international analysis and commentary

Income and labor in the 21st century

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To really understand the fundamental dynamics of today’s labor market and the serious challenges that lie ahead, one must step back from the current debate as the greater part of the public discussion on work and income is still stuck in the nineteenth century, while we have already entered the roaring twenties of the 21st century. The conventional debate on labor and income is outdated and we need a new, much more holistic approach.

 

“Without labor, nothing prospers”? Not anymore

First, we cannot have a modern debate on labor and income if we do not adjust our predominant vision of the role of labor in a modern society. “Without labor, nothing prospers,” Sophocles said once. For centuries – if not millennia – this logic has applied to all sectors in society. The idea was that one could have many forms of capital, but without human labor this capital is useless, and could therefore not prosper.

The balance between capital and labor has always been an important subject of debate – especially since the first industrial revolution, when capital and human labor were brought together in factories on a scale never seen before. The question of how to divide the profits between (the owners of) capital and labor, has been fiercely fought over in every society. But, underneath this political battle laid the solid condition that capital and labor could not stand one without the other.

Today, however, Sophocles’ wisdom does not automatically count anymore; at least not in parts of our economy. In many sectors physical and digital capital are becoming more and more autonomous, less dependent on human labor, that is. Factories arise where hardly any hands are needed. Blue collar jobs are replaced by autonomously operating machines, and white collar jobs (bankers, lawyers and accountants) see their jobs being taken over by self-learning artificial intelligence algorithms. This does not mean that all jobs will be lost soon, especially as new types of jobs will arise in this new economy.

 

A new social balance

But the fact that capital is becoming increasingly independent from human labor, while our society as such still depends heavily on capital, does mean that we are developing towards a different social balance. Regrettably, this important break from the past is not yet fully reflected in public debates. And the fact that many conventional institutions, such as political parties and trade unions, have not fully recognized this new social balance yet makes them less and less relevant in the ever-important dialogue on the question: How do we divide the profits amongst all members of society?

Second, when it comes to jobs, many scholars, as well as politicians and policymakers, maintain the view that they are primary need. Most, if not all governments of developed countries have designed their entire labor policy around the misconception that everyone needs a job, instead of realizing that everyone needs income. The origins of this misconception lie in the 19th and 20th centuries, when for the greater part of the population a job formed the only source of income. The word job even became more a less a synonym for the word income. Decades of focusing on full employment brought us great welfare, but it has also brought us, in David Greaber’ words, a lot of “bullshit jobs”. Jobs that are just there to keep people busy.

 

Unvaluable jobs and invaluable activities

The rationale behind this approach is that everyone should “earn” a living by adding some value to society. Paradoxically, an increasing number of jobs are in fact adding very little of that, if nothing at all. Instead, these people could, for example, be developing or educating themselves, or doing all sorts of voluntary work, which our society depends on heavily. But since these are not paid activities, they are considered irrelevant by the economic models that still dominate public policy and social welfare laws.

It is time for systemic change: we need to shift the focus of the labor market debate from “full employment”, to “the development of our full human potential”.

When it comes to the question of primary needs, let’s shift the focus from “everyone needs a job”, to “everyone needs (basic) income”. Most societies in the West already have many times the production capacity to produce the primary needs for all their citizens. What holds them back from truly reaching new levels of well-being is not scarcity, but a very inefficient division of the means available to citizens.

 

Value matters

If we really want to bring human development, general well-being and social inclusion to the next level, we should reinvent our view on the function of work, our view on income and especially our view on value. What kind of value do we want people to add to our society? How do we create a system in which everyone is not just “working”, but also really developing as human beings? How do we create a social system in which everyone can participate and in which we, as society, can get the most out of our human potential? Let these new questions be the ones to dominate the public debate on income, labor and welfare in the decades to come.