At 17:53 13/04/2012, Tom wrote:
(TW) 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.
(KH) I can only imagine a condition of
equilibrium economics (in the Marxist/Keynesian
sense) in a world in which there is a constant
stream of brand new consumer goods flowing down
from the exclusive purchase by the rich and
becoming more accessible by virtue of increasing
mass production at every social level. I would
also want to assume a supply of energy at
constant cost, a steady population and a stable external environment.
I can, however, imagine another sort of
equilibrium economics, perhaps of the
"evolutionary" sort that you might be implying,
in which there is optimal automation of a
standard set of consumer goods production and
distribution (P&D), in which there is a constant
improvement in energy efficiency. World trade
would then consist of balanced exchanges between
highly specialized groups, cities, nation-states,
what-have-you, of methods of improvement of P&D
rather than good themselves. This would be a
world which, in fact, would be quite close to
Marxist aspirations, but also close to the
self-equilibriating economics that Keynes scoffed
at but which actually was evolving in the decades
just prior to governmental money-printing occasioned by the First World War.
(Incidentally, I hadn't come across Sir Sydney
Chapman's economic ideas. He seems to be thinking
of a Laffer Curve of labour rather than governmental taxation.)
Keith
On Thu, Apr 12, 2012 at 7:32 PM, Keith Hudson
<<mailto:[email protected]>[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
(<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/>http://allisstatus.wordpress.com
--
Cheers,
Tom Walker (Sandwichman)
Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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