[Marxism] Vampire capitalism

Louis Proyect lnp3 at panix.com
Fri Mar 19 08:35:44 MST 2004

"Capital is dead labor, which, vampire-like, lives only by sucking living 
labor, and lives the more, the more labor it sucks."

--Karl Marx, Capital, vol. 1, ch. 10


NY Times Op-Ed, March 19, 2004
Only Machines Need Apply


The gross domestic product is going up, but hiring looks sluggish. Credit 
cards bills go unpaid, but big-screen TV's are flying off the shelves. With 
statistics so contradictory, maybe economists should ditch their 
spreadsheets for dart boards.

Let's leave aside all the estimates and extrapolations for a moment and ask 
a simple question that may help cut through all the confusion: if you were 
a manager, why would you hire a human being instead of a machine? Humans 
get sick. They daydream. And they take coffee breaks.

The cost of capital equipment, meanwhile, from laptop computers to lathes, 
has plummeted since 1995. Moreover, the cost of leasing and financing new 
tools has fallen to the lowest levels since, well, before there were 
laptops and lathes. At the same time, federal tax policy has been tilted 
toward capital spending, with taxes on most dividends and capital gains 
falling to 15 percent. Changes in the tax law two years ago allow small 
businesses to write off $100,000 in new equipment immediately, while big 
firms get a temporary 50 percent write-off.

People, however, remain relatively expensive. Let's say an applicant can 
deliver $35,000 of value for the firm — and she is willing to work for 
$35,000 a year. Great match, right?

Not exactly. In addition to her salary, the employer also has to pay a 7.65 
percent Social Security and Medicare tax, and contribute to workers' 
compensation and unemployment insurance. And then there's health insurance 
costs: employers paid an average of $6,600 per family last year. President 
Bush's tax cuts chipped away at these barriers, but they are still rising — 
just when the hurdle for capital has shrunk to the height of a sidewalk curb.

Can anything be done? Well, we certainly shouldn't dissuade businesses from 
investing in machines. Huge productivity gains help raise our standard of 
living. Congress could make it less costly to hire workers by reducing the 
amount an employer is required to contribute to Social Security taxes for 
new employees. Then managers might be less likely to view a job applicant 
like a walking bill from a collection agency.

Barring action by Congress, however, there is still hope for job seekers. 
Stein's law, named after the economist Herb Stein, declares, "If something 
cannot go on forever, it will stop." Over the next year, as American 
businesses take delivery on all the technology and machines they have 
ordered, the "Help Wanted" signs will finally go up. Human workers are not 
yet an endangered species. After all, somebody needs to operate the 
equipment — or at least turn on the coffee machine.

(Todd Buchholz, a former White House economic adviser in the administration 
of George H. W. Bush, is the author of "Market Shock.")

Louis Proyect
Marxism list: www.marxmail.org 

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