Thursday, November 27, 2014

The New Economy of Fealty

PRINCETON – Since the 2008 financial crisis, most industrial economies have avoided anything like the collapse that occurred during the Great Depression of the 1930’s. But, despite large-scale fiscal and monetary stimulus, they are not experiencing any dramatic economic rebound. Moreover, the pre-crisis trend of rising income and wealth inequality is continuing (in marked contrast to the post-Great Depression period, in which inequality declined). And survey data show a rapid decline in people’s satisfaction and confidence about the future.

The explanation of the post-crisis malaise – and people’s perception of it – lies in the combination of economic uncertainty and the emergence of radically new forms of social interaction. Long-term structural shifts are fundamentally changing the nature of work, and thus of the way that we think of economic exchange.

In the early twentieth century, a large share of even advanced economies’ populations was still employed in agriculture. That proportion subsequently fell sharply, and the same decline could later be seen in industrial employment. Since the late twentieth century, most employment growth has come in services, particularly personal services – a pattern that looks like a reversal of a previous historical trend.

At the beginning of the twentieth century, upper-middle-class households had a substantial staff of cooks, maids, nannies, and cleaners. In the interwar years, these employees largely disappeared from the lives of all but the ultra-rich. The iconoclastic British historian A. J. P. Taylor quipped that laments about the decline of Britain were really generalized reflections of Oxford academics’ view of the “servant problem.”

By the end of the twentieth century, however, many of these old service occupations were reappearing on a large scale, as dual-career households needed additional “help.” The employment of nannies, au pairs, babysitters, and day mothers reflected carefully differentiated approaches to the problem of looking after children.

After child care, there followed hordes of private tutors, test coaches, and university admissions consultants. And, beyond childhood and adolescence, the need for specialized personal support only grew.

Some of the new services would stretch the imagination of previous ages. Dating agencies have developed increasingly complex algorithms to sort out their clients’ romantic lives. Lawyers work out prenuptial contracts, and then the complexities of divorce negotiations. Design consultants choose our interiors and clothing. Personal trainers look after our fitness. Cosmeticians, skin-care specialists, and tattoo artists shape our appearance.

Two of the largest areas of service-employment expansion have been education and health services. And yet this has not been a result of adding more teachers or doctors. Instead, a new division of labor has surrounded the classical providers of education and healing with more and more layers of administration. Doctors need experts to deal with insurance forms, negotiate with other doctors and pharmaceutical providers, and manage legal risks. Educational specialists fill every conceivable logistical and administrative gap, run sports and arts programs, guarantee diversity, and oversee technology transfer to the private sector. Indeed, a rapidly growing army of administrators is overrunning our universities.

None of these new services can easily be standardized, or dealt with at long distances (as can some types of clerical legal and financial work). The caregivers and consultants need to be on location. And that raises a question of control. How can child-care providers be trusted? Cautious parents seek agents to select their employees and technology to monitor them as they work. So, to find out about the reputation of service providers, we need still more service providers: ratings and surveys and agents to tell us about agents.

The new service economy extends market relations to areas of life in which, previously, informal assistance and guidance within family units prevailed. To the extent that employment and income in the new services can be easily recorded, this change implies an increase in measurable economic wealth and output, because unpaid household services are ignored in GDP calculations.

Experts might thus interpret the macroeconomic consequences as largely positive. But the element of personal dependence is a throwback to the preindustrial world.

The zenith of the old service economy was the court of Louis XIV, where specialist courtiers attended to the Sun King’s every need, even the most intimate (there was a Groom of the King’s Close Stool). In that pre-modern world, private life was extraordinarily public, whereas the social movements of the nineteenth and twentieth centuries dramatically expanded the realm of individual privacy and self-definition.

Today’s new service economy is driven by the resulting uncertainty over identity. We need advice on every aspect of life, provided in a complex world by people whom we think to be experts in ever-narrower and more specialized fields. We can easily monitor that advice and subject it to statistical testing: are our children doing better on tests? Are we more fit? Are we dating more people who share our perceived interests?

Paradoxically, the new technological possibilities are also eliminating privacy. We are moving back to the Sun King’s world, in which everything personal is known, rumored, or whispered. But now, with electronic surveillance, personal dependence has never been more extreme, more humiliating, and more depressing.

This might explain some of the public dissatisfaction captured in so many surveys, even when economic conditions are not dire. Subjectively, modern growth feels problematic, and perhaps even immoral.

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    1. Commentedjames durante

      James gets a few things exactly right: rising income and wealth inequality continue unabated. For everyone below the 70th percentile of income (roughly) this means trouble, the more you project outward. Hence, the survey results. He is spot on about an army of edu-bureaucrats who drain billions from education and provide nothing but more hiring of their own kind, ed school gobbledy-gook ("outcomes assessments" is the latest tripe), and absurdly meaningless teacher training and "student enrichment." All the rest of the stuff about servants is only relevant to James and his ilk, those well above the 70th percentile. Wake up! Those of us in the middle and below are not able to hire armies of staf to reassure us about our identity and that of our children's. The rich did away with that level of discretionrty income for the so-called "middle class" a long time ago. Whatever, take on some more debt, buy the latest gadget and download some apps. It is designed to make you feel cool even if you are sinking.

    2. CommentedJohn Nick

      The malaise = no economic rebound, rising inequality
      Economic and social relations are shaped on a master - servant model. Let's be clear, this goes beyond the services economy, it's about personal services, not impersonal offers. And this is coming with growing economic uncertainty. So we will be servants of the rich and we will have very unstable job prospects, the master's option on our welfare will be discretionary.
      The good thing is that this model is able to sustain growth and employment.
      So there is no reason to address economic inequality, it is the key for our future prosperity.
      Towards the end of the article the servants totally disappear from the perspective of the new society, we only acknowledge about them the fact that they pose an intimacy, privacy problem to their masters.
      And that is the moral issue of this projected evolution.
      I'm glad our masters are thinking about the future and they are deeply moral individuals.

    3. CommentedEdward Ponderer

      An overview of the articles points are quite stark. The new economy is plainly the service of filling in the ever-widening entropy gaps in peoples relationships at the family and societal levels -- and like the filling of a cavity, it is expensive, painful, unnatural, awkward, exhausting, and depressing.

      This is exactly wrong in a world heading headlong into global & down interdependence. "Wrong?" -- why that's the wrong word, I meant catastrophic.

      Never before has there been such urgency to work toward new familial and social bonds. And in sum this comes down to one thing: inculcating a deep abiding sense of mutual responsibility in everyone. Only when I know -- I really know -- that we all understand that each one's happiness and well-being depends upon that of everyone else, will I trust them, and they trust me.

      Integral educational initiative and media methods of building up related societal values. Round table discussion outside the standard political representative type of framework -- something truly grass-roots. This is really how things will need to start I think.

      You know the joke about the father warning his son not to trust anyone these day, except for the father. And to demonstrate his love and the son's need to trust in it, he tells him to fall backwards and trust Dad to catch. He does this faithfully, and almost breaks his neck when he hits the floor. Piped up Dad standing over him, "And that teaches you not to trust ANYBODY -- not even your own father!"

      Well, we had better learn to trust falling into Dad's arms again -- and in the not to distant future, even into the arms of complete strangers. For if we don't, this Humpty Dumpty of human civilization is itself in for one big fall -- and there will be no one to catch us.

    4. CommentedAvraam Dectis

      The irony is that Orwell thought that intrusive measures would be needed to monitor the citizens.

      All that was really needed was an INTERNET and cell phone system that tracks your movement and records your interests in return for the conveniences they offers.

      Very few have the fortitude to refuse the offer.

    5. CommentedZsolt Hermann

      The key is to move into "true service economy", the real "economy of fealty" in the literal meaning of the word.
      Today we use words like "service", "trust", "love" but we do not know or care abut the fundamental meaning of those words.
      And the foundation of all this is within human nature, human attitude.
      Today and so far in our history it does not matter what words we used for our thinking, activities, the primary intention behind anything we do is self-profit, self fulfillment.
      If I love, serve another I do so in order to gain something for myself, otherwise I cannot even move a finger.
      Even the most altruistic people have this intention behind their actions, and many times, usually after they passed away we start to reveal their true, self centered intentions.
      This is not a flaw, a sin, it is simply how we are born, the human ego directs us towards ourselves all the time.
      This propelled humanity to the present degree before, but today suddenly this drive has turned against us. Why?
      Because we evolved into such a global, interconnected and interdependent network, that we resemble cells, organs of the same organism. In such a system any self-centered action leads to harm for the system, inevitable leading to destruction.
      The whole global crisis stands as a proof, not to mention more and more emerging research proving our interconnectedness, interdependence.
      Thus we truly need a service economy, but in the literal sense, we need to serve each other in a mutually responsible and complementing fashion in order to keep the whole system functioning optimally.
      Even this system can be understood selfishly, egoistically: in today's global system if the system suffers, I also suffer, if the system prospers, I also prosper.
      We need to rebuild the whole human adventure in this new, truly serving way.