The use of the word "army" refers to the workers being conscripted and regimented in the workplace in a hierarchy under the command or authority of the owners of capital.
Prior to what Marx regarded as the start of the capitalist era in human history (i.e. before the 16th century), structural unemployment on a mass scale rarely existed, other than that caused by natural disasters and wars.
[5] Engels discussed the reserve army of labour in his famous book The Condition of the Working Class in England (1845) before Marx did.
To be sure, the proletarian can restrain his natural instinct by reason, and so, by moral supervision, halt the law of nature in its injurious course of development.The idea of the labour force as an "army" occurs also in Part 1 of The Communist Manifesto, written by Marx and Engels in 1848: Modern Industry has converted the little workshop of the patriarchal master into the great factory of the industrial capitalist.
The more openly this despotism proclaims gain to be its end and aim, the more petty, the more hateful and the more embittering it is.Marx introduces the concept of the reserve army of labour in chapter 25 of the first volume of Capital: Critique of Political Economy,[7] twenty years later in 1867, stating the following: [...] capitalistic accumulation itself [...] constantly produces, and produces in the direct ratio of its own energy and extent, a relatively redundant population of workers, i.e., a population of greater extent than suffices for the average needs of the valorisation of capital, and therefore a surplus-population...
However, as Marx develops the argument further it also becomes clear that depending on the state of the economy, the reserve army of labour will either expand or contract, alternately being absorbed or expelled from the employed workforce: Taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army, and these again correspond to the periodic changes of the industrial cycle.
They are, therefore, not determined by the variations of the absolute number of the working population, but by the varying proportions in which the working-class is divided into active and reserve army, by the increase or diminution in the relative amount of the surplus-population, by the extent to which it is now absorbed, now set free.Marx concludes as such: "Relative surplus-population is therefore the pivot upon which the law of demand and supply of labour works".
The availability of labour influences wage rates and the larger the unemployed workforce grows, the more this forces down wage rates; conversely, if there are plenty jobs available and unemployment is low, this tends to raise the average level of wages—in that case workers are able to change jobs rapidly to get better pay.
Samuelson argues that much Marxian literature assumes that the mere existence of the unemployed drives down wages, when in reality is dependent upon contingent factors.
[9] A similar argument was made by Murray Rothbard, who argued that if the reserve army lower wages by being absorbed into the ranks of the employed, then eventually it will disappear and be incapable of being a threat (that also means that the risk of perpetual impoverishment is averted).
Rothbard observes that this is supported by modern market economics, which holds that unemployment lowers wages and thus ultimately eliminates itself.
[10] Some writers have interpreted Marx's argument to mean that an absolute immiseration of the working class would occur as the broad historical trend.
[11] This is no longer credible in the light of the facts because in various epochs and countries workers' living standards have indeed improved rather than declined.
However, economic historian Paul Bairoch estimated in the mid-1980s that in Latin America, Africa and Asia "total inactivity" among the population was "on the order of 30-40% of potential working man-hours"—a situation without historical precedent, "except perhaps in the case of ancient Rome".
[12] Other writers, such as Ernest Mandel and Roman Rosdolsky,[13][14] argued that in truth Marx had no theory of an absolute immiseration of the working class; at most, one could say that the rich-poor gap continues to grow, i.e. the wealthy get wealthier much more than ordinary workers improve their living standards.
[16] Next, Marx says that in proportion as capital accumulates, the situation of the worker, be his payment high or low must "grow worse".
However, the validity of this argument depends also on state economic policy and on the ability of workers to raise their wages.
For example, young people will stay in the family home, in schooling, or in some make-work scheme because they can not find a paid job.
Marx was writing in the mid-19th century, and his discussion of unemployment may therefore be in part out of date, especially if one considers only particular developed countries.
Over 30 million jobs were still needed to return total employment to the level that prevailed before the financial crisis.
Among the world's unemployed, the ILO estimates that roughly half the global total are young people aged 15 to 24.
[27] Precarious workers do work part-time or full-time in temporary jobs, but they cannot really earn enough to live on and depend partly on friends or family, or on state benefits, to survive.
If there is no possibility for getting a job at all in the foreseeable future, many younger people decide to emigrate to a place where they can find work.