1819 ideas for the XXI Century economy
Wages are actually the market. If wages are saved by using robots, the present-day economy is not sustainable; because wages are essential for consumption and without consumption there is no economic dynamic.
Sismondi, was the first to speak of class struggle over wages (1819). The Industrial Revolution had just started. Later (1834) he maintains that the relationship between wage earners and employers does not have to be antagonistic; because both have an interest in the prosperity of the productive sector that occupies them.
At this point, Sismondi recommends that employees after a time be treated as partners of the company helping to design company policies and share with their employees the benefits of the corporations.
This idea is at the bottom of the German system of concord between unions and employers' associations in negotiated agreements within specific sectors of production.
Here Sismondi senses a recent discovery of Economic Science exposed by Michael Porter in his book: The Competitiveness of Nations (1990). Porter discovers that nations are not competitive in all their areas of production,
Nations have sectors that are competitive, those sectors lead community life, in which information on know-how, science and technology, that make this sector competitive, are exchanged; therefore, competition in the international trade of goods and services is something that happens between companies in the same sector.
This perception was proposed by Juan Domingo Perón's speech before the Buenos Aires Chamber of Commerce in 1946. Then Perón proposed concord policies to maintain Social Peace. It is like reviving the spirit of the old guild associations, without their monopolistic pretensions.
His 1946 proposal was still in his mind when he returned in 1974. It was the reason for conflict with the Marxist sector of the Peronist youth. Like Marx, they believed class discord is necessary for the violent conflict they would mount in order to come to power.
It is revealing that Marxists coincide with imperialist capitalists in their aversion to Perón.
There is another modern issue in which Sismondi has some proposals to solve dangerous modern trends: Sismondi considers money a public good that must have a durable government backing that guarantees its value. Because money’s exchange value must be maintained for the sector that imports inputs, to remain stable in their competitivity.
When money loses value, we call it devaluation of the currency, which causes loss of money purchasing power, which we call Inflation, that harms the entire national society. It hurts most the wage earners, pensioners and savers, and only favors speculators.
Two countries with a realistic prospect of economic growth in the economy of the near future – China and Russia – have started to back their national currencies and even their crypto-currencies with a gold standard. The US Dollar is not worth more by itself than any crypto currency. Crypto currencies with a gold benchmark are a better value reference than national currencies backed by reserves in US dollars.
Sismondi dealt 200 years ago with a highly topical issue: employment displaced by new technology products that automate functions previously performed by people. Sismondi notes that these technological and scientific advances belong to the entire society and are part of our civilization; because in science or technology no novelty starts from scratch.
The issue he highlights is that these automations in production seem to exclusively favor the employers’ side, when their advantages must be for the good of all humanity. These automations generally save time in the production of goods and services, making them cheaper for the benefit of consumers.
Sismondi proposes that the number of employees be maintained and they should also benefit from the saving in production time. He recommends that wages be maintained and employees benefit from these advances, leaving them more free time.
Something in this direction was applied in France with the 35-hour week. The idea was sound, but its application was rather chaotic because it was personalized at a daily level. It may have worked better if expressed in working days. Something like a five or four-days work week; and to compensate owners, shops and offices would remain open seven days a week. That would improve the leisure-time quality for workers; because right now they cannot do their errands on their leisure time because shops and offices are closed. A seven-day activity week would increase both output and employment
It is rumored that among the wealthy conjurers who gather in Davos to speculate on the direction to drive the World Economy, an automated world with employees totally replaced by robots is being considered. That is the meaning of the Great Reset that will come after the COVID-19 Pandemic.
I want to remind those mean dreamers that one of the most important discoveries by Sismondi, is that wages are totally spent on consumption. This discovery was confirmed 100 years later by Keynes. Wages are actually the market. If wages are saved by using robots, the present-day economy is not sustainable; because wages are essential for consumption and without consumption there is no economic dynamic.
Robots would have to be humanized until they become consumers. Someone might argue that in today’s economy, where the financial sector predominates, wealth is mainly virtual and does not need consumers of goods, it only needs people or companies that invest and circulate the virtual money manufactured on computer keyboards and it is enough to keep going what constitutes a kind of a universal Ponzi pyramid, it no longer needs consumers. Their clients buy financial products whose markets are then financial exchanges rather than goods markets.
I must admit that creating money from nothing is something that Sismondi could never have imagined; because Sismondi always lived in the real economy of goods and services produced by the work of men and women. In his time robber bankers were punished by jail, as in exemplary Iceland.
Almeria 08 /01/2120
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