ZERO UNEMPLOYMENT

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ZERO UNEMPLOYMENT

• 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)

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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

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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

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Error of the dominant paradigm

• It is impossible to eliminate unemployment by
  education (conceived as job training) and health
  services
• Because the main problem is not lack of qualified
  applicants
• But lack of jobs

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Livelihood is the broader idea

• In the modern world most people meet their basic
  needs
• By buying what they need with money
• Which they obtain by working
• We will propose six steps to livelihood for all
• Starting with job creation by employers

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PROMOTE LIVELIHOOD

• BY ENCOURAGING EMPLOYERS TO CREATE JOBS

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EMPLOYMENT IN THE ENTREPRENEURIAL SECTOR DEPENDS
ON TWO FACTORS

• 1. the efficiency (marginal efficiency") of
  capital
• 2. the rates of interest
• (from John Maynard Keynes, General Theory of
  Employment, Interest, and Money, p. 39))

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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

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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

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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

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

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Returning to Keynes

• Employment in the entrepreneurial sector depends
  on two factors
• 1. the efficiency of capital
• 2. the rates of interest

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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

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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

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Discourage capital flight

• Anchor money in a territory and in a community

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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

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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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PROMOTE LIVELIHOOD

• BY PROMOTING PRODUCTION

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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.

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• 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

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For example

• Restrict competition from imports from low-wage
  countries with non-existent labour laws
• Back productive projects with pubic 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

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Another problem ecology

• Unfortunately
• Increasing production and consumption
• Without adequate environmental planning
• Tends to destroy the biosphere
• And therefore all of us

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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

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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 by substituting human labour for
  technologies that rely on fossil fuels
• and poison the environment.

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• SUPPORT THE PEOPLES ECONOMY

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The peoples 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 worlds people
• It is self-employment, whether alone or in a
  cooperative group

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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

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The peoples 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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• REBUILD THE WELFARE STATE AND THE PLANNING STATE

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IT IS FUNDAMENTAL THAT THERE BE A STATE

• THAT WORKS FOR THE WELFARE OF ALL THE CITIZENS
• .AND HAS RESOURCES

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In our epoch of neoliberal globalization

• The state is weak
• Because it lacks resources
• Because it cannot tax societys 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

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Public control of natural resources

• The relatively strong states are the ones that
  finance themselves with income from natural
  resources
• But from the peoples 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

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• therefore

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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 anybodys labour or by anybodys
  entrepreneurial skill (the gifts of nature)
• And uses them to support livelihoods for all

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We do not need

• Businesses or individuals
• So powerful
• That the state does not dare to tax them at
  reasonable rates

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• RECYCLE EXCESS PROFITS TO FINANCE HUMAN
  DEVELOPMENT

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

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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

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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

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• 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.

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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

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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.

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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.

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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.

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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.

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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 peoples 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.

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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

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To memorizeThis 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.

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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.

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The ethical principle

• The ethical principle is an ancient idea found in
  ubuntu, in the worlds 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.

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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

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• BUILD SOLIDARITY IN THE NEIGHBOURHOODS

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• 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

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REVIEW THE BARRIERS

• Employment in the entrepreneurial sector runs up
  against the necessity of profit.
• The peoples 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.

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SOLIDARITY AT THE NEIGHBOURHOOD LEVEL

• Formerly clans and other traditional communities
  maintained networks of solidarity through
  extended family ties.
• Their continued existence today is generally
  underestimated and underappreciated.
• To build community in todays fragmented world
  many have concluded that a small territorial
  unit, a neighbourhood, is a promising space for
  restoration.

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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.

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• 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

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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

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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

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A second thought exercise regarding unemployment

• A second way (among infinite possible ways) to
  think of ending unemployment
• Is to consider Mahatma Gandhis 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

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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)

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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.
•  

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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

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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

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SECOND CONCLUSION

• OUR GREATEST POLITICAL PROBLEM
• IS LACK OF IMAGINATION.
• --MICHEL FOUCAULT