by Mahr
[Title Page and Publication Details]: The title page and publication information for Alexander Mahr's work on the main problems of unemployment, published in 1931 as part of the Vienna Studies in State and Legal Science series edited by Hans Kelsen. [Copyright and Table of Contents]: Copyright information and a detailed table of contents listing eleven chapters. The chapters cover topics such as the causes of unemployment, the relationship between wages and performance, the effects of excessive wages, monopolies, rationalization, seasonal and cyclical unemployment, emergency works, and wage reductions. [Preface and Chapter 1: The Main Causes of Unemployment]: The author introduces the work as an attempt to clarify fundamental disagreements regarding unemployment, specifically critiquing the over-generalization of specific economic findings. Chapter 1 categorizes the causes of unemployment into two groups: changes in profitability (seasonal, cyclical, and structural) and monopolistic market influence by unions or employers. Mahr distinguishes between 'credit cycles' (monetary) and 'non-monetary business movements,' arguing that the current depression is non-cyclic and driven by factors like the US stock market crash rather than typical price level increases. He also discusses structural changes, citing Bernhard Harms' distinction between constructive factors like rationalization and destructive factors like the loss of foreign markets and reparations. [Chapter 2: Wage and Performance]: This chapter examines the relationship between wage levels and labor performance. Mahr argues that wage increases do not cause unemployment if they correspond to increases in 'value productivity' (monetary yield). He explores the 'high wage' philosophy, noting that while higher wages can improve labor quality and intensity over long periods by fostering higher cultural needs and physical fitness, immediate or forced increases often fail to boost productivity. He contrasts the voluntary high-wage policy of Henry Ford with the forced wage increases in Germany and Austria, which he claims have exceeded marginal productivity and thus contributed to unemployment. [Chapter 3: The Effects of Excessive Wages]: Mahr analyzes how wages exceeding marginal productivity lead to production cuts and unemployment. Drawing on Hans Mayer's theory of imputation (Zurechnung), he explains how entrepreneurs determine the marginal contribution of labor. He argues that wage rigidity prevents necessary adjustments during downturns, turning potential wage cuts into actual layoffs. The chapter also discusses the 'indirect' effects of wage hikes in one sector (e.g., baking) causing unemployment in others due to shifted consumer spending. Mahr critiques the idea of 'financing' wage increases through credit expansion, warning it leads to inflation, and notes that high wages accelerate the elimination of labor-intensive small businesses in favor of capital-intensive large ones. [Chapter 4 & 5: Monopolies and Unemployment]: Chapter 4 applies Cournot's monopoly theory to labor costs, showing that while monopolists usually pass costs to consumers via higher prices and lower production (causing unemployment), there are exceptions based on price rounding and demand elasticity. Mahr discusses 'duopoly' and 'tacit agreement' using Chamberlin's concepts. Chapter 5 addresses the 'secondary effects' of monopolies; if monopoly profits are reinvested productively or spent on luxury services, they may create new jobs. However, Mahr warns that in contemporary Germany, these profits often flee the country due to high taxes and political instability, leaving only the negative 'primary' effects (higher prices and lower output) to impact the domestic labor market. [Chapter 6: Rationalization and Unemployment]: Mahr distinguishes between technical rationalization (capital intensification) and labor intensification. He argues that while technical progress can temporarily displace workers, it usually leads to higher equilibrium employment (compensation theory). However, when rationalization is forced solely by excessive wages, it results in chronic unemployment because the 'subsistence fund' is stretched too thin. The chapter provides detailed statistical tables of US industry (1899-1927), showing that highly rationalized sectors like the automobile and rubber industries saw massive production growth with minimal or negative employment growth, while less rationalized sectors like textiles absorbed more labor. He concludes that while rationalization is the only path to higher living standards, its forced implementation via wage pressure is harmful. [Chapter 7: Seasonal Unemployment]: This chapter explores methods to mitigate seasonal unemployment, such as distributing public orders to off-peak months and encouraging year-round production in industries like construction. Mahr critiques the current German unemployment insurance system, arguing it acts as a hidden subsidy for seasonal industries. By providing benefits during the 'dead season,' the system allows seasonal employers to pay lower annual wages than would otherwise be necessary to retain workers, thereby artificially expanding seasonal sectors at the expense of year-round businesses. He suggests decoupling seasonal workers from the general insurance fund to force economic normalization. [Chapter 8: Combating Cyclical Unemployment]: Mahr discusses the prevention of credit cycles through monetary policy. He argues that central banks should stabilize the wholesale price index rather than a general price index (like Snyder's) or a consumer index, because wholesale prices are the primary drivers of entrepreneurial profit and production decisions. He notes that while central banks can easily stop a boom by raising rates, they are often powerless during a deep depression when low rates fail to stimulate credit demand due to lack of confidence. He critiques using wage increases as a stabilization tool and advocates for public works as a necessary supplement to monetary policy during depressions. [Chapter 9: The Question of Emergency Works (Notstandsarbeiten)]: Mahr examines the utility of 'Notstandsarbeiten' (emergency public works). He addresses Gustav Cassel's critique that public works merely divert capital from private industry, arguing that during a depression, public works can utilize 'idle' capital and stimulate credit creation that would otherwise not occur. He emphasizes that for such works to be economically sound, they must be financed through credit (not taxes), pay wages based on performance, and focus on 'filling' projects (Füllarbeiten) like infrastructure that provide long-term economic value. He explicitly rejects J.M. Keynes' suggestion of 'useless' work (like tearing down and rebuilding cities) because it burdens future generations with debt without increasing the real social product. [Chapter 10: Reduction of Working Hours]: The author evaluates the reduction of working hours as a means to spread available work. He argues that reducing hours while maintaining full pay is counterproductive as it raises unit costs and prices, leading to more unemployment. However, 'Kurzarbeit' (short-time work) with proportional wage reductions is praised as a superior alternative to layoffs. It maintains the workforce's skills, prevents total pauperization, and reduces the burden on the unemployment insurance system. Mahr provides statistics on short-time work in Germany (1930) and discusses technical implementation (e.g., skipping days vs. adding shifts). He warns that in sectors with inelastic demand, unions might use hour reductions to hide wage increases, which would harm the broader economy. [Chapter 11: Wage Reductions as a Remedy]: Mahr argues that wage reductions are necessary when wages have been pushed above marginal productivity by unions. He critiques the 'purchasing power theory' of high wages, noting that excessive wages in one sector often come at the expense of other workers' real income and employment. He identifies a trend of 'Aushöhlungssozialisierung' (socialization by erosion), where unions try to eliminate profit and interest through wage pressure, which he claims only leads to capital flight and economic decay. He advocates for a coordinated reduction of wages and prices across all production stages to restore profitability and international competitiveness without severely lowering the average worker's real standard of living. [Chapter 12: Measures for Germany and the Reparations Problem]: The final chapter synthesizes the proposed measures for Germany: credit-financed public works, wage and price reductions, and the dismantling of monopolistic price structures via cartel and tariff reform. Mahr provides a table showing the steady rise of German nominal and real wages from 1924 to 1930 despite rising unemployment. A significant portion of the chapter is dedicated to the Reparations problem. Mahr argues that reparations are a unique burden because they offer no domestic economic return and trigger capital flight. He claims the high interest rates in Germany are a 'risk premium' caused by the political and economic uncertainty of the Young Plan. He concludes that a revision of reparations or at least a moratorium is essential, as Germany has become a 'global economic danger zone' where reparations exacerbate every crisis.
The title page and publication information for Alexander Mahr's work on the main problems of unemployment, published in 1931 as part of the Vienna Studies in State and Legal Science series edited by Hans Kelsen.
Read full textCopyright information and a detailed table of contents listing eleven chapters. The chapters cover topics such as the causes of unemployment, the relationship between wages and performance, the effects of excessive wages, monopolies, rationalization, seasonal and cyclical unemployment, emergency works, and wage reductions.
Read full textThe author introduces the work as an attempt to clarify fundamental disagreements regarding unemployment, specifically critiquing the over-generalization of specific economic findings. Chapter 1 categorizes the causes of unemployment into two groups: changes in profitability (seasonal, cyclical, and structural) and monopolistic market influence by unions or employers. Mahr distinguishes between 'credit cycles' (monetary) and 'non-monetary business movements,' arguing that the current depression is non-cyclic and driven by factors like the US stock market crash rather than typical price level increases. He also discusses structural changes, citing Bernhard Harms' distinction between constructive factors like rationalization and destructive factors like the loss of foreign markets and reparations.
Read full textThis chapter examines the relationship between wage levels and labor performance. Mahr argues that wage increases do not cause unemployment if they correspond to increases in 'value productivity' (monetary yield). He explores the 'high wage' philosophy, noting that while higher wages can improve labor quality and intensity over long periods by fostering higher cultural needs and physical fitness, immediate or forced increases often fail to boost productivity. He contrasts the voluntary high-wage policy of Henry Ford with the forced wage increases in Germany and Austria, which he claims have exceeded marginal productivity and thus contributed to unemployment.
Read full textMahr analyzes how wages exceeding marginal productivity lead to production cuts and unemployment. Drawing on Hans Mayer's theory of imputation (Zurechnung), he explains how entrepreneurs determine the marginal contribution of labor. He argues that wage rigidity prevents necessary adjustments during downturns, turning potential wage cuts into actual layoffs. The chapter also discusses the 'indirect' effects of wage hikes in one sector (e.g., baking) causing unemployment in others due to shifted consumer spending. Mahr critiques the idea of 'financing' wage increases through credit expansion, warning it leads to inflation, and notes that high wages accelerate the elimination of labor-intensive small businesses in favor of capital-intensive large ones.
Read full textChapter 4 applies Cournot's monopoly theory to labor costs, showing that while monopolists usually pass costs to consumers via higher prices and lower production (causing unemployment), there are exceptions based on price rounding and demand elasticity. Mahr discusses 'duopoly' and 'tacit agreement' using Chamberlin's concepts. Chapter 5 addresses the 'secondary effects' of monopolies; if monopoly profits are reinvested productively or spent on luxury services, they may create new jobs. However, Mahr warns that in contemporary Germany, these profits often flee the country due to high taxes and political instability, leaving only the negative 'primary' effects (higher prices and lower output) to impact the domestic labor market.
Read full textMahr distinguishes between technical rationalization (capital intensification) and labor intensification. He argues that while technical progress can temporarily displace workers, it usually leads to higher equilibrium employment (compensation theory). However, when rationalization is forced solely by excessive wages, it results in chronic unemployment because the 'subsistence fund' is stretched too thin. The chapter provides detailed statistical tables of US industry (1899-1927), showing that highly rationalized sectors like the automobile and rubber industries saw massive production growth with minimal or negative employment growth, while less rationalized sectors like textiles absorbed more labor. He concludes that while rationalization is the only path to higher living standards, its forced implementation via wage pressure is harmful.
Read full textThis chapter explores methods to mitigate seasonal unemployment, such as distributing public orders to off-peak months and encouraging year-round production in industries like construction. Mahr critiques the current German unemployment insurance system, arguing it acts as a hidden subsidy for seasonal industries. By providing benefits during the 'dead season,' the system allows seasonal employers to pay lower annual wages than would otherwise be necessary to retain workers, thereby artificially expanding seasonal sectors at the expense of year-round businesses. He suggests decoupling seasonal workers from the general insurance fund to force economic normalization.
Read full textMahr discusses the prevention of credit cycles through monetary policy. He argues that central banks should stabilize the wholesale price index rather than a general price index (like Snyder's) or a consumer index, because wholesale prices are the primary drivers of entrepreneurial profit and production decisions. He notes that while central banks can easily stop a boom by raising rates, they are often powerless during a deep depression when low rates fail to stimulate credit demand due to lack of confidence. He critiques using wage increases as a stabilization tool and advocates for public works as a necessary supplement to monetary policy during depressions.
Read full textMahr examines the utility of 'Notstandsarbeiten' (emergency public works). He addresses Gustav Cassel's critique that public works merely divert capital from private industry, arguing that during a depression, public works can utilize 'idle' capital and stimulate credit creation that would otherwise not occur. He emphasizes that for such works to be economically sound, they must be financed through credit (not taxes), pay wages based on performance, and focus on 'filling' projects (Füllarbeiten) like infrastructure that provide long-term economic value. He explicitly rejects J.M. Keynes' suggestion of 'useless' work (like tearing down and rebuilding cities) because it burdens future generations with debt without increasing the real social product.
Read full textThe author evaluates the reduction of working hours as a means to spread available work. He argues that reducing hours while maintaining full pay is counterproductive as it raises unit costs and prices, leading to more unemployment. However, 'Kurzarbeit' (short-time work) with proportional wage reductions is praised as a superior alternative to layoffs. It maintains the workforce's skills, prevents total pauperization, and reduces the burden on the unemployment insurance system. Mahr provides statistics on short-time work in Germany (1930) and discusses technical implementation (e.g., skipping days vs. adding shifts). He warns that in sectors with inelastic demand, unions might use hour reductions to hide wage increases, which would harm the broader economy.
Read full textMahr argues that wage reductions are necessary when wages have been pushed above marginal productivity by unions. He critiques the 'purchasing power theory' of high wages, noting that excessive wages in one sector often come at the expense of other workers' real income and employment. He identifies a trend of 'Aushöhlungssozialisierung' (socialization by erosion), where unions try to eliminate profit and interest through wage pressure, which he claims only leads to capital flight and economic decay. He advocates for a coordinated reduction of wages and prices across all production stages to restore profitability and international competitiveness without severely lowering the average worker's real standard of living.
Read full textThe final chapter synthesizes the proposed measures for Germany: credit-financed public works, wage and price reductions, and the dismantling of monopolistic price structures via cartel and tariff reform. Mahr provides a table showing the steady rise of German nominal and real wages from 1924 to 1930 despite rising unemployment. A significant portion of the chapter is dedicated to the Reparations problem. Mahr argues that reparations are a unique burden because they offer no domestic economic return and trigger capital flight. He claims the high interest rates in Germany are a 'risk premium' caused by the political and economic uncertainty of the Young Plan. He concludes that a revision of reparations or at least a moratorium is essential, as Germany has become a 'global economic danger zone' where reparations exacerbate every crisis.
Read full text