How Jobs Destroyed Work: The Complete Edition (part two)

CHAPTER SIX: THE (INEVITABLE?) CORRUPTION OF FREE-MARKET CAPITALISM

From one perspective, what happened during the global financial crisis could be seen as either the failure of free market capitalism, or what invariably happens when it’s replaced with something more corrupt. After all, this is supposedly the system that creates a rising tide that lifts all boats, or at least all boats captained by honest folk who work hard. The fact that so many have found their lives involve increasing pressures coupled with decreasing rewards, regardless of whether or not they did everything like they were lead to believe they should, could be taken as evidence that something went wrong with the free-market ideal.

But others have a different perspective regarding free market capitalism. This perspective denies that the freedom implied in the term ‘free market’ refers to uncoerced, voluntary exchange resulting in appropriate, mutual gain for all participants regardless of where they may be positioned on the economic ladder. Rather, it is argued that the ‘freedom’ is the freedom to use whatever means possible in order to compete against each other, take what we can, and generally dominate, suppress and beat other businesses via whatever methods you can get away with.

In other words, while capitalism has helped improve life in some ways, it remains a fundamentally bigoted and elitist system that favours one group over another. This favouritism has little to do with the belief held by free-market zealots, that rewards always go to the manifestly worthy. Rather, they are directed toward the group who gamed the system for structural advantage. Unlike in previous cases of elitism and bigotry, classes such as gender, race, or religion have little to do with favouritism within the free market system. It is to do, instead, (as the Zeitgeist movement put it) “with a kind of forceful expedience and competitive mentality that pushes itself to the top of the class hierarchy, at the inevitable expense of others”.

An important question is whether the free market went wrong and was allowed to be corrupted by those who betrayed its principles, or whether the corruption is just what you get by following the logic of market competition and the commodification of everything including debt and state power. This could be seen as analogous to the question of whether Stalin was an accident or the inevitable consequence of running the communist experiment. A detailed investigation may be beyond the scope of this essay, but regardless of whether the free market became corrupted or whether it just evolved in predictable ways given its premises, we can see in the beliefs mentioned above why the worsening conditions brought about by the lean-and-mean model were tolerated as much as they were.

HOW LEAN-AND-MEAN WAS JUSTIFIED

Firstly, there is that belief, mentioned earlier, that money always flows toward the manifestly worthy. The implication of such beliefs is that, in order to have gained the most in free-market competition, your contribution to society must have been just as high. In other words, if a few are enjoying skyrocketing wage increases and bonuses, becoming billionaires in the process even as the rest of us experience deteriorating conditions, those few must have done something both important and helpful for society, making their wealth a just reward.

Such beliefs arguably do not coincide with the logic of the capitalist system. Recall that this is an inherently class-based system that divides us up into two groups: Workers who do most of the labour (both physical and mental) and who may remove their labour but have no right to a job; and the Owners, who choose who is employed, gain most from production but are not obliged to participate in production itself.

Under such a system, everything that really makes a positive difference to our lives- all the services, the problem-solving, the creative innovation- happens almost exclusively within the lower echelons of the corporate complex. It is those at the lower and middle runs of the economic ladder- blue- and white-collar workers- who actually produce wealth, only to see the fruits of their labour capitalized upon by those who exploit the mechanisms of the market. That’s why we call this system ‘capitalism’. This is not to deny that those who hold vast wealth worked hard, or are clever; it is just acknowledging that the hard work they engage in really has little to do with generating real wealth by solving society’s problems (such work being undertaken by those lower down on the economic ladder.) Instead, it involves manipulating and restructuring the market so that rewards are directed toward those who rigged the game, not to those who actually do the bulk of the problem-solving, engineering, and creative innovation.

Secondly, those employees who accepted increasingly harsh and unfair working conditions had a mind-set nurtured by three decades of management practices within the paternalistic model (see part four of this series if you want to know more about Paternalism.) They were prepared to do what was necessary to help their employer overcome current challenges, because they still believed there was such a thing as mutual loyalty. By the time it became obvious that the system was now one in which their class was exploited by the executives in the corporate hierarchy, many of those white-collar workers were trapped in economic conditions that restricted their ability to choose alternatives.

This brings us to another way in which jobs are not like work. Where work is concerned, provided you are working well and appropriately, your living conditions will improve. Appropriate work done well is always rewarded. But when it comes to jobs, you can do everything you have been lead to believe is right and yet experience deteriorating conditions because the system favours a class or group other than your own.

‘I’M ALRIGHT, JACK

The reality of the lean-and-mean model is that it allows the executives in the corporate hierarchy to receive a disproportionate share of the wealth while also forcing employees below the executive level to bare most of the costs of economic recovery. Over the period in which the lean-and-mean model rose to dominance, chief executives gained a 490% increase in annual compensation (ie salary, bonuses, stock grants and options.) This, remember, was during a period in which other workers had wage increases that barely kept up with inflation, or even found themselves financially worse off as they spent their retirement savings, accepted lower-paid jobs and other such measures, in order to meet household obligations.

During the 80s and 90s, the feeding frenzy of mergers and acquisitions meant that related ‘downsizing’ happened during periods of prosperity as well as downturns. One in every five white-collar employees spent less than 24 months in their job before getting fired, and their termination did not necessarily have anything to do with the quality of their work ethic. They were, instead, victims of a system that used layoffs as a blunt instrument of first rather than last resort, wielded by an executive class prepared to blame anyone other than themselves for inadequate results.

THE ENVIRONMENT OF FEAR

Destroying viable businesses and sacking good workers might sound like bad practice, but only if you cling to the belief that the free-market is a rising tide that lifts all competently-piloted boats. But, if you see it in terms of a system of competitive exploitation favouring one class at the expense of another, it actually makes sense. A business world in which there is little job security creates an environment of fear. The less secure your job is, the less bargaining power you have. Therefore, the more you can be pressured into taking on more labour for fewer rewards. By cutting wages, slashing benefits, and imposing longer working hours, a business is effectively saving money that could go toward the sort of things that boost stock prices, like bottom-line results or growth-orientated activities. The lean-and-mean model just doesn’t believe in wasting corporate earnings on employees, not if they can be coerced into working harder for less.

Is there coercion? That depends on what you believe. There are those who believe that there cannot be coercion in free-market economics because everybody is in a position to voluntarily accept or reject whatever terms of employment are offered to them. Of course they are free- it’s the ‘free market’! By this logic, the Dear Leader of North Korea must have been one of the most genuinely beloved rulers ever to have lived. He was, after all, the ‘Dear Leader!’. Maybe I am being unfair and forgetting that the free market ideal became corrupted by meddling governments. But I suspect it is more a case of those who strongly favour libertarianism acknowledging coercion when spoken of in the context of state power while being unable or unwilling to acknowledge the reality of economic coercion. But if the system has corrupted or evolved toward one akin to a game that’s rigged to favour one small group of players at everybody else’s expense, if one’s perception of the market is that of a highly insecure environment in which tenure in a job may be removed at any time, casting you with all the probable financial stresses that are part and parcel of a world of booms and busts back among the unemployed (hardly a group in a strong negotiating position in a world in which jobs are perceived to be scarce) then all these factors are very likely going to influence your decisions and offer an advantage to companies seeking to keep working hours high and employee rewards low. According to this perspective, general relative poverty is not really a tragedy to be overcome, but rather a positive condition for the owner classes, since it ensures economic coercion resulting in cheaper labour. Among those who lost jobs during the years 1995 to 1997, one in every four were paid at least 20% less when re-employed.

TEMPTED BY THE STOCK-OPTION CARROT

Not surprisingly, given that employee earnings were barely keeping up with inflation or actually deteriorating, many found that the only way in which they might share in their company’s rewards was through stock market. This only increased the financial sector’s power to prioritise the bottom line at the expense of everybody below the executive level. As ‘Marty’, an art designer at one of America’s largest publishing companies remarked:

“We’re all devouring ourselves. We all own stocks, and as shareholders, all we care about is profits. So we’re the ones who are encouraging the conditions that make our lives so awful”.

Under the lean-and-mean model, businesses use vestiture as a carrot-and-stick to both tempt and beat employees into working harder. Recall that this model really doesn’t want to reward those below the executive level in the corporate hierarchy if it can possibly get away with it. In the case of becoming invested, the lean-and-mean model provides a strong incentive for companies to set investing requirements high, since that invariably increases the likelihood that employees will be ‘downsized’ before they meet those requirements, enabling those funds to be recaptured. Limited, for example, pegged tenure at seven years. The rate of forfeitures was around 35%.

Many white-collar employees put up with unbelievably harsh job demands in order to participate in stock-option plans that permitted employees to buy stocks and shares at discounted rates, but only if they remained employed long enough to gain ‘vested’ ownership of the options. A few people did indeed gain fortunes, becoming ‘Microsoft Millionaires’ or its equivalent in high-tech and financial sectors. But the working conditions were so intense that many more just burned out before that reached that goal. Furthermore, it was a goal that often receded away from them, like a rainbow supposedly locating a pot of gold. “I know it's ridiculous”, confided one software expert in ‘White-Collar Sweatshop’, “but I haven’t looked for another job because my boss keeps telling me he’s going to give me options sometime soon. It’s very hard to leave because you feel so close...even though stock options themselves are no guarantee that you’ll make money, and the promise of stock options is even less certain than that”.

The dream people like him were sold was that if every employee worked to the utmost of their abilities, every single moment of every single day, they would surely be rewarded enough to compensate for participating under such difficult and demanding conditions. But this was a naive belief because they were devoting time and energy to uphold a system that commodified their labour power and rerouted rewards to executives who, quite simply, were not held to the same inflexibly high standards. The rule that, in times of both recession and prosperity, employees should tighten their belts and accept reduced benefits for the good of the bottom-line does not apply at the executive level, although it’s hard to say why not. At least, it is difficult to justify but not explain if you realise that, in a plutocracy, there is a revolving door between corporate executives and the political/financial systems that determine CEO pay rates and bonuses.

According to Chrystia Freeland, author of ‘Plutocrats: The Rise of The New Global Superrich and the Fall of Everyone Else’:

“You don’t do this in a kind of chortling, smoking your cigar, conspiratorial thinking way. You do it by persuading yourself that what is in your personal interest is in the interest of everybody else….And what I really worry about is, there is so much money and power at the very top, and the gap between those people at the very top and everybody else is so great, that we are going to see social mobility choked off”.

That yawning gap consisted not just of the vast differences in earnings between those at the top of the corporate hierarchy and everybody else, but also in terms of the standards one must meet in order to gain reward in the lean-and-mean model. The familiar spin put on stratospheric executive pay is that it is just reward for those who shoulder the responsibility for steering such mighty corporate ships toward higher profits. But this is a lie, because these people seem to be richly rewarded regardless of how well the company does under their leadership. Sometimes, fiddling the books is undertaken so executives continue to be lavishly rewarded. For example, a fair number of companies simply repriced their stock options to lower levels in the event of declining shareholder value, enabling their executives to earn equity-related profits whether the company was doing well or not.

Warnaco’s Linda J. Wachner received a total of $73. 4 million during a period in which the company lost $32 million after taxes. At&T’s return on equity dropped by nearly 25% from 1995-1997, but CEO Robert E. Allen still took home nearly $21 million in all. That must have pleased workers whose lives worsened under management dictates like ‘there’s no free ride’.

Jack Stack, Chief Executive, Springfield Remanufacturing Corporation, was scathing in his criticism of executive behaviour within the lean-and-mean model:

“I have no patience with CEOs who make excuses for layoffs, who say they’re cutting jobs only to make the company more competitive in the market, to protect the interests of shareholders...When downsizing is the only choice, it’s a sign of how badly management has failed, and the people who get hurt are invariably those who had nothing to do with creating the problems in the first place”.

Those who get hurt are those who had nothing to do with causing the problems. Work is not supposed to be like that. Penalties are supposed to go to those who do bad work; rewards to those who do good. This rule often does not apply in the world of paid employment, a world in which ‘boss bears’ have rigged the system in order to favour their class at the expense of everybody else. For the most part, employees do not go to work at all, at least not to ‘work’ as I have defined it. They are instead forced, by economic coercion and social conditioning, to submit to labour within a post-modern slavery system that’s held in place by a value orientation of ‘competitive freedom’ susceptible to oppression, structural advantage, and abuse.

In the last three parts of this essay, we have seen how the Paternalistic Model nurtured a generation of employees who believed- justifiably so, at the time- that the largest corporations cared about them above and beyond their commodification as labour power; how declining economic conditions in the 80s lead to an attitude that these were dinosaur companies bloated with bureaucracy and complacent workers, and how the lean-and-mean model aggressively upped the pressures imposed on white-collar staff who believed- until it was too late to change- that the business world still operated under conditions of mutual loyalty. This has been a macroscale look at the world of employment can betray the promise of work: That reward comes to those who work well and hard in productive effort. Next, we shall investigate how technology is used to devalue labour within the hierarchically fascist dictatorships that are modern businesses.

CHAPTER SEVEN: MANAGEMENT, TECHNOLOGY AND THE DETERIORATION OF WORK

Work combined with technology can make for a wonderful union. Described by W. Brian Arthur as ‘a reprogramming of nature’, technology provides us with new tools and capabilities that can improve our lives and broaden our horizons. It was technological advance and the rise in productivity it enabled that lead to the likes of Keynes to predict a marked reduction in labour along with a rise in living standards as the 20th century marched toward the millennium.

But technology is a double-edged sword. Depending on how it is used, it can be a source of ill as well as good. When it comes to jobs, technology can be used to cause the deterioration of work.

To understand why anyone would want to do such a thing, one must understand why businesses exist in the first place. Their only real purpose is to generate wealth for their owners. They do not exist in order to provide work for anybody, nor do they exist to produce anything for anybody other than the owners. Rather, both of those things are what businesses have traditionally had to do in order to achieve their one and only true purpose.

Because their one and only purpose is to enrich their owners, businesses are motivated to increase sales and lower costs. One of the commodities that count among a business’s costs is labour power. Work that achieves that highest of aspirational standards- the ‘calling’- more than likely requires judgement, flexibility, challenge, and autonomy for employees who occupy such positions. The problem is, employees who possess the skillsets such work requires tend to be in a better bargaining position and can therefore negotiate greater benefits compared to less autonomous and creative labourers. Since employers would prefer to pay their workers less so that they can gain more, they strive to reduce the amount of judgement, flexibility and challenge required of their employees, thereby allowing them to hire cheaper labour.

DESKILLING MANAGEMENT

In “The Electronic Sweatshop”, Barbara Garson explained the techniques which achieve that objective. “A combination of 20th century technology and 19th century scientific management [turn] the office of the future into the factory of the past”. In other words, employers seek out technologies and management techniques that will enable production to be arranged in such a way so that minimum skill is required to do the job. The goal is to make the workplace smarter so that employees will not need to be as autonomous, flexible and creative as they otherwise would need to be. Put another way, bosses are motivated to move control away from the managed and toward the managers. In ‘What Do Bosses Do?’, Stephen Marglin wrote about how the assembly-line division of labour gives control to whoever constructs the assembly line while simultaneously removing it from whoever actually works on it.

The more employers rely on production-line techniques, the more employment resembles the factories of the past. Take service-based jobs for example. Employers in call centres are micromanaged, provided with such detailed scripts they don’t really need to know anything about the product or service they are talking about. Airlines have standardized reservation. American Airlines, for example, divided a two-minute reservation conversation into segments of ‘opening’, ‘sales pitch’, ‘probe’ and ‘close’. A set of interchangeable modules was provided for each segment. As Garson explained, “an acceptable conversation could now be put together like a mix and match outfit for a Chinese dinner- one from column A, two from column B”. This standardization of the reservation conversation meant that the airline needed less dependency on the agents’ own experience and judgement. That made them more easily replaceable, which lowered their bargaining power, which meant their labour could be hired at lower cost. It would not surprise me, in fact, if such employers were replaced by artificial intelligence by now, something which is always a possibility if work is dumbed down enough and AI becomes smart enough.

The reader is reminded that while techniques to reduce judgement, flexibility and challenge in work saves money for the owner classes by lowering the cost of labour, it also reduces engagement and meaning and so prevents such work from being a ‘calling’. Consider this extract from an application letter written by an aspiring teacher:

“I want to manage a classroom where children experience the thrill of wonder, the joy of creativity, and the rewards of working hard. My objective is to convey to children in their formative years the sheer pleasure in learning”.

Well, that certainly sounds like the kind of employment that offers the chance to exercise one’s creativity and gain tremendous satisfaction from work, doesn’t it? Alas, the actual job was rather different. School administrators had broken teaching down into several dozen observable behaviours and then set about micromanaging teachers. For example, another teacher was required to use a script that was twice as long as the book she was reading to her Kindergarten class. She was not at liberty to invent lessons for teaching, say, the letter ‘B’ to her pupils; instead she had to follow a script which laid out, in excruciating detail, every step of the lesson from where she should have the class sit (“assemble students on the rug”) to what she should say to them (“Say, ‘listen very carefully as I read the story’”).

In every case, the overall objective is the same. If the system can be made smarter, that reduces the skills employees need. That makes them cheaper to train, less special, easier to replace and therefore more expendable. The more technology and management techniques can decrease the importance of human judgement, discretion, creativity, autonomy and flexibility in any process, the more owners are able to capture a share of their company’s income.

CHAPTER EIGHT: THE TECHNOLOGICAL PANOPTICON

(Image from Pinterest)
Some observers, among them Noam Chomsky and Jacques Fresco, have noted how corporations tend to have the same organizational structure as fascist dictatorships. In other words, there is a strict hierarchy that demands tight control at the top and obedience at every level. Granted, there may be a measure of give-and-take, but the line of authority is usually clear. Others, perhaps most notably Michel Foucault, have argued that prisons and factories came in at more or less the same time, and their operators consciously borrowed each other's’ control techniques.

For example, in the late 18th Century, social theorist Jeremy Bentham designed the ‘panopticon’. ‘Pan’ means ‘inmates’ and ‘opticon’ means ‘observed’ and so the panopticon was a prison designed in such a way that all inmates could be kept under surveillance by a single watchman. True, it was impossible for a single observer to keep an eye on all inmates at once, but the panopticon was designed in such a way as to make it impossible for any inmate to know if he was being watched or not. The inmates only knew that it was possible that they could currently be under surveillance. Bentham’s belief was that, under such conditions, inmates would effectively mind their own behaviour.

So what became of the panopticon? They are everywhere, only we now tend to refer to them as ‘offices’. Many a white-collar employee (those below the executive level, at least) spend their in-office hours in a cubicle, most likely of a one-size-fits-all, institutional-gray design that can be set up, reconfigured, and moved at the whim of those higher up the line of authority: A constant reminder of the employee’s own lack of security and importance to the corporation. Moreover, cubicles are (in the words of one employee) “mechanisms of constant surveillance”, lacking doors and usually arranged so that managers can spy on whoever they like at any time. The employees are usually made to work facing a wall, so cannot know if they are being watched unless they look over their shoulder. The message such an environment sends out is clear: We can see what you are-or are not- doing. So work harder or we’ll replace you.

With IT technology, bosses have access to surveillance possibilities that Bentham can hardly have imagined. There is, for example, the ‘Investigator’ program. This software can be installed, without the employee's knowledge, on the company’s PCs. It records everything the employee does- every mouse-click, every keystroke, every command. Through appropriate programing of their internal computer networks and security systems, businesses have the power to impose constant surveillance on their employees, tracking precisely when they start, when they finish, how often and for how long they take a toilet break, and so on. If they so choose, bosses can adjust the ‘Investigator’ program so that any time an employee types an ‘alert’ word (‘union’, say) the document in which it appeared will be automatically emailed to the appropriate supervisor. Given all that, is it any wonder that Bob Black was moved to write:

“There is more freedom in any moderately de-Stalinized dictatorship than there is in the ordinary American workplace...The boss says when to show up, when to leave, and what to do in the meantime. He tells you how much work to do, and how fast. He is free to carry his control to humiliating extremes, regulating, if he feels like it, the clothes you wear or how often you go to the bathroom...He has you spied on by snitches and supervisors”.

BRING ON THE TEMPS

By creating environments that constantly monitor worker behaviour and reduce, so far as is possible, reliance on employee skillsets, businesses increase the commodification of labour power, creating a just-in-time workforce that can be increased or decreased with all the impersonal efficiency with which a business may manage its inventory. As might be expected, this has lead to an increase in the number of temporary employees. In the mid 1980s, there were around 800,000 temps employed daily across the US. By the late 1990s, that number had increased fourfold.

In labour terms, temporary employees are often indistinguishable from their full-time counterparts. The job functions they perform are the same, and they frequently put in the same 50, 60, 70 hour schedules expected of noncontingency staff throughout the high-tech sector. What really sets them apart from the full-timer are the benefits to which they are- or rather are not- entitled. While agency fees mean temps are more costly than full-time staff in terms of their salaries, they can save up to 33% of an employee’s paycheck, thanks to those skipped benefits. The benefits they are not eligible for are often discounted-stock-options or corporate retirement plans. As one Microsoft temp put it:

“People who started at the same time as I did are cashing in their options and paying for their houses in cash...I’m still paying $200 a month for healthcare”.

The advantages to business in hiring temps over full-time staff does not just consist in saving costs through denial of benefits. A workplace heavy on contingent workers has the added bonus of creating an environment of fear. We saw earlier how office floorplans that rely on quickly reconfigurable cubicles underscore the precarious, temporary nature of employment within the lean-and-mean model, and this is only enhanced as more job categories get converted to contingent status. The underlying tension created by workplaces such as these means full-timers are less likely to make demands upon management and more likely to submit to more labour for fewer rewards.

THE MOBILE PRODUCTION LINE

Here, too, technology helps business while negatively affecting workers. Blue-collar workers have long known the monotony of working on production lines that micromanage every aspect of the working day but they were at least able to walk away from such dehumanizing environments at the end of their shift. The white-collar worker in the modern IT sweatshop is not so fortunate. Because white-collar employees can be issued with web-enabled company phones, laptops and other such devices (perhaps loaded with software that can surreptitiously spy on them) businesses now have the ability, in effect, to set up portable assembly lines wherever they please, be it in former recreational places or private homes. This results in what Jill Andresky Fraser called ‘Job Spill’- the phenomenon of one’s job demands growing and taking over more and more of one’s ‘out-of-office’ existence. So, not only can smart and spy technologies enable employers to create efficient workplaces that can cut down on the quality and quantity of staff they employ, there is also the opportunity to squeeze more labour out of the remaining staff (‘voluntarily’, of course, if you ignore the coercive pressure imposed by harsh corporate and financial conditions). As Fraser put it:

“The balanced and secure 9-5 work lives of their parents’ generation belongs to a utopian past...they struggle to fulfil job demands that require them to work after dinner and during lunch hours...on Saturdays and Sundays...during summer or winter vacations...while waiting in line at movie theatres”.

As technology and management techniques reduce or eliminate the judgement, flexibility, and challenge work needs to become a calling, we can perhaps explain why many employees feel they have ‘bullshit jobs’- that is to say, labour that seems to perform no beneficial function, either for the person doing it or society. ‘The Economist’ explained how the complexity of today’s economy has compelled businesses to impose production-line techniques at ever higher-levels of the professional ladder. In the case of much white-collar labour:

“You end up with the clerical equivalent of repeatedly affixing tab A to frame B: Shuffling papers, management of the minutiae of the supply chain and so on. Disaggregation may make it look meaningless, since many workers end up doing things incredibly far-removed from the endpoints of the process”.

Now, ‘meaning’ and ‘boredom’ are subjective states of mind. Following Sartre, we might say that the individual is always free to find meaning in what they are doing. I think there’s a lot of truth in that, but I also think it’s fair to say that, for most people, finding meaning while doing their job happens in spite of- not because of- what they are doing. This is because so many of us end up employed in jobs that have had autonomy and creativity designed out of them in the interests of reducing the bargaining power of employees so the executive classes can take advantage of economic coercion and grab a larger slice of the pie.

CHAPTER NINE: HUMAN NATURE (?)

There is this commonly-held belief that there are people who ‘don’t want to work’. I find it hard to believe that any such person really exists: that there could be anyone who would wish to avoid productive activity that is meaningful, enhances one’s talents and improves quality of life. But, of course, when people say of others that ‘they don’t want to work’, what they always mean is that some people would rather not submit to paid employment unless forced to. If employers strive to reduce or eliminate the very qualities work needs to become a calling, though, is it any wonder if people turn their noses up at such labour? Who would willingly submit to a job that has had engagement designed out of it and is performed primarily for the enrichment of strangers?

‘NATURE’ IS UNLIKE ‘HUMAN NATURE’

At this point, it may be worth uncovering an important way in which ‘human nature’ differs from ‘nature’. Nature is in no way influenced by our theories regarding its workings. For example, it does not matter how many people believe nuclear fusion powers the Sun, nor how fervently this belief is held. Nature either does power stars using fusion, or it does not. What we believe has got nothing to do with it.

But human nature can be influenced by our theories of human nature. How? If we believe certain things about people, and society is designed in such a way as to amplify those traits, people may well be influenced to turn out that way. If we then take how people happened to turn out in the society we created as proof that our theories of human nature are correct, that may further persuade us to build societies around such beliefs. We have created a self-fulfilling prophecy.

Take the belief that people don’t want to work and that only wages motivate us. As we saw in part one, Adam Smith believed this was the case. Now, suppose that this Smith chap is influential enough to have his beliefs adopted by others. Business owners, fearing the disastrous consequences of laziness and inattention, set about designing systems to manage people based on such beliefs. Industrialists, believing workers are only motivated by pay, construct assembly lines that reduce work into essentially meaningless units.

What is happening, then, is that workplaces are being designed to focus on efficiency only, counting on the pay to compensate. If we put people into environments such as these, it would hardly be surprising if they acted in stereotypical ways predicted by their superiors’ theories of human nature: Finding no meaning in the labour they are performing and having no reason to do such a job apart from needing the wages. And now that feedback loop of self-fulfilling prophecy really kicks in. Discretion, autonomy, and creativity have been designed out of work, making it hard to find meaning and engagement in what one is doing. Therefore, people feel less satisfaction and chances are that if they feel a lack of satisfaction they will not perform very well unless pressured to. As they work less well absent coercion from superiors, this reinforces the belief about human nature, and so the system is reconfigured to impose even tighter controls and take away even more autonomy. As Barry Schwartz wrote in ‘Why We Work’:

“The concept of ideology, and the self-fulfilling feedback loops that ideology can give rise to, helps explain, I think, why it is that most workplaces have come to be dominated by excessive reliance on close supervision, routinized work, and [monetary] incentives”.

MADE TO OBSESS OVER MONEY

If there is more than one reason to tempt those with power to design workplaces along certain lines, that obviously increases the likelihood of such practices being adopted. In the case of reducing or eliminating the qualities of work that make it a calling, the advantage (to owners, at least) is that workers need less training, less skill, and are therefore more expendable. That enables owners to squeeze more value out of labour, as the reduced bargaining power that results means the working classes are more likely to ‘agree’ to longer hours and fewer benefits, knowing full-well how much easier it is for their superiors to replace them and throw them on the scrapheap of unemployment. During the rise of the lean-and-mean model, a time when lack of commitment to employees was regarded as something business should boast about and aspire to, and when the benefits of prosperity were largely monopolised by those at the executive level and professional investors, workers at lower scales of the hierarchy increasingly adopted similar attitudes to those of their superiors, as self-protection, cynicism, and preoccupation with short-term material rewards proliferated. As Frazer put it:

“A new breed of careerists began to multiply, a group that felt as little attachment to their jobs or employers as the era’s day-trading investors had for the stocks and shares they bought and sold at a rapid-fire rate”.

Why wouldn’t they feel that way? After all, the workplace had commodified their labour power to the extent that hiring and firing was proceeding at a similarly frenetic pace, and not for their benefit but rather to increase the paper-profits of executives who were not beholden to the same merciless standards. People, looking around for missing meaning, received plenty of advice on where it might be found: Through the consumption of material wealth. Advertisements and other forms of propaganda were insistent that satisfaction and happiness could be bought on credit.

But there is more to this sorry tale than just individuals seeking meaning by maxing out their credit cards. We are encouraged to believe that if individuals get deeply into debt it is all down to their own reckless behaviour. But the fact is we are all in debt regardless of how prudent we may have been. This is because we are now in a situation in which entire countries are mired in debt and when their governments bail out banks that are too big to fail by engaging in massive deficit spending, what this amounts to is the stealing of future generations’ prosperity. Also, according to David Graeber, when it comes to personal debt:

“Very little of this debt was accrued by those determined to find money to bet on the horses or toss away on friperies. Insofar as it was borrowed for what economists like to call discretionary spending, it was mainly...to be able to build and maintain relations with other human beings based on something other than sheer material calculation...most ordinary Americans- including Black and Latino Americans, recent immigrants, and others who were formerly excluded from credit- have responded with a stubborn insistence on continuing to love one another. They continue to acquire houses for their families...insist on continuing to hold weddings and funerals, regardless of whether this is likely to send them skirting default or bankruptcy...Granted, the role of discretionary spending itself should not be exaggerated. The chief cause of bankruptcy in America is catastrophic illness; most borrowing is simply a matter of survival (if one does not have a car, one cannot work); and for most, simply being able to go to college now means debt peonage for at least half of one’s subsequent working life”.

Graber summarised the plight of the blue and white collar worker:

“One must go into debt to achieve a life that goes in any way beyond sheer survival”.

When he says ‘one must’ he is not referring to any law of nature but rather a consequence of how we have allowed our economy to develop. The role money plays in destroying work will be our next topic.

CHAPTER TEN: “INDENTURED SERVANTS TO A RULING CLASS OF FINANCIAL NOBILITY”

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When it comes to the topic of how money can destroy work, we encounter a problem. Such a topic really calls for an investigation into what money actually is, along with the history of empire building, trade, banking and finance and the various actions, both well-meaning and exploitative in intent, which caused money to evolve into the form it now takes. Such an undertaking calls for a book in and of itself, and as such we cannot do full justice to the role of money in destroying work here. Rather than attempt a comprehensive account, I want to focus on a few things: The commodification of debt, market efficiency, and extrinsic versus intrinsic value.

JUSTIFYING PRIVATE PROPERTY

In explaining the commodification of debt, one might select as a starting point the 17th century. The reason for choosing that century over another has to do with that being the period in time in which the ideas that underpin capitalism were put down in writing.

If one belief can be said to be of prime importance to capitalism, it would have to be the concept of private property. The problem is, the Earth and its resources do not actually belong to anyone. Such a problem was resolved in the past by asserting that divine power had set up rigid caste systems, with everybody assigned their place from birth. But such assertions were not persuasive enough for more rational minds. Another justification was needed.

In 1689, in chapter five of his Second Treatise of Government, John Locke attempted such a justification. Locke’s line of reasoning was that commodities hardly ever come in a form where they can be obtained without effort. Tin must be mined, crops must be sown, land that is to be built on must be made fit for such a purpose. So why not say that whoever performs such labour may lay claim to the end product?

“The labour of his body and the work of his hands, we may say, are strictly his. So when he takes something from the state of nature has provided and left it in, he mixes his labour with it, thus joining to it something that is his own; in that way, he makes it his property”.

Such an argument fits nicely with my definition of work, because it entails a person undertaking mental and physical effort that leads to reward. Locke argued that the individual was entitled to work to obtain all the reward he or she could make good use of:

“Anyone can, through his labour, come to own as much as he can use in a beneficial way before it spoils; anything beyond this is more than his share and belongs to others”.

Again, all reasonable-sounding points: Work to acquire all that you can use, but use all that you acquire. Do not over-hoard, for in doing so you are taking resources that others may have more use for.

AH, BUT WITH MONEY….

However, in the very same book, Locke made another statement that undermines his argument concerning labour and property. He wrote:

“The one thing that blocks this is the invention of money, and men’s tacit agreement to put a value on it; this made it possible, with men’s consent, to have larger possessions and to have a right to them”.

We have already seen how market logic commodifies labour and self-interest adjusts negotiating positions such that the owner classes may impose conditions that maximise their benefits while minimising the reward due to the working classes. The power that money has to commodify labour brings the statement ‘anyone can, through his labour, come to own as much as he can use’ into doubt. After all, if I have money, and I pay other people to build me a house, whose labour is it that is being mixed with the resources used up in such a property? Not mine. I have not lifted a finger, other than to write a cheque.

Now, at the time when John Locke was writing, just about everybody was something of a producer. That being the case one could claim that whoever had money must have mixed their labour with it (although you would have to ignore the reality of inheritance connected to earlier empiric conquests, feudalism, or state monopolies of mercantilism to believe it is true in all cases). This kind of reasoning may sound acceptable to people, most of whom are used to striving to obtain even modest amounts of income. But capitalism’s drive to commodify everything and lower costs would further undermine such belief.

THE CREATION MYTH OF MONEY

If you ask somebody to visualise money, chances are that they will picture a physical object, like a dollar bill or an English penny. There is a popular belief that before money existed, people relied on systems of barter. Such systems would have fallen foul of the ‘double coincidence of wants’: For a barter transaction to take place, I must want what you have, and you must want what I have. Some commodities were more likely to be accepted, and people began using these as intermediaries. The word ‘salary’ is derived from ‘salt’, so presumably people were once content to be paid in salt because they could be reasonably sure of it being exchanged for something more useful. Over time, we converged on a commodity that was used pretty much exclusively as a medium of exchange; something like coins. Money was born.

This story, by the way, is fictional. Anthropologists have been searching for the fabled land of barter, a land in which people act just like today only with money removed, and found no evidence that it ever actually existed. That is not to say that nobody ever bartered. Rather, the evidence points to no actual commonly-used system of the form ‘I will swap my four eggs for your beef steak”. If you read economic textbooks, you may note how they all use imaginary examples of a barter-based economy. True, they may be based on real-world communities (‘imagine a tribal village…’, ‘imagine a small-town community…’) but they are never examples drawn from historical fact.

Quite simply, this tale that goes ‘in the beginning there was barter, and it was darned inconvenient so money was invented’ is capitalism’s creation myth. Most economists retell it, and it is a lie. Why perpetuate such a fantasy? David Graeber has argued that it is necessary to believe this is how money came into being, because it justifies arguing that economics is “itself a field of human inquiry with its own principles and laws- that is, as distinct from, say, ethics or politics”. Once you accept that, it follows that property, money, and markets existed prior political institutions and that there ought to be a separation between the State and the economy, with the former limited to protecting private property rights and guaranteeing the soundness of the currency (some go further and say the government should be limited to protecting property rights only). In actual fact the emergence of markets and money has always depended on the existence of the State (whether markets and money will continue to depend on the state, regardless of technological development, is another matter.)

A full justification of the accusation that the most commonly-told story of money’s creation is a myth is beyond the scope of this essay (those who wish to consider the evidence should read ‘Debt: The First 5000 Years’ by David Graeber). Whatever the real evolution of money was, we undoubtedly did arrive at a situation in which coins (usually gold or silver) became the ubiquitous medium of exchange. But the drive to reduce costs was not content with money remaining as a physical commodity. If something else, some non-physical thing, could be accepted as ‘money’, that would enable a marvellous ability for whoever gained control of such ‘money’: It would be possible to created any amount of the stuff out of nothing.

DEBT-BASED CURRENCY

What could possibly be accepted as a non-physical form of money? In a word: Debt. We are still lead to believe that money is a physical commodity. Documentaries and news reports invariably depict money in the form of paper notes and coins, but money of this kind actually represents a tiny percentage of currency in use today. The vast majority of money, 95% or more, is created out of nothing by the banking system. More precisely, it’s created out of the promise to pay. Whenever anybody takes out a loan, the bank does not lend out money it already has. Instead, the digits are simply entered into the borrower’s account, and hey presto, the money is there.

Explaining in detail the mechanisms by which money is created out of debt, and how the banking system is able to get away with something like ‘printing money’ which is fraud if done by anyone else, is sadly beyond the scope of this essay. Those who are interested to know more might want to read books like ‘The Creature From Jekyll Island: A Second Look At The Federal Reserve by G. Edward Griffin or ‘Modernising Money: Why Our Monetary System Is Broken And How It Can Be Fixed’ by Andrew Jackson and Ben Dyson. Here, though, I want to focus on an aspect of the system that is surrounded by a lot of misunderstanding: The application of interest.

INTEREST

Whenever money is borrowed, it typically has to be paid back plus accrued interest. For example, if I borrow £10,000, at 9% interest I must pay back £10,900. Now, the banking system only creates enough money to pay back the principle (ie the original £10,000) not the interest. Therefore, the total amount of money in existence is insufficient to repay all loans plus interest.

This has lead some to conclude that our-debt-based, interest-bearing currencies must lead inevitably to growing debt. There simply is no way for all the money plus interest to be repaid, other than to borrow the extra amount. But that extra also has interest charged. Therefore, the more we borrow, the more we have to borrow, in a never-ending spiral of growing debt.

There is, however, a way to pay back more money than actually exists. To see how, we can turn to a simplified example. Imagine that Alice and Bob live alone on an island. Bob is in possession of a pound coin, the only money on the whole island. Alice asks to borrow the pound, and after interest is added she must pay back £5. How can she do that? She can submit to paid labour. She paints Bob’s fence, and earns £1 salary. She hands that £1 over and pays of a part of her debt. Next day she prunes Bob’s roses, and receives the same £1 she was paid as wages yesterday. Again, she hands it back as payment for part of her interest-bearing debt. This revolving-door process of money handed back and forth as wages and repayment can continue until the debt is paid off entirely.

The same principle can apply in the real world. Say a bank loans £10,000 at £900 per month and that £80 represents interest. That interest is spendable money in the account of the bank. The bank decides to hire a cleaner, and the result is not all that different from the simplified case. Nor do you have to literally seek employment at the very branch of bank which you borrowed money from. So long as there is no requirement to repay everything at once, so long as the money needed to pay interest is spent into the economy, and so long as there are wage-paying jobs, it is possible to repay debt plus interest even though the total amount of money is never enough to cover all the money owed.

Another popular idea, in marked contrast to the previous belief of absolute shortage, is the idea that since banks spend interest charges as operating expenses, interest to depositors and shareholder dividends, there is in fact enough money released back into the community to make all payments. But this is an oversimplification that rests on the assumption that interest-bearing money is always spent into the economy, never lent at interest or invested for gain. In reality, there are a significant proportion of non-bank lenders, and if they manage to capture some of the money needed to retire the loan that created that money, the original loan cannot be retired. Beyond that there is a cultural expectation that money should generate more money- not through productive effort but through mere investment for personal gain.

The theory that there is always enough money spent into the productive economy to pay off interest has to be true 100% of the time. But that cannot be the case when the money needed by borrowers in everyday productive economics is instead moved ‘upstairs’ to play in a casino world where players essentially gamble on how money moves through financial systems. For example, the volume of trade on the world’s foreign exchange markets in just one week exceeds the total volume of trade in real goods and services during an entire year. This money is in continuous play by speculators hoping to make windfall profits on currency fluctuations; it is money circulated for no reason and no productive outcome, other than to make more money. Nowhere in our system is there any restriction on re-lending money or investing it for personal gain in the casino economy that is, arguably, completely auxiliary to the real, productive economy. It stands to reason that every time interest is added to money that already bears an interest charge (as happens when secondary lenders capture such money) and every time money is taken out of circulation in the real, productive economy, that increases the pressure on the system to repay the debt.

Producers may respond by increasing sales or raising prices. Consumers may meet the demand by taking on an additional job or paying off debts over a longer period of time. Governments may respond by raising taxes. But each tactic comes with possible negative consequences. For producers, competition for sales usually entails lowering prices, a move that necessitates even more sales and possible overproduction and saturation of the market. Increasing taxes drains money from the productive economy, thereby reducing the collective ability to pay taxes, which then necessitates deficit spending and additional interest charges. Competition for jobs lowers wages, lower wages means less consumer spending, and paying interest over longer periods adds enormously to the amount of interest owed.

WHO BENEFITS?

The truth, regarding the affect that interest has on our lives, lies somewhere between those opposing extremes in which the money supply is believed to be in absolute shortage on one hand, and always available on the other. In principle, the money could be made available provided it were always spent into the real, productive economy, but it isn’t. And the result- fuelled in part by the commodification of debt and what some call the ‘money sequence of value’ (meaning systems that do nothing except turn money into more money)- is increasing debt, and people finding the struggle to keep themselves afloat becoming harder as the system plays out.

So who benefits from a crazy system like this which causes debt to grow and grow? Those who control the money, that’s who. Remember: banks profit primarily from interest-bearing debt. As G. Edward Griffin put it:

“No matter where you earn the money, its origin was a bank and its ultimate destination is a bank...this total of human effort is ultimately for the benefit of those who create fiat money. It is a form of modern serfdom in which the great mass of society works as indentured servants to a ruling class of financial nobility”.

I have defined work as physical or mental effort that is intrinsically meaningful and directly connected to a reward. I would argue that any work that is directly connected to a reward will necessarily be intrinsically meaningful. A beaver does not construct a lodge for no good reason. Work done for the purpose of rewarding yourself is a great thing, but how many of us can honestly be said to be ‘working for ourselves’? The so-called ‘self-employed’ cannot be said to truly work for themselves if what they are mostly doing is paying off debt. They and anyone else in that situation are working for the banks or the state (whoever you think controls fiat money). They have jobs, but they don’t have work. They are, indeed, indentured servants to a ruling class of financial nobility.

WIPING OUT DEBT DESTROYS DEBT-BASED CURRENCY

If money is created out of debt, one may ask if money is destroyed as debt is repaid. The answer is yes. In 1864 King Henry II borrowed £1, 200, 000 from a consortium of bankers. In return for the loan the consortium was given a monopoly on the issuance of banknotes, which basically meant they could ‘monetize’ the debt and advance IOUs for a portion of the money owed by the king. The bankers were able to charge the king 8% annual interest for the original loan and also charge interest on the same money to the clients who borrowed it. So long as the original debt remained outstanding this system could continue and, in fact, it remains unretired. It cannot be fully paid off because if it were Great Britain’s entire monetary system would cease to exist.

Mariner Eccles, one-time Chair of the Federal Reserve, agreed that money is destroyed as debt is paid off in a debt-based system:

“If there were no debts in our monetary system, there wouldn’t be any money”.

(Continued in part three)