The current discussion about the future of work seems to be monopolised by the version of the future in which technology destroys jobs. It has gained an air of inevitability, as if it is the only possible future. NESTA’s open minded report suggested that the “robots hypothesis” resonated because it connected “two powerful themes in popular culture: the rapid advance of IT, and the startling growth in inequality.” But there is a problem: it hasn’t happened before.

So it is worth considering reasons why it might just be a phase. The economic historian Carlota Perez has a model of technological development that describes five long waves, or surges, since the Industrial Revolution. Each is around 50–60 years and follows an S-curve pattern; the last quarter of each is marked by saturated markets, diminishing investment opportunities and declining returns. The first part of the 20th century was dominated by the oil and auto surge; the latter part by ICT. The ICT wave is now reaching the turning point at which returns start to fall.

On this model, finance is looking for new opportunities, and although it is too early to say what the next platform will be, and we’re still 10–15 years away from it, it is possible to imagine that the next technological surge might be built around, say, a material such as graphene.

Labour market woes

David Autor concludes that much of “the labor market woes” of the past decade are not down to computerisation, but to the financial crisis and reduced investment (starting with the dot.com collapse) and the impact of globalisation on labour markets. He suggests that many middle-skill jobs will prove more resistant to unbundling than advertised; while computers can do specific tasks, turning collections of tasks into self-contained jobs, and then automating them, requires substantial investment. In the long run, people are both more flexible and cheaper.

One implication is that the question of the future of work may actually be about power in the labour market. This leads to broadly political interpretations of the future of working conditions, ranging from Guy Standing’s formulation of the fragile “precariat”, facing intermittent, insecure work, David Weil’s description of the “fissured workplace”, in which many functions are sub-contracted, and the rise of campaigns for the Living Wage.

The technology cycle

The way ahead depends on how you read this bifurcation between the technologists and the sceptics. We don’t know who is right: there are no future facts. But there are some observations that can help shape our perspectives on this.

The first is that these widely divergent views are a feature of this point in the technology cycle. The most excitable projections of the future of the car were seen at just this point on the oil and auto curve in the 1950s.

The technology S-curve in Figure 1, based on the work of Carlota Perez, helps us to understand why. At this point, when the S-curve is at or approaching its second inflection point, people have been experiencing rapid technological change for the best part of two generations. The notion that “the only constant is change” has become a breathless platitude. The technologists’ perspective (point ’t’ in Figure 1) is a projection of this steep ramp. The sceptics note instead sign of falling returns and declining customer utility — and see a flattening of the line (point ’s). The gap is large, and one’s perspective on it is a matter of worldview, not evidence.

Figure 1: the technology S-curve and the future expectations gap

Source: Carlota Perez/ additional analysis by The Futures Company

Second, almost all business innovation and new business value is driven by the application of knowledge, and the way it is embedded in individuals, teams, and systems. The Futures Company has explored this in recent research with the Association of Finnish Work on the idea of ‘high value work.’ This is true of a whole range of knowledge, including knowledge of service and customers, and knowledge of culture and place, as well as technological knowledge. You don’t have to be Google to make this work for you. The most successful businesses use technology to complement and enhance this knowledge, not to replace it.

Third, the trend towards values and purpose in work is a deep and powerful one. If Millennials express a desire for meaningful work, this is also true more broadly. We are on the cusp of a transition to a world where, as Hardin Tibbs (2011) has argued, half of the populations of Europe and the United States subscribe to post-modern values (drawing on Inglehart) of autonomy and diversity. The workplace will not escape this trend.

Fourth, the bargain that businesses struck in the 1980s and 1990s, as they enforced flexibility and “downsized” headcount, may turn out to be a Faustian pact. Shedding jobs and exerting tight control of labour markets increased short-run profits. But at the same time that same control squeezed out their sources of growth. As both the OECD (Cingano, 2014) and the IMF (Ostry et al, 2014) have noted recently, wage inequality has been a further drag on economic growth. To regain growth, they are likely to have to increase wages and give back some control and power to their workforces.

A ‘perfect storm’

My own best guess is that we are not headed for long-run technological unemployment. I have changed my mind about this over the past year as I have spent more time with the evidence.

The explanation that seems best to fit present state of work and labour markets is that it has been through a “perfect storm” of a globalised workforce, the deskilling of routine work (which was highly vulnerable to automation) and the shift of these workers into manual or service work, and aggressive deregulation of labour markets driven by a neoliberal political agenda.

But, and it is a big but, we’re only part of the way through the dislocation to work and to labour markets caused by this perfect storm. Things will not get better quickly.

Looking at the shorter-term impacts, then, it’s possible to see a range of approaches to this turbulence in the world of work. Governments have options, largely about whether to intervene in labour markets to influence work outcomes, or not. But employers are also moving to new strategies, not out of goodwill but through self-interest.

Some scenarios

These options, highly simplified, are shown in the matrix (Figure 2), which contrasts laisser-faire approaches with interventionist approaches.

Figure 2: Indicative scenarios for the future of work

The race to the bottom: This laisser-faire option operates on the principle that labour market flexibility is the secret to increased employment in a globalised labour market. In practice, nearly all countries have increased flexibility and permitted more casualised work over the past decade. The evidence increasingly suggests, however, that the pursuit of low value jobs leads to a vicious cycle of low productivity, low investment, low growth, and low tax and social contribution from business.

This policy approach also involves government subsidy to employers, as low-paid workers are supported by state payments. Increasingly this looks like a political choice that is no longer supported by economic evidence.

Enlightened self interest: It appears that employers who pay better and create better working environments do better financially. Walmart is a relevant case. Over the last decade, its share price has been broadly stagnant, while Costco has outperformed it “by a considerable margin”, in terms of sales, earnings or stock market returns. One reason: according to HBR, far lower staff turnover means knowledge is kept in the company — and drives customer engagement. The Spanish retailer Mercadona similarly invests heavily both in training and stock management systems.

Wages and labour performance are also becoming part of businesses’ reputational capital. See, for example, the increasing success of the UK Living Wage campaign in signing up large companies as “living wage employers”. The public sector can encourage this, for example by giving tax breaks or other forms of support to companies who deliver such commitments.

Keeping the market honest: Turning to more interventionist approaches, the state can take the view that it wants to drive unscrupulous low-wage employers out of the market as a way of driving up standards and investment (low-wage employers spend less on training, and under-invest in capital equipment, which reduces productivity.) They would enforce (and increase) minimum wages, through regulation, law and procurement.

This removes free-riders from the market. Although conventional wisdom has argued in the past that minimum wage legislation costs jobs, this seems to be a weaker effect than claimed.

Re-imagining work: Much of our intervention in the labour market is driven by a view that it creates social goods, from an economic and  But it is possible that such findings are linked to a set of “modernist” social values that are rapidly giving way to “post-materialist” values. People with some income and a degree of social capital who do not have to work already worthwhile things to do, including volunteering. This is part of the argument for the Basic Income: that as we move to the “post-industrial” world envisioned by Daniel Bell, in which skills are more embodied in personal knowledge, that encouraging traditional work is no longer the only, or the best, way to get the social benefits from productive engagement.

The rise of the basic income

Until very recently, the idea of a basic income, a minimum sum paid to all people regardless of their work status, was right of the fringe of political discourse. But it has been moving rapidly towards the mainstream. The idea has deep roots: it goes back to H.G Wells, George Bernard Shaw, even Tom Paine. Betrand Russell promoted it as “a vagabond’s wage.”

The analysis in this provocation helps to explain why. It is a policy idea that helps to improve outcomes whether the technologists or the sceptics turn out to be right. And in the meantime it helps to shore up economies, and individuals, that are struggling in the slow readjustment of labour markets.

If the “robots” hypothesis is right, we’ll need a basic income to make the economy work (markets need people who can afford to buy products). If the market power argument is right, then basic income keeps employers honest, by ensuring they have to pay good enough wages, in good enough conditions, to attract and keep their workers. One interesting side effect is that it would mean that our fundamental notions of the value of paid work could be about to shift, for the first time since the Industrial Revolution.

The full-length essay was originally published at Future Agenda. The image at the top of the post is Ford Madox Ford’s painting Work, in the Birmingham Museum and Art Gallery, via Wikipedia under a Public Domain licence.

In my previous post on Guy Standing’s recent talk on the precariat at Goldsmith’s College, I rehearsed his argument about the economic and political changes that created the precariat, the characteristics of precarious life, and the composition of the precariat. With all of that laid out, he went back again to Karl Polanyi, or at least to his interpretation of Polanyi. He deduces three principles from The Great Transformation that seem relevant to where we are now.

1. Every new forward march has to built on the insecurities of an emerging class, and there must be new forms of action. There must be a struggle for recognition (cf Syriza, Podemos) – which needs to be a process of subjective recognition. He argued that Podemos is leading the polls in Spain because it is a precariat party. In Milan, different but similar, the *sciopero social* or “social strike.”
2. The second struggle is a struggle for representation in the state.
3. The third struggle is a struggle for redistribution. A lot of redistribution is needed: a redistribution of security; a redistribution of the control of time (the precarisat has none); the redistribution of access to quality space (in the face of the shrinking of the commons); the redistribution of access to education (as against standardised training for the labour market; redistribution of financial knowledge and advice; and a redistribution of financial capital (see the discussion of Basic Income below).

The Charter

So what would be in the charter for the precariat? Standing argued that we need to reinvent the French revolutionary trinity of egalité, liberté, fraternité (solidarity), to build on the traditions of republican freedom, rather than liberal freedom.

There are 29 articles making up The Precariat Charter: he didn’t go through them all, and I’m not going to summarise everything he said here. But a reasonable paraphrase is that it’s about finding different ways to think about work, different ways to measure it, and new ways to put limits on it.

Different ways to think about it: reconceptualise what we mean by work (beyond measuring paid labour).

Different ways to measure it: overhaul what we use as labour statistics. More and more of what we do for work is not seen in our statistics.

New ways to put limits on it: regulate forms of flexibility, for example around the amount of unpaid work (with layers upon layers of unpaid application process) employers expect people to do. Every member of the precariat knows they have to do time off the job in order to reproduce themselves for the labour market.

Basic Income

But maybe the most important one is about redistributing income. How? I’m quoting Standing here, quoting Confucius: “The easiest way out is through the door”. And the easiest way to redistribute income is to redistribute income.

This is the case for Basic Income, paid of right to citizens. There have been recent pilots promoted by the Basic Income Network. In the pilots in rural India there were also randomised control groups. The result: far more work, more production, and economic activity. And women also gained more autonomy and power (“we’re not fearful anymore”), as they also did in a pilot in Namibia.

In Alaska the state’s Permanent Fund – under which part of the profits from oil go into a capital fund from which a small annual dividend is paid to all – has created a form of Basic Income. When the scheme started, Alaska had the worst poverty rate in the US and the highest levels of inequality. Now it has the lowest poverty rate and the lowest level of inequality. And in Brazil, the Bolsa Familia, introduced in 2003, is a form of Basic Income: although there are conditions, they are loosely applied. Lula has said it was why he was re-elected. There’s a good recent post on the All That Is Solid blog on why the Labour Party should adopt it as policy, although I live in hope not expectation.

Citizen’s Easing

Of course, there are preconceptions about the Basic Income and its possible adverse effects, although both the Financial Times and the Economist seem to be coming round to it. The sorts of criticism I’ve seen – Standing didn’t spend long on these in his talk – are that it encourages idleness (those pesky “undeserving poor”) and reduces initiative, or that it simply provides a platform for unscrupulous employers to drive down wages. The recent evidence doesn’t suggest this happens; instead people with more security become more active as their fearfulness is reduced.

Standing talked about the need for a small amount of conditionality, since Basic Income is a function of citizenship; migrants, for example, might have to earn basic income in increments through residence. It might be associated with a legal or moral requirement to vote – to fulfil the most basic requirements of citizenship. He also observed that it might be a paradoxical way of resolving some of the probelsm that politicians are most concerned about, such as economic migration within Europe. So, instead of the vast amount of quantitative easing just announced by the ECB – which we know will do wonders for the balance sheets of the financial sector, make bankers richer, and increase inequality – a “Citizen’s Easing,” funding a Basic Income in the poorest regions of the EU, would reduce inequality, increase aggregate demand in those regions, and reduce migration.

The century of economic rights

I’m increasingly persuaded by the arguments about Basic Income. One of the reasons is that the pilots and other examples seem to be positive, and quite strongly so. A second reason is that if we’re worried about inequality – and even the OECD and the IMF (pdf) are now worried about inequality – it seems to be a relatively direct way to do something about it, especially if it is funded through some kind of tax on wealth, capital, or land. A third is that many of the arguments against it (and evidence) are hangovers from a 20th model of thinking about paid work.

As Standing said in response to questions, “The 20th century system of economic distribution lasted for 60 years and it’s gone. The 21st century is the century of economic rights.” And a fourth: that it is a way of correcting the excessive imbalances of power that we now see in the labour market, in which those with least power are coerced into work through sanctions. It gives people the power to say ‘no’.

And I also wonder if the long shift in values that we are seeing means that it is an idea that now fits the landscape. This is a short version of a much larger argument, but following Hardin Tibbs’ sharp analysis (pdf), we’re close to the point where – in the US and Europe – Inglehart’s “post-materialists” are now in a majority, as the “modernists” fade away. The values of post-materialists, which are about “autonomy and diversity over authority, hierarchy, and conformity,” are values that chime with a society that makes the most of a Basic Income, that makes its own work from it.

The image at the top of this post was taken by rUssEll shAw hIggs and is published here with thanks under a Creative Commons licence. Some rights reserved.

The concept of the precariat, from Wiktionary: “People suffering from precarity, especially as a social class; people living a precarious existence, without security or predictability, especially job security.”

After he wrote The Precariat, Standing was asked to do hundreds of talks around the world. From one of these talks, the idea emerged of a Precariat Charter, timed to coincide with the 800th anniversary of the Magna Carta, which he described as being “the first class-based demand for rights and liberties against the state,” albeit that the demands were coming from the class of barons. The Charter of the Forests, two years later, was the first ecological charter.

A “great transformation”

In writing the Charter, there are some contextual starting points.

• “Every age has had its stupidity about what is work and what is not work.” The 20th century is the only century in which labour – meaning work done by an employee for a boss – is put on a pedestal. The economist Pigou summarised the idiocy of this when he observed that if he hires a housekeeper, unemployment goes down and national income goes up. If he marries her, the opposite happens. “In 2015, we still ignore all types of work that aren’t labour.”
• We are undergoing a great transformation. Drawing on Karl Polyani’s book of that title, we have gone through a period of “disembeddedness,” dominated by financial capital that pursues policies that detaches people from social institutions and creates insecurities – until there is a crisis. After the crisis, people are “re-embedded” in those social institutions.
• The disembedded phase was marked by neoliberalism, and has run from the 1970s. It includes commodification, individualism, marketisation, and the systematic dismantling of all institutiions of social solidarity.
• We’ve also seen the dismantling of other institutions, including the firm. The unbundling and the commodification of the firm has led the firm to disrupt itself and become a commodity.
• Along with the dismantling there has been a fragmenting labour process. In the 1980s, in the space of a few years, the world’s labour supply all but quadrupled: first China, then India, then Eastern Europe, all worked used to working for far less than an American or British worker. “It unleashed the Great Convergence.” Governments responded by making a Faustian bargain: an “orgy of debt-based consumption” to prop up their economies. The bargain came to an end in 2008 – and the result since then has been austerity.
• At the same time, the number of the top people in the world whose wealth equals that of the bottom half gets smaller every time someone does the sums. In almost every country the share of wages has gone down and the share going to profits has gone up – meaning an end to Nicholas Kaldor’s belief that these relative shares were stable in the long-run.

The four snakes

The result: there is, in Standing’s view, no real prospect of the incomes of the people at the bottom and edge of the system ever seeing a real wage increase. And more: economies have started to behave in ways that weren’t supposed to happen, at least according to economic theory. Standing calls these “the four snakes.”

• When productivity went up, wages used to go up in parallel. No longer.
• When employment went up, wages went up. No longer. Employment goes up, wages go down.
• When employment went up, tax revenues from employment used to go up. Now it goes down – “a remarkable development.”
• When profits went up, wages went up. Again, no longer true.

The main reason for this is that we’ve moved into an era of rentier capitalism. And the result is that we have the most “unfree” system of market capitalism ever constructed. So, for example, millions of patents are filed with WIPO every year – and the number is growing every year – which creates a 20-year monopoly. Copyright extends 50 years after your death, longer in some markets. Corporations have become adept at financial games such as share buybacks, which are good for the share price and not much else.

The new class

At the bottom end of the economy, as a result of all of this, we’re seeing the emergence of a new class: the precariat. (He noted that he used to be widely criticised for calling the precariat a “class”, but people mostly seem to be coming round. It’s worth looking at the argument between Jan Breman and Standing on this.)

So the new class structure goes as follows. The plutocracy is at the top – “a hugely powerful group.” Then there is a salariat, made up of the white collar corporate workers, which was once expected to become the dominant employment group. There are the professions, who tend to be project oriented. Then there is the old working class, or the proletariat. That part of the economy is shrinking everywhere in the world. Below them, there is the precariat, and then the lumpen proletariat. But it is important to remember that the precariat is not an underclass.

Distinctive relationships

The precariat is characterised by a number of things:

1. Distinctive relationships of production: it is habituated and disciplined to accep unstable forms of labour, and of life. There is frequent innovation in forms of precarious labour, such as crowd-sharing and zero-hour contracts, which have forced wage rates down and forces employee effort up. There is no sense of occupational identity: they move between jobs and roles. They have to do a lot of work for labour that doesn’t get counted: training, networking, filling in forms, which all leads to the rise of the “precariatised mind.”
2. Distinctive relationship of distribution: the precariat is the first class in history that has to rely almost entirely on money wages. It has no access to work-based benefits or community benefits such as the welfare state. Real wages are falling, and are fluctuating much more than they used to, and so the precariat experiences uncertainty, constantly facing ‘unknown unknowns.’ Members also suffer from acute poverty traps. Low wage jobs face a high marginal tax rate as they go into work, much higher than higher income groups or corporations. They also face precarity traps, such as (deliberate) bureaucratic delays in paying benefits.
3. The precariat has a distinctive relationship to the state. For the first time in history we have a group that is in the process of losing rights – cultural rights, economic rights, social rights. They are being converted into *denizens*.

In summary, then, the ‘4As’ of the precariat life are alienation, anomie, anxiety and anger.

So, he argues, this “new class” is outside of the institutions of social democracy (such as trades unions). But members of the precaraiat are free of the false consciousness of thinking that your job is Nirvana. They have that freedom that comes from insecurity; just, I guess, another word for nothing left to lose. And if they are a class, they are still only a class in the making.

Composing the precariat

There are three elements to the precariat, effectively generated (this is my phrase, not his) by process of class decompsotion and recompositon.

• One group has fallen out of old working class communities. They would like to recover the past, but they know that that’s not going to happen, They are drifting to the political right.
• A second group is made up of migrants, and the children of migrants, minorities with “no sense of home”. Every so often there are “days of rage” as seen in the 2011 riots in London, in 2013 in Stockholm – and, my addition, in the banlieue in 2009.
• The third part is an educated minority who leave college and discover that there is no future in terms of the salariat or professional jobs they had been encouraged to expect. And this part is growing, while the first group is shrinking,

In the next post I’ll discuss what this means for political change – and how it links to the idea of a Basic Income.

The image at the top of the post is “The pyramid of capitalist society,” inspired by the famous 1911 poster by the International Workers of the World. More information at the Solidarity Federation’s website.