What unites the Occupy Wall Street demonstrators with los indignados in Madrid, the demonstrators in Tel Aviv, those in Cairo’s Tahrir Square and many of those who lit the fires of English cities in August?
They are all actions of primitive rebels, by people who know what they are against, but are not sure what they are for.
The USA is experiencing what is happening elsewhere, the growth of a precariat, consisting of millions of people who must survive through insecure jobs and unemployment, with insecure homes, without an occupational identity, with volatile wages, without company benefits and with fragile access to state benefits.
One in five American workers is in a part-time job involuntarily, millions more are in temporary jobs wondering if poverty awaits, while outsourcing and home working for a pittance are rising. Sixty million Americans are eligible for food stamps. Millions of Europeans are in a similar plight. They are anxious, alienated and angry.
The precariat emerged in the 1980s, when rich countries opened their economies to competition from emerging market economies. Most politicians thought that through high productivity and technological innovation, investment and good jobs would stay in the USA and Europe. But workers’ bargaining strength was bound to decline, widening inequalities. Capital could move to where costs were lowest, while low-income country workers were propelled into the world’s labor pool. Almost overnight, labor supply to market economies trebled, with 1.5 billion extra workers prepared to labor for one-thirtieth of wages in America and Europe. Two fears emerged. Either jobs would rush to China or wages would plunge in today’s rich countries. Neither was politically sustainable.
So, urged on by economists and the International Monetary Fund, governments made a Faustian bargain, postponing painful adjustment, with an orgy of consumerist pleasure.
The bargain helped create a global precariat that is the new dangerous class, a threat to all mainstream governments. Most politicians who made the bargain are now purring in retirement. Their successors are paying the price, including President Obama.
The Faustian bargain was simple. In order to retain jobs and investment, governments set out to make labor markets more flexible. The USA was seen as the model. So governments weakened employment security, claiming this would boost jobs, and made wages more flexible, which meant lower, while stripping workers of benefits.
The Faustian bargain was welcomed by the financial markets and corporations, for it permitted labor costs to fall while corporations became global. But as with every Faustian bargain, a day of reckoning beckoned. The crash of 2007-08 was not due solely to the banks. The bargain had built up unsustainable budget deficits and pushed millions of people into debt.
The legacy is unprecedented inequality, and a precariat, feeling their lives are going nowhere. Economic insecurity is pervasive. Many of us fear dropping into the precariat, seeing it as a matter of luck if we do not.
Orthodox economists have yet to learn. When Greece went into meltdown, the IMF, European Central Bank and European Commission urged its government to make the labor market more flexible and to dismantle professional communities. Spain and Italy faced similar demands. The message was clear: Make your workers more insecure.
Where is this leading us? This is the subject of my new book. The precariat is internally divided, but it is united in anxiety, alienation and anger.
There are three factions. There are those bumped down from working-class backgrounds. They are bitter. They are led to support the tea party and similar populist groups in Europe and Japan. Many listen to the sirens of neofascism, offering a recipe of shrinking government coupled with authoritarian measures against migrants, minorities and “strangers.” Generating jobs of the type envisaged by job creation programs will not stem the growth of this nastiness. Only policies to create economic security and social stability will.
A second group is politically passive, including many migrants. There are more migrants today than ever. They keep their heads down. This part of the precariat also includes many suffering from social illnesses or criminality. Some fall into an underclass, as bag ladies and homeless shadows of humanity.
However, it is the third group where hope is growing. The USA is catching up. Across Europe and Japan, educated youths and activists, joined by old agers, women’s groups, migrants, gays and nonconformists are linking up to demand a new politics of paradise. Many are still “primitive rebels.” But a progressive agenda is evolving. EuroMayDay parades have drawn thousands, and have fused with crowds occupying city squares from the Middle East to Madrid, Athens, Tokyo and Santiago.
As they vent their frustration, the precariat is demanding a revival of the Enlightenment values of liberty, fraternity and equality. An agenda is taking shape, and politicians should listen, before they are swept aside as failed tail-enders to a dead Faustian bargain. Let us hope they are.
Guy Standing is a professor of economic security at the University of Bath in England. He will give a public talk on his new book, “The Precariat: The New Dangerous Class,” at 4 p.m. Tuesday, Nov. 8, in 206 Ingraham Hall, 1155 Observatory Drive on the UW-Madison campus.