Wednesday, December 22, 2004

America's Biggest Problem?

Here is my first contribution to a new blog forum created by The Casual Observer. The deal is that us invited bloghounds write a little ditty about an issue posed by Mr. CO, an ecumenical and intelligent kind of guy. The question was, What is the biggest problem facing America?

The biggest problem facing America right now is work. Put it as two questions. How do we occupy ourselves, and why? What is the proper relation between your effort and your reward, between your work and your income?

It used to be that our occupations defined us. Once upon a time, work was the cauldron in which your character was forged. In some ways, it still is. Who hasn’t been asked “What do you do?” And then watched as expectations took shape on the face, in the eyes, of the stranger who asked the question?

A century ago, there was a similar sense of crisis, or at least frustration, in trying to define the meaning and significance of work. The Populists and the socialists claimed that the paper-pushing mental labor of bankers, lawyers, merchants, and intellectuals—all those prissy “middlemen”—was not productive. In fact they insisted that such labor was parasitic.

By this they meant that the incomes of the bankers, et al., were deducted from the sum of value created by others, by the productive labor of the “toiling millions.” Their assumption was that your consumption of goods was authorized by your production of goods. You weren’t supposed to get more than you contributed to the sum of value, to the stock of real, tangible goods.

Not a bad idea, mind you. It’s what animates some of the more strenuous versions of the labor theory of value—including that purveyed by Marx.

But with the rise of a corporate kind of capitalism, mental labor became central to every enterprise and every sphere of social life. Witness the emergence of higher education as we know it, ca. 1890-1920. Witness the little magazines, the young intellectuals, the government agencies employing sincere young men and the settlement houses employing sincere young women, all in the same moment.

This kind of mental labor looked suspicious from the standpoint of most Americans, not just Populists and socialists (although, if you do the math, these folks were probably the majority of voters in 1894 or 1896). Then as now, people wanted a transparent, tangible, reasonable relation between effort and reward—you were supposed to earn what you received as income.

But how to measure this relation? What exactly do intellectuals and other paper pushers do? Like bankers and lawyers, they clearly don’t produce anything tangible or measurable, or even enjoyable.

The crisis of a century ago was solved by admitting mental labor into the category of work as such, but it took a while. The question, then as now, was How should we think about the relation between effort and reward, between work and income? The question never went away, of course, and it has been answered in interesting ways by recent “reforms” of both welfare and Medicare, under both liberal and conservative presidents, as well as by Social Security and other redistributive programs.

But we are now at a real crossroads. There is no way that private investment can produce enough jobs to employ even the slowing growth of the labor force. Since 1919, we have seen economic growth (larger output of goods and increasing productivity), as a result of declining net private investment and of declining labor inputs to expanded goods production.

Since the 1930s, public policy has acknowledged this very basic fact by attempting to detach the receipt of income from the production of value through work—via the programs I already mentioned, but also by developing the notion of “human capital,” by treating education as the basic industry of the U.S., by trying to come to terms with what is clearly a “post-industrial society.”

But what now is to be done? None of us, left or right, wants to abolish a transparent, tangible, reasonable relation between effort and reward, between work and income. That’s why we tell our children to work hard in school, and why we laugh, or cringe, when someone says Jack Welch earned what he now gets from G.E.

What is to be done is, quite simply, to stop acting as if we can restore the moral universe of the 19th century. We have to understand that our rewards are not, and cannot be, the function of our measurable efforts. I’m not invoking luck here, people, I’m telling you that there’s not enough work to do. And the private sector, the “supply side,” can’t change that. Either we redefine work or we redefine income. How about both?

This is the biggest problem because it is at once an economic, a social, a political, and, most importantly, a moral problem.

P.S. Matthew: MM got this from me, not vice versa: see Pragmatism and Political Economy (1994), Part I