The genius of Jacobin’s Mike Beggs

by Jehu

I made the mistake of reading this horrible tripe published on the website of Jacobin magazine, Jobs For All, by Mike Beggs, economics genius and defender of the concept of public deficit funded full employment. Don’t bother reading it. Really. It will only depress you. So far as I can tell, after an interminable election year the morons at Jacobin have concluded we need to capitalism harder if we ever want to empower the working class to end capitalism.

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According to Beggs, “In an age of precarity, a left-wing demand for full employment could be massively popular. But liberalism can’t deliver it” and hasn’t been able to deliver for four decades:

“Two generations have … come of age in a world where getting a job and building a career is a fierce competition against your peers. Even the winners are anxious. Comfortable spots are precarious; the losers have nothing to blame but their CV. In a buyer’s market it seems like the employers are bringing the goods; they create the jobs, we just work in them.”

This all is changing now as millions have now discovered they need a job to eat and that full employment is critical to changing the relations between the two big classes:

“It is in this climate that the demand for full employment is resurfacing with a vengeance. The importance of full employment is not just that, when people’s subsistence depends on selling their labor power, being unemployed sucks. If that were all, cutting a few percentage points off the unemployment rate would be a worthwhile reform but nothing to build a platform around. The bigger point is that the tightness of the labor market affects the whole working class.”

Although it is far from obvious that liberals, who have been dominating society for 250 years suddenly are dumber than Mike Beggs, it appears that, unlike Mike Beggs, they don’t know just how popular having a job would be in a society founded on wage slavery.

Mike’s one fucking genius to figure that shit out on his own with only a college education.

And since he is such a genius, the first job he has is to explain how the rest of us non-geniuses missed the popularity of being employed in a society founded on wage slavery. A challenge like this usually involves presentation of unique polling data that Mike uncovered showing most voters would rather have a job, getting a paycheck, than be unemployed without any income. Mike would also have to explain why and how liberals, who have ruled successfully for 250 years, and actually invented polling, managed to miss this important polling data.

Why just now is the demand for full employment resurfacing? What happened to the demand for jobs when the Keynesian revolution was first overthrown by a “pre-Keynesian” orthodoxy that all but extinguished “continuous prosperity with full employment”? For all those decades didn’t “people’s subsistence depends on selling their labor power”?

It sounds just a bit implausible that the working class somehow went almost fifty years without realizing they needed a job to eat — and that being unemployed sucks. That is the sort of thing you would sort of expect a worker to know day one when the company hands her a pink slip. Since our Jacobin genius can’t possibly make the argument that people just forgot they needed to eat for forty years, he has to come up with another explanation. That explanation relies on the bizarre theory that capitalists don’t like full employment because it allows workers to get all uppity:

“A tight labor market is a seller’s market. It reverses the normal order of things. Chris Maisano made the point with the memetic figure of “Old Economy Steven”: “Steven can tell his boss to shove it, walk out and get hired at the factory across the street . . . If he gets fired at the new job, that’s no big deal. He’ll just pick up a new one on the way home. If he wants a raise, he can just walk into the boss’s office and demand one . . . he doesn’t have to bow before anyone to make ends meet.” … A full employment economy raises the bargaining power and living standards of the working class in the short run and erodes the relative power of capital, opening up possibilities for radical social transformation.”

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Michael Kalecki first suggested this silly argument in 1943, when, owing to the decade-long Great Depression it had a ring of authenticity. As Kalecki noted then, economists realized that, even in a capitalist system, full employment could be ensured by government deficit spending. For this to happen, all the was necessary was for the government to create an “adequate plan to employ all existing labour power, and provided adequate supplies of necessary foreign raw-materials may be obtained in exchange for exports.”

Why then did Washington not do this? According to Kalecki, the resistance to employing government deficit spending to achieve full employment was political:

In the great depression in the 1930s, big business consistently opposed experiments for increasing employment by government spending in all countries, except Nazi Germany. This was to be clearly seen in the USA (opposition to the New Deal), in France (the Blum experiment), and in Germany before Hitler. The attitude is not easy to explain. Clearly, higher output and employment benefit not only workers but entrepreneurs as well, because the latter’s profits rise. And the policy of full employment outlined above does not encroach upon profits because it does not involve any additional taxation. The entrepreneurs in the slump are longing for a boom; why do they not gladly accept the synthetic boom which the government is able to offer them?

Kalecki identified three political reasons for this resistance: First, ‘industrial leaders’ resisted all unnecessary government intervention in the economy. Second, they feared the direction such government intervention might take once the government was in control of investment and consumption. Third, they were wary of the social and political changes in the relations between the two classes that could result from full employment.

Beggs argument focuses on the third of the three political reasons, which was stated by Kalecki this way:

We have considered the political reasons for the opposition to the policy of creating employment by government spending. But even if this opposition were overcome—as it may well be under the pressure of the masses—the maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, the ‘sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire; and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But ‘discipline in the factories’ and ‘political stability’ are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the ‘normal’ capitalist system.

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Of course, Kalecki’s paper was written well before the Soviet Union proved in practice that full employment was possible without any loss of political control over the working class. For six decades the central planning mechanism of the Soviet Union was able to achieve breakneck expansion of the national capital by employing the total labor power of the country. Never once in all of these years did the Soviet Union experience anything like the Kalecki-inspired scenario, where “Steven can tell his boss to shove it, walk out and get hired at the factory across the street”.

The reason was simple: Steven’s cousin, Stipan, who grew up in the USSR, knew the factory across the street had the same owner as his own, the Soviet state. In fact, Kalecki’s scenario was mistaken even in the United States. Steven’s choices were far less diverse than they appeared because, although each factory in his town may not have been owned by the same corporation, essentially the same small group of shareholders owned both corporations. Steven’s option to go to the factory across the street and improve his position in society was never anything more than an illusion produced by the more apparent than real fragmentation of the total social capital into competing units.

Moreover, even in 1943, when Kalecki wrote his nonsensical trash, employment in the United States was approaching zero as war production reached a feverish pitch. The full employment that Kalecki said was impossible owing to the resistance of the owners of capital proved to be not so impossible in times of war — as Keynes had presciently observed ten years earlier. But even this full employment required Washington to take the productive forces under its control, much as had already occurred in Nazi Germany and in the Soviet Union. Only by subjecting the whole of the national capital to a common plan could the whole of the labor power of society could be employed.

In none of the three cases I cited above did the absence of the “sack” permit working class to undermine the social position of the “boss”. Even if we concede that the Soviet Union, unlike Nazi Germany and the United States, was a form of socialism, it is obvious that both socialism and capitalism are capable of achieving full employment without the social position of the boss being undermined, or the self-assurance and class-consciousness of the working class growing.

In either case, the critical condition for achieving full employment isn’t the alleged mode of production, but subjecting the productive forces of society to a common plan.

The problem with geniuses like Mike Beggs is that they are enamored of well argued hypotheses — so enamored in fact they never think to subject these hypotheses to any historical verification. If our Jacobin genius had taken just a little time to examine the instances of full employment in the 20th century, it would quickly become obvious that none occurred without state control of the productive forces. Once we dump all the nonsense first developed by Kalecki and now being spread widely by the radical Keynesians at Monthly Review, we can try to make sense of this interesting argument by Jacobin’s in-house genius.

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According to our Jacobin genius, “Demanding full employment also doesn’t mean glorifying wage slavery: it’s perfectly compatible with converting technological advances into leisure time.” Full employment, says Beggs, is simply the point where the demand for labor power equals the supply of labor power.

This is an interesting argument, because it begs the question (pun intended): If the aim of a full employment program is simply to equalize the supply of labor with the demand for labor, why can’t the supply of labor power be equalized with the present demand for labor — creating a massive new block of leisure time? What is the justification for increasing demand for labor power first and only reducing the supply of labor later? If we are not intending to glorify wage slavery and we all agree a society with less labor is itself a good worth having, where is Mike Beggs demand for a reduction of labor hours right now on the basis of the present demand for labor in the market?

I assume Mike Beggs would answer with this objection: We can’t afford it right now, because the working class can’t afford a reduction of wage that would result from labor hours reduction today. “If supply falls because working people earn enough to be comfortable from fewer hours of work, that’s great”, but wages are far too low at present to make this a realistic option.

Again, this begs the question: Why are the working class not earning enough to reduce hours of labor to achieve full employment on the basis of the current demand for labor? Could it possibly be because a crapload of people are presently unemployed and unemployable on the basis of current demand for labor, have no income whatsoever, and drag down the wages of those who are employed?

Is it possible that the present oversupply of labor (relative to the current demand for labor) has the same impact as would be the case with oversupply of any other good or service — the price of the good or service falls? Unemployment is like that: it implies a whole lot of people who are unable to sell their labor power to purchase the means of subsistence; desperate folks will do anything, even sell their labor power at a deep discount for even the most dreadful purposes, to secure those means. If the reason people won’t work less is that they lack the means to eat, it is unclear to me how you fix this problem without reducing the supply of labor in the market.

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And here is the thing Mike Beggs won’t tell you because he thinks you don’t need to know it: creating new jobs takes money up front — a lot of money.

Mike Beggs doesn’t want to talk about this because he has no idea where the money is going to come from and no idea who is going to be paying to create all of those jobs. He simply presents us with two alternatives — raise the demand for labor power or lower the supply of labor power — without ever mentioning the cost of each of these alternative approaches.

Well, how much, exactly, does it cost to raise the demand for labor power through deficit spending or some other means, genius? One thing you will not get from our Jacobin genius, nor from the worthless document he references from Dean Baker and Jared Bernstein, is just how much the state has to spend to create one job. Although Beggs never mentions it creating jobs (increasing the demand for labor) is nothing like reducing hours (cutting the supply of labor). The first requires massive up front state spending, the second doesn’t.

Where is that money coming from? Baker and Bernstein throw around a lot of figures in the paper but never once do they provide even a conservative estimate for what it would cost to create jobs for (just a wild ass guess) 20-30 million people who would need jobs just to raise the labor force participation rate back to where it was in 2000 on the basis of the present 40 hours workweek. On the other hand, I can tell you exactly what it would cost the taxpayers to reduce hours until that same 20-30 million have jobs: Nothing, nada, zilch.

Not only would it cost nothing, you could, at least in theory, eliminate most of the government budget as you did it simply by reducing hours of labor until you absorb the unproductive military sector.

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Says Mike Beggs:

“Some on the Left have taken the view that full employment is a regressive goal because automation is steadily reducing capitalism’s need for workers. Better to redistribute to the surplus population through a universal basic income. But the idea that machines are about to supplant workers is a trope as old as capitalism itself. It always looks plausible because so many particular tasks are always in the process of being automated, and new wonders are always just around the corner. And yet new jobs have always come along. Maybe this time of driverless cars and machine learning really will be different, but it would be foolish to place our political bets on it, especially before it starts showing up in the productivity growth stats.”

In all my years studying this issue, this argument has always astounded me: If new jobs have always come along, why the fuck are we even having this discussion this issue? Just let the new jobs come along — problem solved. There is no justification for Mike Beggs, Dean Baker and Jared Bernstein to argue for spending trillions of dollars to create jobs if, as Beggs insists, new jobs always come along.

Who is the fucking editor over at @jacobinmag? How did you miss that Mike Beggs kneecapped his entire argument for full employment halfway through this piece? Are all of you over there as stupid as your genius, Mike Beggs?

Do you not realize this idiot wrote a piece for your journal arguing trillions of dollars be spent on a problem that fixes itself?

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