The Limits of the Mixed Economy. Paul Mattick 1969



Apart from its irrational aspects, the mixed economy can exist a long as an increasing productivity yields a sufficient social product. Production must be large enough to maintain the necessary profit ability for the stagnating or relatively declining private capital, to secure existing living standards, and to allow for a growing quantity of non-profit production. Since the national debt can be refunded, it is actually only the interest on it which need be covered by either taxes or new borrowings. And since the rate of private investment decreases, more funds become available for government borrowings. In the long run, however, and with the continuous, faster growth of the “public” as against the “private” sector of the economy, profit-production must contract. To prevent this development, government-induced production must remain a limited part of total social production. If definite limits cannot be kept, the market system will eventually be superceded by a politically-controlled system of production as far removed from the mixed economy as the latter is from laissez-faire capitalism.

Once non-profit production becomes an institutionalized part of the economy, a vicious circle begins to operate. Government-induced production is begun because private capital accumulation is diminishing. Using this method diminishes private capital accumulation even more; so non-profit production is increased. The addition, in its turn, diminishes private capital expansion further; and so on. So long as the private sector dominates, there is no way of indulging in non-profit production except at the expense of private capital’s profit production. The limits of private capital production are thus, finally, the limits of government-induced production. To change this situation through farther going state interventions requires the existence of governments able and willing to destroy the social dominance of private capital and to proceed from government control to government ownership.

How much can a government tax and borrow? Obviously not the whole of the national product. Perhaps fifty per cent? This would come close to war-time conditions: for instance, during World War II the American government purchased roughly half of the national product. Under these conditions, however, the rate of investment was 2.9 per cent of gross national product – a rate below that of the depression years, with the sole exception of 1932, when the rate was 1.5 per cent. Moreover, to indefinitely continue a war economy will destroy the capitalist system. However, until the end of 1965, actual waste-production in the United States, i.e., the military budget, comprised roughly 10 per cent of gross national product, while total government expenses accounted for about one-fourth of gross national product. There was, and at this writing still is, considerable leeway before the conditions of the peacetime economy approach those of the wartime economy.

Although private capital can exist and even flourish when government spending is high relative to national product, there is, of course, an absolute ceiling to government spending, past which point the taxation which finances it will reduce rather than in crease social production. What this ceiling is, or when it will be reached, is not predictable. When the increase in government-induced production is enough to prevent private capital formation, its gain will be nullified by the loss of that production which private capital would have undertaken for expansion. A further in crease in government-induced production would then be possible Only at the expense of consumption in that term’s true sense. This process may be understood by analogy with the war economy: the increasing amount of waste production which occurs during war is made possible by restricting consumption and cutting down new Capital investments. Eventually, however, waste production is at the expense of consumption only; for the productive apparatus must be replaced and extended if waste production is to grow.

Although high taxes do not necessarily imply that private enterprise is being replaced by government production, some Keynesians recognize that “a high rate of taxation is closely related to socialism ... If a government collects fifty per cent of the profits of business, in taxes, and because of ‘loss effect,’ also carries fifty per cent of the losses, it is just as if the government owned fifty per cent of the business... The high tax rates can more properly be said to be socialism than to threaten it.”[1] It is for this reason that “socialistically-oriented” Keynesians do not expect that the Keynesian “remedies” will be fully applied by capitalistic governments, but look to the rise of socialist governments which combine “the Keynesian economic policies with the traditional socialist measures of public ownership and social reform.”[2]

As the limits of private profit production are also the limits of government-induced production, the latter will become less effective as it increases in scale. A flourishing mixed economy can thus only be considered a temporary state, or a transitory condition between. Laissez-faire and state capitalism. Whereas Keynes himself did not (in theory) shy away from the idea that the development of the mixed economy may lead to a completely (unmixed) state-controlled economy, his bourgeois disciples look upon the mixed economy as a permanent state of affairs. But their only answer to arising difficulties within the mixed economy is a request for more extensive state interventions, which must eventually rob the mixed economy of its “permanence.”

According to Marx, commodities must have both exchange- and use-value. In capitalism the production of use-values ceases when and wherever they cannot function as exchange-values. In the mixed economy, however, material production (use-value production) continues even though no exchange-value attaches to it. The increase of “use-values” in largely useless forms accompanies the relative decrease of use-values capable of serving as exchange-values. This is a modified reappearance of the discrepancy between material- and value-production elucidated by Marx. Under laissez-faire conditions, this discrepancy came to the fore in the crisis of overproduction; it led to prolonged depressions, which restored the capitalistically-necessary relationship between material- and value-production. But in the mixed economy there is no restoration of this “dynamic equilibrium” with its “proper” relationship between profitability and accumulation; instead, a growing part of social production is carried on outside the profit system and to that tent indicates the system’s decline.

The profitability of the existing and relatively stagnating capital can nonetheless be maintained through an accelerated increase in the productivity of labor, that is, through labor-displacing and capital innovations. The more government-induced production grows, the more urgent is the need for greater production to maintain the profitability of capital. Yet the steady increase production and productivity reproduces the need for further vast increases in productivity on an ever-narrowing base of private capital production. Even if capital-saving innovations check the growing discrepancy between that capital invested in means of production and that invested in labor-power, and in this manner curb the fall of the rate of profit, the consistent displacement of labor by labor-saving devices will enforce this tendential fall. Yet capitalism cannot do without the steady displacement of labor as the only effective means of coping with the intensified pressure on the rate of profit brought about by the increasing mass of non profitable production. While the increase of productivity through labor-displacements is a way out for capitalism, it is a way which ends in a cul-de-sac.

Any particular state of capitalism is transitory, even though it may prevail for a considerable length of time. It is only by considering the general laws of capitalist development that its given historical stages reveal their transient nature. The question is, then, whether the general laws of capitalist development can be set aside by technological and political means, which attend to both the profit needs of private capital and the “general social welfare” by the simple expedient of non-profit production for this is exactly what has happened. To see this process as a permanent and ever-widening social practice is to assume that capitalism can transform itself into another system in which – to speak in Marxian terms – is no longer exchange-value but use-value which rules.

According to Marx, definite social relations, or production relations, correspond to definite social productive forces released by them and bound to their existence. The capital-labor relationship determines the unfolding of technological development as the accumulation of capital. Only within the frame of capital forma ion do science and technology expand the capacities of social production by increasing the productivity of labor. Capital is congealed surplus-labor in the form of surplus-value; it feeds and expands on living labor. Insofar as technological development is a function of capital formation, the capital accumulated is the materialization of unpaid labor-time. The reduction of labor-time implies the reduction of unpaid labor-time as well. To be sure, unpaid labor-time can be increased at the expanse of paid labor time, even while total labor-time is decreased through the increase of productivity. As less labor-time is needed to produce the commodity equivalent of the workers’ income, more of the total labor-time can take on the form of products appropriated by the capitalists. Yet the continuous reduction of labor-time through the displacement of laborers must eventually reduce the total unpaid labor-time, and where there is no labor, there can be no surplus-labor – and, consequently, no accumulation of capital.

Whatever the extent of automation and computerization, means of production neither operate nor reproduce themselves. Their owners, the capitalists, on the improbable assumption that they themselves engaged in production would thereby cease to be capitalists, that is, buyers of labor-power for purposes of exploitation. Assuming what is more probable, that they succeed in continuously reducing the number of productive workers, they would also reduce the unpaid labor-time relative to the mass of the accumulated capital. It will then become increasingly more difficult to continue the accumulation process, which is only the accumulation of unpaid labor-time transformed into profit-yielding new means of production.

Capital-labor relations are value relations, which is to say that means of production are not that only but are also capital values, and that labor-power is not that only but is the source of value and surplus-value. To consummate the capitalist production process surplus-value must be sufficient to ensure its enlarged reproduction. As value-relations are labor-time relations, it should be clear that a reduction of labor-time which would disturb the necessary relationship between surplus-value and capital is not compatible with capitalist production. However, while the reduction of social labor time becomes a detriment to capital production, the reduction of labor-costs remains a necessary requirement for each single capitalist enterprise or corporation. Their profitability increases as their labor-costs diminish. It is for this reason that the displacement of labor by capital cannot be halted within the competitive capital formation process, even though it undermines the very structure of capitalist society.

All social progress is based on the ability to produce more with less labor. Capitalism is no exception. Technological development always displaces labor, which is only another way to saying the production increases with the increasing productivity of labor. A rapid rate of capital formation, however, can increase the absolute number of workers while decreasing this number relative to the growing capital. It is then only under conditions of relative capital stagnation that advancing technology diminishes the number of workers absolutely.

Although Marx experienced unemployment as a social fact, he held that full employment was as possible as unemployment. The level of employment depended on the rate of capital formation. Nonetheless, the displacement of human labor by the machine was what industrialization was all about. And this same process, according to Marx, turned the productivity of labor into the “productivity of capital.” Although the means of production represent a definite sum of values and can be capitalistically productive only through the enlargement of this sum of values, it is the quantity and quality of the means of production in their physical form, rather than labor-time, which expresses the growing productive powers of social labor. But as long as exchange-value is the goal of production, labor-time quantities remain the source and measure of capitalist wealth. Although the “very development of the modern means of production indicates to what a large degree the general knowledge of society has become a direct productive power, which constitutes the life of society and determines its transformation, [3] “capitalism’s particular contribution to this state of affairs consists of no more than in its use of all the media of the arts and sciences to increase the surplus-labor, because its wealth, in value form, is nothing but the appropriation of surplus-labor time.”[4]

Were it not for the capitalist relations of production, the growth of social wealth would by a continuous reduction of direct labor time, and the wealth of society would be “measured not by labor time but by free time. According to Marx, “labor-time ceases to be the measure of wealth, and exchange-value ceases to be the measure of use-value, as soon as labor in its direct form ceases to be the source of wealth.”[5] Although in an antagonistic form, the diminution of labor time as the source and measure of value already takes place under capitalistic conditions. But here it involves the reduction of surplus-value relative to the growing mass of capital. And here it is the productivity of labor, not the “productivity of capital,” which accounts for the capitalistic profit. To be sure, profit presupposes the existence of capital. But profits can only be the difference between paid and unpaid labor. If they should in some mysterious fashion derive from the “productivity of capital,” independently of the labor which first sets this capital in motion, they would not be profits in the capitalistic sense, for they would not be the result of labor exploitation. It would still be true that capital represents transformed past surplus-labor, but it would no longer be determined by living labor. Actually, of course, capital presupposes wage-labor just as wage-labor presupposes capital; they are the two necessary sides of capitalistic production relations. Where there is no capital involved in production, there is no capitalist society; and where capital is no longer dependent on wage-labor, capitalism has ceased to exist.

A vast increase in productivity makes it possible for private and government production to grow side by side. But the resulting prosperity is deceptive; for the credit mechanism which fosters in creased production is based on future profits, which may or may not materialize. This pseudo-prosperity thus requires a continuous and accelerating increase in productivity, and the need only be comes greater as “prosperity” continues. Less-productive means of production must continually be replaced by more-productive ones, and a portion of realizable profits must be used as additional capital for this purpose.

In view of the present trend of automation, it is more generally discerned that the growing discrepancy between labor and capital tends toward a point of development at which further progressive capital expansion through labor exploitation would be impossible. This growing conviction implies an unconscious acceptance of Marx’s theory of accumulation, if only because the idea is dressed in non-Marxian terms. Instead of deducing the eventual collapse of capitalism from the growing “productivity of labor,” which is only another expression for the accumulation of capital, the inverted “Marxists” deduce it from the growing “productivity of capital” and its tendency to displace labor. In either case, the system of capital production through labor exploitation comes to an end. Since the growing productivity of labor implies the growing productivity of capital, an end of capitalism by way of automation equates with the end of capitalism for lack of surplus-value.

Whatever the theory, however, the end of capitalism is not as yet in sight. Surplus-value is still produced in sufficient measure to secure the profitability of capital within the conditions of a declining rate of capital expansion; and automation, considered in relation to world-capitalism, is as yet no more than an exotic exception to a rather stagnant technology. In Marx’s view, technological development is limited by the conditions of capital production; the full realization of its potentialities is impossible without the destruction of capitalist production relations. At a certain point in its development capital becomes a hindrance to a further unfolding of the social forces of production and changes from a progressive to a regressive system of production. The revolutionary working class is now alone able to overthrow the barrier to further development. By ending the capitalist system it clears the way for the social and technological advancement which can eventually abolish unwanted and disagreeable human labor. In Marx’s view, capitalism’s exploitative class relations made it an economically limited system and an obstacle to technological development.

On this last issue, too, Marx appears to have been wrong because of the so-called second industrial revolution, characterized by atomic power and automation. Strangely enough, however, this new triumph over Marx’s gloomy prognostications is rarely celebrated as a solution to current social problems. Rather it is seen as the harbinger of new and perhaps insoluble difficulties. Suspicion that there is a possible incomparability between the new technology and the prevailing socio-economic relations runs through the growing literature on automation. While most of the difficulties of the capitalist system have see been overcome, the problem of permanent and large-scale unemployment appears to be the last and most important of all capitalistic contradictions.

There is no dearth of data on automation. Its changing statistics appear everywhere, in the daily press as well as in scientific publications. These statistics simply indicate increasing productivity, production, and profitability through the reduction of the labor force. The impact of automation differs with different industries. It is particularly noticeable in textiles, coal mining, oil, steel, chemicals, railroads, and automobiles, but it affects all large-scale production in increasing measure as well as commercial and organizational activities and to some extent even agriculture. It does away with “white collar” and “blue collar” jobs; presently more of the latter than of the former, though this may change in time.

However, automation is still in its infancy and the existing number of unemployed may not be traceable to the labor displacements it causes. Clearly, workers lose their jobs due to automation; but their inability to find other employment may be the result of at declining rate of capital formation. After all, there were sixteen million unemployed in America during the Great Depression. Displacement of labor by machinery has been continuous and has not prevented a steady growth of the work force. It is feared, however, that automation is so different in degree from previous technological development as to amount to a difference in kind. The social problem it poses is thought to be unique and insoluble by analogy with past conditions.

Evaluating the impact of automation upon the American economy, Donald N. Michael, for example, attempts a prognosis of its possible social consequences within the next two decades.[6] His study is based on a number of assumptions, all of which imply that trends will remain largely what they are now and what they have been during the last ten years. Michael employs the term “cybernation” to account simultaneously for “automation” and “computers,” which usually go together in the application of cybernetics to production processes. We will leave aside all the wondrous existing and potential capabilities of cybernation, and will merely indicate what Michael, among others, considers to be the advantages of cybernation. The advantages for both business firms and governments are plainly to “boost output and cut costs,” leading to success in private and national competition. The other advantages Michael mentions, such as “reducing the magnitude of management’s human relations tasks; greater rationalization of managerial activities; freeing management from petty distractions; greater freedom in locating facilities,” and so forth, are all aspects of, or different expressions for the cheapening of production. Expressed in Michael’s genteel fashion: “If the criteria are understanding, and profits, there are strong reasons why government and business should want to, and indeed would have to, expand cybernation as rapidly as they can.” [7]

The advantages of cybernation will, however, be offset by the problem of unemployment, which will eventually affect all occupations – the unskilled more than the skilled, consequently Negro workers more than white workers. The present relocation from production to service industries will come to an end. “If people cost more than machines – either in money or because of the managerial effort involved – there will be strong incentive to replace them in one way or another in most service activities where they perform routine, predefined tasks.” [8] As technology allows fewer people to do more work, many of the intermediary middle-class management jobs will also disappear.

There are, of course, answers to the projected dilemma, such as the retraining and upgrading of labor and the shortening of working hours for the same pay, or even price reductions leading to a larger consumer demand. But because all workers are affected by cybernation, Michael feels that such proposals will not solve the problem. His own suggestion is a large public works program, for “although the proportion of workers needed for any particular task will be reduced through the use of cybernation, the total number of tasks that need to be done could equal or exceed the absolute number of people available to do them.” [9] He thinks, however, that such a policy would run counter to the capitalist spirit. It may, therefore, be self-defeating for free enterprise to encourage cybernation.

While the consequences of cybernation may endanger the free enterprise system, the very continuance of this system compels in creased automation. Michael sees the dilemma: the outlook is unfavorable with cybernation it is just as bad without it.

Greater government control and national planning are, in his view, only partial solutions. Ideology and goals must change, and the required centralization of authority “would seem to imply a governing elite and a popular acceptance of such an elite.” If newly evolving behavioral standards do not complement the cybernated future, feelings of frustration and pointlessness “may well evoke a war of desperation – ostensibly against some external enemy but, in fact, a war to make the world safe for human beings by destroying most of society’s sophisticated technological base.”[10] Obviously, however, it would more probably be a war in which the sophisticated technology would serve to destroy most of mankind.

However, both technological development and capital formation correspond to underlying social relationships and may be altered by changing these relationships. While automation enhances capital development it is also limited by the existing capital-labor relations. This is a familiar phenomenon: monopolization is an instrument of both capital expansion and capital contraction; the drive for profits reduces capital’s profitability. Any prognosis about the cybernation process must, first of all, raise the question as to how far this process can be carried by the existing society. What is feasible technically may not be so economically; and what may be feasible economically may not be so socially.

Whereas Michael approaches automation from the point of view of technology, economists usually approach it from the economic point of view. S. Kuznets, for instance, thinks it necessary to distinguish between potential and actual technological change. Although the “concept of potential technological change is difficult to define precisely, let alone measure,” he writes, “it is extremely useful, for it points to the fact that of the large flow of technological change offered, as it were, to society, only a part is embodied in the productive structure, mainly because of limitations of capital and of entrepreneurial ability.”[11] Kuznets thinks, however, that the next three decades will witness an acceleration of the rate of technological change, mainly because of a quickening in the pace of scientific research. It seems certain, he says, “that the development of nonmilitary applications of nuclear physics, of electronics in automation and communications will have an immense impact upon the production system.”[12] All this will give momentum to the demand for capital funds and Kuznets thinks it not unlikely that the new technology – at any rate initially – will require an amount of capital that can be brought forth only at the expense the national product. In other words, installation of the new technology may require a larger part of total production for new material capital equipment and leave a correspondingly smaller part for immediate utilization and consumption.

So it has always been in the past under conditions of capital formation. And even though the material requirements of capital formation may be more formidable for the second industrial revolution than they were for the first, they may be nevertheless attainable. The more so as the new technology may, eventually, demand a smaller amount of capital to yield a greater product than has been true for the “conventional” technology. But new capital in vestments must be financed. The question is then “whether the savings patterns in the private sector [of the economy] suggests saving proportions that will match the prospective demand for capital.” The concern is with the private sector alone, for “the government sector is not likely to have net savings in the long term prospect. Indeed, it may be forced to draw upon the savings of the private sector.”[13] Because of an actual decline of the private sector’s savings propensity, Kuznets thinks that the previously experienced “pressure of the demand for goods upon the supply of savings will persist.” He suggests, cautiously, that “during the 1948-1957 decade a combination of high-level demand for consumers’ goods and continued high level of government drafts for current consumption might have kept private savings and capital formation below the proportion required to increase productivity sufficiently to offset inflationary pressures.” Against this background, and in view of an expected growth of the non-productive population, rising government expenditures, and continued high levels of consumption, Kuznets fears that the supply of voluntary savings may not he adequate to the demand. For this reason inflation pressures[14] may well continue, with the result that part of the savings needed for capital formation government consumption will be extracted through this particular mechanism.”[15] While a lack of investment capital may hamper cybernation, the same lack is also its raison d’etre. The expected rise of profitability is supposed to lead to increases in production and employment large enough to compensate for the labor displaced by technological improvements. This is the idea behind the argument that all technological advancement, sooner or later, creates new and additional work opportunities. It is usually illustrated with reference to definite enterprises and particular situations. For example, R. Calder points out that “in France the state-controlled Renault Company was able to undertake, after the war, the most intensive automation of any automobile factory in Europe,” in consequence of which “three times as many workers are employed now as there were before the introduction of automation.” Calder thinks that this is “a good example of the repercussive effects of modern technology.”[16]

For the Renault Company this is no doubt true, at any rate for the time being. And it may well be true for many or even all enterprises, in the expanding West European economy which has been experiencing the same process of growth that – for a variety of reasons – occurred in America earlier. While the rate of capital formation in the last ten years was higher in Western Europe than in America, there is no reason to assume that this will remain so. Obviously, the effects of automation will be different under conditions of rapid capital expansion than under conditions of capital stagnation. The present American situation may, therefore, be just as much “an example of the repercussive effects of modern technology” as Calder’s experience with the Renault Company, or even with the whole of Western Europe.

From the viewpoint of a single capital, an increase of productivity by way of automation is no doubt a good thing, if it enables this capital to enlarge its markets by eliminating less-efficient competitors. The individual capital is not aware, and could not beware, of the loss of profit through the loss of social surplus-labor; its only considerations are its production costs and its return on sales. No matter what the social consequences of automation, private capital will always try to increase its productivity to gain extra profits or just to maintain a given profitability. A declining rate of savings will not stop the cybernation process in corporations with sufficient reserves to finance their technological innovations. Because automation speeds up obsolescence, smaller businesses, unable to introduce automatic machinery quickly enough, will fall by the wayside. Automation thus accentuates the concentration process inherent in capital competition.

Capital concentration demands, and allows for, further extensions of automation. Short of an ever-increasing rate of capital expansion, unemployment is bound to grow. Such an accelerated rate of expansion is highly improbable; so that the increase of profitability which automation brings may well be nullified by the simultaneous increase in government expenditures needed to cope with cybernation’s social consequences. To be sure, automation would also cheapen the products falling to the government and to that extent ease the burden of private capital. Yet this may be offset by an extension of government demands on the private sector of the economy – which, by itself, would hasten rather than hinder the automation process.

None of this will happen if the social conditions of the near future discourage both the growth of automation and that of the “public sector” of the economy – in other words, if society, by and large, “freezes” existing social conditions. But this requires a centralized control over the whole of the economy which the government does not possess. If it had this control, it would no longer preside over a free-enterprise economy. Aside from the internal difficulties of a stationary state, the nation’s external relations preclude the maintenance of the economic status quo. For automation, it is said, must overcome foreign wage advantages by enhancing domestic productivity. And capitalist nations must compete not only in the economic sphere but also in the military, and weapons production already depends to a very large degree on automation technology.

However, many enterprises that would like to may not be able to do so without ceasing to exist. Subsidies may be extended to these businesses such as have been granted to sections of agriculture. This is not less likely than, or different in principle from, sustaining the unemployed out of current production. In this way, part of private enterprise (in its technologically backward form) may become a part of the “public sector” of the economy, as has long been true for sections of big business. Unless the latter’s privileges, such as government contracts, tax exemptions, and extraordinary depreciation charges are cut back, the shrinking profitable sector of the economy will have to give up a still larger share of its production to the public sector. This course would reach its “logical” end in the destruction of the profitability of private enterprise by the demands of government.

The actual course of events, however, determined as it is by the interaction of diverse and contrary interests, is rarely, if ever, “logical.” It may be both logically and economically possible to have a highly cybernated industry with, say, half of the working population unemployed; yet in practice this is quite improbable. Social movements would arise to change this situation. Similarly, the accentuation of capital concentration by way of automation would most likely bring political forces into play seeking to arrest this development. When theory conflicts with real necessities, fetishistic attitudes toward the production system and its technology lose their sway, and people will try to change the social structure rather than accommodate themselves to it indefinitely. In the end, the question of the degree of cybernation will be resolved by political actions.

Even on purely economic grounds, cybernation finds its limits where it begins to contradict the profitability of capital. Its full development would be a very long process at any rate, as it requires the displacement of most existing production equipment. To throw out the mass of capital based on the old technology is to throw out the congealed labor of generations. To create the capital of a radically new technology also requires the work of generations. Cybernation can only be applied in piecemeal fashion regardless of the nature of society. But in capitalism it is doubly hindered because it can be applied only insofar as it safeguards and promotes the growth of the existing capital.

Taking past developments into consideration and judging present conditions realistically, the future of cybernation seems not at all promising except, perhaps, for selected industries, particularly those engaged in the production of armaments. Indeed, it has been said that “these miraculous machines in which cybernetics could develop all its resources seem to be usable only as engines of death.”[17]

One method of dealing with the increased productivity produced by cybernation would be to cut the number of hours of work and provide people with more leisure time. Almost uniformly, however, this method is questioned or totally rejected, not because it contradicts the capitalist mechanism, but because society has “failed to develop meaningful leisure.” Boredom is considered a very serious and even dangerous problem because “it still remains true that the happy man is very often the one who has insufficient time to worry about whether hr happy or not.”[18] All sorts of crimes and delinquencies are attributed to increased leisure, which, then, must be “organized” by competent authorities before it can be granted. This silly and insincere talk can be dismissed at once. The leisure class has always found the leisure of the lower classes obnoxious and dangerous to its own leisure. Looking at the wonders of the first industrial revolution, Delacroix mused about the “poor abused people, [who] will not find happiness in the disappearance of labor. Look at these idlers condemned to drag the burden of their days and not knowing what to do with their time, which the machines cut into still further.[19] Yet leisure is precisely what the majority of people need most and have the least of – leisure without wants, that is; for the leisure of the starving is not rest, but a relentless activity aimed at staying alive. Without greater leisure there be no betterment of the human condition.

This whole question cannot arise under prevailing conditions. Aided by special circumstances, one or another laboring group may succeed in cutting down its working time without diminishing its income. But this is an exception to the rule. For to cut down working hours generally and maintain the wages bill would defeat the capitalist’s purpose in introducing technological change and make automation a senseless affair. The point of automation is precisely to reduce wage costs relative to overall costs of the “factors of production” and to recoup the higher capital costs by greater productivity. It can be argued, of course, that there is no longer a need for extensive capital formation and that mere replacement and modernization of the existing productive apparatus suffices to satisfy all social needs. Any increase in productivity could then immediately be translated into higher wages, shorter hours or both. While this may be true, it is not possible within the capitalist system, and those who seriously propose this solution must be prepared to change the system.

The capitalist “solution” to the problem of automation is to be found not in higher wages and a shorter work week for the laboring population but in higher profitability and a larger capital. Each entrepreneur, or corporation, employs the minimum of labor relative to capital investment; each, of course, tries to increase this minimum by correspondingly larger investments. They are interested – economically speaking – not in a larger or smaller labor force but in that labor force which proves most profitable. They are not and cannot be concerned with the national labor force; the unemployed are the government’s responsibility, although it can sustain them only with funds extracted from the whole of society.

Because production in capitalist society is achieved by numerous independently operating and competing enterprises, each following the dictates of profitability, there is no way for the total labor force to share the available work. There will be overwork for some, unemployment for others. The employers will not cut working hours without cutting wages; and the more fortunate workers will insist on working enough hours to support their customary style of life. In place of shorter hours, there will be growing unemployment. Capitalism must attend to its victims well enough to secure their quiescence; but the system will bear this loss only if the increasing productivity of labor compensates for it. When increasing productivity itself gives rise to large-scale and permanent unemployment, it will no longer benefit capitalism: the profits it creates will be lost again by the cost of sustaining the non-productive population. Capital will have ceased to function as capital.

This is the general tendency of rapid technological development under conditions of capital production. Actually, because such a development cannot be fitted into the capitalist relations of production, it will remain a mere tendency. It will constantly be countermanded by the social reactions it releases. Nonetheless, the tendency assures the continuation of social crisis conditions. Capital production in the mixed economy thus faces a double dilemma: its future is challenged equally by the rapid growth of its public sector and by its labor-displacing technology. The more automation there is, the greater is the need to deal with its social consequences by an increase of public expenditures. The more the government spends the more urgent becomes the need for more automation in 1964 the American Congress set up a National Commission on Technology, Automation, and Economic Progress to deal with the increasing rate of technical change and its consequences. The Commission found the problem still “manageable,” if technological change was accompanied “by vigorous fiscal policies” fostering economic growth and government employment for all those unable to find jobs.[20] Yet – such “vigorous fiscal policies” are just as detrimental to the private-enterprise system as are the social consequences of automation under conditions of relative capital stagnation.

1. A. P. Lerner, Everybody’s Business, p. 125.

2. J. Strachey, Contemporary Capitalism, p. 294.

3. Grundrisse p. 594.

4. Ibid., p. 595.

5. Ibid., p. 593.

6. D. N. Michael, Cybernation: The Silent Conquest, Santa Barbara, 1962.

7. Ibid., p. 13.

8. Ibid p. 16.

9. Ibid., p. 26.

10. Ibid., p. 46.

11. S. Kuznets, Capital in the American Economy, p. 442.

12. Ibid., p. 443.

13. Ibid., p. 453.

14. Ibid., p. 457.

15. Ibid., p. 460.

16. R. Calder, Europe’s Needs and Resources, p. 789.

17. P. de Latie, Thinking by Machine, Boston, 1957, p. 284.

18. R. Theobald, The Challenge of Abundance, New York, 1962, p. 86

19. L. Delacroix, The Journal of Eugene Delacroix, New York, 1961, p. 512.

20. The New York Times, January 24, 1966.