>Why isn't it a better policy for the long run--even for the medium run--to
>tax and spend to accelerate the long-run structural evolution of the
>economy (along with a healthy social-democratic program of redistribution)
>than trying to freeze the sectoral distribution of employment and
>production in the pattern it held in 1950? The pattern of income
>redistribution implicit in the Multifiber Agreement is... not progressive.
>
>Brad DeLong
So Prof DeLong is a "social democratic Schumpeterian", the psychological type that riddled Schumpeter. First, if in the export of industries (toys, steel, tvs) there is also a reversion to more labor intensive and eco destructive technique then in what precise sense are you saying that we are undergoing evolution, not regression. Or is evolution synomous with change?
Second, if the world remains in recession, then demand will not be sufficient for the skill intensive capital goods in which the US retains comparative advantage; capital good orders are the first to suffer in downturns or expected downturns, and the remaining US industries will thus not grow quickly enough to absorb the displaced workers--whether they are retrained or not.
In the context of a global recession brought on by a fall in the rate of profit, the most important counter-tendency is a rise in the rate of exploitation. You are trying to sell this as a structural evolution of the economy or progress or world wide economic integration. With dim profit expectations, capital good orders are not about to surge and displaced US workers trained and absorbed in "high tech" (for want of a better term); with dim profit expectations, the whole social order is organized around the achievement of a higher rate of exploitation--restoring profitability as Grossmann and Burns put it. In some cases, this will be achieved by moving industries abroad where wages will continue to be set by average productivity in those nations, not the marginal productivity of workers in the modern plants. In other cases, a higher rate of exploitation will be achieved in our own US through labor rationalisation, reduced overtime pay, cuts in safety regulation, speed ups and nastiness.
I know this all very depressing, Brad. I think you need to understand that that edifice, the conception of general or full employment equilibrium that has hitherto seemed to you as an ideal illuminator, a lamp that only needed to be refined a little further and made yet more precise and subtle with Comrade Debreu to illuminate ever more brilliantly all corners of the economic field; that lamp that you mistook for an unshakeable citadel is really only your refuge, the refuge of a Platonist.
Yours, Rakesh