Thinking About Tomorrow: Guaranteed Minimum Income vs. Right to a Job

In Economic Planning, Economics, Full Employment, History and Politics, Inequality, Liberalism, Living Wage, Political Ideology, Politics, Politics of Policy, Poverty, Progressivism, Public Policy, Social Democracy, Social Policy, Taxes, Welfare State on October 25, 2010 at 4:56 pm

Introduction:

The Realignment Project often focuses on the furthest reaches of public policy – the big picture, the long term, the very edge of the Overton window – because these are the places where the true character of any political movement is manifest. Paul Ryan’s now-infamous roadmap is important, not because it’s a “serious” attempt by a conservative to honestly grapple with the reality of the Federal budget (it’s not), but because it reveals what conservatives actually care about – privatizing Social Security and Medicare, lowering taxes for the wealthy and spending on everyone else – and what they don’t care about, namely balancing the budget or reducing deficits. For all the protests to the contrary, these long-range visions reveal us for who we are, or at least who we’d like to be.

If the American left produced a report that got the same kind of attention – it would reveal a curious division of sentiment between two of its most cherished dreams of the future, namely the dream of a guaranteed minimum income, and the dream of a right to a job.

Background:

These two visions arguably stem from the same place – namely, the emergence of the modern Left in the early 19th century in response to the rise of industrial capitalism and the then-new phenomenon of total, lifelong dependency on wage labor. Prior to this, economic security had always had the agricultural backstops of the village commons and the parish relief, and most people weren’t completely dependent on the market for subsistence. Total disasters tended to be natural – a famine or flood or drought wiping out all in its path – and thus somehow distinct from mere “hard times.”

As scholars like E.P Thompson and others have noted, the arrival of industrial capitalism (accompanied by the theft of the commons and poor law reforms) severed the links between the poor and such primitive systems of support as had existed, leaving no recourse when wage labor dried up. This new experience of involuntary unemployment without recourse provoked two divergent responses. Tom Paine and others – including Henry George – pointed to the expropriation of the commons as an act of injustice that had to be compensated for by the provision of a basic income. Assuring every working-age person the princely sum of ¬£15 (about ¬£14,000 or $22,400 today) would ensure that economy-wide downturns would not mean individual destitution for the worker. As early as 1848, figures like Louis Blanq were looking back to the National Workshops of the French Revolution to argue that the state should “guarantee the existence of the workmen by work” through the establishment of the right to work (at a rate of 2 francs a day). In their eyes, enabling workers to work for the common good recognized the dignity and self-worth embodied in one’s labor, and a step to socialized production more generally.

Guaranteed Minimum Income – Broken Down:

The idea of a Guaranteed Minimum Income (GMI) has had a long staying power, in part because of the sweeping nature of the change it envisions. GMI goes beyond the more reformist impulses of the welfare state, which even in its most robust, social democratic form still envisions “cradle to grave” pensions as the exception to the norm of wage labor intended to support those who are either out of work (unemployment benefit) or who cannot (old age pensions, disability benefit) or are not supposed to work (traditionally family benefit and mothers, although this did change substantially following the 1960s) for a living. GMI extends state support to all, and in this light envisions the abolition of poverty and the end of dependence on wage labor through a simple redistribution of income.

For this reason, GMI has always had a strong attraction on the left. In addition to the the anti-poverty impulse that inspired the welfare rights movement and Martin Luther King Jr., social democrats like John Weeks argue that a GMI could eliminate the coercive discipline of the market place – namely, the ultimate threat of being fired and the resultant destitution – and sever the link between market labor and income, thereby taking one small step out of capitalism and a giant leap towards an economic order beyond scarcity.

Oddly enough, GMI has also had a passing popularity on the conservative side (although more the academic economic conservative side than the movement conservative activist side). Milton Friedman famously pushed the idea of a negative income tax as a means to eliminate the inefficiency-inducing welfare state bureaucracy, and in a sense seeing the loss of the presumably insufficiently productive poor from the labor market as not much of a loss. Likewise, Richard Nixon pushed a Family Assistance Plan that sought to establish a minimum income, at least for working families with children, as a way to support the “deserving poor” and divide the Democratic Party’s base.

Right to a Job – Broken Down:

In a similar way, the right to a job is similarly a traditionalist and a radical idea. In one sense, the right to a job honors the implicit social contract in America (and within capitalism more generally) that one’s right to participate fully as a citizen and one’s worth as an individual is earned through labor, what Alice Kessler-Harris and others described as “economic citizenship.” This concept also has deep roots on the American Left – in the “labor republican” ideas most notably expressed in the American Populist movement of the late 19th century.

Groups as varied as the Knights of Labor, the Farmer’s Alliance, the Greenback Party, and the People’s Party brought Thomas Jefferson’s belief in the necessity of independent yoemanry in a Republic into the world of industrial capitalism and advanced the labor theory of value as a moral claim to the supremacy of a people’s government over the forces of capital. Farmers produced the food that civilization required to exist, workers produced the goods that were traded, and through their labor had earned full citizenship – by contrast, labor republicans argued, speculators, investors, and bankers who lived off of capital income were “parasites” who didn’t morally own the property they were increasingly monopolizing, and who were undermining the republic itself through the wholesale buying of politicians.

In this sense, the right to the job goes beyond the conservative prescription of “work requirements” to argue that in addition to expecting people to work, society and the state are required to provide the opportunity to live up to the expectation by providing work to any who seek it. The right to a job also goes a step further than the traditional Keynesianism adopted by the center-left throughout the West in the 1940s – while Keynesian economic policy envisions the government acting to manage the economy through stimulating demand, in most cases it relies on stimulating private consumption to spur private employers to achieve its ends. To many Keynesians, this was an advantage in that it provided a solution to the economic crisis of the Great Depression that didn’t require statist planning and ownership of production.

The right to a job ultimately requires the government to act as an Employer of Last Resort, directly hiring the unemployed and competing with the private sector as an employer of workers and a producer of goods and services. Not only would the right to a job therefore envision the end of unemployment, but it would also end the monopsony (a single purchaser – in this case of labor – as compared to “monopoly,” a single seller) position of employers. This would also work to diminish the disciplinary powers of employers, creating a countervailing force in support of workers.

Devil in the Details:

So how then does the left choose between these two compelling dreams?

On a purely political level*, the choice is pretty clear:

Politically speaking, the guaranteed minimum income is poison. When Richard Nixon attempted to establish the Family Assistance Plan as a way to split the Democratic Party’s base between the working and non-working poor, he ultimately succeeded in doing nothing more than enraging the country. Even low wage workers who would massively benefit from his program wrote thousands of furious letters to the White House denouncing the idea that non-workers should be paid at all. The idea that 1972 when a Democratic Congress and a supportive presidency seemed poised to establish a GMI represented a lost opportunity to move beyond the cramped confines of the American welfare state – a view expressed by many left of center activists – doesn’t hold in the face of massive popular opposition. This negative impression continued throughout the 1980s and 1990s at about 60-70%.

By contrast, the right to job is enduringly popular. Even after the decline from its height during the New Deal-influenced 1930s and 1940s, a consistent three-fifths of the American people have continued in their belief in the right to a job, even in the midst of McCarthyism or the dawn of the Reagan Revolution. This commitment stems not merely from the policy’s reflection of longstanding cultural values of work, but also I believe because it makes visible the bilateral nature of democracy inherent in all forms of social insurance. When welfare programs are both designed and talked about in terms of a relationship between the state as provider and welfare clients as beneficiaries, part of the reason that we see the creation of anti-welfare politics based on a tax-payer/tax-spender divide is that the individual is taken out of the picture in favor of a state that taxes and a population that benefits. When programs are designed instead to frame everyone as common contributors and common beneficiaries, they begin to think of themselves as part of a people’s government who are actively engaged in a program of mutual protection and benefit.

In the case of direct job creation programs, at the same time that beneficiaries can use the cultural importance of work to legitimize their public benefits as earned through labor, taxpayers are made immediately aware of what they are getting in return in the physical form of roads, bridges, tunnels, libraries, schools, hospitals, airports, housing, and the like. They are also more likely to see themselves as potential beneficiaries when they think of themselves as workers who might be temporarily unemployed and in need of a job as opposed to non-workers on benefit.

* (There’s a practical issue that GMI tends to reduce work participation, whereas the right to a job envisions full employment and full production, which would have significant consequences for GDP growth, tax revenue, and so forth, but that’s a subject for another time.)

Conclusion:

As a firm believer in Max Weber’s description of politics as the “strong and slow boring of hard boards,” I believe that the roadmap of the center-left should be to embrace the right to a job for all, and a guaranteed minimum income for all workers. As I have shown, the former is politically popular even in conservative epochs; the latter is also politically viable when we consider that two-thirds of Americans support raising the minimum wage to $10 an hour (including 47% of Tea Partiers!), and the nigh-universal support for the Earned Income Tax Credit. In so far as both dreams should be given scope within a larger political program, this is a compromise that has some legs.

This roadmap – the idea that no one who works should live in poverty, and that no one who wants to work should be unemployed – is one that both transcends the immediate limitations of the political moment and can serve as a roadmap to victory as well.

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  1. I suspect you don’t know what is missing from your argument.

    In a word, REALITY. It will finally become clear that it makes no difference what the opinion polls say, or what social conditioning, upbringing, cultural mores, education or media propaganda implant in the minds of the submissive. Economics, since the industrial revolution, is a product of technology, and technology is based on physics, which reflects the nature of REALITY.

    Reading your article was a real roller coaster ride for me. I’ve spent years searching for people who might have a glimpse into what is really going on here, and only recently, with the help of the internet, have I stumbled upon some folks who seem to have a clue. So when I read your brilliant analysis of the problem as being a choice between guaranteed incomes and guaranteed jobs, I was elated: here was a truly Olympian thinker!

    But the fall was even more dramatic. How can someone who can eloquently state the problem, and who seems to have a grasp of at least some of the history, suddenly make the conscious decision to support the solution of an imbecile?

    Here’s the situation. We, collectively, are all in this broken down vehicle stalled beside the road. All the politicians, pundits, and great “leaders” of humanity have set themselves up on a platform, and are arguing about how to get our vehicle going again. Of course, you’ve got your religious fanatics of various sects proclaiming that we’ve reached the end of the road, so prepare to meet thy maker, or chanting in ancient tongues to fix our spiritual problem. But such idiocy has been with us from time immemorial, so that’s no surprise.

    More disturbing is the argument among the pundits, who conjure various theories — all aimed at inflating their own personal glory — of locomotion, supposedly aimed at getting the vehicle moving again.

    But most disturbing of all are the politicians, constantly polling the static passengers on their opinions of what needs to be done, and then formulating half-baked half-way policies over which they wrangle endlessly with ever more powerful and efficient tools of persuasion — all the while enriching themselves for their great “contributions” to humanity.

    Of course, the solution is obvious. An engineer simply needs to open the hood and look at the engine (in our parable this is the Economy). He then makes the necessary tests and measurements, based on an understanding of mechanics, and discovers what adjustments are necessary to make the machine function properly. Maybe you don’t get it, so I’ll spell it out. It is not a question of the opinions of the ignorant. It is a matter of knowing how things work.

    Fortunately for us … and this is what is missing from your argument … we have such an engineer available in the person of Major Clifford Hugh Douglas. After working on major engineering projects in several countries, he was asked by the British air force to analyze some problems with the accounting of an air force base during World War I, and in the process he figured out the flaw in the capitalist system of economics, and proceeded to write many books describing the problem and its simple solution. Books like Social Credit, Economic Democracy, and The Control and Distribution of Production, among others. And the surprising thing is that he solved the problem of free-market capitalism without resorting to the central control and coercion of socialism (and communism) almost 100 years ago!

    If Douglas’ ideas had been adopted when he printed them after the Great War, humanity could have avoided the catastrophies of the Great Depression, World War II, and our current (and, apparently, future) cataclysms … all the direct results of the flaws inherent in the capitalistic free-market system.

    So what is the solution of Major Douglas, which he called “Social Credit”? OK, I’ll save you the trouble of reading his books — although they are the clearest explanation of economic principles you will find — and just tell you. It is basic income guarantees, in order to create a free-market system in which everyone has purchasing power, which in turn makes the free-market system work with incredible efficiency.

    Finally, regarding your decision to opt for guaranteed jobs — because it’s “too hard” to do anything else — I’ll leave you with a quote from John Hargrave, one of the first to recognize that Douglas had found “the critical path”, that is, the REAL solution to humanity’s toughest problem, fixing the economy: “A call for full-employment is a call for War.”

    If you don’t understand this statement, read the books of Major C.H. Douglas.

    Thanks for a great analysis of the problem in your article. Unfortunately, the option you chose is not really an option, because guaranteed jobs won’t work (as should be obvious by the 21st century, since that’s been the solution of choice, on both sides of the aisle, all over the planet since the dichotomy was recognized in the 18th century). The reality is, guaranteed incomes are the only choice.

    • Wow, I couldn’t disagree more. Douglas did point to an important problem with capitalism – namely, the mismatch between production and wage consumption – but I don’t agree that his solution is the only one.

      Nor do I agree that full employment necessarily means war – most of Europe enjoyed peace-time full employment for thirty years following WWII, and the Swedish system of direct job creation and labor market policy did so for about sixty years following the Great Depression. There are many ways to deal with his dilemma – one, ensure that wages rise in step with production/productivity through a combination of wages, progressive tax policy, and the welfare state, two, influence production towards a lower-margin/higher-volume position, such that prices are lower and thus easier for more people to buy, three, have the state invest the excess capital production in long-term infrastructure (i.e, build bridges not bombs), four, have the state redirect excess capital production into the public sector through the production of new public goods and services, etc.

      I believe that guaranteed jobs is an elegant solution that solves the problem of unemployment in the direction of higher production of public goods and services and long-term infrastructure, which we are badly in need of.

      Finally, I disagree with your argument that guaranteed jobs has been the solution of choice since the 18th century. The dominant classical liberal paradigm does not allow for guaranteed jobs – as it denies the possibility of involuntary unemployment. Only during the Great Depression was any serious commitment to the end of unemployment entertained – and here, only the Scandinavian countries made a long-term commitment to direct job creation. The U.S made a temporary effort in the form of the WPA and similar programs, but turned away from any commitment in 1945-6. Even in Europe, the only commitment that was actually made was a commitment to demand management such that full employment should exist through private employers (the U.S didn’t even go that far). This more limited commitment broke down in the 1970s, and hasn’t been a part of economic policy for the last 40 years.

      And I do think that public opinion matters in a democracy. In the U.S, the idea of a guaranteed income is disapproved of by overwhelming majorities – in the face of that, you cannot pass a guaranteed income into law and sustain in across several elections. By contrast, Americans have a long and enduring belief in direct job creation.

  2. […] that the EITC should be expanded into what is effectively a Guaranteed Annual Wage (as opposed to a Guaranteed Minimum Income), I think we have to both expand the scope of our ambitions and lift the level of our […]

  3. […] there are certain coherent themes in popular attitudes to social welfare. As I’ve discussed before (and this has been studied by any number of political scientists, including Theda Skocpol and […]

  4. […] this fashion, a Universal Credit could serve as the foundation of a genuine Guaranteed Annual Wage, which would decrease inequality both by lifting up the poor and by providing a cushion for those […]

  5. […] motherhood by forcing a crisis in the welfare system, hoping that the outcome would be a national guaranteed minimum¬† income guaranteed by right. This backfired horribly in part because a GMI ran right into popular belief in […]

  6. […] can see in the video clip above – is an inversion of the classic labor republican ideology of producerism, whereby the wealthy become the producing classes and workers and consumers are turned into […]

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