A Cold Day in Hell

Today Paul Krugman has discovered that, gasp, technological unemployment is really real! And it’s really, finally here! And it really, really will result in a permanent transfer of wealth from labor to capital, no matter how many college degrees laborers go into debt to acquire! (and, coincidentally, of course, this also seems to imply that Marx might actually have been a bit smarter than we thought.)

I’m being unfair, or at least uncharitable, to the penitent Dr. Krugman, who’s a nice guy, and would be a nice guy even if he weren’t an economist. Still, this is an amazingly belated observation on his part. I thought that these economist guys all knew this stuff, but were afraid to mention it for fear of devaluing their Keynesian cheerleading. Horrifying to think that they didn’t actually know it at all.

6 Comments

  1. bystander says:

    Ah, well, yes. Unless one’s training had a healthy dose of heterodox economics, one would have failed to notice this “rough beast” stalking us through the decades. Krugman had a standard issue training steeped in neoclassical economics. His models were all birthed there, and he’s done well with the models he has; taken them to their apex as it were. I’m not ready to toss him in the dumpster, but we need some voices that are exploring economics differently than Krugman, and I’m not talking about more of the Fresh-Water-Chicago-School types that our elites are so fond of.

    Economics is as successful at marginalizing heterodox economists (they have their quants, but the math is hard hard hard!) as the Democrats are at marginalizing the DFHs. *sigh*

    • William Timberman says:

      Forget economists — for anyone over sixty who’s had to work for a living all his life, this hasn’t been news since the early Eighties at the latest. Keynesian theory gets one thing right: rising productivity, if the political climate is hospitable, may indeed lead to higher wages for the employed, but without active state intervention, no way will it ever be a guarantee of full employment. Unfortunately, Keynes had a magisterial disdain for political realities, and so do his followers. No matter how many Keynesian advisors stand in the weeds and shriek, the resources of the rich will more often than not work effectively against such state intervention. The Realpolitik of rich versus poor, in all its ugliness, tends to trump the priorities of any rational technocracy.

      In manufacturing, employment is first outsourced to countries with low wages and more hospitable regulatory environments. Later — and now is later in that sense — it will inevitably be replaced by capital in the form of automation. The correct response to this, said the Keynesians, was to create jobs in the non-tradeable sector, which meant service jobs.

      As any fool ought to know, however, most service jobs are low-paying, the reason being that spending on most of the services provided is discretionary in a way that spending on basic goods is not. Doctors command a high wage because people don’t want to die, Corporate lawyers, investment bankers and financial consultants command a high wage because the rich worry about their money. Plumbers command a (relatively) high wage, as long as there aren’t too many of them, because people don’t want sewage on their bathroom floors. But what about massage therapists, fry cooks, taxi drivers, or poets?

      Sooner or later the majority of workers in the service sector will likely be forced to join Walmart associates in the race to the bottom. Absent rock-solid — and global — social solidarity, the lack of which since Marx has to be understood as the most significant political and economic failure of the modern age, insufficient aggregate demand was always fated to be the crowning achievement of global capitalism.

  2. bystander says:

    Okay. Forget economics and forget Keynes. According to the WSJ Keynes’ foray into economic theory was a mere divertissement (or, in a salute to the blog, perhaps, divertimento?), anyway. Wanna talk about Robert Heilbroner, Arthur Okun, Subroto Roy or JK Galbraith instead? We could try talking about Janos Kornai, but, Jesus, I found him impenetrable.

    Economics trailed Capitalism; it didn’t invent it. So, it comes as no surprise to me that as it a discipline it fails to do more than what it’s ever done – trail behind, describing what it sees – or, doesn’t because of its inherent blinders. Once upon a time I thought the “presence” of Marx under the discipline’s umbrella might offer a corrective. But, I was younger and more foolish, then. And, labor economists only rank about a tenth of a degree above Marx in the organization of that world.

    This is a tough cocktail party conversation. So, might we be better off to try Sociology and C Wright Mills?

    Sorry; I’m being obstreperous, I guess.

    I don’t disagree with your premise. My training was provincial but catholic for all the good it did. The climatologists might actually get us to a social solidarity way ahead of economics. The climate, at least, absent anything else, is one condition of existence we all share even as we share it unequally.

    • William Timberman says:

      Yeah, C. Wright Mills — or Thorstein Veblen, perhaps. ;-) I don’t know about climate change. At this point — using the recently concluded Doha Kabuki (COP 18) as an example — the familiar dynamics of rich overwhelming poor seem to remain the only game in town. Also, given the Pentagon’s interest, and the general inability everywhere to see the forest for the trees, resource wars seem more likely than a new solidarity.

      It remains to be seen, of course, if my easy cynicism is any more than one person’s blindness to developments beyond the range of his personal disappointments. Perhaps something better is already underway. I certainly hope so. The one remedy I can still endorse without hemming and hawing unfortunately remains unthinkable in today’s political climate, although forty or fifty years ago a lot of people were thinking it out loud.

      Since we seem to be able to make everything we need without employing everyone, we really ought to consider paying people whether they have a job or not. Guaranteed minimum incomes, etc. — there’s no shortage of schemes. (I’m reminded of Paul Rosenberg’s references to Star Trek Socialism.) The moral hazards involved will just have to be dealt with as best we can. The moral hazards associated with Garrett Hardin’s armored lifeboat scenarios, and the endless wars which they’re likely to engender, seem to me far worse.

  3. bystander says:

    Since we seem to be able to make everything we need without employing everyone, we really ought to consider paying people whether they have a job or not. [...] The moral hazards involved will just have to be dealt with as best we can. The moral hazards associated with Garrett Hardin’s armored lifeboat scenarios, and the endless wars which they’re likely to engender, seem to me far worse.

    Agreed. It would be doable except, perhaps, for those pesky well-to-do who aren’t too interested in sharing; hoarding, being more their style. Particularly, given a sense of their own omnipotence at being able to do so, well into their own futures. With the assistance of those they are able to convince that the “slackers” might claim their finger-hold on the lifeboat’s gunwale, of course.

    As for the lifeboat captains, I suppose, it depends on how well trained they are; (meet your future college educated elite). Would people trained thus be able to recognize those other “swimmers” as anything other than a moral hazard?

    I dunno, William. I honestly don’t know…

    • William Timberman says:

      Assuming Carolina doesn’t have a nervous breakdown at 13, or a psychotic withdrawal at 20, or commit suicide when her husband leaves her at 40, I suspect that she’ll be as reliable an ally in the class struggle as any factory-bred waif of the 1830s. The best-laid plans of tyrants everywhere are notable mainly for their lack of imagination, and that may be the one hope we have.

      As for your not knowing, I share it. It may not be the solution to anything, but at least we’re not wearing someone else’s armband.

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