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." One choice 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
