Keith Rankin: The Future of 'Wealth' and 'Work'

Thursday, 29 January 2015, 12:01 pm
Opinion: Keith Rankin

I wish Andrew Little well as leader of Labour, and as a likely Prime Minister in 2017.

His 'State of the Nation 2015' speech, while claiming to advocate a new way forward, seemed to me to be very much a speech about the growth of the market economy, and about New Zealand as principally a mix of wealth creators; namely businesses and paid workers.

Andrew Little uses 'wealth' in two different ways. When he says "wealth has to be created first" he means economic wealth, goods and services produced. Later when he refers to "the combined wealth of the richest 1 percent" he is talking about financial wealth. Very different.

Economic wealth is not only the produce of private capital and paid labour. It is the combined produce of all forms of capital, and all forms of work.

Financial wealth, on the other hand, is largely a product of double-entry book-keeping. When I have money in the bank, it is wealth in my ledger but a liability to the bank. I may regard this money as wealth, and most statistics on wealth will count this and other financial assets as wealth; but money is not part of our societal wealth. Debt is positive wealth to its owner and negative wealth to its ower.

Work in Little's speech means 'paid work'. He briefly acknowledges the voluntary sector, but then returns to his discourse on 'working people'. The 'future of work' is not just the future of paid work. It can only be discussed meaningfully when we include all workers paid and unpaid. And the future of wealth must acknowledge private capital and public capital as both being important.

If we are to create a better society – as Mr Little wants – then the relative importance of unpaid work and of public capital will increase. Unpaid work and public capital must be central to our dialogue, not on its periphery.

Let's use both words wealth and work – with much more care. Paid work means successfully selling labour services. Actual work means service, effort, contribution, production of services. As we become more productive, the future of work means that relatively more of the value we create will not be at the behest of market forces. Unpaid work is at the very heart of any discussion about the future of work.

Economic wealth is the valued outcome of work. Wealth in its fullest sense is the conflation of economic wealth and socially valuable assets; it is both the goods and services we produce and the capital assets (including natural capital, social capital, infrastructure, knowledge) that our productive system draws on. Much of our wealth cannot be said to be owned by one person, let alone one percent.

The future of work is not the future of paid work. The future of wealth is not the future of individually possessed financial assets.

For most people, including I think Andrew Little, 'the economy' is essentially the market-based 'production system'. For a good discussion about the nation’s economy in its fullest sense as the creation and maintenance of wellbeing, see Paul Dalziel's and Caroline Saunders' easily accessed book Wellbeing Economics.

Keith Rankin teaches economics at Unitec's Department of Accounting and Finance. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand’s GNP going back to the 1850s.

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Keith Rankin

Political Economist, Scoop Columnist

Keith Rankin taught economics at Unitec in Mt Albert since 1999. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand's GNP going back to the 1850s.

Keith believes that many of the economic issues that beguile us cannot be understood by relying on the orthodox interpretations of our social science disciplines. Keith favours a critical approach that emphasises new perspectives rather than simply opposing those practices and policies that we don't like.

Keith retired in 2020 and lives with his family in Glen Eden, Auckland.

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