[p2p-research] What's different about this economic downturn? -- the severe unemployment

[Michel Bauwens]

Hi Kevin,

I completely agree with the picture here, and I note that nowhere do you
explain it with a simplistic 'automation is destroying jobs forever'
argument, but rather your arguments are both structural and linked to the
existing logic of the current system. Whether the process of reconfiguration
will be as smooth though, time will tell,

Michel

On Tue, Sep 8, 2009 at 2:04 AM, Kevin Carson <
free.market.anticapitalist at gmail.com> wrote:

> On 9/7/09, Michel Bauwens <michelsub2004 at gmail.com> wrote:
>
> > I do not give credence though to the automation argument of paul .. this
> has
> > been a recurrent theme in every crisis, yet employment has been growing
> > steadily, with woman entering the workforce etc... The simple reason is:
> > human needs are evolving,and there is plenty of cultural work,
> environmental
> > work, relational work that is very hard to automate, and even should not
> be
> > automated ... (machine massage sucks, for example, because it doesn't
> give
> > you the human relation that is part and parcel of such a service). There
> is
> > enough 'work' for everybody, even given industrial automation,
>
> I think the answer, quantitatively, lies somewhere between your and
> Paul's arguments.  There is extreme overcapacity of manufacturing
> industries, coupled with what will be permanently weak demand without
> a new debt bubble to restart it.  The value of assets is declining as
> outlay costs for physical manufacturing plummet (the same thing that's
> already rendered so much investment capital superfluous and with no
> outlet in the information and culture industries, according to
> Rushkoff).
>
> Put the two together, and I think we will see something like what Alan
> Greenspan called "The Great Malaise" back in the '80s (see Harry
> Magdoff and Paul Sweezy's article "The Great Malaise").  Greenspan,
> anticipating "Helicopter Ben" Bernanke, speculated that the tools
> available to the Fed meant there would never be another Great
> Depression on the pattern of the '30s.  After the '29 crash, the Fed
> actually tightened money, which led to a snowballing series of
> deflationary collapses fueled by bankruptcies.  A stock market
> collapse on the 1929, or a banking collapse on the pattern of 1932,
> Greenspan, would be met with an emergency expansion of liquidity to
> prevent the kind of catastrophic deflationary spiral that happened in
> the last Depression.  And in fact, that's what actually happened after
> the stock market collapse of 1987 and the bank crisis of 2008.  Had
> there not been monetary countermeasures by the Fed after the October
> 1987 crash, and had the government followed the same do-nothing
> approach it did in 1929, it probably would have led to another Great
> Depression.  What we will have in lieu of depressions, Greenspan said,
> is the Great Malaise:  long periods of economic stagnation and
> overcapacity, with unemployment never dipping below 8 or 9 percent.
> He wrote that, BTW, before the series of "jobless recoveries" that
> began in the 1990s.  It's also noteworthy that the average rate of
> profit, decade by decade, has been falling in the U.S. since the
> 1960s.  The rate of profit in the '90s and the 00s was at a record
> historical low since the 1930s.
>
> I think the permanent overcapacity will result in just such a
> long-term stagnation, with employment figures never rebounding but
> with no sudden collapse either.  Rather, employment rates will
> gradually decline over the next decade or two, and much of the decline
> will be concealed as underemployment.  Meanwhile, increasingly
> underemployed workers will of necessity shift a growing portion of
> their value-creation outside the cash nexus and into direct production
> either for their own consumption or for the social economy in the
> informal sector.  Expect to see a steady increase in such things as
> home gardening, participation in LETS systems, and the "do it
> yourself" ethos.
>
> There will also be no significant increase in investment in the
> conventional corporate economy.  Investment will see the same pattern
> of long-term stagnation as employment.  The singularity in small-scale
> production technology, like Fab Labs with CNC machines and RepRap, is
> causing initial capital outlays for manufacturing to implode, with a
> factor 10 or more reduction in the need for all that superfluous
> investment capital.  So conventional mass-production industry will
> follow the old strategy for economic downturns, but on steroids:
> they'll let the old mass-production core stagnate and slowly decay,
> restricting investment to maintenance needs (if even that), while
> shifting more and more production to small shops in flexible
> manufacturing networks that require less and less capital to engage in
> production.
>
> In the end, almost the entire manufacturing economy will be in small
> shops with entry costs in the few thousands of $$ and virtually zero
> overhead.  Most value creation will be either through part-time
> employment in such industry or unmonetized production in the
> household/informal sector.  The old corporate centers of mass
> production will have evaporated, first leaving a sector of decaying
> industry with massive overcapacity, then a legal shell of trademarks
> and advertising, and then (when the small flexible manufacturing
> networks take the final step of simply disregarding trademark and
> patent rights) nothing at all--much like the way the Cheshire Cat
> disappeared all but his smile, and then the smile itself vanished.
>
> My hope is that this process will be fairly gradual and slow over a
> couple of decades, with no sudden dislocations or catastrophic
> collapse, and that despite the steady erosion of conventional economic
> metrics like employment and dollar output, when the trendlines finally
> bottom out most people will be living so comfortably they won't really
> care.
>
> I've got a review copy of Doctorow's Makers on the way, which deals
> with a lot  of these themes.  I can't wait to read it.
>
> --
> Kevin Carson
> Center for a Stateless Society http://c4ss.org
> Mutualist Blog:  Free Market Anti-Capitalism
> http://mutualist.blogspot.com
> Studies in Mutualist Political Economy
> http://www.mutualist.org/id47.html
> Organization Theory:  A Libertarian Perspective
> http://mutualist.blogspot.com/2005/12/studies-in-anarchist-theory-of.html
>
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