A ‘kolorob’ (uproar) can be heard from the entire country- “Investment!” — “What is the status of annual investment status?” — “The government has to be more investment friendly.” — “How can there be investment without relaxation of taxes?” — “We need more investment.”… Amidst such political clamour in the market, is there any opposition in the country, who is not attacking the party in government for not being able to attract investment? Is there any political party in power, who has not been desperately trying to prove its efficiency in terms of drawing more and more investment? Be it the ‘Mitha Laddu’ (a dessert) or the ‘Tetoh Dawai’ (Bitter Medicine), the drive for development or the campaign for job opportunities, the Almighty “Investment” has been at the centre of all such debates. Therefore, it has become crucial to deeply study and critically analyze this “BharataBhagyaVidhaata”. Thus, we must first investigate the most ‘pro-people’ element of investment, i.e. the very relation between investment and employment.

How much investment? How many employed?
When a company sets off a factory, the investments on possession of the land, building up the factory, installation of machines etc are its one-time investment. With it, after the factory starts running, the expenditure on raw materials and the wage/salary of the workers and staffs gets added, which continues cyclically. In addition to such running expenditure, a fraction of the one-time investment (it is calculated by several factors), added with the profit assumed as per the average rate of profit (observed from the general trend in the market) are summed up to determine the total price of produced commodities for a production season (e.g. annual). Based on this total price, the price of each commodity is calculated. However, each and every commodity cannot get vended. Therefore, subtraction of the net income from the net price of the commodities traded in a year (i.e. the ‘turnover’ of the company) is a measure of the effective investment of the corresponding year/season. If we carry out a comparative analysis of such a component of the net investment, i.e. its annual effective component, with the total employment, what will we observe?


Calculated from Data Sourced: Forbes 2015

Let us analyze the data (source: Forbes 2015) seeded in the graphical representation stated above. Here, we have mentioned the calculations related to top 500 companies (based on their market values) from each of the US, UK, Europe, Japan, and BRICS+ (i.e. BRICS and other developing countries). We have classified the companies based on the amount of their annual effective investments (million dollar) in the groups of less than 2,000 m$, 2,000-10,000 m$, 10,000-1,000,000 m$ and more than1,000,000 m$.
The data shows the following: Firstly, the largest companies (top 500) of both the developed and developing capitalist countries have failed to recruit at least 6 people on an average per million dollar annual effective investment (the actual investment is much higher) [ i.e. 10 people per 10 crore rupees investment in Indian currency only; while if we consider a monthly wage/salary of Rs. 20,000 for 10 people, it amounts to an annual expenditure of less than 25 lakh rupees, which is not even 1/40th part of the total investment]; secondly, higher the amount of investment, lower is the employment per investment (from 6 people/m$ for <2,000 m$ to about <1 or 2 people/m$ for >1,000,000 m$ investment); and thirdly, these features are characteristic to not only the developed capitalist economies like US, UK, Japan or the Europe, but also of the developing nations like Brazil, Russia, India, China, South Africa and others. Therefore, such features are common, not only in facts but also in figures, in all parts of the current neoliberal world indicating what indeed the globalization means. Thus, isn’t the emphasis on more and more investment for the purpose of employment or creating job a capitalist superstition?

Whose interest the large investments serve?
The following data represent the average rate of profit appropriated by the non-financial private companies (NFPC) of our country in the recent years.


Data source: RBI


The data shows that those companies, which have a turnover of near about 1000 crore rupees or more, are able to maintain their appropriated rate of profit near or above the average rate and the profit rate declines below the average proportionately with lower turnover and subsequent low investment. For example, in 2009-2010, the companies with a turnover of more than 1000 crore rupees had a profit rate 1% higher than the average whereas those with a turnover less than 25 crore rupees had an appropriated profit rate 1/3rd of the average value. Therefore, larger the investment, larger is the profit rate appropriated; however, the employment per unit investment, as shown earlier, is proportionately low. Still is it necessary to justify, which class, the slogans of “Investment” and “More and more investment”, are in favour of?

Who are the exploited ones through generation of such profit?
Today, it is not at all unfamiliar that the entire profit is generated through the exploitation of the workers; i.e. through the denial of actual value of labour in the name of providing wages to the workers. Thus, the unpaid labour (in terms of wage) of the workers produces the profit of the proprietor. Then, do the workers of a given industry only by themselves create the entire profit of the industry through their unpaid labour? In that case, the question arises whether the larger profits of higher investments come entirely from the unpaid labour of their significantly smaller numbers of workers! For example, does the profit of an owner of an aeroplane company come entirely from the unpaid excess labour of the pretty well paid pilots and air hostesses? Or, does the profit of the oil refinery companies exclusively come from the unpaid price of the value created by their few number of workers? Such explanations seem to be unrealistic to the common people but the so-called ‘Marxist Economists’ (in reality, belonging to the school of bourgeois economy) try to justify them by introducing the concept of ‘productivity’; they say, that, owing to advanced technology, the workers generate a value much higher than their high level of wages by working for the same period of time due to higher ‘productivity’; thus, such large profit is created as a whole. In that case, what can we observe about the price generated by an employee per hour if the similar types of industries, with practically no variations in their ‘productivity’, are compared? For example, Indian Oil and ONGC, both are nationalized mineral oil and natural gas producing companies of the country with almost equal number of employees. The labour price (wage/salary + profit) per employee is Rs. 2,500 per hour in case of the former company whereas for the latter, it is nearly Rs. 5,500 (Source: www.moneycontrol.com). Similarly, the first ten pharmaceutical companies of the US, which also come under the first hundred companies of the country, have a profit per employee per hour varying from less than Rs. 1,000 (Abbott Laboratories) to more than Rs. 12,000 (Gilead Sciences). If we look at Japan as well, it is observed that the profit per employee per hour for automobile companies varies from less than Rs. 50 (Sumitomo) to more than Rs. 1,000 (Fuji). Thus, wide range of variations in profit are observed among companies without much differences in their technology and where the workers do the same type of work and get similar wages on an average (which is normal since similar order of salary is paid for similar type of work). Therefore, in such cases, evidently the profit is not generated solely from the unpaid labour of their own workers. But someone or the other must have been deprived to be paid; otherwise the balance sheet remains incomplete. ‘Output’ cannot exceed the ‘input’. Then who generates this profit?
In this age of mature capitalism, the great discovery by Marx, which is exiled by the bourgeoisie panegyrists through the weapon of ignorance in their urbanized theories, can only give an answer such question. Citing the differences between ‘exchange value’ and ‘price’, Marx stated:
The whole difficulty arises from the fact that commodities are not exchanged simply as commodities, but as products of capitals, which claim participation in the total amount of surplus-value, proportional to their magnitude, or equal if they are of equal magnitude”.
Thus, in the entire capitalist society, the portion of price generated through unpaid labour of all the workers (in the present society, they may be workers of the industrial sector, landless farmers, self-employed labourers or crop producing peasants) gets distributed among the proprietors based on their proportion of investments, where the basis of price determination depends on the sole view: “More the investment, more is the profit”. Doesn’t the table of profit rates appropriated by the different companies, as shown above, reveal the same truth? As a result, some owners siphon out more profit than that generated as surplus from the unpaid labour of their own workers, some can expropriate lesser; however, such profits are generated only from the unpaid labour as a whole. In case of factory workers or landless farmers, it appears from their ‘wage-system’ and in case of self-employed workers or poor peasants, it is originated from the ‘price-system’.

To summarize
Large capital exploits the working people by denying them their due labour value through four ways: firstly, by expropriating ‘profit’ from its labourers together with siphoning ‘excess profit’ from the total labour employed in the entire society including self-employed and small peasants thereby creating huge poverty in the society; secondly, by reducing job availability and thereby creating huge unemployment (along with a corresponding expansion of informal sector) in proportion to its volume, (just in exact opposite manner to those who campaign in favour of large investments for employment); thirdly, through extracting capital from small industries thereby pushing millions and millions of workers towards the curse of ‘lock outs’; and lastly, within the sphere of capitalism itself, through exile of the peasants from their lands and through the loots of natural resources as its capitalist assets in order to get profit out of it. This is how they set up their entire empire.


This article was first published (in Bengali) on 8th March, 2015 in the 9th issue of ‘Jabardakhal’.


Basudev Nag Chowdhury is the Convenor of People’s Brigade


Translation: Sumit Ghosh

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