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Britain needs a shorter-hours culture
So far, the government has just thrown money at the economic crisis. But another Keynesian remedy may be required
by David Spencer
Tough times call for radical thinking. In the present crisis, orthodox economics has been thrown to the wind and long forgotten (indeed once discredited) ideas have re-emerged in debate over the nature and limits of free-market capitalism. John Maynard Keynes and even Karl Marx have been rehabilitated. Heresy has turned to common sense, seemingly overnight.
Governments across advanced capitalist economies have eased fiscal policy in an attempt to combat recession. The long-established view that "we can't spend our way out of recession", famously uttered by James Callaghan in 1976, has been ingloriously dumped. Now, governments must look to pump prime the economy by cutting taxes and increasing public spending.
There is even talk of a modern New Deal to counter rising unemployment. Nationalisation and public works programmes, once thought of as relics of a distant past, have been revived as possible remedies for present economic ills. Big government, it seems, is needed to save capitalism from itself.
However, policy debate has yet to turn to other, equally important, economic remedies. Keynes's emphasis on demand-management policies has rightly been highlighted. But there are other less frequently remarked upon aspects of Keynes' policy proposals. In a letter to the poet TS Eliot in 1945, he suggested that unemployment could be lowered by the reduction in working time. Indeed for Keynes this was the "ultimate solution" to the unemployment problem. Reducing work time not only extended the time during which workers could spend income and hence generate employment, but it also allowed jobs to be spread out more evenly across the available workforce, thereby reducing unemployment.
Some rebalancing of work in the UK economy would doubtless bring benefits. The perversity of the present situation is that while many people work very long hours, others languish in unemployment. A readjustment of work time would help to reduce the jobless rate. It would also provide a necessary boost to the quality of work and life for many workers.
Orthodox economic theory teaches that those who argue for shorter working time succumb to the "lump of labour fallacy". This is the idea that there is a fixed amount of work to be done in society, so any reduction in work hours must increase the number of available jobs. It is argued by orthodox economists that the amount of work is not fixed and that reductions in work time will simply add to firms' costs. But the above fallacy is not wholly persuasive. If reduced hours encourage people to work more efficiently, then the effect may be to lower prices and to increase the demand for goods and services and in turn the demand for labour.
There is a deeper point that shorter hours have benefits beyond the contribution to economic output and may be justified as a way to promote a more relaxed and creative way of life.
The prospect that the UK government might be forced belatedly to adopt the EU working time directive may be seen as a positive outcome not only in combating the long-hours culture in the UK but also as a potential weapon against rising unemployment. At a time when many firms are cutting back on working hours, the government could take the lead in negotiating an across-the-board limit on work time.
The talk now is what governments can do to counter recession once other policy options have been exhausted. A former economic heresy – the reduction of working hours – may offer policy- makers an additional tool to prevent the economic downturn turning into a depression.
David Spencer is a columnist for the Guardian newspaper in the United Kingdom. His article was published on January 19, 2009.
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