Explaining Bullshit Jobs with Monetary Theory

It’s as if someone were out there making up pointless jobs just for the sake of keeping us all working. And here, precisely, lies the mystery. In capitalism, this is precisely what is not supposed to happen. — David Graeber

The recently deceased anthropologist David Greaber’s seminal essay, followed soon after by the book, “Bullshit Jobs”, was undoubtedly one of the most impactful intellectual efforts of recent times, being translated into several languages, resonating with people across the globe and becoming a touchstone of political and economic discourse.

Graeber has no trouble identifying the what of the problem — work so frivolous that even the person doing it agrees that it serves no real purpose. He also proposes a somewhat convincing reason why:

The answer clearly isn’t economic: it’s moral and political. The ruling class has figured out that a happy and productive population with free time on their hands is a mortal danger (think of what started to happen when this even began to be approximated in the ‘60s).

This might be part of the story, but whatever the “moral and political” imperatives of employers as a class, there is a strong individual incentive for them to minimise their labour costs. What is the mechanism, the how, by which their supposed collective interest wins out?

Employment is, by definition, work performed for money. Therefore labour (like other resources) moves in the opposite direction to currency. I made a rhyme so it’s easy to remember: From whence money flows, there labour goes.

There are exceptions to this, when money flows up, away from workers -taxes and loan repayments for example- but those are both times when money is flowing out of the real economy.

So from where does the money flow in? Well, actually, the same places: banks and the government.

Banks create money in the form of an account balance when they authorise loans. These accounts are, economic textbooks falsely argue, backed by a reserve of central bank money, created in the same manner. But in reality banks lend first, then top up their reserves after the fact.

Bank lending favours the wealthy and large companies, since banks are more inclined to lend to people and businesses with existing assets and high incomes. This will be important later on.

But first it’s important to note that governments also create money. The government borrows by selling interest paying treasury bonds to investors and banks. Then, as needed, the central bank buys these bonds from those investors and banks with money it creates with keystrokes. So called “modern monetary theory” isn’t just an idea for what should happen, but also a description of what already happens.

There’s more to it, but for the purposes of this post, what matters is that proportion of money entering the economy from one of these sources vs the other changes over time.

The post-war boom was the product of sustained and substantial deficit spending. This government largesse put money in the hands of ordinary people who spent it on products and services -made, sold and delivered by other ordinary people — causing widespread prosperity, like how a whole ecosystem becomes more vibrant after a big rain.

Since the 70’s, though, the fashion in economics generally has been to laud the private sector as “wealth creators” and demonise the public sector and government spending, often by way of the false premise that it must be “paid for” in taxes.

That means the right hand side of the graph above has come to dominate over the left hand side, and pull labour away from things which have direct value to consumers, and towards things which have value to businesses.

So you have experts consulting on tax law to design companies who are contracted by advertising companies who are engaged by companies that make software for lead generation for companies who run corporate team building retreats for law firms who provide patent expertise to venture capitalist firms who invest in blockchain technology companies who provide services to banks who, maybe, lend money to companies that, finally, actually make products for customers to use in the real world. Or not. The real world, after all, is not where the money comes from.

This helps explain how, fuelled by cheap money provided by the Federal Reserve the US stock market has continued to rise even as the real economy has collapsed.

Of course this kind of networked specialisation can be used — in the right macroeconomic conditions — to create an efficiently modular system. Each company doesn’t need it’s own tax experts or designers or whatever but can bring in specialists as needed. These specialists will — by providing services to many different companies — have certain economies of scale. But these aren’t the right macroeconomic conditions.

It’s also true that some of the jobs driven by consumer spending are not worthwhile, or at least not very worthwhile. When consumers don’t have much money, and workers are prepared to work for low wages, people will spend small amounts on low value products at businesses that pay shit wages. If they had more money, they would buy more expensive products and businesses could pay better wages, invest in better equipment and generally be more valuable as enterprises.

We’ve had a hint at what might happen if these low-worth jobs were eliminated during the pandemic. Australia saw GDP contract by 7% over the 2019–2020 financial year, but saw GDP per hour worked rise by 4.1% over the same period. Most of that is accounted for by a particularly dramatic 3.1% increase in a single quarter, between just March and June of this year, as the lockdown kicked in, as roles for receptionists and waitstaff were terminated — but high value jobs continued (leaving aside the question of whether the market is currently valuing things correctly, which it isn’t).

More fundamentally, it’s not even true that all jobs driven by consumer spending are actually driven by consumer spending. A great deal of what we count as consumer spending (transport for commuting, clothes for the office, sandwiches and coffee purchased at the cafe at the bottom of the office building) is actually to do with working which is, in theory at least, about production, not consumption. Having a job is expensive. The most privileged and in demand workers, like a-list engineers working at the big name tech companies, it is worth noting, are not expected to cover these costs. They get free food at work and buses to bring them to the ‘campus’. But the rest of us are not so lucky.

All this work-related expenditure funds what Medium’s editor at large Steve Levine calls the “The Hidden Trillion-Dollar Office Economy”, which, he laments, remote work is “killing”.

He rightly points out that “a massive part of our economy hinges on white-collar workers returning to the office” but fails to consider what that tells us about the fundamentally wasteful nature of our economy. Instead he worries about the fate of food delivery services, dry cleaners, printing and office supply stores, Starbucks, the business wear chain Brooks Brothers, and even real estate. Discussing this final example he asks:

It will save these companies leasing costs and their employees their commutes, but at what cost to the rest of the economy?

But, unless we think work and economic activity are inherently good things, ends in themselves rather than a means to providing people with products and services, then for the economy overall it’s not a cost. It’s a saving.

When making rockets engineers and scientists work hard to minimise and overcome what they call the “Beer Can Problem”. You start with a payload you want to deliver to space — some astronauts who need to get to the space station or whatever. Then you need the fuel to lift them into orbit. Then you need the fuel to lift that fuel. Then you need the fuel to lift the fuel to lift the fuel. And so on. Pretty soon the rocket is like a tall explosive beer can, only heavy when it’s full.

We can imagine the economy facing a similar problem. We need a certain amount of labour to make, transport and provide the stuff and services we actually need, or even want: food, housing, education, healthcare, plumbing, electricity, consumer economics — directly useful stuff. That’s the payload.

Then there’s the labour of management, admin, banking, lawyering and even some amount of sales and marketing, and so on required to support these industries. That’s the fuel that lifts the payload. Then the people performing this labour need office space and transport and electricity and so on to function, which requires more labour. Then that labour needs administrative support and so on, until you have massive city centre office towers filled with paper pushers far removed from the direct production of useful stuff, and 24 lane freeways, which are not need to deliver goods to consumers or let people move around for leisure and consumption, but to handle the commuter rush-hour and get people all to work on time. Then we need concrete suppliers, who need factories, for which we need architects who need accountants who need…

This could be viewed as our economy-wide version of the Beer Can Problem. It is to some extent unavoidable. But it could — especially with increasingly advanced information technology — be minimised.

But we don’t view it as a problem. Instead we view it as a solution; to the problem of not enough work. We don’t seek to mitigate and manage it, we seek to enhance, expand and maximise it. Jobs! Jobs! Jobs!

Problems are solutions. Savings are costs. Work is good. Leisure is bad. Production is not a means to achieve consumption — instead consumption is a means to achieve production.

When the ideological blindfold is removed, we can see the fundamental irrationality of our economic system — a huge headless meatware machine, to which we have all become slaves, which lumbers on mindlessly, dragging us towards a future no one really wants.

This helps us understand two things Graeber got wrong. One of these is placing the blame entirely at the feet of a ruling class he apparently sees as fiendishly conspiratorial and disciplined, rather than just mean and stupid. The second is the attempt to say which kind of jobs are bullshit. Just before his untimely death he wrote:

Whole industries (think telemarketers, corporate law, private equity) whole lines of work (middle management, brand strategists, high-level hospital or school administrators, editors of in-house corporate magazines) exist primarily to convince us there is some reason for their existence.

It’s pretty hard to defend telemarketing. But this kind of demand mining activity (of which Facebook and Google’s zillion dollar ad-placement algorithms are further examples) is really just a symptom of a deeper, structural problem. In a sane economy, where people had money to spend and labour was properly priced, demand would drive supply. Companies would be focussed on making and doing stuff, not coaxing and badgering consumers into making purchases.

Fundamentally it’s not specific kinds of jobs, or companies, or industries, or sectors. The whole economy is infused with bullshit. No job is free of it. Even a large portion of the work performed in the health system is just dealing with the damage our sadistic economy does to people.

The fundamental problem is that money enters the economy in the wrong place. That puts banks and investors and the wealthy upstream — and everyone else, what Graeber would call “the 99%”, downstream, at their service.

The only way for us to get even a drop is to come up with something they want. And what do you sell to the man who has everything? Well, it turns out, maybe some caviar, a superyacht or two and a half-shredded Banksy — but mostly financial instruments, tech stocks, and other vehicles for achieving an ever greater economic power and an ever higher net-worth.

So that is what our economy is fundamentally geared towards.

If the money flowed the opposite direction — if it started with the people and flowed into the economy from there everything would change. Everything.

When it comes to a solution, therefore, I think Graeber is correct, but that he doesn’t quite realise just how correct he is. A basic income, he argues, would allow people to decide what to do with their time. But it’s actually much bigger than that. They would spend it on things they really want, not just the things they need to keep their jobs (like uncomfortable shoes, or housing in overpriced cities) and so our whole economy would start to reorient towards both reducing drudgery and producing what people actually desire, rather than increasing the abstract wealth of a tiny minority.

Unfortunately those who understand the macroeconomic dynamics of money creation described at the start of this essay — proponents of MMT — for the most part fail to appreciate the labour market side of the equation. They have fallen into the same trap and view leisure and freedom from the need to work as a problem, and therefore prefer a job guarantee to a basic income. Only the even more obscure school, really just a cluster of thinkers, who advocate what can be called Consumer Monetary Theory (of which I am a proponent) have effectively joined the dots between money creation and a basic income.

In MMT’s defence, there’s something to the argument that the jobs created by a government program like this (which they say should be federally funded but administered by local councils) might be less bullshitty than those created by the dysfunctional, debt driven private sector.

But to the extent that this is true, those jobs can be created by traditional public sector spending, oriented around goals, which are achieved using the minimum, rather than the maximum amount of labour. Anything else is bullshit job creation, by definition.

Measuring the prosperity of a nation by the amount of work performed in it, or the degree of economic activity is like measuring the value of a book by the number of letters it contains, regardless of whether they say something interesting or are jumbled in meaningless garble.

The best economy is not the biggest (or the smallest), but the most pleasing to the people who inhabit it. The first step towards this is the screamingly, obnoxiously obvious step of just giving people money.

Then we can start to untangle the messy knot we have tied ourselves in, and begin to properly enjoy the efficiency and productivity we have already achieved through technology. Once everything and everyone is pulling in roughly the same direction — towards efficiency and prosperity and away from drudgery and scarcity — further efficiency and productivity gains will be made, and they’ll be made in the areas that really matter. This in turn will allow us to pay a higher basic income, and so on, as the virtuous cycle takes off, carrying us forward towards the Star Trek economy that technological progress clearly makes possible — but which our political economy precludes.

The sooner we start dreaming big, the sooner the nightmare can stop.