Unemployment and Revolution (Part 1) – by Albert Langer, written in 1981

Unemployment and Revolution

First published in August 1981 as an Australian Political Economy Movement conference paper by Albert Langer (Adelaide 8-9 August.1981). It was republished subsequently by the Red Eureka Movement. (REM).

It holds up very well, given that it was written more than 30 years ago.

Brief Synopsis

Conservative economists and politicians generally argue that unemployment and inflation in Australia are the result of changes in the international economy, and that Australia has to adapt to those changes or things will get even worse. They say government economic policies must promote more rapid economic growth by stimulating profits and investment at the expense of real wages and social welfare.

Labour movement opponents of the current Liberal government have proposed a series of sometimes contradictory arguments in opposition to this line. Explicitly or by implication they suggest that unemployment is at least made worse by the present government’s economic policy, and could be improved if different policies were followed. Various proposals are advanced – such as:

for shorter working hours

redistribution of wealth from the rich

protection of Australian industry

limitations on technological change

nationalisation

government job creation schemes

improvements in the lot of the unemployed

measures to stimulate economic growth without attacking living standards

and so on.

These proposals have had little impact on public opinion. Given the manifest failure of its economic policies, there has been nothing like the mobilisation against the government that might be expected.

The reason is that these proposals do not make sense. They ignore fundamental facts about how capitalism works, and about recent economic and political history.

The capitalist system is not capable of restoring full employment in any of the ways suggested from the labour movement, and it is silly to pretend that it can. The only alternative to conservative policies will be communist revolution. That alternative must be made realistic.

Introduction

Before deciding what could – and what could not – reduce unemployment, we first need to look at what causes unemployment. I am not very clear on that myself, but I still feel confident enough to reject various commonly accepted views on the subject. I will state my own provisional understanding rather baldly. Others can then point out its inadequacies, and we can go on from there.

This paper is thus a preliminary attempt, necessarily half-baked, and partly written for the purpose of self-clarification. It examines an issue that really needs to be considered in close connection with many other economic and social questions. It would have been better to have provided more facts and figures, examples and other evidence for the assertions below, as well as more explicit reference to other views. But we have to start somewhere.

Hopefully feedback will result in refinements and modifications of the arguments. Please do send comments.

Part 1. Emphasises that unemployment is specifically a problem connected with market economies. Then it gets slightly distracted to talk about science fiction and jellyfish.

Parts 2., and 3. Analyse the economic mechanisms that regulate “normal” unemployment, in order to explain the conservative arguments for “wage restraint” and why such arguments are wrong.

Part 4. Examines “technological” unemployment and shows that the increased unemployment now is not “technological”.

Part 5. Attempts an explanation of “overproduction” and “cyclical” unemployment (without great success).

Part 6.Considers various “solutions” from the labour movements, in the light of the earlier analysis, and rejects them all, but cheerfully, in view of part 7.

Part 7. Tries to give some concrete content to the idea that “the only solution is revolution”.

1. WHAT IS “UNEMPLOYMENT”

First, let us be clear about what unemployment actually means. Unemployment and employment are two sides of the same coin. Capitalism is based on wage labour. Workers sell their labour power to employers for money wages. They are “employed”, that is “used”, or “exploited”, to produce profits. They do not work for themselves, but are “employed” by others. Inherent in this is the possibility that some workers will be unable to find a buyer who is willing to purchase their labour power when it is offered for sale.

In fact unemployment is not only possible, but inevitable, in a capitalist or market economy. The labour market, like the other commodity and financial markets, is an essential mechanism regulating production and consumption by balancing supply and demand through price movements. Even at the height of prosperity there has to be some pool of unemployed for employers expanding their operations to recruit from. Otherwise they could only recruit from other employers by offering higher wages.

“Full employment” actually means “very little unemployment” – say 1% or 2% – just enough to stop a “wages explosion”. Any less unemployment than that is not “full employment” but a “labour shortage”.

The very term “market economy” implies an economy in which commodities, including labour power, may be offered for sale with no buyer. If there was a guaranteed buyer, then the transfer would be some sort of allocation, rather than a free market exchange.

So in a market economy, goods and services may be left unsold, capacities for production may be under-utilised, and workers may be unemployed. It all depends on the market – ie on whether somebody is willing to pay money for them.

For additional workers to be employed, an employer has to be able to make a profit out of employing them, by selling what they produce on the market at a price higher than their wages. If this is possible, then some employer, whether government or private, will do it. But on the other hand, if no profit can be made from employing additional workers, directly or indirectly, then they cannot be employed.

The government can pay them unemployment benefits, and it can call these benefits “wages”, but if the work done does not pay for itself on the market, it is not “employment”, and will require a continuing subsidy from revenue obtained by taxing real employment.

If there were any commodities with guaranteed buyers in a free market, then those commodities would be in short supply and their price would go up until there were no longer guaranteed buyers. That is actually what happens to wages when unemployment falls below a certain minimum. This is perfectly normal and completely unavoidable.

Most proposals for reducing unemployment lose sight of this essential fact. If it was possible to reduce unemployment by some simple measure to increase the number of jobs immediately available, then it would theoretically be possible to eliminate unemployment entirely by pursuing the same measures more vigorously.

However the basic nature of a market economy does not permit that. In fact it regenerates unemployment as part of its normal functioning. “Job creating” measures might work in some other kind of society, where work is done because a job needs doing, rather than because someone is willing to pay for it. But in a market economy, jobs are “created” by the market, and only by the market. Somebody has to pay.

In order to confirm that unemployment really is just the other side of employment and only occurs where work takes the form of wage labour, we can examine some societies which do not have a market economy.

Employment is so “normal” in our society that one tends to take it for granted and to look elsewhere for the explanation of unemployment. So it is worth reminding ourselves that employment and unemployment are characteristic features of only one kind of society – the capitalist or market economy.

Other Societies

Primitive Communism

Savage society was characterised by a primitive form of communism in which people worked together as a tribe. There were no employers and there was no question of finding or losing a job. You could starve to death, or get eaten, but you could not become unemployed. The fact that it’s quite common to hear modern society compared unfavourably with primitive society says something about how disgruntled people are with capitalism. In reality however the life of the “noble savage” (including the Australian Aboriginals) was, as Hobbes famously said, “nasty, brutish and short”. Nevertheless there was absolutely no reason why everybody in the tribe could not work at once. Unemployment was just not a possibility for people living in these societies.

Slave and feudal societies

Slave society marked a considerable improvement, for civilisation, culture and so forth. This was so even for slaves since captives were no longer killed and eaten. There was still no unemployment. Even as recently as feudal society, for most of the population there was no such thing as employment and unemployment. A peasant or serf did not have to find a job. They simply worked the land and engaged in household industry. They could suffer from wars and famines, but not from unemployment. An artisan might have difficulty selling goods, but could not become unemployed. Again, reactionary romantics, including many supposed to be “left”, often look back on the cramped, narrow lifestyle of those times, as though it was some sort of “golden age” compared with modern society.

Modern society based on wage labour has opened up much wider horizons than anything that existed before it. But unemployment is part of the deal. Nevertheless it is a good deal compared with tribalism, or slavery, or being tied to the land.

Freedom to sell one’s labour power on an open market is an enormous advance over previous social systems in which people were born into their jobs and were therefore stuck with them for life. This freedom is the basis for all other freedoms.

However the deal is no longer good enough. We want more freedom and we will have to move beyond a market economy to get it. The current concern about unemployment is just one sign that the social system we have now is no longer good enough.

Future society

In future communist society people will not work for wages, but for social needs, as was the case in primitive communist society. They will not buy their requirements in exchange for money received as wages or profits, but will be given an allocation in accordance with their needs. Again, as in primitive communist society.

Unlike primitive communist society, people will not be ruled by “necessity” but will use their knowledge of natural laws to attain freedom from the blind working of “nature” or “fate”. Work as an obligation, and consumption as a right will not need to be enforced through commodity exchange, any more than they will need to be enforced through tribal sanctions.

Distribution will be “from each according to their ability, to each according to their needs”. The state as an apparatus of coercion will wither away since the government of people will give way to the administration of things. The free development of each will be the condition of the free development of all, and the long dark ages of the pre-history of humanity will have ended.

Science Fiction

It is worth reminding ourselves that this is what the progressive movement is ultimately all about – something that often gets forgotten in the midst of day to day struggles.

Even some science fiction stories take it for granted that humanity is headed towards a sort of communistic society. Sci fi characters tend not to be looking for jobs, receiving wages, or buying things with money. In these stories people do various jobs and obtain supplies of accommodation, food, and other things they need, without buying and selling. Although social relations specific to capitalism are often imposed on sci-fi societies quite inappropriately, there is still no “private enterprise” in many of these visions of future society. Likewise “nations” often seem to disappear.

Needless to say, in such a future society there would be no question of unemployment, since there would be no labour market. Despite this there could be plenty of other problems – just check out the sci-fi literature for examples.

Further along, or for alien life-forms, the very concept of “society” gives way to a single organic whole, where there is no question of distribution “from” or “to” any separate individuals. This reminds us of the way in which single celled creatures first gathered into colonies and then evolved into jellyfish -like creatures and eventually some went on to develop into highly complex organisms.

But returning to the present millennium – communism will still not be a good enough deal once we have it! People will then be ready to demand something along the lines of “From each according to their inclination, to each according to their wildest dreams” – and other more radical proposals.

There will still be struggles and the need for revolutions. We cannot predict what new problems will arise as humanity continues transforming itself and eventually changes into, or gives way to something quite different from the present species.

But unemployment will certainly be a problem over and done with, once employment is over and done with. It is not a permanent problem and one day we will not have to worry about it, just as today in most advanced countries we do not have to worry about starvation.

Coming right back now to the present day, communism is long overdue and we still have unemployment – and it is growing. However in recent times we have actually seen examples of modern societies where unemployment was not a problem. These were societies that had consciously set out on the road towards a communist society and had begun abolishing the market economy. They had no difficulty controlling and then eliminating unemployment. This was despite the fact that they had started with extremely backward economies and first had to deal with even bigger problems such as starvation. There was not any unemployment in the Soviet Union when it was socialist, even at the height of the 1930’s Great Depression.

However today there is unemployment in some sectors of the Soviet economy and labour shortages in others (apparently with an overall labour shortage as existed in most western capitalist economies in the 1960’s.) Since Soviet economists admit there are labour shortages, there must be a labour market, and that implies the shortages will later be followed by surpluses, just as in the West.

In China the connection between a market economy and unemployment is more dramatically obvious. There was no unemployment at all in China from the 1950’s until recently. There may be arguments about how efficiently people were employed, but nobody seriously suggests there was actual unemployment.

Within a few years of the restoration and expansion of market relations (ie since 1977), mass unemployment exceeding 20 million people has become a major social problem. Previously investment was planned and regulated by a socialist state, with each enterprise responsible to the state plan and having no independent right to hire and fire. Now enterprises are “free” to take their own independent investment decisions and to hire and fire while at the same time, workers are “free” to be unemployed.

All this suggests that we must examine every proposal for reducing unemployment, according to its implications for a market economy. Unemployment is a problem specific to capitalism and it is no use looking at solutions that ignore the specific features of market economies. We need to figure out how the labour market actually works in a capitalist economy.

(Next instalment: WHAT “NORMALLY” CAUSES UNEMPLOYMENT?)

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