Macroeconomics needs to take people more seriously. Human beings represent the most important economic resource that undergirds long-run economic performance and well-being. It is not just the sheer number of people on the planet that counts. Their capacities to contribute to their households, communities, and their societies are of utmost importance. Moreover, human beings are products of the economies in which they live. Raising children to adulthood requires substantive investments of time, money, goods and services. It also requires coordinating the allocation of resources across generations.

This coordination does not happen by magic, or exclusively through markets or pure self-interest. Numerous institutions, including household structures, social norms, and gender roles, come into play. These institutions may not be fair. They may not be efficient. They often perpetuate inequalities, including economic disparities between men and women, and artificially limit women’s potential by constraining their choices and options. Equally important, these institutions may not seamlessly adapt to the future needs of the economy. There is no guarantee that current demographic trends or investments in human beings will be sufficient to keep our economies healthy in the future.

Despite the importance of all of these issues, current macroeconomic thinking and practice falls short. This is dangerous, since the way we understand how the economy works influences the policies that are ultimately adopted. If our understanding is partial or impoverished, so will be our solutions to the problems we face.

What is also clear is that the exact mix of policies and institutions needed will vary from one context to the next. Some countries fear the consequences of below-replacement fertility, as their populations age and slowly shrink. Others, with high fertility rates, face the challenge of what to do with a burgeoning youth population. Social norms and gender roles differ, as do the structures of economies. No single solution exists for all people and places. There is no “one size fits all” option. Nevertheless, we can discuss what the elements of a better macroeconomics might look like.

So, what are the key ingredients of a revitalized macroeconomics? Reworking basic concepts and measurements is a good place to start.

MACROECONOMIC POLICY AND GENDER INEQUALITY: WHAT ARE THE CONNECTIONS?

Macroeconomics claims as its domain the policies, prices and practices that affect the economy as a whole. In contrast, microeconomics primarily concerns itself with the choices individuals and businesses make. In many respects, this way of carving up the economy is artificial. Macro–micro overlaps are commonplace. Individual decisions and behaviours, taken together, affect the overall economy. Likewise, a general collapse of financial markets changes the choices people make. There are certain interventions that have broad-based impacts and have the potential to alter the general economic environment. We call these interventions macroeconomic policies.

Macroeconomic policies are typically divided into two categories: fiscal policies and monetary policies. Fiscal policies are concerned with how governments mobilize resources and how they spend the money they have. They include government spending, tax policy, and the generation of other types of public revenues. Governments are also capable of borrowing when expenditures exceed current revenues. Fiscal policies are therefore concerned with deficit financing and the management of the public debt.

Monetary policies are the remit of central banks. They affect the supply of credit and the resources available to financial institutions. They are able to influence some of the most important prices in the economy: interest rates and exchange rates. Interest rates affect the cost of borrowing and impact major economic decisions: whether to buy a house, whether to expand a business, and whether to take out a loan for a new car. Exchange rates have a huge effect on international transactions. They influence a country’s ability to compete on global markets and the cost of imported essentials, such as food and energy.

Governments and central banks implement macroeconomic policies with a number of objectives in mind. In some cases, macroeconomic policies attempt to promote economic growth. They can be used to try to insure that there is adequate demand for the goods and services an economy produces. By changing the level of demand, they have a knock-on effect on the level of employment. Because of this, one common macroeconomic policy objective is to reduce unemployment.

Most macroeconomists identify economic progress with growth – a sustained increase in GDP, or GDP per capita, over time. But relying on GDP has its shortcomings. Standard national income statistics fail to capture many features of the economy that are important to our well-being. Plus, these measurements are not the best indicator of household living standards, since they ignore non-market production, do not fully reflect transfers, and fail to accurately capture the benefits of direct government services. Nevertheless, increases in national income are imperfectly correlated, at least on average, with outcomes people care about, such as living longer and healthier lives, enjoying better living conditions, and having more choices in the course of their lives. When growth turns negative, as happens during recessions and depressions, the effect can be devastating. People lose their livelihoods and feel their economic security evaporate. For these reasons, understanding the factors that contribute to long-run economic performance at the macro level remains an area of concern.

Robert Solow, a prolific US economist, is intimately associated with one early, and extremely influential, approach to theorizing growth at the macro level. The original Solow growth model identifies two factors of production that determine total market output: capital and labour (Solow 1956). In the Solow model, capital refers to investment in productive, physical assets, such as equipment, buildings and machinery. Labour represents the total volume of paid work that employed people perform. In most versions of the original Solow model, there is a technology parameter that increases the productivity of capital, or labour, or both factors simultaneously. In the model, capital is a produced factor of production, meaning that a certain fraction of total output is reserved for building more machines, equipment, production facilities, and other forms of physical investment. In contrast, factors outside of the macroeconomy determine the amount of labour available. In the basic model, population growth rates are fixed and are not influenced by the process of production or the accumulation of capital assets over time.

When it comes to modeling economic growth, capital has always had the pride of place as the quintessential produced factor of production. The Solow growth model is not alone in this regard.

Women do an enormous amount of unpaid labour. A 2018 report of the International Labour Organization (ILO) took survey data from 64 countries, representing two-thirds of the world’s population, and estimated that the people in the countries surveyed performed over 16 billion hours of unpaid household work everyday (ILO 2018). Women did 76 per cent of this work. This means that women’s unpaid labour in these countries totaled about 4.5 trillion hours a year, a volume of work equivalent to that of 2.1 billion full-time jobs (based on a 40-hour paid working week).

What is all this work worth? Estimates for the US economy of the value of unpaid childcare, an important component of non-market household production, run to trillions of dollars – one calculation for 2012 places it at $3.2 trillion, or approximately 20 per cent of that year’s GDP (Suh & Folbre 2014). This number only captures unpaid childcare, and does not add in all the other non-market services produced within households. Efforts at valuing unpaid work across a variety of countries typically come up with estimates in the range of 15–40 per cent of GDP, depending on the methods used (UN Women 2015). This range of the estimated value of unpaid work is of the same order of magnitude as the monetary value of the public sector’s contribution to the measured economy. Macroeconomists would never think to exclude the government from their analysis. Yet non-market production using unpaid labour is routinely ignored in macroeconomic statistics.

Earlier we argued that changes in the macroeconomic environment interact with structural sources of gender inequality to yield different outcomes for women and men. One source of inequality is women’s disproportionate burden of unpaid household work. The unbalanced way in which women’s labour is allocated must be addressed to reduce, and ideally eliminate, persistent gender inequalities in the world’s economies. But it is hard to rebalance the non-market side of the economy when unpaid work does not count and is rarely acknowledged.

Feminist economists have long pointed out the need to recognize, value, and do something about the unequal burden of unpaid work.

The US economy entered the twenty-first century exuberantly, with unemployment plunging to historic lows and families seeing the value of their assets grow to unimagined heights. A few years later, beginning in 2007, it all came crashing down. The US subprime mortgage crisis, which blossomed into a full-blown financial crisis a year later, made jobs evaporate and asset values disappear. On the employment front, men were hit hard, with unemployment rates reaching double digits. Women’s employment fell, but not as far as men’s. The press was quick to coin a new term to capture this economic assault on masculinity – the US was experiencing a “mancession”. Despite the initial alarm, the mancession was relatively short-lived. By the beginning of 2010, men’s employment already showed signs of recovery. Women weren’t so lucky. Women’s employment stagnated until almost a year and a half later, exhibiting signs of steady growth only in the second half of 2011.

These kinds of macroeconomic meltdowns have happened elsewhere. Between 1998 and 2002, Argentina experienced one of the worst economic disasters in its history, earning this crisis the moniker of the “Argentine Great Depression”. Unemployment reached record highs as Argentina’s economy shrank by over 18 per cent. Despite the decline in employment opportunities, women’s participation in the labour force actually rose modestly during the crisis (Montaño & Milosavljevic 2012). With formal jobs evaporating, employment in the informal sector became an important coping strategy (Whitson 2007). During crises, like Argentina’s, women’s work allows families to make ends meet as they try to weather the economic storm. Economic distress may trigger reactions that hurt women in other ways. Due to macroeconomic policy choices, Zimbabwe experienced extreme rates of inflation beginning in the late 1990s that squeezed households and threatened living standards. Incidents of domestic violence rose as the country’s economic crisis intensified (Masiyiwa 2017).

Economic crises are extreme events, yet they all illustrate an important lesson. Changes in the overall economic environment affect women and men differently. This holds true in non-crisis situations. Broad-based economic policies will have gender specific outcomes.

Since the 1980s, non-standard forms of employment have grown in the US, although detailed data documenting this trend have not always been consistently available. Drawing on earlier work, we show here how non-standard employment produces economic vulnerability in a variety of ways: low and irregular earnings, underemployment and frequent unemployment or unstable labour market participation. Non-standard arrangements particularly affect women workers as a whole. They also disproportionately touch racial/ethnic minorities, primarily African-American workers and Hispanics. Non-citizens, that is, mostly recent immigrants, are also disproportionately affected by non-standard work. All of these groups may thus be exposed to economic risk through non-standard employment to a greater extent than other workers.

The US experience shows how these vulnerabilities are compounded by a lack of social protection schemes. UK workers may be able to depend on a National Health Service and more generous in-work and unemployment benefits, but even with these protections in place, nonstandard employment leaves workers exposed to income instability and limited opportunities to save, which in turn makes household budgets and unexpected expenditures hard to manage. Significant cuts in tax credits and public services in the aftermath of the recent economic crisis in the UK are likely to exacerbate the vulnerabilities of workers in non-standard employment.

Of course, workers in standard employment arrangements may be vulnerable as well: heightened economic risk is not the exclusive province of workers in non-standard arrangements. This is particularly true in the UK and the US, whose employment protection frameworks (e.g. dismissal protection) are deemed weak when compared to other industrialised nations.

Nevertheless, non-standard arrangements do have a greater propensity to leave workers vulnerable, as this chapter shows. The US is an important cautionary tale, showing how recent labour market developments – particularly the growth of non-standard employment arrangements – can leave workers vulnerable and deeply exposed to economic risk. Our analysis underlines the importance to such workers of a rights-based approach to employment such as that pursued by UK governments over the last decade. This analysis shows the value of models of welfare provision that are linked to citizenship or residency rights rather than employment status alone – an approach followed by the UK system of social protection.

The social structure of accumulation (SSA) framework has been used to explain the dynamics of the South African economy under apartheid. Specifically, SSA analysis provides an explanation of why, after decades of rapid capital accumulation following the establishment of the apartheid state in 1948, the South African economy entered a period of economic crisis, beginning in the mid-1970s (e.g., Gelb 1987). The SSA approach offers an alternative to liberal explanations of the crisis years, which see apartheid and capitalism as antagonistic systems, and to traditional Marxist analysis, which argues that apartheid and capitalism were mutually reinforcing. However, the SSA approach, as it has been applied to South Africa, has been criticized for a lack of empirical rigor and a tendency toward functionalist arguments (Nattrass 1994). This chapter reexamines this critique and offers an empirical foundation for the SSA framework as it has been applied to apartheid South Africa.

If SSA analysis is relevant for understanding apartheid capitalism, can the same approach be applied to the economic transition in post-apartheid South Africa? Electoral democracy helped restore social stability after years of unrest, but, at the time of transition, the widespread deprivation that was the legacy of apartheid remained. This created a conundrum for capital: political stability needed to be restored, but doing so could unleash redistributive pressures unfavorable to business interests.