Some important caveats regarding Autonomy’s proposal to reduce the work week

by Jehu

In January of this year, Autonomy Scotland, an independent, progressive think tank, embarked on a new initiative to shorten hours of labor in Britain. This initiative began with the publication of a proposal, “The shorter working week: a radical and pragmatic proposal”.

The extraordinary proposal by Autonomy sets a medium-term goal of a transition to a four day, 32 hour full-time working week by 2025. For firms over 250 employees a non-compulsory option to reduce working hours to 28 hours per week would be provided to all employees. Under Autonomy’s proposal, the public sector would be the first to adopt the shorter working week without a reduction of pay. A board composed of trade unions, government and business leaders would aim to increase productivity in sectors of the economy that have seen low investment in technology.

While I support much of this proposal, I do think there are important caveats that must be mentioned.

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At the outset, let me say I know very little about Autonomy, who seem to be associated with the UK’s Labour Party. I also do not consider myself knowledgeable on British politics generally, so bear with me. According to their own website information:  Autonomy Scotland was founded to support Scottish Independence from the United Kingdom. Having lost the Scotland independence referendum, they now keep the blog going to promote, in their words, an “outward looking inclusive independent Scotland”; “better functioning democracy within the UK”; “ethical foreign policy, ethical trade deals, compassionate welfare laws and the advancement of environmental issues”; and “empowerment of local communities.”

In any case, the full proposal outlined by Autonomy makes several important points about the impact of this reduction of the working week that deserve attention:

Economic stagnation: The U.K., like most countries generally, face problems of job polarization, precarious work, stagnating productivity, and the threat of automation. While the authors of the proposal center on Britain, many of their points can be applied to most of the advanced industrialized countries. A shorter working week, say the authors, if it were combined with a set of other, broader economic policies, is a powerful and practical response to some of these trends.

Profits and wages: The authors assert that there is no positive correlation between productivity and the amount of hours worked per day. This assertion leads them to make the surprising argument that reducing workers’ hours is not necessarily detrimental to the profits of a capitalist firm. They then make the equally dubious claim that there would be no necessary impact on wages.

Climate change and inequality: There are strong indications that reducing the working week can help reduce air pollution and our overall carbon footprint through simple changes like a reduction in the number of commutes to and from work each week. Unlike the Green New Deal that is so much the fad among US Democrats, reducing hours of labor can dramatically slash climate change without a lot of very costly public investment.

Automation: The proposal argues that automation can facilitate a shorter working week for workers and should be encouraged by government.

While I think this proposal is a welcome change from the otherwise impotent conventional state-centric strategies of the radical Left, it contains at least one claim (or assumption) that might complicate its implementation. The particular claim is that a reduction in working hours is not necessarily detrimental to businesses. This dubious claim is based on the equally dubious claim that there is no positive correlation between hours of labor and productivity.

Reducing hours of labor is deflationary

What is wrong with these claims?

Well, for one thing, the more likely result of a significant reduction of hours of labor in the UK will be a deflationary economic crisis. Why this will happen very much depends on how you define productivity.

Following simpleton economic theory, the authors of this proposal seem to believe productivity can be separated from the length of the working week, but this is only partly true. The impact of productivity is two-fold.

The amount of goods that can be produced is independent of the amount of human labor that may be required for their production. This is why, in Capital, Marx could argue that the introduction of power-looms into England may have doubled the quantity of yarn that could be weaved into cloth, but Marx also adds that the same power-looms reduced the value of the cloth by half.

The introduction of power-looms doubled the amount of cloth that could be produced with a given amount of labor, but it also halved the amount of value contained in a given quantity of cloth.

There are two things to consider here: the impact of technological innovation on the technical production of use-values and the impact of the same technology on the production of value. As can be seen from Marx’s example, while the impact of capitalist innovation on technical productivity is generally positive — increased productivity leads to greater output of commodities — the impact of capitalist innovation on the production of value is generally negative — increased productivity leads to a fall in the magnitude of value embodied in each commodity.

Here is where it gets rather tricky when trying to analyze the impact of a measure to reduce hours of labor.

If, as the Autonomy proposal calls for, sufficient technological development is secured, and a shorter working week actually increases the productivity of an hour of labor, it may be possible to produce the same amount of commodities as we do now within a much shorter working week. The problem with this proposal, however, is that, according to Marx’s labor theory of value, each commodity will now embody less value and, therefore, command a lower price in the market.

If the Autonomy proposal is implemented, the prices of commodities should fall as hours of labor are reduced.

Economists call an environment with generally falling prices, deflationary. Capitalists typically don’t like deflation because it adds pressure on their profit margins; deflation makes it harder for firms to make a profit. And a firm that can’t make a profit is of no use to its investors and creditors.

Reducing hours of labor in the public sector is even more deflationary

Now let’s add another wrinkle. The Autonomy proposal calls for initially focusing on the so-called public sector:

We believe that UK’s public sector can set a positive benchmark for shorter working week practice. Use the public sector as an innovator in adopting a shorter working week without a reduction of pay, setting a benchmark for future labour legislations and improve collective wellbeing. This follows past policy examples where the public sector has acted as the primary adopter of better working conditions (such as equal pay and job security), later benefiting workers in the private sector.

The authors seem to be unaware of an important distinction between the public and private sectors with regards to productivity: as a general rule, the public sector produces neither use-values nor values. (There may be exceptions to this rule, of course, but they are exceptions.) Thus, while shortening the working week in the public sector may help in areas like reducing our carbon footprint and public spending, it cannot increase output. This means a reduction of hours of labor in the public sector may work mostly on the demand side of the ledger.

This is certainly no argument against shortening the working week in the public sector, nor does even it argue against beginning there aggressively. But it helps to recall that much public sector spending began as attempts to stimulate economic demand. As hours of labor are reduced, a lot of that effort may be unraveled. Ideally, the government should no longer have to borrow excess capital and use it to employ workers, because, with hours of labor shrinking, fewer jobs will need to be created.

To restate what I am saying in plain English

Shrinking the working week in the public sector has an impact on the so-called economy that is very similar to what the Left calls “austerity”, without the catastrophic effects of an outright reduction in public services and employment. The size of the public sector is reduced in proportion to the reduction of hours of labor in that sector, but this need not result in layoffs of public employees and service cuts.

For all of this, however, such a reduction of hours of labor in the so-called public sector is as deflationary as a reduction of hours of labor in the so-called private sector. While this deflation of the price level need not effect wages or public services and may even raise them, the impact on the profits of capital will likely be devastating.

A general fall in profits of capital is an unambiguous predictor of crisis.

This is just my first pass on this proposal, of course, but my conclusion is that Autonomy is deluding itself if it thinks a shorter working week is good for business. A reduction of hours of labor is highly deflationary. This implies profits will be under intense pressure if Autonomy’s plan is implemented.

Deflation is a feature of a shorter work week, not a bug; the radical Left should be prepared for howls of bloody murder from the capitalists.

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