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Lewis Corey

The Decline of American Capitalism

PART FIVE
Unemployment, Technology, and Capitalism

CHAPTER XV
Disemployment and Surplus Population

IN the past, industry absorbed more workers than it displaced, and employment rose steadily. This historical fact is used as an argument against the contemporary fact of increasing unemployment. Since the industrial revolution, it is argued, technological change has created new industries and a multitude of new jobs; although there was in 1920-29, a small displacement of workers, the total of employed workers was greater in 1929 than in 1899. While “the expansion of old industries,” according to one economist, writing in 1929, “is not sufficiently rapid, apparently, to absorb the rising generations, up to the present time the increase over and above those absorbed by the old callings has been taken up by the new industries.” [1] The increase in unemployed workers is temporary: they will be eventually absorbed by renewed expansion. So runs the apology.

But what has been need not always be. The theory that workers displaced by machinery are absorbed by new occupations was formulated a century ago, when capitalism was at the beginnings of its great expansion, of an immense upward movement in production. Now capitalism is in the epoch of decline, of a downward movement in production. This fundamental fact must influence all interpretation of former experience. Moreover, even in the epoch of the upswing of capitalism there was a definite tendency for unemployment to increase. In the United States, from 1865 on, constantly greater cyclical and normal unemployment tormented the workers. Prosperity prevailed in 1889 and 1899, yet unemployment among workers in manufactures, transportation, and the building trades rose from 5.6% to 7%. [2] And in the following years the percentage of unemployed workers rose steadily, both in prosperity and depression (Table III). In spite of greater talk of “stabilizing” employment (as if words become deeds by the sheer magic of words!) there was greater unemployment. In the two periods of prosperity immediately preceding the World War, unemployment, both absolute and relative, rose. It fell only slightly during the war years, in spite of conscription and the mobilization of industry. Unemployment in periods of depression showed the greatest increase, rising from 10.7% in 1907-09 to 15.9% in 1914-15.

Usually unemployment was ascribed to unrestricted immigration, which had been so important in American expansion. Yet after the war, when immigration, now no longer economically necessary because of a declining rate of expansion, was severely restricted, normal unemployment increased more rapidly than in the pre-war years. In the depression of 1921-22, unemployment was twice as high as in the depression of 1907-09 and nearly 50% higher than in that of 1914-15. Normal unemployment rose to 9% in 1923-26 and 9.5% in 1927-29, an increase of one-fifth over the two pre-war periods of prosperity. The absolute number of unemployed workers in the prosperity years 1923-29 was greater than in the 1907-08 depression. Average yearly unemployment during 1920-26 was 12.1% of the available workers, considerably higher than the 10.2% during the years 1897-1926. [3] And for the four depression years 1930-33 average yearly unemployment rose to 35.2% of the available industrial workers, over three times as much as in 1907-09 and nearly twice as much as in 1921-22 ...

The accelerated increase of normal unemployment in 1920-29 was the result of a fundamental change in the American economy: for the first time the rise in the productivity of labor was greater than the rise in production. This condition is the basic cause of an absolute displacement of workers.

A definite, if proportionally changing, relation exists between employment and the productivity of labor and output. An increase in productivity must be matched by a corresponding increase in output, otherwise there is an absolute displacement of workers. But where formerly an X% increase in output was enough to absorb a certain number of new workers, now, because of the higher productivity of labor, a still greater increase in output is necessary. Production must grow faster than productivity. [1*]

If output rises more rapidly than the productivity of labor, there is a relative but no absolute displacement of workers. The theoretically displaced workers and new workers in addition are absorbed by the expansion of production. (It also makes possible higher wages and shorter hours.) Because the increases are not proportional, normal unemployment tends to rise, but not much. This is the epoch of the upswing of capitalism.

If, however, the productivity of labor rises more than output, the tendency is toward an absolute displacement of workers. There is an expansion of production, but not enough to absorb all the workers displaced by higher productivity plus a part of the newly available workers. Normal unemployment rises more rapidly.

If productivity rises more than output and, in addition, the movement of production is downward, workers are displaced both by higher productivity and lower output. Normal unemployment becomes constantly greater. (Wages tend toward lower levels; and while hours of labor may not be lengthened, they are at least not shortened in accord with technical-economic possibilities.) This is the epoch of the decline of capitalism.

From 1899 to 1919, and in earlier years, output rose more than the productivity of labor. In manufactures, in 1899-1909, the increase in output was 59%, in productivity only 16%; 2,182,427 new wage-workers were absorbed. For the whole period 1899-1919, the increase in output was 59%, in productivity only 16%; 2,183,427 new wage-workers were absorbed. [4] There was a similar trend on the railroads.

In agriculture the movement of productivity and output was such that only a small number of new workers was absorbed, while in mining (exclusive of oil wells) there was a small absolute displacement. The expansion of production was enough to absorb most of the available workers; there was only a small rise in normal unemployment.

This relation was, however, completely reversed in 1919-29: the productivity of labor rose more than output. The rise in the productivity of labor in manufactures was over 40%, in output only 38%. Productivity rose 12.5% and output 2.5% on the railroads, and 30% and 20% respectively in agriculture. There was a similar tendency in mining. As the expansion of production was smaller than the rise in the productivity of labor, an absolute displacement of 1,155,000 workers, wage and clerical, took place. Displacement was most severe in agriculture; in this industry, for the whole period 1899-1929, productivity rose over 61% and output not much more than 56%. [5] The expansion of production was great (although the rate of increase was smaller than in 1900-14), but it was not enough to absorb any new workers or even all of the displaced workers; hence normal unemployment rose considerably.

Under capitalist conditions, an expansion of production depends upon an increasing output and absorption of capital goods. It depends, in other words, upon an increasing accumulation of capital; this means that a constantly greater proportion of the workers are employed in the capital goods industries. But these industries, because of the higher productivity of labor, displaced a large number of workers in 1919-29, although the rate of increase in their output was greater than in pre-war years. There was a similar displacement in mining. Construction augmented its labor force by 320,000 workers. In all branches there was a small net loss of workers in the production of capital goods. And the higher composition of capital, made possible by the greater output of capital goods, displaced many workers in the industries producing consumption goods. [2*]

In most of the European nations normal unemployment was augmented both by the increasing productivity of labor and the downward movement of production ... The tendency for productivity to outstrip production was already manifest in the pre-war years. Thus in Great Britain, in 1907-13, output in basic industries rose 7% and trade-union employment only 0.5% ... In the pre-war years, British unemployment averaged 500,000, or 5%, yearly; it was 1,450,000, or 12%, in the post-war years (before 1929). The output of mines and quarries was slightly higher in 1930 than in 1925, but 20% fewer workers were employed. In ten industries, an 11% increase in output was accompanied by an 8% decrease in workers. The element of British economic decline appears clearly in the fact that the number of workers employed in the export industries was 2,465,000 in 1907, 2,485,000 in 1924, and 2,000,000 in 1930; their proportion to the total workers in manufactures fell from 44% in 1907 to 38% in 1924 and 33% in 1930 ... Trade-union unemployment in Germany rose from a yearly average of 2.3% in 1907-13 to over 11% in 1923-27, and from 11.1% in 1927 to 20.7% in 1929. The former relation between productivity and output was reversed. Productivity rose 23% in the “boom” years 1925-27, and output 24%. In 1930, of 1,500,000 unemployed workers, 1,000,000 had been displaced by the higher productivity of labor and 500,000 by the lower level of production ... In the prosperous year of 1929, according to the International Labour Office, 3,258,000 workers were unemployed in Germany, Great Britain, and Italy. Total unemployment in the capitalist nations of Europe rose from 3,616,000 in 1923 to 4,330,000 in 1929, an increase of 20%. [6] ... But the official unemployment figures are underestimates. Some include only those “on relief,” others only those registered at the labor exchanges. It is probable that over 4,000,000 workers were unemployed in Britain, Germany, and Italy, and 6,000,000 in all Europe.

The same factors underlying the increase in normal unemployment also produce an increase in cyclical unemployment. The tendency of productivity to rise more than output is aggravated by industrial breakdown. In Germany, the productivity of labor was 17% higher in 1932 than in 1929, and output 40% lower. In the United States, according to the National Bureau of Economic Research, productivity per man hour rose 12% in 1929-32. [7] Workers were thrown out of work both by the higher productivity of labor and the lower level of production. The output of capital goods, whose decreasing rate of labor absorption accelerates the rise in normal unemployment, now falls more in depression than formerly because of higher productivity, the more disastrous nature of cyclical breakdown, and the lower demand for capital goods. And the output of luxury and durable consumption goods, upon which prosperity increasingly depends, falls in depression in about the same ratio as the output of capital goods. Thus, as prosperity becomes more unstable, depression tends to become more severe.

The depression which set in after 1929 augmented unemployment steadily and on an unprecedented scale. [3*] During 1932, average unemployment in Germany affected 5,579,858 workers, 30.2% of the available labor force; of the trade-unionists 43.8% were wholly unemployed and 22.6% partly unemployed. In Great Britain 2,272,590 workers or 17.6% were wholly unemployed, and 573,805 workers or 4.5% partly unemployed. Fascist Italy, whose statistics are notoriously unreliable, officially admitted the existence of 1,040,910 jobless workers. In all of capitalist Europe, average unemployment during 1932 was 12,178,000, exclusive of part-time workers. But these are the official figures, which are not inclusive. In Germany, for example, there were in December 1932 probably 3,400,000 unregistered unemployed. [8] Actual unemployment in Europe was over 20,000,000. Never before had cyclical depression afflicted such a large proportion of the working population.

Still greater was the rise of unemployment in the United States. During 1930, when, because of the illusions of prosperity everlasting, the masters of industry, finance, and politics simply couldn’t believe there was a depression, unemployment rose to 5,000,000, compared with half that amount in 1929. It kept on rising. In manufactures alone there were 2,327,000 fewer workers employed in 1931 than two years earlier [9], while total unemployment rose to 8,250,000. But this was only a midway point. By the spring of 1933, the lowest depth of the depression, unemployment in all occupations had reached the staggering total of 17,252,000 (Table IV), an increase of 14,750,000 over 1929. The blight of unemployment fell upon 35% of the gainfully occupied: 14,252,000 or nearly 50% of the wage-workers, 2,000,000 or 40% of the clerical workers, and 500,000 or 15% of the persons in professional occupations. (Unemployment among professionals is not a complete measure of their plight, as those independently occupied, such as architects, physicians, and dentists, might not be unemployed and yet suffer keenly from the depression.) Just as normal unemployment in 1923-29 was greater than in any previous period of prosperity, so cyclical unemployment was greater than in any previous depression. This is progress in the epoch of the decline of capitalism.

In addition to wholly jobless workers, other millions were working only part time. This was due to the generosity of employers, who “made” work by “staggering” and “spreading” employment, thereby throwing the burdens of the crisis upon the employed workers. In January 1933 20% of the members of the American Federation of Labor were working part time. [10] The animus of the employers was thus frankly admitted by Virgil Jordan, editor of Business Week: “The spread-work movement will probably gain momentum as a means of shifting the burdens of unemployment relief from income to wages.” [11]

Because of the severity of the crisis (typical of the decline of capitalism), unemployment swooped down mercilessly on professional and clerical workers ... A survey by Columbia University in 1933 showed unemployment as high as 98% among architects, 85% among engineers, and 65% among chemists ... Five societies of engineers in 1931 formed a national committee to aid their jobless; within one year they had spent $441,737, of which $307,119 was in the form of wages on “made” work paid for by semi-public bodies, the balance in cash, old clothes, and other relief ... Unemployment was intensified among musicians, 9,885 or 50% of whom had been displaced in motion picture theaters by the sound films ... In New York City, 40% of those seeking jobs from the Emergency Work and Relief Bureau were “white collar” workers, including executives, technicians, statisticians, editors, efficiency experts, engineers, and personnel managers ... An executive of a New York employment agency said in 1932: “Employment conditions among ‘white collar’ women are so appalling this fall that I haven’t the heart to think about them from a statistical angle.” ... A survey in 1933 of 3,000 charity patients in New York City hospitals showed that 175 were professional workers and 430 clerical workers, a greater proportion than in previous years of patients who are called the “new poor.” [12] ... The tremendous increase in the number of jobless “white collar” workers is not only a necessary result of greater unemployment among wage-workers, upon whose employment, in final analysis, depends the employment of “white collar” workers. Their situation is aggravated by the overcrowding of clerical and professional occupations, a condition which developed ominously during the pre-1929 prosperity. The “scarcity value” of the “educated” workers is no more; for, turned out by mass production methods, their numbers increase while the opportunities of finding work decrease.

The need for relief was great ... In October 1930, President Hoover at the convention of the American Federation of Labor condemned unemployment insurance as involving “doles of various kinds which limit the independence of men.” The condemnation, according to the New York Times, “was particularly pleasing to some of the Federation leaders, who are opposed to compulsory unemployment insurance under Federal or state supervision.” ... Three days later, William Green, the Federation’s president, urged government officials to prepare winter relief for the unemployed. And Hoover set machinery in motion to “coordinate” relief in the form of charity. No doles! ... It was charity of the most demoralizing kind ... Arthur Woods, chief of the President’s Emergency Committee for Unemployment Relief, broadcast appeals for money: “Increased funds for local relief are needed if human misery is to be prevented. Hospitals and dispensaries must receive more free patients; children’s organizations will be crowded as broken homes are increasing.” (In New York City, in 1930, evictions increased 30%, children in institutions 12%, and foundlings 100%.) ... Workers, with lower earnings, were forced to contribute to money-raising drives, public school teachers to pay for free lunches to children ... For the first time women and children appeared in breadlines. “We must,” urged Grace Abbott of the United States Children’s Bureau, “get the children out of the breadlines.” ... Two years later she added: “Relief agencies have been unable to meet the needs of those dependent in cities and towns and able to give little or no assistance to small mining communities, where undernourishment among children is widespread.” ... Relief was niggardly, ungracious, humiliating ... It was particularly so in the case of Negroes and “aliens.” The aliens were thrown out of jobs, denied relief. In New York City, the Emergency Work Bureau discouraged the registration of Negroes, and few of those who registered got jobs ... Needy families were told to go to the police, who gave them a basket of food once a week, old clothes, occasionally some money for rent ... Charitable persons organized more, bigger, and better breadlines ... Hotels, restaurants, and produce merchants gave waste food to the needy, and bakeries gave stale bread ... Garbage cans were ransacked at night ... One man made it a business to hand out a batch of nickels to applicants and the advice: “Have the will to do, have patience, have hope, place your faith in God, and you will come out on top.” ... Unemployed workers sold apples on the streets of New York, and wholesale prices went up in a few days ... Well-to-do women (some of them!) made clothes for the children of the unemployed ... The President’s Emergency Committee for Unemployment Relief made much pother about “providing employment” – the old, old appeal to “make” work ... Employers were begged to “stretch matters a little to give added employment for a few months at least.” This was done by “spreading” work, taking from one worker to give to another ... Corporations announced proudly that they would not discharge any workers; investigation revealed they had either had no decrease or an increase in business ... Department stores “helped” by advertising that they had hired new salespeople – during the few days of a special sale, workers they would have hired anyway ... The housewife was asked to “study her budget, find out what she can afford to do in the matter of advancing work to be done in her home, and then have it attended to immediately.” ... Rich men were implored to build rock gardens and yachts to “make jobs” and revive prosperity ... Some unions made their working members take time off one or two days a week to make work for the unemployed ... The Federal government rejected pleas for direct relief to the jobless workers. It was contrary to the American traditions of rugged individualism. (Apparently rugged individualism was not menaced by the doles of local government relief and charity.) The government instead issued considerable publicity on new public works construction, adding, however, that “a long time is required to prepare construction work.” ... By January, 1932, millions were starving or approaching starvation, 500,000 in Chicago alone ... Meanwhile the unemployed were becoming more and more resentful, more and more desperate. Demonstrations of the jobless, in many of which the communists had the leadership, broke loose all over the country ... They were met with the hatred of the well-to-do. The workers in one such demonstration in Seattle were called “bums” by a prominent businessman, “hobos” by a lady active in social affairs, and “criminals” by a millionaire factory owner in an address to his employees ... Henry Ford said: “Men who want work can get it.” ... The communists, whose idea spread, started the Unemployed Councils, to carry on an aggressive struggle for relief and social insurance; organized state and national hunger marches, dramatized the plight and will to struggle of the unemployed ... Demonstrations and hunger marches were answered with clubs, bullets, and tear gas, brutally revealing the repressive class nature of the state ... The Federal government deported 18,000 aliens in 1931, many of them because they were radicals or took active part in demonstrations and strikes ... The upflare of lynchings of Negroes in the South was not disconnected with the depression and unemployment ... Farmers organized resistance to foreclosures, went on strikes, demanded moratoriums on debts and the end of foreclosures, tax sales, and evictions ... In 1931, the Illinois National Guard issued the following document to its members: “Blank cartridges should never be fired at a mob. When troops of the National Guard are ordered on active duty to suppress domestic disorders, under no circumstances will blank ammunition be issued to them. Never fire over the heads of rioters. The aim should be low, with full charge and the battle sight. Officers and men should not fear reprisal in case one or more people are killed. Officers of troops aiding civil authorities should not permit the latter to indicate how their duties should be performed.” ... A survey by the United States Public Health Service showed that in 1932 one-fifth of a representative group of wage-worker families were “on relief.” It was niggardly enough, this relief: some jobs on “made” work, some food, some rent money; and many didn’t even get that ... According to the Children’s Bureau, one-fifth of the children in the country “are showing the effects of poor nutrition, of inadequate housing, of lack of medical care, of anxiety and insecurity. In some regions, without question, the proportion of below par children is far greater, reaching truly appalling figures.” ... Conditions among the unemployed had become unbearable by 1933. In January, William Green denounced “the money-fat enemies of America, who, through one device or another, have wrung from the people such a proportion of the fruit of their toil that they are stranded in a motionless sea of depression. After three years of suffering we, the organized workers, declare to the world: ‘Enough. We shall use our might to compel the plain remedies withheld by those whose misfeasance has caused our woe’.” ... All Green asked was a small Federal relief appropriation. But such talk by a conservative labor leader was a reflection of the underlying resentment and pressure of the masses ... The efforts of the government, of Niraism, to “revive” industry in 1933 by pouring billions into private enterprise had to include some measures of aid for the unemployed. The masses were desperate. The sight of billions going to corporations and nothing to themselves would inflame their desperation. Moreover, local governments, which had borne the burden of what relief there was, were virtually bankrupt; Federal aid for the unemployed was in a sense a measure of financial relief for the local governments ... In October, 1933, according to the Federal Emergency Relief Administration, 3,143,678 families were “on relief,” 12,500,000 persons, including 5,500,000 children. Millions more were on local relief or no relief at all. And the Federal appropriation for relief was a small part of the billions spent by Niraism. [13]

Employment reached its lowest point in March, 1933. It rose thereafter because of the inflationary stimulus to production, and reached a high point in July; but output and profits rose more than jobs and wages. After July, the NRA got into action, and there were some small gains in employment. But by November only 3,500,000 more persons were at work than in March. Nearly all the increase under NRA, moreover, was mere “spreading” of work. Employment in the iron and steel industry was higher in October than in preceding months, but hours worked decreased and average monthly earnings were only $91. In 312 New England factories, 90% operating under NRA codes, employment rose 20.7% from June to October, but man hours rose only 1.3% and average weekly hours worked decreased 1 6%. And in New York City, according to the NRA Administrator, employment rose 20% from August 1 to November 1, but payrolls rose only 13%, indicating an increase in part-time work (and lower wages). Then employment again slumped disastrously. From mid-October to mid-November 580,000 workers lost their jobs, 330,000 in manufactures alone. In December the United States Department of Labor reported a decrease of 113,000 workers in manufactures; and the Department’s survey includes less than half of the manufacturing industries. The percentage of decrease was greater than the average for the ten-year period 1923-33. The rise in total employment dwindled to less than 2,500,000. All the gains made after the NRA got into action were wiped out. And average unemployment was higher in 1933 than in 1932. According to the American Federation of Labor it rose from 11,489,000 to 11,888,000. [14] (These figures minimize total unemployment; they underestimate the number of the jobless in 1930, the starting point of the calculation, the increase in newly available workers, and the unemployment in agricultural and professional occupations.) In January, 1934, over 15,000,000 persons were still unemployed, including those engaged on temporary “made work” provided by the Civil Works Administration as a substitute for direct relief.

The unprecedented mass of cyclical unemployment, its great relative increase over previous depressions, and the inability to restore prosperity on any considerable scale, all indubitably forecast a tremendous rise in normal unemployment. Productivity is growing at an accelerated rate. The National Bureau of Economic Research estimates that man-hour productivity rose 12% in 1929-32 compared with only 7% in 1927-29. [15] In some cases the increase is much greater; thus man-hour output in the manufacture of pneumatic tires was 34% higher in 1931 than in 1929. [16] Total average unemployment in 1933 was 4% higher than in 1932, yet, according to the Federal Reserve Board, production and trade rose 10%. [17] The displacement of labor goes on; and as the tendency of production must be downward after revival, while productivity moves upward, absolute displacement will take place on an increasingly larger scale. One estimate is that if production in 1934 reaches the 1923-25 level, with the average work week reduced to forty hours and no further rise in the productivity of labor, 12,200,000 wage and clerical workers will still be jobless, a total which may be reduced by part-time work; if the 35-hour week is introduced, the unemployed will still number 9,000,000, which would become greater if the productivity of labor rises. [18] If production reaches the 1929 level, 4,000,000 workers, according to General Hugh Johnson, NRA Administrator, will still be jobless. [19] But that is an underestimate. It forgets that the unemployed workers in 1929 numbered 2,500,000, and makes too small an allowance for the rising productivity of labor and the new workers coming into the labor market. Production at the 1929 level, not an immediate expectation, would involve the unemployment of 7,000,000 to 9,000,000 workers. [4*] It is absolutely certain that there will be a tremendous increase in “normal” unemployment. The surplus population must grow, an increasing mass of workers for whom capitalist production cannot provide work. Marx thus described the underlying causes of the surplus population:

“The working population, while effecting the accumulation of capital, also produces the means whereby it is itself rendered relatively superfluous, is turned into a relatively superfluous population; and it does so to an ever increasing extent ... The supplementary capital formed in the course of normal accumulation serves chiefly as means for the utilization of new inventions and discoveries, especially of advances in industrial technique. But, as time passes, the moment necessarily comes when the old capital renews its head and limbs, sheds its skin, and is reborn with a perfected technique, so that a comparatively small quantity of labor will thenceforward suffice to set a comparatively large quantity of machinery and raw materials in motion ... The supplementary capital formed in the course of accumulation attracts fewer and fewer workers; the old capital, periodically reproduced with a new composition, tends more and more to repel workers whom it used to employ ... The demand for labor falls progressively as the total capital increases ... An accelerated accumulation of that capital (accelerated in geometric proportion) is needed to absorb an additional number of workers, or even, on account of the continuous metamorphosis of the old capital, to keep in employment those already at work ... Capitalist accumulation constantly produces, and produces in direct proportion to its energy and its extent, a relatively redundant population of workers – a surplus population ... promoting capitalist accumulation and indeed a necessary condition of the existence of the capitalist method of production. [5*] It forms an available industrial reserve army which belongs to capital for its own varying needs in the way of self-expansion ... an ever-ready supply of human material fit for exploitation. As accumulation proceeds, and as the accompanying development in the productivity of labor takes place, capital’s power of sudden expansion grows ... The mass of social wealth, become superabundant owing to the advance of accumulation, and transformable into additional capital, urgently seeks investment, either in old branches of production for whose products the market has suddenly expanded, or else in newly formed branches the need for which has grown out of the development of the old ones. In all such cases, it is essential that there should be a possibility of providing great masses of workers whose activities can be engaged at the decisive points without any interruption in the work of production in other spheres ... A sudden and fitful expansion is a prelude to equally sudden and fitful contractions. The latter, in turn, evoke the former; but the former, the expansions, are impossible unless there is available human material, unless there has been an increase in the number of available workers irrespective of the absolute growth in population. This supply of available human material is dependent upon the simple fact that some of the workers are continually ‘being set at liberty’ by methods which reduce the number of employed workers ... The production of a relatively superfluous population has become an indispensable condition of modern industry. The greater the social wealth, the amount of capital at work, the extent and energy of its growth, and the greater, therefore, the absolute size of the proletariat and the productivity of its labor, the larger is the industrial reserve army. The available labor power has its extent promoted by the same causes which promote the expansive force of capital. Consequently the relative magnitude of the industrial reserve army increases as wealth increases. But the larger the reserve army as compared with the active labor army, the larger is the mass of the consolidated surplus population, whose poverty is in inverse ratio to its torment of labor. Finally, the larger the Lazarus stratum of the working class and the larger the industrial reserve army, the larger, too, is the army of those who are officially paupers.” [20]

Marx added: “This is the absolute law of capitalist accumulation. Like all other laws, it is modified by numerous considerations.” The most important consideration is the rate of expansion in production. (Another consideration is the growth of non-productive occupations.) If, as in the epoch of the upswing of capitalism, production rises more than the productivity of labor, the surplus population grows, but slowly. It grows rapidly in the epoch of the decline of capitalism, because the rate of expansion in production falls while productivity rises; and it grows still more rapidly if there is an absolute downward tendency in production.

The Marxist theory of an increasing surplus population was (and is!) scorned by bourgeois economists, by the post-Ricardian epigones. “Look,” they said, “look at the constantly greater number of workers.” But they ignored the increase in normal unemployment, in the insecurity of work. Now the surplus population is so large that it must be recognized and dealt with. In 1932, the British Royal Commission on Unemployment Insurance admitted the existence of “an element of unemployment that is not temporary and will not disappear with trade revival.” It used such phrases as “persistent unemployment,” “redundant element of workers,” “surplus labor,” and “excess of workers.” It accepted the fact of permanent unemployment:

“Until 1928 the view was taken that all or most unemployment was due to trade depression of the ordinary type. Had this been the case, its duration would have been limited, its incidence would have been limited ... It is now clear that the greater part of the unemployment of the period 1923 to 1929 was not due to trade depression, but was of a more persistent character due to causes that were not transient ... It is, of course, true that the present depression has involved workers who have every prospect of re-employment when industry generally improves ... But the difference remains that the unemployment caused by trade depression will pass, while the other unemployment will persist when trade improves, as it persisted through the good years 1924, 1927 and 1928 ... associated with some more permanent condition of British industry.” [21]

The Commission on Unemployment Insurance estimated, for seven industries with one-quarter of all the insured workers, an excess of from 395,000 to 718,000 workers (out of a total of 3,264,000). It foresaw the more or less permanent unemployment of 3,000,000 workers. The Commission proposed, and the British government has since substantially accepted the proposal, to “reform” the unemployment insurance system, which has broken down because of the increase in “redundant” and “excess” workers. The insurance system is to be made self-supporting: it is to cover only employed workers who are temporarily unemployed and only for so long a period as they have paid for with contributions to the insurance fund; all other jobless workers, the great majority, are to go upon poor relief. Even before the adoption of the new system, “reductions in, and disallowances of, benefits” had, according to the minority report of the Unemployment Commission, “caused a great increase in pauperism and vagrancy.” [22] “The larger,” in the words of Marx, “is the army of those who are officially paupers.” This is also true of Germany, Italy, and France, where most of the aid for the unemployed is on the basis of poor (very poor!) relief. Unemployment insurance in Germany is insignificant in comparison with “emergency relief” and “poor relief.” An unemployed worker must “prove” his right to relief, which was always small and is still smaller under the brutal Hitler regime. In England, where relief allowances are a bit larger than in the other three nations, the minimum diet prescribed by the government for an unemployed worker is less than that for soldiers and convicts; and in many areas, the food expenditures of unemployed and part-time workers are far below even the government’s low minimum ration. [23]

These conditions of constantly greater unemployment and mass pauperization appeared in capitalist Europe before the depression which began in 1929. They have since appeared in the United States, after gathering force during the flourishing prosperity of 1923-29. One of the worst by-products is the growth of an army of homeless children. They are larger in number than in the period after the Civil War, when, according to a conservative estimate of the New York Times, there were in New York City alone 10,000 completely homeless children, “exposed to incessant and overwhelming temptation, who suffer severely in winter and stormy weather – a fearful mass of childish misery and crime.” [24] In 1932, 200,000, probably 300,000 homeless youngsters, many of them girls, wandered over the highways of the nation, “meagerly fed, scantily clothed, told endlessly to ‘move on’. No use to go home – even if they could get there – for home offers even less in sustenance than the open road. No jobs to be had regularly. Few beds to sleep in, except the hard ground in tramp ‘jungles’ along the railroad tracks.” Many are killed “stealing” rides on trains. Others, as “criminal” vagabonds, are sentenced to serve in the horrible chain-gangs of the South. The conversation of three of them is revealing:

TOM [mournfully]: If I ever get home I’ll just park.

RED [wistfully]: Y’oughta be glad you got a home.

MIKE: I’ve got a home, but the folks don’t want me. So I’m on my way. What would you give for a dish of ice cream?

RED: Ice cream! I ain’t seen any in months ... I used to get a job delivering for a butcher, but after my relations lost their jobs I lost mine too. Guess they got tired of having me around when I didn’t make no money, so I thought I’d better leave ... Fun? [ruefully] I ain’t had no fun since I left school. [25]

Now, when it is too late, American reformism, and this is characteristic of it, proposes compulsory, self-supporting unemployment insurance. In 1932, the Executive Council of the American Federation of Labor, “with considerable reluctance, abandoned its long opposition to compulsory state insurance,” and its action was approved by the convention. But the plan proposed was merely, “after a waiting period of three weeks, to pay benefits for a maximum period of sixteen weeks in a year based upon 50% of the normal weekly wages, but not to exceed $15 a week.” [26] Niggardly as it is, that plan might have been of value in the epoch of the upswing of capitalism, when unemployment in periods of prosperity was relatively small and temporary; although the plan would have had little value in depression. But now unemployment is increasingly permanent; it is disemployment, a complete separation of the worker from the job. This is most apparent in the millions of young workers in Europe and the United States who do not know work and have no chance to work, who merely swell the surplus population. The permanently unemployed workers are not covered by unemployment insurance; they are thrust upon emergency or poor relief. [6*] This appears clearly in the 1933 report of the Secretary of Labor, Frances Perkins:

“Some form of unemployment reserves should be set up in the different states so that in future it may take the place of the breadlines or other charities ... No one has yet found a cure for unemployment ... In urging unemployment reserves, I realize that adoption would not mean the throwing up of economic bulwarks for all wage-earners ... There should be a definite and fairly long waiting period. The number of weeks of benefit should be limited to bear a definite relationship to the amount of contributions made or the premiums paid.” [27]

That is a proposal to force the great majority of unemployed workers to be satisfied with emergency or poor relief or no relief at all. This is emphasized by the fact that in the reports of various state unemployment commissions “there is,” according to a member of the research staff of the National Industrial Conference Board (an employers’ organization), “a recognition that unemployment is not an insurable risk, and the proposed plans are labeled ‘unemployment reserves.’ ... No provision is made for state contributions, no benefits are paid after the reserve fund is exhausted, each employer is responsible only for his own workers, and no attempt is made to ‘insure’ against unemployment – that is, to give full security to the worker as long as he is unemployed.” [28] Thus capitalism offers merely niggardly relief or no relief at all to the surplus population for whom it cannot provide work, and for whom there is small prospect that work will ever be provided.

 
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Footnotes

1*. Production, of course, includes the new industries. For the sake of simplification, the factor of the distributive and service trades is excluded. Employment in these trades tends to increase much more than in directly productive occupations (a great part of it is wholly useless and parasitic). But the increase, as shown in 1923-29, is not great enough to absorb all the available workers. In any event, employment in the distributive and service trades is dependent primarily upon production, which supplies means of livelihood for all occupations. As a sop to its supporters, fascism tends to increase arbitrarily the number of non-productive jobs; but this also is not enough to absorb all the unemployed, there are definite limits to the creation of such jobs, and they multiply the burdens imposed upon the workers employed in productive work.

2*. This subject is discussed more fully in Chapter XVI, The Economics of Technology.

3*. Except in the Soviet Union, which passed through the “years of world depression apparently with comparatively small loss, continuing, indeed, to new and greater gains ... Standards of living are debatable, always, but in the present instance can hardly be considered as other than improved. The average real wage of the industrial worker certainly has been improved and that with the hours of work reduced ... The result of the experience of Soviet Russia would seem to be primarily twofold: the leveling of distribution and a new control over economic forces. It is not argued that the effects of the world depression have not been felt there. Most certainly they have been, but not in the production processes, nor in employment; wages, also, have been maintained and increased.” Susan M. Kingsbury and Mildred Fairchild, Employment and Unemployment in Pre-War and Soviet Russia, World Social Economic Congress, International Unemployment (1931), p.421. It is often said: “Of course the Soviet Union has no depression and no unemployment; that country is industrializing itself, and work is more plentiful than workers.” This is an obviously wrong argument. Every capitalist country has had depressions and a resulting increase in unemployment during its period of industrialization: in the United States there were three major depressions from 1837 to 1873. The element of socialist planning and control makes the difference. Cyclical crisis and breakdown is a function of the contradictions and antagonisms of capitalist production, not of industrialization (or of industrialism itself).

4*. The social-economic losses of unemployment are tremendous. A worker in manufactures in 1929 produced $5,330 (unduplicated value) worth of commodities. If, in 1923-29, 1,000,000 of the unemployed workers had been put to work on some of the unused capacity, they would have produced an output of $37,000 million. If 500,000 more workers, who were available, had been working on construction, they would have produced around $7,500 million (excluding value of materials) of new housing. If in 1930-33 manufactures had employed 4,000,000 unemployed workers, they would have produced an output of $60,000 million. Unemployed construction workers involved loss of an output of $15,000 million. This rough calculation indicates a wastage, in 1923-33, of $120,000 million in goods which might have been produced. That is two and one-half times the combined value of manufactures and construction in 1929. And it does not include services which might have been performed. Nor other forms of waste. There is tremendous waste in the production of useless and shoddy goods and services, and in the growth of non-productive occupations; millions of workers might be released for socially useful labor. And it is notorious that capitalist industry, in spite of its excess capacity, does not always utilize the newest and most efficient technology. The social-economic losses of unemployment become increasingly greater in the epoch of the decline of capitalism. Industry can easily wipe out poverty; capitalism retains the abomination.

5*. Marx quotes David Ricardo: “The same cause which may increase the net revenue of the country, may at the same time render the population redundant, and deteriorate the condition of the laborer.” With increase of capital “the demand for labor will be in diminishing ratio.” Marx, Capital, v.I, p.697.

6*. Because of this, the working class must demand and struggle for real unemployment insurance covering all forms of unemployment and all workers. The “white collar” workers, whom mechanization and economic decline thrust increasingly into the surplus population, must also demand real unemployment insurance, and become allies of the wage-workers.

Notes

1. Dexter S. Kimball, Industry, National Bureau of Economic Research, Recent Economic Changes, 2 vols. (1929), v.I, p.93.

2. Paul H. Douglas, Real Wages in the United States, 1890-1926 (1930), p.411.

3. Douglas, Real Wages, p.459.

4. Bureau of the Census, Manufactures, 1929, v.I (1933), p.15.

5. Department of Commerce, Commerce Yearbook., 1930, p.28; Statistical Abstract of the United States, 1931, p.669.

6. Allan W. Rather, Is Britain Decadent? (1931), p.34; V.A. Demant, This Unemployment (1929), p.39; Harold Callender, The Unemployment Riddle, New York Times, December 4, 1932; Great Britain, Committee on Finance and Industry, Report (Macmillan Report, 1931), p.308; E. Varga, The Decline of Capitalism (1928), p.19; International Labour Office, International Labour Review, June, 1933, pp.809-11.

7. New York Times, December 17, 1933.

8. International Labour Review, June, 1933, pp.809-11; New York Herald Tribune, December 28, 1932.

9. Census of Manufactures, 1929, Preliminary Report.

10. New York Times, February 13, 1933.

11. New York Times, November 18, 1932.

12. Editorial, Unions for Technicians, New Republic, January 24, 1934, p.295; Last Year’s Unemployment Relief, Electrical Engineering, November, 1932, pp.809-10; Department of Labor, Monthly Labor Review, August, 1931, p.261; New York World-Telegram, November 14, 1932; New York Times, November 12, 1932; November 6, 1933.

13. New York Times, November 4, 1930; December 14, 1932; January 14, 1932; New York World-Telegram, November 13, 1931; January 14, 1932; Laura T. Turnridge, We Haven’t Saved a Cent, Nation, September 16, 1931, p.281; New York Times, January 7, 1932; New Republic, January 27, 1932; New York Times, July 29. 1933; January 14, 1934.

14. New York Times, December 29, 1933; January 13, 1934; January 14, 1934; January 19, 1934; Bruce Bliven, New England is Waiting, New Republic, December 20, 1933, p.158.

15. New York Times, December 17, 1933.

16. C.R. Whittlesey, Rubber, Encyclopedia of the Social Sciences, v.XIII (1934).

17. New York Times, December 30, 1933.

18. Stuart Chase, What Hope for the Jobless, Current History, November 1933, pp.131-32.

19. New York Times, December 9, 1933.

20. Karl Marx, Capital, v.I, pp.693-95, 698, 702, 712.

21. Great Britain, Royal Commission on Unemployment Insurance, Report (1932), pp.91-93.

22. Royal Commission on Unemployment, Report, p.380.

23. New York Times, January 14, 1933.

24. New York Times, October 31, 1869.

25. Maxine Davis, 200,000 Vagabond Children, Ladies Home Journal, September 1932, p.8.

26. New York Times, November 21, 1932.

27. New York Times, January 21, 1934.

28. V. Trivanovitch, Relief for the Unemployed, New York Times, February 12, 1933.

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