Work and Employment in Post-Manufacturing Society – part two by Michael Shanks

I prefer to describe the new society now emerging in the Western world as "post-manufacturing society", since its most obvious feature is the shift in the balance of the workforce out of manufacturing into services. Just as farm mechanisation and more efficient husbandry - crop rotation, irrigation, fertilisers - starting in the mid-eighteenth century meant that a small minority of the labour force could eventually supply all the food needed by the community, so automation and increasing industrial efficiency are rapidly reducing the numbers of people needed to satisfy the world market for manufactured goods. Just as manufacturing expanded to emloy the agricultural labour surplus two centuries ago, so today people are moving in large numbers out of manufacturing into the service industries - into banking and insurance, retailing, catering and hotels, public utilities and communications, education and leisure, and perhaps above all into the public services outside the market economy.

One of the major questions facing the Western world in the 1980s is whether the service sector can expand fast enough to absorb all those now surplus to the needs of agriculture and manufacturing. Although the service sector now employs more than half the total labour force of most Western countries, there is nevertheless a growing problem of unemployment. The likelihood is that manufacturing unemployment will continue to rise during the 1980s. We need to understand why this should be so.

If we review the history of Western capitalism from the end of the eighteenth century to the present day, we see that economic development has been characterised by cyclical fluctuations - of three kinds. There are the short term (two to three years) fluctuations of commodities, determined by time lags between supply and demand; there are the major business cycles (seven to eight years before the Second World War, now typically four to five years in duration) which occur in all industrialised economies, and which spring essentially from fluctuations in demand for capital - and to a lesser extent consumer - goods. But over and above these cycles there are longer term fluctuations, lasting typically for twenty or twentyfive years, know as the Kondratieff cycle after the distinguished Russian economist of the 1920s who perished in one of Stalin's labour camps.

Until recently economist were divided on the question of the validity of the Kondratieff cycle, but developments since the Second World War have greatly strenghtened the case for its existence. Kondratieff's case is that capitalist development proceeds in major spurts, driven largely by technological changes which create new markets for capital saturation, while it digests as it were the effects of the previous boom. Thus, if one goes back to the London Great Exhibition of 1851, which was also the launching-pad for the great railway boom, one can identify six subsequent periods of alternating rapid and slow economic advance. During the periods of rapid growth, booms were long and pronounced, recessions short and shallow; during the periods of stagnation, the reverse was true.

The six "Kontratieff periods" since 1851 have been:
1. 1851-73. The era of the railway boom, leading to the opening-up of large tracts of North and South America, with rapid industrialisation in Western Europe; discoveries of gold and precious metals in North America and Australasia were also significant.
2. 1873-93. The end of the railway boom in 1873 ushered in a period of slower growth and capital saturation until the mid-1890s.
3. 1893-1914. The "belle epoque" which led up to the First World War was another period of fast growth, characterised by the heyday of imperialism, the "scramble for Africa", the opening-up of Japan, China and South East Asia, a new round of gold and precious metal discoveries in South Africa and the Western part of North America, and the beginning of industrialisation in European Russia.
4 1918-1939. The end of the Second World War ushered in the greatest and most prolonged economic boom the world has ever seen. With the benefit of hindsight, one can assign as one of the main causes cheap energy in the pre-OPEC era. Other factors included major technological advances, a rapid increase in world population, reconstruction after the war and catching up with the run-down in investment during the pre-war slump, greatly improved communications, and the elimination of many of the artificial barriers for trade created during the 1930s, producing an explosion in world trade.