{"id":47627,"date":"2014-09-22T12:00:04","date_gmt":"2014-09-22T11:00:04","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=47627"},"modified":"2015-05-05T21:30:35","modified_gmt":"2015-05-05T20:30:35","slug":"memo-on-the-evaluation-of-the-community-work-program","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2014\/09\/memo-on-the-evaluation-of-the-community-work-program\/","title":{"rendered":"Memo on the Evaluation of the Community Work Program"},"content":{"rendered":"

[Note: For a basic introduction to CWP see the website of the International Labour Organization www.ilo.org<\/a>.\u00a0\u00a0 Search under \u201cSouth Africa\u201d and \u201cCommunity Work Program\u201d]<\/p>\n

Abstract<\/em><\/p>\n

This memo stresses the importance of evaluating CWP\u00b4s compliance with its mandate to use public employment to catalyse community development.\u00a0\u00a0 It also underlines the importance of issues in economic theory that bear on CWP\u00b4s contribution to society.\u00a0\u00a0 Since by its very nature CWP raises questions in economic theory those questions should be carefully examined as part of its evaluation.<\/em><\/p>\n

Jeremy Cronin wrote:[i]<\/a><\/p>\n

\u201cAs German economist Wolfgang Streeck puts it, at play is a systemic contradiction between two conflicting principles of resource allocation \u2013one operating according to \u201cmerit\u201d by the free play of market forces, the other based on social need `as certified by the collective choices of democratic politics \u2026 Under democratic capitalism governments are theoretically required to honour both principles simultaneously, although substantively the two almost never align.\u00b4<\/p>\n

\u201cThis underpins the vacuous churn in many liberal democracies. Governments failing to honour democratic claims for redistribution are punished electorally.\u00a0\u00a0 Those failing to obey the market\u00b4s `iron laws\u00b4 are punished by disinvestment with the same electoral result.<\/p>\n

\u201cPolitical tinkering within this sterile damned-if-you-do, damned-if-you-don\u00b4t predicament leads to popular disillusion with formal politics, or even dangerous demagogic, neo-fascist, ethnically chauvinist politics on the rise in much of Europe.\u00a0\u00a0 What is required is a democratic politics of structural transformation\u2026.\u201d<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In these few words Cronin poses THE problem of our times.\u00a0\u00a0 It is not A problem. It is THE problem.\u00a0\u00a0 I permit myself to use the definite article in capital letters because if we cannot solve this problem, then we cannot solve our other problems.\u00a0\u00a0 Its solution would be a key to open solutions to other problems; failure to solve it is a lock that closes off solutions to other problems.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Here GOVERNABILITY is at stake. If capital by disinvesting can undermine any set of government policies \u2013concerning ending poverty and inequality, concerning the environment, or concerning any other issue\u2014then government cannot govern.\u00a0\u00a0 Cronin mentions government policies directed to meeting social needs that involve redistribution of resources.\u00a0\u00a0 Those are the sorts of policies that typically lead to disinvestment, with its sequels of fewer jobs (which implies more crime), less production, higher prices, shortages of goods\u2026 The ship of state sinks.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Cronin mentions the roots of THE problem in the \u201ciron laws\u201d of the market. It is the market that requires that profits be kept high and risks kept low in order to keep the economy running.\u00a0\u00a0 But such economic considerations do not tell the whole story.\u00a0\u00a0 As Michael Kalecki astutely observed, capital will disinvest even when investment would be profitable when it does not like the political situation.[ii]<\/a><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Latin American experience abundantly confirms that disinvestment can be politically motivated.\u00a0\u00a0 For example, as we speak a political battle is raging in Argentina pitting the large farmers against the progressive government of Cristina Kirchner.\u00a0\u00a0 The farmers oppose the heavy taxes on agricultural exports that the government levies to finance its programs.[iii]<\/a> Hence although at one level THE problem is about the normal the tendency of a market economy to slow down whenever profits fall, at another level it is about politics<\/p>\n

If Cronin has correctly named the solution to THE problem as democratic structural transformation \u2013and I think he has\u2014then it would be important to evaluate CWP or any social measuring its contribution to democratic structural transformation. [iv]<\/a><\/p>\n

We need to be careful.\u00a0\u00a0 THE problem is fundamental.\u00a0\u00a0 Mistakes made in trying to solve it can be fundamental mistakes.\u00a0\u00a0 One of the most common mistakes is to see THE problem as essentially a matter of seizing power.\u00a0\u00a0 It is assumed that the root of THE problem is the wrong people having power, and that if only the right people, or the mass of the people as a whole, had power they could use their power to solve the problem.<\/p>\n

History records a number of times when people won political power who were committed to solving the problems of capitalism either by eliminating it altogether or by substantially modifying it.\u00a0\u00a0 In Russia, China, Vietnam, and Cuba the left won military victories and established dictatorships in the name of the working classes.\u00a0\u00a0 They imposed central planning. It did not work.[v]<\/a>\u00a0\u00a0 In Sweden and in most of Northwest Europe the centre-left tried to solve THE problem with a welfare statement financed by taxes and other measures commonly called social democratic.\u00a0\u00a0 That did not work either.[vi]<\/a>\u00a0\u00a0 In the former Yugoslavia the ownership of enterprises was vested not in private capital and not in the state but in the assembly of the workers of the enterprise.\u00a0\u00a0 That did not work.[vii]<\/a><\/p>\n

Today the BRICS countries, Brazil, Russia, India, China, and South Africa are learning from the past and finding new ways to shape the economy to make it work for the common good. The same can be said of the progressive Latin American democracies and of minority social movements in Europe, the USA, Canada, and Australia.\u00a0\u00a0 CWP can be counted as one of the new ways to shape the economy to make it work for the common good. It is a step toward democratic social transformation.<\/p>\n

One approach to giving concrete meaning to the rather abstract concept of \u201cdemocratic structural transformation\u201d is to pay attention to the question, \u201cWhat exactly is the key problem for which democratic structural transformation is the solution?\u201d\u00a0\u00a0 The text from Cronin quoted above suggests an answer: Democratic structural transformation leads to governability. It frees democratic decision-making from duress.\u00a0\u00a0 It removes the threat that redistribution will lead to economic slowdown or collapse.[viii]<\/a><\/p>\n

Before going on, let us take a moment to rule out neoliberal solutions to these dilemmas. They are the most obvious solutions and the ones nowadays most frequently practiced.\u00a0\u00a0 In brief, they consist largely of providing incentives for investors.\u00a0\u00a0 Investors are offered low taxes or tax exemptions, disciplined labour, infrastructure provided at public expense, an educational system geared to teaching the competences that employers are looking for, law and order, easy repatriation of profits, subsidies, few and simple regulations, and so on.\u00a0\u00a0 Governments frankly admit that their goal is to attract investment. They compete with other governments who also want to attract investment.<\/p>\n

There is a gaping hole in neoliberal reasoning \u2013famously analysed by John Maynard Keynes\u2014which makes it futile to expect full employment from gilding with ever more gold the welcome mat for investors.\u00a0\u00a0 Keynes called the gaping hole \u201ca chronic insufficiency of effective demand.\u201d [ix]<\/a>\u00a0\u00a0 The bottom line is that however gilded the offers government makes to capital, capital will only come if there is money to be made selling products.\u00a0\u00a0 Both logic and history show that consumer demand is not strong enough to motivate investors to keep investing and hiring workers until everybody who needs a good job has one.\u00a0\u00a0 They stop long before that.<\/p>\n

Assuming that the neoliberal project of creating employment by doing everything in the power of government to raise the profits and lower the risks of investors is at most only partly feasible, we return to questions about how to meet the social needs that such an approach does not meet.\u00a0\u00a0 We return to the dilemmas of governments that want to redistribute wealth but fear that if they redistribute on any considerable scale their economies will be sabotaged by disinvestment.<\/p>\n

If a government fights poverty and inequality with redistributive measures, including public employment programs, how does it make peace with private capital?\u00a0\u00a0 How do you persuade capital to invest and dissuade it from disinvesting at the same time that you are levying more taxes on business, establishing minimum wages, enforcing labour laws, backing unions, and requiring green technologies?\u00a0\u00a0 Before reframing and then answering these two questions let me first remark on an ambiguity in the word \u201ccapital.\u201d<\/p>\n

The word \u201ccapital\u201d refers to money and to things that are used to turn money into more money.\u00a0\u00a0 An ambiguity arises when we attribute action to capital, when we say that \u201ccapital\u201d does something.\u00a0\u00a0 We may mean that there is a more or less defined group or class of people who choose to do something.\u00a0\u00a0 But we also may attribute the action to the \u201ciron\u201d laws of economics, such as the law of supply and demand or the necessity to make a profit.\u00a0\u00a0 In the latter case people do what they must do, regardless of what they may want to do and regardless of what they may believe to be the right thing to do.\u00a0\u00a0 \u201cCapital\u201d is conceptualized as an historical force of which individuals are only agents. Its inevitable motions produce inevitable consequences as long as the institutional framework of capitalism is what it is.<\/p>\n

It is best to keep both interpretations of \u201ccapital\u201d in mind.\u00a0\u00a0 On the one hand its actions stem from the choices of people; on the other hand its actions are determined by the rules of the game the people are playing.<\/p>\n

THE problem and the two questions above can now be reframed as: How to defeat capital (on both interpretations of \u201ccapital\u201d sketched above) by depriving it of its veto power over public action, while at the same time working with capital so that it will continue to produce goods, services, and employment?<\/p>\n

*\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *<\/p>\n

I want to discuss CWP in the light of these larger issues.\u00a0\u00a0 I want to shed light on these larger issues by discussing CWP.<\/p>\n

Public employment is a giant step forward toward solving THE problem. It is democratic structural transformation.\u00a0\u00a0 I back this point up with a quote from Michael Kalecki: \u00a0\u201cUnder a laissez-faire system the level of employment depends to a great extent on the so-called state of confidence.\u00a0 If this deteriorates, private investment declines, which results in a fall of output and employment (both directly and through the secondary effect of the fall in incomes upon consumption and investment).\u00a0 This gives the capitalists a powerful indirect control over government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis.\u00a0 But once the government learns the trick of increasing employment by its own purchases, this powerful controlling device loses its effectiveness.\u201d[x]<\/a><\/p>\n

Governability increases and the veto power of capital diminishes when capital ceases to have a monopoly on creating employment.<\/p>\n

The stakes are high.\u00a0\u00a0 They are even higher when one considers that CWP is designed as a pilot program \u2013as a prototype and as a builder of infrastructure\u2014leading to a true employment guarantee.\u00a0\u00a0 The ideological warfare can be expected to be intense, as it was in the case of the now terminated Argentine employment guarantee, and as it now is in the case of the Mahatma Gandhi National Rural Employment Guarantee in India.<\/p>\n

As is usually the case in ideological warfare the deep underlying issue \u2013in this case the democratic structural transformation of South Africa\u2014is less decisive for the outcome of the battles than issues lying nearer to the surface and more visible to the public eye \u2013 in this case corruption and waste.<\/p>\n

The South African motorist is also a South African taxpayer and a South African voter.\u00a0\u00a0 When the motorist drives by a flock of CWP workers in their orange uniforms lounging alongside the road, leaning on their tools, chatting, and taking naps, she or he may well say to herself or himself, \u201cThat is where my tax money is going!\u201d The CWP workers for their part ought to be saying to each other, \u201cLook sharp and act lively! The boss is watching!\u201d<\/p>\n

At the top of the list of factors to measure in the evaluation of CWP should be the question, \u201cAre the participants doing useful work?\u201d\u00a0\u00a0 Even more important:\u00a0\u00a0 \u201cAre they perceived<\/em> as doing useful work?\u201d<\/p>\n

When I write \u201cevaluation\u201d I refer primarily to \u201cformative\u201d evaluation for the purpose of providing feedback for ongoing operations. I refer secondarily to \u201csummative\u201d evaluation for the purpose of assessing the extent to which the program as a whole is a success or a failure.[xi]<\/a><\/p>\n

\u201cCorruption\u201d is a broad term. Although all government programs, especially in the third world, are always suspected of it, it is not always clear what it means.<\/p>\n

Does it mean that book bags sewn by CWP ladies for free distribution to schoolchildren must not be sold to passers-by with the lady who sewed the bag keeping the money? The lady who made the bag can justly call attention to her vital needs and to the pitifully low wage that CWP is paying her.<\/p>\n

Does it mean that vegetables grown in CWP community gardens for free distribution to the needy must not be sold in markets, regardless of what is done with the money earned by the sales?<\/p>\n

Is it corruption when \u201cgraduates\u201d of CWP are put first in line for employment in the private sector or in the public sector? (Notice that this type of \u201cgraduation\u201d does not increase employment; it only selects who gets already existing jobs.)<\/p>\n

Consider the case where an individual signs in at one CWP site, and then the same day signs in with a slightly different name at another CWP site, and then at the end of the day shows up again to sign out at both sides; and in the end succeeds in getting paid for two days of non-work attributed to the same day. Do such practices show that CWP is corrupt, or do they only show that certain dirty individuals stain what is otherwise a clean program?<\/p>\n

What if employment in CWP is contingent upon approval by the local ANC branch? Is it really possible for the NGOs administering CWP to work cooperatively with local government authorities without acquiescing when they treat public employment as a reward for the party faithful?<\/p>\n

From research in the psychology of moral development comes good news regarding the dilemmas posed by these questions. The good news is that discussion of moral dilemmas, especially when continued for several years, raises the levels of moral reasoning and moral behaviour.[xii]<\/a>\u00a0\u00a0 A participatory evaluation process[xiii]<\/a>\u00a0\u00a0 in which CWP staff and participants earnestly discuss issues around corruption can be expected to make all concerned more conscientious and less corrupt.<\/p>\n

Rosario, Argentina, is a city famous for absence of corruption in a country that is in general famously corrupt. In my study of Rosario[xiv]<\/a> I was impressed by the many ways in which a learning culture and a culture free of corruption overlap. Ideally the evaluation of CWP will consider not only how much corruption there is, but also what measures \u2013such as the nurturing of a learning culture\u2014are being taken to encourage the growth of mentalities and cultures that are proof against the temptations of corruption.<\/p>\n

In India the proponents of NREGA have advocated and included in the legislation creating their public employment program a high degree of transparency and a high degree of supervision by the local popular assembly, the gram panchayat. <\/em>Transparency means that complete records of all financial transactions are available on the Internet. Anyone at all has access to records showing every rupee spent. [xv]<\/a> Nevertheless, progress in the fight against corruption has been slow.[xvi]<\/a><\/p>\n

Whether CWP \u2013and with it a great hope for democratic structural transformation\u2014succeeds will depend to a large extent on whether it can convince the public that it is a clean and efficient program<\/p>\n

*\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0 *<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The South African government is paying for CWP at a time when its annual budget deficit is running in excess of 4% of Gross Domestic Product.\u00a0\u00a0 Taxes, unions, legislation favouring labour, and regulation appear to have already motivated considerable disinvestment; an example would be the delisting of firms from the Johannesburg Stock Exchange to relist in London. Meanwhile, there are more applicants to participate in CWP than there are slots; this is a recipe for bitterness.\u00a0\u00a0 Choosing few when many are called breeds charges of corruption.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It is hence more urgent than ever to find ways to meet social needs that are not punished by disinvestment. Let me propose two layers of solutions: first a solution to what I will call political disinvestment; and then a series of solutions to what I will call economic disinvestment.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What I will call \u201cpolitical disinvestment\u201d occurs when firms deliberately pass up business opportunities because they oppose the government.[xvii]<\/a> An example, to take an extreme case, would be the opposition of international and national capital to the government of Salvador Allende in Chile.\u00a0\u00a0 New private investment fell to zero. Credits were denied. Spare parts were available only to lorry owners who joined the opposition and went on strike against the government.\u00a0\u00a0 Copper reserves were dumped on world markets to lower the price of Chile\u00b4s principal export. Etc.[xviii]<\/a><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 My suggested solution is based on what I believe to be a solid fact. The solid fact is that an ungovernable nation or an ungovernable world is not objectively in the best interests of anybody.\u00a0\u00a0 The alignment of business with the societal enterprise is while not always most favourable to abstract financial results as shown by conventional accounting, always most favourable to the concrete interests of the flesh and blood human beings involved. A government that pursues social cohesion and ecological sustainability objectively deserves support.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The most obvious example of the benefit to everybody of a more just, equal, inclusive, and humane society is a decrease in the crime rate.[xix]<\/a> In the present state of society it is not only the rich who are ungovernable; the poor are ungovernable too. Here it is relevant for the evaluation of CWP to assess its impact on crime.\u00a0\u00a0 We already have testimonies of participants that CWP has cut crime, including those of some participants who say they lived by stealing until they joined CWP.[xx]<\/a>\u00a0\u00a0 Hard data would be politically useful.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 As I see the world \u2013and I confess that others may see it differently\u2014at this point in history the bourgeoisie and its principal institutions (the major multinational corporations, the World Bank etc.) are every day more aware of the objective fact that a green world without poverty would be to everyone\u00b4s benefit.\u00a0\u00a0 Although there are some holdouts, most can already read the handwriting on the wall.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Having shown to my own satisfaction that political disinvestment while it sometimes happens is not objectively inevitable, I turn now to the stubborn economic mechanisms that may appear to make it inevitable that redistribution to meet social needs will be punished by disinvestment to cut losses and maximize profits.\u00a0\u00a0 The same economic mechanisms may make it appear to be impossible for the South African government to marshal the resources necessary to turn CWP into a true employment guarantee.<\/p>\n

\u00a0Punishment by disinvestment will not be inevitable and raising the money to pay for an employment guarantee will not be impossible when democratic structural transformation is achieved.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The solution to punishment by economic disinvestment is to be found by analysing the problem. The problem is that capital can veto government by disinvesting. The solution lies in promoting multiple ways to meet social needs that do not lead to disinvestment; or, equivalently, compensate for disinvestment. Capital is defeated because it loses its veto power, but everybody wins because society becomes governable.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The solution is unbounded, not bounded. It is an infinite set of material practices[xxi]<\/a> that satisfy a negative criterion: they do not incur punishment by disinvestment.\u00a0\u00a0 The solution is not planning.\u00a0\u00a0 It is not worker ownership.\u00a0\u00a0 It is not enlarging the public sector. It is not socially responsible business.\u00a0\u00a0 It is not a self-reliant locally based people\u00b4s economy.\u00a0\u00a0 It is not family ties. It is not learning from indigenous knowledge systems. It is not cooperatives.\u00a0\u00a0 It is not non-profits. It is all of the above and more. It is the cumulative effect –not any single practice– that achieves democratic structural transformation.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It is dangerous to exhibit a sample member of an infinitely large set of material practices because the sample cannot possibly represent the set\u00b4s infinite variety. Nevertheless I will exhibit two and one half samples.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The first is cooperative dairy farming in the province of Quebec. According to the strict logic of capitalism it would be rational to close down that dairy industry, buy milk on the international market, process it into yoghurt and other products, and sell it in Canada and across the border in the United States.\u00a0\u00a0 But the capital in question does not disinvest from Quebec\u00b4s dairy farms.\u00a0\u00a0 It is controlled by cooperatives and the mission of the cooperatives is first and foremost to serve their members.\u00a0\u00a0 The members want to keep their farms and they want to keep their communities alive.\u00a0\u00a0 Disinvestment does not happen because a social logic prevails over the strict logic of the market. (Quebec\u00b4s largest bank, the Caisse Desjardins, is also a cooperative. Its logic of service leads it to establish branches in remote rural areas where other banks do not invest because of lack of profitability. This is the one half example.)<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The second example is the municipal bank of Rosario, Argentina. When disinvestment of many kinds led to the collapse of the Argentine economy and to a government decree freezing all bank deposits in December of 2001, most of the banks in the city of Rosario closed.\u00a0\u00a0 They were branches of the major international banking chains. They were there primarily to make money. Since there was no money to be made there they left.\u00a0\u00a0 But the municipal bank had a different mission. Its charter provided that it was a local bank.\u00a0\u00a0 Its capital was tied to a territory.[xxii]<\/a>\u00a0\u00a0 Its mission was to serve the micro-businesses, the small businesses, and the medium-sized businesses of the city and its environs.\u00a0\u00a0 Its legal staff (whom I interviewed at length) went to work finding loopholes in the decree freezing all deposits, and finally engineered a way to provide emergency loans so that small businesses could meet payroll, using their frozen assets as collateral. Many small businesses and many jobs were saved because the material practices of the municipal bank followed a different logic.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Among the many material practices that provide a counterweight to the threat of disinvestment, and whose sum can add up to a repeal of capital\u00b4s power to veto government, are those of locally-based people\u00b4s economies.\u00a0\u00a0 Here CWP has a special role to play. CWP has a mandate from Cabinet to use public employment to catalyse community development.\u00a0\u00a0 It is expected by itself and dovetailing with other agencies to encourage the spirit of enterprise that can lead participants to create additional means of livelihood for themselves during the days of the week when they are not working for CWP.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A people\u00b4s economy is defined by Jos\u00e9 Luis Corragio[xxiii]<\/a> as an economy where the objective is making a living, not accumulating profits. It is an economy where the main resource is labour, not capital.\u00a0\u00a0 It includes the hawkers on the sidewalk, the small family laundries, the spaza shops, plumbers, handymen, babysitters, ladies and men who make a meagre living taking care of the elderly, and the independent taxi drivers who own their taxis.\u00a0\u00a0 In most countries of Latin America and Africa it generates more employment than the highly capitalized and technologically advanced major corporations. In a people\u00b4s economy the liquidity preference is close to zero.\u00a0\u00a0 Such an economy makes only a minimal contribution to the big hole in capitalism that is its chronic insufficiency of effective demand because it consists mostly of poor people buying and selling goods and services to one another. Money circulates and facilitates sales because it is not saved.\u00a0\u00a0 If Say\u00b4s Law comes close to being true anywhere, it would be in a locally-based people\u00b4s economy.\u00a0\u00a0 Although thriving people\u00b4s economies do not eliminate the need for public employment, they are among the material practices that help to whittle down poverty and unemployment to dimensions that public employment can successfully cope with.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Community development is a major contribution to democratic structural transformation because it taps resources that do not come from the government\u00b4s budget. The government is under strain to finance its social programs in the face of the threat that higher taxes on the rich will lead to disinvestment, and in the face of the reality that the Value Added Tax that provides about a fourth of the South African government\u00b4s revenue falls on the mass of the people, most of whom are poor. When a community mobilizes its own resources to meet its own social needs that is a gift from heaven.\u00a0\u00a0 It solves social problems bypassing the veto power of capital.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The evaluation of CWP should focus on its mandate to use public employment to catalyse community development.\u00a0\u00a0 In this respect the evaluation need not deal only with what CWP has done on the average, or on what it has done at most sites. The evaluation could serve to highlight what is possible with case studies of sites where community development and with it the spirit of local micro-enterprise have been most nurtured by CWP. Studies already done, such as those of an Organization Workshop followed by CWP at Bokfontein, could be assembled and systematized.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 At some sites CWP has been initiated by an Organization Workshop and at some sites it has not.\u00a0\u00a0 It is a reasonable hypothesis that self-organization and community development have advanced farther, and that apathy and isolation have receded farther, where CWP has been preceded by an OW. Apart from simply testing this hypothesis, qualitative methods could be used to gain general insight into the effects of OW in relation to CWP.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It remains to ask how democratic structural transformation can pave the way to funding a true employment guarantee. My short answer is that it will be easier to tax rents and accumulated wealth because the rich will have less power to retaliate by slowing down or stopping production.\u00a0\u00a0 I will complement this short answer with twenty additional thoughts. Here as everywhere I write aware that I may be mistaken, but I know no better way to correct the errors in my ideas than to put them into writing so that others can criticize them.<\/p>\n

\u00a0The evaluation of CWP should estimate how much it is costing to fund a participant. It should consider how the cost varies among sites of different kinds, and among useful tasks of different kinds.<\/p>\n

It should facilitate projections of what it would cost to expand CWP and eventually make it into a true employment guarantee.<\/p>\n

    \n
  1. Evaluation should compare CWP with the rest of EPWP (the Extended Public
    \nWorks Program of which CWP is a component). It should project the comparative costs of achieving an employment guarantee with different models and different mixes of models.<\/li>\n
  2. CWP has advantages over the now terminated Swedish employment guarantee. The Swedish government had to abandon being the employer of last resort because it could not afford it. It had been paying for full 40 hour weeks at high Swedish wages.\u00a0\u00a0 CWP is much cheaper.<\/li>\n<\/ol>\n
      \n
    1. Nevertheless, expanding CWP to make it ever larger is unlikely to be the best way to guarantee every South African a livelihood.\u00a0\u00a0 The best way is almost certainly a multi-pronged approach that promotes many kinds of livelihood \u2013most of which are not paid for (or not entirely paid for) by public budgets.<\/li>\n<\/ol>\n
        \n
      1. Unlike most public employment programs, CWP dovetails with a multi-pronged approach. It goes beyond providing a livelihood itself to play roles in promoting other livelihoods. Its evaluation should study not only its direct funding of two days a week employment but also its catalytic community development effect, including its role as an inspirer of self-help.\u00a0\u00a0 This would be in addition to the multiplier effect of injecting cash into poor communities where it is then spent and re-spent. It is an additional kind of multiplication that mobilizes community assets.<\/li>\n<\/ol>\n
          \n
        1. Different dimensions of a guarantee of livelihood in the future are reflected in different priorities in the present.\u00a0\u00a0 The fastest and least expensive way to generate high numbers of participants might well do no community development at all. On the other hand, it is a reasonable hypothesis that the least expensive way to achieve the end result of livelihoods for all would multiply CWP\u00b4s impact by using public employment as a catalyst to mobilize community resources complementary to those made available by the CWP budget.<\/li>\n<\/ol>\n
            \n
          1. It might be worthwhile to conduct an experiment.\u00a0\u00a0 Concentrate at some sites on how many jobs can be directly funded and at what cost. At other sites do direct job creation plus community development. Compare the results. It would have to be a long experiment because the time it takes for community development to be effective is measured in years.<\/li>\n<\/ol>\n
              \n
            1. Studying the feasibility of an employment guarantee leads directly to the general question how to pay for the social programs of the state. This general question is addressed in an important new book by Thomas Piketty, Capital in the Twenty First Century.[xxiv]<\/strong><\/a> <\/em> Piketty amasses overwhelming evidence to refute Kuznets\u00b4 and Solow\u00b4s claims that capitalism as it matures gradually reduces inequality. Piketty demonstrates that the observed reductions in inequality during parts of the 20th<\/sup> century relied on as proof by Kuznets and Solow were deviations from capitalism\u00b4s normal trend.\u00a0\u00a0 They were brought about by popular political struggles and by the shocks of war. Normally under capitalism increasing inequality is inevitable because the rate of return on capital exceeds the growth rate, r > g. The neoliberal philosophy of minimum government and maximum market can only lead to injustice.<\/li>\n<\/ol>\n
                \n
              1. Piketty advocates forms of progressive income and capital taxes suitable for the 21st<\/sup> Without them a social state is impossible. He is unfortunately partly silent and partly foggy on how to prevent redistribution from being punished by disinvestment. Here a politics of democratic structural transformation fills in a gap left by Piketty.<\/li>\n<\/ol>\n
                  \n
                1. Piketty also proposes a tax on accumulated wealth.[xxv]<\/a> He imagines an annual tax of 0 percent on fortunes under 1 million euros, 1percent on fortunes from 1 to 5 million euros, and 2 percent on fortunes over 5 million.<\/li>\n<\/ol>\n

                  Among the historical findings supporting his proposal are: Families successful in business tend to evolve over time into rentier families. They hold their wealth in the forms of real estate, government bonds, and stock portfolios \u2013all managed by others. Their large fortunes tend to grow at 6 to 7 percent per year, while the assets of smaller and less privileged investors tend to grow at 4 or 5 percent. At this point in history enormous wealth has been accumulated.<\/p>\n

                  \u00a0In most countries: Total accumulated wealth is about 6 times the annual gross national income. Net public wealth is approximately zero, since the total value of all public assets is approximately equal to total public debt. Virtually all net wealth is in private hands.\u00a0\u00a0 The bulk of it is in the hands of the upper 5% of the population.<\/p>\n

                    \n
                  1. A tax on accumulated wealth would have minimal impact on the day to day operations of business.\u00a0\u00a0 If, for example, a taxpayer sold stock in a corporation to pay a wealth tax, the corporation would simply change its books to record the buyer of the shares as their new owner.<\/li>\n<\/ol>\n
                      \n
                    1. Piketty discusses taxes, but he does not discuss other ways to share the surplus, such as, for example, transferring wealth to the endowments of non-profit institutions devoted to meeting social needs.\u00a0\u00a0 (Such transfers are often encouraged by tax exemptions.)<\/li>\n<\/ol>\n
                        \n
                      1. My basic formula for full employment is: Skim off unneeded funds from individuals and businesses.\u00a0\u00a0 Then use them to fund livelihoods that do not depend on sales. This formula solves a problem that John Maynard Keynes did not solve, namely: how to achieve full employment in spite of a chronic insufficiency of effective demand.<\/li>\n<\/ol>\n

                        Now comes the question: .What funds are \u201cunneeded\u201d? Regarding individuals up to a point luxury consumption and a high standard of living are unneeded, but only up to a point. Beyond that point depriving high-income individuals of the rewards of success chills motivation for high productivity that benefits everyone including the poor.[xxvi]<\/a><\/p>\n

                        \u00a0Regarding business what is \u201cneeded\u201d are all expenses that enter into the cost of production.[xxvii]<\/a> Surplus over and above the cost of production is \u201crent\u201d available for transfer.<\/p>\n

                        \u00a0Here I tread ground well-soaked in the ink of the learned. To save further spilling of ink I write succinctly: Normal profit is a cost of production.\u00a0\u00a0 In the kind of economy we are talking about, in the sector we are talking about, if there is no profit there is no production. Therefore normal profit is a cost of production.<\/p>\n

                          \n
                        1. Does this bring us back to square one? Are we back to saying redistribution cuts profits, cutting profits leads to disinvestment, therefore redistribution leads to disinvestment?\u00a0\u00a0 No.\u00a0\u00a0 Am I simply repeating the mantra of the conservatives who say that the ANC\u00b4s social programs are the cause of South Africa\u00b4s dismal economic growth and deepening deficits?\u00a0\u00a0 No. I have not yet defined \u201cnormal.\u201d<\/li>\n<\/ol>\n
                            \n
                          1. Distinguishing between the normal profit that is a cost of production and the rent that can safely be socialized is essential for a rational tax policy. It is irrational to decree that the corporate income tax[xxviii]<\/a> is, for example, a flat 20%. At 20% some businesses will be milked dry, will fall short of normal profit, and will close their doors. At the same 20% others will be contributing less to meeting social needs than they can and should contribute. [xxix]<\/a><\/li>\n<\/ol>\n
                              \n
                            1. I have already hinted at what I (following Alfred Marshall[xxx]<\/a>) call normal profit.\u00a0\u00a0 It has two components:<\/li>\n<\/ol>\n