“Though I voted to Remain in the EU at the referendum I have long been concerned about wages being depressed at the lower end of the wage market,” Gloria De Piero, Labour MP for Ashfield, said earlier this week. “Is there anything socialist about a free market in human beings?”
Let’s leave aside the evidence on the impact of migration in general, and free movement, on wages – I’ve written about that extensively before. Those who claim there must – because of “supply and demand” – be negative wage impacts simply don’t understand the basics of economics (see here; and for the empirical evidence on what we do know, see here).
Let’s also pass over De Piero’s reference to a “free market in human beings” (as opposed to “free market for labour”). This is, essentially, the dictionary definition of slavery – which is a legal state under which market relationships, underpinned by property rights, can apply to human beings. Even allowing for the hyperbole of Twitter, making this comparison to the choice of individual workers to move within the EU to seek employment ought to be out of bounds.
My immediate reaction was to suggest that if it was indeed socialist to stop people from choosing to move where they want, to work, live, study or retire, then Se Piero thought that East Germany was an exemplar of socialism in practice. This was challenged by several people on twitter, and, on reflection, I do think it is slightly unfair – there’s nothing to suggest that De Piero wants to forcibly prevent people leaving their countries of origin, as opposed to stopping them moving here.
A better analogy is China’s hukou system, which controls internal migration. As my colleague Adrian Favell has written, “Just as some Chinese cities and regions are now adopting measures to limit or marginalise migrant labour despite economic growth, some European countries – notably the UK after Brexit – are seeking to re-impose the “hukou” of national citizenship on demand-led labour mobility which previously enjoyed the free movement rights of European citizenship.”
As with the EU, China is a continent sized economy, with very large differences in productivity, wages and job opportunities between different regions, which means people have a strong incentive to move. And as with the EU, people are mostly free to travel internally where they want – internal migration is not controlled at the borders – but, unlike with free movement, there are very considerable restrictions on their rights to reside permanently, work, and access public services. Moreover, this relatively restricted system for labour mobility coexists with free trade, capital mobility and so on. This is presumably the sort of system that De Piero (a strong supporter of the UK remaining in the EU customs union) would like to see operating in the EU, or between the UK and the EU after Brexit.
Is there anything “socialist” about this? Well, it would certainly be hard to argue that, overall, it’s inhibited China’s economic development to date. And I don’t want to enter into the difficult debate about whether China is socialist, capitalist or its own unique mixture.
But what is clear, and relevant here, is that the idea that the hukou system is good for Chinese workers is delusional. Quite the contrary. It creates a two-tier workforce, with migrant workers having fewer rights and less job security, enabling employers to pay them less and treat the worse; and at the same time, to use the availability of this class of workers with inferior rights to undermine the bargaining power of workers in general. Indeed, to the extent that there are genuine issues with “undercutting” of wages and conditions in the EU, they typically relate not to workers’ rights to move, but to employers’ ability to do exactly this, under for example the pre-reform Posted Workers Directive.
Those making De Piero’s argument often refer to the Marxist concept of the “reserve army of labour.” But where Marx really excelled was not his understanding of the functioning labour markets (he mostly got that wrong, as I’ve written here), but of the dynamics of power in a capitalist economy.
Indeed, it’s worth recalling what Marx did actually say about both the purpose and result of dividing workers according to their place of birth:
“Every industrial and commercial centre in England now possesses a working class divided into two hostile camps, English proletarians and Irish proletarians. The ordinary English worker hates the Irish worker as a competitor who lowers his standard of life…This antagonism is artificially kept alive and intensified by the press, the pulpit, the comic papers, in short, by all the means at the disposal of the ruling classes. This antagonism is the secret of the impotence of the English working class… It is the secret by which the capitalist class maintains its power.”
As a description of the political economy of the debate around free movement and Brexit, this could hardly be bettered. De Piero – and many others across the political spectrum – want us to have “all the benefits of the Single Market”, without free movement. That is, they argue for restricting the rights of workers to move to where they could find better jobs, while allowing the owners of capital to move it to wherever it could obtain the highest return. Socialism? Marx, for one, would have laughed.