Thc Expcrts Look at Unemployment

Ryan, L.John A.

612 THE COMMONWEAL October 16, I929 THE EXPERTS LOOK AT UNEMPLOYMENT 1. HIGHER WAGES FOR THE MASSES NDIRECTLY and by implication, Recent Eco- nomic Changes suggests a more...

...No intelligent student of our economic system doubts the capacity of our industries to satisfy in reasonable measure all these wants for the majority, and to provide a considerable surplus for the economically powerful minority...
...A considerable proportion of business men have, since the war, become converts to this doctrine...
...Instead of striving to invent new luxuries and create new industries to satisfy wants that are as yet unknown and unfelt, why not provide an effective volume of demand for goods which are already known and desired, which can be produced by inhave the workers and the productive equipment to provide all these goods in vastly increased quantities...
...According to the new theory, it is still desirable to sell the largest possible quantity of goods at the lowest prices and with the lowest production costs, but it is not desirable nor necessary to obtain low costs thi'ough low wages...
...Am I the only mourner here...
...Up to the bier my steps I takeAnd now, the lonely spell to break, My fingers lift the lid...
...It is that overproduction, underconsumption and general unemployment come about because industry does not put sufficient money into the hands of the consumers to pay for all the goods produced...
...It is too bad that the Committee did not explicitly accept the implications of this recognized fact...
...The more extensive use and more steady operation of the plant would offset either partially or wholly the higher wage costs...
...If goods can be manufactured in sufficient quantity, the production cost can be low...
...The economic factors and implications are exactly the same in the two cases...
...Hence, the first and obvious requisite is to raise wages somehow, with some kind of money...
...Now, the largest part of this flow, and the part that is most promptly spent, is the stream of wages...
...The money phase of the problem, the question how to bring about the right flow of money to the consumers, will then be much more urgent than it is today...
...The foregoing argument has taken no notice of the thesis upheld in several publications by Foster and Catchings...
...Increased power to consume must be extended to the only class that possesses in large measure the unsatisfied desire to consume...
...Paraphrasing this statement, we observe that American prosperity would have been decidedly greater during the same period had the ten million or more underpaid American laborers been receiving adequate wages...
...612 THE COMMONWEAL October 16, I929 THE EXPERTS LOOK AT UNEMPLOYMENT 1. HIGHER WAGES FOR THE MASSES NDIRECTLY and by implication, Recent Economic Changes suggests a more acceptable remedy for the kind of unemployment which is now puzzling students of the problem...
...Owing to the unfavorable decision of the Supreme Court in the District of Columbia Minimum Wage Case, to say nothing of two or three other obstacles, this most important reform is, and for many years to come will remain, impossible of attainment in the United States...
...dustries already established, but now languishing for lack of an adequate market...
...While neither of these methods is likely to produce beneficial results rapidly, they have both proved their ef[ectiveness by experience...
...After all, solid and permanent progress comes slowly in every department of social life...
...Indeed, the Committee on Recent Economic Changes gives some measure of endorsement to the doctrine and proposal here advocated when it declares that one of the ten outstanding developments in our industrial history since I92o has been "the recognition of wage-earners as the great domestic market...
...Would not a generous increase in the remuneration of our underpaid toilers be the most direct and the most obvious way to eliminate the evil of idle machines and idle men...
...This policy would provide the most humane and the most easily available remedy for the persistent overproduction and underconsumption that afflicts our industrial system...
...Not more productive power but a rational organization of existing power is what we need in order to provide all our people with the material means of wellbeing and thereby to abolish chronic unemployment...
...So oft in dreams my steps come near This solemn, sealed and silent bier...
...To meet this difficulty, the only immediately adequate measure would be minimum wage scales fixed by law...
...The masses desire and could use vastly more than they now obtain of the standard necessities and comforts: food, clothing, housing, hospitals and medical service, education, recreation and amusements...
...The extent to which our national production might be increased is not fully indicated by our unused equipment, our unemployed workers and the vast expansion of productive power that is obtainable without any new mechanical inventions...
...This theory has not been considered for two reasons...
...To see that face but once," I said, "And I would leave her with the dead...
...It endorses "the principle of high wages and low costs as a policy of enlightened industrial practice in a period of By JOHN A. RYAN In two previous articles, Father Ryan evaluated the findings of the Senate Gommittee appointed to investigate the causes o[ unemployment...
...Until quite recently the great majority have believed that one means of obtaining low production costs was low wages...
...A grey, cold couch on which there lay Two days and then another day One whose own child was far away...
...As expressed by Ernest G. Draper at the hearings before the Senate Committee : Workers are consumers as well as producers, and to increase the purchasing power of consumers is desirable, not only for the worker himself but for industry and society as a whole...
...Father Ryan reminds us nevertheless that "solid and permanent progress comes slowly in every department of social li[e," and that a minimum wage law in the United States is only a remote possibility.--The Editors...
...While the individual employer may accept the doctrine that high wages and high purchasing power in the hands of labor are good and necessary for industry as a whole, he realizes, or thinks, that relatively low wages would be more profitable in his own business...
...The only practical methods now available are increased organization of labor and the economic, social and ethical education of the masters of industry and all other influential groups in our population...
...Tis well--a life-long wish shall be Fulfilled in its sweet agonyThat I that ashen face may see...
...Here the reader will meet economic theories destined to prove increasingly attractive...
...The magnitude of the latent demand for them may be appreciated when we reflect that probably the majority of employees, even in the United States, do not obtain adequate living wages...
...Nothing, therefore, can go so far toward sustaining trade and employment as increasing the weekly payroll of the country fast enough, and not too fast...
...Instead of seeking to arouse new wants in the jaded appetites of the rich and well-to-do, why not supply the proper and reasonable wants of the toiling masses...
...We already stationary cost of livingmthe recognition of wageearners as the great domestic market...
...Instead of using language which tended to exaggerate the increase which has taken place in wages, it ought to have frankly pointed out that further increases are necessary before a large proportion of the working classes will have satisfactory incomes, and before their effective demand will be sufficiently enlarged to furnish an adequate market for the products of our industries...
...o lor I dream of candles--in the night, A haze of palm--and roses white...
...The inOctober I6, I929 THE COMMONWEAL creased costs, be they great orlittle, would be defrayed only in part by the wage-earners, inasmuch as they are not the only consumers of the goods af[ected by the increase...
...In the second place, these authors admit, nay assert, that a great increase in general consuming power could be obtained through a general advance in wages...
...A pang through life my heart has bled...
...Money to buy the goods must exist in the hands not merely of a few well-to-do, but of the masses...
...SISTER TH~R~;SE...
...He believes that this is true at least so long as his competitors fail to adopt the policy of high wages...
...In general it should be noted that if this objection were always heeded, it would prevent any increase in wages for any reason whatsoever...
...If that measure should fail to increase consuming power sufficiently to take all the goods of[ the market and keep industry going, the time would then be at hand to consider the problem of increasing consumers' credit...
...Men who have to produce goods in competition with their fellows have always striven for low costs in order that they might sell at low prices...
...The following paper and its sequel will consider the opinions o[ various experts, notably those who constituted the Gommittee on Recent Economic Changes...
...The workers must have high wages in order to make their demands for goods effective...
...The real difficulties confronting the proposal for a better organization of our distributive system, for a better combination of the desire to consume with the power to consume, have to do with the methods for obtaining the requisite increase in wages...
...Happily, it has not been heeded universally...
...but in order to sell all these goods even at low prices, purchasing power must be widely distributed...
...I wake...
...The better organization that has just been outlined immediately provokes the ancient and facile objection that such a large increase in wages would involve such an increase in production costs as to frustrate the object sought, and that the higher cost of production would cause such a rise in prices that there would be little or no increase in the average demand for goods and for labor...
...A curtain drawn against the light...
...George Soule, in The Useful Art of Economics, says: In view of the vast array of preventable wastes, it is probably not an exaggeration to say that the national income might be doubled simply by eliminating them, even if inventions and knowledge of better techniques for production should cease to advance today...
...To this objection the obvious answer is that not all the additional outlay for wages would be reflected in prices...
...First, in so far as it deals with the flow of money and credit, it is too difficult either to prove or to refute...
...And nothing more is needed to achieve the right rate of consumption than the right flow of money to consumers...
...For example, in a pamphlet reprinted from the Century Magazine, July, I929, these sentences occur: Adequate consumption, therefore, does more than anything else to sustain employment...
...Wesley C. Mitchell, who directed the study of recent economic changes, tells us that American prosperity in 1922-1927 in non-agricultural lines would have been decidedly greater had the six million American farmers been flourishing...

Vol. 10 • October 1929 • No. 24


 
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