Thursday, February 19, 2015

New Economics: old errors

From the Winter 1986-7 issue of the World Socialist

Alvin Toffler, in his latest book about the nature of the global crisis, opens up with a compelling metaphor:
What is happening is not like a hurricane that sweeps across the landscape, leaving the earth itself unchanged. It is more like the beginnings of an earthquake. For the subterranean structure on which all our economics are based is now, itself, shifting, cracking. In our efforts to prevent a major collapse, we are dealing with surface phenomena rather than focussing on the deep-structure where the really big changes are occurring (Previews and Premises, Pan Books, 1984, p.9).
While, as Victor Anderson points out, the "New Economics" represents a "field of debate rather than a settled doctrine" (New Ground, No.6), one can detect within it a unifying theme: the desire to break out of the suffocating grip of market forces, to situate real needs and values at the centre of social affairs. For this reason it has been dubbed the economics of "anti-economics".

For socialists, this undoubtedly holds promise. Indeed, at the extreme cutting edge of this movement one may obliquely glimpse a vision of the socialist alternative, an alternative so long obscured by the prolific undergrowth of reformist politics. If today the tension between life as we know it and life as we could make it, has never been so palpable, than the significance of the New Economics is precisely that it often unwittingly mirrors much of this tension. Its aspirations, its assumptions, are channeled to no small extent along grooves gouged out by the material forces that have now made socialism, a non-market society based on voluntary work and the free availability of goods, a real possibility.

One aspect of this revolt against the blinkered tyranny of abstract economic laws is the belief that "non-economic values" should be allowed to play a greater role in the capitalist economy. As Harford Thomas has put it, there is an "urgent need for new economic indicators which will show a cost benefit balance of loss and gain not only in money terms but also in terms of human needs and human values" (Guardian, 8 May 1985).

The major force for change in this direction has been the growth in ecological awareness. Conventional accounting measures economic performance in terms of Gross National Product (GNP) according to which losses inflicted upon nature may actually count as additions to economic prosperity. The New Economics argues that as long as governments are guided by GNP in their efforts to promote economic prosperity, they will remain blind to the environmental consequences of economic growth - until, that is, those consequences reach the point where they rebound against them, forcing them to re-assess the parameters of their economic thinking. Once again, Harford Thomas:
Money economics is treated as sacrosanct but the rate of return on money is no measure of the worthiness of human endeavour. It is inappropriate as an indicator of personal or social wellbeing. We need a new financial ethos.
We need a new economic language to match new concepts. This would distinguish between "sustained recovery" and "sustainable development". New accounting systems would distinguish between self-defeating and sustainable growth (Guardian, 5 June 1985).
What this proposal amounts to is a translation of ecological factors into monetary values. In theory, this would mean that if a particular amenity such as a river were priced, the destruction of that amenity would entail a cost that would have to be borne by the offending firm to hopefully deter it from polluting. The cost of disposing of its pollutants in an ecologically acceptable manner would thus be "internalised". Perhaps as a consequence, the local fishing industry downstream might live to see another day and in so doing, continue to provide employment for the local population. In this event, the "sustainable development" of the area would have been secured. But in order for this to happen, goes the argument, it is essential that the relevant authority - central or local government - takes the necessary steps to ensure that firms conduct their business with due regard for the environment Left to their own devices, market forces are quite "unfit for (this) purpose" (Harford Thomas). In any case, some elements of the environment - like the oceans or the atmosphere - do not lend themselves to private ownership by individuals or firms. Thus a political authority of some sort is regarded as a vital key to policing the environment.

The trouble with this scenario, and even more so, that proposed by the advocates of "zero growth", is that it assumes that governments operate in a social vacuum, that they are in a position to consciously direct economic growth in line with some preconceived objective. In fact, economic growth is subject to those very economic laws, the consequences of which the Green movement attacks, that arise out of the nature of the present social system, that transcend firms, governments and even international bodies. Capitalism is a system that is inherently dynamic and geared to "growth". It is a system based upon the relentless accumulation of capital out of the surplus value produced by workers. Because it is an intrinsically competitive system, each enterprise must strive to maximise this surplus value in order to extract from it as much capital for the purpose of investment so that the enterprise can remain competitive - the only alternative is economic bankruptcy. The tendency of a competitive economy is to force upon its competing units the overriding need to pursue short-term gain. It is hardly surprising, then, that the total effect of their actions should amount to a general disregard for the long-term costs such actions entail.

Of course, economic growth does not proceed in a straight line; it is periodically interrupted by recessions. But this is not something for which governments can be held responsible any more than they can take the credit for the economic upswing that follows on the heels of every recession. Rather, it arises out of the anarchic nature of capitalist competition itself, resulting in an uneven growth between different industries leading to cutbacks which spiral uncontrollably into a general recession.

Governments do not control the capitalist economy - the opposite is the case - and those who want the government to direct the economy along ecologically sustainable lines overlook that firms, including government -owned firms (which are among the most conspicuous polluters of the environment), invest their capital only if they see the prospect of profit in doing this. Ironically, in an economic recession when that prospect diminishes, the pressure on firms to "externalise" their costs actually increases. It is no coincidence that at such a time, "acceptable" levels of pollution are less rigorously adhered to or are deliberately downgraded by government decree. Under these circumstances to expect governments to compel firms to internalise their costs is to ignore the essential nature of government as an institution which seeks to promote the interests of the capitalist class within its territorial bounds, upon which it depends for its revenue.

Despite Murray Bookchin's claim that "carried to its logical conclusion . . . the struggle for a more balanced environment is the struggle against commodity production" (Post Scarcity Anarchism p. 16). it is clear that the Green movement with talk of a "new financial ethos" and the like is still trapped within a money-bound mode of thinking. Spurning the sacrosanctity of "money economics" it nevertheless pays it due homage. Yet it cannot hope to make much headway while it fails to extend its ecological awareness of the environment into a more fundamental analysis of the economics of capitalism.

If the New Economics sees the "environmental backlash" to be an external constraint upon capitalism, supposedly forcing it to redefine its priorities, then the primary internal constraint is seen as the impact of new technology on the level of employment, forcing a separation of work and income.

The basic premiss of this argument, as presented by Andre Gorz. is the view that the new technology is of a qualitatively different order to that of previous technologies:
New technologies are being developed which are both cheaper and more effective than the old ones, allowing for growing quantities of goods and services to be produced with shrinking quantities not only of labour but also of capital. Whereas in the past, additional investment made for a growing number of jobs, at present it abolishes more jobs than it generates (Guardian, I August 1985).
Moreover, argues Gorz, it is no longer possible to count on the service sector to compensate for the elimination of jobs in manufacturing industry. Here too, jobs are under threat as automation bites deeper holding out the prospect of a tapering off of service sector employment. As a net result, a "society of mass unemployment is coming into being before our eyes".

How in the face of this chronic mass unemployment on an ever-increasing scale can workers expect to support themselves beyond the diminishing opportunities afforded by waged employment? For Gorz. the answer is to sever the link between income and employment by providing everyone with a "social income" as of right - an idea that can be traced back to the "underconsumptionist" theories of Jacques Duboin before the war and others before him (see Socialist Standard, February 1980).

To some extent, a "social income" of a sort already exists in that many workers receive an income out of state funds in the form of welfare benefits, to supplement, or to substitute for the total lack of. an income from employment. This is not merely a politically expedient development carried through by the state, mindful of the social consequences of absolute destitution on a large scale and aware of the advantage of holding large sections of the working class within a relationship of dependance upon the crumbs it doles out. There is also an important element of economic expediency in this in that it makes for a working class sufficiently fit and able to run modern industry with the degree of efficiency it requires.

On the other hand, there arc also counteracting tendencies that inexorably work to restrict the size of the crumbs doled out. Above all there is the fact that such benefits, paid for out of taxation, represent a burden upon the national capitalist class, whose competitive standing in the world economy would be adversely affected were that burden to become too great. This is why at a time of economic recession welfare benefits tend to be squeezed.

For this reason one would think that the notion of a "social income" has at best a limited applicability. Yet Gorz insists that it is bound to become a much more significant aspect of capitalism - indeed, a precondition for its continued survival - with the consequence that the law of value regulating the distribution of income will bear little, if any, relation to the way capitalism will operate in the future. Since the rapidly shrinking amount of wages as a result of growing unemployment will lead to a severe contraction of the market, capitalism will be increasingly forced to provide workers with a social income to buoy up its markets. In a sense, says Gorz, capitalism will thereby negate itself:
We are going towards a society where commodities will buy people instead of people buying commodities. It's what I call "dead-living" capitalism - capitalism which is a living corpse. Capitalism which is already dead but keeps up the appearance of the wage relationship and commodity production (International, January-April 1984).
But is Gorz right in claiming that a "society of mass unemployment is coming into being before our eyes" as a result of new technology? Similar claims have been made in the past about other technologies. Generally speaking, such claims have proved unfounded, based as they were upon a grossly exaggerated view of the increase in productivity that could be achieved by the introduction of such technologies. In focussing attention upon the particular area of employment immediately affected, they failed to notice, or greatly underestimated, the repercussions this had for the wider picture of employment as a whole. In this respect, the claims made about new technology are no exception.

An an antidote to Gorz's conjectures, one can cite the conclusions reached in a major study recently published by Wassily Leontief and other researchers of the Institute of Economic Analysis of New York University. This study, called The Impacts of Automation on Employment 1963-2000, which relies on an input-output analysis of different sectors of the United States Economy, argues that new technology, far from precipitating  a fall in aggregate employment, is likely to result in a substantial increase:
Far from it being likely that machines will displace workers, it is more likely that there will not be enough workers to operate all the machines we will want Equally, the changing structure of the labour force will not be dominated by a decline in production workers who will probably increase their share of jobs. But there will be a dramatic fall in office workers and a rise in the number of professionals (Guardian, 7 February 1985).
How is it possible to have such vastly different predictions about the future? The answer is that both scenarios - those who foresee the "collapse of work" and those who imagine there will be abundance of jobs - take as their starting point what they believe is an existing trend and, differing markedly over their interpretation of this trend, are able to reach very different conclusions about what the future might hold.

But there is an inherent weakness in the procedure of extrapolating from an existing trend. It assumes the linear progression of that trend indefinitely into the future. As earlier pointed out, economic growth does not behave in this fashion. Unemployment, as a feature of capitalism, waxes and wanes in response to the capitalist business cycle of boom and slump. In every slump there have been prophets to predict that mass unemployment was here to stay. In every upturn that followed those prophecies were proved false as industrial growth eventually led to more workers being employed.

For the New Economics, the administration of a "social income" poses a particular problem. It could massively reinforce the power of the state, a prospect which it does not welcome. The way round this difficulty, suggests Gorz, is to create opportunities for the "autonomous production of use-values", that is, people using their free time to produce goods and services for their own consumption (what Toffler calls the "prosumer economy") rather than for sale on a market. What is interesting about this proposal is the way Gorz relates it to the socialist objective:
Today there is another technological revolution going on which can be compared in its significance to the industrial revolution and which holds out the possibility of the dream of the first socialists - the abolition of wage labour. In the Grundrisse, Marx opposed disposable time to labour time. And certain key parts of his work say that the measure of wealth is disposable free time. "Really rich" is a nation where you work six hours and not twelve hours... When people work two days a week, the essence of their life is no longer labour, it's no longer the wage relation, it's what they do with their free time (International, January-April 1984).

According to Gorz, the realisation of socialism is only possible through the spaces opened up within capitalism for the utilisation of free time for the purpose of autonomous production; the development of technology under capitalism has effectively short-circuited the possibility of socialism being achieved in the way classical Marxism envisaged. The division of labour, having evolved into a highly integrated system of mass production, does not lend itself to a "socialist rationality" with its emphasis on the "free development of each individual as goal and precondition of the free development of all" (Marx):
Technology is not neutral, it was developed precisely in order to destroy workers' power in the factory. You can win a certain amount of control overworking conditions, over the technical process of production on the shop floor. You cannot, as Marx thought in his early period, say that the working class will feel at one with a comprehensive social process of production. You have to compare the working class as it is now with an army. It is structured by capitalist management, like an army. It is subdivided by smaller units led by what Marx called the "officers and petty officers of production". Of course an army can take power. But as long as the technology of production remains the same, the division of labour remains the same, the subdivisions will remain the same and those who will take power will be the officers. It will not be the soldiers (International, January-April 1984). 
What is at issue, then, is a form of alienation inherent not only in capitalist relations of production, but in the socialisation of the process of production itself; in the workings of a complex machine-like society. The effects of this alienation can be attenuated, but never entirely eliminated. (Farewell to the Working Class, Pluto Press, 1982, p.9)
So for Gorz, there will always remain a residual area of what he calls "heteronomous activity" - that is, activity over which individuals have relatively little control, activity that is determined by the technical requirements of the production system. In other words, the opposite of autonomous or self-determined activity. For example, no individual or group of individuals can manufacture a complete washing machine. As Gorz points out, "because there are so many inter-dependant processes you need a country of five million people to make one washing machine". In that each of these processes is tightly honed into, and governed by the specifications laid down by, numerous other processes, there is very little room within which individuals can freely develop, can creatively identify with the product of their collective efforts.

It is worth relating this point to the recurring theme in Alvin Toffler's work that, as a result of the revolutionary impact of new technology, society's dependance on socialised mass production techniques is now diminishing. According to Toffler, the trend towards a de-massified economy signals the end of a centuries old process of "market building". This marketisation of the economy went hand in hand with the socialisation of production itself based upon an ever more complex division of labour. The more elaborate this division of labour, the greater the split between producers and consumers, between production and consumption. This led as a direct result to the market playing an increasingly important role of mediating between the needs of producers and consumers (including, of course, the consumers of producer goods such as machinery). Now that the divorce between producers and consumers is narrowing - as shown by the growth of the "prosumer" economy - so the role of the market itself is corresponding contracting.

Gorz himself appears to endorse this view of the market as inextricably bound up with the development of socialised production. But whereas for Toffler the necessity for the market lies in the fact that it provides an indispensable mechanism to facilitate the flow of information linking producers and consumers (a quite mistaken view, as it happens, since it is entirely feasible to convey such information purely in terms of physical quantities by means of a self-regulating system of stock control), for Gorz market relations will remain an inevitable feature of a socialised system of production by virtue of the alienating experience of work within such a system which necessitates the retention of labour power in its coercive, commodity form. Like Toffler, he sees the decline of market relationships in relative terms as being connected with the growth in autonomous production:
The liberation of individuals and society, together with the regression of wage labour and commodity-based relationships, requires the domination of autonomous over heteronomous activity (Farewell to the Working Class p. 10).
Thus, instead of what the Communist Manifesto described as a "radical rupture with traditional property relationships", Gorz envisages the emergence of a socialist society in terms of a process of change analogous to the way capitalistic relationships developed within, and ultimately gained ascendancy over, feudalism. As he puts it:
The outlines of a society based on the free use of time are only beginning to appear in the interstices of, and in opposition to, the present social order (p.3).
However, this analogy only holds good up to a point Whereas capitalism supplanted feudal society, Gorz does not foresee the growth of self-determined, autonomous production leading to the elimination of externally-imposed, heteronomous activity. On the contrary, he asserts that that very growth will depend crucially on the goods and services provided by the latter. For example, advanced technology like computers which could be used for autonomous purposes depends crucially on research and development which can only be effectively carried out on a socialised basis. Generally speaking, local communities or groups lack the means to undertake such work, but the large-scale production of such technologies at low cost puts them within a price range that the latter can afford.

Thus, what Gorz is arguing for is what he calls a "Dual Society" with the emphasis on enlarging the sphere of autonomous production by making the sphere of non-autonomous, wage-based production as productive as possible through widespread automation, with workers moving continuously to and fro between these two spheres. He relates this scenario to Marx's reference in Capital Vol III to the "realm of freedom" and the "realm of necessity". The latter cannot be merged with the former and the former can "blossom forth only with this realm of necessity as its basis" having "the shortening of the working day as its basic prerequisite" - a prerequisite which Gorz would contend has now been met with the aid of new technology.

Let us now examine Gorz's claim that the nature of "socialised" or mass production techniques makes for the retention of wage labour (however marginalised it may become as a result of the growth in autonomous production) because of the "alien" technical requirements imposed upon the workforce. Put simply what this suggests is that, in any sort of society that makes use of such techniques, there would be certain types of work that would still have to be done but which could not be made intrinsically enjoyable or satisfying, regardless of the extent to which such a society sought to attenuate "the effects of this alienation", and that therefore people would have to be offered monetary incentives - a wage - to undertake them.

Quite apart from the absurdity of imagining that money could be an incentive - could have any sense even - in a society where goods and services would be freely available, there are several reasons for supposing that such work would not present the insurmountable difficulty it would appear to in a society based upon the purely voluntary efforts of its members.

Firstly, there is the fact that having established socialism people would not wish to jeopardise what they had consciously achieved. In so far as such work was seen to be a vitally necessary contribution to the material security of a socialist society it would be carried out. Gorz's claim that "socialist morality - with its injunction that each individual be completely committed to his or her work and equate it with personal fulfilment - is oppressive and totalitarian at root" and that it is "a morality of accumulation which mirrors the morality of the bourgeoise in the heroic age of capitalism" (Farewell to the Working Class p. 10) completely misses the point To describe as totalitarian what (for want of a better term) is a self-imposed sense of duty, a desire to cooperate out of a sense of enlightened self-interest to carry out the more routine humdrum tasks of a socialist society, is to strain the use of language beyond all reasonable bounds. Oppression presupposes the division of society into oppressors and oppressed. In a socialist society where all have free and equal access to the wealth produced by that society there can be no leverage that one could apply in order to oppress others.

Secondly, it is quite mistaken to argue that the only source of satisfaction in work derives from the intrinsic nature of the work itself. Another source of satisfaction is the social esteem that attaches to such work. In a socialist society, where the products of work are made freely available to all, status based upon the conspicuous consumption of wealth would be rendered meaningless: the only possible basis of social esteem would therefore be one's contribution to society. This being the case, it would seem likely that the less intrinsically satisfying a particular task is held to be, the greater would tend to be the social esteem that attaches to such a task.

Finally, one has to question whether the externally-imposed nature of some aspects of work today would in any meaningful sense persist in a society based upon voluntary effort. It is true, of course, that having volunteered to work for a certain length of time in some process such as the mass production of washing machines (to use Gorz's example) one would have to submit up to a point to the technical requirements this involves. But the point is that one would have consciously chosen to do this. In this sense one's activity is of an autonomous or self-determined nature however little one is able to individually influence or alter the technical process of production itself.
Robin Cox

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