This Chapter deals with the undesirable ways a basically capitalist economy impacts on the personal lifestyles of people in the richest countries such as Australia. These issues are not as significant as those regarding the fate of the planet taken up in the next Chapter, but it will be argued that this economic system imposes heavy costs on our welfare and quality of life. Unfortunately most people seem to take it for granted that life inevitably must involve a lot of drudgery, hard work, struggle, competing, insecurity and stress, without realising that most of this is inflicted by the kind of economic system we have, or seeing that we could have a system that eliminated most if not all of these burdens.
Consider the paradox that this economy creates vast and ever-increasing amounts of wealth but most people struggle to get by, and see little or no improvement in their capacity to pay their bills as the years go by. This is mainly because the wealth created is increasingly flowing to the richest few. (Chapter 4 discusses inequality and the way a capitalist economy inevitably accelerates it.) The top social policy concern is not “how can we reduce struggle?” or “how can we provide comfortable, secure and satisfying lives to all with a minimal or no amount of struggle?” It is “how can we increase the GDP as fast as possible?”
This economy makes us work far longer and harder than would be the case in a more satisfactory system. This is largely because the cost of living and especially the cost of housing is so high. The debt that has been taken on by Australian households in order to cope is now about the highest in the world. Many households need two incomes to survive, and most of them would probably say it’s still a struggle to pay the bills. National income has been doubling about every 25 years, but for many and possibly most people it is increasingly difficult to get by. For instance a few decades ago a single income was all the household needed, tertiary education was free, and that one income could pay off a house.
Because the very rich have been increasingly able to take more of the national wealth created, that wealth has not gone into reducing the hours ordinary people must work. In the more or less richest country in the world, the US, national wealth has more than doubled in the last three decades but the real wages taken home by most workers have not increased at all. That increase in output could have gone into reducing the hours people have to work but it has not.
It will be argued in Chapter 10 that in a sensible economy most of us might need to work for money only about two days a week or less. This is because we would be living simply, for instance in very low cost, small and humble housing, within highly self-sufficient communities organised to provide a lot of free food and services via community cooperatives, working-bees and rosters. Yet we have an economy in which there must be constant effort to increase work and production. The Liberals won a recent election on the slogan “Jobs. Jobs. Jobs.”
In addition to the long hours, many and probably most of us have to do work that is not enjoyable or meaningful or in any sense “fulfilling”, especially for the many in low-paying jobs. Many who would say they have a “good” job spend eight hours a day doing the same limited thing which adds nothing to their enjoyment of life or their personal growth, and they must spend another two or more hours getting to work and back. In the kind of economy argued for in Chapter 10 we would make sure that just about all work was enjoyable (and if some of it wasn’t we’d all do our fair share of it no matter how important anyone thought he or she was.) And because the economy would be mostly localised not globalised, we would not need to spend much time getting to work…on our bicycles. (More issues to do with work are considered in Chapter 4.)
One of the most disturbing yet little-recognised faults in this economic system is that it involves unemployment. It makes work scarce and precarious. You fear that you might not be able to get any. This inflicts great psychological and financial hardship on very large numbers of people. But unemployment is totally unnecessary. In a good economy a top priority would be to ensure that all who wanted work could have a share of the work that needed doing. It would be easy to design an economy that did this, just by organising to make sure everyone who wants work can do something useful and valuable for society. The administration costs would be far less than the unemployment payments now made, and we would not be wasting all the idle productive capacity, or inflicting the psychological costs on people.
So why is there unemployment? The answer is that in capitalist society labour is treated as a commodity to be bought and sold in a market. It is like bricks or timber, an input to production that an owner of capital can buy and use to produce things, but that can be left idle if using it would not make a profit. But money, land and labour are things that should not be treated as commodities. Labour is people who need work and incomes. It is alright to leave a brick idle but it’s not alright to leave a person without work or income. In capitalist society there is great pressure on people to find owners of capital willing to use their labour, and there is pressure to accept the conditions offered, including pay rates. If no capitalist thinks he can make money hiring them then it’s alright for them to be cast into miserable conditions. This is brutal and barbaric and avoidable. Whose interests does it serve: the owners of capital, or the rest of us?
There are economic systems in which this is not the arrangement. Your household is an economic system. It involves work, production, consumption, distribution and development decisions, but none of these are made with a view to making profits. No one has to compete for jobs. It is a cooperative system. No one seeks to get rich and be able to avoid house work because they have investment income. Goods such as dinners and clean clothes are produced and allocated but not sold. When we ask how well it is functioning we do not think about its GDP. People in your household economy do a lot of work without expecting any payment. No one is dumped into unemployment. Thus, it is an economic system that is totally different from the one outside the household. The overriding driving principle is not to make money but to maximise the welfare of all family members. But the economy outside the household does not operate on such principles.
In a capitalist society much and probably most work is unpleasant. It suits the factory owner to have many people repetitively doing limited tasks that do not involve much skill or pay, and he has little or no reason to make the work enjoyable. Few if any workers would do these jobs if they had any choice, so a major incentive is the threat of unemployment. As Socialists say, unemployment “disciplines the reserve army.”
And the robots are coming. Their role is to replace workers with machines. In a sensible society they would be an unmixed blessing, because they would mean less work needed to be done by humans. But in this society the benefit of putting in a robot goes to the owner of the factory, and it is no consolation to the displaced workers that the machine results in cheaper goods…which they are less able to buy than before. This is another example of how this economy typically works in the interests of richer people rather than of the rest. It enables those with capital to get most of the benefit of automation. A satisfactory economic system would make sure that the benefits of automation went to all people, by enabling production of the things we all need while spreading the reduced work across all wanting work.
The Australian economy produces a lot of wealth, but it is very difficult to get a house to live in. Young people are finding it more difficult than their parents did, many have no hope of ever owning a house, and most distressing of all, many people are homeless. One of the main reasons we have to work so hard is that it costs so much to get a house. In a sensible economy it would cost very little, because a high priority would be to build small and cheap housing for all who need it. Chapter 10 will explain how you could build yourself a humble but perfectly sufficient, and beautiful, small house for well under $20,000. In fact you could build a cute mud brick tiny house, perfect for young couples, for maybe under $5,000. For the costing see TSW: Housing. (An experienced builder would guide you, and you could pay him in labour.) But in Sydney in 2020 the lowest cost of building a house was over $150,000. To build the average house would cost you around $320,000 (Delahunty, 2019.), meaning that by the time you have paid the interest on the loan, and the tax on the amount you have to earn to pay off the house loan plus interest, you have had to earn around $600,000! (For the house, not including the land.) This is delightful for people who own capital; it forces you to borrow a lot from them to get your house and then spend decades working to pay it back plus interest. It also means that large numbers of people can’t get a housing loan and are forced to rent, so they have to pay even more over their lifetime for housing, and it means many end up homeless.
In this economy you cannot buy a very low-cost but perfectly adequate and sufficient house; because they are not produced. Why not? Because in a market system house builders make much more profit building big and expensive houses for those who can afford them. So the housing industry in this economic system sets most of us up with a huge and decades-long amount of work, debt, worry and insecurity. What if interest rates rise? What if you lose your job, or have an accident and can’t work? The bank will “buy” you out…at a low price you will have little scope to haggle about.
In this economy houses are not regarded as things to be made available to everyone who needs one as cheaply as possible. Houses are commodities, and their price is allowed to be determined not by the cost of building them but by how much they can be sold for. It is no surprise therefore that as people with more money compete to get houses the prices rise and the builders shift to building only expensive houses they know they can sell to richer people. They aren’t going to maximise profits building small as-cheap-as-possible houses are they? And investors and banks find lucrative opportunities in speculating on rising house prices as people with higher incomes compete to secure one.
This illustrates one of the main themes running through this book: the power and undesirability of the market system. Many things like housing could be provided to all at low cost but they are allowed to be treated as commodities that go to those who can pay most for them in the market system, which means that humble, cheap yet sufficient housing is not built. The American health system shows what this leads to; excellent but extremely expensive care for the very rich along with very poor care for most people and no health insurance at all for millions. In a good society the market might have a significant role but it would not be allowed to be a major determinant of what is produced and who gets it, or of what is developed. (Detailed in Chapter 10.)
This economy makes most of us worry about security, in several fields. This contributes to what is now likely to be our most prevalent illness syndrome, which is to do with depression, stress and anxiety. We worry about losing our job and then possibly losing our home because we can’t keep up the payments, about falling into poverty, not being able to provide for our old age, and about physical security in urban environments. In the US having an accident or becoming ill can mean financial ruin.
Similarly in this economy many services that a good society would guarantee to everyone, such as good health care and satisfactory provision for care in old age, are commodities for sale at maximum price. Consequently, high quality care is available for richer people but many have to worry about what will happen to them if they become ill or when they grow old.
Note how the above concerns exist primarily because in this economy individuals have to pay for their housing, health care and aged care out of their individual incomes, and have to buy such things mainly from corporations seeking to maximise their profits. We do not guarantee and provide sufficient incomes, housing, health and aged care, etc. to all, paid for by taxation if necessary, which is what we do for roads, police, railways, etc.
In a good family we all look after each other and make sure worries about security are minimised or eliminated. A good society would do the same. To say the least that is not a priority in this economic system. Most of the increase in wealth produced, evident in a rising GDP, goes to the rich few and not into making things like aged care more available for all, or helping neighbourhoods to be more interactive, communal and mutually supportive.
Chapter 3 deals at some length with the undesirable social, moral and spiritual effects of a capitalist economy. It creates a social climate of competitive, acquisitive, selfish individualism. Because we have to compete in the market for jobs and incomes, and this is difficult and many do not fare very well, our focus has to be on our own and our family’s welfare, not on the welfare of others or how our community can thrive and develop ways of cooperatively providing good lives for all.
Suburbs and neighbourhoods are little more than dormitories for isolated families and workers. Few people are there all day. There is negligible interaction, familiarity, community, bonding, provision of assistance, organised maintenance or productive activity, and little sense of social responsibility. People are passive consumers and produce little or nothing for themselves and engage in few if any functions that might create social bonding let alone community resilience or capacity to provide. Citizenship means little more than obedience to law.
The irony is that when people come home from work they go inside and watch a screen for several hours, time which could have been devoted to community interactions and activities that maintained a rich local culture and replaced the screen watching with more rewarding leisure activities.
The media compound the problem, being the dominant source of information and ideas, being preoccupied with trivial entertainment as well as concerned primarily with increasing passive consumption.
Because so many in the “precariat” struggle and many are dumped into “exclusion” many turn to behaviour that is socially and personally disruptive, such as drug abuse and crime. Over 55,000 cars are stolen every year in Australia, and there are probably twice as many home burglaries. How many would there be if everyone had a guaranteed minimum income and a worthwhile job in a vibrant local community? And this impoverished cultural climate contributes to the incidence of depression, stress, anxiety, alcoholism, boredom, family violence and racial conflicts…as well as the need for the vast police, court, prison and “welfare” expenditures.
Above all is the ethos, the climate of selfish individualistic struggle in a predatory winner-take-all situation. You have to focus on your own welfare, you must compete against others to get the jobs and income and housing etc. you want, knowing that there will not be much help if you can’t cope. You have to be suspicious of others out to disadvantage you, such as advertisers who routinely deceive, and people tempted to cheat you because they too are struggling to get by. The context is not characterised primarily by concern for the welfare of all, looking after the least able, cooperation, support, community, desire to see all thrive and to contribute to the public good. Many Eco-villagers live in communities where these are the dominant values and members are very conscious that such an atmosphere is the major factor in their high quality of life. They can be proud of how caring their communities are; most of us back in the mainstream can’t be.
Australia is very rich, technically sophisticated, and innovative. Shouldn’t we be aspiring to a much more satisfactory state of affairs, to arrangements which enable people to have nice lives without all that work, struggle, worry, insecurity, poverty and mental un-wellness? Why don’t we have such a situation? The answer is because we have a capitalist economy. It is not driven by a determination to build a nice, secure and equitable society; it is driven by determination to maximise profits. Is there no better way?