Solidarity for Full Employment
EDITORIAL, 10 Sep 2018
The ideas expressed in this Editorial are developed more completely in the section Featured Research Paper: Solidarity for Full Employment (whole paper)
The problems of drug addiction, gangs, crime, ethnic nationalism, racism, sexism, chronic depression, immigration issues, poverty in old age, mental illness, war, inner city schools, taking necessary measures to save the biosphere that cost jobs, and many others will not be reduced to manageable proportions, much less solved, until human life is reorganized so that most people who need decent employment are able to find it. Would you agree? I call employment a bottleneck problem. If it is not solved, many other problems will not be solved either.
To solve it, I advocate more non-market employment. More non-market employment can be made possible by those of us who have more than we need. We can make it possible by sharing more than we do now with those of us who have less than they need, either voluntarily or involuntarily. One might also add a third category of “semi-voluntary” sharing (sharing is known to economists as “transfers”). The third category would cover transfers where decent employment is made possible by moving resources in ways that are neither voluntary (as is donating to a symphony orchestra, helping it to pay musicians) nor involuntary (as is paying taxes, helping governments to comply with Article 23 of the Universal Declaration of Human Rights, establishing the right of everyone to employment with just and favourable remuneration) but somewhere in between (like funding a charitable foundation that subsidizes asset based community development,[i] which in turn creates livelihoods where there were none, in order to get favourable publicity and a tax exemption).
The non-market alternative may be purebred, as in the case of a research scientist whose salary is paid entirely by the Rockefeller Foundation; or hybrid, i.e. partly non-market and partly market, as in the case of the coach of a football-4-youth programme whose salary is funded partly by the city government and partly by sales of tickets to games. Whatever the non-market alternative may be in a given case, purebred or hybrid, I want to make it as crystal clear as I possibly can that sales in markets alone cannot solve the employment problem.
Market employment depends on sales. In the standard case, workers contribute to producing goods and services that are sold at a profit. If they cannot be sold at a profit, they are not produced, and therefore no workers are hired. The workers are paid their salaries out of the revenue from the sales of the products. Business owners, tax collectors, landlords, executives, bankers, suppliers, advertisers, as well as several other classes of people are also in line to collect their slices of the revenue-from-sales pie. Unless they too take their cuts, the business is a no-go, and once again no workers are hired. Do you see what I am driving at? I am saying that whether there will be market employment is iffy. There is no guarantee whatever that there will be a job, much less a decent one, for everybody who needs one. There is no guarantee whatever that every child born will have solvent parents who can afford to buy diapers, baby food, a crib and a baby buggy.
The picture is somewhat different if the firm is non-standard, like a coop, or a firm owned by its employees, or is owned by its customers (like a mutual insurance or water company); or is a non-profit cemetery or hospital or school; or is an autonomous parastatal like the New York Port Authority or is owned by one or another level of government like the State Bank of North Dakota; or if we are talking about self-employment. Employment in non-standard forms may also be purebred (non-market) or hybrid (partly market and partly non-market). I am saying that to the extent that employment depends on sales to generate the fund from which salaries are paid, we are talking about a market solution to the problem and therefore it is iffy.[ii]
The probability that market solutions will reliably provide decent employment for all of the human beings on this planet who need decent employment is the same as the probability of a snowball in hell. Would you agree? Let me explain why that probability is precisely zero, and not some slightly larger number like .01.
The reason is structural. It is a consequence of the rules of the game, not just a conclusion derived by induction from the empirical observation of many labour markets. The basic social structure, also known the basic cultural structure, of modern society is the market. Theodor Adorno calls it the Tauschprinzip, the principle of exchange. He finds that in our times a Tauschprinzip mentality, which tends to see everything and everybody as a commodity for sale, affects and infects all of human life. While some cultures live by fishing and fishing sets the tone for everything else, some by raising corn, some by pastoralism, some by slash and burn agriculture, some by hunting and gathering, and some in other ways, the basic rules of our game (the cultural rules that constitute the material relations of our basic social structure[iii]) are those of buying and selling.
The buying and selling game is a game with losers. That is why the probability of reliable decent employment for everyone provided by markets alone with no help from other institutions is zero and not .01. The losers are those who do not sell enough at a high enough price to make a living. There have to be losers. Every player aims to have accounts receivable greater than accounts payable. Similarly, everyone wants to take in more money than they pay out. They want to save some. In John Maynard Keynes terminology, everyone has a liquidity preference; people want the freedom that comes from keeping some liquid cash in their pockets or in the bank without spending it.[iv]
But one person’s receivable is another person’s payable. If some people take in more than they pay out, some people must pay out more than they take in. The sum of receivables and payables must be equal.
Given that it takes expectations of profit to motivate producing and hiring; in other words, an expectation that more will come in than goes out; and given that some such expectations must be mistaken, because not everybody can have receivables greater than payables, and given that business cannot run along forever on illusory expectations that are not true, there will be some investments not made and some people not hired.
History confirms this analysis of the implications of the rules of the buying and selling game. What the social structure makes inevitable is what is observed. As John Maynard Keynes writes in his General Theory[v], the historical record shows that full employment, or even approximately full employment, has rarely occurred, and when it has occurred it has been temporary. Keynes could have added that there are also times when full employment’s alleged occurrence, in addition to being temporary, is also bogus. Full employment can be and sometimes is defined as fewer than 5% jobless, and then announced as a statistical fact even when everybody can see the homeless people on the sidewalks. For example, the fraction of workers who are unemployed is calculated inflating the numerator by counting beggars trying to sell handicrafts as self-employed, and deflating the denominator by disregarding all who are not at the present time known to be trying to sell themselves in the labour market.
All of the above was true even before today’s apparently irreversible trend of technology –exemplified by Toyota manufacturing automobiles with robots instead of workers and Tesco running supermarkets with automated check-outs instead of clerks— started making most human work redundant. Work is indeed becoming redundant as a means for producing goods and services to sell. But it is not becoming redundant as a means for making a living, bringing up children, achieving self-esteem, and achieving self-realization. Worldwide, economies are requiring fewer workers; but workers are not requiring fewer jobs.
[i] Cormac Russell (2015) Asset Based Community Development: Looking Back to Look Forward. Dublin, Nurture Development.
[ii] See Susan Woodward (1995) Socialist Unemployment: The Political Economy of Yugoslavia, 1945-1990. Princeton: Princeton University Press.
[iii] Douglas Porpora (1993) Cultural Rules and Material Relations. Social Theory. Vol. 11 pp. 212-229); Howard Richards (2018) On the Intransitive Objects of the Social (or Human) Sciences. Journal of Critical Realism. Vol 17 (pp. 1-18. Jürgen Habermas makes the point that the market is late modernity’s primary institution, and the nation-state secondary in The Legitimation Crisis. Boston: Beacon Press, 1975.
[iv] Keynes, Book III.
[v] John Maynard Keynes (1936) General Theory of Employment, Interest and Money. London: Macmillan, 1936. Pp. 249-50 At p. 304 and elsewhere Keynes notes that for similar reasons there is also a chronic and structural insufficiency of investment.
Prof. Howard Richards is a member of the TRANSCEND Network for Peace Development Environment. He was born in Pasadena, California but since 1966 has lived in Chile when not teaching in other places. Professor of Peace and Global Studies Emeritus, Earlham College, a school in Richmond Indiana affiliated with the Society of Friends (Quakers) known for its peace and social justice commitments. Stanford Law School, MA and PhD in Philosophy from UC Santa Barbara, Advanced Certificate in Education-Oxford, PhD in Educational Planning from University of Toronto. Books: Dilemmas of Social Democracies with Joanna Swanger, Gandhi and the Future of Economics with Joanna Swanger, The Nurturing of Time Future, Understanding the Global Economy (available as e-books), The Evaluation of Cultural Action (not an e book). Hacia otras Economias with Raul Gonzalez, free download available at www.repensar.cl. Solidaridad, Participacion, Transparencia: conversaciones sobre el socialismo en Rosario, Argentina. Available free on the blogspot lahoradelaetica.
This article originally appeared on Transcend Media Service (TMS) on 10 Sep 2018.
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