Antonio Gramsci wrote in 1930: “The crisis consists precisely in the facts that the old is dying and the new cannot be born. In this interregnum, a great variety of morbid symptoms appear.” Trump’s reelection even after the January 6th insurrection and the widespread embrace of scapegoating and conspiracy theories are today’s morbid symptoms. In The Habitation Society: Paths to Sustainable Prosperity, I argue that both our politics and our economy are so damaged because we have been unable to transition from an industrial society to a habitation society.
The word habitation literally means the state or process of living in a particular place. I argue that we already have a habitation economy because most of us now work at creating and maintaining the communities in which we live. This includes health, education, other services, retail trade, local government, and the construction and maintenance of the built environment. This is a stark contrast to both agricultural and industrial societies when most people worked at producing agricultural products or manufactured goods. But even though most of us work at producing habitation and all of us consume it, we are not getting the habitation that we want or need.
In The Great Transformation, Karl Polanyi described the enclosure of farm land in England as creating a conflict between improvement and habitation. Landlords were adopting more productive farming practices, but this displaced rural people who had survived for generations by grazing their animals on a public common. Polanyi argued that this conflict between productive advances and the habitation of working people intensified further with industrialization.
With a habitation economy, we should finally be able to move past this conflict. We could be using our technologies to create communities that are vibrant, inclusive, resilient, and environmentally sustainable. Instead, our habitation is being threatened by extreme events—floods, fires, hurricanes, and tornadoes—that have been intensified by climate change. We also suffer from a crisis of housing affordability, our health and education systems are in continuous crisis, and there are myriad other problems.
The conflict has gotten worse because we are using the policy tools and ideas of the industrial era when they are no longer appropriate for the economy we have now. I develop four distinct arguments about why these inherited frameworks no longer work. First, we continue to rely on the market mechanism to bring supply and demand into balance. But that framework made sense when much of consumption consisted of standardized products, available from many sources, that were transferred in a moment of time. But very little of what we consume now fits that definition.
Today, we consume mostly destandardized goods and services, many available from only a handful of providers, and the transactions often involve an ongoing relation between buyer and seller. At the farmer’s market, we can easily shift from one booth that sells tomatoes to another. But switching from one cell phone service provider to another can be an arduous ordeal, and the monthly bills are likely to still be incomprehensible. When there is only one effective pharmaceutical for one’s particular medical condition, there is no possibility of switching.
Destandardization means that when we make a major purchase such as a new refrigerator, we are faced with a dizzying array of choices. On Amazon, we can get a new fridge for anywhere between $200 and $43,000 with almost infinite variations in size and features. Consumer advice services are often unable to keep up with the constant changes in model numbers, so many of us end up opting for familiar brand names which means going with the firm with the biggest advertising budget. All of these factors mean that power has shifted radically in favor of big corporations and away from consumers both individually and collectively. Correcting this imbalance requires both more regulation and new mechanisms that enhance the voice of consumers.
Second, we continue to rely on the giant, multidivisional corporations that emerged in the industrial era because they were good at mass producing standardized goods. But it turns out that they are not particularly skilled at innovation or at producing destandardized products of quality. Most of the innovation now comes from government funded research and from small, startup firms. However, the giants are still able to skim off most of the profits because they control key economic levers. For example, only the largest pharmaceutical firms can afford to mount the clinical trials needed for FDA approval of new drugs. If instead the government managed the clinical trials, we would likely see fewer scandals and more opportunities for startup firms to accelerate medical innovation.
Third, our understanding of what activities are productive and deserve funding have been distorted by industrial-era accounting. In the economic accounting system used in developed market economies, households are defined as engaged solely in consumption. While economists have long recognized the importance of expenditures to improve the skills and capacities of the work force by talking about “human capital”, these outlays are still not counted as investment. With a different and more coherent accounting scheme, in 2019, business investment in the U.S. declines from 84% of the total to just 29%. In other words, government, households, and nonprofits are responsible for most of the productive outlays. This is in stark contrast to claims that government and households must tighten their belts so that business has large enough profits to finance the vital outlays that assure our prosperity.
In a habitation society, in contrast, care work would be recognized as productive work because it enhances the skills and capabilities of the population. Parents, skilled child care workers, and teachers would be recognized as contributing to social and economic vitality and rewarded accordingly.
Fourth, our financial system is structured to siphon resources away from households to fund businesses. However, corporations collectively are able to finance their new investments out of profits. Nevertheless, hundreds of billions of new dollars of retirement savings flow into the stock market each year. Corporations now spend $1 trillion each year to buy back their own shares which helps expand the compensation to top executives who receive generous stock options and stock grants. Meanwhile, the financial system invests far too little in clean energy, affordable housing, the care economy, infrastructure, small business, and innovation. In a habitation society, financial flows would be redirected towards these neglected activities to create the conditions for human flourishing.
It follows that we need radical reform of our political and economic structures. Most basically, we need to democratize the creation of habitation, so that people living in cities, towns, and rural areas have much greater opportunity to shape their communities and what they consume. This requires dramatically increasing the resources available to state and local governments through federal revenue sharing and new nonprofit financial institutions that would fund needed investments. It also requires new institutions to facilitate and encourage much greater public voice in decision making.
Pursuing this reform agenda will take time, but the sooner we start, the sooner we can move beyond the poisonous politics of the interregnum. Even our Trumpy neighbor who is obsessed with trans people participating in women’s sports might join in the struggle to create a more responsive health care system or increased availability of affordable housing. The way forward is to focus on improving our collective habitation.
Read More
Fred Block is a Research Professor of Sociology at UC Davis. He specializes in economic sociology and political sociology.
