Counter-argument needed

[Robocommie]

In a discussion of the balance between productivity and jobs, it gets pointed out that for the last 10 years, US manufacturing exports have risen as a result of increased productivity, but US manufacturing EMPLOYMENT has gone down.

Someone else in the discussion suggested that the economy should be held responsible for keeping people employed. My opponent, a conservative, responds thusly:


The problem with that - from my limited knowledge of economics - is that it forces things to be one way, rather than seeking the most efficient way of doing things.

For instance: You build a robot that builds a car, puts a thousand welders out of work. That robot can't be used, because then those welders will be out of work. So no robots in making cars.

Except that they're going to find a way to use robots to build cars somewhere else, and they're going to cut their costs immensely by doing that. So now you're operating at a big economic disadvantage; their cars are cheaper and have more features.

So now what? Prevent those cars from being sold in your country?

You can't dictate how an economy should work - say that employment is its highest goal - because then you're creating a command economy, and those don't work.

I mean, the Soviet Union used to have factories designated specifically for fuckups and incompetents, because they had to have a job in the Soviet Union, but would do too much damage if left where they were.

Any responses to this in regards to the command economy would be highly appreciated. Thank you for humoring me, comrades.

[Kléber]

Well over the last few years capitalism has proved that it is not the most efficient way of doing things, the government has had to step in to stop the whole thing from collapsing. The American auto industry is a great example of how capitalists can fuck up as badly as any evil Soviet empire. If he says that the failures of the auto companies were because of the unions, that's BS because UAW completely sold out and believed the lies about profit-sharing arrangements, and now they've become literally a company union, the labor bureaucrats like them are happy but the retirement funds of millions of American workers are long gone, whisked off to island resorts and Swiss bank accounts of the new robber barons.

Any official can make a stupid decision, it doesn't matter whether they are a Ford executive, a private banker, a government executive, or the deputy of a workers' council, but I would rather that somebody with the power that their decisions can affect workers across the world, be as democratically accountable and recallable as possible to the entire population, rather than to their wealthiest shareholders.

The problem with the simplistic "robots" stuff is that it's based on a vulgar understanding of economics with producers over here and consumers over there, ignoring the fact that for the system to work, the consumers have to have jobs and be getting paid enough to buy what they produce. If the capitalists do their job of exploiting the workers too well, they just widen the gap and create the conditions for their own demise. There is enough surplus to end all human misery, but instead of this being done, all the capitalists can do with it is competitively throw fictitious capital at the economy when people have less and less money to afford what is being made which leads to crises of overproduction and underconsumption. This is clear in the US right now where you have poor people being evicted from houses they thought they could retire in, while there is a huge surplus of empty homes. At the core of the contradiction is the divergence of interests and fortunes between the ultra-rich exploiters and the working class. The capitalists are not really "producers" at all, all the production is done by workers and specialists, the magnates at the top are merely exploiters. In capitalism, when mechanization is introduced, now the unemployed workers are starving, they are no longer making money to afford the goods they used to make.

As for the latter part, the US used to try and take care of those people too, until the neoliberal restructuring of the late Carter and Reagan presidencies. I don't see what's wrong with finding jobs for people with debilitating illnesses or conditions.

[Dermezel]

Any responses to this in regards to the command economy would be highly appreciated. Thank you for humoring me, comrades.


His facts are just wrong. First of all, the situation is already being forced by economic laws- how constant capital displaces variable, and how capital naturally centralizes and accumulates for this reason. I really hope you don't have to prove that machines displace living labor, or capital centralizes over time to this person (merely seeing automobiles and major corporations everywhere should prove this) but if you need further empirical data I can provide it.

Second, the Soviet Union collapsed after turning capitalist. And that's proof for capitalism? That's completely backwards logic.

http://www.guardian.co.uk/world/2003/apr/09/russia.artsandhumanities


The move from communism to capitalism in Russia after 1991 was supposed to bring unprecedented prosperity. It did not. By the time of the rouble crisis of August 1998, output had fallen by almost half and poverty had increased from 2% of the population to over 40%.

Russia lost half its wealth after abandoning state-control of the economy.

Also the Soviet Union modernized faster then any other nation in all of history.

http://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union


Starting in 1928, the five-year plans began building a heavy industrial base at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry, and without reliance on external financing. The country now became industrialized at a hitherto unprecedented pace, surpassing Germany (http://en.wikipedia.org/wiki/Germany)'s pace of industrialization in the 19th century and Japan (http://en.wikipedia.org/wiki/Japan)'s earlier in the 20th century.

As for command economies doing poorly, consider China vs. India. Both are similar in terms of population, geographic regional locations, and history of imperialist occupation. But China is far, far ahead of India in every war, including environmental protection. China has increased spending on environmental protection by almost 100%, and it is getting real results:



Last year both chemical oxygen demand (COD), a main index of water pollution, and the total emission of sulfur dioxide, a main air pollutant, were down 4.42 percent and 5.95 percent respectively; and down by 6.61 percent and 8.95 percent for the past three years, said Wen at the NPC's annual session.


But more efforts must be made before China could reach its goal of reducing its energy intensity by 20 percent and major pollutants including COD and sulfur dioxide by 10 percent before 2010, according to the country's 11th Five Year Programs (2006-10), a guideline for the country's economic and social developments.


China has also risen to third place in research development: http://www.chinadaily.com.cn/en/doc/2003-11/03/content_277867.htm


And is climbing, while the US is beginning to lag:


http://www.time.com/time/magazine/article/0,9171,1156575,00.html


http://www.foreignaffairs.com/articles/60260/adam-segal/is-america-losing-its-edge


This is due to our losing our "command economy" structure known as Pentagon socialism:



http://arstechnica.com/old/content/2006/07/7340.ars



Of pocket protectors and unlimited budgets

The Cold War, with its "Pentagon socialism", combined with large corporate monopolies that were expected to provide lifetime employment and pensions, made for something of a golden age for American technological innovation. This is the era that brought us the transistor and the predecessor to the Internet, an era where all the seeds of today's "information economy" were sown and carefully cultivated at great private and public expense.

The great labs of this era—Bell Labs, Xerox PARC, and IBM's labs—were places with massive budgets, where the world's top scientists were invited to pursue "blue sky" research into areas with no immediately apparent commercial applications. The facilities were state-of-the-art, and there was no pressure from management or shareholders to do anything but science for science's sake. To be able to fund such a lab was a mark of corporate prestige, and the labs themselves, along with their public counterparts like NASA, were major sources of national pride. For a company like Xerox or AT&T, what it meant to have a blue sky research lab was very much like what it means for a city to host a winning sports team; it was a source of pride and an anchor of collective identity. So much like the science that they produced, these labs were ends in themselves.

You might think of these private and public laboratories, with their hordes of young, energetic PhDs and blue-sky research programs, as producers of a kind of scientific capital. This painstakingly built fund of scientific capital that the postwar era left us was what the later generation of engineers—the fabled "two guys in a garage in Silicon Valley"—drew on to produce the information revolution that began to burgeon even as the Soviet menace was disintegrating.


Most of our key technological breakthroughs to date are from Pentagon, University or NASA/government projects. The fact that we have dismantled this apparatus has set us back:



Dropping out of school and spending the family fortune

It's no coincidence that many of those who went on to lead the information revolution were dropouts from either PhD programs or top-notch undergraduate programs. Even those who finished their doctoral work didn't end up doing open-ended research at the new companies they either founded or joined. The information economy demanded go-getters who would put their energy towards turning basic science into marketable products, and that economy rewarded those who opted out of more traditional research careers with a mix of world-altering power and cold, hard cash. Thus many of the truly ambitious adjusted their career aspirations away from the blue sky research labs where their parents might have dreamed of working and focused instead on the new brass ring: the profitable start-up. Start-ups aimed not at producing scientific capital but at turning it into technological wizardry, and from there into real money—or, rather, into stock value.

Now, I think it's important not to oversimplify things too much, or to caricature anyone. The more agile start-ups played an important structural role in making pure research careers less attractive. It's not that everyone was suddenly lured away from doing science by the promise of instant wealth. The competitive pressure that start-ups and new industries put on established businesses ultimately combined with trust-busting, structural changes in the economy, social shifts, and an array of other factors to turn expensive prestige items like research labs into unaffordable luxuries. Thus it stands that to one extent or another, all of the aforementioned labs have been downsized and/or transformed over the years into places where research programs must now yield commercial fruit.

In today's more agile economy, where workers hop from job to job and businesses spring up from nowhere to dominate an industry in the span of half a decade, there's no longer anything in the private sector like the enduring safety of the Ma Bell monopoly to lavishly support a blue sky research lab. The closest we have today is Google's "20 percent time," where engineers are encouraged to spend 20 percent of their time working on whatever research project strikes their fancy. But 20 percent isn't 100 percent.

With today's short-term corporate focus on maximizing shareholder value by inflating the stock price at all costs, the pressure to innovate comes from the boardroom and the marketing department. Hence all the men and women in R&D have to be able to make a case for the eventual marketability of what they're working on or risk being downsized. We've come a long way from men with pointy glasses and pocket protectors who spend decades just doing pure science on the corporate dime.

There's no doubt that the information economy continues to create a lot of wealth, but I think it's fair to ask if it's also creating enough science to replenish the stock of scientific capital that it's still burning through. I think it's clear that chaotic, market-driven change is a good way to bring ideas quickly and efficiently from concept to profitable product. However, such a rapid churning of the institutional and cultural landscape ultimately may not be conducive to the kind of steady, expensive, long-term investment in fundamental research that produces the really big ideas that somewhere, at some completely unforeseeable point in the future, change the world.

(And no, before you suggest it, the academy isn't all that insulated from rapidly changing market pressures anymore. Grant money is doled out to academics by private-sector corporations who are looking for a return on their investment. But this issue would take up a whole other article.)


Also the reason why Command Economies can sometimes lag has more to do with politics then economics:


http://21stcenturysocialism.com/article/how_china_rises_01546.html



To guage this, we must take into account three matters.

The first is that economic development depends on the introduction of more advanced machinery and production-related knowledge - that is, technology. For all less developed economies, that means importing technology from the industrially advanced countries and applying it successfully in local conditions. Even the most advanced countries rely hugely on importing technological developments from each other, by means which include cross-investment, purchase of technology licences and buying foreign machinery.

Secondly, countries in which workers are paid lower wages have a big potential advantage in competitive world trade, because, other things being equal, they can produce cheaper goods. But other things are not equal. Aspects which restict the less developed countries from benefiting in global trade from their relatively lower wages stem from the very fact that they are less developed- not only do they have generally lower levels of technology, but they have lower levels of infrastructure, education, and health.

Third and by no means least: national economies exist within a global context which is dominated militarily and politically by the USA and economically by the advanced capitalist countries of North America, Western Europe and Japan; is regulated by international institutions controlled by those countries; and in which transnational corporations which are almost exclusively based in those countries own and control hugely important resources including the most up-to-date technology. The People's Republic of China was and still is a Third World nation. Its per-capita GDP, even when measured by purchasing-power parity, is $7,600 per person, considerably less than one-fifth that of the United States.

As we shall see, moving away from full public ownership and implementing market reforms has indeed been crucial for China in overcoming barriers to more rapid development; but these measures have been necessary in a very different way from that given in the usual explanations. It is acknowledged by all that the increase in China's foreign trade, especially trade with the West, has been an indispensible factor in the country's increased economic growth since the late 1970s. Yet the conventional economic analysts never make a connection with the obviously relevant fact: that China was enabled to increase its trade with the USA and other Western countries, including both its imports of technology and its exports of manufactured goods, because Western economic restrictions against China were relaxed during this period.


Capitalists don't like trading with socialist economies because they don't get to own all the profits. This puts the country in a state of de facto sanctions.



However socialist countries do just fine with each other, and in fact seem to evolve into post-trade economies based on general utility and altruism as opposed to profit.



Consider how the USSR played a major role in modernizing China:





It was in this period that China founded its motor vehicle production industry. As Walter Arnold for the Japan Policy Research Institute notes (http://www.jpri.org/publications/workingpapers/wp95.html), it was in 1953 that:

… the First Auto Works, FAW, was formed in a Sino-USSR cooperative effort that led to the production of the first Chinese truck that rolled off the assembly line on July 15, 1956. Two years later China’s first domestically made passenger car, [the] Hongqi, was launched and the first cross-country motor vehicle went into production. It appeared that following the Soviet model, China was now on track to produce a larger mix of motor vehicles...
Yang Yao of the Centre for Economic Development at Beijing University, although a critic of socialist planning, concedes (http://en.ccer.edu.cn/download/482-1.doc) that China’s technological development during its period of co-operation with the Soviet Union brought benefits which lasted many years. The joint projects:

…laid the foundation of China’s modern industry, their impacts can still be felt even today… The imported technologies not only brought industry to China, but also brought new knowledge and skills. Thanks to the more than 3000 Soviet experts and many others from the Eastern European countries, China quickly gained necessary skills and trained a capable workforce. In addition, more than 20,000 people were sent to Soviet Union and Eastern European countries to take formal education or training. These people had become the backbone of China’s technological capacities in the subsequent years until very recently when the new generation of college graduates after the Cultural Revolution matured in the late 1980s and early 1990s. Thanks to meticulous plans aided by the Soviets, the imported projects were allocated in a way to level the regional disparities of industrial development in the country.


Simply put Socialist/Workers' State economies can simply give each other new technology and aid to increase the overall economy in general, whereas bourgeoisie economies are constrained by profit.

[Dermezel]

Another example of how economic planning trumped free market economics is exemplified by how Japan used government intervention to race ahead of us in internet development:

http://www.cfr.org/publication/8008/down_to_the_wire.html?breadcrumb=%2Fpublication%2F publication_list%3Ftype%3Dforeign_affairs%26page%3 D31

The article notes how the Japanese government utilized heavy government involvement, while the US deregulated the internet under Bush, putting the entire telecommunucations network into the hands of two monopolies both which had a vested interest in retarding net development.

The US went from number 4 to number 13 in internet development, while Japan has moved ahead from high-speed (of which something like a fourth of the US has) to Ultra-High Speed, something that is ridiculously fast, like 100 mbps. Just to give you some idea of what this looks like:


When the United States dropped the Internet leadership baton, Japan picked it up. In 2001, Japan was well behind the United States in the broadband race. But thanks to top-level political leadership and ambitious goals, it soon began to move ahead. By May 2003, a higher percentage of homes in Japan than in the United States had broadband, and Japan had moved well beyond the basic connections still in use in the United States. Today, nearly all Japanese have access to "high-speed" broadband, with an average connection speed 16 times faster than in the United States -- for only about $22 a month. Even faster "ultra-high-speed" broadband, which runs through fiber-optic cable, is scheduled to be available throughout the country for $30 to $40 a month by the end of 2005. And that is to say nothing of Internet access through mobile phones, an area in which Japan is even further ahead of the United States.

They get internet 16 times faster for half the cost.

This development is projected to have cost us quite a bit:


The United States is losing considerable ground to Japan and its neighbors, and they will be the first to reap the economic benefits of these technologies. It is these countries, rather than the United States, that will benefit from the enhanced productivity, economic growth, and new jobs that high-speed broadband will bring. In 2001, Robert Crandall, an economist at the Brookings Institution, and Charles Jackson, a telecommunications consultant, estimated that "widespread" adoption of basic broadband in the United States could add $500 billion to the U.S. economy and produce 1.2 million new jobs. But Washington never promoted such a policy. Last year, another Brookings economist, Charles Ferguson, argued that perhaps as much as $1 trillion might be lost over the next decade due to present constraints on broadband development. These losses, moreover, are only the economic costs of the United States' indirection. They do not take into account the work that could have been done through telecommuting, the medical care or interactive long-distance education that might have been provided in remote areas, and unexploited entertainment possibilities.

[Dermezel]

Also Tibet, how the Chinese government literally doubled life expectancy there: http://www.womenofchina.cn/Data_Research/Latest_Statistics/203027.jsp


Currently, the average life expectancy of people in Tibet has increased to 67 from 35.5 in the 1950s. He stressed the total population of Tibetans has risen to 2.5 million, accounting for 95 percent of total regional population, from 1.2 million in 1964.

By the end of 2007, 612 townships had been connected by roads, accounting for 89.6 percent of all townships in the Tibet Autonomous Region, and all townships had been linked with telephones. The government also took measures to solve the drinking water problems and ensured safe drinking water for 1.02 million farmers and herdsmen. The average income of farmers and herdsmen reached 2,788 yuan last year after maintaining a double-digit growth rate for five straight years, he said.

Until now, over 110,000 households with 590,000 farmers and herdsmen have moved into new houses since the Tibetan regional government has launched a program in 2006 to build homes for 220,000 local farming and herding households by 2010.

Tibet also took the lead in adopting a free nine-year compulsory education system, both in rural and urban areas. About 230,000 needy farmers and herdsmen with an annual income lower than 800 yuan are all covered by the minimum living allowance system, he said. In the past 20 years, the government has invested over 700 million yuan to renovate monasteries and cultural relics.

And Cuba, despite being under a 70 year long embargo, is leading the world in biotech:

http://www.wired.com/wired/archive/12.12/cuba.html



What Cubans call "the Special Period" produced one notable success: pharmaceuticals. In the wake of the Soviet collapse, Cuba got so good at making knockoff drugs that a thriving industry took hold. Today the country is the largest medicine exporter in Latin America and has more than 50 nations on its client list. Cuban meds cost far less than their first-world counterparts, and Fidel Castro's government has helped China, Malaysia, India, and Iran set up their own factories: "south-to-south technology transfer."


Yet at the same time as they were selling generics, the science-heroes of the Cuban Revolution were inventing. Castro made biotechnology one of the building blocks of the economy, and that has opened the door - just a crack - to intellectual property. To date his researchers have been granted more than 100 patents, 26 of them in the US. Now they're setting their sights on the markets of the West.


http://www.csmonitor.com/2003/0417/p14s03-stct.html





Ironically, the 42-year-old US trade embargo might actually have spurred the island's pursuit to science. Imposed in 1960 by President Kennedy after Mr. Castro infuriated the US by nationalizing $1 billion worth of US-owned property in Cuba, the embargo remains in place decades later.


Unable to import some of the medicines it wanted, Cuba began making its own generic drugs through reverse engineering - piracy by another name. From there sprang a state pharmaceutical industry and later, a biotechnology offshoot.
Cuban officials say the country now produces 80 percent of the types of drugs and medicines used by its 11 million people, though the empty shelves in pharmacies suggest the actual shortfall in quantity may be greater.


The healthcare strategy is straightforward: The government develops the drugs and vaccines according to the demands of Cubans. It then tests them and dispenses them across the population through a network of neighborhood family doctors, polyclinics, and hospitals.


Also China owns the US, and the US, arguably the freest market in the world, is facing a major trade deficit (http://economyincrisis.org/content/understanding-trade-deficit).


As for why the US been ahead in the past- that is simple- geography and history. Just consider the advantages of US geography, you simply have to look on a map, or apply the certain laws of historical development proven by Jared Diamond:


http://www.edge.org/3rd_culture/diamond/diamond_p1.html


The US has an ocean on both sides to protect it from enemies, it is located in a nice temperate region with an east-west axis (east-west axis are important because they allow crops/agricultural technology to spread faster due to weather/temperature being more continuous) and it inherited a great deal of technology from England/Europe.



This gave the US a tremendous advantage. World War 2 gave us another boost as most major competitive economies were destroyed.



I think these two historical advantages are what has allowed the US to thrive despite, not because of, a free market ideology.