A Brief Call for Change in The Economics Profession

As the stock market continues to boom, driven by strong macro economic indicators of the possible end of the Great Recession, it is only a matter of time before the policies of my neoclassical colleagues result in another downturn in the business cycle.  If the Debt situation in the EU doesn't cause the collapse fist of course.  I would love if my profession would accept even these small changes:

 The global economic systems needs new economic thinking because of unnecessary slowing of technological growth during recessions, and the social harm suffered when recession occurs.
  My decision to study economics is from a personal (technological) humanism.  The ability of people to develop their material lives has brought vast changes in living standards and productivity in my life time.  The greatest constraint on advancement is slowing of economies by market failures and productivity losses periodically experienced.

The processes that limit human advancement also can cause unnecessary suffering.  There is strong correlation between unemployment levels and health outcomes, family stability, and substance abuse.  New economic thinking could lead to much less suffering in the developed, and developing world.

The new economic thinking necessary needs to come in two forms:  Movement away from the neoclassical model of the individual (and firm).  Largely because a less ahistorical approach to the economy could lead to a much broader policy implication space.  Secondly, an increase in pluralism of methodology to open up economic outcomes beyond the limits of statistical analysis.  An expansion of accepted method could result in an expansion of solutions to some of the cyclical problems economies currently face.

I am not usually a champion of reform over revolution, but even small steps are better than none.

The Growth of Holyoke Continued:

Probably the last post in this short series.  Unless I decide to share some stuff on the decline: 

YEARS OF BIRTH AND GROWTH

            The first paper mill in Holyoke “Parson’s Paper” was opened in 1853, four years after the completion of the dam.  Many other mills followed, and within 25 years Holyoke had become the largest production center of writing paper in the world. By 1880 Holyoke had more paper mills than any other American local, including production of cheaper quality papers, with 17.

            This period is characterized by massive increases in the organic composition of capital and worker productivity in paper making.  The output of Parson’s Paper increased more than 25 fold from 1854 to 1884 without an increase in the physical size of the mill. By assumption the downward pressure put on the rate of profit by the increasing organic composition was more than offset by productivity gains and relative surplus value. 

The wage of paper workers was fairly stagnant through the second half of the 1800’s.  There were some small increases, especially in the more skilled jobs, but nothing close to the increases in productivity that went along side them.  There was some unionization of paper workers during this time, however workers remained mostly divided along skill divides as well as divides of ethnic origin.  The Holyoke paper worker was usually of Irish Catholic heritage (often first or second generation immigrants).  There was however a large French Canadian immigration wave into Holyoke during this period as well.  It seems a common complaint of the Irish that the French Canadians were willing to work for a wage that was far below V for the Irish workers.  The large population growth in Holyoke during this period seems to have put enough downward pressure on wages that they did not rise even as many more mills opened in the city. 

By 1880 the total population of Holyoke was 22,000 roughly 1900 of these people worked in paper mills.  About 9% of the total population and 25% of the total workforce!  The combined employment of the textile and paper industries totaled more than 50% of the total workforce.  This period, although characterized by increasing capital investment, was still a relatively labor intense one in paper production. There was also a vast difference in the types of labor and wages employed in the mills.   Machine tenders and beaters of the pulp were high skilled jobs and not easily replaceable.  Women in the “rag sorting” room and workers in the finishing departments (often French Canadian immigrants who were willing to work for far less) were easily replaceable.  Class antagonism seems to have been absent for the most part.  Most documentation of workplace disputes points to problems of the Irish owners and skilled workers with the French Canadian (and to some degree Polish) unskilled workers.  Class harmony between labor and capital and a blind eye to exploitation of workers was present from the beginning of Holyoke paper though much of the hundred years the mills were in operation. Even workers in more skilled jobs felt the pressure of a high local immigration rate, as well as ethnic bonds with mill owners.[1]

Profits were not just high because of being able to pay low wages.  During the first 4 decades of paper production in Holyoke the mill owners (in an informal, and sometimes formal, cartel setting) took actions to gain monopoly power.   The mills had a rising organic composition of capital that was lowering average costs for the mills as their production vastly increased.  In a competitive system this would result in a cheapening of the final commodity being produced, in this case cheaper fine writing paper.  The Holyoke mill owners prevented the fall in their profit rate that would come with such a result by colluding to keep prices for writing paper high.   For most of the 1870’s and 80’s most of the mill owners in town meet two or three times a month in a formal organization.  The stated purpose of the organization was to discuss marketing strategies and export markets, however it is well documented that price fixing took place. 

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Now That's What I Call (An Increased Rate Of) Exploitation (Are You Fucking Kidding Me?)

Over that past week or so, all the news about General Motors (GM) has been about how they recorded a RECORD 8 billion dollars in net income for 2011, and hope to be over 10 billion for 2012. 

That is BILLION WITH A B ladies and gentlemen.

As good for GM and their shareholders (not their shareholders who lost everything three years ago of course) as this news is,  (Honestly, this is fantastic for some!)   GM is a symbol of the American heartland, an institution of American capitalism, receiver of one of the largest "Keynesian" (sorry J.M. Keynes, you will always be blamed for the digging holes and refilling them with government money thing)  bailouts in history,  employer of many of my family members past and present, the next major story in the news makes it clear that the revenue increase is nothing but the blood of GM workers. 

What to make of this?

This must mean that the recession is over right?  GM is making a shitload of money for investors as well as the American taxpayer (at least according to every major news outlet). 

Until we get to today's news...
Historically General Motors was a great company to be exploited by (comparatively in terms of standard of living.)  With nothing more than a high school deploma you could earn a decent living and suppport a family.   Part of supporting yourself and your family was being able to retire at a reasonable time (without having to take a job as a greater at Wall Mart to make ends meet).  Right after news breaks of record earnings, today we get this:

A destruction of the pension plan at GM. 
Of course the conservative New York Times frames it as a "change" not a destruction....

Will we see an increase in profits at GM?  Yes........Will it allow the US government to sell the rest of their GM shares at a higher price than otherwise would have been possible?  Yes... Is it just another example of the massive increase in the rate of exploitation in this country?  Of course.
 

The Power of a Strong Literary "Hook"

Scanning through my Google Alert of all new material on General Motors (in case I ever decide to actually write my dissertation), I skipped over 12 or so articles just reading the tag lines (like I always do).  After clicking on an article, and getting about half way through a conservative rant on why the relaunch of the Chevy Volt will fail, I begin wondering why I was reading the article at all. 

Then it struck me. 
The first line of the article mentions putting lipstick on a dog. 

 The brain works in mysterious ways. 

I really wish I had that data....

To follow up what I just posted on paper production in Holyoke... 

In all my time focusing on Holyoke and its paper mills there is no records (that I have come across) on the prices of paper's major input (prior to the days of wood pulp), cotton rags. 
I would think that the scraps left over from textile mills would vary dramatically in price depending upon many factors.  One that really stands out is that within Holyoke a single firm (Farr Alpaca) dominated textile production.  Would they have abused their monopoly power to over charge Holyoke paper mill owners?  Of course, this is capitalism! 

The Growth of Holyoke

As I sit in the wonderful city of Holyoke MA, home, preparing for a guest lecture tomorrow in a legal history course at UMass entitled "What is Capitalism, and How Does it Work?".  I have decided to go the case study route with my lecture.

As such, I have been reading an old, and not particularly excellent essay that I wrote a few years ago on the production of paper in the mills of Holyoke.  We all evolve as scholars, and there is a lot of changes I would make to the paper if I were to write it again today.  I did however want to share the section of the paper that introduces the growth of paper making in Holyoke and the growth of city itself.

Out of context, and without the Marxian analysis that follows in the essay, there is nothing overly exciting here:  I just find some of the growth numbers fascinating, and thought some of you might as well.  I remember reading somewhere that in the early 1900s Holyoke had the highest per-capita millionaires in the United States.  That was largely due to the paper production in "The Paper City" .  70 Years after the decline of paper making (and the wealth of Holyoke) the history of this city has left us with a mediocre brewery of the same name (Paper City Brewery). 

The following is from my paper circa 2008:     
Hope you find the numbers interesting as well, and a public thank you to Dan MacDonald for inviting me to lecture tomorrow.  I am looking forward to it!


 

Holyoke was transformed during the first half of the 1800’s from an agrarian backwater to a major industrial center.  The two main industries operating in Holyoke were textile production, that was common in much of the region during this time period, and paper making.  There were a number of factors that allowed for a speedy industrialization in Holyoke, although a factor that cannot be understated is its location on a rapidly flowing section of the Connecticut River. 

            During the 1830’s and 40’s two large construction projects were undertaken in Holyoke with the intention of attracting industry.  Holyoke built an intricate canal system allowing for direct fresh water supply to numerous parts of the downtown area,, and built a large hydroelectric dam on the Connecticut River. 

            The canal system was considered vital for paper makers that decided to open shop in the city.  As will be discussed in more detain in the next section 100’s of gallons of water were needed for each pound of fibrous material to turn it into the “chemically pure” pulp needed for high quality paper.  The canals provided easy access to large amounts of water for a much larger number of mills than would have been possible if they were to locate only along the river banks.    

In a stretch leading into Holyoke the Connecticut River falls 70 feet over the span of two miles.  This allows for massive power generation at what is today known as the Holyoke Dam.  The heavy machinery that became part of both the textile and paper making industries required enormous amounts of power by the standards of the middle 19^th century.  Proximity to the Holyoke Dam allowed for uninterrupted and relatively cheap access to large quantities of power for manufacturing concerns in the community.  The “Great Dam” as it was then know, was completed in 1849.   

            Another factor that was important for Holyoke paper manufactures was the proximity of a large textile concern (Farr Alpaca) that was also located in Holyoke.  Again to be discussed in the next section one of the inputs for the paper mills of Holyoke was linen and cotton rags.  The proximity of textile manufacturers lowered the cost of these inputs, as they did not have to be shipped far, and could be purchased from local businesses with whom relations were generally good.  In Marxian language it could be argued that it was the possibility of cheaper C compared with other areas that originally encouraged paper mills to open in Holyoke.  It was estimated that in the early days of industrialization a paper mill could be opened in Holyoke for as little as $5000 in initial capital compared with estimates of $8000 to $10 000 elsewhere. 

            The growth of the workforce in Holyoke, and the population in general, tends to coincide with the growth and success of the paper and textile industries in the City.  The first paper mill in Holyoke was opened in 1853 with many more following in the next 10 years.   

Holyoke Population

1850 1855 1860 1865 1870 1875 1880 1885 1890 1896, May

3,245 4,639 4,997 5,648 10,733 16,260 21,915 27,895 35,674 44,153

            The population numbers of the town and then city of Holyoke (became city sized circa 1870) tell a story of a rapidly growing industrial community during the second half of the 19^th century.  Computing an average yearly growth rate for this period yields a whopping 5.85% yearly population growth in Holyoke, compared with the United States national population average growth rate of roughly 2.2% for the same period.  As the textile and paper industries stopped growing so did the population of Holyoke.  As of 2007 the city was home to 39,765 residents.  This is almost 5,000 less people than its peak around 1900. 

"Money Ain't A Thang" A Response To Robert Paul Wolff on "The Philosopher's Stone"

At the end of the day, revolutionary change to our system of exploitation in production requires massive cultural change as well. 
Who better than Jay-Z to usher it in?  If only we could get him to read Marx...



Wolff claims that "The Left Has All The Best Songs for Half A Century". 
I Strongly Disagree!
The following is the text of my comments on his post. 
Do any of you care? 
You will, when I am in a Ferrari or Jaguar switching four lanes. ....


Apologies in advance for this. If I hadn't just returned from a concert I would never bother to nitpick at something like this.

Respectfully speaking as both a Marxist and a fan of your blog...

People that are aiming to be in, singing about, etc. the bourgeois elite have released some musical masterpieces in the last 20 years.

The bourgeois culture I spend much my life subverting has given us a lot of good music. To be honest about it, I find most of the contemporary music of the left does nothing more than whine about being on the left.
The other side of this coin is that people unabashedly trying to get rich in our society have provided much of the best music of the past two decades.
For example:
http://www.youtube.com/watch?v=XK-KFfYA2Vk
All good Detroit boys like myself love Seger, so I am not going to argue his greatness, I just want to point out that over the past 20 years or so leftist music has been much like the American social left: Unappealing to those without a vested interest, and fragmented.
The left used to have all the good songs, sure. The left today needs something to unite it, a good song would be a start, and it has been a while since we have had one.