Monday, 15 July 2013

Scoubidou and the Protestant Work Ethic

The debate around the presumed inevitability of a basic income is beginning to ramp up. Expect a Horizon or Newsnight special sometime soon. The fundamental premise is that late capitalism cannot provide full employment in an advanced economy, largely because technology substitutes capital for labour (automation) and simultaneously leads to commodity deflation ("the coming abundance"). This pincer movement makes more and more people surplus to requirements as labour, but maintains their usefulness as consumers, assuming basic commodities remain within their reach.

We have now reached a point in history where capital, the inventory of surplus value, is so large it struggles to find opportunities for further productive investment. Simultaneously, the number of people needed to keep growing that inventory is declining due to continuing productivity gains. Some argue that the growth in value over the last 30 years is mainly due to a massive expansion in productive (i.e. non-subsistence) labour through the process of globalisation and trade liberalisation, but I'm of the school that thinks the main driver has been technology. Double-digit Chinese growth rates were less the product of farmers becoming industrial workers and more the improved productivity of Chinese industry. The growing surplus of labour we see in advanced economies will eventually appear in the developing economies too.

In such a world, where an increasing minority are denied the opportunity of a job, and thus access to wealth, we put democracy in jeopardy (the Chinese may be playing a long game by constraining democracy now). If we are to preserve a society based on the ideals of merit and equality of opportunity, then we must either more equitably share work or we must pay people not to work. In reality, a subsidy is a better solution for the rich, i.e. those who own capital now, than ceding their relative monopoly over the shrinking pool of future jobs. Despite the hurdles of intern programmes and professional closed shops, sharing work would mean sharing access to wealth.

The main subsidy options being considered are the job guarantee and the basic income. The former means providing work when the market cannot, not unlike the old idea of outdoor relief. Pro-social work (digging ditches, tidying-up parks) is provided by the state until such time as the private sector can deliver full employment again. The latter means providing everyone (i.e. all citizens of the state) with an unconditional income, independent of employment. For people who work, tax would be applied only on their additional income. A job guarantee attempts to address a surplus of labour. A citizen's basic income attempts to address a surplus of wealth.

The job guarantee is popular among Moden Monetary Theory (MMT) and post-Keynsian economists, who argue that governments have the means to achieve full employment without high inflation. However, the popularity of the job guarantee concept among social democrats and neoliberals is more to do with traditional notions of the disciplining of labour: not leaving "hands idle" and government as the employer of last resort. The basic income has historically been more popular among the libertarian left, as it assumes that individuals should be allowed to decide on their level of labour contribution. Despite evidence of its practicality and hidden benefits (e.g. the spur to innovation and entrepreneurship), the basic income tends to be dismissed as hippy madness that would produce a nation of couch potatoes, rather than fit workers trained for trench warfare.

A fundamental difference between the two is that the job guarantee is paid at a sufficiently low wage to encourage migration to private-sector jobs once the economy improves. In other words, slightly less than the minimum wage. It does not necessarily require coercion, in the sense of obliging everyone to work, but there is an obvious tendency towards the labour battalion given the poverty wages and the manual bias of much of the work. The chief modern argument against the job guarantee is that it is based on traditional assumptions about cyclicality: the periodic move from full employment to unemployment and back again. It does not address secular trends in respect of automation and commodity deflation, and is thus guilty of  "fighting the last war", being more appropriate as a response to the temporary depressions of the 20th century than the structural unemployment of the 21st.

In contrast, the basic income provides a mechanism to transition to a world where most labour is surplus to requirements, either in terms of specific individuals or a gradual reduction in the working week. A basic income also has the potential to be redistributive. Whereas a job guarantee wage will always gravitate to the lowest level, a basic income can be gradually increased to reflect two "social dividends": the gradual reduction in average working time, and the growth of GDP. In other words, the growth in wealth due to productivity could be more equitably distributed, rather than being disproportionately captured by owners of capital. A basic income thus creates a positive tension with the distribution of work, and thus wealth, whereas a job guarantee is concerned with temporary alleviation only and is deliberately parsimonious.

The current obsession with "skivers" may prove to be the last hurrah before the introduction of some form of income subsidy (the "universal benefit" is obviously suggestive). The suspicion must be that workfare will gradually evolve into a job guarantee - i.e. the left will pitch it as "the right to work" while the right will revert to the Biblical "he who does not work, neither shall he eat", and both will bang on about the need to cultivate a "work ethic". The problem is that such moralistic coercion will become increasingly pointless as jobs disappear and more and more "strivers" are sucked into its scope. Indeed, there is a strong argument that we'd do better to encourage a "workshyness ethic". The suspicion is that the job guarantee will mutate in the medium term into permanent boondoggles [*] and mere gestures, not unlike the ritual of signing-on.

That said, the job guarantee (and the work ethic) makes perfect sense if your goal is to defend current wealth inequalities, though it can only be a delaying tactic. Eventually, it will evolve into voluntary work and an unconditional basic income. The real prize will be to ensure that the latter is kept sufficiently low to ensure that productivity gains disproportionately accrue to the owners of capital. Over the coming years, we can expect neoliberal ideology to frame the basic income as "Utopian" and the job guarantee as "pragmatic".

[* - In the US, the term "boondoggle" is used both for pointless projects (it originated in the use of handcraft courses as temporary job creation during the New Deal) and for Scoubidou, the pastime of plaiting and knotting key-rings and other knick-knacks using leather strips or colourful plastic tubes.]


  1. Worth noting that many of the MMT crowd actually claim to be happy with the idea of a basic income, but see the "job guarantee" as more politically possible - aka pragmatic...

  2. Ah. I was just thinking you were being a bit unfair on neoliberals, saying to myself "our mutual neoliberal friend Mr Worstall is in favour of such a wage," when he cropped up in the links, saying it has to keep low. Ah well. At least he's in favour.

    On the feasibility front, consider Tory policy on Child support for 40% taxpayers - partly a money saving, but without being a conspiracy theorist, partly an attack on universal benefits.

  3. Right libertarians like Tim Worstall tend to be cool about the idea of a basic income, partly because they despise the moral basis of the work ethic (it pollutes the purity of marginal utility) but more because they assume it would be self-regulating. If the share of GDP that goes to the basic income pool is fixed, then an increase in those opting out of work (i.e. taking out more than they put in) would reduce the income level for all participants.

    As Tim says in the Forbes piece linked to above, "the clincher for me is that it would eradicate those huge marginal tax rates that people at the bottom of the labour pile face". In other words, the combination of a basic income close to subsidence levels and low marginal tax rates for low wages would oblige all but the ascetic to work some hours. A basic income would likely lead to the abolition of the minimum wage, as the safety net is presumed to be provided for by the BI. A wage of £1 an hour (with tax at zero or a single digit percentage) would be entirely feasible.

    All discussions around basic incomes boil down to a) the inability of the market to provide a regular income for all, and b) the obligation to distribute the benefits of technological advance (which is a collective endeavour, despite the ideological worship of inventors/entrepreneurs) to all members of society.

    Reactionaries (i.e. classic conservatives) either refuse to accept the truth of 'a' and/or insist that the failure is the fault of the individual ("just deserts"). Right libertarians accept the truth of 'a' (albeit with a variety of explanations), but insist that 'b' (the obligation) is weak. The difference is simply the ground on which they choose to fight the battle. The object is to preserve wealth and power in the hands of a minority.

    The left libertarian perspective has traditionally seen basic income as a form of social dividend - i.e. the fruits of progress being shared equally. The state socialist (and labourist) perspective has historically been suspicious of basic income as undermining the nobility of labour. Neoliberals (and now "predistributionists") continue to believe that "arbeit macht frei".

    A basic income is coming. The fight is over whether it will be progressive or regressive in terms of the distribution of wealth and power.

  4. I solved this of course, and have crushed both sides of this bloggers frame:

    GICYB is just open source software.

    Once built states adopt it and set their own settings.

    It can be UBI (no work)

    It can be JG like MMT suggests (non-profit jobs)

    AND it can be what I want (Uber for Welfares - only private sector jobs)

    This way we all just agree to see which way works using same software.

    Of course, you know MY WAY will produce the most consumption and wealth for poor and minorities, so UBI and MMT JG will die off quickly.

    1. Solved, except for the small matter of not treating people as means rather than ends (see Kant, categorical imperative etc). In practice what you propose is a Hayekian spin on workfare, with software magically removing the need for any government involvement. Less charitably, this looks like a libertarian fantasy of a guilt-free slave market.

      It is also technically infeasible. I spent over a decade working on very large recruitment software systems and can assure you that: a) matching candidates and vacancies is nothing like eBay (there is no common reference for any product); and b) Monster and other job boards are just lead generators, not full-cycle process executors. There is a reason why recruitment agents have not been disintermediated by the Internet.

      I'm also not clear as to why you think this would be "open source" software, unless you just regard that as a synonym for free. A genuine opensource approach would soon produce multiple branches, seeking to address data and process variables specific to particular job sectors. This would quickly take on a class dimension and lead to the unskilled getting the "shitty end of the stick".