Unemployment and Society

People forget that (chronic) unemployment is a relatively recent phenomenon. For the vast majority of human history, productivity was so low that most people suffered through lives of back-breaking physical labor just to survive. Even well into the 19th century, recessions were generally not characterized by chronic mass unemployment. To the extent employment suffered at all, it was the last to do so and generally the first to recover.

Industrialization and mechanization, of course, changed all this. Part of what made the Great Depression so especially traumatic, despite the fact that it was tame in comparison to earlier depressions, was the fact of mass unemployment. The solution then was simply to conscript them all into public service through make-work jobs. In the long run, killing all the unemployed workers and blowing up all the excess productive capacity was the only thing that worked.

But as the pace of industrialization increases (aggravated by foolish free-trade policies that permit manufacturers to exploit Third World manual labor for pennies and ship their products back to the United States without consequence) and the number of chronic unemployed continues to rise, the resources to keep those people employed in makework jobs is being taxed beyond capacity. And, for obvious reasons, another world war is something to be avoided.

The libertarian claims that unemployment doesn't matter because jobs only exist for the purposes of production. As I've argued before, his claim rests on a macro view of economic activity. In this sense, jobs don't exist at all, only productivity; therefore the loss of jobs is meaningless if production remains the same. But it falls apart at the micro level, where the well-being and dignity of the individual man is of primary consideration -- not statistics and aggregates.

Man yearns for rational order: for a rational society in which he has function and a rational community in which he has status. Employment is one means of integrating him into just such an order. Employment directs his energies toward the accomplishment of some good, and thus unites him and the community in a common purpose. Large-scale employment is insufficient, certainly, for a healthy society; but it is necessary.

This is why all the efforts in the world to mitigate the consequences of unemployment -- through welfare, Social Security, unemployment insurance, etc. -- have failed. They can feed a man, but they cannot integrate him into society or assign him status and function. Thus, unemployment, while perhaps not a problem from an economic standpoint, is certainly a problem from a sociological and psychological one.

Which is why this article (old but still relevant) caught my eye:

As the current economic crisis and pending recession lead to rising unemployment, research by Arthur H. Goldsmith, the Jackson T. Stephens Professor of Economics at Washington and Lee University, warns of the devastating, and possibly permanent, psychological effects of joblessness.

Goldsmith’s innovative research into the psychological effects of joblessness contributed at an early stage to the now popular field of Behavioral Economics. He says that he and his colleagues Jonathan Veum, a Research Economics with FreddicMac, and William Darity Jr., Professor of Economics and Public Policy at Duke University, wanted a richer understanding of what it fully means to be unemployed. “At the time of our research, economists were asserting that the consequence of exposure to unemployment was simply lost wages and output,” says Goldsmith, “yet anyone could see that there was a non-monetary effect that was much more personalized.”

These effects become more pronounced with time. Unemployed individuals exhibit marked increases in depression, anxiety, and sleep issues. Their sense of self-worth erodes. Their locus of control (the general attitude regarding control over the events of one's life) shifts toward externality. They grow bitter and cynical.

I recall reading of a study once that showed that couples that were employed or unemployed together tended to stay together, while couples in which one partner was employed and the other (involuntarily) unemployed tended to split up. There is a strange dynamic at work there. The employed are in a world all their own; the unemployed are cut off from it, lost, alienated, unintegrated.

A while back, I called for the adoption of a post-capitalist economic system. Much of that system involved creating the conditions right for employment: the revision of our tax system to make it business- and employment-friendlier; the erection of trade barriers; and the end of our turbulent debt-based money system. Policies like the guaranteed minimum income may help to bring about the conditions that are right for mass employment; but they are not enough in and of themselves.

What is needed, it is clear, is a dramatic revision in our understanding of economics. We must wed it to psychology and sociology, as has already been started with the field of behavioral economics. We must dethrone the macro theorists and their practitioners at the Federal Reserve. Most crucially, we must acknowledge that our choice is between an economic progress that impoverishes millions and the health and well-being of the polity. Most people, I think, would happily choose the latter.

Comments

[Heathcliff]

Have you ever read the writing of Ted Kaczynski? He has some very interesting ideas on the dissatisfaction of man with modern economic life.

I just found this blog and I'm really enjoying it. I'll try to resist making 100 comments before I digest a little more.

[Proph]

I can't say I've read the Unabomber's manifesto, but from what I understand it's not much more than a Luddite screed. I can certainly credit him for recognizing the problems that industrialism has imposed on us, but the proper response should be adapting our way of life and our social order to the reality of it, not attempting to throttle it.

By all means, comment all you like! Often times I get inspiration for new posts from people's comments.

[Lee. S]

I used to be in favour of free trade but no more. Ian Fletcher and others have taught me a lot. And there are a number of libertarians I like, but in the end they're often extremist individualists who imagine a fantasy world that will never exist.

[Heathcliff]

Don't write off Kaczynski without reading him. I think reading his manifesto might help you fine tune your idea of the post-industrial man. His analysis of the problem was spot on. He had no real solutions but for the big problems who does? I can only assume he slipped further into madness after he wrote it. It will be a conversation killer when you start recommending it to people at cocktail parties.

[Heathcliff]

I am in no way endorsing bombing or other violence, I'm just interested in his ideas on economics and human psychology.