Is there a case for a basic income guarantee – Part 5

This is Part 5 in the mini-series discussing the relative merits of the basic income guarantee proposal and the Job Guarantee proposal. It finishes this part of our discussion. Today, I consider how society establishes a fair transition environment to cope with climate change and the impacts of computerisation etc. I outline a coherent adjustment framework to allow these transitions to occur equitably and where they are not possible (due to limits on worker capacity) alternative visions of productive work are developed? I argue that while work, in general, is coercive under capitalism, the provision of employment guarantees is a more equitable approach than relying as the basic income advocates envision on the exploitation of some to provide the freedom for others. Further, I argue that the Job Guarantee is a better vehicle for creating new forms of productive work. Adopting a basic income guarantee in this context just amounts to surrender. Our manuscript is nearly finished and we hope to complete the hard edits in the next month or so and have the book available for sale by the end of this year. More information on that later.

Just Transition Framework

The Just Transition Framework first entered the public debate in the 1990s as a result of the pioneering work of Canadian trade unionist Brian Kohler who emphasised that environmental preservation and employment were not trade-offs.

In a 1996 Op Ed, Brian Kohler wrote (Kohler, 1996):

The real choice is not jobs or environment. It is both or neither.

[Reference: (1996) ‘Sustainable development: a labor view’, San Diego Earth Times, May 1997, Based on presentation at the Persistent Organic Pollutants Conference, Chicago, December 5, 1996. LINK.]

This insight was formalised in his 1998 article – Just Transition – A labour view of Sustainable Development – and was adopted by the Canadian trade union movement in 2000 (CLC, 2000).

[Reference: Kohler, B. (1998), ‘Just Transition – A labour view of Sustainable Development’, CEP Journal on-line, Summer, 6(2).]

[Reference: Canadian Labour Congress (2000) Just Transition for Workers During Environmental Change, LINK.]

The initiative was in relation to the challenges that climate change was presenting for unions who were keen to promote the growth of so-called ‘green jobs’ on the one hand, but knew full well that “when we create Green Jobs, there will be an industrial transition – this means that workers in traditional industries must be protected” (CLC, 2000).

The idea of a Just Transition is that it allows the benefits of new green technologies to be introduced but, at the same time, provides a “safeguard” for people who “work in jobs that will become obsolete” as a result of “unsustainable production” processes (CLC, 2000).

The International Labour Organisation (ILO, 2010: 141) note that the “definition, boundaries and scope” of the Just Transition concept “has evolved” since the initial idea was floated by the Canadian union movement.

The ILO (2010: 141) offered this definition of a “Just Transition”:

can be understood as the conceptual framework in which the labour movement captures the complexities of the transition towards a low-carbon and climate-resilient economy, highlighting public policy needs and aiming to maximize benefits and minimize hardships for workers and their communities in this transformation.

It is not a blocking framework – but rather “a supporting mechanism of climate action, and not inaction” (ILO, 2010: 141).

[Reference: International Labour Organisation (2010) ‘Climate Change and Labour: the need for a “just transition”‘, International Journal of Labour Research, 2(2), Geneva, International Labour Office.]

The Canadian Centre for Policy Alternatives (Cooling et al., 2015: 5) introduced a distributional focus by stating that:

Underlying the concept of just transition is the principle that the costs of environmental adjustments should be shared across society rather than shouldered alone by those most affected by them.

[Reference: Cooling, K., Lee, K., Daub, S. and Singer, J. (2015) ‘Just Transition: Creating a green social constrat for BC’s resource workers’, Canadian Centre for Policy Alternatives, Canadian Justice Project, January]

Whether the source of disruption is climate change or the march of robots, economic restructuring is a painful process and is, typically, spatially concentrated, which raises significant issues for the social settlement (where people live).

It is the responsibility of the state to put in place a framework that minimises the impact of these disruptions on people and regions that are affected by them.

A progressive vision should ensure that these impacts are not only minimised but also shared across the nation.

Is the provision of a basic income sufficient to absorb these negative impacts on people of the loss of jobs that follow the accelerated introduction of robots?

The answer is clearly not.

A better response is to provide new opportunities to work for workers who, in the interests of Society in general have to give up work as a result of climate change or who are displaced by the manifestations of the ‘second machine age’.

A ‘just transition’ ensures that the costs of economic restructuring and the shift to sustainability do not fall on workers in targeted industries and their communities. It would also help manage the impacts of the second machine age.

A just transition in any threatened region or sector requires government intervention and community partnerships to create the regulatory framework, infrastructure and market incentives for the creation of well-paid, secure, healthy, satisfying environmentally-friendly jobs with particular attention to appropriately meeting the needs of affected workers and their communities.

Government support in a progressive world must include:

  • Assistance for both displaced workers and for contractors;
  • Adequate notice of workplace change and closures;
  • Consultation with and full engagement of relevant unions;
  • Support for innovation and partnerships for new local industries, research and development and infrastructure investments;
  • Training and alternative employment tailored to local and individual needs and opportunities;
  • Special targeted support for older, disabled and less educated workers;
  • Relocation assistance for displaced workers;
  • Income maintenance, redundancy entitlements and retraining allowances;
  • Cheap loans and subsidies for new industries and employers;
  • Compensation and equipment buy-outs for contractors;
  • Assistance programs extended to workers employed by contractors;
  • A just transition requires investment in training programs and apprenticeships to create a highly trained ‘green’ workforce;
  • The introduction of a Job Guarantee to provide continuous employment for all those without work.

These support elements go well beyond the conceptualisation of the individual as merely needing income security to maintain current consumption levels.

The Just Transition framework provides a dynamic environment to allow an individual, their families, their regions to make adjustments that will enhance their future prospects.

Among other things, the Framework values jobs and require that all people have access to decent work wherever they choose to live.

If the private sector is unable to create sufficient job opportunities then the public sector has to stand ready to provide the vital employment.

That is the basis of the Job Guarantee, which is one plank in a broad adjustment environment described above.

The ‘freedom’ of a basic income guarantee against the ‘enslavement’ of an employment guarantee

While many opponents of employment guarantees seem to believe they are just schemes to enslave workers in pointless work (the ‘boondoggling’ critique), the Job Guarantee should, in fact, be an essential part of a progressive liberal and radical agenda to transform the way we use the economy to advance a very broad and egalitarian conception of public purpose.

Basic income proponents do not seem to be able to grasp why this is so.

They cannot seem to get beyond a construction of the Job Guarantee as being a vehicle for defending the industrial capital status quo.

The Job Guarantee can help society rebuild notions of collective will and reject the neo-liberal emphasis on individualism and see the economy as delivering benefits to the planet and the people who occupy it.

That is quite a different conception that the basic income guarantee proposal.

As discussed earlier, work is intrinsic to human existence. We seek to transform nature to live.

Certainly, history has evolved to the stage where the organisation of that effort – Capitalism – is oppressive and the anathema of liberation, despite the wage form making it look as though we have freedom to choose.

But we need to separate the specific form of work organisation from the intrinsic meaning of work for people. People will still seek ways to ‘work’ and will have to continue working, even if we liberate ourselves from the specific yoke of Capitalism.

Basic income seems to construct humans as meagre consumption units where a small stipend, of sufficient amount such that the person can continue to consume at survival levels is provided.

Individuals are then allegedly going to ‘work’ at play while an unprepared society applauds their inventiveness. The reality would be quite different.

Basic income proponents like to construct what for them is a meaningful dichotomy, which contrasts the so-called ‘freedom’ that the provision of a basic income provides individuals with the ‘enslavement’ that an employment guarantee offers.

However, if the ‘freedom’ of non-work runs counter with social attitudes towards work and non-work and or doesn’t provide sufficient ‘income’ under the basic income guarantee in recognition of the fact that consumption of leisure requires monetary resources, then the appeal might be hollow.

Further, as we have seen earlier in this mini-series, there is a growing recognition that work plays a much more significant role in society and in the lives of individuals than merely providing an income. We are not just ‘consumption units’.

Until we change social values as they pertain to the concept of productive endeavour and broaden what is considered to be meaningful work, we have to design solution that recognise these values.

In this context, the case made for the Job Guarantee leaves two outstanding and important issues to be discussed:

  • Is a compulsory Job Guarantee overly-coercive; and
  • Does the BI model introduce dynamics that can take us beyond the oppressive reliance on work for income security?

We deal with the first point in this section and the second point in the following section.

We should start by noting that a Society can choose to have whatever transfer system its sees fit (including the provision of unemployment benefits) running parallel with the introduction of a Job Guarantee.

The latter does not demand a total abandonment of the existing income support schemes.

But a strong case can be made that individuals in any coherent society have an obligation to give back to the community that is guaranteeing them a job and the broad benefits that accompany that guarantee.

Most societies are not yet ready to create a class of individuals of working age and amenable health to draw a living income without directly contributing something back to society (output).

That starting point conditions the way we might think about coercion with in the context of a Job Guarantee

Is a compulsory Job Guarantee overly-coercive? One of the essential criteria for a sustainable full employment policy is that it not violate the current social attitudes towards work and non-work.

Robert Van der Veen and Philippe Van Parijs (1987: 642) argued that that the introduction of a universal income guarantee can provide a “capitalist road to communism”, which relates to the need to move beyond the oppression of the capitalist workplace and “to move toward distribution according to needs”.

[Reference: Van der Veen, R. and Van Parijs, P. (1987) ‘A capitalist road to communism’, Theory and Society, 15(5), 635-655. LINK]

However, they qualify that notion by noting that there is a “constraint on the maximization of the relative share of society’s total product distributed according to needs” (pp.644-45) and that “some economies are unable to meet this constraint” (p.645), which means the basic income guarantee is not a general path to a better future for all.

Their appeal to Marxist concepts of the freedom of a communist era is partial, however.

In 1851, the French socialist politician and historian Louis Blanc laid out a scheme whereby cooperative workshops under worker control would be supported by the state to provide guaranteed employment for the impoverished citizens in French cities.

Blanc (1851: 92) discussed whether the system would be practical (“Le système proposé est-il practiable?”). He wrote that we had to go beyond hysteria and construct such arguments based on what we considered the fundamental principles for a future society might be.

As part of his view of the role of the state and the responsibilities of individuals in this regard he said the ‘base fondamentale de las société future, pierre angulaire du Monde nouveau” was (Blanc, 1851: 92):

De chacun selon ses facultés, à chacun selon ses besoins

[Reference: Blanc, L.J.J. (1851) Plus de Girondins, Paris, Charles Joubert. LINK]

Which translates to the famous (gender neutral):

From each according to his/her abilities, to each according to their needs.

See this for more Detail.

Somewhere along the way our basic income champions dropped the “each according to ability” bit (the give option) and only presented a take option. We do not consider that to be the basis of a healthy society based on reciprocity.

Marx also incorporated that fundamental principle in Part I of his Critique of the Gotha Program (Marx, 1875).

In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly — only then then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!

[Reference: Marx, K. (1875) Critique of the Gotha Program, Moscow, Progress Publishers. LINK]

So the basic income “capitalist road to communism”, which abandons the principle that individuals who can work and have the ability to work, should do so for the benefit of all, would appear to be a very partial interpretation of the concept of a communist society where workers are ‘free’.

There has been considerable research done by social scientists which suggests that people still consider work to be a central aspect of life and there are deep-seated views about deservingness and responsibility for one’s circumstances.

These views translate into very firm attitudes about mutual obligation (reciprocity) and how much support should be provided to the unemployed.

While these attitudes are at times expressed in an ugly way and are exploited by right wingers to divide-and-conquer the working class, the fact remains that they are ingrained and will take time to shift.

Further, most unemployed workers indicate in surveys that they prefer to work rather than be provided with income support.

By creating circumstances in which an individual’s opportunity to engage in paid employment and earn a living wage is guaranteed, the Job Guarantee would support current social attitudes towards work and non-work; and as a policy mechanism would dampen any resentment felt towards that proportion of unemployed persons who are currently perceived as undeserving of state support and assistance.

The Job Guarantee approach overrides the free-rider option that is available under an unconditional basic income.

In a society which accords value to the notion of reciprocity, the guaranteed work model ensures that no social group is considered to be solely viewed as ‘consumption units’ – to be fed and clothed by the State but ignored in terms of their social needs for work and human interaction within the work place.

If the vast majority of workers prefer to work then the systemic failure to provide a sufficient quantum of jobs imposes harsh costs that can be alleviated by the introduction of a Job Guarantee.

In this regard, the Job Guarantee is a source of freedom – the capitalist property relations notwithstanding.

But it is entirely possible that some people do not value work in any intrinsic sense and if confronted with the choice between the Job Guarantee and a basic income guarantee would take the latter option every time. A blanket Job Guarantee is thus coercive in its impact on this particular group.

The basic income advocates would likely recommend a simple modification that would ‘merely’ make the Job Guarantee voluntary within the context of a universal basic income guarantee.

To understand this criticism of the Job Guarantee I note that the underlying unit of analysis in the basic income literature is an individual who appears to resemble McGregor’s (1960) theory X person.

Theory X people are found in mainstream microeconomics textbooks and are constructed as self-centred, rational maximisers.

Lester Thurow (1983: 216) said that this neo-liberal conception of the X persion considered that “man is basically a grasshopper with a limited, short-time horizon who, liking leisure must be forced to work and save enticed by rewards much greater than those he gets from leisure.”

[Reference: Thurow, L. (1983) Dangerous Currents, Allen and Unwin, Sydney.]

Reinforcing this conception of human behaviour is a libertarian concept of freedom. Optimal outcomes require an individual to have free choice and basic income proponents see a decoupling of income from work as an essential step towards increasing choice and freedom.

So by permitting individualism at this level – for the state to support individuals in their consumption but not require any reciprocation limits the possibilities for social change and community engagement.

Progressives should, rather, be at the forefront of collective engagement rather than advocating policies that smack of individualism.

Of-course, provision of a basic income guarantee doesn’t preclude community action. Individuals may adopt a whole range of campaigns and activist agendas while being supported on the barest income guarantee.

A characteristic of the neo-liberal era has been the elevation of ‘volunteerism’ to some virtuous heights. The morality runs deep through neo-liberal narratives when it works to reinforce the redistribution of income towards the top.

The reality is that the functions that are now considered to be the ambit of the volunteers were previously, in many cases, paid jobs.

So if the basic income recipients are engaged in these agendas then why wouldn’t they want to be paid for their work?

The Job Guarantee would replace the neo-liberal agenda to reduce the size of the public sector contained within the so-called ‘volunteerism’ crusade.

It would also highlight how many previous jobs have become voluntary activities despite their value to society.

Further, from a Marxist perspective, a basic income guarantee offers the hope of separating an individual’s subsistence from any necessity that they produce surplus value.

Accordingly, proposals like the Job Guarantee are met with derision because they represent the antithesis of individual freedom. Even if the vast majority of individuals desire to be employed, a flexible system would also permit those who did not want to work to enjoy life on the income guarantee.

By denying citizens the opportunity to choose between the Job Guarantee and the non-work alternative of the basic income guarantee, it is alleged that the Job Guarantee becomes an unnecessarily coercive and harsh system.

However, most basic income guarantee proponents also consider that the national government faces a fiscal constraint – which makes their macroeconomic conception indistinguishable from that touted by the neo-liberals.

By taking the orthodox government budget constraint version of the basic income guarantee at face value, its proponents are confronted with a major dilemma.

To ‘finance’ the scheme some people have to work and thus, create surplus value. It is difficult to believe that all those who are working are choosing to work in preference to not working. However, under capitalist property relations, workers in general have to work to survive.

Leading basic income guarantee proponent Phillipe Van Parijs (1993: 179) is representative when he asks:

… what is ‘unfair’ about living off the labour of others when everyone is given the same possibility? Facing this possibility, some will choose to do no or little paid work. Others will want to work a lot, whether for the additional money or for the fun of working, and thereby finance the universal grant. If the latter envy the former’s idleness, why don’t they follow suit?

[Reference: Van Parijs, P. (1993) Marxism Recycled, Cambridge University Press, Cambridge.]

Operating under the flawed assumption adopted by Van Parijs and others that there is a binding financial constraint on governments, Cowling, Mitchell and Watts (2003: 19) articulate a number of problems with this conception of a free and fair system. First, our lives do not all begin at the time of the inception of the basic income guarantee. Individuals who, under different circumstances, may have taken the no-work option have entered into commitments, like having children. In that sense, prior constraints prevent them from ‘enjoying’ the freedom.

Second, the ‘financing’ logic fails due to the inherent fallacy of composition. The basic income guarantee system becomes undefined (that is, there would be no production or income) if everyone chose to take the non-work option. So we are left with the uncomfortable conclusion that under the basic income guarantee the ‘coercion of work’ is neatly transferred to those who do not take the basic income guarantee, while under the Job Guarantee the ‘coercion of work’ is shared by all.

[Reference: Cowling, S., Mitchell, W.F. and Watts, M.J. (2003) ‘The right to work versus the right to income’, Working Paper No 03-08, Centre of Full Employment and Equity, Australia.]

More generally, no form of wage labour is non-coercive under capitalism. The question is what forms of coercion are most likely to lead to changes in the mode of production over time. The importance of the work ethic in reinforcing capitalist social relations cannot be underestimated.

Sharon Beder (2000: 2) observed that the problem is that work remains at the:

… heart of capitalist culture … and is seen as an essential characteristic of being human. No matter how tedious it is, any work is generally considered to be better than no work.

[Reference: Beder, S. (2000) Selling the Work Ethic: From Puritan Pulpit to Corporate PR, Scribe Publications, Carlton North.]

Further, many capitalist economies now suffer the dual wastage – entrenched unemployment and increasing time-related underemployment (with implied inadequacy of employment situations).

It is highly likely that the introduction of the Job Guarantee will place pressure on private employers, particularly in the low-skill service sectors to restructure their workplaces to overcome the discontent that their underemployed workers feel.

A full-time Job Guarantee position at wages not significantly different from the low pay in the private sector service industries would appear attractive relative to a private job that rations the worker hours.

In this regard, the Job Guarantee would offer flexibility to workers. Some would prefer part-time jobs while others would require full-time jobs within the Job Guarantee.

It should be obvious this flexibility can accommodate virtually any requirement of workers. Further, it is very easy to design the program in such a way that child care services will be provided by Job Guarantee workers, to accommodate parental needs.

A transformative and radical framework for an inclusive society

The basic income guarantee proponents argue that the introduction of an income guarantee “moves us closer (ceteris paribus) to communism, as defined by distribution according to needs” (Van Parijs, 1993: 162).

In other words, the basic income guarantee approach contains a dynamic that can steer society away from capitalism towards a communist state. Marxist supporters of the basic income guarantee see this as a major advantage, a palliative under capitalism but also the seed to its end.

What is the validity of this claim?

Around the world there are several trends that challenge the traditional notions of work and income:

  • There rise in part-time and precarious employment.
  • Elevated and persistent levels of unemployment.
  • Growing and significant underemployment.
  • Increasing polarisation of income distributions and rising income and wealth inequality.
  • The impacts of the ‘second machine age’.

The traditional moral views about the virtues of work – which are exploited by the capitalist class – clearly need to be recast.

A progressive vision cannot embrace a capitalist labour market where a rising number and proportion of workers are finding it difficult to get sufficient work and/or pay rises in line with productivity.

In many countries, real wages growth has been flat or going backwards for a few decades now as the top-end-of-town capture an increasing proportion of the real income produced.

Something has to give. Our Progressive Manifesto seeks ways to make the transition away from the destructive dynamics that characterise the neo-liberal labour market.

Clearly, social policy can play a part in engendering this debate and help establish transition dynamics. However, it is likely that a non-capitalist system of work and income generation is needed before the yoke of the work ethic and the stigmatisation of non-work is fully expunged.

The question is how to make this transition in light of the constraints that capital places on the working class and the State.

Basic income guarantee advocates consider their approach provides workers with the necessary options to reject the capitalist ‘gainful’ worker approach by breaking the nexus between surplus value creation and income receipt at the individual level.

But, Job Guarantee proponents argue that there is a need to embrace a broader concept of work in the first phase of decoupling work and income.

However, they argue that trying to impose this new culture of non-work on to society as it currently exists is unlikely to be a constructive approach. The patent resentment of the unemployed will only be transferred to the “surfers on Malibu” (using Van Parijs’ conception of life on basic income!

The Job Guarantee provides a superior vehicle to establish a new employment paradigm where community development jobs become valued.

Over time and within this new Job Guarantee employment paradigm, public debate and education can help broaden the concept of valuable work until activities which we might construe today as being ‘leisure’ (non-work) would eventually be considered to be productive employment.

For example, imagine we allow struggling musicians, artists, surfers, Thespians, and the like to be able to be employed within the Job Guarantee.

In return for the income security, the surfer might be required to conduct water safety awareness for school children; and musicians might be required to rehearse some days a week in school and thus impart knowledge about band dynamics and increase the appreciation of music to interested children.

Reciprocity is clear in these cases. The surfer receives income security because he/she is employed to surf but is productive because they also provide value to society beyond their own hapiness. Win-win.

A surfer who has no reciprocal responsibilities under a basic income guarantee provides nothing to society in general.

Further, basic income advocates like to hold out community activism as something that would increase under a basic income guarantee.

But why not declare these activities to be a Job Guarantee job. For example, organising and managing a community garden to provide food for the poor could be classified as a paid job. We would see more of that activity if it was rewarded in this way. What might be a selfish activity under basic income could become a society-enriching and productive activity if the gardeners were required to redistribute their produce.

By gradually re-defining the concept of productive work well beyond the realms of “gainful work” which specifically related to activities that generated private profits for firms, a Job Guarantee sets us up for the future.

The conception of productivity (and efficiency) as a social, shared, and public outcome is then only limited by one’s imagination.

In this way, the Job Guarantee becomes an evolutionary force – providing income security to those who want it but also the platform for wider definitions of what we mean by work!

Social attitudes take time to evolve and are best reinforced by changes in the educational system. The social fabric must be rebuilt over time.

The change in the mode of production through evolutionary means will not happen overnight, and concepts of community wealth and civic responsibility that have been eroded over time, by the divide and conquer individualism of the neo-liberal era, have to be restored.

The Job Guarantee provides a strong evolutionary dynamic in terms of establishing broader historical transitions away from the unemployment (and income insecurity) that is intrinsic to the capitalist mode of production. The Job Guarantee provides a short-run palliative and a longer-term force for historical change.

The basic income guarantee is found lacking in this regard on all counts.

Conclusion

We have outlined many reasons for opposing the introduction of a basic income guarantee. We believe it entrenches the notion of a dependency on passive welfare payments.

Given current social values towards work and non-work, a basic income guarantee creates a stigmatised cohort.

It does not provide any inflation buffer. Either the scheme is mean-spirited (low stipend) and thus self-defeating or it provides a decent living income but then blows up as a result of its inflationary bias.

Many people argue that the non-work of basic income recipients is equivalent to the unproductive work of a Job Guarantee workers (using narrow conceptions of productivity).

Whether the Job Guarantee workers add to the productive capacity of the economy that can absorb growth in nominal demand or not is moot.

The Job Guarantee pool will be small when the economy is operating at high pressure and large when private demand is weak. It works in a counter-cyclical fashion (as an automatic stabiliser) so even if the workers are adding nothing productive to the array of goods and services for sale demand is also weak.

The basic income recipients add nothing productive to society (in the same sense we are using the term here) but receive the same income irrespective of the state of the cycle. That introduces the inflationary bias.

Further, the basic income guarantee does not provide an architecture for individual capacity building. A basic income guarantee treats people who are unable to find adequate market-based work as ‘consumption’ entities and attempts to meet their consumption needs.

The provision of a basic income guarantee provides no additional training or support structures for individual advancement. Some recipients might be individually motivated enough to advance their skills. Other will not unless there is formal support mechansims.

Essentially, the basic income approach ignores the intrinsic social and capacity building role of participating in paid work.

It is sometimes said that beyond all the benefits in terms of self-esteem, social inclusion, confidence-building, skill augmentation and the like, a priceless benefit of creating full employment is that the ‘children see at least one parent going to work each morning’.

In other words, it creates an intergenerational stimulus that the basic income guarantee approach can never create.

Unlike the basic income guarantee model, the Job Guarantee model meets these conditions within the constraints of a monetary capitalist system.

The Job Guarantee is a far better vehicle to rebuild a sense of community and the purposeful nature of work. It is the only real alternative if intergenerational disadvantage is to be avoided.

It also provides the framework whereby the concept of work itself can be broadened to include activities that many would currently dismiss as being leisure, which is consistent with the aspirations of some basic income advocates.

The point is that over time, activities that basic income advocates think represent freedom (surfing) would become jobs under the Job Guarantee as out attitudes to work evolve in a progressive way.

The series so far

This is a further part of a series I am writing as background to my next book on globalisation and the capacities of the nation-state. More instalments will come as the research process unfolds.

The series so far:

1. Friday lay day – The Stability Pact didn’t mean much anyway, did it?

2. European Left face a Dystopia of their own making

3. The Eurozone Groupthink and Denial continues …

4. Mitterrand’s turn to austerity was an ideological choice not an inevitability

5. The origins of the ‘leftist’ failure to oppose austerity

6. The European Project is dead

7. The Italian left should hang their heads in shame

8. On the trail of inflation and the fears of the same ….

9. Globalisation and currency arrangements

10. The co-option of government by transnational organisations

11. The Modigliani controversy – the break with Keynesian thinking

12. The capacity of the state and the open economy – Part 1

13. Is exchange rate depreciation inflationary?

14. Balance of payments constraints

15. Ultimately, real resource availability constrains prosperity

16. The impossibility theorem that beguiles the Left.

17. The British Monetarist infestation.

18. The Monetarism Trap snares the second Wilson Labour Government.

19. The Heath government was not Monetarist – that was left to the Labour Party.

20. Britain and the 1970s oil shocks – the failure of Monetarism.

21. The right-wing counter attack – 1971.

22. British trade unions in the early 1970s.

23. Distributional conflict and inflation – Britain in the early 1970s.

24. Rising urban inequality and segregation and the role of the state.

25. The British Labour Party path to Monetarism.

26. Britain approaches the 1976 currency crisis.

27. The 1976 currency crisis.

28. The Left confuses globalisation with neo-liberalism and gets lost.

29. The metamorphosis of the IMF as a neo-liberal attack dog.

30. The Wall Street-US Treasury Complex.

31. The Bacon-Eltis intervention – Britain 1976.

32. British Left reject fiscal strategy – speculation mounts, March 1976.

33. The US government view of the 1976 sterling crisis.

34. Iceland proves the nation state is alive and well.

35. The British Cabinet divides over the IMF negotiations in 1976.

36. The conspiracy to bring British Labour to heel 1976.

37. The 1976 British austerity shift – a triumph of perception over reality.

38. The British Left is usurped and IMF austerity begins 1976.

39. Why capital controls should be part of a progressive policy.

40. Brexit signals that a new policy paradigm is required including re-nationalisation.

41. Towards a progressive concept of efficiency – Part 1.

42. Towards a progressive concept of efficiency – Part 2.

43. The case for re-nationalisation – Part 2.

44. Brainbelts – only a part of a progressive future.

45. Reforming the international institutional framework – Part 1.

46. Reforming the international institutional framework – Part 2.

47. Reducing income inequality.

48. The struggle to establish a coherent progressive position continues.

49. Work is important for human well-being.

50. Is there a case for a basic income guarantee – Part 1.

51. Is there a case for a basic income guarantee – Part 2.

52. Is there a case for a basic income guarantee – Part 3.

53. Is there a case for a basic income guarantee – Part 4 – robot edition.

54. Is there a case for a basic income guarantee – Part 5.

The blogs in these series should be considered working notes rather than self-contained topics. Ultimately, they will be edited into the final manuscript of my next book due later in 2016.

That is enough for today!

(c) Copyright 2016 William Mitchell. All Rights Reserved.

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    26 Responses to Is there a case for a basic income guarantee – Part 5

    1. Neil Wilson says:

      I’ve loved this series. It’s been great.

      I haven’t seen any mention of Psychological Loss Aversion (endowment effect) in any of the articles, but it is surely relevant to the debate.

      Research studies into the psychological value of losses and gains have identified a loss aversion ratio of between 1.5 and 2.5. This means that a loss that is identical in money terms to a gain is valued up to 2.5 times more than the gain.

      So if you give somebody something, and then increases taxes to take it away again you are going to create far more anger and upset than if you hadn’t bothered in the first place.

      Similarly this should apply to progressive tax policy. Voters notice that they are being taxed. So change the process so they don’t. They should be calculated and paid over by businesses behind the scenes – because businesses don’t vote.

      The idea should be that employees always get their gross salary in their hands without any deductions. All the deductions should be placed on the employer to pay directly and calculated as additional to the gross salary. Similarly with the sales tax – it should be included in the advertised price and handled behind the scenes by business. Hut taxes should be part of the rent/mortgage, etc.

      The right want to make taxes explicit to trigger loss aversion and drive a movement to eliminate them. The left ought to take the alternative view, and a Job Guarantee helps them do that because the ‘well jobs will vanish’ argument is neutralised.

    2. GLH says:

      In my mind words like volunteerism and charity along with phrases like a thousand points of light and free labor are simply ways to convince the people that they will be free of something and in the end the words mean nothing. I don’t believe in the sincerity of those backers. It seems like another ruse to keep the government out of the private sector and I suspect somehow to gain from the unemployed. I suspect that BIG is a diversion from the problems of neoliberalism and a way for the backers of BIG to keep the people divided. If the BIG weren’t a fraud its backers would opt for a jobs guarantee. Anytime something is dangled in front of us as FREE people should beware.

    3. financial matters says:

      A lot of great points for a JG and I think we definitely need one. Work is important in many ways and as you state many forms of work are not appreciated as such and are not compensated.

      I think we need a well functioning JG in place before considering a BIG. Give people chances to work for a decent wage and put pressure on businesses to compete at a fair wage.

      I see a BIG as supporting people who do not fit into this template. It may require a change in our attitude that work is the be all and end all. It implies a broader concept of the human right to survive and I think this is supported in Polanyi’s work.

      “”‘Compulsion should never be absolute; the “objector” should be offered a niche to which he can retire, the choice of a “second-best” that leaves him a life to live. Thus will be secured the right to nonconformity as the hallmark of a free society.’””

      And he believed in a minimum wage or living wage not set by the market:

      “”“To take labor out of the market means a transformation as radical as was the establishment of a competitive labor market. but the basic wage itself, are determined outside the market.’””

    4. Jerry Brown says:

      I don’t like the use of the word compulsory when used describing a Job Guarantee. Surly you are not suggesting that an individual who was willing to forgo income for a while would still be drafted into such a program against their will? If you are, then I don’t like the program at all. If you aren’t you should find another way to describe it, because it reads like a prison work camp to me.

    5. Benedict@Large says:

      Jerry ~ The JG is voluntary. Always.

    6. financial matters says:

      By compulsory I mean having the income to survive. We have a growing precariat that needs action on multiple fronts.

    7. Jerry Brown says:

      @financial matters- Sorry, I was referring to Bill’s use of the word compulsory in the post and recommending that he not use it to refer to a Job Guarantee – not your comment.

      On the subject of your comment, I also support a Job Guarantee. And in my mind, nothing about having a Job Guarantee precludes a discussion about an additional basic stipend or “citizen’s dividend” or any other such welfare type program just so long as the inflationary biases Bill discusses are included in the discussion.

    8. Kingsley Lewis says:

      It is unfortunate that Prof. Mitchell weakens his otherwise very strong case for JG by speculating that social attitudes and human nature can and should be fundamentally changed.

      His main case here is that that income guarantee schemes do not satisfy “One of the essential criteria for a sustainable full employment policy” because they “violate current social attitudes towards work and non-work”.
      In contrast, a well-designed JG/ELR/workfare scheme may be more consistent with innate human instincts.
      Social attitudes mentioned by Prof. Mitchell include “deep-seated views about deservingness and responsibility for one’s circumstances” which “translate into very firm attitudes about mutual obligation (reciprocity) and how much support should be provided to the unemployed”.
      Prof Mitchell mentions that these social attitudes are “deep-seated” and “ingrained”.
      This argument is fine thus far.

      But Prof Mitchell goes much further in claiming that these social attitudes can and should be fundamentally changed. He says they “will take time to shift” and that “It is likely that a non-capitalist system of work and income generation is needed before the yoke of the work ethic and the stigmatisation of non-work is fully expunged.”

      Unfortunately he does not explain why these social attitudes are wrong or defective so that they need be changed.
      Nor does he give any evidence that these social attitudes can be radically changed.
      Nor does he explain why these social attitudes are widespread in most human societies, including primitive tribes and advanced countries.

      Recent work by evolutionary psychologists suggests that the social attitudes mentioned by Prof. Mitchell evolved during the last 300,000+ years. If so it is highly unlikely that any new political regime such as Prof Mitchell’s preferred “non-capitalist system” could alter innate human instincts in the foreseeable future.

      An instinct for “strong reciprocity” between members of human social groups evolved by the process of “group selection”.
      Strong reciprocity is a propensity to cooperate with others on a shared social task, even at personal cost, and a willingness to punish those who violate cooperative norms, even when punishing is personally costly.
      Tribes with a high proportion of cooperative members tended to be the most successful at surviving wars, predators, resource constraints, climate changes and natural disasters. Groups whose members were less willing to cooperate tended to be become extinct.
      Strong reciprocity instincts lead to social security and welfare schemes for people who are regarded as ‘deserving’. But egalitarian policies that reward people independently of whether and how much they contribute to society tend to be considered unfair/contrary to cooperative norms.
      This analysis helps to explain why JG/ELR/workfare schemes may be socially acceptable whereas mere income guarantee schemes are often seen as unfair to those who work/contribute to society.
      A good intro is:
      https://newrepublic.com/article/103896/cooperative-species-human-reciprocity-bowles-gintis
      The book by Bowles and Gintis can be downloaded for free from:
      http://library.uniteddiversity.coop/Money_and_Economics/Cooperatives/A_Cooperative_Species-Human_Reciprocity_and_Its_Evolution.pdf

    9. J Christensen says:

      “It is highly likely that the introduction of the Job Guarantee will place pressure on private employers, particularly in the low-skill service sectors to restructure their workplaces to overcome the discontent that their underemployed workers feel.”

      Or given the option, private employers might automate all of the low skill jobs all the sooner. Some of the fast food producers are already moving down this path without the added pressure of the job guarantee.

    10. Neil Wilson says:

      “nothing about having a Job Guarantee precludes a discussion about an additional basic stipend”

      The line from Beveridge was that once you have secured the full employment of the population at reasonable wages, then progress in other areas is much more likely to happen.

    11. J Christensen says:

      “From each according to his/her abilities, to each according to their needs.”

      The abilities of a very large and ever growing number of people in this world are more than a match for the existing challenges to providing for their needs in a sustainable way. The capitalist system has become just as coercive and dangerous to our common interest in survival as a centrally planned communist economy once proved itself to be.

      Ultimately we are not resource constrained either in terms of material or labour required for either survival or a decent quality of life. The real constraints are the ones imposed on everyone by those who are allowed to occupy dominant positions within society who then use them to impose their own selfish will and vision for the world upon the rest.

      The notion that we could have leaders who can command satisfactory systems capable of delivering both sustainability and satisfactory living conditions for all given the powers of coercion is proven false. All we have witnessed since the dawn of history are brutes ever increasingly interfering with and dispossessing dis empowered individuals of that which they had been able to derive a sustainable living when mutually cooperating with their immediate neighbours on a human scale.

      Saving capitalism or reviving communism are not answers. They were mere steps in an evolutionary process. Neither could be ends in themselves because the existence of both reflects a duality in human nature which emerges from our intrinsic tendencies.

      Much of science and technology is a blessing bestowed upon society by the modicum of freedom granted to progressives during an era when it’s development could be exploited to further the interests of those seeking to capture the commons for selfish reasons. Along that journey we all became ruthless exploiters of both nature and one another.

      We have the science and technology now and are free to use it to increase our options for achieving the common goal of improving the human condition while living within the natural constraints imposed by our only reasonable choice: living as a viable component within an organic system or perishing forever.

      With capitalism and it’s evolution toward radical form of fascism or neoliberalism, and, socialism with it’s radical form communism all demonstrated failures, I think it was Noam Chomsky I read at one time, who pointed out that anarcho-syndicalism, or a kind of left wing libertarian ism, which seems to permit the above within a democratic framework, is the only thing left that we haven’t tried.

      With high technology socialised and accessible for all to use, share, and improve our only true jobs (that to which we direct our effort) will be mostly to become experimenters, tinkerers and co discoverers of better ways to achieve that common objective with all the social participation and cohesiveness a free “open source” sharing approach can offer. The job guarantee jobs would be the only jobs in town!

    12. larry says:

      It might help certain skeptics who may find the JG difficult to understand how it might work would be to describe FDR’s Work Progam in the ’30s where artists were paid to paint, writers to write, and sculptors to sculpt. If you know where to look you can still see some of the work of these artists in some buildings in NY, where some social housing was embellished by artistic elements, such as above doorways and in entrance ways.

    13. Rob Holmes says:

      The current row over backpacker taxation brings the business of seasonal farm work into focus – which could function as a Job Guarantee of sorts. I had a quick look at the figures – various websites claim an average pay of between $15 and $22 per hour; the Australian basic wage is about $17.50 plus a loading for casual work; and assuming a forty hour week “newstart” pays an equivalent of about $6.30 per hour if you are single and less if you have a partner. So why isn’t casual farm work flooded with people who are on unemployment benefits – particularly given the high youth unemployment in areas where casual farm labour is required? A straight answer is that no matter how many forms you have filled out, once you depart for casual work you will find yourself back at square one with Centrelink when the work runs out. Clearly something for our “tax-not” treasurer to consider.
      While on the subject – what is the point of taxing backpacker pay? Regardless of the obsession of balancing the budget, backpackers take casual farm work to pay for their holidays as they go – taxing this work drains the cash out of the private sector whether you accept MMT or not.

    14. Jake says:

      Interesting post

      “Most societies are not yet ready to have a class of working age and amenable health to draw a living income without contribution something back to society”

      well….there are plenty of buy to let landlords who own hundreds of tiny bedsits (or even just tens of them)aquired through leverage drawing a living income and society is completely non fussed about them.

      Not to mention Trust fund recipients.

      Financial market speculators.

      Income from Gilts

      Everyone else who earns passive unearned income.

      It’s quite obvious to me that society apparently is all to keen for a class of rentiers to draw a living income and not contribute to society.

      Not to mention income “earned” from doing nothing useful but through institutional positioning.

      Or businesses which “earn” through monopoly ownership of economic rents or oligopolistic cartels extracting rents and providing really high renumeration to employees.

      All this work talk is fair enough considering output still requires labour inputs.But this has to be parallel to a total and complete gutting of all unearned income in the Capitalist system.

    15. Kevin Harding says:

      Logical fallacies and strawmen.
      SOme neo liberals support BIG so BIG is neo liberal.
      UNiversal citizens dividend will make people satisfied to contribute nothing
      To enjoy relative poverty .As if!

    16. Kevin Harding says:

      THe problem is that the minimum wage has never been a genuine living wage.
      Each have not been accorded their needs although social wages above their earned income helps.
      Not even in the full employment post war era .There is a fundamental problem with
      Capitalist distribution as both Marx and Keynes reflected.Profits in conflict with wages.
      Wages being both costs and income for employers.
      UNiversal citizens dividends in a progressive tax context can help.
      IT does not preclude other full employment strategies including job guarantees.
      PAid work and investments do not necessarily add to societies wealth and unpaid labour
      human and machine often does as well as human labours of the past.

    17. Neil Wilson says:

      “society is completely non fussed about them”

      If society is non fussed about them why are there armies of people desperate to tax them when there is no need to?

      ‘Unearned income’ is resented whichever end of the spectrum it sits at. The problem the Left have is that they can’t see that their anger against ‘the rich’ comes from precisely the same ‘quid pro quo’ human requirement that anger against unearned income guarantees comes from.

      Neither have earned their loot.

    18. Kevin Harding says:

      Some people are full of resentment. It is a useless quality literally worthless.
      Those who resent old age pensioners inflation protected basic income guarantees would no
      doubt resent paying people for demanding to be paid to act or paint whether it was labelled a
      Job guaranteed position or not .
      Others run 401 marathons for a charity supporting victims of bullying.
      Us humans are a contrary lot often individuals give and resent from one day to another.

    19. John Tillson says:

      Bill, It was a great pleasure for me to meet you last week in KC. I have been reading your blog for the last few years. You have changed my perspective on the world and especially on the potential role of government. I especially appreciate your work on the job guarantee. Would that Hillary C understood what government could do in the face of the economic dislocations caused by trade policies. The JG would provide her an initiative that could transform her campaign.

      FYI, there is an article in today’s NYT, which lays out the problem without recognizing the potential for a job guarantee program.

      http://www.nytimes.com/2016/09/29/business/economy/more-wealth-more-jobs-but-not-for-everyone-what-fuels-the-backlash-on-trade.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=photo-spot-region&region=top-news&WT.nav=top-news&_r=0

      John Tillson

    20. Jengis says:

      Surfing as part of a JG program? Perhaps as an event at a community organised festival that JG workers organised but surfing just for the sake of surfing isn’t benefiting the community at large, other than of course having an extra person receive a disposable income that they can spend and that individuals personal and mental wellbeing.

    21. Brendanm says:

      Bill seems to describe the JG as run by Jesus. We equally have to be interested in the JG as run by Tony Abbot.

      For example Medibank was very cleverly designed with bulk billing compulsion etc to gain social acceptance and withstand conservative hostility. So now 40 years after introduction conservative attacks consist mainly of stealth whiteanting of the stability features of the program; co-contributions etc. The main effect of such tinkering has been to make the program look less affordable by pushing up the rents extracted by the industry.

      It seems plausible that a poorly designed JG could devolve to either something hard to distinguish from communism or fascism in the wrong hands. What are the design elements needed to make it truly resilient and able to properly recognise the full spectrum of human productivity?

      One aspect I would think critical would be maximum decentralisation of its administration. Something like a universal right-to-hire would be a great stabiliser, being something that once established few would be willing to relinquish. Both Bill and Neil seem to envisage administration by some form of centralised authority, “… we allow struggling musicians, artists, surfers, Thespians, and the like to be able to be employed within the Job Guarantee”. This is great if “we” is local people turning up to local gigs and art galleries and surf contests. It is less wonderful if “we” is some arts council in some distant capital city.

    22. Neil Wilson says:

      “Both Bill and Neil seem to envisage administration by some form of centralised authority”

      Not at all. In UK terms I would see the administration operating along the lines of the Future Jobs Fund arrangement which matched requirements against jobs constructed and offered by third and public sector operations across the country, with the handoff managed via the existing employment service.

      For example a group called ‘Artswork’ delivered 105 jobs to the scheme in two areas of the country in which they operated.

      Small. Targeted. Local.

      In terms of payment the local employer would simply file the relevant timesheet into the main PAYE system with a zero wage paid. That then triggers a Job Guarantee payment via the normal social security payment system. That pathway already exists in the UK to support Tax Credits.

      The restriction on the FJF was that the entities hiring had to be hiring outside the main private sector and they had to be new positions not otherwise funded elsewhere. So if your payroll was approved there is no reason why a normal referral from the employment service wouldn’t work – just like any other job advert.

      There will be a core of people for which a match has to be made more directly, but again that already exists within the employment service.

      All social functions exist within the context of politics and have to be defined and defended in those terms. One of the characteristics of the discussion of income guarantees is the studious avoidance of the simple fact that none of them have ever survived the political test. They always fail because it fails basic reciprocation. The Job Guarantee defends against that by providing a clear contribution to the social pool and a PR service that lets everybody know what the individuals are doing. If your society has become so degenerate that it won’t accept that contribution and demands ‘rock breaking’, then ultimately it is going to rip itself apart in social collapse anyway.

      To suggest that JG will always become workfare in the same breath as suggesting people will be allowed to keep ‘free money’ without doing anything has always struck me as the one greatest demonstration of the human ability to believe two contradictory things at the same time.

    23. Brendanm says:

      @neil

      “To suggest that JG will always become workfare …”

      Not suggesting that at all, just that the enemies of equity will not all become reasonable overnight. Being entirely on board I would like to know how individual citizen to citizen value exchange is supported under the mechanisms advocated by Bill or Neil.

      My wife makes awesome patchwork quilts. Many dozens of work hours in each one. Since there is little or no financial market for these items she gives them away to newly weds, new parents, the infirm etc. Noone ever refuses the gift. There are many such craftspeople just here in Adelaide. How would they get recognition under current JG proposals. Would it have to happen under the quilters guild with city council accreditation and other red tape. Would some endless parade of busybodies get to offer judgement on the value her quilting or could an individual client sign off on JG funds because they personally value the quilt they are getting?

    24. Neil Wilson says:

      “How would they get recognition under current JG proposals. ”

      You need to look at it from the other point of view. How does the individual demonstrate to their peers the value of their work such that it is seen as being worth the JG wage?

      This is always the problem when discussing the JG with people who have an excessively individualistic outlook. It’s not about you. It’s about how others see you and what you do.

      Now it may be that others see no value in what you would like to do. In which case you will have to do something else to impress them and take your second choice activity, or convince them via sales techniques that you do something of real value.

      The one thing the public sector has always been bad at is its PR game. If you look at commercial companies you will see that they put out propaganda on a regular basis demonstrating what good social citizens they are, how much they have raised for local charities and generally how responsible they’ve been. They spend money maintaining their image and get those reports out into the press.

      The public services have to do the same thing. Constantly reminding people that they are there, what they have achieved and ensuring people value their existence.

      Operational the Job Guarantee does one thing. It buys spare labour hours at a set rate. That’s functionally all it does. The transformation of those labour hours into labour services that society values is the job it has to do to maintain social cohesion – because of the human innate need to see reciprocity. So you have a labour hour transformation function – something that generates jobs for people as they are, rather than hoping people match existing jobs – to generate value and then you have a PR system which is there to keep people onside that JG workers are fulfilling their side of the social bargain.

      Others will judge you – because we all maintain internal balance sheet of who we think owes us and who we owe. That’s how our society holds together. Give and take.

      Society will fail if there is a move towards excess individualism (you *must* value what I do) or excess de-individualisation (you *must* do what I say). Like maintaining genuine democracy there will be a constant tug of war to keep the social relations in the sweet spot between those two extremes. That’s where the JG sits, and is part of its job as I see it.

    25. Brendanm says:

      @neil

      “Others will judge you”

      The question is who do I need to convince. Some people or “these” people. For many, “these” people will be your worst enemies.

      I would think a touchstone for the JG is to guarantee Australia’s Aboriginal people can access it while remaining in their traditional cultural setting. Remember, their current JG is in a prison cell.

    26. Neale says:

      William Morris said a lot (gender failings aside) in “Useful Work versus Useless Toil” https://www.marxists.org/archive/morris/works/1884/useful.htm

      This part seems apposite: “Here, you see, are two kinds of work – one good, the other bad; one not far removed from a blessing, a lightening of life; the other a mere curse, a burden to life.

      What is the difference between them, then? This: one has hope in it, the other has not. It is manly to do the one kind of work, and manly also to refuse to do the other.

      What is the nature of the hope which, when it is present in work, makes it worth doing?

      It is threefold, I think – hope of rest, hope of product, hope of pleasure in the work itself; and hope of these also in some abundance and of good quality; rest enough and good enough to be worth having; product worth having by one who is neither a fool nor an ascetic; pleasure enough for all for us to be conscious of it while we are at work; not a mere habit, the loss of which we shall feel as a fidgety man feels the loss of the bit of string he fidgets with. “

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