Too Many People
The shakeup in the world financial system has brought forth a lot
of hand-wringing over the future of capitalism. Most commentators
devote themselves to how best to get capitalism back onto
whatever their preferred path is. Thus, we see a range of ideas
from improved regulation, corporate governance, compensation
restrictions or, at least, review, and changes to tax policy.
Too Little Work
What we don't see, at least among the most quoted
commentators, is any examination of the basic economic
foundations of modern society. I'll summarize.
The prevailing picture is that a market economy is the only
viable system, where "market" is taken as a synonym for
capitalism. That is, entrepreneurs raise capital to start an
enterprise with a promise of returning more than they borrowed.
They harness natural resources and workers to generate products
which they can sell for more than the cost of production and the
excess is "profit". This is used to pay off investors (including
The "market" idea comes in because each enterprise needs to
trade with suppliers and customers. The ability to negotiate
terms between parties is assumed to be based upon supply and
demand. The more ideological think that this is sufficient to
insure a smoothly running exchange, while the more pragmatic
expect to see some sort of rules imposed and enforced by
government. How many rules and how vigorously enforced are the
subject of hundreds of years of debate.
There are two problems with this model, it ignores the role of
the "externalities" of resource availability and waste disposal
and it ignores the structure of the market for labor.
For much of the history of the human race, people could barely
support themselves by their own labor. Work was by hand and
mostly consisted of agricultural production, tools and shelter.
The rise of the industrial revolution and the machine age changed
this. A few people could now produce enough for many. This has
led to a permanent condition where the labor supply exceeds
demand, except in unusual circumstances, like war or pandemic.
The result has been that wages have always remained low relative
to the total wealth produced. In an earlier age it was royalty or
the aristocracy that absorbed the excess wealth. With the rise of
the corporation it was the big industrialists.
This has now reached a new crisis moment. Advanced agriculture
requires only 2-3% of the work force to feed everyone and even
can provide export capacity. Manufacturing is highly automated
and factories that a few decades ago required hundred's now make
more with only dozens of workers. To pick up the slack wealthy
societies have invented a large number of "service" jobs, which
resist mechanization. Hardly anyone makes their own clothing, or
bakes their own bread anymore. With many more women in the
workforce, child care is now given over to a service sector as is
much personal care. The rise of the financial sector and
"intellectual property" has also absorbed a goodly number of
Even with all this make-work we still have excess labor. In
many places chronic unemployment reaches 30% or more. This leads
to a permanent class of disaffected young people who are under
educated, have few marketable skills and are prone to civil
unrest and criminal mischief. If we can make everything that we
truly need with 20-30% of the population what are we to do with
In an earlier time when there was
excess population a variety of solutions were used to bring
things into balance, some deliberate and some not.
1. Pestilence caused by overcrowding and malnutrition caused
large numbers of deaths, especially among the very young and old.
This left the more productive members to do the work.
2. Military adverturism was used to obtain resources from
neighbors or to expand the land available for cultivation. This
remained a popular option up through the end of WWII. It is still
going on in poorer regions of the world, especially in parts of
Africa. The loss of life also helped restore the balance between
workers and consumption.
3. Emigration was handy as long as there were places for
people to go. The safety valve of the US frontier allowed for the
huge influx of people to be accommodated for 200 years. This has
ceased to be an optimal solution since only poor lands are now
available for new settlement. In the US it has meant moving into
the desert areas, while Europe is under strain from those from
the east and south who are attracted to its relatively better
living conditions are are becoming immigrants, in many cases
4. Make-work projects were popular in the USSR and in Maoist
China. The ideology demanded that everyone work, so to maintain
the myth that the system was functioning well, jobs were invented
for everyone. It also helped that both societies were coming off
a feudal base and still had large peasant populations that
engaged in inefficient agriculture. Thus the need for many
superfluous factory jobs was kept to a minimum. The succession of
wars and civil unrest from the 1890's to the 1990's also meant
that there was a continual drain on the work force due to
excessive death and disease.
5. Localism also limited labor competition. With transport
being expensive and difficult and the lack of a reliable
international system of trade funding and commerce, regional
labor inefficiencies could be maintained despite potential
competition from further away. Now a farmer in rural Africa can
be put out of business in a few days by a shipment of cheap grain
from the US. Similarly labor intensive work in high wage
countries can be replaced by low wage work elsewhere and cheap
transport of finished goods to the final market.
There have been two fundamental
changes in the past 50 years that make all prior solutions
unworkable for the future. They are interrelated and both relate
to population. In 1950 the world had 2.5 billion people, it now
has 6.5 and will reach 9.5 by 2050. Such growth is unprecedented
both in the rate of increase and in the actual growth in numbers.
This sudden population growth has created the second change -
limits on resources on a global scale. In the past when local
resources became overused people would migrate as I mentioned
above. The world was "empty" enough that this was frequently not
too difficult. Furthermore the absolute numbers tended to be
small. So that even if an entire society failed only a few
thousand would be affected.
People can no longer migrate in large numbers, in fact the
movement from the land to cities which has been taking place in
poorer countries is only making the situation worse since these
people have no way to make a living off the land as their
ancestors did. The world is now mostly "full" and this is putting
a strain on resources, including arable land and water. So what
is to be done?
1. Population growth control must become systematized. Only
China has any sort of policy in place for limiting population
growth and it is highly flawed. The latest defect to emerge is
the rising imbalance of boys over girls as families abort girls
so that their one child will be male. There are stories about
similar happenings in India.
The best way to limit population growth in high growth areas
is through the education of women and changes in cultural
patterns which will allow them to earn money outside the home.
Educated women have less children and those that they do have are
also better educated and more productive. Educating women is one
of the cheapest things that can be done in a developing country
since teachers are paid at the local wage level and there is no
need for massive development or trade policies to be put in
place. There is also little scope for corruption which may be why
this isn't a more popular option.
In developed countries birth rates have already dropped and if
governments would only stop fretting these societies would be
stable or even start to decline in size slowly in the future.
I'll discuss why this is opposed later.
2. Consumption must be equalized and constrained. Those at the
top must consume less, a lot less, while those at the bottom must
get more that the $1-2 per day that over one billion subsist on.
Giving each of these people an extra $1 per day would cost about
$400 billion per year. We just gave one firm, AIG, $180 billion.
I think the world can afford the $400 billion, it's all a
question of priorities. How to inject this money into local
economies is a subject of endless debate and I won't go into it
here, but there are enough examples of successful anti-poverty
programs in poor countries to serve as templates. Done right
those who could be working would be under this policy.
In the wealthy countries we need to shift away from
consumerism. I realize this will decrease the demand for labor
and I'm arguing that we have too little work to go around as it
is, but we now insist on generating demand so that people will
have to work to satisfy it, I want to break this connection.
3. Break the work to live cycle. Advanced societies don't need
to work full time to live. In fact I've already stated that we
have more people than are needed to supply the essentials.
Several hundred years of (mainly) Christian teachings have
promoted the "virtue" of work, but societies outside this
tradition have viewed things differently. Many of them regard
living as the essential thing and do just enough work to meet
needs. When such societies have come up against the Protestant
work ethic described by Max Weber they have been regarded as lazy
and in need of missionaries to show them the error of their
Some of this still exists in the US, although I don't think
most people would state it in the same terms. There are certain
sectors of the population that prefer leisure to work and do just
enough to get by. Rather than understanding that they have other
priorities in life they are treated as loafers and free loaders.
I'm promoting adopting lifestyles which can get by on less work.
So instead of being forced into make-work jobs people would just
do more rewarding things with their time.
With people doing less work then what needs really to be done
can be spread around to more people. Traditional job sharing is
usually cast in terms of fewer hours per week, but what about a
shorter career period? In the Utopia "Looking Backward" by Edward
Bellamy, not only were hours worked inversely proportional to the
unpleasantness of the task, but people retired at 45. They then
spent the rest of their lives on self improvement, communal
activities and the arts.
4. There are many tasks that are not being done adequately,
but many of them are because they are "uneconomic". If we paid
people to take care of their children and the elderly we would
improve the lot of many. Right now we have perverse incentives in
place. A woman can go to work and then pay someone to care for
her children. This adds to the GDP while having her stay at home
and do the same task herself doesn't. Because the "success" of a
society is measured by GDP and other financial yardsticks human
welfare and life satisfaction are left out of the equation and
policies to promote them are not instituted.
There have been cases where women have been paid baby bonuses,
because leaders were afraid there wouldn't be enough men to fight
future wars and staff the factories. If incentives can be paid
under these conditions why not as a regular feature of life?
In addition paying people to do tasks now usually considered
as volunteerism would add an overall benefit to society. This
means things like mentoring children, teaching reading and
language to immigrants, driving people to doctor's visits and the
like. Much unemployment exists while there are unmet needs. This
is all because everything is measured in financial terms, not in
5. Finally we need to support leisure. For centuries people
have been persuaded to give up their free time because hard work
will be rewarded in the hereafter, but there is no evidence for
this. Better to enjoy the one life you know you have. Society can
foster leisure activities that don't consume large amounts of
resources. This means more arts, sports and community activities.
A bit of sitting at a local bistro and chatting with friends can
go a long way. The popularity of online communities shows that
people are starved for this type of interaction.
People are not
by nature solitary creatures and more community is a net gain for
all. I call it dancing in the streets.