Die Neue Zeit
26th March 2011, 22:04
Supply-Side Political Economy: More Public Management over Labour Markets
In the mid-1970s, Arthur Laffer, Herbert Stein, Robert Mundell, and Jude Wanniski started to develop the notorious supply-side economic school of thought. Recall that bourgeois-fied commodity production has three broad markets: the consumer goods and services market, the labour market, and the capital market. Naturally, that first market which predates modern production relations is related to demand-side economics, and the aforementioned bourgeois economists were concerned primarily with the last market. Wanniski even considered Marx to be a supply-side economist, but of course for the wrong reasons. Most modern labour economists, meanwhile, merely analyze the labour market from a supply-side perspective, while what insufficient normative or policy-related conclusions they have are too biased towards demand-side economics and aggregate demand management, like “full employment” stimulus spending betting on money multipliers here and there. In fact, unconditional basic income is the most extreme form of demand-side policy. Finally, only a handful of market-socialists to date have discussed the labour market like Hyman Minsky did, while most others discussed only the consumer and capital markets.
All labour-related radical reform proposals proposed in earlier chapters have in fact been proposed from a labour-oriented supply-side perspective of political economy. This means being more critical of Marx’s remark about “the childish babble of a Say” in reference to snide and personalized remarks about Jean-Baptiste Say’s nonetheless simplistic observations about the relationship between supply and demand. As demonstrated in information technology, the supply of valued consumer goods and services creates necessary prerequisites for the satisfaction of, and sometimes the very occasion for, demand. In the relationship between the labour and capital markets, the vulgar mantra that “businesses create jobs” (an indirect capital theory of value) does not hold water, since without the labour supply or labour market the so-called “innovative entrepreneurs” who still need to hire for a profit cannot realize their innovations. What follows are two key proposals from a labour-oriented supply-side perspective of political economy, boosting the bargaining position of labour more directly, spilling over into consumer demand and savings.
When considering the newest, cross-sectoral, cross-age (from youth to midlife and beyond), and growing part of the working class that is the precariat, there is growing “casualization” of labour to the point where some economists have described it as a "commodity" in the sense of regular business lingua: a good or service supplied without qualitative differentiation, such as natural resources. Long-standing populist resentment towards the “middleman” can be applied to temporary or casual labour agencies, whose charges increase labour costs without the workers realizing increased labour compensation, let alone much in the way of employer benefits. On the one hand, the proliferation of these agencies does not substantially reduce their payroll costs per unit of service provided. On the other hand, fully extending the responsibilities of public-administered job search agencies and labour ministries overseeing them by reorganizing every single temporary labour agency into a monopoly under public ownership could result in economies of scale for payroll costs and help tackle the problem of structural and cyclical unemployment. With legislation and regulation around gainful wages and working conditions, extra support for temporary workers, and especially rules guaranteeing their ability to refuse lousy wages, working conditions (especially unsafe working conditions), or both, such monopoly may even be the modern means to Hyman Minsky's realization of zero unemployment structurally and cyclically by means of expanding public services to fully include employment of last resort for consumer services.
Another proposal is simpler, more radical, and less discussed: that “big government” should be the sole de jure employer, hiring all workers directly (with of course the ability to refuse jobs with things like unsafe working conditions) and contracting out all labour services to the private sector and to state enterprises and the rest of the public sector. This puts a practical end to wage theft such as back pay from small-business employers, which despite labour laws still occurs on the scale of many billions of dollars, according to Mike Elk:
Advocates estimate that tens of billions dollars are stolen from workers every year through wage theft. A national survey of workers in the United States’ three largest cities – New York, Chicago, and Los Angeles – showed the startling finding that 26 percent of those surveyed in low-wage industries were paid less than the minimum wage in the last year and 75 percent were not paid overtime. The survey showed that 15 percent of the earnings of low-wage workers were stolen each year.
Part of the problem is that often workers don’t have the ability to prove that their wages were stolen. Pay stubs do not have uniform standards that clearly indicate overtime, wage per hour, exact days, and hours worked.
This proposal also opens up discussion to a whole range of labour policies. On the one hand, it could popularize the very petit-bourgeois advocacy of wage subsidies to small businesses, thereby repeating the vulgar “businesses create jobs” mantra (as if lumpen-based calls for unconditional basic income and various other non-worker schemes are not paternalistic enough). In this instance, instead of rebates and tax credits being the subsidy mechanisms, every worker as a public employee to be contracted out could be paid higher while the “big government” incurs negative gross margins by charging lower labour usage rates for small businesses. On the other hand, the government agency responsible for the workforce could coordinate with a separate government agency responsible for employment of last resort for consumer services.
Both proposals do not directly address the wholesale absorption of all private-sector collective bargaining representation into free and universal legal services by independent government agencies acting in good faith, or the prohibition of all private-sector subcontracting of labour such as the case whereby at least one contractual party is a workers’ cooperative. However, there is still private-sector dispute resolution on the labour usage rates charged, and private-sector logic (with the related labour dispute resolution mechanisms) still applies elsewhere except where taxpayer funds directly compensate public-sector workers. The latter proposal can open up another route with respect to “state aid” discrimination favouring workers’ cooperatives over other private businesses: as public employees, owners of workers’ cooperatives enjoy the associated benefits, while their operations can be charged lower labour usage rates by the government agency.
Naturally, these proposals enable the basic principles to be “kept consciously in view.” The class struggle by, of, and for the working class is emphasized, since their human labour, both manual and manual, and its technological, labour-saving equivalent are the only non-natural sources of value production. A fully socialized labour market goes a long way towards the systemic establishment of worker management (i.e., planning, organization, direction, and control) and responsibility over an all-encompassing participatory economy. Just as only “big government” can end structural and cyclical unemployment, only “big governments” can collectively establish something like the World Trade Organization but for enforcing a bill of workers’ political and economic rights such as a globalized and upward equal standard of living for equal work based on real purchasing power parity.
However, it is more difficult to determine if these proposals are of an intermediate stage or on the threshold. By themselves they are more radical than the universalization of annual, non-deflationary adjustments for all non-executive and non-celebrity remunerations, pensions, and insurance benefits to at least match rising costs of living, and the first proposal could very well have an immediate character. On the other hand, they could be combined with Minsky’s program to emphasize the need for a fully socialized labour market.
REFERENCES
The Way The World Works by Jude Wanniski [http://books.google.ca/books?id=hr7t8LUHuvQC&printsec=frontcover]
Theories of Surplus Value by Karl Marx [http://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch17.htm]
Supply-side economics: labour supply-side economics? [http://www.revleft.com/vb/supply-side-economics-t145030/index.html]
Nationalizing casual / temp labour agencies? [http://www.rabble.ca/babble/labour-and-consumption/nationalizing-tempcasual-labour-agencies]
Is the Labor Department Dragging Its Feet on Promising Anti-Wage Theft Measure? by Mike Elk [http://inthesetimes.com/working/entry/7047/is_dol_dragging_its_feet_in_stopping_wage_theft/]
In the mid-1970s, Arthur Laffer, Herbert Stein, Robert Mundell, and Jude Wanniski started to develop the notorious supply-side economic school of thought. Recall that bourgeois-fied commodity production has three broad markets: the consumer goods and services market, the labour market, and the capital market. Naturally, that first market which predates modern production relations is related to demand-side economics, and the aforementioned bourgeois economists were concerned primarily with the last market. Wanniski even considered Marx to be a supply-side economist, but of course for the wrong reasons. Most modern labour economists, meanwhile, merely analyze the labour market from a supply-side perspective, while what insufficient normative or policy-related conclusions they have are too biased towards demand-side economics and aggregate demand management, like “full employment” stimulus spending betting on money multipliers here and there. In fact, unconditional basic income is the most extreme form of demand-side policy. Finally, only a handful of market-socialists to date have discussed the labour market like Hyman Minsky did, while most others discussed only the consumer and capital markets.
All labour-related radical reform proposals proposed in earlier chapters have in fact been proposed from a labour-oriented supply-side perspective of political economy. This means being more critical of Marx’s remark about “the childish babble of a Say” in reference to snide and personalized remarks about Jean-Baptiste Say’s nonetheless simplistic observations about the relationship between supply and demand. As demonstrated in information technology, the supply of valued consumer goods and services creates necessary prerequisites for the satisfaction of, and sometimes the very occasion for, demand. In the relationship between the labour and capital markets, the vulgar mantra that “businesses create jobs” (an indirect capital theory of value) does not hold water, since without the labour supply or labour market the so-called “innovative entrepreneurs” who still need to hire for a profit cannot realize their innovations. What follows are two key proposals from a labour-oriented supply-side perspective of political economy, boosting the bargaining position of labour more directly, spilling over into consumer demand and savings.
When considering the newest, cross-sectoral, cross-age (from youth to midlife and beyond), and growing part of the working class that is the precariat, there is growing “casualization” of labour to the point where some economists have described it as a "commodity" in the sense of regular business lingua: a good or service supplied without qualitative differentiation, such as natural resources. Long-standing populist resentment towards the “middleman” can be applied to temporary or casual labour agencies, whose charges increase labour costs without the workers realizing increased labour compensation, let alone much in the way of employer benefits. On the one hand, the proliferation of these agencies does not substantially reduce their payroll costs per unit of service provided. On the other hand, fully extending the responsibilities of public-administered job search agencies and labour ministries overseeing them by reorganizing every single temporary labour agency into a monopoly under public ownership could result in economies of scale for payroll costs and help tackle the problem of structural and cyclical unemployment. With legislation and regulation around gainful wages and working conditions, extra support for temporary workers, and especially rules guaranteeing their ability to refuse lousy wages, working conditions (especially unsafe working conditions), or both, such monopoly may even be the modern means to Hyman Minsky's realization of zero unemployment structurally and cyclically by means of expanding public services to fully include employment of last resort for consumer services.
Another proposal is simpler, more radical, and less discussed: that “big government” should be the sole de jure employer, hiring all workers directly (with of course the ability to refuse jobs with things like unsafe working conditions) and contracting out all labour services to the private sector and to state enterprises and the rest of the public sector. This puts a practical end to wage theft such as back pay from small-business employers, which despite labour laws still occurs on the scale of many billions of dollars, according to Mike Elk:
Advocates estimate that tens of billions dollars are stolen from workers every year through wage theft. A national survey of workers in the United States’ three largest cities – New York, Chicago, and Los Angeles – showed the startling finding that 26 percent of those surveyed in low-wage industries were paid less than the minimum wage in the last year and 75 percent were not paid overtime. The survey showed that 15 percent of the earnings of low-wage workers were stolen each year.
Part of the problem is that often workers don’t have the ability to prove that their wages were stolen. Pay stubs do not have uniform standards that clearly indicate overtime, wage per hour, exact days, and hours worked.
This proposal also opens up discussion to a whole range of labour policies. On the one hand, it could popularize the very petit-bourgeois advocacy of wage subsidies to small businesses, thereby repeating the vulgar “businesses create jobs” mantra (as if lumpen-based calls for unconditional basic income and various other non-worker schemes are not paternalistic enough). In this instance, instead of rebates and tax credits being the subsidy mechanisms, every worker as a public employee to be contracted out could be paid higher while the “big government” incurs negative gross margins by charging lower labour usage rates for small businesses. On the other hand, the government agency responsible for the workforce could coordinate with a separate government agency responsible for employment of last resort for consumer services.
Both proposals do not directly address the wholesale absorption of all private-sector collective bargaining representation into free and universal legal services by independent government agencies acting in good faith, or the prohibition of all private-sector subcontracting of labour such as the case whereby at least one contractual party is a workers’ cooperative. However, there is still private-sector dispute resolution on the labour usage rates charged, and private-sector logic (with the related labour dispute resolution mechanisms) still applies elsewhere except where taxpayer funds directly compensate public-sector workers. The latter proposal can open up another route with respect to “state aid” discrimination favouring workers’ cooperatives over other private businesses: as public employees, owners of workers’ cooperatives enjoy the associated benefits, while their operations can be charged lower labour usage rates by the government agency.
Naturally, these proposals enable the basic principles to be “kept consciously in view.” The class struggle by, of, and for the working class is emphasized, since their human labour, both manual and manual, and its technological, labour-saving equivalent are the only non-natural sources of value production. A fully socialized labour market goes a long way towards the systemic establishment of worker management (i.e., planning, organization, direction, and control) and responsibility over an all-encompassing participatory economy. Just as only “big government” can end structural and cyclical unemployment, only “big governments” can collectively establish something like the World Trade Organization but for enforcing a bill of workers’ political and economic rights such as a globalized and upward equal standard of living for equal work based on real purchasing power parity.
However, it is more difficult to determine if these proposals are of an intermediate stage or on the threshold. By themselves they are more radical than the universalization of annual, non-deflationary adjustments for all non-executive and non-celebrity remunerations, pensions, and insurance benefits to at least match rising costs of living, and the first proposal could very well have an immediate character. On the other hand, they could be combined with Minsky’s program to emphasize the need for a fully socialized labour market.
REFERENCES
The Way The World Works by Jude Wanniski [http://books.google.ca/books?id=hr7t8LUHuvQC&printsec=frontcover]
Theories of Surplus Value by Karl Marx [http://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch17.htm]
Supply-side economics: labour supply-side economics? [http://www.revleft.com/vb/supply-side-economics-t145030/index.html]
Nationalizing casual / temp labour agencies? [http://www.rabble.ca/babble/labour-and-consumption/nationalizing-tempcasual-labour-agencies]
Is the Labor Department Dragging Its Feet on Promising Anti-Wage Theft Measure? by Mike Elk [http://inthesetimes.com/working/entry/7047/is_dol_dragging_its_feet_in_stopping_wage_theft/]