Originally published June 25, 1984
IN TWO mind-opening books on money (Money and the Real World and International Money and the Real World) Paul Davidson, professor of economics at Rutgers University, has occasion to use the phrase “in a world where slavery and peonage are illegal.” In both cases, he is explaining that industrial production takes time, requiring industry to plan for weeks, months or even years ahead. To be sure of adequate materials at acceptable prices, manufacturers enter into contracts with their suppliers for future delivery. The largest factor in the cost of both supplies and finished goods is the cost of labor; therefore, Davidson argues, stable labor contracts are in the interest of modern industry.
Davidson is a civilized as well as a rational man. Consequently he sees a stable labor market as one in which labor is fairly paid and decently treated. “Efficient planning … in a world where slavery and peonage are illegal,” he says, “requires contractual commitments for … regular (non-casual) employment and fair treatment for labor over time.” This proposition will surely commend itself to other civilized and rational individuals.
Toiling in a neighboring vineyard, John Kenneth Galbraith, professor emeritus of economics at Harvard, has argued in The Affluent Society that modern industry is so productive it does not have to coerce workers (as Victorian industry perhaps had to) by keeping them in squalor and threatening them with starvation. He observes the money and effort modern business puts into advertising and selling, and concludes that the things produced must be little needed if finding buyers requires such expenditure. From this “it follows,” he explains, “that the efficiency of the process by which they are produced ceases to be an overriding consideration… Under these circumstances, the relation of the modern corporation to the people it comprises -their chance for dignity, individuality and full development of personality – may be at least as important as its efficiency …. Evidently the unions, in seeking to make life tolerable on the job, were being governed by a sound instinct. Why should life be intolerable to make things of small urgency?”
And as a matter of fact it was possible, only a few years ago, to hope that such obvious logic and reasonableness were beginning to break through the age-old barriers of greed and fear. As I noted recently in this space (“Voodoo on the Primary Trail,” NL, April 30), many labor leaders were confident of the dawn of an era of good feelings. Davidson is describing the rational actions of civilized businessmen, and Galbraith is prescribing rational actions for a civilized society. We are not, however, beneficiaries of any law guaranteeing that either businessmen or their society will be rational or civilized. There is, indeed, another way of looking at the economy that is as up-to-date as neoconservatism or neoliberalism, and is now generally accepted in the boardrooms of our great corporations. For convenience we may call it The Business Roundtable way.
This starts, as do Davidson and Galbraith, with the observations that labor is the largest single cost of production, and that we don’t need all the labor available to us in order to maintain ourselves in the style to which we have become accustomed. But The Business
Roundtable way concludes from these observations that the smart thing to do is to stabilize labor costs at the minimum, and that a whiff of unemployment is a mighty convincing stabilizer.
There is no doubt that the recent depression and the so-called recovery, with 8 million men and women still unemployed, have been deliberately stage managed accordingly.
A few quotations may dramatize the reasoning behind The Business Roundtable way: “With increasing productiveness of labor, the power of sudden expansion also grows, because the technical conditions now admit of rapid transformation into additional means of production. In all such cases, there must be the possibility of employing masses of men suddenly without injury to other spheres.”
“Industry progressively replaces skilled laborers by less skilled, mature by immature, male by female. The productiveness of labor increases the supply of labor.”
“Overwork of employed labor swells the ranks of the unemployed, while the latter, by their competition with the employed, force them to submit to harder work and lower wages.”
“Investment in the means of production and the productiveness of labor means that the labor force increases more rapidly than the need for workers.”
“Taking them as a whole, the general movements of wages are regulated by the expansion and contraction of the unemployed.”
The foregoing passages, which accurately enough represent the thinking of The Business Roundtable, are of course somewhat edited and sanitized quotations from Capital by Karl Marx. The original versions can be found in Chapter XXV – “The General Law of Capital Accumulation” -where Marx develops his notion that what he cleverly calls the industrial reserve army is necessary to the capitalist system. As a military commander uses a reserve army to exploit sudden openings or reinforce sudden weaknesses, so, Marx says, capitalists use the industrial army of the unemployed.
ONLY THE other day, as the Great Society of Lyndon Johnson unfolded under the supervision of Joseph Califano, it seemed that, like so much of Marx, the industrial reserve army was specific to the 19th century and consequently destined to be discarded in the last half of the 20th. But instead we have been discarding the Great Society, while the industrial reserve army is still with us, 8 million strong. And besides the 8 million in the domestic divisions, there are uncounted millions in the Orient and in the Third World generally.
The usefulness of this massive army that already exists lies in its very lack of organization. Its deliberate exploitation has so changed labor relations that rational analyses like Davidson’s of the need for civilized labor contracts are being brushed aside as irritatingly idealistic. Industry still needs to plan ahead, as Davidson says, and planning still depends on the availability of adequate labor at foreseeable wages. But as Marx said, and the Business Roundtable agrees, productivity is a euphemism for employing less skilled and less well-paid labor. As a result, the world-wide industrial reserve army can be expected to be mobilized to exert a steady downward pressure on wages and working conditions. If wages are falling, and potential scabs are plentiful, business has a greatly reduced incentive to contract for “regular employment and fair treatment for labor over time.” Slavery and peonage are of course illegal, but the industrial reserve army is a more convenient means to the same end. Marx recognized that, too.
It is, in truth, difficult to fault Marx on his analysis, and impossible to fault him on his passionate attack on the abuses he observed. We read with horror of Bradford, a Yorkshire worsted-mill city, where as many as 18 people – for the most part regularly employed workers – lived crowded into a single room; where in one neighborhood there were 223 houses sheltering 1,450 inhabitants, but with only 435 beds (many of them merely “an armful of shavings”) and 36 privies, or one for every 40 people. According to The Blue Guide: England, Bristol today “preserves … splendid examples of Victorian industrial architecture.” At the time those factories were built, Marx reports, Bristol was notorious for “the misery of its dwellings.” And this one chapter of Capital has 72 pages of similar details.
That we react with amazement to such accounts points to the fact that some things are better now than they were 150 years ago. That some things are better now points to the fact that Marx was mistaken in thinking his dialectics of materialism would inevitably bring his apocalyptic vision to pass. Given the nature of that vision, this is a blessing.
Nothing inevitably comes to pass, for there is nothing either good or bad but doing makes it so. What is done – or not done – is our doing. Whether we move ahead into the rational and civilized world described by Davidson and Galbraith, or fall back into the brutal and degrading world described by Marx and complacently accepted by the Business Roundtable – whichever we do, it will be our doing. We had better get on with it.
The New Leader