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David Graeber: "Spotlight on the financial sector did make apparent just how bizarrely skewed our economy is in terms of who gets rewarded" - Salon.com

After my piece came out, for instance, The Economist rushed out a response just a day or two later. It was an incredibly weakly argued piece, full of obvious logical fallacies. But the main thrust of it was: well, there might be far less people involved in producing, transporting, and maintaining products than there used to be, but it makes sense that we have three times as many administrators because globalization has meant that the process of doing so is now much more complicated. You have computers where the circuitry is designed in California, produced in China, assembled in Saipan, put in boxes in some prison in Nevada, shipped through Amazon overnight to God-knows-where... It sounds convincing enough until you really think about it. But then you realize: If that's so, why has the same thing happened in universities? Because you have exactly the same endless accretion of layer on layer of administrative jobs there, too. Has the process of teaching become three times more complicated than it was in the 1930s? And if not, why did the same thing happen? So most of the economic explanations make no sense.

All true, and very correct about the universities, but there's got to be an official-if not economic-explanation for why we didn't get this Truly Great Thing that everyone was expecting not all that long ago. Like: Keynes was all wet, or such a system just wouldn't work, or workers aren't educated enough to deserve that much vacation, or the things we make today are just so much better than the things they made in Keynes' day that they are worth more and take more work-hours to earn. There must be something.

Well, the casual explanation is always consumerism. The idea is always that given the choice between four-hour days, and nine or ten-hour days with SUVs, iPhones and eight varieties of designer sushi, we all collectively decided free time wasn't really worth it. This also ties into the "service economy" argument, that nobody wants to cook or clean or fix or even brew their own coffee any more, so all the new employment is in maintaining an infrastructure for people to just pop over to the food court, or Starbucks, on their way to or from work. So, sure, a lot of this is just taken as common sense if you do raise the issue to someone who doesn't think about it very much. But it's also obviously not much of an explanation.

First of all, only a very small proportion of the new jobs have anything to do with actually making consumer toys, and most of the ones that do are overseas. Yet even there, the total number of people involved in industrial production has declined. Second of all, even in the richest countries, it's not clear if the number of service jobs has really increased as dramatically as we like to think.  If you look at the numbers between 1930 and 2000, well, there used to be huge numbers of domestic servants. Those numbers have collapsed. Third, you also see that's what's grown is not service jobs per se, but "service, administrative, and clerical" jobs, which have gone from roughly a quarter of all jobs in the `30s to maybe as much as three quarters today. But how do you explain an explosion of middle managers and paper-pushers by a desire for sushi and iPhones?



'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Wed Jun 4th, 2014 at 12:40:06 AM EST
No time for extensive comment now, but it is really quite galling that Graeber of all people should accuse others of "obvious logical fallacies"! :D

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Jun 4th, 2014 at 01:21:03 PM EST
[ Parent ]
I'd certainly like a hint where you see Graeber's obvious logical fallacies. At least his book read perfectly coherent.
by generic on Wed Jun 4th, 2014 at 01:42:21 PM EST
[ Parent ]
Are you serious? This is the guy who knows absolutely nothing about the economics of credit, despite writing a book which was actually even named "Credit"!

To boot, he was arguably the guy who willingly and knowingly destroyed the "Occupy Wall Street" movement, relegating it to eternal obscurity instead of forming the basis for a populist revolt against economic inequality.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Jun 4th, 2014 at 01:46:58 PM EST
[ Parent ]
Also, please enjoy this article, where Graeber manages to completely misunderstand the banking system, despite the article being about a "banking for dummies" release from the Bank of England...


Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Jun 4th, 2014 at 01:50:06 PM EST
[ Parent ]
That reads like bog standard endogenous money Post - Keynesianism if you take out the details and try to make a point.
And I remember Occupy being destroyed by synchronised DHS raids. I doubt Graeber ran those.
by generic on Wed Jun 4th, 2014 at 03:20:48 PM EST
[ Parent ]
Um, specifics, please?

As far as I can tell, his understanding is perfectly sound.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jun 4th, 2014 at 06:36:12 PM EST
[ Parent ]
Everything Graeber wrote is consistent with what I learned in Perry Mehrling's Money and Banking course.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jun 4th, 2014 at 10:24:53 PM EST
[ Parent ]
The explanation is that increasing productivity necessitates the creation of "ancillary services" to keep people employed. This is what Kalecki called "overhead and ancillary wages".

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Jun 4th, 2014 at 03:14:14 PM EST
[ Parent ]
And let us not dwell on the increasingly large portion of gains from increased productivity that go to capital. People might get the wrong idea. As John Stuart Mill noted long ago, justifying capitalism on the basis of its ability to create wealth neither says nor implies anything about how that wealth is distributed. But the capitalists see it as a 'law of nature' that those who make the money get to decide how it is distributed, to the extent that it is distributed at all and regardless of the consequences of the distribution that they make.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jun 4th, 2014 at 03:54:37 PM EST
[ Parent ]
I suppose that the reason that there is no crushingly argued paper detailing just how "overhead and ancillary wages" ate up ALL of the gains in productivity for the bottom 80% of the workforce is that the prospect of being able to do so is laughable, even to 'Mainstream' economists. Best just to keep quiet about increasingly skewed income distribution - damn Pikittey!

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jun 4th, 2014 at 05:23:00 PM EST
[ Parent ]

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