Economics of the home and hearth

Theoretically speaking

Saibal Basu

Part 1 – Lens of Enquiry

Economics has always been a contested discipline. There exists no universal or natural law that governs the functioning of an economy or its study. Any curious mind would have to choose a set of lenses, more often than not, determined by the set of questions for which answers are being sought. Let me elaborate with a few examples.

François Quesnay, a physician by profession, during the early 19th century, while living and working in France, a country that was at the time predominantly agrarian, felt that the economy was like a living organism and sought an answer for the simple question: what moves an economy? He found his answer in agricultural surplus. Money facilitated the movement of this surplus while agricultural produce created the wealth of the country.

“Value” intrigued economists like Adam Smith, David Ricardo and Karl Marx during the 18^th and 19^th centuries. They were working in England, one of the early beneficiaries of the Industrial Revolution. The introduction of mechanisation and massive increase in production of goods led them to seek an answer for a simple question: what creates value? They found their answer in labour or simply, human sweat.

Jeremy Bentham, the proponent of “utilitarianism”, had a different lens altogether. Instead of starting his social enquiry by looking at the economy as an aggregate, his focus was on the individual. He argued that an economy was simply an aggregation of individuals. Hence, if we allow all individuals to satisfy their individual wants or needs, society as a whole would be best served.

It is fascinating to observe how different analytical frameworks have emerged over various moments in the historical evolution of the discipline of economics, when the lens of observation and subject of enquiry have been tweaked with. When Karl Marx looked at the existent economic structure through the dual lens of class and exploitation, he proposed a method of study that is distinctly different from that of Bentham’s.

While looking at the apparently same economic structure, Marx concluded that the existing economic order, being Capitalism, had inherent class conflict and exploitation, and a legitimate query would focus on finding ways and methods towards elimination of the same. On the other hand, in Bentham’s world, we had individuals with hedonistic pursuits and social justice would be ensured if all impediments towards such hedonistic pursuits were eliminated.

Another important distinction between Smith-Ricardo-Marx and Bentham lies in their varied focus on production as opposed to consumption. While the Smith-Ricardo-Marx analytical framework focused on production and distribution of value, Bentham’s focus was on consumption and in a way, on realisation of value.

There exist other schools of thought that have, over the years, added various insights, often through conflicting propositions, that have made contested claims over the legitimacy of the enquiry to be pursued by the discipline of economics.

Part 2 – Problematising the household

The “economics” that is taught in almost every school, college or university today owes allegiance to the neoclassical school of thought. It has a particular set of restrictive as well as simplifying assumptions about human behaviour, some of which are as follows:
• Production occurs at the site of a firm and consumption occurs at the site of the household (a unit comprised of individuals).
• A firm’s objective is to maximize profit and an individual’s objective is to maximize utility.
• There are two broad classification of markets – factor market (capital and labour provided by the household) and product market (commodities produced by the firm).
• Individuals get wages in return for their labour and interest in return for their capital.
• The market clearing prices at the respective markets determine the quantum of value produced in an economy at a given period of time.

In this simplified framework, an individual wakes up in the morning and then goes to a labour market and sells his/her capacity to work, which in turn is purchased by the highest bidder. The winning bidder then takes this individual to a firm where the individual’s sweat or capacity to work is utilized for production in return for wages. Once, the working day is over, the individual takes the wages earned and goes to a market in order to purchase food and other commodities which he/she carries back to his/her household for the purpose of consumption. While computing the productive activity of this individual, the individual’s transactions in the labour market, in the product market and the output produced in the firm are taken into consideration. It is, however, presumed that the food and other commodities that this individual purchases for consumption at his/her household does not require any value addition before final consumption within the confines of the household. In other words, activities going on within the domain of a household are not considered as productive activity for the purpose of recording its value in the overall economic accounting process. All household activities that are not exchanged in a market do not get considered as productive economic activity, and hence are not recorded.

This failure to recognize the household as a site of value addition and the resultant omission of the household from the dominant economic discourse has been a bone of contention for a significant number of social scientists for almost a century now. It is to be noted that this omission of the household from being a participant in a legitimate economic process cannot and should not be reduced to a simple accounting problem. Using the lens of the household, a critical mind would be able to locate some major socio-economic-political issues that are ignored and suppressed in the otherwise pretty discipline of mainstream economists. As a matter of fact, the household has been ignored by almost all the various schools of economics, save and except the broadly constructed feminist school.

It is beyond the scope of this write-up to go into the nuances of the various feminist critics of economics and I would like to just touch upon one proposition that “reproduction” and “production” need to be recognized as legitimate parts of a dual-systems theory within a unitary framework. Let me briefly elaborate on the proposition. The individual who earlier went to the labour market and sold his/her capacity to work (labour power) in the labour market for utilization in production of commodities, once he/she returns home would need to reproduce his/her capacity to work (labour power) in order for the same individual to wake up the next morning and repeat the economic process. Thus, production and reproduction of work are two integral parts of one unitary economic process, and yet while the former gets recognized as legitimate, the latter is relegated to redundancy.

All students of economics need to be acquainted with this invisible household. Economics is as much about reproduction as it is about production. Economics is as much about allocative efficiency of markets as it is about distributive justice within a household. Economics is as much about the self-maximizing human nature on the outside as it is about the caring and sharing aspect of human nature within the confines of a household. All of the above are integral parts of a social reproduction narrative.

Part 3 – An experiment with school students

1. Each student should make a list of permanent members of their respective households/homes (excluding visitors/guests and hired help).
2. Track the activity of each member of the household over a 24 hour period (one full week would be more representative) and make a table with three columns with column 1 listing all the activities performed, column 2 – time allocated for each activity and column 3 – report if the activity is of economic value or not.
3. Students should turn in the activity sheet.
4. There is a very high probability that most, if not all, students would not assign any economic value to most of the common household activities like cooking, washing, cleaning, shopping, child rearing, etc., performed by the members of the household.
5. Once the data is collated, have a classroom discussion on the issue of invisibility of the household activities in our perception of economic value.
6. One of the easiest ways to make the students understand the economic value of such household activities is by having them assign a money value to all the “non-economic” chores, if the jobs, instead of being performed by the members of the household, were indeed performed by hired labour.
7. This exercise would have inherent limitations in terms of true value assessment. For example, the quality of child rearing performed by a mother cannot be equated to that of a hired help whose wage rate would have to be imputed. However, in spite of such limitations, the students would get some sense of the economic value created by household work.

The author obtained his PhD in Economics from the University of Notre Dame, USA and has taught at various universities in India and abroad. He can be reached at saibalbasu@gmail.com.