On Work, Consumption, Economy and the Whole

Saul Kaplan, the founder of the Business Innovation Factory–where incidentally I will be a storyteller on 16 September–writes a Labor Day post on his blog listing what he calls 20 random thoughts on the Future of Work. (They’re not so random, really, but it’s a really good list.) Naturally agreeing with points such as

Projects are more important than jobs; and

Free agent nation becomes a reality,

I got to thinking that change of this scale will have GINORMOUS downstream effects (I’ve been told by some very reliable sources that ginormous is now officially a word!). Because if we change how we work, don’t we in fact CHANGE EVERYTHING? Saul touches on some of these broader implications when he notes that

Workforce and economic development are transformed and become indistinguishable; and

Work and social become indistinguishable

but what I’d like to do in my Labor Day post is draw these points out even more.

We cannot underestimate how important steady 9 to 5 work is to the American economy; it is that steady, predictable income that has allowed US consumers to become the BEASTS that we are. (It was part of Henry Ford’s genius to realize the connection between his profits and the wages he paid.) The US consumer has been the engine behind world economic growth since WWII. I wasn’t able to easily find a statistic on what percentage of the world economy is ingested by the US consumer–the closest I could get is the oft-cited data point on how we account for about a quarter of world energy consumption despite being in low single digits in percentage of world population. But you get some indication of the importance of US consumption to the world economy from the website of the Worldwatch Institute, which in its press release for its 2004 monograph on world consumption noted that “the 12 percent of the world’s population that lives in North America and Western Europe accounts for 60 percent of private consumption spending, while the one-third living in South Asia and sub-Saharan Africa accounts for only 3.2 percent.” It’s safe to assume the US consumer accounted for more than half of that 60 percent.

So let’s get in that trusty Time Travel Apparatus and fast forward let’s say 50 years. If the predictions about how work will change are true, then one of the implications–unless we come up with interesting new methods of compensation, question mark?–is that the steady income that drives American consumer consumption will dissipate, to be replaced with more aperiodic payouts. Presumably these payouts will average out to meet our needs and sustain roughly approximate standards of living, but not without some important adjustments. I would imagine, for example, that the average individual’s willingness to accept large revolving debt balances will weaken once she cannot rely on a regular, stable income. Similarly, companies and business models that are based on consumers handing over huge amounts of money on a regular basis, like the cable companies, may have to retool.

Many industries in fact will have to rethink. Agreeing to five years of car payments? I don’t think so!! The 30-year mortgage? Perhaps not!! It’s interesting that already in the car industry companies such as Zip Cars are introducing new ways to acquire the services of a car on a pay-as-you-go basis. And the shambles in the mortgage industry have led people to question the inviolability of the American dream of home ownership. Finally, the emergence of Cloud Everything probably will allow consumers to dispense with the need to own important consumer goods such as music, videos, books, etc.

So my hunch–a sophisticated analytical term–is that a redefinition of work will be the prelude to a redefinition of economic prosperity. Prosperity and economic growth would no longer be synonymous. I don’t know yet whether this will be a net plus or minus, although the optimist in me believes of course it will be a net plus. Certainly the world’s ecology could tolerate a break from constant growth, particularly growth dependent on mass utilization of finite resources. Again from the Worldwatch Institute, “WWF’s Living Planet Index, which measures the health of forests, oceans, freshwater, and other natural systems, shows a 35 percent decline in Earth’s ecological health since 1970.”

Nevertheless, there’s also a part of me that senses the wisdom of the view that the opposite of growth is death. Without economic growth, can we advance as a species and improve the lot of those who live and die without ever getting a chance to explore their human potential? I know many have conceptualized what they argue are more equitable economic models, but these always seem to ignore the demonstrable quirks of human nature.

Clearly, there’s still a lot of work to be done.

9 responses to “On Work, Consumption, Economy and the Whole

  1. Carmen. Please tell me ginormous isn’t a word! I completely agree with your thoughtful amplification of my lazy Labor Day morning musings. There is no question that rethinking work also means rethinking economic prosperity. Impending system change is both scary and exciting. It is a great time to be an innovation junkie and free agent. Can’t wait to spend time with you at BIF-6. Saul

  2. Great post…I have been exploring this idea on my blog, specifically here (http://spiralout.posterous.com/the-emerging-shift-away-from-monetized-consum).

    I think you make a very important distinction in noting that an effect on economic growth, traditionally conceived, does not necessarily entail an effect on economic prosperity. We may shy away from financial commitments, but new service (subscription/rental) oriented business models are allowing us to achieve similar “prosperity” at those lower levels of financial commitment.

    I will look forward to your future posts on this topic…

  3. FYI —

    Just two years after a majority of visitors to Merriam-Webster OnLine declared it to be their “Favorite Word (Not in the Dictionary),” the adjective “ginormous” (now officially defined as “extremely large: humongous”), has won a legitimate place in the 2007 copyright update of Merriam-Webster’s Collegiate® Dictionary, Eleventh Edition.

    Merriam-Webster updates its best-selling Collegiate® Dictionary every year with a number of new words, senses, and variants. This year, the word “ginormous” was one of approximately 100 neologisms to make the cut, while many others will stay “closely watched” by our editors for possible inclusion in future revisions. (This, of course, begs the question: so just exactly how does a word get into the Merriam-Webster dictionary?)

  4. In Argentina, it is no longer possible to borrow on a long-term basis. The only loans that are commonplace are short-term with sizable cashdown. The nature of work has changed there, too. A book I’ve been meaning to pick up that talks about this is called ‘Horizontalism’. http://www.amazon.com/Horizontalism-Voices-Popular-Power-Argentina/dp/1904859585

    I’m increasingly inclined to believe that you can have progress, and even growth (of a different kind), without having growth in monetary terms. Check out http://steadystate.org/

    Bankers will argue against this to their death bed, though.

  5. Hey Seb,
    Good stuff. I think this has a lot to do with the stage of development in a given economy. One thing that I find disconcerting is the confrontational attitude in a lot of writing/thinking about currency systems and shifting economic paradigms. Often these concepts are discussed in the context “overthrowing” the current system, or the like.

    Yet, the current system served the industrial economy very well. Ubiquitous, standardized, (long term) debt based currency was extremely useful in an economy that required massive infrastructure investment. In other words, the industrial economy required a means of motivating large numbers of mostly anonymous people to do things that mostly weren’t much fun, that they wouldn’t have done without financial compensation. And, it required large investment up front because revenue generally wasn’t realized until significantly later (after a large factory had been built).

    I think it is important to realize that this wasn’t a system that was always unnecessarily exploitative. It has just now become unnecessary because the nature of work and production has changed. Less of the work needed now is abhorrent physical labor, much of it can be motivated intrinsically. Up front investment requirements have also decreased dramatically, the means of productions have been liberalized, and “revenue” (broadly conceived) can be realized incrementally rather than well after the full investment is sunk.

    There are a lot of parallels in this line of reasoning to the points I outlined in my last post (http://spiralout.posterous.com/defining-abundance-in-the-context-of-a-gift-e). There are circumstances under which a transactional currency, even a transactional centrally managed debt based currency, will be preferred. Those are largely the circumstances of the industrial economy. We are now entering an economic phase where other systems will be more efficient, and I believe we will naturally transition to these new systems because their value will be empirically evident.

    Sorry for the long rant but your comment got me thinking…

  6. Great points Gregory. It seems like along the way we somehow lost the ability to make long-term collective bets. Do you expect that, moving into the future, we will recover that ability?

  7. Great Post Carmen.

    You mention how the steady 9-5 has encouraged consumption and I will not disagree. That said, I think the ability to work whenever, whereever, will encourage us to consume in radicially different ways that could change simple things such as hours of operation at stores, to larger luxury items that we can enjoy in our homes because we can, in theory, now be in/at them more often. These changes could actually raise overall consumption rates rather than limit them. And since you mentoin zip car, the rise of “renting” items, think Chegg for text books, has enabled companies to tap into previously non-existent revenue streams and force other services to adapt. I think as our work changes our consumption will adapt as well.

  8. Hey Seb,
    Great question. I had to ruminate on this for a while to give an honest answer because I am biased towards thinking that collective action hasn’t accomplished much recently. Our governments are mired in bureaucracy and inefficiency and no progress has been made on the really contentious problems in decades (immigration, entitlement programs, tax code reform, deficits, etc). I am most familiar with the US but I think the same can be said generally for most developed country gov’ts.

    So admitting that bias, I want to reframe the question. Democracy has never been true collective action, it has been a transparent system for achieving a significant enough majority such that action can be taken on behalf of the entire population with some moral justification. There have always been dissenters to even the most popular policies. What we are losing then is not the ability to form unanimous decisions, that was never possible. What we are losing is the ability to force the dissenters to go along with the majority decision through legal coercion, taxation, etc. We are losing the illusion of control.

    What we are gaining though is the ability to experiment with a much wider range of solutions. Those solutions might be direct solutions to a given problem or they might be solutions for influencing the voluntary behavior of others. So for example, if you are concerned about Global Warming, I think the day is quickly approaching when the cost of developing an improved solar panel will be less than the cost of influencing mass political opinion.

    What say you? Have I successfully sidestepped my bias or am I just avoiding the question?

  9. I caught your presentation on the BIF6 live stream, and wanted to say that I thought it was really a great talk. I enjoyed it very much.(although it kept going in and out-what was the advice you gave the innovators near the end?)

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