GUEST COLUMN BY PROF. ART LERMAN: Paying the Workers to Become Customers

The Original Reason for Economic Liberalism/Progressivism

 

This book is presaged on prediction—the next wave of U.S. politics will be liberal/progressive.

But it also has an advocacy element: That’s a good thing.

Why?

Because the challenges we face are not to be engaged by current conservative policies:

  1. a.           Simply depending on free markets—laissez-faire. Indeed, the whole role of liberal/progressive policy came into being in reaction to the early industrial revolution resulting from free markets. Left to itself the free market produced great numbers of products, but provided no way for the producers to access these products. Their pay was too low to buy them.

The result was impoverished workers who could not afford to buy anything, well stocked warehouses with no demand to meet, and businesses with no sales going bankrupt.  (Classical Marxian analysis.)

It took liberal policy to impose wage standards, so that business paid its workers enough to buy its products.

It was necessary for government to do this for all society.  If only one business paid its workers enough, other businesses would sell their products at lower rates, and the well-paying business would fail. So all businesses had to be compelled to pay the minimum, saving businesses from themselves. (Yes.  The issue is who has the authority to do this in today’s globalized marketplace?)

  1. b.                    The more nefarious conservative policy—gardez-nous: big government, but for the rich–welfare for the rich—skewing policies so that the rich benefit more than others. This, of course, makes the above worse. The rich are protected from not paying enough by government subsidizing them. They don’t have to worry about their workers not being able to buy their products. They can fill up warehouses, have low sales, and still get rich from government largess.

What are the challenges? Newspaper headlines give us the list: lack of opportunity and inadequate outcomes —in education, employment, healthcare, retirement, access to resources—water/air/fuel/food/safety.

Outsourcing: A New Example

Outsourcing has been a long term problem. It has been seen nationally and internationally.

Nationally we see firms and governments getting around union rules and legal contracts for workers by hiring outside firms for their work.

Typically they will outsource cleaning services and security—hiring low paying firms to do the job for less money than their contracts say they must pay their own workers.  Governments (and the voters) have followed private employers in these practices. First it was private business that outsourced, but now, governments (backed by taxpayer ballots) are doing the same.

And it went international.  If the work can be done by even lower paid workers outside of the country, that’s where the jobs were sent—even cleaning and security are being done this way—by siting whole factories/business offices abroad.

This has given rise to two problems and a boon.

  1. a.               First problem: Lower pay to U.S. workers again makes it hard for workers to buy their own products—restricting the market and making it hard for businesses to sell products.

  1. b.                    Second problem: Low payment of workers outside of the U.S. makes it next to impossible for U.S. workers to buy anything—they’re unemployed. And the foreign workers are paid too little to take up the slack.

The boon? The businesses are making money. Yes, they’ve insured that a large population of underpaid and unemployed workers cannot buy their products. But there are enough employed people who can buy–especially in positions that cannot (yet) be outsourced—especially services, many governmental. (Though, recently, with the fiscal challenges to state/local governments, we’ve been thinning their ranks too.)

And, there is always government to buy—and give them subsidies—to help.

So we have the development of great wealth–some very rich businessmen, including major stockholders. This has been noted (2012-13) in terms of high U.S. business profits.

Robosourcing: The Next Step

But now, we may be going further. The trend is the development of robots, to replace even low paid foreign workers. It’s not outsourcing, it’s robosourcing.

So now we have the possibility of making products with few wages paid at all. Businesses can make large amounts of products at low cost. The point is, who will be out there to buy them— since so many will be unemployed?

Yes, there will always be enough customers to keep some factories going—though perhaps in declining numbers—since there are a minimum of people who society cannot do without—even as robots take over more and more employment positions.

This possibility continues, with a vengeance, the current trend toward more income inequality—a few people, managers and stockholders, making a fortune, and everyone else struggling.

This is not just the possibility of massive unemployment. It also raises the issue of who is to fund public services and those jobs not yet robotized—doctors, nurses, classroom teachers, scientific researchers, police and firefighters.   

Solution?

Yes, there are solutions—it’s again a (democratic) Marxian analysis. Society has great wealth. But that wealth is bottled up in the back accounts of the few employed and owning class. The resources are there if applied to society as a whole, to fund all the positions that are not subjected to robotization, as well as making for early , well-funded, retirement for everyone else.

The key is to transfer the wealth from the few to the rest of society.  One answer would be taxation, leaving the wealthy with plenty, but taking enough for the rest of us.

Another: the rest of society becoming a/the stockholder—i.e., like pension funds writ large.

Unfair? After all, it’s the wealthy that produced the wealth.  No? Here we go to Obama’s “You did not build that.” How much do the wealthy depend on the broad backing of society—police, fire, hospitals, subsidies?

And how much do they have to lose if their wealth is not reinvested in the rest of society? For one, sales would go up if the rest of us could buy their goods. And investments in schooling, scientific research, community development, would give them a more supportive environment to prosper even further.

The idea is that with robots, great wealth can be produced for everyone, and society can move forward for all. But the robot owners must share the wealth—or end up living in fortified mansions, surrounded by electrified barbed wire and robot guards. They also may need their own oxygen masks to access breathable air and have their own robotized water purifiers.

Remember Marx’s ultimate vision. Most people will be materially supported by factories, turning out what everyone needs, in more than enough quantities. These factories would be tended by everyone on a part-time basis, since they wouldn’t need that much oversight.

What most people would do most of the time is work on self-development—tending to their poetry (see poetry by Frederick Shiels, for example), their art work, cultivating their minds and other talents.

2 thoughts on “GUEST COLUMN BY PROF. ART LERMAN: Paying the Workers to Become Customers

  1. There is a lot of insight here. It’s all about fair distribution and sane distribution of opportunity and resources. REDISTRIBUTION used to be a word taken for granted (the rich give some things to the poor, a global historical tradition, though inadequately applied). Now it seems to have a bad name among Gilded Age types. Reich, Krugman, Frank, and more than 1 Nobel Prize for economics (more than Krugman!)– say Stiglitz, has pointed out that money bottled up at the top damages the whole society, and even people at the top! It’s all about people having work and money in their pockets to consume, consume, Consume!

    Under-consumption was the biggest factor, arguably leading to the Depression of the 1930s. Inequality of income like we have today is always dysfunctional, and especially dysfunctional at times like the 2008 great recession. What is amazing is that the economic downturns caused DO NOT HELP THE RICH, although they may be affected less. They probably lose more money by the imbalance in consumption and the shakiness of the middle/working classes than they ever would by ponying up taxes and community grants without whining.

    It is just AMAZING, again, that the 1 %, the 5%, and–even more– the conservative elements that carry the banner for those wealthy folks even though They do not have much income themselves act the way the do. You do not have to follow Marx, to understand this. But Marx, Keynes, and for that matter most American Presidents from 1933 to 1981, realized this, with different ideas about What To Do About It.

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