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Why The World Of Work Has Changed Forever

A professor at the London School of Economics argues that the free market and everything we thought we knew about economics are now irrelevant.

Mickey Peled

TEL AVIV — Professor Amos Witztum examined, checked, cross-checked and analysed his data, then made a clear-cut conclusion: the gods of economics are dead. The naive belief around which humanity has collectively organized life — the free market, the education system and even the core principles of social justice, just turned out to be false.

“We’ve been taught that if we study hard and work hard, everything will be all right,” says Witztum, an economist of the London School of Economics. “But this assertion has long been irrelevant.”

Maybe it has always been, says the professor who predicts the end of a world based on standard and continuous work allowing people to make a decent living.

“We are in a market where most people would get reduced access to products through work — be it because there would be no work, or because salaries would be low,” he says.

In November 2013, even the Organization for Economic Cooperation and Development (OECD) acknowledged that there was a problem. The organization, which traditionally works to promote a free market, observed two concurrent trends in each of its member countries.

On one hand, it saw a rise in per capita GDP, in part because of productivity increases. On the other, the organization spotted a persistent stagnation in real wages. At best, increased wages have been high enough to keep pace with inflation, but they surely haven’t been consistent with the rising productivity per capita.

In other words, we’ve lost for good the correlation between contribution and compensation — between employee output and the salary they receive, Witztum says. The excess money hasn’t disappeared, but it now goes to capitalists through dividends to shareholders, for example.

Furthermore, even when people do find jobs, they often don’t match their abilities, the professor says. Witztum mentions studies showing that the percentage of overqualified employees is growing. In the UK, for instance, the number has jumped from 21% in 1992 to 33% in 2006.

Fear is everywhere

This reality is already a daily concern for many employees who fear losing their jobs to a younger, quicker and cheaper workforce — or even to computer software. Eighty percent of the decrease in employee income is explained by technology, which allows greater output and reduced pay to workers, an OECD study found.

Occupy Wall Street protests in October 2011 — Photo: David Shankbone

But we should think of this reality as an opportunity rather than taking to the streets, Witztum believes. “We live in a world where technology enables the production of an increasing share of things we need,” he says. “It would be wiser to embrace the value of technology, rather than pushing people to come up with more ways to get a salary. There is hopelessness in the need for people to invent new ways to make a living.”

Witztum believes this is linked to the kind of education we receive. Yet an alternative is possible. “Today, higher education teaches students how to be competitive in the job market, giving them specific skills,” he says. “Yet schools don’t need to train students to become screws in the economic system. They rather need to put an emphasis on endowing their cultural capital through science and spirit. Such capital would allow them to deal with a reality where salaries don’t grow, where income from capital is limited, and when working hours decrease as fewer hands are needed to produce something.”

It doesn’t take an economist to feel the employment scarcity. In recent years, an unprecedented wave of protests have erupted in developed countries because of the gap between the haves and the have nots. Witztum, however, doesn’t pin his hopes on Occupy Wall Street and its sister movements.

“The protests were a complete shame,” he sayss. “In the end, what did they say? ‘We’re not against the system, but capitalists shouldn’t exaggerate with what they take. Bonuses should be smaller.’ This is nonsense. The problem is not that people act in an extreme way, but the fact that there is a system allowing it. It only shows how strong the perception that if you work hard enough, everything will be alright is.”

Witztum doesn’t believe that social democratic ideas are the answer to capitalism, simply because they are based on market principles that are “inherently unsocial,” he says. But he is also reluctant to think that growing frustration with the existing system will automatically lead to a breakdown. “To me, people’s fatigue with their work and life is already so deep that I’m not even sure who would protest,” the professor says.

A brave new world

Witztum admits that he can only outline in broad terms this “new world” that will replace the current system. Yet he is confident that once we understand the fact that a free market cannot save decreasing work resources, new solutions will appear.

“I’m not calling for a centralized governance,” he stresses. “But there is a significant difference between the dominant perception today — which idealizes the market — and the understanding that the market is a necessary evil. A change in perception will also change policy. For instance, governments would no longer focus on supporting a competitive business environment, but realize their responsibility to citizens. They would revisit private property rights and the redistribution of wealth. They would be able to do so by increasing taxation or by changing the definition of corporate from one that’s only caring for its stockholders, to one that cares for its stakeholders.”

[rebelmouse-image 27087953 alt="""" original_size="500x375" expand=1]

Could guaranteed basic income be a solution? — Photo: Russel Higgs

It’s been a while since the challenges of ending the work era has been on the minds of economists and social studies researchers. One of the most popular solutions for life in a work-free world — or at least in a world where work is not mandatory — is called “guaranteed basic income.” As strange as it may sound, the idea is that every citizen would receive a specific amount of money that is high enough for them to make a minimal living, independent of other incomes they might have.

The proposed arrangement has been endorsed by some renowned economists. Witztum himself believes this idea might hold some potential for solutions. The different supporters of this concept stress several reasons for its logic, but most of them agree on the need to tap existing technological resources to ensure a minimal living standard, and reduce dependency on work.

The main question, of course, is what the cost would be for the national output, and hence the ability to provide this basic income. If people don’t have to work at all, or work much less, tax revenue might also decrease. One way to settle this is by establishing a ratio for changes in that basic income that is consistent with changes in the national product.

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Migrant Lives

They Migrated From Chiapas When Opportunities Dried Up, Orchids Brought Them Home

An orchid rehabilitation project is turning a small Mexican community into a tourist magnet — and attracting far-flung locals back to their hometown.

They Migrated From Chiapas When Opportunities Dried Up, Orchids Brought Them Home

Marcos Aguilar Pérez takes care of orchids rescued from the rainforest in his backyard in Santa Rita Las Flores, Mapastepec, Chiapas, Mexico.

Adriana Alcázar González/GPJ Mexico
Adriana Alcázar González

MAPASTEPEC — Sweat cascades down Candelaria Salas Gómez’s forehead as she separates the bulbs of one of the orchids she and the other members of the Santa Rita Las Flores Community Ecotourism group have rescued from the rainforest. The group houses and protects over 1,000 orchids recovered from El Triunfo Biosphere Reserve, in the southeastern Mexican state of Chiapas, after powerful storms.

“When the storms and heavy rains end, we climb to the vicinity of the mountains and collect the orchids that have fallen from the trees. We bring them to Santa Rita, care for them, and build their strength to reintegrate them into the reserve later,” says Salas Gómez, 32, as she attaches an orchid to a clay base to help it recover.

Like magnets, the orchids of Santa Rita have exerted a pull on those who have migrated from the area due to lack of opportunity. After years away from home, Salas Gómez was one of those who returned, attracted by the community venture to rescue these flowers and exhibit them as a tourist attraction, which provides residents with an adequate income.

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