Making the social economy pay

Childcare, taking care of the family home, buying and preparing food, and supporting the vulnerable in our community… all hugely important jobs and all miserably underpaid. Diana Finch, of Bristol Pay, suggests a better way to remunerate the essential work without which our societies would collapse.

During my lifetime, some 57 years and counting, the market economy has grown hugely. It’s not just that more stuff is being produced for us all to buy, it is also that whole areas of work that used to lie outside the market economy have been brought into the fold.

I’m talking mainly about what used to be called ‘women’s work’: the care of children, the day-to-day maintenance of the family home, the buying and preparation of food, and the wider support of vulnerable people in the community. Increasingly as women have had the opportunity to take up roles in the market economy, new jobs have been created within the market economy to back-fill the unpaid roles they used to do. I don’t want to suggest that it was a retrograde step for women to be involved in the market economy, but I do want to note that there have been unhappy side effects from the way that work was moved from the unpaid social economy to the market economy.

When women were undertaking these roles outside the market economy, they were invisible to the market and therefore without a price. From the market’s perspective, they were free. Unfortunately, this has led to a chronic undervaluing of those roles: if they had been free, they must now be as cheap as possible. Most of the jobs created to back-fill work that had been hitherto unpaid are therefore paid as if they required no skills. They are often treated by the rest of society as if they have little importance, even compared to teaching or nursing. However, this work, of caring for and socialising children, of budgeting and buying, of creating nutritional meals from raw ingredients, both requires significant skills and is vital to create healthy and happy communities. When we bemoan such things as the prevalence of diabetes, or levels of anxiety in children, we can see that as societies we are paying dearly for the lack of importance we have assigned to this work.

Research undertaken by James Heyman and Dan Ariely found that if a lower than fair rate is paid for a task in the market economy, people don’t make as much effort in their work. However, their research also found that when people are doing something as volunteers in the social economy, they make more effort – in fact just as much (or more) effort than if they are paid a decent rate in the market economy. This suggests that if we really want the important work of looking after our children, cooking nutritious meals and providing care for those in need to be taken seriously, we need to either pay that work decently, or take it back outside the market economy.

Of course there is a problem here. To switch to paying everyone at decent market rates for the skilled work of caring for people or preparing food from scratch would create huge shocks to the economy. Equally, all this work cannot just be made voluntary: everyone needs money to live. To enable people to volunteer to undertake this work would necessitate a very different approach to out-of-work benefits, namely the creation of a universal basic income (UBI) set at a level that would not place people in poverty. Such a UBI would avoid any stigma attached to choosing to volunteer instead of taking a paid role. Even with such a system in place, it might be effective to have another sort of token (not money) that could be awarded to people volunteering their time, to thank them.

Heyman and Ariely found that gifts, as long as they were not associated with a financial value, did not undermine the effort people put in when undertaking work in the social economy. A specific token recognising this social economy work without monetising it would be a way of accounting for social cohesion, recognising the gratitude of the community for this vital work. The tokens wouldn’t enable market transactions, but they might form part of a curriculum vitae, like one’s educational history.

It is the development of these kinds of tokens, recognising non-financial value, and specifically accounting for social value and environmental value, that we are working on at Bristol Pay. We’re building a platform that carries tokens, in order to account for value creation outside the market economy.

This is important on many levels. First, with these tokens, we can count the actual social or environmental good, rather than just a proxy financial value. This would help us to set targets and measure our progress in more real ways than counting only the financial aspect of those activities. Second, we can make visible the scale of engagement with these value-creating activities, helping to create new social norms as we increase the recognition of activity external to the market economy. Third, we can start to create an off-ramp from the hamster wheel that is the constantly growing market economy, with its rapacious demand for consumption, and its reliance on ‘bullshit jobs’, to quote the title of David Graeber's book.

If we are ever to find a way of stopping our addiction to constant growth and creating sustainable doughnut economies as described by Kate Raworth, we need to find some ways to gradually move things out of the market economy. Bristol Pay is a good place to start this process, offering a platform that can change our collective approach to value and account for the social economy in non-financial terms.

If you’d like to get involved in this work, come along to our hybrid conference, Way Out Economics, on Tuesday 4 October 2022.

Diana Finch is the Managing Director of Bristol Pay CIC, the organisation formerly known as Bristol Pound CIC, which designed and operated the Bristol Pound currency for nine years. Diana’s career started in bookkeeping and designing accounting systems. Following a career break during which she was a community volunteer and activist, she then shifted her career to focus on the voluntary sector, taking senior and leadership roles in charities in both environmental and social fields.