The point is so elementary it ought not to require a quotation from Engels or anyone else to establish it. But, since the argument here points in a direction that many on the Left do not want to go, let us go with Engels. ‘The condition of the working class is the real basis and point of departure of all social movements at present … A knowledge of proletarian conditions is absolutely necessary to be able to provide solid ground for socialist theories …’. This is what he wrote in 1845 in his preface to his The Condition of the Working Class in England.[1]
So where is our analysis today? There is no shortage of discussion of precarious contracts, the gig economy, zero hours contracts, work intensification, low wages and so on. But this is a post about none of these. It is a post about the elephant in the room. That elephant is the huge historical rise in the standard of living of the populations of the advanced world.
At one level, the existence of the elephant is obvious. I am writing this in the UK – still, for all its problems, one of the richest countries in the world. Wherever you are, you are probably reading this in relative comfort too – a comfort that would have been unimaginable in Marx or Engels’ lifetimes. Even the lives of the poorest of the poor today in the UK, USA or Europe would have been beyond the comprehension of their mid-nineteenth-century counterparts.
In the UK, over 90% of households have home computers. Almost 80% have cars. Everyone who wants a colour TV has one. Over 80% of the population have a current passport and a higher percentage has probably held one at some time and travelled abroad. The precise figures will differ in other advanced world countries. But the point will be the same. ‘Workers of the world unite; you have nothing to lose but your chains’? In the twenty-first century, it is a bit more complicated than that.
Yet the question of how this has happened and what consequences it has are still far from the minds of those on the Left who write about capitalism. Of course, major problems still exist. Too many people still live unfulfilled lives and worry about their futures. But to ignore the extent to which people have benefited from capitalism helps no one. Shouting apocalyptically that capitalism is terrible, and the system is going to crash to people on good incomes who are planning their next foreign holiday while keeping half an eye on the film that they are watching on Netflix and waiting for Uber Eats to deliver their takeaway is simply daft.
This post is not going to try to solve this problem. It is a challenge. What I want to do is to set out the scale of the transformation that needs to be explained.
Capitalism in Marx’s Time
Both Marx and Engels saw the beginnings of industrial capitalism and were horrified by what they saw. Their main focus was Britain – then the most advanced country in the world. Marx, having been born in 1818, settled in England in 1849. He spent half his life there, dying in 1883. Engels arrived, aged 22, in 1842. He came back on a permanent basis in 1850 living in Manchester until 1869 and then London until his death in1895.
Both Engels in the 1840s and Marx in the 1850s saw abject poverty on a scale we find hard to imagine today. They also saw workers with little protection, in a weak bargaining position and fearing unemployment. Here is Engels:
But far more demoralising than his poverty in its influence upon the English workingman is the insecurity of his position, the necessity of living upon wages from hand to mouth, that in short which makes a proletarian of him … The proletarian who has nothing but his own two hands, who consumes today what he earned yesterday, who is subject to every possible chance, and who has not the slightest guarantee for being able to earn the barest necessities of life, whom every crisis, every whim of his employer may deprive of bread, this proletarian is placed in the most revolting, inhuman position for a human being.[2]
The myth survives, despite repeated refutations, that Marx and Engels had an immiseration thesis. They did not. Marx insisted that wage formation was complex and that wages under capitalism were not driven to subsistence levels. They both allowed that the standard of living of the workers might be improved and both – especially Engels – recognised that, by the end of their lives, some of this had begun to happen. In 1892, he wrote a new introduction to The Condition of the Working Class in which he said that ‘the most crying abuses described in this book have either disappeared or have been made less conspicuous’.[3]
But the underlying logic of Marx’s argument is that profits come at the expense of wages. Employers are driven to hold down wages, put pressure on hours and worsen conditions in order to sustain profits. There are counteracting forces, not least class struggle. And, in good times, there might be some advance but, in the crises that inevitably occur, these gains periodically come under pressure.
What Marx and Engels missed was the extent to which productivity might increase and the ways that would be found, however unevenly, sometimes through collective struggle but often without, to share out these gains. We cannot blame them for this since, as we will see, this improvement has been uneven in time and most of it came after their deaths.
But later socialists continued to make the same mistake of under-estimating capitalism.
After Marx’s death his successors may not have been as convinced of immediacy of revolution as Henry Hyndman apparently was in Britain. He is said to have carried around with him a list of a revolutionary cabinet headed by himself. But still, as Harry Braverman wrote in 1958,
Marx and the movement he shaped operated on the basis of imminent crisis. If he never gave a thought to the kind of living standard inherent in a capitalism that would continue to revolutionize science and industry for another 100 years, that was because he thought he was dealing with a system that was rapidly approaching its Armageddon.[4]
Luxemburg, Lenin and Trotsky, were they able to see, would surely be as incredulous as Marx and Engels would be at the scale of the increase in real wages, the growth in household incomes, the reduction in hours, the improvement conditions and the absence of mass crisis in the rich countries. And, so indeed, might Harry Braverman a half century on from his own death in 1976.
Table 1 below shows the data for the UK and the changes in the century or more after Marx wrote Capital. We see that the Human Development Index (which puts output per head, life expectancy and education into a single index) had almost doubled by the start of the twenty first century. Life expectancy at birth had nearly doubled too. Real wages had increased at least seven times. The annual hours worked had fallen by over a third and workers who had to work until they died in the 1870s were now looking forward to a decade and a half in retirement.
Table 1 Indicators of Average UK Standard of living 1873-2001[5]
| Human development index | Life Expectancy at Birth | Real Wage Index | Annual Hours Worked | Expected years of retirement *** | |
| 1873 | 0.5* | 41.3* | 67 | 2755* | |
| 1901 | 96 | 2.84 | |||
| 1913 | 0.644 | 53.4 | 100 | 2656 | 3.17 |
| 1938 | 135 | 5.72 | |||
| 1951 | 0.766** | 69.2** | 173 | 2112** | 6.44 |
| 1960 | 221 | 6.83 | |||
| 1973 | 0.839 | 72.0 | 343 | 1919 | 8.29 |
| 1990 | 406 | 13.64 | |||
| 2001 | 0.930 | 78.1 | 483 | 1655 | 15.62 |
*data for 1870; ** data for 1950; data for 1911; *** data for 01 years in decade.
Calculating real wages
Real wages measure the changing value of what those in work are paid. A real wage index looks at the nominal rate of pay – that is simply the money in your pay packet or now, more likely, your bank account at the end of the month. We then divide this by a price index which reflects whether prices are rising or falling. Prices have risen everywhere in the lifetimes of people reading this, albeit, at different rates in the advanced world. But, save in short periods, money wages have risen faster than prices, so real wages have increased in most advanced countries.
But prices did not always rise. In the late nineteenth century, they fell so that, although workers’ money pay may not have increased that much, their real wage did. We find the same thing happening at times in the inter-war years in Britain.
Any real index is, of course, an average – some will earn more, some earn less but this does not matter for our point. This is because not only has the average level of real wages risen – so, over the long term, has inequality diminished. Today, it is at much lower levels than it was a century ago even though levels have turned upwards in many (but not all) advanced countries.[6]
There are lots of technical problems with doing these calculations. Here, we will pause on only one. The sorts of goods we can buy today are very different from those available in 1848 or 1917 or 1945. It is almost impossible to capture this in a single index. If we try to take account of the vast array of new goods that have become available over time then, if anything, the real wage index vastly understates the improvement in the standard of living. Think of the changes involved in moving from candles to gas to electricity in lighting a community or in an individual house. And think, too, of the wider opportunities electricity has created.
This growing availability of new goods is important in another sense. Their prices often fall dramatically. In the 1980s, a Commodore 64 computer would have cost you over £1,000 in today’s money. The capacity of such a computer was tiny. A 4-terabyte hard drive today has maybe 40,000 times the storage of one from the early 1980s and sells at 100th of its price. This is an extreme example, but look at the price of many aspirational electronic items from TVs to mobile phones, white goods, even cars and you can see how much cheaper they have become in real terms and how they now form the basis of mass consumption of workers across the advanced world.
The Rising Standard of Living in the UK
If we focus for the moment on the UK, we can track how real wages (defined narrowly) have increased since Marx and Engels’ last years. Table 1 above shows that average real wages by 1913 had risen by around 25-33% compared to the 1870s. Looking back from today, this rise was not huge, but it made an enormous difference to those at the time. Of course, much absolute poverty still existed. It was tracked by people like Charles Booth in the 1890s and Seebohm Rowntree in the 1900s. Rowntree made clear that there was a life cycle in poverty – sometimes you were up and sometimes down. But the increase was real, and it had begun to spread beyond what some called the ‘labour aristocracy’. Lenin, when he came to the UK in the 1900s saw abject poverty, but it was nothing like on the scale of that Marx and Engels saw when they arrived in the mid nineteenth century.
Now look at the real wage index for 1938. It is 35% higher than in 1913 and 100% higher than in 1873. Even during the 1930s, which we think of as a depression decade, average real wages rose in the UK.
Seebohm Rowntree continued until his death to track the impact of this in the decline in absolute poverty measured against the basic necessities needed to survive. His study of York published in 1901 showed a very similar level of absolute poverty to that found by Charles Booth in London – around 28%. These were people who lacked enough income to meet what he considered their most basic needs. The biggest cause of this was simply low wages.
In 1936, he published a second study which found that absolute poverty in his terms had fallen by a half. Adding items to the basics, 18% were still in poverty but the main cause was no longer low wages (10%) but unemployment. In 1951 came a third study which now showed just 1.5% in absolute poverty. Full employment and welfare reform had “all but …. eradicated poverty” as he had analysed it in his youth.[7] Henceforth, poverty in the UK (and soon in the rest of the advanced world) would be about a relative concept not absolute immiseration.
So, now look again. By 1973, the real wage index has risen to 343. It is now nearly 5 times higher than 1873. But that is the long boom. Surely the increases stopped then? The answer is no. As we entered in a new phase of capitalism, the real wage index continued to grow. In the 1980s and 1990s, despite all the talk of the pressures on the ‘working class’, the real wage index grew to 483 by 2001.
In the 2000s and 2010s, the pattern has been more variable in the UK and other countries. The pattern is not always identical but, overall, real wages have increased, albeit more slowly in most advanced countries in the last decades. But, in the UK, only between 2008 and 2014, briefly in 2017/18 and again in 2021/22 did wage growth dip below the inflation rate. The basic comparative data is set out for those of working age in a number of countries in table 2 below.
Table 2 Real Median disposable (i.e. after tax) income growth for 25–60-year-olds by country[8]
| 1995-2007 | 2007-2019 | |
| UK | 41 | 6 |
| USA | 11 | 12 |
| Austria | na | 18 |
| Germany | 6 | 16 |
| France | na | 4 |
| Netherlands | 24 | 11 |
| Italy | 19 | na |
| Portugal | 21 | 17 |
| Sweden | 38 | 21 |
| Finland | 40 | 8 |
| Denmark | 18 | 13 |
| Norway | 51 | na |
| Spain | na | -7 |
| Greece | na | -19 |
Something else important happened. More and more women went into paid work. And, although gaps remain between men and women’s pay, they too have come down. Now, at one level, this is an example of proletarianisation, but it is a proletarianisation that has dramatically added to household income. Any loss of child income as education has been extended has been more than compensated for by the increase in women’s paid labour which has added significantly to family income. Median disposable household income (after taxes) is now around £35,000 in the UK. And a husband and wife, if skilled workers, will have much more.
We could, of course, add in the risks of unemployment, injury, disability etc. But these too have dramatically diminished. And, contrary to what the Left often seems to imagine, there has always been a high level of job stability for most workers. This remains the case today. Indeed, job tenure has not fallen significantly, if at all, in most advanced countries despite all the talk about precarity.[9]
Safety nets, too, have been put in place. The UK once led much of the world in the development of a welfare state. Today what it provides is less impressive and some can fall off the cliff edge in its complex system. But, still, the long-term improvement has been massive.
And there are other gains to be thrown into the pot, including wider welfare reform. But let us keep closer to the workplace. In the UK, in 1938, the then Tory government passed a new Holidays with Pay Act. One Coventry worker (a boom town in the 1930s) wrote to his local paper, ‘my wife, two children, and myself have just returned after enjoying our first “holiday with pay”. We have had a good holiday, feeling for the first time that we could afford to pay for it without having to apologise to the butcher and baker for being unable to meet his bills the week after. I feel am justified in saying “thankyou” to whoever it was who did the trick’. The worker signed himself ‘sunburned’.[10]
Today, the sun that burns a holidaying worker will not be enjoyed at Blackpool but on the Mediterranean or even in Florida. This matters not simply as a cultural phenomenon but an expression of high levels of disposable income.
The Building Labourers Trick
What happens if we widen our vison and take a more global perspective? The difficulties of comparing standards of living in the same country are magnified when we try to compare over time and between countries. But do not lose heart. We can use a simple trick to get a sense of what is involved.
Some time ago, the economic historian Robert Allen laid the basis for some helpful long run comparative data using a simple idea. He took as his basic standard for real wages the wages of building labourers. Many societies in the past have had paid building labour and every society has this form of labour today and more or less good data exists as to what wage rates might have been and are.[11]
But what of the real wage bit? Allen worked out the price of a basket of essential subsistence goods. He then calculated how many such baskets (adjusted for price changes) a building worker could buy with the standard builder’s wage of the day. This enables a comparison over time and between countries. His approach has been built upon by other historians. It is certainly rough and ready, but it is also very clever. Using this approach, we should not put too much faith in very small differences but, as the table below shows, we can see some fascinating big differences in time and space.[12]
Table 3 Real Wages of Building Labourers 1820s-2000s
Number of subsistence baskets a dally wage buys, decadal average countries and regional averages
| UK | Western Europe | USA | Australia | East Asia* | Sub-Saharan Africa | World | |
| 1820s | 16 | 13 | – | – | 3 | 3 | 6 |
| 1830s | 17 | 11 | – | – | 3 | 3 | 6 |
| 1840s | 16 | 11 | – | – | 3 | 3 | 5 |
| 1850s | 17 | 11 | – | – | 2 | 3 | 5 |
| 1860s | 17 | 12 | – | 33 | 3 | 3 | 6 |
| 1870s | 21 | 12 | – | 37 | 4 | 3 | 7 |
| 1880s | 25 | 15 | – | 50 | 4 | 4 | 9 |
| 1890s | 28 | 18 | – | 52 | 5 | 5 | 10 |
| 1900s | 28 | 19 | – | – | 5 | 5 | 11 |
| 1910s | 23 | 17 | – | 65 | 4 | 4 | 12 |
| 1920s | 30 | 19 | 73 | 70 | 4 | 6 | 11 |
| 1930s | 37 | 25 | 77 | 60 | 4 | 8 | 13 |
| 1940s | 41 | 26 | 76 | 58 | 5 | 6 | 13 |
| 1950s | 36 | 21 | 103 | 68 | 6 | 8 | 17 |
| 1960s | 49 | 32 | 153 | 59 | 11 | 8 | 20 |
| 1970s | 62 | 49 | 179 | 97 | 20 | 7 | 26 |
| 1980s | 78 | 65 | 175 | 108 | 26 | 8 | 31 |
| 1990s | 120 | 105 | 185 | 140 | 27 | 11 | 35 |
| 2000s | 167 | 163 | 209 | 171 | 37 | 18 | 43 |
*excludes China for 1990s and 2000s. Were it included the growth would be more impressive still
Note that, already in Marx and Engels’s time, the real wage levels in the USA and Australia were far above those in the UK and Western Europe. We also see how the rest of the world remained stuck for so long and how big gaps opened up.
But we can also begin to see the beginnings of a rise in this very basic standard in other parts of the world. Africa stayed stuck, but this data shows some improvement there too since the 1990s, although the gaps are huge and poverty remains intense in poor countries.
Realism or Panglossian Analysis?
There will be some readers who will puzzle that the focus here is on the improvements that capitalism has brought and not the problems that still exist. But there are endless discussions of these. Too often, they are framed as if high levels of income do not exist. Look at the discussion of the recent ‘cost of living crisis’ that hit after the end of the covid lockdown. The task is certainly to understand these short-term reductions but also to understand the long-term rise, its variation in time and place, and the extent to which it now provides something of a buffer for modest declines.
How do we integrate these huge rises in the standard of living and real wages with Marx’s analysis of capitalism? In the 1950s, in the UK, a younger Marxist called Tony Cliff wrote a short essay on what he called the ‘stubborn adherence to Reformism’ of the workers of the advanced world. At a time when some of the Left still denied that postwar capitalism was booming, he insisted that ‘in the final analysis the base of reformism is capitalist prosperity’ and, like this post, he sought to outline some of its elements.
A part of that prosperity, he suggested, might have been born of imperialism but the gains were too big to be explained just by that, and they had spread across workers of all kinds. A contradiction had therefore come into being between what Marxists thought of as the long-term interest of people to go beyond capitalism and their immediate interests which were to support the system as it is and try to reform it.[13]
But then his argument got messy. He thought that the boom which had lifted living standards would go on for some years yet but eventually peter out. He did not imagine an apocalyptic crisis, but one where the contradiction between the longer-term interests of people in transcending capitalism and their shorter-term ones would disappear. When it did, then the economic roots of reformism would disappear too.
But they have not. So, what are its consequences for our understanding of the world when what workers see is a system that has delivered on the scale it has?
It is a pretty big elephant in the room.
[1] Frederick Engels, The Condition of the Working Class in England, 1845 https://www.marxists.org/archive/marx/works/1845/condition-working-class/ch01.htm
[2] Ibid.
[3] Frederick Engels, “Preface to the English Edition’ 1892. https://www.marxists.org/archive/marx/works/1892/01/11.htm
[4] Quoted D. Renton, Dissident Marxism, London: Pluto, 2004, p. 33.
[5] N. Crafts, I. Gazeley & A. Newell eds., Work and Pay in Twentieth Century Britain, Oxford: OUP, 2007, passim.
[6] D. Dorling, The Equality Effect, Oxford; New Internationalist, 2017, chap. 2; T. Piketty, A Brief History of Equality, Belknap: Havard Mass., 2022.
[7] See B. Harris, ‘Seebohm Rowntree and the Measure of Poverty, 1899-1951’, in J. Bradshaw and R. Sainsbury, eds., Getting the Measure of Poverty: The Early Legacy of Seebhohm Rowntree, Aldershot: Ashgate, 2000, pp. 60-84.
[8] Institute of Fiscal Studies, https://ifs.org.uk/data-items/real-median-disposable-income-growth-25-60-year-olds-country-and-period
[9] https://leftiehistorian.wordpress.com/2022/11/20/is-there-heightened-labour-force-precarity-in-the-uk-5-minute-read/
[10] https://www.historyextra.com/period/20th-century/holiday-revolution-were-all-going-on-a-summer-holiday/
[11] R.G. Allen, Global Economic History. A Very Short Introduction, Oxford: Oxford University Press, 2011, pp. 8-13.
[12] J.L. Van Zanden et al, How Was Life? Global Well Being Since 1820, Paris, OECD, 2014, pp. 80-81.
[13] T. Cliff, “The Economic Roots of Reformism’, Socialist Review, vol 6 no. 9, 1957 https://www.marxists.org/archive/cliff/works/1957/06/rootsref.htm
