By Louis O. Kelso*
Not long ago I helped interview several potential executive trainees, fresh out of business school, who were applying for a scholarship to spend a summer in Europe studying business, industry and politics. “Which of these alternatives do you consider most desirable?,” I asked one of them. “Maximum production with maximum employment? Or maximum production with minimum employment?”
“The first, of course,” he snapped.
“Very good,” I nodded. “Now suppose we change the word ‘employment’ to ‘toil’? Would you answer still be the same?”
The boy looked puzzled. “‘Toil’ and ‘employment’ don’t sound the same,” he said at last, “but I guess I’ll stick to what I said.”
I aimed for the moment of truth. “Now suppose you are the president of Standard Item Manufacturing, Inc. You’re sitting in your office when the door flies open to admit your youngest, most ambitious junior executive. ‘Sir!,’ he exclaims, ‘I have been thinking about the antipoverty war and how our company can do its part to help. I think I have it. I want to tell you about a sensational new plan with which Standard Item can turn out the same number of items per year with twice our present number of employees!’”
“I guess I don’t go on that trip,” said my candidate, looking stricken. Naturally he went. It would have been unfair to blame the boy for stubbing his logic on the glaring incongruities of the manpower myth when they go unchallenged in the highest councils of business and state. The manpower myth is our official faith, although like the Roman gods, it is more honored in public utterance than in private observance.
According to this myth, “people” produce all our economic goods and services, and “people” are becoming more and more “productive” every day. Our economy has become the wonder of the world because of our “manpower resources,” and these “manpower resources,” with the negligible assistance of nearly a trillion dollars worth of productive capital, will produce even more magnificent wonders tomorrow. As a recent U.S. government publication put it — artistically staggering the lines to suggest a paean to the economy in blank verse:
Our manpower potential is great enough, with an improving technology,
to increase the production of goods and services by about 50 percent from 1960 to 1970.
We begin the 1960s with a gross national product of $500 billion.
We can reach a level of $750 billion by 1970.
Naturally since people are producing all this opulence, the way to reach even greater heights of future opulence is to have as many people as possible “fully employed.” “Heigh-ho, heigh-ho, off to work” they go — fathers, mothers, grandmothers, uncles, brothers and cousins, all just one big happy labor force pitching in to produce an ever bigger gross national product.
As an explanation of what is going on in our economy, of course, all this is sheer nonsense. It treats the most sophisticated and complex collection of capital instruments ever assembled in the world as if they were extensions of man himself, or magic helpers, or natural resources functioning gratuitously like the sun. It pretends that machine output is human output or what is even more misleading, that it is the output of the machine operator himself. And this fiction, to use a polite word, is the launching pad for an even more curious delusion: the notion that human labor is, through technological advance, becoming more and more “productive.” Any humble truth-lover stubborn enough to challenge this assertion is de facto anti-labor, if not downright antihuman.
But calling a cow’s tail a leg does not make it a leg, as Abraham Lincoln used to say. Similarly, calling people “productive” does not make them so. “If us working guys were really producing everything, we wouldn’t either be unemployed or scared stiff of losing the crummy little jobs we’ve got,” a San Francisco deliveryman told a friend of mine the other day. This flawless logic has yet to escalate up to the policy floor.
The President’s Council of Economic Advisers could learn a thing or two from this knight of toil. As one of the nation’s four million known moonlighters, he works literally night and day to maintain a rather bleak living standard. The family’s furniture, bought on time, goes in and out of hock. “I’ve got to run all the time to keep from slipping back,” he said. He spoke for millions of his fellow Americans, dependent on their labor in an economy that has less and less use for it. Nor is this the language of rising productivity. It is just the opposite.
An inventor in the automotive industry used to say that machines were designed by geniuses to be run by dopes. That is much nearer the truth than the claim that the genius of the machine resides in the operator. The Industrial Revolution broke down crafts which had previously required years of arduous apprenticeship and experience — crafts so exacting that they were properly called arts — and reduced them to a simple rote that could be performed by untrained women and even children.
As sorry as we feel for those helpless victims, crushed by the violent impact of technology on a world that had not the slightest comprehension of what was happening to it, we cannot say that they were more “skilled” or “productive” than the craftsmen they supplanted. They themselves entertained no such notion; certainly the factory owners did not. Like good management today, they knew to a penny what they had spent on capital instruments; nor did they labor under the delusion that the purpose of such capital investment was to create jobs or utilize the manpower resources of their day. They were not obliged to bow to the manpower myth, for the simple reason that it had not been invented yet.
The manpower myth is a relatively recent arrival to our ideological pantheon; its striking resemblance to Marx’s labor theory of value is probably coincidence. Historically, we Americans understand very well the value of capital; it is what our forebears came to America for. Generations of life in Europe had schooled them well in the hard truth that labor without capital means subsistence toil. “O God! that bread should be so dear, and flesh and blood so cheap,” is the laborer’s cry, not the capital owner’s. Americans know this, or used to. But the overwhelming success of our capital instruments has temporarily made us lose our nerve.
The manpower myth is our collective attempt to wish away the automation crisis; it is our hopeful whistle in the graveyard of full employment.
Even five years ago, reports from industry were at least candid. “For every $5,000 worth of investment, you can get rid of one worker,” confided one AFL-CIO official to the press, while the vice president of a major steel company artlessly babbled: “It costs $25 a day for every steelworker that walks through that gate. Naturally, there is a great incentive to eliminate that cost.” But this was before the automation curtain. As the Sixties came in, it descended with a heavy metallic clank.
No longer does one hear such vulgar expressions as “eliminating labor.” The process is now called “creating jobs.” Nobody knows how many jobs are being “created” by automation. Nobody wants to know — officially. Corporation executive, politician and labor leader publicly adopt the stance of the three wise monkeys. Management tells nothing, the politician hears nothing and the labor leader sees nothing. Privately, of course, they are in a flap.
Standard Item plans to install the Triple Whammy Computer system, thereby increasing its production by 125 per cent and [blast the public relations bugles] creating six and one-half new jobs. How to conceal the fact that the Triple Whammy will simultaneously wipe out 124 old jobs keeps the PR department walking the floor nights. The union negotiating committee has not been sleeping well either. Its problem is how to force Standard Item to admit that 124 thumpingly redundant employees are absolutely indispensable on the scene of production, and how to convince its dwindling membership, and the public at large, that unions are equally so and that the “productivity” of the obsolete 124 has “gone up.” This situation, repeated on a smaller or grander scale in virtually every industry in the country, has led to an economic farce. It is now being solemnly enacted by a full cast of distinguished national characters, who are beginning to look as if they had sleepwalked on stage in their nightshirts, or were enacting an American version of the Kabuki dance.
The political personages, of course, are in most imminent danger of losing face. Congress, in its wisdom, has decreed how goods and services in the second half of the 20th century are to be produced. They are to be produced through full employment of the labor force. This is another way of declaring that economic goods and services are created mainly or entirely by human labor. A century ago, reality would not have so rudely contradicted the Congressional edict. Then labor was the most important factor of production. When road building was a job for picks and shovels, the traditional sign “Men at Work” told most of the truth. With today’s vast array of construction machinery, “Machines at Work” would be far more honestly descriptive — with perhaps, in parenthesis, “Men Also Present.”
The Congressional idea of how goods and services ought to be produced is at variance with the facts of technology as well as its logic. Let us seek this logic in the most simple class of machines, the household appliances.
Suppose we are reading the evening’s news; the following advertisement catches our eye:
SENSATIONAL NEW SISYPHUS
MAKES HOUSEHOLD CHORES
TAKE TWICE THE TIME
Why waste your potential? Why read, watch TV, play golf, pursue hobbies and other time-killers when the SISYPHUS MACHINE can keep you fully employed up to 16 hours a day?
Scrubbing, cleaning, cooking . . . now, they all take longer. Thanks to sensational new SISYPHUS, you can spend almost all your waking hours in meaningful, productive work.
SISIPHUS gives you that “retired feeling.” Banishes boredom. Makes you sleep like an ox. Best of all, SISYPHUS gives you that inert satisfaction of knowing that you are using 96.5 percent of your woman-power potential.
Remember SISYPHUS means work!
Only $89.50
Presidents’ Council of Economic Advisers
Seal of Approval
The original Sisyphus was condemned to push a stone up a mountainside for all eternity; this was the Greek idea of hell. Even today, committed as we are to the manpower myth, the Sisyphus machine would be something less than a best seller. Men do not invent machines to make toil.
Embarrassing as it is to have to state such a commonplace, the purpose of the machine is to eliminate work; the more work it eliminates, the greater its success. Americans, in particular, have always delighted in their “labor-saving devices.” However enthusiastically our government goes in for “creating jobs” in principle, we may be sure this policy will never get as far as the patent office.
When our Secretary of Labor asserts: “I think we are all absolutely dependent on technological development for full employment,” he is using Sisyphus-machine logic. Full employment is the antithesis of technological development. They are horses pulling in opposite directions. We have only to imagine them both tied to our economy to envision the final result.
If job-oriented thinking is unrealistic now, it will be even more so in the future. What about the men and women whose jobs are being automated? How are they to produce their livelihoods? This is the momentous question technology is forcing on us, but we can only chorus helplessly with Secretary of Labor Wirtz: “We don’t have any well-worked-out answers.” And as long as we insist on looking at automation through the pink spetacles of the manpower myth, we are not likely to have any.
We must relinquish the manpower myth. We must cut the anthropomorphic umbilical cord and admit that capital instruments independently exist. The fact that they will probably always require some human attention does not change their essential separateness. Then we must admit that the goods and services machines produce are just as truly goods and services as those human labor produces; just as moral, just as real, just as useful, just as legitimate. Many things go into the excellence of a fabric, an automobile engine, a haute couturedress, but human sweat is not one of them. In a current fashion advertisement, a pedantic gentleman tells a pretty woman that the “extraordinary textured pattern” of her white robe was put in without needles or thread or even a sewing machine. “I couldn’t care less if they did it with chemistry. It’s the look I love!” is her pragmatic reply. Human labor adds to the cost of a product, but it is no mystical enhancer of value. The question is not whether a thing was produced by the human factor or the nonhuman factor; it is whether we like it, find it useful, and want it.
Every economist should repeat firmly to himself every night before he falls asleep: “There are two factors of production. There are two factors of production.” When this truth has percolated through enough craniums, the answer to the automation crisis will suddenly be as obvious as the machines themselves.
If the economy no longer needs our personal toil, there is another way for us to be economically productive. We can own the capital instruments that are doing the producing. If technology is obsoleting the human factor, and increasing the productivity of the nonhuman factor, isn’t this just common sense?
But there is a difficulty. Labor power is diffused throughout society by nature; everybody gets it at birth. But nobody comes into the world owning capital. Property is a social arrangement, conferred by custom and law. Even in the slave-owning societies of the past, the master could not extract the labor power of his slaves and concentrate it in his own person. Capital is different. Theoretically, one person could own it all. And under our present financial customs that decree “he who has gits,” ownership of capital is automatically invested in a very small fraction of our total population.
Most of us, like the San Francisco deliveryman, owe instead of own. And the less the economy needs our labor, the less able we are to “save” our way to capital ownership. Thus the very people who most need to own capital have the least chance of ever getting any.
This is the paradox in which the solution to the automation crisis must be sought. We must adapt our financial machinery to enable people without savings to buy and pay for the machines that are automating their labor. Dividends — like wages — are income. Dividends could also be a source of mass purchasing power if stockholders were the people with unsatisfied economic needs and wants — i.e., if there were many of them instead of few, if their holdings were of sufficient size to produce significant income and if corporate earnings were actually paid more fully to stockholders. Standard Item’s current quarterly dividend of $1.75 represents, of course, only a fraction of what the stockholder would receive if the earnings represented by his capital were not diverted by corporate income taxes and other government and corporate policies.
Years ago an automobile executive showed Walter Reuther Detroit’s first mechanized assembly line. Reuther’s crack is now famous: “But will those machines buy cars?” When we have buried the manpower myth, perhaps we can at last supply the logical riposte that did not occur to the executive. “No, Walter, it is the owners of machines who buy cars. And given enough of them — assuming they receive the income their private ownership entitles them to — they can buy everything the machines can turn out.”
* Patricia Hetter, Co-Author
— Originally published in CHALLENGE, The Magazine of Economic Affairs, April, 1965
