Category: Humanistic Economy

3.1.2.1          Good Capitalism

Full employment is the turning point of capitalism

Humanistic reform of the economy must start with the elimination of unemployment. Workers’ unemployment cannot form a sound basis for creating a good society. A good community can only develop on equal human rights. A just society requires the availability of work to everyone.

Unemployment creates the exploitation of workers. When a work position opens on the market with a high unemployment rate, a large number of candidates apply. The competition of workers may tear down their incomes to a level sufficient only for basic survival in order to get the job. Unemployed workers have to accept poorly paid jobs to feed their families. Unemployment has widened the gap between rich and poor, creating injustice and problems in capitalism.

Employers favour unemployment because they profit from the exploitation of workers. Employers can maintain unemployment because they do not necessarily need to hire employees most of the time. Large employers support political parties that maintain unemployment through economic policy. It starts with importing cheap labour and ends with rising interest rates. This is how unemployment becomes state policy and how state policy maintains the exploitation of workers. To secure their privileges, the rich have imposed the belief that unemployment is an unavoidable price to pay for technological development. They have pressured economic science to accept that “0% of unemployment is not a positive thing,”[1] which they accomplished.

The capitalists have found an unemployment rate of about 5% the most convenient, so 5% unemployment has become a “normal” state in capitalism. This “normal” state exploits workers by dependence on capitalists, while workers’ total purchasing power produces enough profits for employers. The market economy should appreciate workers more, but capitalism resists it. Due to long struggles, workers have gotten some rights through laws and trade unions. Still, the existence of poverty confirms that the interests of workers are not protected enough.

Society may introduce justice in production processes through a fully employed environment that balances the number of jobs with workers. Reducing work hours will make full employment a reality. Such a measure will require the prevention of work imports and regulation of overtime work. It will increase workers’ demand on the market and put them in a better position in production processes. Full employment will increase workers’ wages and reduce exploitation. However, no formula can determine what exactly exploitation is. Only workers dissatisfied with their earnings may present it. Workers will be satisfied in a fair work market where their work is equally demanded as the jobs they need. The more balanced the work market is, the more satisfied workers are, and the less they are exploited.

Society may increase workers’ satisfaction by further reducing work hours, which will create negative unemployment. Negative unemployment is a shortage of workers on the market. It will further increase workers’ demand and incomes. Negative unemployment may put workers in the privileged position that employers have practically always been in. When workers are not available on the market, employers who need more workers will have to attract workers from other companies by raising their salaries. Competition among employers will start a chain reaction in which workers’ wages will grow, bringing more justice to the production processes.

The rise of workers’ salaries in the negative unemployment environment was proven in the 14th Century when the Black Death killed one-third of the European population. Suddenly, the crops in the fields perished because there were not enough workers to harvest them. The Chronicle of the Black Death, a firsthand account finished in 1350, states: “the shortage of servants, craftsmen, and workmen, and of agricultural workers and labourers, left a great many lords and people without service and attendance… there were far fewer people to work the land: peasants were able to demand better conditions and higher wages from their landlords.” Suddenly workers and their labour were in much higher demand, enabling those who survived the Black Death to be in a much better position to negotiate work conditions. The shortage of workers increased the workers’ wages. The servants’ higher salaries contributed to economic growth, but the employers were not happy with it.

• At Cuxham (Oxfordshire, England), a plowman demanded from his Lord a payment three times greater in 1350 than in the previous year.[2]

• “In Parliament, in 1351, the Commons petitioned Edward III for a more resolute and effective response. They complained that ‘servants completely disregard the said ordinance in the interests of their ease and greed and that they withhold their services to great men and others unless they have liveries and wages twice or three times as great as [prior to the plague] to the serious damage of the great men and impoverishment of all members of the said commons.’”[3]

According to this historical example, if a political party offers a reduction of work to 5 hours per day and wins an election, the lack of workers would increase the lowest workers’ salaries two to three times per hour in one year. The minimum daily wages of workers would increase 30-90% for just a 5-hour shift. The fair work market is the best choice for bringing justice to the economy.

The first problem with eliminating unemployment is that employers do not want to increase workers’ salaries because they profit from exploiting them. But on the other hand, excessive wage demands of workers may make the economy unsustainable. This would reduce employers’ interest in production and slow down the economy.

Negative unemployment will make employers unsatisfied. Very unsatisfied employers may avoid paying higher workers’ wages in a fully employed society by moving their businesses out of the country. People need to understand that Western capitalism has established laws that give more freedom to capital than workers, which needs to change. At the very least, the laws need to provide the same rights to workers as to capital.

Any capital departure results in business closure and newly unemployed workers, bringing trouble to a domestic economy. Full employment would again require a reduction of work hours. The shortening of working hours would reduce workers’ incomes in the short run. Workers would not like it. On the other hand, it is not easy for employers to organize a new production by finding new employees and new markets. The escape lies in finding the length of work hours that optimally satisfies the needs of workers and employers.

Today people have accepted the 8-hour workday suggested by Robert Owen at the beginning of the 19th Century. There is no particular reason for an eight-hour workday. Society just took it and adapted to it. Besides providing full employment, the workday length should be a function variable that coordinates workers’ and employers’ needs and justice in the economy. This function should be primarily based on the full employment of people. If more workers search for jobs than employers search for workers, the work hours should be shortened. And vice versa, if employers need more workers than are available, the economic policy should consider extended work hours. The second essential principle of work regulation should be based on the work hours people desire the most.

The length of a workday can be a potent regulator of the free-market economy and the basic point of democracy in the economy. Political parties may propose the best full-time work period for workers and employers. It would probably be one of the most critical decisions of political parties, making them elected or not. On the other hand, the work hours can also be directly determined by the work needs of workers. Every worker may express the most desired work hours, and the average value would decide. Democratically determined work hours are supposed to create a fair work market, which will present a turning point for capitalism, making it a decent social system.

Minimum wages would no longer be needed. Full employment will increase salaries for all lower-paid workers at the expense of higher-paid workers and employers’ profits, balancing an enormous gap between peoples’ wages in the western world. Besides, workers being able to purchase more will contribute to the economy’s growth, earning employers more profit and workers higher salaries, bringing benefits to all. 

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Shortening working hours proportionally to the unemployment rate will improve capitalism, but this study from the beginning intended to achieve a lot more. A better future requires a reconstruction of the economy as a whole. The introductory statement showed that the planned economy is more stable than the market economy, which is significantly more productive. A new economy will have to take advantage of both systems and eliminate their deficiencies.

[1]Mike Moffatt, Why 0% Unemployment Isn’t Actually a Good Thing (ThoughtCo, 2020) www.thoughtco.com/what-a-0-percent-unemployment-means-1147540www.thoughtco.com/what-a-0-percent-unemployment-means-1147540

[2] David Routt, The Economic Impact of the Black Death, (Economic History Association  EH.Net Encyclopedia, 2008) http://eh.net/encyclopedia/the-economic-impact-of-the-black-death/

[3] Michael Bennett, The Impact of the Black Death on English Legal History (South Wales: Australian Journal of Law and Society, 1995) Vol. 11, p 197 http://classic.austlii.edu.au/au/journals/AUJlLawSoc/1995/1.pdf