Hans Groen

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the ruminant economy 4 – it is eating us

For about two centuries, the economy has been approached from the frame of labour and capital. The core is ‘productive’ labour: we make something that has more value than the sum of its ‘ingredients’: the farmer selling milk or grain and the dairy industry making yogurt and butter; the car manufacturer making and selling a car. We need this surplus value so that we can pay for the education of our children, for the care for the sick and the elderly, for arts and sports, for leisure, etc. It makes it possible that many people can do something to earn a living and do something they (and we!) enjoy. And we can enjoy the frivolities that make life pleasurable.

We are so productive that this surplus-value feeds a whole economy of its own – a non-productive economy of services that we need, want, and enjoy. This economy is ‘piggy backing’ on our productive economy. This economy has always grown along with the productive economy, and it had to do this because otherwise we would not have had any necessary luxuries, from education to arts, from health care to restaurants. Presently, it is overgrowing the productive economy. A majority of people is being (self-)employed with non-productive work, not productive labour. Productive labour is diminishing due to more efficient production – agriculture has been the front runner with fewer people employed and relatively much higher output – and available work in services has absorbed redundancies in labour. Whether that is good or bad or inevitable I do not know, we surely have to organize our economy and our jobs with this frame in mind so that it does not end up as a bad development.

The core of the ruminant economy is not the services that aid the productive economy and deliver some frivolities to make life enjoyable. The core consists of activities that earn money by surcharging on these services themselves – platforms that charge a fee for those who want to connect for offering services to customers; derivatives that repackage loans and mortgages. What used to be the service section of a flourishing economy has grown into a major source of capital generation itself, milking a big number of workers and producing ‘share holder value’ for a few. The service charges can run up to 20%, thus equaling the VAT or sales tax that is often also charged on these services. But whereas sales tax will be spent by the government for the general benefit and under democratic control, the platform fees enrich the private owners and shareholders of the platform. The ruminants are eating us!

AirBNB, Uber, Deliveroo, and many others, let people earn some money with the necessities they own, a house, a car, a bicycle. These platforms are the ‘social’ mirror of the derivatives of the financial sector. The rise of both cannibalizes the importance of being employed and the nature and meaning of labour. The platform-economy of Uber and Airbnb and all the other services monetarize the bare necessities that people need for a living: your house, your car, your bicycle is your asset with which you earn money. These platforms let people work for low hourly rates, taking themselves 13% to 20% off the amount paid for the service, the fare, or the meal, as a fee for being connected to the platform. The platform can raise the height of the charge at will and you cannot choose not to comply, lest you have no income. The income of the platform itself and its owners skyrockets, driven also by share prices. Technically, these platforms quite often write red numbers, leading to the contradiction that a losing business leads to huge profits for some private parties. Also, the bailout of some companies which were deemed to be essential for the economy after 2007 led to a transfer of huge amounts of public money into private hands. This perverted model was originally welcomed in the 1990s as the ‘newconomy’, and later on rejuvenated as the ‘sharing economy’. Its true face is scavenger behaviour where money is made exclusively piggy-backing on the activities and the labour of other people. The platform economy produces monetary value for the shareholder; it does not produce economic or social value. The platform is not interested in developing the activity on which it rides, nor in the individuals that work for the platform – the Uber-driver is just a drone, for AirBNB your home is just a hotel room. From a purely business point of view, your assets, your car and your home, might be repossessed in case you go bankrupt, and you will ‘justifiably’ end up on the streets. Another kind of scavenger behaviour is seen by pharmaceutical companies where expired patents are being bought only to raise the price of the drugs with a factor 50 or more[*].

Against this, I would like to argue that there is a labour standard in the economy: money is ‘made’ with, derives its value from, productive labour. The gold standard has been abandoned; maybe we should have a labour standard and have the worth of an economy be determined by the productive labour done in an economy, and not by just the sum of all the work that is done in an economy. Not all ‘work’ is ‘labour’ in this sense and should not be brought under the discipline of money and the economy – bad examples are commercial jails, which turn-over also counts in the BNP, and monetarizing social services of churches and other organizations, as in Rotterdam was done by calculating the value of the work done by volunteer church work in society. There is much more to life than labour. Humanity is fulfilled when people can freely give to each other.


[*] Some examples. Dexamfetamine, a drug used for children with ADHD and cheaply produced by local dispensing chemists, until Medice, a German pharmaceutical company, registered it as a drug in 2016, making it three times more expensive. AZT was developed and tested in 1964 as a drug against cancer but was not successful. In 1985 the drug appeared to be effective against the HIV-virus, and the patent was renewed till 2005. Recently, Priadel, a drug used by people with a bipolar disorder, tripled in price after the drug was bought by Essential Pharma, a company which apparently makes a habit of buying the rights for drugs and hiking the price afterwards — see this article (in Dutch).

Onderwerpen: basic income, economische ongelijkheid, European Social Week, labour unions, ruminant economy, social dialogue