Just to clarify -- my aim in citing Keynes and Marx was narrow here. I wanted to call attention to their critiques of the "self-adjustment" or "compensation" thesis that is virtually an article of faith among economists, both old and new. I agree with Keith that what are commonly regarded as "solutions" advocated by Marx and Keynes -- "Communism" and "Keynesianism" -- have failed. But in a longer paper linked to my blog article, "Further Thoughts on the Use of Machines: a statistical science fiction," I develop the thesis that those programs were not actually the ones that Keynes and Marx saw as the "ultimate solution".
Rather than dwell in the sterile exercise of "What Marx (Keynes) REALLY meant," though, I find it more useful to explore the contribution of a little known economists from the turn of the 20th century, Sir Sydney Chapman, whose historically-grounded industrial economics set the stage for the establishment of a welfare economics that unfortunately was not fully realized. In a nutshell, that alternative welfare economics would view social cost and externalities as the foundation of an evolutionary economics rather than as a peripheral afterthought of equilibrium economics. On Thu, Apr 12, 2012 at 7:32 PM, Keith Hudson <[email protected]>wrote: > 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 (or at least had been a few years previously according to the out-of-date 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* ( "Efficiency’s > Promise: Too Good to Be > True"<http://www.nytimes.com/roomfordebate/2012/03/19/the-siren-song-of-energy-efficiency/efficiencys-promise-is-too-good-to-be-true>) > and Erik Brynjolfsson's and Andrew McAfee's *Race Against the Machine* ("More > Jobs Predicted for Machines, Not > People"<http://www.nytimes.com/2011/10/24/technology/economists-see-more-jobs-for-machines-not-people.html>). > 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 > > -- > Cheers, > > Tom Walker (Sandwichman) > _______________________________________________ > Futurework mailing list > [email protected] > https://lists.uwaterloo.ca/mailman/listinfo/futurework > > ** > > ** Keith Hudson, Saltford, England http://allisstatus.wordpress.com > > -- Cheers, Tom Walker (Sandwichman)
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