LESS GROWTH AND LESS WORK
A Realistic Alternative
By Mohssen Massarrat
[This article published in: Wissenschaft & Umwelt 13/ 2009 is translated from the German on the Internet.]
Forty years after the catastrophe of the 1920s and 1930s, the tragedy was repeated in the new garment of neoliberalism that sought to turn back the wheel of history to the 19th century. Neoliberal ideologies, parties and institutions successfully instrumentalized the distresses and social uncertainties of people for their invisible dictatorship and cu9ltural hegemony and enforced Manchester capitalist conditions worldwide.
The result is well-known: 9 million unemployed, low income persons, subcontracted workers and Hartz IV recipients in Germany alone. Contrary to all neoliberal promises about creating new jobs through flexible labor markets, liberalizing trade and strengthening the competitive positions of business persons, increased profits since the 1970s were invested in rationalization and job destruction (and above all on the deregulated international financial markets).
Neoliberalism brought mass unemployment which increased and did not decrease everywhere in industrial- and third world countries – wherever growth as possible. Neoliberalism was like a global mega-bulldozer that rolled on the inclined plane of global wage disparities and tore down all political and moral barriers standing in the way of the interests of the rich of this world. Neoliberalism has long implanted this culture in the minds of people – competitiveness through more work and lower wages and social benefits. [1] It made possible a smooth redistribution from bottom to top and from South to North and played off governments against unions, local communities and states against the nation, younger against older generations, men against women and domestic workers against foreigners. Neoliberalism instrumentalized globalization in the interest of a global minority, intensified the global joblessness, provoked wars and intensified the social division within and between the unions. It was – and is – a strategy of wealth distribution [2] and of the zero-sum game, led to more unemployment in one place because people were simultaneously put on the street in another place and stimulated growth only through cheapening labor and nature and consequently over-exploitation of human workers and the natural foundations of life. Active possibilities for future planning, for strategies for ecological redevelopment, climate protection and global combating of poverty were reduced to zero. The invisible neoliberal dictatorship represents the greatest barrier for solving global challenges like climate change. After fascism, it is the greatest threat to civilization.
BUILT ON SAND
While mass unemployment increased, the wage rate and the domestic purchasing power of millions of people declined while governments following the credo of neoliberal ideologues gave big business tax gifts in the billions. Surplus capital was withdrawn from value creation in the real economy – into the hands of great capital and shareholders seeking investments with the highest profits. From Germany alone – to name one example – 260 billion Euros in profits and revenues in 2008 flowed on the international financial markets through the ridiculous profitability of 25 percent and more. In this virtual world, managers come under pressure to increase profits in the real economy by lowering wages and dismantling social systems to the disadvantage of working people.
Whoever thinks this virtual world benefits the environment since it absorbs funds that otherwise would flow in destructive “real projects” is mistaken. All speculations have a material basis whether oil stocks, real estate derivatives or investments in soy plantations. This basis can be very great… New skimmed-off profits usually have a considerable material basis like the single family homes of the American middle class built on sand covering the whole landscape.
While neoliberal capitalism finds itself in an historical legitimation crisis, nothing indicates politically that a system-change is on the horizon. With all their power, protagonists seek to save their system. They could succeed in this if the victims of neoliberal capitalism do not use the chance for a system change offered by the second great world economic crisis.
A SYSTEM CHANGE
If there is a serious difference between the two crises of 1929 and 2009, it is in dealing with the consequences of the crises. The governments of the G8 and G20 states succeeded in resisting protectionism instead of being screened by nationalism and protectionism as in the 1930. That reaction prepared the ground for German fascism and the Second World War.
All this happened when the governments were willing and able. The “bailou8t packages” for banks and mammoth corporations resolved in Germany, Europe and the US as well as individual measures like clunker premiums for old cars and short-term work are obviously intended to curb the rage of the present world economic- and financial crisis whose burdens will strain future generations through several thousands of billions of Euro state indebtedness. All previously resolved measures – in Obama’s US as in Merkel’s Germany, Sarkozy’s France, Brown’s England and Berlusconi’s Italy – are the opposite of a solution. The real causes of the crisis are still not recognized. These are related to the causes of the first world economic crisis in the 1920s as neoliberalism is similarly confused with classical laissez-faire liberalism. This first variant of capitalism led to the first world economic crisis since the anarchist logic of individual capitalists (“After me, the Flood”) determined economic events.
Unfortunately the clever critics of neoliberalism have not drawn the consequences from their own diagnoses regarding therapy. Joseph Stiglitz warns astutely of Obama’s substitute-capitalism and explains that the “500 billion-bailout package of the US government leads to “banks winning, investors winning while taxpayers lose” (Stiglitz 2009). In the past, he limited himself to only proposing more efficient measures of financial policy. This is similarly true for the recent Nobel Prize winner Paul Krugman who in the style of classical Keynesianism supports a comprehensive economic program and warns against making state indebtedness taboo (Krugman 2009). Rudolf Hickel who proposes a consistent program “to regulate capitalism” does not argue any differently (Hickel 2009). However his financial regulation proposals are not a proper answer to his own causal analysis. [3]
The time is right for contrasting the neoliberal model obliged to the financial world, capital and machines with another model originating from the interests, basic needs and basic rights of people. Neoliberalism was always a power-politics strategy of the rich, the world elite and powerful states, not an economic theory. This strategy owed its triumphant advance to the weakness of leftist parties and unions, ultimately to the crisis of classical-employment Keynesianism to which the left still holds, not of its own conceptual and moral superiority.
For several decades, this classical Keynesianism provided OECD states with effective concepts for containing mass joblessness and was unrivaled as a strategy for mobilizing growth resources during the postwar era in the industrial states of the North with their seemingly inexhaustible growth capacities. Where growth resources are declining, the rationalization speed quickly increases and is widely superseded by intensive growth strategies. Keynesian instruments for creating jobs are losing their striking force. High growth rates in highly developed capitalist states belong to the past. These growth rates have been below the rate of labor productivity since the beginnings of the 1970s. In developed industrial countries, more and more social wealth is produced with less and less living labor. Whole population sectors lose their work and are uncoupled in the long run from the labor process and the economic cycle. The high rationalization speed as a result of countrywide use of high tech and communication technologies can no longer be cushioned despite considerable efforts in mobilizing new growth capacities.
Classical Keynesianism presently experiencing a Renaissance [4] seems unable to lead out of the crisis. The first world economic crisis was overcome by a system change away from Laissez-faire capitalism to Keynesian capitalism. A system change is imminent today. The crucial question is where?
REDUCED WORKING HOURS AND FULL EMPLOYMENT CAPITALISM WITHOUT GROWTH
First of all, the illusion of an unfettered growth must be abandoned and zero-growth recognized as an economically and morally positive goal. Zero-growth on a high level is a very critical goal that mobilizes creative potentials for a “qualitative” growth – building social services, ecological agriculture and renewable sources of energy. A return to higher growth rates – even if attainable – would not be desirable for ecological reasons.
Secondly as the next step, building a “full employment capitalism” stands on the political agenda and unlike Keynesian capitalism is not based on growth. For full employment through growth, growth rates of 3 percent and more must be realized over a long period of time that are higher than the rates of present increased productivity amounting to 2 to 3 percent. However the economy in most EU states has already reached its growth limits.
The new capitalism with a constant tendency to full employment is built on new politically defined regulatory mechanisms: firstly short-term within a few years (transformation phase) through radically reduced working hours and fair distribution of the total work volume. Then the successive reduction of working hours in the long-term adjustment process coupled to rising productivity follows after reaching full employment.
In this perspective and with demographic realities and work concentration, the volume of paid work declines in the long-term with the level of the gross domestic product staying the same (zero growth) since increased productivity balances the negative effect of declining work volume. So paid labor shares at last in the productivity gains and receives more free time for that.
Zero growth, less gainful work and more quality of life are new substantive orientation points that help regain lost ground for genuine reforms and a more socially and ecologically just world. A redistribution of gainful work and income without substantial loss of prosperity is entirely possible. “The actual weekly working hou9rs of full-time employees in the EU lies between 37.7 (France) and 43.3 hours (Great Britain). Germany is in midfield with 39.9 hours. The average full time working hours must be lowered from the spread of 26.4 hours per week in Belgium to 34.4 hours in Austria to reach full employment through redistribution of the existing work volume. The EU average would then be 31 hours” (Bontrup/ Niggemeyer/ Melz 2007). For Germany, the present work volume of 56 billion hours must be redistributed to 44 million persons. With 45 weeks of work, full employment can be reached through lowering to 28 hours per week (Memorandum 2008).
The statistically-calculated reduction of working hours can be carried out individually in many forms and with a flexibility that does justice both to the interests of employees and the requirements resulting from administrative procedure – part-time employment, shorter weekly-, monthly- or annual working hours. Mass unemployment means the destruction of work ability. All potential abilities could be optimally used through full employment and flexible regulations.
A successive reduction of working hours coupled to productivity with simultaneous qualitative growth in areas like education, health care and environmental protection can also be financed. This pays off economically since the formerly unemployed relieve the social treasuries through their social security contributions and make unnecessary transfers from tax revenues to social funds. In every regard, macro-economic reason supports financing reduced working hours, not unemployment.
MEANS AND WAYS
The crucial question is how this alternative can be accepted socially, gain a majority and be carried out politically. Linkage of the relevant actors is vital. The growing rejection of neoliberal globalization seizing all social groups offers a platform for a broad political alliance with a social-ecological orientation that is supported by unions, social movements, social groups and bourgeois capital groups which neoliberal capitalism led to the edge of ruin and self-sacrifice. Forming an alliance under the dominating spirit of neoliberalism is certainly a very complicated challenge. The de-politization in the last decades, the naïve attitude that the cup will pass and the clever gambit of the governments to shift the drastic effects of the current crisis with new indebtedness to the burden of future generations in the future – all these and other factors certainly make difficult the genesis of a powerful counter-movement that can overturn the social-political mood. Nevertheless mastering this challenge is not impossible.
The price for realizing full employment in capitalism without growth is that the effective national income and the monetary purchasing power of all social classes will stay constant and not grow any more. Financing the conquest of mass unemployment through fair division of the total work volume also assumes a fair distribution of income during the transformation phase. Without income adjustment, reduced working hours leads to poverty and unacceptable losses in prosperity for lower income groups. (a) Funds from financing unemployment are one source for financing the maximum equalizing for low wage- and income groups. (b) Tax relief or even tax exemption for the lower income groups, (c) rearranging from higher wage- and salary groups in collective bargaining and (d) full taxation on income of independent persons. Full wage compensation in reduced working hours still urged by unions and leftist groups and parties in Germany cannot be realized without growth. Gaining a majority is blocked politically. Renouncing on this demand and coming to terms with maximum wage adjustment (Sauerborn 2009) is a prerequisite for pressing the capital side to higher taxation on their income.
Zero growth means maintaining the monetarily financed prosperity and in no way is a stagnation of material and immaterial prosperity. Through reduced gainful working hours, time prosperity increases and the possibility of using the newly gained time for satisfying diverse needs beyond the monetary sector (from growing one’s vegetables in the allotment garden to artistic activity). Despite significant advantages of the full employment without growth in capitalism model, backward-oriented business associations, neoliberal media, parties as well as politicians will fight this project most sharply. The project as a whole touches the asymmetrical distribution of power and wealth in Germany and the world. A broad social alliance is necessary for acceptance of the project. Considerable efforts and an offensive debate and enlightenment are demanded of all participants, even in their own ranks.
At the same time, alternative possibilities for arranging leisure time, enhancing individual self-realization options and raising quality of life must be developed. The project clearly goes beyond the employment dimension. Alternative projects like division of labor just to the genders, continuing education and self-realization, citizen initiatives for supporting the needy and protecting the environment have wind behind them. A plus in available time for everyone, for the family and solidarity life together comes with renunciation on higher income, in particular more quality of life.
Distribution in the long-term will be regulated on the basis of relative strengths – relations that may be more balanced than under present conditions of mass unemployment and neoliberal capitalism – and by the parties to wage agreements. This will happen after the end of the transformation phase and after the model has been socially accepted. In this model, the foundations of capitalism also remain untouched as long as serious alternatives are not carried out.
IS THE END OF CAPTIALISM IMMINENT?
Neoliberal capitalism has now fallen into crisis, not capitalism. Those who repeatedly sing the song of the “end of capitalism” may help in the circulation of illusions. However they hardly contribute to enlightenment and development of alternatives to capitalism. The alternative to capitalism will not appear suddenly from nowhere as soon as the capitalist cycle collapses and the model of capitalism loses legitimation and fascination. It is more likely that a sudden end of capitalism will change abruptly into a new fascism. The seed of a new society will arise and be seen and developed in practice by ever-wider social sectors in the society dominated today by capitalism. Permanently conjuring “the end of capitalism” may not be a great service in view of the unsolved global challenges and the present crisis. Not completely missing what is historically possible and politically realizable may be crucial.
Reduced gainful work with or without wage adjustment is not anti-capitalist per se. Full employment without growth could even stabilize capitalism in industrial countries through increasing acceptance. A more just distribution of growth and income in the world may improve the global consumer demand – as in the industrial countries after the war – and thereby favor the prerequisite for a new deregulation of capital accumulation and global economic growth. People should not have any illusions about this perspective.
The model “Less gainful work and more quality of life and jobs for all” opens a window of hope to snatch an ever greater share of material production of goods and services from the driving forces of capitalist accumulation and the “practical constraints” underlying them. This perspective could be more revolutionary than verbal-radical capitalism criticism.
Pointing the way to the future started from the readiness to exchange income and economic growth for freedom and quality of life. From the perspective of ecological and global justice, the insight is less and less contested and more and more feasible. The age of economic growth and increased consumption was definitively over in the industrial countries of the North with the end of the 20th century. In the 21st century, redistribution and sustainable development are on the agenda.
CHEAPENING LABOR AND NATURE
Neoliberalism simulated growth by cheapening labor and nature and thus over-exploitation of human labor power and the natural foundations of life.
CRISIS
Unfortunately even clever critics of neoliberalism have not drawn the conclusions from their own diagnoses on what seems commanded for therapy.
REORIENTATION
Zero growth, less gainful work, more quality of life – these are now substantive orientation points that help regain lost ground for genuine reforms and a more socially and ecologically just world.
REASON. In every regard, macro-economic reason supports financing reduced working hours, not unemployment.
POINTING THE WAY TO THE FUTURE. A signal for the future started from the readiness to exchange income and economic growth for freedom and quality of life.
MOHSSEN MASSARRAT, 1942, studied economics and political science in Berlin, professor (retired) of political science at the University of Osnabruck, themes: political and social-ecological economics, international economic relations, globalization, sustainable development, peace and conflict research, Middle East. E-Mail:
mohssen-massarrat@uni-osnabrueck.de This article is based on the author’s texts “30 Hour Week for Europe” (sandimgetriebe 34, 6/22/2004.
http://sandimgetriebe.attac.at/979.html) and “Full Employment Capitalism. Plea for a System Change” (Widerspruch. Beitrage zu sozialistische Politik, 2009, p.141-153, www.widerspruch.ch).
NOTES
1. Neoliberals selectively use liberal principles, support the liberalization of trademarks in threshold- and developing countries but not liberalization of the agriculture of the EU and the US. They denigrate all laws promoting renewable energy, speak explicitly for building nuclear power plants and put in question the billions in subsidies for this industry. With liberalization, neoliberals think of the unfettered movement of financial streams and streams of goods over the whole globe. With flexibilization, they do not think of taking into account the diverse needs and interests of people but subordinate human work and existence to administrative efficiency criteria. With privatization, they in no way think of expansion of human privacy and spaces for self-determined work as well as other possibilities of self-realization – no, they do not mean that at all. Rather they think public goods like social services, health care services, education, water- and energy supply, security (police and army) – and even administration of justice must be open to financial world access and subordinated to capitalist exploitation conditions.
2. Cf. on the function of neoliberalism as a strategy of redistribution: Massarrat 2008
3. Rudolf Hickel, member of the “Alternative Economic Policy” study group blames “the neoliberal priority rules for profits” for the financial crisis that “among entrepreneurs and the rich led to enormous liquidity surpluses. These surpluses stream on the financial market. “Capital accumulation institutes like investment funds and hedge funds,” Hickel said, “attract money like vacuum cleaners” (FR 10/24/2008).
4. This is urged by 40 academics from the circle of the Keynes society in its call “Dare More Keynes” (FR 4/10/2009).