The End of Work
    — Five Years Later

    By Jeremy Rifkin
    Introduction to the 2000 Penguin Edition

    It's been five years since the publication of JEREMY RIFKIN's controversial book The End of Work, and Penguin Books have just released a new paperback edition.

    In a special introduction to the Penguin edition, Rifkin observes that structural unemployment remains high, and the task of “re-envisioning work” continues to be a major social and political challenge.

  • IN THE FIVE YEARS that have elapsed since I published The End of Work, structural unemployment has remained dangerously high in Europe and countries around the world, despite gains in both global productivity and gross domestic product. In 1995, 800 million people were unemployed or underemployed. Today, more than a billion people fall in one of these two categories. Only the United States, of the major industrial nations, has significantly lowered its unemployment to a record 4 percent, raising the question of whether it alone has found a formula for success in the new economy. The fact of the matter is, U.S. gains in employment have less to do with a new economic vision and more with a combination of short-term fixes that give the appearance of a robust economy, but hide a darker reality.

    To begin with, the U.S. counts its unemployed workers in a very narrow way, allowing it to hide structural unemployment in its official reporting figures. If a worker's unemployment benefits runs out and he or she gives up looking for work, they are reclassified as "discouraged" workers and not counted in the official tally of the unemployed. One can walk the streets of any city in the U.S. and encounter large numbers of unemployed men and women. Yet, few of these men and women are deemed "unemployed" by the U.S. Labor Department. Second, as incredible as it may seem, 2 percent of the adult male workforce in the U.S. is currently incarcerated, by far the largest percentage of imprisoned workers of any country in the world. Third, the U.S. economy did bring record numbers of unemployed Americans back to work over the past eight years, by creating an unprecedented "just in time" work force. Today, millions of American workers are leased out to employers by temporary and professional employment organizations. Millions of others who once enjoyed full time jobs with benefits are now working under short-term contracts or as consultants and freelancers. While the ranks of the unemployed have shrunk, the number of underemployed workers has increased significantly.

    Finally, and most significantly, the American miracle has, to a great extent, been bought on credit. It is impossible to understand the dramatic reduction in U.S. unemployment in recent years without examining the close relationship that has developed between job creation and the amassing of record consumer debt. Consumer credit has been growing for nearly a decade. Credit card companies are extending credit at unprecedented levels. Millions of American consumers are buying on credit — and because they are, millions of other Americans have gone back to work to make the goods and perform the services being purchased.

  • Today, according to the Federal Reserve, Americans are literally spending as much as they are taking in, marking the first time since the Great Depression that the country has experienced a near-zero savings rate. Recall that just eight years ago the average family savings rate in the U.S. was 6 percent of after-tax income.

    An analogous situation occurred in the mid to late 192Os. Like today, the 192Os was a period of great economic change. Electricity replaced steam power across every major industry, greatly increasing the productive capacity of the country. Productivity gains, however, were not matched by a significant increase in worker compensation. Instead, wages remained relatively flat, while many marginal workers were let go in the wake of cheaper, more efficient technology substitutions. By the late 192Os, American industry was running at only 75 percent of capacity in most key sectors of the economy. The fruits of the new productivity gains were not being distributed broadly enough among workers to sustain increased consumption and empty the inventories. Concerned over ineffective consumer demand, the banking community and retail trade extended cheap credit in the form of instalment buying to encourage workers to buy more and keep the economy growing. By late 1929, consumer debt was so high, it could no longer be sustained. Even the bull market was being stoked by record purchases of stocks on margin (i.e., the amount paid by the customer when using a broker's credit to buy or sell a security). Finally, the entire house of cards collapsed.

    The short-term substitution of cheap credit in lieu of a broad redistribution of the fruits of new productivity gains in the form of increases in income and benefits is a subject that has received little, if any, attention among economists. Still, the fact remains that great technology revolutions — like the substitution of electricity for steam power — generally spread quickly, once all of the critical elements are in place. (It should be noted that it took several decades for the electro-dynamo to finally kick in and become a tour de force. Once, however, all the necessary conditions were finally realized, the new technology paradigm swept through every industry in less than a decade or so.) The problem is that it generally takes at least a generation or more after a defining new technology finally comes on line, for social movements to build enough coherence and momentum to demand a fair share of the vast productivity gains made possible by the new technologies. In the 1920s the interim crisis of increased productive capacity and ineffective consumer purchasing power was met by the extension of consumer credit to unprecedented levels.

  • The same phenomenon is occurring today. The productivity gains brought on by the information and telecommunication revolutions are finally being felt and, in the process, virtually every main industry is facing global underutilisation of capacity and insufficient consumer demand. Once again, in the United States, consumer credit has become the palliative of sorts, a way to keep the economic engines throttled up, at least for a time.

    Today, consumer credit is growing by a staggering 9 percent annual rate and personal bankruptcies are increasing. In 1994, 780,000 Americans filed for bankruptcy. By 1999 the number of bankruptcies had soared to 1,281,000. Some economists argue that the zero savings rate is not really as bad as the figures might suggest, because millions of Americans have experienced record gains in the stock market, making their equity portfolios a substitute for traditional bank savings. Still, it should be pointed out that even here, many of the high-tech stocks Americans hold are over-valued and likely to be the subject of significant "readjustment" in the months ahead. Moreover, it should be noted that 90 percent of the gains of the stock market have gone to the top 10 percent of households while the bottom 60 percent of Americans have not benefited at all from the bull market, as they own no stock.

    The point is, if countries of the European Union were to lower their current family savings rate from 8.8 percent to near zero, as the United States has, they could likely reduce their unemployment rate from 8.5 percent to under 4 percent. Millions of people spending money — on credit — would assuredly bring millions of additional European workers back to work to make the goods and perform the services being purchased on credit. But, following the U.S. lead would only result in a short-term fix and create the conditions for an even more profound long-term period of economic instability when the extension of credit reached its limits, pushing consumers into default and the economy into a downward spiral, as occurred in the late 1920S and early 1930s.

  • Hiding unemployment figures, incarcerating large numbers of male workers, creating a "just in time" work force, and extending consumer credit to grease the economic engine are all weak, temporary measures that, in the final analysis, will prove ineffective at dealing with the long-term rising structural unemployment brought on by increasing technological and organizational displacement of workers in the new economy. The twenty-first century will increasingly be characterized by a transition from mass to elite employment as more and more agricultural, manufacturing and service work is performed by intelligent technology. The bottom line is that the cheapest workers in the world — from the factory floor to the professional suites- will not be as cheap and efficient as the intelligent software and wet-ware coming on line to replace them. By the mid decades of the twenty-first century, computers, robotics, biotechnologies, and nano-technologies will be able to produce cheap and abundant basic goods and services for the world's human population, employing a fraction of the world's human labour in the process. Based on current and projected trends in the agriculture, manufacturing, and service sectors, in the year 2050, less than five percent of the human population on earth -working with and alongside intelligent technology-will be required to produce all the goods and basic services needed by the human race. Few of the CEOs I talk to believe that mass amounts of human labour will be needed to produce conventional goods and services in fifty years from now. Virtually all believe that intelligent technology will be the workforce of the future.

    The great issue at hand is how to redefine the role of the human being in a world where less human physical and mental labour will be required in the commercial arena. We have yet to create a new social vision and a new social contract powerful enough to match the potential of the new technologies being introduced into our lives. The extent to which we are able to do so, will largely determine whether we experience a new renaissance or a period of great social upheaval in the coming century.

    Source -- The End of Work (2000 Penguin Edition)

    — Penguin Paperback edition (pub 2000) (350pg)
    with new introduction and postscript by Jeremy Rifkin
    ISBN 0-14-029558-5

    Available from booksellers

  • The Rifkin Reader Homepage
  • A Rifkin Reader — our essential summary of Rifkin's ideas
  • 1995 — A View of the Future — from The Utne Reader
  • 1999 — The Third Sector and the Rebirth of Civil Society
  • 2000 — Introduction to The 2000 Penguin Edition by Jeremy Rifkin