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ZERO UNEMPLOYMENT IN A PLURAL ECONOMY A working document of the South African Research Chair in Development Education Prepared by visiting fellow Howard.

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Presentation on theme: "ZERO UNEMPLOYMENT IN A PLURAL ECONOMY A working document of the South African Research Chair in Development Education Prepared by visiting fellow Howard."— Presentation transcript:

1 ZERO UNEMPLOYMENT IN A PLURAL ECONOMY A working document of the South African Research Chair in Development Education Prepared by visiting fellow Howard Richards (Chile) With the support of professors Joanna Swanger (USA) and Alicia Cabezudo (Argentina)

2 No Magic Wand There is no single solution. There are many ways to arrive at zero unemployment. We propose here a thought exercise consisting of six complementary steps Whose outcome would be a decent livelihood for everyone At the end we will briefly present two other thought exercises regarding unemployment

3 The dominant paradigm The dominant paradigm (the neoliberalism of the Washington consensus) Thinks in terms of employment with an employer rather than in the broader category of livelihood It recommends pumping money into education and health services In order to add value to what the poor have to sell in the labour market, i.e. themselves

4 Error of the dominant paradigm It is impossible to eliminate unemployment by education (conceived as job training) and health services Because sometimes the problem is not lack of qualified applicants But lack of jobs

5 Neoliberal theory The dominant theory holds that markets match employers and employees Hence the main problem is to produce the qualified employees the market wants

6 Keynesian theory Markets normally tend to a low level equilibrium that leaves willing workers unemployed “Full, or even approximately full, employment is a rare and short-lived occurrence.” --General Theory, p. 250

7 Recent theory Recent experience confirms the theoretical insight of Keynes that there is a chronic weakness of effective demand for labour --Paul Krugman, Nobel Memorial Prize in Economics 2008, in The Return of Depression Economics, 2009

8 Consequently In today´s economy those who lack education and job skills will not find employment …but those who have education and job skills may and may not find employment

9 Livelihood is the broader idea We will propose six basic steps toward livelihood for all Starting with maximizing traditional forms of employment And ending moving beyond employment to a broader idea of livelihood

10 LIVELIHOOD need not come from a job It is true that everyone should contribute to society But it is not true that everyone's contribution to society (and livelihood) must depend on finding an employer whose ability to pay salaries ultimately depends on sales or on taxes

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12 First step: PROMOTE LIVELIHOOD BBBBY ENCOURAGING EMPLOYERS TO CREATE JOBS

13 EMPLOYMENT IN THE ENTREPRENEURIAL SECTOR DEPENDS ON TWO FACTORS 1. the efficiency (“marginal efficiency") of capital 2. the rates of interest General Theory of Employment, Interest, and Money(from John Maynard Keynes, General Theory of Employment, Interest, and Money, p. 39))

14 “efficiency of capital” A technical concept Which boils down, as Keynes says To whatever motive in fact motivates running a business and hiring employees to work for it The motive may be maximizing profit, or a vocation to serve the public, or fascination with technology, or even a desire to create jobs

15 “efficiency of capital” again Often the decision to run a business is driven by what Keynes calls “animal spirits” Or love of adventure Keynes, Schumpeter and others find that decisions to invest are rarely purely rational

16 Treat business people as human beings  Not as machines programmed to maximize profits by minimizing costs  But as humans who are called to live in community and in service to others

17 SEEK AND ENCOURAGE THE IDENTIFICATION OF BUSINESS PEOPLE WITH THE ETHICAL VISION OF THE COMMUNITY

18 Remember that bulk of employment in the entrepreneurial sector is provided by small and medium-sized businesses, is provided by small and medium-sized businesses, Therefore it is key to generate participatory processes Therefore it is key to generate participatory processes through which small and medium sized businesses through which small and medium sized businesses identify with the community identify with the community and are supported by the community and are supported by the community

19 Returning to Keynes … In bare theory, employment in the entrepreneurial sector depends on two factors 1. the efficiency of capital 2. the rates of interest

20 impact of a rate of interest If the rate of interest is high enough It does not pay to hire Because you can make more money without hiring anybody Letting money gather interest

21 Nobody hires workers if it is safer and more profitable to speculate Therefore, to move toward zero unemployment Put the brakes on non-productive speculation Channel money toward job-creating production Lower interest rates to make it harder to speculate and easier to run a business

22 Discourage capital flight Anchor money in a territory and in a community

23 Another problem: Inflation It is often said, and not incorrectly That it is inflationary to lower interest rates in order to boost employment Easy money brings higher prices It risks making business impossible By making money lose its value

24 It is necessary to rethink inflation: Inflation is too much money chasing too few goods It can be stopped by taking money out of circulation by taxation, taxing most those who have most And by increasing production, putting more workers to work

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26 PROMOTE LIVELIHOOD BY PROMOTING PRODUCTION

27 A PRO-ACTIVE APPROACH Besides encouraging business Take direct measures To support employment and livelihood generally Including production that is not for sale, but for barter, use, gift, sharing etc.

28 We reject the idea that the way to stimulate job-creation is to further lower wages that are already low It is necessary to create livelihoods for people With more imagination and less cruelty

29 For example Restrict competition from imports from low-wage countries with non-existent labour laws Back productive projects with public funds on condition that jobs are created and good wages paid Plan production with deliberate attention to jobs as a goal Form productive alliances with universities, now that knowledge is the leading factor in production Measure the efficiency of the public sector and all sectors with social criteria, including job creation Work with institutional sources of capital, such as pension funds and the endowments of schools, churches and charities

30 Another problem: ecology Unfortunately Increasing production and consumption Without adequate environmental planning Tends to destroy the biosphere And therefore all of us

31 It is necessary to rethink livelihood Livelihood is at the junction where ecology, culture and economics meet Zero unemployment has to be made compatible With green technologies and simple living Because that is the only way our species can avoid destroying itself by destroying its habitat

32 A healthy economy is ecological and it creates jobs It creates jobs installing the green technologies that must replace most of the existing technologies It creates jobs installing the green technologies that must replace most of the existing technologies It creates jobs by substituting human labour for technologies that rely on fossil fuels… It creates jobs by substituting human labour for technologies that rely on fossil fuels… …and poison the environment. …and poison the environment.

33

34 SUPPORT THE PEOPLE’S ECONOMY

35 The people’s economy Is that economy Where the main resource is labour (not capital) And the objective is making a living (not profit) It supports the lived world of the majority of the world´s people It is self-employment, whether alone or in a cooperative group

36 Enterprising people It includes the businesses where the workers and owners are the same people It includes grassroots sharing of resources for mutual survival It includes independent workers, like a plumber who owns the tools, or a taxi driver who owns the vehicle

37 The people’s economy… ► …creates livelihoods that do not exist according to the equations of Keynes ► Because it repeals the rule that for someone to be employed someone else must profit ► The workers who own their own tools do not have to make profits ► They can get by with just enough to live on and to replace tools when they wear out.

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39 REBUILD THE WELFARE STATE AND THE PLANNING STATE

40 IT IS FUNDAMENTAL THAT THERE BE A STATE THAT WORKS FOR THE WELFARE OF ALL THE CITIZENS ….AND HAS RESOURCES

41 In our epoch of neoliberal globalization The state is weak Because it lacks resources Because it cannot tax society’s major wealth For fear of capital flight and similar reprisals And must support itself with taxes that fall on the poor and the middle class

42 Public control of natural resources The relatively strong states are the ones that finance themselves with income from natural resources But from the people’s point of view it is useless to have a strong state If that state is dominated by a corrupt elite that serves not the people but itself

43 therefore

44 To achieve zero unemployment We need a government devoted to the service of the people. Which takes control of the incomes that are not produced by anybody’s labour or by anybody’s entrepreneurial skill (the gifts of nature) And uses them to support livelihoods for all

45 We do not need Businesses or individuals So powerful That the state does not dare to tax them at reasonable rates

46

47 RECYCLE EXCESS PROFITS TO FINANCE HUMAN DEVELOPMENT

48 Argentina, Chile, and South Africa are enormously unequal countries. Source: UNDP, Human Development Report 2005.

49 Extreme Inequality Is not only unjust and inefficient It is also dangerous It produces economic instability Because of the accumulated profits that are not spent on consumption And have no profitable investment outlets And which can be taken out of the country at any moment

50 An excess of money Extreme inequality is due to The limitless accumulation of the profits of the upper class With a consequent instability of the system Due to lack of consumers who would justify investments by buying products In other words due to the poverty of the majority

51 …whether or not governments care about reducing inequality Or about poverty They always care about stabilizing the system to keep it from collapsing So they seek some solution to the problem of keeping money circulating so the economy can keep going.

52 Constant economic growth as a solution The classic solution of Keynes to the problem of keeping money circulating was to promote through public policies… …every year spending on investments sufficient to compensate for insufficient spending on consumption So that total spending would be enough to keep the economy humming along and profits rolling in This classic solution has proven not to be reliable

53 The “capitalist revolution” as a solution. The neoliberal solution has been to dismantle the regulation of financial markets. So that accumulated profits with no profitable productive outlets could be thrown into the global casino of high-flying speculation. Which has led to a series of crises as the bubbles burst.

54 We propose another solution Recycle the accumulated profits that have no profitable investment outlets In order to finance Livelihoods directly connected to human development For example in sports, in culture; in personal attention to young children, sick people, and old people.

55 What to do with the excess profits of the upper classes? Is always a moral question Whose answer Or rather whose answers (since there are many legitimate answers) Determine to a great extent the happiness or the misery of the entire population.

56 A moral answer to a moral question We propose that to some considerable extent rents and profits be devoted to promoting human development By the voluntary actions of their owners… ….complemented by suitable public policies Tending to overcome the barriers blocking zero unemployment.

57 BARRIERS BLOCKING ZERO UNEMPLOYMENT Employment in the entrepreneurial sector is limited by the barrier that there is no employment if it does not lead to profit for the employer. Livelihood in the people’s economy is limited by the barrier that it is impossible to earn a livelihood when there are not enough customers willing and able to buy the product or service. Public employment financed by taxes cannot in the long run serve as a guarantee of employment for all, as the experience of Sweden shows.

58 Sports partly overcome the barriers. “Sports give dignity to the person rejected by the labour market.” --Rolando dal Lago Sports Director City of Rosario, Argentina

59 To memorize This will be on the test TO ACHIEVE SOCIAL INTEGRATION WITH DIGNITY FOR ALL, SOCIETY MUST SUPPORT THOSE ACTIVITIES THAT HAVE HUMAN VALUE EVEN IF THEY DO NOT PRODUCE ANY MERCHANDISE THAT CAN BE SOLD.

60 DIVERSITY Support for sports and culture, for life- long education, and for the care of the weak…. … comes from many diverse sources, from civil society, from families and traditional communities and from governments at the municipal, regional, and national levels. This diversity is desirable.

61 The ethical principle The ethical principle is an ancient idea found in ubuntu, in the world’s main religions, and in indigenous knowledge systems around the world. As articulated by Mahatma Gandhi the principle is that those of us who have more than we need are trustees of our surplus for the benefit of those who have less than they need.

62 Recycle the Surplus According to the ethical principle of solidarity Which is put into practice in diverse ways in diverse traditions Thus we overcome the instability of a system in which excess profits accumulate And we take another step toward zero unemployment

63

64 BUILD SOLIDARITY IN THE NEIGHBOURHOODS

65 “Our aim is that in every barrio in Argentina the people will be assured at the neighbourhood level of adequate nutrition, housing, and primary health care.” --Enrique Martínez Director, INTI (National Institute of Industrial Technology) Argentina

66 REVIEW: THE BARRIERS  Employment in the entrepreneurial sector runs up against the necessity of profit.  The people’s economy is limited by the necessity of having markets for its products.  The public sector normally has insufficient resources to satisfy social needs, even urgent ones.  The voluntary sector supports itself to a certain extent with hybrid resources from diverse sources, but in the last analysis it requires grant money from public or private sources, and there is never enough of it.

67 SOLIDARITY AT THE NEIGHBOURHOOD LEVEL FFormerly clans and other traditional communities maintained networks of solidarity through extended family ties. TTheir continued existence today is generally underestimated and underappreciated. TTo build community in today’s fragmented world many have concluded that a small territorial unit, a neighbourhood, is a promising space for restoration.

68 The New Extended Family  The neighbourhood being a small territory has the advantage that organizers can walk the streets  And check every house, apartment, or shack  To be sure nobody is abandoned.

69 Those who are still unemployed after steps I through V Are not alone because they can fall back on friends, family, and neighbours And on NGOs and government agencies that back up the efforts of the neighbours to serve and take care of each other

70 Decent work … True grassroots solidarity is not like getting a welfare check and doing nothing in return Every person has decent work to do Doing something to serve others and/or to keep up the neighbourhood

71 FIRST CONCLUSION ► ZERO UNEMPLOYMENT CAN BE IMAGINED AS THE SUM OF THE EFFORTS OF DIVERSE ACTORS, INCLUDING: ► ENTREPRENEURS ► AN ACTIVIST STATE ► PUBLIC POLICIES ► SELF-ORGANIZING WORKERS ► UNIVERSITIES ► PENSION FUNDS ► VOLUNTEERS ► DONORS ► FAMILIES ► NEIGHBOURS

72 A second thought exercise regarding unemployment A second way (among infinite possible ways) to think of ending unemployment Is to consider Mahatma Gandhi’s Constructive Programme for the villages of India Gandhi said there should be no idle hands in the villages Anyone who is idle should start working immediately

73 For Gandhi unemployment in principle disappears Because we repeal the rule that people only work when they are paid Simultaneously we repeal the rule that to get food you need money to pay for it Both rules are replaced by the restoration of the Hindu concept of dharma, i.e. duty (Similarly, he required his middle class followers to spin yarn without pay)

74 A Third Thought Exercise Think of the 70% of Africans living in rural areas and engaged in various modes of self employment They use a different metaphysics of economics, i.e. different mental frameworks socially constructing WHAT IS and WHAT SHOULD BE. Their paradigms for living cannot be reduced to POVERTY; they are not UNEMPLOYMENT They are interlocking systems of social and knowledge capital Capable of promoting and sustaining cohesion, peace human development, and LIVELIHOOD for all.

75 A fourth thought exercise Consider that in most of the cultures humans have invented In the 200,000 years since homo sapiens sapiens first appeared Unemployment has not been an intelligible concept The Swahili language, for example, had no word for it prior to European contact

76 The modern world-system The expansion of the European world- system To become the modern world-system Can be thought of as creating the historical conditions of the possibility of unemployment

77 SECOND CONCLUSION “OUR GREATEST POLITICAL PROBLEM IS LACK OF IMAGINATION.” --MICHEL FOUCAULT --MICHEL FOUCAULT


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