The vision of a “post-work” society––one in which the fruits of technological progress take the form of reduced work-time rather than more consumer goods and services––has recently enjoyed a measure of renewed interest and support in parts of the left. There’s the essay by John Quiggin, a social-democratic Keynesian economist and author of Zombie Economics; articles by Peter Frase and Chris Maisano in Jacobin magazine; and, from a somewhat different perspective, David Graeber's recent thoughts on "bullshit jobs".
Post-work is certainly not a novel idea, but it’s a good one… sort of. In 2011, the average consumption of the 80-plus percent of people who live outside of the “high-income” countries was only eight percent of the U.S. average, so the urgent priority for most of the world’s people is more consumption, not less work.[1] And why shouldn’t individuals choose the form––less work or more stuff––in which they personally benefit from technological progress? Different strokes for different folks. Is it really the job of the left to become the shadow nanny state?
That said, reduced work-time is hard to argue against. And I wouldn’t want to argue against it even it if were easy.
But why is post-work catching on at this particular moment, when lack of work is the immediate and intractable problem faced by tens of millions of workers in Europe and the U.S.? Quiggin tells us that the renewed interest is the result of Robert and Edward Skidelsky’s promotion of a 1930 essay in which John Maynard Keynes suggested that a 15-hour workweek would become feasible by about 2030. But the underlying goal is to give social democracy a human face—for even its proponents find it rather desiccated in its received form. Quiggin recognizes that
if Keynesian social democracy is to regain the dominant position it held from the end of Keynes’s own lifetime until the ’70s, it must offer more than a technocratic lever to stabilise the economy. We need a vision of a genuinely better society.
Maisano expresses such a vision quite nicely. In a passage I wish I had written, he says:
The one-sided focus of most Marxists and socialists on distributional questions has obscured the fact that the animating principle of the Left is not so much equality, but rather freedom—freedom from alienating work and freedom to use our time and creativity for our own self-directed ends. Socialism does not equal the roughly equal distribution of stuff; the martyrs of the labour movement didn’t give up their lives so that everyone could have the right to buy an iPhone or a plasma screen TV, or to waste their lives working at crap jobs.
However, the problem is that this vision is being used to entice us to rally round the same old social-democratic technocratic lever-pulling. To make the vision a reality, we supposedly have to start with what Quiggin calls “[t]he first step … the social democratic agenda associated with post-war Keynesianism”––guaranteed minimum income, more social services, allocation of investment funds on the basis of “social need rather than market signals of price and profit,” and so on.
The problem here is that Keynesianism and social democracy don’t work. They failed in the global economic crisis of the 1970s and they failed when Mitterrand’s government tried to implement them in France shortly thereafter. These events killed them off––for good, I thought. But since the latest global crisis can’t easily be blamed on Keynesianism and social democracy, they’ve recently risen from the dead (zombie-like, as Quiggin might say).[2]
Mitterrand's experiment is particularly important to revisit. It definitely wasn’t your standard post-war social-democracy. I was very excited about it at the time. In coalition with the Communists, Mitterrand's Socialist Party came to power in the spring of 1981, promising rapid economic growth and reduced unemployment. The new government nationalized a lot of industry and virtually the whole of France’s financial sector became directly government controlled. New laws strengthened the power of the trade unions. The minimum wage was increased several times; by the end of 1982, it had risen by 39%. Rent controls and new taxes were imposed, including a wealth tax and a maximum 75% tax rate on income. Private healthcare was curtailed. Significant capital controls to prevent the outflow of funds from France were already in place and the new government strengthened them further.
And in order to solve the country’s serious unemployment problem, the government engaged in fiscal stimulus, the central bank pursued an easy-money policy, and (proponents of reduced work take note) measures to reduce working time, without cutting pay, were implemented. Specifically, paid holiday time was raised from four weeks a year to five, and the workweek was cut from 40 hours to 39 as the first step in a plan to reduce it to 35 hours by 1985.
These are the sorts of “transitional” measures that folks like Quiggin and Maisano dream about. But they just didn’t work. They turned out to be a transition to nothing but “socialist austerity” and the French Socialist Party’s abrupt turn to free-market economics a couple of years later.
Despite the stimulative policy and the reduction in working time, economic growth remained very weak and the unemployment rate kept rising. Indeed, outside the government sector and those sectors of the economy dominated by state-owned monopolies, employment fell by almost 4% between 1981 and 1984, while the number of hours worked fell by more than 8%. And inflation kept rising even as it was abating in most other industrialized countries, which is something an export-dependent economy like France’s could ill afford.
This debacle had three main sources:
• The new government and its policies spooked businesses and the financial markets. Despite tightened capital controls, there was substantial flight of capital from France. There was also a speculative attack on the currency that began even before Mitterrand was elected, and France’s stock market plummeted by about 20% in May and June 1981 and kept falling. When the government executed its about-face two years later, the market had declined by about 40%.
• The combination of rising inflation, increased domestic spending, and recession abroad caused French exports to fall and import spending to rise, and this imbalance produced a currency crisis that the central bank and capital controls could not contain, even when the government began to back away from its more ambitious reforms. France’s currency was devalued three times; by the end, its value had fallen by 32% against the German mark.
• French companies’ labour costs rose as a result of the lengthening of holiday time, shortening of the work week, and minimum wage increases. This cut into profits, partly for the obvious reason and partly because French exports became less competitive. As a result of the reduction in profitability and, perhaps, the stock-market plunge, productive investment fell. And the declines in investment and demand for French exports erased the temporary stimulative effect that the government’s fiscal and monetary policies would otherwise have had.
This wasn’t supposed to happen. The reduction in working hours was supposed to create more jobs due to “work sharing.” And according to the trickle-up economics underlying government policy, minimum wage increases were supposed to fuel consumption spending and thereby stimulate productive investment, even as they cut into profits.
The Mitterrand government’s policies failed because they were based on a serious misunderstanding of how capitalism operates. Unfortunately, similar misunderstandings underlie recent advocacy of post-work society, which proceeds as if the goal can be achieved within capitalism, by making the latter into something it's not.
Above all, the new post-work advocates evince a similar failure to appreciate the centrality of profit to the capitalist system. In his piece “Against Jobs, For Full Employment,” Frase quotes and endorses the following bit of wisdom from Michał Kalecki, the co-founder of “Keynesianism”:
under a regime of permanent full employment, the "sack" would cease to play its role as a "disciplinary" measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire, and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But 'discipline in the factories' and "political stability" are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the "normal" capitalist system." [emphasis added]
Come again? Profits are going to be higher even as discipline in the factories is eroded and strikes break out all over the place? Kalecki is often identified as a Marxist economist, but he seems to have been clueless about how profit is created.[3] But he then tells us that profits don’t matter much anyway; the goal of business leaders isn’t to maximise their profits, but to maintain their class rule. To what end?
Graeber has almost identical illusions. Why, he asks, are more and more people at work who don’t need to be, “salaried paper-pushers” who spend most of their working hours “organising or attending motivational seminars, updating their facebook profiles or downloading TV box-sets”? Since this isn’t profitable for the companies that employ them, “[t]he answer clearly isn’t economic.” Instead, “the only explanation” for why companies waste money employing a whole class of people to do next to nothing is that the system operates this way because it’s “perfectly suited to maintaining the power of finance capital.” Again, to what end?
And just because a prosaic economic explanation for the existence of these “bullshit jobs” isn’t immediately apparent, that is no warrant for rushing to the conclusion that the explanation is “clearly” non-economic, any more than the existence of puzzles that haven’t yet been solved by evolutionary theory “clearly” warrants an embrace of creationism. I’m no expert on this matter, but even I can come up with two possible economic explanations that might help account for the existence of “bullshit jobs”––principal-agent problems and the theory of “labour as a quasi-fixed factor.” (I’m resorting to unintelligible jargon because what’s relevant here are not the explanations themselves, but the fact that economists have proposed economic explanations of phenomena that seem rather similar.)
Quiggin begins his essay by telling us that he became an economist “when utopian ideas were everywhere, exemplified by the Situationist slogan of 1968: ‘Be realistic. Demand the impossible.’” He, however, was different. He has always “preferr[ed] to think in terms of the possible.” The problem is that it just ain’t so.
A key plank of his zombie Keynesian agenda is a guaranteed minimum income. He proposes that everyone be guaranteed a level of income “significantly better than poverty[-level],” and that this guarantee be “unconditional.” In other words, everyone will be entitled to adequate income even if they do nothing. They won’t even have to attend motivational seminars, or kill time updating their facebook profiles or downloading TV box-sets!
But what would happen if this proposal were implemented? Given the nature of work in our society––about which the proponents of post-work rightly complain—so many of us would jump at the chance to escape the workplace that profit would disappear, production would grind to a halt, and there would be no minimum income left to guarantee.
Quiggin is aware of this problem. His response is that “the production of market goods and services needs to become pleasant enough that those doing it don’t mind supporting others who choose not to.”
Right. And how is that going to happen under capitalism? Isn’t there an economic motive––a profit motive––behind the persistence of alienated labour, speedup, unsafe working conditions, thankless jobs, meaningless jobs, and all the rest? Or are they just more ruses, of the kinds identified by Kalecki, Frase, and Graeber, that lack any economic rationale but enable a power-crazed ruling class to stay in power?
The basic flaw in the thinking of Kalecki, Graeber, and the zombie social democrats now, and of the Mitterrand government three decades ago, is political determinism. They think that the capitalists control capitalism––not the other way around––so that the system can become something it’s not once different people with different priorities assume control of it.
I on the other hand think that historical experience and a bit of reflection show that the system has a “logic” of its own, so that what must be replaced is the system itself, not just the current personifications of it. Technological possibilities notwithstanding, there isn’t going to be much progress toward a post-work society, or indeed a lot of other good stuff, until we grapple seriously with the fact that capitalism operates as it does because of its autonomous logic, not because of the specific priorities of those who happen to be running the system at any particular moment. If we don’t deal with this problem head-on, the inspiring post-work vision will simply degenerate into a slogan used by wannabe personifications of capitalism to win support for their efforts to replace the current personifications.
Andrew Kliman is the author of The Failure of Capitalist Production: Underlying Causes of the Great Recession (Pluto Books, 2012) and Reclaiming Marx’s “Capital”: A Refutation of the Myth of Inconsistency (Lexington Books, 2007). A professor of economics at Pace University (New York), he works politically with Marxist-Humanist Initiative.
[1] Author's calculations based on World Bank data for population and household final consumption expenditure at purchasing power parity (in constant international dollars of 2005). Source: World Development Indicators, The World Bank.
[2] I’ve discovered that I’m not the first to employ the concept of zombie social democracy. John Passant and Dr_Tad beat me to it.
[3] It’s created by workers––if and when they do what they’re told, in the way they’re told, and as fast as they’re told, not when they’re ignoring instructions, taking long breaks, sabotaging production, working to rule, and going out on strike. (I haven’t forgotten about demand; there’s no demand for products that don’t exist because workers haven’t produced them.)
20 Comments on "Post-Work: Zombie Social Democracy with a Human Face?"
Carl R, on 13 September 2013 - 06:39
Hi Andrew - nicely argued article, but I think what we’re talking about here are two interpretations of history.
One argument has it that the post-1945 settlement in Western Europe and North America was a historical fluke - that it was only the devastation of war, increased Cold War military spending, geo-political circumstances, that allowed the welfare state and a degree of social democracy to be absorbed into the template for modern industrial capitalism.
The other argument would suggest that, whilst elites are extremely oppositional to accepting democratic control of the economy, and will try to resist at every turn, progress was made before the Second World War, especially with the Lloyd George government in the UK, and the Roosevelt administration in the UK. Not socialist governments, but governments which included elements of socialism which were often very clearly expressed. The NRA, WPA employed artists to do *art* at government expense: the concept that functional services such as post offices should boast artwork of quality and that everyday life should be enriched in this way - these have been unfortunately lacking from much of post-war social democracy in the UK and US.
I think there is more historical merit in the second perspective. I think the first perspective is coloured by the period following the end of the Cold War. I’m not defending capitalism in any shape or form - capitalism does have its own logic - but it also engineers its own failures. By doing so, gaps/cracks will *always* open up and the question then is exactly how a radical re-engineering of society can have both gradualist and reformist elements. Imposing a 30-hour week would not seriously challenge capitalism - employers would work out new rotas - but it might help to undermine the culture of materialism, and therefore challenge some of the ideological elements. It’s one of the plurality of challenges which will need to arise.
John Quiggin, on 13 September 2013 - 08:08
These objections have a fair bit of force. But they apply equally to any transitional program, whether it’s based on parliamentary politics, a revolutionary takeover of the state (with or without a transition to state capitalism) or direct action by workers within a capitalist framework
Of the three, social democratis have the best track record of success, despite the string of defeats and retreats that began with Mitterand.
Andrew Kliman, on 13 September 2013 - 11:13
I greatly appreciate John Quiggin’s generous comments, especially because my article is critical of his proposals, etc, and because I agree that my “objections ... apply equally to any transitional program, whether it’s based on parliamentary politics, a revolutionary takeover of the state (with or without a transition to state capitalism) or direct action by workers within a capitalist framework.” Well said. Political determinism comes in several flavors.
For (part of) my view about the notion of “transitional society,” please see the video or text of my talk “The Incoherence of ‘Transitional Society’ as a Marxian Concept,” http://www.marxisthumanistinitiative.org/alternatives-to-capital/video-the-incoherence-of-transitional-society.html.
I think this addresses part of Carl R’s comment as well. The rest is hard to comment on, since no argument is given as to why “there is more historical merit in the second perspective.” I just finished a reply to someone who sent me an e-mail message about this and related matters. It’s a defense of something like what Carl R calls “the first perspective” and points at a critique of the second:
I think ‘[capitalism in the West in the 1950s and 1960s] was functioning well but not because of Keynesianism’ is right. The ‘basic constraints of the system as such’ differ at different times and places, and are sometimes weaker, sometimes stronger. So when you have a strong long-term boom phase of capitalism, and when you have a country that’s largely shielded from international competition, as was the case with the US during the first quarter-century or so after World War II, the system can accommodate significant reforms and make concessions. And such things can even help stabilize the system, in a sense, in such conditions. For instance, in the US, there were regular wage increases in a lot of the unionized sector of the economy, as a quid pro quo for the union leaders enforcing the contract, i.e., preventing and helping to squash wildcat strikes.
But I don’t think the post-WWII boom was due to demand stimulus as an ongoing policy, or to ‘wage-led growth.’ In _The Failure of Capitalist Production_, I suggest that the boom was made possible by the massive destruction of capital value during the depression and war, which wiped out a lot of old business debt and allowed new owners to buy companies and assets cheaply, thereby boosting their expected profitability. (But the book is pretty heavily focused on an explanation of the Great Recession, so it doesn’t say much about the conditions that led to the boom or to the pre-1970s economy. And I haven’t written much about those things elsewhere, either.) And with the massive increase in expected profitability, there was a major spurt of investment and GDP growth. Of course, productive investment also depends crucially on businesses’ confidence and expectations of the future, and government intervention during the depression and the war helped to turn expectations around. In *that* sense, which is quite different from demand stimulus or ‘wage-led growth,’ ‘Keynesianism’ did play a causal role in creating the boom, it seems.
I think wage-led growth is a mirage, because higher wages cut into profits, and profits are the key to productive investment and therefore growth. Also, it’s not obvious at all that higher wages boost demand. One reason why is that, while there *may* be more personal consumption demand as a result, there’s less productive investment demand, due to the reduced profitability of investment. And even Keynesian theory itself doesn’t suggest that demand stimulus is a feasible means for achieving long-run growth, multiplier effects notwithstanding. The stimulus comes from borrowing and [the] effects of the stimulus go into reverse when the stimulus is withdrawn—it doesn’t set a perpetual-motion machine in motion. (As I say, thi[s] is straightforward textbook Keynesianism.)
But as I also say in the book, “when push comes to shove, working people’s gains are not compatible with the continued functioning of the capitalist system.” And “push came to shove” (there was a critical situation) in the 1970s.
Carl R, on 13 September 2013 - 13:48
“For instance, in the US, there were regular wage increases in a lot of the unionized sector of the economy, as a quid pro quo for the union leaders enforcing the contract, i.e., preventing and helping to squash wildcat strikes. “
I don’t think that was the functional reason for providing wage increases, and this implies a more static model than existed. The technological changes in the decades after the second world war combined with the growth in white-collar and skilled professions, which drove up wages overall. First electrical engineering, then electronics - much initially driven by defence, academia and aerospace. Government money in this case led to a mixture of diverse, partially privatised and entrepreneural outcomes. As some economists have pointed out: not only did the assembly workers in Ford tend to leave Detroit, but a new wave of workers arrived. Social mobility depended on the renewing of the lower working-classes, as their offspring preferred to do work elsewhere (when possible).
Which then casts a cloud over the following statement:
“when push comes to shove, working people’s gains are not compatible with the continued functioning of the capitalist system.” And “push came to shove” (there was a critical situation) in the 1970s.”
I just don’t see this at all. The ‘progressed working class’ of the post-war period exists, and it is big. I don’t think the more affluent working class voting for Reagan during the 1980s was a pure case of false consciousness or pure ignorance. It was deliberately voting with one’s own perceived immediate interests - mainly the promise of low taxes.
Of course, in the long-run, maybe *nothing* is compatible with the continued functioning of the capitalist system. The problem is, we would prefer to intervene before that stage. And intervention requires engagement. It’s a big problem.
“Also, it’s not obvious at all that higher wages boost demand.’
Surely it is obvious that lower wages would reduce demand? That those receiving consistently low wages would face growing victimisation, both economically and politically?
Tom Walker, on 13 September 2013 - 16:16
Thanks, Andrew, for a stimulating and provocative critique. There are a number of “empirical” assumptions you make that I would take issue with but I want to first agree with what I take to be your main point about the futility of what you call “social democratic lever-pulling.” I’m glad you acknowledge the same or similar difficulties would obtain for revolutionary socialist lever-pulling. The levers will not be pulled.
Some quibbles: First, your eight percent consumption figure presumably refers to market incomes, I would object that a lot, perhaps most, of life takes place outside of the clutches of market exchange. People outside of high-income countries may indeed aspire to North American-style “affluence” but that doesn’t mean they’d be better off if they got it. Second, capitalist calculation is subject to rather severe restrictions and it is therefore true that, at least within limits, profits may be increased by social democratic policies that make workers better off. This doesn’t mean such improvement can go on indefinitely, but such improvement as can be achieved has the potential of opening up other possibilities. That’s the notion of transformative reforms.
I would like to suggest that analysis is not enough to inform practice. In some cases too much analysis becomes inhibiting because it substitutes for practice. I would highlight instead something Charles Tilly termed “repertoire”. These are collective habits, behaviors and expectations that lead to collective action. Social democratic aspirations may thus inform direct action that points beyond social democratic lever pulling.
John Quiggin, on 14 September 2013 - 01:02
Andrew, I read your piece on the incoherence of transitional society. Some interesting ideas, but i end up (unusually for me) with Lenin - we can’t adheive socialism instantly, and therefore there must be a transition. I don’t really understand how changing “transition” to “transformation” does what you want it to. You haven’t spelt out what “transformation” would actually entail, so I’ll try to work with the lightbulb metaphor.
If you want to change from, say, candles to electric light, you first need to do a whole lot of wiring. And one household relying on, say, a generator, won’t do as well as if we have an electric grid. How is all this preparatory work supposed to take place in a society where the dominant interests have a lot to lose from the arrival of electricity? Don’t the problems of “transition” just reappear as “preparation for transformation”
And, it’s not as though the transformation will be final and complete. Furniture will need to be rearranged, fuses will blow, unexpected problems of all kinds will emerge. In the process, it will be necessary to rely, to a large extent, on things left over from the past.
Maybe if you spelt out your idea of transformation in a bit more detail, these objections could be overcome. But for the moment, I think we have to accept that there is no easy path to a better world, and work on following the hard paths
oskarsdrum, on 14 September 2013 - 09:39
In spite of disagreeing with many of the positions expressed in it I found this piece an invaluable and very enjoyable one. Excellent comments so far too. Still a few comments on why I remain unconvinced, having read numerous pieces from Kliman and co-thinkers on the topic!
The most important point for me is encapsulated in the statement “They think that the capitalists control capitalism––not the other way around”. I appreciate the critique of Graber’s implied view, that it’s about a group wielding power for its own sake and we just need to dismantle that (the analytic level of the political, we might sight). However it seems a very undialectical view to simply take the opposite position - that capitalists as individuals and as a class are only subject to a set of laws outside anyone’s control because of our system of “capitalism”. Surely ‘capitalists make capitalism - but not just as they please’. That is to say, yes, profit keeps the system going and operates to certain laws, but profit is only important because capitalists want to get to the top of the pile.
So, we have to look at the sociology as well, and look at the astonishing growth in income and wealth disparities in Europe and the US that have grown up since the 80s. Is it the abstract economic laws of capitalism that makes billionaires own ever more mansions, swimming pools and golf courses all over the world for their own pleasure? Not really, in fact, they could make more profit investing the spare $$$ (alright so there’s an asset inflation/speculation aspect that is economic, but it’s not the whole story). Is it because of some universal and insatiable need to own those things? No, not that either….we need to look at status-competition and institutional practices *within* capitalism that create an “arms-race” of the super-rich, that leads intense competition for materially displayed prestige right down the layers to the middle (and often working) class.
Certainly some of this is inevitable in capitalism, but looking at the institutional specificity of such practices, much of it is likely amenable to regulation on the right scale - of course the problem is that since the end of the post-war boom the only regulatory scale for many factors has been international. Which is very difficult to achieve - but again, on the level of sociology/politics more than economics (obviously they can’t be entirely seperated, but we can identify dominant logics in different levels). This of course ties in with Kliman’s excellent exposition of the French radical expirement’s inglorious end. Anyway the sting in the tail for me is that international political co-ordination is just as much a barrier to socialist revolution as it is to social democracy. And I think “top-down” international regulation exists interdependently with “bottom-up” international organisational solidarity, so I’m sceptical that socialist revolution would be possible without serious, non-ephemeral (radical) social democratic advances.
The final thing is that I don’t think you can ever now ignore climate change when talking about capitalism, and what the solutions to it might be. Obviously we need to demonstrate endlessly why climate change is a problem of capitalism. Yet the pat revolutionary answer - so that’s one more reason why you should join the revolutionary party! - isn’t good enough either. How likely honestly is it that we’ll end capitalism in the next 20 years? If it’s not likely, then we need to take solving climate change as part of a social democratic transformation *within* capitalism extremely seriously - and have much better reasons to believe it isn’t possible if we reject it (there seems to me good reason to believe it’s not impossible, though it is obviously very difficult). On top of that, there’s the possibility that democratically-controlled huge scale investment in “climate jobs” is the only viable strategy for social democracy.
Kliman punctures many delusions of what are broadly termed “Keynesian” outlooks, but there’s an unsustainable certainty caused by remaining at a very high level of abstraction: when the enormous complexities of society make “laws” much more tentative than Marxists like to admit. I should say that I’m all in favour of socialism, mass working class action, anti-parliamentarian strategies and consider myself a Marxist, but the best efforts of many militants over 150 years hasn’t yet called a successful revolution into being and we need to be ready with alternatives in case the revolution drought lasts even another 15!
Andrew Kliman, on 15 September 2013 - 08:54
I’m going to try to respond to all of the comments by people who’ve kindly provided feedback on my article. But there’s too much to handle all at once. So I’ll take it bit by bit from the top, starting with Carl R’s 2d comment.
I wrote, in my reponse to him, “significant reforms and … concessions … can even help stabilize the system, in a sense, in such conditions. For instance, in the US, there were regular wage increases in a lot of the unionized sector of the economy, as a quid pro quo for the union leaders enforcing the contract, i.e., preventing and helping to squash wildcat strikes.”
Carl quoted part of this, and replied, “I don’t think that was the functional reason for providing wage increases, and this implies a more static model than existed.” But I wasn’t offering a functional reason or a model, just noting that such higher-wage/no wildcatting contracts helped to stablize the system in a sense.
He then takes issue with my statement (in my comment) that “when push comes to shove, working people’s gains are not compatible with the continued functioning of the capitalist system.” And ‘push came to shove’ (there was a critical situation) in the 1970s,” on the grounds that the “‘progressed working class’ of the post-war period exists, and it is big.” Right, but I was referring to events in the US of the period that immediately followed—flight of firms overseas and to the south, giveback contracts, and the Fed’s use of interest-rate hikes to create unemployment in order to break the back of inflation. Also, while compensation of employees has been a stable share of output since the 1970s in the US, compensation paid to less-educated (presumably lower-paid lowers) has more or less stagnated.
I wrote, in my reponse to Carl, “it’s not obvious at all that higher wages boost demand,” He responds: “Surely it is obvious that lower wages would reduce demand? That those receiving consistently low wages would face growing victimisation, both economically and politically?”
I don’t understand what these two sentences have to do with each other. By “demand,” I meant spending on goods and services. And it’s not obvious that higher wages boost it, partly for the reason I noted in my original response: “while there *may* be more personal consumption demand as a result, there’s less productive investment demand, due to the reduced profitability of investment.”
Another factor worth pointing out: it’s not even obvious that higher wages (or, more generally, redistribution of income toward the bottom) will increase even the personal consumption component of demand. Paul Krugman has noted that there’s no real evidence that it does: http://krugman.blogs.nytimes.com/2013/01/20/inequality-and-recovery/?_r=0 .
Tom Walker, on 15 September 2013 - 19:39
“while there *may* be more personal consumption demand as a result, there’s less productive investment demand, due to the reduced profitability of investment.”
This is not “wrong” but it is incomplete. Higher wages may also be compatible with increased productivity resulting from improved education, health, morale, etc. In other words, there is not necessarily a trade-off between personal consumption and productive investment. Personal consumption and social consumption can be regarded as indirect forms of productive investment that nevertheless also contribute to capitalist accumulation. This is the element of social accounting that the capitalist accounting mentality has difficulty grasping. This social accounting failure is particularly acute in the case of the length of the working day. Marx pointed this out, of course, but subsequently so have Sydney. Chapman, Cecil. Pigou and John Maurice Clark within the tradition of marginalist analysis.
Nick Thorne, on 16 September 2013 - 08:24
I just received a link to this article and was fascinated by the arguments made. I was particularly interested in the following segment:
“The basic flaw in the thinking of Kalecki, Graeber, and the zombie social democrats now, and of the Mitterrand government three decades ago, is political determinism. They think that the capitalists control capitalism––not the other way around––so that the system can become something it’s not once different people with different priorities assume control of it.”
I am not convinced that this is the case. After all, no country displays capitalism in its pure form, and there are multiple varieties. Germany is currently debating whether or not to introduce a minimum wage for example, while France has brought in the 35 hour working week. Governments and businesses do have some control over capitalism which is why there are often siginificant differences between different countries.
Your article also seems to suggest that capitalism and workers’ rights are necessarily in conflict. But introducing workers’ rights can also be seen as a capitalist move. Abolishing slavery boosted profits, was good for capitalism and led to the vicotry for the North in the American civil war. The genius of Henry Ford was to pay his workers enough to allow them to buy the cars they were producing.
Over the past 100 years the length of the average working day in the West has been reduced and workers’ rights improved. Given this is it not possible that a basic income or post-work society could emerge? As Jeremy Rifkin argues in The End of Work, we face a choice between an 8 hour working day for fewer employees and increasing unemployment due to mechanisation, or a shorter working day with a bigger work force. The latter option may sound unrealistic but would be the better option from a capitalist perspective. Why then could it not be brought in by capitalists in the future?
Andrew Kliman, on 17 September 2013 - 05:21
I want to continue to respond to comments in order, but the myth of “Fordism” that Nick Thorne has repeated—“The genius of Henry Ford was to pay his workers enough to allow them to buy the cars they were producing”—is too widespread and pernicious to be left until later. It’s the iconic example meant to demonstrate, as he tries to do, that there’s no fundamental antagonism between the interests of working people and the capitalist system. (So if working people are getting shafted, it’s not because of capitalism, but because the particular people running it happen to be malevolent or greedy or stupid. And things will be just fine, thank you, once different people are in control.)
If a company pays its workers more than it needs to pay them in order to get them to come to work and produce, this MUST reduce its profits. It’s a simple matter of accounting.
Assume that Ford pays workers $10 million more than it needs to. Also assume that it costs Ford nothing to produce its cars, and that the workers spend all of the $10 million extra they receive on Ford cars. In this case, the company reduces its profit by $10 million by paying the extra wages, but it receives an extra $10 million in sales revenue because it sells more cares, and all of the extra sales revenue is extra profit, because Ford’s production costs are zero. So in this case, Ford’s extra profit is zero.
This is the BEST it could possibly do.
But in reality, workers won’t spend all of the extra money on Fords, which means that Ford won’t recover all of the $10 million extra and it will therefore lower its profit. And in reality, it costs Ford money to produce the extra cars it sells, and this lowers its profit, too.
For instance, imagine that the workers spend only $3 million of the extra $10 million to buy extra Fords, and that it costs Ford $2 million to produce the extra cars that it sells for $3 million. In this case, its extra profit from extra sales is $3 million - $2 million = $1 million, but it pays $10 million extra in wages in order to get this extra $1 million. So, by paying more than it needs to pay, Ford has lowered its profit by $9 million.
All this is OBVIOUS. But to so many people on the left, it’s not, and entire bodies of theory have been erected on the OBVIOUSLY false premise that Ford boosts its profit by paying its workers more than it needs to. This indicates that wishful thinking and comforting myths have crowded out reason and that such folks don’t understand the most elementary things about how capitalism functions. It would do them (and the world) a lot of good to question what they think they know.
Nick Thorne, on 17 September 2013 - 11:57
I’m not sure that you’ve understood my point. Surely it is a fact that over the past 100 years in the Western at world at least, profits for companies such as Ford have increased, while working conditions have also improved. Of course, there is still exploitation, zero hours contracts for example, and as you say there is a tension between profits and wages. But despite this, child labour has been abolished, the the 8 hour working day has replaced the 12 hour working day and so on. And Ford’s strategy, despite what you say, worked. Ford wasn’t altruistic, it paid its workers more for its own gain.
I am not saying that “there’s no fundamental antagonism between the interests of working people and the capitalist system” as you put it. Capitalism is a brutal system, which is why need government regulation and social policy. The system is far from perfect and the suffering of those who are marginalised is appalling. But I disagree with your pessimistic view that the contradictions of capitalism and the conflict of interest between employers and workers are inevitable and unsurmountable barriers to social progress.
Andrew Kliman, on 17 September 2013 - 12:14
NIck Thorne writes. “I’m not sure that you’ve understood my point.” But I did understood his point, as is clear from his comment that “Ford’s strategy, despite what you say, worked. Ford wasn’t altruistic, it paid its workers more for its own gain.”
It wasn’t Ford’s strategy. And as I explained, such a strategy could not have worked. Mere reiteration of an unsubstantiated claim in the face of a counterargument is not an argument. (No offense intended, but it’s known as dogmatism.) If you must persist in thinking that a company increases its profit by paying workers more than one needs to pay them, Nick, you have to find an error in my reasoning, above. Unless and until you do, I regard your point as having been disproved.
JamieSW, on 17 September 2013 - 13:45
Andrew: what if paying workers more had the effect of increasing their productivity? E.g. if Ford workers were happier, better fed, etc. they ended up being more productive?
Andrew Kliman, on 17 September 2013 - 18:39
Jamie, I was addressing the prevalent myth, reiterated by Nick, that paying people more than one has to pay them increases profits because it boosts *demand*. It doesn’t and can’t do that.
The productivity issue is different. The “Fordism” myth is about demand, not productivity.
I wrote, “If a company pays its workers more than it needs to pay them in order to get them to come to work and produce, this MUST reduce its profits.” I don’t think that can be challenged. Your point about productivity doesn’t challenge it, because it concerns a different case, one in which a company *needs* to pay the higher wages to get the workers to come to work and produce.
In fact, that’s the situation that Ford faced, and that’s why it instituted the $5 day. It wasn’t about boosting demand for Fords. It was about controlling turnover of workers. But *not* by making the workers happier; far from it. The higher wages were what Ford had to pay in order to prevent people from upping and quitting all the time because of the assembly line speed and monotony. It’s the price they and other firms had to pay in order to get people to endure torment:
“Shortly after Ford introduced mass production and assembly lines at Highland Park in 1914, the president of an early automobile workers union noted:
“The skilled mechanics may be in the factories, but they get little or no chance to use their skill. The work in each department is split up into so many operations and instead of carrying a piece of work from start to finish they do only a small part over and over.
“He recalled one Ford worker who told him: “If I keep putting on Nut No. 86 for about 86 more days, I will be Nut No. 86 in the Pontiac bughouse.”
“In the late 1920s, another automobile worker described the maddening pace of work in the Ford River Rouge facility. “The workers in their blind submission to the Ford machine,” he testified, “drive each other on in a mad inane orgy of production, and the belt drives them all.”
In 1930, a Yale student who worked for the summer at the Ford River Rouge plant, reported: “Within a week, my machine operation became a series of seven physical movements—absolutely automatic in character.” The student worker stated: “I felt that I was on a tread mill—producing—producing—producing—getting nowhere.” As he labored, he was simply an adjunct to his machine, which regulated the pace of his work tasks. He added: “Just a few, petty, automatic movements on my part—machines had done the rest; brainless machines working with super-human speed and precision.” When he considered his contribution to the work and compared it to the machine, “mine was worth nothing.”
“In 1949, the sociologist Charles Walker conducted detailed interviews for his study of the man on the assembly line of two General Motors plants. When asked about how much thought he put into his work, Joseph Romalko, a dash board assembler, commented: “Brains, hah! It sure doesn’t take brains out there. They just put you in the line and drive you.” Another General Motors worker, William Bradley, observed: “This place is different from any I’ve worked in every respect. If you work here you gradually become an automaton.” One Framingham plant assembly line worker reported: “Anybody who would want to work on an assembly line is crazy in the head. It’s not just the monotony, but the rush, rush. . . . you get in the hole and have to work like hell to catch up.” A black line worker in the same plant also recalled: “you feel like they enjoy working you by push buttons. They push a button for you to begin, they ring a buzzer when they want you to stop and so on.” Another worker stated: “There’s nothing more discouraging that having a barrel beside you with 10,000 bolts in it and using them all up. Then you get another barrel with 10,000 bolts and you know that every one of those 10,000 bolts has to be picked up and put in exactly the same place as the last 10,000 bolts.” George Kane, who attached front fenders, said: “The worst thing is the pressure. It’s like a dog sled. As soon as the whistle blows, they yell, ‘Mush!’ and away you go producing cars. . . . You know when you’re behind and have to work to catch up. They don’t have to tell you.”
“In 1955, auto workers at Ford protested the speed-up and the degraded work conditions in the automated Brook Park plant. Prior to the wildcat strike which involved almost all of the workers in its three facilities, the union president, Alfred Granakis, warned that he, union officials, and Brook Park workers had reached the limits of their patience with the new automated technologies. He wrote to Ford management: “On job after job in the Foundry and Engine Plant, without any notification to the Union , supervisors have been speeding up the lines and increasing production standards to a most unbearable rate. . . . Management must change their attitude of going hog-wild production crazy, or else they must be prepared for the inevitable results of this kind of speed-up.”
“Like their counterparts in earlier automobile plants, Lordstown workers accepted the familiar auto worker trade-off of good pay for rotten work. When asked about the reason for high auto worker pay, Jim Graham, the local UAW leader, noted that autoworkers performed “very strenuous jobs, not physically, [but] mentally.”” ...
All of these accounts, from the auto industry’s first years through the 1970s, reveal a remarkable consistency in auto worker ideas and attitudes about their work-lives in American automobile factories. ... Despite years in the refinement of work reorganization and the development of new production technologies, automobile workers deeply resented and despised their degraded work tasks and work routines. Though they enjoyed their high wages, especially after unionization in the 1930s, few took pleasure in their daily work activities and work regimen in American auto plant.”
http://www.autolife.umd.umich.edu/Labor/L_Overview/L_Overview8.htm
oskarsdrum, on 17 September 2013 - 18:58
Nick - on top of the substantial mathematical logic of Andrew K’s points, it’s rather notable that the last 35 years have been anything but continuous advance for workers in pay and conditions in both the US and Britain! E.g. http://www.tuc.org.uk/economy/tuc-21783-f0.cfm , http://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/31/wages-arent-stagnating-theyre-plummeting/ . A similar trend has been apparent in Germany in the last 10 years or so, following declining profits and broader economic stagnation. There’s no way any individual firm will benefit from increasing wages due to demand effects - much as any capitalist country in the world system increasing wages/social provision will find much of the demand dissipated to its competitors and the costs far outweighing the benefits.
JamieSW – I agree that Marxists all too often disregard a rare instance of common interest between workers and bosses, in maintaining a decent environment where workers feel somewhat invested in what goes on. Looking at workers’ own reports of their experiences, this has a big effect on quality of life and much business literature I think confirms there is some benefit to this for the bosses. However there are many things that pull bosses away from this goal in favour of other more pressing ones: the need to keep up a fast pace of work, the availability of repressive methods to enforce high quality work, the many dilemmas and difficulties of being a ‘liberal’ manager in an alienated production environment…and that’s things that don’t cost hard cash. I suspect most capitalists look at the extra innovative benefit of high wages for the mass of their employees, and cooly decide that the profit isn’t in it for them!
JamieSW, on 17 September 2013 - 20:13
Thanks for the responses. Yes, I recognise that the productivity question is separate from the claim that Fordism worked by stimulating demand, just wanted to clarify for my own benefit. So Andrew, would you be happy with this slightly amended version of a sentence from one of your previous comments?:
“If a company pays its workers more than it needs to pay them in order to get them to come to work and produce at a given level of productivity, this MUST reduce its profits.”
Andrew Kliman, on 18 September 2013 - 00:52
Jamie: yes, I think that’s about right.
Nick Thorne, on 18 September 2013 - 09:38
I’ll try one last time. The point which I was making and which I don’t think Andrew Kliman has addressed yet, is that there have been huge advances in working conditions over the past 100 years, at the same time as increases in productivity and profits. As oskarsdrum says, and as I have said myself, wages for some have decreased, and there is still exploitation. But shouldn’t we acknowledge the fact that children aren’t working twelve hour days down mines anymore? In other words, the original statement that “They think that the capitalists control capitalism––not the other way around––so that the system can become something” is problematic. Instead of another exchange on Fordism, I would be really interested to know how you can reconcile that statement with the social progress and difference in policy across different countries, which has taken place.
Tibor, on 18 September 2013 - 22:53
@Thorne:
Of course no one is defending the “absolute immiseration thesis”. There has been social progress, some of the worst capitalist excesses have been curtailed since the Victorian era, or so it seems. However, I wouldn’t be so quick to claim children aren’t forced to work in mines for 12 hours a day - that may be true in the West, but look at the currently most competitive capitalist countries in the world that are located outside the West. China’s superior competitiveness isn’t due to safe 8 hour work days with benefits, long holidays and permanent work contracts. If we in the West want to catch up, we’ll have to dismantle our welfare-state capitalism - and right now we’re doing just that. Some of the most competitive EU countries - Germany, for example - have seen economic success primarily because of extremely low labor costs (wage restrictions) that were achieved through center-periphery relations which helped them generate current account surpluses, which reflected current account deficits in countries of Southern Europe. Germany has been enjoying economic success to the extent that Southern Europe has been suffering.
I’m not convinced you can simply claim that today capitalism is “self-evidently” a lot more humane than it was. It’s probably true if you tendentiously focus your attention primarily on the countries that have achieved such “humaneness” by outsourcing shitty jobs to the global periphery, and ignore the other side. But that’s about it. Workers in China are performing suicides on the job, so protective nets have to be put outside of factories. Also, child labor across the globe is much more prevalent than you might think. Is this really much better than 100 years ago? I’m not so sure.
However, that is not my main point. What Kliman is rightly arguing against is a voluntarist view of capitalism that is predominant on the left currently. With statements like “They think that the capitalists control capitalism––not the other way around,” he’s claiming that it isn’t true that the current economic malaise we’re experiencing, for example, is fundamentally caused by greedy bankers, corrupt capitalists and shitty politicians. They might have helped, but the root of the problem is, sadly, systemic (i.e., the same would happen even if everyone did exactly what “they’re supposed to”).
He is, of course, not saying that class struggle doesn’t exist and that in capitalism everyone is devoid of a will, quite the contrary. He is, instead, saying that a lot of popular leftist theorists that focus so much on “bad finance” and argue for boosting personal consumption demand, for example, to solve the current economic crisis, are not grasping the way economic activity under capitalism is structured. I can’t see how claiming something like that is in contradiction with the existence of welfare-state (i.e., “social progress and difference in policy across different countries”), for example.