Economics Works Backwards Now

Do you ever think about how strange it is to worry about “creating jobs”? Wednesday, Douglas Rushkoff observed this:

Our problem is not that we don’t have enough stuff — it’s that we don’t have enough ways for people to work and prove that they deserve this stuff.

Originally, economics was supposed to be about scarcity. People didn’t have enough food, clothing, housing, or tools. So you worked to make some, and then traded your surplus for somebody else’s surplus of the things you needed.

Today it’s all backwards. We produce plenty of goods, and if necessary we could dial the process up and produce more. What’s scarce now is work.

Try to imagine that on a personal level: It’s dinnertime. You’re hungry. There’s so much good food in the frig that you worry about it spoiling. But you haven’t justified your meal yet and you can’t think how you’re going to do it. So you have to sit there and be hungry until you can create a task for yourself.

Or on a family level: The kids each had jobs to do to help with dinner. But then we got a dishwasher, so now Jenny doesn’t get to eat dinner because we haven’t found a new job for her yet.

Crazy, isn’t it?

This week the big news was President Obama’s jobs speech, the Republican reaction, and the various economists who mostly told us that these were pretty good ideas.

But think about that speech’s focus. Not that we need to grow more food or make more cars or build more houses because those things are needed, but that we need to produce more of something so that people can be employed producing it. He tried to justify the needfulness of the jobs, but all the same it would miss the point if Obama could accomplish the same things by snapping his fingers instead of hiring people.

Rushkoff again:

it seems to me there’s something backwards in that logic. I find myself wondering if we may be accepting a premise that deserves to be questioned.

I am afraid to even ask this, but since when is unemployment really a problem? I understand we all want paychecks — or at least money. We want food, shelter, clothing, and all the things that money buys us. But do we all really want jobs?

John Kenneth Galbraith was making similar observations half a century ago. In The Affluent Society he described the following paradox: We judge our nation’s economic success by how much it produces, and we justify production because it satisfies demand. But demand has to be created by advertising, because without constant hectoring people would not want all the things we produce.

After a certain point, Galbraith said, “Production only fills a void that it has itself created.”

So why are we doing all this? In theory, our society could work less, produce less, advertise less, and we’d have no more unmet desires than we have now. But then there wouldn’t be as many jobs.

If production is a paradox, productivity as an even bigger one. On the one hand, productivity is our best friend. The reason the standard of living today is so much higher than in the Middle Ages is that an hour of work now (with the assistance of machinery, electronics, fossil fuels, and a better-organized society) produces so much more than an hour of work did then. Beyond an occasional hobbyist project, why would you choose to work all week making something that you could buy for 20 minutes worth of your salary?

But productivity and new technology kills jobs. Rushkoff begins his essay talking about the Post Office, which faces massive layoffs because email and electronic bill payments don’t require human sorters and couriers.

Again, that’s not a new idea. The French economist Sismondi satirized the pure productivity-is-good view in 1819 in New Principles of Political Economy:

In truth then, there is nothing more to wish for than that the king, remaining alone on the island, by constantly turning a crank, might produce, through automata, all the output of England.

That fantasy gets closer and closer to reality. In his 1995 book The End of Work, Jeremy Rifkin wrote:

The quickening pace of automation is fast moving the global economy to the day of the workerless factory.

Sismondi’s image of the king turning a crank captures the social problem of the workerless factory: The only reason to care whether it is in Topeka, Taipei, or Timbuktu is who owns it and who gets to tax it. Wherever it is, it will make goods, but it won’t provide jobs.

So even if “the output of England” stays the same, all the value of it now belongs to the crank-turning king (or maybe to the Workless Factory Corporation). No matter how plentiful those goods are, what can the people of England trade in order to get them?

In 1930, at the depths of the Depression, John Maynard Keynes wrote the hopeful essay “Economic Possibilities for our Grandchildren“:

We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come — namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.

But this is only a temporary phase of maladjustment. All this means in the long run that mankind is solving its economic problem.

Imagine if humanity really did “solve its economic problem”. Suppose we got off the hamster wheel of ever-increasing desires, and kept improving our productivity until we could comfortably supply everything people really wanted.

Now imagine that we could do all that with only a few people working. The way we’re currently organized, that would be Hell. Whoever owned the machines and the natural resources would have the whip hand over the rest of us, who would scratch and claw to get the few remaining jobs.

So I want to suggest this: Yes, in the short-to-medium term we really do need to create jobs. But maybe our economic problems seem so intractable because we’re using economic tools to attack what is really a social problem. Currently (because in centuries past scarcity seemed eternal and the production system needed as many workers as possible) jobs organize our lives, give us our identities, and (most of all) allow us to prove that we deserve to eat.

But unless we either outlaw progress or keep inflating our desires until we consume the planet, eventually we’re going to have to rethink our lives, our identities, and the system that distributes goods. Otherwise we’re headed for Cornucopian Hell.

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  • Maggie Pax  On September 12, 2011 at 4:47 pm

    Good meditation on our production/consumption conundrum. Whenever I suggest that Americans shift to a 30-hour work week (for the same of higher wage) people act as though the 40-hour week was mandated by God. They forget that unions helped give us the 40-hour week a hundred years ago. We need to rebuild our unions if we want to exact meaningful changes in our work patterns.

    And there is plenty of work for Americans to do–just no one willing to pay a living wage for us to do it.

  • G-man  On September 12, 2011 at 11:52 pm

    The philosopher Alan Watts tells a story to teach us about the nature of money as follows: ‘Imagine construction workers coming to work one day, and the Superintendent meets them at the gate and says, “Sorry boys, you can’t work today.” One of the workers asks, “Why not? We’ve got wood, bricks, mortar, nails, everything we need. We can work just fine!” The Superintendent answers, “You just don’t understand. Sure, we’ve got all the raw materials, but we just don’t have any inches. I don’t mean tape measures, but the inches themselves. We just ran out of them!”‘ Watts posits money is just the same sort of artificial construct, like the Equator and lines of Latitude and Longitude, and therefore, we need to move to a ‘Resource-based Economy’, wherein we eat the meal and not the menu! That’s what things were like in the Late Middle Ages, according to Rushkoff in his ‘Life, Inc’ book.

  • Stephanie Brent  On September 18, 2011 at 2:32 pm

    When I was in college in the mid-sixties, I heard professors talk about the Triple Revolution when robots would do all the work and jobs would be a special honor limited to the best and brightest and everyone unemployed would be paid by the state to stay home and be consumers. The assumption was that the unemployed would take classes, read books, write books and engage in crafts they could barter with others for the crafts the others produced. The catch in our case is that we shipped jobs and the money earned to other nations so the state is running out of the economic resources to pay the unemployed because money leaves and doesn’t return. We’d have been better off with robots.

  • Derek  On September 21, 2011 at 8:46 am

    I totally agree with the argument that we have more than enough “stuff” and that marketing artificially increases our desire for more stuff. But the general idea that we don’t have enough for people to do is problematic. Look at the crumbling infrastructure in this country and the inner city neighborhoods that need repair. There are diseases to cure, new energies to be developed, space to be explored, and so on. There are plenty of ways to create jobs other than making more useless “stuff.”

    And the conventional wisdom that we work solely to obtain food, shelter, and “stuff” is simply wrong. Every mentally healthy individual wants to feel a sense of self worth and accomplishment. Having a job is an excellent way to fulfill this basic human need. An excellent book on this topic is “Drive” by Daniel Pink.

  • Kim Cooper  On September 23, 2011 at 12:07 am

    So, how would you organize a society that disconnected income from work? Passing over the fact that Americans would never accept paying people who don’t work (though we have been paying farmers not to grow certain crops, for many years….), would everyone have the same income? what would people do with themselves? Most important, where would their self-esteem come from? Would people spend their time with cultural and artistic things, inventing, playing games, babysitting….? and how would we get there from here?
    By the way, I want to mention that there would be a lot more jobs if the current companies hadn’t laid off people and then given their work (but not the salaries or appreciation) to the remaining workers. If overtime were outlawed, so that if companies wanted the work done, they had to hire someone else to do it, there’d be a lot more jobs.

    • weeklysift  On September 25, 2011 at 6:59 am

      The cultural problem is enormous, which is why I think we need to start thinking about it before the everybody-needs-a-job system breaks down completely. And yes, I agree that there are many things that could be done to create more jobs in the medium term.

      My hunch is that the direction to go is to take more and more things out of the money economy. Public education, for example, is already mostly out of the money economy; you don’t need a job to give your kids a basic education. What if, over time, basic subsistence was taken out of the money economy, so that you didn’t need a job to eat, have a minimally acceptable place to live, and get health care? People who wanted waterfront vacation homes would still be motivated to work for wages, but that wouldn’t be everybody.

      • Allison  On September 26, 2011 at 4:31 pm

        This makes sense, but it’s hard to find models where that worked. A while back, I was thinking how great it would be if there were some sort of national system of barracks-style housing, with mess halls.

        Here’s a related (set of) question(s): Why aren’t housing projects considered a decent, but basic, option for housing? Are there housing projects that fit this description, and we just don’t hear about them in the news? What goes wrong with this sort of thing, and how could we do it better? Could we, or is there some fundamental economics in the way?

      • Allison  On September 26, 2011 at 4:33 pm

        (PS- Public education is sort of an example, but I’m not sure that kids in some poorer districts really get even a decent-but-basic education.)


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