Labor as a Commodity

Is labor a commodity or not? Is it just a factor of production or is it something more? This question goes into the heart of the type of society that we have built and are building. Treating labor as a commodity means treating people as commodities. A key point to be remembered about commodities is that they are meant to be used and then discarded. In other words, commodities are either transformed from one state to another or they are consumed either physically or otherwise. When people are treated as commodities, then this implies that they are to be used and then discarded.

For about 50 or so years, there was an unspoken compact between companies and their workforce. This compact meant that workers (and I include both managerial and non-managerial staff in this category) could expect to rise fairly steadily up the hierarchy partially depending on performance and ability criteria and also see a concomitant increase in wages received. This compact is one of the reasons behind the rise of the middle class first in the developed world and then in other parts of the world as well. This middle class is extremely important for the modern capitalist system as it is one of the main drivers of growth in an economy. The middle class is the largest buyer of goods and services in virtually all categories. It is also a bulwark against social unrest. It gives hope to lower income people that they will be able to join its ranks one day.

However, now the compact which helped to create this most important class of people is broken. Companies increasingly treat labor as just one more input to consider. Under such circumstances,what matters is the price at which the commodity is available. Capitalists have an inherent interest in lowering the cost of all input including labor to the maximum extent possible. This is a primary logic behind outsourcing. This is also a reason behind pressure to reduce wages - pressure that is largely supported by economists. There are also some underlying assumptions behind this treatment. The basic assumption is that labor as a commodity will act like other commodities in terms of demand and supply. Another assumption is that the type of work does not really matter. Labor is interchangeable as far as the type of work is concerned in the sense that anyone can be plugged into any type of work at any time anywhere at any price (or in normal parlance pay scale). How far these and other such types of assumptions are true will be examined in later posts.