technological unemployment

Rakesh Bhandari bhandari at phoenix.Princeton.EDU
Thu Oct 22 21:34:43 PDT 1998

This post includes 1. Harald Hagemann's summary of Pasinetti's theory of technological unemployment

2. Jagdish Bhagwati's analysis of why globalization in the form of heightened North-North competition (not in the form of greater third world imports) has exacerbated the inherent problem of technological unemployment, especially for unskilled labor, and accentuated wage inequality.

3. The reiteration of my argument that the bemoaned immobility of labor, even on the dubious assumption of the possibility of full employment, is due to capital having sunk the proletariat in a listless habitus as a result of the way it has organized work tasks and education to control and to make controllable the working class. I like the way Mike Cohen made the point in a post eons ago.

1. Pasinetti

I shall not belabor the point that Pasinetti's basic reasons for why a growing economy cannot sustain full employment equilibrium is fully anticipated by Grossmann in his Marx, The Classical Economists and the Problem of Dynamics (trans from the German ed. Paul Mattick in Capital and Class, 1977).

Here Grossmann analyzed the accumulation process from the technical side, as Pasinetti does, and revealed the impossibility of full employment equilibrium in a dynamic process. In 1941, he had already pointed to the difficulties that differential rates of productivity growth in the varying sectors and saturation of demand for the output of certain sectors would create for the achievement and maintainence of full employment. That the argument can be made without Pasinetti's use of linear algebra is revealed by Hagemann's summary.

Hagemann underlines the specific problems in shifting investment rates and labor itself to sustain full employment and the necessity for government intervention. He doesn't develop his reasons for skepticism that labor will be sufficiently mobile but it seems to be implicit in his analysis.

Oh, I am too lazy to type it out. I do highly recommend Hagemann's summary of the developments in bourgeois economics of the theory of technological unemployment; it's in The Political Economy of Full Employment, ed. Philip Arestis and Mike Marshall (1995). It's a very useful supplement to Alexander Gourvitch's Survey of Economic Theory on Technological Change and Employment; you'll get a whiff of the original machinery debate, Adolf Lowe, John Hicks and Luigi Pasinetti and probably all a non economist needs to know (at least I hope).

2. Bhagwati's point, which I am too lazy to type out, is that given all the North-North competition, no country can maintain its comparative advantage in any industry for too long. Its industrial profile ends up having a kaleidoscopic character and labor must be able to move continuously from one industry to another; the evidence suggests a heightened turn over of labor. Only skilled and smart people can turnover so quickly; he literally castigates the unemployed others as couch potatoes and leaves his explanation for wage inequality at that. Bhagwati provides this alternative theory as a way of underlining that it's not North South globalization that is messing with first world labor but OECD rivalry. So there is no need for import barriers on cheap goods from the third world or, heaven's forbid, labor and environmental regulations in trade agreements. But don't kid yourself--he's a minor servant of the bourgeoisie. His brother was a justice of the Indian Supreme Court.

3. I am too lazy to make argument three.

best, rakesh

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