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Comment on 1996 draft report to the Club of Rome by Orio Giarini and Patrick Liedtke
"Unemployment begins in the minds of men, and it is in the minds of men
that sustainable lifestyles must be constructed"
(adaptation of a key phrase in the constitution of Unesco)
The report starts with the comment: "the future of work and the employment dilemmas are some of the most pressing issues that the world has to face".
The report "aims at disclosing some of the weaknesses and shortcomings of present concepts, proposing a different, alternative view of present and future economic activities that will enable us to meet today's and tomorrow's challenges with more adequate insight. The main objective is not to provide final answers that in an ideal world might satisfy everyone under all circumstances. We rather wish to provoke and stimulate economic thinking in a new direction by adopting a different, alternative point of view that will reveal previously hidden aspects opening the path for new approaches and more satisfactory solutions" (p. 9)
The question which will be asked is whether the report has adopted a broad enough framework in "disclosing the weaknesses and shortcomings of present concepts". It is possible that fruitful approaches to the dilemmas of employment lie outside efforts to understand "present and future economic activities". Whilst it may be useful to "stimulate economic thinking in new directions", it is unclear whether economists are necessarily equipped to respond to the concrete challenge following such stimulation. The "previously hidden aspects" may at present lie openly in the territory of other disciplines (with their own limitations) who themselves have difficulty in focusing their skills in response to these same challenges.
The report is written under a banner of useful humility provided by Francis Bacon: "If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts, he shall end in certainties". The question is whether the report has locked itself into certainties based on the primacy of economic thinking concerning response to the challenges of employment. This primacy can be usefully doubted.
The report is realistic in seeking to avoid providing "final answers that in an ideal world might satisfy everyone under all circumstances". The question is whether its proposals will satisfy sufficient people under sufficient circumstances in time to avoid the severe social disruption predicted by many observers if trends continue as at present. Some would also ask which people it is appropriate for the report to seek to satisfy.
The international community now has a very poor track record in delivering on the promises built into a variety of international plans of action ("Health for All by the Year 2000, Elimination of Hunger within a Generation, etc). These plans increasingly arouse cynicism and are coming to be recognized as aspirations rather than strategiesoffering any real hope of implementation. The recent FAO conference on hunger has illustrated and reinforced this view.
The question is whether the report offers possibilities of immediate implementation in response to the challenges it addresses, rather than deferring responses to people in distressed situations -- whilst economists redirect their thinking to legitimate more appropriate government policies some time in the future.
The report calls for a "profound and far-reaching renewal of economic thinking, a discipline whose fundamental purpose is the better utilization of resources for the creation of wealth" (p. 13). Further, it is "only through a thorough understanding of what the process of wealth creation in today's world entails that an updated definition of the notion of productive work can be arrived at" (p. 13). This is fine, although equivalent attention could usefully be given to the manner in which poverty is created -- both in its material and, more interestingly, in its immaterial sense.
But then the report states that the "notion of employment itself, i.e. remunerated work, is only a part, albeit an important part, of what must be understood by 'productive activities'" (p. 13). This statement traps the report in two ways:
"Employment" is tied to remuneration, so that by definition all those who are not remunerated are "unemployed" and vulnerable to the stigma and loss of self-esteem associated with that term.
An initial orientation is given to "productive activities" which may prove fatal to any efforts to reach an understanding of the framework appropriate to transcending the dilemmas of employment.
The report stresses that the "employment dilemma is a concept which on the one hand reflects the enormous potential for developing productive activities we require to enhance the wealth of nations and the people the world over, and on the other, the contradictions arising from an inadequate understanding of the means whereby to produce and benefit from such wealth and potential." (p. 13). And then "it is our production, in the widest sense, not just the one linked to industrial processes of creating material goods, that defines ourselves; we are what we produce" (p. 14). The question is what might some important constituencies see as excluded from the report's understanding of "wealth" and the "the widest sense" -- and as such vital to effective response to the dilemmas.
The report makes significant efforts to venture into areas that are problematic for economists. In stressing the role of "human capital" as "the central production factor in any economic theory", it acknowledges that the return on investment in such capital "is also related to the superior subjective feeling of intellectual well-being, confidence, social recognition, etc" (p. 14). But even this will be challenged for failing to include the emotional and affective well-being so vital to any sense of quality of life, whether as lived or as marketed so explicitly by the fashion and leisure industries.
Despite aspiring to such new sensitivity, the fundamental flaw of the report might be said to be the need to prove to economists and industrialists that these dimensions are important to increasing the wealth of nations -- when the real challenge is to provide the people who are liable to disrupt the system with means to reinforce thesedimensions in their own lives. Does the report reflect the need and the means to increase the wealth and value of people's lives? The employment dilemma is cast unfortunately into a dilemma for those who have defined the economic paradigm (effectively to ensure increasing unemployment) -- and not in terms of reframing the dilemma for those most imperilled by the vagaries and inadequacies of such thinking.
For whom?: The report provides a useful, and extensive, summary of the evolution of notions of work in relation to economic theory -- which could be seen as a review of what has as yet failed to deliver full employment. However, despite acknowledging the value of "superior subjective feeling of well-being", it demonstrates relatively little ability to address the issue from the perspective of the person engaged, or not engaged, in "work" according to different definitions. It is this person who, consequently, then becomes defined as "employed" or "unemployed" and is presented (by the prevailing economic theory) with the challenge of "finding a job", "having a job created for them", or "creating a job".
It needs to be recognized that in an important sense it is such people who are the ultimate "consumers" of the theories produced by economists, whatever the delivery system through government or industry policies. As in any marketing situation, the question is to what degree the producers of such theories, or their intermediary distributors, are sensitive to the needs of the consumers. It might be argued that such consumers have legitimate reason to be dissatisfied by an environment in which "more people are unemployed in industrialized countries than at any time before" and when there is every prospect of such numbers increasing (p. 110). As the report notes, this "reflects both human distress and economic inefficiency and undermines social cohesion and confidence in market mechanisms and democratic institutions" (p. 110).
Constraints on definition of work: The report rightly points out that "the mind-set of the Industrial Revolution has totally excluded from the notion of productive employment for global wealth [the role of] non-remunerated and self-production-consumption activities" (p. 111). But it is weak in its efforts to broaden the definition of "productive work" and to draw policy conclusions from this.
It might be asked, for example, whether a professional meeting of economists, present in their personal capacity, constitutes work. The same might even be asked of a meeting of members of the Club of Rome! If such phenomena are to be considered work, how are they to be understood as productive? The same questions can be raised with respect to local community organizations. Which forms of social activity are to be labelled "unproductive"?
It is unfortunate that productive "work" has been artificially limited to a selection of activities in which some humans engage. This is a tiny subset of those which are defined as work by thermodynamics in relation to the planet as a whole. It is ironic that human, financially remunerated "work" takes place within a very broad context of non-monetarized transactions which sustain the economically defined working environment. Some aspects of this broader environment currently constitute significant challenges to economic thinking, including the value to be placed on the "work" done: by unpaid creative or caring people; in the household; by non-human species, in maintaining the ecological system (trees, animals, etc) and in developing food products through biological processes (for which man may seek to develop substitutes); and in natural inorganic systems (notably that done by water -- from which hydro-power may be drawn). This broader contextraises questions concerning how a tree is to be appropriately valued, when the work it does in the ecosystem is not acknowledged (eg in relation to air purification). The extent of such work only becomes apparent, and valued, when man-made systems must be introduced to compensate for their absence.
Basic compromise: The report effectively accepts the inability of current economic theory to provide a conceptual framework for full employment -- or at least to provide any guarantees of its deliverability. It rightly points to the need to seek a compromise between:
Despite some acknowledgement of the role of non-monetarized activity, the report remains locked into the dilemmas of resolving the issues by monetary means for which no implementable solution appears viable --nor does any solution offer guarantees for the immediate relief of those in distress. A creative approach to the situation calls for a checklist of excluded options, and the reasons for which they are excluded. The focus of the report is on options locked into the existing mind-set that it tentatively criticizes.
Social policy responses: The policy responses to unemployment are distinguished in the report as:
Flawed definition: The problem lies with the definition of productive work and employment. The narrow definitions currently favoured by economists must necessarily define increasingly large numbers of people as unemployed and not engaged in productive work. Within this logic,the only response is to find means of relieving their disadvantage in terms of the monetarized economy. The options for this are limited within that logic -- and must necessarily perpetuate an increasing class of impoverished people, and the "moral hazard" associated with unemployment benefits (p. 114).
The report usefully stresses that there is a major contradiction in the current system which "started out to produce more in order to increase wealth, could achieve exactly the opposite, producing more scarcities. Goods [like fresh water] that become scarce have less value in terms of real wealth than when they are in virtually unlimited supply. Our economic system, however, does not account for this, because only priced goods have an economic value. Until a good becomes scarce and therefore priced, its real value is not recognized and an original amount or stock is not accounted for" (p. 120).
What is unfortunate is the limited attention by the report to radical options for broadening the definition of productive work and employment, as an acknowledgement of activities through which people sustain their "superior subjective feeling of intellectual well-being, confidence, social recognition, etc" (p. 14) -- namely their sense of quality of life.
Non-monetarized activities: The report does however focus (p. 127) on two forms of non-monetarized human activities:
Occupational ecosystem: Although efforts to articulate categories of occupation have reached a high level of detail for statistical purposes, no effort has been made to demonstrate how such occupations weave together into a sustainable ecosystem of mutually dependent initiatives. The real wealth of society could be considered as intimately associated with the richness of the pattern of connections within any such system -- whether monetarized or not. Partial recognition of this may be seen in the weakness attributed to Eastern European societies at this time -- due to the absence or immaturity of their "civil society". How the economic system meshes with this social system is a matter of continuing exploration.
Dematerialization of products: What "wealth" is engendered in societies, communities or families where the emphasis is on quality oflife, cultural expression, and personal and community development?
The report approaches such issues through the debate over the "dematerialization of products". Unfortunately it places the emphasis on justifying the use of the immaterial assets (in the form of knowledge and culture) "that are needed to put material tools to their best use" (p. 136). It excludes the possibility of any modern economy based on "immaterial goods". This ensures that those who lack material tools and goods are prematurely defined as unable to put immaterial assets to any "productive" use. The reaction of Buddhists whose lives are dedicated to the "accumulation of merit" would be of interest on this point. The reaction of academics and socialites dedicated to (and rewarded by) the accumulation of status and recognition would also be of value.
Developing countries: In the case of developing countries, the stress placed on severing the "historically tight bond between money and the wealth and welfare of people" (p. 151) is valuable, as well as the emphasis on the "next step now has to be to integrate the non-monetized and non-monetarized contributions [as distinguished above] into a more general framework" (p. 151). It is argued that the non-monetarized parts "here more than anywhere else contribute to the wealth and welfare of people" (p. 151). But the arguments for this could as well be applied to those segments of industrialized societies that have effectively become "developing societies" in the worst sense of the term -- and are liable to become more so in the future.
In developing countries, the report makes the valuable point that since "the so-called productive, because monetarized, activities may be parasitic on other non-monetarized work, such as domestic services, child care, etc., it is extremely important, especially for the developing regions of the world who have still a larger proportion of such activities prevalent in their economy, to take an integrated view of their future development. People in developing countries will only be better off in real terms, if the development of more monetarized work does not destroy more valuable, but in monetary terms, unrated activities that add to the real, but not the monetary wealth, of the society" (p. 152). The learnings for industrialized countries, from developing countries in this respect are usefully emphasized -- where some 75% of workers are active in both the formal and the informal sectors (p. 153).
The report places faith in the globalization process to respond to the challenge of unemployment. "There is a message of hope in the present situation in the Service Economy which far outweighs the theory of comparative advantage. There now exists a vested interest for all producers to establish efficient local utilization systems...Thus we discover, in an economic sense also, a great general interest that all can share, in that the poorer become richer because they are the terrain which new markets can develop on the basis of their ability to use prosumers and properly manage available systems" (p. 159)
Unfortunately for many this is only a statement of faith. It is unclear, following extensive downsizing, what the next transformations in large corporations must be once "lean management" no longer guarantees competitivity. What happens "after lean"?
It needs to be recognized that endeavouring to market this new religion in terms of a promised payoff sometime in the future faces considerable challenge from the increasing numbers who do not see themselves as benefitting from this process, now or in the more distant future.Focusing on those who will benefit is not enough, and does not respond to the essence of the employment dilemma.
The report fails to recognize that economists have a track record of proposing new theories offering a payoff sometime. As with the promises of religions, these may persuade and placate some people some of the time, some people all of the time, but not all of the people all of the time. It is the unpersuaded and unplacated who are on the increase.
In this sense the report indicates its weakness in limiting its comment on this to: "Delicate negotiation and compromise will be needed to strike a balance between legitimate concerns about labour rights and practices and purely protectionist considerations" (p. 161). Who is expected to do the compromising, and will they be prepared to do so?
In response to the challenges implicit in its argument to this point, the report endeavours to reframe the challenge in a very useful way. It acknowledges an increasing reversion to the non-monetarized system, and makes the point that: "the efficiency level of monetary expansion and of the use made of money is not infinite. In a sense the encouragement of self-productive activities as a means of reducing production costs can be seen as an indication of the limits of the efficiency of the monetary system" (p. 162). It argues:
A principal reservation about these valuable points is the continuing assumption in the report that employment, whatever its future form, must necessarily be primarily at the service of a larger economy to which it must continue to justify itself proving itself to be productive through competitive mechanisms. There is a marked tendency to value that wealth that is most readily apparent at the collective, and typically, national level.
However, it is quite possible that a degree of "delinking" may be more appropriate to the extent that, where stressed global distribution systems fail, "employment" may usefully be associated with the smallest local communities, and above all to the individual. The "work" involved may be then far from "efficient" according to external criteria. The "products" of this work may themselves be far from tangible. How such micro-systems need to develop calls for attention. For it is at this level that safeguards against "unemployment" and social insecurity can be most effectively built. It is at this level that "deliverability" is most crucial.
The authors assert that "We are much more what we produce than what we consume" (p. 164). They draw attention to the degree to which many identify strongly with their jobs or their profession -- increasing the psychological implications of redundancy. But they usefully point to the extent to which people engage in other kinds of activity, notably in the form of voluntary work, which are of equivalent, if not greater, importance psychologically. "Even if these activities do not contribute directly to the monetized part of the economy, they are a valuable element that deserves recognition since they also add to the wealth and the welfare of people" (p. 162).
It usefully questions the policy conclusion that the key to the employment dilemma is simply a question of reducing working hours in remunerated employment. For:
"it is obvious that the number of activities unrelated to remunerated employment has increased enormously" (p. 165)
Unfortunately the report fails to explore further the implications of such recognition for any reframing of the employment/work issue. The key issue is, however, how "non-remunerated" work is to be recognized in such a way that it compensates fully for the loss of monetary rewards, and may even come to be valued more than monetary rewards. Trends in this direction are to be seen in the, often abusive, use of "perks" and honours. But these merely serve to indicate that some substitution is possible. Such examples do not address the following situations, each more anguishing than the last:
The report fails to raise the issue, as a creative possibility, that "downshifting" might be deliberately encouraged -- provided appropriate substitution of non-monetary rewards could be achieved in a meaningful, sustainable manner. The question is how to substitute quality-of-life for dependence on money -- reversing the tendency to force consumers up market by progressive conversion of luxuries into necessities.
The recommendation of the report is for a three-layer approach to work:
As it stands the report remains trapped in a mind-set in which "productive", "work" and "employment" are all defined externally. Whilst this is true to an extent, it is how these are experienced by the individual concerned, and the interface between society's definition and that of the individual, which are the basis for a sustainable development, community and lifestyle -- or the source of chaotic social disruption. The report recognizes this through statements such as: "Individuals would have the freedom and even the stimulus to define themselves, in terms of their own image and of society, for activities which they deploy beyond their first level of activity" (p. 180). However the implications are not explored.
But while the report should be lauded for such statements as "It is imperative therefore that social policy consider people as human beings deserving of opportunities to 'produce themselves'" (p. 179); the question is not whether an individual is "employed" or "productive". The question is rather how to articulate the relationship between what they are able (or choose) to do and the monetarized economy. In this sense people are always "employed" and "productive", it is how what they do can be honoured and integrated into a viable, broader framework -- with monetary and non-monetary dimensions -- that is the issue.
By shifting the emphasis back to the non-monetarized system, which is the core message of the report, a great service is preformed -- notably through such statements as:
The report fails to determine the existence or possibility of broader or alternative understandings of "work" and "employment", the constituencies or cultures subscribing to them in some measure, and the challenges implicit in them for more conventional audiences. In this respect the report makes itself vulnerable to criticism at the service of interests that have themselves little real hope to offer.
The weakness of this approach lies in the inability of new thinking on the part of economists to deliver "employment" and "wealth creation" potential to increasingly significant segments of the population -- through the kinds of plans and strategies that emerge from the current paradigm. It is assumed that globalization will ensure such delivery whereas there is every indication that it will be as successful in "delivering unemployment" to the many as it is in delivering employment to the few.
Faced with such challenges, it is "paradigm leaps" that are called for, not "paradigm hops"! Better still would be development of an ability to coordinate "walking" continually forward rather than having to depend on occasional, spasmodic leaps. It should be noted that the "leap" metaphor constitutes a simplistic avoidance of the coordination required in strategies implicit in the "walking" metaphor.
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