The job market is a little less dismal today. The jobless rate apparently decreased to 10 percent. That is a modest step forward, although I’m not aware of anyone predicting a quick return to the mis-named “full employment” (which is actually the “natural” rate of unemployment, somewhere around five percent). Below this rate, workers start asking for more and inflation kicks in. High unemployment creates downward pressure on wages (an expense to be minimized) and is therefore good for business. Keep in mind that the stock market has been doing just fine while six unemployed persons chase each available job.
The Wall Street Journal said it best (perhaps sarcastically): “Only 11,000 lost jobs! Praise heaven.” Indeed the editorial blatantly concludes that we should avoid any government jobs program and let the market do its magical thing.
Whatever the case, a drop in unemployment is good news for the average person. So how do we get more of it? I want to take a look at a couple of approaches (not counting the market idea, which is pretty self-explanatory). First, using government policy to boost the job market. Second, the grassroots cooperative job creation that tends to happen on its own when people get hungry enough.
This weekend, Nobel laureate economist Paul Krugman called for an urgent jobs-creation program. He notes that the Fed is forecasting unemployment to remain above eight percent until sometime in 2012, and calls for an urgent government program based on creation of public-sector jobs and incentives for hiring.
Happily for Krugman, this week President Obama hosted a jobs summit. He divided participants into six topical working groups, including “small business” and “strengthening Main Street.” Participants were intended to “span the spectrum” to provide “fresh perspectives and new ideas.” I haven’t found any sign that co-ops were at the table, or that the concept was even discussed. If anyone has seen this (or a participant list) please let us know with a comment. I really hope I’m wrong here, but it seems like they left out a major perspective.
And that brings me to the other approach, which requires a little trip back in history. During the depths of the Great Depression, hundreds of thousands of people formed a wide variety of mutual-aid systems. These often used barter, and were often organized along cooperative lines. This was a continuation from previous economic crises, as John Curl has chronicled in his mind-blowing book For All the People. (Read this; you’ll never look at our supposedly individualist history and culture in the same way again.)
Oddly, this laid the foundation for a different approach to government intervention. It was never fully tried, and parts of it might be worth examining again.
Upton Sinclair latched onto mutual aid and created a radical movement for the 1934 California gubernatorial election. It was called EPIC – “End Poverty in California.” The detailed platform is available, ironically at the Social Security web site. (with the note that it “may not reflect current policies or procedures” Really?) A key part of the plan was for the government to build on the great successes of the mutual aid cooperatives. The state would rent (not seize) unused factories and turn them over to worker cooperatives and “production for use” rather than for profit and speculation. EPIC also planned huge “land colonies” that would get people back to growing their own food.
Essentially it would be a massive publicly-supported barter system, modeled after a smaller plan that was already underway in Ohio. Sinclair had apparently done the math, and it would have been cheaper than continuing to provide people with public assistance. And more importantly, it might have gotten around the problem we once again face: creating new jobs is not profitable for capitalist business. Of course, we should wonder what happened to the “Ohio Plan.”
EPIC is really wild stuff and I’m really not sure what I think of it. However, the idea apparently had legs and did fairly well on election day. First, Sinclair won the Democratic primary with more votes than the other six candidates combined. Then, despite intense red-scare tactics, no support from his party, and Roosevelt’s last-minute decision not to endorse the plan as he said he would, Sinclair still managed to take more than a third of the vote, while keeping the incumbent from winning a majority.
What would have happened if EPIC had been enacted? One thing is certain, California – and probably the nation – would look dramatically different today.
Systemic joblessness is a critical flaw of capitalism. I’m not aware of anyone who has even theorized a way out of it. But I’ve got a growing suspicion that if we can reduce the need to keep investors fat and happy, there will be less of a need to keep wages low and therefore less of a need for unemployment. We might not be able to eliminate joblessness or recessions, but hopefully we can minimize their frequency and intensity.
I don’t think that “production for use” should originate from the government. But as long as the government is messing around with all aspects of the economy, it seems like this is something worth trying. A little funding for a pilot project could go a long way.
Regardless of the government’s involvement, cooperatives seem to be catching on. Nancy Folbre at the NY Times Economix blog seems to be all riled up about co-ops. The model is now spreading like wildfire throughout the Midwest.
Even if the economy perks right up and gets back to where only five percent of people are systemically unemployed, we need something new. There are no quick fixes, no magic bullets, and no guarantees that we’ll be able to build a cooperative economy to supplement or replace the capitalist one. But if we really want to try “new ideas” we at least owe ourselves a read of the EPIC Plan and a serious consideration of mutalist approaches.