Note: This is a draft of a piece written for a forthcoming collection of essays on Voluntary Simplicity and its role in thinking about Peak Oil, Climate Change and the Economic Crisis. I welcome comments, critiques and suggestions for this piece. BTW, in the interest of fairness, if you want to read a cogent critique of my Informal Economy analysis, you should check out Crunchy Chicken’s latest _Depletion and Abundance_ book discussion club post - she takes me to task for overemphasizing the value of the informal economy. I found her critique useful as I try to make the idea of the role of the informal economy clearer.
Although I admire the Voluntary Simplicity movement, when I was asked to write about simplicity and the economy, I was at first stumped. I can certainly see the grace and benefits of living a simpler life. We already grow much of our food, buy most of our consumer goods used, “Use it up, wear it out, make it do or do without,” try and keep our energy use down to below 1/5 of the average American’s, and depend heavily on community, barter and sharing. At first glance, although we’re Jewish, not ”Plain” our life evokes a simpler past with the wood cookstove that heats our house, the jars of home canned food, the milk goats and our carefully managed budget.
When I think about Voluntary Simplicity, I tend to think about the end - imagining, if I could only get there, that my life would have the clarity, beauty and elegance of a a sculpture - nothing extraneous, only the essence of the thing. I want this, although it seems hard to achieve. My own sense of the voluntary simplicity movement is that it works kind of like sculpture - one pares away everything that isn’t needed, until one find’s the essence of one’s life. It reminds me of the old sculpture joke, that one starts with a block of stone, and “cuts away anything that doesn’t look like an elephant.” At times, the idea of the elephant, the life lived gracefully has haunted me.
And yet, for me, the simple life has arisen from a conviction that we face a kind of “involuntary” simplicity, a shift to a life with less from necessity. It isn’t that I’m not taken by the aesthetic beauty of the transformation - how could I not be, as the snow falls upon my woodpile and as I come in, dusted with white stuff, carrying the milk from the barn, with the memory of my goat’s warm bodies and the gentle sounds of chickens settling in for the night. But along with an appreciation of the pleasures and clarity of a life with less, there is also the convictions that many of us, including me, will have no choice but to live simply, and that we are more likely to live well and beautifully if we practice now. I think there has been a tendency in the Voluntary Simplicity movement to see simplicity as primarily a chosen path, one which all compromises are voluntary, and the art of living is the primary mover. How then, might simplicity change when it is thrust upon many of us?
Why do I think that it will be? Why do I believe that hundreds of thousands of Americans and Europeans are facing a radical drop in standard of living, and an urgent need to live simply, make do and do subsistance work that helps them live that way? Well, as someone once pointed out, ”its the economy, stupid.” Oh, and peak oil and climate change. But for now, let’s stick to the eocnomy.
As I write this, the official unemployment numbers are rising quite rapidly, to 6.5%, with the broadest estimates including the underemployed at 11.8%. But more importantly, those numbers don’t tell the whole story of US unemployment. Because US unemployment numbers are routinely understated - they do not include most of the underemployed or workers who have been unemployed more than 1 year, some analysts place the numbers as high as 16%. By the end of 2009, many economists are predicting unemployment rates of 9% using the lowest estimates - and since time to finding new work has also extended, we can anticipate than many of the currently unemployed will have fallen off the radar screen, used up their unempoyment benefits, and no longer be counted. Full national unemployment will probably be debatable, but may be as high as 20% when all workers are counted. At minimum, more than 3.6 million additional jobs will probably be lost.
It is possible that unemployment benefits may be extended - this occurred during the 2001 recession, for example. But if that comes, in the US, it will have to come from the federal government, not the states, which are already nearing a crisis in their unemployment funds. California, New York, Nevada, Ohio, Michigan and Rhode Island are among the early canaries in that coal mine, with unemployment funds already near empty, but other states will also struggle. Two-thirds of American states are already experiencing budget crises as I write this, at the end of 2008. And since the government has already committed 7.7 Trillion dollars, mostly to financial institutions, there are real questions about what they will be able to fund, and to what extent.
Unemployment is uniquely disheartening and destructive to people’s sense of self. And families dealing with extended unemployment will have an urgent need to reduce their economic needs, and also find supplemental income, often unreported income that won’t impact their unemployment or their eligibility for social support programs. Perhaps even more importantly, they are going to need meaningful work, or risk depression, despair, the destruction of families and households. John Maynard Keynes argued that having work, any work was so important to morale and thus to the hope of the economy that people should be set to work burying money in the ground, while others are paid to dig it up. For those who are unemployed, finding some kind of way of contributing to their family’s well being is going to be essential.
But unemployment isn’t the end of the story. Wages are also likely to fall in the current economic crisis. To give a sense of what is possible, in the Great Depression, according to historical documents collected in David Shannon’s _The Great Depression_ both salaries and hourly rates fell quite dramatically. For example, in the state of Ohio, fully employed wage earners (that is, this doesn’t average in the losses of the unemployed) saw their annual salaries fall from an average of $1499 in 1929 to $960 in 1932, a huge decline. Unemployment on a large scale begets lower wages, as employers can pick and choose, and employees will increasingly take any work.
Meanwhile, many US employers will respond, as they have in the past, by reducing hours for employees, shifting more and more of their employees to part-time work without benefits, to save money. Electronics retailer Circuit City was an early example of this, but we are seeing more and will continue to do so. For now part time employees, there is likely to be a strong need to remain healthy (ie, to shift their lifestyle so that they don’t make use of medical care if it is avoidable) and also to reduce expenses and find supplemental income.
For many older baby boomers, the loss of a job and a period of extended unemployment may push them out of the workforce altogether. Unemployment at 60 is different than unemployment at 35. Right now, stock market losses are discouraging retirement - but the comparative certainty of Social Security and Medicare may soon look better than a long job hunt with minimal prospects of success, creating a new class of older adults living on a comparative pittance, with a strong need to reduce costs and perhaps make some extra money under the table.
Because many US two earner households, particularly those with children, find that a second income is often eaten up by increased expenses associated with working - the second car, the daycare costs, the meals out because there’s little time to cook - a decline in wages, particularly accompanied by a dramatic cutback in available credit (at this time credit card companies are planning to pull back 2 trillion dollars in personal credit lines to consumers and small businesses - at a time when credit card use is increasingly necessary for strapped consumers), may actually push workers out of the workforce, as the marginal value of their work declines.
While the cost of living will almost certainly decline along with wages, it probably will not do so proportionally - for example, the price of gasoline has declined dramatically since the summer highs - but not to nearly the price levels of the last time oil was at $48 barrel. Utility price raises implemented earlier in the year remain in place, and food prices have not come down dramatically, despite lower ability of consumers to pay. So the marginal cost of going out to work may well narrow, discouraging people, especially women providing second incomes, from working.
What will all these households do to survive? Most of us rely heavily on what economist call “the formal economy” - that is, the wages and benefits paid by employers. And yet these are going to decline or disappear. The second largest source of consumer liquidity is credit cards, and credit lines are disappearing as well. What happens when the formal economy stops supporting 10, 15 or even 20% of all of us? Do we starve to death?
Well, if evidence from other countries that have experienced economic collapses, and from the Great Depression itself is any measure, the answer is, for the most part, we don’t. Government social programs may well pick up more of the slack. So will charities, although most will suffer from decreased giving and increased need. But the other thing that we rely on is the informal economy.
What’s that? Well, worldwide, according to Teodor Shanin, the founder of “Peasant Economics” the world of GDP statements and taxable labor only produces about 25% of all economic activity. The other 75% is the territory of the “informal economy.” What is that economy made up of? Well, it includes everything from off the books labor (illegal alien employees, your habit of driving your cousin’s taxi off books, the babysitting your sister takes cash for, your daughter’s babysitting wages), to volunteer work (enormously economically valuable - I’m betting your city or state has quite a few major tourist-drawing institutions like museums, parks, annual events and symphonies that depend heavily on volunteer labor but bring in income), to love-labor (Grandma watches the kids for free while the parents work, you don’t put Grandpa in the nursing home, you take care of him at home) to the criminal economy (15%+ of the world’s total GDP comes from criminal activity, believe it or not, and drug dealers and bribed politicians shop at Walmart and McDonalds too - that is, that money makes it into people’s pockets), to subsistence labor (the food you grow and preserve yourself, the clothes you fix instead of replacing, etc…), from barter, to what was once “women’s work” (now often shared between the genders - the household labor you do yourselves instead of paying for).
Three full quarters of the world’s economic activity is informal economy labor. There’s more of it in the poor world, and less of it here, more of some kinds in the country (more seasonal, off the books work and subsistence work) and more of other kinds in the city (prostitution, illegal immigrant labor). And in hard times, there’s more of it than there are in good ones. In fact, in hard times, the informal economy is the last and most important safety net.
Peasant economics emerged in part out of studies of Africa and the collapsed Soviet Union - economic models claimed that Russians, for example, should have been starving, but they mostly weren’t. Instead, the informal economy grew up to replace the formal one - people grew food in gardens, and small farmers actually did better than they had when imported goods undercut their prices. People dismantled their abandoned workplaces, and sold the metals, sold goods on the street, and brought unavailable imports over the border.
But we don’t have to go to Russia, with all the baggage that implies, to see the role of the informal economy. After all, what are the iconic images of the last Great Depression, except stockbrokers selling apples on the street? During the Great Depression, the informal economy expanded enormously. For example, the New York Times in 1932 reported that the number of shoeshine “boys” (most were adult men) rose from 423 in 1928 to 7,000 in 1932. Hawkers of non-food goods rose dramatically - on 14th St, between Sixth Ave. and Union Square, 38 street sellers were counted, where two years before there were two. The number of truck farmers from New Jersey and Long Island coming into the city to sell the vegetables they grew rose by more than 400%. Tens of thousands of “Okies” ended up picking fruit or doing farmwork under the table when the dustbowl cost them their own farms. One study of African-Americans in and around Baltimore found that more than 20% of households relied on gardens, backyard chickens or other “farm” activities in the city” to feed themselves. A WPA study of rural women in Tennessee found that 74% of households relied on money made by women outside the formal economy - by taking in laundry, sewing, selling sandwiches or home cooked food, caring for other people’s children. In 14% of the cases, the women were single parents or sole earners living entirely outside the formal economy.
That is, the informal economy, which includes many of the traditional activities of a simpler life - having less stuff, consuming less, making your own, cooking from scratch, growing a garden, bartering with neighbors, relying no community, taking care of your own, being self-sufficient - is likely to experience a rapid influx of people who now depend on this segment of the economy. As the formal economy shrinks, the informal economy becomes more central to people’s lives.
There is a tendency to understate and devalue informal economy work, particularly the portion of it that has typically been the work of women, or laborers - and thus, to underpay it. I remember being a teenager and being astonished to find that many of the people who employed me as a babysitter a substantially higher hourly wage to the landscaping employee who mowed their lawn than they did to the person they left their children with. We are told that our work in the informal economy is too physically demanding (growing food) or too mind-numbing (caring for children or the elderly), and that we won’t enjoy it. Never mind that much of the work we do is physically onerous (working in nursing homes did much more damage to my back than gardening ever has, and sitting still in front of a desk can be as physically painful and disabling as any outdoor labor), mind-numbing (do I really have to provide a list of jobs that aren’t particularly stimulating?) and unenjoyable.
But because we devalue the informal economy and its work, we are blind to the power it has. It isn’t a magic bullet, and our lives of involuntary simplicity will probably be complex and difficult at times. Sometimes they will have that measure of grace and beauty we associate with simplicity. Sometimes we will look and find that we are happy despite what we don’t have, despite the hardships. But no one can be happy if they live in fear, in hunger, in cold - ensuring that when the formal economy falters, when the promises it made to us are left unfulfilled, there still is the informal economy to enable us takes some work, work we should start now.
What work? Well, if we plan to rely on meeting the needs of our neighbors informally, perhaps we’d better meet them now, and learn what they need. If we plan to rely on our adult children to help us survive the loss of our retirement funds, perhaps we’d better live more closely now. If we plan to live the simple life, perhaps we’d better get some practice at simplicity - try and pick up the skills of mending and fixing, making do and stretching menus. If we’re going to live in the informal economy, perhaps we need to first locate the ways that economy exists in our area, and the community structures that enable and surround it.
Getting to the simple moments in my life hasn’t always been easy. Coming from the barn, warmed by animal bodies and smelling of hay and life with fresh eggs and a container of milk, into a kitchen warmed by wood and full of the smell of roasting homegrown root vegetables, comes in part from many small scrimpings and struggles, many of them made possible by a life lived partly in the informal economy. The good price on hay to feed the goats came from a barter arrangement we made with a nearby farmer. The barn was rebuilt with the money we saved by cramming all six of us into a single compact car, and by not driving that very much. The garden was the product of time - time in which I might have been earning money but wasn’t - time bought by the value of the food I grew. It adds up to a measure of security, a kind of certainty that I find rich and valuable in this uncertain time.
Choosing the artful life has merit. But it is worth noting that most lives are a combination of choice and necessity. What if there is another way of sculpting an elephant - what if we cannot start with the pure vision of the elephant in the stone, and then choose what to remove. What if bits and pieces of the stone are being worn or cut away without our intention?
In that case, we have a stark choice. We can attempt to hold on equally to everything, to each piece of stone. But what if we can’t? Then the question becomes what we end up with, when our losses are complete. Do we have an elephant, perhaps a smaller and less perfect elephant than we’d dreamed of? Or do we have a pile of rubble?
The role of voluntary simplicity is helping us understand what we can let go, that we can let go of more than we thought we could. Its role is finding the elephant in our losses - that is, leaving us with a life with less we can live with. We know what this means - the kind of life where we can say “we were poor, but we were happy” or “we were poor, but there was always food on the table and plenty of love and friendship.” The difference between that and the kind of poverty that leaves us in the rubble of our lives, without anything to cling to is vast. In order to achieve a kind of functional poverty that we can live with, we have to know what we can really live with - and without. In return, we get an elephant.