Are Lower Wages Better for Business? Will they Shift us to a Creative Society?


Morning rant after listening to Steven Joyce et al. on Morning Report (25th October 2017) claim to be the friend of business.  Tosh.  Increasing wages are linked to building economies through building *both* social capital and demand.  Yet we’re already hearing that a lift in wages will be a business cost for Small & Medium Enterprises (SMEs).  This is reactionary, unthinking and dinosaur thinking.  Simplistic.  Mean.

We’re hearing that SMEs will suffer?  Will they?  Who buys?  Who are those who create and think within a commercial team?  Who *actually* benefits?  The one slave owner who can produce the cheapest cotton for export to a disconnected social system?  Ever cheaper milk?  A race to the bottom of third world costs structures?

Consumptive to creative.jpg

Source: Takashi Iba: Pattern Languages as Media for the Creative Society

There is a dialogue happening around the world that links so strongly to this discussion.  Our world is changing.  The abuse of corporate power with the loss of unions and the rise of the Neoliberal religion has lead to undeniable disparities.  Add to that technological shifts with the potential for huge implications for the future of work.

But it is more than that.  There is a fundamental shift in thinking – from the Productive/Consumptive society (the Neoliberal’s wet dream) to the Communicative society, and then to the Creative Society.  Suddenly systems thinking and the Pattern Language and ecological systems of thinkers like Jane Jacobs, Jan Gehl and Christopher Alexander are coming into the policy space.  (This shift necessarily requires that Treasury Neoliberals be told to go and make the tea after counting some beans of course).

This is a shift!  A shift from Having and mechanical measures, to Being.  And this does not mean some idiot trade-off assumption so loved by the technocratic mind.  It can mean a significantly better place within which local commerce thrives.  Strong societies make strong economies.  Creative people make creative and attractive places, make creative economies.

OK, the Corporate Colonial Industrial Slavers may lobby hard (and spend money on media and deal-maker far right politicians) to see this terrible thing never occur, but …

….. fuck them.

corporate-profits-labor-share.jpeg

Source: The Economist, quoted in an article from Business Insider that argues technological shifts requires us to completely rethink minimum wages.

A number of people have researched what makes an economy tick, and it isn’t about putting corporates at the centre of things.  Adam Smith’s suspicion of them was very well placed.  And there is so much research out there.  I’ve written a number of blogs about building regional economies by thinking differently here.  Others have looked at low wages as both the cause and the consequence of low productivity.  In other words, a poverty trap, a race to the bottom, to Mordor and the Third World.  The unions of the past that argued against the power and short-term of the robber baron types (the types that have been welcomed back under Neoliberalism with open arms) did a great deal for the economy as well as for society.

To think of staff as just a cost (lower the better) is ridiculous unless you want a slave style economy.  Narrow.  Unthinking.  Mechanical.  Such thoughts highlight the linear myopia of the technocratic class who so often cannot think beyond the spreadsheet by looking at only the numbers they can count.  If it’s not in the accountant’s spreadsheet, it apparently doesn’t exist.  Fallacy.  Fallacy.  Fallacy.  There is an interconnected system out there if anyone can be bothered to look for it.

Two examples to think about – 1. Henry Ford raises wages in 1914 or thereabouts. 2. Ruth Richardson cuts benefits in the Mother of All Budgets (Neoliberalism gone completely barking mad) to below subsistence.  In both situations it wasn’t just the dollar demand figure that was affected. There was a significant social and psychological component.

One had a significant positive effect.  One had a significant negative effect.

Why?  That social/psychological component is at least as important as the effects on aggregate demand – if not the most significant according to Robert Putnam – trust, participation, expression, cooperation, sense of belonging, hope, esprit de corps, the freedom to be creative and act, with self-organised clustered collectives for recreation or commerce etc.

And so says Amartya Sen – justice and the freedom to be is vital to enterprise, and especially justice for the thinking and actions of women and cultural diversity.  Both Sen and Putnam argue that strong economies are built by treating people well – treating them with morals – as an necessary condition for creating resilient, thinking, adaptive enterprise (whether commercial or community).  They’re also built on favouring SMEs over outside-owned Corporates (and here) – the locally-owned enterprise over the Walmart.  Creative verses Extractive enterprise.  A vision of Tuscany or the Shire rather than a corporate Mordor.  Here and here and here.

These are people-centred economies, not resource-centred dystopias.  They go beyond the measured machine and bring the Goddess back into our thinking.  Kick Milton Friedman to touch and invite Manfred Max-Neef or Jane Jacobs to speak.  The Corporate Dystopian slave economy is not the vision most of us have in mind.  So think soft systems.  Think Humanities and humanity, and what it is to be human living within a world that cannot be objectified without losing our souls.  Never think of people as merely ‘resources’. Ignore any models that are framed that way.  They are bullshit.

You won’t find *one* *single* neoliberal economist discussing this soft social part of our economic system – because if they recognised its importance, they couldn’t accept neoliberal axioms.  Neoliberals hated Putnam’s research that demonstrated that Strong Societies build strong economies, not the other way around.  It completely refuted their direction.

On Measurement - the McNamara FallacyBut if you cannot think outside the machine, or autistic measures, then you’ll never get it. I pull my hair out when people think that only the measurable matters – or even *exists*!!!! See the McNamara Fallacy – “we’re winning the Vietnam war! Look at the respective body counts! I have created a model of the results, and predict VICTORY!”

Neoliberalism essentially dismissed all the research and understanding of workplace sociology (let alone what it means to be in a community) – because they cannot deal with anything that isn’t part of a measured, predictable, mechanical, Physics-envy, machine. That is their metaphysics and cosmology – but they think they rest on a solid objective plinth of rationality and truth because they are not taught to test assumptions, logic and corollaries.  They are not taught to think philosophically about their subjective metaphysics. Better to presume it’s ‘objective’ and ‘factual’.  Less messy.

Narrowly technical and tactical without any strategic sense. The nightmare of action without vision.

Let’s corporatise all public departments, schools, hospital, universities and research organisations.  Let’s cut benefits.  Let’s sell assets.  Let’s subsidise those big & therefore meritorious mega-corporates (under Neoliberalism, big is better, might is right).  Let’s allow the pollution and degradation of the environment, because, “the market will provide!”  Let’s give carrots to the axiomatically deserving rich and beat the axiomatically unworthy poor with a big stick.  Let’s call it “freedom.”  And let’s never examine our axioms, naturally.  But we’ll still call ourselves a science.

Total bunkum. Those economists shouldn’t be allowed anywhere near policy making; put them in the “don’t call us, we’ll call you” room along with the Stalinists.  They don’t understand the complexity of our home – and how our societies and our ecosystems function as verbs self-organising into life.  Our world is not just a warehouse of stacked ‘resources’ for allocation and price.  Actors in the simple ‘market’ can rationalise the destruction of those qualitative functions (even if they acknowledge and understand them! – it’s still profitable in the short-term to destroy, sack and pillage) if all they look at is supply/demand and price – production and consumption without a shred of understanding of what it is to be a communicative and a creative society.  I’d rather ask a dustman’s advice than that of a Neoliberal economist.

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So 1. In 2014 Henry Ford significantly increased the wages of his workers.  He got less turnover, happier people caring a lot more, less costs, more productivity.  Profit. “Hang on, my little spreadsheet doesn’t say that …. surely higher wages, means higher costs, means less profit.”  Presuming Ceteris Paribus of course – all else remains the same. Which it absolutely doesn’t!  Kick that assumption to touch as well.

I remember being taught about the shift in thinking from early 20th Century Frederick Taylor’s mechanical incentives to work – piece rate reward and punishment – to the motivational approaches of Hertzberg, Maslow, McGregor and Edwards Deming in the middle and later 20th C.

(MY GOD, these people are *people*, working in a workplace and wider *community*. They *care* and want to belong!  They aren’t cogs in the machine!)

And then the appallingly ignorant Neoliberals – who are taught not to think in social systems, only mechanical individuals who are ‘resources’ and ‘consumers’ (in all aspects of life – because, of course, the market defines life – all hail) come along and take us right back to Frederick Taylor thinking – long debunked in work place sociology.

The market defining life …. Remember Dr Gift from Jane Smiley’s Moo who calculated the NPV of marriage and children and decided not to invest?  Hilarious, and a little glimpse into the withered mind of the Neoliberal Professor.

Of course, neoliberals don’t want to hear about hearts and minds and communities with a collective moral sense and inspiration in their souls, never mind cooperative communication and creativity – they are frustratingly inconvenient in putting in your model.

So with Ford, higher wages in workers’ pockets created more value, less costs, and – by some commentators view – the creation of the middle class who could buy the cars.  They also nurtured the creative.

This demonstrates a system of feedbacks where no one is on the top, the system is socio-ecological and self-organising.  And that system is not just about measurable ‘male virtue’ linear hard measured bits.  So much of economic success comes from the heart of people – their motivation and vision in life – their desire to be and belong and create as much as to have – the archetypically ‘female virtues’ of belonging, love, care, nurture, sharing etc.  People have a sense of morals, they either trust or don’t, they participate or not, they express their ideas and have the confidence to speak and act, or they hunker down and be the cog the idiot corporate bosses want them to be (because they really lack anything like a complete worldview).  We need the Goddess back.  The wisdom and the caring and the purpose and the qualities as well as necessary (as distinct from convenient) measures.  Not just the measures.

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2. Darling Ruth and her slavering adherence to Milton Friedman’s nonsense. Cuts the benefits and the economy tanks.  Less money in the economy, and so SMEs go DOWN!!  Then they had to let staff go.  So more unemployed on below subsistence benefits.  So yet less money in the local economy.  Idiots.

But it gets worse.  Our people lose hope and connection – some of those social and psychological things that are fundamental to the realisation of both individual and collective creative potential.

WalmartAnd guess what. That’s when the Warehouse rose because we need to buy cheap – our very own Walmart corporate style operation killing the SME retailers.

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So treat our people well.  Pay them decent wages that don’t require the subsidisation of Corporations by Working for Families, and refocus on the whole of what makes a society and an environment tick and function, rather than the most asinine accountant measure that presumes that lower wage costs means more profit because they haven’t the wit to see the connections that go beyond the number on the sheet.  It is simplistic bullshit; the bullshit that has become so prevalent in this least Wise of ages – the Age of Neoliberal Madness.

In a system you never do one thing. Ceteris Paribus is bollocks. And assumption that needs to be explicitly assigned to the scape heap.  That is not how systems work.  You tug one strand of the spiders nest, and the whole things moves.  You might even wake the spider.
Ask yourself what else you do to the system when you raise or lower wages.  Ask what you do to the motivation, sociology and psychology of people, as well as to your customer demand base.

Are you supporting a productive/consumption society.  Emphatically, no.  You undermine both production and consumption.  Are you supporting a communicative or a creative society from which we – local people and enterprise – benefit?  Categorically, no.

Low wages support the Corporate, Colonial, Industrial Slavers.

If you listen to the nonsense accountant logic of lower wages simply meaning more profit (the thinnest slice of our social and economic system you could imagine) then the logical corollary is slavery, with the ever present hope that the Lords at the top will buy your SME shoes.
Mind you, some would say we have already that.  Under our Neoliberal madness, that dystopia of obedient cogs, living within an authoritarianism fear-based slavery is exactly what is being promoted.

saruman

Can you follow the trend lines?  Think about it.  That’s why we need to change.  That’s why we need a vision of something a whole lot better, with very different policy making frameworks.

Make the differentiation between SMEs and outside-owned corporations.  Treat decent wages as a part of that vision of a better world – economically and socially bettter.  Adam Smith’s village and a Tuscanesque Shire is what we ought to be striving for – not a Corporate dystopia run by obedient and expendable Orcs for the benefit of a few Sarumans and Saurons telling us in we are “free!” in the media machine run by the Uruk Hai.

Chris Perley

Thoughtscapes

Chris Perley has a background in embedding himself in our landscapes and fields, in management, policy, consulting and research relating to land use, the environment, provincial economies and communities.  He is an affiliated researcher at Otago University’s Centre for Sustainability.

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This entry was posted in Building Regional Economies, Neoliberalism & Corporatism, Thought Pieces. Bookmark the permalink.

One Response to Are Lower Wages Better for Business? Will they Shift us to a Creative Society?

  1. Bronwyn says:

    Wonderful rant

    Like

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