Monday, 12 May 2014

The Economics of John Steinbeck's 'The Grapes of Wrath'

I recently wrote a review of the lovely book Nightfall, and thought I might blog about John Steinbeck's The Grapes of Wrath, too. It is a classic and a true example of the Great American Novel, so my praise for its terrific readability, wonderfully captured personalities (including accents) and chillingly evocative illustrations of despair would in all likelihood be a reprise of what other critics have said before. Instead, I will focus on how some of its truly amazing writing was sadly wasted on bad economics and misinformed history.
The economics is really terrible, even Luddite. Remarkable statement? Not at all! In the fifth chapter, Steinbeck discusses the mechanization of farming. A farmer using machines can work greater areas, so other tenant farmers are let go. These farmers tell the tractored one that he makes his three dollars a day at the expense of the redundant farmers' ability to feed their families, and then talk in a threatening fashion about performing many violent acts in response to their sorry situation.
     The problem here is that there is no fixed number of jobs. Anyone who reads The Grapes of Wrath will be unable not to feel sympathy for the Joads and down-and-out families and individuals like them. Nevertheless, one should not let such sad facts permit poor economics. The illogic expressed in the idea that mechanized farming costs jobs deserves a sound thrashing. About two hundred years ago, nineteen out of twenty individuals were farmers while today it is well below one in twenty. What has happened is in great part that farming has become more productive due to advances like the Green Revolution and mechanization, so by Steinbeck's logic something like eighteen out of twenty people should be unemployed today, or wages would have been competed down to peanuts.
     This is palpably false, and the reason it is false is that there are attractive alternatives for farm labour, employed or unemployed but probably the alternatives are more visible in the latter case. A common finding is that a person's reservation wage goes down the longer he stays unemployed, which sounds fairly reasonable. Suppose a piece of legislation prevents mechanization from destroying jobs which pay a dollar a day, and that an entrepreneur could offer work at 85 cent a day. Unmechanized farming will shed workers much more slowly than will mechanized farming, causing prospective industry to struggle when it could flourish. When, ineluctably, workers are eventually laid off the idea may be gone.
     Unemployed workers possess skills, a willingness to apply themselves and other qualities which are praised by the prospective employer. Something else did come along for those eighteen out of twenty former farmers, and something else will come along whenever willing workers can offer something to a willing employer, be it work at a very low wage if nothing else.
     Now this is a point which is surprisingly hard to argue, even though it must be true. The retort is obvious: "If jobs are to disappear, at least tell us what will come instead". The truth is that no-one really knows what progress will bring. But two things are beyond dispute: (1) workers kept in obsolete unproductive jobs wastes resources, and (2) technological progress has a truly amazing record, but it can be delayed severely with the adoption of sufficiently wrong-headed policy.

Where Steinbeck gets his economics right, it conveniently happens to support the points he is trying to make. Steinbeck has some grasp of game theory; for instance, as he shows when he deals with strike-breakers' continued failure to bargain for a higher wage due to the fact that it is individually rational to accept the lower wage. However, it is a shame that Steinbeck gives no hearing to the argument that the higher wage sought by the strikers would bring unemployment to some who could support themselves (just barely) on the lower wage.
     The poor economics is particularly pernicious because it is mixed with instances of better and clearer understanding. Part of the above is one such instance; another is the good grasp of social interactions expressed on page 36 (of the Mendarm 1990 edition) illustrating the deep squalor of the Okies: "We got no clothes, torn and ragged. If all the neighbours weren't the same, we'd be ashamed to go to meeting". This does not really require great perception, but it is accurate. Misery loves company. An unkempt appearance is less of a bad thing if everyone else is the same.

So much for the appalling economics. The Grapes of Wrath is not even as good an historical statement as is often believed. In the 25th chapter, Steinbeck blames the profit motive for the deliberate destruction of farm produce without noting that this was profitable only because the federal government were paying for non-production. I would be ill at ease arguing that the free market always produces stable economic conditions, but it is more than a stretch to blame the free market for the shocking non-production.
     In 1942, there was actually a decision taken by the Supreme Court, Wickard v. Filburn, according to which farmers were legally prevented from producing even for on-farm consumption if this production exceeded the limits imposed during the Depression. So the profit motive restricted supply only through ill-conceived interference.

But Steinbeck's is a society of conflict and whoever owns or attempts to make a profit must be pitted against those who do not own (as much) and do not (in an obvious way) try to make a profit. This leads to the above kind of nonsense. A natural question which is conspicuously absent from Steinbeck's (otherwise truly) Great American Novel is who is currently giving the workers a better way of supporting themselves. Can the greatest scourge of the hard-up workers really be their employers? Those who might do more is everyone who is currently not engaged in any productive activity, not those who are.
     In conclusion, The economics of The Grapes of Wrath is shocking in two senses: The first is its poverty. The second is the way in which the story of extreme destitution plays on emotion and thus loads the dice against careful analysis. To wit, the tragic story may shock the reader into accepting poor economics. But the laws of economics do not stop working because circumstances are bad. Thinking that they do adds upon the tragedy.

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