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Lewis Corey

The Decline of American Capitalism

PART FIVE
Unemployment, Technology, and Capitalism

CHAPTER XIV
Prosperity and Unemployment

UNEMPLOYMENT is essentially an aspect of the higher productivity of labor under the social relations of capitalist production. Normal unemployment grows when the productivity of labor rises disproportionately to output. Cyclical unemployment prevails in depressions, brought about primarily by forces identified with the higher productivity of labor (which is not matched by higher employment and wages). And the increasingly greater unemployment of capitalist decline is a result of industry having become so highly productive that it is unprofitable to use all its capacity: hence millions of workers are thrown out of work. The increasing efficiency of American industry in 1920-29 considerably raised the total of “normally” unemployed workers. For while the higher productivity of labor may mean higher wages, it always means a displacement of labor because fewer workers are required to produce a larger output. Thus labor is penalized by its own efficiency.

The great rise in the productivity of labor, in output per worker, started in 1921-22, under the impact of falling prices and rising real wages. In 1922, after a temporary shutdown, during which equipment was improved, the Ford Motor Car Company turned out more work with 40,000 workers than formerly with 57,000 ... In 1925, the Owens automatic bottle machine was adapted to the production of prescription ovals, and man-hour productivity rose 4,100 times ... A survey of thirty-five plants in 1927 showed that output per worker was 75% higher than in 1919 and 39% higher than in 1924 ... The productivity of labor rose 98% in 1919-27 in the manufacture of automobiles and 198% in rubber tires ... In blast furnaces, with operation becoming increasingly automatic and almost manless, the productivity of labor in 1929 was 135% higher than in 1919, and 43% higher in steel works and rolling mills ... In 1923-29, productivity rose 65% in the coke industry, 48% in beet sugar and condensed milk, 46% in tanning, and 44% in petroleum refining ... It rose 30% in the electrical manufacturing industry and over 27% in electric power plants ... The dial telephone displaced more than half the operators ... Building construction was intensively mechanized. The cement gun and the paint spray cut in half the labor of painting; a sanding machine for flooring did the work of six hand workers; the time needed to erect large buildings was cut 30% to 40% ... In roadbuilding, output per worker rose from 4.7 lineal feet in 1919 to 17.7 lineal feet in 1928. [1] ... Many equally great increases in productivity took place in various processes of labor on the railroads and in mining and agriculture.

The rise in the productivity of labor was uneven, but it rose substantially in all industries. In 1927, productivity in manufactures was 42.5% higher than in 1919, 40.5% higher in mining, 12.5% higher on the railroads, and 29.5% higher in agriculture. (For the period 1899-1927 the increases were: manufactures 48%, mining 118%, railroads 63%, and agriculture 61%.) [2] The productivity of labor kept on rising: thus on the railroads in 1930 it was 20% higher than in 1920. [3]

There was, naturally, a displacement of labor because of technological changes and higher productivity. This is a normal aspect of capitalist development. “It is,” according to one bourgeois economist, “as old as the present industrial system and it is inherent in this system ... a constant accompaniment of progress in modern industry.” [4] But technological displacement is a constant torment to the workers, as it deprives many of them of skill and occupation.

The significant aspect of the rising productivity of labor in 1919-29 was not its rate nor its technological displacement of workers. Only in manufactures was the rate unusually high in comparison with 1899-1919, when there was a lag in the increase of productivity among factory workers: it was not materially higher than in the 1860’s-90’s. And in the past, displaced workers were almost wholly reabsorbed by the expansion of industry, accompanied by an increase in the total number of workers employed. The significant aspect of the rising productivity of labor in 1919-29 was that for the first time in American history there was an absolute displacement of labor, a decrease in the employment of directly productive workers.

Large numbers of workers were permanently displaced in manufactures and mining and on the railroads (Table I). By 1929 the higher productivity of labor in manufactures had displaced 2,832,000 workers, of whom 2,416,000 were, however, reabsorbed by an increase in production; the absolute displacement was 416,000 workers. On the railroads 345,000 workers were displaced by higher productivity and 71,000 by a decrease in output, making the displacement 416,000 workers. In coal mining higher productivity displaced 95,000 workers but the absolute displacement was raised to 171,000 workers by lower output. (In both these cases the immediate cause of the decrease in output was essentially technological. Improved motor trucks competed more effectively with the railroads; electricity increasingly cut into the demand for coal by industry and the home, steam power plants used less coal because of more efficient combustion, and hydroelectric plants dispensed with coal altogether.) Thus the higher productivity of labor permanently displaced 1,003,000 workers in manufactures and coal mining and on the railroads.

But that was not all. There was, also for the first time, an absolute displacement of labor in agriculture. In 1929 American farms gave work to 540,000 fewer persons than in 1919. The number of farms, rising steadily from 1,449,073 in 1850 to 6,448,342 in 1920, fell to 6,288,648 in 1930, a decrease of 159,695. Thus most of the displacement was of farm laborers, either hired or the children of farmers. As, however, the farm population fell from 31,614,000 in 1920 to 30,447,000 in 1930, the actual displacement was much greater, there being, probably, 1,000,000 persons who had to find work in other than agricultural occupations. [5] A surplus farm population appeared in 1909-19, because of the small increase in the number of persons working on farms. It has since grown and it will continue to grow as productivity in farming rises and output is stationary or falls. This completes the profound change inaugurated by the closing of the frontier, which still left, however, some few opportunities of absorbing new workers in farming and of rising on the agricultural ladder; but even those few opportunities are now ended. American farming is becoming as stagnant and hopeless as European farming has been for the past century. The surplus farm population of Europe was absorbed by the expansion of industry and by emigration, much of it to the United States when the frontier was being renewed. But American farming begins to produce a surplus population in the epoch of the decline of capitalism, when industry is unable to absorb those who cannot find work on the farms. This has long been true of European farming and nearly all nations, moreover, are now restricting immigration ...

The absolute displacement of directly productive workers is of extraordinary significance. It was a result of the development of the forces underlying the decline of capitalism. The direct significance appears clearly in a comparison of the absorption and displacement of workers in the thirty years 1899-1929 (Table II). In 1899-1919, 7,010,000 workers were absorbed by employment in manufactures, mining, agriculture, and the railroads. In 1919-29, on the contrary, the same industries displaced 1,155,000 workers (including clerical workers, whose labor was increasingly mechanized). And this displacement was accompanied by greater output, except for a small decrease on the railroads. [1*]

The significance of the absolute displacement of labor becomes more apparent if comparisons are made on the basis of two ten-year periods. In 1909-19, three major industry groups absorbed 3,847,000 new workers: manufactures 3,175,390, railroads 457,615, and agriculture 214,000. The process of absolute displacement began in mines and quarries, with a decrease of 42,325 workers. While there was a rise in the total number of workers absorbed, from 3,163,000 to 3,847,000, the rate of absorption fell slightly, from 20.7% in 1899-1909 to 20.1% in 1909-19. This slackening was a forecast of the 5.2% rate of displacement in 1919-29, which necessarily produced an increase in unemployment.

In 1909-19, there was an increase of 6,027,000 in the number of persons gainfully occupied. To that must be added the 42,325 workers displaced in mining because of the rising productivity of labor, and 310,000 workers displaced in construction because of the decrease in building during the World War and shortly after. [6] Of the 6,388,000 workers who had to find new jobs, 3,847,000 found them in manufactures, railroads, and agriculture. All other occupations had to absorb only 2,541,000, of whom 822,000 were absorbed in trade.

In 1919-29, there was an increase of 7,180,000 in the number of persons gainfully occupied [7], to which must be added the minimum of 1,155,000 [2*] workers displaced by the rising productivity of labor. Of the 8,335,000 persons (mainly wage-workers) who had to find new jobs, all had to find them in occupations other than in manufactures, railroads, mining, and agriculture.

This was an unprecedented development, of profound significance. For it meant that the four major industry groups which formerly absorbed most of the new workers, now displaced a considerable number of workers. It meant that, to provide employment for the 8,335,000 persons who sought work, occupations other than in manufactures, railroads, mining, and agriculture had to grow nearly three and one-half times as much as in 1909-19. They did experience an unusual growth. Distribution, motor transportation, and trade (including automotive and radio products, garages, chauffeurs, motion pictures, insurance agents), gave employment probably to over 3,000,000 persons. There were similar great increases in some other occupations. But absorption in the construction industry, in spite of its unusual expansion, was limited to 320,000, and in 1929 its total employees (attached to the industry, but not necessarily regularly employed) was somewhat lower than in 1909. [8] The statistical evidence is incomplete. The decrease in the number of directly productive workers is a clear indication, however, that there was, after all absorptions, a substantial remainder of unabsorbed and unabsorbable workers. Prof. Wesley C. Mitchell, writing early in 1929, said:

“The supply of new jobs has not been equal to the number of new workers plus the old workers displaced. Hence there has been a net increase of unemployment, between 1920 and 1927, which exceeds 650,000 people.” [9]

That was admittedly a minimum estimate. Agricultural workers are not included, and the figures of unemployment in groups comprising nearly one-half of total employees are conceded to be “the least reliable of all and probably much too low.” It is much more likely that unemployment increased by at least 1,000,000. As there were probably 1,500,000 unemployed workers in 1920, normal unemployment (including clerical workers) in 1921-29 rose to 2,500,000, excluding the unemployed in professional occupations. And this great increase in the reserve army of the unemployed took place in the midst of the most flourishing prosperity. [3*]

That unemployment did rise, whatever the magnitude of the increase, is an indisputable fact. It was observed and admitted by a number of bourgeois economists. They maintained that technological efficiency, or the productivity of labor, was rising faster than production, and displacing many workers. This was denied by the more sheerly apologetic economists. One of them, the president of the National Industrial Conference Board, said:

“It is a well demonstrated economic principle that increased production creates new wants and that new industries bring with them new demands for both materials and services. As mechanization of industry with its requirement of fewer workers per unit of product decreases production costs and prices, the demand for commodities simultaneously increases and causes not only the theoretically released workers to be absorbed but in addition calls new workers into production.” [10]

Not necessarily. For the argument assumes “ideal” general principles regardless of whether they work in reality. Production costs decrease, but prices may not fall correspondingly: capitalist enterprise retains as much as it can of the gains of the higher productivity of labor. Prices in 1923-29 did not move downward as productivity moved upward. Even if prices fall, they may not do so as much as costs, and consumer gains are offset by the losses of displaced workers. Disproportions in prices and profits, in production and consumption, are intensified by the fact that gains in efficiency are unevenly distributed [4*] within an industry and between industries. Prices are affected by productivity, but they are also affected by long-time price movements and by the resistance of monopolist combinations to lower prices. Increasing productivity, where it requires new equipment, stimulates output and employment in the machinery industries; but the labor incorporated in the making of the new machinery is always less than the labor it displaces, otherwise there would be no gain to the buyer. Moreover, the greater efficiency of new machinery may flow from qualitative changes, and thus reduce the amount of new equipment. Or higher productivity may result from more intensive exploitation of labor, requiring no capital expenditure. Workers are displaced in the machinery industries because there, too, the productivity of labor rises. New industries create new demands for labor, but such demands are relatively small, as these industries, adopting the most efficient methods of production, have a high composition of capital (with a low ratio of labor and wages to equipment and raw materials). And new industries may not develop rapidly enough or on a scale proportionate to the displacement of labor. The demand for luxuries may increase, but their production may also require less labor as its productivity rises. Finally, because of high profits, low wages, and the concentration of income, the demand for commodities may not rise simultaneously and equally with the rise in productivity and production: if it did, there would be neither an increase in unemployment nor cyclical crises and breakdowns. Thus changes may go on within the limits of magnitudes and proportions which upset the “ideal” assumptions of apologetic economics.

A liberal reformer, Prof. Paul H. Douglas, also accepted the “ideal” assumptions of apologetic economics:

“It is clear that permanent technological unemployment is impossible ... Improvements in industrial processes, like changes in demand, will produce a shifting of labor and capital within the economy.”

But the “shifting of labor and capital” is always within definite limits, permanently excluding from employment a part of the available workers small in the epoch of the upswing of capitalism, increasingly larger in the epoch of decline. And Douglas’ modification of his conclusion permits drawing one which is the complete opposite of his own:

“There is likely to be a considerable intervening period of unemployment before all the [displaced] workers find employment. During this period they will not receive wages and their purchasing power will in consequence be reduced. Some unemployment will tend to result elsewhere. This element of instability is multiplied if improvements are taking place simultaneously in a large number of industries and is particularly aggravated if the commodities are subject to inelastic demand. If the rate of technical progress in a society is, moreover, accelerated, the number who are thrown out of employment temporarily is increased. The purchasing power of these workers is temporarily reduced and their demand for goods curtailed. This transitional loss of employment has therefore a magnified effect and prevents the previous analysis from working out to the full extent and with the precision which has hitherto been implied.” [11]

Precisely! The “considerable intervening period of unemployment” and the “element of instability” upset all the “ideal” assumptions that workers displaced by the higher productivity of labor are necessarily absorbed by higher output. And if there are factors which prevent the process of absorption “from working out to the full extent and with precision,” why insist categorically that “permanent technological unemployment is impossible”? Combinations of the same factors underlying “considerable intervening periods of unemployment” may conceivably produce absolute displacement and an increase in permanent unemployment. It is not only conceivable theoretically, it is demonstrated by the granite facts of the steady, if small, increase in the reserve army of the unemployed in the epoch of the upswing of capitalism, and of the constantly greater increase in the epoch of decline. [5*]

Even if it were true that workers displaced by technological changes and higher productivity are absorbed as output rises, great hardships would still be imposed upon them. Unless the displaced workers are absorbed by greater output in the same plant and on the same job, they lose their skills or familiarity with particular processes, the older workers are thrown upon the scrap heap, and at least an interval of unemployment must ensue. A survey in Philadelphia in April 1929, when prosperity was still on high levels, disclosed 100,000 unemployed workers, 10.4% of the available labor force; 16% of all families were experiencing unemployment. Of these, 50% had been out of work for three months, 28% for six months, and 12% for one year or more. [12] Even more significant were the findings of a survey of displaced workers “to see just how many were being absorbed by American industry,” conducted during the summer of 1928 in Baltimore, Chicago, Columbus, Ohio, and Worcester, Mass. The findings are here summarized:

• Of 754 workers, who had been discharged during the twelve months prior to the survey, 45.5% had been unable to secure employment other than odd jobs.
• Of the workers still unemployed, the majority had been out of work four months or longer: 8.4% for a year, 9.3% for eleven months or longer, and only 58.8% had been unemployed for less than six months.
• Of the 54.5% who were absorbed in new jobs, only 12% had found permanent work within a month after discharge; one half had been out of work three months or longer and one-fifth six months or longer.
• Of the displaced workers who found new jobs, more than one-half had to accept work other than the kind to which they were accustomed, usually of a type where their former skills were useless. The older workers had the greatest difficulty in finding new jobs, as it is a general policy not to employ workers who are past the age of 45.
• Of the displaced workers, only 13% were absorbed in the “newer” industries or occupations radio, gasoline stations, garages, chauffeurs, moving pictures, hotels and restaurants, beauty parlors, bootlegging.
• Of the workers who found new jobs, 27.1% made about the same as in their old jobs and 18.8% made more, while the majority made less than their former earnings. [13]

Thus there is wanton human suffering and wastage even if the displaced workers are eventually absorbed. Workers are forced to take new jobs at lower wages. They are deprived of old skills and experience. Months and months of unemployment intervene, while their paltry savings melt away, and the compulsion arises to accept charity. In 1927, when the Ford automobile plants in Detroit threw 60,000 workers out of work, the city was forced to spend $1,954,000 on charity relief, more than in the two previous years combined. Henry Ford generously contributed $175,000 and this bit of wisdom: “I know it’s done them a lot of good – everybody gets extravagant – to let them know that things are not going along too even always.” [14] And in 1928, H.W. Morehouse, president, Brookmire Economic Service, insisted that the increasing unemployment was really increasing leisure: “With such progress in well-being, no wonder some members of the family have decided to take life easier by ceasing to work.” [15] A book by Clinch Calkins, Some Folks Won’t Work, revealed the reality, the conditions among the unemployed before March,1929 in the midst of unprecedented prosperity. It gave 300 cases chosen at random in thirty cities of twenty-three states. Let Miss Calkins speak:

“In a group of twenty men on relief work cleaning streets, fifteen had been displaced from skilled trades.

“When Riley lost his work he had no savings. The combination of four children and a peak income of $28.50 weekly is not conducive to savings accounts or investment ... Just what part of the $28.50 could the Rileys have put away in a sock? ... So they ran into debt. They fell behind on their furniture and insurance. At first Mrs. Riley rather went to pieces and rushed about trying to get help. Then she made frantic attempts to get a job herself. Novels could be written about this particular period in unemployment – the almost invariable shift of wage-earning from the man’s to the woman’s shoulders because women work for less pay ... Finally she got work in a cafeteria from eleven to three. She was paid $9 a week. And what wonders she did with her $9! She slapped it on insurance. She slapped it on the rent arrears. She slapped it on the furniture instalments ... Then suddenly five or six of the newest comers were dismissed, Mrs. Riley among them ... Since then she has worked at the sandwich counter of the Five and Ten and at several obscure eating places near the docks. She received less pay and had longer hours ... But she had to give up even this work when Rosey, aged eight, contracted an illness which seemed directly traceable to ‘poverty and makeshifts resulting from unemployment’.”

Jervis was a skilled worker, a mixer of colored inks used by lithographers; he earned the comparatively high wages of $37 weekly, and lived in a seven-room house with his wife and four children.

“During the last lay-off, machines were installed which laid on solid colors of ink and blended them. Between October 1928 and March 1929 (six months), Jervis made $100 at anything he could get for the most part laboring and stevedoring. When their savings were gone and when they could no longer pay their rent, the Jervises went to stay for a month with friends while they located a place to live. He finally found one for $12 a month. To meet expenses he pawned their possessions and sold their radio. The new house is one room deep, has an outside toilet, no heater, and no kitchen stove. When their case was reported, both parents and children were destitute of shoes and clothing. A city nurse obtained for them a $3-a-week order for groceries. Fortunately for the family, Jervis was injured on his last day’s work as a stevedore and went to bed with ulcerated legs and a strained back. I say fortunately, for besides medical aid the company paid him $15 a week for indemnity.”

“He was out of work for fourteen months and got so discouraged he turned on the gas.” ... “She resented her husband’s idleness, said he did not try to find work. He became inert and fatalistic. They quarreled and were under constant domestic strain.” ... “Now that he has lost his work she attempts to do outside housework besides caring for her seven children. Frequently, over periods of time, she had only bread and black coffee to feed them.”

The Negro worker is hardest hit by unemployment.

“The Lovejoy saga is a clear case of race prejudice as such, since this family is superior both in intelligence and education to many of the white workers who have received preferment at their expense ... From the spring of 1928 to December, 1928, they lived mainly on an occasional day’s work done either by the father and the mother and the $2 or $3 a week earned by George in shining shoes.”

The workers, when unemployed, resort to charity only as a last resort, not until they are practically broken in body and spirit:

”Mrs. White of Philadelphia said she watched her children starving until she could not stand it any longer. Before she asked for help she undoubtedly went through the equivalent sacrifice of Fred Johnson, who, when he was accused by some one of standing on the corners with other men, was defended by his wife. He stayed there all noon, she said, for fear if he came home he would be tempted to eat what they had been able to put on the table for the children ... The six young Murphys of Boston are reported by their teacher as being ‘soft’ from lack of food ... The Hagers of Louisville made their savings spin for two years of unemployment and then went without food rather than ask for charity ... The Browns of Philadelphia were reported by their grocer as having lived on bread and tea for six weeks ... An undernourished child was given by the school teacher a medicine to whet her appetite. As time went on, and she continued to give evidence that she was not eating enough, a visit was paid to her home. Then it was discovered she had little to eat.” [16]

These are the heartbreaking accompaniments of technological unemployment, an aspect of the steadily increasing normal unemployment in 1923-29, while prosperity surged upward. (On a greatly enlarged scale they are the accompaniments of cyclical unemployment.) “I know it’s done them a lot of good.” “Taking life easier.” ...

The output of goods, of the means of livelihood, rose because of the higher productivity of labor, of more efficient methods of production. Simultaneously, however, the higher productivity of labor deprived many workers of means of livelihood by depriving them of employment. And industry operated below its capacity.

While millions of workers were unemployed there was, contrary to the earlier trend, a tendency for child labor to increase during 1927-29, when both prosperity and unemployment reached their peaks. According to Grace Abbott, Chief of the United States Children’s Bureau, full-time working certificates issued to children fourteen to eighteen years old (sixty cities in thirty-three states) increased from 150,000 in 1928 to 220,000 in 1929. [17] Although registering a decrease over 1920, the number of children ten to seventeen years old gainfully occupied in 1930 was 2,145,000. [18] “The great mass of working children,” according to the National Child Labor Committee, “enter occupations that are monotonous in the extreme, lacking all educative content other than a certain amount of training in habits of work. What they must do can usually be learned in a few hours or at the best a few days; after that it is a matter of repeating the same tasks over and over again. Such a procedure involves more than the usual waste during the years when mental growth and acquisition are at their highest and offers a poor substitute for the training and self-expression of school life.” [19] Many children were forced to work because of the technological displacement of their fathers. And the number of working children was about equal to the number of unemployed adults.

Another result of the higher exploitation of labor, besides the augmenting of normal unemployment, was a tendency for accidents to increase in many industries. One method of raising the rate of exploitation is to make labor more productive by the introduction of more efficient equipment. Another method is the intensification of labor: the use of speedier and more complicated machines and more speed-up, multiplying the pressure on the muscle and nerves of the worker. Work tended to become more dangerous ... From 1922 to 1925, in thirty-four industries employing 254,529 workers, output per worker rose 14.4% and the accident severity rate 2.5% ... In 1925-26, eighteen out of twenty-four industries, employing 1,000,000 workers, had a rising accident severity rate ... In 1929, plants reporting to the National Safety Council had a small decrease in accidents but a small increase in the fatality rate ... Industrial accidents in New York State rose from 346,000 in 1922-23 to 518,000 in 1926-27; in 1929 there were 20,000 more compensatable accidents than in the previous year ... In this state’s building trades the rise in accidents was much greater than in employment from 10,000 in 1923 to 21,600 in 1927 ... The fatality rate in coal mining in 1921-25 was 2.73 per 1,000 employed workers; it was 3.32 in 1926, 2.94 in 1927, and 3.19 in 1928; or, on another basis, the fatality rate rose from 3.93 in 1916 to 4.54 in 1929 ... The risks of the American coal miner (and of the worker in general) are infinitely greater than those of the European. In 1929, the death rate per 1,000 full-time 300-day workers was 4.54 in the United States, 2.19 in Prussia, 1.31 in England, 1.29 in Belgium, and 1.15 in France. And the natural conditions in mining are more favorable in the United States than in Europe ... The iron and steel industry is usually considered a “model” of accident prevention work. Yet, while the frequency rate fell in 1920-29, the fatality rate was stationary and the permanent disability rate rose ... In 1928, according to the National Safety Council, there were 24,000 fatal industrial accidents and 3,250,000 non-fatal ... Managements are directly responsible. Not more than 10% of industrial enterprises are members of safety organizations. In 1928, the American Gas Association sent an accident questionnaire to its members, but the great majority did not reply ... Safety devices multiply but employers refuse to spend the necessary money. The high accident rate in the New York building trades is due, according to the Industrial Commissioner, mainly to defective equipment and the disregard of safety devices by employers. In the electric power industry the most important safety devices are not being introduced because of the cost. Safety engineers are usually limited in their efforts by considerations of output, costs, and profits ... The responsibility was placed squarely upon management by H.W. Heinrich, of the Travelers Insurance Company, who completed an analysis of 73,000 industrial accident cases, 10,000 from records of his company and others from the records of plants. His conclusion was that 98% of all accidents are preventable; only 10% were due to physical or mechanical hazards, while 88% were due to neglect by management ... In one of its reports the United States Department of Labor said: “All American industry has been much influenced by the effort for increased production. The speeding up has not been accompanied by an equally intense effort toward accident prevention!” [20]

The tendency for accidents to increase in many industries was a reversal of earlier trends.[6*] It may become more marked; for, as the mass of profits tends to fall, employers will introduce more speed-up and will be more unwilling to pay for safety devices.

But the increase in unemployment was not a reversal. It merely strengthened the tendency of capitalist industry to augment unemployment. And this must become more marked under the conditions of the decline of capitalism.

 
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Footnotes

1*. While the output of coal decreased, there was an increase in other minerals: total mining output rose.

2*. Actual displacement was over 1,500,000 workers if the calculation is made for the years 1920-29. Employment in 1920 was greater than in 1919, and the absolute displacement of labor began only in 1922-23.

3*. Increasing unemployment aggravated competition in the labor market and helped to prevent any general rise in wages, one of the most important uses of the reserve army of the unemployed. “The overwork of the employed part of the working class swells the ranks of the reserve; while, conversely, the increased pressure which, through competition, the members of the reserve exert upon those who are in work, spurs these latter to overwork, and subjects them more completely to the dictatorship of capital.” Karl Marx, Capital, v.I, p.702. “The difficulty of obtaining employment has discouraged workers from leaving the jobs which they have held the resignation rate among factory employees between 1920 and 1926 decreased two-thirds.” Sumner H. Slichter, Market Shifts, Price Movements, and Unemployment, American Economic Review, Supplement, March 1929, p.13. “Unemployment is reducing labor costs per unit of output Invariably labor efficiency increases whenever there are more men than jobs.” John Moody, Review and Forecast, Moody’s Investors Service, January 5, 1928, p.1. “The labor reserve in the United States, despite immigration restrictions, is slowly increasing and is likely to act as a bar to any further general rise in the wage level.” Magnus W. Alexander, president, National Industrial Conference Board, New York Times, January 1, 1928. “We face an increase in unemployment ... Unemployment, disagreeable though it be, has its use despite the heartaches which accompany it ... The shadow of unemployment will reduce labor to sanity.” Nelson, Cook and Company, bankers, New York Times, March 11, 1928.

4*. There must be, under capitalism, an uneven distribution of technical efficiency. The simultaneous adoption by all enterprises of improved methods of production would tend, from the standpoint of competition and profit, to cancel the gains. A rise in the rate of profit ensues where an enterprise has the exclusive use of more efficient methods and can undersell its competitors; but when their use becomes general the rate of profit tends to fall because of the higher composition of capital, excess capacity, and competition. The profit motive is the basic cause of the planless nature of capitalist production: they are inseparable.

5*. Technological displacement of labor added to the unemployment produced by capitalist decline in Germany, England, and other capitalist nations of Europe. An English economist says: “The introduction of new and improved methods into an industry has the immediate effect of displacing labor by enabling the industry to satisfy its market with a smaller supply of labor ... At any particular moment of time there is a considerable number of workers who have been displaced and who have not yet been absorbed. Hence, during a period of rapid progress, technological unemployment is abnormally high.” Allan W. Rather, Is Britain Decadent? (1931), pp.25-26.

6*. In Germany, where rationalization raised productivity as much as in American industry, there was a similar intensification of labor and an increase in accidents. “Labor expressions of opinion on these problems have been particularly outspoken, critical and bitter. Mechanization and speeding of work routines are held to have increased fatal, major and minor accidents and the number of persons suffering from industrial diseases. Speeds are adjusted without regard to cumulative fatigue, and the killing pace which workers must keep shortens their life cycles and throws them into the discard at an early age. Injuries reported have steadily increased as output per worker, indicating greater productivity through rationalization, has risen.” Output per worker rose from 100 in 1924 to 140 in 1929; the number of workers injured per 100 rose from 6 to 10, an increase of 66.6%. “The data given by both industrial and professional classifications in the Statistisches Jahrbuch show, in nearly all cases, increases in accident rates between 1927 and 1928. Estimates for 1929 are still higher. In all cases the post-war figures are much larger than those for 1913.” Robert A. Brady, The Rationalization Movement in German Industry (1933), pp.346-48.

Notes

1. J.M. Clark, The Economics of Overhead Costs (1924), p.93; Boris Stern, Glass and Pottery Industries, Encyclopedia of the Social Sciences, v.VI (1931), p.673; National Bureau of Economic Research, Recent Economic Changes, 2 vols. (1929), v.II, p.513; Labor Research Association, Labor Fact Book (1930), p.90; Meredith Givens, Iron and Steel Industry, Encyclopedia of the Social Sciences, v.VIII (1932), p.303; Frederick C. Mills, Economic Tendencies in the United States (1932), p.296; Department of Commerce, Statistical Abstract of the United States, 1931, pp.387, 835; William Haber, Construction Industry, Encyclopedia of the Social Sciences, v.IV (1931), p.265; National Bureau of Economic Research, Recent Economic Changes, v.I, p.248.

2. Department of Commerce, Commerce Yearbook, 1930, v.I, p.28.

3. Leo Wolman, Machinery and Unemployment, Nation, February 22, 1933, p.203.

4. Dexter S. Kimball, Changes in New and Old Industries, Recent Economic Changes, v.I, p.92.

5. Statistical Abstract, 1931, p.637.

6. W.I. King, The National Income and Its Purchasing Power (1930), p.50.

7. King, National Income, p.50.

8. King, National Income, p.50.

9. Wesley C. Mitchell, A Review, Recent Economic Changes, v.II, p.878.

10. New York Times, January 11, 1928.

11. Paul H. Douglas and Aaron Director, The Problem of Unemployment (1931), pp.132, 141-42.

12. Clinch Calkins, Some Folks Won’t Work (1929), p.13.

13. Isador Lubin, The Absorption of the Unemployed by American Industry (1929), pp.4-10.

14. Paul U. Kellogg, When Mass Production Stalls, Survey Graphic, March, 1928, p.685.

15. True Story Promotion Department, New Market News, October 1928, p.1; quoted from Forbes Magazine.

16. Calkins, Some Folks Won’t Work, pp.27-28, 34-36, 40-42, 117, 122-24, 157.

17. New York Times, December 15, 1930.

18. Statistical Abstract, 1932, p.50.

19. New York World-Telegram, January 23, 1932.

20. American Engineering Council, Safety and Production (1928), p.76; Louis Resnick, Saving and Wasting Lives, Nation, May 21, 1929, pp.593-94; May 28, 1929, p.622; Labor Research Association, Labor Fact Book, p.96; Department of Labor, Monthly Labor Review, July, 1930, p.85; Royal Meeker, Mining Accidents, Encyclopedia of the Social Sciences, v.X (1933), p.511; Monthly Labor Review, November, 1931, p.27; W.E. Spahr, ed., The Economic Foundations of Business, 2 vols. (1931), v.II, p.321; Hugh Quigley, Electric Power, Encyclopedia of the Social Sciences, v.V (1931), p.467.

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