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More than 10 million unemployed
Unemployment hurts ALL workers and students
By Nathan Johnson
An unemployment rate of 6.5 percent means our GDP is 16.25 percent lower than what it could be.
“The right to employment is the only serious right left to the worker in a society based upon exploitation.”- Leon Trotsky.
It is important to remember that in all phases of the business cycle there exists structural unemployment in market economies. This is not accidental. A year ago, before the recession really took affect, seven million Americans were unemployed. Since the means of production are privately owned, the working class must constantly sell its labor-power to earn a living, but the demand for human labor is constantly undermined as machinery replaces human labor to an ever increasing extent. This structural unemployment, which politicians and the wealthy find so convenient to ignore, escalates during times of recession to the point that it can no longer be swept under the carpet.
Such a time is upon us now. The unemployment rate is rising above 6.5 percent, the highest level in 14 years. This comes out to be more than 10.1 million able-bodied unemployed workers. These potential workers, composing an “industrial reserve army,” are not unemployed because they are all stupid or unqualified to work. They are unemployed because of the anarchy of profit-based production. If we lived in a democratically planned economy, where the working class collectively owns the means of production and everyone is guaranteed the right to full employment, we wouldn’t be faced with the absurd situation where 10.1 million people who want to work are disallowed simply because a ruling class does not need their labor-power at present.
The U.S. workforce is about 155,384,000 people strong. Imagine how much shorter the workweek would be if these more than 155 million people had the help of 10.1 million additional people. The 40-hour workweek was established, thanks to a heroic struggle on the part of unions and the industrial working class, in the Fair Labor Standards Act in 1938, i.e., 70 years ago. Considering the massive gains in labor productivity since that time, there’s no reason why the 40 hour work week couldn’t be shortened further except that the working class hasn’t fought hard enough for that demand.
In economics, Okun’s Law states that for every one percent of unemployment above the “natural rate,” the GDP will fall 2.5 percent below what it could have been. However, there is nothing “natural” about the “natural rate of unemployment,” just as there is nothing “natural” about the fact that we live in a class society. Structural unemployment is not some “eternal law,” but rather a historical development particular to market economies. Therefore, an unemployment rate of 6.5 percent means our GDP is 16.25 percent lower than what it could be. This is actually an underestimation, because 6.5 percent does not include those who have given up the search for employment, the incarcerated (2.3 million people) or the underemployed.
So just think about that- the GDP could be over 16.25 percent or $2.25 trillion higher. Imagine how much poverty could be alleviated. Imagine that public college education, instead of continually increasing in cost, could easily be offered free to all students. No more having to work part or full time, no more student loans, no more being at the mercy of scholarship applications- students would just be able to focus on their studies. No more students from poor backgrounds would have to join the military to go to college either.
Instead of a society where workers fraternally self-manage the economy, the disunited workers in our present-day society compete against each other for access to jobs. When so many unemployed people are competing with the employed for their jobs, the only result can be for wages to stagnate and fall. For all the reasons given above, the working class needs to organize and fight for its interests, especially during such a time of crisis.
> Comments
Erik Reichertz on Nov 17, 2008 at 10:39 PM:
"the demand for human labor is constantly undermined as machinery replaces human labor to an ever increasing extent."
So the same amount of goods can be produced with less labor. That's a bad thing?
"Imagine that public college education, instead of continually increasing in cost, could easily be offered free to all students. No more having to work part or full time, no more student loans, no more being at the mercy of scholarship applications- students would just be able to focus on their studies. No more students from poor backgrounds would have to join the military to go to college either."
Any effect on GDP here?
Nathan Johnson on Nov 18, 2008 at 06:00 PM:
On the one hand it is good that commodities are produced with less labor, as that creates the objective conditions for abundance and leisure. However, in a profit-based economy the replacement of human labor by machine labor occurs antagonistically. This has always been the case, since the earliest days of capitalism. Some of the first factories ever built were burned down by those whose jobs were replaced by machines. When a person is replaced by a machine, that person now is faced with the situation, sometimes a very desperate situation in times of recession, of finding a new job before going hungry or before that person's children suffer the consequences of poverty. On the other hand, the capitalist makes a larger profit, and the class nature of society is strengthened. Also, when this phenonmena happens on a large enough scale, the result is the recessive phase of the business cycle, since the reduction in wages on the part of the working class makes it harder to buy the surplus commodities produced by the more efficient mechanized labor. So, in an unplanned economy, replacement of human labor by mechanized has contradictory consequences on freeing humanity from the need to labor. The conditions of plenty become the conditions of poverty in our alienated society.
Providing free college education would undoubtedly increase not only the GDP in the medium and long term, but much more importantly, the quality of life across all layers of society. Realistically, you can never have a society where the people are "too intelligent." An educated public would know better than to support the permanent arms economy (and the wars it produces), but would fight to redistribute those hundreds of billions of dollars into social spending, education, healthcare, etc.
Johanan Raatz on Nov 19, 2008 at 09:06 PM:
Nathan I believe suspect you could create a viable and complete solution to unemployment through state capitalism. In a state capitalist system the entire country would essentially operate as a giant corporation. In such a system every citizen would be the equivalent of a mini-CEO or stock holder in the "corporation."
The system would operate similar to the Japanese model. The idea is that the government uses funds to "pump" the stock of the nation's corporations on the global market thereby creating an extra demand for the nation's stock. After taxpayer money goes into the system doing the pumping process all taxpayers would receive their share of the national profits. (Think of this in a fashion similar to how all Alaskans receive $1000 from the government each year for oil revenue coming from the state)
Johanan Raatz on Nov 19, 2008 at 09:16 PM:
"However, there is nothing “natural” about the “natural rate of unemployment,” just as there is nothing “natural” about the fact that we live in a class society."
I'm afraid it is -at least insofar as heirarchy is concerned. You can even see seminal aspects of "class" structure in societies within the animal kingdom. All societies throughout human history and probably all animal social groups as well have had heirarchy or what one might refer to as "class structure." Simply put in any society you need some individuals to lead and others to follow.
There is an objection to this. Some suggest that hunter/gatherer societies operate without heirarchy. However this is not true as they have chiefs and tribal elders. Furthermore the only reason that these class distinctions are not as apparent is because their societies are smaller. If you look at societies the more advanced they become the more the class structure becomes apparent. Also I don't see the point -as some anarchists suggest- of going back to such a level of civilization when we could have a larger civilization with more apparent class structure but also with more achievements. For example I doubt many of today's scientific acheivements would have been possible were it not for what capitalism has done for the economy. We probably wouldn't have had a moon-landing and we probably wouldn't have developed gene therapy.
LP on Nov 21, 2008 at 11:01 AM:
Johanan!
Haven't heard from you in a while. You seem to have a lot to say about Mr. Johnson's article, maybe you'd like to write another editorial?
Johanan Raatz on Nov 21, 2008 at 04:51 PM:
Yes sorry Leslie. I've been a little busy recently. I just finished writing a book and have had some school projects that tied me up. I'm going to try to send something in for the next(next next)edition.