Relationship Between Management Control, and the Production of Surplus Value - Coursework Example

3.2 Review of the Relationship Between Management Control, Organization of the Labour Process, and the Production of Surplus Value An economy can be described by the relationships between workers and employers that exist within corporations. Managerial activities consist of a wide variety of tasks, including staffing, directing, planning, and organizing the labour force. Management control refers to the systematic effort that a business manager will take in order to compare performance with predefined standards, thus ensuring that an organization is effective and efficient in achieving its corporate goals (Mockler 1970, p.14-17). Management control is essential to the organization of the labour process, particularly in processes of production. Employers in capitalist societies also develop control over other aspects of labour organization, such as education and expectations, which aids in maintaining the balance of power in the employee-management relationship. In each economy, whether capitalist or of other organizational structure, the relationship between management and employees affects the manner in which surplus value, or the total profit, of an enterprise is distributed. All corporations exhibit some form of profit, and the manner in which that profit is distributed or remains undistributed is characteristic of the economic organization. Marx stated that profit is not realized from any surplus product created, but it is instead realized from the surplus of work done by workers inside the workplace that is above and beyond the salary of those workers (Yates 2003, p.175). This means that, according to Marx, the human labour component is the only source of new economic value. The product that is created does not actually generate profit, but merely allows the surplus work that has already been provided to be converted into a useful monetary form. As such, in a capitalist society where wage-labour is the primary source of profit, if an employee were to produce an amount only equivalent to that employee’s wages, the employee would be considered unproductive, even though the work done by the employee was enough to sustain the employee (Marx 1865, Ch.4-1). In order for surplus value to be created, it is the role of the management to ensure that employees of a corporation produce more than their wages. If Marx’s theory is assumed to be correct, it is intuitive that the efficiency of management control and organization of labour directly relate to the production of surplus value in an economy. A number of factors can complicate the production of surplus value, which is why an individual corporation’s management control method and organization of labour affect the surplus value produced. For instance, the surplus value may be affected by unsold products, or products whose intrinsic human labour value is never monetarily realized. Price inflation and backwardation, in which some good lose value over a period of time may also affect the amount of surplus value that is achieved, and are concerns that must be taken into account when making many managerial decisions (Fekete 2008, p. 3). As such, calculating the real wage versus the wage that is used in generating surplus value is often difficult to calculate, and many large firms employ accounting companies or have dedicated departments that analyze these trends in order to increase corporate efficiency. The twentieth century was characterized by a revolution in the processes of production. Many jobs that were formerly completed by highly skilled labour from start to finish, with limited efficiency and a small rate surplus value generation, changed into assembly line processes. The first large scale implementation of the assembly line was seen in 1901 automobile factories, where production efficiency was more than quadrupled (“Invention of the Assembly Line” 2007). In contemporary industry, many new automated systems have reduced or eliminated the new for skilled labour in many occupations, lowering education requirements. Because the labour is less skilled, and producing equal or more product at lower wages that reflect their educational level, the labour to surplus value ratio rises (Yates 2003, p.178). When deciding the organization of a corporation, management must taken into account the education level, which often directly relates to the wage level, of the necessary employees. The growth in both education level and wage level of employees over the term of employment is also important for long-term organization of labour. Part of organizing labour in many corporations is economizing the amount of skilled labour used, in order to minimize wage costs and ensure that the employer remains the dominant power in the employee-employer relationship. Economists agree that private business has the goal of minimizing wages and maximizing profits, which is most dramatically demonstrated in the extremely low wages found in third-world sweatshops, allowing the corporation to realize high profits on the human labour that is above the wage cost of the employee (Yates 2003, p.91). Additionally, capitalist economies always display a fundamental difference in the level of power of those who work and those who control the work (Yates 2003, p.30). The balance of power between the employer and the employee is more easily maintained when workers are less skilled, and more dependent on their employment. Skilled workers not only command higher wages, but these workers often have a variety of other costs. For instance, skilled workers may stay with a company for a shorter period of time, require expensive relocation fees, have expensive vacation and bonus requirements, and need expensive training that is often paid by the corporation (Knights and Willmott 1985, p.2). Economization of skilled labour is imperative to creating high surplus values, and is a task that is normally undertaken by management of a corporation. Management control is ultimately responsible for maintaining the balance within a corporation, and ensuring that corporate resources are used in the most effective and efficient manner possible. The most significant corporate resource is human labour, and modern management control is generally accepted to be concerned with the manner in which management controls the behavior of people within an organization in order to encourage the accomplishment of corporate goals. The goals of a corporation may be set by the director or CEO, by a committee within the organization, or even imposed on the organization by some external authority, but no matter whose goals the organization follows, the management control methods remain goal oriented (Flamholtz 1996, p.2). This is often accomplished by following a predetermined plan that may be based on historical performance of a corporation, allowing observation of deviation from corporate standards to be easily recognized and remedial action to be taken. Management control is not an exact science, but instead it is a dynamic process that focuses on eliciting the highest probabilistic ratio of a desirable goal-oriented behavior from as many of the labour providing parties, or employees, as possible. It is important to note that, particularly in large organizations, the goals of the corporation may deviate from the goals of the individual, making ensuring consistency of goals throughout an organization one aim of management control (Flamholtz 1996, p.3). This can often be accomplished by establishing subgroups within an organization, in which an individual has a personal connection and greater authority than that employee may have in the corporation as a whole. Subgroups often are used as a tool in management control to influence individual goals and align those goals with corporate goals, which is often referred to as a method of increasing goal congruence (Flamholtz 1996, p.4). When management control is successful in creating a virtually ubiquitous goal-oriented environment efficiency within the organization’s labour force causes surplus values to rise. The Marxist view assumes that the surplus value is entirely generated by human labour surplus, however some other economist disagree with the assessment that only excess human labour equates to profit. The economist Braverman argued in the mid twentieth century that inserting social action into the labour process not only providing intangible benefits, such as higher worker satisfaction in a less routine environment, but also increases efficiency (Knights and Willmott 1985, p.5). Braverman goes on to argue that the human conscious element has a value that can be transferred into monetary value, linking the practical experience of the employee in an organization within a capitalist economy with the creation of surplus value (Knights and Willmott 1985, p.5). This has important ramifications to overall corporate labour organization, because it suggests that in order to achieve maximum efficiency and the highest profits, a certain amount of social interaction, creativity, and ingenuity must be allowed in the workplace, because labour time alone is not enough to create a product with maximum value. Unfortunately, Braverman’s untimely death made his contribution to the economics of management control less significant because he was not able to respond to the comments of the many critics of his work (Knights and Willmott 1985, p.3). Despite this shortcoming, the ideas of Braverman serve as a sharp contrast to the influential ideas of orthodox Marxism, and they have strongly influenced political policies that govern how an organization may organize labour in western societies. In capitalist economies, the employer usually holds power over the employee, and reaps the rewards of the surplus value, which is largely distributed to owners or shareholders in the corporation. Other economies suggest distribution of surplus value to the providers of labour. In 1839, the French Economist Louis Blanc wrote L’Organisation du travail, or The Organization of Labour, a work that explored the possibility of a state-financed by worker-controlled economic system, that would allow for the distribution of the majority of surplus value to the individual workers. In such economies, the management control techniques are assumed to be implemented by the workers, and it is likewise assumed that workers, which profiting from their own labour, have goals that are naturally congruent with that of the organization. In such economies the organization of labour and management control techniques are diverse and differ from their capitalistic counterparts. An economy may be defined by the manner in which surplus value is distributed through the implementation of management control techniques and the organization of labour. Despite the differences between different types of economies, the goal of maximizing efficiency in order to increase the surplus value generated as a result of the production of goods or services is common to every type of economy. Management control and organization of labour manifest differently in each extreme, but are critical to the maximization of surplus value. References Yates, M. D. (2003). Naming the System: Inequality and work in the global economy. New York: Monthly Review Press. Flamholtz, Eric. (1996). Effective Management Control: Theory and practice. Norwell, Massachusetts: Springer Press. Robert J. Mockler. (1970). Readings in Management Control. New York: Appleton-Century-Crofts. Knights, David and Willmott, Hugh. (1985). The Short Overview of the Labour Process Perspective and History of the International Labour Process Conference. London: Chris Smith School of Management, Royal Holloway, University of London Press. Retrieved 9 September 2010 from Marx, Karl. (1865). Economic Works of Karl Marx 1861-1864: Theories of Surplus-Value [Volume IV of Capital]. Retrieved 9 September 2010 from Fekete, Antal. (2008). RED ALERT: GOLD BACKWARDATION!!! Retrieved 9 September 2010 from “Invention of the Assembly Line.” (2007) Idea Finder Homepage. Retrieved 9 September 2010 from "The Organization of Labour." (2010). Encyclopædia Britannica Online. Retrieved 9 September 2010 from . Read More