Adam Smith Institute

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Surely Owen Jones, of all people, understands his Marx?

Owen Jones tells us that Brexit requires stronger unions. If he actually understood the Marx he derives so many of his prejudices from he’d understand that Brexit is the cure for the very thing he bemoans:

Workers, after all, had been stripped of bargaining power when it came to demanding higher wages. Simplistic generalisations often made about the triumph of leave should be avoided – most full-time and part-time workers voted to remain, as did a majority of those whom pollsters classify as working class under the age of 35 – but that real wages had fallen or stagnated for so long fuelled the disillusionment that Brexit fed on. When rightwing Brexiteers argued that migrants were undercutting wages, they were redirecting blame away from the weakening of unions and the so-called “flexible labour market” – but they had a receptive audience. In many ex-industrial areas, the replacement of jobs that had security and prestige with ones lacking both fed that disenchantment: the ingenious slogan “take back control” appealed to many for a reason.

It is one of those - rare - areas of economics that Marx did get right. The wages of the workers are determined by the bargaining power of the workers. Unions are only a minor part of this though, an artificial creation of said bargaining power. The real influence is that reserve army of the unemployed. As and when there are those willing to work for any crust going then employers both don’t have to raise wages to gain more labour, nor do they have to raise wages to keep the labour they currently employ.

So, rises in productivity flow into the pockets of the capitalists and not into those of the workers. Unions are indeed a potential response to this. But they only work to benefit those in the union, leaving those in the reserve army quite out in the cold. The answer, as is obvious from Marx, is the absence of the reserve army - full employment is what raises the workers’ wages.

We had full employment among people actually in Britain pre-covid. But we also had 450 million people in the European Union who could join that British labour force by hopping on a £50 flight. That is, stagnation of wages didn’t stem from “the immigrants taking all our jobs” but from the existence, in parts of Europe, of a substantial reserve army of the unemployed.

The end of the free movement of labour rather solves this point. Yes, we do indeed prefer free movement ourselves and we’d not regard this change as a justification of anything. But it does actually solve the problem Jones is complaining of. The annoyance here being that if Jones actually understood that Marxism he gains such impetus from then he’d grasp this - in a manner that he clearly doesn’t.

It is, after all, one thing to be a socialist, or a Marxist, and quite another to actually understand either.