This is, depending on how you look at it, either entirely glorious or deeply depressing.
Peter Wilby has been both the editor of a national newspaper (yeah, OK, Indy on Sunday but still) and the New Statesman. And in his latest piece he displays that he knows absolutely nothing at all about economics.
His essential argument boils down to Teh Foreigners taking all our jobs and those they don\’t being lost to automation means that living standards in the UK will inevitably fall.
And it\’s all the fault of those darn neoliberals.
As Luis Enrique continually points out, it can be embarassing to be on the left when somone so senior on said lefty side proves themselves to be so ignorant.
There are a number of responses to this (starting with \”Open a fucking textbook, cretin!\”) and moving on to the less emotional points as folows:
Average wages in an economy are determined by the average productivity in that economy.
Individual wages are not set by what that individual does: but by the wages paid by the next possible alternative use of that individual\’s labour. This is, for example, why a hairdresser in London makes more than a hairdresser in whatever the capital of Upper Volta is called this week. Because the other jobs available in London pay more than the other jobs in WTCOUVICTW.
There is no shortage of things to do: the wants and desires of humans are unlimited, while the resources (including labour) that we can put towards meeting them are limited.
Johnny Foreigner doing things cheaper than we can could indeed reduce, temporarily, the wages of the specific person that used to do what JF is now doing. However, JF\’s production is, quite clearly, lower in cost than the previous incumbent\’s, which means that everyone\’s real income has just risen. Real income is not, after all, how much you earn, but how much you can buy with it and if prices are falling generally then your income, even if static in nominal terms, is rising.
Machines doing things cheaper than we can could indeed reduce, temporarily, the wages of the specific person that used to do what the machine is now doing. However, machine production is, quite clearly, lower in cost than the previous incumbent\’s, which means that everyone\’s real income has just risen. Real income is not, after all, how much you earn, but how much you can buy with it and if prices are falling generally then your income, even if static in nominal terms, is rising.
Finally, as Marx pointed out, wages rise to meet average productivity, not wages falling as cheaper labour becomes more productive. This happens because capitalists compete for access to the profits that can be extracted from that labour. As the labour becomes more productive more profits can be extracted and the competition means that wages are bid up.
So, what happens when the machines or the brown and yellow peeps come to steal all our jobs?
All of the things that we consume, now being made by these cheaper providers of labour, become cheaper, thus our real incomes rise. Their wages, now that they are becoming more productive, rise. Our wages on average, determined by our average level of productivity, move in step with our productivity, not the changes in the productivity of others. And our labour can go off and do those other things which will satisfy yet more human desires and wants: another way that we get richer of course, for satisfying two or three needs and desires instead of only one means that we are of course richer as long as we define wealth in any rational sense at all.
Oh, and, yes, there\’s another little effect. Our brown and yellow bretheren, those who were recently and perhaps still are stuck in that child killing misery of Third World peasantry, get rich too.
So, we get richer, they get rich, misery declines and yet more kittens gambol happily with the lambs.
Peter Wilby blames this all on neoliberalism and he\’s right to do so. Which of course is why I\’m proud to be identified as a neoliberal.
Come on, what the fuck else do you want from a socio-economic system than everyone managing to get gloriously, stupendously, rich*?
*Please note that in current $, average world GDP in 1700 or so was around $600, $800 a year. Today it\’s around $8,000. The IPCC assumes, in its calculations of climate change, that if we\’re all good little neoliberals for this coming century that it will be $80,000 in 2100. Seriously folks, what the fuck else do you want from an economic system?