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A society of leisure is richer than one devoted to financial growth

by William McGaughey

 

As we look to the future, economic expectations are pessimistic. The unemployment rate is expected to remain high for some time. Wages and benefits will not increase as rapidly as in the past, if at all. GDP growth will be modest. Meanwhile, retiring Baby Boomers will put increased pressure on the Social Security and Medicare funds. Health-care costs will continue to soar. The earth’s nonrenewable resources will become more scarce and expensive as the human population grows. No, our grandchildren’s future may not be bright.

This is so if we accept certain assumptions some of which may not be true. The first assumption has to do with the nature of money. Money is essentially fictitious. It is printed slips of paper or electronic recordings by banking institutions, supported by faith in government. If push comes to shove, this can be made to go away. Debts of whatever magnitude can be eliminated by refusing to pay them. Future generations of Americans can renege on promises of retirement and health-care support for today’s Baby Boomers. Whether that happens depends on how bad things get.

It is, instead, the physical realities which ought to concern us more. We are polluting the earth’s water and air. We are depleting its energy and mineral resources. Unbounded population growth will collide with a fixed resource supply. Nuclear, chemical, or biological technologies, and the threat of newly evolved diseases, pose a danger to human existence.

I say that the future is grim - if we keep doing things as we have done in the past. Given a few changes, however, our future becomes considerably brighter. Granted, the per-capita consumption of materials will likely decline as resource limitations kick in. It may be that Gross Domestic Product (GDP), which measures the volume of a nation’s money-making activities, may increase less robustly than in the past. However, these things are not so bad. Neither GDP nor per-capita consumption of material goods is synonymous with economic satisfaction. They do not necessarily bring increased happiness.

productivity improvements, increased output, and shorter hours of work

How could our happier future be induced? Start with this fact: Over the years, investment in labor-saving technologies and equipment has allowed a greater volume of consumer goods to be produced for a given input of labor, measured in worker-hours. Alternatively, the same volume of goods could be produced with less labor. Either way, it is a gain for humanity. The ratio of goods available for consumption to the human toil needed to produce the goods has been increased. We can each consume more goods than before, or we can consume the same amount of goods while having to work fewer hours. What used to be called “living standards” has increased.

The result, in fact, has not been so fortunate. If the economy continued to produce an ever growing and expanding amount of useful products, we would become ever happier and more satisfied consumers. Yes, the volume of product has expanded - which economists call “output” - but it has also become increasingly less useful. Limitless economic expansion tends to create self-defeating kinds of products: We impose ever increasing educational requirements upon the work force, or we let lawyers have their way with legitimate businesses, or more people become sick and need health-care services, or the nation is continually preparing for war, or increased crime leads to increased prosecution and incarceration of criminals, etc., etc. Such activities, while undertaken as “necessary evils”, do not contribute to human happiness or prosperity in a real sense. From the standpoint of living standards, we would be as well off if the activities simply did not take place.

Increased labor productivity might also have afforded shorter working hours. This, too, has not happened. After the eight-hour day and the five-day week were gained in the early 20th century, the average workweek for full-time workers in the United States has remained unchanged or slightly increased. Unlike their counterparts in Europe, U.S. workers have not made recent gains in leisure in the form of longer vacations or more holidays. Instead, work has become more stressful as employers strive to increase profits by laying off workers and requiring the remaining employees to do their work. The uncertainty of employment and unemployment also adds to the stress.

It used to be that organized labor agitated for shorter work hours and achieved this benefit through collective bargaining. That has ceased to be the case. Government, too, used to try to legislate shorter hours. For instance, the U.S. Senate passed a 30-hour workweek bill in 1933. It has now been a quarter century since a shorter-workweek bill was introduced in Congress, and none have come close to passing or being signed into law.

But let’s assume that unemployment remains stubbornly high and the Obama administration is forced to “think outside the box” with respect to increasing the number of jobs. Let’s assume that it supports amendments to the Fair Labor Standards Act that would effectively create a four-day, thirty-two hour workweek to replace the five-day, forty hour week. Let’s also assume that legislation is passed to give U.S. workers a three-week minimum annual vacation, bringing us into compliance with a standard set by the International Labor Organization in 1970. In that case, Americans might gain a real taste for leisure. Conceivably, we could be on our way to a different kind of society.

It is that prospect which I have in mind in suggesting that Americans might have a bright future even if economic “growth” is diminished. First, reduced GDP does not mean that more Americans will go hungry, lack adequate clothing, or are less able to afford a home. It is likely that these core economic functions can and will remain adequately handled as we cut back on less essential functions on the periphery. But, of course, if the nation’s political elite insists on expanding our war-making function, the rest of us will be dragged into that enterprise. But let’s assume that we handle the change in a rational way and the economy is rearranged to maximize useful production. The “bright future” then becomes possible.

a few misconceptions

One might ask how our future can become brighter if the overall volume of production is smaller. The answer is that working people have more free time. Even if dollars are not attached to what they do during that time, their leisure-time activities do afford personal satisfaction. Here is where a paradigm shift might take place. We are used to valuing only those activities that contribute to GDP. Phrasing it a bit differently, we are conditioned to value mainly our “slave activities” - what we are forced to do while working for someone else who pays our wages.

In the new and happier society of the future, we may learn also to value what we do in a state of personal freedom. This new, imagined society could be built upon a foundation of greater freedom, which means that people would have more time to do as they please without having to worry so much about acquiring materials for living. They would have both material satisfaction and adequate free time.

The truth is that government, business, and the media have deceived people on this point in consistently opposing proposals to shorten work hours. Our national leaders had their eye on the prospective production that might be achieved if Americans were kept working long hours. They said that American “greatness” depended on maintaining a strong military. If we wanted to remain a first-rate power, we could not take the risk of allowing American workers shorter work hours. They might well become addicted to leisure and try to escape the harness of long-hours work to pay taxes and support the various projects that politicians have, war being of course the chief project.

Another paradigm shift has to do with the nature of “excellence”. Who could be against striving for the very best? In reality, however, this can mean an intense competition by a large number of people for a small number of functional positions. The very “best” performers are selected for a network television show or the New York Yankees baseball team. As the model of an entire economy, this fails. We need work positions for poor and mediocre workers as well as excellent ones.

Not everyone can be brought up to a high level of performance through education, coaching, and motivational speaking. Instead of concentrating meaningful work in the hands of a few highly rewarded persons believed to be excellent performers, this work needs to be spread around. The new paradigm is to find useful positions for all workers that would allow them to perform well according to their individual talents and ambition rather than to fit everyone into a cookie-cutter model of excellence, guided by educational or social-service professionals. The reward for labor also needs to be more evenly distributed. An “excellent” system of labor means making the best use of everyone.


some economic effects of shorter working hours

Shorter work time spreads work to a larger group of people. If the government gives employers a financial incentive to reduce the weekly and annual hours of work, it means that new people will have to be hired to fill the void in production unless the system is so inefficient that production levels can be maintained just by eliminating waste. An agency of the French government once estimated that a “1 percent reduction in weekly hours of work would lead to an average fall in production by 0.6 per cent.” That 0.6 percent decline in production can be made up by increased employment. The other 0.4 percent represents improved production efficiency, which is presumably a good thing.

Existing businesses could therefore create jobs for people in need of work and so integrate more people into the mainstream economy. New people become employed because the businesses need additional human labor to operate, not because those people have become more adequately trained. Employers in need of labor take whoever is available.

There is a misunderstanding about the impact of shorter work hours on wages. Yes, in the short run, employers who impose work-sharing arrangements on their employees during recessions typically keep hourly wages the same. If the employees work fewer hours in the week, that brings a decline in weekly pay. However, if the decline in hours is carried out over a longer period of time - in boom times as well as recessions - the result is entirely different. Annual wages do not decline but, in fact, rise more rapidly than before.

Why? It is because of the law of supply and demand. Downward pressure is put upon the supply of labor (measured in worker-hours) as the average hours worked per employee declines. This decline in labor supply combined with a constant level of demand causes an increase in the price of labor. In fact, consumer demand tends to rise as more people become employed. More people have spending money in their pocket and are more likely to spend as they feel more secure in their jobs. In short, a diminished supply of labor combined with rising consumer demand yields a turbocharged increase in wages - quite the opposite of what academic and corporate economists are telling the public.

Is this so? Before U.S. economists became corrupted by textbook ideologies and influences from the corporate world, there were some honest ones such as Paul H. Douglas at the University of Chicago (later U.S. Senator from Illinois) who actually studied the situation. Working hours came down quite rapidly in the United States in the period between 1890 and 1926. In his book “Real Wages in the United States: 1890-1926”, Paul Douglas found that the coefficient of correlation between changes in hours and in wages for industry as a whole was -.67 for 1926 relative to 1890.

Douglas explained: “This indicates a relatively high negative correlation between changes in hourly wages and standard hours of work. When the gain in hourly wages was less than the average, there was a tendency for the hours to fall by less than the average, and when the gain in wages was greater than the average the tendency was for the fall in hours to be greater.” In other words, you could have both more leisure and more ability to purchase consumer goods if working hours were reduced.

In the past half century, American full-time workers have seen modest, if any, reductions in their work schedules. Real wages have been flat since the early 1970s. Our nation’s trade competitiveness has gone into the tank. In the meanwhile, our nation’s principal trade competitors - Germany, Japan, and China - have all made substantial reductions in their weekly and annual hours. Real wages in those countries have also increased. They all enjoy healthy trade surpluses. Germany, in particular, has some of the shortest hours and most generous wage (and benefit) levels in the world. We Americans, once the world’s leader with respect to treatment of labor, are now falling behind. Our national resources have gone instead into building a strong military.

material success giving way to improved personal identity

Enough of economic arguments, though. The purpose of this paper is to address the idea that people cannot be happy in a growthless economy. (Growth in this case is measured in financial terms. It refers to GDP.) Let’s assume, then, that the air has gone out of the financial bubble. The architects of the various governmental and nongovernmental Ponzi schemes are in a high state of panic. The U.S. government is forced to dismantle its worldwide military network and perhaps renege on some of its insufficiently funded obligations. People are having to make do with less. Material production is scaled back more to what they need. The economy has more people working for shorter periods of time, though with more opportunities for leisure-time activities.

Is this not a dismal future? There are fewer McMansions, private jets, and mega-billionaires boasting of what is possible in America if you work hard. The period of our national “greatness” is said to be past. If so, it is a false greatness. It is a greatness built on enslavement to money rather than one built on personal freedom. But now, in this imagined future, working Americans have more free time. They have more real opportunity to choose their activities and shape their own lives.

The reason that the future will not be dismal under those circumstances is that people in their spare time may well create something that is better than what we have now. I cannot say what that will be though I can make a few guesses. No, working Americans who are no longer struggling to make ends meet and fearful of losing their jobs may not look back upon the present era of our “national greatness” as a time of happiness but a time of suffering and folly. People by that time will have seen a different kind of society and know it is viable and, hopefully, better.

Freedom is its own gift. Yes, some people will squander opportunities that they have in leisure time - but it will be their squandering, not government’s or an employer’s. Others will use that leisure to their own and society’s advantage. Free time is, as the name suggests, free. It is a blank slate. It is an opportunity for people to express themselves in their own way, whether or not the expression is beneficial. And that’s how people find out who they truly are. They discover their real identities in the time when they are free to make personal decisions, one way or another. That’s what life is about.

Think of it. We suppose people to be successful because they occupy a high position in government or business and can afford to buy McMansions. People with money are assumed to be successful and happy. Why is that? Is it because they can have all the pleasant and enjoyable things available for purchase in this society? Do they want to live in a McMansion for the thrill of being able to walk through a suite of rooms and admire the beautiful furniture and know it is theirs? No, of course not. They want to own a McMansion because of what this says about themselves. It says that they are successful. The success that comes from such ownership is a personal attribute of themselves. It is a part of their own attractive identity.

So let’s cut to the chase. An attractive identity is what people really want, not material possessions. People want to admire themselves and they want to be admired by others. What use is it, then, for you to consume more than your fair share of the earth’s natural resources to gain that admiration? Let the economy be designed to satisfy people’s material needs and let your pursuit of a positive personal identity take place by some other means.

Humanity can no longer to waste the earth’s scarce resources in feeding powerful people’s egos. In particular, it can no longer afford the wasteful, destructive wars. We can, instead, create a new arena of competition where all those egotistical pursuits can be exercised in less dangerous ways. It can be in the area of culture and the arts, or in sports, or in personal fashion, or in fields yet to be imagined.

When we give working people more free time, we give them the opportunity to become active participants in some of those competitions. We give them a chance to hone their own personal identities. And that’s what people want. They want to know who they are and, hopefully, see progress toward what they wish to become. That’s better than identities illuminated by the glow of material possessions.

This is why I say that the future of increased leisure for working Americans can be better than what we presently have. Americans would then be free to seek what they want directly. They would be free to work on their own improved identities, conscious of doing that and being encouraged by others to that end. It would be a greater freedom than what we have now because, in a person’s free time, he or she can experiment and make mistakes without fear of being fired.

The one who buys a McMansion from money earned in corporate or professional employment must always say and do the right things to remain in the good graces of the employer. It is an identity imposed upon him by others. On the other hand, the one who cultivate identity in his free time is free to choose a more authentic identity, its being self-chosen rather than imposed. The conditions for self-fulfillment here are more favorable than in the society we have now.

the world of work entering a mature phase

Let’s say something now about the world of employment. When working hours are reduced and unemployment goes down, employers lose some of their leverage over employees. Employees who know they have alternatives in the market for labor become less fearful of being fired. Employers must make some concessions to retain their skilled workers. Still, this is a realm of discipline where working people must adapt to the employer’s behavioral requirements . It is no place for free spirits experimenting with their personal identity. The identities expressed here must be business-like and productive.

And so, in this world of the future, we will have two separate realms of roughly equal duration. We will have the world of work, which consumes thirty-two hours of a person’s time each week. We also have the world of free time, occupying hours in the rest of the week. Each person is expected to work and thus contribute to the society’s material sustenance. The person is also given time to be creative and productive in his own terms. Work time is meant to be disciplined - the employee becomes a slave to the requirements of the job - but that is no real hardship if adequate leisure also becomes available.

If personal ambition becomes exercised less during working hours and more during the hours of leisure, I would anticipate that the economy would settle down to a reasonable routine of producing goods and services while people’s creative energies would be directed more toward activities associated with leisure time. There would be a certain loss of “greatness” in commercial enterprise as the glamor and hype gave way to sensible routines. The arrangement would strike some people as being “socialistic”. But socialistic societies did not offer that other sphere of freedom that our imagined society of leisure might provide.

Maybe we could compare the world of employment with obligatory military service. Each adult citizen is required to do remunerative work as a contribution to the community. Yet, there is a limit to the time required for that activity. You fulfill your term of service and are then returned to civilian life. So working Americans might subject themselves to the discipline of working for someone else to gain the money to finance activities in the other part of their life - that is to say, in their free time.

The growth phase of commercial enterprise is past. The empires of money are reduced to a manageable size. Like an old tree, the economy continues to function as a source of material sustenance even if it is no longer growing so fast. In our civilization, commerce is entering a mature phase.

In this type of society, I can imagine that the work life might be arranged differently. There is no sense in requiring young people to spend many years in educational institutions allegedly acquiring the knowledge and skills they will need in a career if they have only a vague idea of what a career involves. The main benefit of this system is well-paid employment for educators and reduced competition for the incumbent job holders if the young are kept in a holding tank for extended periods of time.

No, it would be better to shorten the period of education, provide more efficient training, and start people working at an earlier age. Society could then afford to give workers paid sabbaticals at certain times in their lives. These periods of total leisure would come when people are in relatively good health and have adult understandings from having worked for a number of years. These would be opportunities in some cases for people to receive new kinds of training, pursue pent-up dreams, and perhaps change careers. By that time, they would have a better sense of who they are.

I can also imagine that term limits might be set for corporate CEOs and managing partners of professional firms as now for the President of the United States. Maybe someone would spend twenty years working his or her way up the corporate ladder, spend five years in the top position, and then leave the firm. That way, many more people would have the opportunity to reach the pinnacle of success in the business world. The former CEO would also have an opportunity to enjoy life while relatively young.

If term limits were set, it would become understood that a given CEO is not irreplaceable and unique but a creature of the organization that he leads. The corporate leaders would then be less able to extract exorbitant amounts of compensation from the firm’s board of directors since relationships would be of shorter duration. The self-serving corporate and professional fiefdoms would be subjected to greater outside scrutiny and regulation.

Perhaps the greatest change, however, would take place within educational institutions. The purpose of career preparation is overblown. If fewer years of schooling are required to begin a career, that frees up college campuses for other uses. Leisure-time activities need to be organized. They need a physical context. As London’s Hyde Park is a place where people freely gather to speak their mind, so college campuses can be gathering places for various types of activity that people pursue in their leisure time.

Colleges can be institutions that recognize individuals for certain kinds of achievement. They can sponsor contests or host debates. They can be places where like-minded persons meet to discuss or pursue common interests. They can reinvent themselves as auxiliaries to the new culture of cultivated identity that may develop if humanity is fortunate.

Government is needed to regulate the world of business so that it affords the personal freedom that people need to have happy and productive lives. It should not try to control everything. Let individuals determine their own lives to the greatest extent possible in the free time that they have available. Society can support a compartmentalized system of leisure and work defined by its hours division.

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