COMMENTS: If There Is a Recession - and If Not
Harrington, Michael
Given two diametrically opposed projections of our economic and political future, what should the response of the left be? I pose the issue in this uncertain way for a reason. The United States...
...Each would pose new problems that we have never encountered before...
...Who, during World War II, would have argued that we could not "afford" the defeat of fascism...
...It would be good if in the United States we tried similarly to connect "status" and social contribution, so that the former would not simply be determined by commercial values...
...This concept contains, however, the core of a larger notion: that work pay and status should be determined on some kind of rational basis and be open to bargaining...
...The democratic left must be as bold as Newt Gingrich...
...What has just been said is prelude and precondition...
...THE CENTERPIECE, clearly, must be jobs...
...One sees a recession within the next two years and tries to explore what that means for the progressive forces in American society...
...Unemployment rises "only" to 9.5 percent...
...They were, in order: building custodians, cashiers, secretaries, office clerks, registered nurses, waiters and waitresses, kindergarten and elementary teachers, truck drivers, nurses' aides and orderlies, technical sales representatives...
...Where such deductions actually result in investments in wealth141 producing and job-generating assets, they should be increased at a time of crisis...
...Perhaps the AFL–CIO could relaunch it next year when it celebrates the 100th anniversary of the AFL's radical call in 1886 for the Eight-Hour Day...
...Easy money...
...This is why I take two contradictory scenarios as my point of departure...
...Until quite recently, it was a standard article of liberal faith that the huge "tax expenditure budget" of deductions for the wealthy was one of the most important potential sources of funds for social programs...
...Small wonder that Rep...
...Upward mobility" can be translated as rat race, the acceptance of a dog-eat-dog ethic that is antithetical to everything the left stands for...
...Wouldn't it be worthwhile if, instead of waiting for the recession, the democratic left tried to spell out its approach in concrete legislation...
...The redefinition of the working life in my first scenario was put forward as a way of sharing jobs during a period of economic crisis...
...But I also think that the radical nature of the challenge I have hypothesized requires that they at least be put on the table...
...It is an idea whose time has come again...
...That is, 32 hours' work for 40 hours' pay would increase the economy's labor cost by 20 percent, reduce profits, cut back on investment, and in general provoke a downward spiral...
...Here, too, the redefinition of the working life has a significant potential...
...And we are about to import automobiles from South Korea . . . When an economic-political paradigm is in its maturity, prediction is simple...
...Assume that the society was producing a growing GNP...
...What are our alternatives...
...But my central point should be plain: that new departures or, as in the case of tax policy, a return to old verities that now have become radical are in order...
...So deficit financing, starting at a base of $275 billion, would be enormously problematic, particularly if the foreign lenders who have been financing about half of Reagan's deficits decided that the U.S...
...In the late '70s the emergent conservative movement focused its theories and practical proposals on the Kemp–Roth tax-reduction bill, much as the liberals articulated their values in the original Humphrey-Hawkins bill...
...The same demand would apply here, but as a means of creating more upward mobility...
...This is one of the reasons the Bradley–Gephardt tax proposal is "revenue neutral"—that is, simplifies but does not redistribute—compensating for abolished deductions by providing lower, overall rates...
...This proposal will present us with, at least, two major problems, and they will have to be confronted...
...The profound recession of 1982-83 was, it will be remembered, universally anticipated as a short and shallow down-turn...
...And this should be done only by abolishing tax expenditures that have no, or a perverse, effect...
...In 1983 interest on the national debt—which goes primarily to rich Americans, rich foreigners, and some federal employee pension funds—already cost more than the total spending for all means-tested programs...
...I must admit that I expect something like this to take place (I am somewhat bothered that so many others, including business economists, agree...
...But I have put my doubts into parentheses and asked, if somehow this economic oxymoron should come to life—a low-wage, high-tech growth society—what should the response of the left be...
...Today the pay men receive is not necessarily an index of what it should be according to the worth of their work, and it still often is a significant measure of discrimination against women...
...There were two computer occupations among the top 40—systems analysts and programmers—but even if taken together, they are expected to yield only about 60 percent of the projected increase in building custodians...
...At the same time, many students are adopting career strategies (becoming, for instance, lawyers) that have nothing to do with their inclinations or talents but are simply tactics for beating the system by joining it...
...Further, let us give more credit to the president than he deserves and hypothesize that the federal deficit is running at a rate of "only" $200 billion...
...For instance: "We should consider a nutrition program which made the most basic foodstuffs—flour, cheese, rice, red beans, and a dozen similar items— available free or at nominal cost in grocery stores to anyone who wanted them...
...But, arguing from long and quite pertinent experience, they say that it is politically impossible to achieve that goal...
...On the one hand, as Business Week's recent issue on the corporate elite made clear, the high-tech gurus are antilabor, seeing unions as an improper restraint on their free-wheeling style...
...This point touches upon a second area: the problems of youth...
...Conservatives who resist this active government role," he writes in one of the most striking political passages in recent years, "must be reminded that you cannot keep Panama Canals unless you first build them...
...If there is indeed a recession in 1986, I think those political conditions will be changed...
...One could go on detailing possible effects—how the superdollar would turn anemic with the consequent disruption of international money markets brought on by any sudden change—but the point is clear enough...
...If, to take a simplified example, a company has to hire an additional 20 percent of workers in order to bring production up to its old level, that means 20 percent more "fixed" labor costs (payroll taxes, health benefits, and so on...
...First, as Wassily Leontief has pointed out, if the nation attempted a rapid transition to the 32hour week through the wage system, economic havoc would result...
...was no longer the best investment...
...That, we now know, was nonsense...
...But, particularly if the tax shift I urged earlier were adopted, we could proceed to this goal by means of, say, 32 hours' work for 33 hours' pay plus tax reductions for working people, which would bring up their after-tax income to the 40 hours' equivalent...
...In a recent projection, the Department of Labor listed the jobs that would grow fastest between 1982 and 1995...
...This development, obviously, would utterly destroy the economic fairy tales of the 1984 campaign and the 1985 inaugural address...
...Which program...
...As of now, comparable worth is a demand addressing the sexism inherent in the job structure...
...143 In this second scenario, as in the first, I have only suggested the broad directions of a left response to unprecedented change...
...And it dares to be different...
...More broadly, discussion of the 32-hour week should focus, not only on the immediate employmentgenerating effect of the measure, but on the opportunity it affords to redefine the relationship between work and leisure in the United States...
...I will not linger over the first part of this proposal, since one's attitude toward military outlays is primarily determined by concern for national security, not for balancing the budget...
...Kemp said he would be willing to unite with Bradley–Gephardt by splitting the small differences between their bills...
...On the other hand, labor's reserve army among the new poor as well as the technological and international options for substituting robots and/or foreigners for American labor would also militate against the unions...
...With the deficit nearing $300 billion in our scenario, room for traditional Keynesian maneuver would be, to put it mildly, circumscribed...
...At the same time, it is clear that the Keynesian welfare-state policies, which seemed totally triumphant in the '60s, no longer work...
...But if there is a certain reversal, and more and more men now are reduced to a "female" occupational status, isn't there a basis for a united movement that could challenge the job structure itself, on both male and female grounds...
...Finally, the experience of the women's movement would become important for men if, as might be the case, there is a "feminization" of the occupational structure, where "macho" smokestack work is replaced by "women's" service employment...
...Clearly, I have not tried here to sketch an exhaustive response to the crisis I have imagined...
...Part of the resonance of the right-wing populists' arguments is to be found in their antibureaucratism (which is often a cover-up for the power of corporate bureaucracies...
...We could all join in blaming Reagan for having structurally reduced the tax base through giveaways to the rich, thereby preventing the recovery from significantly lowering the federal deficit...
...Here, too, there should be an emphasis, not simply on expanding the quantity of available work, but on dealing with its quality...
...Easy money...
...But under the conditions I have sketched, both would quite likely lead to making the William Simon fantasies about "crowding out" come true...
...In such an economy unions would be on the defensive...
...What then...
...This is one reason why serious thought should be given to abolishing, or reducing, payroll taxes and funding their programs through general revenues, while also moving to a system of national health care...
...At the very moment that the Chase Manhattan Bank was engaged in a nationwide advertising campaign around the "crowding out" theme, it was so awash with liquidity—including recycled petrodollars— that it was roaming the Third World looking for borrowers...
...How we respond to events may...
...Indeed, the women and the men needed one another and helped each other to a victory...
...The constraints created by Ronald Reagan will make it impossible for the democratic left to turn to its standard answers in the event of even a not-sosevere recession...
...And there would be three interrelated areas where the democratic left might attain a new relevance...
...But then two distinct groups turned away from that notion...
...What would the left propose...
...Since the production jobs in this sector are easily exportable, they would not have too much trouble in imposing their desires on the workers...
...One of the most important developments of the postwar period was the growth of mass higher education...
...In recent years, it is well known, this has led to "credentialing"—an increase in the training of people unrelated to the work they perform and a consequent downward displacement of the less educated who once held those jobs...
...In 1973, Simon and a good part of the business community insisted that the "irresponsible" and "utterly lavish" social spending of the '60s—which, in fact, never took place—had crowded business out of the money markets because it was unable to compete with a federal government borrowing all that money to pay for its profligacy...
...We could then rightly say that the monetarist meat ax used to fight inflation had destroyed jobs in the export industries and kept real interest rates excessively high, even under conditions of very rapid economic growth in the first three quarters of 1984...
...So in addition to defense cuts, the response to the crisis of this first scenario must include that oft-repeated but never achieved goal: to get the rich off welfare...
...First, the issue of social mobility would be prominently on the agenda...
...It is inspired in part by the radicalizing effect of a book upon me, written by a right-wing populist—Newt Gingrich's Window of Opportunity...
...Under the circumstances we have assumed, there would have to be such a massive infusion of credit into the economy that inflation would become an immediate threat...
...Each would open up new opportunities in the struggle to democratize, decentralize, and humanize the economy...
...The second problem is that business will try to evade the law precisely because it is designed to create new jobs...
...The co-variations function nicely—an X increase in unemployment yields a Y decrease in interest rates, all other things being equal—and pedestrian analysts can appear to be seers...
...Unsocial socialization is still the basic problem, even if in ways never dreamed of by Karl Marx...
...This book is the most bizarre amalgam of the imaginative and the reactionary I have yet encountered and seems to have been written jointly by the Tom Hayden of 1962 and the Jerry Falwell of 1985...
...Interestingly, the AFL was in favor of such a move over half a century ago, and the concept was even included in the National Industrial Recovery Act of the "first" New Deal...
...Women in the labor force could find that, rather than seeing female jobs raised to equivalent male levels, the reverse would take place as "women's jobs" were more and more diverted to men...
...At the outset, it is well to recall an interesting relationship: that periods of growth tend to be periods of social protest and innovation...
...On the one hand it should, like him, emphasize the necessity for the government to create new industries and jobs, including space— and that these must not be given away for the enrichment of the corporations...
...Thus, as the recession gathered momentum and joblessness rose, the deficit would increase to $275 billion because of both the lost revenue and triggered entitlements of some 3 million additional men and women out of work...
...Those are the traditional answers of the last 50 or so years...
...These trends have to be rearranged by public policy decisions, since they move in the inegalitarian direction of a society with a technocratic elite, a "sliding" middle, and a new poverty at the bottom...
...The neoliberals bought the conservative argument that excessive government spending was a major cause of low investment levels and declining productivity...
...One of the most important ways of doing that is through the redefinition of the working life, beginning with the adoption of the 32- (or 30-)hour week...
...Taxing the rich requires a bit more comment...
...The basic point is the one with which I began: a recession will not "save" us and a recovery will not "bury" us...
...Dramatic technological changes are under way: GM's new Saturn automobile is scheduled to be built in an automated, robotized process that will reduce the total labor cost per car from its present level of 55 hours to 21 hours (in 1979, it was nearly 80 hours per car...
...In his fine book The Economic Illusion, Robert Kuttner points out that in Sweden homemakers who help the elderly, the severely handicapped, and the mentally ill receive both 160 hours of training and "middle-class" wages...
...In the '60s, many constituencies protested against an Administration that had helped create the semiaffluence without which dissidence was impossible...
...The second scenario—that American society has turned a corner and embarked on a new, expansionary stage—strikes me as implausible, perhaps even impossible...
...for that, in recent times, is a sign of error...
...This, however, is an ambiguous and possibly even a bad goal...
...Clearly, if there were the kind of long-range recovery I have just posited, an enormous number of people would have cause to mobilize...
...However, since this is such a huge subject in its own right, I merely mention its importance here...
...More to the point, where, under circumstances of increasing joblessness, is the democratic left going to find a financial margin of maneuver...
...ASSUME, THEN, that in the fourth quarter of 1985 or the first quarter of 1986 there is a recession...
...Assume that the postindustrial nightmare that I 142 described earlier—a society with an increased elite of, say, 25 percent, a depressed but not povertystricken middle, and a new poverty—not only comes to pass (which is possible) but turns out to be a viable new paradigm for economic growth (which I do not think possible...
...And if Ronald Reagan's dreams come true, the left is not defeated, but could find a new 139 relevance...
...The neoliberals will be hard hit if my scenario of a modest recession comes true...
...But other liberals do bother me more...
...LET US SUPPOSE that the recession scenario just sketched is the work of an old-fashioned man incapable of realizing that a new age has dawned...
...This means, first of all, dealing with the money problem by a major cut in defense spending and a progressive tax reform as forthright as Reagan's regressive tax law of 1981...
...Gingrich is for an industrial policy through which the government would subsidize a new space industry and then turn it over to the private sector...
...Events are not going to revive or destroy us...
...Though I will advance a traditional theme before turning to some more innovative ideas, I want to begin my answer with a plea for boldness...
...And, on the other hand, we should take back some of what has already been stolen from the working people...
...But when one is in between paradigms it becomes extremely difficult, if not impossible, to project the future...
...The United States and the other advanced industrial economies are in the midst of a transition from one economic-social-political paradigm to another...
...Yet soca, in 1986 or so, Simon's nightmare could come true, not as a result of Democratic liberality but as a consequence of the very Republican policies that he himself supported...
...The 140 left, then, should be as ready to take chances as this Reagan radical...
...History thus would savage the George Gilder and Jack Kemp idylls about the entrepreneur as deus ex machina...
...Indeed, it seems to me that this is a model for chronic overproduction and underconsumption...
...That proposal is populist (or even socialist) in its advocacy of free food...
...Blacks and other minorities would be disproportionately represented among the new poor and within the sliding middle...
...When I spoke at strike rallies at Yale last year, I found that one of the most important developments there was the unity between the clerical strikers and the male-dominated blue-collar local, which respected the clericals' picket lines...
...Underlying all this is a central point that will serve as the leitmotif for these comments: if a new economic crisis breaks out, the left is not "saved," but confronted with a situation for which it is quite unprepared...
...Though it most certainly can be, it is not simply, or always, that...
...For these three groups— unions, minorities, and women—there would be both a need for defensive struggles and possibilities for organizing...
...And we know that, even though Reagan's Economic Recovery Tax Act of 1981 cheapened capital and subsidized savings, it was followed by an investment bust and a decline in savings...
...The ideas are briefly outlined and sketchy—merely a beginning...
...It is conservative in that it proposes to abolish Food Stamps in return for a monotonous, minimal—free--diet...
...It could create the fiscal and monetary space in which a positive program could go forward...
...next year will be like last year with some small shifts, up or down...
...I am perfectly well aware that changes of this magnitude and sweep are difficult to achieve...
...Even in the '30s, mass resistance and organizing did not begin in the trough of the disaster but only after Roosevelt took over and the economy began to revive...
...These people admit to the desirability of a tax reform that actually redistributes burdens in a fairer and more democratic way...
...Clearly, education for high tech is not an immediate response to 9.5 percent unemployment (it is not a long-range response either, but that is another story...
...But if the occupational structure of that production were such that fewer and fewer people had the hope of rising within the system, there could be an openness to proposals designed to create new possibilities for mobility...
...But we are no longer in 1965 when we could hope that a stimulus would create new openings for the hardcore unemployed in smokestack industries...
...Democratic and social socialization is still the answer, even if in forms yet to be invented...
...Deficit spending...
...I will only note that I think large reductions in our present dangerous arms spending could enhance our national security as well as facilitate negotiations with the Soviets...
...It is, let us say, not as severe as the last one was...
...The problem, it turned out, was not a lack of investment funds but the structure of a chronically malfunctioning economy...
...That theme has been an important aspect of left-wing thought since the '60s (at least), and it is critically important to conceptualize active local participation in the decision process of any industrial policy...
Vol. 32 • April 1985 • No. 2
