Illustrations © byTony Biddle

Session 5

Reproduction and Gender;Closing the

Circle

Readings:Chapters 9-10

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www.economicsforeveryone.com © Canadian Centre for Policy Alternatives, 2009

Key Topics Covered

• “Producing” and maintaining workers• Paid and unpaid labour in the home• Reproduction, work, and gender• The economic importance of

households• Closing the “little” circle of capitalism• Income and expenditure

Key Terms Introduced• reproduction• household• consumption• labour supply• discrimination• sexism

• unpaid labour• labour force participation• labour market

segmentation• income• expenditure

Reproduction: Where do Little Workers Come

From???• For economists, “reproduction” is more

than about sex and making babies!• In the economic sense, reproduction

means reproducing the ability of human beings to work and produce– Yes, this involves making babies!– But it also involves raising and training

children– Caring for workers (food, shelter, rest)– Ensuring that the labour force is able to go

back to work again the next day

The “Cost” of Workers• In a way, the household is like a “factory”

that produces workers.– Classical economists actually thought of it that

way.• How much does it “cost” to “produce” a

new worker?– The cost of subsistence: that is, the cost of

keeping workers alive and ready to work the next day.

• For classical economists: wages will tend to equal the cost subsistence – which is, after all, the “cost” of producing workers.

– In reality, workers can win wages that are higher than subsistence wages.

– But it’s not automatic and depends on their bargaining power (more on this in Session 7).

The Work of Households• A great deal of productive work occurs

inside the home.– Perhaps one-third of all economic work occurs

in the household.– Child care, elder care, cooking, cleaning,

household maintenance.

• Much of that work is unpaid, and most of it is done by women.

• Analyzing household work (who does it, how they do it, how is it valued) should be a central issue in economics.

– But neoclassical economists tend to ignore household work, since it isn’t usually paid.

The Evolution ofHousehold Labour

• Household work has evolved in recent years:1. Mechanization of household work: appliances.2. Commercialization of household work: purchases

for money from nannies, cooks, take-out restaurants, cleaners, etc.

3. Socialization of household work: some tasks (like caring for children, the sick, and the elderly) are now partly performed through public services.

• These trends have both assisted, and reflected, women’s growing participation in the formal (paid) labour market.

– In most developed countries, women’s participation is approaching that of men (especially young women).

Men and Womens's Labour Force Participation

40

50

60

70

80

90

100

1970 1980 1990 2000 2006

Per

cen

t W

ork

ing

-Ag

e P

op

ula

tio

n

.OECD Average

Men

Women

(p.117)

Gap is closing…

Women’s Work:Paid and Unpaid

• Women carry an unfair burden of household work:

– They do more of the work– They often do the less rewarding, less

valued work (eg. cleaning, cooking, caring)• This division of labour reflects sexist

attitudes, reinforced by:– Religion ̶ Tradition– Economic pressures ̶ Violence & coercion

• Women’s heavier burden of homework undermines their paid work participation

The Wage Gap• Women in the labour market earn

about half as much over their working lives as men, reflecting three causes:– Discrimination: Women make less on

average for performing the same job.– Segmentation: Women are concentrated

in jobs that tend to pay less.– Working hours: Women work less paid

hours over their lives than men (part-time work, career interruptions), mostly because of their home responsibilities.

Fighting for EqualityIt will take a multi-dimensional effort to

improve women’s economic equality:1. Men must be challenged to perform a fair

share of unpaid work in the home.2. Employers must be challenged to treat

women more fairly at work:• Access to good-paying jobs; employment equity• Pay equity; equal wages for equal work• Provisions to allow better work-family balance

(time off, flexibility)

3. Governments must be challenged to provide more reproduction services (eg. child & elder care).

Economic Road Map:Closing the “Little

Circle”of Capitalism (Ch.10)

Where are we going, anyway?

Drawing the Map:The Core Elements

• So far, we have learned about several key economic concepts:– Workers and capitalists– Investment– Work and production– Consumption and reproduction– Profit

• Now we will now assemble them into a picture of the core “circle” of capitalism.

It all starts with our“capitalist” (or, more precisely, the “major

owners and top managers”).

Seeking profit, he or she decides to make an

initial investment

(I).

The investmentis used to purchase

real capital goods and set up a

workplace.But notice that nothing is

happening yet in this workplace. (…Why not?)

Work requires workers.

They live in the working

class neighbourho

od.

The workers

are hired, and only then can

production begin. NOW

something is finally

happening!.

WHY do the workers agree to

work? Not for the joy

of it. Rather, they seek to earn wages (W)

through wage labour in order to live. They have no

other way to support

themselves.

With their wages they purchase

the consumer goods and

services (C) that

(together with unpaid

labour in the home) allows for

their reproductio

n.

Workers spend

essentially all their

income on consumption (reproductio

n). This is summarized

in the slogan:

“Workers spend what they get.”

After the bills are

paid (especially wages for

the workers),

the capitalist

gets what’s left over as

profit (symbolized

by the Greek letter

pi, Π).

After all, that profit was the

point of investing in

the first place!

The capitalist also likes to

consume (usually high-quality stuff).

Their consumption

(C) is diamond-studded!

Finally, if the whole

process has unfolded suitably, and the

capitalist received a

healthy profit, then he starts the whole cycle over again with

another investment.

Ta-da!That’s the

“little circle” of

capitalism. It portrays the core

relationships at the

centre of the whole system.

What We LearnedFrom This Simple Map

• There are two dominant classes in society.• The capitalist’s investment is the initial

force that starts the cycle going.• Workers work to survive – and their wages

are how they pay for survival.– And hence their income, once generated, is

immediately pumped back into the economy in the form of consumption spending.

• The economy is a circular process:– Investment production income

consumption profit– This cycle repeats itself over and over again

Income and Spending• For the whole cycle to be completed

(and then started again), the capitalist must sell all their output.

• In other words, all income generated in production, must be spent, in order for:– All output to be purchased.– The capitalist to receive (or “realize”) their

profit.• This balance between income and

expenditure is very important to the smooth functioning of the cycle.

The capitalist has 3 potential markets to sell their output:mass consumption, luxury consumption, and investment goods (capital equipment). They must sell all their output into one of

those markets.

Class Income Expenditure

Workers Wages (W) Consumption (C)

Capitalists Profits

(Π)

Investment and Luxury Consumption

(I + C)

Total Economy

W + Π C + C+ I

Income and Expenditure:The Little Circle (p.125

)

Making it Work• This is a simple map.• But it captures the essence of capitalism:

– Production is motivated by profit-seeking investment.

– Work is performed by wage labourers.• And now we see what’s required for

capitalism to successfully function:– Initial investment by the capitalist.– Successful work by the workers.– The successful sale of all output.

• If capitalist is optimistic, it happens again

Session #5, Student Exercise:

Where Did the Time Go???

• Conduct a survey of the adult members of your household (including yourself), reporting on how they use their time.

• Fill in a table summarizing how time is allocated to various uses: paid work, unpaid work, personal care, and free time.

• Answer several questions, and estimate the “value” of the unpaid work performed in your home.

• See www.economicsforeveryone.com for copies of the full exercise set and instructions.

www.economicsforeveryone.com © Canadian Centre for Policy Alternatives, 2009