A recent post on the Believe in Scotland Facebook page prompted a debate on Scotland’s future constitution. It provoked opinions on the micro details of the independent nation, but not much on actual philosophy or wider aspirations. The minutiae that were pored over and pulled apart were, in my opinion, ‘mostly relevant for the future electorate to base their choice of government on political party manifestos’. These are not the issues that should weigh down a constitutional framework.
A quick scan over the UN Declaration of Human Rights is an enlightening experience. It is quite concerning that some rights are disregarded by the ‘developed’ nations of the world. Perhaps this would be a good starting point, a foundation for a constitution, although aspiration for where Scotland is going should be included.
The right for any fit and able person to work caught my attention. Very few developed nations aim for real full employment. Despite a constant media assault on the unemployed ‘scroungers’ in the UK, the government forces a percentage of the UK workforce to be out of work through their pursuit of the Non-Accelerating Inflationary Rate of Unemployment (NAIRU)
NAIRU as explained by the UK treasury
The justification for millions of people to be excluded from the workforce is that they act as an economic stabilizer. These people are the nation’s defence against inflation. The government’s thinking on this is explained in this 2017 letter from the then Chair of the Treasury Committee, Rt Hon Andrew Tyrie MP.
This is quite a rabbit hole to go down, so I will avoid going into more detail here but will point out why this is so important. The dependence on an unemployed buffer stock to control inflation has consequences on the individuals and communities affected. Inflation has been stable for some time, aside from recent shocks, however the same outcome could have been achieved with a buffer stock of jobs. This has different consequences and the effect on the distribution of wealth between the options is crucial.
When work is (even slightly) scarce, relatively, the balance of power is with the business owners. Even when there is only one person in involuntary unemployment in the whole country, business has no incentive to take that person on. There is no incentive for businesses to compete on wages, ecological and environmental standards, working conditions or benefits. The only thing business needs to worry about is profit. When chasing profit, workers and everything that workers require and desire, are costs that reduce the figure on the bottom line.
The superior economic anchor
A job guarantee scheme (buffer stock of jobs) counteracts the economic impact of the business cycle, automatically balancing the economy. Economist Pavlina R. Tcherneva explains the process in her book The Case for the Job Guarantee. The boom-and-bust nature of private sector business means the labour force expands and contracts constantly as productivity ebbs and flows. As workers get laid off from private sector jobs in a downturn, the Job Guarantee (JG) scheme absorbs them at a set minimum, but liveable wage.
The effect is to arrest the cumulative effect caused by an unemployed buffer stock, as workers are kept in employment so do not suffer entropy of skills or physical ability, and have disposable income to spend into the economy. The current unemployed buffer stock tends to result in long-term unemployment for some, who tend to be disregarded by hiring firms. The economy also suffers through the loss of spending power through below-subsistence level benefits, which leads to further lay-offs and a continuation of the downward spiral.
Useful explainers
Bylines author and economist Ellis Winningham, published a series of articles on the subject last year highlighting the benefits of the Job Guarantee over another popular proposal for social engineering, the Universal Basic Income. The articles provide an excellent guide to both proposals and why it should be concluded that the JG is the superior policy for a stable economy in the long term.
Another recommendation is a book recently published by Lola books, written by Bill Mitchell and Warren Mosler, entitled Bill and Warren’s Excellent Adventure. From opposing ends of the spectrum, one a Marxist and the other a former hedge fund manager and bank owner, the book relates how their paths converged on the understanding of the money system and the fundamental responsibility of a government issuing and taxing its own currency, to be fully responsible for unemployment. This joint understanding led to the concept of the job guarantee.
There are many secondary consequences to such a policy. The scheme would run permanently, in the background becoming the floor for wages and conditions. This ensures workers’ rights, as any employer who does not meet these minimum national standards will lose employees to the JG scheme. Oppressive bosses or managers causing toxic working environments will likewise find themselves bereft of staff. The balance of power is shifted from capital to worker.
The onus switches from debt-laden staff fearing redundancy, to employers bending over backwards to keep staff. Students will be encouraged to pledge their future to organisations before leaving school or further education. They will be lavished with promises of further training, advancement models, conditions and benefits.
Switch sides to turn a negative into a positive
There is an accounting concept that is largely ignored, at present, illustrating the shift in influence.
Sale price achieved – Material cost of production = Profit + Labour renumeration
How the second part of this equation is divided, largely decides the distribution of wealth in a society.
As I see it, labour is currently on the left side of the equation and treated as a cost. The psychological shift afforded by moving the labour cost of production to the right-hand side elevates the worker in the hierarchy of value. It evokes a far more co-operative outcome to the production process. A better balancing of accounts.
The enhancement of working life
Work/life balance can also be better achieved where precarity is no longer a stress on everyday life. When a family is burdened by debt – and work is not guaranteed – there is pressure to tolerate, unquestioningly, any oppressive action. Rocking the boat has too many unknown and unacceptable consequences.
The self-employed, assuming responsibility for their own subsistence by assuming a 24/7 work ethic, causes free time to become guilt-ridden for fear of foregoing earning potential. The security of employment offered by a JG would encourage these workers back into a team environment once more. Here the benefits on mental health of cooperative work and freedom from self-imposed isolation will manifest themselves.
The concept of a ‘wellbeing economy’ appears to be extremely popular with Scottish voters. It may be that including the guarantee of a job in the constitution of the country, would ensure the right to work for the country and that the JG framework is the most effective vehicle for implementing the policy.
Coming soon
The study of the job guarantee and current employment conditions resulted in a journey through documented thinking on the evolution of work over centuries. Currently, speculation on the effects of technology, such as artificial intelligence (AI) on future work has been centre stage in popular debate. I find much of this to be sensationalist and unrealistic. My next article will be an examination of the contemporary concept of work and how I see our work lives evolving.
