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The Health Care Industry in Advanced Capitalism

Leonard Rodberg and Gelvin Stevenson
Review of Radical Political Economics 1977 9: 104
DOI: 10.1177/048661347700900107

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 The Health Care Industry in
Advanced Capitalism
*
Leonard Rodberg and Gelvin Stevenson

ABSTRACT: This paper analyzes the nature of the health care industry and its
role within the capitalist system. By developing an understanding of this relation-
ship, we should be able to understand more fully the internal dynamics of the
health care system and to develop mutually supportive movements for change
within and outside it. The form and dynamics of the health care system are
grounded in class struggle. The transformation of health care into a commodity,
and the production of surplus value in the health care industry, are central fea-
tures of contemporary health care organization. The health care industry
performs four interrelated economic functions: accumulation, provision of
investment opportunities, absorption of surplus labor, and maintenance of the
labor force. It also has important ideological functions of systemic legitimation,
social control, and reproduction of the capitalist class structure.

Introduction capital&dquo; maintenance; and ideological functions

The health care industry has become one of
the most significant sectors of modern capital-
ism. Yet little has been written that clearly locates
the health care industry within a Marxian frame-
work. This paper is a step in the development of
that analysis. It is hoped and suspected that with
such an analysis we should be better able to de-
velop mutually supportive movements for
change both within and outside the health care
system.
We begin with a focus on the service in-
dustry as a whole and discuss the commodifica-
tion of services and the place and role of surplus
value production and realization. With this back-
ground we turn to the functions of the health care
industry; i.e. accumulation; investment oppor-
(systemic legitimation, social control and repro-
duction of the capitalist mode of production, and
reproduction of the capitalist class structure).
Services as Commodities
Our investigation of the economic functions
of the health care industry in U.S. capitalism will
focus on the production of health care as a capit-
alist commodity, for this is the general economic
form taken by health care in advanced capitalism.
Like many other services, health care has become
a commodity, offered for a price in the market-
place. It is purchased by the working class (and
members of the capitalist class as well) very much
as are food, clothing, automobiles, and hair cuts,

tunities (surplus absorption and creation of new and for the same purposes, e.g. to satisfy needs,
markets); absorption of surplus labor; &dquo;human some of which are created artificially via the mass

*
The authors would like to thank Jim O’Connor, members of
the East Coast Health Discussion Group, where this work was
first presented, and the reviewers for their contributions
media and other means of propaganda. Capital-
ists can organize the production of surplus value
through the provision of health care and can real-

104

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ize high profits in this service industry. Thus
health workers can be as &dquo;productive&dquo; to capital
as auto or steel workers.
To workers, health and health care are vital
components of a decent standard of living; to a
subset of workers the health care industry is a
place to work. To capital, measures that preserve
the worker’s health and provide medical care in
time of illness are a cost of producing labor
power, but the health care industry also provides
capital with another arena for accumulation.
These different class relationships to the health
care industry determine, in part, the class con-
flicts that in turn determine the form, quantity,
and distribution of the production and consump-
tion of health and health care services under the
capitalist mode of production. The following dis-
cussion must then be seen in the context of class
struggle.
The essential economic process in capitalism
is the production and exchange of commodities.
As Marx showed, a commodity has four principal
characteristics: it has use value (though this use-
value need not be an authentic human need - it
could well be induced by advertising or ideolog-
ical conditioning, have no benefit and even be
detrimental, to the user); it is produced to be used
not by its producer, but by someone else; it is pro-
duced to be exchanged for an object of equivalent
value; and the individuals (or organizations) en-
gaged in commodity exchange are independent
of each other and meet (for economic purposes)
only in the marketplace where they exchange
their products.
Marx recognized that non-material activities
or services could be commodities:
If we take an example from outside the
sphere of production of material objects, a
schoolmaster is a productive labourer
when, in addition to belabouring the heads
of his scholars, he works like a horse to en-
rich the school proprietors. That the latter
has laid out his capital in a teaching factory,
instead of a sausage factory, does not alter
this relation.’
A &dquo;productive labourer&dquo; in capitalism is one who
produces surplus value for a capitalist.
Commodity production is then not restricted
to the manufacture of material goods.
Until quite recently, the production of serv-
ices did not form a significant part of capitalist
economic activity. Services were generally avail-
105
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able only in the form of personal services, in
which the individual offering them had particu-
lar personal qualifications (e.g., a servant, gard-
ener, doctor) and received payment directly from
the recipient of the service (not a wage from an
employer who then sold the worker’s services for
a profit).
The growing importance of the service sec-
tor today has been a direct result of the develop-
ment of capitalism including the urbanization
that it produced. Services which individuals or
families or other social groups formerly provided
for themselves now must be purchased from
others. Where one once could ride one’s own
horse or drive one’s own cart, the urban proletar-
iat came to depend upon such transportation
services as trolley systems, initially privately-
owned but now largely publicly-owned. Where
one once could construct a privy for one’s own
family, in the city one had to depend upon sewage
disposal services which, again, were initially pro-
vided by private entrepreneurs but soon became
the responsibility of government.
Today one can buy practically anything. A
scan of the Yellow Pages will show that every-
thing from diaper services to burial services is for
sale, from accent correction services to zoning
services, from sex therapy services to abortion re-
ferral services. To borrow a useful Gallicism, the
last century has witnessed the &dquo;commodifica-
tion&dquo; of practically everything. There has like-
wise been a steady shift from petty commodity
production to capitalist control of the delivery of
services.
The
capitalist purchases labor power in the
marketplace, paying to the worker a wage that re-
flects the cost of reproducing that labor power
and making it available on the marketplace. The
worker produces value that exceeds this ex-
change value, and the capitalist’s sole concern is
with this surplus value. He does not care what is
produced - a good or a service; the precise activ-
ity of the laborer is of no concern to him, only
that it produce surplus value which can be real-
ized (sold) in the marketplace. As Braverman ob-
serves,
The capitalist is indifferent to the particular
form of labor; he does not care, in the last
analysis, whether he hires workers to pro-
duce automobiles, wash them, repair them,
repaint them, fill them with gasoline and oil,
rent them by day, drive them for hire, park
 them, or convert them into scrap metal. His
concern is the difference between the price
he pays for an aggregate of labor and other
commodities, and the price he receives for
the commodities - whether goods or &dquo;serv-
ices&dquo; - produced or rendered.22
The labor power which he purchases can as easily
produce a service as a material object, provided
only that the service can be sold and a surplus
realized. The conditions of capitalist urban life
have increasingly made such sales possible, and
capitalists have exploited this market.
It has not been as easy for capitalists to gain
control of the service market as it was, in an earli-
er period, for them to capture the market for
material goods. The provision of services typ-
ically requires a smaller outlay of capital than the
production of goods. Sometimes no capital at all
is required (other than the clothes on one’s back),
or simply office space is required. This has meant
that individuals can relatively easily set them-
selves up as providers of services in a petty com-
modity mode, and it is more difficult for capital-
ists to gain control of the service market.
Furthermore, the direct nature of the interac-
tion between the provider of service and the
recipient has made it more difficult for the capit-
alist, in effect, to come between them. As a conse-
quence, the provision of services in the commod-
ity form is carried on, even today, by large
numbers of petty commodity producers, small
businessmen and shopkeepers. Capitalist control
has been achieved only when special circum-
stances, such as the need for expensive equip-
ment or special marketing situations, intervene.
In those circumstances, the customer seeks a
service, whether a rental car or health care, which
is available only in a setting which capital con-
trols. O’Connor has pointed out that capital in-
creasingly exercises control over the human
interaction involved in services by defining the
role which the service worker plays, whether she
&dquo;tries harder&dquo; for Avis or, as a nurse, must defer
to a licensed physician.3
Modes of Health Care Production
We can identify several different modes of
producing health care, including the communal
(pre-commodity), petty commodity (fee-for-
106
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service solo practitioner), capitalist commodity
(industrialized, high-technology, hospital-
oriented), and &dquo;social&dquo; (planned, use-value-
oriented). Each of these exists currently, ranging,
in the U.S., from the few practicing Native Amer-
ican medicine people to the large numbers of
acute-care hospitals. Because of the complex nat-
ure of American health care, combinations of
modes of production exist in any institution. The
inherent contradictions between the relations and
forces of production in each mode help drive the
rapid changes the system is now undergoing.
For example, the forces of production in
modern medicine increasingly require high cap-
ital expenditures and coordination among spec-
ialists. While this has moved many physicians
into salaried positions or group practices - mak-
ing their relations of production consistent with
the dominant forces of production - others con-
tinue their fee-for-service status in such institu-
tions as &dquo;individual practice association&dquo;-type
Health Maintenance Organizations (HMOs) and
&dquo;shared group facilities&dquo; (Medicaid Mills).
The development of these modes should be
seen historically. Throughout most of human
history, health care was an organic part of a com-
munal society. It was often indistinguishable
from religious or social activities, none of which
were exchanged (though gifts were often pre-
sented to traditional healers). As communal soci-
eties were conquered by feudal and eventually
capitalist societies, the production of health care
began to be taken out of the hands of these tradit-
ional healers and placed in the domain of doctors
and midwives, who engaged in health care for a
price - as part of a money-exchange. Simple or
petty commodity production was the first stage
in the commodification of health care. The phys-
ician was an independent producer selling the
product of his or her own labor. Later, as the loc-
us of health care moved from the doctor’s office
to the clinic or hospital, which hired doctors,
nurses, and aides, the commodification of health
care entered its next, and present, stage, in which
health care is produced in the capitalist form by
alienated wage labor.
Many physicians continue to struggle to hold
onto their petty-commodity mode of production
through the efforts of their guild, the American
Medical Association. However, this indepen-
dent-producer form of production and its implied
relations of production are coming increasingly
into conflict with the realities of the complete, up-to-date services and the latest med-
technology-
based, capital-intensive medicine that has devel- ical technology. This kind of competition leads
oped in this century. Today, less than one-half of to excessive construction, redundant purchases
the nation’s physicians are in solo private prac- of equipment and, overall, an increase, not a de-
tice ; the rest work in groups, hospitals, or hold crease, in costs.6
teaching, administrative, and research job.44 As noted above in the case of physicians,
Many earn part of their income from private several modes of production tend to coexist in the
practice and part from serving on the staff of a health care industry. Even in its most capital-
hospital. intensive, hospital-oriented form, health care is
Certain privileged social relations of pro- not an example of &dquo;pure&dquo; capitalist commodity
duction still survive in the face of the new forces production (if there is any such example!). Be-
of production. The guild privileges granted them cause the provision of health care is a direct, per-

by the state allow physicians to control entrance
into the profession, via their control over medical
schools, and to control certification of all workers
(including those of lesser skills and grades) per-
mitted to deliver medical care. So long as they are
able these controls, they are able to ex-
to exercise
tract a form of &dquo;economic rent&dquo; from the con-
sumer of their services. Clearly, physicians’ fees
in this country are far above the cost of produc-
ing and reproducing that form of labor power (in
1973, American physicians’ annual incomes
averaged $49,400 ).4 Just as the owners of land
can, through their monopoly of particular pieces
of turf, extract rent for its use, so physicians, pos-
sessors of a monopoly on the right to authorize
and deliver medical care, can charge a rent for this
service.5 However, since this monopoly is grant-
ed by the state, it can be altered, as well, by state
action, and there is growing pressure on the state
to hold down the growth in physicians’ fees and
the unnecessary provision of services.
That portion of the American health care in-
dustry which lies in the private sector operates
nearly entirely on the fee-for-service, piecework
principle, in which a charge is levied on the pat-
ient (or the patient’s insurance company) for each
service provided. Fees are set by doctors and hos-
pitals in accordance with their evaluation of their
costs and the value of their time (within the range
of &dquo;customary and reasonable&dquo; charges), with
little or no price competition. Physicians view it
as a violation of &dquo;professional ethics&dquo; to adver-
tise or engage in price-cutting, while insurers ac-
commodate themselves to whatever fees hos-
pitals choose to charge by passing on these costs
to the consumer in the form of higher insurance
rates. However, since hospitals have large fixed
We will not discuss further the human-sermce element m
costs which must be met from patients’ fees, they
health care This is treated m Gelmn Stevenson, &dquo;Social Rela-
tend to compete for physicians - who bring in the tions of Production and Consumption in the Human Service
patients - by attempting to provide the most Occupations,&dquo; Monthly Review, July-August 1976.
sonal service* in which the human, use-value ele-
ment can never be removed, because of the privi-
leged position which physicians retain, even
within the hospital, and because of the interest of
the state in regulating the provision of health
care, the exchange-value criterion, that is, profit-
ability, does not alone determine the organization
and distribution of health care. Social criteria,
such as the requirement that some form of health
care be available to most people, enter into de-
cisions such as where to build hospitals and how
to finance the provision of health care.
A convenient way to think of this is to view
it as the presence of a non-commodity form of
production which we will call &dquo;social produc-
tion,&dquo; in which use-value, not market, criteria de-
termine the character of the health care delivered.
The primary characteristics of such social pro-
duction are (1) it is planned by determining social
needs and organizing health care facilities to meet
those needs (however inadequately), and (2) there
is no private appropriation of the surplus prod-
uct. One example would be a consumer-con-
trolled health service such as that operated by the
Group Health Cooperative of Puget Sound, in
which users of the service hire the health workers
and determine the types of service they will re-
ceive. Another is the health care facilities estab-
lished by the state, which are planned through
political and bureaucratic processes and gen-
erally serve a variety of functions beyond that of
producing exchange value. Municipal public
hospitals, Armed Forces medical services, HEW-
financed neighborhood and rural health centers,
all provide health care on a planned basis to
selected populations with particular health care
*

107

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needs. Social production intrudes into private
facilities as well when, for instance, federal gov-
ernment planning and funding limit the char-
acter of their growth’ and guide the services they
can provide.
Surplus Value in the Health Care Industry
Surplus value is the difference between the
value produced by a worker and the wages the
worker receives which, in turn, reflect the value
of the subsistence goods and services needed to
reproduce the worker’s labor power. Whether
surplus value is produced has to do with the
organization of the production process, not the
legal form of the enterprise in which the workers
labor. The latter determines only how the surplus
they produce is appropriated. Thus, workers in
both profit and non-profit (including public)
health care institutions produce surplus.
For surplus value to be of interest to the cap-
italist, it must not only be produced, it must be
realized in the marketplace and privately ap-
propriated. Uncollectable bills for services rend-
ered (like unsold merchandise in the case of
material goods production) are of no value to a
hospital. So, in a clinic, hospital, or drug comp-
any, the billing and collecting operations are as
important as the production of the service.Third-
party payers - insurance companies, Blue
Cross (itself a creation of the American Hospital
Association), and the government - are crucial
the financial stability of the health care industry,
for they guarantee that bills will be paid for the
90% of the population covered by such plans. And
workers whose task is to realize surplus
value - by working in the billing departments of
hospitals or for insurance companies - are every
bit as important to capital as those who produce
the surplus value.
Any good or service that, in net, lowers the
cost of reproducing the labor force, or otherwise
increases the efficiency of the labor process, ex-
pands the amount of surplus value that can be
produced. Thus, immunizations can reduce sick
time and make production more orderly and ef-
ficient. If they are paid for by the employees, out
of their wages, the surplus or profits of the em-
ployer will be increased; if the employer pays,
but less than he receives in improved production
efficiency, his surplus will be increased.
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capitalism there is a continuing struggle
In
among capitalists over the appropriation of sur-
plus value. Those capitalists with investments in
the health care industry have their interests ad-
vanced through expansion of the flow of income
into health care by providing new treatments,
raising concerns in the media about new diseases,
raising fees, and so on. On the other hand, the
cost of health care, no matter in what form it is
paid (whether by the patient, indirectly by the
employer in health insurance benefits, or by the
state), is part of the cost of reproducing labor
power, just as are the costs of the food, housing,
and recreation consumed by the worker. The
capitalist class as a whole would like to reduce its
wage bill by cutting these costs as low as possible.
Either directly through wages, or indirectly
through fringe benefits and taxes, it pays for
health care services, and it would like to reduce
them to the minimum necessary to keep the work
force on the job and able to work. It is this contra-
diction which may create major changes in the
form and costs of medical care. In Britain it
played a role in the creation of the National
Health Service and may play a crucial role in the
U.S. over the next few years.
We now turn now to an examination of cer-
tain economic functions of the health care industry.
Accumulation
At the historic dawn of capitalist produc-
to tion, avarice, and desire to get rich
are the
ruling passions...Accumulate! Accumulate!
That is Moses and the Prophets.77
Thus did Karl Marx state the name of the capit-
alist game - accumulate. Expand, acquire, build.
The goal - indeed, because of the anarchy of the
market, the necessity - is to grow. In capitalism,
nearly everything is subordinated by capital to
the accumulation process. In this section we des-
cribe the accumulation process and focus on how
the health care industry aids this core engine of
capitalist development.
Subjectively, capitalists seek to accumulate
because, in their social and psychological world,
greater accumulated wealth is associated with
higher status and greater power. Objectively -
and ultimately determining - the very survival of
each individual capitalist depends on accumu-
lation. To stay in business, the capitalist must en-
108
gage in continuing cost-trimming and technolog-
ical innovation, to retain and, if possible, expand
his share of the market. To insure that goods and
services which are produced are then sold, at a
price sufficient to realize a profit, the capitalist
must engage in massive sales efforts, including
advertising campaigns and the creation of a con-
sumer culture.8
The provision of health care services to
workers and their families contributes to ac-
cumulation by their employers - to the extent
that these services actually improve the recipi-
ent’s capacity for work. However, accumulation
is also encouraged in the health care industry it-
self, often as a precondition for the provision of
health care services.
The health care industry is big business. Last
year Americans spent over $130 billion on health
care services, of which a minimum of $2.4 billion
was profit to private investors.9 Hospitals, alone,
employ 2.6 million workers, and over 4.5 million
workers find employment in some segment of the
industry. As health care facilities have grown and
multiplied, a complex of intermediate, profit-
making companies producing drugs, medical
equipment, and building supplies has benefited
from this growth. Hospitals, doctors’ offices and
pharmacies serve as retail outlets for the
products of these industries, selling to a pliant
patient population upon the order or prescription
of physicians who, in turn, are beseiged by a
never-ceasing sales pitch from these industries.
Because the products of these industries
have become an intrinsic part of health care
&dquo;services&dquo;, accumulation takes place through
any of the three branches of the health care indus-
try -&dquo;proprietary&dquo; (ie.e, profit-making), &dquo;volun-
tary&dquo; (i.e., private non-profit), and public. The
proprietary sector provides direct services (clin-
ics, hospitals, nursing homes, and chains of hos-
pitals and nursing homes); produces material
products (drug companies, medical supply and
equipment companies, construction firms); pro-
vides financial and management services (labor-
atories, insurance companies, and management
consultation); and small amounts of education
and research. This branch engages in the widest
range of health activities. The voluntary and pub-
lic branches do not produce material goods. They reasons.1°
are engaged exclusively in direct patient care, How does the goal of accumulation relate to
financing operations (e.g., Blue Cross and Blue the provision of better health care for more
Shield), and education and research. people? These are, ostensibly, both goals of the
Proprietary concerns have avoided activities health care sector. If there are suitable financing
109
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with limited income potential, while non-propri-
etary concerns - as befits their &dquo;place&dquo; in a capit-
alist economy - have avoided or been denied in-
volvement in highly-profitable, intermediate
supply activities. There are no non-profit drug
companies, for example, while, on the other hand,
there are currently no proprietary medical
schools. (Interestingly, the College of Physicians
and Surgeons of New York University and the
Bellevue Medical Schools were founded as pro-
prietary medical schools, but the advent of scien-
tific medicine early in this century pushed costs
so high as to make their tuitions prohibitive.
They switched to non-profit status and gained
large amounts of public wealth, first in the form
of private philanthropy, later in the form of pub-
lic financing.) The profit-making institutions
have, nevertheless, been able to carve out profit-
able niches in the generally non-profit terrain of
health care, both by producing the increasingly-
necessary material goods that modern health care
depends on, and by providing medical facilities
for those who are not served adequately by non-
profit or public facilities.
This does not mean, though, that accumula-
tion is limited to the explicitly profit-making sec-
tor. Non-profit health centers and hospitals, like
the proprietaries, exhibit an expansionistic drive.
Since they cannot pay out their net income as
dividends to individuals, they invest these sur-
plus revenues (which average about 3% of their
total income and amounted to $455 million in
1974) in additional equipment and buildings.
Greater size and more expensive equipment
makes them more attractive to physicians and
patients, bringing in still more revenue. At the
personal level, administrators of the larger
voluntary hospitals make higher salaries (ap-
proaching $100,000 per year for some) than do
their counterparts in smaller voluntary hospitals.
Even public hospitals, which are organized in the
same hierarchic manner as the private hospitals,
often exhibit the same expansionistic character-
istics, competing with the private sector for
physicians, patients, and prestige. The general
point is that the non-profit health care industry
behaves in much the same way as the profit-
making component, and for many of the same
mechanisms, they can sometimes be achieved continuous creation of new investment oppor-
simultaneously, as when a hospital opens a new tunities. As the U.S. economy has grown over the
outpatient clinic in an underserved area, antici- years, there have been growth industries - rail-
pating that Medicaid funds will pick up the cost. roads, then automobiles, then electronics -
This can serve people while also permitting ac- which have, successively, provided new oppor-
cumulation : the hospital’s &dquo;medical empire&dquo; tunities for investment and absorbed great
grows, construction firms and-or landlords amounts of surplus. As each new growth indus-
profit, supply companies benefit, financiers ac- try initially absorbed the surplus generated by its
cumulate bond underwriting fees, and bond- predecessor, it began to generate large amounts
holders gain interest payments. of its own surplus. New industries then came in-
On the other hand, these goals often are in to being (perhaps not rapidly enough, some have
contradiction. Drug companies accumulate more argued) and absorbed this new surplus. During
rapidly when they introduce new drugs without the last several decades, the service industries
sufficient testing, causing suffering and bodily have been the most rapidly growing sector; thus,
harm to patients who had hoped to be helped. A while employment in goods-producing industries
new hospital will be built using funds that would in the United States rose by 13% between 1960
have served people better in preventive or am- and 1970, service-related jobs have climbed 69%
bulatory care. (It should be noted that preventive in the same period.27
and ambulatory care are less susceptible to cen- The growth of the health care industry has
tral management, less easily commodified, and permitted investment in such areas as new con-
therefore less profitable to commercial interests.) struction and costly medical equipment, even
Consumers of health care services are given little when evidence showed that such expensive
voice in such choices, for their priorities may be equipment was no more effective than other,
quite different from those of the physicians, ad- lower-cost methods. 12 By investing large amounts
ministrators, and government officials who are of surplus in this way, employment and profit
often more concerned with the financial &dquo;health&dquo; levels are kept up. The rising proportion of the
of the industry, and of the capitalist system as a gross national product spent for health care, from
whole, than the physical health of the people. (To 4.6% in 1950 to 8.3% in 1975 has been an impor-
cite examples, municipal hospitals in
recent tant factor in maintaining a profitable climate for
New York City and Philadelphia have been shut investment.13
down, depriving entire communities of acces- The
growth of the health care industry has
sible health services, in order to correct the citiesopened up new markets for capital in the recent
fiscal imbalance and satisfy their bondholders.) period. At home as well as abroad, new markets
for new goods as well as old ones have developed.
Investment Opportunities: Surplus Absorption Selling drugs in Latin America (including drugs
and Creation of New Markets that have been banned here) and dental services
in Harlem (through Medicaid) are examples of
As capitalists accumulate surplus, they are new markets for old goods and services. Nursing
faced with a serious problem: How can they homes, home health services or other social net-
spend it? Where should they invest it so it will works, and other services previously provided
continue to expand? This is a central issue in by extended families, that is, without market
capitalism for, if surplus is not invested, the sys- intermediation, are examples of new markets for
tem will immediately begin to contract, and cur- new services. Both have helped to sustain surplus
rent investments will be endangered. Sales will absorption.
slacken and surplus will not be realized, even As long as funding is provided, through in-
though it has already been produced. And, if sur- surance or state-supported mechanisms, we can
plus stocks build up in producers’ warehouses, expect the health care industry to continue to
production will be cut and workers laid off. Sales churn out new products and services - new
will fall still further, and so on. Furthermore, if drugs, ambulatory psychiatric services, annual
the surplus is not invested wisely, resources will checkups, family planning, cosmetic surgery,
be wasted and accumulation will not occur as and so on. The possibilities are endless. What is
rapidly as it might have.&dquo; the limit to cosmetic surgery - annual human
For these reasons, capitalism requires the style changes? Will annual checkups be replaced

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by quarterly, monthly, and weekly ones? Will a ture and is therefore resisted by the capitalist
wave of hypochondria lead to an exploding de- class as a brake on accumulation.
mand for the treatment of newly-discovered ill- Another possibly complementary approach
nesses ? Won’t a use always be found for another is to keep the unemployed population to a man-
mood-altering drug? Or preventive psychiatric ageable size. Some measures fought for and gen-
care? erally won by the working class, including the
eight-hour day, child labor laws, increased public
school enrollment, pensions, social security, and
lower retirement ages, have this effect.
Absorption of Surplus Labor A final approach is to accumulate and grow
sufficiently rapidly so that jobs are generated to
Capitalism, driven by the need to grow in absorb enough of these three groups - the newly-
order to survive, displaces large numbers of proletarianized petty bourgeoisie, the technolog-
workers. It drives the petty bourgeoisie, the small ically unemployed, and new entrants into the
shop owners and craftsmen (as well as the unsuc- labor force - to avoid unrest. In recent years, em-
cessful capitalists), out of business and trans- ployment has been growing most rapidly in the
forms them into wage laborers. In order to cut service industries, including the health care in-
unit costs, it replaces workers with machines, cre- dustry. Total health sector employment has in-
ating &dquo;technological unemployment.&dquo; As the creased by 64%, while the total employed work-
population grows, or is forced to leave the rural force was growing by less than 20% between 1960
areas and small towns as their economies decline, and 1970.2’
these new entrants to the labor force compete Although part of this expansion in the
with the technologically-unemployed workers health labor force has been a response to in-
and the unsuccessful businessmen for the avail- creased effective demand for health care (espec-
able jobs. ially with the advent, during the 60s, of Medicare
In Marx’s day, these workers comprised the and Medicaid), it is notable that the manner in
&dquo;reserve army of the unemployed&dquo;, and their which health care is delivered has undergone
existence allowed capital to keep wages low by changes which have been responsible for much of
the threat of layoffs for employees who demand- this growth. As new treatments and new technol-
ed too much in wages or improved working con- ogies are introduced, more health care is delivered
ditions. Today, because of minimum wage laws by physician extenders (assistants, associates,
and the growth of unionization, the unemployed paraprofessionals, and nurse practitioners). A
are not as great a drag on wages, but their pres- number of occupational training programs have
ence continues to have a disciplining effect. been oriented toward a surplus population which
(Workers in the Third World, where multination- could be embarrassing if not dangerous, e.g. dis-
al corporations frequently move their opera- charged medics who had served in Vietnam. In
tions, more often play the most important disci- addition, as health care has become more and
plining role today for American workers.) How- more hospital-based, many more nurses, nurses
ever, the unemployed still can pose a threat to the aides, orderlies, and maintenance personnel had
established order, as their lack of stable employ- to be hired. One indication of this process has
ment and income may lead to discontent and been the steady decline in the proportion of phy-
mounting turmoil. sicians in the total health labor force, from one-
One approach to this problem is to provide third in 1930, to one-fifth in 1950, to only one-fif-
the &dquo;surplus population&dquo; - that is, those work- teenth in 1971. 14
ers whose labor is not needed in the core capitalist The resulting &dquo;industrialization&dquo; of the
enterprises, and who thus have difficulty finding health labor force has increased the ability of the
steady employment - with minimal levels of health care industry to absorb workers. Hospital
goods and services through unemployment com- employment nearly tripled between 1950 and
pensation and the welfare system. This serves to 1969, rising from 662,000 to 1,824,000.15 This
legitimize the system as humane, as well as dull labor force is predominantly low-skilled (about
the sharpest edges of discontent. Only minimal 40% of hospital employees are clerical and main-
levels of support are so provided, though, for tenance workers) or moderately-skilled (another
more would threaten the work incentive struc- 40% are nurses, aides, orderlies, and attendants).

111

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Only 4% are physicians. And large numbers of the
new entrants into the health labor force have
been Black and Third World workers who have
migrated to the cities since the 40s.
Many more people have been employed, at a
given level of expenditure, than could have been
employed if the old, high-skill work force had
been maintained. Unlike the goods-producing in-
dustries, the introduction of new technologies in-
to the health care industry has generated more,
not less, employment. It has created new work to
be done, new tests to be administered, new equip-
ment to be operated and maintained. 14
&dquo;Human Capital&dquo; Maintenance
A fourth (and, as we have seen, by no means
primary) function of the health care industry is to
workers
keep (and potential workers) in good
order. From the viewpoint of capital, the
working
health care system does not have to satisfy work-
ers and it is not important that they feel well, as
long as they are able to work hard.
The concept of human capital maintenance
follows from the view that capital has of workers,
that they are machines, one-dimensional con-
tributors to the accumulation process. In the
words of an occupational medicine text pub-
lished in 1925:
Chickens, race-horses, and circus monkeys
are fed, housed, trained, and kept up to the
highest physical pitch in order to secure a
full from them as producers in their
return
respective functions. The same principle
applies to human beings; increased produc-
tion cannot be expected from workers un-
less some attention is paid to their physical
environment and needs.
(The) real object of this book is to show
those who manage plants... how workers’
health may be maintained and improved as a
means of production.’6
This view, although rarely expressed so can-
didly, has gained popularity among neo-classical
economists as the &dquo;human capital&dquo; model.
Human resources are analyzed in much the same
way as physical resources. Investments in human Ideological Functions of the Health Care Industry
beings, for instance, in education and health care,
are conceived of as embodying rates of return
just
as do investments in physical Such health
capital.
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economists thus analyze workers in the way
capitalists have always treated them - as capital.
The treatment of workers as valuable prop-
erty is seen most clearly in the treatment afforded
slaves in the ante-bellum South. They were kept
healthy so long as the cost of their health care, to
the slaveholder, was less than what it would cost
to replace them:
Physicians provided prepaid contracts to
slaveholders to cover the cost of caring for
the slaves, and an entire holding of slaves
would often be moved to a more healthy
location in times of epidemic, even at the
cost of a whole year’s production. Irish lab-
orers were sometimes hired in order to save
the slaves from working in malaria-infested
areas. However, medical care was withheld
from slaves when the anticipated cost (times
the probability of failure) did not seem justi-
fied in the eyes of the slaveholdPr 17
There several
are implications of such an
analysis:
-The most valuable workers, those who
contribute most to the accumulation process, will
receive better health care than the less valuable or
more easily replaced workers. This will be reflect-
ed in company-provided medicine as well as in
the medical care made available outside the work-
place.
-The poor (whose worry, when they have
work, contributes littleto accumulation) and the
elderly (who no longer contribute any labor
power at all) will receive less adequate care, for
monies expended on their health will pay few if
any returns.18
will define health
-Company doctors purely
in terms of the work. They are em-
ability to
ployed &dquo;keep
to their labor force in good physical
condition and make it difficult for malingerers to
choose’ to be ill.&dquo;19
-Disease itself will be defined according to
its impact on the worker’s performance as a
worker and in the context of the worker’s role as
capital. Maladies which grow out of that very
role, such as stress and alienation, will not be de-
fined as diseases or treated as such.
In addition to its economic functions, the
care industry plays an important ideolog-
112
ical andpolitical role in the society. This includes
providing legitimation to the socio-economic
system, exercising social control, and contribu-
ting to the reproduction of the capitalist mode of
production and class structure. These are large
and complex issues, and we attempt here only a
brief explanation of them. References are provid-
ed for those interested in further study of these is-
sues.
Systemic Legitimation: It is important, for
the maintenance of the status quo, that the mem-
bers of a society perceive it to be capable of meet-
ing their basic needs such as provision, when
needed, of effective and humane health care.
Such a perception can atone for other perceived
failings of the system. People may be poor or un-
employed, but if there is at least some form of
medical care available when they or their children
need it, their burdens are easier to bear.
The health care system in the United States
has been relatively successful in this regard, al-
though large areas of doubt remain. The per cap-
ita number of visits to physicians and days spent
in hospitals have both been rising. More people
are covered by some form of health insurance
than ever before. Technological advances and
scientific discoveries occur often and are widely
reported. And yet, in 1971, a Gallup Poll found
that only 45% of a sample had a great deal of
confidence in their ability to obtain good health
care; 39% had only a fair amount of confidence,
and 14% had &dquo;not so much&dquo; confidence or none
at all. Among those with elementary school edu-
cations and those with incomes under $5000 per
year, fully 25% had &dquo;not so much,&dquo; (16% for
elementary education, 15% for income under
$5,000), &dquo;none at all,&dquo; (5% for each) or fell in the
&dquo;don’t know&dquo; (4% and 5% respectively) cate-
gory. 20
Another indication of growing pockets of
discontent with the U.S. health care industry has
been the popularity of publications recounting
the ineffectiveness of modern medical care2’ and
newspaper reports of inadequacies in the
health care system. 22 In spite of such evidence, it
is important to note that a majority (84% from
above) have a great deal of or a fair amount of
confidence in the medical system.
Social Control and Reproduction of the
Capitalist Mode of Production: Health care exists
within a particular ideological context in which it
serves a social control function, part of which is
113
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to ensure reproduction of the capitalist mode
the
of production.23
Modern medicine operates according to an
individualistic, scientistic, machine model.
Humans receive medical treatment outside of,
and abstracted from, their normal social and en-
vironmental context. This engineering approach
to medicine has a long history:
The approach to biology and medicine es-
tablished during the seventeenth century
was an engineering one, based on a physical
model. Nature was conceived in mechan-
istic terms, which led in biology to the idea
that a living organism could be regarded as
a machine which might be taken apart and
reassembled if its structure and function
were fully understood. In medicine, the
same concept led further to the belief that
an understanding of disease processes and
of the body’s response to them would make
it possible to intervene therapeutically,
mainly by physical (surgery), chemical, or
electrical methods. 24
t
Although this view may have been an advance
over previous concepts of humans as &dquo;wretched
pieces of clay inhabited by immortal souls&dquo;25, it
too has severe limitations. Since the medical sys-
tem treats people in the same way the auto repair
system treats automobiles, cure is perceived to oc-
cur, not because of a change in social condition or
through the body’s natural restorative processes,
but by specific treatments, hospital care, or con-
sumption of drugs. This orientation, an essential
aspect of capitalist alienation, is also a vital com-
ponent of the accumulation process. An infant
with pneumonia is taken to the hospital, &dquo;cured&dquo;
with penicillin, then sent home to an apartment
with no heat. On another level, the individual
focus inhibits our understanding of biological
adaptation and the role of genetic factors in dis-
ease. 12 Ideologically, it reinforces the tendency to
perceive problems and their solutions as indi-
vidual and not social, even though the most
prevalent diseases in the United States (heart dis-
ease, cancer, hypertension) have a strong social
element.26 Instead, everything is to be cured
through increased individual consumption.
An alternative to this would be a view of
medicine that recognizes our dialectical re-
lationship to other human beings and to the phys-
ical and social environment. This would place the
focus on the material basis of health, on
relationships, work pressures, food availability,
diet, living standards, and other environmental
factors. Preventive health care would receive
precedence, leading to social struggles to im-
prove living conditions and peoples’ ways of life.
An intrinsically social, cooperative process
of healing has been transformed, under capitalist
medicine, into a commodity exchange process.
People don’t go to doctors for help in their own
healing; they go to receive a cure. Doctors do
things to and for passive patients. The process is
mechanistic and hierarchic as opposed to organ-
ic, dialectical, and egalitarian. 27
Reproduction of the Capitalist Class Struc-
ture : The health care industry serves to reinforce
and reproduce the class structure, both in the
production and consumption of health care.
When non-physician health workers are involved
in the process, the mode of production is organ-
ized, as in all capitalist enterprises, with hierarch-
ic authority and a detailed division of labor. The
entire process is physician-controlled and -ori-
ented (in hospitals, physicians must share this
authority with administrators).
Health workers are tracked into training and
subsequent work on the basis of their class ori-
gins. Physicians typically come from high-
income families.28 Registered nurses, licensed
practical nurses, and aides are stratified in their
work in direct correlation with their class back-
grounds as well as their race. 29
Consumers of health services are given dif-
ferential treatment based on their class, racial and
ethnic status, as well as their sex. Working class
and poor people, though they are generally less
healthy and require more care, actually receive
less and poorer-quality health care.18,30 Perhaps
most importantly, the social relationships they
enter with health workers, and the facilities they
use, all communicate and reinforce their inferior
class position .27,31
Leonard Rodberg
Institute for Policy Studies
1901 Que St. NW
Washington, DC 20009
Downloaded from rrp.sagepub.com at UNIV OF TENNESSEE on September 12, 2014
social Summary and Conclusion
In this paper we examined how health care
commodified, i.e. how this intrinsic part of
was
human social life has become a capitalist com-
modity, and what that implies about the nature
and dynamics of health care. Since health care is a
commodity, it is part of the process which creates
surplus value. With this background, we dis-
cussed various implications of the commodifica-
tion process. As a commodity, its production al-
lows capitalists to accumulate surplus in various
ways. This process opens up investment oppor-
tunities, absorbs surplus, and is an arena where
new markets are continually being created. The
health care industry also serves to absorb surplus
labor and to maintain human beings in good
working order. In addition, this industry has
special ideological functions. These include sys-
temic legitimation, social control and reproduc-
tion of the capitalist mode of production, and re-
production of the capitalist class structure
through both employment and production-deliv-
ery.
As the foregoing has shown, the health care
industry fulfills a variety of essential functions
for capital. Nevertheless there are contradictions
existing within it and between it and other sectors
of the advanced capitalist system. How the in-
dustry develops and will be transformed will de-
pend on how these contradictions are worked out
within the context of class struggle as well as the
overall development of capitalism.
We view this paper as one step in the devel-
opment of a Marxian perspective of the health
care system. We trust it will serve as a foundation
for further theoretical work as well as improved
praxis in furtherance of the working class
struggle for health.
Gelvin Stevenson
Commons
2315 Broadway
New York, NY 10024
114
 NOTES
1 Karl Marx, Capital (Progress Publishers, Moscow, 1971),
Vol I, p 477
2 Harry Braverman, Labor and Monopoly Capital
(Monthly Review, Ny, 1974), p. 362
3 James O’Connor, "Productive and Unproductive Labor",
and Society Summer 1975
Politics ,
4 "Health in the US, 1975: A Chartbook", DHEW Publ
No (HRA) 76-1233, and U.S. Government, Department of
Health, Education & Welfare, Trends Affecting the U.S.
Health Care System, Government Printing Office, Washington,
D C., 1975, p. 357-8
5 For further discussion of economic rent, see Robert Heil-
broner, The Economic Problem (Prentice-Hall, 1970), pp. 461
ff
6 See, for instance, Prognosis Negative Crisis in the Health
Care System, a Health-PAC Book, edited by David Kotel-
chuck (Vintage, NY, 1976).
7 Karl Marx, ibid., Vol. I, pp. 556 and 558
8 This very brief discussion can be supplemented by reading
Paul M Sweezy, The Theory of Capitalist Development
(Monthly Review Press, 1942), pp 79-83 and R C Edwards et
al, The Capitalist System (Prentice-Hall, 1972), pp 98-102
9 Gelvin Stevenson, "Profits in Medicine", Health-PAC
Bulletin No. 72, Sept -Oct. 1976
10 See also "The Profit in Non-Profit Hospitals", an in-
formative pamphlet published by Health-PAC, 17 Murray St ,
New York, NY 10007.
11 For further reading on the capital absorption issue, see
Sweezy, op cit , pp. 162 ff and Edwards et al, op cit , pp 364
ff.
12 John Powles, "On the Limitations of Modern Medicine"
in Science, Medicine, and Man, Vol 1, pp 1-30, 1973
13. "The Problem of Rising Health Care Costs", Council on
Wage and Price Stability (Wash., D C , 1976)
14 Barbara Caress, "Health Manpower", Health-PAC Bul-
letin No 62, Jan.-Feb. 1975
15 Quoted in Barbara Ehrenreich and John H Ehrenreich,
"Hospital Workers Class Conflicts in the Making", Inter-
, Vol 5, No 1, 1975
national Journal of Health Services
16 Hackett, p 11, emphasis in original Quoted in Sander
Kelman, "The Social Nature of the Definition Problem in
Health", International Journal of Health Services
, Vol 5, No
4, 1975
17 Kelman, ibid
115
Downloaded from rrp.sagepub.com at UNIV OF TENNESSEE on September 12, 2014
18 Rodger Hurley, "The Health Crisis of the Poor", in H
Peter Dreitzel, The Social Organization of Health (Macmillan,
NY, 1974)
19 H Peter Dreitzel, The Social Organization of Health
(Macmillan, NY, 1971), p xi See also his discussion of a study
in which a sample of workers described company doctors as
bureaucrats, "skinners", "oppressors", and "vets".
20 Social Indicators (Government Printing Office, Washing-
ton, DC, 1973) Table 1-26
21 For instance, Ivan Illich, Medical Nemesis (Pantheon,
NY, 1976)
22 For instance, New York Times, January 26-30, 1976.
23 On the history of this ideology, see Howard Berliner, "A
Larger Perspective on the Flexner Report", International
Journal of Health Services, Vol 5, No. 4, 1975, on the triumph
of scientific medical schools; Barbara Ehrenreich and Deirdre
English, Witches, Midwives, and Nurses. A History of Women
Healers (Feminist Press, Old Westbury, NY, 1973) on the sup-
pression of medical competitors, and Emily Spieler and Susan
Reverby in Health-PAC Bulletin No 46, November 1972, on
the division of labor in hospitals See also Barbara and John
Ehrenreich, "Health Care and Social Control," Social Policy
May-June 1974
24 T McKeown, Medicine in Modern Society (Allen and
Unwin, London, 1965), p 38
25. Maurice Cornforth, Materialism and the Dialectical
Method (international Publishers, NY, 1953), p 35
26 Joseph Eyer, "Hypertension as a Disease of Modern Soci-
ety", International Journal of Health Services, Vol. 5, No 4,
1975
27 Gelvin Stevenson, "Social Relations of Production and
Consumption in the Human Service Occupations", Monthlv
Review, July-August 1976
28 Grace Kleinbach, "Social Structure and the Education of
Health Personnel", International Journal of Health Services
,
Vol 4, No. 2, 1974
29 Kathleen Cannings and William Lazonick, "The Devel-
opment of the Nursing Workforce in the US. A Basic Anal-
ysis", International Journal of Health Services, Vol. 5, No 2,
1975
30 Social Indicators, op. cit Table 1-21.
31 Raymond Duff and August B. Hollingshead, "The
Organization of Hospital Care", pp. 234-264, in Dreitzel, op
cit