(Image: Democracy Collaborative)This “Chapter Seventeen” is part nineteen of Truthout’s continuing series of excerpts from Gar Alperovitz’s “America beyond Capitalism.”
This is an exclusive Truthout series from political economist and author Gar Alperovitz. We are publishing weekly installments of the new edition of “America Beyond Capitalism,” a visionary book first published in 2005, whose time has come. Donate to Truthout and receive a free copy.
The logic of resource allocation between elites and nonelites and issues of retirement and health care open converging perspectives on the question of whether the privileged position of those at the top might ultimately be challenged—and on how, simultaneously, the pressure of events is forcing ever greater attention to nontraditional strategies related to Pluralist Commonwealth principles.
The longer-term logic of time use and of gender equality offers additional avenues of approach to the underlying issues—and to the dead ends, realignment possibilities, and new strategic and institutional options likely to face other important constituencies over the course of the twenty-first century.
Time and gender issues are also instructive in that they permit the analysis to begin to move beyond pain and difficulty to the question of how the resources of a very rich society might ultimately be used to achieve more fulfilling positive goals.
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Scholars who have studied long-term patterns of work in the United States have documented a clear trend up to approximately the middle of the twentieth century: the typical workweek declined from roughly seventy hours in 1850, to sixty hours in 1900, to fifty hours in 1920, and—allowing for variation during the Depression and World War II—stabilized at a little over forty hours by the middle of the century. After that, further diminution of work-time largely ceased. Indeed, as we have seen, hours worked per week and per year have increased very substantially for large numbers of Americans in recent years.
The pattern is different in Europe: although most Western industrialized nations once lagged behind U.S. developments, in recent years most forged ahead while the United States fell back. In 2000, 76 percent of American workers put in forty or more hours a week—an increase from 73 percent in 1983. In England only about 50 percent worked forty or more hours a week, and in France the share of the employed working that many hours decreased from 36 percent to 22 percent between 1983 and 2000. The reduction in the workweek was even more pronounced in Germany: only 43 percent of the workforce worked forty or more hours in 2000, down sharply from 85 percent in 1983.
In much of Europe four to six weeks of annual vacation is also now mandated by law for all workers (including newly hired workers). In the United States most workers don’t receive four weeks of vacation until they’ve reached twenty years of service. Different methods of data collection make precise comparisons difficult. However, taking hours worked per week together with vacation time, workers in France and Germany reduced work enormously, compared to their American counterparts—by 260 hours per year between 1979 and 2000, the equivalent of cutting six and a half forty-hour-weeks out of the work year!
Not surprisingly, many U.S. workers would prefer to work less—if they could afford to do so. Research by the Families and Work Institute indicates that almost two-thirds (63 percent) would like to work fewer hours—up from 46 percent just a few years earlier. On average those questioned said they would reduce their workweek by more than ten hours if they could.
It is theoretically possible, of course, that the richest nation in the world will never move forward in the direction that is increasingly common elsewhere. On the other hand, as technological progress continues—and as the capacity of one hour’s work to produce three, four, or possibly even five times what it now produces continues to increase—at some point during the coming century, almost certainly Americans are likely to demand that the United States begin to follow the trend of other nations.
It is at this point that some of the most interesting questions come into play.
In 2003 the U.S. economy produced just over $38,000 for each individual, or just over $152,000 for every group or family of four. Per capita production in the United States increased more than sixfold during the twentieth century—even though the economy was jolted by two World Wars and the Great Depression. Although the gains might well have been greater had these costly events not intervened, we may use the twentieth-century trend as an initial rough baseline.
Projecting twentieth-century growth forward yields a very large number by the end of the twenty-first century—minimally $220,000 per capita and $880,000 for each group or family of four. (All in 2003 dollars—far more, of course, if inflation is considered.)
Per capita GDP will still be impressive by the century’s end if the conservative assumptions used in the Social Security Trustees Report are followed: $125,000 per person, or $501,000 per group of four (again, all in 2003 dollars). Even if such projections are substantially discounted (we shall explore ecological limitations shortly), they suggest some obvious possibilities.
In Chapter 2 we noted Segal’s proposal that we should aim to reduce the average workweek for both men and women to something like twenty-five hours. The proposal appears utopian in terms of immediate prospects. On the other hand, it is hardly a major stretch beyond either European practices or the emerging technological possibilities. In France nearly 80 percent of all those in full-time employment worked thirty-six hours or less as of September 2002; in Germany metalworkers, who currently work a thirty-five-hour week, have been pushing to extend this to eastern Germany; and the union’s longer-term goal is a workweek below thirty-five hours throughout the country. If the American workweek were even to be cut in half, the U.S. economy would still be able to produce an extraordinary amount for each family by the century’s end.
Indeed, greater work-time reductions are conceivable—and in principle could be achieved with no diminution of living standards (and plausibly an increase) for the vast majority of Americans. A recent estimate is that productivity gains of 2 percent per year—if fully translated into reduced work-time—would cut roughly seven hours off the workweek in the course of only one decade.
Although many moderates and liberals have shied away from such questions, Robert Fogel has argued that as early as 2040 current trends and “technophysio evolution” could produce a 1,400-hour work-year, a 30-hour workweek, 30 holidays, and 12 sick days. Further movement in the direction of shorter working hours, he suggests, would continue as the century progresses.
The fundamental long-term political-economic problem is not whether major changes in the workweek are likely to be technologically feasible; it is how, specifically, the fruits of technological change can be translated into equitably distributed reductions in the workweek as time goes on. The specific question is how to allocate the financial gains made possible as the productivity of the economy improves.
The logically available options are not difficult to define. The most straightforward but perhaps least likely method of achieving a reduction in working time is simply to enact legislation reducing the workweek—and then penalize companies that violate the law. The difficulty is that both workers and corporations oppose a mandatory approach. The legally set forty-hour week with pay increases for overtime is the basis of our current stalled system, and legislation making it more restrictive is not likely.
Juliet Schor has proposed that companies be required to allow workers to choose whether they prefer to take the value of some portion of productivity gains in increased pay or in reduced hours. This would give workers the right to take more time off, something few now have as a matter of right. Here, however, powerful corporate opposition stands in the way of mandated requirements.
Given the political realities, almost certainly a strategy that offers carrots as well as sticks will ultimately be necessary. One precedent is the thirty-five-hour-week legislation enacted in France in the late 1990s—an approach that required a reduction in hours worked but compensated employers through the tax system for continuing to provide workers the equivalent of full-time pay. Variations on this theme can be found in other nations that (commonly to help spread employment) in one way or another also pass through compensatory payments to the company and the worker.
In Austria older workers (men at fifty-five, women at fifty) can reduce working hours and receive partial compensation for the loss of earnings involved: hours are cut in half, but workers receive 75 percent of their former salary and 100 percent of the employer contributions to the state health care and pension insurance systems. The employer is reimbursed through tax reductions by the government. In Italy full-time workers nearing retirement age who are replaced by new hires may move to part-time work and receive government support to bring wages up to previous levels.
Segal has suggested an expansive work-reduction system that in certain respects both extends European precedents and links them to other well-tested U.S. policies. Segal proposes enacting a “Simple Living Credit” modeled on the current Earned Income Tax Credit (EITC). This would be structured so as to allow individuals to reduce hours worked with a less-than-proportional drop in income. The EITC has proven acceptable to many business groups because it in part implicitly subsidizes labor costs. The enactment of numerous state and local forms of EITC over the last decades also suggests the potential political feasibility of an expanded approach at some point in time. Segal estimates that a phased-in credit of $10,000 for families with combined income of $60,000 would permit a reduction in working hours of 25 percent—with a corresponding after-tax income decline of only 10.5 percent.
A fully evolved long-term program would likely build upon either the indirect subsidy route of the French, Austrian, and Italian models, or on Segal’s direct approach using EITC-related strategies, or on both so that the workweek could be progressively and systematically reduced over the course of the century.
Drawing in part on the work of the Swedish economist Gösta Rehn, Carmen Sirianni has offered the additional suggestion that reductions in work-time should be tailored to individual preferences. Instead of everyone reducing the workweek by a certain number of hours at the same time, a person could choose to take an equivalent amount of time off in different ways—perhaps several months at a time for one, perhaps a year for another.
Low-income individuals who must work long hours to provide for their families obviously have far less choice than middle- and upper-income Americans. Even assuming support for a general reduction in work-time, a critical long-term question is whether time can be allocated equitably—which is to say, in a manner that also provides benefits to lower-income Americans. A coherent approach would ultimately likely entail both a major expansion of the current EITC and perhaps some form of basic income as proposed by Philippe Van Parijs, Bill Jordan, and others. Over the long haul, such an effort would inevitably also converge with a comprehensive general strategy to reduce inequality.
The obvious issue, again, is how a serious-scale program might ultimately be financed. We are once more back full circle to large-order questions of resource allocation and—given the dead ends facing traditional strategies—whether, over time, a transition to a new approach might one day be achieved. And again, if there is no way forward under current strategies, then either there can be no solution—or ultimately an alternative approach must be considered.
There has as yet been very little discussion of such matters in connection with time-allocation issues. A major shift would clearly require a buildup of understanding of strategies beyond traditional taxation, a much sharper focus on how resources are currently allocated, the systematic organization of an alliance of the majority, and finally a critical (if perhaps slow) return to a moral commitment to achieving equity in the U.S. system.
There are reasons to believe the first of these requirements—a buildup of understanding of the need for new approaches—is slowly beginning to develop: we have noted the Ackerman-Alstott suggestion of a 2 percent tax on wealth, the proposal of Thomas Michl for a net-worth tax, and the suggestion of Leon Friedman of a 1 percent tax on wealth owned by the top 1 percent. Kevin Phillips and Jeff Gates (among many others) have also urged that wealth taxation must now be put on the American agenda. Robert Kuttner adds that a wealth tax is “by definition, the most progressive way to raise revenue, since it hits only the very pinnacle of the income distribution.” A large group of multimillionaires has launched a campaign opposing elimination of taxes on inherited wealth—paid only by the top 2 percent—as “bad for our democracy, our economy, and our society.”
Economist Edward Wolff points out that most European nations have for years levied general taxes on wealth. Wolff suggests that the United States follow suit with a wealth tax based on the current modest Swiss effort—an approach that, if applied to America, would involve marginal rates of 0.05 to 0.30 percent after exempting the first $100,000 per household. Existing European practice, in fact, offers precedents for a much more aggressive approach. Wealth taxation rates in ten other European countries are much higher—often between 1 and 3 percent—and would yield very considerable revenues if applied here.
Taxation of wealth, of course, has long been central to the American tax system for the kind of wealth most Americans own—their home. Broader wealth taxation—a “property tax on wealth”—of the kind increasingly being discussed would likely exempt home-ownership and middle-class levels of other assets and focus primarily on large-order elite wealth concentrations.
A comprehensive long-term approach to managing major reductions in the workweek would also likely require new Pluralist Commonwealth–style investment strategies based in part on analyses like those of Roemer, Meade, and Kelso reviewed in Part I. Groundwork has begun to be laid for an understanding of these as well. The most obvious precedent that might be built upon is the Alaska Permanent Fund. In a good year this already produces an income stream (for a family with three children) that approaches Segal’s goal of $10,000 in direct payments.
The numerous investment strategies now increasingly being offered in connection with Social Security also would assemble and invest capital in order to achieve income flows to individuals (in this case the elderly)—and as we have seen, the management mechanisms in common use by public pension funds also demonstrate the feasibility and efficiency of public strategies that invest assets on behalf of broad groups of citizens.
The longer-term logic of such precedents suggests the establishment ultimately of a public authority that would slowly build up a capital reserve for investment to support new time-use (and other) strategies. Such an authority—implicitly a Public Trust, one of the core institutions of the Pluralist Commonwealth—might ultimately draw upon a variety of additional sources, beyond income and wealth taxation, to finance major system-wide allocations over the long haul of the century.
Might clear targets of political attack ever be successfully defined in support of such demanding and far-reaching strategies? Several observers believe that the way to a much more challenging longer-term politics may quietly be developing because of what Paul Krugman terms “tectonic shifts” now taking place among American elites.
The super-elite—the people Krugman, Kevin Phillips, and others have termed the new “plutocracy”—increasingly live in a very, very different world from most Americans and in a radically different culture. It is a world where homes cost $5 to $10 million and where $5,000 grills, $14,000 Hermès Kelly handbags, $17,500 Patek Philippe wristwatches, and $100,000 luxury automobiles are commonplace.
The world of the new plutocracy is also a world of routine white-collar corruption. The former Enron CFO Andrew Fastow as of this writing faces a 109-count indictment for alleged manipulations that prosecutors believe garnered Fastow $30 million and an additional $12 million for his associate Michael Klopper (who has pleaded guilty to federal charges). Global Crossing’s chairman, Gary Winnick, it appears, may have made off with more than half a billion dollars as his company was moving toward bankruptcy and its own federal investigation. WorldCom, another telecommunications giant facing bankruptcy and criminal investigations, paid out hundreds of millions in bonuses and loans to those at the top during its last years.
Above all, the world of the super-elites is a world in which wealth ownership has become extremely concentrated—far more so than is commonly understood. Although many Americans own small amounts of stock, the ownership of wealth—particularly financial wealth—is medieval in character.
The richest 1 percent of households now owns half of all outstanding stock, financial securities, trust equity, and business equity in the United States. A mere 5 percent owns more than two-thirds of America’s financial assets. In recent years those with incomes over $1 million—a minuscule less than two-tenths of 1 percent of all taxpayers––made more money from stock sales than all the rest of the nation combined!
“The rich have always been different from you and me,” Krugman observes, “but they are far more different now than they were not long ago—indeed, they are as different now as they were when F. Scott Fitzgerald made his famous remark” that they were different from most Americans. Political scientist Alan Wolfe adds, “There are really only two classes in America now, the top 2 percent and everybody else.”
The Bush administration showered the super-rich with special benefits—massive reductions in income taxation, in estate taxation, in capital gains taxation, and in dividend taxation. If—when—at some point a backlash occurs among the growing number of Americans experiencing economic pain and the stress of ever greater time pressures, there is a more than reasonable possibility that a target of ever greater clarity at the top may slowly be brought into sharp political focus as the century progresses.
It is even possible that at some point during the century, the majority will wake up to its power and create an alliance to demand change.
Quite apart from the equities involved, more free time is one of the most important requirements of any serious long-term system-wide approach to building solid foundations for individual liberty in the new century. Again, a systematic strategy for opening up free time is absolutely essential if there is to be a renewal of democratic participation.
Although such questions increasingly confront both men and women, the painful choices and pressures facing American women suggest that as a group, women are ultimately likely to have the greatest stake in a positive resolution of time-use issues—and a stake, too, in the difficult challenge of developing a long-term politics that offers hope of altering current work-versus-family patterns.
By now the situational logic facing U.S. families in general and women in particular is well-known. For all but the very well-to-do the choices are stark:
(1)The husband and wife both work, and someone else is hired to raise the children for many hours of the day.
(2)The husband and wife both work, and the wife (rarely the husband) does double-duty raising the children.
(3)Both the husband and wife work and both attempt to raise the children in a shared fashion.
The first choice not only involves leaving the child in the care of someone else for substantial periods; for most people, it increasingly means a series of several “someone elses,” since good and sustained help at affordable cost is hard to find—and since most families do not make enough money to pay for such help either in the form of nannies or decent day care. Low-paid, poorly trained help tends to move on, leaving the children to make do as best they can with the next low-paid, poorly trained person . . . and the next . . . *
Aside from the personal and family costs involved, a substantial body of research suggests that consistent caregiving may be extremely important to both psychological and cognitive development in the very early infant years. This need not be the parent; it does need to be someone regularly and lovingly there. The cornerstone of healthy emotional and intellectual development for very young children is also high-quality early child care.
But high-quality care is even more expensive—from a low of $3,900 a year for minimal levels of quality care to more than $10,000 in many cities. In 2000, according to the Children’s Defense Fund, “the average annual cost of child care for a four-year-old in an urban area center [was] more than the average annual cost of public college tuition in all but one state.”
Accordingly, the first option, though available in theory, is rarely available in practice for most Americans—that is, for all but those at the top, who can afford expensive care. The second of the bad choices often produces the anguish of the so-called Superwoman model—a thoroughly exhausted and depleted woman, a tense marriage, and an inadequate capacity to give full attention either to child-rearing or to a career. “There is no more time in the day than there was when wives stayed home,” observes Arlie Hochschild, the author of The Second Shift, “but there is twice as much to get done.”
“Time use studies demonstrate that working mothers put in longer hours than almost anyone else in the economy,” adds Ann Crittenden, the author of The Price of Motherhood. “On average . . . more than eighty hours a week . . . the equivalent of two full-time jobs.”
The problem is significant at all levels—not simply for those with low incomes. Professional women under the pressure of career competition (reinforced by widespread gender discrimination in the workplace) commonly feel they must put in more time on the job and after hours than nonprofessionals. Even when there is more money available, ironically, time may be tighter and the pressures and stress higher among many at the professional level.
The third option—that of the husband sharing a significant portion of child-rearing—offers the logical possibility of ultimately equalizing gender roles and, too, of a potentially nurturant model of sustained child-rearing. However, given real-world differences between male and female earning capacity, when the male reduces his work-time, this usually entails very substantial costs to family income.
It is an option theoretically available to all, but one that in practice is limited, again, to a small number of families where money either is not important or where women earn far more than median salaries. As Crittenden observes, “[I]n a middle-income family, with one parent earning $30,000 per year as a sales representative and the other averaging $15,000 as a part-time computer consultant,” the numbers just do not work. In the real world, it means the woman commonly severely compromises her goals and aspirations.
Nontraditional families face many of the same fundamental dilemmas. For most families there are simply no satisfactory ways out of the three-sided box defined by current economic constraints; still fewer are there realistic possibilities for moving toward creative, equal, and more generous gender roles and definitions. There are only poor compromises.
For low-income families, the three-sided box often becomes a slowly tightening three-sided vise that makes any option an excruciating compromise. In all too many cases the painful reality is that two adults together work three or more jobs to make ends meet, and the children are left to their own devices or to be raised by television.
In principle, logical long-term solutions to the basic problem are quite obvious. The first is simply to provide sufficient resources to pay for first-rate day care services. “First-rate” means ongoing caregiving by people who can—and want to—maintain sustained relationships with children. The costs of various national programs have been estimated at between $50 and $123 billion per year (the latter figure for free care for all). Brookings scholar Isabel Sawhill calculates that a French style (crèche) system of day care would cost about $8,000 a year per child (or $61 billion).Economist Barbara Bergmann suggests beginning with a $15 billion program targeted to low-income children.
But again, financing a serious strategy in this direction clearly would require confronting the dilemmas of the resource allocation problem in ways that point ultimately to strategies beyond those now at a dead end. Many advocates—Hochschild, Crittenden, Bergmann, and others—have urged that day care be made a priority; few have as yet confronted the need for a fundamentally new political-economic strategy, and new alliances, to achieve the resources necessary to finance it.
A second and more basic solution returns us to the long-term logic of time use. Over the course of the century a reduction in necessary work-time, say, to the twenty-five-hour week urged by Segal, offers the logical possibility of both the husband and wife sharing child-rearing duties if they so desire—or of either or both working more hours (without total exhaustion) to pay for good child care.
Political theorist Philip Green urges that a “democratic division of labor in reproduction requires that as a matter of course, that is of mutual expectation, men share parenting in some rough equality with women, regardless of how much time off from external employments this may require.” We cannot ultimately achieve real change, Joan Williams stresses, until—quite simply—we “redefine the nature of equality.”
But this, in turn, requires that the benefits of technological progress are translated into financial resources to make this possible. We are back by still another route to the basic questions of how new Pluralist Commonwealth approaches might be developed and how new alliances to achieve them might be fashioned over time. The challenging reality facing those concerned with gender roles and child-rearing, on the one hand, and those concerned with time use and allocation, on the other, is the same.
The strictly political implications are again obvious. If change is ever to occur, at some point women and others deeply concerned with time problems will have to confront the need for a new political-economic approach—and for a long, difficult struggle. They also will have to come to terms with the question of how to build common cause with others facing similar pressures so that together they can force serious proposals for change.
The above formulations focus primarily on middle-income families. Unless problems at the bottom of the system also are addressed directly, however, the solution to a middle-class family’s problem can all too easily become just another way to pass the buck to those below—especially to racial minorities and immigrant women. As social historians Linda Martin and Kerry Segrave observe, “Every time the housewife or working woman buys freedom for herself with a domestic, that very same freedom is denied to the domestic, for the maid must go home and do her own housework.”
Sadly, Yale’s Dolores Hayden points out, many women “may never ask how their private maid or child-care worker arranges care for her own children.” Nor, we may add, do many men.
In short, any serious consideration of the larger issue once more forces the profound question of overall income inequality to the surface—and suggests that, difficult as this may be, a serious solution will ultimately require radically new structural arrangements.
In all this we are beginning to confront some of the most fundamental issues posed by the coming technological opportunities, on the one hand, and current political arrangements, on the other. It is clear that quite new and positive possibilities will be well within technological reach. It is also clear that, given the power of existing arrangements, a serious way forward may not be possible—even over very long stretches of time.
In larger historical perspective what is important at this point is not simply the question of how time might be allocated over the course of the century, or even the question of how gender roles might be altered. It is whether individuals at all levels begin to confront the emerging logic that suggests that either economic pain and social decay will continue, perhaps indefinitely—or that a new approach must at some point be clarified that allows diverse groups to come together around different strategies aimed at achieving long-term system-wide change.