At 19:11 13/04/2012, Ed wrote:
(EW) Not sure that you have Keynes and Marx
right here, Keith. When I studied economics,
Keynesianism was still very much the vogue. I
don't recall that his solutions were to be
applied via the banks or printing money.
(KH) I didn't say that. What I said was that that
was something that neither Marx or Keynes could have imagined.
(EW) Rather, the idea was to involve large scale
public works etc. when the private sector ran
out of steam and the public sector had to kick
in. I suppose that borrowing and printing money
might have been part of this, but it was not emphasized.
Exactly. It was because government set the
pattern of creating lavish amounts of credit by
money-printing that banks became infected. The
banks didn't print money directly, of course. But
customers' new bank account credits found their
way, via cheques, into new banknotes which central banks had to print.
(EW) As for Marx, the ideas were very good, but
how would you ever do what he
recommended. Well, as Lenin and Stalin
demonstrated, the state would do it, and in
doing it, they would convert a humane idea into a horror show.
One of the best books I've read on why good
ideas go terribly wrong is John Gray's "Black
Mass". If you haven't read it, do take a look.
I'm always suspicious of intellectuals who do an
almost overnight switch from one end of the
political spectrum to the other. I've read early
Gray but not "Black Mass". But I'll certainly have a read of it.
Keith
Ed
----- Original Message ----- From: Keith Hudson
To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION ; Tom Walker
Sent: Thursday, April 12, 2012 10:32 PM
Subject: Re: [Futurework] "Efficiency's Promise:
Too Go od to Be True" "More Jobs Predicted for Machi nes, Not People"
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out-of-date statistics that Engels was feeding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") and Erik Brynjolfsson's and Andrew
McAfee's Race Against the Machine ( "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
--
Cheers,
Tom Walker (Sandwichman)
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
Keith Hudson, Saltford, England http://allisstatus.wordpress.com
_______________________________________________
Futurework mailing list
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