II - QUEST FOR LEISURE
4. THE GREAT EQUALIZER
Meanwhile, we had pleasant dreams in spite of storm warnings. All through the Nineteenth and the Early Twentieth century, sectorial and multi-sectorial gluts serious and more serious came and went, but somehow the system survived. Human lack of foresight and the inflexibility of machines might have combined to create gluts in this sector and then the next, but some superior forces saw to it that effective demand would always be saved in extremis .
Waiting for the storm
Clouds gathered, but sound remedial measures were taken against what might have been an excessive concentration of wealth, and unemployment did not pass the threshold beyond which the system would have been blown to bits.
As productivity increased and the total amount of work to be done diminished, workers were authorized to renounce total dedication to work, and to fit their productive activities in the framework of roughly "40-hours a-week" jobs. This allowed for more jobs to be created and, since wages could not be reduced lest a dangerous drop in effective demand should occur, the net result of reduced working hours was a tremendous increase in the value of work itself.
It was inevitable. More production begs for more disposable income if it is to be sold, and if less work is available, then obviously work must fetch a higher price. It seemed that the Optimists had been right when they had said that wealth would increase, and that the Red Team had been wrong to think that it was necessary, or even useful, for investors to have a "reserve" of unemployed manpower at their disposal; to the contrary, it would have been a major inconvenience. Wrong also, when they had thought that unemployed workers could be left to starve in the streets; this would have been even more disturbing.
The Red Team had been right, however, to assume that unemployment would become a permanent phenomenon in our society. Machines were pursuing workers from sector to sector and these workers, like so many investors in this commodity called "work", also had to act on the "fight or flight" response, keeping an eye on an advancing technology that was still globally creating more jobs in the industrial sector, but was already playing havoc with all established work patterns.
There was also a more subtle negative effect taking place; now that the "job" was born, and that it was certainly more comfortable to be with, rather than without one, working could be said to be better than "not working" and generations could be conditioned to think that work was in scarce supply. The "work is a blessing" line had come back with a vengeance.
But why complain? Progress would solve everything! When it came to building its stock of new slaves, industrial society really went to business. Sector after sector of the economy was opened to the Machine like so many new frontiers, and a horde of proud owners of 40-h.p. motorboats would soon cruise the rivers, with the same labour equivalent at their disposal as Cleopatra going up the Nile. Every native fisherman in deepest Africa would soon strive to put a motor to his pirogue and to add more metal slaves to his household. The "mechanical slave" population of the world, measured in h.p., would come far to exceed its human population. God Progress took over, we had the "Roaring Twenties".... and then came the bolt from the blue.
From the beginning of the Industrial Revolution, the menace had been there that some day - and whether or not Global Glut was a material possibility - the faith of investors and consumers alike might be shaken and that the realization could dawn upon them all that maybe, just maybe, there was not enough money around, in the hands of prospective buyers, for all the manufactured goods that were produced to be sold at a profit.
They finally reached that conclusion in late October l929. Goods would not sell at a profit, and it was "profit" that justified the price tag which investors as a whole had put on their investment in machines. So, panicky investors figured that the machines that produced these goods were useless, that investments made in these machines were worthless, and they instantly wished away a huge part of the wealth of society; it was the Great Depression. Was it the Marxist "concentration of wealth" effect in action, or nothing more serious than a small problem of distribution compounded by a huge lack of credibility? One thing was sure: the golden age of full employment was over, and if there was a "glut" going on it was well disguised. Now, the question was whether the "superior forces" would still save the system.
They did, the superior forces this time turning out to be the shrewdness
of the human animal who has more flaws than just greed and the very dumbness
of machines. Philosophers and economists had been wrong to read the raw
figures, in the entrails of their primitive calculators, as meaning that
wealth would concentrate in the hands of the few until effective demand
would be nil, until unemployed workers would be up in arms and until all
cogs and wheels would stop. The final result of the meeting of Machine with
human ambition had been misunderstood by both teams of economists, left
and right, for it is precisely because they are dumb and inflexible
that the machines would save the day and be the greatest carrot since laws
and justice. Machine would be the great equalizer.
The bias for equality
Industrial society survived the Great Depression and all the ups and downs of effective demand, because the top-dogs were not half as stupid as Marx had thought. He, the Prophet, had warned - and his supporters were repeating daily in so many words - that wealth would concentrate in the hands of the few, that there would be no more effective demand, that capitalism as a system was doomed, and that the top-dogs would soon be invited to join back the labour force. It was explained very clearly, although not completely as we shall see later, so why should top-dogs be so stupid as to let it happen ?
They were not, and they did not, of course. Nobody in the Upper Kennels barked agreement very loudly, but the message was not lost; if faulty distribution of wealth was to topple the system, then faulty distribution would be corrected. The Marxist error was to believe that the rich crave more riches, that the wealthy are obfuscated by wealth, that top-dogs have dreams of bigger bones. A crude mistake, since money is nothing at all... to those who have money
A little money will buy what anybody needs; a little more will buy most anything that anybody could want; real wealth is practically useless except as a means of power. Power is the name of the game. Wealth, they say, is "having two pairs of pants and using one"; it is mainly having so much more money than one can use, together with the discretion to part with it, that the surplus may become a tool for positive reinforcement: power.
I read somewhere that to catch a monkey, you can put peanuts in a box with a hole big enough for the monkey to put his arm in with extended fingers, but too small for him to remove his arm after he has closed his fist over the peanuts. It will not let go and will remain prisoner of his greed. I do not know if it does work with monkeys, but it did not work with top-dogs. The moment they realized that the game could not go on if all the chips were at the same end of table, they agreed that the chips could be redistributed. Enough chips at least to keep all players at their seat and the game going, the old, intricate, delightful, and all-important game, the purpose of which is to know who is going to lead the pack. The system would not work without a little bit of money in everybody's pocket? Well, if it was so, then let the human flaw of ambition correct the human flaw of greed... and let there be Effective Demand! Keep the power and let the money go. If it was absolutely necessary, of course.
It was. In an industrial society, in which affluence rests on the production of goods, wealth is the ownership of the means of production and power is in the hands of those who control the means of production. To stay rich or become richer, one must invest in machines; either directly, as an entrepreneur, or indirectly as the man who puts his money in the bank... that loans the money to the entrepreneur... who will invest in machines. A perfectly sound investment, provided that the machine produces something that will sell.
If it does, there will be a profit and the investor will become richer. If it doesn't, however, it is not only that the investor is not going to make a profit: it is much worse than that! The investment's value being merely a factor of the profit that the production is expected to yield, if it is known that the product will not sell and that there are no profits to be expected, the machine itself will lose all value immediately. The investment will not be worth its initial value; it will be worth its price in scrap metal. Wealth will have turned to ashes.
And, what is true for one investor is true for all investors, true for top-dogs as a class, true for the whole wealth of society. Once wealth is invested in machines for production purpose, it is not only "captive", as we said before, it is at the total mercy of consumers. The value of the capital investment in machines becomes dependent on consumers' credibility as prospective buyers, a credibility which must then be maintained at all cost. The clients must have money.
Quite enough money, for people who try to "subsist" will usually favour food and shelter over manufactured goods (the utility of which appears more evident in that stage of affluence, unknown to Omar, between the "bread and wine" and the "book of verses"), while the wealth and power of the machine owners rest precisely on the sales of manufactured goods. The "level of subsistence" is not only uncomfortable for the workers, it is obnoxious to the machine-owners, who happen to be also the top-dogs in society and those who decide what policy is applied... So, Malthus' "level of subsistence" may go the way of the dodo bird. The target for worker's income moves up to become a "level of consumption " that society will try to attain, and which will represent the income that ought to be made available to consumers, if everything that is produced in the system is to be sold and sold at a profit.
If "level of consumption" income would merely mean the distribution of a global income, it would be quite simple. Our production system though, is geared to satisfy what investors have guessed would be the wants and wishes of a multitude of individual buyers. Ideally, each of these individual buyers should be provided with the unequal share of the total available income, no more and no less, that would let him buy exactly what modern soothsayers have said he would choose among the millions of different items that come out of our very diversified production system.
Too much for the poor, too much for the rich, and there is a discrepancy between investment and demand that will result in bankruptcies and unemployment. It is quite tricky, and perfect accuracy in the investors' estimation of what consumers will want - (years hence if proper investments are to be made!) - is a dream that will certainly not come through for a while, if it ever does. Society, however, may strive towards this "level of consumption" income, the ideal distribution that would optimize the profits of investors.
At first glance, this approach looks disgustingly biased in favour of investors and producers, but the truth is that the system is biased in favour of equality and that, when he agreed to invest in machines, Man, the ambitious and egotistic animal, painted himself in a corner out of which he would not escape until the system would produce, not only for top-dogs and the rich, but also for those who had less money..., for those who had little and, finally, for those who had none at all.
Equality. Before the Industrial Revolution, in Rome for instance, it was feasible to have a very unequal distribution of income. Since everything was hand-made, it was no trouble at all to invest all the productive resources - the work of slaves for instance - to satisfy the real needs of the rich, and than to change tack and go all out for whatever else became the object of their fantasies.
The productive capacity of the Roman Society could turn on a dime, and make it a priority to bring back ice cubes from the Alps, or to catch lampreys and other delicacies for the rich, while the poor would eat bread when it was available or go to bed on an empty stomach. In an industrial society, the picture is totally different.
The dumb machines are the source of wealth, and they are a source of wealth only because they can produce vast quantities of one given product; not this and then that product but, for each machine, a great many similar items of just one type of goods. These similar items are the wealth which is produced, and the wealth of the machine owners consists in the ownership of these items. Affluence and wealth thus depend on mass-production.
What do you do with many similar items? The owner of the machine - and the leisure class as a whole - have little taste or use for all these similar items. How many shirts can a rich man wear? How many cars can he own? How many, and how much of anything? The unavoidable corollary to a system of mass-production is mass-consumption. Mass-production must be sold to a large number of consumers, and each of them, of course, must have enough money to buy. Not enough money to buy bread while the rich eat lampreys, but enough money to buy more or less the same things as the rich....
Because it is the quintessence of industrial production to mass-produce, and that it is the diffusion of mass-production which brings more wealth to the wealthy and more power to the powerful, the implicit goal of our society becomes to mass-produce and mass-distribute everything possible. Therefore, it becomes essential for the system that money also be distributed more and more equally, so as to guarantee mass-consumption of everything by an ever increasing majority of consumers as soon as it can be mass-produced.
The system is optimized when both rich and poor have the same life-habits and the same buying-patterns, the leisure class being allowed to keep - for the sake of prestige and conspicuousness - longer tail-fins on basically the same cars, golden ribbons on bottles of basically the same booze, and to use French names for basically the same food. Machine is the great equalizer.
As industrial society developed, it was realized that when the Haves
would have bought all the durable goods, cars, radio sets and appliances
they could use, and all the gadgets and trinkets they could dream of, nothing
could prevent the wealth invested in the fabrication of these durable goods
from losing its value, if a larger demand was not to be born from the "poor",
or the "almost poor". So, the poor would have to be treated with
all the respect due to prospective buyers and promoted from their condition
of Have-nots to the loftier status of "Have-not-yet's".
The Common Sense Revolution
It takes no altruism, for a society based on industrial production, to move towards a just distribution of income; the system will simply not work without a little bit of money - enough money - in everybody's pocket. Anybody who has a vested interest in the system must cooperate as best he can towards the goal of equality, since everything that is produced must be sold and sold at a profit, lest workers go without work and investors go bankrupt.
It may be a sobering thought to realize that no Great Ruler, no Philosopher-about-human-nature will be able to claim credit for having brought that more justice and fairness to Mankind but, considering the frailty of human nature, it is a comforting thought that the great big Beast of a system will not have it any other way. Try as he may the Egotistical Animal, machines make sure that there will have to be more justice and equality in the world; the material needs of the needy will have to be satisfied, if those who have "everything" are to have a chance also to keep on looking for what more they really want: power.
Since the will and interests of top-dogs coincided with the wishes and wants of the poor, there was no reason why the Good Fairy Machine should not grant these wishes and make it all happen. No altruism was required from top-dogs, just plain common sense. The power could be kept, but the money would have to be shared with the labour force whose demand would have to be made effective.
The most obvious and traditional way to achieve the required equality without rocking the social boat was to keep the labour force at work, paying it whatever more was necessary to maintain level of consumption income. Although increasingly frequent gluts made that easier said than done, no efforts were spared to keep the labour force working its way to heaven. When the Great Depression proved that these efforts were not sufficient, though, the system did not collapse to fulfill Marxist prophecies; it simply moved one step closer towards equality. It took from the rich and gave to the poor.
It is not easy to have people part with their money, but the circumstances were critical enough - and such was the fear of some "global" glut - that it was possible for Roosevelt to convince an effective majority of the American people that it was "share or perish", and that the time had come for the long-delayed Christian gesture of finally giving something free to the poor and destitute. It helped a lot that this was also the only thing that would keep the system alive, and the labour force was offered a New Deal.
Much but still too little has been said about the New Deal, for it was a significant milestone in the history of Mankind. Often before, the leisure class had been known to pay ransom to the rabble in exchange for peace and quiet. In Rome, for instance, where the slave-owners and slaves constituted a close economic system that had no need, in time of peace, for the citizens soldiers turned workers, wheat distributions and circus games were gratuities that meant giving in to a not so covert blackmail. The situation was totally different in 20th century America, because the ruling class became conscious of the fact that its wealth was nothing more than an instrument of power, and that neither this wealth nor the social order could be maintained, unless the labour force could buy the goods, and thus show its adhesion to the system, acquiescence to its goal and obedience to its power structure. The interdependence that exists in an industrial society, between producers and consumers, was seen, recognized and accepted.
The fact that it was, and that a deal could be struck there and then without bloodshed, was certainly as momentous - and quite more surprising! - than the Great October Revolution in Russia. There is nothing unusual about our pecking-order problems, our social and economical differences and the relevant details of income distribution being settled in open combat: Mankind has quite a track record of violence when it comes to these matters. The New Deal - and the way a majority of the Americans both rich and poor reacted to it - on the other hand, was unusual and revolutionary since common sense prevailed over violence; Mankind was coming of age.
There was more to the New Deal than just giving money to the poor. All the details for income redistribution were worked out later to become Keynesian Economics, but the main concept was that, from then on, the Government would intervene and make sure that no excessive wealth would accrue to the rich and topple the precarious production/consumption balance.
The whole problem at the time was thought to be merely effective demand and the proper distribution of income. Needs could never be satisfied, they believed, no more that they had ever been since the beginning of history, and the demand for industrial goods, globally, could never be satiated. Given enough money, the citizens consumers would always rush to buy the factories' output, indefinitely.
In brief, this meant that Karl Marx had been absolutely right about this "concentration of wealth" business, but that with good planning and a common will to share - although admittedly under some duress - the problem could be solved without too much trouble. His soul could now rest in peace, and so could we, for there might be sectorial gluts, even "frictional" or "cyclical" unemployment problems, but things would soon improve and, meanwhile, the workers in transition would be provided for. If need be, industrial society would be able to give to its labour force a free ticket to heaven. We can refer to the whole concept as the "Santa Claus Approach". Santa Claus could take care of everything. There was no such a thing as "Global Glut", it was a bogeyman, a Ghost!
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