Abstract
Contemporary Sociology 12:1 (January 1983):24–26
Alfred Sauvy, at the age of 83 one of Europe’s freshest and most original minds, has turned to the problem of unemployment and the sharp contrast of appearance and reality attaching to it. Any laborsaving device looks as though it renders someone’s labor superfluous. If a man is replaced by a machine and nothing else happens, the total employment of the economy is reduced by one. On such appearance a variety of policies have been based, ranging from rules that the employee must stand beside the machine even though no operator is needed to tariffs in other countries that lack the machine.
Yet to suppose that all else remains the same is nonsensical. Any automation forces a series of other changes. The reality is that those countries with the most laborsaving machinery also have the least unemployment. Unemployment is worst in the poorest countries; as countries develop, i.e., as they increase their stock of capital, unemployment diminishes. The United States has absorbed forty million new entrants into its employed labor force since 1950, including married women and the baby-boom generation, with virtually no reduction in the work week, at the same time as it introduced a host of laborsaving devices. The machine appears to cause unemployment, where in reality it creates jobs, at the same time as it increases the supply of goods.
The point was made by Adam Smith and would hardly be worth making again now, except that policymaking accords so persistently with the appearance rather than with the reality. Britain offers conspicuous examples, but American history has its share; the New Deal was not the only instance where labor-intensive public works were thought desirable because of their low productivity.
Technical change does dislocate work patterns. If workers who cannot continue doing exactly what they did before regard themselves as unemployed, then unemployment will increase. In the long run technical advance benefits the entire community; its immediate effect is to harm some, benefit others. Depending on various elasticities and policies, someone is likely to have more money to spend—the remaining employees of the firm introducing the improvement, or the owners, or the buyers of its products, depending on its wage and price policy. These funds will be available to give employment, but only to those who are adaptable, who can learn new skills, or change their place of residence, or both, since the new employment is not likely to be in the same place nor of the same kind as the old. This puts the cost of the technical improvement on the employees, and they may be unwilling or unable to cover it.
The liberal (now called conservative) answer to such questions that was much in favor in earlier decades was very far from letting people do what they want to do. It was in fact a rigorous dictatorship. When people lost their jobs they had to learn a new trade or starve. There was no unemployment insurance. The point about liberalism, free trade, and the cash economy was less that it optimized anything than that it broke down old structures. Today we do not believe in so cruel a way of making people adapt, and we seek a less harsh equivalent.
One suggestion for flexibility that need not injure individuals is through the firm. Suppose that when a man or woman was hired he or she was in effect given a lifetime guarantee of employment, as long as the firm remained in existence. Wages would be high when the firm prospered, cut when the firm was in trouble. Competition among firms would be intense, and weak producers would actually go under. The firm would take responsibility for its employees, and the employees would work hard because the prosperity of their firm was a life and death matter to them. When innovation made a job obsolete the firm (which gained through the innovation) would have as its first task finding some other work for the incumbent of that job. This would put worker incentives on the side of technical advance and efficiency; restrictive practices would never enter the mind of the employee. Challenge would be there aplenty; the system would count on reciprocal loyalty to meet the competitive challenge. Each firm would be a solidary team, intent on winning, and its collective effort would benefit the community and itself.
Is such an organization of production a hallucination? Hardly—something very like it prevails in Japan.
But this is not enough. If the only adaptation were intrafirm, we would all still be peasants, as Sauvy says. Progress requires new enterprises. The income to buy their products that results from the mechanization is somewhere—in the hands of owners, workers, or customers of the innovating concern that introduced the mechanization in the first place. Some of the saving from the mechanization can be converted into capital that will fund the enlarged circuit. The spillover effects of mechanization in an advanced society are in considerable part in the tertiary sector, and it is to these that Sauvy gives special attention.
It is not a matter of indifference how the gain from the new equipment is spent. At one extreme it might be used for a trip abroad, in which case its immediate effect on employment within the country is nil. At the other extreme it might be used for the purchase of a pure service in an activity where there are unemployed workers and no capital is required. The money may be spent on hiring a secretary who hires a nurse to look after an ailing mother, and also takes ski lessons on weekends, etc. Very long circuits are possible, and it is these circuits that ensure that there will be more employment created than was destroyed by the innovation.
This fact, that with more machines there is more employment, leads to policies for getting rid of unemployment when it does appear. The long circuits of tertiary employment, including government, trade, insurance, and the liberal professions, create more jobs than the machine takes away. They have to be stimulated, and the secret is adaptability of the human component of production.
Sauvy’s thought is relevant whatever the political orientation. Will socialism increase the circuits of trade and tertiary production? Yes, if it can secure the needed willingness of people to learn new things, to do new work, to receive lower pay temporarily when their productivity shrinks. Is deregulation within free enterprise what we need? Not if it exacerbates the confrontation of capital and labor, for that increases rigidities.
The several kinds of rigidity, to which this perspective ties persisting unemployment, are attributes of individuals as well as collective consequences of social structures. Under feudal organization individuals have every reason to be inert, dependent, respectful of tradition. Capitalist organization and the competitive process changed people, made them mobile, introduced strong incentives to accommodate to change. Sauvy’s book invites social scientists of all disciplines to think hard what new kinds of social organization will further increase adaptability to accord with the accelerating rhythm of change of the late twentieth century.