Karl Marx’s class struggle and Ceylon Tea: A new theory in the offing?

By Hemal de Silva

This is in reference to the article titled ‘Karl Marx’s class struggle and Ceylon tea’ published in the Daily FT on 30 April.

Karl Marx’s research and theories were based on the existing conditions in England during industrialisation. During this period, all workers or employees were exploited to produce goods at the lowest cost to maximise profits for the capitalists. The labour available in abundance was dispensable. The exploitation was tolerated by the workers in order to survive.

The question arises as to who did whom the bigger favour? This query is similar to the one concerning the egg and the chick and unanswerable? Marx who wrote Das Kapital had neither the capital nor make capital or wealth from his labour. The fact that Marx was a truly humane human being has to be recognised. He was a Sociologist but, I doubt he understood the inherent nature of human beings, the greed for amassing wealth which one has to leave behind one day.

It is unlikely Marx was aware of the beginning of the SL Tea Plantation industry (TPI) but, his theories reflected the situation that existed in this industry for a long time after his death. The TPI prospered but, today the small holders are producing app. 70% of the production and help the industry to produce the ‘Ceylon Tea’ still in demand. This important group of entrepreneurs earn their livelihood by employing their labour and productivity to increase their wealth as well as increase the wealth of the manufacturing facilities. There is no conflict or struggle as both are dependent on each other to increase their individual wealth. It is a case of ‘You help me and I will help you’ and appears to be mutually beneficial.

On the RPCs, the situation is different as the workers are paid a wage for their out-put either on a contract basis or for the number of hours worked as well as other incentives to improve productivity. The capital and labour continue to remain in this sector but, with a big difference in their utilisation. During Marx’s period the workers who provided the labour were dispensable but, today in the RPCs, they are indispensable. Was the signing of the new agreement to increase the wages by 20% within a day, due to this fact? If the discussions had dragged on for months with disruptions of work on the plantations, what would the consequences have been at a time when Tea is fetching good or high prices?

Are the workers of RPCs exploiting the owners of the capital now? As the writer points out, if the cost of production is higher than the selling price of the produce, naturally there will be a loss unless, to quote, “waiting for some disaster to happen elsewhere such as droughts, political unrest in African tea producing countries,” in order to obtain high prices. Without high prices and profits to quote, “the estates are reluctantly compelled to curtail tea replanting work, thus making further cost increases due to static tea production.” Continuing, “The estate sector would get into a vicious cycle of low productivity and relatively low prices leading to losses getting accumulated unless proper strategies are discussed and agreed by all stake holders”. What is the future of the RPCs and how much longer can the RPCs continue to function unless they also export ‘Ceylon Tea’ and or value added teas?

According to http://www.sundaytimes.lk/130428/business-times/highest-growth-in-profits-last-year-from-plantations-sector-in-2012-41866.html, NDB Stockbrokers have reported that to quote, “plantations such as Maskeliya, Talawakelle (TPL)and Bogawanthalawa which have high exposure to high grown tea witnessed the highest growth due to record high auction prices.” During the FY 2011 and 2011/12, these three RPCs reported losses of Rs. 370, 58 and 367 m, respectively. During the following year TPL has reported a record profit after tax of Rs. 214 m, the highest within the last 10 years.

TPL also states that the estate crop during this period was the same as in the previous year and the crop from bought leaf was much higher. The same information from the other two RPCs are not available but they too have either reported or expect high profits after tax. During these two years the wage increase of 27% given in 2011 was in force. But, in the first year the RPCs reported high losses and during the second year have reported high profits, mainly due to high prices.

What were the average yields of these three RPCs in the two years referred to and imagine the pat if the yields had been higher by 25%? To quote: “It can be seen that, within the overall tea plantation working environment, the determination of daily wage and the number of working hours per day makes no surplus money for the estate as Karl Marks claimed in a capitalist system.” If so, how can the losses in one year and the record high profits in the following year reported by the three RPCs be explained?

It is a known fact that ‘there is a strong negative correlation between productivity and cost of production in the tea sector’ (Plantation sector statistical pocket book, MPI). But, the high profits achieved by the three RPCs have been purely due to high prices and not due to a low cop or high yield. Prices will depend on the supply and demand for the commodity. Rising costs, adverse climatic conditions are almost beyond the control of the RPCs. However, what the RPCs or the Government, the ultimate owner of the plantations have under their control is the option and ability to increase the yield of the plantations which has been neglected during the past many years. Reducing the cop will not increase the yield but, as the yield increases the cop will get reduced.

Increasing the yield and the demand for the commodity or its value added products is the way to make better and higher profits.

I am obliged to Jayampathy Molligoda for writing the original article. If Karl Marx was alive today, what would his thoughts be on how the Labour and the Capital in the SL TPI has developed or progressed during the last almost 150 years? Will he be amused, scratch his head or himself or wonder tugging his beard? How are his theories on labour and capital to be interpreted as reflected or employed in this industry that is still very important to SL? Can a more plausible one be arrived at? Response from experts will be much appreciated.

(The writer can be reached via [email protected].)