BOOK ONE
II - QUEST FOR LEISURE
3. SECOND DEBUT
Freedom now. But, from the slave's point of view the passage into serfdom
looked like a low blow. Gone was the womb-to-tomb security and the consideration
he had enjoyed as a good piece of equipment. He had been admitted to the
great Brotherhood of Man, and it was now his recognized birthright to get
his share of the profit when things were good. They were not good very often,
though, and when they were not he could expect little help or even sympathy
from his fellow men, landowners and nobles. They had life-goals of their
own, and enjoyed some sort of " Minimum Guaranteed Income" which
allowed them all the leisure they needed to plan raids on neighboring Provinces
and to forecast "Gross Baronial Product", invoking the Saints
or evoking the Devil.
The golden days of full-employment
Biomachines were gone, except for a few Asians or Africans - bipeds from really different tribes - the delivery of which was always precarious. Few sources of energy were available: the wind, beasts of burden... With the disappearance of machines, the concept of the labour force was back and ex-slaves, now that they had attained the dignity of Man, could feel that most of the fun had been taken away from their newly acquired status: they had to work.
To work as hard as ever. The ex-slave was free, but free to become wealthy growing wheat on a one-acre plot, provided he did not sin and paid his taxes faithfully to his lord, since that Minimum Guaranteed Income for top-dogs had to come from somewhere. It was like picking berries once again, except that now it had to be done in a severely controlled area, an area which actually had to be sowed and was sown. Work! Naturally, leisure was still a desirable commodity but few, now, could enjoy it. The whole set-up was called the Dark Ages.
It is extremely unlikely that anybody conceived the grand design that whatever leisure was still available in the Dark Ages should be shared unequally, so that toil for the masses would ensure full leisure for the few, that a little civilization might escape... and with it the hope of a better future. Like so many world-shaking occurrences, this one just happened to save the day, which is probably why so many of us believe in God.
Whether or not He took a hand in the process, the Good Lord certainly got the blame for the subsequent unpleasantness that resulted from the unfair distribution of leisure. Some inspired "non-workers", Shamans and Philosophers, came up with an explanation, rather a slogan: "work is a blessing ". Work was good; it was Man's natural destiny to work his way to Heaven, and leisure was wrong..., except for those who were in the service of God or whom He had endowed with wealth.
While Shamans kept talking, another sub-class of "non-workers"
was putting leisure to profit in order to think. Enough thinking, in time,
brought the Renaissance and "ideas"; ideas about work-saving devices,
that bloomed into a technology and into machines. Honest-to-goodness, work-saving
machines: Mechanical slaves. Mankind was ready for a second try at
automation: the Industrial Revolution.
The benign conquest
Machines came and conquered. The day steam first blew the whistle and the train could get there faster than the horse, it was obvious that work, toil and leisure would never again be the same. Because we all have read accounts of urban life in the early Industrial Era, the word "Industrial Revolution" has a tendency to evoke visions of workers more or less hoarded into town in quasi-slavery, of cloaked-and-daggered agents of evil Scrooges going on the rampage at night, to steal children from their idyllic homes in the countryside and have them work in the coal mines.
More to the point would be a vision of starving peasants migrating in droves from too much work for too little result in the barren fields, and queueing up for work at the door of every factory that would offer what we now call "inhuman working conditions" but may have been the Promised Land at the time compared to the prevailing standard of living in rural areas.
This does not mean that it was all great fun for workers in the early Industrial Era; some descriptions by London, Marx and many others would support a plea for serfdom or slavery! It is important, however, to remember that the Eighteenth and Nineteenth Century peasants turned industrial workers of their own free will - just like berry-pickers of another time had joined society of their own free will - if we are to understand that the early Industrial Era was not a black spot in the history of mankind, but just one more step up, from the initial drudgery of toil to the paradise of leisure yet to come.
From the end of the Eighteenth Century and on, the machines conquered sector after sector of the economy and the machine invasion always followed roughly the same pattern. Smart Alec would invent some labour-saving device, usually a clever application of a well-known scientific principle. Fat Investor would put the contraption to use, so out went the workers, and in came the machines.
The social drama would also follow a well-established pattern. Workers went to the poorhouse, while Fat Investor would make a pile of money but get loud outcries from displaced workers who would try and destroy the machines, preferably with their wooden shoes - hence the word sabotage, from the French sabot - while philosophers would write pamphlets. Machines would soon get repaired and wheels would turn again, but the pamphlets would endure, conveying the impression until this day that unemployment on a large-scale was the scourge of the Industrial Revolution.
On one hand the image of forced labour, on the other the image of rampant unemployment. And yet, this picture of a reduced labour force retreating before the advancing machines was not to become a reality until about a century an a half later! Before mechanical slaves would bring the Utopia of leisure for all, they would first give Mankind a lot of work to do, and work there was, at this stage, like never before. Machines replaced few men; mostly they increased production.
The reason they did was that as soon as Fat Investor had recouped the money of his initial investment in machines, he saw gold at the end of the rainbow: Effective Demand. Effective demand, which is nothing but a name for the sum of all the needs and wishes of the consumers... who have enough money to satisfy their needs and wishes. If you produce anything, anything at all and want to sell it for a profit, you must sell your wares to the people who have the money to buy and the lower the price, the more of these "people who have enough money to buy". After you have amortized your initial investment, your best interest therefore is to cut your prices drastically and to chase for new clients amongst those who have now enough money to buy at this lower price. This is the inescapable logic of machine production, and provided you keep above the operational costs you can do it and still increase the return on your initial investment.
This is exactly what Fat Investor did, and while he chased successfully after effective demand he reached many more new clients than the few who traditionally could afford to buy his products when prices were sky-high. His market multiplied manyfold. He sold more and increased his production, providing more work for more workers. Workers who might not be paid much, but still would have more pocket money to spend now, than they had previously, when they were tilling the land; workers with more needs and wishes, and more money too, which added up to create more effective demand ... which led to more production creating more work for more workers. Apparently, it was positive feed-back without end.
Well, maybe not without end, but certainly for a long time. The overwhelming
majority of the workers in all Western Industrial Nations dropped their
ploughs and hoes and moved to the cities... and they came to WORK. To work
in the industrial sector, with machines, producing more wealth than ever.
The second debut was highly promising and things were definitely looking
up. As for the other "carrot", leisure, it seemed that it might
have to wait a little: there were so many needs to satisfy... Leisure would
come, but not without pain, because there was a little flaw in the system;
not an evil conspiracy to oppress the working class, mind you, but a "bug"
in the system. The machine was still a very imperfect slave.
The imperfect slave
Machines, as slaves go, have a kind of Prima Donna attitude: they are choosy. From the end of the Eighteenth Century and on, machines came and conquered most sectors of the economy, bringing with them a vastly increased productive capability. Not to all sectors at once, though, and certainly not to the sectors in which an immediate increase in production would have been most welcomed. Machines conquered at their own pace and rhythm, and they followed no other logic than their own, which happened to be the logic, first of Technology and then of Economics. Machines were installed where they could be installed, and where they could produce economically. Machines are choosy.
By slave's standards, machines are also dumb. They will stubbornly produce whatever they have been made to produce, and nothing else, leading to discrepancies between consumers and investors. The average consumer has many needs, and will proceed to satisfy them one by one - &laqno;A loaf of bread, a jug of wine, a book of verses... » - going for the next after the first is satisfied, as our marginalist friends would explain, his interest in poetry increasing notably after he has been fed properly.
The consumer's needs will change. The investor who has invested in machines, on the other hand, has acquired something very inflexible. Something that will keep its physical shape until it turns once again into scrap metal, something that will not easily change its purpose. What has been meant to produce one type of goods will go on producing this and not that type of goods. The wise investor may well pass the buck and get rid of useless machines by selling them to other investors, but for society as a whole there is no such easy way out.
For society, the work and efforts that went into making a machine are spent forever; the useless equipment will not magically be transmuted back into money to permit another investment in something that would fit more closely the demand and the wishes of consumers: the initial decision to invest is irreversible. It is up to the consumer to adapt to the machine, and if he does not, the investor will take a beating, while the consumer's needs will remain unsatisfied.
They will remain unsatisfied, because in an industrial society based on machines an investment is required prior to production; the money to invest in what consumers want will not be available, if all the wealth is already invested in the equipment to produce something else. Or, if we get rid of the confusing monetary symbolism, let's say it is always good to make tools to work with... but if all the time and available metal has been spent making harpoons and we have no ploughs, we had better like fish.
The wealth invested in machines is "captive" and the investor is always a prisoner of his previous investment decisions. This is a great flaw in machines, and early industrial society was ill-prepared to cope with this imperfection. Society, then, did not have the enormous wealth which we enjoy today and any wrong decision could create a scarcity of capital, with painful or disastrous consequences. Wrong decisions were frequent, not so much when investors moved into new markets - there were really, after all, huge needs to satisfy - as when they followed to the bitter end the "logic" of machine production.
The logic of production, with imperfect slaves, is that it is so much cheaper to produce more of what you already produce than something else for which you will have to make a new investment, that it is profitable to reduce your prices and fly very, very low, just slightly above your costs, to attract the largest clientele you can. With some refinement, it is possible even to plunge below the level of return that would allow for replacement of the equipment - but still to keep above operating costs - and thus to rake in the last penny of profit while phasing the investment out of a shrinking market.
There is nothing wrong with that in principle. It is the desire in Fat
Investor to scrape the bottom of the barrel that brought Plenty to the less-than-rich,
and multiplied jobs at the time when machines were said to send workers
to the poorhouse. This is the logical way for the investor to maximize the
return on his initial investment and the consumer, incidentally, gets some
real good bargains along the way. It is logical to chase after effective
demand, unless you go too deep in the pursuit and face the bitter day of
reckoning, the point where there are no more takers at a price that will
yield a profit or at least let you break even, and you begin to lose a little
on each item you produce. Glut!
Sectorial gluts
Before the industrial revolution, "glut" and "dearth" (both sides of the same coin) happened only in those sectors where Mother Nature took a hand, proving the bitch she was. For instance, there were regularly gluts or dearths of food, but dearth was the problem, not glut. Pre-machine gluts had been relatively short-lived, for if there is a glut of fresh food, it will last only until the unwanted surplus is spoiled; the producer/investor will recoup his loss - and more - when food is in scarce supply. Prices in this sector fluctuated wildly.
No such fluctuations were likely to occur though, on the market for durable goods. A few things might have intrinsic or circumstantial value, like gold, water in the desert, or desiccated parts of the anatomy of Saints and Martyrs, but for hand-made products the "normal" value of every thing compared to that of another was known: it was the value of the human efforts necessary to make it. Differences in prices would only reflect the quantity of work involved and whether this work was the highly priced art of Michelangelo or the toil of a common laborer.
Saturation in the market for hand-made products was unlikely, because individual craftsmen, responsible for the planning, designing, marketing and production of their own products, knew very well the effective demand for that product (which had stabilized over centuries), the relative value of their work, and the rhythm of production they had to maintain to keep the market in equilibrium.
Machines, of course, changed all that. Not only would there be a general trend for productivity to increase in the mechanized sector of the economy - and therefore for the price of machine-made things to decrease, while the price of hand-made goods would appear comparatively higher and higher - but the price of any machine-made product could also zoom down whenever investors would want to attract more consumers at a lower price.
As the price for a product would go down, it would first sell more, until demand was satisfied, then much less than might be required to bring an adequate return on the investment. When this happened, when demand was saturated in a sector of production, it would mean "glut": goods in this sector would not sell, or would sell at a loss, until the surplus was absorbed and demand would come back. With durable goods it might take quite a while for the surplus to be absorbed. Longer than the investor could wait...
Machines brought periodic gluts in one sector, then the next. The unfaithful consumers would move on, while the fixed capital would remain captive, its value decreasing fast to reflect the lower profit expectations. Every time it would happen, it would be the Roman slavers' dilemma all over again, and Fat Investor would get poorer by the day.
Basically, his was the "flight or fight" response. Flight meant to grab whatever money he had left and run to another sector a to try his luck once again. Fight meant to improve on his technology, to lower his costs and his prices still more, to grant credit facilities to would-be buyers, the net result being to increase effective demand and to postpone the day of reckoning when a more severe glut would occur at a lower price level. Faced with glut, Fat Investor could also, naturally, go bankrupt immediately.
Whenever glut occurred in one given sector, not only were many capitalists left without capital, but there were also an awful lot of workers left without work. Now, this was not the already known "Machine-replaces-Man" type of unemployment, mostly a benign phenomenon (since machines would soon bring an increase in demand and production which would create more work), but a much more ominous type of unemployment which meant that material needs could be fully satisfied. This type of unemployment carried with it a "good news-bad news" message.
The good news was that it would be possible, with the help of machines,
to have Plenty together with leisure... The bad news was that whenever any
discrepancy would arise between investments and the real needs of consumers,
whenever too much work would be spent to produce too much of something that
consumers did not want... then, there would be a glut of some goods while,
simultaneously, some needs would remain unsatisfied. When this occurred,
investors would lose, of course, but mainly there would be "leisure".
It would be the dark side of leisure, though: unemployment.
The dark side of leisure
Before it became a tragedy, mass unemployment was an embarrassment. How could there be such a thing as a shortage of work? Up until then, men could starve only if they did not work, or if their work had not been blessed with results; the peasants who moved to the city from the countryside did not migrate because they lacked work in the fields, but because they had to work too much to obtain too little.
Before the industrial revolution, individual workers - and the whole labour force as a class - were often cheated, robbed or otherwise deprived of the results of their work by the powers that be, but they were seldom told that there was no work to do! Peasants in serfdom had an obligation to work and to make use of the land to pay their lord his share; conversely, they took for granted some kind of life-tenure on the land which they occupied and was then the major source of production. Now that more workers had gathered in the city than were needed and that more were coming daily from the countryside, all of them deprived of any means whatever to produce something and to earn a living, except in the framework of the industrial production system, it seemed that "work" had become a scarce commodity. Of course, it was an illusion: it is the jobs that were scarce.
In the industrial framework, the word "work" had ceased to mean the effort to achieve a result and now referred to neatly packaged units of services that could be bought and sold like any other commodity: jobs. As a commodity, jobs had to go on the open market for the price they would fetch, and the market-value of work would fluctuate with demand, with effective demand, like that of any other commodity.
For workers selling work in job-packages, it is a market of employers/buyers rich and poor which constitutes his effective demand, and the worker running after this demand also may plunge and fly low over his operation costs. The penalty for failure to maintain operations costs, for a living being, is worse than bankruptcy, though... so the worker will go to some length to avoid phasing himself out of a shrinking work market.
The effective demand for work declined when investors were short of money and had poor profit expectations, which is exactly what happened in times of glut, when investments were committed to sectors for which there was not enough demand from consumers. Less demand for their products would have employers aim at less production, which led to less work to do at this particular time and place. This produced less effective demand for the work-commodity and growing unemployment. Unemployment meant less money for the workers-consumers and less effective demand still, even though consumers might be craving for something that was not produced or that they could not buy. From then on, why not crisis until Kingdom come?
Mercifully, it was only until the sheer productive capacity of the mechanical slaves, in spite of the hare-brained schemes of human entrepreneurs, had created some spare wealth to permit investments where it was really needed. But this took quite long enough in many occasions to create much more than intellectual embarrassment. There were enough crises and enough "glut unemployment" to create misery, and it inspired a few gloomy visions of the future.
Massive unemployment provided the tribe of far-seeing economists with something really interesting to argue about. The golden age of full employment, it seemed, was fast coming to an end. In other times, the slaves of Rome had been turned into free men; what could the redundant workers of the maturing Industrial Era be turned into? No other debate was likely ever to give economists such a red carpet access to the limelights, so it was quite a match.
In the right corner of the ring, the Optimists kept their eyes on traditional "man-replaces-machines" type of unemployment and smiled. It was arguable that not only there was more and more wealth around, but also that there even were more and more jobs! Industrialization might have its birth pangs, but it would bring Plenty, and eventually the new god "Progress" would solve everything.
On the left-hand side, wearing red of course, Karl Marx and his supporters had a sadder story to tell. Unemployment was the all but inevitable consequence of industrialization in the capitalistic mode, they said; it was necessary for capitalists to create a "reserve" of cheap labour and, furthermore, the whole thing would self-destroy, since wealth would accumulate more and more in the hands of fewer and fewer people, until the day would come when the great majority of the people would have no money left to buy anything at all. So, we were confronted with "class struggle", it would be fire and brimstone at best and Armageddon was a distinct possibility.
Less violent and less emotional, but gloomiest of them all, Malthus explained that unemployment would be a permanent feature of society; the inconsiderate breeding of the "proletarians" would consistently provide more workers than there would be jobs available, and then perfect competition on the open market would bring down the income of workers to the lowest compensation that would keep them alive and at work: a level of subsistence income. Since all of them, however, might not be necessary for the system to operate, the surplus workers were expandable. They could, as we said, phase themselves out of the shrinking labour market or, as Malthus said it more elegantly, at the banquet of life, there would be no place for them... They should do as the Romans had done, disappear.
Gloomy, indeed. And this Marxist hypothesis about the concentration of wealth was not to be taken lightly either. Suppose it would really get to the point where all that there was money to buy had been bought and the remaining demand was not "effective"? Nightmare!