Towards a theory of unemployment

Bill Dunn


Marx and Engels, and subsequent generations of Marxists, have written an enormous amount about unemployment but this paper argues that there is a lack of a convincing Marxist theory of unemployment. It identifies three sets of relations as the basis for such a theory.

Firstly, capital needs labour as a source of value and surplus value. It also needs (but in a weaker sense) non-labour, unemployment, both to discipline workers and as a reserve from which it can expand. This need for unemployment is weaker in that the disciplining aspects can be affected by other means and that even as the ‘limit’ is approached, the effects are disruptive rather than frankly incompatible with capital accumulation. (History records periods of very low unemployment and successful growth.) Moreover, to functional explanation based on the need for unemployment, it is necessary also to identify mechanisms by which this is created and perpetuated.

Secondly, capital accumulates, expanding the need for new workers. At the same time, as Engels in particular stressed, capital accumulation involves the introduction of labour-displacing technologies. These opposing forces potentially establish the basis for a dialectic of workers’ recruitment and expulsion. However, while this provides a useful background, Marxism is not fundamentally an equilibrium approach so this is insufficient to explain either the limits or the concrete variation in levels of unemployment.

Thirdly, capital (and social relations more generally) are understood in terms of a dynamic relation between structure and agency. A (legitimate) defence of the priority of social structures has militated against an engagement with questions of agency, in particular with the variability of employer motivations beyond those impelling competitive accumulation. Keynesian insights remain reified and apologetic unless resituated within a context of dynamic change and class struggle but when this is done they can add to our understanding of capitalism’s heterogeneity, inefficiency and instability to help explain the persistence of unemployment and the often restricted character of accumulation.

Marxist Accumulation Theory, Exploitation, Income Distribution, Keynes’ Effective Demand, Say’s Law - Unemployment - Political economy - Technology