November 25, 2017

The ecology of unemployment

A leading article for The Ecologist Vol. 4 No. 2, February 1974.

This version was republished in The Doomsday Funbook (Jon Carpenter Books, February 2006). See ordering information for the Funbook.

An extended and referenced version of this article also appeared as Chapter 3 of The Great U-turn, published by Green Books in 1988.

It is generally considered that the only cure for unemployment is more economic growth. Is this justified by the facts? Empirically it is not, for in spite of the unparalleled economic growth of the last decades unemployment throughout the world has continued to rise in the Third World to ever more dramatic levels. According to Mr. Wood, Minister for Overseas Development, the ‘working’ population in the developing countries is expected to increase by 25 percent in the next ten years. This means finding 170,000,000 jobs.

How does he suggest we do this? Needless to say – by further economic growth. But is this possible? – the answer is clearly not. The rate of economic growth required to mop up this unemployment cannot conceivably be achieved, let alone maintained for any length of time, especially in conditions which are ever less propitious to the industrial process. Let us look a little more closely at the reasons why economic growth cannot, in the long term, solve the unemployment problem.

For industry to be competitive, machines must constantly be substituted for labour. Thus there is a continual need for more capital investment. At the same time, as work becomes more capital-intensive and hence more ‘productive’ it can be increasingly well remunerated. In this way, people are compensated for the growing deterioration of their physical and social environment and the increasing monotony of their work. More important, their purchasing power is increased – for industrial society can only function if producers are also consumers – and the result is a continual growth in effective demand, stimulating further production.

The inevitable concomitant of automation, however, is a reduction in the number of people employed for a given level of economic activity. At present, the capital-intensity of industry is increasing faster than GNP, which means that every unit of GNP will produce an ever smaller number of jobs. Consider the UK chemical industry. It employed 407,000 in 1961 for a turnover of $4,875 million. In 1967, it employed slightly fewer people (406,000) for a turnover of $7,589 million. In other words, sales were 55 percent less efficient in producing jobs. If we assume an average reduction in such efficiency of 7 percent per annum, then, to maintain a constant level of employment in this industry, turnover must double every seven years – which we know to be extremely unlikely.

The capital-intensity of industry and the increasing costs of providing a job are well illustrated by the present proposal to build an iron ore terminal at Hunterton on the Clyde. This is to cost £26 million and is expected to provide a mere 200 jobs, which works out at £130,000 per job. At this rate, with a GNP of £40 billion, the country can afford to provide no more than 300,000 jobs.

It should be quite obvious that if this trend were to continue for much longer we would be faced with unemployment on a massive scale. What then is the alternative? To answer this we must reconsider our assumptions. Why do people need jobs in the first place? It is only very recently that they have done so. Previously people worked mainly for themselves, their family or their tribe and did not have to be paid for doing so.

It is part and parcel of the industrialisation process, however, to draw people systematically into the cash economy. Subsistence farmers must become farm labourers, or better still, factory workers. What are the results?

  • Firstly work becomes more monotonous and very much less relevant to people’s lives.
  • Secondly, people are physically separated from the land whose produce is no longer used for satisfying local needs, but is exported to a distant market. They thereby become totally dependent on increasingly precarious jobs for buying food and other basic necessities. Growing unemployment, especially as world conditions become ever less favourable to the industrialisation process, thereby becomes inevitable.

I am assuming of course that we remain committed to the goal of industrialisation but why should we? There is no evidence that industrialisation solves any of our problems. As it proceeds so bigger companies, in particular multinationals, take over from the smaller ones – but this reduces employment, as it is small and medium companies that provide most of today’s jobs. The result is more unemployment, and in particular more people eking out a precarious livelihood in the informal economy.

By reversing the industrialisation process, jobs would become ever less capital intensive, which means that more and more of them would become available. Also people would return to the land and in general become more selfsufficient which means that the demand for jobs would itself become correspondingly reduced. Undoubtedly they would, as a result, have access to less rather than more consumer products, but their society would be organised in such a way that they would also need far less.

In other words, the choice is not between unemployment and economic growth but between unemployment, economic growth (with more unemployment at a later date), and the development of a work-intensive economy in a much more sustainable decentralised society.


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