The Heritage Foundation and Karl Marx

Travis Fast

UPDATE: We should note that since the publication of this article the Heritage Foundation has removed their methodology section and no longer provides a detailed description of each of their sub-indices’s

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Here is a question for our readers. What do the Heritage Foundation and Karl Marx have in common? The answer it turns out is that they fundamentally agree on the definition of “labour Freedom”. Seems odd, I know, but to understand how there could be such a strong symmetry between the Heritage Foundation’s concept of Labour Freedom and Marx’s definition we need to first unpack what Karl Marx meant by the freedom of labour.

Doubly Free Labour

Key to understanding Marx’s definition of Labour Freedom is to appreciate that whenever Marx speaks of the freedom of labour he is speaking about the two-sided nature of labours freedom within capitalist economies. Marx noted that as the commons was shut down and as formally tied labour was made “free” from the land due to the withering of feudalism and the associative process of the increasing productivity of agriculture, workers found themselves increasingly made doubly free. On the one hand workers were freed from what Marx called their means of production, i.e., the ability engage in subsistence farming to meet the basic requirements for the reproduction of the family unit. On the other hand, it also meant that labour was “freed” from all those customary ties that had bound labour over to the land. This freedom of course created another freedom: the freedom to search for employment and the freedom to be fired.

Capitalist forms of labour do not rely on direct political coercion to induce labour to work. What induces labour to engage in wage labour is their “freedom” from the means to (re)produce the necessaries of life. This freedom ensures that in order for labour to survive it must be contracted to capital via the wage relation. Labour is thus doubly free. Labour must, owing to its freedom from the means of production make a wage contract with capital. True labour can contract with any employer that offers it such a contract but contract it must because in absence of entering into a wage contract labour also finds itself freed from the necessaries of life.

Heritage Foundation Freedom Index (HFFI)

I am sure at this point that some readers are asking, “what does all this have to do with the Heritage foundation?” Quite a bit. Apparently understanding the class character of capitalist social relations the Heritage foundation has taken to publishing a “freedom index” which can be found here:

.http://www.heritage.org/research/features/index/countries.cfm.

This index is really an index of several sub-indices, one which being a “labor Freedom” index. The Heritage Foundation derives this index by examining the ease with which owners can fire and hire workers along side of the costs of doing so. According to the Heritage Foundation Canada has a relatively high degree of “labour Freedom.”

Canada: Labor Freedom – 82.7%

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The labor market operates under flexible employment regulations that enhance employment and productivity growth. The non-salary cost of employing a worker is moderate, and dismissing a redundant employee is relatively costless. The labor law does not mandate retraining or replacement before firing a worker. Canada’s labor market flexibility is one of the 20 highest in the world.

Contrast Canada with Sweden:

Sweden: Labor Freedom – 52.0%

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The labor market operates under inflexible employment regulations that hinder overall productivity growth. The non-salary cost of employing a worker is high, and dismissing a redundant employee is costly. Rigid labor market regulations, including high statutory overtime payment, have contributed to Sweden’s failure to create jobs, particularly in the private service sector.

What the Heritage Foundation’s labor freedom index actually measures is the degree to which Marx’s conception of the “doubly freed” worker is enforced within capitalist economies. The higher the restriction on terminating workers—“freeing” workers from their ability to earn a living as Marx would have it—the lower the labour freedom index. In this sense the Heritage index gives us a good metric of the degree to which classical liberal ideas dominate labour markets in various countries. Ironically they have had to invoke Marx’s definition of freed labour to achieve this.

Inadvertently their index also gives us a labour commodification index. Moreover, it also provides a flexibility index against which unemployment rates can be regressed which would provide a quick and dirty way to test the supply side argument about the supposed positive relationship between flexibility and unemployment.

Note that Canada’s unemployment rate is a full percentage higher than Sweden’s despite the fact Sweden has a much lower score on the freedom index.

NB Even a superficial glance at the HFFI reveals that it is wortheless as guide to the real conditions in labour markets in the third world as they have zero appreciation for the rules governing labour markets in the informal sector.

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One thought on “The Heritage Foundation and Karl Marx

  1. Superb analysis! I’ve been reading your blog for some time now and I must say that I am very impressed with the quality of material that you put out. Good job, once again.

    Paul

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