Beyond the Dual Market

Socialists have long asserted that there is no great mystery in labor market inequalities. It is the uneven development of capitalism that leads to two distinct labor markets. The primary market is made up of relatively stable jobs requiring more education and training and offering better compensation and working conditions. It tends to accompany large, capital-intensive firms with monopoly power and a degree of unionization.

The secondary market — with its overrepresentation of women and racial minorities — consists of part-time and precarious jobs done by relatively unskilled workers facing oppressive conditions and often holding another, similar job. It is inclined to smaller, labor-intensive, highly competitive firms that are largely union-free.

There seems little need to parse the details further. But Botwinick insists that, whatever validity such narratives include, they are seriously flawed. Corporations commonly designated as “monopolies,” like Amazon and Walmart, don’t necessarily pay higher wages. And some sectors with small and highly competitive firms, like construction, longshoremen, and, for a time, the garment industry, have above-average labor compensation.

Nor is this apparent anomaly explained by the absence or presence of unions. Even monopolies with unions no longer seem to fit the template. The wages of autoworkers, for example, have not only stagnated for well over a decade, but their collective agreements now include union “sisters and brothers” who are paid less for doing the same work and excluded from the defined-benefit pension plans.

Against the case made in dual market theory, there’s no wall separating the top and bottom rungs of the labor market — those in the higher rungs today may find themselves in the secondary labor market tomorrow. The conditions of the class are better described as gradations of a general working-class precarity.

Something far more complex than dual labor markets is involved here, Botwinick argues, and the key lies in a richer understanding of two central features of capitalism: pervasive competition and pools of unemployed workers.

Creative Destruction

In a pathbreaking 1977 article in the Cambridge Journal of Economics, Jim Clifton challenged the notion that early capitalism was characterized by intense competition, with “monopolization” only to come later, through a process of concentration (the expansion of units of capital in size) and centralization (fewer units of capital in each sector). In fact, Clifton asserted, the reverse was the case. The early competition was largely localized; full-blown competition across firms, sectors, and regions only materialized alongside capitalism’s later development.

At issue wasn’t the reality of the concentration and centralization of capital, and the consequent creation of corporate institutions with great economic, social, and political power. Botwinick labeled these corporations “regulating capitals” because of their influence on sectoral standards for productivity, prices, and wages. But, like Clifton, he saw that this development intensified, rather than eroded, capitalist competition.

Capitalist competition — the consequence of the socioeconomic structures that drive capital to innovate, move in search of more favorable conditions for accumulation, and increase its share of universal profits — is based on the fluidity and mobility of capital, not the number of firms in an industry. As firms grew in size, so did their technical, administrative, and financial capacities to restructure their own operations, enter other industries, and expand geographically — that is, to compete. Globalization universalizes this competition. Financialization, because it is relatively unmoored from physical roots, has accelerated it further.

In more recent decades, corporations came and went at an accelerating pace. Of the ten largest US corporations listed by Fortune in 1995, only one remained in 2020. Names that led their field not so long ago — Blockbuster in rental video, Compaq in computer manufacturing — are gone, and other former goliaths, like General Electric, General Motors, and IBM, have flirted with bankruptcy.

Through this process, sector boundaries blurred. The largest corporations in the aluminum industry competed with Big Steel to source automotive components. Google’s supremacy in search engines and Facebook’s in social media didn’t prevent them from engaging in robust competition for the advertising dollar. IBM, Amazon, and Microsoft might be deemed “monopolies” in their own areas of focus, but they are determined competitors in establishing advantage in cloud computing.

Marx grasped the ever-changing, aggressive, and unending process of this competition: “the old struggle must begin again, and it is all the more violent the more powerful the means of production already invented are.” Of the multiple socioeconomic and ideological implications of this violence, Botwinick was most concerned with its negative bearing on working-class formation.

Asymmetrical Dependencies

Capitalism brings workers into competition with one another. But what especially fragments the working class is the unevenness of capitalist development across workplaces and regions.

There is also a range of corporate circumstances: levels of technology and worker skills; the labor intensity of the operation and the costs of potential disruption; the pools of labor available; the proportion of part-time vs full-time workers; the specifics of the product; the capacity of workers to resist; and corporate decisions about whether that resistance calls for greater aggressiveness or degrees of accommodation.

Furthermore, though workers share a common experience of exploitation, their dependence on the success of their workplace inclines a good many of them to identify with their employer as much or more than other workers — even if they at the same time despise their boss. This is compounded by ambiguities over who the enemy is: the employer squeezing them for more profits, or the incessant pressures from nebulous markets that link workers and employers in the demand to compete or die.

This question has significance because competition does lead to many companies disappearing. This, of course, obscures a crucial asymmetry. That the most effective capitalists survive and take over the capital of the weaker ones strengthens capitalists as a class. For workers, competition fragments the class and undermines their most important weapon, class solidarity, weakening their potential class power.

Bringing public-sector workers into the picture adds divisions internal to the working class. They can be resented by private-sector workers because, standing outside direct market pressures, they generally have greater security and better standards. After all, it is the taxes of those often-lower-paid private-sector workers that helps pay public-sector wages and benefits.

The working class that emerges through all this is not a coherent class but a fragmented one — an amalgam of individualized or subgroups of workers trying to survive. Though this includes resistance and contradictions for capital as well, the challenge is how a class so shaped and deformed by capitalism can come to remake itself.

The Public Option

A special dimension of competition’s impact on working-class fragmentation and the capital-labor power imbalance is Marx’s “reserve army of labor.” These pools of labor are systematically reproduced by layoffs among both workplaces that lose out in the competitive race and those whose success is linked to worker-replacing productivity improvements via machinery, technology, work reorganization, and speedup.

These especially desperate workers reduce pressures on employers having to bid workers away from other jobs and serves as a disciplinary warning to all workers of what awaits them should they get out of line. Botwinick expands the extent of the reserve army beyond the unemployed to include those still working but in the most oppressive conditions. So even when, as in the pre-pandemic United States, unemployment falls to historic lows, the disciplinary pressure on workers remains.

The persistence of this bottom rung of the labor market is based on some workers being particularly disadvantaged in competing for jobs, and especially in sections of capital that find their competitive niche in “super-exploiting” this segment of the workforce. The disproportionate number of black Americans and Latinos in these jobs has led to demands to correct this racist imbalance. Stopping racism is a given on the Left, as an end in itself and as something fundamental to building class unity. Botwinick stresses, however, that the principal issue is ending reprehensible conditions for all, not aiming to see them “fairly” distributed among racial groups.

Calls to raise the minimum wage are clearly a positive step. But given the extreme imbalance of power involved, it leaves open the likelihood of employers finding other ways to get the higher wages back: lowering other benefits, still greater speedup, or simply ignoring the law because, absent unionization, these workers have little enforcement power. It is far better, Botwinick argues, to extend the intent of minimum wages — giving everyone access to basic necessities — to far broader needs and through universal programs like health care, adequate housing, access to education, childcare, pensions, and community safety. This would not only be particularly beneficial to those at the bottom but also lay the strategic ground for building the kind of class alliances that could actually win such programs.

In this spirit of guaranteeing the essentials of life even within capitalism, another demand follows: replacing capital as the “employer of last resort” with state-guaranteed employment in jobs that provide socially useful products or services, are unionized, and meet workplace and social standards. This proposal, going back to Martin Luther King’s call in the 1963 March on Washington for Jobs and Freedom and, even further, to the 1946 Employment Act, would set a floor on the conditions of work, effectively forcing even the most unscrupulous employers to at least match these standards to attract workers.

Class Perspectives

One of the many strengths of Persistent Inequalities is Botwinick’s balanced take on the most organized section of the working class, the unions. Botwinick fully appreciates their centrality to progressive change but doesn’t shy away from examining their existing limits.

In addressing the impasse in the working class, it is no answer to turn to aggressive corporations, hostile governments, economic restructuring, or globalization. All this reinforced rather than caused labor’s weakness; it was, after all, the preexisting limits of the trade union movement that allowed for these developments. As Botwinick notes, once the movement was confronted with the harsher attacks, “participatory democracy and class-wide solidarity were distant memories, and they no longer knew how to effectively mobilise their members.”

The complex reality is that, though unions emerge out of the working class, they are not class but particularist organizations, representing specific groups of workers that happen to find themselves in the same workplace. During the heady postwar decades, this was far less of a problem — workers could make gains on their own that inspired gains elsewhere. But that era, largely because of its success and capital’s reaction, is long over.

It’s not that capital has escaped its contradictions. The very tactics capital used to lower costs have produced openings for greater worker disruption of supply chains and distribution networks, and health care and education workers now represent the kind of strategic power that industrial workers had in the 1930s. But these are only potential openings. Taking advantage of this demands a radical shift — a transformation in unions — to class perspectives. That is, not only looking for allies among other workers but addressing other dimensions of workers’ lives and engaging in the deepest development of unions’ own members as conditional on building the class.

Consider the fact that organizing inspired by the lure of dues or even narrow orientation to self-defense has not reversed languishing union density rates. In the ’30s, the United Mine Workers, recognizing the dangers of being isolated, sent hundreds of organizers out to organize steelworkers. It is that spirit of a crusade to build the class, starting with your own members, and of overcoming cross-union chauvinism by doing the unthinkable and cooperating across unions, that is so essential in order to realize dramatic breakthroughs.

In public-sector bargaining, it is now generally recognized that, to avoid isolation, unions must be linked to a larger community interest (which, in fact, isn’t “others” but different dimensions of working-class lives). This cannot be limited to PR campaigns; it means reconsidering bargaining priorities and structures, the allocation of union funds, the nature of staff and cadre training, and convincing members to fully support all these things — without which there is always a risk of backlash.

And in the private sector, the general acceptance of both corporate property rights and hypercompetitiveness powerfully contains workers’ gains. No union, or even unions collectively, can overcome this constraint without political struggles based on clear class orientations.

Beyond Competition

In addressing capitalism’s constrained democracy, the Left generally raises the power of capital but rarely addresses the authoritarian nature of capitalism’s competition-driven markets — a context Botwinick places at the center of his analysis.

For example, for all the politically valuable contributions in the programs of Jeremy Corbyn and Bernie Sanders, they largely ignored the iron cage of competitiveness. Their focus was instead on worker representatives getting seats on corporate boards and workers sharing in the distribution of stocks. To this, they added the need to break up “monopolies” and the largest banks — i.e., to increase competition.

Aside from misunderstanding the layers of power in these institutions that minority board seats and worker shares won’t overcome, the underestimation of capitalism’s pressures to compete also minimizes the possibilities of radically reversing the corporate ship. It risks workers being integrated into corporate worldviews instead of challenging them. As for antitrust restructuring, this has historically amplified the burdens and insecurities of workers. And breaking up the banks seems like a recipe for intensifying competition that does little for working people while likely magnifying overall economic instability.

Any working-class strategy must start with an understanding that “competitiveness” is not a goal workers share with capital, but rather a real-world constraint that workers must stretch and limit as part of eventually moving toward a society that replaces it with democratic planning for egalitarian social use. Since we cannot, for now, do away with competition, and since trying to regulate markets that retain private property rights has at best brought mixed results, a strategic alternative for limiting the debilitating impact of competition would be to fight for carving out certain spaces within capitalism where nonprofit, nonmarket criteria can take over.

Consider the environmental crisis as an example. Since addressing it necessitates transforming everything about how we work, travel, and live, it involves extensive terrain where we can credibly and popularly argue that private interests, competing to achieve their own narrow objectives, cannot overcome the scope of the emergency. Addressing the environment must be planned, and planning requires some control over what is to be organized. This demands seconding manufacturing facilities to make the material goods needed for environmental planning and involves creating institutions to prevent the closure of potentially useful but not privately profitable facilities and their conversion to social use.

Alongside such expansions of spaces standing outside the competitive/profit nexus, we should also deepen decommodification of those public spaces that already exist ostensibly apart from the competitive economy. The hegemony of the private economy limits funds to this sector, pushes it to be run on commercial terms, and keeps corporations (and states) constantly hungry for privatizations as new sites for accumulation. Could we not fight for these services to become models of democratic administration that benefit both the workers involved and those who receive the services, demonstrating in the process that there are alternatives to private ownership and that these should be expanded?

Such attempts to move beyond competitiveness are inseparable from limiting the disciplinary hold financial markets have on the economy. Though we’re in no position yet to socialize finance, calls have been made for public banks to not only address the environment but rebuild eroded infrastructure. But if this, too, is to escape the dominant logic of competition, such banks cannot be sent out to compete with the rest of the financial system. They will need an unambiguous social mandate and an independent source of funding to meet it. An obvious source of such funding is a levy on every financial institution, a partial payback for the riches the public has bestowed on them.

These are not, in themselves, revolutionary demands. Rather, they look to build on the strategic significance of Botwinick’s emphasis on the centrality of capitalist competition in limiting working-class progress. They aim to link immediate needs with shifting the context in which workers’ struggles take place, and through that process, they carry intimations of a socialist alternative.

The Old Struggle, Begun Again

In his afterword, Botwinick returns to his main concern: overcoming the structured material and cultural gulf among workers and building a confident, coherent, solidaristic working class with the analytic and strategic capacity to lead the transformation of society. He knows that unions are inadequate to this task, though at their best, they can take on a class perspective and educate their members on how capitalism works, perhaps opening the doors to some discussions on socialism.

Going further requires a socialist party, an organization specifically focused on the task of making such a class. Botwinick acknowledges the Left’s impasse in this regard; such a party cannot just be “announced.” Yet the urgency of the environmental crisis has convinced him of the immediate need for an unspecified organization that can start taking on the attributes of such a party.

There are two reasons for supplementing Botwinick’s insistence. First, unless socialists can penetrate the working class, with one foot in and the other out of unions, it is difficult to imagine a revival of unions as the class-rooted and class-oriented institutions we long for. Second in the move from protest to politics of recent decades, and especially in the rise of Momentum and the Democratic Socialists of America, there has been an exciting revival of socialist ideas. Yet without mass class organization, these gains will be fleeting.

We can’t strategize without fully understanding what we’re fighting, and we can’t win without the creation of a social force and agency to lead the struggle. Persistent Inequalities doesn’t try to explain everything nor lay out the unambiguous road to the “luminous summits.” But for anyone who sees capitalism as the enemy and believes that the working class has an indispensable role in the “fatiguing climb” to end it and build something new, this impressive and nuanced book offers crucial clues and insights.