Unemployment in the Globalization Age

, by Lucio Levi

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Unemployment in the Globalization Age

The 100th anniversary of WWI offers the opportunity to compare the current crisis with those occurred during the past century. The two World Wars, the great depression, fascism and nazism are aspects of the crisis of the nation-state.

The 100th anniversary of WWI offers the opportunity to compare the current crisis with those occurred during the past century. The two World Wars, the great depression, fascism and nazism are aspects of the crisis of the nation-state. In fact, this form of state was unable to master the transition from the first to the second stage of industrial revolution, which pushed to the top of world power hierarchy states as large as world regions, like the US and the USSR, and brought about the decay of the European nations. What distinguishes the current crisis is the contradiction between globalization of economy and civil society, and the macro-regional dimension of the major states, which cannot master global phenomena, such as the financial and economic crisis, and submit the financial oligarchies to their will. Unemployment has reached the record level of 26 million jobless, i.e. 12% of the EU’s population.

Thus, the economic crisis is becoming a social crisis and social protest against austerity policies risks triggering an institutional crisis. At the heart of it is the EU, which has to fight with an arm tied behind its back, since it is endowed with a single currency but lacks a government to support it. The solution of the crisis needs a radical change in the way the world is governed. Market and political institutions should redefine their respective roles. International economic organizations should be strengthened and democratized to regulate the global market. According to general opinion, job creation is considered a consequence of economic recovery and growth. It is time to acknowledge that some of the truths we hold to be self-evident are contradicted by the new course of events. The introduction of new technologies might well stimulate growth without necessarily bringing any increase in jobs.

In the past, a decline in employment in agriculture was balanced by new jobs in the manufacturing sector. When the introduction of automation generated unemployment in the industrial sector, the services sector absorbed that unemployment. Now, new electronic services, like email, e-commerce, magnetic cards or automatic teller machines, bring about the disappearance of innumerable office jobs in public administration, banks, post offices, travel agencies and many other sectors. Therefore, if growth starts again, investments will flow towards new technologies which need fewer employees. The paradox of the current situation is that the most successful and competitive companies are those that shed their workers. This means that unemployment today is not simply the consequence of a negative economic trend. It is a structural phenomenon. Job creation can only be expected in areas such as health care services, housing services, social services to the person, research and education. We are entering a new historical era: the scientific revolution of material production. Under the impulsion of the knowledge society, a new ecologically and socially sustainable development model can take shape, whose features can only be approximately perceived. Big concentrations of workers and employees in factories and offices are progressively disappearing and are replaced by independent jobs, self-employed activities and small cooperative enterprises. New needs are asserting themselves tied to the improvement of the quality of life rather than to the consumption of traditional goods and services. Even though the manufacturing sector does not create new jobs, it generates innovation, wealth and high value added services. The engine of a new development model is high-tech innovation applied to renewable energy, medicine, electronics, information and communication, space technology, high fashion, design and so forth.

On the other hand, full employment is a public good, which (like the protection of the environment) cannot be provided by the market. The idea that markets are capable of regulating themselves and therefore do not need any public regulation has been shared by governments and political leaders. Thus, politics has abdicated its responsibility to submit the market to rules and institutions. At the same time, production processes and financial markets globalization, liberalization of the labour markets and massive unemployment have progressively weakened the contractual power of workers and increased labour market flexibility in terms of wages, working time and atypical forms of employment. The vacuum created by the retreat of politics and the weakening of trade unions has been filled by financial oligarchies and all sort of economic and social potentates, and paved the way to the spread of violence of organized crime and terrorism. The lack of political control has led to the financial and economic crisis. The market anarchy can be corrected only by the intervention of the public hand. The greatest lesson we can draw from the experience of the 1929 Great Depression and the Keynesian theory is that the intervention of politics is necessary to get out of the crisis.

How to address unemployment? First, as the most acute distortion of the labour market lies in the fact that few people work too much, while too many people do not have a job, a more equitable distribution of labour is necessary. This is a task which only governments can face, through the reduction of working time and the application of the principle “work less, work all”. Humankind has always dreamt to get rid of the toil of manual work. Aristotle wrote that “if every tool were capable of doing its task on command… likewise bobbins wove of their own accord and plectrums played the zither, then craftsmen proprietors would clearly not need apprentices, nor would bosses need slaves”. The scientific revolution is approaching humankind to the realization of that dream. What is lacking is the power to march in that direction, since, at the moment, the benefits of this revolution have been monopolized by multinational economic powers and the people have been excluded.

Second, a European civilian service open to girls at the end of the study period, as an alternative to the military service, should promote education to supranational solidarity and active citizenship and introduce youth to the world of labour. Third, public authorities from the local communities up to the world community can play a central role in the production of public goods, like the preservation of the environment, development aid, health, human rights, permanent education, the protection of weak social categories such as the poor, immigrants, consumers, women, children and so forth. As our readers know, only supranational political institutions at the regional and global levels can face the failure of the market and the failure of international cooperation. The starting point of an initiative to fund a public investment plan can be a Financial Transaction Tax, which currently is promoted by the European Commission and by eleven EU member states. This tax should foster a European Fund for sustainable development and employment and can represent the embryo of a separate budget of the Eurozone. It is true that European unification is an unaccomplished project, but still the EU is the most intensively regulated region of the world. It is only from Europe that a new policy promoting growth and fighting inequalities can come.

This article was initially published on: www.federalist-debate.org

Picture: @housingwire.com

Your comments

  • On 6 July 2014 at 20:16, by George McDuffee Replying to: Unemployment in the Globalization Age

    While some interesting and important points are discussed, the reality of yet another seismic shift in the socioeconomic tectonic plates, on the order of the shift from hunter/gatherer to fixed agriculture, is never discussed.

    This is critical point in that actions which would indeed correct many of the problems in a “static” environment, will be useless in a “brave new post-post-industrial world.” Several of the driving forces are: Automation, which eliminates the need for many employees; Artificial Intelligence/computerization, which eliminates the need for even more employees; Genetic Modification/bio engineering, and nanotechnology.

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