[lbo-talk] Barbara Ehrenreich Loses Her Mind

Eubulides paraconsistent at comcast.net
Sat Aug 25 07:09:41 PDT 2007


----- Original Message ----- From: "Doug Henwood" <dhenwood at panix.com>

No kidding. It's salutary to be reading Josephson's Robber Barons right now. Practically the whole history of the U.S. economy in the second half of the 19th century was of securities fraud, stock manipulation, and massive booms and busts. Big time speculators were ruined often. The economy spent a lot of time in depression. Yet the U.S. grew into a massive industrial power anyway.

Doug

============== [The working class has always bailed out the capitalists... From Veblen's "The Engineers and the Price System"]

In point of material welfare, all the civilized peoples have been drawn together by the state of the industrial arts into a single going concern. And for the due working of this inclusive going concern it is essential that that corps of technological specialists who by training, insight, and interest make up the general staff of industry must have a free hand in the disposal of its available resources, in materials, equipment, and man power, regardless of any national pretensions or any vested interests. Any degree of obstruction, diversion, or withholding of any of the available industrial forces, with a view to the special gain of any nation or any investor, unavoidably brings on a dislocation of the system; which involves a disproportionate lowering of its working efficiency and therefore a disproportionate loss to the whole, and therefore a net loss to all its parts.

And all the while the statesmen are at work to divert and obstruct the working forces of this industrial system, here and there, for the special advantage of one nation and another at the cost of the rest; and the captains of finance are working, at cross purposes and in collusion, to divert whatever they can to the special gain of one vested interest and another, at any cost to the rest. So it happens that the industrial system is deliberately handicapped with dissension, misdirection, and unemployment of material resources, equipment, and man power, at every turn where the statesmen or the captains of finance can touch its mechanism...

In the beginning, that is to say during the early growth of the machine industry, and particularly in that new growth of mechanical industries which arose directly out of the Industrial Revolution, there was no marked division between the industrial experts and the business managers. That was before the new industrial system had gone far on the road of progressive specialization and complexity, and before business had reached an exactingly large scale; so that even the business men of that time, who were without special training in technological matters, would still be able to exercise something of an intelligent oversight of the whole, and to understand something of what was required in the mechanical conduct of the work which they financed and from which they drew their income. Not unusually the designers of industrial processes and equipment would then still take care of the financial end, at the same time that they managed the shop. But from an early point in the development there set in a progressive differentiation, such as to divide those who designed and administered the industrial processes from those others who designed and managed the commercial transactions and took care of the financial end. So there also set in a corresponding division of powers between the business management and the technological experts. It became the work of the technologist to determine, on technological grounds, what could be done in the way of productive industry, and to contrive ways and means of doing it; but the business management always continued to decide, on commercial grounds, how much work should be done and what kind and quality of goods and services should be produced; and the decision of the business management has always continued to be final, and has always set the limit beyond which production must not go. With the continued growth of specialization the experts have necessarily had more and more to say in the affairs of industry; but always their findings as to what work is to be done and what ways and means are to be employed in production have had to wait on the findings of the business managers as to what will be expedient for the purpose of commercial gain. This division between business management and industrial management has continued to go forward, at a continually accelerated rate, because the special training and experience required for any passably efficient organization and direction of these industrial processes has continually grown more exacting, calling for special knowledge and abilities on the part of those who have this work to do and requiring their undivided interest and their undivided attention to the work in hand. But these specialists in technological knowledge, abilities, interest, and experience, who have increasingly come into the case in this way - inventors, designers, chemists, mineralogists, soil experts, crop specialists, production managers and engineers of many kinds and denominations - have continued to be employées of the captains of industry, that is to say, of the captains of finance, whose work it has been to commercialize the knowledge and abilities of the industrial experts and turn them to account for their own gain. It is perhaps unnecessary to add the axiomatic corollary that the captains have always turned the technologists and their knowledge to account in this way only so far as would serve their own commercial profit, not to the extent of their ability; or to the limit set by the material circumstances; or by the needs of the community. The result has been, uniformly and as a matter of course, that the production of goods and services has advisedly been stopped short of productive capacity, by curtailment of output and by derangement of the productive system. There are two main reasons for this, and both have operated together throughout the machine era to stop industrial production increasingly short of productive capacity, (a) The commercial need of maintaining a profitable price has led to an increasingly imperative curtailment of the output, as fast as the advance of the industrial arts has enhanced the productive capacity. And (b) The continued advance of the mechanical technology has called for an ever­increasing volume and diversity of special knowledge, and so has left the businesslike captains of finance continually farther in arrears, so that they have been less and less capable of comprehending what is required in the ordinary way of industrial equipment and personnel. They have therefore, in effect, maintained prices at a profitable level by curtailment of output rather than by lowering production­cost per unit of output, because they have not had such a working acquaintance with the technological facts in the case as would enable them to form a passably sound judgment of suitable ways and means for lowering production­cost; and at the same time, being shrewd business men, they have been unable to rely on the hired­man's­loyalty of technologists whom they do not understand. The result has been a somewhat distrustful blindfold choice of processes and personnel and a consequent enforced incompetence in the management of industry, a curtailment of output below the needs of the community, below the productive capacity of the industrial system, and below what an intelligent control of production would have made commercially profitable.

Through the earlier decades of the machine era these limitations imposed on the work of the experts by the demands of profitable business and by the technical ignorance of the business men, appears not to have been a heavy handicap, whether as a hindrance to the continued development of technological knowledge or as an obstacle to its ordinary use in industry. That was before the mechanical industry had gone far in scope, complexity, and specialization; and it was also before the continued work of the technologists had pushed the industrial system to so high a productive capacity that it is forever in danger of turning out a larger product than is required for a profitable business. But gradually, with the passage of time and the advance of the industrial arts to a wider scope and a larger scale, and to an increasing specialization and standardization of processes, the technological knowledge that makes up the state of the industrial arts has called for a higher degree of that training that makes industrial specialists; and at the same time any passably efficient management of industry has of necessity drawn on them and their special abilities to an ever­increasing extent. At the same time and by the same shift of circumstances, the captains of finance, driven by an increasingly close application to the affairs of business, have been going farther out of touch with the ordinary realities of productive industry; and, it is to be admitted, they have also continued increasingly to distrust the technological specialists, whom they do not understand, but whom they can also not get along without. The captains have per force continued to employ the technologists, to make money for them, but they have done so only reluctantly, tardily, sparingly, and with a shrewd circumspection; only because and so far as they have been persuaded that the use of these technologists was indispensable to the making of money.

One outcome of this persistent and pervasive tardiness and circumspection on the part of the captains has been an incredibly and increasingly uneconomical use of material resources, and an incredibly wasteful organization of equipment and manpower in those great industries where the technological advance has been most marked. In good part it was this discreditable pass, to which the leading industries had been brought by these one­eyed captains of industry, that brought the régime of the captains to an inglorious close, by shifting the initiative and discretion in this domain out of their hands into those of the investment bankers.



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