 21,066 22,394 16,824
All 84,650 102,715 124,341 124,336
GTU share 25.86% 20.51% 18.01% 13.53%

The sharp relative drop in GTU employment over the last thirty-odd years tends to imply that the workforce is being pushed down the value chain.

It is possible to conduct a more direct analysis using the BLS Occupational Employment Statistics; this is still not totally precise since two workers with identical occupations (eg, clerk) may have completely different positions on the value chain. However, by selecting those occupations that are frequently low on the value chain, such a retail sales or food preparation, we can obtain results suitable for understanding qualitative trends. We are, unfortunately, also limited by the fact that “apples-to-apples” data is only available in the years 1999-2012.

Let us take for comparison, then, the endpoint years. By my calculations (available in full detail here) in 1999 just over 42% of workers were in occupations that tend to be low on the value chain; by 2012 that had jumped to just over 48%. In absolute terms, nearly nine million workers were added “down-chain” between 1999 and 2012, even though the total size working class only increased by 4.2 million in the same period. (My analysis tends to be conservative; I suspect that the majority of the US working class is situated low on the value chain.)

Towards a theoretical case

Why has the American workforce been pushed down the value chain? I cannot say that I have a worked-out “narrative” about the factors that compelled this shift (assuming it exists). It generalizes the phenomena of “Walmartization” and the “McJob,” although such relabeling brings us no closer to an answer. In lieu of a conclusion, then, I’ll try to identify a few major issues to spark further discussion.

First, the problem of distribution along the value chain interacts with the secular tendency, under advanced capitalism, for relative decline in the productive labor force. For instance, Moseley demonstrates that ratio of unproductive to productive workers in the US declined from roughly 1:3 in 1947 to about 5:8 in 1977. Today unproductive workers likely outnumber productive ones. Although unproductive workers are by no means always low on the value chain–port clerks are unproductive and high on the chain; a barista is productive but low on the chain–there is a correlation, particularly given the large number of retail jobs.

Furthermore, as Turl points out, “one of the main reasons for the relative growth of retail versus the relative decline in manufacturing jobs is that the massive explosion of productivity in industry has not been kept up with by a corresponding productivity increase in retail.” Hence a huge amount of commodities produced by a relatively small number of production workers must be “cleared” by a relatively large number of sales workers. This dovetails with the geographical extension of the value chain, with countries such as China becoming export platforms to the all-consuming US.

Finally, the growth of “down-chain” employment also reflects the “capitalization” of American health care and education, which has sparked off an explosive growth in both sectors. Although there are now major efforts to automate, mechanize, and computerize production in these sectors, the inherited processes rely on personal production of service-commodities by front-line workers; eg, nurses delivering care or lecturers giving lessons. Thus, somewhat unusually in a modern economy, the productive workers sit low on the value chain. (The growth of restaurant labor, which has the same quality, has probably been spurred by the mass entrance of women into the labor force and the consequent breakdown of patriarchal nuclear family arrangements.)

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  1. Jonah Birch
    August 15, 2013 at 7:45 pm

    Shaun, I really think that if you want to spark a non-confused discussion about neoliberalism and it’s consequences, your writing would benefit from digging into more of the literature on the topic – ie, some of the extensive theoretical work on the capitalist labor market and more of the empirical research on long-term trends in capitalism (and especially on how neoliberalism has transpired in other parts of the advanced capitalist world, outside the US). A few quick points:

    1) Sorry, but it’s just not true that where workers lie on the “value-chain” tells you much of anything about their potential leverage. Higher-skilled workers in more productive forms of employment, or who are employed in firms or industries that are earning higher than the average rate of profit (“regulating capital”), etc. are going to be in a particularly strong position whether or not they’re situated towards the end of the “value-chain.” In the 1980s, for instance – that is, after the end of the post-War boom, the Volcker Shock, etc. – the competitive efficiency of car manufacturers in parts of Europe meant that, for instance, German and Swedish autoworkers were consistently able to avoid give-backs, even though they were engaged in downstream production of (often specialized) consumer goods.

    Conversely, more easily replaceable workers, those employed in less productive upstream industries or inefficient firms, or workers who produce capital goods or primary commodities for highly elastic markets, are gonna be in much weaker position.

    So, it’s all well and good to qualify your claim with “all else being equal…” but all else isn’t going to be equal. For certain types of lean production models, etc., value-chains might be very significant, but I don’t see the general relevance.

    2) It’s not really the case that neoliberalism has involved a unidirectional shift towards employment further down on the value chain. Definitely, there’s been an enormous growth in the incidence of service sector employment, etc, universally. But in countries like Germany, the Netherlands, etc., production of advanced capital goods (often for export) has become even more important in the last few decades, and these industries employ workforces constituting large swaths of the overall labor market. Yet in those countries too there’s been a significant decline in strike rates, a major drop in the labor share of national income, a rapid growth of marginal forms of employment, etc. So I guess I don’t see how looking at value chains actually helps us understand the demobilizing, disorganizing effects of neoliberalism.

    3) Your data suggests that the proportion of GTU employment remained steady from 1980 until 2000 (by which time I’m pretty sure neoliberalism had already begun), and then fell by 2010. Why would you conclude that that’s a secular shift associated with neoliberalism, and not just a cyclical development?

    I guess I think it’s pretty obvious that neoliberalism has resulted in a transformation of the employment structure (and the functioning of the labor market). Those changes have been described by quite a number of people, but I think it would be really valuable to draw out the implications of that process. But this post probably obscures more than it clarifies…

    • August 16, 2013 at 4:52 pm

      Shaun, I really think that if you want to spark a non-confused discussion about neoliberalism and it’s consequences, your writing would benefit from digging into more of the literature on the topic […].

      It’s difficult to disagree with the contention that I would write better stuff if I had as much time with and access to the literature as, say, a graduate student in sociology. Your suggestions for reading have been helpful. Still, your accusation here (and generally) that I have somehow made things worse (more confused, obscured, etc) by writing continues to strike me as extraordinary.

      1) Sorry, but it’s just not true that where workers lie on the “value-chain” tells you much of anything about their potential leverage. Higher-skilled workers in more productive forms of employment, or who are employed in firms or industries that are earning higher than the average rate of profit (“regulating capital”), etc. are going to be in a particularly strong position whether or not they’re situated towards the end of the “value-chain.”

      OK, nurses are more high-skilled than dockworkers, and hospitals are more profitable than ports–but a dockworkers’ strike that shuts the Port of LA is more disruptive to capital than a nurses’ strike that closes a major LA hospital. Why? Because dockworkers are much higher on the value chain. So while I agree with your statement, it requires a ceteris paribus assumption–just like mine. Why do you get to do it, and I don’t?

      2) It’s not really the case that neoliberalism has involved a unidirectional shift towards employment further down on the value chain. Definitely, there’s been an enormous growth in the incidence of service sector employment, etc, universally. But in countries like Germany, the Netherlands, etc., production of advanced capital goods (often for export) has become even more important in the last few decades, and these industries employ workforces constituting large swaths of the overall labor market. Yet in those countries too there’s been a significant decline in strike rates, a major drop in the labor share of national income, a rapid growth of marginal forms of employment, etc. So I guess I don’t see how looking at value chains actually helps us understand the demobilizing, disorganizing effects of neoliberalism.

      I’ve tried to make an empirical case that the shift has happened in the US, so if you contest it, part of the contestation should be empirical. (I’ve linked to the spreadsheet where I did the calculations. I think there’s actually a lot to criticize there, although I think the trends are strong enough to see even with rough methods.)

      Your point that the down-chain shift may not have occurred in export-oriented countries like Germany is very interesting and deserves more research. (It’s possible to increase production while decreasing employment given a sufficiently large productivity increase, as you know. The key here is the scale of employment, not production.) However, I haven’t claimed that the question of the value chain is sine qua non to the problem of disarticulation under neoliberalism internationally; I’ve only said that it has contributed to disarticulation in the US.

      Certainly there are major issues in US disarticulation that are not present in other countries, such as the decline of the black movement. Alternately there are features that appear elsewhere but not here, such as the introduction of the euro. I am still not sure how to “boil down” all the different national phenomena into a general characterization of disarticulation in the advanced world.

      • Jonah
        August 16, 2013 at 10:04 pm

        It’s difficult to disagree with the contention that I would write better stuff if I had as much time with and access to the literature as, say, a graduate student in sociology.

        ***********************************

        Word, so just to clarify: comrades enter discussions from different places, I’m coming from a place that allows me greater time and opportunity to work through some big political questions, and I really shouldn’t be a patronizing dick about it.

        Is that right Shaun? Cause frankly, I think that’s a sub-political argument.

        I’ll try to respond more later…

      • August 17, 2013 at 8:18 am

        No, I didn’t mean to accuse you of anything. I wish you would write something on the transformation of working class politics under neoliberalism; you obviously know a lot and have thought about it.

  2. Jonah Birch
    August 15, 2013 at 8:02 pm

    If I could suggest a book, you should check out Howard Botwinick’s “Persistent Inequalities”

    • August 16, 2013 at 4:57 pm

      Thanks–unfortunately the book is selling used for $205! I’ll see if I can get a pal to pick it up from a uni library.

  3. Jonah Birch
    August 15, 2013 at 8:06 pm

    Ah, I see that the proportion of GTU employment was falling after 1980, even though the total remained steady for a couple decades. My bad

  4. August 17, 2013 at 12:02 am

    HM is republishing Botwinick.

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