International Household & Family Research
Conference 2002, Helsinki, Finland
(Revised 2007)
BASIC ELEMENTS OF HUMAN ECONOMY
A SKETCH FOR A HOLISTIC PICTURE
Preface
2
Introduction
2
1. The household - a core of human economy
3
1.1. The origin of the picture
1.2. The value of nonmarket, unpaid work
1.3. The breadwinners of the world?
3
6
9
2. The households as strongholds against globalization
12
2.1. Developing a new picture of national economy
2.2. Interplay between public and private
2.3. Turning a trap into an asset - a good life Utopia?
2.4. The household as a counterforce to market globalization
12
14
15
16
3. Cultivation economy - the interface between economy and ecology.
16
3.1. Cultivation versus industrial production.
3.2. Food or commodities?
17
19
4. Conclusion: The Triangle of Human Economy
21
References
23
Hilkka Pietilä, M.Sc.
Independent researcher and writer affiliated to
University of Helsinki,
Christina Institute for Women Studies
e-mail: hilkka.pietila@pp.inet.fi
2
BASIC ELEMENTS OF HUMAN ECONOMY
A sketch for a holistic picture
Preface
Today, there is a pressing need for a new, more comprehensive and relevant perception
of human economy as a whole in order to understand the prerequisites for sustainable
livelihood for the whole of humanity and to be able to create a lifestyle which could
provide a dignified quality of life for all people, with due respect to the ecological
boundaries of the biosphere.
The presupposition in this paper is that human economy is composed of three major,
distinct components instead of one, monetized industrial economy, as usually taken for
granted in mainstream economics. Those components are the household economy and
the cultivation economy in addition to the industrial economy. In fact, households and
cultivation have always existed, long before money and industry ever emerged, but they
have remained invisible in the eyes of mainstream economists.
It is the purpose of this paper to make all these three components visible and elaborate
their background and characteristics, and to argue for the necessity of their inclusion. The
ultimate aim is to challenge alternative and feminist economists into collaboration for the
creation of a new theory of human economy and to expand the domain of economic
inquiry accordingly.
Hopefully, this paper would also prompt us to consider to what extent we would like to
acquire more control over our livelihood and to decrease our dependency on factors
beyond our control, such as the globalized free market with all its consequences, and to
what extent this would be possible without putting at risk other important elements and
needs in life.
Introduction
Human well-being consists of material and nonmaterial "goods", of monetized and
nonmonetized production. The historical transition from the subsistence economy to
monetarized economy has had many repercussions on basic conditions of human life,
and particularly on the life of women. Not all of these effects have been positive, and
neither have they all been understood and taken into account.
Understanding the history and the composition of human economy more
comprehensively may give us new visions and insights on how to solve the problems of
living in a global economy of increasing scarcity. We in the North need visions for
transition from a wasteful, consumerist market economy towards a more sustainable way
of living.
The concept of human economy is used in this paper to signify all work, production,
actions and transactions needed to provide for the livelihood, welfare and survival of
people and families, irrespective of whether they appear in statistics or are counted in
3
monetary terms. It implies also a basic understanding of the necessity to manage the
human household in a sustainable way.
The major blind spots in the prevailing economic thinking seem to be:
-
the household economy, which is used here for the nonmarket, unpaid work and
production by a family or a group of people having a household together for the
management of their daily life, irrespective of whether they are kindred or not; or
even a group of small households living close enough to create a joint economic
unit, and
-
the cultivation economy, i.e. the production based on the living potential of nature,
which is the interface between economy and ecology, human culture facing the
ecological laws.
These constituents of human economy are either misconceived or ignored. The doctrines
of economics seem to be derived from physics and mathematics, the sciences dealing
with non-living objects and material in the universe (Mäki, 1991; Vorlaeten, 1995). Thus,
economics does not take account of biology, the science of living creatures and
processes in nature; and that explains why economists seem to be blind to the logic of
living nature.
Both of these economies are very basic from the point of view of a sustainable way of
living, and thus for human survival and people's ability to control their own lives. A
particular feature of the households is the extent and significance of nonmarket labour of
people without pay for direct production of welfare, and thus as an essential contribution
for human livelihood. A particularity of the cultivation economy is its profoundly unique
nature by being based on living potential of nature.
Human beings are not considered in this paper merely as part of living nature - as many
ecologists do - but as the only rational and responsible species in the universe, which is
accountable for its behaviour and its management of the only planet suitable for its
existence and welfare. Neither does this paper take a human being as mere "Homo
Economicus", whose only motivation is the pursuit of self-interest and maximized
satisfaction of needs on lowest possible costs and efforts.
1. The household - a core of human economy
The household as a basic economic unit in a society lends itself easily to use as a new
angle from which to look at the economic process as a whole. For all human purposes,
the household is the primary economy, which all other economic functions should serve
as auxiliaries. If we start looking at production, trade and economic activities of any kind
from the household point of view, the whole picture will change.
1.1. The origin of the picture
In the course of history, most societies have at some stage of social evolution been
agrarian societies consisting primarily of fairly self-sustaining farming families. Such
families had their fate in their own hands for the good and the bad, i.e. they had much
4
more self-reliance and control of their livelihood - though at a very modest standard of
living - than people living in the affluent, consumerist society.
The basic structure of the society at that stage is the often quite extended private family,
which provides for most of the basic needs of the family members: for food, clothing,
shelter, caring, entertainment etc. On a modest level, the family is a fairly autonomous
unit, depending only on the provisions of nature and the capabilities of its members.
In spite of the often very patriarchal nature of traditional agrarian families, women had a
central role in this kind of society because of their vital contributions to the livelihood of
the family. Since only women knew certain essential tasks, this gave them a leverage of
power in the society, where the services and goods could not be bought on the market.
Thus the gender-based distribution of labour into male and female tasks does not
necessarily imply inequality, as so often maintained in the feminist debate.
In the process of so-called modernization, industrialization, monetization,
commercialization of the society, many traditional functions are transferred outside the
family. Making of furniture and clothing, growing of food, child and health care, training
and education, even entertaining, have been transferred outside the family and
monetized. They have become either public services, provided by the society, or
commodities purchased on the market.
A Swedish researcher, Ulla Olin, analysed this process profoundly in her paper prepared
for a seminar on women and development, just before the first UN World Conference on
Women in Mexico City, 1975 (Olin, 1975). She considers the family as a general model of
human social organization and thus also of a society at large. Since an emerging state
formation increasingly takes over the functions earlier performed by the family, she
suggests terming the nation state as a symbolic family or public family. This fits the
Nordic welfare states in particular. (Figure 1.)
We have to study also the interplay between private and public families. In traditional
cultures, the societal structure outside private families was fairly thin. In the process of
modernization, the structures of industrial production, trade, administration, public
services, security and education grew stronger and increasingly powerful.
In this process, the tasks and skills of people became dispensable. It became possible to
substitute almost everything with industrial products. Nobody is indispensable any
more in the economic sense. This was the beginning of commercialization of life and
ultimately even human relations. For women, this development has naturally given new
knowledge, tools and gadgets to make life easier, but it has been detrimental, too. The
skills and tasks which used to be particularly women’s strengths have become
dispensable and thereby their inherited leverage has virtually vanished.
In the course of this process, women were the last to remain in the private sphere, when
men went to war, work and politics, children were sent to school, the sick were taken to
hospital, and the aged were put into old people's homes. Thus women were also the last
to enter the labour markets. That is one of reasons why they got the most monotonous
and mechanical jobs, or those requiring manual skills and patience. Men were not able or
willing to do these kinds of jobs - therefore they are also poorly paid even today (Friberg,
1983).
5
Figure 1. The Origin of the Picture


In human history after the transition from the gathering economy to the cultivation economy the
extended farming family has been a basic unit of livelihood for long periods. Along the time the
people’s skills and means developed to enable qualitatively better satisfaction of their basic
needs. This kind of “a house-hold” (note: holding the house/farm) was fairly independent and selfreliant economic unit at the modest level. The livelihood was based on the quality and
accessibility of natural resources and skills and assiduity of the people living together.
In the course of time various kinds of production and trade, independent artisania, exchange of
goods and services, public institutions and administration were emerging around the farming
families. The public society and economy was in the making. A means of exchange came into the
picture, and people started to buy and sell goods and services. The people and knowhow, i.e. the
labour and skills, started to move from the private families to the public market. The construction
of monetarized economy and public structures took place. Gradually the public society emerged
around the private households and the transition process of functions and people from the private
to the public has continued ever since. Women were the last ones remaining in the private
sphere.
--------------------------------------------------------------------------------------------------------------------------------
The process described above imply that - in the course of history - the public family,
production, politics, culture and organization outside the private family, was designed,
planned and built up exclusively by men, who possessed neither the particular gifts nor
the experience which women had acquired over centuries of managing the private family
and nurturing its members.
Ulla Olin considers this long-term imbalance between the male and the female rate of
influence in planning and conduct of modern industrial societies to be the virtual source of
most of the social, economic, human and international problems which we face today
6
1.2. The value of nonmarket, unpaid work
Seeing the process of emergence of the market economy through gender lenses helps us
to understand better the lopsided state of industrial societies today, and the exclusion of
and discrimination against women in these societies. It also gives an insight into the
dynamics which still prevail between the home-based subsistence production of goods
and services, on the one hand, and the public services and market on the other.
It is obvious that the amount of unpaid work is significant in the developing societies, but
what is the amount and value of non-market production of goods and services in the
industrialized countries? Even though industrial production and public services have
taken over a major part of this, a lot of work is still done in homes and families.
A lot of surveys has been made in different countries concerning the time and amount of
unpaid work in the households. And plenty of work is done for developing appropriate
methods for measurement and valuing of the work and production done within the
households outside the monetary economy and market ( INSTRAW, 1995).
The usual pattern of approaching this issue is that first the amount of work done in the
households is measured in time, hours and minutes, the so called time-use survey being
done. Even this is a complicated matter, since the housework usually implies several jobs
being done parallel, for example tending to children while cooking and laying the table or
ironing and mending the cloths. Is the issue just counting hours spent or counting the
hours per function as to how many hours for tending to children and how many hours for
cooking and laying the table?
For the statistics the value of work has to be calculated in money. This is even more
problematic. What is the time wage or market price of the work which has an incalculable
human value - like taking care of lively and dear children - and which requires a command
a great number of skills? Or the work which is composed of low paid and highly paid
components like washing the cloths requiring simple washing work plus the knowledge of
the technician for managing the washing machine and the chemist knowing the
composition and effect of the detergent?
The Organization for Economic Cooperation and Development, OECD has done a lot of
work for creating the data sources and methods for measurement of unpaid, non-market
household work and production in the OECD countries(OECD, 1995). The main
categories of methods they have elaborated are the following:
-
the “opportunity cost” method, which is based on the potential salary, what is the
wage opportunity lost by the one who does unwaged work, for example caring for
her children or parents or doing subsistence farming instead of doing a paid job;
-
the "global substitute" method, whereby a general housekeeper's wage rate on the
market is taken as a substitute value for all unpaid housework, and which rests on
the assumption that housework does not require any particular qualifications;
-
the "specialist substitute" (also called “the replacement cost”) method, which
relates various types of household tasks to the wage levels for the type of work
performed by professionals such as cooks, nurses, gardeners etc.
7
All these ways of measurement are applying so called input-based method, because they
measure the household production through the inputs to the process, in particular the
working hours. The UN International Research and Training Institute for the
Advancement of Women, INSTRAW, suggests a method not mentioned in the study
above, such as
-
the “output-based evaluation”, which implies the valuation of the non-market
production in terms of the market value of the outputs produced, whereby the
products and services produced in the household are assigned a value equivalent
to the price of similar market goods and services (such as the meals served in the
restaurant, the cleaning performed by a professional firm, etc). Output-based
evaluation method does not require time-use data, but the data about the amount
of goods and services produced in the households and their values in the market.
It is obvious that the estimates of the value of household production depend, on the
method used. A OECD researcher Ann Chadeau considers the specialist substitute
method to be the most plausible and at the same time feasible approach for valuing the
non-market work and production in the households (Chadeau, 1992). INSTRAW
deplores, that in the past there have been very few attempts to estimate the value of
household output, while it is technically possible and less time-consuming than the
surveys based on time-use measurement (INSTRAW 1995).
The thorough time-use surveys on unpaid housework has been made in Finland in 1980
(Housework Study, 1981),1990 (Vihavainen, 1995) and the latest in 2000
(Niemi&Pääkkönen, 2001). The monetary value has been assessed on the two earlier
ones, the survey in 2000 gives so far only the time-use. In 1980 the monetary value was
calculated according to the then current salary of municipal home helpers ie using so
called “global substitute” method. In the 1990 survey the monetary value was counted in
two ways, both using the global substitute method as in 1980 and for comparison also by
using the average wages on the labour market for all employees.
Due to somewhat different procedures, these surveys in ten years apart are not fully
comparable, but some conclusions can be drawn by comparing their results in terms of
both time and value of work.
The time spent in unpaid labour in average Finnish families in 1980 was 6 hours 40 min.
a day. The survey included all the unpaid work in the households irrespective, whether it
was done by women, men or children, but the gender distribution of work was also
assessed: the women’s share was 4 hours 48 min., and men’s almost 2 hours, then the
women's share was in average about 70 %. The total monetary value of the unpaid
labour in households in Finland in 1980 was about 42 % of the GNP (Table 1).
In the 1990 calculations the average amount of unpaid work per household was 6 hours
16 min. per day, which is only 26 minutes less than in 1980. The share of women was 63
% , i.e. almost 4 hours a day and by men 2 hours 20 min. a day. When assessed
according to the current salary of municipal home helpers, it made FIM 232 000 million.
Using the average wages on the labour market for all employees as the yardstick, it
reached about 300 000 million FIM. Compared with the GNP the monetary value of
unpaid work in 1990 was 45-60 % depending on the method of calculation.
8
Concerning the possibilities for remuneration of the unpaid labour it might be useful to
compare these calculations with the state budgets of the corresponding years. For
Finland the sum total of state budget in 1880 was FIM 50 000 million and the value of
unpaid work was - even according to very low yardstick – FIM 80 000 million.
The sum total of the Finnish state budget in 1990 was FIM 140 000 million and the value
of unpaid work was FIM 232 000 – 300 000 million. Thus the non-market household
production was worth more than one-and-a half to two times the amount of the state
budget in that year, depending on the method used in assessment.
Table 1. Gender distribution of unpaid labour in households in
Finland, 1980, 1990 and 2000.
Women
Men
1980
1990
2000
Hours/minutes/day
4.48
3.56
3.47
1.54
2.20
2.27
6.42
6.16
6.14
The distribution of unpaid work between men and women varies a lot between the
households as well as between the countries. Then an interesting aspect in the Finnish
surveys is, whether the distribution of unpaid work between men and women had
changed during the years. We can now compare the figures of three time-use surveys
with ten years in between. It levelled out a little between 1980 and 1990, men doing a
little more and women a little less in 1990 than in 1980, albeit this difference may also be
partly due to the slightly different methods used. Between 1990 and 2000 hardly any
change has taken place. Even the total amount of unpaid work in the households has not
changed.
"Whatever valuation method is used, the value of unpaid housework is substantial in
relation to GDP. Non-market household production is an important component of
household income, consumption and welfare," concludes Ann Chadeau in her paper
(1992).
In Finnish calculations for both 1980 and 1990, the value of unpaid housework was
between 42 - 60 % of GDP, depending on the method of estimation. This is comparable
with the results from various countries shifting between 30 - 60 % of GDP (INSTRAW;
1995). Thus the conventional SNA statistics give a grossly distorted picture of the
magnitude, composition and trends of productive activities in each country.
"For the last fifty years national income statistics have been widely used for monitoring
economic developments, for designing economic and social policies and for evaluating
the outcomes of those policies. Had household production been included in the system of
macro-economic accounts, governments would have had quite a different picture of
economic development and may well have implemented quite different economic and
social policies," says Ann Chadeau.
The women's movement has insistently demanded for decades that the value of women's
unpaid work should be counted as part of the national income in each country and
included in the System of National Accounts.
9
In Finland the first professional woman economist Laura Harmaja argued in her writings
and public debates 1920s for the inclusion of the household production into the system of
national accounts. In her extensive work on this issue she presented already well founded
estimates about the amount and value of this work proving that the sum total of this work
would be much higher than the production of state, municipalities and consumer
cooperatives altogether at that time. Her main work Kotitalous kansantalouden osana (‘A
Household as Part of National Economy’) was published in 1946 (Heinonen, 1996).
In recent years the most prominent proponent for this issue has been Marilyn Waring,
whose book If Women Counted. A New Feminist Economics became a classic right after
its publishing 1988. Her criticism focuses particularly on the prevailing international
system of national accounts and contributed undoubtedly to the revision of the SNA by
the UN in 1993 (Waring, 1988).
The women’s movement as well as feminist economists have also criticized the methods
so far being used in these kind of calculations. Calculating the monetary value of the
household work by comparison to the wages which women could earn at the labour
market (where the women’s wages are lower than men’s in all countries) or to the prices
of the same type of work performed by a professional ( which most likely will also be a
low paid woman), both methods would perpetuate the pattern of all labour market, where
women are low paid in general.
This criticism is particularly apt to using as the measurement the general housekeeper’s
or municipal home helpers’ wages, which are very low rate work in all countries, indeed.
The output-based evaluation method suggested by INSTRAW do avoid this problem, but
creates an other problem of comparability, because it obviously gives different values in
different countries related to the level of prices and salaries at the market in respective
countries.
The other method, which does not fall into this trap, is to take the average of all wages in
the labour market as the yardstick as it was made in the Finnish study in 1990 for
comparison. It makes some justice also to the fact that the housework - more than
practically any other job - demands the multitude of skills from cooking, cleaning, child
care to planning, administration and management, economic calculation as well as
physical and mental health care, design and composition of the housing, gardens and
surrounding, tending to social, economic and cultural relationships, etc.
1.3. The breadwinners of the world?
The UNDP/Human Development Report 1995 gives even a global estimate of the amount
of women's unpaid labour. The main theme of the 1995 report is the failure of statistics in
general to do justice to women in reporting on their economic contributions, paid and
unpaid. "If more human activities were seen as market transactions at the prevailing
wages, they would yield gigantically large monetary valuations. A rough order of
magnitude comes to a staggering 16 trillion (dollars) - or (if added, it would make a total
of) about 70 % more than the officially estimated 23 trillion of global output. Of this 16
trillion, 11 trillion is the non-monetized, invisible contribution of women."
"Of the total burden of work, women carry on average 53 % in developing countries and
51% in industrial countries." (See Figure 2) Out of the total time of women's work, 1/3 is
10
paid and 2/3 unpaid. For men it is just the reverse: 3/4 of their working time is paid and
only 1/4 is unpaid. "If women's unpaid work were properly valued, it is quite possible that
women would emerge in most societies as the major breadwinners," concludes the HD
report (UNDP, 1995).
Due to the long cooperation with INSTRAW (the UN International Research and Training
Institute for the Advancement of Women) the Statistical Division of the UN took a stand
on whether household production should be included in the SNA (System of National
Accounts, 1993). The 1993 SNA recommendation entails two different categories of
national accounts. Its hard core contains the traditional national accounts, which are
called the central framework. This is surrounded by looser satellite accounts, which are
separate from but consistent with the core national accounts and can measure areas of
interest that are difficult to describe within the central framework. (Ruuskanen, 1995).
In principle, the SNA approves the notion that the goods and services produced at home
are part of production in the widest sense of the term. Nonetheless, the problem seems
to be, what should be counted as production? The production of goods and services at
home for the needs of the family members does not fit into the definitions which have
been used until now. Therefore, for the purposes of the central framework, the SNA has
now chosen to use the definition that production includes the goods but not the services
produced in the household for members of the same household.
-----------------------------------------------------------------------------------------------------------------------Figure 2. Recognizing women's contribution
Of the total work burden, women carry more than half. Three-fourths of men's work is in paid
market activities, but only one-third of women's work. Men receive the lion's share of the income
and recognition, while most of the women's work remains unpaid, unrecognized and undervalued.
Source: UNDP, Human Development Report 1995.
-----------------------------------------------------------------------------------------------------------------This may make the calculation of the value of unpaid household work even more
complicated, since it has to distinguish the work for goods from the work for services.
Even the definition of goods seems to be fairly arbitrary. Growing of vegetables,
production of wine or cheese, and making of clothes are counted in the SNA; but
preparing meals, washing the dishes and clothes, cleaning the house, or caring for
children and the elderly should go into the satellite accounts (SNA, 1993). Still, even
these functions would be counted in the SNA if they were produced by paid domestic
servants.
In the monograph “Measurement and Valuation of Unpaid Contribution: Accounting
through Time and Output” INSTRAW (1995) recommends that:
11
-
-
a framework defining activity classification for SNA and satellite activities
should be established;
an internationally acceptable SNA Satellite Household Sector Account should
be defined;
the Household Satellite Account should include all activities associated with the
maintenance and upkeep of households and families, all activities related to
gaining an education, and volunteering;
an output-based approach to valuing non-market production be developed;
steps to be taken to develop accurate and efficient time-use data collection
approaches;
data capture for the household satellite account should be carefully planned
and undertaken using a range of instruments and approaches.
According to the INSTRAW monograph: “Benefits from the development of a household
satellite account and the generation of data to service that account would be far-reaching.
Such an effort would facilitate implementation of the 1993 SNA measurement
requirements, provide time-use data for formulating policies on women, and facilitate
increasing literacy, the assessment of the importance of the transportation sector, the
accounting for time lost due to sickness, the measurement of children’s work input and
the human capital building process, the measurement of voluntary community services,
the measurement of social and economic change, and informal sector measurement.”
The INSTRAW monograph was published before the IV UN World Conference on
Women in Beijing in 1995 in order to prompt the recommendation for the support of the
SNA Satellite Account on Household production to be adopted. An extensive chapter on
Women and Economy was included in the Platform for Action adopted in Beijing
(UN/WCW, 1995). It elaborates thoroughly the triple role of women in economy production, caring and community management - and the impact of both national and
transnational economic policies on women. The Platform strongly urges the governments
and UN Agencies to make sure that the SNA recommendation concerning satellite
accounts of women's unpaid work and production will be implemented.
This urge by the Beijing PFA prompted the European Union to make an invitation in 1996
to the Statistical Offices of the member states to submit tenders for developing a common
concept of a comparable satellite system in each member state and a common one for
the European Union for making visible the unpaid work done in the EU countries. The
Statistics Finland won the tender and it has provided to the Eurostat a proposal for a
European system of satellite accounts attached to the present System of National
Accounts.
However, the proposal is just the first step in Europe. It will take time and work to bring
this process forward within the EU system until it will become “a harmonized common
satellite system on household production for the European Union” adopted by the
Commission and given as a binding directive to the member states. So far the progress
has been very slow and it is not yet foreseen, when the new system in Europe might be
in use.
2. The households as strongholds against globalization
In the early 1980s prof. Kyösti Pulliainen and myself made a hypotheses, that revival of
the self-reliant, non-monetary local and household-based production of goods and
12
services makes economic growth unnecessary in small industrialized countries like
Finland, without necessarily jeopardizing the quality of life. Our aim was to find ways of
reducing the need for economic growth in a well-off industrialized country with a view to
decreasing international disparity and exploitation of natural resources (Pulliainen &
Pietilä, 1983).
2.1. Developing a new picture of national economy
On the basis of the 1980 assessment of the unpaid work in the households in Finland we
made an effort to rectify the picture of national economy in such a way that it will include
the nonmonetary, home-based economy as well. We perceived the national economy
being composed of three concentric circles. That time this idea of the tripartite picture of
national economy was suggested also for instance by Lars Ingelstam and Mats Friberg in
Sweden (Ingelstam, 1980; Friberg, 1985).
According to our hypotheses the national economy consists of:
- the free economy composed of the unpaid, nonmarket work and production in the
households. It is called ‘free economy’ since it consists of the work that people do
‘freely’ without pay for the well-being of their families and pleasure;
- the protected sector of production and work for the home market as well as public
services (such as agriculture and food production, construction of houses and
infrastructure, administration, schools, health, transport and communication etc.);
- the fettered economy, the production of goods for export and substitution of import,
which is fettered to the world market, and thus the terms of this sector, the prices,
competitiveness, demand etc. are determined by the international market.(Figure 3.)
In Figure 3 we placed the free economy in the middle, since it is the basis of the human
economy. That time the second circle, domestic sector was protected and guided by
legislation and official policies in the Nordic countries, and thus the prices, wages and
other terms in this sector were determined domestically without too much pressure from
outside. The fettered economy is linked with the international market and the bigger this
economy grows the more dependent the national economy becomes on factors outside
the sovereignty of the country.
In 1980 the fettered economy in Finland accounted only for 10 % of the total working
hours and 19 % of the value of total production. Ten years later in 1990 the proportions of
fettered sector had changed surprisingly little as indicated in the table under Figure 3.
2.2. Interplay between public and private
The dynamics and interplay between the public family and the private family, i.e. the
visible and invisible economies, is easy to be realized in the Figure 3.
Earlier in this paper we discussed the amount and importance of the unpaid labour and
production in the households and neighborhoods. In economic calculations such
essential functions in the society as child and health care, cooking and cleaning,
education and training, etc. are not counted as contributions (inputs!) to the economy as
long as they are performed within families. But as soon as they are transferred from the
private family to the "public family" and performed by private or public institutions
(schools, hospitals, business), they cost money, they imply large investments and
expenses to both individuals and society. Then they are outputs and counted in the GNP.
13
Figure 3. Another Picture of the National Economy
The core of the human economy, the household and community economy has been included into this new
picture of the National Economy (by Pietilä & Pulliainen). It is in the middle of the picture, because everything
else has been build around it within the course of history of the human economy. It is the centre of human
economy, whenever the picture is seen from the perspective of families and individuals.
We counted, how much will the GNP be in Finland in 1980 and 1990, if also the non-monetized work and
production was included. The figures below are then counted as proportions of this “greater” GNP.
A. The “free economy”
B. The protected sector
C. The fettered sector
1980
Time
54 %
36 %
10 %
Money
35 %
46 %
19 %
1990
Time
Money
48 %
37,5 %
40 %
49,5 %
12 %
13,0 %
The proportions of different sectors have changed surprisingly little in ten years 1980-1990. In 1992-1995
“the free economy” was likely much bigger, since about 14-15 % of the labour force was unemployed and
then the non-market work in the families may have increased significantly when people were substituting
their declining incomes with increasing work in the households. The surveys indicated that the standard of
living (i.e. the quality of life) in the families did not decline in proportion with the decline of purchasing power
of people.
The membership of Finland in the European Union from the beginning of 1995 has, however, changed the
whole picture of the Finnish national economy crucially, since the protective measures and customs have
been eliminated from the internal borders between the EU countries letting then the fettering effects of
international markets enter heavily into the national economy.
The fact is, however, that when these functions are performed within families or otherwise
by voluntary work they cost a lot of time and work, and when produced in public sphere,
they cost money. A major part of economic growth in the past has consisted of the
functions that have been transferred from the private family to the public one, from the
non-monetary sector to the monetary one and thus been made visible.
14
From women's point of view this discussion is very important. The non-monetary
economy in the industrialized countries is still primarily a female economy. Its invisibility is
a supreme manifestation of women's invisibility in the society at large. The family
economy is in the hands of women even in its monetized form, the consumption of
marketed goods and services, because purchasing decisions are made primarily by
women.

The economic policies of the European Central Bank requires the governments to
liberalize the economy, to cut public expenses and lower the taxes, therefore they cut
resources from the public institutions, which imply reduction of the number of public
employees. In fact these measures imply pushing the services back to the private sphere
and "disemploying" women, in other words women are pushed back home to produce
these services for their families without pay.
After the recession in early 1990s and accession of Finland into the European Union in
1995 the government has applied increasingly neo-liberal economic policies and the hard
core export industry has been doing better than ever. Still the rate of unemployment
remains high. And the more unemployment the more unpaid work is done in the families
and households in order to retain the quality of life as well as possible.
In reality the greatest flexibility in the labour market appears in the households – by force
of necessity. In the times of recession and structural adjustment, due to lack of paid jobs,
declining incomes and dismantling of public services, people have to manage their daily
life by doing more themselves at home. It looks as if even the governments were relying
on this potential of the families and women to expand their caring capacity in proportion
to cuts of public spending.
On the other hand a rapidly strengthening trend now is the privatization of public services
and enterprises like railways, postal services, oil and fertilizer industry, and even schools
and hospitals, which in Finland have been public services forever. Also the unemployed
people are persuaded to start their own enterprises. They are provided with training and
retraining for that purpose and the access to credits is made easier. All life and society is
about being made to a market place.
This process follows the dogma of industrial society to believe, that economic progress
consists of a continual shift of labour and skills from household-based production to the
commodity-based consumption, as presented by Italian economist Mario Cogoy (1995).
He says that the extreme form of market utopia consists of two ideas: on one hand
people are supposed to acquire professional competence only on one single field, where
they will then earn money enough in order to buy everything else in life from the market.
On the other hand this will then imply total abolition of work and skills in the families, in
the private life of people, since all labour and skills are absorbed into the market. Time
outside the economic system is reduced to pure unskilled leisure-time. This way also the
living households would cease to exist and the home remains only as a place to sleep.
If the market forces are allowed to pursue these aims to the ultimate, they will render
people totally dependent on the market and make them helpless and powerless pawns in
their society. This would legitimate the continuity of the market forever and reduce people
only to means of consumption and production, to fuel for keeping the system running.
This process will annihilate the human dignity of everybody.
15
2.3. Turning the trap into an asset – a good life Utopia?
Already in the beginning of 1980s the founder of futurology, Robert Jungk, made the
point that “people out of work are, in certain way in a privileged position because they are
no longer chained to the capitalist production machine. They have more time, they can
think and act in ways which may be beneficial for society, if they have enough
motivation.” (Jungk, 1983)
This thought of Robert Jungk gives hope that we could – and we should – stop the rat
race and turn around the wheel, while the advancing technology is rendering increasing
number of people jobless, and the market is supplying cheap mass-produced goods and
gadgets for all possible purposes thus making our skills and capabilities useless.
The question is, whether we could transform this situation into an asset instead of a trap?
The lack of regular job will allow us to command more of our time, and the declining
income could become an incentive for us to make more use of our skills, knowledge and
experience. This situation could, in fact, guide us to take more control on our lives? How
would it feel like, if we start making our own plans for our household economy and decide
to do more at home in order to decrease our dependence on the money-income and
supply of the markets? Would this become a strategy to use power from below, to give us
power to influence the economy around us?
In this kind of a economic transition the household will again become an asset in the
hands of people. When people realize that the more of necessary goods and services
they are able to produce by themselves, the less they are dependent on the market, both
on labour market and the market of goods and services. Thus they would gain capability
to command again their own everyday life.
But increasing voluntarily work at home will only increase the workload of women? We
should not allow it to become so. Therefore it is necessary to equalize the distribution of
labour between women and men, girls and boys, in the households. Even for the sake of
men it would be necessary to design a new division of labour at home. It will give them a
meaningful and rewarding new role in the family, While they no more can be
breadwinners they could become direct supporters of their families in practice.
In the economically well-off countries the skills needed in various chores of the household
have been deteriorating along with the mechanization and commercialization of our lives.
However, the household can still be a place to gain and train practical skills for everyday
life, if we so wish. And the household tasks provide ample opportunities for work, where
one can utilize “the trinity of human skills”, hands, head and heart parallel. Such a work
stimulates one’s creativity and facilitates personal evolution and integrity contrary to many
highly specialized professions.
Two things go always hand in hand: If we decide to consume as little as possible and buy
from the market as little as possible, our need of money-income will be much less and we
would be much less dependent on paid jobs. A decisive asset for making these changes
possible is the multiplicity of practical skills, they are much more important than money.
The more practical skills one master, the more choices she/he has in everyday life and
the more independent in life she/he would become.
16
2.3. The household as the counterforce to market globalization
As it was pointed out already in the beginning of this paper, the household economy (both
monetary and non-monetary) is, from the human point of view, the primary economy. It
works directly for the satisfaction of essential human needs - material, social and cultural
needs.
The household also produces “goods” that are not available in the market and cannot be
purchased for money, such as the feeling of being somebody, closeness,
encouragement, recognition and meaning in life. All this is realized in connection with
living and doing things together; cooking, eating, cleaning, playing, watching TV, sleeping,
sharing joy and sorrow, and transferring human traditions. In this sphere, every man,
woman and child is a subject, recognized as a person; everyone is indispensable.
If the human maintenance - mental and physical - and the nurturance of human beings
are not taken care of, no other economy is possible. Thus the household is basic not only
for the economy, but for the whole society, for the survival of the human species.
Therefore the picture of the human economy should be turned the right side up; the
industrial and commercial economy should be seen as auxiliary, serving the needs of
families and individuals instead of using them as means of production and consumption.
This turn around will definitely not be made by the market economy, neither it will be done
by our democratic governments any more in today’s world. In the globalizing world we
have to do it by ourselves, to take the power back in our own hands to command our own
lives.
3. Cultivation economy - the interface between economy and ecology.
The most fatal shortcoming of prevailing economics as science is that it does not
distinguish the cultivation economy from the industrial production, from extraction and
manufacturing. As it was stated in the beginning of this paper, the doctrines of economics
seem to be derived from physics and mathematics, and therefore it does not recognize
the science of life, biology.
The survival of human species, however, as the most complex life form in the universe
depends ultimately and decisively on living nature, not on minerals and fossils. "The more
complex forms of life ... are radically dependent on all the stages of life that go before
them and that continue to underlie their own existence. The plant can happily carry out its
processes of photosynthesis without human beings, but we cannot exist without the
photosynthesis of the plants. Human beings cannot live without the whole ecological
community that supports and makes possible our existence" (Radford Ruether, 1983).
Many indigenous traditions suggest that women invented agriculture and animal
husbandry at “the dawn of history when their men were out hunting”. Around the
dwellings they started to cultivate the plants, which had been found tasty and edible, and
they tamed the orphaned cubs of wild animals by breast feeding them. Thus they helped
to provide food for the families even when men did not succeed in fishing and hunting.
This indicates two different ways of relating with the nature; fishing and hunting,
17
exploitation of nature, taking without giving; cultivating and feeding, nurturing when
utilizing, mutually giving and receiving (Pietilä, 1990 a & b).
During the long agrarian history of the humanity the principle of ‘nurturing when utilizing’
was the most effective way of providing livelihood by men and women alike. Nurturing the
animals was primarily the women’s work and cultivating the crops and other plants the
male job. Until this century - in Finland still in 1920s and 1930s - the agriculture was fairly
ecological due to mere necessity, lack of industrially produced inputs, such as energy,
fertilizers, pesticides, advanced machinery, etc.
3.1. Cultivation versus industrial production.
The cultivation economy produces basic goods in cooperation with living nature, i.e. the
ecological systems. Agriculture, forestry, animal husbandry, fishing and all indigenous
livelihoods belong to this type of economy, which operates with plants, trees, animals and
micro-organisms (e.g. microbes, yeasts and Rhizobium), the renewable resources of
nature. Soil itself is the ecosystem full of life. Cultivation is in fact the interface between
human economy and ecology, interaction between human beings and nature, where we
should profoundly understand the terms of ecology, and take them carefully into
consideration.
It is crucial for the fate of humanity that we understand the particular nature and terms of
this economy and conduct our handling with it accordingly. We should learn to care the
living creatures, plants and animals on their terms, while utilizing them. Their living
processes and well-being is the foundation of sustainable wealth and health of human
species, too. A successful and harmonious interplay between human economy and
economy of nature, the ecology, is the essential prerequisite for sustainable cultivation.
Figures 4, A and B are an attempt at illustrating and comparing the basic differences of
cultivation and industrial economies. The main characteristics of these distinct spheres of
production are listed under the pictures, where it is easy to realize how profoundly
different systems they are.
Cultivation economy can also be called a living economy, because it is regenerating and
sustainable, if the ecological terms are taken into consideration. The productivity and
output of this production can be predicted and controlled only in definite limits, since - for
instance - the amount of rain and sunshine, warmth and frost cannot be predicted and
directed by human means.
The nature has programmed the timing and rhythm of procreation and growth, too. The
length and timing of production seasons are very different according to the latitude and
geographic location of the countries and regions. Therefore the preconditions of
production are extremely different in different parts of the globe. In Finland we can
harvest only once a year, irrespective how hard we work or what methods we use. In
Southern Europe the farmers can cultivate all year round and get several harvests a year.
Industrial production can be called extraction economy or dead economy, because it was
originally based on manufacturing of nonrenewable, non-living natural resources minerals and fossils - which are extracted from the earth. Today it processes also raw
materials produced by cultivation economy, like wood, crops, meat, coffee, cotton etc.
18
Figure 4. An Illustration and Comparison of the Cultivation Economy and Industrial
Production. (Pietilä, 1991)
19
The industrial economy is not very dependent on the terms of living nature, thus its
productivity and efficiency can be improved as long as the raw materials are available. Its
driving force is profitability.
Economics as science is based on logic of industrial production, extraction and
manufacturing of 'dead elements', nonrenewable energy and resources. When this logic
is applied to the cultivation economy, the same demands of efficiency and productivity
imposed on agriculture and husbandry as on industry, the system is bound to run into
difficulties.
Nevertheless, national and international economies have been run this way for as long as
any intentional economic policies have been exercised. This misperception and
mishandling of cultivation economy is the reason why agriculture has become such a
problem both in national and world economy. This is also the reason why no solution has
been found for the food problems of the humanity. And now when we are reaching the
limits of the arable potential of the planet, these problems are rapidly becoming fatal.
3.2. Food or commodities?
Trade has been considered to be mutually benefiting and profitable exchange between
the partners with resources and capabilities. Competing with each other through trade the
countries would also optimize their capabilities and the profitable exchange would benefit
everybody. This goes as long as it is an issue only of competitiveness on productive skills
and competence of people, and productivity and effectiveness of technical machinery.
But it is absurd to apply the demand of international competitiveness on agriculture,
animal husbandry, fishing and forestry, while natural conditions vary enormously from
place to place on the earth's surface. The human competence does not hold good for
adjusting the length of winter or the warmth of summer to the needs of competitiveness
and even the breeding of more productive animals and seeds meet very definite limits. .
Mother Nature is not a negotiating partner in the World Trade Organization, her terms are
unnegotiable.
The existing cultivation economies - both the basic production in developing countries
and the agriculture of industrialized countries - are in unsurmountable trouble. Developing
countries have fallen into enormous debts and regression. Agriculture in industrialized
countries, in spite of the application of the most advanced technology and significant
subsidies, creates constantly growing burdens for the national economies and is about to
collapse under the burden and effects of insane cultivation practices.
The problems of agriculture seem to constitute even a major reason for rapid migration
from rural areas around the world, and thus the unmanageable growth of slums and
urban problems. Finally the consequences fall upon the environment and destroy the
foundation of cultivation economy and human economy as a whole.
In free trade, agricultural products are treated as if they were equivalent to minerals and
fossils or industrial products. The trade does not recognize the nutritional value as a
particular quality; the food products are dumped into the same category as pulp and
paper, tobacco and coffee. Hence, people's basic needs in many countries, have been
20
set at risk to increase export income by producing for instance tobacco and drugs instead
of food.
In 1974 a program for the New International Economic Order was unanimously adopted
in the United Nations. It was a program for regulation of international trade for the
benefits of developing countries. But it was never implemented due to the manoeuvring of
the multinational corporate power already that time.(UN/GA, 1974.)
For the purposes of getting hold on the world food problems there should be rules for
trade, whereby the commodities were handled differently according to their importance
vis-à-vis the basic human needs. Thus they should be differentiated e.g. into the following
categories:
1) Food and feed products;
grain, rice, milk and milk products, fruits, meat, groundnuts, soya, maize, etc.
2) Raw materials for industry;
timber, cotton, rubber, jute, wool, etc.
3) Luxuries, primarily for Northern market;
coffee, tea, tobacco, cocoa, sugar, etc.
From the human basic needs point of view, these categories vary drastically in
importance. If food production were a universal priority, as it should be, food problems
would have been solved a long time ago. However, since priorities are defined only
according to the commercial value of products, and to the rules of supply and demand,
the world's food problems prevail. Meaningful priorities and prices do not coincide, since
the market mechanisms are responsive only to demand and not to the poor people's
hunger.
Particular attention should be focused on the third category, the products of which take
huge areas of the best arable land but are for no-one's basic needs, neither are they
important raw materials for any necessary manufacturing. The rules of free trade may be
well applicable to these goods, the law of the supply and demand might well adjust their
prices at the appropriate level for those, who want and can afford to buy them. (Pietilä,
1991).
In any case there should be applied appropriate regulations within countries as well as
internationally to assure the adequate production of goods meeting basic needs. For
instance, food should not in principle be an ordinary commodity at all, but an utility
secured for everyone by the states and the international community, it should be cheap
and easily available to all. This is approximately what a nutritional perspective on trade
and an establishment of a world food security system would imply.
The food production should be protected in each country according to the climatic
conditions of the country concerned. This will be a must in near future if we want to save
viable agriculture, animal husbandry and forestry in various parts of the globe, and feed
the increasing population. The food self-sufficiency should be an ultimate goal and policy
where ever the natural conditions are realistically feasible. (For example in the Nordic
countries, where people have developed during the centuries the skills and knowledge,
21
how to provide the necessities for the inhabitants in spite of only one short cultivation
season!)
Ultimately, the terms of survival for cultivation economy are the terms of survival for all of
us, the whole humanity. They are dictated by living nature. The cultivation should be
understood as an authentically different component of human economy and handled with
due regard to its particular nature. The farmers and other “cultivators” should be given
such terms which will enable them to apply ecologically sustainable means and methods
in their production.
4. Conclusion: The Triangle of Human Economy
This paper is written primarily with the economy and lifestyle of affluent, post-industrial,
countries in mind. It is exactly these countries which are, today, the ones hosting the
transnational corporations and supporting their policies. Hence we can claim
accountability from them, directly and indirectly, for the proceedings of today’s global
economy. The considerations in this paper about limiting the economic growth naturally
apply to the rich countries. These thoughts can be taken as the basis for criticism against
the policies and actions of the rich industrial countries and as suggestions for change
which is seriously needed particularly in the North.
The present process of the economic globalization makes these issues even more
pertinent. How can the local societies and people maintain the space for their efforts
towards sustainable and self-reliant livelihoods?
According to the Canadian feminist ecological economist Patricia Perkins, the local
economies grow in response to economic globalization and global ecological realities.
They are destined to play an important role in many peoples lives irrespective of whether
they represent an accommodation to the global economy or an alternative to it.
“Local terrain is extremely important, not just because it is ‘close to home’, but also
because community-based economic alternatives and resistance to centralized economic
control represent a fundamental challenge to the juggernaut of globalization” (Perkins,
1998). The more self-reliant and sustainable livelihood people can develop locally the
more powerful they will be also to create political pressure on their governments to resist
the globalized corporate power.
Suggestions are made here for the revival of the nonmonetary work and production in the
families and local communities, i.e. for empowering people to manage their own
livelihood better and maintaining the control of their everyday life. The omission of nonmarket household work and production in the economic thinking distorts the picture of the
national economy and makes it inadequate as the framework for the national economic
planning and policies.
The household, cultivation and industrial production are the distinct components of the
human economy. The household and cultivation cannot be accommodated into the
narrow physical-mathematical framework of industrial economy. Caring, cosiness and
health as products of unpaid work in the households do not fit in, neither do sunshine,
rain and fresh air or the life processes of microbes and worms in the soil as inputs to the
22
Figure 5.
The Triangle of the Human Economy
HOUSEHOLDS
1. Skills & ability
2. Unpaid work
3. Care, wellbeing
CULTIVATION
INDUSTRY & TRADE
1. Life in nature
2. Ecological cultivation
3. Production of food,
other necessities
1. Raw materials & fuel
2. Extraction and refining
3. Business for profit
EXPLANATIONS
1. Basic
preconditions
2. The process
3. The purpose
Graph: Hilkka Pietilä
The basic pillars of the human economy, which have to collaborate in order to bring about
sustainable human welfare and livelihood. Each one of these components has different
foundations and terms of operations. Therefore they also have to be taken into account according
to their respective terms. The recognition of dynamics and interdependences within and between
these components is the prerequisite of understanding the totality of provisioning the human
needs in a sustainable manner.
-----------------------------------------------------------------------------------------------------------------------The households and local economies are major components in production of human
welfare. The cultivation economy is an indigenous component in the totality of human
economy. It produces the basic goods for satisfaction of basic human needs. It is a
concrete interface between ecology and economy, where the human culture should
operate with due respect to ecological laws. Each one of these components of human
economy operates by its own logic. Now, only the logic and terms of the industrial
economy are well known. The other components need to be further analysed and
defined. And so needs the dynamism between these three.
The triangle picture of human economy (Figure 5.) sees these three components each
one in its own right of existence and thus helps us to see the links and dynamism within
and between the three. There are links between the macro and micro, monetary and
nonmonetary, visible and invisible, living and non-living, private and public in the reality of
human subsistence. Some of these links are within the components, some are in
between them.
23
The need to develop a new theory for the totality of human actions for sustainable
livelihoods is challenging. Such a new theory and understanding of the operation of this
triangle human economy, will lay a foundation for the kind of economic planning and
policy-making, that seriously aim to provide for a sustainable and dignified livelihood for
all people, instead of constant growth and accumulation of capital and power in the hands
of the rich and the strong. The suggestions and visions in this paper are an effort to
contribute to and stimulate the process towards such a new theory (Pietilä, 1997)
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Note:
An earlier version of this paper was published in Ecological Economics, Vol.20 (1997).
Hilkka Pietilä: The triangle of the human economy: household – cultivation – industrial
production. An attempt at making visible the human economy in toto.
Copyright 1997, the graphics with permission from Elsevier Science.