On the Productivity of Unemployment

August 11th, 2011  |  Published in Political Economy, Work  |  4 Comments

There’s a joke going around, due originally to Daniel Davies*, to the effect that unemployment is an extremely low productivity “industry”, and that “There have been no major efficiency gains in unemployment in the last hundred years.” All of the linked bloggers use this to make a case for an “industrial policy” of sorts, oriented toward moving people out of unemployment into some higher-productivity activity.

That’s all well and good, but it made me think: maybe we should also be figuring out ways to increase the productivity of unemployment! That’s a point that’s sort of implicit in some of my recent posts, where I argue against the standard paradigm in which wage labor seems to be the cause of, and solution to, all of life’s problems. If you believe, as I do, that it’s a good idea to reduce the amount of time people spend in paid employment, it would also be nice to increase the productivity of whatever they do in the time thus freed up.

And I would argue that we have, in fact, seen improvements in the productivity of unemployment–or at least, of non-employment. People without jobs can work in a community garden, or contribute to Wikipedia, or post funny videos on YouTube. Those may be small things, but they do improve our collective well-being–and two of them would have been impossible ten years ago.

Improving the productivity of non-employment is what I think Juliet Schor is on about in her recent book, Plenitude:

It’s based on an idea that’s novel to the sustainability discourse, but is has been around in standard economics since the 1960s: when the returns from one activity fall, shift one’s energy and time into others. This is the theory of time allocation pioneered by Chicago economist Gary Becker. It’s also just plain common sense.

In the year 2010 this approach counsels shifting out of [Business As Usual] jobs, to local, small-scale activity that helps reduce dependence on the market system and lowers ecological footprint. Why is this attractive? One reason is that the BAU market has less to offer. It is failing to provide adequate jobs on a staggering scale. An estimated 26 million Americans are either unemployed, under-employed or have gotten discouraged and stopped looking for work. That problem won’t go away even if the recovery continues. Incomes have fallen and government services are being cut. Wall Street and the wealthy have protected their outsized share of society’s production, but for the vast majority the prognosis is austerity.

There’s some localist, “small is beautiful” stuff going on here that I don’t particularly care for, but this is still a valiant attempt at crafting a new paradigm. And Schor does at least understand the importance of replicators.

* By the way, Daniel Davies is the best blogger in the world. That’s just a fact, you should read him if for some reason you don’t already. Who are the greatest bloggers of all time?. Think about it. D-squared, d-squared, d-squared, d-squared and d-squared. Because he spits hot fire.

  • Vince

    Great blog! And I agree about this groping for a new paradigm being a good thing. I’m curious, though: Why the aversion to the “localist, ‘small is beautiful’ stuff”? Is it just an aesthetic thing, or is there some deeper reason? (btw that’s an honest question, not a claim in disguise — I’m sort of a blank slate with regard to this.)

  • Peter Frase

    It’s not just aesthetic, I think fetishizing the small and the local is an impediment to our thinking. I like living in a densely interconnected, cosmopolitan world. And I don’t think it makes sense to rule out production processes that take place over a global scale, if we can find ways to do it that are ecologically and humanistically acceptable.

  • http://ecologicalheadstand.blogspot.com Sandwichman


    I think Juliet is trying to show “it’s already happening”, but as a consequence celebrates idyllic but rather peripheral developments. Chris Carlsson employed the same rhetorical strategy in his Nowtopia, a few years ago. The obvious point is to appear both optimistic and concrete at a time when both are in short supply.

    On a related note, my unpublished manuscript, Jobs, Liberty and the Bottom Line is being featured this week at the P2P Foundation blog. What I try to elaborate there is what type of new institution is required to “increase the productivity of unemployment”. My book may even be taken as an example of that, having been written in the time freed up by a three-day workweek.

  • http://ecologicalheadstand.blogspot.com Sandwichman

    By the way, Peter, (and anyone else watching)… here’s a funny one. Nick Rowe at Worthwhile Canadian Initiative posed the question of government wage reductions as a Keynesian employment strategy. So I countered with an equivalent reduction in working time. Nick, however, objected on the basis that HIS proposal of wage reductions and proportionate extra hiring “increases output.” I simply cited Lionel Robbins in reply:

    “The days are gone when it was necessary to combat the naïve assumption that the connection between hours and output is one of direct variation, that it is necessarily true that a lengthening of the working day increases output and a curtailment diminishes it.”