Economic and social change and the reasons for it.
When we speak of economic growth, we normally refer to Gross Domestic Product or GDP. That is, the total value of goods produced and services traded in a country in a year. The UK Government website states that “Rising GDP means the economy is growing, and the resources available to people in the country – goods and services, wages and profits – are increasing.” Emphasis is often placed on the risks of falling income, lower consumption, and job cuts if GDP falls. However, there is little talk of the relationship between GDP and profit.
Capital is necessary for the establishment and provision of large-scale communal enterprises. The vast majority of us own insufficient capital to enable us to establish such enterprises independently. So, we must pool our capital to make large-scale services possible. Whether this pooling of capital is via private enterprise or via government is a matter of political debate. There are arguments for and against each. However, the reality in the West is that private enterprise plays a very large part.
Capital investment by private enterprise is itself a form of service. In return, investors expect payment, i.e., a profit. If GDP is rising, then this is an indicator that investors can, on average at least, make a profit on their investment. If it is falling, then this is an indicator that on average they can expect to make a loss. If the latter is the case, then they will be reticent to invest in a nation, and thus, a vicious circle leading to a depression can ensue.
However, entrepreneurs supported by private investors can be ingenious in their pursuit of profit. It is this, rather than GDP per se, that is steadily changing the nature of our economies, and thus, our societies. It could be said that GDP, in part at least, reflects this ingenuity. However, the changes wrought do not necessarily benefit the general population, and there is strong evidence that they are contributing to the rise in mental ill-health. These changes and their impact on society are described below.
We produce and consume three things:
- material goods such as cars, food, housing, etc.;
- services such as healthcare, education, plumbing work, electrical work, gardening, entertainment, accountancy, legal services, and so on; and finally,
- goods and services hired in return for rent, such as apartments, vehicles, software, etc. I will refer to this as “hybrid consumption”.
Economies pass through stages dictated by the ability of investors to make a profit.
Firstly, material goods are produced and consumed. Investors provide the necessary capital to establish factories, finance initial operating costs, etc. In return they expect a profit in the form of dividend payments, a premium on the sale of their shareholding, etc. In essence, in return for providing the resources to organise production, they are taking a share of the value traded between the actual producers and consumers. To maintain this return, in the face of competition, production efficiencies are sought. Typically, this means driving down labour costs via offshoring, automation, the outsourcing of administrative tasks to customers via the internet, and putting obstacles in the way of post-sales customer contact. Growth in turnover is also sought via advertising and expansion to overseas markets. It can also be obtained in less ethical ways, for example by the encouragement of debt, the encouragement of unnecessary social competition, advertisements that create unnecessary wants, the excessive use of sugar in foods, and so on.
Nevertheless, there is an upper threshold to the quantity of material goods that we can consume. So, in pursuit of profit, investors move on to organizing the consumption of services and hybrid consumption.
In the case of hybrid consumption, material goods are offered for rent. The organisation of hybrid consumption has been triggered by improved long-distance communication over the internet. Originally, private individuals and small local enterprises offered hybrid services. However, investors have now begun establishing large organisations to offer them. They are, for example, moving into the private rental market, and even building apartments for rent rather than sale. Unless there is government regulation, the logical conclusion of this ongoing economic change is that individuals will ultimately rent everything and own nothing. Competitive pressures will, of course, still demand increasing efficiency, the driving down of labour costs, and automation.
In the case of service consumption, our individual physical and mental skills are offered to others in return for payment, e.g., gardening, plumbing, cooking, legal knowledge, accountancy, artistic skills and so on. However, investors are also moving into this area and establishing organisations to oversee the provision of these services, e.g., Uber, Deliveroo, and so on. Those who originally provided an interpersonal service are either becoming contract staff or are being replaced. Again, the logical conclusion is that all services will be provided by large organisations, all service providers will be employed by them, and labour costs will be driven down. New services will also need to be found and marketed. What will they be?
So, unless these economic changes are regulated by government, then, taken to their logical conclusion, all who do not own capital will :
- own nothing and rent everything;
- do nothing for themselves but employ large organisations to do everything for them;
- be self-employed and working for the same large organisations;
- have no employment rights;
- earn a minimum wage; and
- be unable to afford the goods and services they need without running up large debts.
Does this sound familiar? Clearly, this situation is free market driven, unsustainable in the longer term, and it is for governments to steer society towards a more equitable and sustainable model.
In the meantime, a growing number of people are finding themselves impacted by these changes. The resulting insecurity, uncertainty, and frustration are leading to the growing incidence of mental ill-health.
Toxic Workplace Cultures
This is compounded by the toxic culture to be found in many large organisations.
Claire Smith, Editor of New Civil Engineer magazine stated in August 2023, that “…people working in the construction sector are three times more likely to commit suicide than those in the general population…” and “…Those working in the trades are eight times more likely to take their own lives.” In the same magazine, the trade union Unite’s national officer for construction, Jason Poulter, estimates that “over 500 construction workers died as a result of suicide last year [2022] and rates are rising.” He goes on to say that “most workers feel unable to raise mental health concerns because of the toxic macho culture that pervades our industry. This is entwined with a fear that if you admit to a problem, you are likely to be given your cards [i.e., fired] and removed from site especially if you are officially self-employed”. Mr Poulter and Unite are, of course, lobbying for mandatory regular mental health work-related risk assessments, cultural change in the industry, and the powers and resources for government agencies to investigate all work related suicides.
I can confirm from personal experience, that toxic macho cultures do indeed exist in industry, and have considerable insight into how and why they form. Such cultures have always existed but for them to contribute to the growth in mental ill-health, they also need to be impacting on more employees or to be worsening. Research by Culture Shift, shows that 40% of interviewees from a sample of 1000, have witnessed problematic behaviour, such as bullying, harassment or discrimination at work, growing substantially from the 22% that their 2020 survey uncovered.
Unfortunately, there are no statistics providing longer-term evidence of an increase. However, as services are increasingly centralized and brought under the control of large organisations that experience the pressures of competition and profitability, the number of people exposed to such cultures, and thus, their impact on mental health is likely to grow.
References
https://www.gov.uk/government/news/gross-domestic-product-gdp-what-it-means-and-why-it-matters
Rational-Understanding.com 