Efficiency

Rakesh Bhandari bhandari at phoenix.Princeton.EDU
Tue Aug 11 16:10:59 PDT 1998



> For example, a more labor intensive method of production may be preferable even if a
> more "efficient" less labor-intensive method is available, if the former decreases
> unemployment. Or a less "efficient" technology is preferable if it results in less

Hi Mat, The first thing that comes to mind here is that the problem could be solved substituting reduced labor time for unemployment so that there would be no need in this case to moderate rationalization; of course in order to rationalize the payment of benefits, employers would prefer the reduction of the workforce to the reduction of worktime. But technological rationalization makes possible reduced labor time.

At any rate, the Austro Marxist Otto Bauer argued that private capitalists underestimated the costs of rationalization for the very reason you give (did not account for the upkeep of the unemployed) and thus rationalized production at an excessive rate (in his book on Weimar Germany Detlev Peukert includes an important discussion of how astoundingly successful rationalization efforts were, especially in the mining industry); indeed it was the putative need to account for the costs of unemployment from rationalization that motivated Bauer to militate for state capitalist control over investment decisions.

Drewk will tell me if I am wrong or imprecise, but I think some marxists argue that advanced rationalized firms, though themselves immensely profitable, enforce a technological obsolescence or moral depreciation on backward firms; that is advanced firms outcompete their rivals and reduce their profit rates or, to put it another way, destroy the value which their unamortized capital once represented. This has

has the effect of making less value available overall for future investment, compounding the problem of unemployment. Unplanned rationalization in a private anarchic market thus tends not only to reduce employment demand relative to new investment but to destroy value elsewhere in the economy which would have been available for future investment and employment growth (Schumpeter struggles with this problem in monopolistic practices in Capitalism, Socialism and Democracy).

Unemployment is nothing but the flip side of rationalization in competitive conditions. The call for state control over private industry investment decisions or, to put it another way, the call for the hegemony of a new Marxist planning class follows from this accounting of the true social costs of rationalization (the upkeep of the unemployed, the destruction of value in rival firms), invisible to private capitalist firms in search of private competitive advantage.

Roman Rosdolsky has a very important, chapter critique of Bauer's thesis on the social costs of rationalization in his Making of Marx's Capital. I think Rosdolsky is persuasive that the real problem is that capitalism cannot rationalize enough due to its foundation in wage labor; capitalism obviously can't make good social use of the productivity gains it can achieve (over work of some, unemployment or pseudo employment of others, etc).

best, rakesh

ps in terms of the stimulating Chuck-Doyle-Jim thread (can't follow it all yet), Ashley Montagu has a wonderful chapter on the anthropological significance of Cassirer's work in the Philosophy of Ernst Cassirer, ed. Philip Schlipp.



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