Iain Duncan Smith and the cruelty of the work injunction

Anything Iain Duncan Smith is “incredibly proud of” should be picked up by robot arms, placed in a hermetically sealed container and blasted off into outer space as soon as possible. Disturbingly, IDS is merely the zealous carrier for a political virus that has infected all but a few politicians.

I speak of the work obsession.

In his resignation letter, the former work and pensions’ minister managed not to mention the 1,390 people who died after a tribunal found they had been wrongly declared fit for work.  What he did find space for was noting his incredible pride in generating ‘record rates of employment’ and cutting the number of ‘workless households’.

It would be churlish not to point out that many of the brutal methods employed to achieve this outcome – the work capability assessment and sanctions for disabled people - were introduced by the previous Labour government. But what is worrying is that while some deplore the methods, everybody seems to agree with the aim.

Rich country economic think tank, the OECD, perennially underlines the urgency of increasing the ‘labour participation’ of women and older people. Disability charity Scope, which advocates ‘fundamental reform’ of the work capability test, wants a million more disabled people into work by 2020.

In 2006, a DWP study found a ‘broad consensus’ among employers, unions, disability groups and the main political parties that work was good for the health of sick and disabled people.

The work obsession began in earnest under New Labour. NL ministers waxed lyrical about the transforming effects of hard work. To underscore the message, the Department of Social Security was symbolically re-named the Department for Work and Pensions.

Unemployment was gradually usurped by the adjective, ‘workless’. Less a word than an accusation, being ‘workless’ meant there was something wrong with you, a psychological flaw, and you needed to be returned to the path of righteous employment.

The idea that work is good for you has become so ingrained among the political elite that the fact that it often isn’t does nothing to dent the enthusiasm. In reality, only well-paid enjoyable work is good for you; low status, badly-paid jobs aren’t, amazingly enough. The work compulsion is such an article of faith that even right-wing diatribes include two million stay at home parents in (entirely fallacious) calculations that people on benefits have more children.

But at the high tide of its influence, there are signs that the work obsession is running out of steam.

Part of the reason is that the work obsession has always relied on the social function performed by work rather than what it actually is in bare economic terms – in a capitalist society economy exploitation and profit-making for others.

Thus, stable jobs help people with mental health problems recover, employment enables people with disabilities to escape ghettoization and contribute to society. Going further back, the huge movement of women into post-marriage work after the 1960s meant financial independence and an escape from compulsory domesticity.

Work has been very consciously linked with escaping domestic drudgery and isolation. “I very passionately believe,” government minister Chris Grayling informed the BBC in 2013, “that if we could help people back into work, they are much better off than if they are left stranded at home on benefits for the rest of their lives.”

But in the putative economic recovery we have experienced over the last five years, the sheen has been systematically stripped from what is meant by ‘work’. We are not talking about stable, good jobs but bare-faced exploitation. Zero-hour contracts have mushroomed post-recession, but are merely the ‘tip of iceberg’ of flexible employment practices, such as extreme part time contracts and key time contracts.

According to researchers these ‘flexi-contracts’ are creating ‘a culture of servitude’ and generating anxiety and ‘depressed mental states’ among workers. So much for work being good for people with mental health problems. It now causes them.

One of the prime motivations for hounding people off out of work benefits is that paying people to do nothing is a drain on resources. Think of that enormous ‘welfare bill’. But unless you produce programmes for Channel 5, it’s a fallacy that moving into work of some kind means you move off benefits. Numbers on working tax credits are double what they were in 2003. But greater ‘labour market participation’, merely means people now work for their poverty.

Without this huge state subsidy, the economy and consumption would collapse. But the situation cannot endure forever. A 2013 study estimated that 47% of current jobs in the US could be supplanted by computers by 2033. Automation now threatens not only manual labour but also previously immune areas such as retail jobs and cognitive work. “The scope of these developments means that everyone from stock analysts to construction workers to chefs to journalists is vulnerable to being replaced by machines,” write the authors of the book Inventing the Future.

The demand for labour already weakened from its post-war high point, is set to wane even further. Therefore, in the near future, the injunction that ‘everyone must work’, will cease to make any sense, apart from being inhumane.

What these developments will make apparent is that the work obsessed society we inhabit has gross flaws and is immensely one-sided. To take one example, the need identified by many psychologists for both parents to stay at home and look after young children, is not possible in a society designed around the needs of employers. Many necessary functions labelled ‘domestic’ can be given their proper due in a post-work society, although performed by both genders, not just one as they were in the past.

Many other socially valuable activities will become possible in a society that does not insist on perpetual exhaustion as a condition of citizenship. Democratic self-management, medical breakthroughs, social useful inventions all become feasible in a society that trusts its members, rather than setting out to punish them.

And this would also be a society that would clearly remember Iain Duncan Smith as the dinosaur that he is.

Mark Carney's Endgame Escapism

One of Tony Blair’s first acts as Prime Minister was to make the UK’s central bank, the Bank of England, independent. The BoE’s governor was to be chosen by the Chancellor but its decisions, over whether to raise or drop interest rates, for example, were not to be left to politicians.

This gave the Bank of England great power over the distribution of wealth and income. The fixing of interest rates clearly has huge ramifications. Mortgage holders benefit from low interest rates while savers gain when they are higher. Insolvent institutions, like banks after 2008, can survive if interest rates are rock bottom.

During the financial crisis, the power of central banks was amplified further. Quantitative Easing, the literal creation of masses of new money, was undertaken autonomously by central banks. Politicians may have supported the policy but they did not instigate it. QE was huge. At the press of a button £375 billion was created in the UK and $4.5 trillion in the US.

QE was a supremely political act. The money was used to buy up the financial assets of banks, and thus enable them to keep functioning. By artificially swelling assets such as shares, bonds and property, the benefits of QE were directed quite deliberately to the wealthy. “People like me will benefit from this”, said one Donald Trump in 2012.

The new shock doctrine

But QE was not the crowning glory of central bank independence. In a speech in Shanghai at the end of February, Bank of England governor Mark Carney (who thinks central bank independence is the ‘right model’), warned that further measures would have to be taken to bring about economic growth. Zero interest rates and periodic QE, known as monetary policies, were not enough. Rich economies need “to use the time purchased by monetary policy to develop a coherent and urgent approach to supply-side policies,” he said.

“Gradualism in structural reforms” was sapping political mandates and weakening investment on the part of business, Carney explained. “In most advanced economies, difficult structural reforms have been deferred.”

Supply side policies and structural reforms sound neutral but they are anything but. Supply side policies are a euphemism for cutting regulations and taxes on the rich and business in the hope they will invest the money gained and benefit the rest of us through a trickle down process. Supply side policies have been in the ascendancy for 40 years. In 1980, the UK’s corporate income tax rate was 53%. Now it is 18%. But clearly things are not moving fast enough.

As for ‘structural reforms’, here are some examples from the OECD, the think-tank representing 34 rich country governments. The ‘structural reforms’ it advocates governments implement include reducing the ‘generosity’ of unemployment benefits, restricting access to disability benefits, curtailing public ownership and state intervention (privatisation in other words), increasing the state retirement age, introducing or raising tuition fees for universities, eliminating collective wage agreements, shifting from corporation tax to flat rate taxes like VAT and raising public support for R&D and investment in infrastructure.

Unfortunately, the OECD laments, the pace of reforms has slowed since 2012. Exactly the same ‘gradualism’ in forcing through ‘difficult’ changes that Carney bemoans.

Long-term economic pain

Despite the perceived foot shuffling, these ‘structural reforms’ mirror very closely the actual policies of democratic governments. The above list is a pretty good description of Conservatives’ ‘long-term economic plan’ for the UK. Every box is ticked.

But we are now admonished by unelected technocrats like Carney (who, like so many other central bankers, earnt his spurs at the vampire squid Goldman Sachs) that the speed of these ‘reforms’ needs to be accelerated. The idea that, in a democracy, the electorate should have any say in what economic policies are pursued is clearly so twentieth century.

Perhaps, this ‘any colour any long as its neoliberal’ condescension should not surprise. What is noteworthy, however, is the imperative to get a move on with ‘reforms’. Why the urgency?

The explanation, in Carney’s words, is that, “with more savings chasing fewer investment opportunities, equilibrium safe returns have fallen sharply towards zero”. Paul Mason, economics editor of Channel 4 News, translates: “In plain English, there’s too much capital for capitalism to function and it’s depressing the baseline return on money to zero.”

Capital is simply money invested in order to make money, to make a return on investment. The idea that a saturation of capital is behind the world’s economic traumas is not one that has received much attention, even on the Left. But it explains a lot. The English economist, Harry Shutt, argues that a ‘wall of money’, augmented by the huge growth of stock market invested pension funds in the last 30 years, is perpetually searching for profitable outlets.

This ‘permanent and growing surplus of capital’ lies at the root of footloose speculative share buying and the never-ending privatisation mania, says Shutt. And here is one of the world’s leading central bankers validating the theory.

The capitalist utopia

A condensed version of the economic story of the last few years goes as follows. The crisis of 2008 exposed the growth rates of early years of the century as fake, based on the huge indebtedness of corporations, banks and consumers. Bail outs and quantitative easing postponed a mass haemorrhaging of wealth, but created a credit bubble in so-called emerging markets. Capital is now surging out of countries like China as that country’s economy slows; ‘foreign capital inflows’ are ’brutally reversing’, in Carney’s wording. Hence the urgent need for ‘difficult structural reforms’ which will open up profitable outlets closer to home, and thus sustain economic growth.

To achieve this capitalist utopia, welfare states need to be gutted, forcing people to search for work at reservation wages  and to accept zero hour contracts or risible self-employment as preferable to claiming benefits. Lone parents, disabled and older people have to be 'incentivised' to enter or stay in the labour market.

Profitable public assets need to be hived off to the private sector, thus enabling private investment where state ownership had precluded it. Rather than ‘wasteful’ welfare spending, public funds need to be directed towards creating infrastructure projects that private capital can gain a return from.

It is revealing how the privatisation narrative has been turned on its head. At the dawn of the privatisation era, in the late 1970s and early ‘80s, the justification was that inefficient ‘lame duck’ public enterprises needed to be streamlined by private sector discipline. Nowadays, nationalisation is specifically reserved for loss-making private sector companies - witness RBS and its £46 billion losses. Profitable public assets, such as the Land Registry or Air Traffic Control, are in the privatisation cross hairs because of, not in spite of, making money.

This process has no conceivable end point. The Marxist geographer David Harvey says that to ‘keep a satisfactory growth rate’, in a world where output is estimated at $45 trillion, profitable opportunities for capital worth $2 trillion need to be found. By 2030, ‘when estimates suggest the global economy should be more than $96 trillion, profitable investment opportunities of close of $3 trillion will be needed,’ he says.

One of the self-evident truths of such a world, Harvey maintains, is that “everything under the sun must be in principle and wherever technically possible subject to commodification, monetisation and privatisation.”

The ‘dictatorship of the world’s central bankers’, in Harvey’s description, is now ordaining that this process be speeded up.