Time for Things Labor, Leisure, and the Rise of Mass Consumption

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Time for Things

APPENDIX 1

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Appendix 1

Appendix 1

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APPENDIX 2

c h a pt e r 1: i n t r o d uc t io n

1. The first version of Keynes’s paper was presented at Winchester public school in 1928, before the financial crash of the following year. Keynes continued to work on the paper, which he presented a second time before an audience in Madrid, in 1930. In the second version, he added some thoughts about the economic crisis then ongoing. The paper was eventually published in a 1931 collection (Skidelsky 1992). As Lorenzo Pecchi and Gustavo Piga (2008) note in their introduction, it is reasonable to suppose that, when writing the first version in 1928, Keynes’s concerns reflected broader anxieties, quite common in the 1920s, about waste and ineficiency in the industrial economy.

1. Keynes (1931, p. 24) ridiculed the figure of the purposive man in the following, whimsical fashion: “The purposive man is always trying to secure a spurious and delusive immortality for his acts by pushing his interest in them forward into time. He does not love his cat, but his kittens; nor in truth his kittens, but only his kittens’ kittens, and so on forward forever to the end of catdom. For him jam is not jam unless it is a case of jam tomorrow and never jam today. Thus, by pushing his jam always forward into the future, he strives to secure for his act of boiling it an immortality.”

1. Zilibotti examined population weighted real per capita GDP growth for the world, on a purchasing power parity basis, and calculated the average growth rate between 1950 and 2000 .

1. Thereafter OECD growth slowed to a still healthy 2.3 percent, while non-OECD growth increased to 3.1 percent.

1. Avner Ofer (2006, p. 298) notes that in the United States, “families with children had a combined 53-hour week working for pay in 1968, and a 64-hour working week in 2000.”

1. Robert Solow (2008) makes the valid point that Keynes ignores distributional issues in his analysis. Keynes just assumes that as the ratio of capital to labor increases (capital deepening), so real wages will rise. But, Solow observes, there is no reason why that should necessarily be the case. After all, in a fully robotic capitalist economy all income would flow to those who own capital. That the benefits of growth were distributed relatively evenly in the advanced capitalist world during the postwar years was not just a natural outcome of increasing productivity. It was, rather, contingent on complex historical conditions, political agreements, and institutional arrangements, most importantly the welfare state, the disruption of which, in the 1970s, led to stagnation in real wage levels and increasing inequality (Piketty 2014). But although Solow’s observation is cogent, it still leaves in place the puzzle of why the gains of increasing productivity were devoted so exclusively during the Golden Age of capitalism to increasing consumption rather than reducing work time. Solow’s point also fails to address the issue of why, in the absence of continuing increases in real wages, consumers toward the end of the twentieth century made use of credit to make up the difference between their expectation that standards of living should continue to increase and the economic reality of static real wages. The resort to credit suggests that the rate of increase of consumer demand had, by the late twentieth century, become quite entrenched— that is, relatively inelastic to changes in the rate at which real incomes were increasing.

Notes

1. In The Protestant Ethic and the Spirit of Capitalism, Weber ([1930] 1992) famously argues that the Calvinist doctrine of predestination created an unbearable uncertainty in early Protestants about whether or not they were among the elect. To assuage that uncertainty, Protestants sought to regiment their lives in such a way as to be as economically productive as possible—“testifying to their belief” through their conduct. Economic productivity then served as a sign of true belief, as well as an indication of God’s favor, thereby providing reassurance to the individual that she was a member of the elect.

1. Knight (1921) argued that leisure is a commodity that workers will be increasingly inclined to “buy back” as their hourly wages increase: “In so far as men act rationally—i.e., from fixed motives subject to the law of diminishing utility—they will at a higher rate divide their time between wage earning and non-industrial uses in such a way as to earn more money but to work fewer hours” (pp.  117–18). Pigou (1932) argued that when income decreases (as a result of increased taxation, for example), workers will be willing to expend more efort up until the point at which marginal disutility of efort equals the marginal utility of income. This is simply because the marginal disutility of efort does not decrease when income decreases. It follows that for Pigou, the value of leisure decreases in relative terms as income declines, so prompting the worker to increase her efort (and reduce her leisure). In theoretical terms, Pigou’s argument proceeds from the same ground as Knight’s, only looking in the other direction, as it were—as increments of income are lost (rather than gained), the associated loss of utility per increment increases. Conversely, it follows that Pigou, like Knight, holds that as income increases, workers will reduce their efort, cutting hours. It should be mentioned that the prominent economist Lionel Robbins, who had strongly subjectivist leanings with respect to value, disagreed with both Knight and Pigou on this, arguing that it is not possible to know a priori what the consequences of changes in income will be on the demand for work or leisure. Robbins pointed out that even if we accept as a law that returns to income tend to diminish at the margin, there is no way of knowing at what rate they will diminish and hence no way to predict what efect a change in income will have on the supply of labor. The consequences of an increase in the wage rate then depends, according to Robbins, entirely on the income elasticity of demand for wage goods and leisure. “It is all a matter of elasticities,” as he put it (Robbins 1930, p.  128).

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Notes to Pages 5–6

Although Robbins’s point is, within the framework of economics, theoretically sound, the fact that the use of increasing productivity in industrial economies over the course of the twentieth century has been so skewed in the direction of increasing income, as opposed to free time, is nonetheless quite puzzling. It seems odd that the demand for free time, under conditions of increasing afluence, should have become so inelastic.

1. Conversely, if income drops, the relative value of leisure should also decline, leading to increased efort on the part of workers.

1. Abduction refers to the logic involved in the generation of hypotheses, as well as to how explanations are justified. The concept has roots in the philosophy of science of Charles Sander Pierce. For Peirce, abduction was one part of what he described as a “logical triad” in scientific method, the other two being deduction and induction. Abduction generates a hypothesis, and deduction derives some testable logical entailment from the hypothesis, which is then inductively tested through experimentation. Abduction, deduction, and induction thus make up the three phases of the process of scientific investigation. While philosophers of science have generally agreed on the importance of deduction and induction, and have put much efort into their explication, less attention has been given to how hypotheses are generated.

Peirce (1931) held that “all the ideas of science come to it by the way of Abduction” (p. 5:145). By contrast, the other two phases of scientific reasoning, deduction and induction, while being crucial parts of scientific method, are unable to produce new knowledge. On Peirce’s account, the urge to make a theory begins when we encounter a state of afairs that surprises us. We theorize by thinking about what would have to be true of the world in order for the surprising state of afairs to follow as a matter of course—coming up with a hypothesis which, if true, would remove the grounds for our surprise at the world being thus and so. The form of inference in abduction, according to Peirce (1931), is:

The surprising fact, C, is observed;

But if A were true, C would be a matter of course,

Hence, there is reason to suspect that A is true. (p. 5:189)

How exactly to cash this out when there are a number of possible candidates for A is not entirely clear, as philosophers have observed (Frankfurt 1958; Achinstein 1970, 1971, 1987). However, broadly put, the procedure is to compare members of a set of plausible candidates for A and pick the one that seems least problematic. This is the strategy I follow in Chapters 3 and 4, where I examine other possible explanations for the pattern of work time and consumption and then show how the theory I develop has advantages over those other explanations.

c h a pt e r 2 : t h e pu z z l e

1. According to the classical doctrine posited in Say’s law, supply must be met with an equivalent volume of efective demand. The argument is that since producers must pay for production, they create the purchasing power required for their goods to be sold. Keynes pointed out in The General Theory that while Say’s law might hold in the long run, the fact that money mediates exchange under capitalism means that there is potential for liquidity to become trapped (as a result of money hoarding), leading to short-turn deficits of efective demand, which can in turn lead to a vicious recessive cycle.

Notes to Pages 6–14

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1. The roots of this insight can be traced to Bernoulli’s ([1738] 1954) solution to the St. Petersburg paradox, which, he argued, is the declining marginal utility of money. As mentioned in the introduction, economists Frank Knight and Arthur Pigou subscribed to some version of the theory. The doctrine also seems implicit in Keynes’s contention that, all things being equal, the propensity to consume added increments of real income should be less than unity, and increasingly so with growing afluence.

1. Sen conceives of welfare as an irreducibly complex basket of incommensurable goods. Commodities are valuable insofar as they can produce capabilities to achieve certain “functionings” (“doings and beings”). Although Sen holds that the value attached to diferent functionings should be a matter left for democratic deliberation, at the same time he thinks that there are certain basic functionings—those facilitated by access to shelter, nutrition, health, and education—the importance of which is not in dispute. This suggests that money spent achieving these basic functionings will generally obtain a higher return in welfare than money spent in order to achieve more specialized ones. The underlying assumptions are then not so very diferent from Maslow’s hierarchy of needs.

1. Layard and Mayraz (2008) examined data on subjective happiness from fifty countries between 1972 and 2005 to estimate the average rate of declining marginal utility of income and found the rate of decline to be steeper than economists tend to assume.

1. As noted in Chapter 1, in this book I employ use value to mean the value attached to the activities made possible by a commodity. Utility is a broader term, meaning roughly actual satisfaction. Utility does not necessarily entail the use of commodities. Use value by contrast, is always tied to things—it is, in the Marxian tradition, a property of commodities.

1. Simon (1971, pp. 40–41) comments: “in an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention eficiently among the overabundance of information sources that might consume it.”

1. Attention economics dovetails with work in psychology, which has shown that when consumers are faced with more than eight choices, they experience cognitive overload and, consequently, discomfort (Schwartz 2004). Contemplating consumers become overwhelmed with information, making the decision at hand very dificult, with detrimental consequences for their psychological well-being. Yet even after they are owned, commodities call on our attention and demand choices. There is no reason to suppose that the choice about which item in a set of owned items to make use of at a given point in time should be less uncomfortably distracting than the choice about which commodities should be acquired in the first place. The cognitive dificulty of managing a set of owned commodities (potential sources of utility) is perhaps reflected in the sentiment commonly expressed by people that their material possessions feel burdensome—and in the sense of lightness and clarity that often follows a purging of stuf.

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Notes to Pages 14–15

1. According to a chain-quantity index measure, which best approximates actual quantity of things produced, per capita output of consumer durables in the United States increased by nine times between 1925 and 1998 (Sherby 2000).

1. The literature on the measurement of happiness and well-being is now vast. See Weimann, Knabe, and Schob (2015) for an overview.

1. Sen ([1985] 1999, p. 3) points out the complexities involved in measuring happiness utility as follows: “You could be well-of without being well. You could be well without being able to lead the life you want to lead. You could have the life you wanted, without being happy. You could be happy, without having much freedom. You could have a great deal of freedom, without achieving much. We can go on.”

1. In an attempt to replace the monetary measure of well-being represented by per capita gross national income, some countries, most famously Bhutan, have begun to use the recent research on happiness as the basis for a more sophisticated measure of economic development—something like gross national happiness.

1. See also Layard (2005) on the failure in America of indices of happiness to increase with increasing productivity, income, and wealth.

1. Blanchflower and Oswald found a similar insensitivity of happiness to increases in income in the case of Britain over the same period.

1. Ofer suggests that this ofers support for the “hedonic treadmill” hypothesis, according to which people increase their expectations, but not their levels of satisfaction, as income rises.

1. Easterlin analyzed survey data from seventeen Latin American countries between 1994 and 2006.

1. Reports of “life evaluation” were, however, to a greater extent correlated with income. The relation between income and well-being thus difered depending on whether subjects were asked to report on their afective states or to evaluate their lives. I would suggest that questions that ask about life evaluation incline respondents to take a thirdperson viewpoint on their lives, assessing how their lives might look to others. This thirdperson perspective might well prompt subjects to place themselves in an “objective” status hierarchy and evaluate their lives according to their relative position within that hierarchy. That hierarchy need not just be internal to a country—it can also be a perceived global hierarchy encompassing people in other countries. For instance, a Turkish person, asked to evaluate her life, might think about how it objectively compares with that of an imagined middle-class American or German, on the one hand, and, say, an Egyptian on the other. Moreover, the concept of life evaluation immediately evokes quantitative assessment—a number that measures how much a life is valued. I suspect that income—the most immediately accessible quantitative measure of the worth of a life—would quite naturally come to mind as a rough proxy for a quantitative rating of life evaluation. Self-assessment of emotional well-being, by comparison, seems better insulated from tendency for money to serve in that way as a stand-in and, therefore, arguably provides a better gauge of welfare. Also, research by Pew, as part of its global attitudes project, shows that in measures of life satisfaction (roughly the same measure as life evaluation), emerging economies have converged on the advanced economies, even as the prospects of economic development converging between the emerging and advanced world have diminished (Pew Research Center 2014). In 2014, 54 percent of respondents in rich countries rated themselves between 7 and 10 on a 10-point scale measuring life satisfaction, while 51 percent of those in emerging economies did so. This suggests that for life satisfaction, as well as subjective well-being, income matters most up to the point at which basic needs are met, after which it begins to lose relevance.

Notes to Pages 16–18

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