Correction; The first sentence of the third paragraph should read:
<<<<
By the time Keynes was writing most of the iconic
consumer goods that we have today (electrical
goods of many sorts, telephone, radio,
television, car) were already in existence for
the enjoyment of a growing middle-class (what I
term the 20-class of today), but not yet for most
of the population (what I term the 80-class of today).
>>>>
Tom,
Your previous comments over the years on FW
concerning the "lump of labour fallacy" caused
quite a change of mind in my own thinking, so I
was interested to read your recent exegesis of
the increasing automation-joblessness problem on
your ecologicalheadstand website. There, you
contrast the different approaches taken by Marx
and Keynes in trying to solve the same problem.
Here, I'd just like to describe what I think are
the reasons why they both failed.
Marx was writing at a time when factory
conditions were still atrocious (or at least had
been a few years previously according to the
out-of-date statistics that Engels was feeding
him with) and workers (mostly fresh from the
countryside and highly biddable) were being badly
exploited by the factory owners (with the
exception of a few such as Robert Owen, and some
of the Quakers, etc). On the whole, though,
workers were slowly beginning to prosper and, due
to gradually improving water and sewage works in
the large cities, children were surviving in
larger numbers and the population was expanding
at a fast clip. They were beginning to buy modest
versions of the sort of consumer products that
the middle-class were already buying. Growing
production efficiencies were such that a growing
demand could be met and even if workers were
displaced from one factory due to more automation
they could usually find another job in a factory
in a slightly newer industry. Note, however, that
when Marx was writing none of the consumer goods
were yet important enough (or pricey enough) that
they were transformational both in their economic
effects (the saving of money to buy the goods)
and in their social use. Within two or three
decades, however, workers were able to buy a
bicycle, for example, which enabled them to be
much more choosy about where they might work for the best wages.
By the time Keynes was writing most of the iconic
consumer goods that we have today (electrical
goods of many sorts, telephone, radio,
television, car) were already in existence for
the enjoyment of a growing middle-class (what I
term the 20-class of today), but not yet for most
of the population (what I term the 20-class of
today). And they certainly weren't for the
millions of workers in the industries which had
been highly profitable (producing highly
exportable goods) in the years before World War
I. These were cotton, coal, ship building, heavy
engineering (bridges, railway locomotives, etc).
These were no longer profitable (or exportable)
because, although money had inflated three times
during the War, the Bank of England (then more
powerful than the Government) was intent on
deflating the pound until it was as valuable as
the pre-war pound. Many workers' wages in the big
industries were ground down and owners couldn't
get the capital to reinstate their machinery,
worn-down by the war. Exports were drying up.
Keynes' General Theory was therefore concerned
mostly with how to overcome this large-scale
unemployment problem rather than to describe an
economic theory of an economy in equilibrium.
Although there was a cornucopia of consumer goods
that were, in theory, available for millions of
workers to buy they simply hadn't enough wages
(or had none at all) to buy them with.
But neither Marx or Keynes were able to imagine a
world in which credit would become so widely
available as today (or, rather until 2008). By
1980/90 or so, not only were workers receiving
wages that enabled them to buy consumer goods
that Marx could never even dream of, workers were
able to get credit for money far beyond anything
Keynes could possibly imagine. In his day (when
he wrote his Theory), the big commercial banks
were growing so fast and so out of control of the
Bank of England (or of the Fed in America) that
instead of keeping up to 20% or even 30% of cash
in reserve when they created credit (to carefully
assessed customers) they allowed their reserves
to decline to almost nothing (0% to 2% or 3%) by
the time of the 2008/9 crash, Instead of being
constrained to give credit of something up to 3
or 4 times their reserves, they were beginning to
give almost unlimited credit. And, just to make
sure (so they thought) they were all in addition
buying and selling insurance policies
(derivatives) from one another. In Japan, America
and Europe, the commercial banks felt impregnable
until 2008/9 hit them (though it hit Japan in
1990). (The small number of investment banks were
in far better condition because they were clever
enough to invent the myriad of derivatives with
which they conned the high street banks.)
But despite the limitations of their respective
theories, both Marx and Keynes (geniuses both to
be sure) were aware that the very real problem of
almost total automation of consumer goods still
existed over the longer term. Who would be able
to buy them? It is this ultimate problem which
neither has been able to solve. Marx's solution
(communism) has already collapsed, Keynes'
solution (government controlled money-printing
and attempted bail-outs of the banks) looks very
much as though it is not succeeding.
Keith
At 00:11 13/04/2012, you wrote:
An invisible thread connects David Owen's The
Conundrum
(<http://www.nytimes.com/roomfordebate/2012/03/19/the-siren-song-of-energy-efficiency/efficiencys-promise-is-too-good-to-be-true>"Efficiencys
Promise: Too Good to Be True") and Erik
Brynjolfsson's and Andrew McAfee's Race Against
the Machine
(<http://www.nytimes.com/2011/10/24/technology/economists-see-more-jobs-for-machines-not-people.html>"More
Jobs Predicted for Machines, Not People"). Both
books address real -- and very important --
problems but they both arrive at false conclusions.
The "conundrum," according to Owen, boils down
to a lack of commitment driven by conflicting
motives, "Do we honestly care?" he laments at
the end, citing George Orwell's observation
that, "All left-wing parties in the highly
industrialized countries are at bottom a sham,
because they make it their business to fight
against something which they do not really wish to destroy."
Meanwhile, Brynjolfsson and McAfee prescribe the
clichéd panaceas of education, "flexibility" and
entrepreneurship: "Our skills and institutions
will have to improve faster to keep up lest more
and more of the labor force faces technological unemployment."
continued at:
<http://ecologicalheadstand.blogspot.ca/2012/04/efficiencys-promise-too-good-to-be-true.html?spref=fb>http://ecologicalheadstand.blogspot.ca/2012/04/efficiencys-promise-too-good-to-be-true.html?spref=fb
--
Cheers,
Tom Walker (Sandwichman)
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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