Lewis Corey

The Decline of American Capitalism


PART FIVE
Unemployment, Technology, and Capitalism


Introductory


THE problem of increasingly great permanent unemployment, of the inability to provide work for millions of men and women eager to work, was not a creation of the depression. Like the decline of capitalism, it emerged in the midst of the flourishing prosperity of 1923-29. For employment, during that “Golden Age,” moved downward while production and profits were moving upward.

Mass unemployment is essentially a peculiarity of capitalism. It has three forms: seasonal unemployment, existing only because it is more profitable not to regularize employment; cyclical unemployment, the result of the recurrent breakdowns of industry, of depression; and the minimum unemployment which is independent of seasonal and cyclical influences. The third form of unemployment is styled “normal,” the expression of an economic system in which the abnormal so often becomes the normal. “The unemployed percentage,” according to one bourgeois economist, “however it may fluctuate, never fluctuates down to zero.” [1] Normal unemployment means simply that capitalist industry is so organized and managed that there must always be a reserve of unemployed workers, even in the most prosperous times, to provide labor for new enterprises and as a means of forcing down wages. Under capitalist conditions, the providing of steady employment would hamper expansion (which is unplanned) and tend to raise wages to unprofitable levels. Normal unemployment is therefore a condition of capitalist production and accumulation.

In the United States, because of its greater and more violent expansion, normal unemployment has always exceeded that in other countries. Unemployment averaged 7.8% of the available workers in the prosperous years 1900-13 (excluding the major depression of 1907-09). [2] It became worse in 1923-29, as a direct result of unusual prosperity.

If the theoretical assumptions of the “new capitalism” (and now of Niraism) were valid, there would have been no cyclical crisis and breakdown. Nor would there have been any substantial increase in unemployment. But the assumptions, where they were not sheerly apologetic, were wholly unreal. They were compact of doctrinal abstractions, having little relation to a dynamic capitalism rent by strains and stresses and contradictions, and ignoring the antagonisms of an economic system dominated by the production of profits. It was, and is, assumed that increasingly higher employment and wages follow an increase in the productivity of labor and in production; that as production costs decrease and output rises, prices fall, consumer purchasing power and mass consumption mount, and more goods are produced and more employment is created. In other words, the assumption is that the gains of greater productivity and production are proportionally distributed. But there is no such proportional distribution under capitalism, whose main characteristic is disproportionality. Hence crisis and breakdown. Hence the spread of unemployment, like creeping paralysis, in the midst of unprecedented prosperity.

An examination of the fluctuations of employment, in their relation to production, prosperity, and depression, demonstrates that there is no objective basis for the wholly unreal theories of capitalist apologists.

Notes

1. W.H. Beveridge, Unemployment, a Problem of Industry (1912), p.68.

2. Paul H. Douglas, Real Wages in the United States, 1890-1926 (1930), p.460.

 


Last updated on 3.9.2007