Sunday, July 25, 2010


It’s been unusually cold in this part of the Overberg this winter. Some confused peach trees have been flaunting their pink blossoms since April and there have been some sightings of swallows. But it has been a false promise of an early spring and has done little more than give some climate change advocates a few rounds of blank ammunition.

clip_image002The freezing cold has also done little to discourage some folk from hugging gravel on the quiet roads leading to the farms where they make up a sizeable proportion of the workforce. They can be seen regularly on week-ends from Friday afternoons to Monday mornings having consumed from five litre plastic bottles a good quantity of “moss” -which is little more than fermented inferior grape juice. The reasons for this apparent state of social dysfunction are many and varied. The reality is that they are mostly trapped in an ongoing state of alcohol abuse extending far beyond addiction itself. (Is this part of Zwelinzima Vavi’s “Irish Coffee Economy”?) Social grants often have the opposite effect here, with absenteeism increasing over pay out days, and the grants clearly not being spent on the care of children. Without a thorough understanding of their social legacy and their hopes and fears we simply cannot judge them - as easy as it may be to do so, or as difficult as it may be not to do so.

This is a diverse agricultural region: including wheat, youngberries, vegetables, dairy, canola, grapes, deciduous and citrus fruits. Ask any farmer what his biggest labour problem is, and he or she will tell you it is unreliability - most of it caused by alcohol abuse. Reliability is the one critical attribute farmers here need. A difference of one day in harvesting can affect the quality of a crop. Already there has been a substantial fall in youngberry cultivation at least partly due to labour problems.

Incentives don’t work. Individual pay increases, which can barely be afforded by the smaller family owned farms are met with resistance and resentment and are viewed as a form of elitism. Of course, this situation does not apply to the total workforce, but it is enough to cause severe disruption at critical times. Like any farming area migrant labour is a feature of production and is often managed through labour brokers. Many have settled in nearby areas, becoming casual workers rather than migrants. This group includes foreign workers, mostly from Zimbabwe and they have begun to infiltrate the more permanent employment ranks in towns and bigger settlements. The seeds of xenophobia have been planted and there are fears that another De Doorns or Khayalitsha is on this area’s doorstep.

This picture is just one tiny thread of a vast tapestry called the labour market. There are many, many more. The tapestry itself has become indistinguishable from the threads, extrapolated to a blandness that has lost touch with the reality of each thread. It has become the fixation of dozens of theories, systems and policies and is glibly flung into academic discussion like some vuvuzela blast intended to still a referee’s whistle.

Markets on a global, national and domestic level can broadly be divided into capital; trade in goods and services, and labour. They interact and influence each other very powerfully. It is self evident that if there is a disproportionate degree of freedom between the three, it will cause severe imbalances. It is obvious too, that the best outcome can be achieved if the three act in harmony and for a common purpose.

clip_image004Of the three groups, capital has been given the freest reign, reflecting the view of market fundamentalists that capital is the magic wand that will correct all imbalances. It is now common cause that capital, particularly global capital, has behaved badly leading to new international constraints. George Soros has described it as behaving “like a wrecking ball.” Shareholder capital, domestic and global, is also under constant surveillance and increasing legislation. It has often blamed “executives” for this behaviour. I find this a bit disingenuous. It’s like saying: “Yes! Stop these thieves. We asked them to steal for us, now they are stealing from us!” Despite executives being increasingly classed as a new self focussed group, shareholders certainly cannot dismiss as irrelevant their pressure for quick and short-term profit gains, incentives promoting this, shorter reporting periods and the appointments of executives likely to achieve it. But still, of the three groups, capital is the freest.

The growing frustrations with the DOHA talks are a reflection of severe impediments in global trade in goods and services. One of the threads of this particularly tapestry that I have witnessed is in the export of citrus fruit to Europe. The manager of the farm where I live is subjected annually to two audits, one from the E.U. and the other from TESCO, the U.K. customer. The audits, which the producers pay for, are a bureaucratic nightmare to say the least, and cover the finest detail, from how many grammes of chemicals were used, to how much workers are being paid. Interviews with employees, both permanent and casual are included in these audits. Not only do many producers here feel that the audits are a form of trade discrimination, but it means that only big commercial farms have the capacity to export. This is over and above the more onerous constraints, such as protectionism, trade barriers and exclusive trading agreements.

Even if we were to concede its validity as a “market”, then the labour market is arguably the most dysfunctional of all. Let me emphasise again that I fully subscribe to the concept of free markets, but have argued all along that without appropriate behaviour, markets can never be free. It is their perfection that reflects behavioural imperfections which then lead to their constraint. In labour, market theory falls apart. It is subjected to all kinds of machinations, regulations, controls and interventions. Despite the evil of migrant labour, immigration controls ensure that labour is simply not a real factor in balancing supply and demand on a global level. Domestically, one simply cannot argue that market principles are truly reflected in differentiated pay – from the lowest paid to the highest. In most countries, labour legislation and collective bargaining put severe constraints on labour flexibility particularly at the lower paid levels– perhaps justifiably so! Executive pay, on the other hand, has reached pop star levels, even if they sing badly.

clip_image006It reminds me of a statement by TV news doyen, the late Walter Cronkite. When he was appointed the first news person to anchor an American TV news show, his pay jumped several-fold. He was asked whether he did not think that he was overpaid and he responded: “Compared with a pop-star, no; compared with a teacher, yes, vastly so!” This is just one of many examples of social values reflected in some bizarre market outcomes.

The labour “market” tries to make a collective of what cannot be collected; generalise what cannot be generalised; define what defies definition. These are individuals: each with their own cultural background, fears and insecurities, hopes and aspirations, intentions and motives. To define each one, you would need more than seven billion entries in the dictionary.

The severe flaw in the labour “market” is its attempt to define labour as a commodity, or “resource”. It is expressed as a “cost” of production and in the Western profit maximisation model is automatically set up in conflict with other “resources” particularly capital. This gives sustenance and a powerful raison d’être to Trade Unionism, strikes and many other arguably wasteful activities. It places emphasis on pay as the key motivator and over decades of conditioning has changed work from meaning to money and has converted many individuals into what can be loosely called “wage slaves”, shackled to daily drudgery by the chains of mortgages and debt in an attempt to maintain comparative lifestyles and excesses in consumption and acquisition. In the process, for most the crucial links between task, passion, contribution, meaning and contentment are shattered.

It can be done differently. There is a model in which the spirit of free enterprise can flourish – a model that fits in with the search for alternatives; that focuses on contribution and adding value to people’s lives; that nurtures the human capacity to care; that forges a common purpose and common fate between all of the actors; that reduces if not eliminates conflict and that thrives on flexibility and sustainability. I hope to introduce you to it in future writings, but for the moment, its spirit is perhaps best captured in this little anecdote related by someone who had returned from a sabbatical to NASA in the United States. Watching a sweeper engaged in his task, he asked:

“What are you doing?”

“I’m helping to put a man into space”, was the reply.


(This post can also be viewed on moneyweb_logo )

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