14 January 2011

The REAL Jobs Crisis

I really like The New Yorker. I’ve been reading it for almost two decades. I like its style, the depth of its reporting, that in a desert of irrational fear-mongering, it is an oasis of well-informed, reasoned discourse. But they don’t quite get capitalism.

Most recently, an article by James Surowiecki demonstrates how this bastion of the liberal intelligentsia doesn’t have the critical perspective we really need to comprehend the present. Surowiecki’s article, “The Jobs Crisis,” (Jan. 3, 2011) discusses two views on the current phenomenon of long-term unemployment. The first view, he says, is that unemployment is cyclical. “At times when everyone is cautious about spending, companies are slow to expand capacity and take on more workers,” he explains. The second view argues that unemployment is structural. “Jobs that existed before the recession are gone for good, and the people who held those jobs don’t have the skills needed to work in other fields,” Surowiecki summarizes. The remainder of the article assesses that at stake in this seemingly “academic” argument is the policy direction of the U.S. government.

All this is correct, but Surowiecki overlooks the real structural reason for unemployment: capitalism itself. To the extent that the point of capitalism is to create surplus value, that is, to create more value from labor power than the value of that labor power, it always seeks to minimize either the value of labor power (that is, the cost of its reproduction), or the amount of labor needed for the production of any given amount of surplus value.

The stagnating standard of living and relative decline in wages since the 1970s signals that capital has pushed as low as possible the cost of the reproduction of labor. At this point, to continue to increase the rate of surplus value, it needs to shed labor. This is possible through increases in productivity. Now, this isn’t to say that the most recent spate of unemployment wasn’t most immediately the result of changes in demand, but to point out that capital doesn’t need labor to reproduce itself. This is all the more evident given that in the past twelve months profits have recovered, productivity has risen, and the job market has not.

Now, defenders of capitalism will say that when jobs are lost in one area because of increased productivity (technology), they are created in new ones. To some extent this may be true. If the widget maker sheds employees because a new thingamachine takes their place, there could now be jobs with the thingamachine maker. This is the assumption behind the structural interpretation presented by Surowiecki. Once people “retool” as thingamachine workers, unemployment will decrease.

There are two problems here. One is quantitative. We cannot assume that the same number of employees that lose jobs as widget makers will regain them as thingamachine makers. And while such numbers may not be significant at the level of an individual firm, capitalism is a social system, and at the socially general level this tendency produces “the industrial reserve army,” one effect of which is to suppress the value of labor power.

The other problem with such a defense is that it assumes that capital will flow to productive industries, that is, to those that create employment. Yet, recent history has shown that capital can readily find reproductive opportunities in realms that do little to create employment. So the problem is indeed structural. Individuals need jobs to reproduce their existence, that is to feed themselves, house themselves, etc. That is, individuals need capitalism, but capitalism does not need them.

By ignoring this deeper structural problem, even well-intended assessments like those provided by Surowiecki focus on only the most immediate level of appearances and thus continue to turn us in the same circle, when really we need to be working to identify the possible route by which to escape.


  1. You seem to be arguing that the employment crisis is a new strategy of capital to continue extracting a surplus even after the strategy of increasing exploitation (attacking wages and benefits) has run up against its limits. In contrast, I would interpret the employment crisis as a consequence of the neoliberal structure of accumulation having exhausted itself. So yes, the employment crisis is a structural outcome of capitalism, but an outcome of internal contradictions that in the long run prove counterproductive to capital and labor alike, rather than an initiative of capital against labor.

    More fundamentally, I'm skeptical of the claim that "capital doesn’t need labor to reproduce itself". In the short run this may seem to be the case, as with the recovery of profits without jobs. But in the long run capital can't survive without someone to buy its products (to realize the value it circulates), and in a mass consumer economy at least, that means workers. Not to mention the tricky question of where value actually comes from - if you follow Marx, then capital is nothing more than the appropriation of the value produced by labor, so by definition capital needs labor to reproduce itself.

  2. I like the spirit of your post to push people to think about what a "structural" explanation of unemployment would mean. That term is thrown around with airs of progressive, cutting edge economic thinking, but ultimately fails to challenge the belief that an uninhibited labor market tends toward full employment (e.g. http://mises.org/daily/2989). Something the Marxian argument convincingly challenges to my mind.

    The other part of your post that I like is connecting unemployment with the tendency toward the reduction of socially necessary labor time. There are few who would suggest that today we have a crisis of underproduction. Even with 10% of the population out of work, we have as many goods as we could want (and far more). Froma certain perspective it seems to make sense not to demand full employment, but to push for the further reduction of necessary labor without limiting access to social wealth. If it weren't for not being able to pay your bills, being unemployed is pretty awesome, who doesn't want to be a social welfare freeloader?!

    Ultimately though, I agree with Walker that we can't overstate the historical implications of this current bout of unemployment. To say that Capital has somehow reached inevitable and irreparably deepening problems of unemployment I think that underestimates its creativity. While we haven't seen it happening yet in a systematic way it seems pretty likely to me that there will be a new regime of accumulation set in the next 10 years. However that looks, it very well might start including populations that seem "structural" excluded under today's system.

  3. It strikes me that this point of view is a little too national, which is of course also a problem of the liberal view. The degree of structural unemployment, or what we would be better served calling the redundancy of labor (its "unemployability"), on a global scale has increased substantially and shows no signs of going away.

    If one looks at Africa almost as a whole and regions, countries, and cities everywhere else, what seems to have developed is a permanently excluded population from the point of view of wage-labor. Around this we have seen arise, since these people are otherwise wholly under the aegis of capitalist social relations, a massive criminal market especially in drugs, slavery, and prostitution.

    Far from there being any reasonable expectation that increased capital accumulation would put this population to work, it seems far more likely that the kinds of changes, even with CSV, will tend to reduce capital's need for actual labor even as it remains dependent as a social form on labor. No small degree of the irrationality of contemporary society becomes comprehensible in light of this problem.