For many people, COVID-19 was a dark period best forgotten, but we are beginning to see the pandemic’s lasting effect on politics and society. One of the more interesting impacts is a revolution in working from home, which has overturned many assumptions surrounding office life, management, and productivity.
More than one-third of the UK’s white-collar workforce still works from home, much to the chagrin of certain politicians and business leaders. Notoriously, Jacob Rees-Mogg has been leaving snide notes on the desks of civil servants whom he could not find in the office. The Prime Minister has also publicly called for an end to the working from home model. Also amongst business, organisations such as Goldman Sachs, JP Morgan, PWC, and Google have tried various techniques from carrot to stick in an effort to get the workforce back to the daily commute. All invariably met stiff resistance and eventually relented due to employee protests and an increased turnover.
I believe that this opposition to working from home is, frankly, anti-capitalist; especially when we look to classic capitalist economists like Schumpeter.
Schumpeter’s creative destruction – the act of innovation in which new processes replace outdated ones – is fundamental to the success of an economy. His classic research into entrepreneurship and innovation has been backed up with significant research, showing that economies which allow innovation and change to run their course – such as the change in working from home – free of intervention and regulation, will be significantly more successful in the long run.
However, many are ignoring Schumpeter’s theory of creative destruction, and instead are pushing back against working from home. Their main argument put forward to refute working from home is that employee productivity is lower. However, this is disingenuous and empirically disproven. Indeed, amongst other research, a study in The Quarterly Journal of Economics showed that teams working remotely are 13% more productive due to fewer breaks, lower absenteeism, and less distraction. Additionally, remote employees actually put in longer hours, partly down to the time savings from an avoided commute.
The real opposition to working from home, especially from the Government, appears to come from concerns for the commercial rental market, loss of income to transport providers, and lower footfall across high streets. However, the Schumpeterian approach is not resistance and regulation, but resignation to what is, ultimately, a net positive opportunity. We must get back to thinking like capitalists.
Imagine what an opportunity it could be if we allowed remote working to force upon the commercial rental market a period of innovation. There are so many buildings that are dedicated to commercial activity which could be repurposed as residential units, without the need for significant building beyond interior remodeling. The transport infrastructure is already there, so we could create massive amounts of affordable homes within pre-existing urban networks. Homeownership is a central tenet of conservative economic thinking, yet for many in Britain, that dream is slipping away due to high prices and limited housing stock.
With fewer people commuting into our cities every day, turning on their laptops in the living room instead, there would be a significant improvement in air quality and less requirement for carbon-negative transport, whilst simultaneously leaving more money in employees’ wallets. The dream of the ’15 minute’ city would be so much closer to actualisation. It would provide enormous benefits for individual health and wellbeing, the environment, community, and, in the longer term, help boost our economy and attract the brightest talent from overseas on the promise of an improved quality of life.
Schumpeter’s argument in favour of creative destruction also highlights the ripple effect that occurs from disruptive innovations. Through the destruction of businesses in certain sectors, new economic actors organise fresh production techniques. In the context of working from home, we have already seen leaps forward in remote working technologies over the past two years. Given that we are on the cusp of a metaverse revolution which will offer persistent virtual worlds and augmented reality that combines the digital and physical layers, the United Kingdom would have a unique opportunity to become a global hub for the entrepreneurs in their field seeking to capitalise on the demand for more advanced remote productivity solutions. Goldman Sachs has valued the metaverse as having a likely $8 trillion market capitalisation by 2030, and through embracing the working arrangement revolution we could seize a large part of that. We have the academic and industrial skills, a buoyant workforce, and the venture capitalists, but do we have the vision?
The future office will not involve rows of soul-destroying cubicles or frustrating hot desk arrangements. Employees will not have to queue at Starbucks for their mid-morning coffee and pay extortionate prices for their lunch. The office will be an interpersonal hub, host to meeting facilities, thinking environments, and social spaces, visited once or twice weekly by staff whose workspace is at home. Frankly, this will happen regardless of the view from the Government. As JP Morgan’s CEO reluctantly acknowledged in his latest shareholder letter, “it’s clear that working from home will become more permanent in business.”
The real question is not whether working from home should stay, but to ask if we can learn the lessons of Schumpeter and embrace this revolution before it leaves us behind. From the comfort of my living room where I write, it is with a sincere hope that we can become a nation of entrepreneurs, not Luddites.
Adam Kearns is a Bright Blue member. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: Sigmund]
