2. Marxist Critique of Organizational Theory
In ways unprecedented, society as it stands now has witnessed transformations of
enormous proportions over the last few centuries. Sociological diktats have faded in their
importance and the continuous mutation of social norms and relations have ensured that
there exists no absolute theory that can justify every social phenomenon taking place
across the world. At this point, though, it should not be assumed that theories and
hypotheses have no value as such. The abstractness of sociological theories and the
actuality of real life events and phenomena fall in somewhat conjugated cycles - each
relative to the other and validated by the same. In this essay, we aim to revisit the theories
of one such revolutionary sociologist and economist, Karl Marx, and how his approach
towards social welfare and better living fall in line with present social structures and
organizations.
In the context of an industrial society as is existent now, with capitalism being the norm
of the day and expanding at an ever-increasing rate throughout the world, it should not be
out of context to revive our understanding of Marxian philosophies and examine its
applicability in the present scenario. Of course, the reader might question the plausibility
of an approach that has been debated to be obsolete and overtly idealistic. Also, the reader
might want to question the insights of a theory that had been formulated over a century
ago. Indeed, the applicability of Marxian theory and justification of present organizational
dynamics through the same might instigate a lot of differing opinions. At the same time
though, it is important to acknowledge the foresight of a man who had talked about
capitalist exploitation and money-driven work culture long before this actually started
happening. Upon closer scrutiny, we might be able to identify many fundamental features
of organizations today that Marx witnessed emerging during his time.
Marx, as an economist, identified the dynamics of production of goods and services in the
context of two relations - the relation between man and the “means of production” which
he termed as “forces of production” and also “relations of production” which refers to the
distribution of the rights of ownership and control over these means of production. A
3. capitalist setup is one where the means of production is owned by certain private parties.
An eventuality of such a setup is that capitalists then try to exercise their dominance over
society by virtue of the power that they now possess. Here, society implies the section of
people who compete with each other in the labour market to earn a wage in exchange for
the sole thing they possess - labour-power. Power, here, refers to the derived authority
that comes with possessing and controlling something which is scarce - the means of
production. The capitalists too compete in the product market to sell their commodities.
Encompassing this setup, Marx felt there exists a superstructure of abstract entities like
culture and religion along with law and government. This superstructure is, Marx argued,
what the exploitative capitalists used as the means to dominate and moderate any
conflicts.
At this point, it is important to comprehend Marx’s understanding about the
determination of prices of commodities as a lead to understand the most generic aspect of
generic Marxist philosophy that we speak about - capitalist exploitation. Marx agreed
with Ricardo when he argued that the forces of supply and demand along with tastes do
not determine the price of a commodity as modern economic theory teaches us. He saw
them as influencing factors on the value of the product that is determined by the socially
necessary labour-time invested in the production of the concerned product. He assumed
that all such products were exchanged at their respective values. The question that
naturally arises here is that of creation of profit. This question baffled all prior economists
until Marx put forward his answer where he argued that the possibility of profit existed
only when a commodity creates value while being used up. This special commodity,
Marx argued, was labour-power. The notion of labour-power and labour as separate
entities was arguably Marx’s greatest achievement. In Marx’s approach, the possibility of
profit arises when there exists a gap between the value of labour-power embedded in the
produced commodity, which is borne as cost by the firm and is determined as is any other
cost- by the socially necessary labour-time required to produce the commodity, and the
value produced by the expenditure of this labour-power. This is a measure of the degree
of “exploitation” as argued by Marx. Given the accelerating nature of industrial
development in a capitalistic society and the resultant levels of productivity attained, it
4. takes less time to produce the equivalent of a worker’s wage which is the necessary
labour time. The “surplus value” that is thus generated is appropriated by the capitalist
firm as profit and other payments. Now, the important aspect about Marxist philosophy
here is that Marx did not see exploitation as a wholly negative aspect about capitalism as
is popularly believed. He was supportive of the generation of surplus resulting from the
progress in productivity and also reinvestment of this surplus into the production process.
What Marx vehemently opposed was the unjustified appropriation of this surplus by the
capitalists and not the whole collective responsible for the production of the commodity.
On these lines, exploitation, as Marx coins it, is not a deviation from ethics and standard
industrial processes but a fundamental and defining feature of capitalism.
Now, when capitalism first establishes itself, firms stick to the traditional techniques of
production with more concentration on the generation of absolute surplus value through
“exploitation”. With upgradation of technology, there is a notable shift from the
traditional techniques of production to a more capital-intensive process. At an early stage,
this shift was noted by Marx as formal subordination of labour to capital, formal because
the underlying labour process was still very much unchanged. But gradually, with the
spread of capitalism and a highly competitive industry, the exploitation took a turn for the
worse with excessive working hours and child labour becoming a negative consequence
of the capitalists’ drive towards greater surplus value. New laws and regulations came
into being prompting the capitalists to shift majorly to a capital-intensive production
process, thus causing a real subordination of labour to capital. This tectonic shift, as
Marx notes, marks the contradiction predominant in capitalist production process. On one
hand, production process is a labour process where characteristics of the employed labour
such as skills and effort contribute as use-values combined. Simultaneously, it is a
valorization process where these use-values appear in the form of exchange-values –
wages, investment, cost of inventory. The dichotomy is what the capitalist feeds on so as
to derive money profit. In other words, the pressure of valorization urges the capitalist to
upgrade the efficiency of its workers by integrating a wide range of skills into the
“collective worker” by organizing a pool of skilled labour which includes technical and
managerial staff. Simultaneously, this very pressure of valorization is what drives the
5. capitalist to exploit its employees more intensively, thus breaking the collaborative nature
of the two phenomena primary to an efficient working of the collective worker and the
industrial system as a whole. Going back to Marx’s statements on the exchange –value
and use-values of a commodity, Marx also believed that the pursuit of exchange value can
destroy the product’s use value. A producer going to the market after anticipating an
exchange - value is not sure if her hope would be realized or not, rather, if the use-values
embedded in the product would go to waste or not. For example, houses not selling at
their cost price, cars sold at heavy discounts, etc. Thus an exchange-value oriented
production, according to Marx, would not yield fruitful results. Such a production
approach would also entail negligence with respect to immediate nature, social welfare
and important use-values.
Marx’s critique of the industrial system and capitalism in particular does not end here. In
his literature, he speaks of many inevitable consequences of capitalism, many of which
have proven to be true at present. His prophecies about an ensuing international corporate
and governmental warfare driven by the greed for wealth, environmental hazards and
labour insecurity and unrest have been proven true over and over again. The
competitiveness of the industry, which by virtue of modern economic theory could
provide the maximum social welfare by guaranteeing equitable distribution of profits and
wages, is gradually paving way to a more oligopolistic setup where market power rests in
the hands of huge capitalist houses, thus leading to a more intense exploitation. At the
same time, his prophecies about better quality of skilled labour, technological
advancements and sophisticated financial systems have also realized themselves. Marx
also accurately predicted the intervening role of the government in regulating the private
sector and ensuring quality education and infrastructure and other important services to
the people as capitalism would enhance itself. But he was always skeptical about the
positive outcome of such a governmental intervention as he believed that the asymmetry
of power would remain in a class-divided society so as to maintain the status quo with
respect to the relations of production.
In a developing country like India, which has been witnessing a major upheaval in terms
6. of its social structures, political dynamism and apparent growth in stature as a powerful
economy, capitalism and its historical predecessor, feudalism exist as counterparts. Post –
independence, the country was plagued by highly skewed income distribution and poor
standards of living but at the same time, it possessed a massive pool of cheap labour
owing to a large population. This offered the perfect breeding ground for exploitative
capitalism to bloom. Labour cost in India was particularly low and the cost to the firms in
equipping them with the right skills did not figure high. Also, the industrial sector in India
was at the start of establishing itself which meant that demand for unskilled labour was
more primary. The domain of unskilled labour, demographically situated mostly in the
rural areas, was the easiest target for the profit-minded capitalist to exploit. Here, by
exploit, I mean to imply the generic meaning of the term which is to unjustly take
advantage of the helplessness of the “proletariat” class of people who have nothing else to
offer other than labour power. Marx, when he spoke of an imminent class struggle under
a capitalist framework, implied the retaliation of the “oppressed” against the “oppressor”.
This concept of a mass struggle for better, rather an ideal, distribution of rights for
workers and just wages and fair treatment, was aggressively professed by Leftist political
parties which made their way into the industrial sector through labour unions. These
labour unions, of which most are Leftist today, upheld and glorified the tip of the
ideological iceberg when they spoke of retaliation through strikes and violent reactionary
measures.
While it was the ideology that drew many labourers into following the philosophy of
these unions, the efficiency of the firms and the industry as a whole suffered a major
setback. Production processes were disrupted and public sector enterprises were the worst
affected. A large number of employees turned to unions to address their issues and the
management could not tackle the growing number of such issues. This nationwide
struggle had as its consequence, direct or indirect, the closure of many PSUs which were
already “sick” owing to low productivity and inefficient management. A prime example
of such a phenomenon is the jute industry in West Bengal, which experienced a gradual
death of sorts owing to rigorous unionism. There is a large number of jute mills in Bengal
with their doors closed with their employees surviving on nothing but a fading hope of
7. revival. With politics so intricately woven into the industrial framework in India, any
effort on part of the ruling government to initiate reopening of closed industries and firms
is likely to be met with a number of demonstrations highlighting the negatives of such an
effort. Contrary to what Marx might have anticipated, the aggressiveness with which
unions tried to counter capitalist exploitation resulted in a major disaster for the industrial
sector as a whole in India. In the private sector though, the affected portion of firms
stands comparatively lower with private firms having their own human resource norms
different from those of publicly-owned enterprises and their ability to “exploit” being far
stronger than the working class’ counter-force.
Examples of such class struggle can be cited even before Marx and throughout history in
general. The collective drive of the downtrodden to achieve a better standard of living –
through greater freedom of speech, freedom to think and profess, better living conditions
and fair treatment, has been the primary factor for the numerous “revolutions” that dot
our historical timeline. Marx, being a thinker of the highest degree and equally well
versed in sociology, political economics and philosophy, was able to assimilate the
knowledge and develop an understanding of the underlying essence of these struggles.
His literature opens up new avenues in the study of history and philosophy, and more
importantly, its transformation over time keeping in alignment with existing
socio-politico-economic dynamics. The rise of Protestantism during the 16th
century as a
reaction towards the intellectual oppression of the Catholic Church marked the beginning
of a new era. In any organized setup, a misappropriation of “surplus value” among a
concentrated group of exploitative individuals or parties is bound to have retaliation by
the collective as its inevitable outcome. This is what Marx believed and this is what
history has shown us as well. In a half feudal-half capitalistic economy like ours, there
exists a reciprocal relationship between the effects of capitalism on the society. As Marx
spoke, capitalism has upgraded the technological framework of the country and has
ensured better education and infrastructure. There is a larger pool of skilled labour in our
country, better quality of living in general and higher aspirations of individuals.
Simultaneously, the demographic transition from a feudalistic setup to a capitalistic one
does imply exploitation on the part of the capitalists. In a way, thus, there are
8. counter-balancing forces of development at play.
BIBLIOGRAPHY
1. https://msbfile03.usc.edu/digitalmeasures/padler/intellcont/Marxist%20philosophy-1.pdf
2. http://www.untag-smd.ac.id/files/Perpustakaan_Digital_2/ORGANIZATION%20THEORY
%20Critical%20analysis%20of%20organization,%20Theory,%20practice,%20revitalizatio
n.pdf
3. http://sociology.berkeley.edu/sites/default/files/faculty/fligstein/inter.handbook.paper.pdf
4. http://www.socialistproject.ca/bullet/974.php
5. Richard Swedberg, The economic sociology of capitalism: Introduction and
Agenda, 2003
6.
