Employment or Profit: The Left must decide

Earlier this week, I had an exchange with @marissaluck7 about an article in the New York Times, In Tepid Wage Growth, a Potent Sign of a Still-Fragile Economy. The NYT piece is part of the debate over fascist state interest rate policy and, in particular, which is a better gauge for when interest rates should be raised: the official unemployment rate or the nominal wage level. Federal Reserve bank policy right now is said to be tied to the unemployment rate — which sits around 6.3% — while two economists, David G. Blanchflower and Adam S. Posen, make the argument Fed policy should be focused on changes in the nominal wage level.

For the Left, this is a phony debate: Workers cannot survive without jobs and the only rate of unemployment we should accept is zero. Hours of labor must be reduced until every worker who wants a job has one — no matter how much this hurts profits.

The alleged flaw in the Fed policy focus on the unemployment rate is that unemployment can fall for a number of reasons having nothing to do with an improving economy. Although many people may not realize this, unemployment itself is arbitrarily defined by Washington bureaucrats. While the unemployment rate is calculated on some measure of the size of the active labor force, the fascist state itself defines who is in this pool and who is not.

In 1994, for instance, the fascist state established the current definition for labor force participation against the backdrop of the first of a series of jobless recoveries. Since it was commonly recognized the fascist state has responsibility to maintain so-called “full employment”, how unemployment is to be defined became a political question. Those opposed to aggressive fascist state measures to maintain “full employment” argued the pre-1994 measure overstated the problem.

If one would like to make the issue politically less urgent, one can simply redefine a portion of the unemployed as “discouraged workers” or “no longer attached to the labor force”; this way tens of millions of actually unemployed persons can be made to go away without requiring the fascist state to create jobs for them. (It goes without saying that this has profoundly racist implications, since it condemns a huge proportion the black population as “no longer attached” to the labor force — conveniently leaving them to bear a wildly disproportionate burden of the capitalist crisis.)

However, according to John Williams’ reconstruction of the pre-1994 definition of unemployment, unemployment in the United States is now approaching 25%:

This places the US on par with some of the worst unemployment figures seen in Europe today — Spain, Portugal, Greece, for instance. Despite a falling official unemployment rate, unemployment is not only not contracting, but has been rising steadily since 2007. Moreover, unemployment reached its lowest level in 2001 and has been rising for more than a decade.

The economists mentioned in the NYT article essentially admit use of the post-1994 measure of unemployment as a guide for Fed policy has broken down with the sudden post-2008 appearance of massive population of long term unemployed persons — exactly the population the post-1994 gauge was deliberately designed to make go away. If you want to disguise the rate of unemployment, one of the easiest ways to do this is to simply say anyone unemployed for a year is no longer “attached to the labor force” This definition has now reached the point of absurdity as a guide for a credible “full employment” policy.

There is, however, another symptoms of “slack” in the labor market that might be more suitable: a robustly growing demand for labor would be expressed in a tendency for wages to rise. Thus some economists like, Blanchflower and Posen, argue this measure of labor demand is now more accurate when so many workers have been permanently locked out of the labor market.

The question, however, is not whether Blanchflower and Posen are right about this, but who cares? The aim of the redesigned gauge of unemployment was meant to disappear the unemployed not address their need for a job. Focusing on money wages may now be a more accurate measure of real “slack” in the labor market, but no one in Washington is the least bit fucking concerned about real slack in the labor market.

After 1981, Washington stopped trying to artificially generate “full employment” and does not want attention to be drawn to this fact. The attempt to maintain “full employment” throughout the 1970s depression brought the dollar to the brink of an uncontrolled devaluation. Even with an accurate gauge of unemployment, there is very little Washington can do to fix it that is consistent with profitability; Fed policy, therefore, is not determined in a vacuum simply by the level of unemployment, but by the highest level of employment consistent with a maximum rate of profit. This level of employment — one that is consistent with maximizing profits — is called “full employment”.

And when is “full employment” reached? When the wages of the working class begin to rise, of course. The focus on wages is merely an attempt to change the subject from the millions of workers who desperately need jobs to the problem of how technocrats can identify the point where the profit rate is being maximized by Fed policy.

Two things must be realized by the Left: First, Federal Reserve policy is concerned and can only be concerned with maximizing profit. Second, every worker is bereft of all means to life except her ability to sell her labor power.

The worker’s ability to find employment should not, under any circumstances, be tied to the ability of capital to make a profit. As long as you focus on fascist state policies of one sort or another, you are focused on maximizing profit; you are betraying millions who have no jobs and cannot survive other than on handouts from the fascists.

The Left have a decision to make: is it concerned to maximize profits for capital, or to maximize employment for the working class? These two things — profit and jobs — are now incompatible with each other.

We have to take our stand that every worker must have a job even if this results in a collapse of profits. The growing incompatibility of employment with profits means a choice has to be made by society.

And for the overwhelming majority of society that choice must be employment.