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Solutions: Part 6 of ‘Unemployment and Revolution’ by Albert Langer, 1981

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Part 6: Solutions

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

– “Giving Fraser the Razor”

– Blowing Up the Balloon

– Fine Tuning

– Political Facts

– Shorter Hours and Higher Pay

– Expanding the Public Sector

– Workers’ Co-operatives

– Labor to Power with Socialist Policies?

– Economic Consequences of Statism

– Protectionism

– “Militant Struggle”

– Revolutionary Optimism

6. SOLUTIONS

The collection of previous instalments on the nature of unemployment is important because it suggests what could and what could not be solutions to the problem.

It follows from the above analysis that the unemployed form an essential “reserve army of labour” as necessary to ensure a continuous supply as the existence of stockpiles of commodities in the warehouses or unused production capacity in the plants. The size of this reserve army does not depend primarily on government policy, but on the objective state of the economy and the phase of the business cycle that it is in.

Australia is part of an interlocked world capitalist market where capital flows freely according to the rate of profit, and where movements in interest rates, prices, wages, and unemployment therefore take place in parallel among all the advanced western capitalist countries together. It would obviously be nonsense to blame the overall state of the Australian economy on the particular policies of any government here, since the same situation exists throughout the western world.

The conservatives are right to say Australia has to adapt to changes in the world economy or the situation will get worse. They are also partly right to say that to stimulate investment and reduce unemployment profits must be improved at the expense of real wages and living standards. But they are wrong to pretend that there will be much improvement without a major economic crisis.

Unemployment has grown because overproduction and insufficient expansion of markets has reduced profit margins and therefore reduced investment. Any “solution”must therefore involve expanding markets to increase profitability. That is the crucial fact which emerges from studying the causes of unemployment.

A lot of people in the labour movement do not like admitting this and instead come up with all kinds of fancy arguments suggesting that capitalism is really a wonderful system capable of continuously improving living standards and providing jobs for all – if only the government would follow correct economic policies.

Those arguments are very mysterious and technical, involving “multipliers”, “accelerators” and various tricks with mirrors. But you only have to look around at the real world to see they are bullshit. For what possible reason would the capitalists be ignoring this wonderful advice on how to keep their system going, if it could really work?

The conservatives are openly admitting that capitalism is a rotten system which needs to grind people down in order to keep going. They are admitting that full employment and rising living standards are not permanently compatible with the capitalist system, which has its own requirements contradictory to social needs. They are actually admitting that production for profit is the cause of our problems.

On that point every socialist, revolutionary or not, must surely agree with the conservatives. Only the wettest “liberals” could join the Labor Party in insisting that there is really nothing wrong with the capitalist system itself – the problem is that wrong economic policies are being followed.

Socialists will not disagree with conservatives about the existence of statistical facts, like the decreased share of profits in the GNP, “real wage overhang” and so on. We will not join the Labor Party in arguing that it can all be fixed by magic tricks with mirrors.

Where we do disagree with conservatives is about whether capitalism is such a wonderful system that we should put up with unemployment and reduced living standards just in order to keep it going a bit longer.

Where revolutionary communists will disagree with other “socialists” is whether capitalism is just getting worse in a gradual way that would make it possible to introduce socialism peacefully, or whether it is heading for major upheavals which make a violent break between the old system and the new, both necessary and possible.

Now let us consider some of the various “solutions” that have been proposed for unemployment according to the simple criteria – “will this proposal increase profitability”. If it will not, then we know from the analysis above, that it will not work.

Giving Fraser the Razor

Attempting to blame each other for the state of the economy happens to be one of the daily preoccupations of Government and Opposition politicians, and unfortunately the left generally goes along with this charade.

Conventional wisdom has it that government job creation schemes, more stimulation of the economy through deficit spending, and various specific adjustments in economic policy could improve the situation. Only Fraser’s “razor gang” mentality prevents these solutions being adopted.

In Britain the state of the economy is being blamed on the Thatcher Government, by business as well as labour. But tightfisted “monetarist” governments have come to power in Australia, Britain and the USA as a result of the previous failure of their opponents to improve the state of the economy. They may conceivably make things worse. But their predecessors have not done too brilliantly either. It will be interesting to see what happens in France. Does anybody on the left seriously imagine that France will now escape the economic difficulties embracing the rest of the capitalist world, because it has a more ‘progressive’ government?

At the first Australian Political Economy Movement conference in Sydney, there were a number of papers purporting to explain unemployment and economic crisis as an inherent feature of capitalism. None of them even suggested that the personal malevolence of Malcolm Fraser was a cause of the problem – let alone the cause.

Nevertheless, the conference plenary session adopted a resolution loudly denouncing the Fraser Government for causing our economic difficulties with its wrong policies!

If that is the response of people at a political economy conference, it is not surprising that the left generally completely capitulates to Labor Party views about the economy. The general feeling is that somehow or other, it must be Malcolm Fraser’s fault, even though unemployment actually grew much more rapidly under Whitlam than it has under Fraser.

Even people who know better tend to go along with this because there does not seem to be much else to do. Demonstrations and agitation have to have a target, and Malcolm Fraser, with his callous attitudes, makes a good one.

If we cannot blame government policy, what can we do? It is in the Labor Party’s interest to pretend that Fraser’s policies are the cause of unemployment. But the only way Labor could do better than Fraser at reducing unemployment would be if they know how to make industry more profitable. There is no evidence that they do, and no reason to doubt that Fraser is doing as much to increase profitability as he possibly can.

Certainly we should give Fraser the razor, along with Bill Hayden, Bob Hawke and the rest. It will improve public morale no end. But it will not bring down unemployment. Only improved profitability and expanded markets can do that.

Blowing Up the Balloon

The main thrust of objections to the Fraser Government’s economic policies seems to be that they could do more to stimulate the economy by increases in government spending. They are accused of wilfully refusing to do so because of dogmatic adherence to “monetarist” theories, and general hostility towards the working class.

Actually this argument amounts to dogmatic adherence to Keynesian theories that have long been discredited by the course of events. All the governments of the western world have been stimulating their economies by increases in government spending, and it simply is not working any more. Keynesian economic policies now amount to little more than attempting to prolong the “boom” phase of the capitalist business cycle by deliberately encouraging the overextension of credit to finance overproduction and overinvestment.

Credit expansion has deferred the crisis, and intensified the most prolonged boom in history. But only at the expense of deepening the structural imbalances that the crisis is needed to resolve, and therefore making the crisis far more intractable when it does come. There comes a point when it just does not work any more. If it still worked, they would still be doing it.

When asked what would happen in the long run, Keynes replied that in the long run, we are all dead. Glib claims that more deficit financing to stimulate the economy are the answer, are simply an assertion of faith, flying in the face of all recent experience. The conservative Ford Administration in the USA ran a breathtaking $60 billion deficit, and it has not done any more than postpone the problems.

Attempting to stimulate the economy by more government spending has been compared to trying to stop a balloon collapsing by blowing into it harder. At a certain point when a balloon is being inflated, the fabric tears and air starts rushing out the hole. You can keep the balloon’s shape for a little while by blowing harder, but the air keeps rushing out and the hole gets larger. Eventually the balloon has to collapse and the only thing to do is to let it go and patch the hole before re-inflating it again – if the hole has not got too big to patch while you were uselessly blowing air through it.

If government spending is paid for by taxation, then it is just a transfer of resources from one sector of the economy to another, with no necessary increase in employment, although the projects may be well worthwhile for other reasons. If the money is borrowed on the open market, then it drives up interest rates and diverts funds from other investments. If it is effectively “borrowed” from the Reserve Bank, then credit inflation can be the only result. The trick can not be done by mirrors.

“New Deal” policies did help speed up recovery from the last depression. But mainly by helping to keep prices up in those industries where they had collapsed more than necessary due to insufficient monopoly concentration. The “New Deal” stopped dumping, put a final end to “laissez-faire” and thoroughly established the system of state monopoly capitalism. But today nearly all industry is pretty well monopolised. Even the farmers have strong cartels, and with rampant inflation, dumping can hardly be an immediate problem.

Really it has been a remarkable performance since the last depression. Despite predictions of capitalist stagnation since the end of the fifteenth century, and with a social system straight out of the sixteenth century, the bourgeoisie has managed to sustain economic growth for another fifty years at a pretty fair pace.

While pathetic by future standards, the rate of economic growth has been sufficient for conservatives and reactionaries (including most of the “left”) to actually complain and want to slow it down. What more can state capitalist policies be expected to achieve? Permanent survival of capitalism?

Fine Tuning

When people say that government policy is responsible for unemployment being more than it should be, they usually argue that there should be a certain increase or decrease in interest rates, the exchange rate, taxes, deficits or what have you.

Perhaps there should be. Who knows and who cares? The argument always revolve around the fact that any effect in one direction is counteracted by other effects in the opposite direction.

Quite clearly there is some underlying movement in the economy itself that makes the adjustments in government policy necessary. People argue about whether interest rates should be marginally increased or decreased, but they have gone up from 2.1% on two year government securities in 1950 to 10.8% in 1974 on their own volition and for objective reasons. Nobody seriously suggests that any government policy could successfully halve today’s interest rates, let alone restore them to their 1950 levels.

Adroit handling or misguided policies could make a good situation better, or a bad situation worse, or vice versa. But in a market economy it is the market, not government policy, that determines the overall situation. And we are talking about a world market, completely outside the control of any group of governments, let alone the Australian Government.

A government that raises interest rates when it should be lowering them, or vice versa, can certainly make things worse. The same goes for other economic variables that government policy can influence.

But the best a government can do is get its economic policy absolutely right, all the time. In that case they will avoid precipitating any crisis before it is unavoidable, which is not quite the same thing as having “control”. No amount of “fine tuning” can determine the overall direction that the world economy is moving. Nor can it change the fact that interest rates and other variables must be adjusted in accordance with that movement and not against it.

“Fine tuning” has been likened to trying to straighten a piece of string by pushing it. The sort of “controls” available to governments are just not capable of determining economic developments. If you want to straighten a string you need to be able to pull both ends, not just push. If you want to control unemployment, you have to have complete central planning of investment and employment and indeed, production and consumption generally. The economy needs a new engine and new steering, not just “fine tuning”.

There is a branch of mathematics called “control theory” which investigates what observations one needs to be able to make, and what variables one needs to have control of, to determine the future path of a complex dynamic system.

Economists have a “simpler” procedure which consists of counting the number of “variables” and “policy instruments” and hoping they are equal. To predict the future course of the economy they do a lot of plotting straight lines through two points.

The fact is that even very simple dynamic systems are extremely difficult to observe and predict, let alone “control”. It is sheer stupidity to imagine that anything so complex as a modern market economy can be effectively controlled by anything so simple as government monetary and financial policies superimposed on market price movements.

A system like this is bound to have oscillatory movements and catastrophes. It is like trying to damp out ripples in a pond by making counter ripples. You will get pretty interference patterns, but nothing very stable.

Before you can control any dynamic system you have to at least be able to predict what the effect of any changes you make will be. If anyone knew how to predict that, for the world market, they would not be wasting their time giving economic advice to governments. Literally billions of dollars could be made by speculation on the commodity and financial futures markets if anyone knew how to predict what the world market would do next, let alone control it. The funds you could accumulate from speculation would give you far more control over subsequent market movements than any amount of government policy.

There seems to be no obvious reason why anybody on the left should want to enter into the argument about whose policies for fine tuning the economy would work better. But if we are to do so, there seems no compelling reason to enter on the Labor Party side of that debate.

There is good evidence that the conservative parties are better at that kind of thing than the Labor Party is, because they have more idea of what it is all about. At least they understand that the name of the game is “profits” and are therefore trying to make the capitalist economy work the only way it can. Labor Governments do end up adapting themselves to economic reality, and working as hard as they can to boost business profits. But it does not seem to come naturally, and we have to put up with an awful lot of hypocritical mumbo-jumbo about the workers’ interests, before they get on with it.

Labor Party supporters make persistent efforts to prove that the other party’s economic policies are stupidly wrong. This proves only one thing. It proves that these people, even if allegedly “Marxist”, have a very deep faith that capitalism can be made to work much better, and that their party is the one to do it.

Political Facts

Most voters understand how capitalism works, better than the Labor Party does, and they are aware that conservative parties know more about economic management than reformist parties do. That is one major reason so many workers vote for the party that frankly upholds the interests of their bosses. If people did not accept the basic idea of having bosses, they would be working for a revolution, not voting Labor.

Labor supporters seem to have a mental block about it, but Fraser is Prime Minister because he won by a landslide, not because John Kerr put him there.

People voted for Fraser because the economy deteriorated much more sharply under Whitlam than it did under McMahon. One statistic tells the story.

Unemployment rose by more than 100 for every day Fraser was in office, according to Bill Hayden speaking at the last Federal elections. It did, but unemployment rose by 150 for every day Labor was in office.

Another fact confirms that part of the reason for this sharp deterioration was Labor’s policies and not just objective conditions. The fact that Labor has abandoned nearly all the economic policies advocated by Whitlam and adopted those advocated by Fraser.

Bill Hayden fought the last election on policies to cut taxes and put money back in people’s pockets, reduce government spending, impose wage restraint and so on – exactly the policies that Fraser won with. It is hardly surprising that most voters preferred to let Fraser implement those policies himself, even though he obviously has not been doing much good with them either.

In government, Labor even had a policy of discouraging foreign investment – in a completely open economy largely dominated by foreign capital. When that policy actually started to work, and foreign capital dried up, Labor supporters complained about a conspiratorial “strike by capital” that was aimed at bringing down their Government. How contradictory and inane can one get?

That is a good illustration of how bad government handling can make a bad situation worse. But Labor supporters are well aware than even if the Whitlam Government had handled economic policy perfectly, instead of stuffing it up, unemployment would still have grown dramatically because of the general state of the world economy. Why should we not admit the same about Fraser?

Public opinion turned against the Labor Party because of the mess it was making, and also the mess it was not making but was blamed for anyway. The media mobilisation of that public opinion was carried out by the same newspapers that brought Labor to power in 1972 with viciously personal attacks on McMahon, and “It’s Time” as the front page headline. In 1972 McMahon was blamed for unemployment too. It was not his fault, was it?

To gain control of the Senate, which he had never tried to abolish, Whitlam resorted to open bribery of an opposition member, Senator Vince Gair, in the tradition of banana republics and dictatorships everywhere. When the Parliamentary opposition tried for force the Labor Government to elections by cutting off supply, that Government tried to rule without the consent of Parliament or the people.

Rather than face a democratic election, Whitlam was even prepared to ask the Queen of England to intervene in Australian politics; to sack an Australian constitutional official appointed by Whitlam himself, and allow Whitlam to rule by decree.

If a conservative government had done any of those things, Labor supporters would rightly have been outraged. But Labor supporters prefer to forget about the economic incompetence that cost them their chance in government. They prefer to distract attention from their undemocratic manoeuvres by a loud-mouthed phony republicanism – as though Kerr had caused the constitutional crisis by insisting on elections, rather than Whitlam by refusing to hold them.

Labor supporters adopt the classic conservative and reactionary argument, that an unpopular government should be given a guaranteed period in office so that voters can not throw it out before they find out what was really good for them after all.

After the Kerr business a lot of people suddenly realised what they ought to have known before. That Parliamentary forms do not mean very much and the conservative parties will use every dirty trick to stay in power. It ought to have also taught another lesson – that the Labor Party shares the same basic philosophy.

Neither party is so committed to Parliamentary government that it would fight against Parliament being replaced by military rule in the face of a genuinely revolutionary opposition.

It is sickening how people on the left pretend the economy is crook because of Fraser, when they know perfectly well it is an international problem. We should stop supporting Labor Party lies and start telling the truth about how the capitalist system really works.

Of course we need a target to fight. But if we do not know what that target is, then we had better take time off to find out, instead of just whingeing impotently about Fraser.

Shorter Hours and Higher Pay

Campaigns for a shorter working week and higher real wages have been put forward as a solution to unemployment. The argument is that higher wages will allow workers to buy more goods and so force employers to hire more workers. Likewise shorter hours will require more workers even to produce the same amount as now.

Of course we should fight for shorter hours and higher pay. That will become more difficult as unemployment increases. But it is still possible to win victories, even when there is mass unemployment, for reasons explained earlier. But the effect will be to reduce profits further, not increase them. So it cannot be a solution for unemployment.

In a communist society, any accidental “unemployment” could certainly be eliminated by reducing the amount of work done more rapidly than had been planned. Alternatively, people could work the same hours, but the extra workers could produce more goods so that everyone’s standard of living would rise. But that is because workers would not be “employed”. They would not be used by the owners of means of production to make a profit. They would be the “employers”, using the means of production to satisfy their own social needs.

In a capitalist society production is carried out for profit, not needs. General Motors can certainly be compelled, under some circumstances, to pay its workers more, or let them work shorter hours. But they are in the business of making money, not just making cars. If they can not make more money they are not going to hire more workers just so the workers can buy more cars.

There is no such thing as “overproduction” in the abstract. Whatever Friends of the Earth might say, it is not as though we have too many consumer goods or houses or schools or anything else. Nor have we too many means for producing them. Living standards are abysmally low is most of the world, and nothing to write to another planet about here in Australia. It is just that too much has been produced to be sold at a profit, and that is not a problem you can solve by reducing profits further.

Expanding the Public Sector

Calls to expand the public sector, are becoming more common, (especially from public sector unions!). This is partly just a reaction to government policies aimed at expanding the private sector at the expense of the public sector. But there is also some suggestion that in itself, expanding the public sector would create more jobs and reduce unemployment.

Government job creation schemes either have to be paid for by the rest of the economy, in which case they provide no net investment, or else they have to pay for themselves. In that case they have to sell their products on the market that is already suffering from overproduction and overinvestment. As far as employment is concerned, there is no difference in principle between expanding either the public or the private sector. The problem is that both are contracting, because they both face a lack of markets. Why should one be able to find markets when the other cannot?

In fact, of course, the public sector has expanded quite dramatically and will no doubt continue to do so. There are lots of things capitalist state enterprises can do better than capitalist private enterprises. But this has not prevented unemployment from growing and there is no reason to expect that it will. In Britain for example, some of the biggest layoffs have been in nationalised industries like British Leyland and the British Steel Corporation.

Whether a firm is publicly or privately owned, in a market economy its ability to provide jobs will still depend on its profitability and that will depend on selling its goods on the market. When there is overproduction it affects government owned enterprises exactly the same way as private ones.

It sounds plausible for Australian car workers to demand that the car industry be nationalised to safeguard their jobs. But how has that helped British car workers? What are railway workers supposed to do when their jobs are threatened? Demand that the railways be nationalised? In Britain some coal miners have actually been demanding that their industry be sold to private enterprise because the government is unable to invest funds in keeping their jobs.

Nationalisation is probably a good thing for all sorts of reasons, but reducing unemployment is not one of them. One need only look at Poland or Yugoslavia to realise that even economies completely dominated by the public sector, can have pretty much the same kinds of economic problems as the “mixed economies” of the west. The economic laws applicable to market economies apply whether the capitalise enterprises are owned by shareholders, bondholders, or the state.

Workers’ Co-operatives

There have been some instances of bankrupt firms being taken over by their workers to preserve their own jobs. The Clydeside shipyards, Lipp watch factory and Lucas Aerospace are well known examples. There is also a traditional “co-operative movement” associated with the labour movement, and a movement for workers control and/or “self-management’. Capitalists themselves are also trying to incorporate workers’ representatives in management functions, with extensive legislation for this purpose in West Germany and some other West European countries, and in Yugoslavia and China.

To some extent, workers’ co-ops can positively represent the new form of social production emerging within the old. Just as the emergence of huge transnational corporations and nationalised industries points towards the socialisation of industry, but more antagonistically.

If workers’ demonstrate that they can manage industry better than capitalists, that is certainly worth demonstrating, to pave the way for getting rid of capitalism in future. It may even save specific jobs in specific cases. But so, for that matter, could any other improvement in the management of an ailing firm.

Obviously improvements in the competitive position of a specific firm cannot reduce, but only displace, the unemployment resulting from overproduction in the economy as a whole. Other workers’ in the same industry will lose their jobs as a result of competition from the firm whose management has improved. This may encourage further takeovers, and be well worthwhile, but there is no need to pretend it will reduce unemployment.

Bankrupt industries may not be the best placed to attempt demonstrations of the superiority of workers’ management. If the prospects for a firm are so poor that its owners are prepared to let the workers’ have it, then they must be very poor indeed. The workers will quickly find themselves facing the same problems of finding a market for their products, that the previous management was unable to face.

The workers’ may do better, since they will show more initiative and will know how to increase productivity and so on. But they may also find themselves accepting worse conditions than they would put up with from their former bosses. (Many self-employed people do put up with longer hours etc – the compensation of not having bosses being well worth it). In the end they may find that they too are forced to carry out layoffs.

If we want practice at running industry ourselves, why not start by taking over some really profitable ones, instead of lame ducks? Presumably we cannot because the state power would be used to prevent us. So it comes back to a question of overthrowing the state. I

In itself a co-op need not be anything especially progressive. For example, the ultra-reactionary health funds in Australia are supposed to be owned by their contributors. So are some insurance companies and agricultural marketing organisations. Within a market economy a genuine workers’ co-op is certainly a more progressive form of organisation than the traditional structures, but it still only amounts to the workers collectively being “their own boss”. It does not abolish the status of workers as “employees” of “their” firm, who are “employed” (used, exploited) by it.

In Yugoslavia the entire economy consists of enterprises nominally under workers’ control, but exchanging products with each other, and allocating investments, through the market as in any other market economy. Yugoslavia has one of the highest unemployment rates in Europe, as well as a very high rate of economic emigration.

If all the firms in an entire capitalist economy went bankrupt and were taken over by their workers, to sell each other goods on the market, they would all remain bankrupt. When the working class does take over industry, it will do so collectively as a class, and abolish the market economy, not ” be their own bosses” within it.

To abolish unemployment, we need to abolish the market economy. Any measures that train workers in economic management are beneficial to that, but none can solve the problems of a market economy without actually abolishing it.

We should support workers who take over their bankrupt firms, just as we should support workers fighting for shorter hours or higher pay, or unemployed youths looting shops, but we need not pretend that any of these activities will reduce unemployment.

Labor to Power with Socialist Policies?

Perhaps a Labor Government with more radical policies could solve the problem? Instead of capitulating to business pressure, they could really hit hard with resources taxes, nationalisation, and a siege economy protected from overseas influence. By taking control of the commanding heights of the economy, they could force industry to provide employment whether it is profitable or not.

This sort of program has gained some support in the British Labor Party. Presumably it could become popular here too, although events in Britain may pre-empt that. The “left” program has won some support from traditional Labor Party activists, because of the obvious bankruptcy of previous policies. But it has also been imposed on the British Labor Party by fairly manipulative means, by people who know they cannot get as much support for their program by going to the working class directly, as they hope to get by working through the Labor Party. It is not a socialist approach, let alone a revolutionary one, because it is based on making social changes from above, without the support and against the wishes of the only people who can really change society – the masses themselves. If it could succeed, the result would be a more bureaucratic and less democratic society – a corporate state, not socialism.

There is an ideological convergence between the interest of the bureaucratic bourgeoisie in state owned industries, trade union bureaucrats, state employed intellectuals and so on, in promoting this “statism” as “socialism”. A more fascist face of a similar basic ideology can be seen in Eastern Europe and in the French Communist Party. The techniques of demagogy and manipulation also have a lot in common.

A feature of this approach, is an identification between “socialism” and “government controls”. The solution to practically any problem is supposed to be a government regulation compelling private industry to act more in accord with the public interest. That identification is promoted heavily by ideologists of the right, like Milton Friedman, who exploit resentments against “big government” and bureaucratic regulations”.

In fact government regulations are required in a market economy because of the inherent antagonism between the interests of each separate producer, to maximise their own profit, and the public interest in things like a better environment, safe working conditions, better products and so on. The regulations are effective by making it more profitable for firms to modify their behaviour in the public interest, than to go on ignoring the public interest. The same effect is achieved by various selective taxes, allowances and so on. Where regulations cannot overcome the limitations of production for the market, the bourgeois state itself will step in and provide a “public service” – such as roads, broadcasting, education and so on.

There is always a need for more regulations, because the bourgeois state is unwilling to interfere with the private interests of various sections of the bourgeoisie as much as it should. So naturally, progressives often find themselves involved in campaigns for more government regulation to restrict some particular abuse or other. Likewise there is always a need for more “public services” because the bourgeois state is always reluctant to assume responsibility for an activity that might have been carried out by some particular section of the bourgeoisie. So we find ourselves involved in campaigns for more public services.

In these campaigns, the interests of sections of the bourgeoisie tied to state capitalism, often coincide with those of the working class. This is nothing new – a lot of social progress within capitalism has depended on one section or another of the ruling class breaking ranks from the others. But we should not delude ourselves that the bureaucrat bourgeoisie and their trade union hangers-on are in any way “socialist”.

The statist approach can never turn private production for profit into its opposite – social production for use. Regulations are symptoms of the basic antagonism persisting, while the elimination of unemployment and economic crisis requires a removal of that underlying antagonism. We need to abolish private production, not just provide more public services.

A socialist economy would actually require less regulations and controls than a market economy. Even the “public sector”, and as such enterprises became genuinely “public” they would cease to be separate enterprises having separate interests from the “public” at all. You do not make regulations governing your own conduct at home, so why should you do so at work?

The result of the “left” influence on the British Labor Party has of course already been a sizeable swing of Labor support to the new Social Democratic Party, even though the Labor Party has not yet fundamentally broken with its traditional “labourism”. This will presumably produce a Labor Party and trade union backlash against the “left” program that is alien to the traditional outlook of Labor Party supporters. Alternatively, the present two party structure in Britain may be replaced with a new one, leaving the “entrists” once again out in the cold, and the traditional Labor supporters once again bankrupt. You cannot change people’s political consciousness by stacking their party meetings, and most workers prefer their present bosses to the proposed new ones.

Economic Consequences of Statism

Let us leave aside the political aspect and look at the economic consequences of a statist program being implemented. Remember, we are not talking about a popular revolution in which the working class takes command of society and re-organises it. If that was the aim, the method would not be through the Labor Party. We are talking about policies to be implemented by a parliamentary government, with the existing state machine still in place, and with the working class still tied to its traditional organisations. Viewed in that light, we have an excellent recipe for a Chile style disaster.

Every measure proposed is designed to transfer economic power from private industry to a government hostile to private industry, without actually expropriating private property. The present owners and managers of industry are to be directed to carry out economic policies hostile to their own interests. But why on earth should they comply?

In themselves, the measure proposed as an “alternative economic strategy” could only reduce profitability and jam up the economy completely. Not capitulating to business pressure must mean reducing profits and therefore reducing private investment and job creation. “Controlling” foreign investment must mean less foreign investment and so less jobs.

Legal nationalisation would just mean saddling the government with a lot of businesses that were already in trouble, plus additional debts to pay off their owners. If capitalism survives the coming crisis it will certainly be with a great deal more nationalisation and state capitalism, but that would be part of the emergency re-structuring after the crisis, not a means of preventing it.

Perhaps the aim of crippling business profitability would not be legal nationalisation, but to force capitalists to hand over their enterprises to the government without compensation. A roundabout sort of expropriation. But if the aim is expropriation, this is a rather odd way to go about it. Expropriation means confiscating the property, worth thousands of millions of dollars, of the class that has up till now ruled society. That class has shown a definite tendency towards hysteria when its property rights are even mildly infringed upon, let alone denied entirely. What on earth is the point of leaving them in charge of industry while you are expropriating them? If they are not kept under lock and key, surely they should not actually be the people asked to implement government directives against their basic interests?

What else could they do except sabotage things in every possible way, and ensure the government is blamed for the economy being in a far worse state than it was before? In war, when one army defeats another, the first thing it does is confiscate the losing side’s weapons. It does not put them in charge of guarding the armories and performing sentry duty. The bourgeoisie’s weapons are its control over industry (not to mention its military weapons).

If our aim is to confiscate the property of the ruling class, then we need our own state and our own army to establish that state. Trying to do it through cabinet ministers in their state, surrounded by their officials and their armed forces, seems rather odd. It sounds like just a complicated way of getting those ministers killed, and anyone silly enough to be associated with them, killed also.

Fortunately, the chances of a Labor Party with “left” policies gaining office seem quite remote. So we need not worry too much.

Protectionism

Unlike other “solutions” proposed from the labour movement, increased tariff protection could have an immediate positive impact on employment in Australia. By restricting other countries from access to Australian markets, the opportunities for employment creating investment in Australia are necessarily widened, at the expense of course, of jobs in other countries.

It is amazing how “leftists” put forward the most blatantly chauvinistic proposals for displacing unemployment from Australian to Asian workers, with pious references to opposing their low wages, exploitation by fascist regimes etc.

Apart from elementary class solidarity, the catch with protectionism is of course, that it cuts both ways. It is to the selfish advantage of any country to restrict its markets. But when all countries do it the result is a loss of markets for all.

While world trade is expanding, there is an increasing “cake” and different countries have been able to agree on how to divide it up. As the crisis intensifies pressures for protectionism will become stronger even though everybody knows the result will damage everyone. So will the pressure for trade wars, and real wars.

Protectionism is inevitable as world trade spirals downwards, but we have no interest in promoting it.

“Militant Struggle”

In their newspapers some political groups urge “militant struggle” as the workers answer to the “employer’s offensive”. It is not entirely clear what this means, if it means anything. But presumably it must be intended to suggest that layoffs and the like are not the result of blind market forces, but are some kind of conscious conspiracy by the capitalist class in order to weaken the working class. By fighting back hard enough, workers can force employers to abandon their “offensive” and restore full employment.

This is obvious nonsense, nor worth discussing. But it does raise the question of how much can be achieved by resistance to layoffs and cutbacks. The answer is, of course, that “if you don’t fight, you lose”. People have to fight or they get ground down, and you can win specific improvements by fighting.

But you cannot change the overall working of the system by this sort of fight. Since we are going to be forced into all kinds of defensive struggles, often losing ones, it is pretty important to be developing an offensive strategy that can win as well. Otherwise it gets rather demoralising. We need to be able to say what could be done about the economic situation as well as just resisting its consequences.

Instead of that, trade unions tend to just resist and lose, in a fairly hopeless sort of way, or even turn the battle against other sections of workers. Often, trade union responses to unemployment ignore the fact the employed and unemployed workers are both part of the same labour force, with common class interests. Trade unions often emphasis protecting the jobs of people who already have them, and especially those who have had them longest – at the expense of school leaves, housewives, part-timers, casual workers and others who need jobs, and perhaps need them more desperately than those protected by “seniority”.

Like demarcation disputes, these trade union efforts can be very “militant” without any positive result. Trade unions are basically conservative organisations concerned with selling their members’ labour power at the best price they can get. We should aim to unite the employed and unemployed workers rather than just protecting the separate interests of employed workers from unemployed ones.

Militant struggles against redundancies, factory occupations and so on, can also suffer this problem to a certain extent. Even if they can actually save the particular job at stake, which is unusual, they can not reduce the size of the pool of unemployed and can only displace unemployment from one group of workers to others, often within the same industry, or even the same firm.

Employers may conceivably be forced to keep a particular factory open, although that is often just as hard as finding new jobs. But it is pretty difficult to change the fact that the total amount of labour required in an industry has declined. The question will be whether a particular factory gets closed down or other factories stop taking on school leavers to replace retirements. Either way, unemployment will grow, but it will affect different groups of workers directly.

The same applies to struggles against “the cuts”. The plain fact is that the government is forced to cut its expenditure because it just has not the resources to sustain it. There is no conspiracy. Nevertheless, what gets cut where, and how much of the brunt is suffered by who, will be influenced by class struggle. So it is worth fighting back. As long as the fight is not just suggesting that some other, more vulnerable section of the working class should cop the lot.

Just saying “cut defence” sounds like an easy way out. But the whole defence budget would not make all that much difference, and it avoids some hard questions about how to deal with Soviet aggression. In practice, if the budget cannot be increased, struggles against the cuts will, whatever people might say and want, just divert cuts from health to education, or education to welfare, or welfare to health.

If we want to not only oppose any cuts at all, but also demand improvements in welfare and public services, we need to have definite proposals about how this can be achieved. We should certainly support militant defensive struggles. But they cannot be put forward as a general answer to unemployment and economic decline.

Revolutionary Optimism

This whole paper so far may sounds rather pessimistic and deterministic. It seems unemployment is inevitable and there is nothing that can be done. But that is only true if your perspective for “something” is for some reform within the capitalist system. Things are grim for reformism, but not for revolution.

Recognising the inevitability of certain laws under capitalism is not deterministic. It implies that the way out is to abolish capitalism. Revolution is a voluntaristic act that must be carried out consciously. The next section, to be published later, (editor’s note: this refers to part 7) discusses revolution. It suggests how the economic situation could be resolved by revolution and suggests that revolution is a perfectly matter of fact “solution” that makes far more sense than the others that have been put forward.

(Next instalment: Revolution, drafted in 1982)

“Cyclical” Unemployment – Part 5 of ‘Unemployment and Revolution’ (by Albert Langer in 1981)

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Part 5: “Cyclical” Unemployment

– Anarchy of Production
– Planning and Money
– Profitability
– Overproduction
– Are Wages Too High?
– Stimulating Demand
– Economic Crisis

5. “CYCLICAL” UNEMPLOYMENT

Well, we have established that the normal adjustment mechanisms in the labour market will not necessarily eliminate unemployment, and we have shown that the unemployment we have now is not “technological”. We have conceded that there is a “real wage overhang” but not conceded that lower real wages would reduce unemployment. We have not yet answered the question of why things have changed from the “normal” regulation of unemployment, nor what can be done about it.

We will now attempt to explain what is meant by “cyclical” unemployment and how this involves a “crisis of overproduction”. Unfortunately the explanation below is not very clear or complete. Generally a good test of whether you really understand something is how well you can explain it to others. So I guess I am not very clear on this stuff myself. Any queries and comments on the following material would be especially welcome.

First of all, what’s new? Why is the labour market not regulating unemployment like it used to? The conventional wisdoms about unemployment just take it for granted that since there is something wrong with the labour market then both the cause of the problem and the solution to it must also lie in the labour market. But in fact they do not, because unemployment and wage rates are not the only things out of kilter.

The labour market is not operating normally because forces outside the labour market have changed the way in which jobs are being created and destroyed. We must therefore look outside it to explain those changes.

Unemployment is part of the mechanism that regulates wages, prices, the rate of profit and the balance between production, consumption and investment. However it would be a gross oversimplification to pretend that it is the sole, or even the main factor.

Unemployment is not even the only factor regulating wages, let alone regulating the economy as a whole. In addition to the labour market, other markets are also out of balance.

Commodity prices are at record levels and still rising, financial markets have record interest rates, foreign exchange market are all over the place, and so on. Something has really gone quite wrong, and it is something that effects all aspects of the economy.

We will argue that what is wrong is “overproduction”. The fundamental cause is the basic anarchy of a market economy. Nothing very much can be done about it except passing through another major economic crisis – or overthrowing the system and building a new one.

Anarchy of Production

It is often assumed that the output of capitalist industry is simply divided between wages and profits.
From one side this leads to the idea that profitability can be simply restored by cutting wages. From the other side it leads to the idea that increasing wages would “stimulate demand”. Once again we have both “left-wing” and “right-wing” prescriptions resting on the same faulty analysis.

In fact only a small part of the total output of industry goes into consumption goods purchased either from wages or profits. The bulk of the output consists of means of production which are used either to replace those used up in the previous period, or for investment in expanding production in the next period.

The “Gross National Product” is not the total output, but output net of all the intermediate products produced and consumed in further production. Even the GNP includes investment as well as consumption. Cutting wages will not solve the problem of realising profits by selling the total output on the market. The product has to be sold before the proceeds can be divided up between wages and profits.

Raising wages also will not solve that problem. Most of the total output is bought by capitalists as means of production, and their ability to buy it depends critically on profits, which would be reduced further by raising wages.

For reproduction to proceed smoothly, the demand for means of production as replacement and new investment must provide a market for those means of production that have actually been produced. The profits made selling goods and services on the market must provide the investment funds to buy them on the same market. Surplus value is produced when products are made, but profits are not realised until the products are sold.

The demand for consumer goods and services by capitalists and workers must correspond to the consumption goods that have been produced. The increase in demand for consumer goods from one period to the next must correspond to the investment that has been made in the previous period to meet that demand. The investment in industries producing consumer goods depends on previous investment by industries producing the necessary means of production, and so on.

Not only the profits, but the cost of production itself, can only be realised if the products are sold on the market. The sale of each firm’s output depends on some other firm (or consumer), buying these products as inputs. The money to buy the inputs depends on the sale of the outputs.

Production has become highly socialised, with every firm directly or indirectly dependent on every other firm through the immensely complex social division of labour. The gigantic means of production operated by huge labour forces are geared to production for the whole of society. They are basically social means of production only useable in common. Yet the physical exchange of necessary inputs and outputs between different establishments is entirely dependent on free market relations.

Any disproportions will result in goods unsold, profits unrealised and investments not made – whether wages are high or low. Sever disproportions will result in suppliers unpaid, bankruptcies and market collapses. This cannot be rectified simply by cutting wages, if there is no market for what has been produced.

In a full scale crisis, products can be virtually unsaleable at any price,and may be dumped on the market by bankrupt firms unable to pay their creditors. Not only can profit margins become too small, and then disappear entirely, but the value added can disappear too, so that production would not be worthwhile even with zero wages. *In fact the value of raw materials (plant and stock) etc can also disappear so that a finished product will fetch more as scrap for its component materials than it will on the oversaturated market for that product. Whole steel plants and shipbuilding yards were scrapped in this way during the last depression.

What ensures that the proper proportions will be maintained so that exactly those goods are produced that are required? Very simple. It is a market economy, so the market regulates it. If demand for a particular product exceeds supply, the price will go up. If production becomes more profitable than average, capital will be attracted to that industry instead of others. Profit is what regulates the economy and profit is all that regulates it. The miracle is not that this sometimes breaks down in a crisis, but that it ever hangs together at all!

Planning and Money

Actually of course, things are not quite that fragile. There is a lot of leeway because firms can go on producing even at less than the average rate of profit, so long as they do not make a loss. They can even bear a loss for some time, as long as they do not go bankrupt. They can even keep trading after they have become insolvent, as long as nobody knows. Goods that are not sold to final buyers can still be sold to wholesalers, or accumulated in inventory.

The credit system is extremely flexible and can be stretched to cover disproportions in particular sectors, and also in the economy as a whole. This is a major topic in itself, quite central to understanding overproduction and crises, but unfortunately it can not be covered here.

But all this leeway and flexibility also implies that disproportions can continue developing for some time before they break out in a crisis.

It will seem to highly profitable firms that their market is still expanding, when actually the demand is coming from firms that are already operating on reduced profit margins, or are insolvent, and from wholesalers which are not actually able to sell the goods to final buyers, and so on. Faced with this apparently “expanding” market the profitable firms will expand their investment, which in turn stimulates demand in other sectors and keeps the whole boom going. But the margins get narrower, credit gets tighter and eventually the whole thing blows up *(implodes).

Another aspect is that production is far more planned than it used to be. Whole sectors of the world economy are each under the management of a single centralised transnational corporation. Governments and international organisations play important co-ordinating and planning roles. There are serious efforts to predict the demand, supply and prices of everything that is produced, and to use these predictions for quite long range planning of production and investment.

But these forecasts and plans still revolve around the market. Nobody allocates the total social product between the different sectors of industry and individual establishments. They buy and sell it from each other because they each privately own a different part of it. Their relations are money relations.

When money breaks down, the “social fabric” unwinds, because money is the social fabric of a market economy. The more large scale and long term the plans, the more fundamental the disproportions that can develop before the crisis actually breaks out.

Again, we need to study the essential nature of money to understand why it breaks down in a crisis, but that will not be gone into here. We tend to take money for granted, as though it is perfectly natural that everything produced should have a price. Yet the social relations expressed by money are extremely difficult to grasp and absolutely fundamental to the nature of market economies.

Profitability

If any single regulator can be considered decisive in a capitalist economy, it is the real average rate of profit. This is what determines the flow of investment from one sector to another and regulates a balance between production and consumption. Wages are one factor influencing profitability, but others are just as important.

In “equilibrium”, higher wages means lower profits, but we are now discussing “disequilibrium” and very often the same factors that push profits above and below their “natural” rate, will push wages in the same direction, until the underlying real movement forces a change in direction for both.

What determines the creation and destruction of jobs is the extent and labour intensity of investment. Investment depends on profitability, in which wages are only one factor. The price at which the output can be sold is just as big a factor.

Over the whole period of the capitalist business cycle we find a general trend up and down in the rate of profit with corresponding trends in employment, prices, interest rates and so on. When the business cycle lasted only five or ten years, these movements were very obvious. But since we have not had a full scale crash since the 1930’s, the changes appear to be long term secular movements rather than features of a business cycle.

Yet the usual pattern can be seen of an apparent high rate of profit with rising prices followed by overproduction, falling profit margins, increasing unemployment and so on.

A characteristic feature is the gradual stretching of credit as overproduction intensifies, until the whole structure becomes top heavy and topples over. While Keynesians are clamouring for more credit expansion, the structure of debt has already become far more top heavy than in any previous period. Most corporations now run on ratios of debt to equity in excess of 80%. There is no room for the slightest drop in prices and profitability without actual bankruptcy.

Another feature is the gradual increase in unemployment until the actual crisis breaks out and intensifies unemployment enormously. This unemployment is “cyclical” because it reaches a peak at the depths of a depression and is a minimum at the height of prosperity. It reflects an overall state of demand in the economy that moves quite differently from the “normal” regulation of wages and unemployment during the phase of prosperity.

There is not the slightest sign of a reversal in these trends and no reason to believe they can be reversed except by the outbreak of a full scale crisis. Just as the labour market is unregulated and must correct its own fluctuations, so there is no overall authority that can ensure a balance between production and consumption, savings and investment, borrowing and lending. In general terms, production creates its own market, and it is theoretically possible for capitalist production and accumulation to continue indefinitely. Theories of “underconsumption” are quite wrong.

But periodic overproduction is inevitable, for reasons explained here. It is only the overproduction itself, and its effect on the rate of profit, that can bring into play the mechanism for restoring a balance. The mechanism for restoring a balance is a collapse in the rate of profit, that is to say, the balance is restored by having an economic crisis.

Overproduction

During a boom, excess demand pulls up prices, including wages, and there is an overinvestment of capital so that more capital is being invested than can ultimately return the expected rate of profit.

More workers may also be attracted into the labour force. This may go on for a long time, with various ups and downs, as the demand for investment goods and services feeds itself, and as credit is stretched.

Each firm can only estimate its market from previous trends and price movements. It has no “guaranteed buyers” for the same reason that labour does not. Planning must proceed on the basis of an assumed expansion of markets, and generally that assumption is self-fulfilling.

The general expansion of investments itself creates a market for the goods produced and allows the expansion to continue. *Every firm is continuously engaged in a relative overproduction, producing more than it knows it has a market for. Yet while the economy is expanding generally, the consequences of a miscalculation will only be a local loss of profits and not bankruptcy or market collapse.

As long as business is brisk, capitalism hardly seems to be obstructing the growth of the productive forces at all. There is no barrier to production beyond the capacity of labour, natural resources and existing plant and stockpiles to produce more goods. But eventually the shit hits the fan and plant is installed to produce goods and services that just cannot be sold at the expected profit margins.

Then the nice “demand pull inflation” that was stimulating increased production turns into nasty “cost push inflation” with the opposite effect. It has to, since one firm’s costs are another firm’s demands. All that can postpone the equation between input “costs” and output “prices” is continued intensification of the excess demand of the boom, and the same factors that postpone it must intensify the crash when it comes.

It turns out then that there is a barrier to capitalist production, namely profitability. Goods can only be produced if they can be sold for more than it cost to produce them. When too many are produced to keep prices at that level, profits disappear and so does production.

It turns out then that for a long time investment has been taking place in the wrong proportions between the sectors producing consumer goods and those producing means of production. More should have gone to producing the means of production for producing more means of production. Less should have gone into directly producing consumer goods because the market there is mainly wages and the workers are not very rich.

But this could not have been noticed before, because production was being expanded more or less uniformly on the assumption of uniformly expanded demand. Why should anyone think that capitalist production has to produce a higher and higher proportion of means of production instead of a balanced output including the final consumer goods themselves?

When the boom stops feeding itself and stops being fed, there is a sudden collapse in the rate of profit and a “crisis of overproduction”. Consumer goods sectors crash because there is not a market for the amount that has been produced (not that we could not benefit from a higher standard of living, but we have not got the money to pay for it). Sectors producing means of production also crash because nobody is buying means of production to expand their capacity to produce goods that cannot be sold.

In the subsequent “bust”, wages are one of the things that have to come down before a new boom can begin, but a lot of other adjustments have to occur too. The crisis involves destroying or devaluing a large part of the overinvested capital and restructuring the whole economy.

When the crisis is over, capital has been restructured in favour of means of production so that much more productive techniques are used, with a higher organic composition of capital. This lays the basis for the next boom with a much higher standard of living than the last one.

Monopoly capitalism is much more flexible than laissez-faire capitalism and has mechanisms for relatively smooth variations of output to correspond to demand. Minor fluctuations will not produce large price movements or great changes in installed plant capacity, but only changes in plant utilisation, inventory levels, and credit stretching. As with the labour market and unemployment or labour shortages, these flexible mechanisms have to already be stretched considerably, before disproportions will actually show up as overproduction and reduced profits.

Even more stretching is required before overproduction could result in the sort of market collapse that used to occur quite regularly in the days of laissez-faire. But since there is no other overall regulator, that stretching is bound to occur, until it does produce the crisis needed to restructure the economy and restore a balance. Since the end of laissez-faire capitalism, crises have been much less frequent but far more devastating, when the flexible limits are eventually overstretched.

Are Wages Too High?

In the period between boom and bust, it is possible for the share of wages in GNP, and real wage costs per unit output, to be higher than usual, even while real wages are falling and unemployment is growing. Conservative economists conclude that this must be the cause of the problem, and the solution must be to push real wages down faster.

But wages appear to be “high” because profits are low. Real profits are falling because overproduction means the goods cannot be sold at their usual profit margins, even if nominal accounting profits at inflated prices are still “record”. This alone implies a higher relative share for wages. The real problem is how to raise profits, and that depends more in this case on prices than wages.

If there was simply a “fluctuation” in demand, with a smooth corresponding adjustment of production and employment, then there would be no problem. Real wage costs would not depart from their normal trend. This has been the experience in previous recessions in Australia, such as 1951-52 and 1960-61. But “overproduction” implies that the unsaleable goods have actually been produced, or the plant capacities to produce them have actually been installed, so that profit levels remain depressed and the ratio of wages to output is changed.

Overproduction implies that the prices of firms’ outputs cannot go up fast enough compared with the prices of their inputs, and this is described as “cost-push inflation” rather than the “demand-pull inflation” of the boom. But it really reflects a situation where there is not a sufficient market for the goods that have been produced. The result is excess capacity as firms cut back their production to keep prices up, and lower labour productivity since the labour force is not reduced in proportion to the restriction in production.

This lower labour productivity resulting from capitalist anarchy becomes the subject of sermons to the workers on not being too greedy. The underlying cause of changes in the relative share of labour in the GNP and the real cost of labour per unit output, is the overproduction and overinvestment, not any imbalance in the labour market. Nevertheless, the effect is similar to labour shortages having driven up wages (which indeed is one of the many things that does happen when overinvestment reaches its peak at the height of the boom),. The response is a slackening in job creating investment and increased unemployment.

One feature is that investment can become more capital intensive than normal, based on the apparently high real cost of labour per unit output. This can destroy jobs faster than they are being created. The unemployment created in this way can and does produce lower real wages since it implies a “slacker” demand for labour. The normal operation of the labour market, will bring down wages until this particular source of increased unemployment is no longer operating, even though the apparently high relative cost of labour is due to output restrictions rather than high real wages.

But the more important reason for growing unemployment is that since profit margins are not high enough on the overproduced goods, there is a lack of funds for any investment that would create new jobs at all – whether labour intensive or capital intensive.

Will Lower Wages Reduce Unemployment?

Lower real wages cannot increase employment since high wages were not the cause of investment drying up. So the apparent imbalances in the labour market continue growing and unemployment continues increasing without being able to produce any equilibrium.

Indeed it is even possible for real wages to rise during a depression, despite mass unemployment. This can occur because it is not wages, but markets, that are limiting investment and employment. Firms can continue their (reduced) production levels despite high wages, and will not expand production and increase employment just because wages come down. Unemployment exerts a downward pressure on wages, but since the employers demand for labour is not highly dependent on wage levels, that pressure can be counteracted.

Wage rates are determined far more by variations in the demand for labour with price than by variations in its supply. Thus the predictions of orthodox economists have been totally confounded by the simultaneous expansion of female employment together with equal pay, and by the trade unions present capacity to fight for shorter hours and higher wages despite more unemployment.

In both these situations we have a level of demand for labour that is not sharply dependent on its price. The first during a boom and the second at the end of one.

Even when the demand for labour is falling, it need not produce a fall in wages unless the demand depends on the wage rate. A firm that has already cut staff to reduce output and has excess capacity, will not necessarily cut staff further if wages go up. The same output will still be required to maximise profit, and the same staff will be required to achieve that output, even if profit is further depressed by increasing wages.

Thus even while the total demand for labour is reduced, that demand may become less “slack” – less variable according to wages, and the bargaining position of workers who are still employed may actually improve. Wages can still rise to the point at which it becomes more profitable to use less labour intensive techniques, or to cut back production and employment further. Given excess capacity, there may be considerable room for wages to rise before either of those points is reached.

Here the distinction between “slack demand” and “unemployment” as a cause of falling wages becomes important. Real wages actually rose at times during the last depression, despite mass unemployment. They also rose sharply during the “wages explosion” of 1974, despite increasing unemployment. They have still not fallen a great deal. The conventional conservative theory of wages and unemployment finds it difficult to account for these facts and compensates for this difficulty by hysterical attacks on unions.

Mass unemployment can compel a reduction in real wages, after working class organisation has been smashed. It can do this by compelling workers to accept wages that are less than the value of their labour power (ie less than the “marginal product” of labour they can obtain as unionists selling at a monopoly price). But that in itself is not enough to restore equilibrium. Unemployment will continue until the overinvestment and overproduction has been worked out of the system. More drastic cuts in real wages will not change the fact that goods are not being sold profitably enough for new investment to absorb the unemployment.

Further cuts in real wages will certainly increase profits, and will be welcomed by employers, but no amount of cuts can make investment profitable when there is no market for more goods. Even at zero wages, nobody is going to build new car plants, when the cars already produced are piling up unsold, or are being sold at low profit margins. More cars may be sold because they are cheaper with lower wages, but not enough more to absorb the excess capacity and encourage new investment. The lower wages will simply increase profits without increasing investment. By keeping up wages in a depression, unions are not doing the unemployed out of a job, but simply depriving capitalists of surplus profits.

Stimulating Demand

Keynesians argue that excess production capacity implies a “slack” in the economy which leaves room for employment to be increased by government action to stimulate demand, without necessarily pulling up prices. But this misses the whole point of the adjustment mechanisms that have produced the excess capacity in the first place.

Excess capacity has appeared because market demand does not allow firms to raise their output prices enough to maintain profit margins. Any stimulation of demand must therefore produce a rise in prices before it will produce an increase in output. There would be “slack” if plant was being underutilised because of a fluctuation in demand and the normal adjustment to it. But there is no “slack” when profit margins have already fallen. There is just “excess capacity”.

Once excess capacity has appeared, attempts to stimulate demand by extending credit with the budget deficit, amount to buying up the overproduced goods on the “never-never”. Extending credit means extending debt. Ultimately there has to be a real market or the postponement of bankruptcy by extending credit only adds to the size of the crash when it finally comes.

That of course may not be such a bad thing. There is no harm in demonstrating what heights of prosperity could be achieved by the permanent boom of socialism at the expense of a deeper crash by capitalism when it fails to maintain that prosperity. But we are already at a stage where the credit has been rather fully extended. While governments should and will continue to extend it as long as they can, that may not be all that long. Governments go bankrupt too.

Economic Crisis

The next phase of the business cycle, which we have not seen yet, involves market collapses to restructure production and get rid of the overinvestment. This is not the place to enter into a detailed analysis of the nature of capitalist crisis, and the particular characteristics and timing of the coming one. This would also involve considering the expansion and contraction of credit, the operation of financial and capital markets and so on. It would also be necessary to explain inflation and the real and apparent movements of relative prices. In any case I do not understand it well enough to say much more.

But the implication of all this for unemployment is simple. The whole world economy is out of balance and only an overall crisis will restore that balance. It is not just a matter of pushing down wages until the labour market is back in balance. Nor are there any other easy solutions.

At the moment we have both rising prices and growing unemployment and that is seen as a unique phenomenon different from any previous cycle of boom and bust. But in fact it is simply a more long, drawn out version of the usual pattern. The boom has basically ended and unemployment has started to grow. But the “bust” has not happened yet and we have not yet got a real crisis or massive unemployment. There is still real economic growth and rising prices and even room for some renewed mini-booms because the next phase of the business cycle has not yet begun. During the late 1920’s unemployment also started to rise while prices were still going up and before the actual crash.

The “price mechanism” we learn about in orthodox economics textbooks does work. A market economy, a capitalist economy, can develop the productive forces to higher and higher levels without central planning. But a pool of unemployed fluctuating between small and large is an essential part of how it works. The price mechanism does not prevent market collapses and economic crises. Crises are an essential feature of the way it works. Booms end in busts and busts pave the way for booms because there is no other regulatory mechanism in a market economy.

The “balancing mechanisms” and regulators of a market economy all sound quite neat and clever. But they are proving extremely destructive. What an incredibly archaic way to regulate an economy in this day and age!

The Great Depression of the 1930’s was the only way that the “roaring twenties” could end. That depression and the Second World War paved the way for unparalleled prosperity in the 1950’s and 1960’s. The post war boom was longer and reached greater heights than any previous boom in the history of capitalism. The period of teetering on the edge between boom and bust has been longer than any previous such period in history. We can reasonably expect that the coming crisis and depression, which is certainly not here yet, will be very much deeper than the 1930’s.

(Next instalment: ‘Solutions’)

TECHNOLOGICAL UNEMPLOYMENT (Part 4 of ‘Unemployment and Revolution’, written by Albert Langer in 1981)

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4. TECHNOLOGICAL UNEMPLOYMENT

– Is It Technological?

– “Controlling” Technology

One reason unemployment can increase is because of sudden technological changes effecting a substantial sector of the economy. We will look at that first, and then consider the other major reason – “overproduction”. Most new technology tends to be developed “ahead of its time”. It will gradually come into use in the way described above, as economic conditions ripen. But if a new invention is economic to make use of at existing wage and profit rates, then it will not have to wait for more capital accumulation before being introduced. Instead of gradually displacing the old technique as conditions change, there will be a sudden scrapping of old methods in favour of the new ones.

This process may be “controlled” by monopolies with heavy capital investments in obsolete technology. They may obstruct the process and then later “discover” patents they have been sitting on for years, when it suits their investment plans. However this presumably is not the sort of “control” on technology that anybody would admit to advocating.

Generally the “structural adjustment” required by a sudden change in technique will only require a rearrangement of ongoing capital investment between other industries and the one that is changing.

If a new technique actually requires more capital to be invested in the changing industry, and less labour, then there will be a net diversion of investment from other industries. But at the same time, there can still be enough investment in the rest of the economy to absorb the displaced labour. That investment will continue using more labour intensive techniques, since the labour is available for it to do so. Productivity will grow more rapidly in the industry that is changing, and more slowly in other industries.

But if sectors involving a substantial part of the labour force are affected simultaneously, there may be more jobs being destroyed by the new techniques than are capable of being generated by the current amount of new investment.

If jobs are being destroyed faster than the economy as a whole is expanding, there will be increased unemployment until capital accumulation catches up.

The same general principles apply to other “structural adjustments” due to changes in demand. The shift from manufacturing to mining in Australia would be an example and this can also be considered as “technological change”.

There has been no reduction in the volume of manufactured goods in Australia – just higher labour productivity requiring fewer workers to produce them.

One point however, is that the capital previously directly and indirectly employing the workers who have been made redundant, will itself be freed by any changeover.

This capital is immediately available to increase the rate of expansion of the economy and employ additional workers in other sectors. That may not be much compensation for individual workers who have been thrown out of work eitherpermanently or temporarily.- but it does mean there should be no long delay waiting for capital accumulation to catch up. Because of this point, “technological unemployment” should not be a major problem in a modern capitalist economy. “Manpower planning” and “structural adjustment” should ensure that labour is rapidly re-trained, and capital rapidly redeployed, with far less upheaval than in the days of “laissez-faire”.

This has in fact been the experience during the post-war boom which involved very rapid technological change and structural adjustment. An enormous displacement of labour from manufacturing and primary industry to tertiary sectors took place in every advanced capitalist economy, without producing mass unemployment.

By comparison the “resources boom” shift from manufacturing to mining is quite minor. However it is is more noticeable because it is happening at a time when demand for labour is slack and unemployment is high. This does not mean it is a cause of unemployment. Obviously it is not because although unemployment is growing worldwide, the “resources boom” is local to Australia.

However since the resources boom is happening here and now, and there is unemployment here and now, it does provide something for people to waffle on about instead of analysing the capitalist system seriously.

Is it Technological?

The above suggests very strongly that the current high levels of unemployment is not “technological unemployment”. If it was, then one should be able to point to the specific new techniques that are rapidly displacing labour in particular sectors of the economy, and then discuss measures to cope with that.

There is a great deal of speculation about the future impact of microprocessors and so on, but no evidence that they are the cause of the sudden jump in unemployment which occurred simultaneously throughout the western world from the early 1970’s. It is quite clear that whatever changed then was in the “state of the economy” rather than in the field of technology.

Capitalism has not implemented microprocessors and other labour saving devices nearly as fast as would be possible, and it may be that when the barriers are finally broken down, there will be some technological employment, as a result. There will certainly be a devaluing of existing investments, which is what is obstructing things at present.

But so far microprocessors have been introduced at a snail’s pace compared with their potential and their introduction could not possibly be the cause of the rising unemployment we are currently experiencing.

Of course new technology is continuously destroying jobs. That is the whole point of it – finding ways to do things with less human effort. But this has been going on for centuries and cannot be the explanation for recurring sudden increases in unemployment.

Since the end of the second world war, technological change has been extremely rapid. The steady growth in GNP and real wages would not have been possible without it, since increased real output per person necessarily implies labour saving technological change. It seems though that the sudden increase in unemployment in the early 1970’s, has sparked off renewed concern about technological change.

Certainly there was no sudden acceleration of technological change around that time which could be responsible for the heightened interest. What has changed is that the workers made redundant by greater productivity are not being re-employed by new investment.

There has been a slackening in investment rather than an acceleration in productivity and technology. (As a matter of fact the rate of productivity improvement has actually been declining – for reasons explained later. A minimum requirement for “technological” unemployment would be accelerating productivity growth).

Apparently people do not notice how rapidly technology is changing when there is no unemployment, but their attention is attracted by unemployment. It is far easier to waffle on about technology than to face up to the need for an entirely new social system.

If there had been a sudden acceleration of technological change in the early 1970’s, there is no reason to suppose that it would not have simply meant even faster growth rates with very little unemployment, as occurred in the 1950’s and 1960’s. Indeed, since it is new technology that provides a market for expanded reproduction, we could say that technological change has not been rapid enough for new investment to provide jobs.

“Controlling” Technology

It follows of course that we cannot reduce unemployment by measures to restrict or “control” technological change. The unemployment that is causing concern just is not “technological” to start with. As will be shown later, the unemployment we are worried about is “cyclical”, and due to “overproduction”.

But even if there was a situation of “technological unemployment”, the appropriate response would be to insist on using the benefits of improved technology for shorter hours, higher living standards, re-training of workers made redundant, and faster social progress generally.
This would be the logical result of labour saving technology in a socialist society.

Capitalism has been able to partly deliver those results in the past, and if it is no longer able to do so, this is an argument for socialism. It is certainly not an argument for “controlling” human progress to suit the pace allowed by capitalism!

What prevents the use of technological progress for social progress now, is not some acceleration in the rate of technological progress, but rather a jamming up of the economic machinery of the capitalist market economy.

There is no reason to suppose that the machinery could be unjammed by slowing down technological progress. Only extreme reactionaries (eg most of what passes for the “left” in Australia), would want to try. On the contrary, slowing down technological progress would just put another spanner in the works.

It would further restrict the expansion of markets desperately needed to unjam the machinery.
Some people say they support technological progress in general, but do not know what else to do but oppose it when there is an immediate threat to peoples’ livelihoods. The short answer is that people are not on the dole because “a machine has taken their job”. They are on the dole because for some reason capital is not being invested to employ them.

Even in a particular work place situation with redundancies, the appropriate demands are for new jobs, not some way to hang on to the old ones that we just do not need doing any more. The result of the latter strategy would be gradually deteriorating conditions for everyone since the redundant employees really have no bargaining power in the long run.

Most jobs are not “lost” through direct retrenchments. Fighting retrenchments, while sometimes necessary, cannot directly involve many unemployed workers, such as school leavers, who have never been made redundant. A lot of the carry on about technology is just reactionary drivel which effectively distracts attention from the real workings of the capitalist market economy.

Even worse is the stuff coming out of the “left” about “deskilling”, destruction of “craftsmanship” and so forth. According to these ideas, people’s jobs are getting more and more menial. If this was really true it would imply that the working class will become so degraded as to become incapable of ever taking power.

The truth is that we are starting to notice how menial our jobs are because we are becoming more intelligent and capable of running things ourselves. Most jobs now require more intelligence than before, and this situation is creating more intelligent workers who are beginning to understand how ridiculous it is to go on doing them for bosses.

The modern proletariat is a class specifically created by modern industry with its requirement for rapid changing of jobs and skills. Continuous technological change has produced a working class more educated, skilled and flexible than ever before in history. Our perspective should be able to look forward to the proletariat taking command of modern industry and not to look backward to some “good old days” when things were much worse and people were much less clever that they are nowadays. Communism will not restore craft labour.

Some people are explicitly opposed to any new technology that saves labour, even if the present staff of an establishment is fully protected and agrees to the change. They put forward the slogan “its not our job to sell”. Meaning that jobs need to be preserved for school leavers and so on.

This slogan is based on the idea that the working class is still involved in some sort of guild system, passing on fixed “jobs” from one generation to the next. The plain fact is that things have not been like that since the middle ages.

There are very few jobs in Australia that are the same as in our parents’ time, and there will be very few that will be the same for our children. Workers improve their position within capitalism by changing their jobs, not by “preserving” them. The proletariat is a revolutionary class, not a conservative one.

If it cannot improve its lot within the existing society then it will overturn that society, not fight to stop it developing. Those who want to fight to “preserve jobs” at the expense of social development should call themselves “reactionaries” because that is the correct dictionary term for their philosophy.

They have no right to call themselves “progressives”, let alone “socialists”. If they had their way with “preserving jobs” we definitely would be still in the middle ages. Reactionaries want to “control” technology because they sense that it is making the existing social relations obsolete. Progressives want to “unleash” technology, and for the very same reason.

(Next instalment: ‘Cyclical’ unemployment)

Unemployment and Revolution (Part 3): What regulates unemployment? (written by Albert Langer in 1981)

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Part 3: What regulates unemployment?

– What Do the Unemployed Actually Do?

– How Unemployment Regulates Wages

– Booms and Busts

– Wages and Class Struggle

– Union Solidarity

– Arbitration and Wage Indexation

– Capital Accumulation

– Technological Change

– Job Creation and Destruction

Somehow, the size of the pool of unemployed itself must regulate the rates of job creation and destruction. Otherwise the number of unemployed would fluctuate wildly all the time. We shall find out later how the regulation works normally, and why it is not working now. But we already know that unemployment must be some sort of regulator. The larger the pool of unemployment, the more jobs must get created and the less must get destroyed. Otherwise we cannot account for the usual balance eventually reached between these two quite independent rates.

Moreover, we know the mechanism usually tends to reach a balance with only a relatively small pool of unemployed. Therefore the mechanism must continue increasing the rate of job creation and/or reducing the rate of job destruction, as long as there is a certain amount of unemployment. It does not usually stop working with half the workforce still unemployed, just because unemployment is not still increasing.

Finally, we know that whatever this mechanism is, it does not always work. Right now, a small pool of unemployment is not balancing the rates of job creation and destruction. We await each month’s statistics with bated breath to find out whether unemployment has risen or fallen, and we usually find that it has risen. We know that periodically capitalism goes through major upheavals called economic crises, in which a large part of the labour force does get left unemployed for a long period. Our explanation of the balancing mechanism must account for that too.

Whatever the mechanism may turn out to be, we know that as long as it still is not working normally, no amount of artificial “job creation” can prevent the continuing mismatch between normal job creation and destruction from quickly recreating a large pool of unemployed. The only effective remedy for unemployment must be one that gets this balancing mechanism to work again. On this point we can agree with conservative economists. But what is the mechanism, why is it not working normally, and how can it be made to work again?

According to conservative economists the mechanism is simply that increased unemployment tends to pull down wages until it is profitable for capitalists to employ more workers. They conclude that the remedy is push down wages and increase profitability until the unemployment is absorbed.

That sounds quite plausible. If it is true, communists have no reason to deny it. We never claimed that capitalism could permanently maintain full employment without periodically pushing down wages to boost profits. Our answer would simply be that we do not feel like pushing down wages and boosting profits, thank you very much. We would prefer to abolish wages and profits and establish communism.

But a mystery remains as to why the mechanism should not be working, and why the remedy does not seem to work either! To resolve that mystery we shall first have to examine how unemployment regulates wages, and then how wages regulate employment and unemployment. We shall find that there is indeed a close connection between unemployment and wages, and between wages and job creation. But it is not as simple as the conservatives make out, it mainly works in one direction, and it does not work all the time. Most important, we shall find that we can not increase employment simply by pushing down wages. First let’s look at what the unemployed actually do to see how unemployment can regulate wages.

What Do the Unemployed Actually Do?

Under normal circumstances most of the unemployed are not just a stagnant “pool” but an active part of the “stream” moving from one job to another. They form a part of the stream that is temporarily banked up looking for outlets. They are an active part of the stream because they spend their time looking for jobs, not just rotting.

Unemployment is normally a period between jobs rather than a permanent status. When there was “full employment”, half the unemployed at any given time got jobs within four weeks. By 1978 more than a quarter had been waiting for over six months and another quarter for over three months. In a sense, one can measure how “normal” unemployment is, by its average duration, more than by the total numbers involved. It really is not a big problem if the economy is so dynamic that large numbers of people are changing their jobs each year, and they are spending a couple of weeks unemployed between each job. But it is very different when there are actually less people changing jobs than usual, but they are spending a longer time looking.

When unemployment increases slightly, it usually means that people moving from one job to another, or from school to work and so on, have to spend a longer time looking. But it does not immediately mean that a larger number of people are outside the labour force altogether.

Of course some unemployed workers do end up outside the labour force altogether, and even become permanently unemployable as a result of demoralisation. The larger the pool of unemployment, the larger the section of it that ends up stagnating instead of flowing back into employment, and the more peoples’ lives are ruined in this way.

Increasingly the unemployment we have got is taking on the features of a stagnant pool, rather than a flowing stream. This is compounded by the sharp reduction in normal labour turnover as people are reluctant to leave their old jobs unless they have new ones lined up. This stagnant unemployment is a different thing altogether from the “normal” unemployment that somehow regulates the rates of job creation and destruction. Nevertheless, we must first understand how “normal” unemployment does regulate these rates, before we can understand why the new unemployment does not.

The important thing about normal unemployment is that a larger part of the labour force is spending more time looking for work, and not that a section of the population has ceased to be part of the labour force. Hence the concept that the unemployed form a “reserve army of labour” that plays an active role in capitalist production, just as reserve armies play a vital role, and are not simply “inactive” in military battles. Some soldiers are in battle, and others are available to be deployed where required. Some workers work, and others are available to work where they are required. Both those in active service and those in reserve are necessary for things to go smoothly.

An important difference is that reserve armies of soldiers are deployed where their officers decide they are needed. With conscious military planning, reserves can be kept to a minimum and troops transferred directly from one front to another as required. Unemployed workers have no officers and are expected to find their own jobs. (Although there is now a fair bit of “manpower planning” and so forth).

The economic function of the unemployed is to look for work. Those that do not are no longer “unemployed”, but are “not in the labour force”. Those that do will normally find a job eventually. Their place in the unemployment pool may then be taken by someone else looking for employment. How long it takes, and what proportion miss out entirely, depends on the level of unemployment. But the unemployed individuals economic function does not change, their basic situation does not depend on the level of unemployment.

It is important to realise this when attempting to organise the unemployed. One reason they are very difficult to organise is that even now, most of them are not permanently unemployed – and the ones with enough initiative to get organised are also likely to get jobs quicker than average. On the other hand those that do become permanently unemployed can end up getting demoralised and dropping out of the labour force so they are no longer “unemployed” either, and are pretty hard to get involved in anything.

Let’s face it, unless things are really desperate, an individual unemployed worker can get more immediate benefit out of looking harder for a job than out of agitating against the government. The harder you look, the more chance you have of eventually getting to the front of the queue leading back into employment.

How Unemployment Regulates Wages

By looking for work, the unemployed play a vital role in the labour market. Their number determines the ease with which employers can recruit labour for expansion or replacement. That recruitment is going on all the time, even when there is a net reduction in the total number of jobs. There are always vacancies as well as people unemployed (and isolated examples of unfilled vacancies are always pointed to even though there are many times as many people looking for work as there are jobs available). The proportion of unemployed workers to job vacancies determines the average speed with which vacancies can be filled, just as it determines the average length of unemployment.

If vacancies cannot be filled fast enough any other way, then employers will bid up the price of labour by competing with each other to fill their vacancies. As in any other commodity market, this will continue until the supply of labour increases to fill the vacancies, or until the demand for labour has fallen (more likely, since the size of the labour force is relatively inflexible). The demand for labour will fall when the price has been bid up high enough, because investments that would have required more labour will cease to be profitable at the higher wage rate. So less jobs will be created and more will be destroyed. This includes of course the accelerated shift to less labour intensive production techniques.

We will examine the details shortly, but the important point to note is that unemployment only regulates wages in one direction. In fact unemployment only regulates wages when there hardly is any! As soon as there is enough unemployment to avoid a “wages explosion”, additional amounts will not significantly increase the ease with which employers can fill their vacancies.

There is no reason to believe that increased unemployment will cause employers to bid less for labour, or will cause unions to accept less. It may be that with really massive unemployment, union solidarity will be broken down. It may also be that the same slack demand for labour that has created unemployment will also make it unprofitable for employers to bid as much for labour as before. But these are both entirely separate questions. All we know for sure about unemployment as a regulator is that lack of unemployment will drive wages up and that will in turn force employment down.

This one-sided regulation is quite sufficient to explain the observed fact of a normal balance between job creation and destruction with very little unemployment. As long as markets are expanding and there is a tendency for the demand for labour to increase, that tendency will be checked by the size of the available labour force, but will permit full employment and real wages rising together with productivity.

This leaves open the question of whether other factors can also push unemployment and wages up or down and whether unemployment can coexist with high and low wages. That is as it should be, since we know that something other than the normal mechanism must account for the abnormal situation of high unemployment.

By way of contrast, the usual explanation that low wages will increase demand for labour, and high unemployment will push wages back down, explains too much. This would imply that any unemployment will correct itself, when it manifestly does not.

The usual explanation also implies that we should never expect to find increasing demand for labour alongside increasing relative wages. Yet that is exactly what has been happening with increased female labour force participation alongside equal pay.

Finally, the mechanism we have described gives no reason to believe that lowering real wages will automatically produce an increased demand for labour. All it says is that excess demand for labour (more than is available), will cause wages to go up. It does not follow that reduced wages would cause demand for labour to go up. That is also as it should be. Despite all predictions from the conservative camp, unemployment has continued rising while real wages have continued falling.

Since our unemployment regulator only explains one side of wages and unemployment, we need to look elsewhere to find what causes the abnormal movements in a crisis.

First, let us look at what happens before a crisis, namely a boom.

Booms and Busts

In a boom, real wages can even increase faster than productivity, so that the share of wages compared to profits will rise and the rate of exploitation will fall. This actually happened in the 1974 “wages explosion”. That was certainly a “boom” even though there was considerable unemployment at the time. Conversely, when demand is slack, unions have little bargaining power and the share of wages, or even the absolute level of real wages, will fall. That is happening right now.

When the economy is booming there is a general tendency for firms to increase their demand for labour power, raw materials and other inputs, in order to meet the demand for their output. This drains the pool of unemployed, reduces warehouse stocks, increases plant capacity utilisation and drives up wages and other prices. The increased demand for inputs and increased consumer spending can itself feed the boom to a certain extent, by further increasing demand.

But when the price of labour and other inputs is rising faster than the price of firms outputs, profit margins are reduced. There is then a general tendency for firms to cut back their investment and expansion, or even undertake contraction. This reduces the demand for labour and other inputs, and eventually recreates a pool of unemployed as well as stockpiles of other commodities and excess production capacities. Prices and wages are then forced back down (relatively).

These movements occur in individual sectors, but also in the economy as a whole. One firm’s inputs are another firm’s outputs and changes in demand act across the board. The balance between production, consumption and investment depends on movements in wages, prices and the rate of profit. This “balance” is always dynamic since it is precisely the imbalances that bring into play the factors for restoring a balance. Hence there is an unending succession of booms and busts in the economy as a whole and in particular sectors of it.

A problem with the above description of booms and busts is that it seems to describe a self-regulating mechanism that would automatically correct for unemployment or labour shortages by moving wage rates, or the capital intensity of investment, in the appropriate direction. So one would expect things to never get all that far out of balance. Indeed capitalism does work like that, a lot of the time, and normal “fluctuations” in the economy can be adapted to quite smoothly. But there must be more to it than that, when we have a “crisis”. Before going into that, we will look at wages, and then look at the normal balancing mechanism in more detail.

Wages and Class Struggle

Conservative economists assume that left to itself, capitalism always works smoothly, and when it does not, they therefore argue that there must be some institutional factor which is preventing prices from clearing market – for example, unions preventing wages from adjusting to the level of unemployment. Hence the calls for “wage restraint” and polemics against the unions.

To some extent this is hypocritical. Conservative economists are generally well aware that the level of wages is determined by the demand for labour, and not vice versa. They could not really believe that wages are greatly influenced by the effect of polemics against unions. They know that the only effective way to bring down wages is through reduced demand for labour, and that means increased unemployment. So it is quite illusory to talk of unemployment and “wage restraint” as alternatives. They go together.

Even though union leaderships might be very willing to go along with “wage restraint”, the employers themselves will bid up the price of labour power if there is not enough unemployment to hold it down. The propaganda for bringing down wages is really propaganda for accepting mass unemployment.

References here and elsewhere to “unemployment” holding down wages are not meant to imply that competition from the unemployed is the restraining factor. While union solidarity remains effective, there is little such competition. It would be more accurate to say “slack demand for labour” holds down wages. But generally (although not always), slack demand for labour is closely associated with unemployment. So the shorthand reference to”unemployment” is near enough.

Illusions about what determines wages are often spread from the labour movement, and especially its left wing, who sometimes picture the level of wages and conditions as primarily determined by the outcome of sharp class struggles on the shop floor.

This is certainly true to a greater extent than for other commodities. Because of the social elements in wages determination, worker militancy can effect wages more than farmer militancy can effect the price of wheat or supermarket rapaciousness can effect the price of groceries. A militant union can secure more for its members than a weak one and a militant workforce can enjoy a higher standard of living than a more servile one in a country with a comparable level of economic development.

There is an element of real bargaining, and extra-economic factors can also influence the outcome – for example fascist governments that suppress unions, or the threat of revolution. Even so, on a world scale it is clear that the level of wages corresponds very directly to the level of economic development in various countries.

Union Solidarity

The main variable in wage determination is the degree of unionisation and solidarity among the workers. If they are solid, they can get the full value of their labour power – its monopoly price. If they are not solid, they can be forced to accept anything below that – right down to minimum physical subsistence level. Unionisation has been and remains enormously important in raising workers above physical subsistence level and securing the value of their labour power. Smashing unions is still a goal for employers to force workers wages below their value and extract surplus profits.

But once unionisation is well established, unions cannot secure any more than the value of labour power. Like any other monopoly, they cannot charge what they feel like, but only “what the traffic will bear”. In this case “the traffic” is what employers will bid to secure extra labour.

In particular, the main effect of the “level of class struggle” is in determining the overall level of labour conditions for the whole nation. It has much less effect on wages in any particular industry or workplace. Even at a national level, class struggle probably has a greater impact on normal working hours and work intensity and on “social conditions” generally, than on actual wage rates.

Since there is free movement of labour between occupations and industries, the level of wages and conditions in any industry is influenced far more by the overall state of the labour market, than by the level of militancy in the particular industry. Workers in low paying industries will look for jobs in high paying ones, producing a labour shortage in the low paid industry which can only be eliminated by offering higher wages.

The bargaining position of a union also depends more on the demand for its members labour than on the dedication of its leadership. We are talking about variations a few percentage points above and below the wage rate determined by “market forces”. Failure to fight could halve wages compared to their “market” rate. But fighting harder could not double them above the market rate, because the market rate is not some arbitrary figure, but the maximum employers can be made to pay before their investment would be diverted elsewhere. Provided a union does fight, it will get more or less the market rate.

There is a parallel with land rent. Landlords can surrender part of their rent, or have it taken from them in taxes. But they cannot compel capitalists to pay a rent that will leave them with less than the average rate of profit on the capital they invest in the land. The capitalists just would not invest in that land.

Real wages have doubled in Australia since World War II, yet it is not a fundamentally different kind of society. They doubled because of economic development, not because of a sudden upsurge in militancy. Indeed the value of labour power has probably not changed very much. The increase in real wages has resulted directly from the relative cheapening of consumer goods, due to increased productivity.

Arbitration and Wage Indexation

The Australian Arbitration system provides elaborate rituals according to which wage rates are supposed to be determined by impartial judges on the basis of principles of equity. Token 24 hour strikes are an important part of those rituals and feed the illusion that wages are determined by some combination of industrial strength and skill in advocacy.

But arbitration is simply an attempt to measure the bargaining strength of the two sides, without them having to actually waste energy to prove that strength by fighting it out each time there may have been some change. The factors investigated in Arbitration Commission hearings, include the “state of the economy”, “productivity”, “capacity to pay”, “cost of living” and especially “work value” and “relativities”. These are precisely the factors that effect the market determined wage rates. The token strikes are a part of that measurement process rather than a form of real class struggle.

The Commission is trying to determine what the market wage rates objectively are. It does not “set” them. When the Commission guesses wrong, it is soon proved wrong by industrial trouble and/or over award payments and/or sectoral labour shortages or unemployment. Adjustments in the “awards” are then required.

The farce of “wage indexation” is a good illustration. When the Commission really did try to “set” wages according to uniform “guidelines”, it failed miserably. Unions and employers, and finally even the government urged it to allow wages to reflect market forces.

There is no reason to believe that the overall level of wages has been kept either artificially high or artificially low by the Arbitration Commission. The Commission itself is well aware that its centrality in the wage fixing process depends critically on how well it estimates actual labour market conditions. It has as much power to “set” wages as the Prices Justification Tribunal had to “set” (or even “justify”) prices, and less power than the Reserve Bank and the Treasury have to “set” interest rates. These institutions can help smooth things out in their respective markets, and they can stuff things up. But they cannot change the overall direction of market movements.

“Rigidities” have allegedly been introduced into the Australian wage structure by the Commission’s fixed “relativities” between occupations and skills. But this has not prevented wages moving in response to changing demands for labour, nor has it prevented labour moving in response to changing demand. It has simply ensured that the wage movements are slowed down and take the form of over award payments rather than awards. Less flexible “relativities” have encouraged more “manpower planning” to cope with shortages and surpluses of particular occupations, instead of the clumsier process of a change in relative wages having to indirectly attract labour from one occupation to another. Likewise, any “rigidity” in overall wage levels could only produce a time-lag in the effect of underlying market movements.

Leaving aside the hypocrisy, conservative economists do believe that bringing down real wages is an essential part of any program for economic recovery. They have masses of quite genuine statistics to prove that wages have increased more than productivity, the share of wages in Gross National Product has increased and so on. They rightly conclude that there is a “real wage overhang” keeping the economy out of balance, even though the purchasing power of wages may be declining.

Therefore, they see unemployment as necessary to bring down real wages, although they prefer not to emphasise that aspect, but just talk about “wage restraint”. But if more unemployment will bring down wages, why hasn’t it? Why is any “program” for economic recovery necessary at all?

The weak point in conservative arguments is that they do not explain what has changed. It is not good enough to just point out that there is a “real wage overhang” since the “wages explosion”. Why is there, and why have “market forces” not corrected it? Before answering that, we need to look at the normal adjustment mechanism in some detail.

Capital Accumulation

Capitalist production is always a process of production for the purpose of accumulating more capital. One part of profits is spent unproductively by capitalists, maintaining themselves and their retainers “in the manner to which they have become accustomed”. That can be fantastically expensive if you look at the lifestyles of Jackie Onassis and the like. But is a very small proportion of total profits, because there are very few really wealthy capitalists.

The more important part of profits is accumulated as new capital. This does not mean it goes into their pockets, or is hoarded into a pile of gold. It is invested in expanding the wealth and power of the individual capitalist, and incidentally developing the productive forces of humanity.

Capital investment means buying more labour power and raw materials to produce more goods, to be sold for more profits (some of which will allow the capitalist to “become accustomed” to an even more lavish lifestyle, and most of which will be invested to expand further). It is a process of continually expanded reproduction. If there was a fixed supply of labour and a fixed technology, this expanded reproduction would become impossible. The new capital would be trying to recruit workers already employed by the old capital, and it would have no market for its products. Only simple reproduction would be possible, with no net investment.

Even if we allow for increasing supplies of labour, a fixed technology would still only permit expanded reproduction at exactly the rate of labour force growth, with no increase in capital or output per worker.

In fact some “models” of the process of capital accumulation are based on assumptions like that. Naturally, they have not been able to explain very much about real economic growth, which always involves new technology with an increasing social division of labour and more capital and more output per worker.

Real capitalism is always expanding. Hence imperialism. Capital can expand intensively or extensively. It can expand extensively by employing more workers, even with the same technology and the same capital per worker. That is important in the third world where there are still reservoirs of peasants who are not employed as wage workers, and it has been important in pulling women out of the household and into wage labour. It also absorbs population increases.

But capitalism also expands intensively, by investing more capital per worker. This implies new technology and a development of the productive forces, and has made capitalism a far more dynamic and progressive social formation than previous ones which went on reproducing themselves without constantly revolutionising the technique of production.

The increasing organic composition of capital implies a falling rate of profit. Here is not the place for a detailed discussion of that, but it is worth mentioning that the difference in internal rates of profit between more developed and less developed countries is equalised by imperialist capital export and import.

A fuller treatment of capital accumulation should examine it internationally. This is very necessary to combat the narrow nationalist outlook so common in the Australian “left”. Suffice it to say that the unemployment we are suffering in Australia is clearly part of a worldwide problem and will require a worldwide solution. Our industries are not just “foreign owned”. They are part of an integrated world capitalist economy. We should think big.

Technological Change

At any given time, there is always a range of known techniques that can be used for production. This range is also always being extended by the discovery of new techniques, which usually involve the use of new intermediate products and hence an increasing social division of labour. But even without new inventions, there is a range of different ways of doing things, some of which will be economic while others are not.

At lower wage rates and a higher average rate of profit, a given labour intensive technique may be cheaper than a capital intensive technique for doing the same job, even though the capital intensive technique is more productive.

For example, third world countries with little capital invested in roads and so on, are forced to use more labour intensive techniques, even though the more advanced methods used in wealthier countries are already known. It can actually be cheaper to use donkeys for transport until capital is available for investment in building roads and truck plants, producing trucks, training drivers and so on. That capital will not be available until the rate of profit on that kind of investment is higher than on alternatives. As more capital is accumulated, the alternatives with higher rates of profit become saturated, the rate of profit goes down, wages go up, and eventually it becomes cheaper to use a truck. It was always more productive to do so.

One day it may be cheaper to use aircraft for regular inter-city transport. We already know how to, but truck drivers’ wages are not high enough, and the rate of profit is not low enough to justify the massive capital investment required.

Increasing returns to scale often dictate a change in technique when a market has reached a certain size. A road will then be replaced by a railway for example. The railway has greater productivity, but the capital investment required is not economic at low volumes of traffic.

Often increasing returns to scale are associated with a greater social division of labour. Special functions are split away from general purpose establishments and achieve a higher productivity while handling the greater volume. A special repair shop will only become economic with a certain level of repairs. Designs will be produced in-house until their volume permits a specialised design firm to do the job more efficiently.

An increase in the scale of operations as more capital is invested and markets expand, may not be regarded as a change in technique. But there will almost always be changes associated with it, like those mentioned above. In most industries the days are long gone when expansion simply meant that more establishments would be set up using essentially the same techniques.

This increasing social division of labour implies more interconnection between different sections of the economy. Each is producing for all, and all for each. It does not imply greater occupational specialisation. On the contrary it requires greater flexibility in the labour force as they change repeatedly from one job to another.

New capital can be invested in the same old techniques to employ more workers using the same old sort of plant to turn the same old raw materials into more of the same old products. But this is only possible if more workers are available. It always creates jobs, provided there is a market for more of the old product. But it creates no new market and assumes that for some reason the market for the old product has increased.

Otherwise new capital can only be invested in more productive techniques that allow fewer workers (usually using more fixed plant and machinery) to turn more raw materials and intermediate products into more products per worker. This destroys some of the old jobs and creates more or less new ones according to whether the output is increased faster or slower than the labour productivity is increased. That depends on how fast the market expands, which depends partly on how much the new techniques cheapen the product (relatively).

New capital intensive investment is always expanding the market, since it does relatively cheapen the product (or the old technique would continue in use), and since it creates a demand for the additional new plant and intermediate products required by the new technique. If there was no technological progress, capitalism would in fact reach the state of stagnation implied by most economic models, since there would be no expanding market for expanded reproduction.

If output is expanding slower than productivity, the result of capital intensive investment will be less workers employed in that sector of industry. If that is happening overall, the result will be an increasing pool of unemployment since more jobs are being destroyed than created. If output is expanding faster than productivity, then labour intensive investments must be expanding employment.

Job Creation and Destruction

Now we can see how a small pool of unemployment normally maintains a balance between job creation and destruction. As profits are continually being invested to become new capital, old jobs are continually being destroyed and new jobs are continually being created. The balance depends on the relative profitability of capital intensive and labour intensive production techniques in new investment.

As long as wages keep increasing at exactly the right rate to keep on gradually tipping the balance towards capital intensive techniques, investment can continue, with increasing capital per worker, even though the labour force is not growing as fast as capital is being invested (provided there is a market for the products).

Otherwise, if wages fail to grow fast enough, the existing techniques would continue being used by new investments, and this will absorb the pool of unemployed until competition for labour drives up wages and restores a balance.

If wages grow too fast, due to labour shortages, there will be a tendency to switch more rapidly to capital intensive techniques which reduce the demand for labour. Slack demand may then force wages down, but even if it does not, there will be no renewed upward pressure until the labour market has again been tightened by further accumulation.

The point is that in “normal” balance, the demand for labour is directly regulating wages so that demand equals supply. It follows that there can be no such thing as “too many workers” or “too few jobs”. The number of jobs will adapt to the number of available workers as capital accumulates. Likewise, wages will not be “too high” or “too low”. They are determined by the demand for labour. It seems then that “everything is for the best, in the best of all possible worlds”. Mass unemployment is impossible as the textbooks insist.

But this process of adaptation only applies to new capital investments. The existing capital investments can only adapt to labour shortages and surpluses, or changes in wage rates and the rate of profit, within fairly narrow limits. A steel mill cannot employ very much more or less labour according to wages rates. Its design is more or less fixed. Changes can only effect the design of new steel mills, or extensions to plant capacity, and the decision to expand steel production at all.

Lower wages will not encourage existing steel mills to hire more workers. It will only encourage designers of future steel mills to continue using more obsolete, labour intensive techniques. That will only create more jobs when, and if, an increased demand for steel causes more investment in expansion of steel mills.

Thus if there is some disturbance to the normal relationships, unemployment can increase, regardless of wage rates. Contrary to the conventional wisdom of economists, there is no automatic mechanism that would quickly restore a balance. The automatic mechanism can quickly cope with labour shortages, by choking off new labour intensive investment. But it cannot quickly cope with labour surpluses. The unemployment will be absorbed when, and only when, new investment has created new jobs, and that may take some time.

(Next instalment: Technological unemployment)

Unemployment and revolution. Part 2: What ‘normally’ causes unemployment?

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What “normally” causes unemployment? (continuation of research paper prepared by Albert Langer in 1981).

– The Labour Market

– The Unemployment Pool

– Changes in the Level of Unemployment

2. WHAT “NORMALLY” CAUSES UNEMPLOYMENT?

We shall argue that conservative economists are correct to stress that unemployment plays an essential regulatory role in a market economy. This contrasts with the usual “left” calls for government action to “create jobs”. But we will go on to show that “wage restraint” will not solve the problem either.

Such “restraint” would be unnecessary to keep “normal” unemployment within limits, because the unemployment itself would regulate wages. Something must have changed so that unemployment and wages are not regulated in the way they used to be.

A common way to look at unemployment is that there is a certain fixed number of jobs and a certain fixed number of people available to fill them, and some sort of mismatch has occurred. The suggestion here is that the unemployed are simply those workers who cannot be fitted into the jobs available for them. This idea leads to “commonsense” proposals to reduce the number of workers, or provide a better match between specific workers and specific jobs.

Solutions aimed at restricting the number of job applicants have historically had a powerful appeal. Discrimination against women, migrants, blacks and so on, can be in the immediate interests of men, native born, or whites, in the competition for a place at the front of the jobs queue.

Obviously such “solutions” cannot reduce unemployment, but they can determine who gets the jobs, and for the individual on the dole, that can be just as important. Efforts are already being made to promote these objective divisions of interest within the working class. Those efforts are serious and should be fought seriously. They can succeed.

There are always vacancies as well as people unemployed, so “solutions” which emphasise re-training and so forth are still popular. So is the idea that there are really plenty of jobs available, but “dole bludgers” are just refusing to fit into them because they want something better.

School leavers do have access to advice about how to be well groomed for a job interview and so on, although only cretins could imagine that if all the unemployed were better groomed, any more of them would get jobs quicker! This simply confirms that who gets the jobs is pretty important for the school leaver. Advice about how to find a job can be somewhat helpful in evening out the duration of unemployment and reducing the numbers who miss out on jobs altogether. But quite obviously it cannot reduce unemployment.

A lot of energy in left wing propaganda and agitation is spent trying to combat the above ideas but without attacking the underlying concept that there is a fixed number of jobs and workers. The “left-wing” and “right-wing” analyses are therefore just two sides of the same coin, sharing the same basic assumptions.

So we should not be surprised that the left makes no progress against the dominant right wing ideology.
What is the difference between saying there are too many workers or not enough jobs? These really amount to exactly the same thing. Yet that is all the left does say. The “not enough jobs” line is sterile, boring, and will get nowhere because it is just not true.

These ideas are wrong because neither the number of workers nor the number of jobs is at all rigid.

Under normal circumstances, the number of jobs adapts flexibly to the number of workers available to do them. In fact there is always plenty more work that needs doing, than the labour available to do it.
As capital is accumulated and society develops its productive forces, jobs that were previously left undone get attended to. The limitation is always the social labour time available to do things, rather than the number of “jobs”.

When the number of jobs fails to adapt to the number of available workers, this must mean that something has changed in the adaptive mechanism itself, and we must find out what. Just trying to “create jobs” would still leave us with an adaptive mechanism that was not working and that could recreate a new pool of unemployed.

This more sophisticated understanding of job creation in a market economy, lies at the heart of conservative arguments for wage restraint. Those arguments have never been satisfactorily answered from the labour movement, and are gradually being accepted by the trade union bureaucracy. There is thus an urgent need for them to be answered. Let us first consider how the adaptive mechanism is supposed to work.

The Labour Market

The workforce in modern industrial countries is extremely mobile. It is the product of centuries of capitalist development in which the technique and structure of production have changed so rapidly that people expect to change jobs many times during their working lives.

Nowadays many firms are so large that a good deal of movement between jobs takes place within the same firm. Some even have regular career services with a defined system for recruitment, promotion and transfer. There is also a certain amount of transfer between firms, directly from one job to another. But a great deal of movement between jobs still takes place via the pool of unemployment.

“Labour Turnover” includes workers changing jobs while searching for a better situation. It also includes the replacement of workers who have died or retired or otherwise left the labour force, by new workers entering the labour force for the first time.

These movements have no net effect on unemployment although many workers will pass through unemployment on their way between jobs, or on their way into the labour force. In addition to this however, there is a continuous process of new jobs being created and old jobs being destroyed. This does have a net effect on employment, and therefore on unemployment, although the effect can be in either direction.

In existing establishments, expansion or contraction of demand will create new vacancies or produce redundancies. Changes in demand may also result in new establishments being set up as an industry expands, or old ones being closed down as it contracts.

New techniques will be introduced with expansion, or when it is time for old plant and equipment to be replaced. Old techniques will be phased out with contraction, or when they have become so obsolete that it is more profitable to introduce the new technique immediately.

Investment in new production techniques requires a reorganisation of the labour process. Vacancies will be created for new positions that previously did not exist. Old staff positions no longer required will be abolished. Some workers will be transferred from old positions to new ones. Others will be retrenched, or not replaced when they leave. New workers, perhaps with different skills, will be recruited. New raw materials and components will replace those previously used. Work previously done “in house” when the volume was lower and the need for specialisation was less, will either be farmed out to new outside contractors or subsidiary establishments set up for the purpose.

Generally the new technique is introduced to increase productivity. The new team of workers will be able to turn more of their “inputs” into “outputs” at a lower cost and using less labour. There may be an increased demand for new inputs used by the new process, with a decrease in demand for the old inputs used by the old process. This may produce some net effect on total employment in the suppliers (and in their suppliers…)

If the output is relatively cheapened as productivity increases, then there may be a further increase in demand, which will again increase the demand for the products of the firms or departments that supply the inputs.

Expansion of markets is generally a consequence of relative cheapening through increased productivity, and at the same time a condition for new techniques to be introduced. “The division of labour is determined by the extent of the market”. Often within the same establishment, there will simultaneously be expanding demand which increases employment, and reorganisation that decreases it. The total staff size may either grow or shrink as a result.

This sort of thing is happening all the time, and may not even be noticed as “labour saving technological change”. Especially if the change only increases output with the same size workforce, instead of leading to redundancies.

However labour productivity and the real gross national product per worker are able to grow each year only because of these changes. Growth rates have been very high in the whole post-war period, because these changes have been taking place very rapidly.

The long term tendency has been for the total labour force to grow more rapidly than the population. Labour saving technological change has meant more output per worker together with more employment overall. However this simply implies the overall rate of economic growth has been faster than the rate of productivity increase. Any particular change may result in either more or less total employment, and there is no guarantee that changes in employment taking place simultaneously throughout the economy will automatically balance each other in any way.

Both changes in demand and changes in technique can produce a net change in total employment. If there was no unemployment pool, there would be no leeway for changes in total employment to occur as a result of job creation and destruction. There must be leeway, so there must be an unemployment pool.But its size is another question.

The Unemployment Pool

As well as the normal labour turnover, there is a continuous stream pouring into the pool of unemployment as a result of positions that have become redundant (whether their previous occupants were sacked, or the position was just not filled when they left).. There is also a continuous stream emptying the pool of unemployment as a result of new vacancies that have been created.

In fact there are a number of interconnected pools and streams for different occupations, industries and localities. And these are also interconnected with the pools of people in the education system or otherwise not in the labour force as well as with the flows of migrants to and from other countries.

The effect of changing demand on the numbers of jobs available for people of various skills and occupations in various localities, is reflected in the filling and emptying of their unemployment pools. People who cannot find a job in one pool are forced to transfer to another by doing things such as changing their usual occupation or residence, acquiring new skills that are more in demand, and so on.

The pools of people “not in the labour force” can also be forms of “hidden” or “latent” unemployment. Women for example, are drawn into wage labour more extensively during periods of peak labour shortage, and pushed back into “home duties” when unemployment is growing. Likewise people may stay on at school longer, or retire earlier, as a result of unemployment.

On a world-wide scale, the movement of people off the land and away from petty production into industrial wage labour jobs is accelerated by labour shortages.

This movement is retarded or even reversed during a depression. Thus countries like Australia which normally absorb immigrants from agricultural areas like southern Europe, will put up barriers to immigration when there is unemployment at home. People left marginally employed, on or off the land in the agricultural areas are also part of the unemployment problem.

The modern capitalist economy is very flexible and has a number of mechanisms for adapting to changes in the level of economic activity and consequent changes in the demand for labour. Thse include adjustments in overtime hours worked, part-time and casual employment, wage rates, labour turnover, work intensity, production techniques and so so.

Only when the other adjustment mechanisms have already been stretched considerably, do substantial unemployment or labour shortages appear directly. Both unemployment and labour shortages are therefore signs of some relatively severe disproportion which must be stretching things. Since each firm hires and fires independently and plans its investment program independently, there is no reason why at any given time the total numbers pouring into the pool of unemployed should be equal to the numbers drained out of it. Some other mechanism must therefore maintain the balance.

After all, why should the number of jobs created in the tertiary sector, just happen to balance the number of jobs lost in manufacturing, plus the additional numbers of women entering the labour force, and so on? Nevertheless, these independent statistics did balance for many years, and we must find out why they did, before we can find out why they now do not.

As will be explained later, the expansion and contraction of unemployment is itself part of the mechanism that regulates the price of labour power, the rate of profit and the balance between production, consumption and investment.

There just is not any government authority that can regulate the number of new jobs being created, or the number of old jobs being destroyed each year – and there cannot be such regulation in a market economy.

Therefore there is not any way that the government can directly determine the number of unemployed.

Changes in the Level of Unemployment

It is difficult to separate job creation and destruction from other labour turnover, and difficult to separate the effects of new technology from expansion and contraction of demand. But labour turnover is very high, and some of it is the result of jobs being created and destroyed.

If people change their jobs an average of once every four years, then the number of job changes each year is equal to a quarter of the entire workforce. If the average duration of unemployment is six months, then twice as many people pass through unemployment each year on their way to a job (or on their way out of the labour force due to discouragement), as the number of unemployed at any given time. Only a small proportion of labour turnover needs to be due to job creation and destruction, for any imbalance between the two to have a rapid effect on net employment and unemployment.

One would naturally tend to think that if all those who happen to be out of work at the moment were to go abroad, or had jobs specially created for them, then there would be no unemployment. But the above analysis suggests that only a slight mismatch between the numbers of jobs being created and destroyed, would very quickly recreate a large pool of unemployed. Just to keep the number of unemployed static, whether at twenty thousand or two million, there would have to be perfect equality between the large number of jobs being destroyed each year, and the large number being created.

It follows that one should not just think in terms of a match between the numbers of jobs and workers, but also a match between the rates of job creation and destruction. In fact, when there is no dramatic continuing change in the level of unemployment, there must be just such a nearly perfect match between job creation and destruction.

How is it brought about? Why does not the number of unemployed fluctuate wildly, all the time? Only if we know how unemployment is normally regulated can we find out why that regulation is not working the same way now.

(Next instalment: What regulates unemployment?)

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

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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?)

COMMUNISM and INDIVIDUALISM – A TROUBLED RELATIONSHIP

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Concluding Tom’s notes…

A) Lenin On the Question of Dialectics

The relationship between the universal and the individual is just that, a relationship. When taken alone – abstracted – the universal is untrue. It is untrue because it is removed from its relationship with the individual, (its opposite) which alone is concrete. It is the relationship between each that gives each its truthfulness, its lived, actual reality.

I am reminded of Hegel’s “If something is abstract it must be untrue…” and how the communist movement has been alot more comfortable dealing or focusing on the universal – the group, class, people, nation than on the concrete – the individual. We have a problem with the individual; but if dialectics has meaning this must indicate that we also have a problem with the universal.

B) Marshall Berman

Berman’s procrustean role description also applies to the Industrial Revolution and to early periods of capitalism generally. Peasants/small farmers and land holders, rural, labourers and artisans were sucked into the factories of the Industrial Revolution and exploited mercilessly. In Dickens ‘Hard Times’ he describes these modern pegs as ‘hands’, an accurate description of that part of the body the bosses valued. Precious little space for the individual to unfold here. That’s the down side and there are clear parallels between this and pre capitalist peg fitting. The up side was seen over generations and caused by the dynamism of capitalism and the space it created for workers to organise, struggle and develop.

Two points re this:

a) the failure of most of the left to see the emergent role of the individual as a good thing; its tendency to praise in a one sided way collectivism and to associate individualism, again one sidedly, with bourgeois ideology.

b) the working class itself has made it clear through its actions and choices that it values individual growth and development and the economic development which facilitates this.

The question for communists is: do we?

Where the traditions and customs of others determine character and conduct of the individual “one of the principal ingredients of happiness” is wanting.

Marx: “liberal economy and politics generate a contradiction between the individuality of each proletarian and the condition of life forced upon him … labour.” And because the capitalist state (liberal or otherwise) reinforced and legitimised that condition, it had to go – be overthrown.

It seems to me that the conflating of that aspect of ‘liberal’ which speaks of freedom in a general political and personal sense with liberal economics (freedom of capital, of property rights and the rights of exploitation) is indicative of a major theoretical weakness and an opportunistic slide toward an authoritarian suppression of individuality. Marx and Engels were revolutionary democrats and communists. They were in the minority all their lives and much of their polemics were aimed not only at the wacky left ideas but at authoritarian ones.

xviii
The defeat of the revolutions of ‘48 generated alot of despair and from this time to the end of the 1950’s, in nearly all arguments between radicals and their opponents, both parties identified the capitalist economy and the liberal state with ‘individualism’ and equated radical aims with “a collectivism that negated individuality.”

I think he is onto something, especially “a collectivism that negated individuality”. The separation, or negation is metaphysical, one sided. Collectivism thus understood will never get anywhere in advanced capitalist societies as it attempts to negate our ‘new fangledness’. It also conflates as per para above.
The group and personal discipline necessary in a party is thus seen as coerced, a top down crushing of individuality rather than a free act from below, of authentic action undertaken by the individuals concerned, in limiting individuality, where this individuality comes into conflict with the cause or the group’s purpose. One can also identify precisely the same dynamic – and duality – in any group endeavour.

The Marxist Archive entry for collectivism is a case in point. It speaks of collectivism transcending or sublating individualism (a collectivism which does not suppress the individualism of bourgeois society). This seems confused. They get collectivism and individuality right historically and in their definition, but the socialist bit clearly gives primacy to collectivism (without individuality being suppressed) and the transcendent, or dialectical leap, only relates to collectivism. Individualism, which remains ‘bourgeois’, or consistent with the individuality that emerged under capitalism, remains unsuppressed but also untransformed. It is as though dialectics has had a senior’s moment and forgotten that individuality too, must transcend its bourgeois limits.

This ambivalence has been characteristic of ostensibly Marxist theory although not of Marx himself. The bods at the Archive clearly understand that individuality is important but are unable to understand it as dynamic.

“Liberation from the standpoint of the bourgeoisie, i.e. competition, was, of course, for the eighteenth century the only possible way of offering the individuals a new career for freer development.” Marx (SW McLellan p186)

The free development of the bourgeoisie destroyed rural communities, threw millions off the land, thereby depriving them of their livelihoods, and forced them into the hands of the bourgeoisie itself. There was nothing pretty or humane about it. Yet, as Christopher Hill shows, it was not entirely, or even principally, negative. It led, among other things, to much greater economic and productive efficiencies, less expensive and more readily available food and better clothing. It also led to the IR, the consequences of which, as O’Flinn positively observed, we are still getting used to twelve generations later.
“…private property can be abolished only on condition of an all round development of individuals, because the existing character of intercourse and productive forces is an all round one, and only individuals that are developing in an all round fashion can appropriate them, i.e. can turn them into free manifestations of their lives.” Ibid p 191

As with spirituality, we have left the field of individuality and authenticity to the right – which is why we find some of their libertarian ideas attractive (presumably this must also apply to the Spiked crew).

This 50+ year old quote from Barry Goldwater is a case in point: “Every man, both for his own individual good and for the good of society, is responsible for his own development. The choices that govern his life are choices he must make: They cannot be made by any other human being, or by a collectivity of human beings.” (The Conscience of a Conservative, 1960). It’s like Nietzsche with a southern twang.

_ _ _ _ _ _ _

THE WINDS OF CHANGE – CULTURAL REVOLUTION IN EUROPE AND THE INDIVIDUAL

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Continuing with Tom’s notes…

Gramsci describes as a cultural revolution the period ushered in by the Renaissance and the Reformation. I’d not previously thought of these events, or movements, as cultural revolutions before, but he was right. They sounded the death knell of medievalism and it is worth remembering that the war was protracted, often bloody and characterised by what we have come to realise as historical transformations with their obligatory twists and turns. (This latter point should serve to reassure.)

It was from this cultural revolution that the modern individual arose.

There was a Cultural Revolution (CR) in Europe and it was accompanied by political struggle, war and revolution. It ushered in the modern era. Because of poor historical and theoretical understandings we are content to think that a CR is something that is launched – as it was by Mao in China. Communists in power will indeed launch GPCRs – its surely part of the job description, part of the deal in waging revolution. It is a conscious attempt to push things forward. Prior to this CRs were not prescribed or consciously directed and were more like a dogs breakfast (could do with a better description). They moved forward in fits and starts, often suffering defeats and being impossible to distinguish from the political and social turmoil that spewed it up. A slow moving but unstoppable tsunami, creeping forward here, being held back there, leaving untouched some remnants and swallowing up others. One way of reading Christopher Hill’s histories is through a cultural lens.

From the times of the English Revolution the big bourgeoisie in Britain only recognised a political personality, an individual, if they had property. This itself was clearly reflected in the franchise which, at the time of the revolution, was given to only about 3% of the population, a situation that changed only very slowly due to a franchise version of ‘bracket creep’ rather than reform. Gramsci makes this point regarding recognition in relation to the Catholic Church (no doubt he was right) but my thinking took me to the English Revolution and the rise of the capitalist class in Europe generally. The point is that a person is not worthy in their own sake, but only insofar as one is accompanied by wealth and the power implicit in wealth. The masses (and many pejorative terms exist to describe them) are the counterpoint to the valued, wealthy man of property and they arouse disdain and a strange mixture of indifference and fear. So long as they have no power and are accepting of this, it is the former; when they cease to accept their proscribed role and seek redress, it is the latter.

The primitivist appeal to the state of nature made during the revolution’s century saw man as a rational but isolated, atomized individual, set free from society. The appeal to the individual conscience, the religion of the heart, was ultimately an appeal to changing social norms. (Hill, Change and Continuity in 17th C England p 116). This too is the appeal of Locke’s tabula rasa.

Reactions to the French Revolution and their implications for individuality.

1. “… Semblance, I assert, must actually not divorce itself from Reality. If semblance do – why then, there must be men found to rebel against Semblance, for it has become a lie.” Carlyle, “The French Revolution.”

Marshall Berman’s page on this raises the matter stated by Marx that the dominant ideas of any epoch are those of the ruling class ->
xxxi Burke saw in 1790, before the revolution’s direction was clear, that the Enlightenment – the multitude of “ sophisters, economists and calculators”, had seized the initiative and “extinguished forever” “the glory of Europe”.

“All the pleasing illusions which made power gentle and obedience liberal, which harmonised the different shades of life, and which, by a bland assimilation, incorporated into politics all the sentiments that beautify and soften private society, are to be dissolved by the new conquering empire of light and reason. All decent drapery of life is to be torn off …”

Beautifully written tripe and an admission that the ”whole social system of Europe was essentially a system of lies.” The artifices of ruling class life and the ideological justifications of it were laid bare. Once again the emperor had no clothes – but this time they had been torn off. Semblance had not only become a lie, it had been seen to become so.

This masquerade, as Berman calls it, may well have been subtle for its beneficiaries (here straight jacketing the self expression of those within it) but it was hardly subtle for the peasants or the emerging proletarians. In Britain it was brutal (the Industrial Revolution) although Burke’s prose applies equally to the draperies employed by the capitalist ruling class in Britain as it did for the decadent feudal ones of Europe.

THE EMERGING INDIVIDUAL

a) in England – the role of Puritanism

Hill makes the point that the transition from tribal to village society involved a shift from kinship (blood bond) to neighbourhood – ie, tribalism to feudalism; and that the transition from parish to sect was a shift from local community to voluntary organisation.

Voluntary organisation cannot occur to any significant degree without the existence of self motivated individuals. Today this is everywhere around us. If we exclude work from our reckoning (it is a necessity and as such limits the ground in which voluntary organisation can operate) we see a plethora of activities, clubs, associations and the like which people engage in freely. It covers all classes, ages and tastes and could not occur without freely choosing individuals, all taking responsibility for fulfilling certain of their needs.

The communist movement has struggled with this aspect, that is, the ‘free’ aspect of the individual. A difficulty I see is that the free individual, as he/she emerged from the medieval quagmire, has been associated with the development of capitalism. In other words the free individual has more than likely been one of the ‘industrious sort’ so central and instrumental in the development of capitalism, in England especially (Tawney’s depiction makes this connection a defining characteristic). Bourgeois individualism has ‘form’ and communist movements have rightly identified these social elements (and the economic relations which generate them) as self serving and willing (and needing, more to the point) to exploit others.

This aspect of the individual’s development, while true, is also one sided. And it’s with the other side that we have had trouble understanding, coming to terms with and more importantly, relating to. Berman, in ‘The Politics of Authenticity’ and ‘All That is Solid…’ has, I think, attempted to correct this by focusing on the other side, that which deals with the emergence of the individual due to the development of modernity.
From a different discipline so too has the English Marxist historian Christopher Hill. One of Hill’s great contributions has been his determination to track and expose the development of both sides or aspects of the individual’s development in England from the 16th to the 18th centuries. That is, the individuals connection to bourgeois economic and social development, the aspect that has ‘form’, and the individuals development caused by modernity (although I cannot recall him using that term).

The Levellers wanted to extend voting rights to all adult men with a proprietary stake in the realm. While limited re today’s understanding, this demand was radical and aimed against their class enemy. The bourgeoisie, for its part, successfully sought to deny the common people this right. What is significant about this struggle is that it indicates that two streams of individuality/individualism had emerged – one was that of the bourgeoisie proper and the other that of the common people, the latter being led at this historical stage by the Levellers. (Paine’s ‘Rights of Man’ represent the logical development of the Levellers position.) This latter represents the historical tradition that we need to identify with. Its development took, what we could call, petty bourgeois and proletarian directions; Paine on the one side, Marx on the other. Figures like Goethe and Shelley sit somewhere in between, but much closer to Marx, I think.

Capitalism and modernity are not the same. Each has developed together and each has, within itself, contained the possibility of the other. This is best seen and summed up in the “all that is solid melts into air’” aspect, the dynamism, that is common to both.

By the early 19th C it was becoming possible to clearly distinguish between the two and to see that the development of one frustrated, distorted and held up the development of the other. Marx’s writings were very much concerned with this distinction; indeed he and Engels were key figures in making it. In effect they were saying: I like this part, the dynamism, the restlessness, the urge to develop, which in turn enables the individual to develop; but not this part, the tying of labour in perpetuity to market relations and the exploitation and alienation that goes with this. Marx and Engels spent most of their lives demonstrating that capitalist economic and social development will materially create the conditions where it can be superseded. Where, iow, (in other words) modernity can be fully transformed and shed itself of its capitalist aspect.

b) The 18th C Enlightenment

xiv
‘To be authentic, authentically “oneself”, is to see critically through the forces that twist and constrict our being and to strive to overcome them” In this sense we see Burke as not authentic, just true to his class (see comments on Burke’s take on the French Rev).

We are affected ourselves by the twistings and constrictions as we do this. We may move toward authenticity through willingly taking on (or perhaps even maintaining) other twistings as we identify and seek to overcome or overthrow the main source of that which twists and constricts us. (This needs some thinking through).

p41
The notion of virtue draws a sharp line between the self and society: the self is virtuous only when it surrenders its freedom and submits to the laws of the society that imposes them. Yep; and clearly an important reason for women in particular to not be virtuous. When Berman wrote that sentence – the second is mine – he could not have imagined how prescient it would turn out to be for Muslim women in the late 20th and early 21st centuries.

p16
In the Persian Letters Montesquieu tries to show that no social system can provide human happiness unless it posits – and its Government guarantees, a basic human right: the right of every person to be oneself.
My Comment:
a) this seems self evident as one needs a ‘self’ to get this.
b) the link between this idea and the American Rev, and its emphasis, well developed by the Revolution and crystal clear by the 19th C, on individualism.
c) The floods of migration from Europe to the Americas and a little later to Australia and other areas of the new world indicate a strong drive for economic betterment for family and for self. This often took the form of a sacrifice for one’s children, for the next generation, and it bore fruit. This drive has been overwhelmingly positive and progressive.
d) The self, oneself, is not a static entity. The self evolves, develops according to the constraints and possibilities of the level of social development in a given society. This applies between social systems and within them. This is especially so with capitalism
e) If communists don’t ‘get’ this, respond to it, work with it (not against it) we will be relegated to the margins of history, a curio blip, like a number of historically redundant beliefs and trends.

p22
“The basic question, now, is how much freedom do the members of any state or society have to be the individuals they are – how far, in other words, is human authenticity allowed to unfold?”
Comment: This is historically and socially mediated, constructed even. As ‘they are’, the degree of unfoldingness, is developmental. This also applies within a historical epoch, to movements.
It applies to us on two levels:
1. The general, the historical.
2. The demands, impacts on oneself of the movement, group, whatever.

p31
A repressive society – and this covers all pre capitalist societies and non democratic capitalist societies – creates a radical gap between people’s social identities (the roles they are forced into) and their real selves/identities. Personal identities must therefore be achieved. People cannot be themselves within the system but must strive to become themselves in spite of the system. This can take private, even mystical forms (see above) where the contradiction is maintained and where, therefore, authenticity cannot be achieved; or against the system. Here people cannot be themselves within the system and strive to become themselves against the system. Thus, Berman argues, revolt is the only mode of authenticity a repressive society allows (a variant of where there is oppression there will be resistance to that oppression, where our true nature is oppressed, revolt is inevitable).

The theory of revolution grows out of, and develops alongside, the idea of authenticity. This is consistent with our revolutionary history going back to the English Revolution. The question is: how well have proletarian parties, especially the successful ones – Bolsheviks, CCP being foremost – fulfilled this – or sought to fulfil – within the boundaries of what was historically and socially achievable? Within the west I think we’ve been mainly bench warmers and not players. Revolutions in the undeveloped economies led by communist parties present a more complex picture. With 80/90% of the population in China, for example, being peasant and where feudal practises, ideas and habits predominated, the communists had to work with the raw materials at hand and an emphasis on a collectivism that downplayed individuality was probably inevitable and necessary. (This did not mean that individuality did not develop – it did, in leaps and bounds – but that this aspect was not overtly promoted.) What I find disappointing is the lack (or maybe it’s an apparent lack?) of theoretical material from either the CCP or the Bolsheviks that laid the realities on the table in such a way that indicated that they knew the growth of the individual was an important goal, and a Marxist one to boot, but that circumstances did not allow them to focus on this. This distinction, the rationale, does not strike me as complex or beyond the ability of most people to ‘get’. That there does not appear to have been much written about this indicates that it was not seen as a problem. This reinforces my hunch that there is a deep ambivalence about the individual/individuality in revolutionary movements generally that has been dealt with through avoidance and a one-sided focus on notions of collectivism.

p36
A comment on the romantic yearnings for an idealised, Arcadian past. What is yearned for is an equality of a simple, static, face to face agrarian economy based on scarcity and frugality.
And this is what makes it a reactionary yearning – it looks to the past, an idealised and non-existent one at that – and posits it as the future. Its most modern form can be seen amongst extremist greens and Islamic fundamentalists like the Taliban. It certainly had a presence in the English Revolution and re-emerged as a current of the Romantic movement which coincided with and responded to the Industrial Revolution.
We, however, envision, as Berman states, equality (and authenticity) within an urban, dynamic economy based on growth and abundance. And Amen to that!

p85
Montaigne: (16th C) Nothing within the range of human experience was alien to him – anticipating Marx in the 19th who was no doubt paying tribute when he said it.

Rousseau’s alienation:
was self alienation. This was new. Rousseau: “they transform themselves into totally different men” (Confessions); in other words, the source of this alienation was men themselves. Philosophers had hitherto enjoined people to “know thyself”. Rousseau deepened this – not just to know, but to be oneself. His Confessions were aimed to bring his authentic self into being. The injunction to know oneself assumes a core self, an inner reality that, while masked, shrouded, hidden beneath layers of socially prescribed falsities (hypocrisies, two facedness) existed and was ready for development. The idea of a true self/false self dualism fits into this. Rousseau’s idea was much more radical. He posited that the inner self itself was a problem – that the self was only potentiality, something yet to be attained.

While stripping away the layers of the false self was a valid ‘work in progress’, the more important task was the actual creation of the self – a ‘work in progress’ from go to woe.

“It is no longer necessary for the self to go back into the past to search for its source. Its source is here and now, in the present moment”. This is a radical idea and one picked up within the psychotherapy field in the last century. Its truth, its value needs to be counter-posed to the observation made by Marx: “we suffer not only from the development of capitalist production, but also from the incompleteness of that development. Alongside modern evils, a whole series of inherited evils oppress us, arising from the passive survival of antiquated modes of production, with their inevitable train of social and political anachronisms. We suffer not only from the living but from the dead.” Capital 1 13. Together these views form a dialectical whole.

p88
“…Rousseau showed how all the modes of personal identity – both traditional and modern – were actually modes of depersonalization, stumbling blocks which kept the individual self from coming into its own.” Marx would not have a problem with this.
“Servitude is so unnatural to man” writes Rousseau in Julie, “that it could not exist without some discontent”. He is grappling with a truth (let’s leave aside the unnatural bit as this is both true and untrue) that Mao was able to articulate in full force 200 years later – it is right to rebel against reactionaries.
p102
Rousseau comments on his experience of servitude when, as a young man he was employed by the Countess de Vercellis. “She judged me less by what I was than by what she had made me; and since she saw in me nothing but a lackey, she prevented me appearing to her in any other light.” “But” continues Berman, “he himself had collaborated in the falsification, by acting as if her image were true.”
This objectification, and creation of a demeaned other in the process, continues today in all areas of life. What is different is that the individual has assumed centre stage and demands expression in ways unimaginable 250 years ago. How the individual exists or is portrayed in media etc – their central role in soaps, for example, are indicators of this development. While the ‘making’ aspect still applies it is now done much more consciously (because there is no other solution). This needs more teasing out………
p103
That the Countess could have this effect underscored to Rousseau that he needed recognition – that he could be himself only to the degree that his self identity was confirmed by others. That which they did not recognise he could not assert. To Rousseau this suggested that others could mould people into whatever shape one wanted, and in a traditional hierarchy this power was held by the hereditary ruling classes – those at the bottom were forced to define themselves according to the terms dictated from above.
While this seems obvious, Rousseau’s conclusions came from a very personal experience via an examination of self. His conclusions indicate that he already had a well established self capable of self reflection and autonomous action. His ability to be self analytical and to resist sprang from that well.
It also indicates that resistance to ruling class pressure that distorts identity a la Rousseau’s experience begins in the individual (there must be formed individuals of which modern societies generate by the truck load) and then taken to a mass arena.
Another take on this: OK, so one can be moulded by the ruling class; this is old news. The interesting bit is the resistance. This was based upon the existence of an autonomous self, who drew the lessons and grew in strength. Today we are a much harder bunch to mould. The autonomous individual is churned out by the truck load. But this means that ‘we’ or, rather, ‘they’ will resist being moulded by us too. If we pigeon-hole whole bunches of people along simplistic class lines without recognising and respecting their individuality, we will be making a rod for our own individual and collective back.
Another aspect here springs from our social nature. We define ourselves in relation to the other. Developmentally the self is created through the interplay of the infant/child and external ‘objects’/subjects. Without recognition there is no self and therefore no individual. The question is not whether recognition is needed, but from whom/what and with what aim.
p114
Traditional societies pigeon hole people; their identities are ascribed and fixed within very narrow limits
Modern societies enable identities to be achieved and transcended. Limits, roles are transcended regularly and to such a degree we barely notice. Your average Joe at work transcends himself out of work – is he a junior sports coach, team manager, assistant this or that, the secretary of a club, an amateur whatever, a blogger etc. How about a revolutionary? Now, that’s a novel idea!
Modern society has made it possible for the first time in our history for people to be themselves, to define and create their lives as they see fit, to create lives authentically their own. And modern capitalist society both enables and prevents this.

p129
Cultural authoritarianism of the 18th C – Berman mentions the political Newtonian physics, used to promote ideas of clockwork perfection in science, everything in its place etc and neo-Classicism in the arts – was aimed at accustoming people to submit to fixed, eternal rules, externally imposed, closed to scrutiny… It’s an interesting idea – a defacto, partial, ideological united front between a decaying French feudalism and an ascendant British capitalism. The point of unity was the need for social stability. The British ruling class was largely successful in this quest because they had had a revolution; their French counterparts were not because they hadn’t. It’s also a consequence of the ER being forcibly stopped where it was. As social/economic developments continued to gather pace, the ruling class was attracted to and also had a need, to dust off ideas of stability and of permanently fixed social roles that they had challenged so successfully when the feudalists held sway.
This following quote has relevance for today:
By teaching to order and evaluate their experience according to received conventions, culture was depriving them of their strongest weapon against political oppression and social exploitation: their sense of self.
This was made regarding Rousseau’s evaluation of pre revolutionary France, albeit a Paris in the early throws of modernity. But the comment regarding culture stands alone. Culture that draws its authority from a closed and oppressive past cannot prepare or aid its members to negotiate the permanently turbulent waters that modernity throws up. For such cultures, the future has already happened and all it does is prepare people for another round of the same.

p131
Rousseau saw modernity as possessing a paradoxical character: “as both the nadir of man’s self alienation and, simultaneously, the medium for his full self-liberation.” Yep, got it in one – well, almost. Seeing it as a paradox denies its dialectical nature although it is unfair to be critical of Rousseau here as he precedes Hegel. He deserves our gratitude for seeing both aspects of this ‘paradox’ which, as an 18th C thinker puts him one up on most the left thinkers of the following two, for, with notable exceptions, only one aspect or the other has been focused upon and only very rarely has their dialectical nature been understood. The left has been particularly guilty of this as it is they who have claimed the mantle of Marx’s critique. This includes the revolutionary left as well as the reformist.

pp158-9
Some interesting ideas here:
To overcome self alienation Rousseau understood that this (modern) social system (although I don’t think he understood it as capitalist), in the course of its own development, had created a mode of consciousness that was capable of transcending it. (He gets a cigar for this very profound insight). Re this, Rousseau drew upon his view that modern men inherently strove to transform their thoughts into practise (another cigar) and that, therefore, their alienation could be overcome via their consciousness being transformed into self consciousness (half a cigar because of the link to individuality and autonomy). In this way they may be able to solve their personal and social problems through reforms from within (no cigar). He hoped “to draw from the evil itself the remedy that can cure it.” (A dialectical view, but not a sophisticated one – a few puffs on somebody else’s cigar for this one).
It seems to me that Rousseau is swinging between idealist and materialist frameworks, anticipating, in some ways, Hegel. His dialectical thinking comes close, but there is no cigar because he is unable (by nearly a century) to link his observations and analysis of modernity to the economic relations driving it. Without this the slide into idealist solutions becomes seductive.

(to be continued)…

Development of the Individual, and the individual in pre-modern society

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Continuing Tom’s notes on the individual in communist thought…

“As a man is, so is his philosophy” – Fichte.

The characteristics of individuals are products of social relations. An individual’s character is a factor in social development only where, when, and to the extent that social relations permit it to be.

Self Alienation in Traditional Society

People derived their feelings of personal identity from ascribed roles – assigned without reference to individual differences or abilities – predicted and trained for from the moment of birth. Charles 2nd was pointedly informed that Oliver sought people on the basis of merit and not status, a reflection of two very different world outlooks.

“The domination of the land as an alien power over men is already inherent in feudal landed property. The serf is an adjunct of the land. In the same way the lord of an entailed estate, the first born son, belongs to the land. It inherits him.” – Marx, ‘Rent of Land’ in Economic and Philosophical Manuscripts, 1844.

Advantages: conducive to social stability and shields the undeveloped self from expectations (and disappointments) beyond its station.

Disadvantages: stifles energy and initiative of individuals slotted into ascribed roles.

Individually the scope for disappointment is narrow as expectations are limited to the role one is born into – an emotional security blanket and an emotional and intellectual straight jacket. Now the scope is much wider because there are no limits placed on expectations.

Rousseau lived at a time when feudal ascribed identities had reached unbearable limits for a large number of people. He understood the psychic costs and urged that feudal traditions in habits and manners, for example, be abandoned.

“Individual thought or feeling, insight or initiative, could only be destructive to these traditions and routines. Marshall Berman, ‘The Politics of Authenticity: Radical Individualism and the Emergence of Modern Society’, p100 [Berman had spent the last couple of pages describing how the dead hand of the past weighted down on the aristocracy and the peasants – differently to be sure and advantageous to the aristocracy,- “it was easy to see why the upper classes were willing to make the sacrifice of self which their social roles demanded” he adds next page – but equally limiting in their own way] Hence it was essential for traditional society to keep individuality from developing, at the bottom as well as at the top.” (p101)

”Every man was reduced to a function of the rank which he acquired at birth – or, perhaps more accurately, to paraphrase Marx, the rank which acquired him.” It is perhaps more accurate to say “limited” as reduced implies a ‘from what’ which did not exist.

Marx’s Grundrisse
pp83-4

Pre-capitalist periods see the individual as an accessory to definite and limited human conglomerates. That is, limited, stunted, unable to develop.

The individual of our epoch is a historical result. The individual arises historically and is not posited by nature.

The individual of Smith and Ricardo – the result of the dissolution of feudalism on the one hand and the new forces of production developed since the 16th C on the other. This individual appears as an ideal whose existence they project into the past – not as the result of historical development, but posited by nature, the so-called “natural man”. This “natural man” was appropriate to their notion of human nature. It persists and remains a dominant view.

The more we go back “in history the more the individual is dependent, as belonging to a greater whole”. The epoch that produces this idea of the isolated individual is that which is most developed viz social relations. This is not a paradox as the human individual can only individuate in the midst of society – ie, the more complex the society the greater is the scope for individuation and complex individuals. This process is ongoing.

The Individual in Pre-Modern Society

Authenticity (and hence individualism) is not a problem or even on the radar in closed, static societies governed by fixed norms and traditions. Here, people are satisfied with the roles given, experiencing themselves as pegs, aspiring “only to fit the holes that fit them best.” A static equilibrium. (Berman p xxvii)

This aspect is foundational in Plato’s Republic and why Platonic idealism is reactionary (because so out of step).

Once a man is fitted into the niche he was born for, the loose ends in his nature fall away, “each part of his nature is exercising its proper function” and he takes on that perfect balance Plato calls justice. This niche fitting gives a person their identity (butcher, baker, tailor etc. That these and a host of other occupational descriptions survive today as surnames speak, historically, of prescribed generational roles…)

“Violent class struggles may go on: but they concern only the allocation of particular holes to particular pegs. The board itself, the closely knit but rigidly stratified system of the Greek polis, which defines men precisely by their functions, remains unquestioned and intact.”

And Kautsky thought of Plato as a prototype socialist?? The fact that he did and the fact that he was seen as the leading theoretician of the Second International indicates the depth of the problem for the left around the individual. This idea needs developing.

Pre capitalist societies (and less developed capitalist ones) fit individuals into Procrustean roles and acts as if human individuality didn’t exist – at least not for the masses.

The Stoics rebelled against the procrustean nature of the polis but did so mystically. They didn’t oppose particular orderings of the world, but the world itself. People were alienated from the world and self was to be found beyond the world, transcendentally. They therefore complied with Plato’s polis in their external relations, but not internally and cut their internal world off from an engagement with the external. And a fat lot of good that did!

“Thus the search for authenticity began with a negative interpretation of the world “ [with no positive attempt to change it] – thus was born disengaged conformity/internal ‘liberation’ which, Berman says, has since passed into mainstream western culture.

Marx, Murdoch and freedom of the press

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“Censorship should be resisted in all its insidious forms. We should be vigilant of the gradual erosion of our freedom to know, to be informed, and make reasoned decisions in our society and in our democracy” – from ‘Smash fascism!’ leaflet, published by the Red Left group, Melbourne, 1970.

If you didn’t blink at the above quote, from the ‘Red Left’ group in 1970, then that’s because the sentiment expressed is precisely what you would expect from a ‘Red Left’ group in 1970. It is what those of us on the left actually believed back then. The quote, however, is not from a leaflet: the ‘Red Left’ group is fictitious. The words are those of Lachlan Murdoch in his 2014 ‘Keith Murdoch Oration’ in Melbourne.

Censoriousness is yet another indicator of the move to the Right in Australia’s political culture. In common with the C19th Prussian ruling class, who wanted to ban publication of anything offensive to religion or morality, in Australia the Labor Party, the Coalition and the Greens have been all for allowing the C21st bourgeois state to decide what is offensive in a publication and what isn’t. And, like the Prussian state, they supported a body to ensure that only ‘proper’ and ‘accurate’ content is published. In Australia, the previous government – with delightful Orwellian sensibility – called this the ‘Public Media Interest Advocate’ (PMIA). After all, the masses – you know, the “motive force of history” – cannot be trusted. Ah, what would they know?! Fortunately, the PMIA was defeated.

When individuals and groups self-identifying as ‘left-wing’ support censoriousness, the notion of a pseudo-left comes into play. Opposition to press freedom has nothing in common with Marxism or a Marxist-influenced Left.

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Fighting censorship

I first intentionally broke the law as a left-wing political activist in the late 1960s, when I was a student at high school. Armed with a bundle of copies of a banned pamphlet, which from memory was called either ‘US War Crimes in Vietnam’ or ‘North Vietnam: an eye-witness account’, I distributed the banned material to those among my fellow students whom I knew, or felt, were thinkers.

The pamphlet had been banned under the Obscene Publications Act (from memory) and I was worried about being caught and facing the embarrassment of arrest for distribution of ‘obscene literature’. To young blokes in their mid-teens, ‘obscene literature’ was something other than images of napalmed women and children.

I wasn’t caught, or punished, but the school principal spoke in generality at the next assembly about the importance of the law and the consequences of breaking it, even in situations where it may seem unjust. I wasn’t – and have never been – an anarchist, so I accepted the need for the law but also felt it was right to break it in this particular circumstance.

A couple of years later at university, I – and other young communists – expected, and DEMANDED, the right to freely distribute the pamphlets, leaflets, and off-set-printed newspapers that we were publishing at frenetic pace.

Within a short period of time, I came to identify with the Maoist rebels in Melbourne, and happily embraced that label. The main thing that appealed to me was the fact that Mao had declared “It is right to rebel!” at a time when Australia’s political leaders were either doing their best to crush dissent or contain it by telling us radicals to ‘use the proper channels for change’. During the Cultural Revolution in China, in the early period, hundreds of new newspapers were being published and expressing divergent and often antagonistic views. ‘Big character posters’ were pasted on walls, criticizing corrupt party officials and exposing bureaucrats who were holding things back.

Freedom to express one’s views means freedom to speak them, and also freedom to publish them. In the flair of our own youth ‘cultural revolution’ back then, I loved the slogans coming out of Paris in 1968. ‘Sous les paves, la plage’ (beneath the paving stones, the beach) is on the masthead of this blog, but I also relished others, including ‘Il est interdit d’interdire’ (It is forbidden to forbid).

Struggle against censorship was a big issue in Australia in the 1960s and the left played an important part in opposing it.

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‘Comrade’ Lachlan Murdoch – “Every citizen a journalist!”

In his oration, Lachlan Murdoch makes some important points. For instance, he understands how the new technologies have a liberating potential in the sense that everyone can be a publisher or a reporter:

“Journalists today file electronically, not just by email but through streaming live images through Skype or Facetime. Pictures taken seconds before can be seen in newsrooms half the world away. Social media such as Twitter, Facebook, Buzzfeed, Tumblr, Instagram, even Snapchat are used to amplify a story to devastating effect. These are tools available not only to journalists but to everyone with a mobile phone. Every journalist has these tools, yes, but also every soldier, every citizen, every teenager, taxi driver, mum, dad, troll, and yes, terrorist”.

“Every citizen a journalist!” – Sounds like something Mao might have said.

Murdoch jr also takes a very good line on the recent Australian security anti-terror proposals. He says: “Our current government is introducing legislation that includes jailing journalists for up to 10 years if they disclose information that relates to a “special intelligence operation.” This proscription lasts in perpetuity. Forever. Long after an operation is complete. And breaching it has no defined defences, despite such defences being well understood under Australian law”.

He provides important facts about the extent of the new “era of human communication” in which we all live:

“Of the 5 billion mobile phones in use today, 1.8 billion are smart phones, capable of publishing and receiving media. Currently smartphone sales are running at about 400 million units per quarter… Over 2 billion pieces of user-generated content are created every day. There are 277,000 tweets every minute. Ten per cent of the world’s images were recorded in the last six months. In fact, 90 per cent of the world’s digital data has been created in the last two years”.

It must be increasingly difficult being a dictator, trying to control a population. In the old days, they could send in goons to seize printing-presses. But today?

Lachlan Murdoch also points out that “the creation of the internet has not, in itself, made the world a better place. It cannot force any of us to be better human beings. But, through the knowledge it facilitates, the internet can help us to choose to be better. Choice is the nature of freedom. And knowledge is at the very root of free choice. It is also at the very core of our democracy”.

And through that knowledge and that choice, people like myself see the likelihood of a better future, one in which the big media empires will be redundant and ‘melt into air’.

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Karl Marx: the free press as the ubiquitous vigilant eye of a people’s soul

Karl Marx’s first political activism was prompted by the issue of press censorship by the Prussian ruling class. He was a journalist from the 1840s to the 1860s and, as a supporter of the bourgeois democratic revolutions in Europe, he wrote eloquently about the need for freedom of the press. Marx had been editor of ‘Rheinische Zeitung’ and ‘Neue Rheinische Zeitung’, as well as European correspondent for the ‘New York Tribune’. He wrote nearly 500 articles for the latter.

The context for Marx’s campaign against press censorship was the decision taken by the Prussian cabinet in 1841 to extend the scope of the censorship law by decree. Under the decree, the state could censor anything critical of the “fundamental principles of religion and offensive to morality and good will”. It was long ago but, gee, there is resonance there with attacks on press freedom in the C21st, including in Australia. The term “offensive” certainly leaps out. And Marx responded as any good leftist should: “The censorship law”, he stated, “is not a law, it is a police measure”. And, moreover, “The censorship law is a law of suspicion against freedom”.

In 1843, Marx himself was censored when he wrote an article exposing the poverty among wine-farmers in the Mosel region. The ‘Rheinische Zeitung’ was banned and Marx was threatened with arrest. So, he did what any good revolutionary would do: he quickly married his fiance and fled to Paris.

For Marx, there could be no progress without freedom of the press. Comparing it to a beautiful woman, he declared that it “has its beauty… which one must have loved to be able to defend”. Censorship to Marx was an “illogical paradox” as the Prussian rulers and their ideologues argued that it was necessary in order to improve the quality of the press. Again, this has remarkable resonance with C21st press censorship. That a free press will sometimes produce lots of nonsense and much that is repugnant is true, but as Marx pointed out: “You can’t pluck the rose without its thorns!” How strange that some people and groups claiming to be left-wing today actually seem to believe that the state – the bourgeois state, I hasten to add – should be empowered to remove the thorns for our protection, as though we – the members of society – could not decide what is, or what isn’t, a thorn for ourselves. A Marxist-influenced left opposes press censorship.

Marx spent a fair bit of time fleeing different places but finally settled in London in 1849, one year after publication of the ‘Communist Manifesto’ which he wrote with Frederick Engels. He died in London in 1883.

Among his rich legacy of revolutionary thought and writing are these words against press censorship; perhaps among the finest ever written on the topic:

“The free press is the ubiquitous vigilant eye of a people’s soul, the embodiment of a people’s faith in itself, the eloquent link that connects the individual with the state and the world, the embodied culture that transforms material struggles into intellectual struggles and idealises their crude material form. It is a people’s frank confession to itself, and the redeeming power of confession is well known. It is the spiritual mirror in which a people can see itself, and self-examination is the first condition of wisdom. It is the spirit of the state, which can be delivered into every cottage, cheaper than coal gas. It is all-sided, ubiquitous, omniscient. It is the ideal world which always wells up out of the real world and flows back into it with ever greater spiritual riches and renews its soul.” (Censorship, Karl Marx 1842)

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Postscript: There is an article at The Drum about this, which argues the Murdoch print media supports the new ‘security laws’: Murdoch’s belated stand.