Bred DeLong is a well-respected economist at the University of California at Berkeley, and a former member of the NBER; his primary "interest," according to his faculty page, is economic history. We mention his expertise because of the strange light in which it casts his most recent paper, "Get Ready for a "Jobless Recovery"" (full text at bottom here; it was also published at The Week, here).
As the title promises, the paper suggests that the climb out of "the Great Recession" will not restore the jobs lost on the way down (let us hold in abeyance the question of when and whether that recovery will come). It presents this claim as if it were, well, confounding or interesting. The rule of thumb in conventional economic circles dates from 1962: Okun's Law, indicating that unemployment swings will correlate inversely with GDP changes, at about a 1:2 ratio. The specifics don't matter so much as the gist, which is that as GDP rises, unemployment goes down. Recovery = recovery of jobs.
But it turns out that Okun's Law endured for all of two decades, and has been broken for longer than that. Since the downturn of 1979-1982, recoveries haven't included employment gains. DeLong offers a penetrating analysis, which — to summarize, though we encourage you to read his specific claims — goes like this: useta wuz, companies held on to skilled labor, identifying that as the core of their business; in general, they pursued a fairly rigid employment program, with long-time employees in fixed employment. For the last couple-three decades, however, companies prefer and take advantage of a far more flexible labor scenario:
Now, by contrast, it looks as though firms think that their workers are much more disposable—that it's their brands or their machines or their procedures and organizations that are key assets.....Hence the start of the recovery is a business' last moment to slim down its labor force and become more efficient and profitable in the coming boom.
This claim is mind-boggling: not because it is so wrong, but because it is such a minor and fractured accounting of what a mountain of economic thinkers have known for years. This wondrous change? It's called "post-Fordism," or "flexible accumulation" or "the casualization of the labor market" or a host of other names describing different facets of the economic shift that takes place around the mid-Seventies. It involves, well, a shift away from fixed full-time employment and toward a labor force retained on temporary and flexible terms: a labor force whose stability, strength, and magnitude continue to wane in ratio to the increase in constant capital ("their brands or their machines or their procedures and organizations" in DeLong's phrasing that conceals more than it shows about the actual operation). This change is called the rising organic composition of capital, and is a driver of crisis; the crisis around 1973 was exactly the occasion for this new labor arrangement that took only a decade to reveal itself in employment cycles, and only 35 years to come to Brad DeLong's attention.
So the reasonable question, from the position of intellectual history, might be: why could a well-respected and quite knowledgeable (and moreover, relatively catholic) observer not see what was not only obvious but the subject of book after book? Here we can only conjecture, though it's easy enough to begin with the suspicion that DeLong simply doesn't like the periodization and has covered his eyes — if he did have to recognize it, he might have to recognize that the categories it uses are somehow relevant, useful, even descriptive of the actual situation. And then he would have to reckon with the accompanying analyses about neoliberalism, late capitalism, and etc. He might even be compelled to consider the possibility that value comes from labor time within the production process.
This cannot be allowed to happen of course, and so, rather than even allow such matters to threaten his consciousness, he chooses to blind himself to the most evident historical facts, which he is then compelled to discover with comic belatedness. Which is an at least somewhat salutary reminder of how ideologically-based are even the more progressive accounts of institutional economists: DeLong's blindness arises out of the imperatives of his situation just as surely as does Okun's Law, which of course appears as a permanent "law" exactly at the peak of the long postwar boom from 1948-73. Pure magic. What laws will be discovered next?
Posted by jane at July 22, 2009 07:58 AM | TrackBack