There's a fascinating TV series on now about modern social and economic history. I refer of course to the re-runs of Brookside on STV Player.

One thing this shows is how many opportunities there in the 80s were for workers to top up their wages by stealing from their employers, either by putting their hands in the till or by nicking stuff to sell to their friends. The closure of such opportunities thanks in part to technical change might help explain increased inequality and the Easterlin paradox, as I discussed here.

But there's something else. In one episode the post arrives at breakfast time. Today, this is unheard of. What a poverty-stricken city could achieve 40 years ago is now not possible even after decades of IT improvements. What we have here is technical regress.

Of course management of the Royal Mail and Post Office has long been indistinguishable from dogshit, but this regress is not confined to the postal system. The UK has lost the ability to build train lines. The BBC is less able (or willing) to make
high-
brow TV
programmes whilst much of its current affairs output has become unwatchable. Water companies have become unable to maintain clean rivers. Construction productivity in the US has fallen since the 1970s. Academic research has deteriorated. And Cory Doctorow has described how platforms have become enshittified.

Lest this sound like an old man's nostalgia, I'll point to ONS data. These* show that there are many industries where gross value added per hour worker is lower now than it was in 2007, among them mining, pharmaceuticals, construction, water and wholesaling. In this sense, technical regress has been widespread.

All this alerts us to the fact that supply shocks are not just rises in the costs of raw materials due to wars. They can take the form of companies becoming less able to do things.

Some economists have long scoffed at this. Brad DeLong has called it the "great forgetting" theory of recessions. But I think there's something to be said for it.

For one thing, organizational capital is brittle; it can be destroyed by bad management, which is one reason why so many once-good companies get into trouble.

What's more, such declines and failures don't merely mean that capital and labour are swiftly redeployed at more efficient companies. Economies don't move seamlessly from one happy equilibrium to another. Instead, as Banerjee and Duflo point out in Good Economics for Hard Times, they are sticky: adjustments are slow, so technology shocks can lead merely to stagnation rather than to faster growth.

This is especially the case when, as Xavier Gabaix has shown (pdf), some companies are so big that their getting into trouble is itself a macroeconomic event, or if those companies are hubs, or key members of networks (pdf).

You can read the financial crisis as a form of technology shock - banks became less able to produce credit - and that had spillovers onto the general economy. Or the inability of TransPennine "Express" or Avanti West Coast to run trains has spillovers onto productivity generally as people can't get to work or meetings or are stressed out if they do. Or the failure of large department stores such as Debenhams leads to depressing high streets and shopping malls, causing less custom for other shops.

Now, you might reply here that a lot of these examples aren't so much of technical regress as of bosses degrading quality to get a bigger slice of the pie at the expense of workers or customers. In some cases, yes. But this merely reminds us that the production process is not merely a matter of solving constrained optimization problems as the neoclassical fairy tale says, but is also a location of class struggle.

All this should be troubling for mainstream economics. It means (some?) downturns are not merely fluctuations in demand which are ameliorable by monetary or fiscal policy but are instead the result of company- or industry-specific supply shocks. The fact that recessions have been almost all unpredicted is, I suspect, consistent with this.

This is not just an economic issue. It's a political one. Keynesian economics offered social democratic governments the possibility of controlling economic growth without having to interfere in capitalist management of workplaces. That option, however, exists only if recessionary threats come only from demand shocks and if productivity continues to grow thanks to capitalist dynamism.

Such conditions, however, are now absent. Which means we must take an interest in what Marx called "the hidden abode of production". We must take seriously the possibility that managerialism can no longer raise efficiency and that, as Michael Roberts says, there is a case for "giving workers democratic control of production and services and ending the autocracy of grotesquely overpaid chief executives and shareholder power."

This should not be so radical. Basic economics says that if a resource is scarce we should try to economize on it - and quality management is very scarce.

There is, of course, little evidence that the Labour party is thinking along these lines. Evidence-based policy-making has fallen out of fashion now that the evidence shows that capitalism isn't working.

* Yes, these. Suck it up, FT style guide.