What is “Unproductive Labour”?

S. Freeman & B. Vandesteeg (1981)

This article appeared in International Socialism 2:12, Spring 1981, pp. 85-96.

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Kopieret til Marxisme Online 20. aug. 2008

The importance of a Marxist theory of productive labour has been neglected in the analysis of the present crisis. In recent years there has been some controversy among Marxist economists [1] over how we should properly define productive labour. But these debates have remained at an academic level and have not been used to develop practical socialist politics.

Bourgeois economists, however, have resurrected a theory of unproductive labour and are using it as a powerful ideological weapon in the class struggle. An example of such analysis can be found in Britain’s Economic Problems – Too Few Producers by Robert Bacon and and Walter Eltis. [2] They take up two important issues facing socialists today: the cuts and de-industrialisation. Britain’s economic problems, they argue, are caused by the underlying structure of the economy. To reverse the decline of the British economy it is not sufficient to tinker with the money supply, interest rates, taxes and incomes policies. It is necessary to change the basic structure of the economy. Too much of Britain’s resources have been directed into the unproductive sector of the economy so that the productive sector, which produces the profits, has become steadily weaker. Governments must therefore make cuts in the unproductive sector in order to release resources for investment in the productive sector.

Crucial to the ideological content of this analysis is their definition of productive labour. They divide the output of goods and services into marketed and non-marketed output. Anything marketed, or sold on the domestic or international market, is produced by productive labour. Consequently all private industry, nationalised industry, financial and commercial services, and consumer services are productive. The civil service, education, health and social services are non-marketed, therefore unproductive. It is this unproductive sector in which cuts must must be made in order to restore a strong national economy and halt de-industrialisation.

Unfortunately, the traditional Marxist view of unproductive labour [3] cannot provide a counter argument on theoretical grounds since it comes essentially to a very similar view of unproductive labour. At the same time there has been sufficient debate among Marxists to suggest that there may be contradictions in Marx’s theory. For example, Kidron [4] put forward the notion of a waste sector which is unproductive of surplus value. This sector included arms, luxuries, police, and civil servants. He also points out that Marx seemed to have two definitions of productive labour. In order for labour to be productive it had to be employed by capital and it had to contribute to the growth of capital. Kidron argues that in Marx’s day these two definitions led to the same result but that today they lead to divergent results. Whilst luxury workers are employed by capital, it could be argued that their activity doesn’t lead to the growth of capital.

We follow Kidron’s view that productive labour is employed by capital and must augment the value of capital. But we take a different approach to arrive at the same conclusions. As will become clearer towards the end of the article, we take the view that there are two theories of unproductive labour in capitalist society; a bourgeois and scientific one. A Marxist approach should adopt an historical materialist method which will reveal both theories. It is method [5] rather than “what Marx said” that is important here. We begin by setting out the elements of Marx’s theory. Then we consider how these elements should be put together in a theory. Finally, having reformulated Marx’s position we will come back to consider the implications for socialist politics on cuts and deindustrialisation.

Marx’ theory

There is no one place where Marx explains his theory of unproductive labour. The most complete exposition is to be found in Part I of his Theories of Surplus Value. However, references are made to unproductive labour in other contexts that are important for a complete view of Marx’s theory. [6] For Marx:

“Productive labour, in its meaning for capitalist production, is wage labour which exchanged against the variable part of capital, reproduces not only that part of capital, but in addition produces surplus value for the capitalist. It is only thereby that a commodity or money is produced as capital. Only that wage-labour is productive which produces capital.” [7]

Productive labour must be employed by capital and produce commodities which can be sold on the market, thereby realising surplus value for the capitalist. Productive labour is responsible for the expansion of capital.

If the services provided by labour are bought directly by the capitalist for his own consumption, that is, exchanged against revenue, then that labour is unproductive. An example of this is domestic service. Labour employed in the circulation sphere is also considered to be unproductive. Such labour is engaged only in the buying and selling of commodities which adds no value. It may be necessary for the smooth functioning of the capitalist economy, but it is not productive.

Labour outside the mode of production, for example artisans, peasants and domestic labour, is unproductive. This is because it is not employed by capital, even though its products may be sold to capital. [8]

Marx expanded his definition of productive labour to include not just those who produce material goods, but also those who provide a service, such as entertainment, as long as they are employed by capital. In addition, labour did not have to be directly involved in the production of a commodity to be productive. Because the labour process has a co-operative character, all workers who aid in the production of a commodity, such as maintenance and repairs, are productive workers.

There are also a number of different types of activities that do not fall neatly into either category. These include transport, storage, retailing and supervision.

Transport workers are productive because they are part of the process of collectively producing commodities and are employed by capital as wage labourers. Their labour may be seen as aiding the realisation of the value of the commodity by bringing it to a location where it can be sold. [9]

Storage activities have a dual nature. Some of the work involved in storage affects the value of the commodity by preventing its deterioration. However, under capitalism the need for storage also arises because of speculation on the part of capitalists. This labour is unproductive.

Retail workers can also be both productive and unproductive, depending on the specific concrete labour they perform. Those engaged in bringing the goods to the counters are productive since their work is necessary for the realisation of surplus value. But the labour that operates the cash register, for example, is unproductive since it is necessary only because the products take the commodity form.

Supervisory labour is another special category. It assumes the form of a combined social process. “All labour in which many individuals co-operate necessarily requires a commanding will to co-ordinate and unify the process ... This is a productive job, which must be performed in every combined mode of production.” [10] However, another aspect of supervisory labour is unproductive.

“one part of the labour of superintendence merely arises from the antagonistic contradiction between capital and labour, from the antagonistic character of capitalist production, and belongs to the incidental expenses of production in the same way as nine-tenths of the ‘labour’ occasioned by the circulation process.” [11]

When Marx analyses these special categories it is clear that an historical element is being introduced. According to Gough, Marx makes use of two sorts of criterion when dealing with the special categories. When defining unproductive labour within supervisory activities, “Here the criterion of unproductive labour is extended to include labour specific to all class societies based on exploitation.” [12] For other categories such as storage, “The critical distinction is between those activities necessary for production in general and those activities peculiar to commodity production.” [13]

But this historical dimension is not integrated into the general theory so that contradictions may arise. For example, luxury production takes place within the circuit of industrial capital and is traditionally seen as productive. However luxury production implies a class society where the surplus is controlled by a ruling class and would be considered unproductive if the historical criterion were used.

Because we recognise that there are contradictions in Marx’s theory, we see that the “what Marx really said” debate is not very useful. Our approach is to incorporate the different elements of Marx’s theory into a reformulation which is more than a sum of the parts.

Reformulating Marx

Most Marxists are agreed that productive labour produces surplus value, whereas unproductive labour consumes surplus value as revenue. However there is always a danger of circular argument. If we ask how do we know where surplus value comes from then we say it comes from productive labour.

But what is productive labour? We would then be going around in a circle if we said that it is that labour which produces surplus value.

To avoid circularity we need to make one of these two concepts, productive labour and surplus value, exogeneous, that is defined first in relation to something else. Our approach is first to define productive labour. Only when this is done do we then know the origins of surplus value. This surplus value may then be distributed in such a way that its origins are hidden. By approaching from this direction productive labour becomes essential for a Marxist analysis because without it we cannot know the origins of surplus value. We could of course approach from the opposite direction first defining surplus value. This would then enable us to see which workers are productive. But here we would know the origins of surplus value without the concept of productive labour. Hence productive labour would not be essential for our analysis.

We begin then with productive labour and only after that surplus value and its transformation. This order is chosen because productive labour is a more general abstract concept. It is a more general concept in that it applies to all class societies with the proviso that under capitalism it takes a particular form which hides its true nature.

(1) Production in general All periods of production have certain features in common, certain common categories. “Production in general is an abstraction but a rational abstraction in so far as it really brings out and fixes the common element” [14] The most modern period and the most ancient will have certain categories in common. Production without them is inconceivable. No production is possible without an instrument of production even if this instrument is a hand. Three elements must appear from the earliest to the most advanced societies. These are labour power, means of subsistence and means of production. Each element enters into the production of other elements.

The consumption of any of these elements is at the same time the production of some other elements. Consumption of labour power implies the production of means of subsistence and of means of production. Consumption of means of subsistence implies the reproduction of labour power etc.

Material production in all these societies need not be thought of simply as the production of physical use values but may include services, like transportation, storage and distribution, all necessary for the production process as a whole. The labour involved in the process is concrete labour producing use values, labour transforming nature.

Fixing these general elements common to all societies does not necessarily mean that we can analyse a particular mode of production. For example we cannot analyse capitalism on the basis of concrete labour and use values. But we would also find it difficult to understand abstract labour and the commodity if we didn’t already have some notions of concrete labour and use value. These abstract elements are necessary but not sufficient to analyse particular modes of production.

(2) Production in all Class Societies Production in general enables us to see the effect of class society on the process of production. The concepts of class, exploitation and unproductive labour may now be introduced.

As a certain group or class takes control of the productive process then exploitation and unproductive activities develop. The nature of the productive process is changed. The dominant class takes no part in the production process except as overseer of its own class interests. This may mean combining the function of coordination with that of discipline and exploitation (as Marx argued in the case of supervisory labour).

Class society implies a new category of production, that of luxuries. In addition the maintenance of exploitative class relations implies the production of armaments, prisons, courts and armed forces. The production of all these elements does not enter into the reproduction of the basic system. Hence the consumption of these elements is unproductive.

Luxury production is not a broad enough category to encompass this unproductive consumption. Kidron suggested that it should be called a waste sector. [15] This seems to imply some sort of moral judgement although Kidron himself probably would not intend this. A better title for this category is non-basics implying no moral statement. [16] Kidron’s waste sector and Sraffa’s non-basic sector seem to be the same. Services can also be categorised as basics or non-basics.

All class societies are characterised both by the exploitation of labour power and the production of non-basics whose consumption is unproductive. The distinction between the production of basics and non-basics is not a physical but a social distinction arising from its organisation as class society.

These categories alone are not however sufficient to analyse the capitalist mode of production. They are necessary but not sufficient. Under capitalism the production of basics and non-basics takes a commodity form so that not only exploitation but also unproductive labour is hidden.

(3) Production under Capitalism (i) Wage Labour and Capital in General. Production under the capitalist mode of production takes the form of the production of value and surplus value. Labour power becomes a commodity as wage labour. Wage labour is employed by capital in general. At this stage we are using the category capital in general abstracting from private and state capital. Capital in general is capital employing wage labour in the process of production, that is the production of basics and nonbasics. Therefore we have also abstracted from circulation, commercial and financial capital and landed property.

Employment as wage labour by capital in general is a necessary (but not sufficient) condition for productive labour. It sets the boundary within which surplus value may be produced. At an early stage luxuries may be produced by self employed craftsmen, farming carried on by the peasantry and education and socialisation by the family. All these non wage-labour activities are outside employment by capital in general and are unproductive regardless of whether they are basic activities.

Under capitalism, then, two conditions are jointly sufficient to define productive labour. Each of these conditions on their own are necessary but not sufficient.

The first condition is labour collectively involved in the production of basics (goods and services). This condition is derived at a higher level of abstraction from class society in general. The second condition specific to the capitalist mode of production is wage labour employed by capital in general. These enable us to define productive labour and hence to see the origins of surplus value. We can also define unproductive labour as far as the process of production is concerned.

The production of labour power needs a special mention because it has been the subject of controversy. The production of labour power involves the production of means of subsistence and the reproduction of health, culture, education and training. All these activities are basic activities and in so far as they are carried on by wage labour rather than by the family are productive of surplus value.

(ii) From production to circulation and exchange. At this stage we have only been dealing with the sphere of production. We have abstracted from the sphere of exchange and the circulation of commodities. Within the sphere of production we have defined two conditions for the production of surplus value (we will loosely call this “profit making”). Hence we are making no distinction yet between private or state employment.

We now need to consider how this surplus value is transformed into profits, rent, interest and taxes. [17] As we do this we bring in the sphere of exchange allowing a whole range of private, state, industrial, financial and merchant capital. Surplus value produced by wage labour in the basic industries may be thought of as entering a common fund which is the collective property of the capitalist class. This is then distributed amongst the various capitals through the exchange process.

We will call this distribution of surplus “Profit-taking”. To take a profit it is necessary that something, indeed anything, is sold. If any goods or services are given away free then no profit is taken. All private capitals are in business to take a profit, whereas state capital, it is usually assumed, may take a profit or could choose to give its output away free or at an artificially low price.

An arms manufacturer producing tanks does not produce surplus value but takes a share of total profits. This profit-taking is not profit-making since non-basic armaments are unproductive. At first this idea might seem a little strange but in a different context Marxists have theorised (and are in agreement over) the same process. Landowners for example take a share of surplus value as rent. They are “profit-takers” who do not contribute to the production of surplus value.

Now we introduce another group of activities which have not been considered so far. These activities can be called the sphere of circulation. They are activities which arise specifically from the capitalist mode of production. Marx uses this notion when considering “pure” merchants capital. [18] Essentially we are concerned with buying and selling in various forms. Examples might include dealing with the commodity markets, on the foreign exchange markets, stockbroking and speculation. In addition we should include the sale of access to land (rent) and the sale of access to finance (interest).

Profit-taking makes no distinction between any of these activities. If something can be sold a profit can be taken. As profittakers the stock-broking firm, the arms manufacturer and the car manufacturer are indistinguishable. All may be operating a profitable business. On this basis they would all claim to be making a profit. Such a claim is deceptive.

There remains the case of state education and health to be dealt with. But this presents no problem within the framework we have set down. The education of workers is a basic service concerned with the reproduction of labour power. Teachers are wage workers employed by capital in general and therefore produce surplus value. However, if education is organised by the state, education may be sold to workers or “given away free”. In the latter case the state does not take a profit. The state covers the cost of education so in effect collectively purchasing it. Surplus value produced by teachers enters the common fund as workers sell their labour power to employers. This surplus value appears in the profits of other employers.

Private education for the rich is different. As a non-basic service, even though carried on by wage labour, these teachers are unproductive. They do not make a profit. But because they are organised as a private business selling education, they are of course profit takers showing a profitable balance sheet. An exact parallel exists with private medicine.

Thus we are led to conclusions which are directly opposite to Tory mythology. The Tories say the National Health is unproductive but private medicine is productive, we say it is the other way round.

Two theories of unproductive labour

By adopting a scientific method we can now begin to see that the way the economy appears, represents a form of false consciousness. This false consciousness is the basis for a bourgeois theory of unproductive labour. We can now consider the theories of unproductive labour from a class viewpoint.

(i) The bourgeois theory of profit taking. The secret of profit making remains hidden and is replaced by a theory of profit-taking. This is a theory of what is productive for the individual capitalist. It can be seen from merely observing the real world. Looking around this theory asks which activities show a profit. The obvious answer is any business that sells something. The current jargon for this is anyone who produces “marketable output”. Hence the arms manufacturer and Rolls-Royce producer are “productive” for the individual capitalist whereas state education is “unproductive” for the individual capitalist.

This of course is claimed to be a theory of profit making because the bourgeois economist considers profit taking to be the same as profit making. This is because each individual business is considered to be producing its own profit by charging a mark-up price.

Ideologically the theory of profit-taking shows a bias towards private capital. All private capitals take a profit whereas only some state activity takes a profit. Hence “productive” activity is associated with private capital whereas “unproductive” activity is associated with the State.

(ii) The working class theory of profit making. In contrast the theory of profit making shows what is productive for capital as a whole. It locates the origins of profits prior to the distribution of this profit. By using Marx’s method the secret of profit making can be penetrated.

This can be claimed to be a working class theory because it arises independently of theory through the class struggle. The struggle of the Lucas Aerospace workers has led them to formulate a view on what activities are productive. The struggles of teachers and hospital workers contains a notion that their work is in some way productive. These struggles challenge in practice the bourgeois view of what is productive for the individual capitalist. Our reformulation of the traditional marxist view is both scientific (adopting Marx’s method) and consistent with the struggles of the working class.

(iii) Marx and Kidron. We can contrast the theories of profittaking and profit-making by the following analogy. Bank robbing is unproductive. Yet in a certain sense it is productive. It appears productive from the viewpoint of the individual bank robber. But to take this viewpoint as the basis for claiming that bank robbing is “productive” would be very misleading. Since bank robbing creates no new loot, what appears as “productive” for the individual robber cannot be productive for the robbers as a whole. The notion of productive for the robbers as a whole is the crucial insight, whereas productive for the individual robber is robber ideology, the justification for profit-taking.

Now we have come back to our earlier note on Kidron’s observation that Marx seemed to have two definitions of productive labour. These were labour employed by the individual capitalist and labour augmenting capital (as a whole). If this is so then these definitions arise from the class struggle. This being the case then one of these two Marxist definitions, should properly be entitled “Marx’s description of how the capitalist class defines unproductive labour”. It must in fact correspond to the bourgeois view.

(iv) The traditional Marxist view. Let us now reconsider what we called the traditional Marxist view. This is the position which seems to have won the recent debates against various revisionists. We will do this by comparing a bourgeois view as put forward by the economists Bacon and Eltis with two versions derived from Marx.

Activity of workers in:

Bourgeois View

Traditional Marxist

Marxist Reformulation

Land Ownership








Baked Beans




Public Schools




State Education








Council Dustmen




Rolls Royces




British Steel




The traditional Marxist view is very similar in its results to the bourgeois view. The only difference in the examples we have presented lies in land and finance. But even here bourgeois economists like Ricardo and Keynes were quite capable of seeing both as unproductive. The key differences between the bourgeois view (of the Bacon and Eltis variety) and the traditional Marxist view is the clear distinction between production and circulation. However within the sphere of production the bourgeois view and the traditional Marxist view are quite identical. This is not surprising since they both consider what is “productive” for the individual capitalist. The bourgeois view and the traditional Marxist viewpoint are not the viewpoints of different classes but are variations in the viewpoint of the same class, the bourgeoisie.

The implications: their waste or ours?

It would be useful to conclude by spelling out the implications for political practice. Theory is academic unless it has relevance for the struggles of the working class. How might the analysis which we have set out be of use to the trade union militants and socialists? How should we approach the issue of cuts and deindustrialisation?

The capitalist class use their theory of profit taking in the struggle against workers. Economists like Bacon and Eltis put forward the argument that Britain’s decline is related to “unproductive” activity like education and health taking too great a share of national resources. This is then taken up by politicians to suggest that there is “too much waste which we can no longer afford”. The Tories (or Labour) can justify cutting “too much waste which we can no longer afford”. The Tories (or Labour) can justify cutting government expenditure on health and education in order to restore prosperity in the national interest.

The traditional Marxist view cannot really challenge ruling class ideology since it arrives at a very similar conclusions as to what is unproductive labour. When the state says that the health service is unproductive the traditional Marxist theory agrees. We are left with a moral defence but without a critique of bourgeois theory to underpin it.

Our formulation would provide the following lines of argument. First, the bourgeois theory of unproductive labour is mistaken. Bourgeois economists have not located the origin of growth. They have simply shown who is taking profits, not who is making them. Consequently, they have not been able to show what activities are unproductive. The education and health services are not waste but are part of the profit producing sector of the economy. By cutting back on education and health, the government is adversely affecting the reproduction of labour power which will reduce the amount of surplus value produced. The real unproductive activities such as arms, police, luxuries, public school and financial and speculative activity are not being cut at all. This is not surprising because capitalist governments have a vested interest in defending and extending this waste. The present Tory government illustrates this point. Their claim to be cutting waste is entirely bogus. In practice they are cutting productive services and reinforcing the power of the bureaucratic, military and the financial sectors of the economy.

Finally although beyond the scope of this article our reformulation could help us at least in part to develop an historical materialist explanation of deindustrialisation. It has been noted that Britain’s relative decline as a capitalist economy dates back to 1870 [19]. From this period the expansion of the British Empire led to the expansion of the financial and military sectors. [20] This could be considered as the costs of imperialism on the domestic economy. These costs would have been more than outweighed by the profits of the Empire. The decline of the British Empire and the loss of profits would leave the domestic economy with the legacy of imperialism, an overexpanded unproductive sector. This in turn would affect the ability of the British economy to compete on world markets. Whilst this line of argument would need further examination it might at least indicate that the theory of unproductive labour has relevance for socialists today.


1. See Gough and Harrison,“Unproductive Labour and Housework”, CSE Bulletin, Feb 1975; Bullock,“Defining Productive Labour for Capital”, CSE Bulletin, Autumn 1974. Fine and Harris, Re-reading Capital, give a summary of the debates. See also the debate between Kidron and Harman in International Socialism (old series), nos. 76 and 100.

2. Bacon and Eltis, Britain’s Economic Problems – Too Few Producers. For a critique see Gillies, ‘Does the State Produce Luxuries?’ British Review of Economic Issues, May 1978.

3. Fine and Harris in Rereading Capital.

4. Kidron, Capitalism and Theory.

5. See Fine, Rereading Capital and Marx’s Grundrisse on the question of methodology.

6. Gough,“Marx’s Theory of Productive Labour”, NLR 76, gives a comprehensive summary of Marx’s writings.

7. Capital, Vol I, p.509.

8. Theories of Surplus Value, Vol I, p.407.

9. Ibid. vol. I, p. 402.

10. Capital, Vol III, p. 383.

11. Theories of Surplus Value, vol 3, p.505.

12. Gough, NLR 76, p.58.

13. Ibid., p 57.

14. Marx, Grundrisse, p. 85.

15. See again his Capitalism and Theory.

16. As Sraffa puts it in his Production of Commodities by Means of Commodities.

17. See Colin Barker, International Socialism 2:1.

18. Capital, Vol III, p. 288.

19. This has been noted by a number of writers, for example Glyn and Sutcliffe in British Capitalism, Workers and the Profits Squeeze.

20. Mary Kaldor, unpublished paper on military industries.

Sidst opdateret 20.8.2008