348
STEPHEN ROUSSEAS
As
for the difference between our potential full employment
output and the actual performance of the economy, again we find
matters in an acute state of confusion. The gap between potential
and actual output implies that since the end of the Korean War
our actual rate of economic growth has been not only below its
historical long-term rate, but also below the full employment or
potential growth rate. The trade cycle, in short, is still with us,
with
the peaks of our economic activity submerged below their full employ–
ment potential. I find it remarkable that this state of affairs should
be
confused with "abundance." But even
if
we should reduce the
gap to zero, the problem of increasing the long-term growth rate
above its historical or even full employment trend line would still
remain. I would expect technological change to contribute towards
this goal and would welcome it on that account. In this context
full
employment policies are not "illusory," and the idea of a guaranteed
annual income is, as I shall try to make clear, hardly the answer.
Starting from this rather basic confusion over the meaning of
"scarcity," Hentoff then goes on to raise the specter of cybernation
and technological change. I would agree that automation is a serious
problem, but like all serious problems it does not contribute to their
resolution to react in panic and take refuge in gimmicky solutions.
Technological change has been with us for a long, long time. Most
innovations have been laborsaving and have, in the short-run, been
troublesome. Yet the increases we have experienced in real wages,
and hence in our standard of living, is directly attributable to tech–
nological change. Real wages over the past sixty-five years (to restrict
ourselves to this century alone) have followed very closely the increases
in the productivity of labor. Recent empirical studies have shown,
. furthermore, that the steady growth in labor productivity (and hence
in real wages) is due more to technological change than it is to the
use of more capital per unit of labor input (or what economists
refer to as "capital deepening"). The net result of all this has been
a phenomenal stability in labor's relative share of the total output
of goods and services, with more recent data indicating a slight
increase.
The problem of technological change becomes acute when the
economy operates for any period of time at less than its full employ-
