On checking my "sent" file, I find that I have posted this essay but when I
reviewed my FW file, I could not determine whether it was posted, perhaps
it got lost on the shift of hosts, if not, my apoligies.
The more I read and study this problem of unemployment, the more I am led
to the conclusion that the "root" causes lay within our capitalistic system
of distributing goods and services which are produced by human beings in
activities that we selectively label "employment". Many of the other
activities that humans do, such as housecleaning, car washing and raising
children are excluded from the title of "employment" in an arbitrary
fashion under the criteria that no one is willing to pay, i.e. provide a
wage for the activity. Common sense would agree that these and many other
activities are work and if we are going to live in a monetized society,
then there should be affixed a value to these activities.
Following is a quote that gives a recapitulation of how capitalistic
economies work. It becomes apparent as we read this that loyalty, skill
level, good work habits, education, talent are nowhere mentioned. Nor is
overtime, work weeks, pay schedules or any of the other criteria that
humans use to determine their economic self-worth. The employee is at the
mercy of a rigged game in which business and government are playing by a
set of rules and criteria in which the employee has no input and which can
violently, arbritarily and randomly affect his quality of life. As
Douthwaite points out so eloquently, at the level of the rules of
capitalism, employees are just a victim to the needs of profit and taxes
with little or no consideration to the human level of families, children,
health, creativity and community.
As we on FutureWork continue to explore and educate ourselves around the
topic of work, it becomes apparent that to ignore the macro forces inherent
within an economic philosophy such as capitalism creates an incomplete
model for solving the concept of redistributing income through wages and
work. And redistribute income we must, it is the single imperative of our
humanity. If the system will not or cannot serve this imperative, then we
must actively seek another system.
Quotes from the Growth Illusion by Richard Douthwaite
Council Oak Books Tulsa
Published 1992 - 93
ISBN Number 0-933031-74-2
Chapter 2 (Page 18)
Why Capitalism Needs Growth
If a country's national income is as poor a measure of its people's
well-being as the last chapter suggested, why does every industrialized
country judge not just its government's success but its national vigour on
the basis of the size of its annual increase in GNP? Why are national
leaders never contend with moderate rate of growth and constantly striving
to speed up the process?
It is not the results of growth that are important to the people who make
it happen. What matters is the process itself; and the more of that process
there is, the better politicians and business people like it. Growth means
change. More rapid growth means even more change; more change means more
market opportunities to be turned into profits. And more profits are not
only the systems motivating force but the source of the financial resources
needed for it to grow faster still. For a company director, corporate
growth creates a virtuous circle with increased profits leading to
increased investment leading to more growth, more profit and more
investment still. For his ally, the politician, national growth means more
tax revenues to spend and more influence in the world.
Here it is baldly stated. The system exists for growth with the attendant
side effects of change. That the change affects people, jobs, security,
livelihood, investment in personal employability training, seniority and
everything else that we at the individual level consider important - has no
importance within the paradigms set forth for the needs of profit.
But it is not just that firms like growth because it makes them more
profitable: they positively need it if they are to survive. A fundamental
part of the modern capitalist system is the payment of interest on borrowed
money. If someone borrows $10,000 at 10 percent interest, there are only
two ways in which they can find the extra $1000 they will owe 12 months
later. One is by taking the money out of their salary or savings: in other
words, impoverishing themselves. The other is by investing in some business
enterprise which will give at least a 10% return so that they can pay the
interest from its profits. But where to the profits come from?
So how did this situation come about? Douthwaite explains that one of
businesses tools, the receiving of credit in return for repayment through
interest is one of the primary causes.
Profits can only be made in three ways, although combinations of these are
common.
1. Growth is one method. When an economy grows, incomes increase and
profits can come from those extra incomes without anyone having to be made
worse off. (This is why we pay such attention to the growth of GNP. Despite
its faults in other directions, the amount by which GNP increases from year
to year is a measure of the potential for profit in an economy.)
This method is favoured by everyone under the assumption that everyone
benefits, the old win/win situation, even though some win more favourably
than others. The real problem with the growth model is it does not factor
in the real costs of products in terms of environmental costs which are
slowly adding up in the greenhouse effect, mineral depletion, nuclear
wastes, El Nino disruptions, acid rain, loss of cropland to pavement and
loss of soil to erosion and a hundred other less known costs. At best, we
are hoping that we will invent solutions to these problems, at worst we are
passing them down to future generations to pay.
2. The second way of making profits applies if there is little or no
growth. In this case a new business must win orders previously filled by
other firms: in other words, some or all of its profits will be made at the
expense of someone else. This is of course the fundamental reason why the
Roman Catholic Church condemned usury until as late as 1830 and why Islam
still does. In economies that were growing only very slowly, if at all, as
was the case in Europe until the Agricultural Revolution and in the Muslim
countries until oil was found this century, no-one could pay interest on
borrowings except at their own expense or that of others. As both courses
were undesirable, it made sense for society, through religion, to ban an
unproductive, harmful practice.
This is the highly respected competitive model with its most ferocious
proponents in the neo-conservative camp. Only the biggest, the toughest,
the meanest will survive and we - the government and corporate leaders have
a twofold job, one is toughing all you employees up by making you work
harder for less and the other is putting it to the weaker less able to
compete. The old I win, you lose system.
3. The third way of securing profits to fund interest payments is by
inflation. Let us suppose that most businesses in a country find that their
profits have fallen because sales have not increased by as much as was
expected or because interest rates on their borrowing have gone up. No
managing director likes having to report to shareholders that the ratio of
profit to turnover has fallen and firms will want to restore their margins
by putting prices up. In a closed economy, one that does not trade
overseas, they will be able to do this because most of their competitors
will be in the same situation and will be putting prices up too. And so
inflation will take place. In a more open economy however, companies have
less freedom to raise prices as they risk losing business to foreign
competitors who do not need to raise their prices as they are not
experiencing the same profit squeeze. Consequently, only firms minimally
exposed to outside competition will be able to push prices up by as much as
they need: the rest will have to put up with lower profits to some degree.
Well gee, if we can't defer costs, and we can't screw you, well then the
third way is we will make what you have worth less. The unfortunate side
effect that the neo-con's learned was that with larger amounts of capital,
the larger the losses. Therefore we had to fight inflation as if it was
the very devil because to the wealthy, it reduced their fortune more than
the poor. So in Canada, we got John Crow, who put us through the wringer
so that the wealthy could retain their capital and continue with solutions
1 & 2.
So what happens in Britain or Ireland if the economy does not grow? In both
countries, new investment is taking place each year: Britain devotes about
20% of its GNP each year to increasing-not just maintaining-its capital
stock, which is the National Collection of machines, factories, roads,
houses and so on. In Ireland, the equivalent figure is 19% year. If there
is no growth, it means that huge sums-in Britain almost $60,000 million in
1987-have been spent without generating any return.
The immediate effect is on industry. Firms that have borrowed from their
banks or shareholders to expand find that they have not earned anything
extra to pay the additional interest or dividend they are committed to pay
and that, because of international competition, they cannot restore their
margins by inflating their prices. The extra interest payments have to be
met out of existing profits, which are consequently reduced, leaving less
available for investment from retained earnings the next year. But less
investment is needed anyway, since each business has unused capacity
created by the current year's unproductive investment. So investment
programs for next year are cut back, causing job losses among builders,
machinery suppliers, architects, lawyers and financiers. Naturally the
newly unemployed have less to spend with the businesses that supply them
and chain stores, travel agents and branches are forced to make lay-offers
too. And so we enter a downward spiral, with no growth leading to an actual
depression, not just a year or two of marking time. In our present economic
system, the choice is between growth and collapse, not growth and
stability. No wonder people want growth so badly.
If you have read this far, we now finally get to the crux of our area of
interest - jobs. And we see the results of no-growth is that people suffer
unemployment. It has nothing to do with the skills or abilities of
workers, it has to do with a system of change that can only exist by
destroying the past and growing the future. And this system has no second
position, Douthwaite says, "the choice is between growth and collapse, not
growth and stability." When you only have two bad choices to choose from,
it is not a choice, it is a dilemma.
This was the reason that the former British Prime Minister, Edward Heath,
once said "The alternative to expansion is not an England of quiet market
towns linked only by trains puffing slowly and peacefully through green
meadows. The alternative is slums, dangerous roads, old factories, cramped
schools, and stunted lives."
For governments, the effects of no-growth are equally bad. Since business
profits fall sharply, the amount of tax collected from companies drops.
Then overtime falls and lay-offs start, the cutting the amount the state
collects in income tax while pushing Social Security payments up. Finally,
there are the second-round effects, like lower VAT receipts because the
unemployed and people on reduced incomes do not buy so many luxury goods.
And if the government has itself been borrowing to fund its capital
spending program (Or even current expenditure), it will have increased
interest payments to make, compounding its problems further.
A government caught in this position can cut its spending to keep its
budget in balance but this will exacerbate the depression. An alternative
is to borrow money to pump into the economy to keep demand up and prevent
the slump from becoming too bad. However, this strategy cannot be continued
for more than two or three years without the national debt burden becoming
cripplingly high. Successive Irish governments found this out the hard way
between 1975 and 1985 when they tried to eliminate unemployment entirely
and then, after 1979, to shield the country from the world-wide recession
caused by OPEC's oil price increase. Ireland's foreign borrowings jumped
from $4 to $2,269 a head during this period as a result.
So, for the two main players, it is growth or -----! But what about us,
the 6 billion who live on this planet and who consider their health,
family, security and a host of other values as very important. Well the
answer seems to be "to bad" we are in this game and someone is going to get
hurt. "Better you than me" says the businessman and the government leader.
I say enough is enough, you want to share, let's share some of the pain.
Let's use some of our much vaunted ability to change to change to a system
that supports human beings and future generations.
It is easy to see why businesses and governments constantly strive to
create growth, since the alternative is debt, depression, unemployment and
commercial disaster. They are obeying the growth imperative, a force that
has largely shaped the last 240 years, leading to the construction of
empires, two world wars and the creation of the European Economic
Community, among much else. More recently this imperative has endangered
the planet environmentally and has generated such an orgy of financial
speculation that the savings of millions of people are almost certain to be
lost.
And now we are down to a hard prediction. "has generated such an orgy of
financial speculation that the savings of millions of people are almost
certain to be lost." If this be the end result, someone had better be
doing some thinking in the wings of this stage play so that we have some
alternatives. That is one of the values of the Internet. I'll leave you
with several quotes from one of those thinkers, John Ralston Saul.
Thought is not a management function. -- John Ralston Saul The Unconscious
Civilization
... Socrates was executed not for saying what things were or should be, but
for seeking practical indications of where some reasonable approximation of
truth might be. He was executed not for his megalomania or grandiose
propositions or certitudes, but for stubbornly doubting the absolute truths
of others.-- John Ralston Saul The Unconscious Civilization
The most powerful force possessed by the individual citizen is her own
government. ... Government is the only organized mechanism that makes
possible that level of shared disinterest known as the public good. -- John
Ralston Saul The Unconscious Civilization
In general, democracy and individualism have advanced in spite of and often
against specific economic interest. Both democracy and individualism have
been based upon financial sacrifice, not gain. Even in Athens, a large part
of the 7,000 citizens who participated regularly in assemblies were farmers
who had to give up several days' work to go into town to talk and listen.
-- John Ralston Saul The Unconscious Civilization
Notice that it is efficiency we always hear about, not effectiveness. The
latter is about content and policy delivery. Efficiency is a general,
abstract and primarily negative term.
All the things which technocrats fear are incapable of efficiency -- risk,
thought, doubt, admission of error, research and development, long-term
investment, commitment to concrete places. ... An obsession with efficiency
prevents growth and stymies capitalism. -- John Ralston Saul The
Unconscious Civilization
The individual's rights are guaranteed by law only to the extent that they
are protected by the citizenry's exercise of their obligation to
participate in society. Rights are a protection from society. But only by
fulfilling their obligations to society can the individual give meaning to
that protection. -- John Ralston Saul The Unconscious Civilization
Criticism is perhaps the citizen's primary weapon in the exercise of her
legitimacy. That is why, in this corporatist society, conformism, loyalty
and silence are so admired and rewarded; why criticism is so punished or
marginalized. -- John Ralston Saul The Unconscious Civilization
What is hateful...is not rebellion but the despotism which induces the
rebellion; what is hateful are not rebels but the men, who, having the
enjoyment of power, do not discharge the duties of power; they are the men
who, having the power to redress wrongs, refuse to listen to the
petitioners that are sent to them; they are the men who, when they are
asked for a loaf, give a stone. Speech in the House of Commons, 16 March
1886. in Oscar Skelton, Life and Letters of Sir Wilfrid Laurier [in -- John
Ralston Saul The Unconscious Civilization]
The virtue of uncertainty is not a comfortable idea, but then a
citizen-based democracy is built upon participation, which is the very
expression of permanent discomfort. The corporatist system depends upon the
citizen's desire for inner comfort. Equilibrium is dependent upon our
recognition of reality, which is the acceptance of permanent psychic
discomfort. And the acceptance of psychic discomfort is the acceptance of
consciousness. -- John Ralston Saul The Unconscious Civilization
