Wednesday, January 30, 2013

Pragmatism is Better than Ideology

Adam Kotsko posts on An und für sich HERE
The reverse invisible hand”
“As we all know, capitalist accumulation is guided by the “invisible hand,” which ensures that the selfish and short-sighted choices of individual capitalists fit together into a beneficial whole that promotes long-term wealth-creation for all. What’s less well known is that for workers, the situation is reversed: their self-interested decisions add up to create a situation that is more and more disadvantageous for workers as a whole. Examples abound. On the individual level, taking an unpaid internship can give one a leg up on the competition — on the whole, it creates a situation where more and more work is being done on an unpaid basis, so that there are fewer slots available for paid workers.”
I shall ignore on this occasion any comments on Adam Kotso’s repetition of the usual nonsense from modern economics about the “invisible hand”.  Instead, I shall comment on the assertions he makes about “unpaid internships” being part of his assessment of capitalist exploitation.
I see unpaid internships and paid 'modern' apprenticships as an extended job interview and better than making a decision on the basis of one or two interviews, which usually are not informed by evidence of a candidate’s range of suitability.  This can lead to early terminations for disciplinary breaches (not turning up for work regularly), or not showing those little positive attitudinal benefits on a daily basis (getting on with colleagues and customers), the absence of which make their employment stressful all round. 
It’s not all one way by any means.  A few weeks work in a work role can also enlighten the unpaid employee.  They may too discover they are not suited or do not wish to be suited for that type of work.  They end up with some experience too which in itself is of benefit to other employers, both private capitalists, public, NGOs and private individuals.
Ignoring the consequences of politically motivated interventions is typical of (albeit well meaning) stances.   In France the restrictive labour laws in the cases of young people and adults too was to raise the costs of employing the unemployed because of the difficulty of correcting mistakes in recruitment of what turns out to be unsuitable candidates.  Hence, youth unemployment is higher that it needs to be even in the current recession.
Pragmatism rather than ideology is relevant when discussing practical problems and selecting and testing potential solutions to them.


Blogger Steve said...

"Hence, youth employment is higher that it needs to be even in the current recession."

I agree with the point, but of course that should be "youth unemployment".

5:10 pm  
Blogger Gavin Kennedy said...

Many thanks for reporting my error.

10:34 pm  
Blogger Unknown said...

I never liked how Kotsko thinks of the invisible hand, painting it as far more of a proactive force than Smith intended. Perhaps this is a bad analogy, but I always understood it in a similar light as Richard Dawkin's "Blind Watchmaker"—a description of a phenomenon rather than an actively regulating entity. (Or maybe I'm just misunderstanding Kotsko). It's the word "ensures" that gets me.

His unpaid internship example is half-baked, at best. For the individual it serves as education and the rewards are often delayed. On a large scale it can bring down labor costs for the firm, which can lead to greater consumer surplus. It also mitigates training costs and is crucial for recruitment, especially for knowledge-based firms like consultancies. While it may disadvantage once group of individuals, it is advantageous for another. Does the trade-off balance out?

Kotsko's theory is interesting, and perhaps not wrong, but the evidence for his thesis (as far as I know) isn't in. Happy to hear counterpoints.

3:29 pm  

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