Sunday, 22 September 2013

How Equilibrium Unemployment theory proves Tory malice


That many people would try to dismiss the idea that "capitalism needs a standing army of unemployed" as some kind of Marxist, anti-capitalist, loony-left conspiracy theory, is indicative of the level of widespread economic illiteracy these days.


The fact is, that under the current neoliberalism riddled economic system, these vast standing armies of unemployed do exist, and what is more, the ruling establishment believe them necessary in order for their pseudo-economic models to work properly (which they clearly don't anyway). The term they like to use to describe their "standing army of unemployment" is the "equilibrium rate" of unemployment, which is credited to the ideological guru of Chicago school neoliberalism, Milton Friedman. Some people may be more familiar with Norman Lamont's 1991 description of mass unemployment as the "price worth paying". 

As is the case with a lot of neoliberal theory, the idea of "unemployment equilibrium" is unproven nonsense treated as unquestionable dogma. It is the idea that in any economy there is only one single ideal point in the balance between the negative impact of mass unemployment and the negative impact of increased inflation (caused by "too many" people having jobs). Quite clearly this is absurd, over-simplistic nonsense.

The "labour surplus", as Marx defined it, as the standing army of unemployed that capitalism relies upon, actually makes sense. But the neoliberal pseudo-economic theory that there exists some kind of magical optimal point of unemployment in something as complex and ever-changing as an economy, and that this optimal level of unemployment can be identified and actually planned for, is the same kind of absurd mystical mumbo-jumbo as the deity like "invisible hand of the market" that underpins the neoliberal fixation with market deregulations.

The nonsense theory that there is just one single point of optimum unemployment in something as complex and variable as a national economy would seem utterly laughable if it weren't for the fact that economic policymakers across the globe take this idea very seriously indeed, and have deliberately worked it into their macroeconomic policies. The Bank of England has defined this optimum level of unemployment as somewhere between 6.5% and 7% unemployment. When unemployment is above 7% they have pledged to keep the interest rate at the all-time record low rate of just 0.5%, but if it falls below 6.5% they plan to take active measures to counter falling unemployment.

Essentially, they have decided that the "optimal state" for the British economy is to have something like 2 million people that are capable of work, but not working.

The realisation that high unemployment is actually planned for by the establishment, brings us to the subject of unemployment scapegoating and "scrounger narratives", which is a right-wing propaganda technique used to justify the savage and sustained Tory party assault upon welfare provision.

Just think about it for a moment: If the central bank of the nation is ideologically committed to the neoliberal theory of unemployment equilibrium, they see millions of unemployed as economically optimal, they have a commitment to counter the trend when unemployment becomes too low for their liking, then it hardly makes sense for government ministers to be deriding the unemployed as "scroungers" and "skivers" and attacking welfare provision, does it?

Considered in light of the fact that a standing army of unemployed is considered desirable, even optimal, under the neoliberal theories that the Bank of England and the Tory government adhere to, it becomes clear that the savage Tory attacks on welfare entitlement have been conducted with malicious intent. 

The stories of incentivising people to work by slashing their benefits becomes even more nonsensical than they were before, once we realise that the ruling establishment have an ideological commitment to maintaining high unemployment.

The idea that further impoverishing the unemployed and the working poor alike would give them more incentive to work is ludicrous nonsense (surely increasing wages and improving access to affordable childcare would be more sensible measures if that were the true objective), but this "making work pay" narrative is completely and totally undermined, once we accept the fact that the political establishment has an ideological commitment to maintaining an "optimum" level of unemployment of around 2 million people.

The fact that the establishment are committed to maintaining this army of 2 million odd impoverished and unemployed people makes the existence of mandatory unpaid "Workfare" schemes for the unemployed look even more sinister that they already appeared.

The thinking behind these unlawful Labour party approved "Workfare" schemes, is that if the bonkers pseudo-economic theories that you accept as unquestionable dogma dictate that you need to maintain this army of "impoverished paupers", then you might as well cash in on the situation by putting them to work as free labour for your corporate mates!

If, under your beloved pseudo-economic ideology, it is necessary for your nation to have a standing army of 2 million people unemployed, then slashing their benefits and deriding them as "skivers" is clearly abusive behavior, as are schemes to compel them to do mandatory labour under threat of absolute impoverishment.

If the ideologically driven economic dogma that you subscribe to says that 2 million people shouldn't have jobs, you're an absolute git if you then go around berating those that find themselves unemployed, and repeatedly voting in favour of legislation to further impoverish them and to compel them into abandoning their labour rights and working for free. Thus the vast majority of the Tory party are clearly acting like complete gits.


Although finishing up with an assertion that the Tory party are behaving like a pack of over-privileged gits is hardly the most enlightening conclusion I've ever drawn, I hope you have at least learned something interesting from this (rather hastily written) piece. Perhaps the fact that Karl Marx's assertions about capitalism relying upon a standing army of unemployed is, right now, being proven absolutely correct by the way neoliberal theory is being applied.

 Another Angry Voice  is a not-for-profit page which generates absolutely no revenue from advertising and accepts no money from corporate or political interests. The only source of revenue for  Another Angry Voice  is the  PayPal  donations box (which can be found in the right hand column, fairly near the top of the page). If you could afford to make a donation to help keep this site going, it would be massively appreciated.


More articles from
 ANOTHER ANGRY VOICE 
              
What is ... A Justification Narrative?
               
Who is to blame for the crisis?
           
             
Neoliberalism and Communism

            


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