Post by Michael ScheltgenFor some reason I thought investment in human capital and R & D,
and the subsequent productivity gains were the engines of real
economic growth.
Anyone know a good lawyer? I'm gonna sue my professors.
:-)
Michael - maybe you ought to sue your professors.
They've evidently presented a limiting case, which is valid in some
times and some places, as a general law.
They've clearly given you the false impression that because "investment
in human" capital in the form of better training for the workers is
SOMETIMES essential for capitalism, this is ALWAYS what capitalist
entrepreneurs and investors want.
Let's use your terms, though.
"Investment in human capital" - obviously that can mean investment in
training and education for the workers, to make high-wage workers
smarter, more efficient, and more productive. Hence able to generate
greater profits per hour for the employer.
However, "investment in human capital" also can mean finding cheaper,
less educated, and/or much poorer workers. Who will work for lower
wages because they have to. And who therefore will generate greater
profits per hour for the empoyer, so long as the price of the product
stays the same.
Look at the economic history of the world textile industry for the past
50 - 100 years, Michael, and you'll see both kinds of "investment in
human capital" occurring. But I think you'll see the corporate search
for cheaper labor predominating. In the US textile industry, for
example, you first see the big textile companies moving out of New
England to the American South, where living standards were lower, union
organizing was damned near impossible and labor therefore was cheaper
than in Massachusetts.
Then, between around 1960 and 2000, I think you'll see US corporations
either getting out of textile production, because they can't compete
well with cheap clothes made in Latin America and Asia.
Or you'll see some US producers investing in the Dominican Republic,
Haiti, China -- I believe the Levis Strauss, the famous bluejeans
maker, at one point even invested in Mynanmar under the brutal military
dictatorship, until social activists here in the US shamed them into
getting out of the country.
Ditto with automobile production, I believe. When auto wages in the US
rose, and when middle-class growth in places like China and Brazil and
Mexico started to generate potentially lucrative markets for cars in
these places, Ford Motor Co. in particular began investing extensively
in "offshore" [meaning non-US] production.
Ultimately, capitalist business is about the generation of profits; in
a more or less free market, capitalist enterprises can't survive
without profits. And profits depend in large part on what the
economists call a favor "value added" per worker that a company
employs. So capitalist companies HAVE to pursue a high "value added,"
or risk bankruptcy.
If the company pays high wages, then it can obviously boost "value
added" by helping its workers be more efficient, either through
education and training or through labor-saving machinery, or both.
But the company also can boost its "value added" by hiring workers who
have the same productivity, or even lower productivity, and paying them
less per hour.
It's the DIFFERENCE between the wages they earn and the economic value
they produce per hour that's the key.
BTW - Hazel Henderson, in "The Politics of the Solar Age," has pointed
out that thecapitalist pursuit of ever-higher labor productivity
generally means that a capitalist economy has to generate ever-higher
output, just to keep unemployment in the society from getting worse.
So long as companies invest in machines and computers that enable a
given number of workers to produce an ever-rising output of cars, or
steel, or plastics, or glass or lumber or whatever per hour, the US
economy has to find ways to consume an ever-rising quantity of cars,
steel, plastics, glass etc. -- or a lot of workers will have to lose
their jobs.
Or, alternatively, the capitalist economy has to develop new industries
and new products -- e.g. personal computers, genetically engineered
foods, plastic throwaway packaging, etc. -- to soak up the excess labor
that's been discharged by basic manufacturing industry as its
productivity improves.
In either case, the capitalist economy has to GROW, GROW, GROW -- even
in the absence of any population growth -- just to keep unemployment
rates from getting worse.
When capitalist growth either allows or encourages additional
population growth, of course, the addiction to growth in economic
output grows more intense. Which normally has really negative
implications for the natural environment, and indeed for human welfare
over the long term.