How come under capitalism the unemployment never falls below 5%? I understand why it will always exist...

How come under capitalism the unemployment never falls below 5%? I understand why it will always exist, but why that number?

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RESERVE

ARMY

I used to work in a factory where I was 99% certain that almost everyone who worked on the lines where there, not because any of us were actually needed to load the stupid pills into bottles (they could have automated this process with machinery very easily) but because the factory owner thought it was a good idea to have people on this pay roll because it mean that there were more consumers out there with spending money to buy shit.

Basically I think porky sometimes just gives people jobs because he wants them to have an income so they keep buying his shit.

bls.gov/news.release/empsit.t15.htm

It's more like 8-10%

Okay but why? Why aren't employers trying to gather as many workers as humanly possible? As an employer, what would motivate me to not do this?

Nah mate you're wrong, in monopolised markets without competition it is more profitable to use labour instead of machines.
Machines help reduce relative cost and improve productivity. But they increase
absolute costs and so are not worth it if you don't have competitors breathing down your neck.

Cockshott explains a similar phenomenon in Britain in TANS.
Basically Britain was suffering inflation in the 70s and the British government realized that one of the main reasons behind it was the rising average wages. Since the 50s there had been very little unemployment in Britain and so the majority of workers had little to fear of getting fired because many of them could have easily gotten a job somewhere else. The result of this was that British businesses often needed their workers far more than the workers needed them and as such the workers began making demands for increased wages and rights and the businesses for fear of losing their workforce were granting it to them. As a result to stay competitive such businesses had to start raising their prices in the end resulting in inflation.
Thus Thatcher's government, one of the first NeoLiberal governments the west had been blessed with realized that a certain level of unemployment in the nation was always desirable. Because it kept the workers scared of losing their jobs and prevented them making demands. Expanding on this the future Tory governments began favouring cutting unemployment subsidies and flooding the Labour market with immigrants to further increase the fear of unemployment.

Nah fam,I don't think that's what causes the 70s inflation in Britain or elsewhere. It was just a good meme to dress up class war from above as something necessary.

M-maybe porkies are not that bad after all…

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It was probably that and because he knew labor is the source of sll value.

According to my reading of marx this is what employers would try to do until the working proletariat grew so big it could overthrow capitalism. I think there's always a political interest as well as an economic interest with capitals actions

Muh NAIRU.
Though until the 70s it was usually around 3%, and there are a lot of additional qualifications to the figure. (For example the UK has cheated it back down to 1970s levels on paper, but only by ignoring underemployment and getting swathes of people to just give up looking for work and thus not officially count.)


The story of excessive pay demands is a bit of a just-so story. A wage-price spiral may have prolonged inflation, but it didn't initiate it. That was more a storm of poor monetary policy, poor control over the financial sector, and an oil supply shock.

If there's full employment, then the workers can demand whatever the hell they want and the capitalists just have to put up with it.

So they fuck things up on purpose if unemployment dips too low, that way they can use the unemployed and the threat of unemployment as a cudgel.


The reason it caps out at a specific percentage is because they've determined that to be the minimum amount that is effective to that end.

How nice of him.

5% gives politicians a "goal" that they can then pander to either side with. the reality of the matter is that it is a false statistic. workers who are out of work for a certain number of months are referred to as "disenfranchised" and are no longer counted in the stats. so the real unemployment rate is likely far higher. but keeping it hovering around 5% allows for them to say "look, its not SO bad, but heres what im gonna pretend to do in office to make it better. see you at the voting booths, patriot".

undoing some of our shitty trade deals such as NAFTA might help in the short term, but the reality is, full-automation factories in a majority of manufacturing jobs is right on the horizon. once that happens, i think you guys will have a real chance, as our unemployment will jump to like 50% in no time. and those jobs will NOT be returning. someone is going to have to make sure the unskilled laborers have food in their bellies.

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can you elaborate on this? i cant see how paying a person would be cheaper than just going full robot in most cases. or do you mean exploitation of third world labor?

That makes zero financial sense.

there's three perspectives to this. the classical socialist one, summarized as the "reserve army of labor", is that Capital needs some amount of unemployed so that you don't get fed up and demand your boss to hand over his cut, because he can just fire you and hire some other desperate person who won't demand that cut instead.

but then there are the liberal arguments, which are twinned. liberals say that there's a certain "natural" rate of unemployment, below which inflation accumulates. there's really several arguments here (there's a natural rate of unemployment, there's a rate of unemployment below which there's high inflation, those two rates are the same, and inflation is actually bad), but the liberals all conflate that as one, which is bunk. i'll discuss them all seperately.

for the first, liberals say that natural unemployment is caused by frictional unemployment (workers leaving their old jobs to find better ones) and structural or classic unemployment (workers just being so shit no one has any reason to pay them). the first type implies it's a valid thing that a worker, finding troubles at their old job, is best off leaving and becoming non-productive for a period of time in hopes of eventually landing at a different place doing probably virtually the same thing (due to specialization of labor) instead of solving the problem that caused the first place to be shit in the first place. the second type is fucking retarded when it's remembered that there are fucking millions of things that different people would like to be done at any given moment of time, it's just they don't have access to the capital that would allow them to do that because it's instead being held by the bourgeois for use doing nothing or things that are useless. really, there's no real reason why someone who can work (or else be improving themselves by education, improving their productivity and thus effectively working) shouldn't be while there are material needs in this world that are unfulfilled and resources available to fulfill those needs; the only reason why that doesn't happen is because capitalism needs people to feel the threat of starvation to be willing to work for less than they deserve.

for the second, I actually don't know enough to reject this, honestly. I just brought it up because it's an implicit claim they make in their argument that they don't make explicit.

for the third, they don't really mention any reason why this is the case, from what I can figure; they just mention that there's a rate of unemployment that's natural and a rate of unemployment below which is inflationary, and just expect them to be identical. it's just another claim they forget to mention they're making and a case of jumping to conclusions, nothing too serious.

the last is the argument that inflation is bad. now, let's take a step back for a moment and consider what inflation is. inflation is when prices become higher; that is, when the same amount of money trades for less goods; that is, when things that are actually useful become more useful at the expense of the means of exchange. i. e, inflation implicitly replaces production for exchange with production for use. *this is a good thing*. in the 19th century rural US, farmers were constantly pushing for the US to devalue its currency; this would cause their debts to shrivel away and the fruits of their labor to actually go to them rather than jerkoffs in big cities who own a slip of paper that says they own the land despite doing nothing with it. inflation is a massive middle finger to bankers and other middlemen, and a massive relief to debtors. now, inflation doesn't solve all problems of capitalism (although the creditor/debtor relationship is decided in favor of the debtor, nothing's really done about the boss/worker relationship (in fact, the worker might be WORSE off because the way capitalism works has him exchange everything he makes for that medium of exchange, which is now useless)), but it does at least solve one point of contention (the point fascists get their main support from, btw), clearly reveals the worker/boss relationship for what it is, and screws over the more powerful organ of capital today, Finance. if the powerful Finance is vanquished, it will probably be easier to attack the unprepared Business than it would be if both were attacked simultaneously.

*when things that are actually useful become more valuable at the expense of the means of exchange

there's a distinction between usefulness and value; diamonds are valued quite a deal despite being useful for jack shit, and my argument here was using that distinction

As the unemployment rate falls the price of labor-power increases because of an excess of demand

I know this was the case in late 19th early 20th century America. It was a huge problem that proles were unionizing, so keeping proles on the payroll working on some dead-end project in the middle of nowhere was a legit tactic.