Human values could lead the way in setting important prices, using markets only as appropriate to achieve the desired valuations. The prices of scarce resources and of more or less destructive energy sources are of great importance at this critical moment in human history. An equally important discussion is just beginning among proponents of the “new economy,” regarding how work is organized and compensated.
The September article which described an ideal economy was followed in October by another article suggesting that theory – in this case wage theory – is an impediment to possible changes that could move the economy in the desired direction. Before concluding with some concrete examples of existing real-world models that could be developed toward the desired change, I will summarize some of the reasons to reevaluate the extent to which human values could lead the way in setting important prices, using markets only as appropriate to achieve the desired valuations.
The prices of scarce resources and of more or less destructive energy sources are of great importance at this critical moment in human history; a discussion has been ongoing for more than a decade about how these prices (especially for energy) might be brought more into line with future realities. An equally important discussion is just beginning among proponents of the “new economy,” regarding how work is organized and compensated. There are many human reasons to care about this, as well as the political reason, that concern for jobs is making it difficult to face environmental realities.
Let us imagine that by ten years from now economics, in concert with ecology, technology, and a variety of other fields of human knowledge, has progressed to a point where it is capable of identifying the types and amount of throughput that can safely be processed, given local and global ecological constraints. This determination, of course, depends on priorities for output, as well as on the technologies to be used – that is, how far technology has progressed toward stripping production down to the “naked value.”
Out of these calculations would come a conclusion regarding how many, and what kind, of labor hours are needed in the formal economy. Note an important point that was suggested earlier: other things being equal, the total of labor hours demanded will be larger if average labor productivity is low, but less if its productivity does not decline, or if it continues to increase. And then there is the important question of whether society has managed to organize work in ways that allow shorter work weeks for those who want them – an achievement that would in itself, represent a critical recognition of the importance of unpaid care work, because such social organization would leave more time for that.
The following table presents six possible scenarios considering “Plenty of jobs” and “Not enough jobs” with “Reduced productivity of labor” and “Technology rescues labor productivity”.
(i) Scenario A: with plenty of jobs and reduced productivity of labor, wages go down and general decline in GDP.
(ii) Scenario B 1: with not enough jobs and reduced productivity of labor, job sharing and generalized decline in material standards of living.
(iii) Scenario B2: with not enough jobs and reduced productivity of labor, no job sharing and some do well while most suffer severe reductions in standard of living.
(iv) Scenario C: with plenty of jobs and technology rescues labor productivity, wages remain about the same and GDP changes little (however demographic shifts may lower per capita GDP, hence lower household income).
(v) Scenario D 1: with not enough jobs and technology rescues labor productivity, job sharing and standards of living may stay flat, or decline slightly.
(vi) Scenario D 2: with not enough jobs and technology rescues labor productivity, no job sharing and some do very well while others suffer effects of unemployment.
The outcome it suggests as scenario C will probably win the most votes. Optimists have suggested that the “naked value” versions of all the things we want – health, nutrition, education, transportation, communication, home with all its comforts, and entertainments in sufficient varieties – could be produced within the envelope of ecological constraints and resource limitations. It would be even better if “all the things we want” had somehow been re-defined to exclude things that are not actually contributing to well-being – reducing the amount of work society demands by excluding the kinds of outputs I described earlier, when talking about work that does not create human value, even if it creates market value. In the best case, such a redirection of work effort could dovetail with demographic trends, so that the workforce declines as a proportion of total population just as household demands are reduced, to focus on real contributions to well-being. Thus per capita GDP and average household incomes could simultaneously decline without a reduction in well-being.
If this re-definition of wants was indeed achieved, scenario D.1 could also be quite rosy; this scenario supposes that, while technology has kept labor productivity high, it has also streamlined production so that it requires less labor inputs along with less material and energy. Indeed, this is the picture painted by Julie Schor, in her book Plenitude; all well-being wants are served within nature’s constraints, while leisure time is greatly increased.
Those are very appealing images. How do we get there? In my next article, I will emphasize the ways in which prices could be understood and used differently from the existing situation.