karl-henrik pettersson

karlhenrikpettersson.se

Filosofiska tankar om företagande och ekonomi

Vilket samhälle vill vi ha? Hur mycket marknad? Hur mycket politik? Varför dessa ekonomiska orättvisor?

What is work? And what is free creation?

Work is what we must do to earn our living. It’s striking that history so clearly shows that the work was something compelling, something that must be done to survive. The word work had a negative connotation. Work was not only unavoidable, it was also tiring and risky. To some extent this negative attitude remains in the modern society. We see it when work is defined by its opposite – leisure time. Work is what we do when we do not have freedom to do what we want.

Again, the core of the definition of the word work is something we carry out to earn our living. Of course, the concept in today’s society has a large wingspan. Work can literally mean to get food on the table every day. But also, in the other extreme, to attain personal development and fulfillment, and to create resources to be able do the things you want to do during free time.

Work can be specified in three points:

• Work is an organized activity. We craft or create something, we have a commitment, usually but not always together with others. We do it voluntarily. An organized activity means that the venture has an objective. It may be to paint the house I have committed myself to paint. Or to sell x number of cars next month for the automobile company I’m employed by.

• Work is something we usually do for a long time. It means that we are good at what we are doing. Eventually, many get an occupation or a profession. We become plumbers or doctors or anything else that requires experience and practice to be performed efficiently.

• Work creates value for other than the worker. In today’s society it’s most often economic value. You get paid by the client for what you have done. Or the product manufactured, or service, can be sold on the market for such a price that the worker gets paid for his or her labor.

Employee or entrepreneur

It’s implicit in these three points that there are only two ways you can work. Either as an employee or as an entrepreneur.

I can be employed by a company producing something for the market, say Ericsson, Volvo, or for that matter, a SME company with perhaps only a few employees. I can also be employed in any other form of hierarchy, for example, in a county-operated medical center, in government, in an authority, in a non-profit organization like the Red Cross or in an interest group, say the Metal Workers Union. You can simply say that those who have an employment contract are working.

An entrepreneur also works. He or she meets the three criteria. I make use of a small shop, “Bibbis byx- och kjoländringar”, because I cannot sew. It is an organized activity. Bibbi is a skilled seamstress, she has gained her skills through many years of work and she creates a value that I’m willing to pay for – and apparently many others. But Bibbi is not employed by anyone. She won’t get a salary. She earns a livelihood through higher revenues than expenses in her business. The residual, the profit, when all of her commitments have been fulfilled, she is free to use for consumption or saving.

Even an entrepreneur with employees work. It becomes particularly clear if he or she is involved in the daily activities like the craftsman who has a few employees but take active part in the business. In the same way as for Bibbi, he or she can freely dispose of the residual, the profit, after its employees, suppliers and others who do business with the company have got what they are entitled to get according to contract.

Possibly, it’s less obvious if a capitalist work. I define a capitalist here as a dominant owner of a firm, not involved in the day-to-day activities, perhaps not even member of the board, and not having a formal job, an employment contract. So defined I still think a capitalist is working. For although a capitalist by definition has more capital than he needs to survive (otherwise the capitalist wouldn’t have had any resources to invest) he meets the other three criteria. He is engaged in an organized activity, he has a profession, ownership, which helps to ensure that the company develops and becomes competitive, and he creates, indirectly, an economic value. Assuming that the business is conducted in a (limited) company, the capitalist will get his economic compensation through the dividend yield and, normally, most importantly through the sale of the company. An economist would say that the compensation, the total return, pays for both his work and his risk taking.

Free creation

If work has a negative connation, leisure time is something positive. But we realize that there are jobs we do on our free time which we ideally wouldn’t like to do. It includes part of what we do at home – cleaning, wash the dishes etc. Consequently, we can devote the rest of our time off to do what we long to do – reading a book, socialize with friends, philosophize or go on vacation.

There are people of working age who, literally, have only free time but still are very important for society. They are not employed, not entrepreneurs, not rentiers and by definition not seniors, children, students, sick, handicapped etc., but still create something in an organized fashion that has a value for others. The archetype could be the successful author. A Henning Mankell or Liza Marklund [two Swedish bestseller authors] is not doing work as the word is defined here, but clearly they produces works which many of us like and are willing to pay a good price for.

And there are the creators, not being employees of any artistic institution or freelancers (entrepreneurs), who cannot fall back on old merits and their own financial resources, but nevertheless devote all their time to create something that many value so high that they voluntarily pay for the experience or the artwork. The survival criterion can be met through government grants, sponsorship, charity, etc. Or they might have their own money, perhaps from a previous job or through family and friends.

And there is the business angel, defined as a non-employed person of wealth, usually former entrepreneur, who is investing his money as risk capital into a new venture. The business angle is also (part of) creating something new. What he or she does, without being work in the strict sense of the word, is to take a financial risk, and bring in expertise and contacts to try to develop a new business.

I would call these activities free creation. It’s an activity in the border-zone between work and leisure. Free creation is an organized activity, it requires a deep knowledge of “craft” (to write a book, to make a film, to guide the innovator to the market) and the result, the “creation”, can have an economic value to others. Yet, it is not work as we usually use the word.

For society it would perhaps be wise to divide human organized activities into two parts – work and free creation. Unquestionably, free creation will in future be more essential for the economic growth and cultural well-being of a society.

Work as a means to self-realization

One aspect of the work is rather new in a historical perspective – that it can be a means of individual self-realization. Today, I can through work take another step up the Maslow-stair reaching what is vaguely called self-fulfillment. My interpretation of the concept is that through the work, I get opportunities to do that I very much want to do, I do at work what I would devote myself to in my spare time. Of course, this does not apply to all workers in all countries. But in the western world we have a new, fast-growing group in the labor market, problemsolvers and creators, who has the option. Problemsolvers can be managers of all kind and specialists ranging from civil engineers to money brokers. But also all possible forms of consultants – (medical) doctors, architects, lawyers, accountants, computer people, PR and advertising people, and now also the Brussels bureaucrats, etc. The creators are artists, designers, book publishers, TV and radio producers, film photographers, editors, etc., but also successful entrepreneurs, managers and small businessmen. Many of the people in these two groups will have a chance to self-realization through work. Apparently, they have that goal in mind when selecting their employers and choosing focus for their line of business.

The work in The New Company Society

The new production paradigm which I have called The New Company [in my book Det nya företagets samhälle, SNS, 2004], and others have called The Third Industrial Revolution, will profoundly change the way in which work is organized. Permanent employment and full-time job with a high security of employment, and sometimes life-long careers in the same company, was the typical form of employment (for men) in The Old Company society, which reached its peak for a few decades after the Second World War and which was characterized of large, vertically integrated company producing products for a mass market. GM may stand as the prototype of The Old Company.

Most people in the western world are still employed full time in a permanent position. But it will most certainly change. Of course, there will be permanent employees working full time also in future but they are becoming fewer when the The New Company will be the dominant production paradigm. A larger proportion of those who have an employment contract will not be permanently employed. A Swedish economist-historian, Lars Magnusson, has pointed out that the permanent-employment-society as we know it is a quite modern phenomenon. He writes: “It is essential to emphasize that the traditional picture of the full-time job and a stable job that characterizes much of today’s image of working life has been a standard in a relatively short period of industrial work history. In between the wars, various forms of temporary and seasonal jobs were common in Sweden.” Probably, we will have to go back to some old-time, less regulated forms of employment. The new production paradigm simply requires a much higher degree of flexibility in the firm.

If we are talking about highly developed western-European countries like Sweden or Germany, far more people than today will in future work as entrepreneurs, not least as self-employed. In the new production paradigm, the market will take over production from the big companies as a result of outsourcing and other disintegration. As a consequence, the SME-sector´s share of value added, or GDP, will increase.

Of course, this development will have profound political consequences. It falls outside the scope of this paper to discuss what that could mean.

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2009-05-12

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