November 25, 2017

The ecological approach to unemployment

From the journal PHP, Japan, August 1978


Unemployment is much more than material deprivation. A job, in an industrial society, provides much more than material benefits. It also provides those people, who in a disintegrated society have been deprived of an extended family and a cohesive community, with a surrogate social environment and hence with a feeling of security, an identity and a goal structure, all of which are psychologically difficult to dispense with.

It is unnecessary to point out that chronic unemployment has now become a feature of our socio-economic life and a growing concern of governments throughout the world. What makes it particularly serious is that its incidence is particularly high among youth. Indeed, unemployment levels for under 25s in many industrial countries are more than 35% of the total. In Italy the figure is closer to 60%. Many of the young people involved have never had a regular job and, at current trends, may never have one. The real implications of this situation can only be grasped if we realise that unemployment is much more than material deprivation. A job, in an industrial society, provides much more than material benefits. It also provides those people, who in a disintegrated society have been deprived of an extended family and a cohesive community, with a surrogate social environment and hence with a feeling of security, an identity and a goal structure, all of which are psychologically difficult to dispense with.

It is not surprising that prolonged unemployment leads to all sorts of social deviations. Marital breakdowns are the most obvious, as unemployed husbands are most likely to vent their frustrations and loss of self-esteem on their wives and family. It also leads to a rise in the incidence of alcoholism, drug addiction and other such expedients for insulating them from an environment that has ceased to satisfy basic psychological needs, and also of delinquency and indulgence in crime which enables them to acquire a new surrogate social environment even if it be that of a criminal sub-culture. It is no coincidence that the incidence of all these behavioural aberrations is highest among teenagers, particularly those from minority groups among whom unemployment levels are high.

Less Need for Workers

The most obvious cause of today’s higher levels of unemployment is the increased productivity resulting from the automation of manufacturing processes. In the U.S., for instance, the five largest industries—primary metals, stones and clay and glass, food, chemicals and paper—provide only 7.3% of the nation’s jobs. Particularly alarming is the fact that between 1950 and 1970 they provided no new employment at all. In the steel industry, from 1959-69, employment actually declined from 450,000 to 100,000—a pattern that is clearly discernible in other industrial countries.

In fact, on present trends, it is totally unrealistic to regard the manufacturing industry as likely to provide a significant source of new jobs in the coming decades. Where then can the requisite jobs be expected to come from? The answer is the service industries, and it is indeed they that in the last decade have provided most of the new jobs in the industrial world. Thus, in the U.S., between 1947 and 1970, employment in these sectors increased by 95%. This was only possible, however, because work in service industries was relatively labour-intensive. Unfortunately, however, it is becoming less so all the time. As Dollars and Sense points out, “Machinery is reducing supermarket clerks, bank tellers, teachers and telephone operators in order to increase output per remaining employee and avoid dependence on human labour.” The Bell system, they note for example, is planning to replace 33,000 operators by installing computerised switching and billing systems at a net annual savings to them of 390 million dollars.

If the service industries are also becoming automated, then they too will cease to be a source of new employment. For this reason alone, the Service Society, which we are told is to replace the Industrial Society, is an illusion. There is another, however, and that is that many service industries are non-productive (in the strictly economic sense of the term). I refer to education, social services, health services, etc. Most of these are paid for by the state and can only be financed from profits made by the “productive” sector of the economy. There is a limit, of course, to the amount of government expenditure that can be financed in this way. What is more, in Britain, where the government already spends 50% of its GNP, and in Holland, where it spends 60%, the limit may not be too far off. Economists do not appear to be too concerned by these considerations, for they assume that the automation of manufacturing (and presumably too of services) will give rise to so much wealth that people will no longer have to work a great deal. This notion is without any serious basis. The substitution of machinery for human labour has so far led to increased prosperity but there is no reason why it should continue to do so indefinitely. Up to now, capital inputs have been ridiculously cheap (petrol for instance at $1.50 per barrel). This is rapidly ceasing to be the case since many of the inputs are derived from non-renewable resources, whose price, as they become increasingly scarce, must rise even more steeply until a point is reached when it ceases to be economic to substitute them for human labour. At this point material prosperity must cease to rise; the industrialisation process must go into reverse and the demand for human-labour correspondingly increase. The notion of a leisure society is an illusion for another reason. People who work long hours in factories today have little opportunity for spending money. If they worked a 25-hour week, had six weeks a year holidays and retired at the age of 38, as some people suggest they should, then they wouldn’t be able to avoid becoming massive consumers of leisure services which they would only be able to pay for by working longer hours, thereby bringing the leisure society to a premature end.

Finally it is unlikely that a leisure society in the atomised society of today would be psychologically satisfying. Work, as I have pointed out, is necessary not only to provide money but to provide all sorts of psychological and social satisfactions. That is why unemployment is so intolerable; and that too is why leisure is likely to be intolerable. The example of the jet set is eloquent. Its members, who devote themselves exclusively to leisure, are as alienated as the unemployed in the most squalid of industrial slums. The incidence of alcoholism, drug addiction, suicide and even crime among its members is extremely high. In an industrial society, even in apparently ideal conditions, life devoted to leisure is intolerable.

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More Job Seekers

While, because of increased productivity, modern industry is providing ever fewer jobs, the number of people looking for jobs goes on increasing all the time. This is happening for a number of reasons. Firstly because of population growth. World population continues to increase at just under 2% per annum which means an extra 65 million people per year and hence a very large increase in the demand for new jobs. Another reason is that people who were previously employed as artisans or small farmers are being forced to seek paid employment. This trend is particularly significant in the Third World and is largely responsible for the massive increase in the labour force predicted for the coming decade, i.e., a 91% rise from 1,101 million to 1,993 million people between 1970 and 2000, according to the International Labour Office. In the industrial world, population growth has declined as has the rate at which the self-employed are entering the labour market. Immigration, however, especially in America, has increased the demand for jobs as has the very considerable rise in the number of married women who are now seeking employment—in the U.K., in 1911, only 9.6% of married women were wage earners but by 1971 the figure had gone up to 42.3%. There are many explanations for this. To begin with, women are being increasingly educated to fulfil the same functions as men. Also they are finding their men folk less dependable. More and more marriages end in divorce, and husbands are ever less good at making alimony payments on a regular basis. Possible the most important reason, however, is the increase in the cost of living which is partly, at least, due to the increased number of material goods required to satisfy basic biological and social needs and which one salary per family is no longer sufficient to provide.

A further trend making for increased unemployment is the growing mismatch between the skills provided by our educational system and those required by industry, and other employers. This “structural” unemployment, as it is referred to, is largely caused by the excessive rate of technological change.

There is another factor. Many people appearing on the unemployment register may not really be searching for jobs at all. As a result of social disintegration, many young people may have been deprived of a stable family and community and have become emotionally unstable and thereby incapable of submitting to the routine of a normal job. Because too of growing disillusionment with the industrial way of life they may prefer instead to try to make themselves independent of a socio-economic system with which they disapprove.

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The Difficulty in Achieving Economic Growth

We have seen that both manufacturing and service industries must provide ever fewer jobs. We have also seen that, on the other hand, ever more jobs will be required. It must follow that to mop up unemployment an ever higher rate of economic growth is now needed. Unfortunately, however, conditions are ever less favourable to economic growth. In Britain, at the time of the Industrial Revolution, conditions could not have been more favourable to it. It was then possible to obtain abundant cheap energy and resources from all over the empire. The environment seemed limitless in its capacity to absorb the waste products of our industrial activities. Vast empty lands were available from which food could be imported for the new urban masses and to which the inevitable surplus population could be consigned. Besides Britain at the time had no competitors; she was indeed the workshop of the world. It is unnecessary to point out how every one of these conditions is becoming ever less well-satisfied, and it is probably because of this that costs are increasing so rapidly today. The new inflation, in fact, undoubtedly reflects long-term rather than short-term maladjustments in the economic system. That is why it is compatible with a depressed economy and a high rate of unemployment giving rise to a totally new situation referred to in the U.S. as “stagflation.” In a sense we are encountering the “Limits to Growth” that Denis Meadows and his team wrote about, indirectly, i.e., via the price-mechanism, rather than directly, as he presumed we would.

A few studies have been made to determine what growth rate is required to mop up unemployment in different countries. In India, according to a recent OECD study, in order to meet the projected 3 % increase in the labour force a growth rate of 18% is required. If existing unemployment is to be wiped out within a decade the growth rate must be 30-35% per annum. Needless to say, this cannot conceivably be achieved. Indeed the Report concluded that the “eradication of general under-employment through the development of industrial employment is a practical impossibility in the medium term.”

Various ILO studies have repeatedly stressed,

“that there is not the remotest hope that Western technology, with its capital-intensive bias, can create the basis for ensuring employment to the over 184 million additional job seekers in India during the next 27 years leading up to 2000 A.D.”

The World Bank said the same thing in its 1972 Development Review.

“No imaginable rate of increase in industrial and service output,” the review concluded, “can absorb the expected supply of workers.”

The same principle also applies in a less acute form to the industrial countries of the West. In France, for instance, a leading economist from the Institut National de Statistiques et de Sciences Economiques (INSSE) has done a study for Roman Eisenstein of L’Express. It reveals that to provide the 300,000 jobs that are required every year to achieve full employment by 1982, an economic growth rate of between 10 and 11 % would be necessary in order to reduce unemployment to the levels to which people became accustomed in the late sixties. In Britain, Melvyn Westlake of The Times has calculated that to reduce unemployment to 700,000 by 1981, which is two years later than the government once hoped, would require the creation of about 1.9 million jobs—i.e., 380,000 jobs a year. This would mean an economic growth over the four years 1978-81 of about 5%, a rate that cannot possibly be achieved.

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Solutions

There are two ways of dealing with the problem. Either we try to accommodate as best we can the trends that are leading to the present intolerable rates of unemployment—which is roughly what governments are attempting to do today—or we set out systematically to reverse these trends. In the long run, this is the only real solution and the sooner we set about applying it the better.

The first trend that must be reversed is that leading towards increased productivity. Increases in productivity during a period of high unemployment are in any case illusory. They simply mean transferring the cost of sustaining people who have been displaced by the introduction of machines to society as a whole. Per capita productivity in the enterprise involved may increase, but not that of the country’s total labour force. It is indeed unlikely that investments in increasing productivity can be regarded as economic, even in the relatively narrow sense of the term, to a country as a whole if we add to their cost, as we should do, that of masking the resulting unemployment by all the devious methods resorted to by governments at present, and that of the unemployment benefits paid to the people who have been displaced by the machines.

The systematic reduction of per capita productivity by replacing large machines by smaller machines and smaller machines by people is inevitable if large scale unemployment, with the resulting social catastrophes, is to be avoided.

The next further trend that must be reduced is population growth. Once economic growth ceases, as it soon must do, the reduction in population growth must be one of the only means of increasing real wealth. The smaller the number of people, the greater the real resources, such as land, forests, rivers, water, etc., are at their disposal. The smaller too must be the problem of providing them with suitable employment.

Finally, everything must be done to reduce the labour force by bringing about those measures that will increase the number of the self-employed. To begin with, we must reverse those trends that are making it increasingly difficult for them to survive.

In Britain, for instance, mortgages are very difficult to obtain on a farm of less than about fifty to a hundred acres, because our bureaucrats have decreed that such farms are not economically viable. Government subsidies that are increasingly important to the farmer and small producer are, in some cases, only obtainable for an enterprise above a certain size. Small cheese producers, for instance, are not eligible for a Government subsidy on milk. All this must be changed, indeed reversed. If subsidies are required it must be to help the small man not the big one.

The reversal in the trend towards the replacement of people by machines will clearly improve the position of small enterprises. One of the main reasons for their plight today is that they cannot afford the very expensive capital inputs that, in current conditions, are required for survival.

Another reason is the high cost of living. A century ago people needed to buy few consumer products. Today, a motor-car, a radio, a television, a washing machine, a refrigerator and many other such devices have become necessities of life. The artisan and the small farmer, though they may lead a very pleasant life, are unlikely to earn enough to finance the acquisition of all these goods. If they want them, and they are being persuaded in a hundred different ways that they do, then they must seek employment in ever greater numbers.

This problem will be solved, partly at least, by the slowing down of economic growth, and eventually by the economic contraction that inevitably lies ahead. In the meantime, we should be setting out systematically to reduce the cost of living by reorganising our society and modifying our way of life in such a way as to reduce our dependence on so many expensive consumer goods that now artisans and small-farmers cannot afford and that soon few other people will be able to afford either. This means, above all, reconstituting the now largely disintegrated family and the equally defunct small community. Few domestic appliances and no convenience foods are required in a family in which the grandparents, the parents and the children cooperate in doing the household chores. Few capital-intensive devices are required for entertainment purposes in a living community with a highly developed social life, as opposed to a housing estate or a dormitory suburb.

How this can be achieved lies outside the scope of this paper. Suffice it to say that fiscal measures could contribute. In France, the one-salary family is partly subsidized. A tax deduction is obtainable to encourage la femme au foyer. Other such incentives could be devised to revitalise family life and communal life as well. Needless to say, such measures would only constitute the first step in an elaborate and highly integrated programme to transform the anonymous mass-society of today into a real, structured and self-regulated society, with all the many advantages that this would bring about.

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