Wesley Mitchell: American Kalecki?

Wesley C. Mitchell, Business Cycles (1913):

“When a revival has grown into full prosperity, on the contrary, employers are constrained to accept any help to be had. They must take on men who are too old, and boys who are too young, men of irregular habits, men prone to malinger, even the chronic ‘trouble makers.’ Raw recruits of all sorts must be enlisted and trained in a hurry at the employer’s expense. A deterioration in the average efficiency of the working forces inevitably follows…

While the relatively inefficient reserve army of labor is thus called into active service, both the standing force and the reserves are kept at work long hours. Now overtime labor is especially expensive to employers, not only because it often commands extra rates of wages, but also because it is tired labor….Quite apart from this difficulty of overtime, men cannot be induced to work at so fast a pace when employment is abundant as when it is scarce. Employers complain that in good times their men ‘slow down’; employees complain that in dull times they are ‘speeded up.’ Whatever may be the merits of this chronic dispute about the fairness of the day’s work given for a day’s pay in either phase of the business cycle, there is abundant testimony from both sides as to the existence of a considerable difference in the energy exerted. Theoretical writers have strangely neglected this point, but the trade journals make much of it. The most trustworthy body of evidence on the subject, however, is contained in the special report made by the federal Commissioner of Labor in 1904 upon Regulation and Restriction of Output. This evidence is the more convincing because the influence of business conditions upon the efficiency of labor was not a subject of inquiry. Nevertheless, manufacturers and foremen, trade-union officials, and manual workers both within and without the ranks of organized labor called attention time after time to the fact that the pace of work was slower in the flush times of 1900-02 than it had been in the dull times of 1894-96. In different phrases they all gave the same explanation — men are less afraid of discharge when business is good. A sample bit of testimony may be quoted. The superintendent of a company manufacturing electrical machinery said:

The absorption of ‘driftwood’ — that is, the taking on of men who would not be given a job in ordinary times, the temporary employment of tramps, to make it perfectly plain — is the cause of but a small percentage of the decreased output in machine shops. Five years ago men did not restrict their output, union or non-union men, because they wanted to hold their jobs, and a man would do anything and all he was told to do. Now a man knows that all he has to do is to walk across the street and get another job at the same rate of pay. During the hard times we took contracts at any price we could get, and in some places and cases men were driven at high speed to get this work out, so as to lose as little money on it as possible. Men will not keep up that speed rate in these days. “We are not restricted in our right to hire and ‘fire,’ but we are mighty careful nowadays not to discharge a man unless we have the very best of cause, and would not discharge unless we had a case that would preclude a visit from a union committee. We are not looking for visits, nor trouble of any kind.

[T]here is strong evidence that the efficiency of labor becomes much greater in dull years than it had been in the preceding brisk years. Overtime ceases, and with it cease not only the payment of extra rates but also the weariness of long hours. When working forces are reduced in size they are raised in quality by weeding weeding out the less desirable hands. Most important of all, the fear of being discharged at a time when thousands of men are already looking in vain for work disposes every man who is kept to do his best—to keep any pace which may be set, even at grave danger of overtaxing his strength. The heightening of the physical productivity of labor which results from these changes does more than the fall of wages to diminish the ratio between money cost of labor and money value of products.”

Michał Kalecki, Political Aspects of Full Employment” (1943):

“[T]he maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, the ‘sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire; and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But ‘discipline in the factories’ and ‘political stability’ are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the ‘normal’ capitalist system.”

(via Stephen A. Marglin, “Lessons of the Golden Age” [1988])

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1 Comment

  1. Have you compared this to JM Clark’s 1934 Strategic Factors in Business Cycles? The labor-productivity angle of the cycle in Slichter’s book from that year, Towards Stability, given in part to defend collective bargaining as an instrument for maintaining high morale.

    But it would be interesting to see how Clark (Columbia PhD, but not a Mitchell student?) compares, and whether this sensitivity to workplace dynamics survived into NRPB or later CEAs.

    Liked by 1 person

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