EUROPEAN PAPERS ON THE NEW WELFARE

Abstracts from The Employment Dilemma and the Future of Work

6. Integrating the monetarised and non-monetarised activities

Up to the beginning of the Industrial Revolution, the majority of resources which was produced and consumed, mainly in the agricultural sector, was related to a system of self-production and self-consumption, a non-monetarised system. As we have already seen, the Industrial Revolution accelerated the process of specialisation and therefore of exchange. The process of exchange affects — as already explained — what we have termed the monetarised part of an economy, where the value of goods exchanged is either implicit (non-monetised) or explicit (monetised) with reference to the value of what we call money. Keeping these distinctions between monetised, non-monetised and non-monetarised in mind, an essentially agricultural society can be defined as predominantly non-monetarised, whereas when commercial exchanges take place, only a part — at least at the beginning of the process — is specifically monetised.
The fundamental importance of money in the economy is relatively new, albeit the history of money has very ancient origins: obviously, different forms of it have existed since prehistoric times. But they were then far from dominant in the ‘economic’ process. It was with the development of the Industrial Revolution that money became the essential tool to organise the new production system. It was necessary to have a developed commercial system functioning, as the case of England at the turn of the 18th century, so that part of the flow of money could be saved, and transformed into capital for investment. This was absolutely necessary because the new production tools, increasingly important and costly, needed more investment. What at that time was still considered a marginal phenomenon was in fact the key and the most dynamic tool to develop the wealth of nations: the manufacturing system based on investment and therefore linked as such to the monetarisation, and even more to the monetisation of the economy. Herein lie the roots of an economic research that, up to the beginning of this century, focused on the question of productive employment as the one essentially connected to a remunerated activity within the settings of the industrial production system. Other activities, especially services and all forms of self-production and self-consumption, were regarded as socially equitable and noble, but subordinate.
Although this new type of production greatly helped two centuries ago to create the modern world where, despite all the terrible crises and setbacks in history, a substantial step forward was made for the wealth and the welfare of people, a legitimate question may be posed: How far are all these basic assumptions valid in a situation in which services have become the key and greatest part of the production function itself? Should we not overcome the traditional notion that productive employment, in fact that the notion itself of employment, is linked still today essentially and exclusively to this process of monetarisation?
The success of the development of productivity and industrial production has created a very paradoxical situation. Already at the start of this century, Arthur Pigou, the pioneer of welfare economics has shortly touched one of the shortcomings of the economic system in this sphere without necessarily arriving to further conclusions. He reflected on the fact, that if a bachelor employing a woman as a housekeeper were to marry her, national income would fall, since her previously paid work would now be performed unpaid. But unremunerated work and the concepts of non-monetarised and non-monetised parts of the economy go far beyond housekeeping and its omission leaving a gap in national income accounting. We can also observe the fact that where service activities are the key issue, the monetarisation and/or the monetisation system does not necessarily always produce the net positive results which were obvious in the classical period of the Industrial Revolution.
Let us consider the case of health costs: The developments in the capacity of drugs, doctors and instruments to ameliorate health, which was also possible thanks to the Industrial Revolution and to the monetarised systems, has undoubtedly brought decisive advantages. On the other side, when today the high costs of hospital treatments stimulate policies to convince patients to rather stay at home, it is obvious here that the non-monetarised as well as the non-monetised system is called upon to rescue us against an implicit level of inefficiency of the monetarised system. It is clear that women’s work is a social conquest, but it is also clear today that the care of children can be solved either by developing, for money, a system of kindergartens or through the mobilisation of grandmothers or grandfathers who can do the equivalent job for free where the conditions of the family allow such solutions.
Why is the work done by specialised people in the kindergartens part of the productive work, which adds to GNP, whereas the equivalent work of the grandmothers or grandfathers is not? It would seem that in many areas the non-monetarised is called to come to the rescue of what seems to be the limits of efficiency and, in some cases, of the monetarised organisation of the economy. Can we therefore still divide the notion of productive employment between what belongs to the official monetised economy and the performance of activities, which can be defined as productive from a social and even from an indirect financial point of view, but which are not recognised as such?
In the Service Economy, it would appear that the link between monetarised and non-monetarised activities is one of interdependence and that a growing part of these non-monetarised activities, are in fact a form of productive work in the sense of contributing to the wealth of nations and in some cases even as an essential element in the functioning of the monetarised world itself. Albeit there is probably a question of optimum equilibrium of the monetarised and non-monetarised activities, it has to be recognised that their mutual integration and the resulting synergies are becoming more and more important.


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