Later On

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Crafting a Charter for the “Precariat”: How to Build an Economy That Works for Everyone

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First, take a look at the charts in David Leonhardt’s NY Times column today.

A blog reader sent me a link to this interesting article by Leslee Goodman at Truthout:

Development economist Guy Standing, of the University of London, has popularized the term “precariat” to describe a global social class whose most salient characteristic is precariousness. Standing blames neoliberal economic policies, globalization, automation, and outsourcing for the rising number of precariats, who, if not completely locked out of the economy, must increasingly compete for temporary employment at low wages — to the point that they can’t pay off student loans or consumer debt, qualify for mortgages, save for retirement, or make plans for the future. Many are essentially one paycheck away from destitution.

Standing’s solution is a 29-plank platform of policy changes he calls “the Precariat Charter.” Some are as basic as redefining work to include all productive labor, paid or unpaid, while others are as “revolutionary” as unconditional basic income (UBI), which would pay a basic, livable stipend to every man, woman, and child who is a legal resident of a country. Although to capitalist ears this sounds like a recipe for apathy and a reward for laziness, in the places it has been implemented it has, instead, unleashed creativity. Freed from concerns about basic survival, people have used their unconditional basic income to care for children or aging parents, volunteer for favorite causes, pursue creative work or other passions, and start their own businesses. Recipients have also been able to take low-paying temporary jobs offered by employers — knowing that the wages, added to their basic income, will be adequate to make ends meet. Guaranteed income has boosted productivity and happiness, not dampened it.

Standing is no starry-eyed idealist. From 1975 to 2006 he worked at the International Labor Organization (ILO), and as director of its Socio-Economic Security Program. Toward the end of his tenure, he was coordinating editor and main author of the ILO’s Economic Security for a Better World, a global report issued in 2004. He is also a founding member and honorary co-president of the Basic Income Earth Network (BIEN), an international non-governmental organization that promotes basic income. BIEN’s members include economists, philosophers and other social scientists from over 50 countries.

Standing has a doctorate in economics from the University of Cambridge and a master’s degree in industrial relations from the University of Illinois. His most recent book is Basic Income and How We Can Make It Happen (Penguin Books, 2017). Other books on our current economic crises and how we might create an economy that works for everyone include Basic Income: A Transformative Policy for India, with Sarath Davala, Renana Jhabvala and Soumya Kapoor Mehta (London and New Delhi, Bloomsbury Academic, 2015); The Precariat: The New Dangerous Class (London and New York, Bloomsbury Academic, 2011); A Precariat Charter: From Denizens to Citizens (London and New York, Bloomsbury Academic, 2014), and The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay (Biteback Publishing, 2016).

In his 2011 book, Standing argued that if governments fail to address the needs of the precariat class, their societies would witness increasing violence and the rise of far-right politicians — scenarios that appear to be playing out in many countries around the globe, including our own.

Standing travels and lectures widely. He spoke with me by phone on two occasions while addressing university audiences in Massachusetts.

Leslee Goodman: You say that globalization has created a new, worldwide class structure. What do you mean?

Guy Standing: We’re undergoing the painful construction of a global market system. The initial phase, which began in the 1980s and continued up to the crash of 2008, was dominated by a certain brand of economics known as neoliberalism. Margaret Thatcher and Ronald Reagan were the quintessential spokespeople for this ideology, which emphasized “liberalized,” or deregulated markets, individualism, competitiveness, and an erstwhile “meritocracy.” Neoliberalism coincided with a huge ongoing technological revolution, particularly in electronics and robotics, combined with the creation of a global labor market, to give rise to this new global class structure, which transcends national class structures.

Essentially what we’ve got is a plutocracy. Everybody’s talking about it as the top one percent, but it’s actually much smaller than that — more like the top 0.001 percent. These are the 62 richest people in the world, who own as much as the poorest half of the rest of the world’s population, according to Oxfam’s 2016 annual report. The incomes of the plutocrats keep skyrocketing exponentially — mostly from forms of rent and investment income. Below them is an elite — millionaires and multimillionaires, perhaps five percent of the world’s population, who serve the plutocrats. Far below these two income groups, are two other groups. One I call the salariats, consisting of people with long-term employment security, pensions, paid holidays, medical insurance, and all the trappings of salaried employment. This group has also been gaining an increasing percentage of its income from capital, not from wages, which makes them different from those below them. When I was doing economics many years ago at Cambridge we expected this salaried group to be the overwhelming majority by now, but that hasn’t happened. Only about twenty percent of the population at most is now in salaried stable employment.

Alongside the salariats you’ve got another group, the proficians, who are people who don’t necessarily want employment security; they’re happy to freelance in “the gig economy,” going from contract to contract. Many of them make a lot of money from short-term projects as consultants and various types of professionals. However, they have no paid leave or retirement, other than what they provide for themselves. They’re also living a very frenetic lifestyle — always in search of their next gig. Their numbers vary enormously from country to country, but run anywhere from five to ten percent of the population.

All of the top four groups are detached from society below them. The next rung down in terms of incomes is the old proletariat, or working class. Essentially it consists of people who had stable, fulltime employment a generation ago — manual jobs that were the mainstay of the trade unions and various big corporations engaged in manufacturing. But this class is shrinking all over the world. It now constitutes maybe ten percent of the working population worldwide.

Below them are the precariats, whom I’ll define shortly. And below the precariat is an underclass consisting of people who are out in the streets and losing their lives to social illnesses. Although their numbers constitute only two-to-five percent of the population, they’re rising. However, it’s important to differentiate the underclass from the precariat because right-wing politicians like to lump them all together. The precariat is not an underclass. It is a rapidly growing class because the global production system is pushing more and more people into it. However, it already constitutes forty to fifty percent of the population.

Precariats are subject to unstable labor and unstable living. They are in casual jobs, temporary jobs, part-time jobs with no benefits, and various types of piecework or insecure contracts. But even more important, people in the precariat don’t have an occupational identity — an occupational narrative they can give to their lives. They don’t feel they’re in control, developing their competencies, and building a career. So they’re insecure now, but worse, they’re insecure about the future.

Third, people in the precariat have to spend an increasing portion of their time doing work that is not remunerated — such as looking for work, updating their résumés, tailoring their résumés to fit various types of jobs, acquiring additional skill training in the hope that it will land them a better-paying or more stable position, and so on. Thus, they find that their time is increasingly out of control. They can never relax or “take a day off,” and they suffer from what I call a precariatized mind. They don’t know which way to allocate their time optimally because the future is so uncertain.

Yet another feature of the precariat, which is still part of this first dimension, is that it is the first class in history for which the average level of education is above the level of the jobs they can get. This creates a sort of existential insecurity.

The second dimension is that the precariat is distinct in having limited access to many types of income and support. Unlike other groups, it has to rely almost entirely on money wages for all its needs. It doesn’t get non-wage benefits provided by employers; nor rent and other forms of capital income that the plutocrats, salariats, and proficians do. It doesn’t live in a village where people look out for each other; or have access to union or guild support when times are hard. Further, it has shrinking access to state-sponsored benefits, which are always being cut and increasingly restricted to those who are deemed “deserving.”

In addition to being dependent solely upon wages, precariat wages are stagnant or falling. They’ve been falling for thirty years in many countries, including of course the United States, Germany, France, Great Britain, and Japan. It’s an extraordinary global phenomenon and it’s partly to do with the emergence of the newly industrializing countries, most importantly China, but also other countries that have been emerging with very, very low wages.

Globalization basically has enabled an additional two billion people to enter the global workforce simultaneously, driving down wages everywhere. As a result, many people in the precariat, particularly in developed countries, are living on the edge of unsustainable debt. This debt is a form of exploitation because it’s systemic: You go to college and come out with debt. If you’re lucky enough to land a job, you find you have to borrow to make your wages last to the end of the month. Your rents keep climbing out of reach of your income. You cannot pay for medical bills, car repairs, or any other emergency, so you’ve got the threat of debt hanging over you all the time.

In addition, changes in welfare policies over the last twenty years mean that many in the precariat suffer from “poverty traps.” If they’re receiving subsistence benefits and then get the possibility of a low-wage job, they face a dilemma: taking the low-wage job might mean that they actually lose total income rather than gain from it. I call this a moral hazard. If they take the job and don’t report it, so as not to lose their benefits, they’ve fallen into an “immoral hazard.”

All of these phenomena lead to the third dimension, which is that the precariat is unique in experiencing a loss of rights. Precariats lose civil rights, for example, when they can’t afford access to justice, or if they’re migrants, or have a criminal record, and aren’t entitled to the civil rights of citizens. They’ve lost cultural rights because they don’t belong to communities that give them identity, purpose, mutual support, and so on. They’ve lost social rights because welfare reforms are more dependent upon means-testing and aren’t available to certain people at all. Precariats are also losing economic rights because they often can’t practice the skills that they’ve acquired. Finally, they’re losing political rights because they don’t see in the political spectrum parties that represent their interests, needs, and aspirations. I say that they’re not full citizens any longer, but denizens. The entire system is creating a “perfect storm” of conditions for alienating and angering large numbers of people. Which is why I call the precariat the new dangerous class.

How has neoliberalism gotten us here? . . .

Continue reading.

Written by LeisureGuy

8 August 2017 at 9:53 am

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