Economist criticisms Some economists such as
Paul Samuelson have taken issue with Marx's concept of the reserve army of labour. Samuelson argues that much Marxian literature assumes that the
mere existence of the unemployed drives down wages, when in reality is dependent upon contingent factors. (Are the unemployed easily available as replacements? Is the mere threat of replacement sufficient to get workers to accept a wage cut or does the employer have to demonstrate this is not an empty threat?) Samuelson argues that if prices also fall with money wage, then this does not mean real wages will fall. Samuelson also argues that wages will fall only until there are no more unemployed to bid it down: the reserve army can reduce wages only by decreasing its size. Samuelson's concludes that to mean that while the unemployed can reduce wages, they are incapable of reducing them to anywhere near subsistence levels before the unemployed all become employed. A similar argument was made by
Murray Rothbard, who argued that if the reserve army lower wages by being absorbed into the ranks of the employed, then eventually it will disappear and be incapable of being a threat (that also means that the risk of perpetual impoverishment is averted). Rothbard observes that this is supported by modern market economics, which holds that unemployment lowers wages and thus ultimately eliminates itself. Thus, Rothbard concludes that the reserve army would ultimately cease to be a threat. Rothbard also argues that industries can experience an increase in demand for other works thanks to increasing productivity caused by technology, which will then decrease unemployment due to a greater demand for workers caused by expanding production capability.
Immiseration Some writers have interpreted Marx's argument to mean that an absolute immiseration of the working class would occur as the broad historical trend. Thus, the workers would become more and more impoverished and unemployment would constantly grow. This is no longer credible in the light of the facts because in various epochs and countries workers' living standards have indeed improved rather than declined. In some periods, unemployment had been reduced to a very small amount. In the
Great Depression, about one in four workers became unemployed, but towards the end of the
post-war boom unemployment in richer countries reduced to a very low level. However, economic historian
Paul Bairoch estimated in the mid-1980s that in Latin America, Africa and Asia "total inactivity" among the population was "on the order of 30-40% of potential working man-hours"—a situation without historical precedent, "except perhaps in the case of ancient Rome". Other writers, such as
Ernest Mandel and
Roman Rosdolsky, argued that in truth Marx had no theory of an absolute immiseration of the working class; at most, one could say that the rich-poor gap continues to grow, i.e. the wealthy get wealthier much more than ordinary workers improve their living standards. In part, the level of unemployment also seems to be based on the balance of power between
social classes and state policy. Governments can allow unemployment to rise, but also implement job-creating policies, which makes unemployment levels partly a political result. If chapter 25 of Marx's
Capital, Volume I is read carefully, it is plain that Marx does not actually say what many critics accuse him of. Marx himself says that the "absolute general law of capitalist accumulation" is that the more that capital grows in size and value, the bigger the working class becomes and the larger the pauperized sections of the working class and the industrial reserve army become. However, he does not say that the whole working class becomes pauperized, but rather that the part of it which is pauperized grows in size. He then carefully qualifies this argument by saying that the absolute general law is "like all other laws [...] modified in its working by many circumstances". It is quite clear from the context though that by "worse" Marx does not primarily mean poverty. He means instead, as he says himself explicitly, that "all means of development of production undergo a dialectical inversion so that they become means of domination and exploitation of the producers". In Marx's own time,
Thomas Robert Malthus raised dire predictions that
population growth enabled by capitalist wealth would exceed the
food supply required to sustain that population. As noted, for Marx "overpopulation" was really more an
ideologically loaded term or
social construct and Marxists have argued there is no real problem here as enough
food can be produced for all; if there is a problem, it lies in the way that food is produced and distributed.
Consent In the social welfare area, there are also perpetual disputes about the extent to which unemployment is voluntarily chosen by people, or
involuntary, whether it is forced on people or whether it is their own choice. In the Great Depression of the 1930s, when unemployment rose to 20–30% of the
working population in many countries, people generally believed it was involuntary, but if unemployment levels are relatively low, the argument that unemployment is a matter of choice is more often heard.
Measurement There are endless debates about the best way to measure unemployment, its costs and its effects and to what extent a degree of unemployment is inevitable in any country with a developed
labour market. According to the
NAIRU concept, price stability in market-based societies necessarily requires a certain amount of unemployment. One reason a reserve army of the unemployed exists in market economies, it is argued, is that if the level of unemployment is too low, it will stimulate
price inflation. However, the validity of this argument depends also on state economic policy and on the ability of workers to raise their wages. If for example
trade unions are legally blocked from organizing workers, then even if unemployment is relatively low, average wages can be kept low; the only way that individual workers have in that case to raise their income is to work more hours or work themselves up to better-paying jobs. Normally, the government measure of unemployment defines "unemployed" as "without any job, but actively looking for work". There are also people defined as "jobless", who want work yet are not, or no longer, actively looking for work because they are discouraged and so on. This official view of the matter is closely linked to the administration of
unemployment benefits. To be entitled for an unemployment benefit, it is a requirement that the beneficiary is actively looking for work.
Hidden unemployment There are also many controversies about hidden unemployment. Hidden unemployment means that people are not counted or considered as unemployed, although in reality they are unemployed. For example, young people will stay in the family home, in schooling, or in some
make-work scheme because they can not find a paid job. People might also have a job, but they might be underemployed because they cannot get more working hours or they cannot get a job for which they are qualified. People might also drop out of the official labour force because they are discouraged and no longer actively looking for work; they are no longer counted as unemployed, although they are. Governments can also subsidize employment of people who would otherwise be unemployed, or put people on benefits even although they could be working. It may be that workers are hired, but that they do nothing while at work. On the one side, governments often try to make unemployment seem as low as possible because that is politically desirable. On the other side, governments also often provide "broader" and "narrower" measures of unemployment. For example, the United States
Bureau of Labor Statistics provides six measures of labor underutilization (U-1 through U-6). The U-3 rate is the "official" unemployment rate. == Global reserve army of labour ==