, , , , , , ,

Today I post ad libitum.

I will forgo any kind of research to substantiate anything that I will say.  There will be no ‘endnotes’ appended to anything that I will write.  For the only thing required by way of substantiation is elementary logic – or so I believe.

People who know me and who out of kindness or a sense of personal obligation come here to read may want to skip over this particular post.  For it will amount to a tiresome repetition of a syllogism that I too often trot out to explain the inevitability of the phenomenon of unemployment in any social context wherein the primary reason for producing goods and services is ‘profit.’

‘We,’ the citizens of most anywhere on earth today, but especially of counties like Britain, Canada, the U.S., Germany, and so on,  live in economies premised upon the idea and grounded in legal frameworks ensuring that most “units of collective labor” (businesses) exist primarily to generate ‘profits’ for the ‘owner(s)’ of those businesses.

‘Profit’ is the difference between the overall cost of producing one unit of whatever is being produced by way of a good or a service, however that unit may be defined or ascertained, and the price received on the open market for that unit of production.

Although there are a thousand variations on the theme, a business can only truly increase its profit margin by increasing its productivity, that is, by reducing the amount of labor required to produce one unit of whatever it produces, which we will henceforth call a ‘widget,’ be it a good or service.  (Of course, it is true, there are other ways of leveraging one’s ‘profit margin’ besides relying upon the mechanism of actually increasing the productivity of one’s labor force, but that leverage is always only the exploitation of temporary instabilities or the breaking of functionally relevant correlations that in the aggregate and over time accelerate or exacerbate the effects of the relationship on which I here want to focus the laser beam of your attention.  What I want to emphasize is how the dynamic of profit seeking as such, through the vaunted mechanism of inventing and introducing more efficient means of production, invariably produces an increase in unemployment among the ranks of those having to work for a living.)

When a business discovers a way of reducing the amount of time it takes to produce a ‘widget,’ when it figures out how fewer hands might be used to exactly produce what was yesterday’s more labor intensive result, it finds itself before the following eminently enviable choices: it can layoff part of its workforce while maintaining its pre-established share of the market and pocket what previously paid the wages of that part of its workforce to be furloughed; or it can do the foregoing but not pocket the savings in wages, so as to lower the price of its widget and thereby increase its market share – in that case, not only will it furlough some of its own workforce, it will now ‘compel’ a competitor somewhere to do likewise since market share is really a zero-sum game.  Whatever the business decides to do in terms of making  good on its productivity gains, someone somewhere will be out of a job.  For people who work for a living, this is the inevitable effect of the dynamic of increasing profit margins through the mechanism of increasing labor productivity by whatever means.

Additionally, since labor in a for profit economy is at one and the same time the consumer of the widget produced by that economy, as profit margins increase and the labor force proportionately shrinks, so must the available purchasing power for widgets in the overall economy diminish, thereby eventually undermining not only the process of ‘increasing’ profit margins, but also that of merely ‘maintaining’ margins.  The system is anything but inherently stable or self-sustaining.  It must and it does ‘crash.’  And no, it isn’t any more complicated than that to understand why Western economies are perpetually mired in recessions and financial crises.  It really is that simple.