Saturday, April 02, 2016
How Would You Like a Lovely Sheepskin Coat?
Redundant. When I worked at a Bermondsey school in London in the late 60s, the famed Surrey Docks that had made Britain rich since the days of Elizabeth I, were shutting down. Lots of stevedores were put out to pasture or, as the Brits termed it, "made redundant." You could usually tell the guys who just got the boot. When they got their redundancy pay many went out and treated themselves to a lovely lambskin coat.
The North American economy was still jumping and so I had no experience of this situation in which workers were herded up, en masse, and told, "that's it, you're done."
As they say, that was then, this is now or soon will be. The dockyards were cleared because there were better ways to get goods into The City and that waterfront property was just too valuable not to be redeveloped, the whole area gentrified. Now we're facing something along the same lines, humans made redundant by technological innovation.
The eternal struggle used to be labour versus capital with the government playing referee of a sort, badly most often. Remember the bad old days when employers hired goons as strike breakers? Now the goons have been displaced by technology which is even worse for labour.
This is how James Galbraith sums up our predicament in "The End of Normal":
A part of the cash flow that previously supported these people - the managers and the checkout clerks, the secretaries and the TV repairment, the booksellers and the reporters and the photo-lab technicians - now flows instead to a minute number of people at the top of the digital food chain. This was a dominant source of rising inequality in the late 1990s, when fully half the rise in income inequality measured across counties in the United States could be accounted for by rising incomes on Wall Street, in the three counties of Silicon Valley, and in Seattle. It continued to be a large part of the continuing high inequality in the decade that followed, although the locus of most rapidly rising incomes shifted, first to the military-heavy counties around Washington, DC, and then to the most flagrant centers of real estate speculation in the months before the collapse.
The rest of the cash flow that technology eliminates finds no immediate outlet. Businesses that had previously met a larger payroll now meet a smaller one. their cost saving, like all saving, implies lost employment, diminished incomes, and the waste of displaced human talent. This affects all those directly displaced and also those who previously worked to provide goods and services to those now unemployed. In effect, the "saving" disappears. There is no paid activity to replace the activity lost. The plain result of the new technology is unemployment.
The crux of the matter is in those two words, "paid activity." Companies employing technology can generate output more cheaply but there's an inevitable shortfall between production and paid activity. The gap between them represents loss of demand. Capital can still make the stuff but the labour side, the market, has been reduced.
Is this how we usher in post-capitalism? Are we nearing the point where government really has to take sides - capital or labour? (What I wouldn't give if only we could reincarnate David Lewis) Keeping the economy going - not growing but simply going - is probably going to require some degree of redistributive intervention. It seems even capital knows it. That's why you're hearing a growing chorus of voices supporting the idea of guaranteed annual income.
I'll leave it at that but will be writing more on this in the coming week.