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Unemployment of Scientists and Engineers
by Britta Fischer & Claus Offe
Unemployment in the United States rose to 5.5% in September of this year and there is every indication that it will increase further. The last time a similiar level of unemployment prevailed was in the early sixties before the escalation of the Vietnam War. However, in today’s situation a new dimension has been added. It is no longer only the unskilled who find themselves out of a job, but also more privileged workers such as technicians, scientists and engineers, and other skilled workers. Dean Bisplinhoff of MIT recently stated that of America’s one million engineers, 60,000 are out of work, 6%. Official projections for the Massachusetts electronics belt, Route 128, estimate 25,000 lay-offs in the next two years in addition to unemployment that has already tripled in the last year. On the West Coast unemployment in the aerospace industry is also high among more privileged workers. The daily newspapers abound with accounts of large-scale layoffs and of individual cases illustrating the general problem.
How are these developments explained in the press and by the scientific establishment and how valid are the explanations given?
Generally they now acknowledge that the crisis in scientific employment stems from space and defence cutbacks and cuts in academic funding by government. Since these structural causes were apparent from the beginning of the year, it is surprising how slow the scientific establishment has been to acknowledge their consequence, namely unemployment.
Treatment of the problem in the scientific journals went through two levels of awareness. At first, instances of unemployment among scientists were minimized. They were referred to by anecdotes as isolated events. Some department chairmen explained their graduates’ absence from the job market in terms of people taking a year off to travel as having identity problems with respect to the choice of their careers, and, in the case of women, as having babies. Indeed people were doing all these things, but what prompted them? It is very likely that the increasing tightness of the market led recent graduates to these alternatives. Just consider the following quotes, “The AIP (American Institute of Physics) reported that ‘it is not unusual today for a young man to apply to over 100 universities and industrial research laboratories and receive only one — or in some cases no — job offer”1
Also “Ph.D. watching” became a favorite pass-time to substantiate the random nature of incipient unemployment. On May 22, Science2 reported on a study showing that only around 1% of the 1968 and 1969 science Ph.D.’s were unemployed. However, the study did not adequately account for the fact that the percentage of people holding postdoctoral fellowships doubled during that time. Likewise the criteria for “suitable” employment that most of the graduates were supposedly engaged in were not spelled out. (What about the physics Ph.D.s who are now teaching high school?) The 1%, figure creates the illusion that all is well as long as departments can somehow place their “products.” But it sheds little light on the actual employment situation of Ph.D.s. For example, of eight hundred NASA employees laid off in Cambridge. Mass. earlier this year, 130 including 30 Ph.D.s have not found emplyment. Since poverty is blamed on the poor themselves and ecology problems on automobile owners and leatburners it is obviously in the American tradition to blame unemployment on the unemployed and not relate it to its true economic and political causes. It is also understandable that the scientific establishment, threatened with reduction in funds and personnel, is worried about the loss of power and prestige and would therefore like to explain such unpleasant facts away, but it is myopic in the long run and irresponsible towards those affected.
It may be argued that the trends were not apparent and the above types of explanations are therefore justified. Let us then see what happened in stage two,i.e., when unemployment became statistically significant and not so easily dismissed. Individualistic answers were by no means abandoned, only carried to a different level. As late as June 1970 Gruner dealt with the unemployment question in a lengthy article in Physics Today3. He failed completety to mention any causes for the problem and recommended that the physicists out of work “adjust” to the situation, much like psychiatrists recommend that their patients adjust rather than encouraging them to change the intolerable conditions that create many psychological problems.
Other explanations say that there has been an unfortunate overselection by individuals of certain fields notably as a result of the Sputnik panic. Now people are seen as having the wrong skills, so next time we’ll do better and the call goes out for better manpower planning. Still the blame is placed with the individual. He picked the wrong job, so he better retrain. He has been pampered by a seller’s market, so he better learn how to market himself more aggressively. If there are no jobs to retrain for, he can take work that requires fewer skills (as Time, Oct. 5, 1970, p. 84 well describes.) so go the arguments when in fact scientists and engineers under age fifty were educated at a time when war and armament spending was riding high, when they were automatically channelled into contributing to essentially destructive activities. Now that he is no longer needed by that system and the money not spent on war is not being allocated to other projects or to projects that cannot absorb his skills he is on his own and told to adjust.
This cynical liberal interpretation of the plight of unemployed scientists and engineers denies the scope of the problem. It is much beyond that which self adaptive forces of the market will solve. Toretrain, to aquire new skills in addition to the “overspecialized” ones they already have, to learn how to market themsleves will be of help for only a few. And even for those who will be able to adapt individually, there are still the subjective costs of lost income, lost economic security, and lost self esteem — all having consequences for their lives and the lives of their family.
The only hope for the great majority of unemployed scientists and engineers is not in individual adaptation, but in structural change of the conditions which determine their employment perspectives. The better this fact is understood, the more political will be the way in which scientists and engineers react to the new situation of unemployment. Unfortunately, some of the scientists and engineers whose employment is threatened or who are unemployed are likely to find “hope for change” in resumption of undiminished levels of defense and space spending and in continuing the arms race. They may agree that this alternative is irrational from a political point of view, but it promises at least to take care of their present problems. Those who are unable to conceive of any other option can be expected to put the pressure on. Already there are officials of some unions of war-dependent workers who have turned into fervent supporters of the war machine. Will there be another faction in the war lobby?: scientists and engineers whose employment opportunities depend on war related industries? As we learn from many historical examples, depressed and economically threatened segments of the middle class show a strong inclination to resort to reactionary and militarist attitudes. These people need an alternate vision. What is being offered them?
One perspective on structural change that we hear much about is conversion of defense resources to useful civilian production (“useful” meaning more than just shifting from arms race to space race.) Everyone talks about conversion and the ” peace dividend” and all the things that can be done (and all the jobs that can be created) once the defense budget is down. Even the Nixon administration pretends that this is exactly what it is going to do. Without speculation about the intentions of the administration, let us consider the prospects for conversion and the structural obstacles which stand in its way.
About 9% of the labor force are today absorbed by the military machine of the Pentagon. Of these, 3.5 million are military personnel, 1.2 million are civillian employees of the military forces and 3 million are war production workers (working in 15,000 to 20,000 prime contractor firms.) One author “would guess that if the DOD simply shut down tomorrow and nothing took its place, unemployment would rise to over 15%, roughly as in 1931.” (R. Heilbroner.) A shutdown of the DOD would be first of all economically suicidal. Although neither administration officials nor any other established political forces are favoring anything which comes close to such an “irresponsible” policy, the problem of overall size makes even very moderate steps of partial reduction of the defense budget difficult. For even simple linear arithmetic indicates that a 10 percent reduction in military spending leads to an increase in the overall jobless rate of at least 1 percent.
Since the economic system of the United States is unable to reduce the chronic unemployment (that which is not caused by cutbacks in defense spending,) since it maintains civilian unemployment somewhere between 5 and 6 percent (according to the highly euphemistic labor statistics) is there any reason to believe that unemployment caused by defense cutbacks will be absorbed easier than plain unemployment? To fail to produce an analytical reason on which to base a positive answer to this question, and still expect the militaristic economy to convert simply as a response to popular demand for “conversion” is sheer self-deception. To spout the liberal conversion peace dividend rhetoric without an analytical base is utopian. What institutions and what political forces do supporters of this rhetoric expect to do the job? To be taken seriously they must carry this burden of proof. An attitude of simplistic confidence is not enough. Those who want to defend the prospect for conversion as being realistic must consider the facts of life in a highly militarized capitalist economy, particularly those that we discuss in the following three points.
As we know, under capitalism, employment of manpower is a byproduct of investment of capital; investment of capital in turn is a consequence of expected profits. No profit expectations mean no investment means no employment. Consequently, non-defense alternatives will be open for employees if and only if profit expectations for civilian investment are provided for defense corporations. In order to make sure that expected profits will be as high and as secure as they are in the highly monopolistic defense business itself, the federal government will have to subsidize profits to the same extent it subsidizes the profits of defense industries today.4 Civilian investment of capital and employment of labor will happen only to the extent that government is willing and able to do exactly this.
But the same imperative of rising inflation which forced the lowering of the ceiling in defense spending will also enforce a reduction in the budgets of other government departments. Moreover, the reduced overall funds are essentially channelled through the same monopolistic corporations that used to do the defense-industry-dependent states like California,) farsighted as their management usually is, prepared themselves for the emergency of cutbacks in defense spending. To a large degree they have already exhausted the nondefense alternatives to which the physical and intellectual capital5 can successfully be applied.
This type of corporate emergency planning, called diversification not conversion because the corporations do not have a direct intrinsic interest in either war or civilian production but in profitable government contracts has already been going on for some years. At the present time, for example, Boeing is engaged in SST, McDonnell-Douglas in something called “campus design”(??), Lockheed in “educational technology” and “international development” Litton Industries in a project on “regional development,” and Philco Ford in “systems analysis of poverty” and the development of a zip-code reader. All of this is under contracts awarded by government agencies other that the DOD (at monopolistic prices.) The almost exclusive allocation of reduced government funds to monopolistic defense corporations results because the government has to take into account thay whole regions of the country and many primary and secondary subcontractors are dependent on them. Hence preservation of the big defense corporations and their business has highest priority. The common denominators of the “diversified” projects are (a) they allow for the application of techniques and experiences which are developed in the defense-oriented corporation, and therefore (b) make possible the maintenance of monopolistic structure based on high capital intensity and a high degree of technological sophistication. Together, these prevent competitors from entering this type of “market”.
Many economists describe defense contractors, although conventionally considered “private industry”, as being simply some kind of subordinate administrative agencies of the government—a unique type of agency insofar as it obtains monopolistic profits at little or no risk, and thereby causes inflation.6 Since it is inflation that made necessary the cutback in defense and space spending, there is little reason to expect that a shift to the civilian departments of the same “agencies” will be considerably less inflationary, and therefore allow for higher employment.
The government created this sector of the economy through the defense spending of the post-World War ll period (1,100 billion dollars) and has put it into the position of an indispensable pillar of the economy. How can the government now get rid of its obligations? It can’t. Therefore, parts of the reduced funds of government will be used for the purpose of averting any serious losses in the profits of this central part of the economy . No attempt at conversion can be undertaken which would threaten the monopolistic structure itself. Consequently, conversion happens exactly to the extent that the monopolistic corporations feel diversification is profitable to them, given the decreased government budgets.
Most urgent public needs are those which are most unlikely to be satisfied by monopolies. Among others, these needs are in the areas of urban reconstruction, health, environmental protection, education, housing, and transportation. By their very nature, these collective needs call for their fulfillment by enterprises which have different characteristics than defense enterprises.
(1) Capital intensity is low relative to defense-type enterprises; that is, the proportion of salaries and wages in proportion to fixed-capital outlays per year is higher. Or,
(2) total investment required and the level of technological sophistification of the investment is relatively low; that is, effective barriers against entry of competitors are absent, and there is little prospect for long-term and continuous-investment outlets.
(3) Effective demand (as opposed to need) is so low that not even competitive firms with their lower profit expectations are attracted, much less monopolized ones. The combination of attributes of “collective-need” industries explain why private industry is simply not motivated to do the job.
The simple, rational conclusion seems to be: let public enterprises do the job. But although this suggestion is rational and common sensical, it contradicts the logic of a capitalist system. Government in a capitalist system may not engage in economic activities which are not, directly or indirectly, beneficial or at least neutral to private enterprise. What may government do, what is it supposed to do ? First, socialize losses: pay for deficits incurred by Penn Central, Lockheed and many others. Second, subsidize profits: put a ceiling on the prices of some very significant cost-items for industry (electric power, transportation, etc.) or put a floor under the prices of over-producing industries (agriculture). That is done by regulatory agencies. Third: open up new markets which are too costly or otherwise impossible for private industry to develop on its own. This may happen up to (but no step beyond) the point where industry itself finds it profitable to become active. The most important market provided by government is, of course, the government’s own demand for defense items. What government may not do, then, is (1) engage in competition with private business directly (e.g., build publicly financed and publicly owned homes through public enterprises for the market) and (2) make competitive bids for the resources of private industry (labor or capital) to the effect that prices for these resources, and consequently costs for industry, rise. This indirect type of competition (on the markets for resources) is permitted only to the extent needed for the three functions government is supposed to fulfill.
This unelaborated analysis is adequate to draw some important conclusions. The nature of collective-needs industries provides inadequate investment incentives. But government is structurally prevented from filling the investment gap, and from thereby creating employment and meeting social needs. Why? Because by doing so, government would violate the basic imperative of noncompetition with private business. A not-for-profit government enterprise would necessarily increase demand for productive resources, thereby causing private industry to release some of its resources, thereby causing unemployment. A government enterprise would also supply goods and services (for example rapid-transit systems), thereby cutting the markets of private industry (for example, Detroit), thereby causing private industry to release workers, thereby causing unemployment. Therefore regardless of how much unemployment exists and how many collective needs are unmet, direct not-for-profit government employment (outside areas which, like defense, are beneficial to the private sector) creates disproportionately more unemployment in the private sector, and is thus, disruptive for the entire economic system. Defense employment and useful civilian employment, like guns and butter, are structurally asymmetric, and one cannot be substituted for the other, that is, without a basic change of the system.
This contradiction is all the more paradoxical since government is the only sector of the economy (except, to a much lesse degree, trade) which was able to expand substantially its long term share in the total number of people employed. Mining absorbed 2.2% of the total labor force in 1929 and 0.9% in 1963. The figures for construction are 5.0% vs 6.2% for the service industries 14.0% vs 15.1 %. But government (all levels) went from 6.9% up to 16.3%. The simple explanation, of course, is war and war production, which seems to be the only sector in which, under capitalist conditions,substantial new employment opportunities can be created in the long run. It is hard to see how conversion will work, unless it is a conversion of the institutional framework itself which is fettered by these paradoxical constraints.
Professional and technical personnel account for the single largest component of all government employees and the long-term growth rate in this occupational caregory is higher than that of other government employees. In the defense sector, employment of scientists and engineers apparently does not depend as much on the overall level of the defense budget, as on its growth rate, or more precisely, rate of military innovations. In 1969, 63% of all scientists and engineers employed in the United States were employed either directly or indirectly by the military. This enormous impact of the defense sector on science not only affects employment opportunities, but also the structure of scientific personnel — their specialization, the distribution of scientific growth according to field, institution, and level. To a large extent, science becomes the superstructure of the defense sector which, as we have seen, seems to be the only sector where it is possible to offset the forces of stagnation and depression inherent in a highly monopolized system. Both the economy and scientific progress hinge to a large extent on the level and growth rate of the defense sector.
Scientists and engineers who have lost or will lose their jobs are suffering the consequences of this basic misallocation. Perspectives for the conversion of the labor power and skills of these workers into some kind of civilian use are even bleaker than those for a rational conversion of the defense economy as a whole. For the very technical and scientific substance of their skills is affected by the fact of their being part of the superstructure of the defense economy. “Many military-industry engineers now have a trained incapacity for civilian work,” as Melman observes. It is indeed difficult to imagine how a civilian economy could absorb large numbers of engineers whose training prepared them for studying and experimenting with phenomena like extreme temperatures, extreme altitudes, extremely costly materials, extremely high safety margins and other peculiar elements of a technology which is designed for the purpose of extreme destruction.
In principle these scientists and engineers could work as “generalists” by being retrained, and doing useful jobs as, for example, high school teachers in physics. But at what costs? Many of them will be unemployable in anything similiar to their previous jobs and professional tasks, and for many of the others the hardships of individual adaptation to a system that remains basically unchange in its mode of operation will destroy their professional and private lives. Those who will be willing and able to apply the principle of scientific rationality to science itself and to the institutional forms science takes on in this society will organize themselves, not in order to demand more defense spending, but to work politically for a society in which production does not structurally depend on destruction, scientific progress is not progress in irrationality, and in which the individual is not held responsible to adapt himself to a system which is basically unresponsive to human needs.
- “Recession in Science: Ex-Advisors Warn of Long-Term Effects,” Science, May 1, 1970.
- “Employment Status of Recent Recipients of the Doctorate.”
- “Why There is a Job Shortage,” p. 21–26.
- “Many of the largest defense contractors not only owe their sales volume to the DOD, but a considerable fraction of their capital: as of 1967, defense contractors used 2 billion dollars worth of government owned furniture and office machines, 4.7 billion dollars worth of materials, and over 5 billion dollars worth of plant and equipement, on all of which, of course, they were allowed to make profits just as if they were using their own property.” (Heilbroner, NYR, July 23, 1970).
- Intellectual capital here is the knowledge and technical experience accumulated in connection with defense contracts for which the government paid. Like all knowledge, it is not used up in the process of production and therefore can be privately exploited by the defense corporations. Hence, accumulated intellectual capital, is just another example of capitalization by ” profit subsidizing,” which is usual in the defense industry.
- For arguments along these lines, cf. the books by Ginzberg et al., R. Barnett, S. Melman, B. Nossiter and, most interesting and revealing, M. Weidenbaum, The Modern Public Sector, 1969