Capitalism and Western Civilization: Independence

William H. Young

The independent economic individual was an integral idea of the American founding. That view was gradually replaced over the late-nineteenth and twentieth centuries by one which viewed the individual as a corporate (or organizational) employee. But the economically independent individual is being resurrected in our time and needs once again to be recognized as such.

Thomas Jefferson’s original rough draft of the Declaration of Independence contains the words “all men are created equal & independent”; he simplified that phrase to make it more powerful and memorable, notes MIT historian Pauline Maier in American Scripture (1997). The founding republican principles included the belief that to be free and self-governing, citizens should be economically autonomous, free of dependence on others or the state.

The term “independence” embodied a doctrine of political economy necessary to support a stable republic. The basis for economic independence was called “competency,” which came to describe a degree of skill or capacity to function in an industrializing economy. Independence was the path to economic improvement and social mobility. The English Puritan (Protestant) ethic, esteeming literacy and encouraging self-reliance, inculcated the ethos of economic independence.

By the late-nineteenth century, the” job” within a factory and corporation became a new social artifact of industrialization. Independent artisans who became employed by corporations, ironically, initially considered themselves “wage slaves.” Over the twentieth century, giant corporations dominated the mass-production American economy, usually offering long-term employment security to individuals. But by the 1980s, all of this began to change dramatically. Globalization placed the jobs of American workers in competition with lower-paid, often better-educated and harder-working, foreigners, who became the beneficiaries of corporate outsourcing and off-shoring. The information age increasingly substituted computers and other machines for humans in physical jobs.

The use of “contingent workers” has grown in the U. S. economy. Contingent workers are variously called non-employee labor, part-time or temporary workers or employees, contract labor, or free agents—new economically independent individuals. While many contingent workers do so voluntarily, many others, often with lower skill levels, are so employed involuntarily.

Lori Schultz, president of Yoh, a work-force solutions company, observes (“Non-employee labor a growing trend in work force,” Atlanta Journal-Constitution, February 22, 2011) that “employers are saying that the recent recession has fundamentally changed their employment strategies and led to a ‘just-in-time’ hiring strategy that will make temporary employees an even greater pillar of the American economy.” A Gallup survey (“Small Business Hiring Intentions Best Since January 2008,” February 7, 2012) reports that 72 percent of small businesses, our new job creators, said they would “prefer to add temporary or contract…or part-time workers” rather than full-time employees.

Contingent workers are becoming an archetype for the future economy. Such workers, like those of the America before the twentieth century, are no longer under the security blanket of full-time employment, with health care, retirement and other benefits, in big corporations. The rapid growth in contingent workers is influenced by growing health care costs and regulatory mandates. 

Kelly Services reports (“Changes in the Labor Market Leads to Increase in Free Agent Workforce,” August 15, 2011) that “more than four in 10 employees classify themselves as free agents compared to 26 percent in 2008.” “There is a significant increase in the percentage of employees—across all generations—who classify themselves as free agents.” The Kelly survey identified the rates of contingent work or free agency within each generational group. Today, free agents comprise 49 percent of all Baby Boomers (age 47-65). Nearly 38 percent of Generation X workers (age 32-46) are free agents compared to 18 percent in 2008—more than doubling over the past three years. Already half the members of Generation X without college degrees are being employed as free agents or contingent workers. By comparison, 25 percent of Generation Y (age 18-31), or the Millennials, classify themselves as free agents, a relatively small increase from 21 percent since 2008.

Are Millennials likely to go the way of Generation X, becoming ever-greater free agents, and are they prepared to do so? Workers who will best be able to compete for fewer full-time and more part-time jobs as free agents must be cognitively capable, self-directed, self-disciplined, and interactive with others. How do Millennials rate on such capabilities?

Many have not been educated to possess the cognitive skills or critical thinking ability—competency—to compete in the marketplace. They have been schooled to rely on the work of others in groups rather than to perform as individuals. As contingent workers or free agents, they must compete on their own skills. Many have had their lives planned for them by parents and expect such facilitation in the work place; they lack initiative and are often not capable of self-direction. Many are weak on interpersonal skills, of the kind needed to compete in the marketplace and work place rather than interact on social media. Moreover, many have come to believe that it is the responsibility of government to take care of people who can’t take care of themselves.

Stephen Balch adds in Is Our Civilization a Bubble? Part II that  

the aversion to recognizing differential success that crops up in our schools is another symptom of an every-expectations-can-be-fulfilled outlook, entrenched in this case at a critical cultural location. The preference for group work and non-competitive games, the discomfort with tracking and class honors, the accompanying educator euphemisms meant to hide gaps in ability…are all telltale. The vale of tears once taught us that it was wise to underscore the relationship between talent and reward so as to promote maximum effort.

The independent economic individual of the founding era is again reappearing—like the craftsmen hired to conduct and complete projects in Tocqueville’s early-nineteenth-century America. This provides new opportunities, but also far more responsibility for individuals to manage their own futures.

Jim Clifton, CEO of Gallup, warns that “the coming world war is an all-out global war for good jobs.” (The Coming Jobs War, 2012) Separately, Andy Grove, former CEO of Intel, has offered the following advice to future workers: “No matter where you work, you are not an employee. You are in business with one employer—yourself—in competition with millions of similar businesses worldwide….Nobody owes you a career—you own it as a sole proprietor. And the key to survival is to learn to add more value every day.” In Sumantra Ghoshal and Christopher A. Bartlett, The Individualized Corporation (1997).

Academia faces a significant challenge to prepare secondary and college students for the new role in the workplace of the contingent worker. Individual skills must be substantially upgraded as NAS has long recommended, such as in Too Much For Too Little, by Peter Wood. The self-defeating work ethic, identified by Ashley Thorne in Your Comfort is Our Priority, must be reversed if Millennials are to compete in the more demanding climate they face. And the historic and returning role of independent economic individuals should be covered in the liberal education sought by NAS.

Employees of corporations, governments, universities, and unions enjoy the exclusion of organization-paid health care costs from taxable compensation—the most expensive and regressive preference of the federal income tax code. Contingent workers, usually far lower paid, do not receive such a tax advantage. A new social contract for the nation should recognize independent economic individuals and level the playing field by providing government tax advantages, if any—such as for health care or retirement—only directly to individuals, not to organizational employers for them.

Next week’s article will address education in the academy related to business and social responsibility.

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This is one of a series of occasional articles applying the lessons of Western civilization to contemporary issues relevant to the academy.

The Honorable William H. Young was appointed by President George H. W. Bush to be Assistant Secretary for Nuclear Energy and served in that position from November 1989 to January 1993. He is the author of Ordering America: Fulfilling the Ideals of Western Civilization (2010) and Centering America: Resurrecting the Local Progressive Ideal (2002).

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