The Job Market of the Future

Some Questions and Answers

By James Cooke Brown (M.E. Sharpe, 2001.)

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Eleven people very kindly read the Job Market manuscript as it was building and gave me the benefit of their scholarly and/or literary advice. I've not only profited directly from that advice, but I soon discovered that their more baffled comments evoked answers from me in which others, I felt, might be interested. Here you will find their questions and my answers.

-James Cooke Brown, May 1999

Questions for Chapter:

  1   2   3   4   5   6   7   8   9   10   11   12   13   14   15   16  

Chapter 1, The Problem and the Promise

1-1. Your view that economic equity will diminish nationalistic memories of "past savageries, pogroms, and slaughters" is too optimistic. Don't inter-ethnic hostilities tend to survive indefinitely, no matter how long they are given to cool?

Actually, no. The scientific news on this point is very good. As E.O. Wilson showed in his book On Human Nature (Wilson, 1978), human aggression can now be safely viewed as a graded response to threat that is matched rather closely to the prevailing degree of that threat. So aggression in humans is not an "all or nothing" affair as some have supposed. Nor is it "appetitive" in the sense that Konrad Lorenz (1966) thought it might be in his 1966 book On Aggression. Nor is its expression independent of external circumstances, and thus in some sense internally or "culturally" maintained. A people who have never been warlike, like the Semai of Malaya, for example, can suddenly become warlike when external threats develop, while a people who have been continuously warlike for hundreds or even thousands of years, like the Maori of New Zealand, can suddenly become pacific when external threats disappear. These remarkable changes in human aggressiveness have been carefully documented, not only among the Semai and the Maori but among many other peoples for whom, for some reason, an external threat has suddenly emerged or subsided. There is much hope in these apparently solid findings that human ethnic groups can forget their grievances when threat lessens as they come to interact in peaceful, mutually advantageous ways. TOP

1-2. You say that employers who discriminate in the job market will "end up paying more for their labor" than their competitors. But won't that discriminatory practice itself drive up the price of all the labor of that type?

No. Jobs are sold, and wages determined, "cake by cake" in a Job Market. The wages or salaries ("credit rates") offered in the market for doing work of a given sort in a given place-what I have called the "cake" of work from which individual jobs are then "cut"-are constantly shifting, and these numbers compensate precisely for the limiting effect that the qualifications for that cake of work may be having on the number of people in the market at that moment who are able to buy jobs from it. When somebody does buy a piece from that cake, that is, a job, the credit-rate for that particular job "freezes"; and it stays constant throughout that job's contract life. So each qualification an employer adds to a job description decreases the number of persons in the market that can consider buying pieces of that cake. That will drive up its market value, its credit-rate. This, in turn, will suggest to the employer that he reduce its qualifications by training, thus increasing the number of persons who can buy his cake. (See also Chapter 6, "Experience, Training, and Productivity" ) TOP

Chapter 2, About Markets

2-1. You are projecting a stereotypical image of the "free market" here. Do you really believe that "free" markets exist in any scientifically useful sense of that word?

I recognize that the concept of the "free market" is a highly idealized one, that it is a creation oflaissez faire economists constructed mostly for its "educational" and political value. I agree that "free markets" never have had any sort of real world existence in the economic life of humans except in the so-called "black markets" that occasionally spring up in wartime and other chaotic periods. Still, there is strong evidence that even unfree, that is, sensibly-regulated, goods markets have remarkable sensitivity to consumer needs and preferences, and that they probably perform far better at assessing such lambent phenomena as consumers' preferences among goods than central planning ever has; see Heilbroner (1993). I believe it is this property more than any other-the sensitivity of the market mechanism to shifting human wants and needs-that can be perpetuated, even replicated, in the job market; that we can learn how job markets can be made to work in this same people-sensitive way by studying how the best of the goods markets perform today. TOP

2-2. You imply that capitalism began in the last half of the 18th Century. The great French historian Fernand Braudel would not agree with you, arguing that European capitalism really began in the 15th Century. What do you mean by 'capitalism' that he doesn't?

Some scholars, e.g., Braudel in his massive studies of European economic life in the 15th through 18th Centuries (Braudel, 1981, 1982, 1984), argue that European capitalism began in the 15th Century with the accumulation of surplus money -in that sense, capital-first, in the hands of "merchant princes," later, in the coffers of the great merchant bankers. Let's call this period of monetary accumulation "mercantile" capitalism. In contrast, I am referring to the emergence of industrial capitalism, the sort unleashed by the invention of scientific technology in the last part of the 18th Century. It was then that the multiple markets of the modern world-including the labor market and the distinction between producer and consumer goods markets-began to emerge. TOP

Chapter 3, The Job Market

3-1. Doesn't the employer have any say in whom she hires?

Of course she does. The site-visit option provides for bilateral negotiation between employer and potential employee when this is thought necessary by either party. Most employers will want to have that kind of say in choosing at least some of their employees, and they will be willing to pay for the privilege of doing so through the higher CRs that such "red-coded" jobs will inevitably entitle their buyers to earn. Bilateral negotiation will no doubt continue to occur wherever companies are hiring people as members of teams.

It is, however, a surprising fact that interviews are not very useful for predicting performance in labor-market economies. Herrnstein & Murray (1994: 81) report that, in America at least, the job interview is one of the weakest predictors of job performance (14% success) while test scores yield the strongest predictors (53%). Three other factors yield higher performance predictions than interviews do: biographical data (37%); reference checks (26%); and (3) education (22%). TOP

3-2. If all the "workers on the coal-face" have to have experience, how do youngsters get it? When old miners retire or change jobs, the employers will be out of luck unless they green-code some mining jobs.

So of course they will. But the green-coded jobs will not be the dangerous ones, but the ones designed to train new give them instruction on how to mine coal safely. (See also Chapter 6 on "Experience, Training, and Productivity" .) TOP

3-3. Doesn't the employer have any say in how his or her work is going to be "cut up into jobs"? If I want to buy a hat, I have to be content with certain standard sizes. If I wanted a "7-17/64ths" hat, I'd know it would have to be made to order by a hatter...and it would take a good deal more than "thirty seconds" for him to make it. I find it difficult to conceive of 30-second production of made-to-order hats or jobs...or of such services being free!

Job-cutting can be very efficiently performed-and re-performed whenever we want it to be-by a computer working entirely within the sizing and scheduling limits specified by employers. So the employer will have inputs into the job-sizing process. But these will arrive before the cutting commences, and be broad enough so the computer won't have to consult the employer every time a new buyer with a special need comes along. We'll see that jobs-rather like hats, in fact, but unlike our present two sizes of jobs ("full-time" vs. "part-time")-will be sized almost continuously by the computer, that is, through tiny increments. So in fact you could probably have the equivalent of that "7-and-17/64ths-inch" hat of yours off the shelf. But even if it is made-to-order, it will take a lot less time than 30 seconds to make that special job for you if a computer is doing the cutting by off-the-shelf algorithms. (See Chapter 5, "Job Size and Full Employment," for a full explanation.) TOP

Chapter 4, The Credit Rate

4-1. How does the job market stop people from quitting a job before its contract term is up? For example, in order to get a better one while the getting is good? Or simply to get out of a bad situation?

It won't stop them. But job-market societies are very likely to require workers to pay the costs to their employers of all such "early departures". The unused portion of the cost of a worker's training will always be knowable beforehand, and any other costs the employer may have suffered by the worker's early departure will also be calculable. TOP

4-2. Exactly how does the compensation of such a "loyal worker" increase as her skill and competence increase?

There are several ways in which the increase in an old employee's value to her company can be recognized and compensated in a job market. The simplest way is for the employer to put an experience qualification-say n or more months or years at such work-on each "occupied" job as it comes up for renewal, one that matches the experience of the occupant and guarantees that his own employee(s) will be just included in the set of qualified buyers. The job market will, as usual, assign an initial credit-rate to each such job on the basis of its knowledge of the interests and qualifications of the shoppers in the market at that time. But instead of putting "occupied jobs" on the board for anyone to buy, the job market would first offer them to their occupants at those new credit-rates. Each occupant could then accept that "price" and rebuy, or decide to wait and look at what happened to "her" credit-rate once it appeared on the Big Board. If it were the only such job, she would be taking a chance of her job being "bought out from under her;" but if it were one of several such jobs in her own plant, she could afford to take that chance. TOP

4-3. You say that owners will have to work at credit-rate = 1.00? That is, for salaries or wages that are no higher than the national average for all workers? This sounds like the death-knell for entrepreneurship to me!

Not really. In addition to paying themselves a salary, if their businesses are successful, owners will also earn profits. What the statutory credit-rate of 1.00 applies to is their salaries, or to the hourly wages they pay themselves. Any work that owners do for a business is, of course, part of the cost of running it. But if their businesses are successful, their salaries or wages are likely to be only a small part of their incomes from it. Revenues in excess of costs-including their own salaries-are their profits. (See Chapter 7, "A Fair Profit and the Just Price," for how profits are likely to be calculated in job-market economies.) TOP

4-4. Can the job market staff fiddle with the programs to change, say, their own credit-rates?

The job market staff will be made up of highly-qualified professionals who have chosen this public-sector work for personal reasons. Like scientists, teachers, and librarians, they are therefore likely to be motivated by the ideals of public service rather than by opportunities for private gain. Staffs made up of such persons are relatively unlikely to harbor criminals, or even cheaters. But there will in fact be very few opportunities for fraud or theft by the job market's staff. Programmers, for example, are logic-handlers, not money-handlers. It is true that their work causes the computer to determine credit-rates, and that credit-rates generate money; but programmers won't be handling credit-rates singly or directly. Fiddling with a program to make it secretly award a falsely high credit-rate to oneself or a friend, for example, or to an outsider who has paid one for that illicit service, would not only be difficult to do undetectably but also, in the job market world, hard to motivate. TOP

4-5. As the "budding Egyptologist" waits for the credit-rate to rise, say to that heroic 4.80, some other job or jobs will necessarily be losing credit-rate value. Is this fair to the holders of those other jobs?

Yes; because the rising price of an Egyptologist won't have any effect on jobs at which people are already working! It is only the offering prices of the jobs that are for sale that will change. Some of these must go down, of course, as the offering prices of other jobs rise, and vice versa. This is not only fair but exactly what the buyers and sellers in this market want them to do. TOP

4-6. I question the stability of credit-rates. I fear they might be as volatile as stock-market prices. How would you prevent volatility in credit-rates?

By rational calculation based on an accumulating fund of knowledge about a given people's reactions to jobs with given characteristics. Stock-market prices are, after all, the results of two sets of players bidding against one another, buyers and sellers, both guessing what the other's intentions are. Moreover, all members of both sets try to keep the reasons for their moves totally secret from one another. As a consequence, a stock market is a little like a battlefield, with panicked routs or stunning victories always looming. Volatility is built into stock markets in the same way that the uncertainty of battlefield outcomes is built into the conduct of wars. In a job market, in contrast, all wages will be assigned by a single player, the job market's computer. The computer will know exactly what it's doing and will be stuffed with information about the other players, the employers and the job-seekers, both of whom the computer will be serving. In short, the relationships between the job market and its two sets of clients are not adversarial ones governed by secrecy but service ones governed by openness. TOP

4-7. How will workers have a say over the conditions of their work in a job market system?

The job market will expose jobs to inspection by their potential buyers for attractiveness. So the employer who insists on providing unattractive work will be aware that he'll probably end up paying high credit-rates for it. Among the many implications of this principle is the fact that "ugly" jobs-especially jobs made ugly by insensitive management styles-are not likely to survive in the job market world.

As an example of jobs made ugly by ruthless management, Parker & Slaughter (1994) report the effects on workers of a radically new management style, one that deliberately stresses teams of workers on assembly lines by putting colored lights above their work-stations. The lights are colored green, yellow, and red. Green means that work at that station "is proceeding smoothly"; yellow, that "bottlenecks are developing"; and red, that a crisis has developed that has stopped production. When all lights are green, the work is "too easy" and either the assembly line is speeded up, the numbers of workers on the teams are reduced, or their workloads are increased. As yellow lights come on, the teams at these "yellow stations" are "expected to increase their efficiency until the lights are again green." Once the lights are all green, "management stresses the system again. And again. And again. It is a race without a finish line." See Yates (1996) for a review of other new "management styles" likely to have low survival value in a job market world. TOP

4-8. You say that the job market "abhors privilege." Possibly wholesome competitiveness as well?

Not at all. The job market is built on competition, but among jobs, not people. In a job market, jobs will compete with one another for people's attention. In theory, the employer will get his or her work done only if that work can compete successfully with the work being offered by other employers. In practice it will seem that the job market has eliminated even this potential competition between employers by sizing jobs so that all the work collectively required by them will get done. It will do this by using credit-rate "handicapping" to create a level playing-field...not for employers but for their jobs. When properly handicapped by a job market, all the jobs in it will be moving out at approximately the same rate. There will still be competition, but it will be for those low credit-rates, those lighter handicaps that lower an employer's costs. Light handicaps are given only to attractive jobs or to jobs with large numbers of potential buyers. So ultimately it is competition between employers working to make their work either more attractive to more people, or easier for people to do, and if possible to do both at the same time; for this is what will reduce credit-rates most effectively. It will be this constant effort toreducecredit-rates relative to those being paid by one's competitors that will drive the innermost engine of the job-market economy. TOP

Chapter 5, Job Size and Full Employment

5-1. How about people who are not in the work-force, like children, students, housewives, and pensioner-the people you call the "pleasantly unemployed"? Suppose they too want work from time to time? Also, how about permanently disabled adults? Not pleasantly unemployed, of course, but what will the job market do with, for, or about them?

The job market will welcome all such persons...but only, of course, when they themselves indicate an interest in buying a job by visiting a job market. Not all will do so. Not everyone in the categories mentioned actually want paidwork. It is true that many older people-people who would be safely pensioned-off amongst us-will, with a job market to help them find jobs that suit them, choose to continue working, although possibly toward the end of their lives for only a few hours a day, a few days a week, or a few weeks a year. The job market, being responsive to all its customers, will enable even its oldest customers to work as and when they wish.

Children, too, often want to try their hand at grown-up work, and there is no intrinsic reason why the job market should not accept them as customers, supplying jobs for them under such conditions of safety and supervision as their parents and societies might wish. And students often want to combine study of a particular industrial process with active participation in it. Job markets will be able to make that kind of "no experience necessary" employment available to them as well.

As for the partially disabled-whose numbers are growing largely as a consequence of advances in medical science that now save the lives of accident and war victims who would once have died-the difficulties they experience now in finding employment are largely artifacts of the laws that give employers the right to sort over applicants. Once they can pick their own jobs from the set of jobs for which they qualify, the problems they now experience from negative discrimination will largely disappear. TOP

5-2. How do the earnings of peasants fit into the paidwork-ownwork picture? Or those of sharecroppers, dirt farmers, and market gardeners? Will they all price their products by reckoning their own credit-rates at 1.00?

Precisely. While sharecroppers are self-employed tenant-workers, peasants and market gardeners are usually owner-workers, and both are entitled under job market cost-accounting to earn exactly one unit of purchasing power for each clock-hour they work to produce whatever it is they sell. Such self-employed workers also do a good deal of ownwork that produces nothing for sale but that directly sustains them, their families, or their communities. These arrangements-except for the pricing of their products and the much lower rents that renter-workers will have to pay-will not change essentially under job markets. TOP

5-3. Could you put a statutory limit on how "big" jobs could be, or how "small"? Could you put maxima and minima on credit-rates?

Putting limits on the range of credit-rates will provide a promising legislative "lever" by which whole societies can learn to deal with inequality.

It would not be wise, however, to limit job size. In a job market, the sizes of jobs will be self-limiting. If elderly people want very small ones, or high-energy youngsters very large ones, the computer can only find this out by being free to push job size beyond what we would regard as its "normal limits." If a job is "too big" or "too small" for everyone, the computer will find that out when nobody buys it. There should, however, be a statutory ceiling put on the average work-year (see chapter 11.) TOP

5-4. Will people who have jobs in factories that "get slices added" to their work blocks be offered narrower jobs the next time their contracts come up for renewal? How will their credit-rates be affected?

Yes, and they are likely to go up. The jobs offered old workers for renewal, after their "cakes of work" have been resliced, are also likely to be smaller and to have higher credit-rates. Recall that credit-rates are lowest when the sizes of jobs are optimally attractive, and that size-optimization takes place before resizing. Thus resizing is likely to produce both suboptimal sizes and higher credit-rates.

The "resizing" of jobs in midstream bothers me. If a given job, among several that exist side by side in the same workplace, is resized, what happens to the related, contiguous jobs already occupied by those who previously bought them? The older workers will know that their newer colleagues have made, let us say, more advantageous contracts with the boss: say slightly longer workweeks, and so more income, for what is essentially the same work. Won't they feel cheated?

Jobs already held by workers in factories in which these smaller, better-paid jobs are appearing won't be affected right away by these job-market maneuvers, for neither the sizes nor the credit-rates of their jobs will change until their own "contract times" come up again. But then they will be; for neighboring jobs are also likely to be offered at fewer hours of work per week at higher wages if their occupants stay on. In other words, the parameters of occupied jobs are never changed by the job market. It is only the unoccupied jobs, the jobs that are still for sale, whose sizes and credit-rates are changed by the resizing operations of the job market. But once contract-time does come up for an occupied job, the job market will be obliged to make compensatory adjustments for any changes in the credit-rates of similar work as may have taken place during its contract period. So it is unlikely that factory workers will ever "feel cheated" when they notice that new jobs that are similar to their current ones have just been resized. Such resized jobs will also be available to them on the next go-around.

Resizing is going on all the time, of course, both upwards and downwards, in job market economies, which is precisely what saves workers from the disabling effects of unemployment. Older workers will remember those unhappy days when labor markets weren't resizing jobs for them. They'll be able to tell their younger co-workers that it is precisely these resizing operations of the job market that is keeping them all employed.

This business of downsizing jobs to make room for more workers sounds depression-causing to me. Please tell me why it isn't.

The reason it isn't is that the value of their pay will not be decreasing even though their hours of work are shrinking. The purchasing power of their incomes will remain the same, or even grow, although their work-years are gradually getting shorter. So downsizing jobs with job markets is not likely to seem to anyone to herald depression. Indeed, in job market economies, people will come to expect increases in productivity to shorten their workweeks at the same time as it is increasing the value of their money, and so come to welcome any sign of it. TOP

5-5. What about a large number of people with few or no negotiable skills arriving suddenly in a job market, say from another country? Wouldn't their arrival en masse greatly restrict the width of the few jobs they were qualified to buy? As these jobs have, at best, mediocre credit-rates, dividing them up into even smaller pieces might well push the annual incomes of such people below the poverty level.

The question makes two assumptions. Happily, neither is likely to be fulfilled. The first is that the sudden arrival of a large number of unskilled job-seekers from abroad would cause the jobs they buy to have narrow widths. Not true. If the aggregate need for work does not go up with their arrival-which is the second unlikely assumption-that event will indeed cause the average job-width to go down but not the widths of the jobs for which inexperienced persons can qualify. (Reducing the average width will not necessarily pull all widths down.) Indeed, the jobs purchased by unskilled workers are likely to both be and stay quite wide. Why? Precisely to compensate, in the eyes of their buyers, for their low credit-rates. The second assumption is even more certain to be false. The aggregate work required in any economy will go up with any large influx of new workers. All workers need food, shelter, clothing, healthcare, and entertainment. So the aggregate of work needed to supply an influx of workers with their livings will therefore go up with their arrival. TOP

5-6. How would the professional worker, whose income is not specifically dependent on the number of hours worked, fit into this picture? E.g., the professor, the lawyer, the physician, the minister, etc.?

All paidworkers work for intervals that are measurable in hours, whether their present circumstances of employment require them to keep track of them or not. In the job-market world, everybody paid to work in any organization, from its CEO on down, will be working for what amounts to a "wage," that is, at a credit-rate that, when multiplied by the hours worked-or assumed to have been worked at jobs in which track-keeping would be awkward, dangerous, or impossible-determines the worker's income. Such time-keeping is necessary because here is no way of determining the average of anything unless we measure either all or a fair sample of its instances; and knowledge of averages and variances is critically necessary for maintaining the kind of mathematical equilibria that job markets are designed to provide. If a society needs to know that an "average hour of its people's work" is being paid at a credit-rate = 1.00-then managers, professionals, artists, scholars, politicians, preachers, mom-and-pop store owners, athletes, the self-employed, and everybody else who is receiving pay for his or her work in those economies, will have to get used to keeping track of their working hours. TOP

5-7. What about people like writers, inventors, artists, and other one-worker "businesses"? These people live on royalties, commissions, or occasional sales. Will they also have to keep track of their time?

Makers of copyrightable objects-such as novels, musical compositions, cinemas, recorded performances of any kind, even patentable works like inventions, will not need to keep track of their working time; for it will be the right to copy their works, not the works themselves, that they will eventually sell. On the other hand, makers of "one-of-a-kind" pieces-such as sculptures, paintings, pottery, things that are in principle copyrightable but seldom are-generally depend for their incomes on outright sales of such works to end-users, or on commissions to produce them for specific purposes. These owner-workers, like all workers who hope to be paid for their work, will, in a job market economy, be well-advised to keep careful records of their productive time. For the time they spend creating an object must ultimately enter into the price they will charge for it. TOP

Chapter 6, Experience, Training, and Productivity

6-1. You say that higher levels of performance and, ultimately, of productivity would result from workers buying their own jobs and choosing their own hours, and that this would profit the employer. I agree it would, if it happened. But I can't see why it would happen. Please explain.

Studies repeatedly show that the present situation of overwork coupled with unemployment in the U.S.-employers requiring old employees to put in overtime rather than hiring new ones-has been accompanied by a drop in U.S. productivity. These same studies show that U.S. workers would prefer not to work such long hours-the U.S. average for men having risen to 47 hours a week in the last decade-and would choose not to, even if that meant less pay. But workers are not given such options in labor markets. Employers do all the choosing; and for a variety of reasons, U.S. employers are increasingly choosing to concentrate their most desirable paidwork in the hands of a lucky few, even though that means overworking them and lowering their productivity, while leaving the unlucky many either totally unemployed (rare in a boom economy) or reemployed at low paid, often temporary jobs. So it is not surprising that U.S. labor markets, which are much "freer" than European ones, in the sense that U.S. labor law gives American employers wider options, are associated with substantially lower productivity gains than Europeans have been making over the past few decades . From these data we can infer that job markets-which would give, for the first time, job-choice to whole workforces-are likely to enhance the productivity of any nation that adopts one. TOP

6-2. You say that the cost of labor will go down, and with it, I infer, the prices of goods and services, and so the hours one needs to work to live. It occurs to me that the nice thing about this aspect of the job market is that it discards the present emphasis on money. You can't make scads of it, but also you have no need to, and you'll be glad you have no temptation to do so mindlessly!

Yes; the job market is likely to be anti-materialist in its long-term effects, although much will depend on the bent of local cultures. But the general effect of job market economics will be to reduce the hold of economics on human life in every culture. Currently we live in worlds that are increasingly dominated by economic concerns. Both as corporations and as persons, we seem to be increasingly harassed by economics: as corporate leaders, by the relentless and sometimes cruel demands of the "bottom line"; as workers, by the increasing meaninglessness of the work we do and the fear of losing our jobs; and as consumers, by the increasing invasion of our private lives by advertising and other unwanted commercial intrusions. We sense that all this is bad...bad for us, bad for our children, bad for business, and bad for the planet. The job market will substantially diminish that domination and that harassment, both at the corporate level and for persons and families. TOP

6-3. In the United States at least, a large part of our perpetual doctor-shortage is distributional: there are sufficient physicians in the big cities but real shortages in rural areas. What could the job market do about that?

A lot. Any differential attractiveness of practicing medicine in rural vs. urban settings will automatically be compensated for-turned into a level playing field-by differential credit-rates. Paying rural physicians more than urban ones may sound unrealistic to us, but it is exactly what will happen when employees-that is, physicians and nurses-are the choosers of work in the healthcare sector, and when it is job markets and not labor market that are determining both their rewards and their characteristics. TOP

6-4. What if the Islanders, now that they have their widgets, want to improve their standard of living? Start a community library, for instance? Suppose the paidworkers don't mind working 40 hours a week, and are finding now that working 36 hours a week is a little too little? Suppose they are quite willing to work more to have that library? How do they do that and still keep their new job market?

First, they'd have to figure out how much work it would take to build a suitable building. Then they'd have to find out how much extra work they'd have to put in to buy the books to stock the library. Then they'd have to know how much labor it was going to take to staff the library once it's open. Such things are not simple. But when some committee or other had that all figured out, they'd probably find that they could easily build their library in a couple of weekends of ownwork; that expanding their wombel industry by, say, 10%-which would cost them only 0.4 extra hours of work per week per worker to do (that's 24 minutes)-and exporting the surplus wombels to neighboring islands would give them enough cash flow to buy just the steady stream of new books they felt they'd need; and that it would then take their 250 paidworkers an extra 0.2 hr/wk apiece (or 12 additional minutes) to keep the library open 50 hours a week, or a new total of 36.6 hours a week of paidwork to keep making the extra wombels and staff the new library indefinitely. Or they might start an electronic job market, run it with a programmable calculator, and let it figure things like that out for them. TOP

Chapter 7, A Fair Profit and the Just Price

7-1. You imply in your discussion of the ways in which command socialism failed that consumers' interests were neglected because an elite body of dedicated gurus made planning decisions from above. But isn't that just what a job market, with its dedicated corps of programmers, would also do?

No; the job market's programmers will make no plans and give no commands, at least not to human actors. They will simply cause its computer to maintain-by mathematical methods that allow for great inventiveness as to means but little or no discretion as to ends-certain numerical equilibria will that stabilize the whole economy. In causing such things to happen reliably and efficiently, the job market's programmers will be performing a service for that society. They will be executing firm, numerically-expressed mandates that will have been given it by its legislature, or by its party congress. Whatever else this is, it is not planning. (For the opportunities for real planning under job-market conditions, see Chapter 11, "Planning for Downsizing & Development".) TOP

7-2. Who has the responsibility for paying the costs of employee pension plans, health benefits, unemployment insurance, and other so-called "fringe benefits"? The employer, as in the U.S. now? Or some other agency? How will these costs figure in prices? The prices of goods and services in a job-market economy almost certainly won't contain an item called "employee benefits". Some of our modern employer-paid benefits, like healthcare, are almost certain to be furnished directly by job-market-using nations to all their citizens, rather than unfairly penalizing companies-especially smaller ones-with this burden. Other current benefits, like unemployment insurance, will have become completely unnecessary. The bulk of most retirement incomes, on the other hand, are likely to have been purchased by the retirees themselves-possibly from public-sector providers of such financial services-even in countries that currently have national pension plans. On the other hand, a social-security system that guaranteed a minimum income to everyone-a means-tested "safety net"-could happily co-exist with job markets, and be paid for out of public revenues. TOP

7-3. In the U.S., at least, private non-profits don't charge just cost. A great zoo, for example, is often a money-making institution, charging the public "what the market will bear" to get in. It is true that its handsome profits are mainly used for upgrading exhibits. Would such profit-making "non-profits" be counted as part of the public sector? And, in a job market, would such upgrades of a zoo's exhibits count as costs?

To answer the first question, no. In a job market economy, private non-profits will probably be treated as private-sector businesses though with special legal privileges and obligations, as indeed they are in the U.S. today.

To the second, it depends on when the upgrades are made. If before the moment of pricing admission, they're amortized costs of development, and so part of the ticket price; if afterwards, they're reinvested profit. In the U.S., what is prohibited to private non-profits-as many American zoos, museums, research institutes, and universities are-is distributing their profits to individual stockholders. They can make as much profit as they like, provided they plow it all back into their chartered, not-for-profit activities. No change in these arrangements need be made under job markets. TOP

7-4. Suppose a farmer's wheatfield is flattened by hail. As sometimes happens, his neighbors' wheatfields go through the same hailstorm unscathed. On the cost-plus-p method of pricing, as I understand it, the few bushels of wheat the farmer might be able to salvage from his hail-damaged field would have to be priced at about the same aggregate price as the hundreds of bushels of wheat that his more fortunate neighbors were reaping from their fields. This could lead to a huge difference in the price-per-bushel between the two sources of wheat. Who would buy this farmer's wheat at, say, 100 times the normal price?

You're right. The first farmer would price the few bushels he could salvage from his stricken wheat-field according to their cost to him. That could well be a bit more, in the aggregate, than the cost of the hundreds of bushels of wheat each of his neighbors was harvesting from similar fields. The interesting question is, What is his community going to do about it? Are they going to buy his poor pile of wheat from him at that astronomical price?

Different job-market societies will meet such challenges differently. Some individualistic ones will require the unlucky producer whose unit-costs have suddenly skyrocketed to bite the bullet, take his loss, sell his farm or borrow money to plant next year's crop, and buy insurance to guard against future calamities. Others will form local producers-cooperatives and solve such problems without the intervention of distant insurers. Cooperative associations of farmers (such as exist in some countries today, e.g. Canada) would be particularly appropriate in job-market economies, for they will be able to share the burden of natural disasters by buying all their produce at each member's cost-plus-p price per bushel and then sell it at the association's average cost-plus-p price. In effect, this would be putting all their wheat in one pile, in this case, into a community-owned grain-elevator. TOP

7-5. Suppose a woman is running a small seasonal business like a hotel. How can she possibly know what her "cost-plus-p" price is going to be until the season is over?

She won't. But when the season is over, she will know. It will then be time to "send out rebates." (Rebating will be quite common in job-market economies. Money-transfers will soon be entirely electronic; so service providers such as hoteliers will be especially likely to use this facility in job-market economies, for it will make rebating overcharged customers both cheap and easy.) Knowing she can rebate later, our hotelier can set her room-prices safely high, and, at the end of the season, pay back any customer she finds she has overcharged. TOP

7-6. May businesses in a job-market economy decide to charge less than their 10% allowable profit as a way of gaining market share?

The answer will depend entirely on the commercial traditions of the job-market-using country. If the host culture has traditionally been a commercially ruthless one, one in which, for example, large companies regularly destroy small ones by temporarily dropping prices below cost until the competition vanishes, then that society's answer will probably be yes; for in them, price-cutting will be an established means of gaining competitive advantage. If, on the other hand, the host culture is unsympathetic to such maneuvers, has already tried to prevent them by legislating against "unfair competition," then pricing at less than the allowable maximum in their new job-market economy will probably not be permitted except as a "salvage" operation, that is, as a controlled way of recovering part of the cost of unsellable inventories; see question 8-5 for more details. TOP

7-7. Are you saying that, with cost-plus-p pricing, those who produce early strawberries, say, deserve no higher price for their produce than the growers of mid-season berries get? In the produce markets of today the rarity of early strawberries causes their price to start out high, but then the glut of mid-season berries comes along and causes the price of all strawberries to drop. How would your method of pricing deal with this?

It actually costs more per berry to bring strawberries to market early; so the cost-plus-p price of early strawberries will be higher than that of late ones...although probably not as much higher as it would be if set by opportunistic pricing. But even a cost-based price differential would cut down on the number of buyers willing to pay the higher price.

But suppose a real if temporary scarcity of some essential good like milk occurs? What then?

In that case some job-market societies, like societies in wartime, might be inclined to use rationing rather than the first-come-first-served principle that so often leads to hoarding. On the other hand, many people object to both these ways of dealing with scarcity. They prefer the rigor of opportunistic, even "black market" pricing, even though it often puts the prices of scarce but essential goods out of reach of the poor. A rich person's being assured of milk even at outrageous prices, when milk is in short-supply, is simply one of the "natural privileges" of wealth, according to this view.

All three of these traditional ways of dealing with scarcity are defective in some way. In job-market economies, "scarcity taxes" would be free of most of these defects. Such a tax would be added by a national or local government to the otherwise cost-plus price of a scarce product or service, the rate to be continuously adjusted on the spot by the vendor to reflect the exact degree of its scarcity. Indeed, tax calculations could be made at the point of sale using government-supplied algorithms on the vendor's computer. Such a system would raise the price to consumers of any good or service that had become scarce, but would distribute supplies equitably. Moreover, a consumer's paying such a tax when she really wanted fresh strawberries-or a good seat in the stadium for that once-in-a-lifetime football game-is one of the happier ways of contributing to public revenues. (There is more on scarcity taxes in chapter 11.) TOP

Chapter 8, A Deflationary Currency

8-1. Do you not perhaps put an overemphasis on "pleasant work"? How about skill, and the joy that comes with any chance to use it? As in woodworking, music, sports, nursing, teaching?

Anticipated pleasure hardly operates at all in labor markets. People are often so desperate to make a sale when it is their labor they are selling, that inquiries into how pleasant or unpleasant the work they're offering to do might appear beforehand seems almost irrelevant. After the fact, the pleasantness of work does matter, of course. After they have jobs, working men and women often organize in unions with the specific objective of improving the conditions of their work...which often means increasing its pleasantness as well as its safety and healthfulness. But in a job market, it is the prospect of either pleasant conditions or unpleasant ones that enters into the buyer's decision to buy. That such subjective, before-the-fact considerations should turn out to be important in job-market decision-making will, I believe, be a genuine novelty, creating genuine differences between job and labor markets. TOP

8-2. Could a person have more than one job in a job-market economy?

I don't see why not, though there would be less incentive to "moonlight" in the job market world than in this one. First, the wage or salary a shopper selects from a roomful of options is much more likely to meet her total needs than one thrust upon her by a labor market. Second, an unusual set of personal needs can probably be better met by buying a custom-made single job from a job market than a suite of jobs to meet those same needs. Still if it works, why not? All the job market would have to do to maintain equilibrium in the face of multiple-job buying is to measure, and then provide, the number of jobs its customers collectively want. TOP

8-3. Where are the costs of healthcare and retirement benefits going to come from, then? From taxes?

Yes. But the sources of public revenues in job market societies are likely to be rather different from those we rely on today. Among the sources of revenues are likely to be green taxes, scarcity taxes and taxes on wealth, rather than on purchases or income.

Daly & Cobb (1989: 56-57) relate green taxes to the economist's conception of "external costs". An external cost is one that the community, not the producer, pays. For example, the community pays a downstream cost in either its health bill or its clean-up services to restore a river polluted by upstream industries that enjoy the (usually traditional) privilege of flushing work floors and tanks with river water. The economic objective of green taxes is to recover the whole of the cost of production by adding to the manufacturer's price of such polluting products a tax that will augment the public revenues, and so pay for correcting the ultimately polluting effects of his activities. Green taxes compensate the government, and so the community, for these external costs. Daly (1993) strengthened this argument by showing that the environmental costs of economic growth are nearly always larger than any conceivable benefits growth might bring, "thereby making us poorer, not richer." He says of his profession: "We economists have [by blindly advocating growth] become dangerous to the earth and its inhabitants." Daly distinguishes, as I do, between growth and technological development, deploring the one and strongly advocating the other.

The notion of a mathematically-determined scarcity-tax, as developed in this book, represents a very different approach to the recovery by governments of the external costs of production from the one offered by green taxes. Unlike the latter, scarcity taxes can address the problem of resource allocation under conditions of environmentally benign scarcity, e.g., the scarcity of early strawberries, or of a diaond brooch, or of a seat at a World Cup football game. They are thus a functional alternative to the opportunistic, or "black market", way of pricing scarce products. Sometimes scarcity taxes are preferable to green taxes simply because they are easier to calculate. Thus, one can tax rainforest hardwoods either because they are rare, using straightforward scarcity algorithms to calculate the tax, or because cropping any rainforest product contributes to global warming, which has an external cost but one that is a good deal more difficult to calculate.

The looming exhaustion of fossil fuels may soon strengthen the argument for using green taxes to stimulate the use of renewable resources. Beardsley (1994a) tells us that a United Nations study predicts that, from 1990 to 2020, world energy consumption will increase by 80% as population increases by about 45%, and discusses two scenarios for meeting this need. The first is that green taxes on fossil fuels will be widely adopted, and that these will internalize costs and stimulate the development of renewable resources. The second is that protectionist policies and the domination of governments by oil companies will continue, and that these will continue to externalize the real cost of using fossil fuels and so inhibit the development of renewables. Beardsley shows that the second scenario leads to a pretty bleak future. The Economist, in "Clean Air" (1995), provides a riveting footnote to this same question: The polluting effect of small, 2-cycle engines is apparntly enormous. A gasoline-powered lawnmower generates as much pollution in 1 hour as a new car driven 8,500 miles! Happily, by 1993 the European green-tax movement was already making political headway. Buerkle (1994) reported that Ioannis Paleokrassas, the European Union's (EU's) Commissioner for the Environment, was even then urging "a sweeping shift to "green" taxes by EU nations." Paleokrassas said that the EU needed to shift about 20% of its overall tax-burden "away from social security charges, income, and value-added taxes, and other levies on human effort," as he put it, "toward taxes on resources, such as energy, timber, and generators of pollution, such as cars."

As early as 1977 Herman Daly (1977: 159-161) proposed yet another method for slowing the depletion of scarce natural resources, one that is now being used in some countries. This is the "depletion quota auction" under which producers are allowed to purchase from one another the permits issued them by governments on an annual quota basis to deplete scarce resources. Daly's plan is thus be a quite different approach-different from both ordinary green-taxes, as these have been proposed, for example, by L.R. Brown (1994), and the scarcity taxes I've proposed-to what is essentially the same problem. TOP

8-4. You seem to be saying that profit creates no value, and therefore should not appear in the price except as a surcharge on the "real" cost of production. But isn't profit, too, a real cost? Isn't your account at odds with explanations of the role of profit in standard economics?

Yes, it is. As Lester Thurow puts it, "In a capitalist society, profits....hold center stage," implying that they are objects of veneration to all who contemplate them (Thurow 1993: 64). That may be true; but that doesn't make them a cost of production. Profit is now, and has always been, not a cost but a reward: something added on to the cost of production to motivate owners to stay in business. As to why the job market account of these matters differs from that of "standard economics," it has not been a project of the latter to help us engineer economies that will work better than our current ones. Disequilibrium, for example, is assumed by mainstream economists to be both normal and unavoidable: just one of those features of economic life that makes theirs "the dismal science." In contrast, my project has been to show how computer-aided job markets can eliminate economic disequilibria by stabilizing certain fundamental economic parameters computationally. Tying money-supplies to the cost-component of inventories contributes vitally to that project. Money could not be equilibrated if those inventories included variable profits. There may be other means of equilibrating human economies that leave profits free to meander, and that allow money earned by profit to augment money supplies; but, so far at least, no economist has shown us how this could be done. TOP

8-5. Your example of the baby-carriage manufacturer's operations assumes that she is able to sell all her carriages. But what if she doesn't? What does she do with any unsold carriages? How does she price them?

Good question. The answer is a fairly long one and has two parts:

Part one is that good market-research undertaken in a hyperstable economy should be able to tell any established manufacturer within very narrow limits just how many units of anything she makes she can sell. Large corporations will perform this information-gathering service for themselves, as they do today. Smaller ones will either buy such information from service companies who gather it, or endure the risks of guessing. Market-research companies offering such services to smaller manufacturers are likely to be an important part of any job-market economy.

Part two is that a "salvage" maneuver-possibly even a special "salvage market" operated by the government-must be available to companies in job-market economies so they can dispose of goods they find they cannot sell at the just price. This is likely to be a rare event: useful in emergencies but otherwise to be avoided. For instance, suppose a certain shoe manufacturer has been happily living on a 20% market-share. Unknown to him, a competitor with a smaller market-share installs some computer-operated shoemaking machinery that cuts the price of her shoes in half. Some of our man's customers will keep on buying his now expensive "handmade" shoes, but most will not. So his market-share will shrink and hers will grow. Soon everybody in the shoe-business will feel obliged to adopt the new computerized shoemaking technology, including our man. So he grumpily buys the new machinery from its manufacturer; pays a license fee to its inventor; sets it up in his factory; and starts making shoes in the new way.

But what does he do with the old, handmade shoes he has on hand but cannot sell? He salvages them. He puts them in the salvage market and finally sells them at, say, 50% of what had been their just price. Better than scrapping them, he figures.

But this is not the end of it. When all his handmade shoes have finally sold at their new, below-cost, salvage price, he'll find that his "payroll account" (of which more later) is, say, 2,000C out-of-balance. That means that 2,000C of the wages he paid his workers six months ago, say, are now not ever going to be balanced by sales. There is now 2,000C of money still in circulation in the economy that is not matched by inventory on the nation's shelves. So exactly that amount of generated money must now be destroyed to put the nation's money-supply back into equilibrium. Sound draconian? Not really. It will make good sense to everyone in such hyperstable economies to maintain their monetary equilibria by eliminating all such unmatched money. But whose ox is to be gored? Whose 2,000C are we going to wipe out? The unhappy shoe manufacturer's? Or the government's? Or will they do it jointly?

Again, the answer will be dictated by the local culture. Some job-market societies will require companies forced into salvage operations by marketing errors to pay for the payroll losses those errors will inevitably generate. Others will provide "compassionate help." Still others will match the entire deficit with public money. But to restore equilibrium, that 2,000C must somehow be "retired" from the national money supply. See Appendix B, "What Happens to Money?," on this website, for the details. TOP

8-6. Are you telling us that you can't charge rent, for example? Something over and above the labor cost of maintaining whatever it is you're renting?

No. Selling wealth or charging others for the use of it-which is what selling or renting land and buildings turns out to be-will take place in job-market economies pretty much as they do in ours. But it is best at this stage of our understanding to regard these events as happening outside the job-market economy. The most important thing about renting or reselling some already purchased product, from the point of view of job-market accounting, is that these actions generate no money. They utilize money that is already in existence but they neither augment nor diminish its total supply. So both purchasing wealth and paying owners for its use must, in a job-market economy, be treated as transfers, not generators, of money.

Here's a definition of the word 'wealth' that will serve our purposes: Wealth is any paid-for, long-lived product. Thus a product becomes wealth if (1) some end-user has either purchased or made it, but in either case with the result that the costs of its production have been paid, and (2) the utility of that product persists in time. Thus an ice-cream cone and the privilege of attending a theatrical performance, though both are purchased, are not wealth. But any battered old screw-driver in your toolbox is, like the Empire State Building, wealth. (In Chapter 14, "Transition to a Job Market," wealth and its handling are discussed in some detail.) TOP

8-7. People bid up the price of naturally rare or vanishing resources, especially land. Bidding becomes especially vigorous wherever population density has increased: witness current land prices in Japan. The resulting long-term increase in the price of land, and of the higher rents that reflect those higher land-values, must surely be yet another source of inflation. Isn't this pressure on rents separate from, and in addition to, the pressures from wages, profit, and the money supply? These you've discussed, and shown ways of controlling. But what can be done about the constant inflationary pressure on job-market economies from increasing rents?

The long-term inflationary pressure on rents from rising land-prices is indeed one of the chief reasons why, in a job-market economy, the money supply must be kept tightly controlled. But I believe it will be found that it is the current excessiveness of our money supplies that is now allowing both land-values and their derivatives, rents, to rise in these economy-crippling ways. Once job-markets are installed, we may find that maintaining a constant equilibrium between the money supply of a national economy and its inventory of new goods and services will be sufficient to stop profiteering on the resale of land or houses, or on the resale of anything old, for that matter, including paintings by Old Masters.

Reselling land and houses at ever-higher prices is, after all, what produces the inflation of real-estate values in the first place, and so inflates our rents. The same thing happens-though with less widespread consequences-with the resale of collectibles like paintings. Pegging money supplies to new-product inventories should moderate, perhaps even remove altogether, this source of inflation. In addition, job markets will make it possible to raise or lower the money supply exactly, should this be required to control rising real-estate prices, or, for that matter, the speculative buying, reselling, or renting of anything valuable. (These various "valves" for controlling the level of job market money are discussed in chapter 11, on "Planning for Downsizing & Development.")

If controlling the money supply doesn't work to eliminate-or at least to moderate-the speculative reselling of land and collectibles, then job market societies can take still further measures to relieve what would then clearly be a fourth inflationary pressure. Treating land like a ticket to the World Cup finals, and so putting a scarcity tax on its resale, could turn out to be still another anti-inflationary measure offered by job markets. Ultimately, nationalizing land itself, and leasing it back to users at the cost price of that small service, would stop the profit-driven cycle of endless resale altogether. But it is quite likely that controlling the flow of money into and out of job-market economies, at the two points at which it is generated and extinguished, will have the desired effect of limiting the profits (and also the losses!) to be made on the resale of any sort of wealth, including houses, land, boats, cars, paintings, and shares of stock in corporations. It would do so by simply limiting the total quantity of money that is available to buyers for bidding up the value of other people's property. TOP

8-8. You say that "no other source of purchasing power than that generated by human labor [is] permitted to enter the goods market." But what about products like milk, to which the chief contributors are not human workers but cows and pastures?

Cows and pastures are wealth, and so are essentially outside job-market economies. Nevertheless, some sort of wealth, as you suggest, nearly always figures in production. Many ways of managing productive wealth in job-market societies are possible; here is one that is consistent with job market mathematics: If a private producer uses his own wealth in production-say an inherited pasture-then he is allowed to charge nothing more than its upkeep as a cost of production; for the work that went into creating that pasture has long since been paid. But if he uses someone else's wealth in production-rents a pasture or a cow, for example, from a neighbor-then he may include whatever rent he agrees to pay his neighbor for that privilege as part of his own cost of production. But that rent will, like any other profit earned by his neighbor, be a transfer between his customers and that neighbor and will generate no money. However, if a new producer-good, like a milking machine, has just been created in some factory, and so is not yet wealth (because the costs of its production have not yet been paid), and our milk-producer decides to buy it, he may choose to buy it gradually, and so sell it gradually to his customers, that is, amortize it as a cost of production, or he may choose to buy it outright, thus becoming its owner and counting it part of his wealth. If he chooses to amortize this producer good, he is in a very real sense deciding to sell it bit by bit to his customers; so when the milking machine is finally paid for, it becomes part of their wealth, not his! And since "they" are anonymous milk-users among the citizenry, such capital goods as they have paid-for through amortization become part of the public's wealth. The dairyman may now rent it from the public, that is, from the government, if he continues to use it. But if he feels its useful life is up, he may turn it back to the government for recycling and salvage, the proceeds of such materials recovery going into the public treasury. The above method of managing wealth-appropriate, of course, only to certain cultural values-would provide a strong incentive for producers to own whatever land, animals, and machinery they use in production. For ownership will produce the lowest unit-costs of the owner's products, and lowering cost is what assures success in any cost-plus-p economy. Moreover, the wealth that owners use in these ways remains their wealth, and so ultimately passes on to their heirs. So to a people who wish to equilibrate their economy and, at the same time, to retain a strong private-sector tradition of wealth and inheritance, this could well seem an appropriate way to manage whatever wealth they use in production. TOP

8-9. If I'm a painter and take 500 hours to paint a painting, and charge 500 credits plus 10% plus the cost of canvas, paint, and studio rental, but can't sell it, what do I do? Suppose I say that I just spent 20 hours on it. Is that ok?

No; this would be a fraud on both yourself and your buyer, and in any case quite unnecessary in a job-market economy. You can salvage it; see question 8-5. Or, you can go into business, buy a job from yourself at the lowest credit-rate allowable in your nation, and do so quite legitimately on the grounds that you really enjoy your work! Let's say that the minimum credit-rate in your country is 0.20, and that allowable profit is 10%. You would then charge (500 0.2 1.1 =) 110C plus other costs for your 500-hour painting. TOP

Chapter 9, Money Supply & The Growth of Savings

9-1. I'm worried about using the average hour of work as the source of purchasing power. It allows any old entrepreneur to create money simply by hiring his cronies, regardless of whether they're doing anything useful or not! Apart from the fact that this would be cheating, the long-range effect of such frivolous "economic" activities might be bad for the environment, the society, or both. Can the job market do anything about this?

It can. But there are really two parts to this question. One is what do we do about fraud? And the other is what do we do about failure? I won't attempt to answer the fraud question here because it's common to all economies, and the way it varies from country to country is very largely a function of their peoples' national character and their commercial traditions. Failure, however, will have some quite general features under job markets: Let's assume that the entrepreneur in this question is an incompetent businessman. He has started a business he's not able to run, has offered a service he cannot sell, and hired employees he's unable to train. With all these strikes against him, he will surely fail. The first the economy will know about his failure, however, will be when the bank discovers that, for his first 4 weeks of operations, say, his weekly payroll shows 4 debits and no credits, that is, 4 payrolls have been paid but there have been no compensating sales. (We assume he's a service-provider, not a manufacturer, so whatever he sells should be instantly paid for.) There were four weeks of average (credit-rate = 1) wages for four people, each putting in 30 hours a week, and no sales. That's a debit of 480C, the equivalent, we decided earlier, of about $15,000 1999 U.S. dollars. Fine; this makes it a simple, clear-cut case of early business-failure. The central bank-which will be the first line of defense against both fraud and failure -will have as one of its tasks to monitor the accounts of new companies in order to spot failing ones. There is also likely to be a legal limit on how much money new businesses can create for the economy in this untested way before demonstrating their ability to sell their product. Thus, legislatures may decide that new businesses must put up a bond to cover their first few months of operation in order to show that they can sell what they make or serve before the central bank will begin covering their payrolls. Suppose the law states that after four weeks of steady losses this trial has run long enough. The business is declared to be a failure. What will happen to its 480C debit? Remember that it reflects 480C of new money having gone into the money supply with no hope of ever being extinguished by end-user purchases. The 480C can either be subtracted from the government's own account, or from the failed entrepreneur's bond account, or from some combination of these, or from some other source. In any case, failure, like salvage (see question 8-5), requires that an adjustment be immediately made to the money supply to maintain its equilibrium with the national inventory. So that 480C must now be extinguished somewhere. Exactly how this will happen will depend entirely on this particular society's views about business failure. Like the question of who is to suffer the shoemaker's salvage loss, different societies will respond to the losses of failure differently. TOP

9-2. Where does all this "working capital" come from? You talk of "old money"; but you make it sound as if there are "slush funds" lying around. If so, what builds them up? How do they get generated in a new job-market economy that starts with zero credit-hours?

These are three different questions. The first two apply to what is happening in a mature job-market economy, one that has transformed the financial wealth of all its people into credit-hours. The first two questions are (1) What is this "old money" you're talking about? And (2) Where does "working capital" come from? Both are easily answered. The third question deals with new job-market economies and is (3) How do capital funds get generated in new job-market economies? (1) In a mature job-market economy, "old money" is any money that is still in circulation. All of it will have been generated by work and, of course, none of it will have yet been extinguished. "New money," in contrast, is a transient category. It's that part of the money supply that has just been generated by appearing in someone's pay-envelope; and, as soon as it appears there, it becomes old. In short, new money is money at the spigot. It's the money that will soon be "old" simply because it's still there; and it will remain there, in circulation, until it is extinguished. Appendix B, "What Happens to Money?" on this website will help the reader understand the accounting mechanisms by which money is first generated and then extinguished. (2) Obviously it is old money that supplies the working capital of businesses in mature job-market economies. These are the funds with which producers buy the materials and services they use in production, as well as the funds consumers use to buy end-products. In other words, old money is really all the money there is in a job-market economy. It's the stuff that matches in amount the aggregate labor-value of the goods in inventory in that economy at any given time. (3) As for transforming genuinely "old" money-in the sense of "non-job-market" money like francs, yuan, and dollars-into credit-hours, that's a question which is addressed in Chapter 14, "Transition to a Job Market." TOP

9-3. Why are payroll loans necessary? Why not just pay workers from the proceeds of past sales?

Payroll loans make it possible for employers to pay workers from the proceeds of future sales. This makes sense in a job-market economy because it provides a means of generating money exactly when and where it is needed and then extinguishing it exactly when and where it is no longer needed. This is one of the many accounting procedures that equilibrate job-market economies. We've seen that, in them, payroll loans are not discretionary; that the bank is legally obliged to make them to any established employer; and that the bank literally creates the money that the employer then disburses among her employees. So the money that employers "borrow" doesn't even exist before they borrow it! Apparently it was "created"-that is, its generation was precipitated-by their workers' simply working. The only thing the employer is doing is collecting what her workers have already, in a sense, created by working, and disbursing it among them. (What they are really doing is certifying to the bank that the work that it is paying for actually took place.) See Appendix B, "What Happens to Money?," on this website, for clarification on the cycle of money-generation and extinction. TOP

9-4. Some British readers have objected to the job market's promise of increasing leisure. The British working-class, they tell us, do not want "more leisure" but "more work." Though this seems doubtful, it raises an interesting theoretical question: What could a job market do about such a sentiment if it turned out to be widely held? In particular, how could its job market create more paidwork for a people while a high technology that was diminishing their paidwork?

If such a leisure-abhorring folk do turn up among the peoples served by job markets, their job market will provide them with a ready means of augmenting their paidwork. There is a "production throttle" built-into every job market economy (see Chapter 11, "Planning for Downsizing and Development") that will allow any people to expand or shrink their economy by changing the statutory limit on their average work-year. So even though manufacturing technology continues to lower the labor required to produce tangible products, there is an indefinite number of services-from teaching each other yoga to coifing one another's hair-that any people can decide to supply one another on a fee-for-service basis, thus diminishing their leisure and increasing their paidwork. Tiger (1992: 41) tells us that there is apparently great cultural variance in the taste for work. Average workyears now range from highs of 2,300 to 2,600 hours in consumption-oriented societies like the U.S. and Hong Kong to roughly half that among the Germans and Danes, who put in about 1,400 hours per worker a year (Moody, 1992). Tiger tells us that this is because these north Europeans prize their leisure and people in more consumerist cultures do not. But this explanation becomes dubious when we consider that the working folk in precisely these European nations happen to have much stronger voices in their social-democratic governments than either American or Hong Kong Chinese workers do in theirs. On the other hand with job markets to empower them, the workers of any country will automatically have "stronger voices" in their society's decision to spend more or work less; so though it does seem likely that average-work-year variance is likely to diminish under job markets, the cultural component of whatever remains of that variance will probably remain strong, may even strengthen, under job markets. TOP

Chapter 10, Unclogging Investment

10-1. You say that the central bank need exert "no enterprise" to gather in all the public's savings. That implies that there is no other place for it to go! What has happened to the stock market, to individuals investing in corporate stocks and bonds? To providing "venture capital" for startup companies? To pension funds and insurance plans? Have all these other repositories of an individual's saved money disappeared?

No. It is nevertheless very likely that most people's savings will stay in the central bank. If "enterprise" means getting out and hustling to build your business, then no enterprise will be needed on the part of the bank to attract depositors. For in a job-market economy, all wages and salaries will, as we have seen, appear first in the records of its central bank. Money will appear in workers' accounts as they are paid, and the unspent part of it is likely to stay there. This will be due to two factors, neither of which involves any particular effort on the part of the bank. (1) In an economy in which technology is genuinely and finally unleashed-as I believe I have shown it will be in all job-market economies-there will be a steady, dynamic, deflationary increase in the value of saved money, amounting perhaps to 5% to 10% per year, even more in the early years. That means that other ways of "making money grow"-the ways we currently use in the West when we "invest" saved money in mutual funds, pension funds, insurance policies, and stocks and bonds, and hoping their value will increase through "market forces"-will simply not be necessary for most people in job-market-served economies. A plain old-fashioned savings-account in the national bank, one that pays an extremely low interest-rate of, say, 0.5% (the Japanese rate in 1996), will be doing all that for them. (2) The second reason is sheer inertia. The bank will be the "birthplace" of all credit-hour money. It will even be the first resting place of all the old, floating money that has been exchanged for credit-hours during transition, and, in that new form, brought into the economy. (See chapter 14, on "Transition to a Job Market") So, while any unspent money can be moved out of the central bank and into a commercial one, most of even a young job-market economy's money will start life in the central bank; and thus-if only from inertia-be likely to end life there as well. Where could you put your money in a job-market economy if you didn't want to keep it in the central bank? You will be able to put it in all the diverse places where you put extra money now. That could mean putting it in private banks, which will still exist, of course, but as a substantially smaller industry and paying much lower interest rates than private banks pay today; see question 10-2. Or one might wish to invest directly in corporate stockshares or municipal bonds, just as at present. Or one might wish to put venture capital in startup companies. Or, indeed, in one's own or a friend's business. All this is "investment" in the financial sense, and interesting primarily to moneyed individuals. To varying degrees in different job-market countries, these opportunities will remain open. But most people won't need them. They will be able to live quite handsomely on the savings they have kept in the nation's bank, where it will have been continuously available for publicly-directed investment by the nation's bankers. TOP

10-2. Will private bankers essentially be out of business?

No; in most job-market economies-and despite the establishment of central, public banking-the larger commercial banks, at least, are likely to survive. Central banks, operating under the public's mandate, would encourage all those economic and non-economic activities in which the public had declared an interest. Commercial banks, in contrast-whose moneys will still be coming largely from wealthy savers, and in larger sums than workers' savings-are likely to be making fewer but larger loans, and so earning the full, allowable profit on their value-added operations. TOP

10-3. You say that the central bank will be empowered to "lend the savings of its citizens in accordance with guidelines set up for it by its political masters." This assumes that somebody-an expert-knows best. In economics, this is always doubtful.

The central bank of a job-market economy is not there to make policy decisions or to settle conflicts between competing interests. In most job-market countries, goals like increasing productivity, improving healthcare, widening access to education, and protecting the environment will have been politically defined as major, ongoing public concerns. The public banks will then loan public money-so long as public money is still available-at no or little interest to startup or upgrade any enterprise that has been in this way designated as worthwhile. Apart from dealing with applicants fairly, the bankers' primary tasks will be to identify applicants who are competent to carry out their plans and to provide constructive oversight until their loans are repaid. There is no question here of experts "knowing what's best." TOP

10-4. What do you think will happen to the volatility of the stock market with cost-plus-pricing?

It will diminish. There are at least three reasons why: (1) The variance in even the expected performances of companies is certain to diminish under job-market equilibration, and this is the major source of volatility in stock prices today. Variance in actual performances will also decrease because, at the top end, windfall profits and other opportunities for making huge but essentially unearned profits will disappear, and, at the bottom end, fewer businesses will fail. Together, these two effects will make corporate performances more predictable, and so reduce the volatility of corporate shares. (2) There will be more, and more reliable, information available to investors in job-market economies. The Economist has recently reported (in "Forex with Rice" 1997) a new theory about stock-price volatility that relates it mainly to the sudden disclosure of new information. Precisely because of the Information Revolution, however, information is like to be more routinely and continuously available to investors in the future; so such "disclosure shocks" are likely to be rarer. (3) There will be less gambling with stockshares in job-market economies. There are many reasons for this, only some of which can be touched on here. But less gambling and more long-term shareholding will mean less volatility in stock prices because there is a large random component in those prices today that is caused by gamblers guessing how other gamblers will respond to the daily news. TOP

10-5. Why would a business ever want to use a private commercial bank if there is a central bank?

Because only some businesses, namely those responding to a nation's priorities for furthering its politically-expressed interests at that time, will qualify for the no- or low-interest loans offered by the central bank; see question 10-3. Others will require the services of commercial banks, and be willing to pay for them. TOP

10-6. Are consumer loans even advisable in the job market system?

What is "advisable" depends on the local culture. If the culture is paternalistic-if its elders are determined to instill the thrift habit in its youngsters by not letting them borrow-then consumer loans are likely to be hard to get. If it is permissive, consumer loans could be easy to get. Job-market economics will work on either side of the street. What job markets will always do is arrange that interest rates will, on average and by our standards, be very low. But no job-market economy will ever need to stimulate consumption by extending easy credit to consumers the way our growth-dependent economies do now. So those thrift-undermining factors will largely disappear. Besides, in all job-market economies young people are likely to learn thriftiness from the intermittent pattern of their work. Intermittency requires that one save while one is working in order to tide one over when one is not. TOP

Chapter 11, Planning for Downsizing & Development


11-1. Technological advances don't necessarily diminish paidwork. Business people constantly create new ways of making money by doing useless work. For example, by increasing the amount of advertising, paperwork, selling, etc., their workers do despite advances in technology. So the "fund of work" stays high even though the useful proportion of it, I admit, diminishes.

What you say is currently true. Yet over the long term, per capita human work has been diminishing. It has diminished in the industrial world over the last two or three centuries despite massive increases in standards-of-living, leisure, and life-expectancy. This is attested to by the steady shortening of the work-year. It is also true that this has taken place recently only where governments have paid attention to productivity gains, and compensated for them with legally shortened work-years. This has happened in Western Europe, where the work-year is now very short, but not in the U.S., where it is still very long; see question 9-4. But this is a non-conformity with a general trend that is probably due to the special nature of U.S. capitalism. Yet in the short term, what you say is true of labor-market economies. In them both governments and corporations attempt to solve the abiding problem of keeping people emloyed in the face of advancing technology by increasing the amount of paper- and nonsense-work their workers do. Two noteworthy instances come to mind. One is the efflorescence of bureaucracy in Costa Rica, where there are probably more officials per capita shoving paper around than anywhere else on Earth. The other is the equally vigorous growth of the advertising, marketing, insurance, and finance services in the U.S.A.; this also keeps huge sectors of its population gainfully but all but uselessly employed. In the cost-plus-constant-p economies generated by job markets, however, cost will assert itself even in the short term, and the fund of work will visibly diminish wherever their influence reaches. TOP

11-2. In Chapter 1 you mentioned the "gradual dissolution of local underclasses," and in this one you talk about manipulating "equality parameters" of job markets, presumably to achieve it. If this means sharing the limited affluence of the middle and upper classes in the industrial world, I worry about a lessening of everyone's standard of living in an overpopulated world.

That is certainly a warranted fear. But it has little to do with dissolving local underclasses or moderating income inequality. Perhaps the most substantial of all the dangers we humans will face in the 21st Century is our tendency, as animals, to overpopulate our habitats and to exploit them relentlessly with little or no thought for their maintenance or survival; for these traits are maladaptive to almost any conceivable human future. These two tendencies, then, one, to overbreed when times are good, and the other, to degrade our habitats while pursuing short-term goals, may be our two most dangerous biological "sins". I hope to show that, with the planning tools afforded by job markets, 21st Century humans will be able to downsize their economies without harm to themselves whenever and wherever they need to. The point is that job markets will both reward human efficiency and reduce our natural fear of unemployment, and so our resistance to change. This will equip 21st Century humans to deal intelligently with the overgrowth of both their economies and their populations, as we in the 20th Century have clearly not succeeded in doing. But I agree: wherever human populations, and so human economies, are still growing, the fear that the standard of living will decline correspondingly, even precipitously, is a real one. But the source of that danger is quite independent of how the people in them divide up their resources. TOP

11-3. I think you overlook in this chapter the desire of people everywhere for a higher standard of living and the capacity of automation and other new technology to provide it.

This sanguine view-that technology is in principle capable of solving nearly all our economic problems-is one I obviously share. But if automated manufacturing indeed proves capable of producing all our goods with barely the touch of human hands, if nuclear fusion can indeed supply us with endless non-polluting energy from seawater, if room-temperature superconductivity can transport electrical energy nearly anywhere without loss, and if high-density batteries will make our vehicular traffic non-polluting-to mention just four of the most promising of these scientific prospects-then there is all the more reason to adopt job markets to distribute the dramatically smaller amounts of human work-though coupled with higher standards of human living-that would immediately result from the realization of any one of them. TOP

11-4. Won't Third World countries need to increase the size of their economies while they are still developing? In other words, isn't growth sometimes good?

Yes; but most development-induced economic growth will be early and temporary, as when a pre-industrial economy shifts from ownwork to paidwork. There is then a sudden increase in GDP that is mostly a matter of accounting. Further development can often then take place in a Third World nation without any further economic growth...provided its population also stops growing. That original shift to paidwork is likely to be very important, however. For instance, Dasgupta (1995) reports that when rural women in Third World countries begin to earn wages, they acquire a new and greater economic value to their families. Before women are paid to work, the production and care of children is their primary economic value; and in degraded rural habitats, the short-term value of the children they produce turns out to lie in their fetch-and-carry roles. Thus, a family's having more children means that it can collect more fuel, water, and fodder from greater distances, and this gives a short-term advantage to large families in such habitats. But this use of children degrades such habitats even faster! Making paidwork available to rural women interrupts this cycle by putting a higher value on a woman's wage-earning ability than on her fecundity, which ultimately means that she can have fewer, healthier, and more educable children. This in turn lifts the population pressure that is now destroying such habitats, makes habitat restoration possible, and sets the stage for the use of more productive technologies. TOP

11-5. Almost all technological advances since the 18th Century have been made by substituting the energy of fossil-fuels for human labor. Because of this we've come to expect ever fuller marketbaskets for ever smaller expenditures of labor. (American agriculture is the best example of this; the proportion of farm workers in the working population has gone from about 80% to about 3% in two or three generations.) However, as the per capita supply of non-human energy is reduced-as is bound to happen very shortly, as we are now depleting fossil fuels very least until that mythical day when nuclear fusion comes along-won't we humans have to work even harder to fill our marketbaskets? Won't our job-market economies have to grow, not shrink, in order to supply us with the same marketbasketful of goods?

Good question; though its prediction-that the supply of energy from renewable sources will not keep up with demand-may not, happily, be fulfilled. But even given this dour premise, the answer provided by the job market model is encouraging. Let me first agree with the questioner that job-market economies would indeed have to grow if continuously rising costs of non-human energy were the only factor in the equation. But it is not. Under job markets there would be at least eight other growth-affecting factors at work, and all of them, unlike the energy one, can be made to lead to downsizing. Job markets would encourage all eight of them. So their collective effect under job markets is almost certain to be larger than-and so to overcome-the indubitably upsizing effect of hypothetically rising energy costs. Let's have a look at the eight downsizers:

  1. The decline in the amount of human labor used in manufacturing, as more factories become automated.
  2. The decline in both materials and energy use made possible by the Information Revolution, as the old high-energy paper-using technologies, for example, are replaced by new low-energy electronic ones.
  3. Miniaturization will also make its contribution to downsizing. Think how much smaller a computer disk is than a book...than a shelf of books! Smaller products use fewer materials, less energy, and occupy less storage space.
  4. The conservation of non-human energy, as we learn to make and use more efficient motors, vehicular engines, lightbulbs, insulation, heating-and-cooling systems, and so on.
  5. Less materials extraction as the recovery of materials from discarded products becomes more general. One way consumers can insist on such materials recycling is by making manufacturers legally responsible for the recovery of materials from their discarded products, as the Germans are now doing.
  6. The changeover to products that are both more durable and more repairable. Cost-plus-p pricing will help make both things happen. More durable products will also mean a smaller volume of production in the long run.
  7. The gradual replacement of fossil-fuels by renewable energy sources such as wind, sun, tide, rain, and biomass. Green and/or scarcity taxes can accelerate the development of these renewable supplies. Finally we may add to this already formidable list of downsizers the one that may have the greatest effect:
  8. The huge savings in labor that can be realized by any country willing to prune away the secret "make-work thickets" of its domestic economy.
By this I mean those hidden places in any modern economy where masses of people are doing things that don't need doing, and were probably set to doing to keep them employed. For example: (a) those parts of bureaucracies that have been created to make jobs; (b) the U.S. "junkmail" industry; (c) endless "financial services" that seem to do nothing for their customers except get them to move their money around; and (d) the equally endless chains of middlemen whose presence clogs our commercial channels and whose commissions raise our prices. All these costly activities will, in the Information Age, prove prunable; so pruning them can be used to help shrink human economies. It will be the rigors of cost-plus pricing-a price system that will give buyers both the power to lean-out production and a vital interest in doing so-that will effect most of this pruning. None of these dispensable activities will be greatly missed once job markets make a fair share of the good work that is left available to everyone. TOP

11-6. You make the demise of growth part of the demise of capitalism. I believe that is a mistake. Growth is part of the life process and typical of all living forms. Growth will be around long after capitalism has passed from the scene.

There are two false assumptions lurking here. One is that the kind of growth I've been talking about is the organismic kind that does indeed characterize the early histories of nearly all organisms: when young their size increases. The kind of growth I've been talking about is the numerical increase in populations of organisms, which is something that happens in only some species some of the time, and, derivatively, to their economies. In particular it happens when they are still underusing their habitats. This sort of population growth is about to end for our species, as indeed it must for any species approaching the provisioning limits of its habitat. Ours is now doing that. In a certain moral sense it already has. But the organismic sort of growth you evidently mean will, I agree, continue forever, or for at least as long as there is life. The second false assumption I detect in the question is that I am arguing that capitalism-as-a-whole is headed for some sort of "historical demise." I am not. I have been arguing in this book that capitalistic macrostructures are slated for the historical ash-heap; for it is these national and global structures of finance capitalism, which, like those of command socialism, have proved incapable of meeting the environmental, social, technological, and ethical challenges of the 20th Century that I believe will be replaced early in the 21st by technically more adaptable systems. The challenges that finance capitalism in particular has failed to meet are typified-in a way, summed up-by one of them: its mismanagement of downsizing. Downsizing is something that capitalist macrostructures evidently cannot do well. TOP

Chapter 12, Fairness Among Nations

12-1. What assumptions are you making about land ownership in these earliest job-market countries? How much will landowners be able to charge, after job markets come along, for the use of their land?

To be sure, land-ownership in most command-socialist countries is still invested in the state. In others likely to be "early job-market countries," land is partitioned between private and public (or royal) ownership with most productive land in private hands. At first, having a job-market would change none of that. Job-markets would, however, have a notable affect on rents, in that a job-market economy's equilibrated money-supply would cause both rents and interest to be appreciably lower than they've become under our currently swollen money-supplies. In cultures that took an interest in these matters, job markets would provide powerful tools for setting them to rights; see also question 8-6. TOP

12-2. You say that trade could "easily" take place between two developed nations, one with and one without a job market. But how, if their money is so different?

By the non-credit-hour nation making an honest and accurate estimate of the average hourly reward for work in its own domestic economy. Whether that reward was paid in wages, salaries, stock-options, prizes, bonuses, or other perquisites wouldn't matter. But the non-credit-hour country would have to demonstrate that it had left no stone unturned to arrive at an accurate measure in its own currency of its average hourly reward for work. Suppose that in the U.S. in the year 2005 that figure turned out to be $40 per hour. Trade with the U.S. could then take place in equivalent credit-hour prices by dividing the dollar-price of every U.S. tradegood by 40. Of course to keep trade fair, prices of U.S. tradegoods would also have to be adjusted to accommodate the differences between the profit levels of its own trading companies and those of its credit hour trading partners. TOP

12-3. Why should a manufacturer voluntarily absorb the loss between his normal 30% domestic profit and a 10% export profit just to put his goods in foreign trade?

Why indeed? He might well decide not to. But if he did decide to accept this lower profit on his exported products, it would probably be because he'd found that he had saturated his domestic markets and still had productive capacity left. Under those circumstances he might well decide to make more tractors at a smaller profit per additional tractor but increase his annual profits. If he did this happily, it might be because he-like everyone else in credit-hour trade-had got used to the reality of cross-cultural differences, and to the fact that, under job market circumstances, even a superpower could no longer force its local commercial customs on its trading partners. TOP

12-4. Your discussion of the equality of a possibly illiterate Jamaican worker's hour of labor and that of a sophisticated Englishman's doesn't seem to take into account the Englishman's preparation for his job by long years of study, etc.

Job markets would reward workers differentially along at least two main dimensions on which both jobs and job-buyers differ. One is the scarcity of the qualifications brought to the work by the job-buyer (this would include, of course, that Englishman's "long years of study"). Another is the agreeableness or disagreeableness of the work itself to those who are qualified to do it. Both dimensions are measured locally, that is in the job-buyer's own national job-market. So if a highly-prepared English worker makes something in England, and the work he does there was of average agreeableness to the English job-buyers who were also qualified to do it when he bought his job, then whatever product he helps to make in England will probably cost a lot in both England and Jamaica. If the Jamaican worker brings no other special skill to his or her work in Jamaica, and the work he or she does there is not especially difficult or disagreeable to Jamaicans, then the product of his or her work will cost very little; and again, it will have that little cost in both countries. The truly surprising thing that job markets introduce into these equations is that an average education in Britain and an average Jamaican education will be rewarded-other things being equal-by exactly equal credit-rates in the two countries. For it is only the local cost of the English and Jamaican workers' average work to the job-shoppers in their respective countries that are set equal to each other by their job markets. The job market obliges us to treat all credit-hours equally. What that means is that 10 English C and 10 Jamaican C will have the same buying power in both countries, indeed, anywhere in the credit-hour area. I admit that, to contemporary Jamaicans, that it is likely to seem a pretty good deal. But to Jamaicans of the next century it may well seem pretty normal. TOP

12-5. Suppose a Caribbean island people doesn't enjoy "chopping" sugarcane, but that is the only kind of paidwork available to them. How would the island's job-market handle that problem?

If there were literally only one job in an island nation's cash economy, that job would have a credit-rate of 1. Everybody who wanted pay for work would have to work at that job at that wage. Whether people liked it or not could not even be found out by their job market under these circumstances. For without a second job to compare it with, there would be no way for the job market to discover the people's negative response to chopping cane. This is unrealistic of course. There will always be more than one type of work in any cash economy. TOP

Chapter 13, The Biology of Fairness

13-1. Isn't the altruism you're talking about in chapter 13 usually called "kin selection"? Isn't this the mechanism that causes us to evolve traits that then cause us to "sacrifice" our own interests in favor of our kin's?

Reciprocal altruism should not be confused with "kin selection"; the latter is the idea, first formulated by the evolutionary biologist J. Maynard Smith (1964), that one can profitably give up one's life to save the lives of 2 children, 3 siblings, 5 first cousins, 9 second cousins, etc. Such behavior is not altruism, at least not in Trivers' sense, as it is precisely through the survival of one's relatives that one's own genes survive. There's nothing mysterious about a mother goose leading a fox away from her brood by feigning a broken wing. If she took this risk to save an unrelated neighbor's gosling from predation, that would be altruism; but in general, she doesn't. Trivers' theory is one solution to the much more challenging evolutionary puzzle of why we humans help unrelated neighbors in trouble-even strangers-often at substantial cost to ourselves. TOP

13-2. The trading problem between your farmers (Fs) and your miners (Ms) could have been resolved in quite a different way, namely by their setting up markets for food and gold and using some sort of money in which to set prices. Those markets would then allocate work and resources by changing those prices. Why isn't that just as good a solution-or even a better one-than the cost-price exchange system you are advocating?

This is partly right, of course. Opportunistic pricing does approximate the benefit in the benefit/cost ratio, while cost-pricing-or cost-plus-uniform-profit-pricing-measures only the cost in that ratio. I'm not saying that humans can't use opportunistic, benefit-estimating prices when they choose to, for of course they can; they have for centuries. I'm arguing that humans are instinctively tuned to look more closely at the costs in these ratios than at the benefits; although obviously they must look at both. But as to the fairness of a given trade, it is always the values of the costs in its benefit/cost ratios that are critical; for they must be approximately equal for any trade to be thought fair. All that is required of the benefits in these same ratios is that each benefit be greater for each trader than his cost. Economic costs tend to be crisp, measurable, and biologically real; projected benefits, in contrast, tend to be vague, shifting, often imaginary, and biologically ephemeral. In other words, the job market economy is based on a theory that human attention is focused critically on the costs, not the benefits of economic transactions...letting the latter be determined subjunctively as the buyer will. (Do I like Madeira wine or rock music? Then I might momentarily wonder how much would it cost me to make it in my basement.) The argument of chapter 13 is that counting up the costs of those who make Madeira wine and rock music makes a "fairer"-a deeper, more ancient, more biologically satisfying-basis for pricing them than modern, fleeting, opportunistic, "benefit-estimating" prices ever do. In other words, we won't miss these chimeras when and if they disappear. TOP

13-3. But trade does not need to be fair, in the sense of yielding benefits greater than the labor-costs of the items traded, in order for the two parties to accept it. For example, huge-and hugely unfair-prices are paid by addicts for their drugs. Also, in some communities in the undeveloped world, because the work of the women supplies all the food, men trade days of their own work for a beer, a coke, or a cigarette. I take it that cost-plus pricing would prevent that sort of bizarre exploitation of "false benefits"?

The combination of desperation on the part of the purchaser and the illegality of the transaction for both parties makes drug pricing a classic case of opportunistic pricing. But food can also be priced opportunistically, to a starving person. To the individual consumer, benefits are always subjective, as well as subjunctive, and sometimes even self-destructive. So projected benefits, however estimated, are pretty weak pegs on which to hang anything that should be as sturdy as a society's price-system. Any opportunistic price of a drug to an addict is bound to be an unfair one. But drug addicts are only the most obvious victims of opportunistic pricing. Directly or indirectly we all suffer from the unfairness of opportunistic prices. TOP

13-4. Why is it not true that the genes of the savvy trader would continue while the genes of those who couldn't recognize a good trade were extinguished?

That probably became true, once trading had begun. But selection for non-reciprocal "savviness" could not by itself launch trade. Only selection for awareness of the reciprocal costs and benefits of trading behavior could launch it. Besides, if by 'savvy trader' is meant someone given to seeking unfair, that is, non-reciprocal trades-trades that favored only himself or his kin but provided no surplus benefit over cost to his trading partner-then such a trader is likely, on this model, to be bearing the non-altruist allele. Even then that allele could not be extinguished from the gene pool, studies show, but would be maintained at very low frequencies in it. This is because the "cheater"-the unfair trader attempting to look like a fair one-depends on there being large numbers of fair traders about for him to cheat. (In a world composed wholly of cheaters, no cheater succeeds.) Thus if trade itself is a development of the reciprocal altruism model-and no one has proposed a better one by which this extraordinary human behavior might have evolved-then its advantageousness for any individual trader depends on most-in fact, on nearly all-other traders routinely "keeping their promises," which means fulfilling the other-benefiting parts of their trading deals. In short, trade depends on a large proportion of the trading community actually having the "delayed reciprocal-altruism" allele while all others, to succeed in such communities, must pretend to have it. TOP

13-5. The altruism you're talking about in chapter 13 doesn't sound like generosity to me. It may seem generous to risk one's life to save another-and, of course, it is-but your altruist is doing so, you say, because a reciprocal benefit is expected in the offing. That puts a different twist on it. Are you-and Trivers-saying that altruists act on the basis of self-interest? And a rational self-interest at that?

No; we're saying exactly the opposite. No personal advantage from my altruism need be consciously sought, or even passively expected, by me for my altruism to work for all of us. My genes may be considered to have a "selfish" interest in everything I do, including my altruism; see, for example, Richard Dawkins' The Selfish Gene (1976). But as a feeling, acting, individual organism, I need not be motivated by long-term interests of any kind in order to leap into the water to save your child. For according to the delayed reciprocal-altruism model of the origin of these heroic, other-serving impulses, evolution has installed in me a strong, selfless desire to rescue any other human person-especially a child-who may be in distress; and that's all the motive I need in order to act. Evolution has installed this impulse in me in the "selfish" interests of my genes. And, according to the Dawkins model, I help my genes to perpetuate themselves by acting blindly on their behalf. This works for all of us including me because, as a member of a species in which this marvelous mechanism has been installed in a large proportion of its members, the cost to my genes of my heroic actions are very likely to be much more than equally repaid by other (and thus genetically similar) humans acting in that same unselfish way toward me and my kin. That's the evolutionary payoff. And it works only for animals who live in dangerous circumstances and are frequently surrounded by non-kin, as we hominids evidently did and were in the Pleistocene. So the payoff for my heroism need not be to me directly. I may die while being heroic. It's to my genes-which will presumably survive my heroism in the bodies of my kin-that the payoff is really being paid. So what my altruism actually does is help the "tribe of altruistic genes" increase. TOP

13-6. Don't you find it curious that humans who are not programmed with altruism (did they break their programming?) have accumulated in such numbers in the upper classes? It's well-known among panhandlers that those who give the least are those who have the most.

Even if true, that fact would not falsify the delayed reciprocal-altruism model. Instead, that model helps us understand "the stinginess of the rich," if in fact the rich are stingier than other people. Trivers (1971) explains what happens to the surviving non-altruists in a population as the frequency of the altruist allele in its gene pool increases. The very success of the altruists will create a habitat in which "cheaters"-non-altruists who assume the outer characteristics of altruists but do not reciprocate-will not only survive but prosper. Indeed, their cheating will become more and more "successful," that is to say, invisible to the true altruists, over time. For if and only if these pseudo-altruists escape detection will they continue to reap the benefits of altruism without having to pay its costs. Such a situation, when it stabilizes, leads to what population geneticists call a "polymorphism": sets of two or more traits, such as the variety of shell-colorings found in a species of snails living in a polychrome habitat, are evidently governed by a set of alleles whose individual proportions in the gene-pool never go to zero but eventually reach an equilibrium with one another. Sickle-cell anemia is a well-known polymorphism among humans. Both the allele that causes this disease and the one that produces normally-shaped blood-cells are sustained in substantial proportions in the gene pools of humans living in tropical habitats because the heterozygous condition-having both alleles in one's genome-protects against malaria. Altruism and non-altruism may be like that. Their alleles may behave in much the same way in most modern human gene-pools: the frequency of the altruism allele stays high but the non-altruism allele never entirely disappears. Indeed, the traits of the non-altruist seem to strengthen in subtlety over time, primordial non-altruism having been transformed, over the generations, from simple mimicry into the proactive arts of deception that we find in successful cheaters today. If this is so, then it would not be at all surprising to discover-in the next century, for example, when more genetic facts are in-that the allele for the "false altruist"-the one who cheats by non-reciprocating but pretends to be one in all other respects-is more frequently found, as the questioner suggests, in the upper-classes of societies that had long been the beneficiaries of exploitative class-relations. In this way, the cheater allele would be behaving like the sickle-cell anemia allele. In the gene pools of populations exposed to malaria the frequency of anemia increases; when malaria dies out, so does that variety of anemia. Just so, it may be that in populations exposed to highly stratified, exploitative social conditions, the proportion of the cheater allele tends both to increase and to concentrate in the gene pools of the upper classes. As class differences diminished, and with them the opportunities for exploitation, we should expect the frequency of the cheater allele also to diminish. For in these societies there would be fewer opportunities for cheating-which is one-way favor-doing-and without its occasion, the cheating allele would gradually diminish in frequency, but probably never disappear. See question 13-8 for more on cheaters and for a quite a different explanation of the "stinginess of the rich." TOP

13-7. It seems to me that credit-hour pricing would create systems in which individual gain would not be tied to individual effort. But do such systems work? Many would say that the fall of communism provides strong evidence that they do not.

Job markets will "tie individual gain to individual effort" in the most direct possible way: dangerous, arduous work, long and costly preparation for work, all these will be directly rewarded by high credit-rates in job markets. Even profits will go to businessmen in proportion to the success of their efforts to keep quality up, costs down, and the work of their employees pleasant. To be sure, cost-plus pricing would eliminate "windfall profits." But isn't this precisely where, under the present system, gain is not "tied to individual effort"? A windfall is precisely that: an effortless gain. Similarly, speculative profits from capital gains-another case where gain is almost completely detached from human effort (though not, of course, from risk)-would occur much less frequently in economies in which the amounts of money available to bid on real-estate or stockshares were kept continuously equal to the aggregate value of new products. All this would tighten the bond between gain and personal effort, not loosen it. The "fall of communism" was more a political event than an economic one, and likely to be seen by future historians as having more to do with the 20th Century's contagious fascination with the politics of democracy than with the essentially economic question of how command socialism worked. TOP

13-8. How do you account for the obviously non-reciprocating behavior of the CEO of a successful corporation-successful, that is, in producing high income for its investors-who decides to close a plant, sell off its assets, fire all its blue-collar employees, and use the capital thus acquired to make "more profitable investments" elsewhere? Clearly this man owes a lot of his success to his employees; and he must be smart enough to know that. So how do you get such non-reciprocating behavior from a "reciprocal altruist"?

Genetically, such a person may not be a reciprocal altruist; see question 13-7. If he is not, he is almost certain, on Trivers' theory, to be a person who has been genetically programmed by the same evolutionary process that produced altruists to mimic them in all respects except in the matter of payback, which they are programmed not to do. Thus, even though this CEO may previously have been thought to be an altruist, his actions have, on this hypothesis, been privately calculated to be non-reciprocal and so to serve only his own interests and those of his kin. (Non-altruists, too, are subject to kin-selection.) As explained in question 13-7, Trivers' theory predicts that there will be both kinds of individuals in any population in which altruism has evolved to maturity, that is, in one characterized by what biologists call "evolutionarily stable strategies" (ESSs); see Dawkins (1976: 74) for a definition. In any such population, true altruists and false ones will co-exist as a "genetic polymorphism"; see question 13-7. But primordial non-altruists-nakedly selfish people who do not even pretend to be altruists-will have all but disappeared. There is of course an older-by this time classic-explanation of the non-reciprocating CEO. Marx argued that owners and their managerial agents belong to one social class, the "owning class," while their blue-collar workers belong to a totally different social class, the "working class," and the economic game these two classes have been given by capitalism to play with one another was thought by Marx to be one in which the interests of both classes-indeed, of nearly all members of both classes-are genuinely opposed to those of the other class. In short, according to the Marxist view of history, the class struggle under capitalism is, in the short term, a zero-sum game, although in the long term it was an advance over feudalism for everyone because it led to the greater productivity of human work. Even though zero-sum circumstances may have obtained fairly commonly in the early days of capitalism, the broad conditions assumed by this analysis may no longer hold true. Capitalism may have become so modified by political struggle-ironically, by the same struggle that was, in large measure, inspired by Marx-and, in later years, by the democratic process itself, that the interests of owners and workers may have been brought legislatively into much closer harmony than was true in the early stage of the industrial revolution. It was this early stage, of course, from which Marx induced the details of the explanatory model we call "Marxism." So the game that owners and workers are now playing with one another may no longer be quite so zero-sum. Yet, anthropologically considered, social castes and classes do still seem to function as quasi-tribes, as they do in modern India, for instance, where castes are still mutually hostile elements of the larger society. For example, both classes and castes display taboos against intermarriage-indeed against any other intimate behavior across class-boundaries-as well as many other signs once used to mark tribal boundaries. Among these are the "badging" of class-membership, something that is everywhere accomplished by distinctive habits of speech, dress, and ritual. Badging holds just as true for tribes as it does for castes and classes. Indeed, the American psychiatrist-anthropologist Eric Erikson (1985), a student of tribal customs, was the first to notice one of the most remarkable effects of the badging phenomenon, one that he called "pseudospeciation." It was Erikson's hypothesis that, for some useful effect that he couldn't explain-Brown & Greenhood (1991) for another possible explanation-neighboring human tribes went out of their way to make themselves both look and sound as different from one another as they had spare energy to effect, which was often quite a lot. The net result was that some neighboring human tribes seemed so different from one another that they regarded each other as belonging to different species. Of course they weren't. Like all contiguous human populations, they occasionally interbred. But their attitude toward one another was just as hostile, just as rivalrous, as if they had been different species competing for scarce resources in a restricted habitat. The pseudospeciation phenomenon may go a long way toward explaining Marxian interclass hostility. In most modern industrial societies, members of different social classes do seem to know very little about one another-especially members of the upper about the lower classes-and to care even less. In the preliterate world, members of neighboring human tribes also had very few interpersonal dealings with one another. Moreover, they nearly always exhibited "spontaneous"-that is, without apparent cause or instruction-hostility toward one another. See Reynolds et. al. (1987) for a recent sociobiological symposium on this phenomenon. One of its conclusions was that human ethnocentrism has very deep biological roots, most participants agreed. These roots lay in the adaptive value for the hominid lineage of mutual repulsion among Late Pleistocene tribes. Brown & Greenhood (1991) argued for essentially this same explanation of human tribalism, and of the remarkable efforts at pseudospeciation that seems always to accompany it. We argued that it was the mutual alienation of neighboring human tribes that both triggered and sustained what might be called the "centrifugal migration" of our ancestral hominids over the Earth's habitable surface, and was in this way adaptive for the tribes whose gene pools supported this ethnocentric response to their human neighbors. Summing up, it would appear that humans, when tribally organized, are driven instinctively apart. Moreover, apparently some features of our modern class and caste systems imitate these more ancient intertribal relations well enough to evoke these inbuilt xenophobic responses to one another, though now they take place between races, castes, ethnic groups, and classes rather than between tribes. So even if the quasi-tribal entities in such systems are prevented by some central authority from showing their hostility toward one another openly-as seems to have been true when there was a strong central government in the former Yugoslavia-members of different classes or ethnic groups are likely to be at least indifferent to one another's welfare. So when two social classes within a given nation are based on the ownership and non-ownership, respectively, of the tools of their economic production-a feature that Marx argued polarized their interests completely-then they too will seem in many ways to be "tribally organized". What remains of the Marxian class struggle in the modern world may thus represent this still fundamental ethnocentrism between mutually xenophobic, pseudospeciated, and therefore quasi-tribal human groups. See Erikson (1964, 1967, 1968, 1985), Brown & Greenhood (1991), and Reynolds et al. (1987) on the various facets of this fascinating phenomenon. TOP

13-8. Doesn't culture plan an important role? You have largely ignored it in this discussion.

I agree; but this does not mean I think that culture has no role in economic affairs, for certainly it has. Yet despite a century and a half of observing and recording human cultures, there is still no general theory of the nature of the cultural material itself. We know that human cultures exist, that they are expressions of a single species, and that despite this common origin they are astonishingly diverse. We know that cultures grow by borrowing (sometimes called "diffusion") and by such oddly autonomous mechanisms as "simultaneous independent invention" and that they emerged on this planet at, or soon after, the time that the hominid lineage itself broke off from the pongid line. Tool-making and using was probably a very early hominid specialty. We also know that though cultures change, most parts change slowly, and that certain parts-mainly the value-setting parts-of even modern human cultures are extraordinarily resistant to change. Apart from this lean harvest, we know very little. Accordingly, I have insisted in this book, as in The Troika Incident (1970), on the lasting diversity of human cultures, which means that the only thing a job market can really do for a people is be an instrument of their culture, a better way of realizing their own values. It also means that each culture that adopts a job market will use it-as it already uses plastic buckets, outboard motors, and Marxist political theory-in its own sweet way. But I have not hazarded to explain the many influences of culture on economics, or even to track its influence on the wide variety of economic behavior we still see on this planet; for I take its power to remold even the boldest invention to local needs for granted. Perhaps the mystery of culture will yield to the behavioral science of the next century. But in this one it has not. In contrast, 20th Century science has made enormous strides in biology: from decoding DNA to understanding, at last, a very large part of the prehistory and ethology of our own species. So it is in the advances science has made in our understanding of the biology of humans that I have grounded this work. TOP

Chapter 14, Transition to a Job Market

14-1. Could job markets be adopted by smaller entities than nations? What about communities? Corporations? Cities? Provinces?

In various modified forms, yes, job markets could indeed be adopted by any of these smaller entities. For example, in my novel The Troika Incident, I not only describe regional job markets that distribute paidwork worldwide, but I describe a fictional California community, Loma Verde, that used a "task market" to distribute its community chores. Chores were unpaid tasks, ranging from childcare to landscaping, for which the worker received credit toward doing his or her share. The rate at which such credit was earned, however, varied with the task, unpleasant tasks earning credit at a faster rate than pleasant ones. So even ownwork could be fairly distributed among villagers by monitoring their voluntary choices among tasks, their choices being influenced only by their own tastes and by the credit-rates that were mathematically assigned to them by a community-run task market. There is no reason why a large corporation could not also establish its own internal job market even before its host nation decided to adopt one. All monetary compensation for work within such a "job-market corporation" could be determined by its own local credit-rates as these were generated by the tastes, talents, and qualifications of its personnel...including managers, of course. The only functions that job markets in these smaller entities could not perform-and these are fairly serious exceptions-are curing inflation and stabilizing money. These final effects of job markets would have to wait for job market adoptions on a national scale, just as fairness among nations will have to wait until more than one nation decides to use credit-hours in trade. TOP

14-2. How will the job-market government deal with the money tied up in collectibles during transition? How about after transition?

Selling collectibles is different from selling ordinary wealth; see question 14-4 below. Some wealthy people-especially in Western societies-buy art objects, or coin collections, or classic cars with spare money instead of putting it into savings accounts or buying stocks and bonds with it. Often they do this as a hedge against inflation; always they do it in the hope that the value of the purchased object will increase. So, given this quite different financial motive from the one involved in the purchase of a house to live in or a horse to ride, we have to consider what a transiting government should do about a collector who wants to "get his money out" of an Old Master, say, during effect, to cash it in for new crowns. This problem arises because these scarce objects are not being used in the ordinary way but as repositories for money, just as a savings account or a wall safe is used. Any transiting government would be well-advised to recognize this function of, let's say, a Van Gogh painting, and to acknowledge that the price paid for it by some collector, plus some reasonable amount of market-determined interest over the period he or she has held it, should be treated as exchangeable money...just as old crowns deposited in a real savings account, plus the interest earned by them, would be exchangeable for new crowns when the depositor decided to join the job-market economy. Transactions of this sort would, of course, augment the money supply beyond the actual amount of new money that had been in circulation before that Van Gogh was "sold" to the government. So this treatment of a given collectible-of that particular Van Gogh, for example-would have to be requested by its owner before the formal end of transition had arrived. For after transition, such objects could no longer be treated as savings accounts. The reason is that collectibles "cashed in" during transition would be automatically treated as part of the owner's exchange of old money for new, and would thus be included in the total quantity of old crowns that had been exchanged for new during transition. This is one of the several quantities that will help determine the final adjustment in the exchange-rate between old and new crowns; see Appendix C, "Two Transition Problems" on this website, for the details. After transition ends, however, all the money in use will be new money; so fair exchange-rates for any old money that might still be lurking under bricks, or in Swiss bank accounts, or in collectibles, will be much more difficult-although not, I suppose, impossible-for the government to calculate. Note that transiting governments that obliged themselves to "buy back" collectibles in this way, would be likely to acquire quite a few objects for their national art-galleries and museums during transition. And in a job-market economy-in which there would never be the least whisper of inflation, and in which the amount of money available for speculation would always be linked to new-product inventories-collectibles could no longer be expected automatically to increase in value. So a speculator's expectation of gain from his purchase of a famous painting, say, might well drop to zero by the end of transition, or become negative. Thus collectibles would suddenly be worth more as cashed-in "savings-accounts" than as investments. Those who do carry art objects with them into the new, job-market world are therefore likely to be people who really enjoy looking at them. TOP

14-3. Where does the transition government get all the new crown (NC) with which it buys old crown (OC) and collectibles during transition?

It "mints" them; it "prints" them; it creates them, we might say, "out of thin air." What actually happens is that the government-or the government's agent, the national bank-will generate an electronic record in a citizen's bank account in return for each collectible, or sum of old currency, that it has in that way purchased. The citizen walks into a branch of the central bank with, let's say, 100,000 OC to exchange. The money is in old bank notes or written as a check on his or her "old crowns account" at a commercial bank. At an exchange rate of 25-for-1 the citizen will walk out with 4,000 NC in his or her new electronic bank account. Where did these 4,000 NC come from? From the same mysterious place that the money generated by work in a factory comes from, which, when it ends up as entries in workers' bank accounts, represents their wages. They come from a government's exercising one of its most ancient rights-indeed, its solemn duty-to provide its citizens with a stable, trustworthy, and universally acceptable medium of exchange. There is no essential difference between a government's minting or printing money and its entering it as an electronic record in someone's bank account. And where do those 100,000 old crowns go? They are destroyed. TOP

14-4. How can a transiting government deal with the sale of its citizens' non-monetary wealth? In particular, how will a job-market government deal with the sale of land, houses, boats, cars, or any other personal property that we normally regard as wealth?

The buying and selling of non-monetary wealth, such as used houses and boats, will have no effect whatever on the job-market-managed money-supply; for sales of wealth neither create money nor destroy it (see chapter 9 for details). An object of wealth is a product-in-use. It is a formerly new product that has in a sense been "retired" from the "paidwork" economy by being paid for, but is still being cared for and preserved by its owner for further use. So such objects can now be resold for any price the buyer and seller agree on. Normally, that price will reflect the use-value left in the resold object. That use-value will in turn be reckoned by the buyer to be some fraction of the cost of a new product of the same kind, or of a functionally equivalent new product: in any case one that is being currently offered for sale at the cost-plus-constant-profit price. So the speculative buying and selling of wealth is likely to become a thing of the past. Therefore wealthy people facing transition to a job-market economy are likely to think about the use-value to them and their families of any non-monetary wealth they may still be holding: say a seldom-used summer-house on a certain northern lake. If they had been holding it in the hope that its value would increase, that hope would now be dashed, and they should probably turn it into money during transition. If they had been holding it to use, it will be no less useful under a job-market economy than it was under a labor market one. TOP

14-5. The number of workers ready to make the switch to the new job market sector during transition might well run ahead of the amount of work available to them in that sector. As a result, the computer would have to cut the available work into jobs that were too small to meet their income needs. This would discourage them from moving. How could this circular, "Catch-22" effect be avoided?

By a Keynesian move: by the government's immediately supplying more public-sector work as they noticed this shortfall in private-sector work beginning to happen. The transiting government would, of course, have to monitor the flows of both work and people into the new sector very carefully. If work fell behind people, the government could move public-sector work into the job-market sector at a faster rate; if people fell behind work, there are any number of things the government could do to encourage more people to move. In any case, the people flow would be the determining one. If it were unexpectedly rapid, transition as a whole could take place at an unexpectedly rapid rate; if it were unexpectedly slow, at a slower one. On the other hand, by Phase 2, the matching of work flow to people flow would be largely self-adjusting. After all, the major components of both flows will be whole firms and their employees arriving in the job market arena at the same time. TOP

14-6. If all the money in a job-market economy is nothing but an electronic trace in a computer memory, doesn't that make it pretty fragile? What if somebody pulls the plug on the bank's computer? All those "electronic records"-all that money-would be lost!

Private banks will preserve the physical integrity of their accounts in essentially the same way they do now: by issuing receipts and rendering statements to account-holders. On the other hand, there'll probably be more physical safeguards preserving the public's money-supply than private banks can afford to install today. These will not only protect against power outages, but also against tampering, theft, invasion of privacy, or simple mistakes. On the question of security, Fallows (1994) gives a good explanation of public-key cryptography and how it works. Garfinkel (1995) reports a new U.S. development in this mathematical technology, namely the discovery and patenting of a certain number that makes modular division substantially easier. Modular division, it turns out, is heavily involved in the Diffie-Hellman public-key system for encrypting and decrypting secret codes. What seems to be a discouraging development but probably isn't, is Leutwyler's (1994a) report that a 129-digit public-key code has already been broken. "It was inconceivable 17 years ago," when the mathematics of "public-key encryption" was first devised, that this "RSA-type" of code could ever be broken, says A.K Lenstra, who led the team that broke it. But by using new mathematics and a group assault-600 volunteers, linked by the Internet-the code was broken in just eight months. The moral says Lenstra, is that "a system believed to be secure now may not be tomorrow." The practical significance of this result is that encrypting codes need to be far longer than 129 digits. On the other hand, the academic assault on the code-breaking problem mounted by Lenstra and his 600 colleagues would be effectively impossible for a criminal organization to replicate. So it remains an academic demonstration only of the need for longer coding numbers, numbers that can, after all, be handled easily by modern computing machinery. On a less cautionary note, Schiller (1994) describes a new system of computer security developed by the Massachusetts Institute of Technology that depends on both encryption and reciprocal authentication between communicating computers. Birman & van Renesse (1996) also report a substantial increase in the reliability of computer systems by the development of so-called "highly available distributed systems" (HADS). HADS are now being designed to replicate critical information and distribute multiple backup copies among the individual computers in the system in case of breakdown anywhere, obviously ideal for job market money management. One way or another, "electronic money" can apparently be made both mathematically and physically secure. TOP

14-7. The transition that you describe in chapter 14 is very sane, very rational, very Scandinavian. But my own opinion is that the job market system will only be ushered in-and I do believe it will-by default after the present system has collapsed. It is clear to everyone-except those who profit from it-that the present consumerist, ecology-destroying, society-dividing, money-driven, children-abusing system won't work. High tech will put more and more people out of work. The technically gifted will become a noble class of the super-rich. Their excesses will finally become intolerable. The masses will revolt as they did in the French Revolution. After that, rural people will learn-as they did in the U.S. Depression in the 1930s-to take care of themselves. It is then that the job market will come into its own. Job markets will seem a good way to improve people's ways of life by handling their paidwork in a way that doesn't destroy the planet. Why isn't this a much more likely scenario than the "civilized" one you describe?

Indeed it may be. But your argument that it is confounds the people who operate the system with the system; so its collapse may not be as likely as you think. Even some of those who have profited most from the global economic system are aware that it needs repairing; see Goldsmith (1994) and Soros (1997). What these concerned financiers do not yet have is the least idea of how a viable alternative to the rickety financial machine they have inherited could be built. I hope they will get one from this book. It is quite likely that once a fundamentally new engineering technology, such as job market technology, is found capable of performing the basic task that has been assigned to it-in the job market's case, distributing work fairly-it will find wider uses. In the job market's case, resolving or diminishing all or most of the other systemic problems that now dog the old economic technology: its endemic inflation, its habitat degradation, its insatiable thirst for growth, its runaway money, its unstable currencies, its failure to deal justly with both its domestic and its foreign poor, the constant invitation it tenders to its rich to gamble with its savings, and, as a consequence of all this, the relentless increase in the inequality of the societies being built under its regime. It is virtually certain that a demonstration of the effectiveness of the new technology in a single country, will persuade others-including the corporate bosses and national decision-makers who will watching, as well as those among the ordinary citizens in the watching countries who are now trapped in the workings of the old technology-that the global economic machine that our financiers are now charged with "running" can and should be rebuilt for the common good. In short, that we needn't wait for revolution or despair, or for damage so grave to our planet or ourselves that it cannot be repaired, before we do something about it. With good tools, and honest craftsmen to use them, we can again, as our species has many times before, change the world. TOP

Chapter 15, Motives for Adoption

15-1. Can it be true that less work will be needed to feed, house, and care for a growing or aging population? Even as an old-style technophile, it is hard for me to believe that the emergence of new, "nick-of-time" technology will solve all of these looming problems.

Increased productivity is not, of course, guaranteed by job markets. What is guaranteed by them is that if a people do choose to upgrade their tool-using by buying into some new technology, then the effect of doing so will be an increase in the purchasing power of all their hours of labor and will be felt immediately throughout their whole society. With job markets to do this for them, people will be in a position to "spend" the surpluses generated by increased productivity pretty much as they choose. Aging populations and growing ones present quite different challenges to job markets of course; but both are partly met by the job markets spreading the benefits of technology across whole societies. When a population is aging, job markets will help governments deal with the increasing proportion of older persons in it by permitting them-it need never force them-to continue doing productive work by removing that final, categorical discrimination against freedom of job choice, namely "old age." Most adult humans, including older ones, want to be useful, that is, to work. This will be especially true as work everywhere becomes physically lighter, mentally more enjoyable, and better paid. And that will be especially true when job markets are busy crafting jobs for older workers. So the wisdom and panoramic vision of older persons are likely to again be available in the workplace; and this, in turn, will not only help older people pay their way, but also add to the per capita productivity of their economies, and so benefit everyone. We may even expect "retirees," as a legally-defined category of older persons to disappear altogether from job-market-served populations. A rapidly growing Phase 2 population, on the other hand, can be helped by a job market to accelerate its movement into Phase 3, the phase in which birth-rates descend to match death-rates again. It will do this, first, by rewarding any society's adoption of modern family-planning technology, as well as each individual family's use of it, with both greater purchasing power and better educations for their fewer young. Second, their job market will do this by encouraging their adoption of other new technologies. This will raise the productivity of some subsets of its workers' labor, and this, in turn, will either increase the standard of living of the whole society or diminish its per capita work-load, and possibly both. Which it will do, and in what proportion, will depend entirely on what its people choose to do with their productivity-generated surplus. TOP

15-2. Your Danes being willing to pay "a much higher price than they were used to paying" for tropical fruit or sailing holidays sounds like a giant leap to me, and not one that many Danes would welcome. What makes you think the Danes would voluntarily give up their present advantage over Third World peoples if it meant this kind of sacrifice?

Because it wouldn't be a sacrifice. It would substitute one way of helping the Third World for another. The Danes already put a substantial part of their national budget into aid to the Third World. They regard themselves, quite rightly, as among the more fortunate people in Europe. So it would be no sacrifice for a Danish family to use some of the kroner they now pay in taxes to pay higher prices for their Caribbean fruit and holidays, once job markets came into play. For most Danes this would have the advantage, in fact, of expressing their support for Third World peoples more directly, by visiting them or buying their products, rather than by paying taxes. Besides, raising the purchasing power of Third World peoples by paying higher holiday costs and/or banana prices will mean greater dignity for them than being the recipients of foreign aid. That is likely to be a pleasanter experience for the Danes as well. Granting aid to foreign governments often involves the unpleasant discovery later that the aid failed to reach its intended beneficiaries, and ended up in the pockets of local officials. Paying higher wages directly to banana workers and sailboat rentiers-and that's what paying higher credit-hour prices for these products will actually mean to the Danish consumer-will end all that. TOP

15-3. The 1/6th of the world population that is now industrialized uses up 85% of the world's fuels, minerals, soils, fish, etc. If the other 5/6ths of the world should begin to consume at anything like that rate, there'd be more pollution, more greenhouse gases, more damage by mining, and more dammed-up rivers, hastening ecological disaster worldwide. Wouldn't it be better if job markets slowed down Third World development rather than speeding it up?

No. The hidden assumption behind all such "Don't let them do what we did" arguments is that developing Third World nations would, if "permitted," pursue their own industrial development by taking the same path we have taken; in particular, that they'd use the same crude technology that has despoiled our own habitats and much of the rest of the planet's at the time we used it. But this prediction is historically and anthropologically naive. Technology, perhaps more than any other component of human culture, changes "monotonically"; that is to say, its changes are always in the same direction. That direction is always toward greater efficiency, where tool-using is concerned: toward more economical uses of energy, materials, and labor. Without our telling it to do so, human tool-using regularly reaches ever-higher levels of economy. This applies now to our use of energy and materials as well as, more traditionally, to our use of human labor. So long as this is true-and it is hard to see how such a principle could disappear from engineering practice -all we have to do is release to the Third World the best, the newest, the most powerful technologies that science has yet generated in our universities and research laboratories from the clogged, private-sector investment channels where profit now constrains them, and the effect you speak of will not happen. Job markets will surely accomplish that unclogging and with luck, this will produce the same kind of cultural "leap-frogging" that caused the Japanese and Germans to do so well after World War II. All that is required to make this happen is that we make our newest technology regularly available to the Third World. If we do that, its people will build entirely new industries full of miniaturization, computerized control systems, low energy enzyme chemistry, super-efficient motors, high-density batteries, weird new renewable materials, and, of course, use the renewable energy of wind, tide, and sun to power them. All these are things that are developing now in the universities and laboratories of the First World. But it is one of the paradoxes of modern capitalist economics that, because of their private sectors' prior investment in old technology, the countries whose scientists and engineers develop new technologies are often among the last to adopt them. It is important for everyone on the planet that these energy and materials-economizing moves be adopted as soon as possible. So it will not be good for job markets to slow down Third World development, although that same development can and should be used to slow down Third World growth. Instead, we should "let" job markets hasten development where and as they will, but with the finest, planet-preserving, population-controlling technology that any scientists and engineers can devise. TOP

15-4. You are making it sound as if the job market's benefits will accrue only or primarily to the "working classes." But in earlier chapters you have argued vigorously that its benefits would be felt throughout all sectors of society. Is the job market program then in the end, like so many others, only a partisan, "special interests" program that would polarize society rather than draw it together by benefiting everyone?

In the short term some will benefit more from job markets than others. Therefore those who will gain immediately from job markets will be on the leading edge of the movement to adopt them. Moreover, in this chapter we are talking about adoption, which in any democracy will be a political process and hence essentially combative, and combat turns people into adversaries, even when their long-term interests are not opposed. However in the long term job markets will objectively benefit nearly everyone, including both sets of adversaries in whatever political fight develops over them. Politicians are certain to dispute this claim...whether honestly or dishonestly doesn't matter; their disputes will polarize them in any case. So the political adoption of a job market by any democratic nation will depend on the marshaling of whatever politically "progressive forces" there are in it, and not on tabulating its sociological beneficiaries...who are nearly everyone. As E.O. Wilson recently put it (McKeever 1998: 15), "The loss of biodiversity is the folly our descendants are least likely to forgive." Job markets will help us avoid that folly. The progeny of the rich, too, will either benefit from the preservation of biodiversity or suffer from its loss; so the rich, too, are likely to care what their descendants think of them. TOP

Chapter 16, Life in Job-Market Societies, pages 272-289

16-1. You have reminded me in this chapter that nowhere in this book have you dealt with the problem of human greed. How will job markets deal with greed?

If the reader means by "the problem of human greed" that the partisans of the job-market program will have adversaries who believe they will lose much of their present wealth if job markets are adopted, then I agree that that is likely and a problem that must be met. But the fears of the wealthy that they will lose their affluence under job markets are largely unfounded and can easily be quieted. If a nation's job market is used to reduce its inequality-as I have shown it can but need not be-then what will be lost is the poverty of the poor not the affluence of the rich. Indeed, job markets are so likely to improve the overall productivity of human work that all sectors of the populations they serve are likely to feel richer under their regimes. If, however, the reader means how will job markets deal with the "natural greed" in all of us once job markets have been adopted, then there is also an answer to that much more interesting sociological question. If by 'greed' we mean 'an often temporary desire for excessive consumption, i.e., of more than the individual really needs,' then such intemperate desires do sometimes grip nearly all of us, though for varying lengths of time and at different stages of our lives. The answer to how to deal with greed of that sort in the job market world has two parts: (1) a desire for excessive consumption among workers in job-market economies-assuming they're reasonably well-qualified-can be easily met by their following the simple strategy of taking only high-credit-rate jobs with long work-years for as long as their greed endures. If carried on long enough, such a strategy would make such a person financially wealthy, by our standards-and once they're financially wealthy, they'll be potential owners or shareholders in other wealth-generating enterprises. But (2) the exercise of greed by owners can, paradoxically, be severely constrained in job-market economies. We've seen, for example, that the cost-plus-p principle will govern the pricing of all products. That puts a socially-dictated limit on profit margins, though not on the amount of profit itself, and hence on one of the uglier manifestations of human greed: the opportunistic, customer-destroying greed of the merchant that takes place now in the narcotics trade. On the other hand, profit on investment, which is quite a different matter, can be vigorously pursued in any mixed economy served by a job market. So if that is what avaricious people sometimes want to do with their wealth, i.e., get even wealthier, that option will still be open to them under job markets. In short, what job markets will do about this kind of greed is not prevent its exercise but render it socially harmless. But the questioner may have another, deeper concern. He may believe that some of his conspecifics are motivated by greed nearly all of the time, that greed is a temperamental matter, like optimism. In that case the genes for greed would be found, like those for optimism, in some but not all human genomes. While this is biologically possible, it's unlikely. Greed and service motives tend to alternate in the behavior of the same individuals. So greed is likely to be a social phenomenon, a behavioral byproduct of the institutional systems that evoke it, as the mercantile, industrial, and financial phases of capitalism have certainly evoked it among Europeans of the last three centuries. If so, then greediness is not something that some of us are doomed by our natures to display, but something we are nearly all capable of displaying when social circumstances demand it. If that is so, then people in job-market economies will display much less of it than, say, the 19th Century British did; for there will certainly be less to evoke it. But even if the questioner's fear is correct, and greed is, at least in part, characterological, job markets may still manage to render even that part fairly harmless. Supporting the view that greed is a derivative of social situations is the observation that greed is nowhere salient in our records of the human hunter-gatherer world. So if it is true, as many anthropologists believe-e.g., Lee and Devore (1968)-that in this small pool of ethnographic records (we have been privileged to record the ways of about 200 hunter-gatherer societies, most of them now extinct) we are seeing as sharp a picture as we are ever likely to see of what "human nature" was like when it emerged from the Pleistocene, then it is of some significance that these ancestors of ours were nearly always and everywhere food-sharing animals; that is to say, rather spectacularly non-greedy. Moreover, we are likely to be seeing in those same records what human nature still is in modern times, for insufficient evolutionary time has elapsed since we were all hunter-gatherers to make the extinction of our former sharing propensities, and their replacement by what now seems to be nearly universal greed, a plausible evolutionary hypothesis about human nature. TOP

16-2. I don't believe that a people with the power to change it would ever want to sustain large inequality margins. Job markets will throw more economic decisions into the political arena than ever before. Minimum and maximum wages, workyear length, profit rates ...we've never voted on that kind of thing before! It's very unlikely that what is more like a 5,000 to 1 gap in hourly compensation in the U.S. right now will survive political inspection.

I agree that once a democratically-governed people are in a position to control their economic lives, a majority of them will want to reduce their inequality. But what will count as "excessive inequality" to a people is a cultural matter, and large differences between cultures exist now on these very matters and are likely to persist. Japanese capitalists could now be as unequal to their workers as American capitalists are; but they're not. American capitalists could now be as equal to their workers as Japanese capitalists are; but they're not. Americans tend to like winners, despise losers, and to believe that both get pretty much what they deserve. The Japanese people, on the whole, do not share this winner-take-all philosophy. They are a group-oriented people and do not like "tall poppies." This is shown in nearly every aspect of their culture, from the way they play baseball-an American game that has been transformed by the Japanese to fit Japanese values-to their esthetic lives. And human cultures change very slowly. Job markets will not change the cultures of the peoples who adopt them; they will instead serve as tools for achieving the values their cultures impart. Equality may be one of those values, or it may not. A lifetime of observing changes in human cultures, in both the anthropological and the historical records, and in the responses of modern cultures to this century's most challenging events, has convinced me that one of the most remarkable-and scientifically least understood-characteristics of human cultures is the "obsidian character" of their value-systems: people's resistance to any change in what they prize. This stands in sharp contrast indeed to their tool-using habits, which seem to be as malleable as clay. It's from these obsidian parts of human cultures that the political decisions about what we mean to do with our economies, once we have job markets to steer them with, will be wrung. So it is just possible that Americans as a whole, or in their vast majority, will turn out to actually like inequality, perhaps because they believe in its generally salubrious or morally justified effects. So Americans may persist in being the most unequal people on Earth ...even when the tools to diminish their inequality are placed in their hands. TOP

16-3. You say that nursery-school teachers are ill-paid because their work is "fun." But isn't it because nursery-school teaching is seen as "woman's work," and so not worth as much as "man's work" traditionally is?

That may be part of the reason they are ill-paid today; but it will not be any part of the reason if, when job markets are setting credit-rates, such jobs remain, as I am cautiously predicting they will be, relatively low-paid. Nursery-school teachers and pet-store clerks may be ill-paid now because that sort of work is "nurturing" and therefore thought to be "female" in style, and in labor markets "female work" never has been worth as much as "male work". But when such jobs are sold by job markets, if their credit-rates still manage to be fairly low, then the reason will not be discrimination against the large number of people who will choose to do nurturing work, but because they are rewarding jobs.. In short, the job market will recognize, and express in its credit-rates, the real biological costs and rewards of the various kinds of work that people do to the people who choose to do it. TOP

16-4. The end of careerism is hard to imagine for lawyers, doctors, nurses, professors, and scientists. These professions require their practitioners to put in long years of unpaid or poorly-paid study with consequently delayed entry into their professions. Delayed entry means long years of following one's career just to compensate for these early sacrifices. Won't this still be true? If not, what am I missing?

What I think the reader does not foresee is the effect of large increases in productivity on the dogged "careerism" that many of our overworked professionals exhibit today. Let me make the point by exaggerating it. Suppose productivity grows so high that an average hour of paidwork-professional or not-earns a quantity of purchasing power that is equivalent to $1,000 in U.S. dollars now. How many people are likely to spend their whole lives "slaving away" week-in week-out, year-in year-out at a single professional role-say being an operating-room nurse or a courtroom litigator-when the money they would earn by doing so much work at such a pace would far exceed their needs? When there are so many other things about yourself and the world that job markets will be tempting you to explore? The general productivity of work won't increase that much, but it will increase. And as it increases, it is going to nudge people into doing things they are not doing now, and into not doing things they are doing now. Among the latter, in all probability, will be the kind of single-minded, lifelong careers that many of our present nurses, doctors, lawyers, architects, engineers, and other non-academic professionals pursue almost automatically today; and it's these you're probably thinking of. As for academics, whether career scientists or scholars, their positions will not be very different under job markets from what they are today. Professors tend to have happier and more flexible jobs than most other people's anyway, and so will be less affected by the arrival of job markets. Most are already doing the work they love, and in jobs that might well have been shaped for them by those ephemeral job-markets mentioned in chapter 1. TOP

16-5. Some scholars-among them, Herrnstein & Murray in their 1994 book The Bell Curve-predict the emergence of an intellectual elite, one actually caused by the scientific character of new technology. I notice you don't. Why not?

Observe how discrimination figures in Herrnstein & Murray's own prediction. In a world without job markets, this could happen. In a world with them, what Herrnstein & Murray (1994) predict would be almost impossible to bring about. This is because job markets abhor discrimination, intellectual or by any other kind. So the emergence of an elite badged by high IQs would imply the use by employers of job-qualifications so rarefied that job markets would make the work done in them extremely expensive, and so penalize. It has been the business of this book, and of optima-assessing thinkers from Plato to Wells, to lay out other equally realizable alternatives that lead to more desirable outcomes. More desirable, that is, than these effortless, near-sighted ones of the "just wait and you'll see how ugly things will get" school of futurism to which Herrnstein & Murray evidently belong. Like George Orwell's 1984, The Bell Curve predicts a future that no person of good will could possibly desire. TOP