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The invisible hand of unpaid care

JRF recently published research on the financial penalty faced by unpaid carers. In this post, lead analyst Spencer Thompson reflects on the wider significance of the work.

Written by:
Spencer Thompson
Date published:
Reading time:
6 minutes

The founder of modern economics, Adam Smith, is often quoted as likening the market to an ‘invisible hand’. Though the phrase is frequently taken out of context, the basic idea is that while each individual ‘intends only his own gain’, market forces channel our efforts to ‘promote the public interest’.

In reality, we know that the market does not always operate this way: as Smith himself acknowledged, the public interest is often undermined, rather than served, by the pursuit of private gain. But while the invisible hand of the market may be a fiction, there is an invisible hand which keeps our economy going: what Smith called ‘The Wealth of Nations’ critically depends on the vast amounts of unpaid care work performed by parents, spouses, children, and others, who for the most part are women.

An unseen army

Whereas the invisible hand of the market remains invisible despite our best efforts to see it, the invisible hand of unpaid care is hidden in plain sight. In fact, unpaid care work is invisible precisely because it lies outside of the market mechanism. With market forces assuming an unparalleled degree of control over society, activities that follow other organising principles are excluded from measures of economic value (notably GDP) and neglected in the decisions of economic actors (notably businesses and governments).

The tension between the two invisible hands is starkly manifested in the lives of unpaid carers. Many are forced to leave paid work or reduce their working hours, foregoing not only their previous pay but also the opportunity for pay progression. Our research finds that, on average, this ‘caring penalty’ increases over time to reach more than £1,750 per month for unpaid child-care givers six years after they begin providing care, and over £600 for those providing care to someone is ill, disabled, or elderly.

An invisible penalty

Despite its magnitude, the caring penalty is itself invisible. This is partly because, as an opportunity cost rather than an out-of-pocket sum, it cannot be directly observed. But this does not make the penalty any less real – and failing to acknowledge it only makes it worse. Carer benefits, for example, are not only inadequate; other than maternity pay, they also penalise paid work, thus contributing to the underlying problem. Carers Allowance, in particular, is fully withdrawn once a carer’s earnings exceed a low and arbitrary threshold, and no statutory paid leave is available to care for a loved one who falls ill. Largely unmitigated, the caring penalty pushes thousands of carers into poverty each year, along with their families.

Is unpaid caring a choice?

Some might wish to argue that unpaid carers choose their roles voluntarily, with full knowledge of the sacrifice involved. Choice, of course, is the guiding principle of the market. But this argument assumes that the market for formal care – the alternative to providing care yourself – functions well. In other words, it assumes that the invisible hand is working its magic. In reality, care services are often substandard, prohibitively expensive, or simply unavailable, despite the wide-ranging benefits that such services offer to society. Unpaid care – the real invisible hand – is more of a necessity than a choice in these circumstances.

Of course, many unpaid carers do choose their occupation willingly. Whereas the invisible hand of the market is characterised by self-interest, unpaid care is often a labour of love. To put a price on such an intrinsically human act would be to devalue it by reducing it to the logic of the market. But the reality is that, in a society dominated by market logic, unpaid carers already do a pay a price – and the fact that the alternative cost may be even more devastating hardly justifies the situation. We also need to be careful when attributing choice, particularly given the gendered nature of care work. Economic decisions are never made in a vacuum; rather they are set within a social context, whether that is conceived in terms of prevailing norms, power relations, or government policy.

How do we make unpaid care more visible?

Still, the purpose of making the invisible hand of care work more visible is not only to redress specific injustices that arise within the economic system. It also gives us a glimpse of what a better economy might look like – one which prioritises human needs, centres human relationships, and aligns with the noblest of human instincts. In fact, Smith’s other great work, The Theory of Moral Sentiments, was dedicated to showing how society is held together by precisely these instincts – the foremost, in his view, being empathy. Though scholars have long debated the extent to which Smith incorporated this insight into his analysis of the economy, it is demonstrated every day in the lives of unpaid carers.

So how might we make unpaid care more visible? One view is that we should measure the value of unpaid care, and potentially incorporate it into headline economic statistics such as GDP or some new, superior metric. Unpaid care certainly merits such inclusion, purely on grounds of economic significance. But if this means imputing a cash value, we run the risk of reinforcing the current paradigm by seeing unpaid care only through the lens of the market – a lens which has become so taken-for-granted in our understanding of the economy that it has itself become invisible.

At stake is therefore not just a technical issue of how to measure value, but a deeper, more philosophical question regarding the nature of value itself. This question was, in fact, one of Smith’s primary concerns, along with the other economists of his era. But economics has never really settled the matter, not least because it is impossible to separate economic value from our values as such. The invisible hand of unpaid care demonstrates a different value system to that of the market – what would it take to view the economy through this lens instead?

We need shifts of perspective and structural changes

One possibility is to focus on time as the source of value. This idea has a long lineage, going all the way back to Smith himself, but has been advanced most forcefully in recent times from a feminist perspective. As JRF’s Graeme Cooke has explained, time to care is under increasing strain, and must be a central plank of any agenda to achieve economic security in an age of disruption. Another avenue, again opened by feminist economists, is to conceptualise all economic activities as contributing to greater or lesser degrees to the production of care. Care – including unpaid care, paid care, and even self-care – thus becomes the very purpose of the economy.

Ultimately, though, shifts in perspective must be accompanied by practical, structural changes. In themselves, policies that merely mitigate the caring penalty, such as our proposal of a new entitlement to paid leave, won’t transform the underlying structures which give rise to the penalty in the first place – not least because the struggles of unpaid carers intersect with those of women, disabled people, and workers as a whole, particularly those in the formal care sector. But they would be a step in the right direction.

A man and a woman standing in front of a building and trees.

This reflection is part of the care topic.

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