excess demand between money and commodities requires quantity adjustments in

Excess demand between money and commodities requires

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excess demand between money and commodities requires quantity adjustments in commodities and labour. So the dynamic of capitalism requires there to be idle capacity in machinery and plant, cash balances and unemployment regardless of the impact on labour of technological change. The result is the creation of pools of unemployed labour. 12 Some people float in and out of work while others are seasonal migrants and a particularly stagnant pool is filled by those without work for long periods. These reserves of unemployed people are functionally useful to capital since their very existence disciplines and disempowers those in work, discouraging them politically from struggles over the distribution of wages and profits – which might result in their being deprived of livelihoods – and depressing the wages of workers by their mere existence. In the absence of state intervention, they reproduce a system which is self- reinforcing. For political stability as well as welfare reasons, states need to control the rate of labour- displacing growth, but it is a very difficult task. The infrastructural preconditions for capitalism must be guaranteed. To keep capitalism competitive states also need to enforce the weeding- out of unproductive and wasteful forms of investment, to make some provision for the results of risky innovation, to make sure institutions are in place to manage information and technological change and to establish means of challenging the tendency to centralisation, concentration and monopoly. 13 At the same time, as Mushtaq Khan (2004) has pointed out, states require resources and authority to maintain political stability and to set economic limits to unavoidable political compromises. Among this armoury of interventions, states may mitigate the poverty of workers by regulating wages, the length of the working day and the minimum rights of labour. They may provide healthcare and education as public goods in order to help supply the appropriate quality of labour needed by capital at any given stage. By various social security policies the state determines the manner in which unemployed people regulate the political assertiveness of those in work. Social security policies also reduce the vulnerability of those in work to shocks of ill health and enable them to return to work. Social policy may be understood in part as an economic policy for labour. Without such regulation, capitalism seeks to maximise profit and to displace labour. Some have termed this the creation of waste people [Bauman 2004] – but they are not entirely “waste” for capitalism because, although they constrain demand for commodities, their
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existence disciplines those in employment. A key question for the state is therefore the extent to which it mitigates the poverty of waste people and reduces their threat to the labour force.
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