It seems to me that the long term growth of employment depends on the
long term growth of consumption.
The familiar way of stating the issue, "job creation resulting from
technological progress" always bothers me. Technological progress
destroys, doesn't create jobs. What occurs is that technological
progress frees resources, i.e. what was produced yesterday can be
produced today with less/fewer inputs. Those now-available inputs can
be used to produce something more than before, or something that
wasn't produced before. But what actually gets something produced is
monetary demand for it. Thus if workers have the income to buy more
stuff -- after technological progress -- and they spend that money,
jobs will be created.
The liberal view, IMHO, is that workers must fight for and get a fair
share of the GDP in order to keep consumption growing. But what has
happened over the past thrity years is that almost all workers did not
get a fair share of the increased output. Nevertheless, jobs and the
economy kept growing, as did technological progress. I think we have
come to the end of that. Growth kept going in spite of the fact that
incomes did not because people kept consumption on track by drawing
down whatever saving they had and then borrowing to keep consuming.
We all know the story. Credit cards, easy and then easier mortgages,
with cash back, and then second mortgages, car loans stretching from
three years to four, then five, then six, then seven. Student loans.
Consumption kept up with technological progress in this way, but
perhaps no longer.
The question is, can technological progress keep going if consumption
can't or won't keep up as jobs disappear? Or will things grind us up
more slowly than before?
I'll look for your book, which sounds very useful.
Gene Coyle
On May 6, 2008, at 3:49 PM, Gernot Koehler wrote:
For readers with an interest in the long-term growth of aggregate
employment (or lack thereof).
Marx’s view on the relationship between technological progress and
(un)employment was right in theory, but wrong in empirics, insofar
as he underestimated the potential of job creation resulting from
technological progress. Joan Robinson got stuck with her attempt to
develop a “long-period theory of employment”. Rather than trying to
develop a theory or model on the long-term growth of employment, I
conducted a comparative empirical study of long-term employment
growth and decline, examining a wide range of evidence from the 20th
century about the long-term growth of employment in the countries
around the world, including industrialized, developing, and formerly
Communist economies. The empirical investigation distinguishes
between normal and abnormal employment growth – that is to say,
“normal” if aggregate employment increased commensurate with the
growth of the labour force; and “abnormal” if aggregate employment
deviated from that trend due to war, transition shock, and system
breakdown, or if there was growth of underemployment, jobless growth
or job-destroying economic growth. Major related theories are
critiqued, including theories of unemployment, economic growth,
technological progress, and structural change. Standard labour
market economics are criticized for following a “slave auction
model” of employment.
Reference:
Job Creation: The long-term growth of employment, normal and abnormal.
New York: Nova Science, 2008
See
https://www.novapublishers.com/catalog/product_info.php?products_id=6781
GK
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