Unemployment and Economic Fallacy

Europe and North America are at present suffering the ill effects of a severe economic downturn which is most visible in the rising levels of unemployment. To the economist and government policy maker, on the one hand, the question of employment is clinically reduced to statistical analysis and numbers spread over ledger sheets which have no greater impact than the meaning they have to the powers of investment and taxation. The question of employment to the unemployed, on the other hand, is a critical question of concrete reality. Whilst it must be acknowledged that the competence of this weblog is theology and not economics per se, yet the Swiss Reformed Theologian Karl Barth (1886-1968) once said that theologians should take their Bible and take their newspaper, and read both. Economics, without doubt, is the driving force of the modern market culture of Western civilisation, and therefore of politics and the press. Economics is culture; it is the basis of the newspaper industry, as every newspaper reader reads to see his or her Sitz im Leben within the market economy which is the modern world. Therefore the question of economics is a question for the theologian who, by vocation, has an interest in the condition of people who are subject to the whims of impersonal market forces.

A recent article by James Pilant, a lecturer on Business Ethics, “Unemployment and Suicide” on his Business Ethics Blog (December 8th 2010), suggests that there remains within the psychology of the employment dependent worker a sense of individual merit in ones employability. Put another way, the worker finds a certain mental security in his or her conviction that they are employed because, by his or her proven worth, they deserve to be employed and thus are employed. Pilant writes,

“We often think of ourselves as a special case different in every way from the rest of the world. Certainly there are areas where that’s true. But it’s not always true.”

It stands to reason that the effects of unemployment upon persons suffering from such a delusion of merit are devastating. The cyclical nature of this meritorious and magical thinking requires that unemployment equates to personal failure; poor ergonomic performance and indolence. The manifold adverse effects of unemployment on the welfare of the family, social life and self esteem, consequently compound the unemployed person’s sense of failure and worth. This common psychological trait appears to play a not insignificant rôle in the decision to complete suicide among the unemployed.

Employment in reality has very little to do with personal merit. Rather the rate of employment is directed by the wider economy over which the individual labourer has negligible control. Within the prevailing capitalist economy the human person is reduced to a means of production; a commodification which dictates that the worker is hired or fired subject to the demands of the economy and the interests of profit. Workers are employed to perform tasks that will generate monies for a given industry which will cover the costs of production, distribution, sales, employment and profit. The worker is no more or less worthy of employment than any other willing employee on the planet. It is merely a matter of location and demand. The worker within this economic matrix cannot be paid the full value of his or her labour, but must be rewarded according to what the competitive market values that labour allowing for the generation of profit to the benefit of the investor. Morgan Rose Ph.D., writing for the Library of Economics and Liberty puts it thus,

“A minimum wage makes employers less likely to hire someone by setting a lower limit on the amount that employers can pay employees. Some workers will be made better off with a higher wage, but workers whose labor is not considered to be worth as much as the law says they must be paid will find themselves without a job.”

Rose’s brutalist and reactionary articulation of capitalist economics makes a number of assumptions of the nature of labour. He assumes that the belief that profit is the only feasible end of economics, and this requires some serious criticism. By investing capital into an industry the investor expects to collect the maxim profit achievable in order to consider the investment worthwhile. This does not consider the needs of the worker, but rather places financial yield before people. If the profit from one particular investment could be increased by moving the investment to another location, even though the initial investment was still profitable, the investor will shift the investment, thus creating unemployment. In order to prevent this from happening the first location of the investment (plant or factory for example) shall have to rationalise its costs of production in order to increase potential profit, thus driving down wages. This is one of the great fears of globalisation.

The assumption is also made that investment is the only means of injecting an operation with capital. This is a fallacy. Common ownership of the means of production is another viable alternative. The concept of a small élitist cabal profiting from the work and skill of others is nothing other than exploitation; which in and of itself is psychologically harmful to the worker who toils for minimum wage knowing full well that the economic value of his or her labour is only as high as the cheapest rate available to the investor who expends no effort in the production of trade goods. Common ownership of the means of production removes the need to rationalise wages and employment; as the workers are not working to the sole end of profit, but of production of quality for trade. There is no suggestion that the production of such goods would be less economic than the production of similar goods funded by private investment which expects a share of the prostituted work of the skilled tradesperson. In fact, without the drive to create profit, there is every reason to assume that goods can be produced and marketed more cheaply.

Unemployment is a necessary result of a system which both requires a pool of unemployment and creates unemployment. It is nothing more than false reasoning to suggest that there are no alternatives to the current capitalist structure of investment driven industry. One does not have to have a totalitarian Communist régime in order to have a socialist work ethic which places the needs of human beings before the financial greed of a few invisible investors.

Jason Michael