The challenges for radical labour organizers in India are immense, more so because capital exploits the employed workforce with a vast reinforcement of potential workers at its disposal, what Marx called the reserve army of labour or the relative surplus population. This is the enormous pool of the unemployed and the underemployed, along with the petty commodity producers and service providers among the self-employed.

The reserve army of labour presents capital with a pool of labour available for hire; equally, it also forces “discipline” and “efficiency” on those who are already employed. The threat of unemployment and underemployment hangs like the sword of Damocles over the heads of all those who work for a wage under capitalism, and this is the real source of capitalist efficiency, the real means of increasing the rate of exploitation of the active army of labour. As Marx put it in chapter 25, “The General Law of Capitalist Accumulation,” in Capital, Volume 1:

The overwork of the employed part of the working class swells the ranks of the reserve, whilst conversely the greater pressure that the latter by its competition exerts on the former, forces these to submit to overwork and to subjugation under the dictates of capital. …

… The industrial reserve army, during the periods of stagnation and average prosperity, weighs down the active labour-army; during the periods of over-production and paroxysm, it holds its pretensions in check. Relative surplus population is therefore the pivot upon which the law of demand and supply of labour works [my emphasis]. It confines the field of action of this law within the limits absolutely convenient to the activity of exploitation and to the domination of capital.

Marx categorized the reserve army in normal times into three components—the floating, the latent, and the stagnant—and added on those engaged in illegal activity, more generally, the lumpenproletariat. Leaving aside the latter, that is, the lumpenproletariat, for which there are no reliable estimates, I will estimate the size of India’s reserve army of labour and each of its components in 1973 and 2011, and explore the roots and implications of a huge reserve army of labour relative to the fully active army of wage labour.

A Vast Reinforcement of Potential Workers in 1973

The floating component is composed of workers who are chronically unemployed. But then, with no social security, many of these persons will not be able to survive if they remained unemployed. They desperately do what they can to earn a living, so the actual number of such chronically unemployed persons has been much lower than what it otherwise would have been, that is, with social security. In March 1973, 1.61 percent of the “usual status” labour force of 240.1 million persons, in absolute numbers, 3.9 million persons, were chronically unempolyed, and thus formed the floating component of the reserve army of labour [1].

The latent component of the reserve army of labour in the Indian context includes those who work for subsistence on own-account (as petty commodity producers/service providers) in the workforce, including in agriculture itself, as well as the other members of their families who chip in as unpaid workers, the proportion of which goes up in times of economic distress. In March 1973, the proportion of the self-employed in the usual status labour force was 61.4 percent of the usual status workforce of 236.2 million persons, in absolute numbers, 145.1 million persons. Roughly 50 percent of this number were petty commodity producers/service providers, 72.5 million persons, constituting the latent component of the reserve army of labour in March 1973.

Let me explain why I take roughly 50 percent of the number of self-employed in March 1973 to be petty commodity producers/service providers. At around this time, petty-commodity producer households engaged in agriculture (cultivating from 0.50 acres to 2.49 acres) were 48.4% of all the (largely) 43.56 million self-employed farmer households (cultivating from 0.50 to 9.99 acres) [2]. But, of course, in 1972–73, the self-employed, though largely based in rural India and working on farms—76.5 percent of the total of 145.1 million self-employed persons, rural and urban, worked on farms—they also engaged in non-farm household enterprises, in rural and urban areas, the remaining 23.5 percent (34.1 million) of them. We do not exactly know what proportion of this latter economic activity was petty commodity production/service provision on own-account, but a comparison of the simple averages of the mixed real income per worker of the self-employed and the real compensation per worker of employees, both in the unorganised sector, over the period 1960-61 to 1972-73, surprisingly shows that they were not very different, Rs 1,071 and Rs 1,096 (at 1970-71 prices) respectively [3]. In fact, the average compensation per worker of employees in the organised private sector over the same years was Rs 4,127 (also at 1970-71 prices) [4], roughly 3.8 times that of the former figures. The very low average mixed real income per worker of the self-employed, Rs 1,071, seems to suggest that a very significant proportion of the self-employed non-farm sector’s economic activity may indeed have been petty commodity production/service provision on own account. So our guesstimate that 50% of the self-employed, overall, were petty commodity producers/service providers may not be far off the mark.

The stagnant component of the reserve army of labour is composed of those regular and casual workers who only manage to find extremely irregular employment (at best they are intermittent workers). In the Indian context, a significant proportion of casual wage labourers, including agricultural labourers, would be in that category. In 1972–73, 59 percent of the 50.24 million casual workers in rural areas and 61.6 percent of the 4.85 million casual workers in urban areas were intermittently unemployed and either sought or were available for work, in all, 32.6 million persons. Besides these casual wage workers, 4.2 million regular wage/salary workers, farm and non-farm, despite being designated as “regular”—that is, received their wages/salaries on a weekly or monthly basis—sought work or were available for work. The sum of these two categories of wage workers, 32.6 million persons plus 4.2 million persons, 36.8 million persons, constituted the stagnant component of the reserve army of labour in March 1973.

With a 3.9 million “floating” reserve, a 72.5 million “latent” reserve, and a 36.8 million “stagnant” reserve, the size of India’s reserve army of labour in March 1973 was 113.2 million persons. The active army of wage/salary-based labour in the same year was 54.4 million persons, the sum of employed casual wage and regular wage/salary earning “usual status” workers who were not seeking nor available for work. Thus the size of the reserve army of labour was 2.1 times that of the fully active army of wage/salary-based labour, and the former constituted the “pivot upon which the law of demand and supply of labour work[ed],” serving to restrain the rise of real wages. Inclusion of the petty commodity producers/service providers as part of the reserve army of labour is necessary because they are subjected to appropriation (by mercantile, credit and “semi-feudal” capital) of the profit, interest, and rent (in the case of tenancy in agriculture) respectively in the value added by their economic activity, and are left to extract their own “wages,” which, invariably, turn out to be a pittance. Moreover, they suffer considerable underemployment and are therefore available for employment as wage labourers.

Now on the assumption that each person in the reserve army supports one dependent, the size of the reserve army and its dependents would have been 226.4 million persons, 39.4 percent of the country’s population in March 1973. By adding to this absolute number the number of “usual status” employed casual wage workers who were neither seeking nor available for work and their dependents (2 x 22.5 = 45.0 million persons, again assuming one dependent per casual wage-worker), the total becomes 271.2 million persons, or 47.2 percent of the population. In essence, no sharp divide between the casual wage worker and the petty commodity producer/service provider is posited. The only major difference is that a significant part of the business risk is borne by the latter.

Looked at in the light of a Planning Commission estimate of the headcount ratio of poverty for 1972–73 of 51.5 percent of the population [5], this suggests that, in 1973, those who were robbed of access to a minimum nutritional diet in terms of calorie intake extended far beyond the reserve army of labour and its dependents, and even beyond the range of the employed casual wage workers not intermittently unemployed and their dependents.

Labour Still Massively in Reserve in 2011

To reprise, in 1973, the headcount ratio of poverty was 51.5 percent of the population and the reserve army of labour was 2.1 times the fully active army of wage labour. What about the same in 2011–12? The floating component of the reserve army of labour was 5.6 percent of the “current daily status” labour force of 440.4 million persons in 2011–12, in absolute numbers, 24.7 million persons [6]. Let me then come to the latent component of reserve army of labour. In 2011–12, a “normal” year, the proportion of the self-employed was around 51.9 percent of the workforce as estimated on a “usual principal plus subsidiary status” basis, which was 245.3 million persons. Roughly 70 percent of this number were petty commodity producers/service providers in 2011–12; so the size of the latent reserve army of labour was 171.7 million persons in that year.

Let me explain why I take roughly 70 percent of the number of self-employed in 2011–12 to be petty commodity producers/service providers. In 2003, petty-commodity producer households engaged in agriculture (cultivating from 0.01 to 2.00 hectares of land) were 70.5% of all (largely) self-employed farmer households (cultivating from 0.01 to 4.00 hectares of land). Their consumption expenditure exceeded their income even as they sold more than half their output [7]. In 2005–06, 75% of the total manufacturing sector workers were engaged in unorganized manufacturing enterprises. A large number of the latter were very small firms (85% of the firms in unorganized manufacturing employed no wage workers) subject to unequal exchange with large industrial firms and mercantile and credit capital [8]. Further, according to National Sample Survey data, in 2009-10, the share of “own-account enterprises” (enterprises not employing hired labour on a regular basis) in all enterprises in the informal sector in manufacturing, wholesale and retail trade, and other services (excluding construction) was around 85% [9]. So the guesstimate of 70 percent as the proportion of petty commodity producers/service providers among the self-employed may not be too off the mark.

Let us then come to estimating the size of the stagnant component of the reserve army of labour. According to India Census 2011, the proportion of “marginal workers” in the census workforce, those who found employment for only less than three months in a year, was 18.6 percent of the workforce. Assuming the proportion of marginal workers among all wage labourers and salaried employees to be the census figure of marginal workers in the workforce, 18.6 percent, in 2011-12, and the proportion of “marginal workers” among casual wage labourers to be six times the proportion of the same among regular salaried employee/wage labourers, we roughly get the proportions of “marginal workers” among the casual wage labourers to be 30 percent and among the regular salaried employees/wage labourers to be 5 percent. The stagnant component of the reserve army of labour comprises those wage labourers and salaried employees who find only extremely irregular employment (at best they are intermittent workers), and the “marginal” wage-labourers/salaried employees seem to fall in that category. The size of the stagnant component of the reserve army is therefore the sum of 30 percent of the 138.6 million casual wage labourers and 5 percent of the 88.8 million regular salaried employees/wage labourers — 46 million persons.

With a 24.7 million “floating” reserve, a 171.7 million “latent” reserve, and a 46 million “stagnant” reserve, the total size of India’s reserve army of labour in 2011–12 was 242.4 million persons. The fully active army of labour in the same year was the sum of 70 percent of the 138.6 million casual wage labourers and 95 percent of the 88.8 million regular salaried employees/wage labourers—181.4 million persons. Thus the size of the reserve army of labour in 2011–12 was 1.3 times that of the active army of labour, a formidable force that restrained the rise of real wages. The two estimates of the reserve army of labour relative to the fully active army of labour, 2.1 in 1973 and 1.3 in 2011–12 are, however, not comparable because the respective assumptions underlying each of the estimates are ad hoc, and, unlike the 1973 figures, I think my estimate of the stagnant “reserve” in 2011–12 doesn’t fully capture the extent of intermittent unemployment among the casual wage labourers.

But again, assuming that each person in the reserve army in 2011–12 supports one dependent, the size of the reserve army and its dependents would be 484.8 million persons (40.1 percent of the country’s population). To this absolute number if the number of non-“marginal” casual wage workers and their dependents (2 x 0.7 x 138.6 = 194 million persons, assuming one dependent per casual wage-worker), is added, the figure rises to 678.8 million persons, or 56.1 percent of the population.

Now, in multidimensional terms, that is, taking account of deprivations at the household level as indicated by child mortality, nutrition, years of schooling, child enrollment, and living standards as evident from the cooking fuel used, access to safe drinking water, electricity, toilets, type of flooring, and assets owned, and deeming a person poor if she/he is deprived in at least 30 percent of the weighted indicators, in 2005, the UNDP and Oxford University estimated that 55.4 percent of India’s population was poor [10]. Assuming that this multi-dimensional poverty estimate holds for 2011–12 too, then it is likely that the reserve army of labour and their dependents and the non-“marginal” casual wage labourers and their dependents likely constitute most of the “multidimensionally poor.” And yet, instead of improving and extending public provision, the establishment has been promoting the privatization of education and medicare, and the private provision of water, electricity, housing, and transport.

Sharp Class Polarization

One aspect of India’s underdevelopment has been its backwardness—a low level of development of the forces of production (the material means of production and labour-power) in significant parts of the economy, with these spheres dominated by mercantile, credit, and “semi-feudal” capital. Indeed, there has been a political and commercial alliance between the “semi-feudal” landowning classes and mercantile-cum-credit capital that has preserved the status and prerogatives of both. This, and the preservation of the large mass of super-exploited poor peasants and other petty commodity producers/service providers, has been at the core of India’s underdeveloped capitalism. Importantly, this state of affairs has been concomitant with backward capitalist political, ideological, and cultural traits.

The huge reserve army of labour not only circumscribes the wage and other demands of the regular and casual wage workers, but also moderates the producer prices of the petty commodity producers/service providers in the overcrowded and intensely competitive supply-side of the markets in which they find themselves and the forced commerce they have to engage in. Thus, without mincing words, it is possible to surmise that India’s underdeveloped capitalist system enables exploitation of criminal proportions, utterly denying the rights of hundreds of millions of human beings to even a bare subsistence.

Overall, with a labour market pivoted upon a reserve army of labour 2.1 and 1.3 times the size of the fully active wage/salary-earning army of labour in 1973 and 2011, respectively, the sharp class polarization—islands of wealth, luxury, and civilization in a vast sea of poverty, misery, and degradation—that stares one in the face has been/is a ramification only to be expected. There is a relatively small number of owners/controllers of Indian big businesses and multinational corporate affiliates, beneficiaries of the skewed distribution of surplus value, at the apex of a steep social-class hierarchy, at the bottom of which is a massive reserve army of labour and the remaining casual wage workers. In between, at different distances from the apex and the base of the social-class pyramid, are the political entrepreneurs, the semi-capitalist landowners, SME capitalists, the merchant and moneylending classes, administrative, professional, scientific & technological sections of the middle class, labour contractors/jobbers who recruit and manage gangs of unregistered wage workers, and the regular wage workers.

Historical Genesis and Important Implications

The historical genesis of the phenomenon of India’s huge reserve army of labour—as per our estimates, 2.1 and 1.3 times the size of the active army of wage labour in 1973 and 2011, respectively—a vast pool of pauperized labour with little or no prospect of a better tomorrow, can be traced to the process of de-(proto)industrialization in the nineteenth century. The ruination of artisans/crafts-persons in competition with imported manufactured goods from England, their degradation into unskilled labourers in mines or plantations, or after being forced to fall back upon the land, as disguised-unemployed labour in agriculture, or into petty trades in the services sector should not be lost sight of. Many of the artisans/crafts-persons were turned into “unproductive labourers,” doing jobs that would have been absent if society had been rationally and humanely ordered.

There are other roots of the phenomenon of the huge reserve army of labour, among which was Britain’s appropriation of the export surplus of India (and its other colonies) with the rest of the world by politically imposing invisible charges to match India’s (and its other colonies’) high net export earnings with the rest of the world [11]. I would however like to emphasize another tragic dénouement in the de-(proto)industrialization story. This is that the process of de-(proto)industrialization obstructed what Marx called “the really revolutionary path” to industrial capital, wherein class differentiation within artisanal/craft production gives rise to the emergence of industrial capitalists from the ranks of the artisans/crafts-persons themselves. De-(proto)industrialization blocked this path even more than it did the conservative path to industrial capital wherein merchant capital takes control of and reorganizes the process of artisanal/craft production by turning all the artisans/crafts-persons into wage workers.

The relation of industrial capital to the sphere of production that emerges in these two distinctly dissimilar paths is radically different as far as its approach to and appreciation of those whose knowledge and skills reside in technology and the labour process. The relative attenuation of “the really revolutionary path” to the emergence of industrial capital in India is one of the root causes of contemporary technological dependence and technological underdevelopment [12]. Technological dependence suggests a structural propensity to systematically rely on imports of technology with little significant adaptation and modification and hardly any autonomous innovations. Technological underdevelopment indicates a certain weakness and lack of development of local R&D and design & engineering, including those of capital goods, and equally important, their lack of integration with production, in the process of technological development, apart from tenuous linkages among and between the various organizations in the social division of technological labour. Technological dependence and technological underdevelopment have diminished the artisans/crafts-persons to mere skilled manual workers stripped of their intellectual, imaginative or creative powers, leading to the degradation of their work, besides, of course, devaluation of the persons deriving their livelihoods from such work, both rooted in dependent capital and in the ideology of the caste system. Technological dependence and technological underdevelopment have brought about a degradation of work qualitatively deeper than mere de-skilling.

Moreover, a process of deindustrialization, understood in terms of (a tendency towards) a decline in the proportion of the workforce employed in industry, goes on, in the form of what has been called “jobless growth.” As the eminent macro-economist Amit Bhaduri explains quite simply, the basic recipe of such growth is that if ten persons each producing two units are displaced from the petty-commodity production economy and five find employment in the corporate sector with a labour productivity of eight units, employment and livelihood possibilities have halved, but output has been doubled [13]. Technological dependence reinforced by technological underdevelopment has led to technological choices that—even as they have been rational from the point of view of the profit maximising objectives of capitalist enterprises—are inimical to the macroeconomic objective of significant net employment creation. The technologies applied by Indian big business and the multinational affiliates have been dysfunctional and inappropriate from the point of view of significant net employment creation. Technological dependence reinforced by technological underdevelopment has deepened the biased pattern of technological change associated with the process of capitalist economic growth and has thereby underpinned what may be called “technological dysfunctionality” [14].

India’s capitalist development strategy over the long-term has really been one in which, despite industrial growth, no vast industrial working class (relative to the size of the labour force) has been created. Huge numbers of people have been left out of the development that was supposed to accompany the growth of modern industry. Such development merely made way for a prosperous upper-middle class and defended the privileges that came from ownership of the means of production, including land, and other productive assets. At the core of the subjugation of labouring people to the dictates of capital is the huge reserve army of labour relative to the fully active army of wage labour. It is this relatively huge reserve army of labour that ensures a high rate of exploitation and guarantees the domination of big business that is itself technologically dependent, technologically underdeveloped, and technologically dysfunctional.

Notes

[1] I estimate the sizes of the three different components of India’s reserve army of labour in 1973 with data drawn from the National Sample Survey Organisation’s “Employment and Unemployment Situation at a Glance,” NSS 27th Round (October 1972 – September 1973),” Sarvekshana, 1: 2 (October 1977), 81–102.

[2] Anil K Nauriya, “On the Agrarian Question in India”, Monthly Review, 30: 4 (September 1978), the Table on p. 44.

[3] Abhijit Sen, “A Note on Employment and Living Standards in the Unorganised Sector”, Social Scientist, 16:2 (February 1988), Table 3, p. 57.

[4] One must keep in mind that employees in the organized private sector also include engineers and managerial personnel.

[5] EPW Research Foundation, “Poverty Levels in India: Norms, Estimates and Trends,” Economic & Political Weekly, 28:34 (August 21, 1993), Table 6, p 1766. Scheduled Castes and Scheduled Tribes suffer from a higher extent and severity of poverty than the general population, with the latter much worse off than the former.

[6] I estimate the sizes of the three different components of India’s reserve army of labour in 2011 with data drawn from the National Sample Survey Office’s Employment and Unemployment Situation in India, NSS 68th Round (July 2011 — June 2012), (New Delhi: Ministry of Statistics and Programme Implementation, January 2014).

[7] Amit Basole and Deepankar Basu, “Relations of Production and Modes of Surplus Extraction in India: Part I — Agriculture”, Economic & Political Weekly, 46:14 (2 April 2011), Figure 3 (p 45), Table 3 (p 50) and Figure 14 (p. 54).

[8] Amit Basole and Deepankar Basu, “Relations of production and Modes of Surplus Extraction in India: Part II — ‘Informal’ Industry”, EPW, 46:15 (9 April, 2011), pp 64 and 66.

[9] C P Chandrasekhar and Jayati Ghosh, “India’s Informal Economy”, Business Line (28 October 2013).

[10] Oxford Poverty and Human Development Initiative, “Country Briefing: India — Multidimensional Poverty Index at a Glance” (July 2010), at www.ophi.org.uk.

[11] Utsa Patnaik, “India and the World Economy, 1900 to 1935: The Inter-War Depression and Britain’s Demise as a World Capitalist Leader,” Social Scientist, 42:1/2 (January–February 2014), 13–35.

[12] For a brilliant conceptualisation of technological development and technological underdevelopment, see Norman Girvan, “The Approach to Technology Policy Studies,” Social and Economic Studies, 28:1 (March 1979), 1–53.

[13] Amit Bhaduri, “On Democracy, Corporations and Inequality,” Economic & Political Weekly, 51:13 (March 26, 2016), 31–34.

[14] For the concept of “technological dysfunctionality,” see Girvan, “The Approach to Technology …”