Is this the long-awaited general crisis that some socialists believe will kill capitalism…or is something else afoot?
While the financial side of this crisis, in terms of a long buildup of private and public debt, together with persistent US trade deficits, offshoring of production from more-developed to developing economies, and the acute crisis of home financing, is well-known, some deeper roots of the crisis should be unearthed and exposed, in order for us to properly understand and deal with the situation.
On the one hand, capitalism is known to be unstable by a wide variety of economists: that is, subject to cycles of growth, recession, and recovery (furthermore, economists of the Marxist tradition note that the process of capitalist development makes the capitalist world-economy increasingly unstable over time).
Various economists noted cycles of varying length: Simon Kuznets, for example, concentrated on ten-year inventory replacement cycles, while Nikolai Kondratiev observed, and attempted to explain, long waves of about fifty years duration: the most cogent explanation seems to have been offered by Ernest Mandel, who offered that the Kondratiev long wave is a special case of the Kuznets inventory cycle, in which the entire production process was revolutionized by such innovations as the factory system and steam power (the original Industrial Revolution of the late 18th Century), interchangeable parts and electrification (the cycle which characterized the 19th Century), internal combustion and the assembly line (begun by Henry Ford at the beginning of the 20th Century) and automated production (the cycle in which we now find ourselves).
This is only half the story of the long wave, however: with each wave comes massive unemployment, necessitating a reduction in the working day and working week, if capitalism is to continue to survive and develop.
As David R. Roedinger and Philip S. Foner (1989) document in Our Own Time: a history of American Labor and the Working Day, and confirmed in the other studies cited by Juliet B. Schor (1991) in The Overworked American: the Unexpected Decline of Leisure, the first resistance to long hours goes hand-in-hand with the Industrial Revolution in the last half of the 18th Century, with the birth of the Ten-Hours Movement: it originated outside the textile mills, as artisans struggled to keep up with the spreading factories.
By the 1850s, factory workers were winning a ten-hour limitation as well: shortly thereafter, the Eight-Hours movement began, cumulating, in the United States, with the passage of the National Labor Relations Act, toward the end of the Great Depression in 1937.
A very curious thing happened thereafter: the Six-Hours Movement, which began with the Great Depression in 1929, disappeared by 1939. What happened? Very simply put, the economic expansion which began with the Second World War just kept going into the Cold War: with it came the longest period of inflation in American history, as well as in the history of all industrialized economies: there was a widespread belief that Keynesian fiscal and economic policies had banished mass unemployment, and with it, the need for any further shortening of working hours: such shortening had always come about as a result of arduous political and economic class struggle, necessitated by massive unemployment and corresponding overwork of those gainfully employed.
The current economic crisis, however, underscores the need, according to Juliet Schor and others, including this author, a pressing need to adjust the length of the working day and week in order to achieve full employment:
This chart represents a combination of diminishing marginal returns over two ranges: from most productive to least productive worker, and from most to least productive hour per worker. The basic hypothesis is this: the diminishing marginal return on longer hours is greater than that from most to least productive worker. If that is the case, and in this initial state, represented by the first series, workers 1, 2, and 3 are employed 8 hours apiece, while worker 4 is unemployed (a 25% unemployment rate), if we change the length of the working day from 8 hours to 6, we have the result shown in the second series. - Notice that, according to our basic hypothesis, the equilibrium wage rate rises from 2 to 3, as our productivity rises, and, according to the theory of inverse rent presented here, is set at the least productive hour of the least productive worker: hence, the wage rate rises because of a rise in productivity, and the workers may well be able to maintain their income with reduced hours.
Hasta pronto, y a la victoria, siempre,
Mateo Owen.
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