Theory, Evidence, and Policy
2. Segmented Labour and an Employer of Last Resort The folly is now patent of the economic wisdom that preaches to the labourers the accommodation of their number to the requirements of capital. The mechanism of capitalist production and accumulation constantly eﬀects this adjustment. The ﬁrst word of this adaptation is the creation of a relative surplus population, or industrial reserve army. Its last word is the misery of constantly extending strata of the active army of labour, and the dead weight of pauperism. (Marx 1954, p.603) Chapter 1 has provided insights into a period of capitalism where nearly no hindrances existed for the exploitation of the working population so that capitalism could be described as failing with regard to the development of a society in which all members are able to live in an acceptable way. As we have shown, social legislation began in Europe (in Germany under Bismarck) at a time when many workers (including children) were suﬀering from too much work and little income with no social insurances. It lasted until the 1920s before unemployment insurances were established in European countries. The question now is whether the present situation of the working population can be considered as acceptable or whether we see again a failing capitalism at work which needs urgent changes. If we look at the case of Germany, for example, we ﬁnd a larger portion of the active working population in a situation which can be compared with the Marxian reserve army of...
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