Retooling America: It is time
for new thinking about work and productivity
by Robert Bernstein
Santa Barbara News-Press – 8 November 1992
The end of the Cold War has brought the opportunity to shift from military production to civilian production in a process of economic conversion. I would like to raise another opportunity for economic conversion: Converting unemployment for some to leisure for all. We can all work less and enjoy life more with shorter working hours and more vacation time. The Europeans have been doing this for decades and now enjoy a higher standard of living than we do.
Our industrialized society has made production ever more efficient. Yet the work week has not changed in a hundred years. In recent years it has actually increased. Where has this increased productivity gone?
There are only two realities of economics: 1) What are you making? (what goods and services are people providing) and 2) What do you need? (what goods and services do people want or need).
If these two realities are matched up, that is a good economy; if they are not, that is a bad economy. Why do we now have a bad economy?
The paradoxical answer may be that so many are poor because our ability to create wealth is so efficient. If fewer people are needed to create goods and services in a highly industrialized society then fewer people are employed and receiving paychecks to buy goods and services.
This is exactly what happened in the wake of the first Industrial Revolution. Large numbers of craftspeople were replaced by a smaller number of factory workers. If a machine allowed one person to do the work of ten, nine people were out of a job and the owner of that machine got the wealth of those nine.
Since there were so many people out of work, wages went down by supply and demand. Those who were still employed needed longer hours to survive on the reduced wages. The unemployed and underpaid workers could not afford to buy the products that the industrial age was bringing.
Opium was bought and sold as income for the unemployed and as an escape from the pain of hunger and poverty. Crime was rampant and often violent. Those who owned the factories acquired great wealth while everyone else sank into poverty.
After much struggle and organizing, a very elegant solution was put in place: Shorten the work week from the prevailing sixty or more hours to forty hours.
Shortening the work week meant that more people were needed to do the same amount of work. This meant lower unemployment. Undesirable unemployment for some was converted to desirable leisure for all.
Lower unemployment gave leverage for the formation of trade unions and demands for higher wages. With low unemployment labor commands a higher price by simple supply and demand. Higher paid workers were able to buy valuable manufactured goods and industries like Henry Ford's car factory were the result: Workers making things that they want and need and can afford to buy. (The fact that Henry Ford tried unsuccessfully to smash the unions that brought this success shows that he was a better inventor than economist!)
The problem was that increased productivity was not matched by further increases in leisure and unemployment was the result. This was a major contributor to the Great Depression.
The Depression ended with World War II absorbing the increased productivity. The War put large numbers of people to work making things that nobody wanted or needed. The effect on unemployment was the same as more leisure would have been. We also could have paid people to dig holes and fill them in again or to lie on the beach or to read novels.
That war in some sense didn't end until the 1990s since the Cold War provided plenty of work for people making weapons or being soldiers or doing other activities that provided no needed goods or services.
We are now at a time of great opportunity. We have the opportunity to do what the Europeans did decades ago: Shorten the work week even more and have more vacation time. Europeans typically work seven hour days and have six weeks paid vacation per year, plus many holidays and paid leave for a variety of personal and family needs.
Their standard of living is now higher than ours. They make more things that they want and need than we do and they can afford them. They do not absorb high productivity through doing unproductive work. Opportunity exists to become wealthy, and full employment at high wages means few are poor. They not only have more, they have the time to enjoy it more.
Men and women can both work and can both have time with their families. More leisure also allows more time for citizen and community involvement. It can be an opportunity for lifelong learning of new skills or new pleasures. Leisure allows travel to other places and cultures at a pace that brings understanding rather than stress.
In a global economy it is also important that workers in all countries be allowed to organize for higher wages, more leisure, social security and the other benefits we hope to enjoy. Part of the Cold War was calling any movement for such change "Communist" and a "threat to our national security". That time is fortunately gone forever.
If Third World countries are not allowed to increase wages, then jobs will continue to be exported to those countries and the wage scale for everyone everywhere will be driven down.
Economic conversion in the wake of the Cold War is not a luxury but a necessity. There are many unmet needs of infrastructure development, environmental protection, mass transit, alternative energy R&D, and consumer goods and services that will re-employ many of those who in the past were involved in military production.
But in the long run, we must not think just in terms of "creating jobs" but rather in terms of matching up useful production with needed work. When there are more workers than work to be done, we must think in terms of the benefits of shared leisure rather than in terms of making more work.
We must also think in terms of a sustainable economy. Increased productivity can mean growth, but only within finite limits of resources. The information age has provided an opportunity for growth without undue burdens on resources. Yet this opportunity is largely unachieved as we continue to consume finite resources and pollute the planet.
Inefficiencies in our economy are nurtured at present because of their ability to "create jobs". As one example, truckers work long hours pulling single loads across the country at minimum-wage levels. More use of freight trains would be more efficient with a small number of workers pulling hundreds of truckloads across the country. But our high-efficiency economy ironically precludes this change now since those truckers would be out of work. A shorter work week and more vacation time as a national policy would mean that the truckers could be absorbed as railroad workers working fewer hours per year at higher wages.
Military contractors have become accustomed to high profit margins, cost overruns and immunity from competitiveness and will actively resist trying to compete in the world of consumer goods. Workers at these businesses will resist as well if they feel their jobs are at stake. Low unemployment brought on by increased leisure will ease these fears.
With proper leadership and grassroots support we have the opportunity for a higher standard of living for all the people of the world with more leisure time to enjoy it.
Let's seize this opportunity!