As our economy continues to undergo rapid change Prof. Alan Finlayson finds that seemingly small changes in one enterprise reveal much larger transformations in how we work and earn in the twenty-first century.
If you want to understand what is happening in a society- how it works, who has power, developing trends- you might try to attain a bird’s-eye view: zoom out, generalise, see the bigger picture. But you don’t have to do that. Everything in a society is connected to everything else. And that means, if you look carefully at something small and specific, you can see- in the proverbial ‘grain of sand’- something of the entire social universe.
Here is an example.
Last month, a hairdressing salon near to where I live in East Anglia changed its way of operating. The individual hairdressers were told- unexpectedly- that they would no longer be paid a regular wage. Instead they will pay a fixed amount of twenty-pounds a day for the use of a chair and facilities. Whatever they earn they can keep.
That means that the hairdressers have suddenly become self-employed. And in this they are part of an important trend.
In 2014 the Office of National Statistics found that self-employment was higher than at any point in the last forty years. It has dropped a little since then but is still remarkably high. The data shows that the number of women in self-employment is increasing faster than that of men. And that is because of a rise in self-employment in three fields where female workers predominate: cleaners and domestics, child minders- and hairdressers.
Sometimes self-employment is presented as an ideal. Who wouldn’t want to be their own boss, an exciting and wealthy entrepreneur of the sort that appears on Dragons’ Den? But, behind the figures of increased female self-employment are not CEOs of new tech-startups but people who, like my local hairdressers, have simply had their employment status changed- to the benefit of their former employer who no longer has to support sick leave, holiday pay or a pension. That is why- in a whole host of employment sectors from call-centres to construction-employees are being turned into the self-employed. Their reward is not riches but intense insecurity. They cannot know ahead of time what their monthly income will be, which makes life hard to plan and getting out from under even more difficult. They are part of what the economist Guy Standing calls ‘the precariat’, leading a precarious financial existence, one illness away from ruin.
Behind this is a deeply significant change in economic identities and in the power associated with them.
At the start of last month my local hairdressers was made up of an employer and employees. Each received an income- the employee from wages, the employer from profit (what was left over after all costs-including wages- had been accounted for). Their relationship was governed by a market-the one that set the price of a hairdressers labour. The employer could try to drive that price down- for example by finding alternative, competing and cheaper, sources of labour. The employees could band together to defend themselves collectively. Each could support political and social movements campaigning to introduce or remove regulations that affected their conditions and the price of labour. Their relationship- and the politics that came from it- dominated most of the twentieth century.
But, by the end of last month everything at the hairdressers had changed. The employees no longer received a wage. At first glance, it might seem that they have been turned into a small capitalist hoping to make their income from profit. But unlike capitalists they don’t own any assets such as factories, machines or brand names. They have only their body, skill and time. Meanwhile, their former employer no longer receives an income from profit. He now earns money from rent. The relationship between them is now governed not by a market that sets the price of wages but by the difference in power between someone who owns and controls property and somebody who does not.
In various areas our economy seems to be ever more focused on rent. This is obvious in the case of housing. Private renting, which fell from the end of World War One to the early nineteen-eighties has been increasing over the last twenty years. Recent research indicates that home ownership is now at a 25 year low (with a very great difference across generations). But housing is only one source of rental income. In fact, for economists ‘rent’ can refer to a much larger range of activities than is covered by the word in its everyday use. It includes all kinds of ‘unearned’ income, charges for the use of something that might make a productive process possible while not actually adding any value to it. In fact it takes value away- money that could otherwise have been invested to improve or enhance production. And it is worth remembering that the most serious problem in the British economy right now is not government debt or inflation (important though these are) but chronic under-investment.
To whom is rental income going? As well as land and buildings, patents and copyrights are sources of rental income- and their increased importance is one reason they are sources of conflict. When Taylor Swift takes on Spotify it’s a dispute about whether money goes to pay musicians’ wages or Spotify’s rent. The goal of companies patenting GMOs may be to help feed the world; it’s also to charge a rent on each seed we plant. Meanwhile, the online world is all about rent. Search engines and online booksellers, new kinds of taxi company and online pirates are all trying to control access to virtual territory so that others can be charged a rent for its use.
I believe you can already see the growth of a rental economy changing our culture. Who now wants to learn a craft, a skill or trade, that they put to work for life? That’s for suckers. The dream is to write the killer piece of software or inherit a house in the right part of town so that you can live off the rent rather than work for a living.
Of course, an economy in which everybody rents to everybody else is a logical impossibility. Somebody somewhere has to make clothes, burn fuel and cut hair. But in the new feudal or rental economy those people, the propertyless, will always be getting poorer while the propertied clean up. And the relationship between them will dominate the politics of the twenty-first century. Look closely at what’s going on around you and you might see this happening at a hairdresser near you.
Alan Finlayson is Professor of Political & Social Theory at the University of East Anglia.
Image Credit: Wikipedia