Markets and humans

Brank Milanovic has an interesting post on what he decries as the commodification of life by markets, something that will surely strike a chord with the many fans of Michael Sandel’s [amazon_link id=”0241954487″ target=”_blank” ]What Money Can’t Buy: The Moral Limits of Markets[/amazon_link] and others. While I absolutely agree that there ought to be limits to what resources are allocated by markets as opposed to other means, Branko lost me in this early paragraph: “The most obvious case is commodification of activities that used to be conducted within extended families and then, as we became richer and more individualistic within nuclear families. Cooking has now become out-sourced and families often do not eat meals together. Cleaning and child-rearing have become more commercialized than before or ever.”

The trend towards buying ‘domestic’ services outside the home dates back decades now, linked to urbanisation and women’s participation in the paid workforce. The switch from home cooking to ‘outsourced’ meals, and similar market activities, has saved women millions of hours of labour in the home. I’m all for it.

Indeed, one of the social advantages in general of a switch toward markets (or ‘commodification’) is precisely the anonymity of the market as compared with the personal (patriarchal) power relations involved in from home production and household/village economic activity. Robert Putnam’s classic [amazon_link id=”0691037388″ target=”_blank” ]Making Democracy Work: Civic Traditions in Modern Italy[/amazon_link] touches on this in its contrast of northern and southern Italy – the south being more family-centred, with ‘strong ties’, in all sense of the word family, the north more oriented toward ‘weak ties’ in the wider urban community. Partha Dasgupta’s Economics of Social Capital is very good on this tension.

Branko’s post goes on to criticize the so-called ‘gig’ economy. Again, I think this isn’t so straightforward. Some of the ‘gig’ corporations are deeply unpleasant and the conditions of work unsatisfactory. However, those conditions are determined by workers’ outside options in the job market, so corporations’ behaviour to these workers can be improved by the framework of labour law and its enforcement. There is every reason to believe – from the numbers participating if nothing else – that very many people appreciate the opportunity to make money from participating in this segment of the economy; and indeed that it offers a route into the formal job market for people who otherwise find it hard to participate (see for example this on Uber in France by Anne-Sylvaine Chassany).

Branko writes: “The problem with this kind of commodification and flexibilization is that it undermines human relations and trust that are needed for the smooth functioning of an economy. ” This seems obviously true, and indeed the tension was identified by Daniel Bell in his [amazon_link id=”B0028QL03K” target=”_blank” ]The Cultural Contradictions of Capitalism[/amazon_link], and all its forerunners.

I’d certainly agree that western economies are not in a good place in terms of this balance now. But to illustrate this, I wouldn’t pick on the exactly the examples of markets that empower women and marginalized workers.

[amazon_image id=”184614471X” link=”true” target=”_blank” size=”medium” ]What Money Can’t Buy: The Moral Limits of Markets[/amazon_image] [amazon_image id=”0691037388″ link=”true” target=”_blank” size=”medium” ]Making Democracy Work: Civic Traditions in Modern Italy (Princeton Paperbacks)[/amazon_image] [amazon_image id=”B0028QL03K” link=”true” target=”_blank” size=”medium” ]By Daniel Bell – The Cultural Contradictions Of Capitalism (20th Anniversary Ed)[/amazon_image]

8 thoughts on “Markets and humans

  1. The way you solve this problem is actually to nationalise the minimum wage. The idea is called a ‘Job Guarantee’:

    The government offers a job at the living wage to all fitted to the person working for the public good. The definition of ‘work’ is expanded. Work could include things such as open source programming, social care, environmental work, teacher assistants, community dial-a-ride services, looking after a child under a certain age and so on. We would have to sample local areas to see what needs doing.

    There will be some contracts that can be ‘shelf contracts’ that are given a fixed ‘take it or leave it’ price. Replacing the central reservations of motorways with concrete is one type of contract that has served well as a counter-cyclical balancer over the last few years. A set of those should always be available so that contractors can drop onto them when the private sector has one of its wobbles.

    That then eliminates worse jobs via simple competition. Unlike a minimum wage it does not require enforcement by a police force, and it also requires businesses to provide good *conditions* as well as guaranteeing a minimum wage. If you are working part-time elsewhere, then you can ask for a top up to full time from the Job Guarantee. You’ll never be short of work, or a living wage.

    The retired, sick and the disabled are treated as working full time.

    Because of this:

    (i) People can choose to go onto social security via the JG. This disciplines the standard economy. All of a sudden ‘no deal’ is an option in the normal business jobs market and that makes the job market behave, well, like a market.

    (ii) Because they are working, the number of people on a JG becomes less of a social issue – no more ‘bring down unemployment’, no more ‘shirkers’. Therefore normal businesses can be allowed to go bust, not pay redundancy, etc because the JG will catch people who lose their jobs during a retrenchment. That disciplines the spending and wage channels since there need be no bailouts or the ‘special industries’ that pump-priming requires. Overpaid workers get an imposed wage cut when they are forced to move to the JG as do greedy bosses. ‘Corporate confidence’ is no longer of overriding concern.

    (iii) People on the JG are working and producing output – so they are more socially productive than on unemployment benefit or income guarantees. In addition they have something to do with their day, so they are unlikely to be isolated or be exploited by extremists. And because they are seen to be working they become *cheaper to hire and more productive* from a normal business’s point of view (there is always less hiring risk if you know people are working.) That eliminates a current risk cost completely from the economy (the ‘long term unemployed’ issue.)

    (iv) Forcing businesses to compete for staff should accelerate the capital development of the economy, and replacing jobs with better machines is what we want the private sector to do. People need to be expensive to use and valued, and jobs in the normal business jobs market must not be sacrosanct. Business models that fail, must be allowed to fail without any sentimentality. We need to ensure that businesses in a capitalist economy are treated like cattle, not pets.

    (v) The JG is a *very* strong auto stabiliser. If the living wage was set at £10 per hour and you worked 37.5 hours a week you would get a gross wage of £375 per week. That’s five times the current rate of Job Seekers Allowance of £73.10 per week. When you start a Job Guarantee the first thing you do is pay people the wage while you ramp up the job side. That money given to people will in the short term bring the effective demand of the economy up to speed causing the economy to hire any remaining skills off the pile – reducing the number of people on the Job Guarantee.

    Only when that effect subsides do you then look for and create jobs *that match the people* on the Job Guarantee. That’s the key difference of JG that solves the matching problem. Find people something to do, not come up with something to do and find the people.

  2. I followed a link to the post, and website, from Mr. Milanovic’s response on his blog (I have not yet read his response). I’m glad I did, and I’ll very much enjoy reading back through the archives.

    My Comment: You said: “The switch from home cooking to ‘outsourced’ meals, and similar market activities, has saved women millions of hours of labour in the home. I’m all for it.”

    I’m wondering if it is women, or men, the commercial food industry saved by acting to fill the growing home labour gap, created by the desire of women to participate more in the work force and the collective male will to maintain power dynamics, with ‘outsourced foods’.

    It may well be that by taking over the home, the markets didn’t so much free women –who I choose to believe would have gone to work regardless of the existence of, say the tv dinner– as it did protect men from having to contribute a larger portion of their time to domestic acts. It delayed and muted the restructuring of the familial order: instead of forcing men into the kitchen, women still did the cooking, but now she could do it after work in 10 minutes. Maybe the anonymity of the market served only to obscure the patriarchy, denying and delaying the (hopefully) inevitable confrontation and dismantling of it.

    I confess, I have no idea how one would even begin going about proving this distinction and, being that I agree with the spirit of you article, perhaps this is merely an irrelevant discussion of semantics developed in real time as I read your post. However, given the current continued societal grappling with housework, cooking and childcare being seen as the woman’s job, and the whole swaths of sad men with no idea how to do any of the aforementioned, maybe its worth talking about?


    P.S: I just noticed that the human verification is a math problem and I love it.

    • Time use data might partly answer your point. From memory, it shows decreasing time on domestic work by both men and women but especially the latter, so there is still a gap but it has narrowed. But i’d need to check, and it could vary between countries too.

  3. Pingback: Save us from Commodification | Koenfucius

  4. Pingback: Treks and hikes | Vantage Markets

  5. Pingback: A rant about markets | The Enlightened Economist

  6. Pingback: The market domain and the social domain – further thoughts on commodification | Koenfucius

Comments are closed.