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On the Financial Crisis in the 20:80 Society

The question is how we deal with the 20:80 society, not whether the 20:80 society is coming because the development is irreversible. In the long term, work will disappear..Jobless growth has become the normal condition. The industrial age is only the blink of the eye in history.

The world economy is in free fall. How will society deal with the expected mass unemployment?

By Jens Berger

[This article published in the German-English cyber journal Telepolis 12/9/2008 is translated from the German on the World Wide Web,  http://www.heise.de/tp/r4/artikel/29/29286/1.html.]

When the digital revolution and globalization made their triumphant advance, future researchers predicted the way to the 20-80 society. Only 20 percent of the population able to work will be enough to keep the world economy going. 80 percent of the population will be jobless and must be humored with "titty-tainment." The coming world economic crisis will be an accelerator for this development since the causes for this development lie more in technical progress than in global trade. There are few concepts on how our society should deal with the coming mass unemployment. Neither politics nor the economy seems interested in facing questions of the future.

Will we live in a society with mass poverty and chaos or in a society where persons freed from work can develop individually? The points for this must be set in the next years.


In September 1995 the global elite met in the fashionable Fairmont Hotel in San Francisco. (1) On invitation of the Gorbatchev foundation, 500 leading politicians, business leaders and scholars of all continents came together to discuss the "way into the 21st century." The thesis that only 20 percent of the population able to work will be enough to keep the world economy going was the main discussion theme of the meeting.

The American economist Jeremy Rifkin was the intellectual father of the 20:80 society. In his book "The End of Work," Rifkin analyzed the consequences of technical progress and concluded that work abolishes itself. The progressive rationalization of processes in the production and service sectors and the worldwide use of information technology lead to a production thrust making many millions of jobs superfluous. According to the capitalist logic, technological progress and higher productivity create many new jobs while destroying old jobs. Rifkin regards this as a fallacy. The question is how we deal with the 20:80 society, not whether the 20:80 society is coming because the development is irreversible. In the long term, work will disappear.


In the pre-industrial age, over 80% of the population labored in agriculture. The gross profit at that time was a few hundred euros per head a year. This was reversed with technical progress. Today around 2.5% of the population is active in the agricultural sector, produces a comparable quantity of products and earns around 15,000 euro per head a year.

The same development has occurred for a long time in the industrial sector. From the end of the industrial revolution to the 1970s, between 40 and 50% of Germany's population were active in goods production. Since then the triumphant advance of higher productivity through modern technology constantly lowered the share of employees to today's share of around 30%. Nevertheless both the product output and the surplus value increased from year to year. In the producing sector, according to Rifkin, a change is taking place to a market that largely functions without human labor. For the coming decade, he predicts a massive job reduction in industry analogous to the reduction in agriculture at the beginning of the last century.

Over two-thirds of all German workers are employed in the service sector, which represents the highest share in the gross domestic product. The "third industrial revolution," as the triumphant advance of information technology of the last two decades is described, sets the points here for a growth in sales with a simultaneous decline of the factor human labor.


Paul Saffo from IFTF in Palo Alto once said that the business of information technology in the 1980s enabled people to speak with people. Today machines can speak with machines. The person as a factor becomes superfluous. Decades of the booming world economy have demonstrated one thing worldwide: production increases, productivity increases but jobs decrease. Jobless growth has become the normal condition.

Even in Asia's booming threshold countries, the number of unemployed has risen and not fallen with the unparalleled economic growth. (2) If wages in these countries rise with time, the productivity will destroy even more jobs there. Factory halls filled with thousands of workers performing functions that could be done by modern robot-controlled production sites will only exist as long as human labor is cheaper than machines. The final stage of this development is the 20:80 society. The progress cannot be turned back and does not know any limits.


While every individual business welcomes this development since its own competitiveness increases and profits climb, the national economy faces a dilemma. Customers must ultimately purchase products and services. When ever-fewer people with ever-lower wages acquire products and services, there are fewer and fewer customers for these products.

Therefore in the sign of the 20:80 society, the free enterprise system must find a way to keep the number of consumers as high as possible. If this does not succeed, the system collapses.


For decades the US was regarded as the motor or engine. However the dirty secret behind the US economic boom, Rifkin says, is the mad indebtedness of the private household. According to the US Federal Reserve, the volume of US consumers credit amounted to $2.56 trillion in 2008 - around $9,000 per capita - from the baby to the old man. The number of private bankruptcies in 2008 will reach the million mark. This is nearly the number of university graduates. Therefore the financial crisis and the consequences are a disastrous avalanche for the snowball system of American growth on credit. Sooner or later the unemployment statistics will soar. (3) The threatening bankruptcy of the US automobile industry is only one of many writings on the wall.

The US is on the way to the 20:80 society. Even if the irrational factor indebtedness disappears, the American national economy will find itself again at a purifying level. How it deals with this is another question. Hardly any other country is worse prepared for the 20:80 society as the US because of inadequate welfare systems.


The worldwide decline in demand will cut exporters to the quick along with importers. No other industrial country has concentrated so intently on export as Germany. Therefore no modern industrial country will be stricken so severely by the export collapse that inevitably follows a worldwide economic crisis. While the private indebtedness in the US created jobs in the service sector, the American demand had an effect on the labor market numbers in the industrial sector in Germany. With the goods sold on credit worldwide, the labor market decline in the producing sector would have been more significant. The rationalization process in production was compensated for years in Germany through increased production output.

For years, it seemed world trade resembled a perpetual motion mechanism where one side consumed and the other side produced. The daily bad news from producing industry now shows that Germany is not an island of the blessed in a worldwide economic hurricane. In Germany, the worldwide economic crisis will massively affect unemployment. One does not need to be a prophet to predict this.

The financial crisis has ultimately only ended one phase of the irrational upswing. For the world economy, it is corrective. Technical progress and higher productivity may not be turned back with declining production numbers. Work fades amid progress. What is left is an army of the jobless.

"The industrial age with its mass prosperity is only the blink of the eye in the history of the economy."
John Nisbitt - American future researcher


In Germany today 22 million full-time workers face 25 million pensioners, 1 million recipients of unemployment benefits I and 8.3 million recipients of state transfer payments to secure their basic livelihood. (4) The number of those who earn their livelihood with classical full-time work is declining in all OECD states and a return to full employment cannot be expected.

The triumphant advance of globalization has contributed to a worldwide economic upswing and to profit expectations that cannot be reached in many areas of the economy. Whoever cannot keep up with the very productive economic efficiency will not be able to sell his product or service. This development is not new. Whole lines of work have disappeared because they were displaced by the productivity in other areas.

Thus the vocation of shoemaker has largely vanished since handmade products cannot keep pace with competition from mass production in modern factories. The proportion of human labor per product unit has fallen massively through this production changeover. This process is irreversible. For a long time, people hoped for a growth of sales markets. When these markets are satiated, the supply of jobs only goes downward through present and future improvements in productivity.


Since the myth of full employment cannot be maintained in a satiated market with higher productivity, it is also time to bid farewell to the golden calf "work." When "work" is no longer the dominant form of gainful income in society, one must also bid farewell to the social form of gainful employment. Work as a central theme of life is both a Puritan and a socialist dogma. The call of "work for all" seems anachronistic in a society where a small part of potential available labor is enough to produce the goods and services for maintaining a high quality of life.

Performing the same stupid activity every day cannot be human fulfillment. Why should people do the same mechanical jobs day in and day out at a production site or answer the same questions on the telephone when machines can do this? The gained free time could be used meaningfully at last. The real problem of unemployment is its financing.

When enough people believe that crass economic reason robs them of their life chances, they will revolt. In any case, no one puts his hand in the fire in our part of the world to prevent revolution in the future. One should not insult history through a lack of imagination.
Theo Sommer, former editor of ZEIT


In ancient Rome, the economic disparity between rich and poor citizens of the city forced by a constantly growing number of slaves was defused through bread and circuses. The machines are today what the slaves were in ancient Rome; Hartz IV is what bread and circuses were. The old warhorse Zbigniew Brzezinski coined the term "titty-tainment." What was central wasn't sexual entertainment for the masses but the milk that streams from the breast of a nursing mother. The population should be humored with a mixture of intoxicating diversion and a minimum quality of life. The better a society can maintain its unity by preserving quality of life for broad sectors, the more future-friendly this society will be. Keeping large parts of the population from general prosperity would provoke chaos and revolution and destroy the economic cause of the modern market economy. If the masses can no longer afford the products and services brought by high productivity, the system collapses. Consequently safeguarding a comfortable living standard for the non-working population is a mega-economic pressure, not an altruistic ideal.


Work disappears. No politician will tell this to his voters. Instead, as Jeremy Rifkin explains, politics has devised three pseudo-theories to explain this development. We are losing jobs in our country because wicked businessmen transfer jobs abroad. We have enough jobs but people aren't rightly trained. We have too few jobs because social taxes are too expensive. For Jeremy Rifkin, all three arguments are absurd.


The 20:80 society can only survive when the 80% who have no full-time job can share through a broad distribution of prosperity in society without feeling expelled and robbed of their chances. The wealth that could potentially be distributed exists in a highly productive national economy. In 2006, Germany had a gross national income of over 2.3 trillion euro - around 28,000 euros per capita.

Thus a form of unconditional basic income is unavoidable. The question is what form and what amount, not whether such a basic income will come. On the way there many detail questions must be clarified. Basic income and tax systems harmonized on the European Union plane could minimize negative competition effects. This will be a long way as long as national politics is fed by competitive thinking.


If the distribution questions were solved in this manner, people liberated from work could develop individually and serve society. The voluntary post could drop its status as a hobby for the higher-paid and make possible meaningful activity in social, cultural or educational areas for wide sectors. Education and access to knowledge, the key factor for the future of work in Jeremy Rifkin's book "Access," could be mediated beyond all market logic and profitability pressures.

To the person of the future, something was taken away in the time of the industrial revolution - time. Overtime hours and the 40-hour week could belong to the 20:80 society of the past since work would be better organized. "From everyone according to his abilities and to everyone according to his needs!" Marx probably could not have dreamt that his ideal could be realized through the abolition of work. Generations of economists have analyzed the market economy and increased productivity. Today the market economy is so productive that holding to the well-trodden path threatens the market economy itself. Society will be defeated by progress without a radical change of paradigms and without utopias.

The end of work can be a great leap forward for humanity. But we must venture that leap.
Jeremy Rifkin

(1) http:// www.sozialimpulse.de/pdf-Dateien/Globalisierungsfalle.pdf
(2)  http://www.ilo.org/public/english/employment/strat/kilm/index.htm
(3)  link to www.ftd.de
(4)  link to www.destatis.de
(5)  http://www.stuttgarter-zeitung.de/stz/page/detail.php/916564
(6)  http://www.heise.de/tp/r4/artikel/21/21221/1.html
Telepolis Artikel-URL:  http://www.heise.de/tp/r4/artikel/29/29286/1.html

homepage: homepage: http://www.mbtranslations.com
address: address: http://www.worklessparty.org