Table Of ContentFree
Enterprise,
Fair
Employment
Elliott Jaques
Crane Russak • New York
Heinemann • London
Free
Continued from front flap
for full employment without inflation; namely,
the achievement of equitable pay differentials
Enterprise, by political consensus, using what he calls the
"differential concertina"—a method for setting
equitable pay differentials tied solely to objec-
tively determined differentials in the level of
Fair
work or responsibility in each job.
Given the assurance of differential pay
equity and non-inflationary full employment, the
people of a nation can attend more constructive-
Employment
ly and rationally, and with greater mutual trust,
to such macro-economic questions as what
standard of living they can afford and how to
collaborate to produce both for themselves and
Elliott Jaques
for their foreign trade.
The key to this new and constructive ap-
proach lies in the differential concertina: what
it is and how it can be used are described in
practical detail.
Free Enterprise, Fair Employment introduces
one of the few genuinely new perspectives on
the problems of inflation and unemployment in
democratic industrial societies.
Elliott Jaques illustrates why supply-side
and demand-side measures, Keynesian and
Friedmanite solutions, public borrowing and
monetary controls, must all fail, and for the
same reason: none of them copes adequately
with the problem of how to get fair and accept-
able wage and salary differentials. It is felt
inequity in differentials which is the spur to pay
leapfrogging. Pay leapfrogging in turn causes
a self-perpetuating inflationary movement, and
full employment becomes an economic threat
rather than a social benefit because it takes the
lid off the coercive power struggle for pay and ELLIOTT JAQUES is Professor of Sociology and
brings the most intense inflation. Some degree Director of the Institute of Organization and Social
of unemployment become an essential compo- Studies in the School of Social Sciences at Brunel
nent of our macro-economic controls. University, England. He received the Ph.D. degree
Jaques argues that it is essential that full in Social Relations from Harvard University and
the M.D. degree from Johns Hopkins Medical
employment and pay differentials should be
School. Jaques is a member of various British pro-
separated and treated as political objectives in
fessional associations and is a Founder Fellow of
their own right. He agrees with those who reject
the Royal College of Psychiatry. In addition to
the lump-of-labor fallacy and who realize that
Free Enterprise, Fair Employment, Jaques is the
any nation has as much work as it wants for author of several other books, including The Form
everyone, regardless of economic conditions. of Time, A General Theory of Bureaucracy, and
The author then establishes the prime condition Equitable Payment.
Continued on back flap
"Elliott Jaques is in the top rank of thinkers in the behavioral
sciences. In this book he shows us what we must do psycho-
logically and sociologically to preserve the free enterprise
system by managing our employment organizations more
rationally. Every executive should read it—and so should all
others interested in, or who work in, organizations."
Harry Levinson, President
The Levinson Institute
"A fine example of basic research framed to inform social
practice. Jaques advocates his position compellingly by draw-
ing upon many years of research on equitable wages and
rewards, organizations, and basic human capabilities. His
arguments will please some and alarm others, but will edu-
cate all."
Chris Argyris, James Bryant Conant Professor of
Education and Organizational Behavior
Graduate School of Education
Harvard University
"Elliott Jaques has spent his life in the study of work and his
new book offers the reader a synthesis between his vision of a
society with abundant employment and how it might be
achieved through protecting the entrepreneurial sector and
introducing a system of equitable wages in the corporate
sector. The issues he raises need to be addressed—and sooner
rather than later."
Eli Ginzberg, Director
Conservation of Human Resources
Columbia University
"This is a truly important book. It rises above the ideas of the
traditional left and traditional right to offer a policy alternative
which maintains employment security within a free enterprise
system. Jaques is to be congratulated. If we're lucky, this will
become the policy bestseller of the year!"
Catherine G. Burke, Associate Professor
School of Public Administration
University of Southern California
Books by Elliott Jaques
Changing Culture of a Factory
Measurement of Responsibility
Equitable Payment
Product Analysis Pricing
(with Wilfred Brown)
Time-Span Handbook
Glacier Project Papers
(with Wilfred Brown)
Progression Handbook
Work, Creativity and Social Justice
A General Theory of Bureaucracy
Levels of Abstraction and
Logic in Human Action (Editor)
Health Services (Editor)
The Form of Time
Free
Enterprise,
Fair
Employment
Elliott Jaques
Crane Russak • New York
Heinemann • London
Free Enterprise, Fair Employment
Published in the United States by
Crane, Russak & Company, Inc.
3 East 44th Street
New York, New York 10017
ISBN 0-8448-1417-2
Published in Great Britain by
Heinemann Educational Books
22 Bedford Square
London, WC1B 3HH, England
ISBN 0-435-84420-2
Copyright © 1982 Elliott Jaques
Library of Congress Cataloging in Publication Data
Jacques, Elliott.
Free enterprise, fair employment.
1. Wages. 2. Full employment policies.
3. Income distribution. 4. Cost and standard of
living. I. Title.
HD4906.J35 1982 331.2'1 82-8038
ISBN 0-8448-1417-2 A A C R 2
No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior
written permission of the publisher.
Printed in the United States of America
Contents
Preface and Acknowledgments i x
Summary x i
PART ONE: INTRODUCTION 1
Chapter 1: Political Objectives and Economic Regulators in
Employment Societies 3
The Employment Society
Employment, Economic Equity, and Freedom
The Confusing of Objectives with Instruments
Full Employment and Fair Wage and Salary
Distribution as Objectives
Wage and Salary Differentials as the Floating
Variable
Chapter 2: Coercive Bargaining and Wage and Salary
Differentials 1 5
Employee Wages and Salaries and Self-Employed
Earnings
Coercive Bargaining and Inflationary Pay
Leapfrogging
Damaging Social Consequences of Coercive
Bargaining
Inadequacy of Pay Freezes and Productivity
Bargains
To Each According to His Needs?
PART TWO: POLITICAL PLURALISM, FREE
ENTERPRISE, AND EMPLOYMENT 2 7
Chapter 3: Competitive Free Enterprise 2 9
Political Pluralism
Utility Valuation as Consumer Preference
Constructive Competition
Individual and Corporate Private Enterprise
Self-Employed Incomes and Employee Earnings
Contrasted
Contents
Commodity Prices and the So-Called Price of
Labor
The State Corporate Alternative
Freedom to Employ—A Social Privilege
Chapter 4: Abundant Employment 4 5
The Open-Ended Employment Contract in
Employment Societies
Abundant Employment a Constitutional Right
No Economic Barriers to Abundant Employment
Modes of Achieving Abundant Employment
Mobility, Welfare, and Redundancy
PART THREE: EQUITABLE DISTRIBUTION OF WAGES
AND SALARIES, AND THE
DIFFERENTIAL CONCERTINA 5 7
Chapter 5: Employment and Payment Differentials 5 9
The Employed and the Self-Employed
Pay Differentials and Employment Systems
Chapter 6: Time-Span Measurement and Equitable Pay 6 5
Time-Span Measurement and Level of Work
Felt-Fair Differential Wage and Salary Levels
The Meaning of the Equitable Differential Norms
Chapter 7: Stratification of Human Capability and of Work
Levels 7 7
The Basic Structure of Work-Strata
Level of Abstraction in Employment Hierarchies
Grades within Work-Strata
Chapter 8: The Differential Concertina 8 7
Those to Whom These Differential Figures Do not
Apply
The Equitable Differential Work-Payment
Structure
The Differential Concertina
Recognition of Individual Performance
Setting the Differential Concertina
PART FOUR: POLITICAL ECONOMY AND THE GOOD
SOCIETY 9 5
Chapter 9: Political Settlement of Wage and Salary Levels 9 7
Actual Wage and Salary Distributions
Differential Distribution of Wages and Salaries
Minimum Pay Levels
Contents
The General Level of Wages and Salaries
The Rights of Minorities
Wage and Salary Incomes and Profits
Relation to Cost of Living and to Social Benefits
Special Payments and Safeguards against
Employer-Employee Collusion
The Problem of Inflation
Chapter 10: Coercion and Participation I 1 I
Open Management
Ownership and Employment
Employee Participation
Consultation and Participation
Policy Decision-Making by Consensus
Chapter 11: Equality of Opportunity 1 2 3
Equality of Opportunity and Egalitarianism
Consequences of a Free Enterprise, Fair
Employment Policy
Inheritance and the Family
Work and Leisure
Coda
INDEX 133
To Wilfred Brown
Preface and Acknowledgments
At the time of writing, the democratic industrial nations are in reces-
sion, unemployment is rising, and disruptive inflation continues on
many fronts. I do not believe that these difficulties are the temporary
reflection of just one more economic cycle. We may swing out of them
into more prosperous economic times, but we shall not really understand
why. We shall therefore be in no better position to avoid a recurrence of
this tragedy.
We cannot afford any such recurrences. There is growing despair
as well as alienation—as a consequence of the current uncertainties
about unemployment, lack of opportunity, and the fears of permanent
unemployment on a worldwide scale. These justifiable fears will not just
go away. There will be an accumulating distrust of democratic society,
unless three prime social conditions are fulfilled: freedom of enterprise;
the achievement and maintenance of abundant employment; and the
construction of democratic political means for resolving the thorny
question of how to achieve a manifestly fair differential distribution of
wages and salaries.
Neither classical economic theory nor Marxist theory provides for
all three of these fundamental conditions: freedom of enterprise, abun-
dant employment, and fair pay differentials. The failure to deal ade-
quately with them contributes to inflation, to chronic industrial unrest,
to the coercive use of power in bargaining, and to widespread despair
about the possibility of doing anything constructive about our large-scale
bureaucratic employment systems—whether in industry or in commerce,
in central or local government, or in social or health services or
education.
Thirty-five years of close working contact with these issues in the
field—where the problems are—have provided a different background
and starting point for tackling the problems. The book outlines this
experience, and describes its implications for political economic policy.
In writing it, I have moved into academic areas that are normally the
preserve of political scientists, economists, and moral philosophers.
These are not the times, however, to be too sensitive about such
intrusions. I have done so because I believe that a serious alternative to
ix
