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Too Many People, Too Little Work

by rdf Tue Apr 21st, 2009 at 03:17:12 AM EST

The shakeup in the world financial system has brought forth a lot of hand-wringing over the future of capitalism. Most commentators devote themselves to how best to get capitalism back onto whatever their preferred path is. Thus, we see a range of ideas from improved regulation, corporate governance, compensation restrictions or, at least, review, and changes to tax policy.

What we don't see, at least among the most quoted commentators, is any examination of the basic economic foundations of modern society. I'll summarize.

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The prevailing picture is that a market economy is the only viable system, where "market" is taken as a synonym for capitalism. That is, entrepreneurs raise capital to start an enterprise with a promise of returning more than they borrowed. They harness natural resources and workers to generate products which they can sell for more than the cost of production and the excess is "profit". This is used to pay off investors (including the owners).

The "market" idea comes in because each enterprise needs to trade with suppliers and customers. The ability to negotiate terms between parties is assumed to be based upon supply and demand. The more ideological think that this is sufficient to insure a smoothly running exchange, while the more pragmatic expect to see some sort of rules imposed and enforced by government. How many rules and how vigorously enforced are the subject of hundreds of years of debate.

There are two problems with this model, it ignores the role of the "externalities" of resource availability and waste disposal and it ignores the structure of the market for labor.

For much of the history of the human race, people could barely support themselves by their own labor. Work was by hand and mostly consisted of agricultural production, tools and shelter. The rise of the industrial revolution and the machine age changed this. A few people could now produce enough for many. This has led to a permanent condition where the labor supply exceeds demand, except in unusual circumstances, like war or pandemic. The result has been that wages have always remained low relative to the total wealth produced. In an earlier age it was royalty or the aristocracy that absorbed the excess wealth. With the rise of the corporation it was the big industrialists.

This has now reached a new crisis moment. Advanced agriculture requires only 2-3% of the work force to feed everyone and even can provide export capacity. Manufacturing is highly automated and factories that a few decades ago required hundred's now make more with only dozens of workers. To pick up the slack wealthy societies have invented a large number of "service" jobs, which resist mechanization. Hardly anyone makes their own clothing, or bakes their own bread anymore. With many more women in the workforce, child care is now given over to a service sector as is much personal care. The rise of the financial sector and "intellectual property" has also absorbed a goodly number of workers.

Even with all this make-work we still have excess labor. In many places chronic unemployment reaches 30% or more. This leads to a permanent class of disaffected young people who are under educated, have few marketable skills and are prone to civil unrest and criminal mischief. If we can make everything that we truly need with 20-30% of the population what are we to do with everyone else?

Prior Solutions

In an earlier time when there was excess population a variety of solutions were used to bring things into balance, some deliberate and some not.

  1. Pestilence caused by overcrowding and malnutrition caused large numbers of deaths, especially among the very young and old. This left the more productive members to do the work.
  2. Military adverturism was used to obtain resources from neighbors or to expand the land available for cultivation. This remained a popular option up through the end of WWII. It is still going on in poorer regions of the world, especially in parts of Africa. The loss of life also helped restore the balance between workers and consumption.

  3. Emigration was handy as long as there were places for people to go. The safety valve of the US frontier allowed for the huge influx of people to be accommodated for 200 years. This has ceased to be an optimal solution since only poor lands are now available for new settlement. In the US it has meant moving into the desert areas, while Europe is under strain from those from the east and south who are attracted to its relatively better living conditions are are becoming immigrants, in many cases unwanted.

  4. Make-work projects were popular in the USSR and in Maoist China. The ideology demanded that everyone work, so to maintain the myth that the system was functioning well, jobs were invented for everyone. It also helped that both societies were coming off a feudal base and still had large peasant populations that engaged in inefficient agriculture. Thus the need for many superfluous factory jobs was kept to a minimum. The succession of wars and civil unrest from the 1890's to the 1990's also meant that there was a continual drain on the work force due to excessive death and disease.

  5. Localism also limited labor competition. With transport being expensive and difficult and the lack of a reliable international system of trade funding and commerce, regional labor inefficiencies could be maintained despite potential competition from further away. Now a farmer in rural Africa can be put out of business in a few days by a shipment of cheap grain from the US. Similarly labor intensive work in high wage countries can be replaced by low wage work elsewhere and cheap transport of finished goods to the final market.

Future Solutions

There have been two fundamental changes in the past 50 years that make all prior solutions unworkable for the future. They are interrelated and both relate to population. In 1950 the world had 2.5 billion people, it now has 6.5 and will reach 9.5 by 2050. Such growth is unprecedented both in the rate of increase and in the actual growth in numbers. This sudden population growth has created the second change - limits on resources on a global scale. In the past when local resources became overused people would migrate as I mentioned above. The world was "empty" enough that this was frequently not too difficult. Furthermore the absolute numbers tended to be small. So that even if an entire society failed only a few thousand would be affected.

People can no longer migrate in large numbers, in fact the movement from the land to cities which has been taking place in poorer countries is only making the situation worse since these people have no way to make a living off the land as their ancestors did. The world is now mostly "full" and this is putting a strain on resources, including arable land and water. So what is to be done?

1. Population growth control must become systematized. Only China has any sort of policy in place for limiting population growth and it is highly flawed. The latest defect to emerge is the rising imbalance of boys over girls as families abort girls so that their one child will be male. There are stories about similar happenings in India.

The best way to limit population growth in high growth areas is through the education of women and changes in cultural patterns which will allow them to earn money outside the home. Educated women have less children and those that they do have are also better educated and more productive. Educating women is one of the cheapest things that can be done in a developing country since teachers are paid at the local wage level and there is no need for massive development or trade policies to be put in place. There is also little scope for corruption which may be why this isn't a more popular option.

In developed countries birth rates have already dropped and if governments would only stop fretting these societies would be stable or even start to decline in size slowly in the future. I'll discuss why this is opposed later.

2. Consumption must be equalized and constrained. Those at the top must consume less, a lot less, while those at the bottom must get more that the $1-2 per day that over one billion subsist on. Giving each of these people an extra $1 per day would cost about $400 billion per year. We just gave one firm, AIG, $180 billion. I think the world can afford the $400 billion, it's all a question of priorities. How to inject this money into local economies is a subject of endless debate and I won't go into it here, but there are enough examples of successful anti-poverty programs in poor countries to serve as templates. Done right those who could be working would be under this policy.

In the wealthy countries we need to shift away from consumerism. I realize this will decrease the demand for labor and I'm arguing that we have too little work to go around as it is, but we now insist on generating demand so that people will have to work to satisfy it, I want to break this connection.

3. Break the work to live cycle. Advanced societies don't need to work full time to live. In fact I've already stated that we have more people than are needed to supply the essentials. Several hundred years of (mainly) Christian teachings have promoted the "virtue" of work, but societies outside this tradition have viewed things differently. Many of them regard living as the essential thing and do just enough work to meet needs. When such societies have come up against the Protestant work ethic described by Max Weber they have been regarded as lazy and in need of missionaries to show them the error of their ways.

Some of this still exists in the US, although I don't think most people would state it in the same terms. There are certain sectors of the population that prefer leisure to work and do just enough to get by. Rather than understanding that they have other priorities in life they are treated as loafers and free loaders. I'm promoting adopting lifestyles which can get by on less work. So instead of being forced into make-work jobs people would just do more rewarding things with their time.

With people doing less work then what needs really to be done can be spread around to more people. Traditional job sharing is usually cast in terms of fewer hours per week, but what about a shorter career period? In the Utopia "Looking Backward" by Edward Bellamy, not only were hours worked inversely proportional to the unpleasantness of the task, but people retired at 45. They then spent the rest of their lives on self improvement, communal activities and the arts.

4. There are many tasks that are not being done adequately, but many of them are because they are "uneconomic". If we paid people to take care of their children and the elderly we would improve the lot of many. Right now we have perverse incentives in place. A woman can go to work and then pay someone to care for her children. This adds to the GDP while having her stay at home and do the same task herself doesn't. Because the "success" of a society is measured by GDP and other financial yardsticks human welfare and life satisfaction are left out of the equation and policies to promote them are not instituted.

There have been cases where women have been paid baby bonuses, because leaders were afraid there wouldn't be enough men to fight future wars and staff the factories. If incentives can be paid under these conditions why not as a regular feature of life?

In addition paying people to do tasks now usually considered as volunteerism would add an overall benefit to society. This means things like mentoring children, teaching reading and language to immigrants, driving people to doctor's visits and the like. Much unemployment exists while there are unmet needs. This is all because everything is measured in financial terms, not in humanistic ones.

5. Finally we need to support leisure. For centuries people have been persuaded to give up their free time because hard work will be rewarded in the hereafter, but there is no evidence for this. Better to enjoy the one life you know you have. Society can foster leisure activities that don't consume large amounts of resources. This means more arts, sports and community activities. A bit of sitting at a local bistro and chatting with friends can go a long way. The popularity of online communities shows that people are starved for this type of interaction. People are not by nature solitary creatures and more community is a net gain for all. I call it dancing in the streets.

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I just love this.  Completely agree on the "support leisure" point.  I'm thinking of Juliet Schor who wrote about the overworked American--comparing the typical work year with that of Europeans, who supposedly work many fewer days in the year and are forced to take 4-6 vacation whether they want to or not.  Her point was that instead of getting a bigger salary/wages, we should have the option of getting more time off.  (Published somewhere in the 1990s I believe, and doesn't really take into account what I assume is the relative difficulty of actually getting one of these jobs in Europe, considering the Paris riots a while back and other such street protests, er, dancing?)

http://www.amazon.com/Overworked-American-Unexpected-Decline-Leisure/dp/046505434X

Educating women is one of the cheapest things that can be done in a developing country since teachers are paid at the local wage level and there is no need for massive development or trade policies to be put in place. There is also little scope for corruption which may be why this isn't a more popular option.

Because if women are more educated, they might start asking questions, thinking for themselves, objecting, etc.

 I don't believe there are too many people, but it is probably a matter of faith than anything else.  

You say that even with all the "make-work" jobs, there is still high unemployment.  Should we consider some of those who are priviledged to rake in some of that "excess" money in the financial sector, especially in speculation, as engaged in rather lucrative make-work, and essentially unemployed?  

by jjellin on Fri Apr 17th, 2009 at 05:34:23 PM EST
well done! great diary, it addresses a very important misunderstanding we have inculcated into our cultures that if you're groaning under the load, you're not responsible, and if you're not stressed, you're lazy.

this has boiled so much fun out of people, it's unreal.

back in the seventies, a friend once told me, 'the biggest problem we'll have in the future is what to do with all the leisure time'.

sounds good, i thought, (having grown up with two workaholic parents), and these last 40 years, i've seen how it just might be true, though the other side of the coin is that we might have to work harder too, which need not be mutually exclusive.

the internet alone can be so endlessly diverting, then there's games, dvds, hobbies, crafts, arts...

you can even stomach doing something pretty braindead for 3 hrs a day, if you know you have the rest of the day and the evening off.

....and can still afford to live...

another thing that occurs to me is the more unemployment, the more time to talk with your neighbours and try to discern what's really going down, instead of assembling widgets all day in grimy noise, impossible to chat, and too exhausting to nurture a hobby in the evenings.

the more people 'doing nothing' the more awake people will become, especially with the toobz spreading info ahead of, and more truthfully than the dwindling, drooping, propaganda organs of tradmed.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Apr 17th, 2009 at 07:21:15 PM EST
[ Parent ]
Where is techno when we need him.....?

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Fri Apr 17th, 2009 at 07:31:02 PM EST
[ Parent ]
AFAIK he quit after a tiff over the journalistic standards of a major US newspaper.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Fri Apr 17th, 2009 at 07:35:02 PM EST
[ Parent ]
I had similar thoughts while reading a set of Chris Cook's comments which were actually a back and forth that he had with a pretentious capitalist carnival hawker.

Where exactly is the rule that everyone must work? At one time, there were streams that one could fish in and forests for fungus and fowl. Wasn't maybe what everyone might call the greatest thing in the world, what with having to support a witch doctor or two and perhaps a sprog or two. And, of course, I'm thinking of California where I was raised. Acorns and fish all gone now, the rivers and the forests commercialized and freeway'd.

So, now because the highrise building owner paid someone some rubies or rupies or something, the dried up river bed is his and the cement companies upstream and anyone's but the oak trees or the polluted oceans.

Less healthy should I get? Well, individually, who cares says the AynRandian. But if the group gets sick enough to threaten the worker supply or get those upper classes sick, then it is suddenly a group problem worthy of study. And the cure becomes, ahh, not the groups of course. Because the laws say that the corporation gets the nod for making it flower.

That law stuff is sublime, ain't it. Those randians sure do complain about it and the fact of its complexness, but they sure do find the holes to quiver through, which at a later date requires new laws...and something more for them to be proud of when they quiver through that, and complain some more.

Well, I shall complain no more. Just had a few thought dripping from my fingertips.

Cya melo and thanks.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Mon Apr 20th, 2009 at 04:14:55 PM EST
[ Parent ]
Her point was that instead of getting a bigger salary/wages, we should have the option of getting more time off.

The fact that this isn't an option is proof that we are universally underpaid.

you are the media you consume.

by MillMan (millguy at gmail) on Sat Apr 18th, 2009 at 09:52:34 AM EST
[ Parent ]
Oh, absolutely.
by jjellin on Sat Apr 18th, 2009 at 10:20:15 PM EST
[ Parent ]
Yeah, but isn't the vast majority of economic activity related to stuff that isn't actually needed? To survive you need food and shelter.

So what you need is consumer confidence so that people will go out and buy stuff that they don't really need, so other people will have jobs making that stuff so they can get money to buy stuff that they don't really need. Seriously, isn't that exactly how it works?

If that's the model, there can never be too many workers, because all you need to do is have them start making something to meet some newly identified desire. Like iPhones, or makeup, or fancy clothes, or Bentleys.

by asdf on Fri Apr 17th, 2009 at 10:32:37 PM EST
If most human activity is "unnecessary", i.e. not focused on food production, shelter creation, in these times, Green Activities, past solutions frequently involve the identification of "an enemy" and the activities of the war machine.  Another "terrorist attack" on America would really give the Repubs a boost, even if they have to help it along. And the Repubs seem to be desperate these days.  Just a thought.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Apr 20th, 2009 at 10:54:02 AM EST
[ Parent ]
asdf:
If that's the model, there can never be too many workers, because all you need to do is have them start making something to meet some newly identified desire.
The can be too many workers, relative to the population's appetite for consumption. When people's livelihood appears at risk, they moderate their desires.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Mon Apr 20th, 2009 at 10:57:52 AM EST
[ Parent ]
one small thing.

If you submitted it to a Conservative Think Tank, i.e. one that represents the people Who Own/Control Everything Of Value and get them when they're drunk, being really honest, what do you think they would say?

"We have too many people?  Idle hands tend to cause trouble?  We don't need them anymore because of automation?  Simple solution!  Get Rid Of Them!"  And they control things.  The children do not run the elementary schools, the adults do.  The children don't say when class is in session, what toys are in the playground, etc, the adults do.  The people at ET ... are you the children or the adults, Really?

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sat Apr 18th, 2009 at 09:52:42 AM EST
You're dreaming. Nearly all the very wealthy and powerful are kidding themselves they're philanthropic and charitable, or have some other self-serving vision of their motives.

If anything around here is puerile, it's this notion that there's a powerful group planning to kill off most of humanity so they can rock on with the resources. Also that they control everything, like (you say) adults control the playground (long time since you were a kid ;)).

Which does not mean that, if circumstances led that way, those who have wealth and access to powerful networks would not defend their interests.   That could of course mean grabbing scarce resources for themselves, while weeping crocodile tears. Or backing an authoritarian rightwing populist movement. It's been seen before.

But let's stop with the comic-strip villain paranoia. It isn't going to get us anywhere.

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Apr 18th, 2009 at 10:46:40 AM EST
[ Parent ]
You and I have been here before.  Let's make sure you understand my position.  That way, we won't have to have this conversation again in the future.

I read plenty of "This is how we should change things." diaries penned by good thinking folks who only mean the best.  The problem is, I imagine the Cheneys/Berlus/etc. reading these pieces, the people who really run things, and I don't see them going along with it.  I don't see how the good intentions/great ideas win over the people who run the show.

BTW, did you see the Olbermann Special Comment in "What Do you get when, you Cross" by jamess?  Hell, WE can't even get Obama to do the right thing.  

So, "comic-strip villain paranoia"?  No no no.  But I do imagine the chuckle that a Cheney would get if he ever took the time to read many of these diaries.  I think those folks have other plans.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sat Apr 18th, 2009 at 11:03:41 AM EST
[ Parent ]
There's a world of difference between your comments.

If you're saying plans to change the world will come up against the interests of those who hold power, I'm not saying anything different.

But your first comment was comic-strip paranoia. Which is what I objected to.

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Apr 18th, 2009 at 12:47:29 PM EST
[ Parent ]
Breakthroughs in leisure were predicted by several futurologists, especially in the 1960s. Here are some of their predictions:

"New York Times" had predicted that by 2000 people would have to work at most 4 days a week, less than 8 hours a day. Work would take 147 days, holidays - 218 days.

The work itself would be much less stressful. "You will not need to go to work. The work will come to you" - told CBS's Walter Cronkite in the documentary series "The 21st Century".

Alvin Toffler, the author of the bestsellers "The Third Wave" and "Future Shock", predicted that the working week in this century would be 50% shorter, we would need "leisure counselors" to get through.

In a BBC film of 1966, "General Motors" promised that people would work from 25 to 47 age old; half-year holidays would be usual. The same year, "Time" wrote that in 2000 the machines would produce so much that every US citizen would be truly independent, rich and with plenty of time to kill.

Arthur C. Clarke wrote in 1968 that by 2001 people would be bored to death, switching between hundreds of TV channels. {The above is from a post Soviet article, 2003. The refer to a journal Retrofuture.}

But the social-political-industrial evolution apparently decided otherwise.

For more fulfilling perspective on leisure, watch this highly recommended video lecture. Somewhere midway, Dr David Levy mentions that the modern consumer society was build as a means to cope with overwhelming industrial expansion. And he mentions the following book, a Christian perspective on leisure:

LEISURE: THE BASIS OF CULTURE, by Josef Pieper.

(Hat tip to ET Salon linking to Berman's blog the other day.)

by das monde on Sun Apr 19th, 2009 at 05:04:53 AM EST
That video lecture was fantastic. Thanks!
by Metatone (metatone [a|t] gmail (dot) com) on Mon Apr 20th, 2009 at 08:03:55 AM EST
[ Parent ]
Thank you for bringing this to my attention.  I just watched the whole thing.  Excellent.

I will look up more about his work, and some of the people he mentions.

by jjellin on Mon Apr 20th, 2009 at 12:01:42 PM EST
[ Parent ]
great article. One caveat though (at least for me), to buy a house (here in southern Germany) I have to pay quite a bit of money. Working 30% of what I do now I will never save enough money to actually own a house or pay the rent for a house... It'd be interesting to empirically calucalte how much labour in todays world is "wasted" on consumption and how much is necessary to live comfortably (ie not in a wooden hut with no real heating, etc...)

Full Disclosure: I own an iPhone and wouldn't want to live without it anymore, even though it is mainly a toy...

by crankykarsten (cranky (where?) gmx dot organisation) on Tue Apr 21st, 2009 at 11:14:33 AM EST
Real Estate is a strongly positional good ; if incomes got lower for most of the population, real estate prices would get lower fast, too.

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Wed Apr 22nd, 2009 at 06:54:21 AM EST
[ Parent ]
This reminds me of my high school days, back in the 50's

I had an ongoing debate going, based on the position "Resolved, that no one has any moral right to own an automatic elevator except the elevator operator displaced by it"

Naturally, I was considered a Communist, no one would date me, and I fled Ohio as soon as I could.

by greatferm (greatferm-at-email.com) on Tue Apr 21st, 2009 at 07:35:44 PM EST
I note that one significant factor has been omitted from this conversation to this point.  The diary has discussed labor, production and distribution of goods and the realms of work and leisure.  What has not really been discussed is the distribution of the wealth that is and has been created.  I do not think that this is entirely accidental.  It seems to me that the very construction of our culture, especially in the USA, tends to make the distribution of wealth, if not taboo, at least awkward.

In fact the distribution of wealth has very much to do with the distribution of leisure.  Those of independent means and significant accumulated wealth at least have the choice of how much of their waking hours to devote to work.  The better off of the employed have some choice of how much of their time to devote to work.  They must fend off the mind numbing demands of popular culture in order to really relax, but it can be done.  The quality of our lives very much depends on the extent to which we can actually engage in recreation.  Specifically RE-CREATION of our interior mental spaces and interpersonal relationships into forms more satisfying.  

But people on the bottom of the employment pay scale have no choice.  Many must work virtually to exhaustion to just survive.  This is degrading and almost certainly life shortening.  The ability to deal with this problem of insufficient leisure time is within our collective ability to solve, but it is hidden from us in plain sight by the norms of our culture.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 22nd, 2009 at 12:33:41 AM EST
I've written about wealth (re)distribution on other occasions, here's the most popular essay on this subject from web site:

Wealth Distribution

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Wed Apr 22nd, 2009 at 09:41:32 AM EST
[ Parent ]
It IS a subject that has been mentioned frequently on ET in the context of the extent to which Neo-Classical Economic policies since 1980 have succeeded in returning the USA to wealth demographics last seen in the '20s and the baleful effects that has had on our politics and economics.  What struck me was the previous absence of that factor in this discussion of the decline of leisure.

The thought arose after I viewed the video of the Google lecture by Dr. David Levy, particularly the distinction between ratio and intellectus as described by Pieper and the extent to which contemporary society has tilted the field towards ratio. It recalled to mind grade school teachers strictures about "daydreaming" and about the enforcement of similar views in the workplace, especially on lower ranking workers by production managers.  I was an engineer and could always claim to be "thinking", which was what I was paid to do, even if I was often not thinking about work related issues.

"I've always been a dreamer," as the song says.  In my youth I discovered how answers could come to mind when I was in the appropriate "mood."  I just didn't know that I was being "intellectual."  Had I not found employment in areas which allowed and even required access to this mental state my life would have been far more miserable than it has been.  Others have not been so lucky.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 22nd, 2009 at 11:08:01 AM EST
[ Parent ]


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