Ha-Joon Chang - 23 Things They Don't Tell You about Capitalism

In perceiving changes, we tend to regard the most recent ones as the most revolutionary. This is often at odds with the facts. Recent progress in telecommunications technologies is not as revolutionary as what happened in the late nineteenth century – wired telegraphy – in relative terms. Moreover, in terms of the consequent economic and social changes, the internet revolution has (at least as yet) not been as important as the washing machine and other household appliances, which, by vastly reducing the amount of work needed for household chores, allowed women to enter the labour market and virtually abolished professions like domestic service. We should not ‘put the telescope backward’ when we look into the past and underestimate the old and overestimate the new. This leads us to make all sorts of wrong decisions about national economic policy, corporate policies and our own careers.

According to an American friend, the Spanish textbook that she used in her school in the 1970s had a sentence saying (in Spanish, of course) that ‘everyone in Latin America has a maid’.

When you think about it, this is a logical impossibility. Do maids also have maids in Latin America? Perhaps there is some kind of maid exchange scheme that I have not heard of, where maids take turns in being each other’s maids, so that all of them can have a maid, but I don’t think so.

Of course, one can see why an American author could come up with such a statement. A far higher proportion of people in poor countries have maids than in rich countries. A schoolteacher or a young manager in a small firm in a rich country would not dream of having a live-in maid, but their counterparts in a poor country are likely to have one – or even two. The figures are difficult to come by, but, according to ILO (International Labour Organisation) data, 7–8 per cent of the labour force in Brazil and 9 per cent of that in Egypt are estimated to be employed as domestic servants. The corresponding figures are 0.7 per cent in Germany, 0.6 per cent in the US, 0.3 per cent in England and Wales, 0.05 per cent in Norway and as low as 0.005 per cent in Sweden (the figures are all for the 1990s, except for those of Germany and Norway, which are for the 2000s). [8] R. Sarti, ‘Domestic service: Past and present in Southern and Northern Europe’, Gender and History , 2006, vol. 18, no. 2, p. 223, table 1. So, in proportional terms, Brazil has 12–13 times more domestic servants than the US does and Egypt has 1,800 times more than Sweden. No wonder that many Americans think ‘everyone’ has a maid in Latin America and a Swede in Egypt feels that the country is practically overrun with domestic servants.

The interesting thing is that the share of the labour force working as domestic servants in today’s rich countries used to be similar to what you find in the developing countries today. In the US, around 8 per cent of those who were ‘gainfully employed’ in 1870 were domestic servants. The ratio was also around 8 per cent in Germany until the 1890s, although it started falling quite fast after that. In England and Wales, where the ‘servant’ culture survived longer than in other countries due to the strength of the landlord class, the ratio was even higher – 10–14 per cent of the workforce was employed as domestic servants between 1850 and 1920 (with some ups and downs). Indeed, if you read Agatha Christie novels up to the 1930s, you would notice that it is not just the press baron who gets murdered in his locked library who has servants but also the hard-up old middle-class spinster, even though she may have just one maid (who gets mixed up with a good-for-nothing garage mechanic, who turns out to be the illegitimate son of the press baron, and also gets murdered on p. 111 for being foolish enough to mention something that she was not supposed to have seen).

The main reason why there are so much fewer (of course, in proportional terms) domestic servants in the rich countries – although obviously not the only reason, given the cultural differences among countries at similar levels of income, today and in the past – is the higher relative price of labour. With economic development, people (or rather the labour services they offer) become more expensive in relative terms than ‘things’ ( see also Thing 9 ). As a result, in rich countries, domestic service has become a luxury good that only the rich can afford, whereas it is still cheap enough to be consumed even by lower-middle-class people in developing countries.

Now, whatever the movements in the relative prices of ‘people’ and ‘things’, the fall in the share of people working as domestic servants would not have been as dramatic as it has been in the rich countries over the last century, had there not been the supply of a host of household technologies, which I have represented by the washing machine. However expensive (in relative terms) it may be to hire people who can wash clothes, clean the house, heat the house, cook and do the dishes, they would still have to be hired, if these things could not be done by machines. Or you would have to spend hours doing these things yourselves.

Washing machines have saved mountains of time. The data are not easy to come by, but a mid 1940s study by the US Rural Electrification Authority reports that, with the introduction of the electric washing machine and electric iron, the time required for washing a 38 lb load of laundry was reduced by a factor of nearly 6 (from 4 hours to 41 minutes) and the time taken to iron it by a factor of more than 2.5 (from 4.5 hours to 1.75 hours). [9] As cited in J. Greenwood, A. Seshadri and M. Yorukoglu, ‘Engines of liberation’, Review of Economic Studies , 2005, vol. 72, p. 112. Piped water has meant that women do not have to spend hours fetching water (for which, according to the United Nations Development Program, up to two hours per day are spent in some developing countries). Vacuum cleaners have enabled us to clean our houses more thoroughly in a fraction of the time that was needed in the old days, when we had to do it with broom and rags. Gas/electric kitchen stoves and central heating have vastly reduced the time needed for collecting firewood, making fires, keeping the fires alive, and cleaning after them for heating and cooking purposes. Today many people in rich countries even have the dishwasher, whose (future) inventor a certain Mr I. M. Rubinow, an employee of the US Department of Agriculture, said would be ‘a true benefactor of mankind’ in his article in the Journal of Political Economy in 1906.

The emergence of household appliances, as well as electricity, piped water and piped gas, has totally transformed the way women, and consequently men, live. They have made it possible for far more women to join the labour market. For example, in the US, the proportion of married white women in prime working ages (35–44 years) who work outside the home rose from a few per cent in the late 1890s to nearly 80 per cent today. [10] C. Goldin, ‘The quiet revolution that transformed women’s employment, education, and family’, American Economic Review , 2006, vol. 96, no. 2, p. 4, fig. 1.

It has also changed the female occupational structure dramatically by allowing society to get by with far fewer people working as domestic servants, as we have seen above – for example, in the 1870s, nearly 50 per cent of women employed in the US were employed as ‘servants and waitresses’ (most of whom we can take to have been servants rather than waitresses, given that eating out was not yet big business). [11] I. Rubinow, ‘The problem of domestic service’, Journal of Political Economy , 1906, vol. 14, no. 8, p. 505. Increased labour market participation has definitely raised the status of women at home and in society, thus also reducing preference for male children and increasing investment in female education, which then further increases female labour market participation. Even those educated women who in the end choose to stay at home with their children have higher status at home, as they can make credible threats that they can support themselves should they decide to leave their partners. With outside employment opportunities, the opportunity costs of children have risen, making families have fewer children. All of these have changed the traditional family dynamics. Taken together, they constitute really powerful changes.