Can we afford to work less than we do now?

by Jehu

Not surprising, one of the most persuasive arguments against abolishing wage labor is that it leads to poverty for the workers. As the comment below from a writer on Reddit states, loss of a job can have a profoundly negative impact on an individual’s financial situation:

If this is anti-work, then how do you get by?

I’m out of a job myself (not by choice), but I still need to make money because I need to make bill payments. My parents have been helping me, but I don’t want to be a burden on them. … I just want to know how y’all get by without work to have money for wants and needs.”

My response to the redditor — that we don’t just want to get rid of wage labor, but also to get rid of money — while true, is hardly going to satisfy anyone who has ever lost a job in the real world and suffered through the reality of unemployment. Being unemployed is real.

Once you are laid off or fired, the race the bottom begins: On the one side are your accumulated savings; on the other side is a pile of bills with your mortgage or rent, groceries, car note, etc. The race is on to see which pile — your bills or your savings — gets to the bottom first. Savings usually lose unless we very quickly find another job. For most people, the only thing that can do more damage to savings than unemployment is an unexpected medical problem.

Everyone can do this sort of thought experiment in their head and it nearly always ends with the same result:

“Get rid of work? Nah!”

The only problem with this thought experiment when it comes to a general reduction of hours of labor is that it is based on the wrong premise. The thought experiment assumes that getting rid of work for everyone is the same as being unemployed. The faulty premise involves what is sometimes called the fallacy of composition. This fallacy assumes that what is true for the part must be true for the whole as well. The fallacy assumes that if unemployment drives one person into poverty, getting rid of work entirely should drive everyone into poverty.

But getting rid of work is not the same as losing your job. Workers in aggregate are suppliers of an important commodity in the market, labor power.

To understand why, I want to use an analogy:

Suppose you owned a gas station and were very unhappy with the price you got for a gallon of gas. You decide to close your station until everyone paid you the price you thought the gas was worth. What would the rest of us do? We would just drive by your station and go to the one up the street, right? You would be unable to force us to pay the higher price and would only succeed in driving yourself into bankruptcy.

Now, suppose instead you were OPEC and you decided to stop selling oil until you got the price you wanted …

See. Economic laws don’t work the same in the case of the individual as they do in the case for the whole. If one person decides to work less they will only end up in poverty. But when every supplier of labor power decides together to work less, the result is altogether different.

Given some level of demand for labor power, the supply of this commodity, like the supply of any commodity, is inversely correlated with its price. The price of labor power is called wages. If the supply of labor power is increased, wages will fall. If the supply of labor power is reduced, wages will increase.

When OPEC wants to increase the price of oil, it collectively tries to restrict the supply it offers on the market. Likewise, when the working class wants to increase its wages, it can collectively restrict the supply of labor power it offers on the market.

In the short-run, there are four major variables that affect the sale of labor power:

  • Supply: How many workers are in the labor market
  • Demand: How many workers are needed by employers
  • Wages: How much employers are willing to pay
  • Hours: How many hours each worker will supply in return for a wage

Of course each of these variables will shift as we work fewer hours. How these variables interact with one another is a story in itself and one I will cover in my next post.