BOOK ONE
II - QUEST FOR LEISURE
5. THE GHOST OF GLOBAL GLUT
The Ghost of Global Glut bided its time. He reappeared about a generation
later, in the Fifties. The Second World War had solved drastically, but
efficiently, the problem of gluts; it had created dearths, something Mankind
was more familiar with and with which it could cope with human ingenuity,
making new things and designing new ways to make things. At the end of the
war, the United States could built a Liberty Ship in less than five days.
The same ingenuity was there after the war, when people decided to apply
it to some other goal than blowing each other to bits. The new ways to make
things were also available, ways which had been designed with maximum productivity
in view, and without a second thought for possible "manpower surpluses"
that the war effort then would have been more than ready to absorb. In peace
time though, more productivity would mean unemployment unless a huge demand
would appear for all types of goods. The demand was there all right, due
to all the destruction in Europe and all the delayed aspirations in the
United States; the only anxiety was about effective demand and money distribution.
The Santa Claus Approach
Planners came in laughing, with the Santa Claus approach in their briefcase. In the United States, mass credit to the Veterans came on top of all the purchasing power which had accumulated during the war and could now find an outlet, so that things got moving pretty fast; Europe was a tougher assignment, so we designed the Marshall Plan. The idea of the Marshall Plan was pure Santa Claus and very simple. The United States would give equipment, old equipment, to the countries that had been destroyed by the war, and thus would immediately provide these countries with a basic production capacity and the means to give a minimum of well-being to their population. Support from American credit would also mean credibility for the democratic governments of these countries, and allow them, at the price of some inflation, to behave as if the demand from their consumers was effective, although this demand would be backed by nothing more than an entry in American dollars on the books... and the will of the labour force of these countries to work harder.
Santa Claus, of course, also had something for the United States. The operation was an import of effective demand, and the workers in America would now have to build new equipment to replace the old equipment that was given to Europe, which made serious unemployment unthinkable. The work that would be required to do that could be financed by the U.S. Government, since it was backed by all the "wealth" that represented these loans to Europe, loans that somehow, some day, some debtor in Europe would pay back... If this operation could work, it would certainly prove that wealth was a matter of credibility and that the Great Depression had not been Global Glut but a sad misunderstanding.
It worked, to the USSR's great despair, whose own far-seeing economists had forecasted total collapse in the United States, as soon as the citizen-G.I. would return home to become a citizen-unemployed. Such was its despair, that the USSR naively begged the European nations to reject the poisonous gift, and bravely to take upon themselves the burden of more hunger and sufferings so that the hated capitalist system would crumble down once for all. This request was received with very little enthusiasm.
The Marshall Plan worked, as did mass credit at home, but a few years later gluts and unemployment began to reappear in the United States. Nothing to worry about, it seemed. Until then, it had been normal in each new sector that had been conquered by the machine and for each new product that had been introduced, for the demand first to grow slowly as the curious and wealthy began to explore this new market, then to grow fast as average consumers moved in, to peak as mass production allowed for lower prices and the lower income groups were attracted, and then finally to stabilize and reach a plateau as the product would sell at the lowest possible price that would still bring a return on the investment and producers would adjust to cater only to a replacement market.
Around 1950 all this was old hat, and although economists still argued, investors and manpower had learned their lesson and could fly real low; they simply fought each round to the limit, then ran to another sector just conquered by the machine: that's where all the profits and the jobs were to be found. Then, suddenly, the situation began to look a little different. The production sectors had all been conquered by the machine, and all significant traditional needs were on the verge of being satisfied. Everything that could be mass-produced was already being mass-produced and mass-distributed.
This did not mean that everything that could be mechanized was already mechanized; to the contrary, technology in the coming years would improve at an increased rhythm. It meant that, from then on, the net result of all these new developments in machines could not be, like it had been before, to make affordable for the masses what had been hand-made for the few: the "masses" were already the clients!
Improved technology now, in traditional sectors, could mean no quantum jump in consumption that would make for the creation of a vast number of permanent jobs; it would only bring more productivity on the assembly lines, better quality products, all of which could mean only less sales, smaller profit expectations, less investments and, for workers, unemployment. Quantum jumps in profits and employment, from now on, could come only from the satisfaction of new "needs" that would have to be created. Production would have to break new grounds and &laqno;boldly to go where no man had gone before». Producers would have to invade the Universe of the Superfluous.
In time, consumers might develop a taste for superfluity, but we would quickly get pretty far from visceral needs and the hold of each new gadget on the consumer would be more fragile, each new addiction less convincing. With each new product on which the investors would risk their chances to become richer or broke, the trumps would be more and more in the hand of the consumers, who could "take it or leave it" when it came to electric toothbrushes in a way they never could when the deal was for food, clothes, or even stoves and fridges. The interdependency between the producers and the consumers was becoming one-sided in a way Marx had never mentioned. How many radios does even a poor man need?
Let's take radio, which is a good example. It is possible to put in transistors and make better, cheaper radio sets, but the day soon would come when more than 97 per cent of the population would already own one or more radio sets and adding anything could not expand the market that much... And how much can you expand the market for cars when there are already more cars than families in the U.S.? It did not look much like a problem of distribution of income anymore. Was it possible, that there was more to this problem than Marx or Lord Keynes had seen?
What if there was really a limit, after all, to what even a hungry man
could digest? What if that point had been reached and if consumers would
simply prefer to keep most of their money, or save it for old age, or join
the top-dogs for some fun at the power game and invest in production, rather
than behave like good consumers and spend? What if Global Glut was not simply
a ghost but had materialized? The best way to find out was to pit Santa
Claus in a one-on-one fight with the Ghost and watch the outcome.
Santa Claus and the Ghost
By that time, the far-seeing economists had already vested their champion with so much hope and "sold" it so well to everyone, that it then seemed as natural to give things away as it had been to sell them a generation before. Santa Claus could be given all the chances. The New Deal was revamped and the old tools refurbished: workload redistribution, progressive reevaluation of the value of labour, credit facilities so that almost anyone could spend much more than he earned (provided he behaved properly and spent it to buy the goods that industry would produce), Unemployment benefits, Social Security, and the whole range of other Welfare transfer payments whenever necessary.
To this traditional "liberal" kit of tools, were also added three devastating new "James Bond" devices:
- Government's deficits, to make all ends meet and regulate the Level of Consumption Income of society;
- Progressive taxes, to make sure that no more wealth accrued to the rich and compromised equilibrium;
- Inflation, to wipe the slate almost clean and start anew, anytime anyone would make a mistake.
With this arsenal at its command, there seemed to be no reason the State could not really give a free ticket to heaven to its labour force... if the labour force would only accept to use it!
The new New-Deal, or Santa Claus Agreement if you prefer, was the tacit understanding to keep demand effective by turning back immediately to the workers/consumers the net result of all productivity gains. Producers/investors would not be prevented from making a profit (because otherwise they would be left with no chips to mark the score in the great Power game), but any profits they made would have to be made at each others' expenses.
Investors, as a class, would not profit anymore from the class of consumers, lest the precarious balance between production and consumption be disrupted. Increments to the investors' share of our global wealth would be taken away in taxes, and either redistributed directly to the labour force or spent to cover the operating expenses of Santa Claus... unless the producers would reinvest the surplus in the productive system, to manufacture more goods that eventually could have only the most destitute as end-users, since existing productive capability seemed more than sufficient to satisfy those who could pay their bills.
It was, by an order of magnitude, the best deal ever offered a working class: plenty of all the goods they always wanted, and all the money to buy these goods, if only they would SPEND the money and not hoard it or otherwise divert it from its mission: acquisition of the goods that Industrial Society could produce. Buying, the consumers would show their willingness to uphold the principles of Industrial Society and to endorse the value of the wealth that top-dogs had invested - and would keep on investing - in the production system.
It meant nothing more than for the worker/consumer also to recognize the necessary interdependence between producers and consumers for the system to survive. Buy! Show support for Santa Claus against the Ghost! The best deal ever. It looked like a sure bet, so the match was set to avoid ambiguity as to the rules and result.
Santa Claus would inject money in the economy to increase demand, create jobs, allow for more profits that would end up in taxes and in investments to produce more and more goods that the labour force could acquire for less and less work. The new products that industrial society would offer might be superfluous though, opening the door to the Ghost's counter-attack who, on the other hand, would try to make it appear all very boring. "You already have three transistor radios, you already own one or two cars, you even have an electric can opener... why bother?" The Ghost would try and discredit industrial values.
The conditions were clear, and it would also be easy to know who had won. If a sufficient number of solvent customers - meaning the workers who had a job to prove that they were bringing to society a contribution for which there was still an effective demand - agreed to buy the total production of the economy at a price that still would yield a profit to the investors, it would be tantamount to an effective majority stating that they were still ready to work to obtain what industrial society could offer. If they did, grateful investors would gladly, not only compensate the labour force still at work more and more generously, but also sponsor the State, to the last penny of their profits if need be, to pay the bills of the unemployed and destitute minority so that the poor also might join the ranks of customers and help total consumption equal total production. Everything would sell at a profit, economy would boom, manufacturing goods would pile up indefinitely, and it would be victory for Santa Claus.
If, to the contrary, the labour force would not hold its part of the bargain, if customers proved unfaithful and too many workers should decide that the goods they were offered by industrial society were redundant, and not worth the price in work that they still had to pay to buy them, then Santa Claus would have to give more and more, until the sum of its gifts would exceed the sum of the profits that resulted from the sale of all the goods. There would be an actual de-concentration of wealth... and nothing can be given out of negative profits. If this occurred, the verdict of the effective majority of workers would have been that there was an irreducible discrepancy between investments in the production of material goods and the real demands of society, that surplus goods were produced by the system that were not needed, and that the investment that had been made to produce these goods was worthless. A clear victory for the Ghost, a loss of credibility in the symbolic value of wealth, the Thirties once again and chaos.
Chaos, because this would not be simply another sectorial glut but Global
Glut. A clear signal that there was a surplus, not of this or that
commodity, but of the global productive capacity of the system as
a whole. If this was the case, all investors would be at something not unlike
the "subsistence level" until that surplus would be absorbed and,
with profound irony, a good many of them might not "find a place at
the banquet"... And there would be some real unemployment.
The reluctant consumer
The dice were heavily loaded in favour of Santa Claus. Was there even a remote possibility that the labour force would refuse the best deal ever and choose poverty over affluence? Would the American labour force - and eventually the labour force of other Western Industrial Nations - accept the masochistic gambit to bring the system down? Certainly not as a conscious decision, but there was always the risk that each individual might vacillate and that, somehow, inadvertently, the system might be torn to bits. This possibility was enough to give the shivers to rulers, planners and economists. What if the reluctant consumer said no?
The day of reckoning arrived, and it would even be possible to say exactly the day and hour it occured: the percentage of the manpower at work in the secondary sector, the sector of industrial production which accounts for the manufacturing of goods, a percentage that had peaked first right after World War I and then during World War II.... began irremediably to decline. Not very impressive as an omen for Armageddon? Yet it meant that the population was not ready to spend the money and to buy enough to absorb all the goods that increased productivity had machines ready to vomit from our assembly lines. This, in turn, meant that the labour force could not be fully employed anymore in industrial production.
Production would not decline - machines would see to it that there would be more goods than the hungriest society could use - but less and less work would be required to produce them, leading eventually to total "unemployment" or at least - whether or not workers might decide to sing psalms to pass the time - to a divorce between "work" and the production of life's necessities. This satisfaction is Global Glut and this divorce the very essence of the work crisis.
Reluctance... on top of massive credit, severe taxes to limit wealth concentration, redistribution of income through transfer payments, and inflation that had the rich running faster than ever just to hold their ground! Now that a production system had been built that could provide the labour force with everything it had always wanted, beyond even the wildest dreams of past generations, consumers were proving to be more capricious than the choosiest of machines and had our society flirt dangerously with collapse: they were not buying...
Not buying enough, at least. The reason that even pumping all profits back into the system, in accordance with the Santa Claus Agreement, turned out finally to be insufficient was not only that productivity had increased. It was also that the consumers were not doing the same. There was a leak through which money escaped from the production/consumption loop. Where was the leak? What did the customer want? Why was he turning away from the treasures of industrial production to save, hoard and invest, when investment without adequate consumption would hardly provide a return? Why was not money behaving as it should? Marx, it seemed, had skipped a part of the picture. The money was there and in the hands of buyers, but what was lacking was the will to buy
On closer scrutiny, it became obvious what the capricious customer wanted, and what he was doing. Not only was he saving rather than spending, he was also leaking more and more money to lawyers, doctors, professors, people who were mostly working without the help of machines and were themselves so highly paid, that an even larger proportion of their income ended up in savings and investments - and payment of fees to other professionals! - rather than contribute to increased consumption of machine-made goods.
The customer wanted precisely what the system - which was so anxious
to please him - had been nevertheless reluctant to give him, and he was
leaking a large part of the gifts of Santa Claus to his paramours. The unfaithful
consumer had fallen in love with services, and as far as industrial
production was concerned Global Glut was not a Ghost, it was real.
The meaning of Global Glut
If the reluctant consumer said no and would not change his mind, if more goods could not sell anymore for a profit because there were simply too much of them and acquiring more was not worth the effort - (which is basically what the consumer says when he refuses to spend the money he earns through his work to buy the surplus the system produces) - it would mean the end of the free society we had known. A society based on positive reinforcement could not survive Global Glut.
We saw that there are two great ways to run a society: positive and negative reinforcement. Faced with the challenge of machines, other societies had stumbled on the "simple" problem of effective demand and had turned to negative reinforcement. Fascism had been one way to do it; the metamorphosis, in the USSR, of the original utopian communism into an oppressive tyranny had been another. No surprise. Since it refused, on principle, to rely on the positive reinforcement of ambition and greed, it was a foregone conclusion that the communist system would, sooner or later, be confronted with stagnation and anarchy and then react the easy way out: negative reinforcement.
In Western Industrial Nations - and most of all in the United States - the choice had been to trust the equalizing impact of Machine together with human ambition to create a society of freedom working completely on positive reinforcement. Each desire fulfilled was replaced by another desire to fulfil, each target met was replaced by another target to meet and no sticks were required. Given enough momentum, the system had equilibrium in motion, like a bicycle, and as long as it kept moving it could be kept on course with one hand, even with no hands at all, since the will to uphold the structure had been internalized and Power had been properly identified with Authority.
This approach - we may call it the American Way - had been the answer to fascism and communism and had proved successful enough to meet the challenge of wealth concentration and income distribution, making it possible to soft-sell to top-dogs the dissociation of "wealth as a way-to-own-things" (the object of greed which they would have to renounce, up to a point), from "wealth as a tool-for-power" (the object of ambition which they would be allowed to keep), and to apply the redistribution of wealth essential for the system to function. It was this success in tackling the income distribution challenge that had paved the way for industrial expansion on a scale that had brought Plenty and a deadlier challenge... for society based on positive reinforcement cannot survive Global Glut.
Why? Because positive reinforcement rests on dissatisfaction and on the fact that wealth flows naturally between unequal partners. Wealth is power because there are Have-nots to whom promises can be made, and because wealth can be owned by top-dogs and distributed unequally along a chain of command, among the labour force, to reward compliance with society's objectives. The objectives as such and the precise "Who is Who" of the chain of command are immaterial to the approach. What really matters is dissatisfaction enough for action, and control over the reward.
Machines had brought not only affluence but more equality in affluence, smoothing the gradient that allowed the goods, the wealth and privileges to flow from the Haves to the Have-nots. The success of the American Way had come in good measure from its ability, in spite of this equalization process, to keep always some "pot o' gold" in sight at, the end of a rainbow that did not shine in some distant Utopia but just barely out of reach. Now the Ghost was upon us, flattening the gradient. Why a hunt if needs are satisfied? Why top-dogs if no hunt is needed?
Even more to the point, the system of positive reinforcement of our society was based almost entirely on the distribution of goods. Wealth invested in machines meant power, but only because there was a demand for the goods that machines would produce. If everything machine-made that the system could offer was within reach, then what next? Global Glut seemed to indicate that we had arrived at the end of the proverbial rainbow to claim the prize, namely affluence and leisure.
Who would rule was irrelevant to the system of positive reinforcement; some social changes would not break the equilibrium of a bicycle-like society. But what Global Glut was threatening was not the downfall of one group of top-dogs to be replaced by another, nor the collapse of one particular hierarchy based on the possession of this or that good, but a slow deterioration of the traditional pecking order, of the existing power structure, and of all hierarchies based on wealth, for what can wealth promise to those who have everything?
For those who really had power in the existing structure, the self-serving question might have been how to keep this power. For all members of the effective majority, it might have taken the form of a strong desire to maintain their position in the hierarchy and reasonable differences in privileges. Global Glut, though, was not threatening merely a palace revolution. For anybody in his right mind aware of the implications, Global Glut was raising a more basic question than mere privileges: "How to keep the pack together... and keep it a society based on positive, rather than negative reinforcement?"
What could be offered that would maintain the drive forward that kept the bicycle society in equilibrium? People had many needs still - (from True Love to Immortal Life...!) - that were not satisfied. But these were needs which it was not in the top-dogs' power to satisfy, and which, therefore would not serve as a reward. The problem was really: what could be offered that money could buy... Now that machines had created a Global Glut of industrial goods, new objectives would have to be found in a hurry that could be attained with the support of wealth, and so would not topple the power structure but give it time to adapt to change. Otherwise, it is positive reinforcement itself that might disappear with Global Glut, leaving only two alternatives: anarchy, or a society based on negative reinforcement, tyranny and oppression. This was the real meaning of Global Glut.