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The End of Work
— Five Years Later
In a special introduction to the Penguin edition, Rifkin observes that structural unemployment remains high, and the task of re-envisioning work continues to be a major social and political challenge.
It's been five years since the publication of JEREMY RIFKIN's controversial book The End of Work, and Penguin Books have just released a new paperback edition.
To begin with, the U.S. counts its unemployed workers in a very narrow way, allowing it to hide structural unemployment in its official reporting figures. If a worker's unemployment benefits runs out and he or she gives up looking for work, they are reclassified as "discouraged" workers and not counted in the official tally of the unemployed. One can walk the streets of any city in the U.S. and encounter large numbers of unemployed men and women. Yet, few of these men and women are deemed "unemployed" by the U.S. Labor Department. Second, as incredible as it may seem, 2 percent of the adult male workforce in the U.S. is currently incarcerated, by far the largest percentage of imprisoned workers of any country in the world. Third, the U.S. economy did bring record numbers of unemployed Americans back to work over the past eight years, by creating an unprecedented "just in time" work force. Today, millions of American workers are leased out to employers by temporary and professional employment organizations. Millions of others who once enjoyed full time jobs with benefits are now working under short-term contracts or as consultants and freelancers. While the ranks of the unemployed have shrunk, the number of underemployed workers has increased significantly.
Finally, and most significantly, the American miracle has, to a great extent, been bought on credit. It is impossible to understand the dramatic reduction in U.S. unemployment in recent years without examining the close relationship that has developed between job creation and the amassing of record consumer debt. Consumer credit has been growing for nearly a decade. Credit card companies are extending credit at unprecedented levels. Millions of American consumers are buying on credit and because they are, millions of other Americans have gone back to work to make the goods and perform the services being purchased.
An analogous situation occurred in the mid to late 192Os. Like today, the 192Os was a period of great economic change. Electricity replaced steam power across every major industry, greatly increasing the productive capacity of the country. Productivity gains, however, were not matched by a significant increase in worker compensation. Instead, wages remained relatively flat, while many marginal workers were let go in the wake of cheaper, more efficient technology substitutions. By the late 192Os, American industry was running at only 75 percent of capacity in most key sectors of the economy. The fruits of the new productivity gains were not being distributed broadly enough among workers to sustain increased consumption and empty the inventories. Concerned over ineffective consumer demand, the banking community and retail trade extended cheap credit in the form of instalment buying to encourage workers to buy more and keep the economy growing. By late 1929, consumer debt was so high, it could no longer be sustained. Even the bull market was being stoked by record purchases of stocks on margin (i.e., the amount paid by the customer when using a broker's credit to buy or sell a security). Finally, the entire house of cards collapsed.
The short-term substitution of cheap credit in lieu of a broad redistribution of the fruits of new productivity gains in the form of increases in income and benefits is a subject that has received little, if any, attention among economists. Still, the fact remains that great technology revolutions like the substitution of electricity for steam power generally spread quickly, once all of the critical elements are in place. (It should be noted that it took several decades for the electro-dynamo to finally kick in and become a tour de force. Once, however, all the necessary conditions were finally realized, the new technology paradigm swept through every industry in less than a decade or so.) The problem is that it generally takes at least a generation or more after a defining new technology finally comes on line, for social movements to build enough coherence and momentum to demand a fair share of the vast productivity gains made possible by the new technologies. In the 1920s the interim crisis of increased productive capacity and ineffective consumer purchasing power was met by the extension of consumer credit to unprecedented levels.
Today, consumer credit is growing by a staggering 9 percent annual rate and personal bankruptcies are increasing. In 1994, 780,000 Americans filed for bankruptcy. By 1999 the number of bankruptcies had soared to 1,281,000. Some economists argue that the zero savings rate is not really as bad as the figures might suggest, because millions of Americans have experienced record gains in the stock market, making their equity portfolios a substitute for traditional bank savings. Still, it should be pointed out that even here, many of the high-tech stocks Americans hold are over-valued and likely to be the subject of significant "readjustment" in the months ahead. Moreover, it should be noted that 90 percent of the gains of the stock market have gone to the top 10 percent of households while the bottom 60 percent of Americans have not benefited at all from the bull market, as they own no stock.
The point is, if countries of the European Union were to lower their current family savings rate from 8.8 percent to near zero, as the United States has, they could likely reduce their unemployment rate from 8.5 percent to under 4 percent. Millions of people spending money on credit would assuredly bring millions of additional European workers back to work to make the goods and perform the services being purchased on credit. But, following the U.S. lead would only result in a short-term fix and create the conditions for an even more profound long-term period of economic instability when the extension of credit reached its limits, pushing consumers into default and the economy into a downward spiral, as occurred in the late 1920S and early 1930s.
The great issue at hand is how to redefine the role of the human being in a world where less human physical and mental labour will be required in the commercial arena. We have yet to create a new social vision and a new social contract powerful enough to match the potential of the new technologies being introduced into our lives. The extent to which we are able to do so, will largely determine whether we experience a new renaissance or a period of great social upheaval in the coming century.
THE END OF WORK
— Penguin Paperback edition (pub 2000) (350pg)
with new introduction and postscript by Jeremy Rifkin
ISBN 0-14-029558-5
Available from booksellers
or www.amazon.co.uk
