by Mario Fabbri
Every month the production sector distributes, in the form of wages to workers and profits to capitalists, an income fully adequate to buy the goods produced.
In the initial situation all the goods are purchased by the workers or the capitalists, and the economy ticks over nicely.
A time then comes when a flood of aspiring new workers arrives from the country, competing for jobs with those already employed. This leads to a drop in workers’ wages, and drives up capitalists’ profits.
But the capitalists have already had their fill of consuming and rather than spend their higher income on purchases, they save it, locking it away in their well-lined coffers, while the workers too reduce their purchases because of their lower wages.
All in all, a quantity of goods will remain unsold whose value is equal to the money the capitalists have locked away in their safes.
The workers who had to reduce their consumption are victims of a Sismondi effect, and the institutions of society that have determined it are the mechanisms of supply and demand in the market economy that produced the lowering of wages due to the arrival of aspiring new workers.
Now if, instead of competing against each other, the workers were to set up a union and, by striking, were to succeed in getting wages back to their former level, the capitalists would make less profit, all output would be sold again and the crisis would be solved.
But this is not the only possible solution.
Suppose the workers are unable to agree or trades unions are prohibited. Then, even if the workers were to remain permanently poorer the Malthus solution would still be workable.
Instead of keeping surplus money in their coffers capitalists transfer it to ‘unproductive consumers’ such as ladies’ companions, artists and so on. And it is these people who do the purchasing that offsets the crisis.
And there is the more centralist Keynes solution: the government prints as much paper-money as the capitalists bury in their safes, and then finds a way of giving it to someone who is ready to spend it, anyone, whether an unproductive consumer or a phoney worker: if the method used is that of bottles full of banknotes to be found, I would speak of phoney worker.
The social-democratic recipe would be “redistributive transfers” from profits to wages… But there are many conceivable solutions, and their evaluation depends on personal preference.
The only condition that a remedy for the Sismondi effect must abide by is being acceptable to local moral values, because if on the contrary it were to create conflict or other serious problems for economic and social mechanisms the problem, instead of being solved, would worsen.
For this reason, the clause “respecting the well-proven principles of the free market”, included in Keynes’ bottle proposal, to scoff at traditional ideas, is curiously appropriate, because it underlines that this recipe to combat the Sismondi effect would avoid impinging on the ruling values of British society!
May I just, however, point out that if the final effect were to create a very egalitarian society, we would obtain not so much a crisis-free development as the arrest of economic growth.
In history we readily see that very egalitarian societies also tend to be static, because in order to prevent the well-being gap widening among people, in them a very strict morality freezes behaviours and therefore also blocks changes.
On this issue, the English historian Chris Wickham explains that in the Early Middle Ages the egalitarian peasant communities were in fact decidedly static:
In the peasant mode, surpluses are not easily accumulated; after the acquisition of essential goods… [other goods] are generally given away, as part of the social network, to kin first, to friends next, to other neighbours thereafter; or else they are collectively consumed, in celebrations of different kinds.
This… discourages any single household from going it alone economically and pushing to improve production, either by increasing its hours of work or improving its technology, for its members will simply end up giving the resultant surplus to the less active and therefore needier people around them; accumulation without such generosity is too risky, as it will cut a household off from its neighbours, and in a bad year it will not receive help from others.
The simplicity of this system also discourages any productive specialisation that cannot be supported inside relatively small communities, as with the village smith and potter.1
Wickham then notes that these obstructions to development were infringed, triggering the economic and demographic re-emergence of the European economy after the year 1000, by the appearance of an aristocracy and their growing demand for luxury consumption.2
It was an élite set apart from peasant society and its stringent egalitarian constraints.
We have thus far seen two factors that contribute to the development of the imaginary economy: the rapid growth in the productivity of labour, which is driven by technological progress, and the inclination to consume which is slower because it is hindered by various constraints.
To complete the picture two more are needed: the vocation of most modern men to be “a worker” and what we will call complaisance: the predisposition present to some extent in all men to comply with the demands of their fellows.
1 WICKHAM, Framing the Middle Ages, p. 537.
2 On these issues, cf. Fabbrica delle illusioni, p. 164 ff., and especially Rovina delle nazioni, p.144 ff., where the thesis is advanced that the 5-6 centuries between the barbarian invasions and the rebirth at the Millennium correspond to the technical time required for the two ‘Roman’ and Germanic components to reconstitute new societies sufficiently homogeneous, structured and guided by their upper classes.
12. Why do people want to work?
All facts are explained if we note that the public opinion [of work]
is simply connected to the occupations of the dominant class.
Vilfredo Pareto1
It might seem obvious: people want to work because they have to find the income to keep themselves, and work provides it.
But today the idea that working is morally commendable plays an important part so that, in addition to income, work also offers the reassurance of being a useful and worthy member of society.
In fact the vocation to play an active part in economic processes by working is present even among the upper classes, many of whom, who have no need to find an income and could avoid all work-related concerns, instead prove eager to procure such concerns.
It should also be noted that today a young person endowed with wealth sufficient to guarantee a comfortable trouble-free existence, could no longer live in idleness like the aristocrats of old, because he would lack a sufficiently large group of people like himself with whom to associate, as normal human psychology demands.
For this reason he would usually exploit the resources at his disposal to become an entrepreneur and work in his own firm, surrounded by an obsequious staff fully engaged in confirming to him and to themselves the reality of the collective representation.
But even among normal people, who are forced to find a job and who may daydream about becoming rich in order to free themselves from it, there are some illuminating anomalies.
For example, many workers who lose their jobs but receive substantial unemployment benefits, rather than cheerfully enjoying their new freedom, seem to be victims of a sort of existential discomfort that is not fully explained either by the fact that their income is somewhat lower or by the fear that in the future it may vanish altogether.
This unexpected phenomenon emerged in the studies on unemployment related to the Great Depression of the 1930s.2
The fact is that today a job linked to the production world is the normal prerequisite for a rightful role in society, and being unemployed generates anxiety and depression, or at least a sense of being excluded from the normal social sphere.
But if today ‘work’ seems
a clear and obvious concept, this has not always been the case.
For example, in classical antiquity, an idea of ‘work’ similar to that current today did not exist, as the French historian Jacques Le Goff points out:
[In Roman times] work and workers (artisans in particular) did not attract the attention of the intellectuals and producers of culture. Work was not a ‘value’, there was not even a term to describe it.3
In fact the Latin term labor, from which both the Italian lavoro and the English labour originate, did not have the morally positive connotations embedded in the modern words, but only the meaning of a fatiguing, and in some way productive, activity, which still underpins the expression “a laborious birth”.
Even in the 18th century, the nobility of the Ancien Régime kept themselves contemptuously distant from any working activity and, military commitments excepted, consumed their time nicely in unproductive and enjoyable social activities: parties, courtship, competitions, personal squabbles, conspiracies, and so on…4
From the 18th century to the present day, in the idea of work, therefore, something important changed and we should ask what: where does the conception that working is a deserving and ennobling activity, as sustained with such conviction by the members of modern societies, come from?
Let’s start, then, by pointing out that the ideological transformation of the 16th century, that brought the idle noble class to social power, conquers Southern Europe which soon stagnates, but not Holland or England, which on the contrary experience spectacular economic growth.
And it is illuminating that these two countries on the rise were intrinsically bourgeois.
If for Holland this is well known, in England the upper classes outwardly imitated the prestigious way of life of the nobility on the continent. But the development was more apparent than real, because the orientation of the fundamentally egalitarian English society had always been and continued to be to ‘keep busy’.
For example, for impoverished aristocrats it was normal to find work, and certainly not dishonourable or degrading as it was for the nobility on the continent where the nobleman who had some involvement in manual or trading activities was suspended from his rank through the so-called dérogeance.
Evidence of the English esteem for work is well documented in the economic reasoning of William Petty, the most appreciated economics writer of the 17th century, who identifies in the simple association of “land and labor” the origin of the economic value of any material good.
And there were moralists who were already extolling work unreservedly. In the late 17th century, the puritan church leader Richard Baxter:
Question: Why is labour thus necessary to all that are able?
Answer: God hath strictly commanded it to all… It is for action that God maintaineth us and our abilities: work is the moral as well as the natural end of [human] power… It is action that God is most served and honoured by…
Question: But will not wealth excuse us [from having to work]?
Answer: It may excuse you from some sordid sort of work, by making you more serviceable in others: but you are no more excused from service [to God] and work of one kind or another, than the poorest man.5
We must not generalise too much, because in England – unlike Holland – more indolent attitudes were also common.6
It was the equivalent of a satisfied adherence to routine ways of life that were felt as satisfactory by those concerned, who keep themselves busy until they achieve them, but then do not aspire to improve further.
This is the case of someone who, as Weber says, wishes “to live as he is accustomed to live, and to earn what is necessary to that end”, and so, if he earns twice as much, he will work half as much.
Similar attitudes, which tend to make society static, were evident to the great promoter of economic progress Adam Smith, who was convinced that it was important to motivate the lower classes to become more ambitious and active.
To this end, he believed that, to increase their commitment to producing, they needed the chance to acquire property:
A person who can acquire no property can have no other interest but to eat as much and to labour as little as possible.7
Anyway, in 17th and 18th century Holland and England work is held in much higher esteem than in aristocratic Europe, and the economies of the two countries flourish visibly, undermining the aristocratic ideology ruling elsewhere.
So, even further south ‘left-wing critics’ appear and begin looking at the idle nobility as a parasite oppressing productive society, guided by the industrious bourgeoisie.
In 1759, while an officer in the Austrian army, the young Lombard illuminist Pietro Verri is a great admirer of a colleague of his called Lloyd, from Wales:
… recently I saw him commanded to fortify a site, he carried the wood, used the hoe and worked alongside the soldiers under his orders, calling them brothers. He worked cheerfully… and under his orders they did as much in one day as another group would have done in three or four.8
At the end of the 18th century, aristocratic Europe collapses spectacularly and a new and dramatically different bourgeois, free-trade world emerges, in which traditional indolent attitudes mostly fall by the wayside9 while aspirations to higher consumption become more common.
Socialists spring up everywhere. Drawing on the English ideas which reached Marx via Smith and Ricardo, they declare that the value of goods is generated by work, and claim for workers and peasants the entirety of what is produced, eliminating the profits and interest that maintain the idle rentiers.
And the idea of the great merit attached to work wins over a great many minds.
But bourgeois ideologues know how to defend their positions, and they immediately put capital, beside land and work, as the third, necessary ‘factor of production’.
And although amazing uncertainty reigns about its true nature, it is, however, firmly established that capital, the offspring of virtuous saving, is the indispensable contribution to production made by capitalists who in receiving profits or interest are on the same moral plane as those who supply their labour to receive a wage.
In the mid-19th century, the more industrialised European societies appear split between two different and hostile worlds, capitalists and workers, and there is a widespread fear – or dream – of a major revolution like the French, which would sweep away the bourgeoisie as had already happened to the idle nobility.
But then time and the spread of well-being mitigate contrasts, large democratic-humanitarian mass societies take shape and the social partners make up their differences pacifically, so that no one loses face.
Capital, the asserted creator of general prosperity – that unsubstantial propaganda invention of 19th century economists – after generating its presumptuous offspring, investment, takes up residence in the remotest recesses of economic theory,10 well protected from any encounters with facts and kept on life support by weighty transfusions of mathematics.
Labour, instead, lives on in everyday life without artificial supports, taken for granted as an obvious, as well as morally praiseworthy, entity.
What Pareto said at the beginning is confirmed: public opinion of work depends on the “occupations of the dominant class”.
In the 17th century, political primacy belonged to an idle nobility. And work was disqualifying. Today it is a matter for the great working populations of the democracies. And “work ennobles man”.
To understand the transformation that has taken place in the term ‘work’ we have to take into account that attaching complimentary or disparaging connotations to a word is commonplace.
This is the origin of those emotionally expressive terms commonly used by propagandists to persuade their audiences without the need for real arguments.
For example in 17th century Southern Europe the term ‘nobility’ combines the idea of
descending from a high-ranking family and the complimentary meaning of virtue and congenital social superiority.
By the same token today, as well as describing activities that demand application, the term ‘work’ embraces values of moral virtue consistent both with the native inclination to keep busy à l’anglaise, and the 19th century socialist belief in the moral superiority of working people.
To 19th century socialist and anarchic propagandists, work was the flag which a part of society rallied round against capitalists,11 but today everyone wants to fly that flag.
And the result of such universal acceptance of the role of the worker is that today working is the normal response to the fundamental need to define one’s place in society:
Work is not simply a means of earning one’s living. It is much more, an integral part of our position in the world. Work structures time, it obliges us to organise and programme our day… it makes possible and facilitates the promotion of social contacts… and this means we do not feel alone… it gives meaning to our lives because… we do not feel useless and… we take an active part in… initiatives in favour of the community…12
But because productivity has greatly increased, the aspirations of the many people who want to work today can only be realised in the imaginary economy.
1 PARETO, Corso di economia politica, vol. II, p. 218.
2 Cf. EISENBERG, The Psychological Effects of Unemployment, in Psychological Bulletin, vol. 35(6), Jun 1938, pp. 358-390.
3 LE GOFF, Pour un autre Moyen ge, p. 109.
4 About the development of the nobiliary culture of Europe in the second millennium, see Rovina delle nazioni, p. 141 ff. where clear similarities are shown with the reorientation toward aristocratic values of the Roman culture from 1st century BC onwards, on which cf. ibidem p. 19 ff.
5 BAXTER, Christian Directory, vol. III, pp. 579-580, vol. II, p. 333.