[Marxism] Fwd: Investment, investment, investment | Michael Roberts Blog

Barry Brooks durable at earthlink.net
Sat Feb 20 08:06:22 MST 2016

Regarding the strange theory that demand doesn't matter, one much
consider whether investors will expand output and thus create jobs
without an expectation of demand ...

>From "The Engineers and the Price System," by Thorsteen Veblen

"Sabotage" is a derivative of sabot, which is French for a wooden shoe.
It means going slow, with a dragging, clumsy movement, such as that
manner of footgear may be expected to bring on. So it has come to
describe any manoeuvre of slowing-down, inefficiency, bungling,
obstruction. In American usage the word is very often taken to mean
forcible obstruction, destructive tactics, industrial frightfulness,
incendiarism and high explosives, although that is plainly not its
first meaning nor its common meaning. Nor is that its ordinary meaning
as the word is used among those who have advocated a recourse to
sabotage as a means of enforcing an argument about wages or the
conditions of work. The ordinary meaning of the word is better defined
by an expression which has latterly come into use among the I. W. W., ?
conscientious withdrawal of efficiency? ? although that phrase does not
cover all that is rightly to be included under this technical term. The


the rate and volume of output have to be regulated with a view to what
the traffic will bear, that is to say, what will yield the largest net
return in terms of price to the business men who manage the country's
industrial system. Otherwise there will be overproduction, business
depression, and consequent hard times all around. Overproduction means
production in excess of what the market will carry off at a
sufficiently profitable price. So it appears that the continued
prosperity of the country from day to day hangs on a conscientious
withdrawal of efficiency by the business men who control the country's
industrial output. They control it all for their own use, of course,
and their own use means always a profitable price. In any community
that is organized on the price system, with investment and business
enterprise, habitual unemployment of the available industrial plant and
workmen, in whole or in part, appears to be the indispensable condition
without which tolerable conditions of life cannot be maintained. That
is to say, in no such community can the industrial system be allowed to
work at full capacity for any appreciable interval of time, on pain of
business stagnation and consequent privation for all classes and
conditions of men. The requirements of profitable business will not
tolerate it. So the rate and volume of output must be adjusted to the
needs of the market, not to the working capacity of the available
resources, equipment and man power, nor to the community's need of
consumable goods. Therefore there must always be a certain variable
margin of unemployment of plant and man power. Rate and volume of
output can, of course, not be adjusted by exceeding the productive
capacity of the industrial system. So it has to be regulated by keeping
short of maximum production by more or less as the condition of the
market may require. It is always a question of more or less
unemployment of plant and man power, and a shrewd moderation in the
unemployment of these available resources, a ?conscientious withdrawal
of efficiency,? therefore, is the beginning of wisdom in all sound
workday business enterprise that has to do with industry.

  All this is matter of course, and notorious. But it is not a topic on
which one prefers to dwell. Writers and speakers who dilate on the
meritorious exploits of the nation's business men will not commonly
allude to this voluminous running administration of sabotage, this
conscientious withdrawal of efficiency, that goes into their ordinary
day's work. One prefers to dwell on those exceptional, sporadic, and
spectacular episodes in business where business men have now and again
successfully gone out of the safe and sane highway of conservative
business enterprise that is hedged about with a conscientious
withdrawal of efficiency, and have endeavored to regulate the output by
increasing the productive capacity of the industrial system at one
point or another.

  But after all, such habitual recourse to peaceable or surreptitious
measures of restraint, delay, and obstruction in the ordinary
businesslike management of industry is too widely known and too well
approved to call for much exposition or illustration. Yet, as one
capital illustration of the scope and force of such businesslike
withdrawal of efficiency, it may be in place to recall that all the
civilized nations are just now undergoing an experiment in businesslike
sabotage on an unexampled scale and carried out with unexampled
effrontery. All these nations that have come through the war, whether
as belligerents or as neutrals, have come into a state of more or less
pronounced distress, due to a scarcity of the common necessaries of
life; and this distress falls, of course, chiefly on the common sort,
who have at the same time borne the chief burden of the war which has
brought them to this state of distress. The common man has won the war
and lost his livelihood. This need not be said by way of praise or
blame. As it stands it is, broadly, an objective statement of fact,
which may need some slight qualification, such as broad statements of
fact will commonly need. All these nations that have come through the
war, and more particularly the common run of their populations, are
very much in need of all sorts of supplies for daily use, both for
immediate consumption and for productive use. So much so that the
prevailing state of distress rises in many places to an altogether
unwhole- some pitch of privation, for want of the necessary food,
clothing, shelter, and fuel. Yet in all these countries the staple
industries are slowing down. There is an ever increasing withdrawal of
efficiency. The industrial plant is increasingly running idle or half
idle, running increasingly short of its productive capacity. Workmen
are being laid off and an increasing number of those workmen who have
been serving in the armies are going idle for want of work, at the same
time that the troops which are no longer needed in the service are
being demobilized as slowly as popular sentiment will tolerate,
apparently for fear that the number of unemployed workmen in the
country may presently increase to such proportions as to bring on a
catastrophe. And all the while all these peoples are in great need of
all sorts of goods and services which these idle plants and idle
workmen are fit to produce. But for reasons of business expediency it
is impossible to let these idle plants and idle workmen go to work ?
that is to say for reasons of insufficient profit to the business men
interested, or in other words, for the reasons of insufficient income
to the vested interests which control the staple industries and so
regulate the output of product. The traffic will not bear so large a
production of goods as the community needs for current consump- tion,
because it is considered doubtful whether so large a supply could be
sold at prices that would yield a reasonable profit on the investment
or rather on the capitalization; that is to say, it is considered
doubtful whether an increased production, such as to employ more
workmen and supply the goods needed by the community, would result in
an increased net aggregate income for the vested interests which
control these industries. A reasonable profit always means, in effect,
the largest obtainable profit. All this is simple and obvious, and it
should scarcely need explicit statement. It is for these business men
to manage the country's industry, of course, and therefore to regulate
the rate and volume of output; and also of course any regulation of the
output by them will be made with a view to the needs of business; that
is to say, with a view to the largest obtainable net profit, not with a
view to the physical needs of these peoples who have come through the
war and have made the world safe for the business of the vested
interests. Should the business men in charge, by any chance aberration,
stray from this straight and narrow path of business integrity, and
allow the community's needs unduly to influence their management of the
commu- nity's industry, they would presently find themselves
discredited and would probably face insolvency. Their only salvation is
a conscientious withdrawal of efficiency. All this lies in the nature
of the case. It is the working of the price system, whose creatures and
agents these business men are. Their case is rather pathetic, as indeed
they admit quite volubly. They are not in a position to manage with a
free hand, the reason being that they have in the past, under the
routine requirements of the price system as it takes effect in
corporation finance, taken on so large an overhead burden of fixed
charges that any appreciable decrease in the net earnings of the
business will bring any well-managed concern of this class face to face
with bankruptcy.

  At the present conjuncture, brought on by the war and its
termination, the case stands somewhat in this typical shape. In the
recent past earnings have been large; these large earnings (free
income) have been capitalized; their capitalized value has been added
to the corporate capital and covered with securities bearing a fixed
income-charge; this income-charge, representing free income, has
thereby become a liability on the earnings of the corpora- tion; this
liability cannot be met in case the concern's net aggregate earnings
fall off in any degree; therefore prices must be kept up to such a
figure as will bring the largest net aggregate return, and the only
means of keeping up prices is a conscientious withdrawal of efficiency
in these staple industries on which the community depends for a supply
of the necessaries of life.

  The business community has hopes of tiding things over by this means,
but it is still a point in doubt whether the present unexampled large
use of sabotage in the businesslike management of the staple industries
will now suffice to bring the business community through this grave
crisis without a disastrous shrinkage of its capitalization, and a
consequent liquidation; but the point is not in doubt that the physical
salvation of these peoples who have come through the war must in any
case wait on the pecuniary salvation of these owners of corporate
securities which represent free income. It is a sufficiently difficult
passage. It appears that production must be curtailed in the staple
industries, on pain of unprofitable prices. The case is not so
desperate in those industries which have immediately to do with the
production of superfluities; but even these, which depend chiefly on
the custom of those kept classes to whom the free income goes, are not
feeling altogether secure. For the good of business it is necessary to
curtail produc- tion of the means of life, on pain of unprofitable
prices, at the same time that the increasing need of all sorts of the
necessaries of life must be met in some passable fashion, on pain of
such popular disturbances as will always come of popular distress when
it passes the limit of tolerance.

  Those wise business men who are charged with administering the
salutary modicum of sabotage at this grave juncture may conceivably be
faced with a dubious choice between a distasteful curtailment of the
free income that goes to the vested interests, on the one hand, and an
unmanageable onset of popular discontent on the other hand. And in
either alternative lies disaster.

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