PERMANENT UNEMPLOYMENT?:

...The expansion of new markets for industrial finished commodities has found its limits, just as the possibility of acquiring cheap raw materials from the developing world...

...This is not readily admitted, but can be inferred from the projection of high unemployment...

...STEVEN PHILIP KRAMER and LEO FRIEDMANN The economy is showing the strain of monopolistic decision-making The depth and duration of the present economic crisis continues to defy our imaginations...

...They tell the cities and the most industrialized parts of the country to go to hell...

...During previous crises and recessions the expectation was that an expanding economy would overcompensate for technological displacement...

...They should suggest that the persistence of such crisis symptoms as increasing inflation and unemployment have structural causes...

...The typical skills of today's operator seem to be precise observation, flexibility, and mental awareness...

...i.e., as long as it operates "automatically" through the "self-regulation" of the market...

...The U.S...

...We must also ascertain the specific causes for the American crisis...

...on the contrary, the unionized sector of the employed tends to become a privileged group which holds on to its wage level, and sees itself increasingly as separate from the unemployed...

...Today, a majority of the visible unemployed might still hope to return "soon" to jobs...

...capital in the underdeveloped countries are indeed a vast incentive for U.S...

...As long as the "combination of capital" remains low (that is, the percentage invested in wages is high in comparison with machines), profits can be expected to proliferate...

...Business turns out to be good, but profit declines...

...But it won't disappear by itself...

...What bothers them, really, is that even a colossal outlay of capital may not bring enormous profits...

...Goldwater and Reagan, you would think that the same government which pumps billions into the pockets of corporations is the greatest obstacle to economic recovery (read, business affluence...

...The typical work layout there is a clearcut assembly line...

...New Element One of the reasons, often hidden, for the prevailing pessimism about rising unemployment is technological...

...There is a decidedly new element in this general pessimism about employment...

...Whatever the reasons (and we shall come to them later on), the result is rather discouraging...

...New technology, on the other hand, is characterized by automated computerized apparatus or machinery, which makes mass effort and mechanical unskilled "discipline" superfluous...

...But the economy is beginning to show the stress and strain of monopolistic decision-making...

...But it is a rather important coincidence that this "law" has been borne out here...

...And it is most characteristic of the U.S...

...The "liberal" Democrats are always willing to renew the NRA or deal with the problem through public works...

...In fact, that is the history of the capitalist-industrial epoch...

...This is even more true for metals, automobiles and garments (and textiles in general) than it is for the oil industry, where the level of technology is relatively high...

...as the combination of capital becomes higher, a larger percentage being invested in machinery, profits tend to fall...

...That this historic lesson is being abandoned is in many respects a particularly interesting sign of the times...

...It's far from clear that this incentive will do any good, that more and more consumer sacrifices, increasing stimulation from the top and subsidies will lead to capital investment...

...If it is true that the recession is bottoming out (if not today, then perhaps tomorrow...

...Any thorough statistical analysis will show that industries with a high degree of technical rationalization suffer from a relatively low or tendential-ly falling rate of profit...

...and that price stability is in the offing, why shouldn't a prospering market-oriented economy and extended production provide more jobs...

...Regardless of whether the falling rate of profit is a mere coincidence or a validation of the principle, all the evidence, and the conduct of the government itself shows, that unemployment is here to stay...

...Germany, technologically perhaps the most advanced, complains about high unemployment (although the figures are much lower than in the U.S...

...For instance, the recent all-out sale of inventories, which led to a rising demand for durable goods, went hand in hand with continuing, if not increasing, fall in the rate of profit...

...i.e., a group exerting pressure to lower wages for the employed but ultimately to be reintegrated into the productive process within an expanding economy...

...The market mechanism cannot operate, self-regulation cannot take place, in an increasingly organized and centralized "command economy...

...From what can be seen in a number of newly organized "factories" all over the world, the worker in the traditional sense is replaced by the operator, who controls and manipulates a complex of automated machines without much help from workers...

...We have used this unsatisfactory survey of the working process merely to illustrate one point: that a new wave of expanded production, based on new technology, cannot be expected to solve unemployment...

...In Great Britain, where technology lags, unemployment figures are much smaller than the actual level of production justifies...

...The strange polarization between developed and underdeveloped worlds might prove a barrier for the extension of such newly organized and technologically advanced societies as Germany and Japan...

...But what happens when public subsidies and price commands fail...

...There are many voices being raised accusing U.S...

...One can always make a good case for extending unemployment benefits another year (even if many of the unemployed never have or presently don't receive such benefits...

...In Japan, for instance, where big industry is technologically more advanced than in the U.S., industry has up to this time maintained its employment levels (although in less organized sectors unemployment seems rampant if hidden...

...Many modifications and regressions were noted by Marx himself...

...One might safely predict that only if American corporations succeeded in dominating world markets and could eliminate or control most of their industrial competitors could the colossal outlays for the new technology pay for themselves...

...Unemployment continues to rise, and prices move upwards by fits and starts, refusing to stabilize themselves...

...In fact, the flight into Hong Kong, and into Taiwan, where masses of people (including children) work for U.S...

...Let us not imagine that our corporate leaders are bothered by the fact that millions will remain unemployed even if their businesses bloom...

...This is not the case, although it is true that the post-war economy in the industrialized world has been spared, so far, a crisis of the dimensions of the Great Depression...

...The number of unemployables will continue to grow...

...corporations for two dollars a day (and in Seoul and Jakarta, for maybe less) is the other side of the flight from the new technology...

...They claim they lack capital...

...One thing is certain-this policy will increase profits for the oil cartel...

...but treats the unemployed, particularly German workers, not much differently from the employed, at least financially...

...economy has become notorious...

...is in a key position...

...Consequently, the appetite of the corporations for new capital investment has been shrinking-despite the fact that they have partially succeeded in dictating price levels and freeing them from the control of the "free market mechanism...

...And this in the face of the fact that U.S...

...Even the administration in Washington admits that it is rather helpless in the face of growing unemployment...

...is one of the main reasons for the recession in Germany and Japan...

...Ironically, the crisis seems to have spared, for the time being, large segments of the public...

...On the contrary, the number of those left at public disposal will increase...

...That prospect may be nearer than they think...

...One only has to think of how all this relates to the problem of the cities...

...Perhaps revealing these sorts of alternatives is the precondition for rallying the social forces necessary for beginning to come to terms with the future.ginning to come to terms with the future...

...You can "entice" them, subsidize them, give them plenty of incentives, but you can hardly guarantee them high profits...

...But why...

...And here again, we must ask in particular whether the falling rate of profit (we disregard such purely political phenomena as "windfall profits") and the growing rate of unemployment are interrelated, and what their relationship might be...

...But there is one fact even more relevant in this connection: our entrepreneurs (corporation managers) seem not in the least anxious to introduce the new technology on any meaningful scale...

...The "profit-motive" for business expansion is all well and good-as long as it works...

...The managers, agents and bureaucrats of the "establishment," shortsighted as they are, encounter a tragic alternative: either to deal constructively with the problems of enduring mass unemployment, or, as they are doing today, just letting things drift...

...It must also be recognized that the massive introduction of the new technology promises to be very expensive...

...If our short analysis is correct, even approximately, a majority of both visible and invisible unemployed will never be integrated into the regular productive process...

...The fundamental question is whether this social system can deal with the problems of the post-industrial world...

...In that case, a social dilemma of the greatest proportion will unfold in the next decade...

...Not only did it absorb many goods from other industrial countries, but it also absorbed a great portion of the raw materials of the developing nations...

...of higher oil prices and deregulation by the prospects of "energy independence...

...But despite the advice of Milton Friedman (the greatest economist of this age, according to Arthur Schlesinger), the federal government has not been abolished...

...But the lack of enthusiasm for reinvesting these excess profits in the U.S...

...Public employees fear the competition of the unemployed in their domain...

...There's an enigma for you...

...Thus we cannot just place the burden of failure for the recession on the deficiencies of the world economic mechanism...

...The corporate leaders are skeptical about the future...

...The investment by conglomerates in these low-wage regions is actually not an investment in modern technology (as some have claimed...

...Naturally, excess profits are always welcome, whether they come from the administration or from investment in underdeveloped countries where wages are lower...

...Visible unemployment will not be, and is not limited to the 7-8 percent the administration projects-in this category we must count 1213 percent of the work force...

...industry and the big corporations of technological laxity and lack of inventiveness...

...That is, the government and the corporations don't seem to believe that a technologically more inventive organization of production will be able to absorb a large number of presently unemployed workers...

...Ironically, rather than provoking serious consideration, the crisis has provoked an efflorescence of silly fantasizing by conservative extremists about the need for deregulation...

...The skill of the people working there is their unusual discipline which makes working habits mechanical and easily controllable...

...that is, the breaking up of the labor organization into small and precise working details...

...Nevertheless, profits in a highly developed industrial environment have a tendency to become lower...

...That's a question no one wants to face...

...One reason why such a crisis has not yet occurred is the rationalization and organization of the industrial world: since 1946, new levels of exchange, a growing interdependence, and a more coordinated command of the industrial economy have indeed brought about a new affluence-to a degree, of course, at the cost of leaving the less developed parts of the world behind...

...leo fried-mann is a widely published German journalist...

...society is still based on "consumerism"-at least for those "middle class" people with a stable income...

...But this is only one of the reasons for the recession, and not the most important...

...The problem is more complicated, more enveloping...

...Thus, it differentiates between visible and invisible unemployment...

...industry has not yet, at least not across the board, brought into being the technological renovation and rejuvenation which alone might secure for it the first place in the world which its material and political weight demands (and perhaps inherently must demand...

...First of all, one must question whether historical "overcompensa-tion," the reintroduction of the "displaced" workers into the productive process will repeat itself...

...The invisible component is open to speculation, and may constitute another 12 percent, with an especially high number of blacks, particularly, black youths...

...Although the immediate threat to the wage level of the employed by the unemployed does not appear immediate, the problem is different when seen in the global perspective: the low wages paid by U.S...

...The really sharp division between employed and unemployed, the near polarization, is perhaps our own unique characteristic, exacerbated by the "racial" peculiarities inherent in our social fabric...

...But transformation to a higher technological level has barely started...

...But even these two industrial giants have exchanged commodities mainly with each other and with other industrialized nations like France and the U.S...

...But aside from the enormous problem of public financing, there are other obstacles today which didn't exist in the 1930s...

...The unwillingness of capital owners to invest is the root of the problem...

...Ironically, only in the public sector does the sword of unemployment hang over those still employed...

...At the present moment, the pressure on wages is less relevant...

...We are not out here to prove the validity (or failure) of the "law of the tendential fall of the rate of profit" derived from Adam Smith and Ricardo and refined and completed by Marx...

...Finally, only the skill of disciplined behavior was actually employed in mass production ( this is, of course, a schematic outline...

...Naturally, low wages are part of the arrangement, and machinery itself is part of accumulated wages...

...In the old jargon, the unemployed were characterized as an "industrial reserve army...

...But they know as well as we do that for effective "American leadership" to occur, a process of capital formation in this country must take place to establish the dominance of the new technology...

...Bottoming out" has become a myth, the "cyclical" movement of the "market mechanism" expected to take care of the problem has taken care of nothing...

...For instance, he predicted that a "command price" or cartelization would be one response of the capital owners: by taking the price mechanism out of the market structure and subjecting it to the arbitrary powers of the capital conglomerate, they would weaken or neutralize the fall of profit...

...One wonders, however, whether these critics are fully aware of the implications of their own advocacy of new technology...

...Later on, more and more skills, derived from handicrafts and assimilated to the machine, were demanded...

...If you listen to Messrs...

...The majority of the invisibles have already concluded that they will never again find regular employment...

...The economic scene is full of surprises, not only for the administration, but also for business itself...

...And as long as it remains in business, it might as well have a policy...

...That is the case even if the most refined electronic equipment is concerned...

...What does it really mean to isolate the cities and let them rot...

...These observations, which can be obtained by reading the newspapers and perusing profit and loss statements, should give rise to a more sophisticated kind of crisis analysis...

...Indications are that it will not...

...In the first place, the administration admits that it cannot provide a statistically relevant picture of actual unemployment, and that it must rely on data obtained in the labor market (those who are looking for employment day by day...

...Minimal wages might prove unacceptable today, etc...

...Logically, a more organized and "ordered" economy should be less prone to deepening economic disorders than a "free" economy...

...Washington policy-makers justify their energy policy steven philip Kramer, a previous contributor, has recently joined the faculty at the University of New Mexico...

...The industrial age started in English factories in which unskilled expropriated peasants were exploited en masse...

...Investment in developing or primitive environments, with mass employment of low-paid workers and low technology, results in higher earnings...

...capital in its notorious flight into these less-developed areas...

...In fact, the shrinking market for consumer goods in the U.S...

...This "law," to make a long story short, is based on the fundamental insight that profit derives from the exploitation of human work...