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Notes on the Question of Unemployment / [Paul Mattick], 1937

Source:  – Notes on the Question of Unemployment / [Paul Mattick]. – In: International Council Correspondence, Vol. III (1937), No 1 (January), p. 27-33; transcribed by Felipe Andrade, 5 November 2020.


The arguments about unemployment turn almost exclusively on the question of whether the machine displaces workers or not. While the one side asserts that the machine has enabled the expansion of old and the creation of new industries, the other maintains that the machine and every thing connected with it gives rise to increasing unemployment.

This debate, in which on the one hand the development of technology is esteemed as creating more jobs and, on the other, unemployment is regarded as originating from this technology in conjuction with the present relations of distribution, is largely doomed to sterility, since it isolates the development of technology, as something independent, from the general capitalist laws of accumulation. By reason of accumulation, however, the number of workers increases in the upswing period of capitalism regardless of workers being displaced by the machine.

According to Marx, the growth in the number of factory workers in conditioned upon a proportionally much more rapid growth of the total capital thus invested. If production does not increase more rapidly than the advance in the development of technology – that is, if accumulation does not proceed in an accelerated manner – then the number of workers is bound to decline. It is true that the number of workers in the United States increased down to the year 1920, yet in relation to the growth of capital the number continually diminished. The tempo of accumulation, which manifests itself in the increasing wealth of society, was more rapid than the rate of increase in the number of workers. At the same time the number of unproductive workers increased more rapidly than that of the productive. As in all other countries, the magnitude of the unemployment fluctuated with the volume of production. When the economy had reached a relatively stagnant phase, the unemployment increased absolutely.

In case the production of surplus value, as the exclusive motive of the present mode of production, fails to meet the demands of a progressive accumulation of capital, this accumulation is bound to slow down or even to become suspended, until in a number of ways of necessary profitability is again reestablished, enabling once more an accelerated accumulation. In the meanwhile the enormous amount of unemployment appears as a result of overproduction of commodities, brought about thru an excess of means of production and a deficiency of mass purchasing power. It is true that the overproduction of commodities is one of the manifestations of the overproduction of capital. According to Marx, however:

“It is not a fact that too many necessities of life are produced in propotion to the existing population. The reverse is true. Not enough is produced to satisfy the wants of the great mass decently and humanely. It is not a fact that too many means of production are produced to employ the able-bodied portion of the population. The reverse is the case. In the first place, too large a portion of the population is produced consisting of people who are really not capable of working, who are dependent through force of circumstances on the exploitation of the labor of others, or compelled to perform certain kinds of labor which can be dignified with this name only under a miserable mode of production. In the second place, not enough means of production are produced to permit the employment of the entire able-bodied population under the most productive conditions, so that their absolute labor time would be shortened by the mass and effectiveness of the constant capital employed during working hours.” (Capital, Vol. III, p. 302).

A number of investigations on productive and consumptive capacity in the United States have led, for that matter, notwithstanding the popular opinion to the contrary, to the recognition that the productive capacity is not great enough to meet the needs of the entire population. As a matter of fact, the productive equipment of 1929 was used to 80 percent of its full capacity. The Bureau of Home Economics of the u.s. Department of Agriculture holds that a 75% increase in the 1929 production level would be necessary to provide a “reasonable” standard of living for every family in the United States. It is only in individual industries that the productive capacity was or is great enough to satisfy all the needs of the population. The purchasing, and hence consuming, power of the great masses of the population around 1929 was far from affording a standard of living which according to present-day criteria could be regarded as reasonable, so that even the application of the 20 percent of unused productive equipment would have made little difference. Even in the so-called period of prosperity there was not a single year in which the workers incomes attained the minimum computed to be necessary for a decent existence. From the standpoint of a reasonable society, computing with use values, there is accordingly no excess of means of production and workers, but indubitably a deficiency. Any further progressive expansion is bound up with the further development of the social forces of production.

Unemployment and unused productive possibilities are not to be traced back to the development of technology, but to the manner in which this technology is conditioned and impeded by war of the laws inherent in a profit economy. This is also the sufficient reason why all attempts to solve the problem of unemployment and to overcome the crisis by way of reforms of the mechanism of distribution alone are destined to remain fruitless; the only matter of any avail in this connection is a change in the mode of production itself. Until that time the restriction of the productive forces (inclusive of technology), with the accompanying lack of goods and shortage of workers, assumes to the superficial observer the paradoxical form of over-production and excess population. The hopelessness of a strictly capitalist solution of the unemployment problem has led to various proposals of a more or less “extra”-capitalist nature, mainly three. In addiction to the ideas of planning, which for the most part proceed from the monstrosity of a capitalism conceived as stationary, holding it possible by means of a suitable policy with respect to money, credit and prices to bring about a socially stable equilibrium between production, consumption and profit and which in practice nevertheless merely promote the concentration of capital and accordingly intensify the crisis and unemployment in the same measure in which they try to operate against them; and apart from the consistent demand so often heard for a complete state capitalism, which at any rate presupposes a thorough overturn of the present property relations, there has also arisen a backward looking movement which has reference mainly to agriculture and which, under the name of Agrarianism, has its spokesmen especially in the southern states of the Union.

Agrarianism, in the conception of its representatives, is to be regarded as the antithesis of industrial capitalism. The self-providing farmer who has made himself free of the laws of the market is here regarded as a model to be initiated not only on the part of the majority of the present farm population but also on part of the urban unemployed. As a matter of fact, however, the condition of self-sufficiency, whether desirable or not, is possible only as an exception to the social rule. The great majority of the farmers cannot, owing to the high degree of specialization already attained, fall back into these primitive conditions. That part of the farmers which has been forced into primitiveness can look upon its position only as a temporary relapse, to get away from which, by all means at command, is the matter of moment. Those elements which have swarmed back into agriculture from the cities are either members of the farming popu lation or people with savings who, by reason of the crisis, invest their holdings in farm property with the hope of thereby being in a position to spend their final years in a peaceful tho modest manner. Even the farm tenants making a new start in life are obliged to have enough capital in order to find the change from the city to the country to be at all possible. The lease obligations preclude for these people any adjustment to self-sufficiency; they are rather, in order to be able to exist, compelled to engage in the keenest competition. The whole previous development of american agriculture is opposed to the possibility of the agrarian ideia; as it is also opposed to the alleged solution of the unemployment problem contained in this program, a return to the days of the covered wagon. Pioneer activity had reached its end as early as about 1890; there was no more tillable free land. With the setting in of the technical revolution in agriculture, the number of workers engaged in it declined. With the recession of industrial expansion and with the increase of unemployment in the cities, arose the permanence of a situation in which over-population on the farms was combined with over-production of farm products.


Not only from the standpoint of a planned economy thinking in terms of use values, but even from the standpoint of the present mode of production no way out of crisis and unemployment is to be found other than thru the further expansion of the social forces of production. Any real attempt at solving the crisis must take the direction of liberating productive forces which are now held in the dormant state, however much this solution may accentuate the finally fatal contradiction between productive forces and relations. The impossibility of any real planning of capitalist activity precludes not only that the productive forces will be restricted because of a recognition of the consequences to which their further development would give rise; it precludes also the opposite policy, that of consciously promoting them. The strangling of the productive forces during the crisis is a compulsory one; while at the same time the crisis forces the adoption of measures which bring with them a greater or lesses overflow of the productive forces in the excessively narrow bed of the productive relations.

Any theory of a conscious limitation of production with a simultaneous rise in mass consumption for solving present contradictions is doomed to remain in the theoretical stage and is only a piece of propaganda designed to conceal the actual situation. If possibilities for new capital investments are present, they are also seized upon, without regard for the social consequences, since every capitalist concern can act only on the basis of its individual needs. Capitalistically, as well as in general, crisis and unemployment can be overcome only by way of increased production. To make this possible within the framework of capitalism is the aim of all capitalistic strivings. There are hundreds of thousands of projects for agriculture and industry, fabulous possibilities for the expansion of production, - scientific and other literature is swarming with them, - the actualization of which, however, hinges upon their profitability. All the efforts of capital are therefore directed to reestablishing a basis for increased surplus value, hence to the appropriation of a greater mass of surplus labor. From this point of view, the shortening of the work day, of the labor time, as a solution of the unemployment problem is likewise rejected by capital.

The well-known demand of the Roosevelt Administration for the limitation of production, this also was raised only so long as the actual stagnation would have made the opposite demand as well a matter of no concern. This demand was in harmony with the process of cartellization and concentration of monopoly capital during the deepening of the crisis. It helped to extend the stagnation of the large capitals to the whole of capital, and thereby prevented in part the realization of extra profits by smaller capitals, which paradoxically and for a time had possibilities of accumulation which were precluded for the large capitals. With the slight upswing since 1934, however, the program for the limitation of production was allowed to drop; in fact, it began to be opposed, as involving artificial and restricting price schedules which the country was unable to bear. More elbow room to business became once more the order of the day. More unpaid surplus labor and less paid labor is the final secret of the reestablishment of profitability, and this presupposes the expansion of the field of production and the raising of productivity. Anyone who wants to exploit more workers is obliged first to exploit a given number of workers more intensively. Anyone who wants to exploit at all must continually increase the rate of exploitation. It is not necessary for this law to enter the consciousness of the capitalists; but their most immediate necessities compel them to those actions, and to only such, which would be taken if this law were a part of their habitual consciousness. With the far from exhausted possibilities of exploitation of the world before their eyes, incapable of harmoniously adapting their activity to the limits of profitability, even if these limits were known to them, the whole class of capitalists, or the entire movement of capital, must, like each individual capitalist, be adjusted to further leaplike expansions. The difficulties with which capital is faced in its attempts at reestablishing profitability and the progressive accumulation of capital bring with them, regardless of al the optimism, a great fear of disturbances of this process thru the reactions of society to the intensified exploitation. A great army of unemployed must be on hand to keep wages within limits if the tender bloom of the rehabilitated capitalist paradise is not to be nipped in the bud. This army must, at the same time, be mighty enough to enable the expected increase of employment, together with the relative displacement of workers, without for that reason essentially diminishing the rate of exploitation. A deficiency in unemployment brings capitalistic successes into question. However much, on the one hand, unemployment is looked upon as a burden, it is no less also a guarantee of the stability of present-day society. In particular, the international competitive struggle and the imperialist policy conducted with a view to raw materials and export of capital and commodities, and which at the same time is the process of reorganization corresponding to commodity economy within the framework of the world economy, and which has its culmination in war, requires a superfluity of population and makes the over-population into a mighty, however horrible, instrument of capitalist expansion of the productive forces, which are always at the same time forces of destruction.

“That the natural increase in the number of workers does not satisfy the requirements for the accumulation of capital, and yet all the time is in excess of them, is a contradiction inherent in the movement of capital itself.” (Marx: Capital, Vol. 1, p. 704).

Thus we have, on the one hand, the fear of unemployment and on the other the fear of its loss, a fear which comes to expression particularly in the ever louder complaints about the dangers of the declining birth rate to humanity in general and about the decrease of population to the further destinies of capital.

After all previous crises, the reestablishment of a sufficient appropriation of surplus value, that is, the assuring of profitability on a lower value and price level, was bound up with an increase in the absolute number of workers. Today also there is no prospect of a new upswing unless success is attained in binding up with the expansion of the productive equipment an increase of exploitable workers. The accumulation must be so strong that it results in new opportunities for work. The success does not depend on additional employment of workers; and yet a success is only possible on condition that the upswing is so great it draws more workers into production. So that to anyone who, in spite of all the unemployment and in spite of all the stagnant means of production, expects a further progressive advance of capitalism, the present productive equipment and the present number of workers are necessarily inadequate. The external compulsion which governs the movement of capital is stronger than any insight of the capitalists involved. The urge to accumulation, that is, the self-preservative instinct of present-day society, does not admit of conceiving unemployment simply as unemployment. The social activity must be carried on in such manner as if an actual shortage of workers existed.

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Compiled by Vico, 8 November 2020