Thursday, January 12, 2012

Efficiency and Unemployment Reconsidered

Yesterday we talked about automation and the resulting mass unemployment that is occurring all over the world and leading to social instability and economic collapse. Today, we will take a brief look at some answers, and why they won't happen. First up is this article in The Guardian:

Cut the working week to a maximum of 20 hours, urge top economists
Britain is struggling to shrug off the credit crisis; overworked parents are stricken with guilt about barely seeing their offspring; carbon dioxide is belching into the atmosphere from our power-hungry offices and homes. In London on Wednesday, experts will gather to offer a novel solution to all of these problems at once: a shorter working week.

A thinktank, the New Economics Foundation (NEF), which has organised the event with the Centre for Analysis of Social Exclusion at the London School of Economics, argues that if everyone worked fewer hours – say, 20 or so a week – there would be more jobs to go round, employees could spend more time with their families and energy-hungry excess consumption would be curbed. Anna Coote, of NEF, said: "There's a great disequilibrium between people who have got too much paid work, and those who have got too little or none."

She argued that we need to think again about what constitutes economic success, and whether aiming to boost Britain's GDP growth rate should be the government's first priority: "Are we just living to work, and working to earn, and earning to consume? There's no evidence that if you have shorter working hours as the norm, you have a less successful economy: quite the reverse." She cited Germany and the Netherlands.
In WAPGF, I covered John Maynard Keynes' "Economic Possibilities for our Grandchildren" essay, in which the most influential economist of the twentieth century envisioned a time where much shorter labor hours would be the inevitable result of workplace productivity. Here's Keynes' biographer Lord Sidelsky, also writing in The Guardian: How much money is enough?
The economic downturn has produced an explosion of popular anger against bankers' "greed" and their "obscene" bonuses. This has accompanied a wider critique of "growthmanship" – the pursuit of economic growth or the accumulation of wealth at all costs, regardless of the damage it may do to the earth's environment or to shared values.

John Maynard Keynes addressed this issue in 1930, in his little essay "Economic Possibilities for our Grandchildren". Keynes predicted that in 100 years – that is, by 2030 – growth in the developed world would, in effect, have stopped, because people would "have enough" to lead the "good life." Hours of paid work would fall to three a day – a 15-hour week. Human beings would be more like the "lilies of the field, who toil not, neither do they spin."
So the solution is obvious, right? But as to why it won't happen, see this entry from the outstanding blog What About Marx: Greater Productivity and the Eight Hour Day
Workers are becoming more and more productive, mainly due to great technological progress. Computers revolutionized production, and huge advances are occurring at a blistering pace (check out 3D "printing" of products for example, a revolutionary new way of producing goods with very little human effort required).

This increased productivity leads -obviously- to the production of more wealth than ever. And yet wages are stagnant at best - so who gets all this new wealth that is being produced if not the workers?

You guessed it, it's a handful of capitalists. Prof Rajan notes that “of every dollar of real income growth that was generated between 1976 and 2007, 58 cents went to the top 1 per cent of households”. (Martin Wolf, Financial Times, "Three years and new fault lines threaten").

Ever since the working class stopped "fighting the good fight" against being exploited by the capitalists, the capitalists have been able to seize a huge (and ever-increasing) portion of the wealth that is being created. Unions, workers political parties, etc. are "a thing of the past" - and off shoring production to China was "the nail in the coffin" for the Western workers.

And yet, today nobody talks about decreasing the working day. But as long as billions of workers in Asia work 10, 12 or even 16 hours/day, and get very little in return, it is pretty clear that a lot of workers, especially in the West, will remain unemployed and starve to death.

These workers "are not competitive enough", so they will live (or die) in extreme poverty. This process will result in many deaths, and much more misery for the workers, yet this is the only way for the capitalists to make them competitive enough, so that their profits can be maximized. Austerity is obviously not a strategy to restore growth, it is a strategy that only aims to reducing the wages of the future generations of workers, even if it re-enforces the economic downturn in the short-term. It is only when the workers have accepted poverty as a way of life that the capitalists will restart investing in the West. Until then, the workers will be left to starve.

The working class MUST demand a shorter working day - for example, even if we could reduce the working day by only an hour, (7-hour day instead of an 8-hour day), we would in effect have created a new job for every 7 workers (instead of employing 7 workers for 8 hours/day, we could employ 8 workers for 7 hours/day).

The problem is of course that the capitalists are the ones in charge, not the workers. And the capitalists will never accept this, as it reduces their profits. And even if some of them do, the rest of them will not, and they latter will dominate over the former, since they will have a big competitive advantage (they exploit the workers more, so they can sell their products at cheaper prices, or produce more products, etc.).
Of course, they won't die of starvation, they'll create parallel system they need to survive, just as people do in the "developing" world. Billions of people live and die every day outside the traditional money/finance economy, and as it discards more and more people, we can expect "black" or "underground" economies to become more and more prominent here as well. This will lead to an inevitable clash between the two systems. We'll talk about that tomorrow.

Some quotes to ponder courtesy of Low Tech Magazine:
"Even in backward mining communities, as late as the sixteenth century more than half the recorded days were holidays; while for Europe as a whole, the total number of holidays, including Sunday, came to 189, a number even greater than those enjoyed by Imperial Rome. Nothing more clearly indicates a surplus of food and human energy, if not material goods. Modern labor-saving devices have as yet done no better."

Has There Been Progress Since 1250?
"Fourastié [A French economist] is right in putting the case numerically to dramatize the shortening of the work week and the enormous transformation in living standards and in the qualitative nature of life. The case is indeed simple if 1950 is compared with 1815. But it is no longer quite so simple if 1950 is compared with 1250. It is important to consider, for labor, not only time but intensity."

"It is possible to make a meaningful comparison between the fifteen-hour workday of a miner in 1830 and the seven-hour workday of 1950. But there is no common denominator between the seven-hour day of 1950 and the fifteen-hour day of the medieval artisan. We know that the peasant interrupts his workday with innumerable pauses. He chooses his own tempo and rhythm. He converses and cracks jokes with every passer-by."

"We cannot say with assurance that there has been progress from 1250 to 1950. In so doing, we would be comparing things which are not comparable. Therefore, it is advisable to limit ourselves to saying that there has been progress since the beginning of the industrial era, which was founded on the breakup and destruction of the non-comparable and vanished old order."

Has There Been Progress Since 1250?
A podcast on the subject:

And a movie:

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