Necessity as the mother of invention has long been a driving force for progress. In our political system, the main driver of change has been crisis. The political system is so robust by design that only when there is a true crisis, do we begin to see movement on anything. Obviously, the same must be true for the economy.
The U.S. economy is considered to be capital intensive, which means that labor costs are higher relative to other parts of the world. Therefore, in a bid to attain greater productivity, the U.S. economy makes greater use of technology. Finding new technology in order to boost productivity is only part and parcel of capital investment.
What, then, was the so-called crisis that spurred all of this? The answer is most likely scarcity. Scarcity of labor requires finding substitutes. Is it a crisis? Not necessarily. But if we want to compete in the global economy, then we need to use our technology in ways that allow us to achieve greater productivity with fewer inputs, especially labor inputs, just so we can remain competitive.
With the effects the coronavirus is having on the economy, it is possible that this is the type of crisis that will redefine the nature of work, at least in the short-term, if not permanently. Technological advances have already rendered the traditional work environment, at least in the services, obsolete. It is possible to work remotely, which has allowed for some greater flexibility in terms of the work week.
No longer does one have to work a traditional work week on-site in order to work. And yet, most of the economy continues to function on the traditional model where workers are expected to be on-site during prescribed hours. Although defenders of this model will argue it still facilitates better communication, as well as socialization, this traditional model rests on control.
In a traditional work environment, managers can still control their workers just through the simple mechanism of monitoring. But capitalism is at root a system of control, where those who control are those with economic power and those who are controlled are without. This is why property and property rights are fundamental to capitalism. Managers effectively have property rights whereas workers do not. Were workers’ labor to be redefined in terms of property rights, workers too would have a measure of control, which no doubt would clash with the control of managers.
If workers have property rights in their labor, then managers cannot dispose of their property as they see fit. It would certainly limit a company’s ability to shut down plants deemed to be not profitable enough just so the capital can be relocated to where they can be more profitable. Managers still want to control their workers, which is one of the reasons they prefer employer provided health insurance to a single payers system despite rising costs.
With all that we don’t know about what is shaping up to be a pandemic, talk of quarantines and maybe complete shutdowns can only be viewed as a threat to the capitalist order in ways that haven’t been contemplated. The market has been in decline, although that could also be out of fear of a Bernie Sanders nomination as the Democrats’ candidate come November. There is concern of disruptions in supply chains, and there is real potential for this to create a worldwide recession.
At the same time, markets do adapt, and stock prices will rise again. As fear and panic grips the economy, there is one silver lining, which is that we may be forced to abandon the traditional model of work in favor of a more flexible and adaptive one.
Many companies are now telling those workers who can do their work at home to do so. It is unrealistic to expect that all activity will cease for two weeks as we all self-quarantine ourselves. If more work occurs remotely, then the market will have found ways to adapt to the crisis. At least many firms will have. And yet, one has to wonder whether once the genie is out of the bottle it can be put back.
Workers who end up working from home may find that they prefer it. They might end up being more productive. Of course greater morale on the part of workers along with greater productivity will also mean greater efficiency, which of course translates into greater profitability. Workers who no longer have to commute two to four hours a day will also enjoy more leisure, which means more time with their families.
Still, is this something that managers can support for the long haul, because it would end the control that they have traditionally had? The nature of work will have been transformed. Instead of coming in daily, they can come in once a week or every other week, or even less. There are still technological means to ensure that workers are indeed working. And yet, the worker now would be working more on his/her terms.
One might think, given all the literature out there about ways to improve worker morale, that managers would openly embrace this. For years, there have been theories such as Y over X where workers are viewed as people with human needs rather than merely impersonal commodities to be tightly controlled under Theory X. Viewing workers as people have also been central to efficiency wage arguments that workers who are paid more are also more productive.
In some cases, they are more productive because employee morale is higher and in others because employers save money on monitoring costs. Changing the nature of work along these lines could be viewed as yet another variation of the efficiency wage. In order to get more productivity from workers, their human needs and desires need to be satisfied both materially and non-materially.
Nevertheless, most firms still operate by Theory X because control is still important. Perhaps it is a deeply ingrained idea of just what property rights in the U.S. mean and how they have been understood. Although the nature of work can be changed for more positive outcomes, it is still the case that many firms will have issues. Of course, they will do it if it is the difference between continuing to work and total disruption. But the threat this crisis truly poses is that it upends the underlying assumptions of free capitalist markets. To the extent that this virus is affecting the psyche of investors, one has to wonder if this isn’t part of it. After all, if the government can intervene (which has much to do with uncertainty and confidence) in the name of “public health,” then it can intervene for other matters affecting public health.
We know that there is a risk of death to some from the corona virus, but one wonders if the panic couldn’t be tamped down a bit if employers would get out and publicly talk about new arrangements to get work done from remote locations than simply talking about the disruption that it is causing. Instead of being reactive, which is characteristic of our political economy, they could be more proactive. Now that would surely entail taking the long view.
Oren M. Levin-Waldman is Research Scholar at Global Institute for Sustainable Prosperity. Learn more at the professor’s Website: https://www.econlabor.com/. Direct email to firstname.lastname@example.org. Tel: (914) 629-6351.
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Author of Restoring the Middle Class Through Wage Policy: Arguments for a Middle Class
Understanding Public Policy in the United.States.
The Minimum Wage: A Reference Handbook
Wage Policy, Income Distribution and Democratic Theory
The Case of the Minimum Wage: Competing Policy Models
Oren M. Levin-Waldman is faculty member in the School of Public Affairs and Administration at Rutgers University-Newark, and Socioeconomic Research Scholar at Global Institute for Sustainable Prosperity Research. Learn more at the professor’s Website: https://www.econlabor.com/. Direct email to email@example.com