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Proof You Are Being Exploited

July 16th, 2010

Ever wonder why we’re still working 40 hours per week? As if that’s some sort of magic equilibrium between labor/leisure that has just organically emerged over the centuries? It’s insanity, really. And evidence that we aren’t free to choose. I touched on this before, commenting that all of our productivity is wasted:

The average worker is several orders of magnitude more productive than he might’ve been a half-century hence… We’ve got more more people doing more jobs, producing more things and still we’re working 40 or 50 or 60 hours a week.

And this doesn’t strike anybody as being just a little bit insane?

In a free market where you aren’t being exploited there is a continuum, a trade-off between labor and remuneration. Let’s say you figure out some way to do your job in a quantifiably better/faster/more efficient manner. Assume for this thought experiment that you are able to double your productivity.

In a free market there is a real tradeoff between labor, leisure, and pay

What would happen in a free market? You could cut your work-week in half and achieve the same output for which you would expect the same remuneration. You could keep your work-week the same, in which case you would expect greater remuneration (perhaps as much as double your current pay). Or any combination along that continuum which would result in some amount of less work, and some amount of relatively (but often absolutely) greater remuneration.

What happens in practice? If you develop some brand new process which, compared to the old process, requires half as much labor, the odds are practically zero that your employer will offer you to begin working a 20-hour work week for the same rate of pay, despite the fact that by working 20 hours you produce the same quality and quantity of output. And it is equally unlikely that they will double your salary, which would justify a 40-hour week because you now produce twice as much and as good of output as before.

Probably what will happen is that some other sap will get canned. You’ll have to absorb at least part of his workload but you will not absorb any of his salary. The corporation will absorb his salary as profit. If you’re fortunate, you’ll get a small raise or spot bonus.

Generally speaking, for a job well-done, under budget, ahead-of-schedule, and to quality, the only reward is more work. We don’t get to enjoy more leisure if we produce more and better and faster, we just have to work even more. For the most part, productivity is severely penalized.

What is the alternative? I do not believe for a second, that given all of the technological advances in the last 200 years, a majority of people in the developed world would continue to work 40 hours a week, if they had any say in the matter whatsoever.  Imagine a 20-hour work week.  Imagine creativity unleashed. Imagine what would happen to progress and productivity, if only people were actually rewarded for the work that they do.

Comments

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  • Hot Karl says on: July 16, 2010 at 9:58 pm

     

    Where did this Marxist bilge come from? You used to have a clue.

  • David Z says on: July 16, 2010 at 10:44 pm

     

    Funny, I don’t see any criticism of the argument put forth in the post. Or do prefer to just unthinkingly react to the word “exploited”.

    For the record: I’m well aware that Marx was a proponent of the exploitation theory of profit, a theory to which I do not subscribe. If you’ve actually been tracking my blog for any amount of time, you’d know this. There’s nothing Marxist per se in this post; no mention of the labor theory of value, no mention of communism, no mention of the proletariat, etc.

    Do you really believe that the 40-hour work week is some sort of magical equilibrium, the optimal tradeoff between labor and leisure?

    Do you really believe that we currently exist in anything even remotely resembling a “free market”?

  • Don says on: July 17, 2010 at 7:20 am

     

    Right from the start I had a problem with this post. The whole thing reeks of enslavement against ones will, which may or may not be correct.
    A person is recognized through his work and all else drops by the wayside.
    Work should not be what one does simply to earn income but rather it should ones willful vocation, that is, something you enjoy doing.
    My observation, over decades, is that most people do not enjoy their job but instead endure it. Thus the saying: “Don’t work to hard.”, and the fact that most workers are living for the weekend.

    If you enjoy your work, rather than tolerate it, it won’t seem like work. You FIRST must figure out what you truly LIKE then go for it. I have been this way for more than 30 years and do not mind *working* 80 or more hours per week. In fact, I am not even aware of the amount of *time* spent at my vocation because virtually ALL of my waking hours, and many of my sleeping hours, are wrapped up in my work. I live my work, all the way around.

    I have seen many people that do not truly enjoy their work and when they are not doing their work they waste their lives in meaningless silliness the most common of which is watching TV and playing video games and accomplishing next to nothing with the hollow voids they have been convinced is the way to run a life. They evolve into the mental capacity of an amoeba and the personality of a mongrel and their eyes glaze in seconds when asked to actually think about something.

    Whether you like it or not your ARE your work and vice versa, so if you have a meaningless job…..

    • Harsha says on: June 23, 2011 at 5:16 pm

       

      Your statement smacks of emotionalising.

  • George Donnelly says on: July 17, 2010 at 10:16 am

     

    Amen. And very well said. People have been locked into a paradigm of one job, at the mercy of the employer. And if you lose that, it’s moving on to another on-job situation. Flexible work and work where you hold on accrued benefits of your work are almost unheard of. Do you work harder, faster or better than others? Good, more work will be sent your way! But you won’t get any more remuneration!

    The idea of finding something you like and making it your work is right on but given how the corporate state has structured financial and laboral matters, that is harder than it would otherwise be. People are purposely kept on the wage slavery treadmill.

    Some people may “be their work”. I don’t. That is a hollow void. I am me. Work is something I do in order to sustain my life and reshape the world to fit my preferences. I have much more important things to do than that – family, hobbies, building a new world.

  • David Z says on: July 17, 2010 at 11:06 am

     

    Don says, “Work should not be what one does simply to earn income but rather it should ones willful vocation, that is, something you enjoy doing.”

    You are self-employed, if I recall. And that’s wonderful, it really is. But for the vast majority of people who have been prepped for menial, automaton-like labor in hot, dirty factories, or bland, stale cubicles, this is not an option. It’s a luxury which the State has made all the more difficult to obtain through decades of retarding education, retarding progress, retarding growth and community, etc.

    And although I’m kind of sympathetic to the Aristotelian notion that one’s work should be a willful vocation and something you enjoy doing, no matter what form society takes, someone has to take out the garbage. Maybe people enjoy that, IDK. But the fact of the matter is, at least as we are presently concerned, most people simply do not have the option, and/or have been robbed of the skills and opportunities, to make their own way in life and work.

    • Don says on: July 17, 2010 at 9:58 pm

       

      @David, you’re breaking it down to the molecular level and I don’t know why. I like mashed potatoes but I can’t say that about all of the atoms that make them up. A spoonful of nitrogen doesn’t turn me on in the least.

      First, everyone has the ability to be self employed and to say it is not an option is short sighted.

      I too succumbed to 15 years of state brainwashing, and even still struggle with it at times, but even while I was working at McDonalds at 15 years of age for $1.45/hr I knew this was not the life for me – I spent much of my time watching the clock. But it took me another 15 years of torture before I started to figure it out and at the age of 30 I became self employed, never to work for any ONE person again and certainly never by the hour. Eventually I went on to hire *employees* and not once did I ever pay them by the hour as I remembered the dismal results such a thing produces. In my opinion it is the worst thing that has ever been done to production. There is a better way and interestingly enough just now many large employers in the US are starting to wake up.

      I taught this to my son, who was homeschooled, and at the age of 16 he passed me in one gargantuan leap by starting his own business. Right now, at the age of 31, the New York Times is one of his clients, but not his only one.

      Self employment is an option for anyone and when you take on the full responsibility of your employment it opens up so many other things to you. (Working for one employer narrows your focus and restricts your abilities to the point of utter starvation. This is proven by the need to take time off, weekends, vacations, sick days, etc. If you are doing things you truly enjoy why do you need time off?) At last, all of your time is your own, to do exactly what you want. Your income is all yours, to do exactly what you want with it. Never again will anyone steal money right out of my paycheck and I will work when I want to work.

      If this is done right, and for the right reasons, you will find that your work doesn’t seem like work and lots of silly things you now do will become meaningless as you devote more and more of your time, energy and resources to the full time job of running ALL of your life. It’s an amazing thing and my only regret in this regard is that I did not start sooner.

      And for the naysayers, its not about the money, its about the self worth and the value in doing a job well and completely. The joy is in the doing and success is not the goal but rather the journey. I’ll never retire and will do my work til I die.

      • Paul says on: June 23, 2011 at 5:21 pm

         

        It is exactly at the “molecular level” that we get to see what’s really happening. Anything else lacks depth regardless of the pleasure we get out of it. People “love” all kinds of things often simultaneously and maybe to the same degree.
        Opportunity is too vague a term. It is in carefully analysing the mechanics of the system and how some can be fortunate like yourself (being self-employed is good I think although working 80 hours on one area would never be my thing) or unfortunate that we can hope to find real understanding. It also requires the dismissal of the love of life/hatred of death and the hatred of life/love of death – a kind of neutral, “cold” thinking that’s required. The passionate kind, while useful at times, is more often manipulated than not.
        That’s probably not being clear enough but I can’t write a book here.

  • Aurini says on: July 17, 2010 at 12:34 pm

     

    I think what a lot of the nay-sayers in the comment thread are doing is going into a happy-death-spiral in favour of capitalism. Believing that capitalism is a Really Good Idea doesn’t mean that it’s perfect, or that it’s some sort of End of History answer to our problems – pointing out structural flaws in the current system doesn’t equate overhauling the system to replace it with communism. It becomes a faith/identity based opinion which precludes things like perfectly valid criticisms of monopolistic behaviour from Microsoft or Apple.

    Robin Hanson wrote a post today about failing creativity: http://www.overcomingbias.com/2010/07/falling-creativity.html

    This seems particularly relevant here; although CEOs may signal that they desire creativity, their actions prove otherwise. On the one hand there is seldom any reward for it, and on the other it’s punished as disruptive in the workplace.

    The role of corporations in creating a sort of Neo-Feudalism vs the ideal of Sole Proprietorship is something that needs to be examined, despite the known arguments for mass-production and specialization.

  • David Z says on: July 17, 2010 at 8:56 pm

     

    Relevant to the discussion is Carson’s recent piece at C4SS:

    Free Market Capitalism is an Oxymoron

  • K says on: July 19, 2010 at 6:29 am

     

    Are not wages the result of some very specific calculations (“discounted marginal value product” > rental price for factor of production)?

    I mean, I don’t dispute your general point here, that the mixed-economy has destroyed employment, productivity, consumed capital, destroyed savings, misallocated resources, retarded growth, stunded expansion, and lowered creativity, etc. and it may well be the case that most people should not be working 40 hours a week. Surely the whole idea of “40 hour work week” as a standard template is utter nonsense, and there is nothing “magical” about it.

    But wouldn’t if be the case, that if for example you discovered some way to utilize the capital good you have employed your labor with that magnified productivity substantially, allowing you to cut your work down to 20 hours per week, don’t you think the owner of that capital would want to re-adjust all the other workers to follow the same pattern and otherwise increase their productivity? Why do you think this isn’t the case under current conditions?

    • David Z says on: July 19, 2010 at 5:28 pm

       

      “don’t you think the owner of that capital would want to re-adjust all the other workers to follow the same pattern and otherwise increase their productivity?”

      Yes, and this goes by many names, like “best practices”, “corporate standards”, etc. The idea being that they use their employees’ process of discovery, distill that to standard processes which are then regulated on to the rest of the workers, the idea is to get that productivity to go up (or the costs to go down like Six Sigma stuff). If that all goes according to plan, the employees see very, very little of that benefit.

  • RJ says on: July 20, 2010 at 3:43 pm

     

    The people I know who find ways to do their job in half the time quit and become consultants making three times as much money. I’m not sure what idiots you’re hanging around with but last time I improved productivity I got promoted within 5-6 months.

    Some companies pay based on past performance and some pay based on expected future performance. If you’re in a job paying based on what you’ve done in the past than your salary will always be < your worth. Find a new job, there's plenty out there for smart people.

    • David Z says on: July 20, 2010 at 5:22 pm

       

      You said,

      I’m not sure what idiots you’re hanging around with but last time I improved productivity I got promoted within 5-6 months.”

      and I think you missed the point… Yes, you got a bit of a raise which usually accompanies a promotion, but factually speaking the other “reward” you received for a job well-done is more work.

      Yes, I see this all the time. I’ve been promoted a few times and making good progress, and the people around me who are awesome are also doing just fine in that regard. What I’m suggesting is that, let’s say you’re up for a 20% raise/promotion. If I were you, I would prefer to just keep my salary unchanged, and cut my work-week to 32 hours instead of 40. But practically speaking, almost nobody gets that option. Why not?

  • Don says on: July 20, 2010 at 5:39 pm

     

    If you can find a way to make as much money in 20 hours as you did when you worked 40 hours why wouldn’t you continue to work 40 hours and make twice as much money as 20 hours? Speculation, rather than doing, kills the deal. I routinely work 80 hours per week but I never count the hours, just the dollars. Time is meaningless in this regard. Some wealthy dood said, “Your time should be divided in to two segments, goal achieving and tension relieving.”

    • David Z says on: July 20, 2010 at 7:30 pm

       

      “If you can find a way to make as much money in 20 hours as you did when you worked 40 hours why wouldn’t you continue to work 40 hours and make twice as much money as 20 hours?”

      Because at some point (and this point differs for every individual based on preferences and obligations) the opportunity cost of foregone leisure exceeds whatever incremental income he earns from additional labor.

  • Don says on: July 20, 2010 at 8:27 pm

     

    Ones *values* changes when they summons the where with all to take their work by the throat and wring out of it what they will.

    If I earn, say, $100 per hour then every hour that I do not work costs me $100. And that’s in addition to the actual costs of the leisure activities.

    I know, that’s not worded right, but you get the point.

    • David Z says on: July 21, 2010 at 9:40 am

       

      “If I earn, say, $100 per hour then every hour that I do not work costs me $100. And that’s in addition to the actual costs of the leisure activities.”

      True, this is the basis of opportunity cost. Maybe you skip out on 2 hours of work to watch a movie. You’re out $200 worth of revenue that you didn’t earn, and $15 worth of expenses. Whether that opportunity cost is worth it is something that only you can decide for yourself. But at some point it definitely is not worth it, even if the only “leisure” you enjoy is sleeping. Otherwise, you’d work 168 hours per week and it wouldn’t be long before you literally worked yourself to death.

      The other thing here is that most workers, particularly those who earn wages, is that they don’t usually have the opportunity to work more if they want or need to work more.

      • Don says on: July 21, 2010 at 10:02 am

         

        Agreed, with the last paragraph, and this is included in my assertion that working for one employer is like putting all your financial eggs in one basket and letting an uncaring person carry it.

        I got laid off from the Wickes Corporation back in 1982 and in spite of my best efforts remained so for about 8 months. Talk about terror and turmoil.

        Being self employed is such a different way of living and looking at life and I can’t imagine living any other way. It is probably the one thing that has most turned my into an enemy of the state, er, the state has become my enemy. Being self employed is a massive dose of raw freedom and the way people were meant to be and anything that goes against that draws all of my ire.

  • Dennis Wilson says on: July 22, 2010 at 3:29 am

     

    “Generally speaking, for a job well-done, under budget, ahead-of-schedule, and to quality, the only reward is more work.”

    It is really worse than that. A very large financial corp where I consulted “lays off” people who complete their projects. Those who are over budget and behind schedule keep working–but NOT with the ones who have completed projects. Eventually the character of the workers changed from producers to slackers. The managers were not “threatened” by them.

    • David Z says on: July 22, 2010 at 8:37 am

       

      And real-life becomes “Survivor” reality TV…

    • Don says on: July 22, 2010 at 9:33 am

       

      In many ways large companies are much like a gov’t, perhaps it’s natural considering the relationships between the two. Both prefer conformity and compliance with all the myriad of rules and the catch phrase forever has been *team spirit*. In other words, the individual is not recognized and all get punished and all get rewarded whether they busted their humps or slacked. Reminds me of the army now that I think about it.

      In my very small businesses I avoid dealing with the large companies for these very reasons for not only do they treat their employees as herd animals but expect their subcontractors to abide by this abuse as well. A common complaint: 1 party at the corporation issues you the work but another party is in control of the payment for the work. In this scenario 9 times out of 10 there is miscommunication between the 2 parties and the sub is ripped off or lost in the bureaucracy.

      • David Z says on: July 22, 2010 at 10:34 am

         

        large corporations succumb to pretty much all of the command economy failures that Mises wrote about in Socialism or Economic Calculation. Add to that the intra-office politicking, and top-down hierarchical management, and yeah, it’s kind of a recipe for disaster. The only reason they survive as they do is because of implicit and explicit government subsidies.

  • anonymous says on: July 22, 2010 at 2:10 pm

     

    I think that if you take your thought experiment a little further, you’ll find a reasonable justification for a participatory economic model.

  • Vincent Diakuw says on: July 25, 2010 at 6:19 pm

     

    Doesn’t inflation take care of this?

    A 1905 dollar was worth 22 times what a 2005 dollar is worth. If you take the necessity of two full time wage earners a household works x2 the hours and so producers must on average be 11 times as productive just to cushion the impact of inflation on the economy.

    Considering that voluntary and involuntary expenditures have increased on the face of it – I could work 2.5 hours less per week if I didn’t want cable and internet and who knows how much I’m paying for police pensions and so on – I don’t see any excess productivity to account for.

    • David Z says on: July 25, 2010 at 9:25 pm

       

      I do not think you understand what inflation is.

      • Vincent Diakuw says on: July 26, 2010 at 10:46 am

         

        Thanks.

  • Don says on: July 25, 2010 at 9:44 pm

     

    Vincent Diakuw says: “A 1905 dollar was worth 22 times what a 2005 dollar is worth.”

    Not quite right.
    A 1913 dollar is worth “93″ 2010 dollars.
    And then you have to figure in the taxation levied at all layers of manufacturing and labor.
    Then factor in the massive costs of regulation compliance and you will see why even 2 full time working people cannot subsist at more than a basic level.

    A general rule of thumb is that in the absence of gov’t your money would be worth 2 times what it currently is and everything would cost 1/2 what it currently does.

    The *Rule of Eight* stipulates that everything the gov’t spends (stolen) money on costs 8 times MORE than originally projected and this is proven time and time again historically.

  • Vincent Diakuw says on: July 26, 2010 at 10:48 am

     

    I was working from http://mykindred.com/cloud/TX/Documents/dollar/. My math-fu might be weak.

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