The Job Guarantee and the future of work: a Polanyian perspective

Karl Polanyi certainly was not the one-in-a-century philosopher of work that Hannah Arendt and Karl Marx were. Still, from a more practical point of view, he has a lot to teach us about modern labour markets of which he studied the emergence and witnessed the unravelling. His revolutionary notion of ‘commodification’ which describes the way in which fundamental aspects of human life - namely money, land and labour - were turned into commodities to meet the demand of the market still bears an impressive relevance. In The Great Transformation, Polanyi also discusses how society resisted to the emergence of this labour market through diverse movements or institutions, notably the infamous Speenhamland system.

Fast forward two centuries later and the struggle that Polanyi identified between the disruptive impact of markets on societies and the demand for protection is still unresolved. Twenty-first-century societies are still looking for mechanisms or institutions to alleviate the dreadful impact of the labour market on certain parts of the population. Among the suggested solutions, the Universal Basic Income or UBI certainly is the most well-known. But in recent years, a new proposal has gained traction among economists and policymakers: the Job Guarantee. What was once a niche policy proposals for labour economics geeks is now a trending topic in public policy, celebrated by the likes of Bernie Sanders and Alexandria Ocasio-Cortez. But what precisely is the Job Guarantee you may ask? Well, it’s pretty much self-explanatory, the Job Guarantee, also sometimes called Employer of Last Resort, is a program under whose most basic form the government would offer a job to anyone legally entitled to work and who is unable to find one in the private sector (if you are interested in a more detailed and technical overview of the Job Guarantee, you should read this paper or buy Pavlina Tcherneva’s book.) In this post, I discuss the political-economic implications of such a policy on the nature of the labour market and the commodification of labour.

As with most heterodox policies, the Job Guarantee starts with an attack on the core tenets of neoliberalism. Its proponents refute the principle of a market-derived employment rate, the infamous Non-Accelerating Rate of Unemployment (NAIRU), one of the cornerstones of the neoliberal labour market. To put it simply, NAIRU posits that there is a rate below which governments should not aim at driving unemployment since it would cause inflation, the fear of all fears of neoliberal thinkers. The second tenet of neoliberal employment policy is flexibilization. Following the post-war boom in unemployment benefits, labour regulations and trade unions’ power, neoliberal thinkers persuaded politicians and policymakers that these policies had disrupted the well-functioning of the labour market and were thus considered responsible for the sudden surge in unemployment starting in the 1970s. As Diamond Ashiagbor summarizes it: ‘The ‘focus shifted away from employment protection (…) rather than protecting from the market, the emphasis is now on enabling them to strengthen their employability within the market’. Flexibilization, after all, is only a watered-down version of Mises’ idea, quoted by Polanyi in The Great Transformation, that if workers ‘did not act as trade unionists, but reduced their demands and changed their locations and occupations according to the requirements of the labour market, they could eventually find work’.

All of this, proponents of the Job Guarantee argue, is wrong. First and foremost because, contrary to neoliberal wisdom, full employment is not necessarily inflationist. Although this claim is of little significance for the nature of the labour market itself, it constitutes a key argument for the legitimization of the Job Guarantee. Moreover, Job Guarantee advocates affirm, unemployment is a political choice, not an economic constraint or an iron law of the market. As Rohan Grey explains: ‘because unemployment is a monetary phenomenon, and money is a state phenomenon, unemployment is always and ever a political question about the monetary structure of the state’. Lastly, the Job Guarantee also brings into play the social and environmental impact of unemployment, a dimension that is too often sidelined from the discussions about employment policy. In her research, Pavlina Tcherneva highlights the detrimental effects of unemployment on communities, children, criminality and society as a whole.

The political-economic implication of the Job Guarantee is thus threefold. Firstly, when it asserts that unemployment is always a political decision, caused notably by a lack of government spending, it draws the issue away from the market back into the realm of human possibilities. The problem of unemployment is thereby re-embedded into the wider social, political and environmental concerns that govern our societies. The Job Guarantee rejects the explanation of unemployment as the result of individual failures or lack of adaptability – something that Polanyi identified at the organizing principle of the atomistic labour market – and rather defines it as a collective failure. The following analysis of modern unemployment by William Mitchell and Martin Watts, two proponents of the Job Guarantee, has strong Polanyian echoes:

‘In the 1980s, we began to live in economies rather than societies or communities. It was also the period that unemployment persisted at high levels in most OECD countries. The two points are not unrelated. Unemployment arises because there is a lack of collective will. It does not arise because real wages are too high.’

Furthermore, the Job Guarantee reaffirms the inherently social dimension of work and unemployment. It concurs with Polanyi’s idea that labour is a ‘fictitious commodity’ that should not be subjected to a supply and demand rational. The transformation of labour into a commodity, Polanyi deplored, required the separation of work from all other human activities. The Job Guarantee takes a completely opposite approach. It seeks to reconcile work with other aspects of human life, notably its relationship to the environment and thereby creates the conditions for a new social and environmental contract.

Lastly, Polanyi recalls, the market for labour rests upon the individual fear of hunger and poverty, something that was absent from the functioning of ancient and archaic societies. (This statement is often misinterpreted, Polanyi did not mean that hunger or even famines did not exist in ancient societies but that these were collective phenomena not individual ones). By offering a job to all, the Job Guarantee would rule out this threat and thereby considerably undermine the foundations for the commodification of labour. Likewise, it would considerably increase workers’ bargaining power and potentially pave the way to the democratization of labour governance as a whole, something that was of paramount importance to Polanyi.

Sceptics would retort - and in some respect, they are right – that the Job Guarantee is not the radical transformation envisioned by Polanyi that would ‘take labour out of the market’:

 

‘The wage contract ceases to be a private contract except on subordinate and accessory points. Not only conditions in the factory, hours of work, and modalities of contract, but the basic wage itself, are determined outside the market; what role accrues thereby to trade unions, state, and other public bodies depends not only on the character of these institutions but also on the actual organization of the management of production.’

 

Nonetheless, as Polanyi ambitioned, the Job Guarantee would create a system where ‘other motives than those directly involved in money incomes may outweigh by far the financial aspect of labour’. Moreover, the community-centred approach to employment developed by Tcherneva and other Job Guarantee economists, where labour is deployed to the benefit of a whole community fits well with Polanyi’s own view of the economy.

Studying Polanyi also provides invaluable insights into the debate between the Universal Basic Income and the Job Guarantee, which are often seen as rival progressive policies when it comes to the future of labour and social policy. It is often puzzling to readers why Polanyi dedicated so much attention to the Speenhamland system, a historical event that might appear insignificant in the global history of capitalism. Yet, the Speenhamland episode is a case in point of how a well-intended social policy can unravel under a market system. The system of guaranteed income put in place in late 18th-century had a dreadful impact on the English economy altogether but most importantly on the very people it was meant to protect. Although the modern UBI is a far more elaborate scheme than the Speenhamland system, Polanyi’s long description of the pernicious pauperisation of the working class can be regarded as a warning against the modern version of guaranteed income policies. Moreover, as Daniel Zamora and Anton Jäger point out, the UBI provides a convenient expedient to the problem of poverty and unemployment that avoids more crucial questions the overall structure of the labour market. In this regard, the Job Guarantee is a far more ambitious and transformational project than the UBI.

 

To conclude, there is little doubt that, from a political-economic viewpoint, the large-scale implementation of a Job Guarantee would be the single most significant transformation of labour since the advent of modern labour markets in the 19th century. By reclaiming the issue of employment from the market, the Job Guarantee would represent a giant leap towards the decommodification of labour and the re-embedding of work into other aspects of human life.