Labor’s Location and Power in Finance

From Bryan and Rafferty, “Deriving Capital’s (and Labour’s) Future” in Socialist Register 2011: 215-218.

“[L]abour itself is being incorporated into capital in new ways, not just via workplace discipline but via the process of securitization. Some have sensed this new development, but have cast it in terms of growing household debt, with the appropriation of interest payments out of labour’s income being treated as a further ‘take’ on surplus value. But this is not the critical aspect of the development, and it is certainly not new…. The critical development is the recasting of labour as the provider of income streams for securities, to facilitate asset diversification and the search for yield. The rapid growth of mortgage, auto, credit card and student loans, as well as contracts on telephones, energy and healthcare, all provide the raw materials on which securities are built to meet the demands of global investors.


The conditions of working-class life — the needs for multiple income households; the needs of old age, education, health, and others — are re-configured so as to privilege the payments that will form the basis of securities.


From the perspective of capital, labour is not just a labouring class producing surplus value. [It] is cast as ‘asset class’ …. an object of portfolio investment…. In the search for yield and diversification, the household and its wage income represents new opportunities for capital’s profitable asset holding.


History now shows that labour as an asset class was not well risk-managed by capital or the state. …. In important respects, it was labour, and its failure as an asset class, not its power as a working class, that triggered the global financial crisis.


Contra the position that ‘labour was not to blame for the financial crisis’, we argue that there is a need to focus directly on labour’s role in the crisis. …. Indeed, in understanding the power of labour in the context of finance, there is a clear parallel with the labour process. Just as the worker cannot be separated from their labour power — part of what constitutes labour as a distinctive and critical input into production — so the worker cannot be separated from the risks attached to their loan repayments. With this inseparability comes political capacity. Unlike all other inputs into production of forms of asset, labour expresses the capacity to resist inside production and inside finance. Capital’s vulnerability to labour in production is also its vulnerability to labour in finance.


Labour can learn from the financial crisis that it is integral to this [new] frontier of accumulation. Its failure to perform at this frontier (a failure to keep repaying loans) was the catalyst of the global financial crisis: it showed the potency of labour, albeit unintended. We find, through financial innovation, that capital needs labour, and in new and urgent ways.” (emphasis added)


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