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Monday, February 23, 2015

Unemployment: A Report Card for Capitalism

Marx suggests in his articles for the Neue Rheinische Zeitung collected as Class Struggles in France, 1848-1850 that the first order of business for the working class is to secure jobs, “but behind the right to work stands the power over capital; behind the power over capital, the appropriation of the means of production, their subjection to the associated working class and, therefore, the abolition of wage labour, of capital and of their mutual relations." It is through the struggle for a place in the capitalist system-- however lowly-- that the means for survival are won and the conditions are met for further challenges to the dominance of capital and even the very system of capitalism. But in a system of private appropriation and with labor as a commodity, life for those without capital begins with securing employment.
Because labor is a commodity, because labor must be a commodity in order for an economic formation to be capitalist, the right to a job cannot be enshrined in a capitalist constitution. Only socialist countries have or can endow everyone with the right to a job. That is why the right to a job is not included in the Universal Declaration of Human Rights. A weak “right to work” (participate in the labor market), a right to “free choice of employment” (compete in the labor market), and a right “to protection against unemployment” (vague, nonspecific prophylaxes or amelioration) are there instead (Article 23). Without recognizing the right to a job, the Universal Declaration effectively turns a blind eye to the ravages of unemployment and the indignities and injustices of the buying and selling of human productive effort.
That is one reason that the USSR and other socialist countries abstained from ratifying the Declaration in 1948.
Without unemployment, the capitalist system would suffer persistent pressure on the rate of profit. When the commodity-- labor power-- becomes scarce, capitalists must pay more to secure it, as they would for any other commodity. And since labor remains the largest cost component of most productive capitalist enterprises, labor-cost inflation erodes capitalist profits. Capitalism and the system's beneficiaries will not, therefore, tolerate full employment. This is the nasty little truth that apologists and media windbags dare not speak.
Economists hide this truth by euphemistically coining terms like “marginal” or “frictional” unemployment or inventing obscurantist concepts like the “Non-Accelerating Inflation Rate of Unemployment” that set an increasingly low standard for “full” employment. By linguistic sleight-of-hand, the economics establishment offers cover for capitalist accumulation by ordaining an “acceptable” level of unemployment.
At the same time, this same establishment understands that unemployment is the greatest challenge to the stability of the capitalist system. The frequent sharp rises in unemployment brought on by dislocations, the business cycle, or systemic crisis dramatically increase the levels of social discontent and raise voices that question the system. For those who hold the reins of power, for those whose job is to contain dissatisfaction with capitalism, managing unemployment is essential.
From that perspective, the unemployment rate is arguably the best barometer of the health and viability of the capitalist system. Consequently reports of unemployment rates and trends are politically charged and subject to great differences in interpretation.
The official unemployment rate... amounts to a Big Lie.”
Recently, the political manipulation of the unemployment rate came under attack from an unlikely source. Jim Clifton, chairman and CEO of Gallup, the polling organization, challenged the notion that the “official” rate of unemployment bore any relation to the realities of unemployment. Indeed, he called the rate a “Big Lie.” It's worth examining his argument closely:
None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job -- if you are so hopelessly out of work that you've stopped looking over the past four weeks -- the Department of Labor doesn't count you as unemployed. That's right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news -- currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren't throwing parties to toast "falling" unemployment.
There's another reason why the official rate is misleading. Say you're an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 -- maybe someone pays you to mow their lawn -- you're not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.
Yet another figure of importance that doesn't get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find -- in other words, you are severely underemployed -- the government doesn't count you in the 5.6%. Few Americans know this.
There's no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.
Though Clifton invokes the always suspect “Great American Dream” in his polemic, he fully appreciates the challenge unemployment mounts to the system's legitimacy:
And it's a lie that has consequences, because the great American dream is to have a good job, and in recent years, America has failed to deliver that dream more than it has at any time in recent memory. A good job is an individual's primary identity, their very self-worth, their dignity -- it establishes the relationship they have with their friends, community and country. When we fail to deliver a good job that fits a citizen's talents, training and experience, we are failing the great American dream.
We owe Clifton a thanks for speaking a rare and uncomfortable truth. And we must admire his bitter remonstrations against those who hide, distort, or slant capitalism's bad performance:
When the media, talking heads, the White House and Wall Street start reporting the truth -- the percent of Americans in good jobs; jobs that are full time and real -- then we will quit wondering why Americans aren't "feeling" something that doesn't remotely reflect the reality in their lives.
Capitalism's Report Card
Many liberal economists would agree with Clifton that the official rate understates unemployment. Like Clifton, some will concede that those marginally attached to the work force or discouraged from the work force should be counted along with those who have looked for work in the four weeks prior to the survey. The Bureau of Labor Statistics (BLS) extends the survey period to the prior twelve months to capture those unemployment figures. Using those numbers and the numbers of those working part-time for economic reasons, the unemployment rate rises to over 11%.
But it is worth questioning how the BLS defines the labor force. They simply count those as employed who work at some time in their survey period and count as unemployed those who show in their records as looking for work. They add the two up to constitute the labor force. They make no effort in this survey to determine the relationship to employment of the tens of millions of people in the US population not counted as in the labor force because they are neither somewhat employed nor present in the unemployment roles.
Have those left aside given up looking because they could find no job in the years prior to the last twelve months? Are they forced out because they can no longer afford child care or must care for relatives? Does neglected health due to lack of insurance preclude working? Are they victims of racial, gender, or age discrimination?
BLS does not ask and we do not know.
We do know, however, that the labor participation rate, relatively stable for two decades, has dropped precipitously since the 2007-2008 crisis. Roughly five to six million fewer people now count as engaged in the work force at any given time today than did eight years ago. Such a sharp drop in such a short time cannot be explained simply by changes in retirement patterns or work-force entry. Thus, it is not unreasonable to view this shift away from gainful employment negatively in our score card for capitalism.
If we were to count this loss in the labor force with the other sources of unemployment, US unemployment (and underemployment) would move to the vicinity of 15%.
But we can take a longer, deeper view. We can ask pointed questions about those engaged in certain categories of socially useless, even destructive forms of employment as well as those completely isolated from the conventional labor force.
For example, the million-and-a-half military personnel and the three-quarters of a million Defense Department employees constitute unproductive workers whose absorption would present a hurdle to the private sector. High youth unemployment and the expense of education have driven thousands of less advantaged youth to the military as an alternative to unemployment, thus serving as a safety valve to the social volatility of idleness.
Homeland Security and other security agencies have enjoyed bursts of employment thanks to the bogus war on terror. These agencies, too, constitute unneeded public-sector job creation that masks potential unemployment.
And of course there is the weapons industry, a massive private-profit-generating behemoth that engorges itself on public funds, stands apart from market forces and risks, and belches death-dealing instruments. Spawned by a desperate, but post-war fear of economic depression, US ruling elites embraced this perverse form of public-sector Keynesian demand-creation as a companion to Cold War hysteria. Military production drives and is driven by US jingoism. US imperialism and the military-industrial complex constitute a dialectical unity. While millions are employed by this juggernaut, capitalism would struggle to find work for them in a peace-friendly economy.
Undoubtedly the most insidious technique of hiding unemployment is the unfettered, soulless operation of the criminal justice system. Even the English workhouse answer to unemployment in the early eighteenth century was arguably more humane than the US judicial-penal complex,  complex. Inmates in state and federal punitive facilities (not including county and local jails) grew from 329,821 to 1,406,519 from 1980 to 2001! In the same period, the crime rate was relatively stable or declining. In 2010 the number of adults warehoused in so-called correctional facilities totaled almost 2,300,000.
The 2013 incarceration rate was six times the rate of 1925. Given the absence of virtually any social services or welfare, the high incidence of poverty, and the squalor of US urban areas in 1925, it is difficult to explain the explosion of incarceration in our era of relatively tame criminality without searching for political expediencies.
Half a million guards and administrators shepherd this population; another half a million churn the gears of questionable justice; and a million police harvest the inmates from the streets. Like the military-industrial complex, the police-judicial-prison industry removes millions from productive activity and warehouses hundreds of thousands of those potentially counted as unemployed. Whether the inmates turn to crime because they have no jobs or not, they effectively are dropped from the labor force. Moreover, nearly 5,000,000 US citizens are on parole or probation, a circumstance that lowers the prospect for employment dramatically. Certainly thousands, if not millions, of these people fall into that statistically ignored area beyond the BLS labor-force boundary. They, too, must be counted as part of the hidden unemployed.
Understanding that unemployment is the Achilles’s heel of the capitalist system, it is not surprising that the official rate is so highly politicized. But it is misleading to accept the official rate or even the useful corrections without also exposing the concealed institutional places where employment is linked to destructive, anti-social activities or where potential workers are forcibly excluded from the work force.
When carefully studied, capitalism's score on providing jobs is abysmal. Reformers who envision a capitalism divorced from militarism and its institutions, but robust with useful jobs, are naïve. The struggle against militarism, in the end, must take the road of a struggle against imperialism and its parent, capitalism --- a revolutionary and not reformist path. Only with socialism will alternative jobs be guaranteed.
Similarly, caging those who have been ill-equipped to fit into a savagely competitive employment scramble only foretells a similar fate for those who pose other challenges to the system. Liberals and reformers miss this point entirely. Nor do they have a plan to incorporate those warehoused by the judicial-penal system into the private capitalist economy.
As Marx anticipated, the quest for a decent job marks the first step in the journey to socialism.

Zoltan Zigedy