Introduction

Economic productivity has been the benchmark of efficiency not only since Adam Smith illustrated the division of labor in pin making in his Wealth of Nations (1776) but especially since Henry Ford combined mass production with a Taylorist ultra division of labor [1]. An efficient economy produces more with either the same or less labor so that productivity rises. By contrast, however, as proposed in this chapter, social efficiency in the sense of more labor-intensive and personalized public services inverts economic productivity. No one ranks a primary or secondary school or university as better than another because it has bigger classes and less personalized teaching. No one prefers a hospital or health clinic because its doctors or health workers treat more patients than another. An efficient society will employ more people in education, health and public and social services with smaller class sizes in teaching, shorter waiting lists for hospitals and more personalized and swifter social services for those in need, not least in societies with aging populations.

It has tended to be assumed that social welfare can be afforded only if an economy first becomes more competitive, that is, that competitiveness must precede welfare. Yet the implicit logic of this is flawed in that it fails to recognize the circularity of expenditure and income. More health workers, teachers and carers spend more than fewer. As their jobs are created, they both raise the level of employment and increase effective demand. They pay not only indirect taxes from their expenditures but also direct taxes on their income since public services are in the “overground” economy [2].

Milton Friedman [3] asserted that markets are always more efficient than governments. This has been challenged by the speculation in toxic financial derivatives that gave rise to the subprime crisis and the greatest crash of markets in Western economies since 1929. It also has been challenged not only by how state intervention resolved the 1930s Great Depression, as with the US New Deal [2], but by evidence that the state not only can provide the conditions for markets to flourish, but also create markets directly. As with computers, since Alan Turing did in breaking the German Enigma codes in World War II [4], their development thereafter by US Defense Department funding, the World Wide Web, as well as US federally sponsored innovations such as the algorithm of Google and the creation of nanotechnology [5].

Friedman [3] also claimed that public investment and spending “crowds out” and drains the private sector. Yet it has been overlooked that he also claimed that this would be true only in the case of full employment, whereas unemployment is now more typical of many advanced economies, while public investment generates demand for private sector goods and services. For example, investment projects financed by the European Investment Bank generate up to three times their initial investment, employment, and income in the private sector. Thus, if European Investment Bank renovate a hospital, as they have done 365 times in France, the renovation is done by private construction companies, which engage other private sector companies to carry out the project [2].

It has been widely assumed that economic efficiency precedes social welfare and that growth is a necessary condition for redistribution, which is a misconception. Economic efficiency historically has been derived from rather than preceded social efficiency. It depended on not only natural talents and inspiration of the kind that Schumpeter [6] submitted were characteristic of innovators, but also the state assuring an educated, literate and numerate general workforce [7].

These are social external economies for which firms may pay through taxation – if not avoiding them through transfer pricing [2] – but cannot directly provide for the population as a whole. There also are others social external economies. Shorter waiting times for more frequent public transport, shorter waiting lists in hospitals and a less polluting environment all improve economic efficiency in terms of less time to get to work, or being healthier in getting there, or obtaining treatment. Fifty years ago Edward Denison’s study for the Brookings Institution [8] Why Growth Rates Differ found education and health to be among the most consistent factors explaining why higher welfare countries have better economic performance. In these key senses, increased economic efficiency proceeds from rather than precedes social welfare and wellbeing.

In addition, income redistribution also sustains rather than drains economies. In a recent study for the European Central Bank, Carroll, Slacalek, and Tokuoka [9] found that a tax transfer to the lower half (in terms of net worth) of the population or the unemployed is two to three times more effective in increasing aggregate spending than a stimulus of the same size for higher earners. Moreover, those dependent on state pensions have a high propensity to consume and sustain demand while the richer tend mainly to save. Cutting state pensions does not improve competitiveness since few people eligible for pensions also work for companies. Cutting pensions on the grounds that there is a fiscal crisis, such as in the EU, ignores the fact that this was caused by speculation by banks and hedge funds, which both challenges the principle that markets are necessarily efficient and defies both the principles of social justice and conviction among people that governments can govern rather than markets and market values rule.

A higher level of public expenditure in turn is crucial for lowering unit costs in the private sector, where economies of scale and more of the same, despite economies of scope and more with the same, remain important. The lack of internal EU demand as a factor constraining competitiveness has been stressed time and again in the debate on the Eurozone crisis and the limits of quantitative easing [2, 10, 11], i.e., that low or zero interest rates will not by themselves promote a sustained recovery, not least since, as Keynes stressed, when confidence in a recovery is low, expectations of returns on net investment are depressed [12, Chapter 12] and low interest rates are like pushing on a string rather than recovering new investment.

In terms of economic efficiency and productivity, it is also widely presumed that employing more people in public services is only a cost rather than a gain from investments in health, education and social wellbeing. Certainly more labor-intensive employment is not a sufficient condition for a more efficient society. This also depends on the quality of more personalized services and to efficiency in outcomes. But, as illustrated in more detail later, more time to individualize a service, such as health care, raises its quality for both the public and service providers, whereas higher productivity at the cost of worker overload and burnout does not.

A Fordist and Taylorist logic has been reflected in the concern of New Public Management (NPM), since the 1970s, to increase efficiency in social domains such as health and education. Within NPM the major concern has been to assure a high performance work system (HPWS) by imposing market or “quasi-market” performance criteria at operational levels [13], often using a transactional approach through financial incentives and managing people within a human capital framework of seeking to raise the rate of return on employees [14]. By contrast, social efficiency implies a service within a high involvement work system (HIWS) through a more transformational leadership approach for which relational models [15] of management are more appropriate, within a longer standing human relations perspective.

It is on such grounds that this chapter proposes that social productivity should be the inverse of economic productivity, assuring more teachers and smaller classes, more health workers and shorter waiting lists and more carers for the aged. It cites endorsements of this by European heads of state and governments intended to relaunch and reinforce a European social model, which have been displaced by the contrary demands for “structural reforms” aiming to reduce employee rights since the onset of the Eurozone crisis. It illustrates that some of the highest productivity gains in the world, by leading Japanese companies, have been by assuring core employees lifetime employment and that, if they suggest continuous improvements in work methods, their productivity gains are to the mutual advantage of themselves and their work colleagues, as well as their organizations.

The chapter critiques the idea that efficiency and innovation can only be achieved by reducing employee rights, through more flexible labour markets by which outsiders can take insiders’ jobs at lower cost, which has been the leitmotif of the “structural reforms” demanded by the troika of the European Commission, the European Central Bank and the International Monetary Fund (IMF) since the onset of the Eurozone crisis in 2009 [16]. It illustrates that there is no basis for this in the purely theoretical “insider-outsider” thesis [17] of former Nobel Economic Committee member Assar Lindbeck and the British economist Denis Snower, which was highly influential in persuading German employers from 2004 to demand longer hours for no increase in pay, which reduced the growth of internal demand in Germany to the detriment of the exports of other EU member states with a “beggar-my-neighbor” rather than “better-my-neighbour” syndrome.

The chapter also cites recent recognition from the IMF that there also is no basis for “structural reforms” enabling more flexible labor markets and substantiates the claim that leading Japanese firms have been able to achieve some of the highest productivity rates in the world through flexible and lean production by offering core workers lifetime employment and profit sharing. It shows that it was the failure of flexible labor markets in Japan in the early twentieth century that gave rise to such high productivity, as well as to annual wage increases for core workers, and how these enabled the kaizen of continuous improvement in methods of work operation and thus sustained competitive advantage.

It develops the concepts of both economic and social efficiency in relation to theories of transformational and transactional leadership and shows that case studies of leader–member exchange (LMX) in the West have shown the importance of retaining core workers to achieve sustained productivity [18, 19, 112]. It recognizes the degree to which theories of institutional logics such as those of Lok [20] have shown that government reforms can be disregarded at organizational levels and suggests the complementary distinction of organizational and operational logics [21] in relation to the role of operational learning, which is excluded in a Fordist Weberian paradigm, which insists on top-down performance appraisal. The chapter maintains that hierarchy and surveillance in education, as claimed by Foucault [7], inhibit creativity and efficiency in NPM in both education and health services and that, in seeking to introduce market criteria, NPM has been counterproductive in the UK [22, 23].

By contrast, the chapter illustrates from other international examples how efficiency in health care provision can be achieved by learning up from lean and flexible production within a post-Fordist and post-Weberian paradigm. In this sense it draws on relational models (e.g., [15]) of management by involving employees in decision making and gaining commitment to high performance through concern with the wellbeing of both providers and users of services. It then shows how such arguments were endorsed by successive European Councils before the onset of the Eurozone crisis, thereafter were displaced and denied, but could and should in principle be recovered to achieve the economic and social efficiency that the European Union needs for its own democratic legitimation.

4.1Productivity and economic efficiency

One of the claims made by Milton Friedman [3], and which influenced Margaret Thatcher – through briefings from a fellow member of parliament and close confidant, Sir Keith Joseph – is that markets always were more efficient than governments. It encouraged her to endorse a presciently named “Big Bang” liberalization of financial markets in the UK in the mid-1980s. This was part of the so-called supply side economics that posed a challenge to John Maynard Keynes’s [12] notion that the state should intervene to manage the level of demand since markets could not of themselves assure a balance of demand and supply. This was paralleled from the 1980s by theories of efficient markets on the assumption that, provided the markets were not constrained by government regulation, perfectly informed entrepreneurs with “rational expectations” would ensure an optimal allocation of resources [2]. Influenced by such a theory, US Treasury Secretary Larry Summers persueaded the US Congress in 1999 to repeal the Roosevelt New Deal separation of deposit banking from speculative finance. The outcome, within a decade, was the worst financial crisis to hit the Western world since the Crash of 1929. This then generated a crisis in the European single currency area, the Eurozone, from which it has not yet recovered [2].

4.2Social efficiency

The words efficiency and economy are often juxtaposed. This is less so for efficiency and societies. Yet a society is not efficient if it allows banks to speculate with people’s savings and destroy them. Nor is it efficient if it tolerates persistently high levels of unemployment. Nor if a sense of injustice threatens the legitimacy of its institutions. Nor if it only serves markets rather than ensures that they also serve people. Nor if it demands that economic criteria for productivity should obtain without qualification in social domains such as health, education and public services.

For a productivity logic is counterproductive in the social domain. An efficient company may take labor out as one way to “go lean” and aim for a HPWS or on the basis of people’s ability, motivation and opportunity (AMO) perspective [52, 116]. But an efficient society puts people in and goes lean in other ways, such as in a more flexible use of plant and equipment, cutting waste in time and procedures, and ensuring personalization of student or patient focus in education or health services. In this case, the concern is with achieving HIWSs through relational models of managing people at work that goes beyond the AMO framework by strengthening relationships and mutual advantage between employers and employees [15].

The earlier claim that no one judges a hospital or health clinic with more patients as being better than another is clearly corroborated in the case of nursing by Oppel and Young [53], who, along with others such as Everhart, Schumacher, Duncan, Hall, Neff and Shorr [54], echoing also Spetz, Donaldson, Aydin and Brown, D. S. [55] and earlier research by Mark, Harless, McCue and Xu [56], found that higher nurse–patient staffing is associated with better clinical patient outcomes such as dealing with complications gaining, lower mortality rates and higher patient perceptions of the quality of health care.

Nor is it clear that economic efficiency can be achieved in the social sphere only through financial incentives. Thus, in health care, Brosig-Koch, Kairies-Schwarz and Kokot [57] found that the outcome of fees-for-service (FFS) payments rather than capitation (CAP), in the sense of payment for the number of patients treated, resulted in less patient-oriented care than CAP after the choice of payment scheme was made and did not necessarily improve but could even worsen patient treatment. From a large administrative data set in the Netherlands, Douven, Remmerswaal and Zoutenbier [58] found that more altruistically than financially motivated providers of mental health care achieve better treatment outcomes. Nor is the mode of ownership versus organization vital to social efficiency. Data from Germany on whether hospitals are public or private show comparable results rather than superior performance by private providers [59].

4.3Hierarchy, surveillance and education

The introduction of primary education in the later nineteenth century was based on what businesses needed were people who could read, write, calculate and perform rather than imagine, create or challenge. For Cherkaoui [79], the forms of assessment that emerged with mass education were a mode of socialization that prepared individuals for the division of labor within a Weberian bureaucratic society. For Foucault [7], this was part of the “normalization” required from modern education itself and, with it, surveillance to ensure that norms were observed. This was echoed by Bourdieu [80] in his Homo Academicus,which also asserted that norms needed to be respected rather than challenged if one wished for advancement.

Most mass education not only is Fordist in its concern for volume throughput, Weberian in terms of hierarchy and Taylorist in terms of explicit rules for achieving standards. It is also Foucauldian in knowledge as power and power in controlling the reproduction of knowledge, including what research is deemed worthy of government support. This was well put in a debate on a proposed reform of Oxford University by one of its fellows teaching management, Peter Johnson [81]. The proposal was to appoint a management board over and above the “congregation” of the college fellows who actually did the teaching, with a chief executive officer and an inner group who could make key decisions on supposedly clear-cut criteria. As Johnson put it:

the particular business variant underlying the new governance proposals is well past its sell-by date. The engineers’ paradigm behind [them] applies the ideas of Henry Ford and Frederick Taylor to learning as though the university were a machine bureaucracy where dons are substitutable employees in an integrated academic factory [81, p. 15].

Misplaced market criteria in education in the UK also have included the introduction of private sector academies to replace local government responsibility for secondary schools. Launched initially by Margaret Thatcher as City Technology Colleges, they presumed that public-spirited business leaders would sponsor local schools, impose higher standards and, by linking business more directly with education, foster entrepreneurship in young people. Taking “market solutions” seriously, one city academy started to pay pupils cash bonuses to achieve target exam results, even if the expected grade was the lowest to get a pass rather than a fail [82].

Overall, academies have removed Hirschman’s [83] “voice” for local governments and parents, yet not improved examination performance. A recent report from the Education Select Committee of the House of Commons on Academies and Free Schools [84] concluded that academy status does not result in raised standards, that schools work best in collaboration with others not in isolation, that sponsors and proposers of academies and free schools have not been properly vetted before being allowed to run taxpayer-funded schools, and that the whole system lacks transparency as well as oversight and is open to fraud, abuse and mismanagement.

Clearly there are dilemmas here. At one level, tests and assessment are important as indicators of whether someone is competent in terms of explicit reasoning. Yet too much testing, especially within schools, can inhibit creativity, especially when it is done according to “national standards” and when schools are assessed for future funding on a productivity basis of how many examinations per pupil have been passed at what grades. This risks meaning less the educare as leading out that Rousseau stressed in his Emile or on Education [85] than the inducare or induction into what Alfred North Whitehead [86], coauthor with Bertrand Russell of Principia Mathematica, deemed too often to be “dead bodies of knowledge” and into the technique of how to pass examinations rather than Whitehead’s concern that education should be about “life itself.”

The potential positive effects of HR practices on organizational performance in education depend on student/staff-related factors (e.g., individual or group wellbeing in relation to those teaching courses or supervising research). This implies transcending an Ability-Motivation-Opportunity (AMO) framework [52, 87, 88]. It also differs from human capital models of HRM such as high-performance work systems [14]. By contrast, relational models of HRM go further than the AMO framework by strengthening relationships between students and staff [15] and enhancing a high-involvement learning environment.

Yet teachers as the line managers of mass education know that if they fail to show productivity in terms of both the quality and volume of examination passes, both those they are teaching and they themselves will be sanctioned. They know that they cannot afford to encourage imagination and diversity in the answers that their pupils give on tests since, if they do, both the pupils’ ratings and theirs as assessors will drop because the pupil – or student – has departed from a top-down assessment “template,” and their “internal market” rankings will fall.

In addition, despite the admirable aim of European education ministers to achieve diversity and quality in European higher education in their Bologna Declaration [89], the Bologna Process adopted to achieve this neglected quality and introduced a crude quantitative input–outputmodel in its assessment procedures. It ranks universities in terms of the input of hours taught, yet pays no attention to class size. It insists that a university must allocate a given number of hours to teaching to earn a high ranking by its own criteria. This neglects entirely the notion that the value of teaching may be inversely related to class size and reflects both a constrained and flawed concept of productivity [90].

For example, a graduate class of 12 is one in which the teacher can get to know not only the names of the students and what they can do well or are doing less well, but also who they are, what their backgrounds are, what their aspirations are, in particular those related to careers and quality of working life. In a class of 24, this is still possible. In a class of 48 it becomes geometrically rather than only arithmetically more difficult. In an undergraduate lecture of 240 students, it is impossible. Assessment of the quality of teaching in terms of input hours therefore is absurd if one wishes to evaluate the quality of teaching irrespective of class size. The Bologna Process pays no attention to this consideration, nor does it rank it in its assessment procedures.

4.4Counterproductive health reforms

From the 1980s the Thatcher and Blair governments in the UK did not overtly aim to privatize the NHS, and they did not commit themselves to doing so in their election manifestoes. But their presumption was that a flexible private sector is always more efficient than inflexible public sector “bureaucracies.” Their explicit logic was the introduction of an “internal market” to the health service and outsourcing of services that hitherto had been internal to hospitals or health care centers. It was claimed that this would raise quality and widen freedom of choice [91, 92]. Its managerial logic was that with more outsourcing and shorter-term internal contracts, the power of professional associations and trades unions in the NHS would decrease [13]. Its implicit economic logic was Fordist in seeking to gain higher patient throughput and Taylorist in terms of introducing line managers to assure that new performance criteria were being observed by health care professionals.

Yet this proved entirely counterproductive in terms of economic efficiency. Many of the new line managers had no medical training. The top-down performance criteria were decided by civil servants who, with very few exceptions, likewise had no medical training. The outcome was entirely counterproductive. It trebled administrative costs in the British NHS, and the English NHS after devolution of health services to Scotland, Wales and Northern Ireland, from less than 5% in the 1970s to 14% by 2004 [23], which, despite government claims that this would be reduced by 2011, was not lowered because of the inertial top-down organisational design of the Nep Public Management paradigm [22].

British shadow finance minister Gordon Brown had made a commitment before the 1997 general election that a Labour government would not breach the budget limits of the previous Conservative government, including those for the NHS, which appeared Thatcherite. Yet then, with Labour winning the next general election, in a very un-Thatcherite manner, he threw money at the NHS, nearly doubling, for example, the income of local doctors or general practitioners and increasing funding for local health authorities and hospitals [22].

The outcome of more money, and more health care employees, had been a reduction in waiting lists. But the ongoing pursuit by government of higher Fordist volume on the presumption of economies of scale, rather than of scope, also posed “size” problems. Some of the chief executives of new local and regional hospital “trusts” chose to take early retirement rather than manage trusts that the government enlarged, and then enlarged again, since in their view they then would have been too big for anyone to know what was going on, much less continue with “change management by consent” [36].

In addition, although Gordon Brown had prided himself on the principle that his “prudent” public management of finances would end an earlier cycle of “boom and bust,” this was the outcome for new funding without a new management model for the NHS since, while increasing resources for it overall, he also imposed strict penalties if they were exceeded. For, in trying to meet local demand, some hospitals ran out of money, as a result of which not only did many have to cut some services, but others closed outright. This led to the resignation of the chief executive of the NHS but without any recognition of what had gone wrong in terms of management rather than choosing simply to quit in view of the resulting crisis [93]. Moreover, Bolton [94] has observed that at the heart of attempts to gain higher productivity in health within a New Public Management paradigm, there is an illogic that emphasizes contradictory criteria in claiming both to improve the quality of service yet also cut those who could deliver it and that “As nurses account for the largest part of the hospital budget, and also are accountable for how the quality of bedside care is perceived, these contradictions deeply affect their work” [94, p. 320].

The new Taylorist focus on internal hospital efficiency also neglected resulting social diseconomies with a degree of deceptive accounting verging on little less than deceit. For example, part of the increase in patient admissions was due to their spending less time in the hospital and, thus, the outsourcing of postoperative care from hospital staff to general practitioners or health workers, or families, whose members might have to take time off work to care for those who had been sent home without having fully recuperated. Faster throughput also meant a higher rate of readmissions of patients who formerly would have stayed longer in hospital. Perversely also, although suiting government claims on admissions, the total figures for these included those who had to be readmitted because of complications or failure to recuperate, with Sterns’ “revolving door” effect that sending patients home early raised “success” in later readmission rates [95].

4.5Logic in learning from lean

By contrast with these failures in change management within an unreconstructed Weberian and Fordist paradigm in the UK, other governments were learning up from lean management on the post-Fordist flexible production model [30, 96]. Teich and Faddoul [97] found that most of these were in the USA but that early approaches implementing lean principles were not much more than an exercise in reducing stock inventories in hospitals. Nonetheless, later approaches included managerial and support case studies, patient-flow case studies and organizational case studies.

Teich and Faddoul give several examples of the successful implementation of comprehensive lean projects in health care in the USA, such as at the Virginia Mason Medical Center, where the hospital reported increased profit margins, decreased deaths, and a reduction in the number of medication errors. Other reported benefits were an 85% reduction in how long patients had to wait for lab results and a lowering of inventory costs by $1 million. In order to directly learn up from lean production systems, in 2002 30 senior managers traveled to Japan for 2 weeks to observe this at Toyota. By 2008, more than 200 employees visited production plants in Japan [97].

Researchers from Belgium explored whether lean management activities improved patient safety culture in a radiotherapy institute. Data were collected over a 3-year period using surveys, workshops, an incident reporting system and interviews with professionals. Lean approaches were associated with some changes in safety culture and increased intention to take action to prevent future incidents. The number of patient safety incidents decreased owing to better group-based problem solving and fuller use of resources. Patient safety culture improved significantly as a result of the introduction of so-called care pathways [97], which is consistent with Gittell et al. [74] on relational coordination and Mørk et al. [75] on boundary spanning.

Flexible capacity utilization, care pathways and concern with cutting waiting times were among the most notable examples of a post-Fordist reorganization on lean principles in the Karolinska teaching hospital in Stockholm in the 1990s, inspired by its general director Jan Lindsten [32, 98]. Flexible capacity use of operating theaters was introduced based on the likely duration of the operation rather than the type of operation.

As a result, all theaters were segmented into four groups – fast,medium, slow and emergency. Flexible theater use was matched by a flexible use of wards. Underlying this was the principle of clustering so-called families of service both within the organizational logic of the hospital and the operational logic of departments and units. In addition, a new post of nursing Coordinator was created and adopted by most departments. This job’s responsibilities include minimizing the number of visits a patient must make and scheduling preoperative preparation and postoperative care by doctors. Two operating theaters were closed, but a new preoperation anaesthetic clinic opened. More anaesthetists were hired, allowing senior staff to focus on surgery and junior staff to manage all preoperative patients.

The outcomes were that the new position of Nursing Coordinator created a career path for nurses, who in practice became responsible for the administration of the various departments. This freed doctors from administration and allowed them to spend more time on their clinical work and research. The time between operations was cut by up to half. Average waiting time for surgery was reduced for hip operations from 8 months to 3 weeks and for some cancer conditions, after diagnosis, to 3 days. Overall unit costs were cut by 15%. Nomedical staff were made redundant.

4.6Responding to technological unemployment

The labor-substituting effects of technical progress, and thus technological unemployment, are now attracting increased attention. Some of this ranges from an optimistic scenario of increased welfare [99] to cataclysmic in its pessimism. Thus Frey and Osborne, of the Oxford University Martin Programme on the Impacts of Future Technology, anticipate that up to 47% of jobs in the USA could be displaced by computer technology and robotics within the next two decades. Analyzing some 702 different occupations, they found that the jobs most at risk were semiskilled or unskilled, which has major social implications [100].

Mainstream macroeconomics tends to assume that technical progress is neutral. But it is not. It has differential economic and social implications. As with horses with the advent of the horseless carriage, in the case of the driverless car being developed by Google, jobs for hundreds of thousands to millions of commercial drivers of cabs and freight vehicles could disappear. Larry Page of Google has claimed that new technologies will make businesses not 10% but ten times more efficient and that, provided this flows through into lower prices, “I think the things you want to live a comfortable life could get much, much, much cheaper” [101, p. 4].

Yet if there is to be an increase in welfare and wellbeing, this demands that the productivity increases be distributed within society in terms of social income, social investments, or social expenditures by governments in ways that compensate for the job losses involved. For example, while technical progress is still creating jobs in firms, it is creating fewer of them. In 1960, the most profitable company in the world’s largest economy was General Motors (GM). In today’s money, GM made $7.6 billion that year. It also employed 600,000 people. Today’s most profitable company, Apple, employs 92,600. Where 600,000 workers once generated $7.6 billion in profit for GM, 92,600 in 2014 generated $89.9 billion for Apple, an improvement in profitability per worker of 76.65 times [99].

Technological unemployment is consistent with Piketty’s findings [69] on inequality but also gives more explanatory power in terms of asymmetric outcomes from technical progress than the neutrality assumed in mainstream macroeconomic theory. It also implies more than Piketty’s proposals [69] for global taxes on wealth and income since, through transfer pricing, which is the near exclusive domain of multinational corporations rather than smaller national firms, vast profits by companies such as Apple, or Google or Starbucks are not being effectively taxed.

On this point, Piketty makes no proposals on how to achieve more effective taxation. There had been such proposals made at high levels in the Commission to Jacques Delors when he was its president, and they attracted his support and that of then director general of Eurostat [2, 102]. But this support lapsed after Delors resigned in 1995 following his 10-year tenure as the commission president. After which, multinational corporations were highly effective at bringing pressure to bear on the subsequent president of the commission, Jean-Claude Juncker, to arrange for them tax avoidance deals when he was prime minister and finance minister of Luxembourg [103]. As Richard Murphy, a tax expert and campaigner who runs Tax Research UK, told International Business Times, UK:

The whole of Europe faces a financial crisis [...]. It’s going into recession. Its member states have one characteristic in common; they are short of tax revenue. And yet, as prime minister of Luxembourg, Juncker made it his job to ensure that, frankly, a blind eye was turned to tax avoidance across Europe being facilitated by his Duchy [103].

Yet the combination of low incomes, current unemployment and social and political tensions arising from both already have been sufficient to change the terms of reference in politics in the USA, with Donald Trump and his assault on globalization decimating other candidates for the Republic nomination for the presidency of the USA as well as in the support for the self-styled democratic socialist Senator Bernie Sanders in the primaries leading to the adoption of Hillary Clinton as the Democratic candidate.

This had echoes also in the UK in terms of the 2016 Brexit vote. In Paul Mason’s view [11], shared by one of us with extensive experience of British politics, this was less a resurgence of nationalism – any more than the remarkable success of the Scottish Nationalist Party in the previous general election – than a protest against a neoliberal model of politics that prioritized market rather than social values. It also had precedents in earlier referendums in Europe for the three countries given the chance to vote on the ill-fated constitution for Europe proposed by former French President Valéry Giscard d’Estaing, France, the Netherlands and Ireland, all of which voted against. On the other hand, opinion polls showed that the constitution was rejected not because most people at the time were “against Europe.” For instance, a Gallup poll in France in June 2005 found that 83% of those voting against thought that “EU membership is a good thing”; the same share also thought that voting “No” would give the “opportunity for a more social Europe,” while 80% wanted a treaty that would “better defend national interests and jobs” [104].

The answer to both technological unemployment and the outsourcing of jobs with globalization is not competing down in terms of incomes and rights at work but more labor-intensive employment in the social domains of health, education and public and social services. In addition, such employment overwhelmingly is local not global, not exposed to international competition and not necessarily subject therefore to the efficiency criteria of the private sector. Finally, as also touched on at the outset, to the degree to which job creation in this field is public rather than private, its employees are in the “overground” economy and taxed at the source, with multipliers in terms of income and employment that then generate demand in the private sector.

4.7Working to mutual advantage

What has been represented so far is that, in the social domain of health care provision in the UK, “change management” focusing in a Fordist manner on throughput, with Taylorist surveillance, has not delivered expected gains from NPM reforms, while continual surveillance and assessment of students on the grounds of needing to compete in a global era is widely held by the UK teaching profession to have degraded the quality of education. The last people to have been consulted in both cases were those on the front lines in health care provision and teaching, whereas it could have been to the mutual advantage of both parties and policymakers to have involved them from the outset in what change was feasible to increase both economic and social efficiency and in what ways.

However, unless there are procedures in place for recognizing proposals for innovativemethods of work operation and share their added value with an organization or institution, few employees, including middle management, will be motivated to make such proposals to increase either economic or social efficiency. This has several implications:

Summary

Japan is an exemplar of the last point, in which less than a seventh of its employment has been in hyperefficient industrial groups, with commitment to continuous improvement in methods of work organization to raise productivity. The rest of the economy has low productivity in both agriculture and services yet is socially efficient in the sense of assuring employment, income and a high degree of social cohesion [28, 107]. The low growth that has followed in the wake of Japan’s own financial crisis in the 1990s is less negative than positive in being less damaging to the environment in a society that already has achieved some of the highest living standards in the world.

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