Common Good Economics, Seminar 3: A Vocational Economy
A Vocational Economy?
In the opening seminar we explored a series of assumptions that have been invisible to the various strains of the prevailing economic orthodoxy but are of central importance to the statecraft that is required to address the lack of productivity in the economy. The first of these was that productivity is linked to the skill, character and resilience of the workforce and that this would require a re-evaluation of vocation and the institutions required to reproduce skills and the power to adapt to changes in knowledge and in markets. We also suggested that a body politic, made up of distinct institutions which embody a good are required to uphold incentives to virtue and the reproduction of value and that this is distinct from an exclusive reliance on a centralised state. A neglect of the role of civic institutions and ethos in the valorisation of labour value, particularly vocational institutions that place a stress on the internal as well as the external rewards of work, were part of this. We doubted whether the concept of ‘human capital’ could quite capture what is required for transforming our ‘low wage, low productivity equilibrium’.
We also argued that there has been a sharp polarisation within the labour market characterised by increasing debt and stagnant wages at the lower end. Those dependent on a modest income, without inherited assets to ease their way, have found themselves as the biggest losers of the long cycle, beginning on the 1970’s of first inflation, then the accumulation of public debt and finally the explosion of household debt that culminated in 2008 and the subsequent growth of pay day loaning.
In terms of state economic strategy, it was assumed that there would be a decline in manual jobs and an increase in transferrable skills. Gordon Brown, for example, predicted in a 2006 speech that there would only be 600,000 low skilled jobs by 2020. In contrast, the number of cleaners, cooks, security guards and builders has grown. A consensus developed that what was emerging was a ‘knowledge economy’ where the knowledge in question was general, abstract and transferrable. This then grew into the idea of the ‘creative economy’ in which the mobile, the literate and the obviously creative people were the basis of productivity growth and prosperity and state policy was based on increasing their number. In 1984 there were 70 universities, now there are 170. 14% of the age cohort went to university then, now it is 48%. In 1984 the turnover of the higher education sector was £7 billion, today it is £33 billion.
The channelling of national resources into higher education was paralleled by the collapse of the apprenticeship system which fell from 250,000 apprentices in in 1973 to 50,000 in 2016. There are, in contrast, 1.4 million undergraduates. The key moment in the final humiliation of vocation as an educational practice was the transformation of 35 polytechnics into universities in 1992. In the meantime, despite increases in funding and multiple reforms there has been little improvement in the educational attainment of the bottom quarter of school students. 17% leave school illiterate and 22% innumerate. In this regard we are genuinely competitive with Albania. Cognitive ability overshadowed character, practical competence or experience as a criteria for success. State policy in regards to mediating globalisation through a national system, if there was one, was not based on the reproduction of skills but the generalisation of knowledge.
One might say that the human desire to earn and to belong has not been a part of the approach and the result is that a polarised labour market has been paralleled by a polarised politics.
In seminar one it was also argued that the supply of a skilled and valorised workforce required non-pecuniary institutions which fostered reciprocity as well as contractual exchange and central redistribution. In a market society the institutions required to sustain the virtue necessary for the reproduction of a productive society are deemed a constraint on liberty. Karl Polanyi developed the paradox that in terms of economic productivity, ‘pre-modern’ vocational institutions are a precondition of sustaining competitive productive practices. The post-was West German economy was sited as an example of this.
The meaning of vocation is itself a challenge to the assumptions of modernity. First it assumes a tradition of practice inherited from the past and transformed in each generation by changes in knowledge, technology and practice. In that sense, it is not entirely owned by the individual in the form of a career, but is joined by means of an apprenticeship. The distinction made in the 1830’s between a profession and a vocation was decisive in the degradation of vocation as a practice. Professions required an extensive apprenticeship, induction and acculturation combined with control over labour market entry. Sustained areas of national excellence; medicine, law, dentistry and even accountancy were elevated in their status through legal recognition of the practices validated by the partnership between universities and professional associations and recognised by the state. This was the not the fate of skilled manual labour whose status was abolished and whose conditions were deregulated.
The Professions renew their knowledge and innovate by assimilating change into an existing practice and body of knowledge. The degree of expertise and specialism is incapable of being grasped by a centralised state, change is based on internal rather than external judgement, but it is also incapable of being sustained by a contractual economy alone. It requires institutions which preserve and renew the inheritance embodied in them. It resists the commodification of the practice and the person. That is what is meant by an inheritance that bestows a status and an advantage over others who do not possess it. In our scheme, it embodies the principle of reciprocity through which mutual benefit is sustained over time through mutual contribution to a common institution that sustains knowledge and status. Vocational institutions preserve bodies of knowledge and patterns of structured co-operation by adapting to the demands of external change in terms of technology, administrative rules and knowledge by translating those external dangers and possibilities into a communicable language of skills and practices. They facilitate a comprehensible adaptation to a changed environment. Vocational institutions, characterised in this way are, what Aristotle called ‘embodiments of human meaning and purpose’, an active means of integrating new knowledge with existing practice, translating information into knowledge of a specific practical kind.
As well as its institutional inherited form there are three other aspects of vocation worthy of mentioning. The first is that of a calling, a person finding their fulfilment and meaning in their labour, which is specific to them and not transferrable. The second is the role that tradition plays in modernisation, which was discussed in the first seminar. The third is its link to virtue, defined by Alasdair MacIntyre as ‘an acquired human quality the possession and exercise of which tends to enable us to achieve those goods which are internal to practices and the lack of which effectively prevents us from achieving any such goods.’ In other words, we are developing a definition of virtue as good-doing rather than do-gooding and then embedding it in the economy as a necessary feature of a resilient productive economy.
This draws attention to the two definitions of economy, the formal one of the rational application of the minimum effort for the maximum gain; economising; and the other substantive definition being the satisfaction of needs through combined effort. Karel Williams has developed this very well through the idea of the foundational economy and it has also been called the everyday economy.
The argument presented here is that through the public recognition of vocational institutions which preserve and teach the practices of specialised disciplines, defined by their own internal goods of quality and expertise, the capacity of the economy to innovate and adapt to changes in its environment is enhanced. They serve as a source of ethical regulation and expertise within the economy, and thus serve as an alternative to an exclusive reliance on external regulation. The paradox is that labour market flexibility is a cause of uncompetitive production. Or, productivity is low because the status of labour is weak.
Productive and resilient economic activity requires a society characterised by robust non-market institutions entangled within the economy that are best described as vocational. This is because they are based on the upholding of institutional authority within the economy through the granting of work licences which permit the practice of a trade or profession through the fulfilment of an apprenticeship and that this is most appropriate for the demoralised lower end of the economy where the productivity problems are acute. We might push this further and say that economic virtue, based on skill, honesty, courage and solidarity is a necessary condition of international competitive success. Some notion of tradition and inherited knowledge mitigates against a revolutionary conception of change, in technology, management or production. It is on the basis of exiting knowledge that the changes resulting from innovation can be assimilated. Innovation, in this sense, is the capacity to re-order and connect received ideas in different combinations rather than an exercise in making something out of nothing. Amidst all the discussion of robots and technology, they can only function if there is enough expertise existing within a firm to repair, retool, redesign and reset them, that is setting aside daily maintenance.
We will discuss in the next seminar how the exclusion of the workforce from corporate governance representation seals off the knowledge of the workforce from decision making. A complementary insight is that it is at the point of production or delivery that quality is built into the product. Elam puts this well:
“All the information inscribed in textbooks, journals, reports, data bases, patents, blueprints, standards, instruction manuals and so one, is just so much ‘empty talk’ unless it is brought to life and lived in and out by skilled individuals.”
A good society, defined here as a society capable of producing goods, requires institutions within the economy that preserve the skills and practices required for concerted responses to innovation and uncertainty. Vocational institutions preserve good practice, or virtue, within the culture of production by upholding the authority of civic institutions and resisting the commodification of the person and of knowledge. The German economy benefits from a strong artisan sector in which vocational institutions enforce their qualifications and forbid industrial firms entering the artisanal domain. Cities and municipalities actively support, through funding and endowment, the preservation of the colleges and artisan guilds. Through the preservation of non-contractual organisations that uphold values other than the maximisation of economic advantage, an ethos of production was preserved which bestowed a considerable competitive advantage in open markets. Free trade did not involve a free market in labour. Or to use the categories developed in seminar one, through regulating the supply side in fictitious commodities, the demand for real commodities was capable of fulfilment.
It was the lack of market penetration in the formation of labour markets that bequeathed a comparative advantage to West Germany in renewing their productive methods. This is the argument of Paul Hirst when he says that:
Social continuity has provided the stability and support to absorb and promote radical change in technology and economic organisation.
This notion of a vocational economy requires certain institutional and legal features. The establishment of a Living Wage is an excellent starting point for forbidding the pubic bad of poverty wages. Another is the status of vocation in regulating labour market entry. This, however, is forbidden in an open economy as a constraint on trade. Understanding this is fundamental to the tension in our economy which could be conceived as a conflict between the forces and relations of knowledge. The forces of knowledge are defined by intellectual copyright, managerial prerogative and knowledge markets. The relations of knowledge are characterised by the pooling and sharing of knowledge within and between firms and the sharing of institutional support, the most important of which are vocational colleges and universities. If an information regime is imposed that prohibits the provision of public goods and conceives of vocational practice as a constraint on trade, then the productive capacity of the economy to innovate from within is threatened.
What is at stake is perhaps best understood through an analysis of the difference between Hayek's economic and social theory. In his social theory Hayek proposes three concepts that characterise the emergence of the open society, or what he calls catalaxy. These are reason, instinct and tradition. It is tradition that mediates between the self-defeating rationality that unmediated reason brings and the atavistic closure that is generated by instinct. Tradition mediates between rationality and instinct and tempers their conflicting and extreme demands. In his economic theory, however, there is no mediating principle between the state and the market, there is no account of the institutions that uphold traditions of virtue, of excellence and of trust. We are, of necessity, interested in those institutions that sustain successful markets and the role they play in shaping and forming the factor market of labour. That is why we are interested in both universities and vocational colleges. Decentralised intermediate institutions that uphold skills, and can translate information into knowledge. They enable people to understand and adapt to change not exclusively as an external force but also as something they can understand and shape.
It is assumed here that state direction of the economy reduces virtue through its reliance on criteria external to the practices of production and is inhospitable to the demand for decentralised adaptation degenerated by the volatility and unpredictability of demand and technological change. It is also argued that the state has a vital supply side role in the recognition of institutions which promote public goods within the economy.
Common Good Economics is committed to establishing a relationship between estranged interests in which no one interest dominates; capital and labour, north and south, producers and consumers, finance and manufacturing, professional and manual, public and private. What policies follow from the arguments made here?
1. Cognitive and transferrable knowledge has been dominant in relation to vocational and specific knowledge. That needs to change
2. The transformation of polytechnics into universities in 1992 exacerbated this weakness.
3. Technical schools were never funded in parity with grammar schools or secondary moderns.
4. Comprehensive education has not remedied this deficiency.
5. Trade Unions have pursued neither corporate governance representation or a knowledge partnership with employers.
6. The poorest third of the population have not benefited from educational or economic changes.
7. Half the universities could be turned into vocational colleges, funded by the state, employers and unions.
8. There could be vocational pathways in comprehensive schools that lead to the apprenticeships in partnership with vocational colleges.
9. Royal colleges could be established as democratic organisations that ethically regulate the manual trades that are now deregulated.
10. Vocation is given equal legal recognition to the professions.