Much of the history of civilization is the story of efficiency, of squeezing more out of an hour of work, largely through the application of technology. Barry Schwartz, in a recent op-ed in The New York Times explains Bain Capital, the company run by presidential candidate Mitt Romney during the 1980s and 1990s, as part of this march to efficiency: buying up underperforming companies, merging companies, and getting rid of unneeded workers.
Increasing efficiency is not necessarily a bad thing. Schwartz explains that “it is only if your company and others find a way to pay you more without charging more that your living standard goes up. So if we want to make material progress, we must become more efficient.” Yet, what has been happening through Bain Capital, as in much of American business in recent decades, is not rising living standards (or at least not always), but shrinking numbers of employees. The increased efficiency is captured not through higher wages, but by employing fewer workers. As Schwartz explains, “The price of too much efficiency is not paid by the company. It is what economists call a negative externality, paid by the people who lose their jobs and the communities that suffer from job loss.” For those left unemployed, increased efficiency is cold comfort.
Schwartz had a nineteenth-century forerunner who referred to the firings and hirings of capitalism, with its drive toward innovation and increased production, as “creative destruction.” That forerunner was Karl Marx, and the term “creative destruction” has since been taken up by Joseph Schumpeter and various advocates of capitalism as a largely positive—and effectively unavoidable—process of change. Marx argued that, as technology allowed increased production by fewer people, unemployment would inevitably increase. In one summary of Marx’s rather obtuse prose, “The capitalists’ search for profits leads them to introduce new machines, thereby increasing the capital intensity in the economy. The workers displaced by the new technology are not absorbed into other areas of the economy.” Although the process is longer and more convoluted than this description, in Marxist ideology the result is a mass of unhappy workers—or perhaps former workers—revolting, ending in Communism.
What has held back this progression in actuality is that technology has not, historically, led to long-term, massive unemployment. Instead, we’ve seen a vast increase in material wealth among a large number of people. The more that’s produced, the more we collectively consume. Although periods of unemployment occur, eventually new workers are hired to produce the ever-accumulating mass of goods in a spiral of new wealth (the “creation” part of creative destruction). The formation of a widespread, affluent middle class in the United States following World War II gave the lie to Marx and led to the triumph of capitalist democracy (at least until the 2008 financial collapse). However, capitalism’s ever-increasing wealth creation has not been good news for the environment. Exponentially increasing consumption means destruction of habitat and increased pollution, threatening numerous species and leading us to the verge of the sixth mass extinction in the history of planet Earth. Powered by fossil fuels, capitalist expansion is also causing global climate change. It’s at least vaguely conceivable that continuing technological breakthroughs, in combination with a wholesale switch to renewable energy, could get us out of the latter problem, but the increase of material throughput and the biodiversity loss it causes mean that the current model has reached its limit. Even should the environment prove more resilient than expected, this just means another exponential increase in consumption (most likely from such countries as China, India, and Brazil), leading to an environmental collapse at some future point.
If ever-increasing growth and consumption have spurred an insoluble environmental situation, and communism didn’t work too well last time it was tried, where does that leave us? There is another path, as laid out by such notable thinkers as Juliet Schor and Tim Jackson. This path is one of wholesale lifestyle and value change, of reduced materialism and greater enjoyment of such aspects of life as leisure, families, hobbies, education, and civic engagement. A key component of this vision is shrinking work hours leading to full employment, a society where everyone works, but much less than today.
The immediate path to such a society would be to take efficiency improvements and channel them not to increased salary and consumption, which leads to environmental disaster, or decreased employment, which leads to social misery, but to a shorter work week. The London-based New Economics Foundation argues for only 21 hours of work weekly, which would trade away increased affluence for increased free time. Such a strategy “could help to address a range of urgent, interlinked problems: overwork, unemployment, over-consumption, high carbon emissions, low well-being, entrenched inequalities, and the lack of time to live sustainably, to care for each other, and simply to enjoy life.” According to Princeton University economist Alan Krueger, there is also evidence that increased materialism does not lead to greater happiness; once a certain amount is achieved, it’s enough. A transition to an economy based on less work and more leisure is far from unprecedented. The forty-hour work week was not introduced in the United States until the 1930s, while in the nineteenth century, the seventy-hour week was common. Improvements in efficiency led to both increased material wealth and a shrinking work week. To reach sustainability, we need to take the precedent of the shrinking work week even further, making it the sole goal of enhanced efficiency.
How to make the transition? This is tricky; on the one hand, there is no theoretical reason why companies can’t start doing it tomorrow. On the other hand, our entire economic system is dedicated to continually increased growth for both producers and consumers. Changing this entails a great shift in social values. It requires considering employees not as factors of production, but as the ultimate aim of production. It requires protecting the surrounding environment as integral to good business practices. That is, the long-term goal of businesses needs to include improving people’s lives and helping communities, not just achieving profit. Because businesses need to make a profit to survive, it means a new compact between business and government—or other external agencies—in which the baseline rules are different. Specific mechanisms need to be set up to ensure that, as capitalism innovates and increases efficiency, the increases go toward shortening the work week, not toward greater consumption or firing workers. Indeed, Germany already encourages companies to shorten working hours when times are tough, a policy that has averted layoffs.
Ethan Goffman is Associate Editor of Sustainability: Science, Practice, & Policy. His publications have appeared in E: The Environmental Magazine, Grist, and elsewhere. He is the author of Imagining Each Other: Blacks and Jews in Contemporary American Literature (State University of New York Press, 2000) and coeditor of The New York Public Intellectuals and Beyond (Purdue University Press, 2009) and Politics and the Intellectual: Conversations with Irving Howe (Purdue University Press, 2010). Ethan is a member of the Executive Committee of the Montgomery County (Maryland) Chapter of the Sierra Club.