Tag Archives: Gig Economy

Xenophobic and racist behaviours as understood by an economist

Economics, Neo-Liberal economics, Politics, United Kingdom, , , , , , , , , , , , , , ,

Neo-Liberalism or the practice of free market economics is claimed to be responsible for the decline in living standards, but it is not usually blamed for the decline in public behaviours. In the UK ever since the vote to leave the EU there has been an increase in racism and xenophobic behaviours. (A policy decision desired by NeoLiberal and Libertarian politicians.) What I want to suggest is that the adoption by Western European governments of Neoliberalism and in particular by Britain, has been one of the main contributory factors in the increase in racism and xenophobic behaviours.

One of the great economists but who is rarely read today gives an insight into the processes by which the practice of Neo-Liberalism gives rise to anti social behaviours. This economist is Micheal Polanyi and any reader of his book ‘The Great Transformation’ on reading the first chapter would think that he is describing today’s society, whereas in fact he is describing that of the 1930s. The great insight that he reveals in this book is that the unregulated free market is destructive of social order. He demonstrates that this was a fact known to rulers in the past who insisted on regulating the market to minimise its most destructive effects. Although he does not quote this particular example, the biblical story of Joseph shows that the Pharaohs of Ancient Egypt were all to well aware of the destructive effects of an unregulated market. Joseph interprets Pharaoh’s dream to as a warning that there will be seven years of plenty followed by seven years of famine. Then Joseph and the Pharaoh store grain during the good seven years to distribute to the people in the years of need. The Pharaoh’s understood the importance of controlling the market, they knew that food shortages and their exploitation by the merchants who took the exploit the situation to raise prices for the scarce  supplies of food could lead to food riots and possible threats to the rule. A careful reading of folk tales shows that good rulers regularly opened the warehouses of the greedy merchants to the hungry people.

Evidence seems to suggest that the great Greek dynasties of the era of the Trojan wars and Agamenon, were overthrown by internal revolt. One possible cause is the shortage of food caused by adverse climatic changes, a problem worsened a self indulgent aristocratic elite failing alleviate the hunger of the poor and preferring to spend the wealth of their society on conspicuous consumption by creating ever grander palaces.

When reading Polanyi’s book I noted uncanny resemblances between the England of today and that of the 18th century. He writes about the plight of the workers in the cottage based textile industry, as they lost work and income to the large cotton manufacturers who employed the latest technology in weaving and spinning. These people were reduced to a life of misery, having to rely upon handouts from the parish  to feed their families. Their contemporary counterparts are those workers in the so called ‘gig economy’. The development of the mobile phone has made it possible employers no longer to have workers on site or in situ, as its possible to call them in for work when they are needed. No longer does business have to keep a large staff team on site to deal with those busy periods, instead they can be called in when needed.

These workers are also disadvantaged by the lack of employment protection legislation, as ever since the Neo-Liberal revolution of the 1980s, successive governments whether of the centre right or left have seen as it as their task to remove as many as possible of the labour protection measures. These measures it was believed hampered the efficient operation of the labour market. What this legislation did was to leave the worker increasing defenceless against the actions of the exploitative employer. The gig economy is made possible by two things, the mobile phone and the lack of legislation to protect the rights of the worker.

Not surprisingly this was paralleled in the 18th century when legislation removed workers access to common land. Prior to the 18th century workers in the countryside had access to the common land on which they could keep cattle and raise crops. This meant that in time of hardship they could rely upon this as a source of income and food for their family. These people were often the workers in the cottage based textile industry, who when trade was bad could rely on the produce from the common land to keep the family fed. A series of enclosure acts deprived rural residents of their rights to common land. When the collapse of the home based textile industry happened these people were deprived of two sources of income and reduced to abject misery. (These hungry and desperate people were the workforce of the new textile mills willing to endure the most dreadful of working conditions as the alternative was going without.).

When society falls to deliver people look to alternatives. In the 18th century  it was to France where the  revolution had otherthrown the old exploitative landlord class and promised a fairer society. In England many revolutionary societies were formed and the aristocratic government was in constant fear of revolution. They were only able to suppress the revolutionary instincts of the poor through repression and through a system of regional handouts (the Speenhamland system) which prevented workers being reduced to that state of despair that would make them resort to dangerous measures. The Speenlandham system was not unlike our current tax credits system.

The depressed poor not only turned to thoughts of revolution, but also to xenophobia. There is the story of the monkey that was cast ashore from a shipwreck in Yorkshire. This unfortunate monkey was then hung as a French spy. Whatever the truth of this story xenophobia thrives when people are in need and society appears to be failing them. They look for scapegoats to blame for their misery, then it was the French, now its immigrants. When resources such as housing are scarce, its easy to see it as being caused by the foreigner who has taken the house that by rights should have gone to a native born citizen. Politicians have used this xenophobia as a means of winning popular support. They have constantly used the EU as a convenient scapegoat to blame for the nations economic and social ills, ills which were often of there making and so it was no surprise that when people were given a choice they would opt to leave the EU.

Now there is a situation in which a government refuses to acknowledge its culpability for the increasingly dire economic circumstances, and instead relies on scapegoating the other (the foreigner) to distract from its failures of governance. It has boxed itself into a corner and now the only policy measure that it can offer to alleviate the misery of the people is the limiting of  immigration.They promise that no longer will the European immigrant take the council house or job that should have gone to the native born Englishman or woman. What they fail to realise or the brightest and most cynical politicians fail acknowledge, is that their anti immigrant policies will make the situation much worse for the so called ‘just managing class’. Even when the negative effects of abandoning the EU become apparent the politicians will be unable to acknowledge there policies are failing. What instead they will do is to to adopt more and more extremist language to disguise their policy failings. Economic decline will be blamed on those opponents of Brexit who have talked down the economy. Already one Conservative party councillor has suggested that the people and politicians that oppose Brexit should be charged with treason. The only hope for a xenophobic government is to turn up the volume of abuse directed at their opponents in the expectation of silencing them. This of course is the policy pursued by the current government, when any reasoned criticism of Brexit is answered with abuse. The opponents are the ‘Bremoaners’ or whatever catchy phrase of abuse that they can conjure up.

When the government’s sole claim to legitimacy is that it embodies the xenophobic instincts of the people, it language will be that which both implicitly and explicitly gives sanction to racist and xenophobic behaviours. The government will not act effectively to discourage such behaviours or to  condemn them without fear of alienating its most xenophobic supporters. Next year when the negotiations start in earnest and the impact of the uncertainty accompanying those negotiations will cause increasing unemployment, increasing inflation and falling house prices, what can be expected is an increase in the abuse directed at those who dare to suggest that these are a consequence of Brexit. Incidences of racism will increase as the government’s abusive language towards its opponents will seem to give a green light to their extreme behaviours. A government that suggests the actions of its opponents is bordering on the treason will be seen to sanction violent racist actions, as they can be described helping the government cleanse the nation of that element that is responsible for the ills that beset society.

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The Gig economy and the rediscovery of the bad employment practices of the 19th century

Economics, Neo-Liberal economics, , , , , , , , ,

There has been a lot of excitement in the media about the gig economy, which ‘whatis.com’ defines as ‘ an environment in which temporary positions are common and organisations and organisations  contract with independent workers for short-term engagements’. One study estimates that by 2020 40% of American workers will be free-lancers employed on a temporary basis. In the media there have been positive accounts are given of this development, in fact one journalist Deborah Orr explained how gig work was much superior to a boring job for life, as the individual worker was no longer stuck in the same job for all there working life, but they were now free to change from one job to another once the first became to “samey’. The gig economy for her was a liberation from the 9 to 5 five day a week job.

In fact there is nothing new to the gig economy, as its a reversion to a much older and more traditional form of employment. There is in Thomas Hardy’s book ‘The Mayor of Casterbridge” an account of how farm labourers attended the fair hoping to attract the attention of farmers who would offer them employment for the coming year. Employment on a temporary basis in that come the winter the farmer could dismiss the labourers for who he had no  use. Those left unemployed at the end of the fair had to ‘go on the parish’, that is with no means of support they had to look for to the parish for support. This meant going to the workhouse, an option so bad that families would rather go without and risk starvation than go to the workhouse. More recently such employment was known as the lump in the building trade. A practice whereby workers would be paid daily (if there was work) and work under an assumed name for an agency to avoid tax and national insurance payments. This work was so poorly regarded that most building workers strived to go on the lump. Given this history of the gig economy it is puzzling while it is greeted with such enthusiasm. 

Those who either were victims of the gig economy or knew its workings wanted it abolished. The 19th century and the early twentieth century witnessed action by trade unions and enlightened politicians to provide security of employment for all. In the 1970’s the last major example of gig economy was ended, with the Dock Labour Registration Scheme. Prior to that dockers turned up each day for work, hoping to be taken on for that day to work unloading a ship.

The only area of employment in which the gig economy remained was in the media world. one such example were actors who were employed only for the period in which a play lasted or which a film or television programme was made. This was considered acceptable as actors had the possibility, if successful, of earning substantial sums.

Today there are over 900,000 workers on zero hour contracts. It is claimed that this is made inevitable, because of technological change. New technology it is claimed is ushering in a world in which the nature of work will change, as most new jobs will be on of a temporary nature as the economy is subject to constant change. However while it is true that in some industries such as printing technological change has made many jobs redundant, many of these workers on zero hour contracts are in jobs which have been little affected by technological change. Care assistants in nursing homes or those attending the housebound have had little experience of technology affecting their work. Baristas, waiters, chefs, hotel cleaners are doing more or less the same job that they would have done 50 years ago. The cleaning of hotel rooms is still  largely a ‘hands on job’ that has to be done by a human being. The machinery they use has remained largely unaltered, that is the vacuum cleaner. Yet these thousands of people are all on zero hours contracts and part of the gig economy.

All new technology has achieved is to make the gig economy work for employers. The mobile phone means employers as employees are  constantly on call and can be called in at a moment’s notice. Making something possible does not make it inevitable.

There is another example I can give. Teaching is largely labour intensive and there does seem to be a limit on the numbers that teachers can teach effectively it is  about 30 students in a class. This has always seem a bugbear to right wing economists and politicians, as they see teaching as a prime example of a profession using wasteful labour practices. During the 1990’s there was great excitement in political circles about new technology making it possible for a teachaer to teach classes of a 100 or more. What they envisaged is remote teaching, whereby a teacher in a distant studio using computer technology would teach several classes at once in different schools.  This would have greatly increased the productivity of teachers and reduced the education budget, as many thousands of teachers could be let go. However anybody who knows children realises that they cannot be left to themselves, being remotely directed by a teacher hundreds of miles away. If such a system was introduced these  classes would require human assistants or guards to ensure that the misbehaviour of the few would not disrupt the class. However these children would have questions that could not be answered by the remote teacher, because there would be so many requests for help that this remote teacher would be unable to cope. A qualified teacher or teachers would have to be on hand to help the children with the work. This can be translated into economics by stating that the optimum economic unit of teaching is 1 teacher to 30, any substantial increase above that number will lead to diseconomies of scale.

Despite this it remains the holy grail of the ministry of education to develop that education technology that will reduce the need to employ expensive qualified teachers and so cutting the cost of education. Schools have been flooded with new technology aimed at achieving this end but so far none has succeeded.

There are areas of employment that have been revolutionised by the introduction of new technology. When I started work in an insurance office it included a typing pool, which contained 20  typists who produced typed copy from the hand written copy provided by the clerks. These typists have long since gone replaced by the word processor as have the messengers who have been replaced by email. The same applies for manufacturing industry where millions of production workers have been displaced by computers and computerised manufacturing. The argument is that this process is continuing and we all will have to be prepared to have several jobs in our lifetime, the old job for life has disappeared.

I am not convinced that this obsolesce of jobs will continue. Many of the jobs that can be done by the new technology have disappeared already and there does no seem likely that this technological change will continue at the same rate. The rate of innovation in the new technology is slowing, the RAM memory of my computer is that which was achieved a number of years ago. What my one year old computer has gained over its predecessors is portability, computers have shrunk in size.  This new miniaturised technology is set to revolutionise delivery services, greater control over delivery times is now possible making delivery services more efficient. Employers now can employ drivers for the time that they need them only. Delivery drivers are now self employed often owning their own van. Computer technology means that delivery companies need only employ drivers when they need them, getting them when needed from the pool of waiting drivers. This reduces costs and makes delivery services profitable.

However the possibilities of huge profits have caused many businesses to set up as delivery companies, so many that there are too many companies in the business. The opportunity for making profits is so reduced that for many businesses it can be achieved by reducing the costs of employing drivers. Incomes are driven down to the bare minimum and drivers conditions of employment are worsened so the companies can maximise the productivity of these drivers.

What makes the gig economy so necessary for the delivery trade is the low level of profits in the delivery trade. Without the benefit of casualised working practices and low driver incomes many of the delivery companies would be forced into bankruptcy. It is not so much new technology, as the weak financial position of many delivery companies that make the bad working practices necessary.

There is an alternative scenario if delivery drivers were paid higher wages and given better working conditions, the delivery business would not seem to be the goldmine that it appears to be at present. If that was the case fewer businesses would be attracted into the delivery business and these fewer businesses would gaina larger market share and the much greater certainty of being profitable.  In such circumstances the worst abuses of the gig economy would not  be needed to make the businesses profitable.

While it cannot be doubted that technological change will continue to change the employment market, it cannot be predicted how employment practices will change. Inevitably in some industries there will be the need for the working practices known as the ‘gig economy’ but a great deal of scepticism is required, as much of the changes that have brought about the adoption of the gig economy have little to do with technology but more to do with changes in business practice. All governments of the Western world have been in thrall to  the philosophy of Neo-Liberalism for the past three decades which teaches that the supply of goods and service is best done by the private sector and that the government is best kept out of the market for goods and services. One key element of Neo-Liberalism is what called ‘supply side economics’ and the key element is reform of the labour markets. What these economists teach is that the greatest threat to economic well being are the restrictions imposed on the labour market by trade unions and government. Employers are prevented by these restrictions from using labour in the most productive manner and so these restrictions need to be eradicated. Politicians have introduced laws to emasculate trade unions and removed much employment legislation, so much so that there are almost no restrictions on employers to prevent them from using the most abusive of the practices of the gig economy go maximise worker productivity and their profits.

Some of the very worst practices of the gig economy at be laid at the door of government, whether it be centre right or centre left, conservative or labour, Republican or Democrat, Christian Democrat or Social Democratic. As believers is Neo-Liberalism they believe that wherever possible government service provision should be transferred to the private sector, as private sector providers are more efficient that those of the state. The worst effect of this practice is shown in the care services in Britain. Care for the sick , the elderly, the house bound has been transferred to for profit service providers. Transferring care provision to the private sector has reduced the cost of care. However rather than it being due to efficiency it is due to hypocrisy. The government can squeeze the private sector care providers by paying less for their services. This squeeze on their incomes means that they have to cut costs and the biggest cost is that of labour. These companies adopt a variety of exploitative practices to keep costs down, such as the use of zero hour contracts and were ever possible reducing the income paid to care workers. Those workers that provide care for the housebound are not paid for the time travelling between housebound clients, only the time they spend with each client. This means that the bad publicity that goes with treating care workers so badly attaches to the private companies and not the government. The dirty secret of both the Labour and Conservative governments of the recent past is that they and not the private care providers are responsible for care workers being subjected to some of the most exploitative of working practices. Governments of both parties have refused to end the practice of zero hour contracts and the various abuses of care workers, because to do so would mean that they would have to increase by a substantial sum the money they spend on care services. Unfortunately these guilty politicians are unwilling to do anything to improve the conditions of care workers as any improvement in there working conditions would mean having to find more money for these workers out of taxation, which they believe would be unpopular with the electorate.