Capitalism does not permit an even flow of economic resources. With this system, a small privileged few are rich beyond conscience, and almost all others are doomed to be poor at some level. That’s the way the system works. And since we know that the system will not change the rules, we are going to have to change the system.
Martin Luther King Jr.
There is nothing more guaranteed to raise the heat in any political discussions on social media than the subject of Universal Basic Income versus the Job Guarantee. From the first Muslim caliph, Abu Bakr (who actually did introduce a guaranteed minimum income) to many others like Thomas Paine, Emperor Napoleon Bonaparte, John Kenneth Galbraith and Martin Luther King, many have suggested that the solution to poverty would be the introduction of a guaranteed annual income. With the persistent rise in poverty and inequality, it has become a hot subject in political and public circles. The trials of erroneously called ‘universal basic income’ schemes in Finland and Canada now curtailed are often the subject of fierce debate. For some, such schemes are seen as offering hope and come with great promises related to giving people a stable income to allow them choices in life and free them from the slavery of work. They promise people more resources and greater freedom to enable them to rise out of their poverty.
In the face of politically induced increasing homelessness, food bank use, income poverty and precarious work not to mention the perceived threat of automation they seem to offer to many a panacea to the ills of an exploitative capitalist system which has been aided and abetted by successive governments through the pursuit of liberalisation and deregulation. Successive governments, having embraced with enthusiasm the principle of “free markets” and wealth trickledown as a means to higher living standards and poverty reduction, are now, in the face of rising discontent and fear for their political tenure, seeking solutions.
Increasingly, a universal basic income is on the political agenda. On the left, it is being pushed as a means to fight poverty and the erosion of stable jobs, with pensions and benefits while on the right it is viewed as a way to restructure welfare systems. The Welsh Liberal Democrat leader Jane Dodds recently said that we need to look for progressive solutions such as a ‘Universal’ Basic Income. In Australia, the Greens have recently announced their plans for a trial of a UBI in New South Wales. John McDonnell, Labour’s Shadow Chancellor, is set to include a pilot for one in the next election manifesto. And, only this week, the New Economics Foundation thinktank in the UK has proposed that the tax-free personal allowance should be scrapped and replaced with a flat payment, ‘a weekly allowance’ of £48 a week paid to every adult over the age of 18 earning less than £125,000 a year (which has to be said cannot be described as universal). Of course, such ideas are scarcely off the drawing board and the trials that have taken place have been cut short for political reasons and proved inconclusive.
One cannot deny that poverty is indeed a scourge on society (and has been so down the ages) and the solutions to it in recent times have rested on political ideologies. The post-war consensus brought UK governments which pursued full employment policies and saw the creation of a social security system to protect people in times of unemployment, illness, disability and old age as well as the setting up of public structures for publicly paid for free health and education services. State promotion of full employment as a policy objective plus its involvement in the provision of public services benefited citizens and provided solid foundations for securing not just price stability but the idea that the role of government was to ensure the well-being of its citizens in the common interest.
This was challenged over decades by acolytes of neoliberalism such as Milton Friedman who argued for a basic income with the precise intention of eliminating welfare payments, social security, public housing, minimum wage laws and public health and social care and replacing them with the private and or charitable sector.
The oil crises in the 1970s proved a defining historical moment when Keynesian pump-prime economics hit the buffers and was discredited. ‘Free’ market ideology was restored its crown and over the next four decades became the predominant economic paradigm seeking to transfer control of economic factors away from the public sector to the private sector and challenging the role of government spending, regulation and public ownership. From the 70s onwards, politicians on both sides of the political divide embraced neoliberalism. This not only radically reordered the economic landscape from one based on the real economy to one run by a casino-style banking and finance sector but also focused on the primacy of individuals as free agents in control of their own fates. The protestant work ethic was distilled into a war of divisive words – hard-working people, skivers versus strivers and welfare scroungers. Iain Duncan Smith in 2015 told disabled people they should work their way out of poverty whilst in the same year George Osborne talked about people sleeping off a life on benefits behind closed curtains and repeated the need to deliver lower welfare. Even Labour’s Liam Byrne joined in during a conference speech saying, ‘Let’s face the tough truth – that many people on the doorstep at the last election felt that too often we were for shirkers, not workers.’
This divisive language stemmed from an ideology that, since Thatcher, has promoted the individual over the collective. The neoliberal purpose to shift responsibility from the state to individuals has been served by the creation of an insidious culture of blame, which has divided society whilst allowing capital free rein to pursue its exploitative employment practices and has resulted in a massive transfer of wealth upwards aided by government itself. It has allowed governments to increasingly withdraw from their role in delivering public purpose to one where citizens are left to fend for themselves. It has done this on back of the deliberate lie of austerity, which suggests that the state finances are like household budgets and that public services depend on tax receipts. The argument hinging on affordability has, instead, allowed governments to deliver their own agendas whilst leaving citizens with reduced safety nets and struggling to make ends meet.
In such an environment it is disappointing to see the newly vitalised progressive left in the UK, albeit in seeming good faith, supporting the UBI as a mechanism to deal with growing poverty and inequality and even up the wealth stakes. Whilst offering a bold and radical vision for a fairer and more equitable future for all along with policies to address the most serious threat the human species has ever faced, it is proposing through offering UBI, to mitigate for a rotten capitalist system and maintain the status quo. Having acknowledged rightly the economic inequality and its damaging social consequences they are proposing, in effect, a deal with the capitalists. As Edward Miller who is a senior campaigner for GETUP in Australia noted a standalone UBI doesn’t challenge capitalism it simply allows continued participation in it:
“Unconditional payments enable people to become consumers without challenging the domain of the market over production. It entrenches the aristocracy of producers who serve a democracy of consumers. It does nothing to provide people who are discriminated against or marginalised from the labour market due to their location, disability or educational background with access to the means of production. People unable to find paid work under the status quo will be unable to find paid work under a UBI. It creates no structure or framework to give people a path to forms of social inclusion that financial independence alone doesn’t offer. The best a UBI does for these groups is give them a near-poverty wage and leave them dependent upon the private or charitable sector to produce the goods and services they need.”
Addressing poverty and inequality within the context of the existing political and economic framework, treats working people as exploitable and disposable in employment terms and will simply serve, yet again, the interests of capital. Furthermore, the idea that it will alleviate poverty is yet another pot of gold over the rainbow. Non-existent. It is designed to entrench poverty and the capitalist wealth and power structures, not liberate working people.
It is interesting to note, however, that our own progressive politicians remain mired in orthodox neoliberal paradigms of household budgets and bringing magic money trees back from the Cayman Islands, to pay for public services. These are feeble ambitions for introducing some form of universal basic income to address the disparities in wealth and equality instead of dealing with its source, the progressive left in the US is forging ahead with a radical plan for a Green New Deal combined with a Job Guarantee. These plans are surging ahead in popularity particularly amongst young Americans whose future lies in the balance not just in environmental terms but also in terms of their hopes for making better and more stable lives for themselves. Alexandria Ocasio Cortez, the newly elected Congresswoman when asked how such programmes will be paid for is not afraid to challenge the dominant but false household budget paradigms and talks openly about Modern Monetary Theory. A shift in the narrative is slowly taking place but, in an environment where, for now, orthodox economists and journalists are having a field day of ridicule, poking fun, unfair criticism and misrepresentation of modern monetary realities.
So, what is the Job Guarantee and why is it preferable to a UBI? What can it offer that a UBI cannot? Is it an optional extra for any progressive government whose policy choices are informed by an understanding of how a modern monetary system works?
Firstly, Modern Monetary Theory and the Job Guarantee are integral to one another. Over the last few decades, governments have allowed their economies to operate below full employment which has purposefully served capital and been detrimental to working people in terms of lowered incomes and job insecurity.
Secondly, it serves a very important macroeconomic function as a price anchor to subdue inflation and also as a stabiliser that maintains economic activity in the real economy when total demand falls below the level required to maintain full employment. A Job Guarantee works counter-cyclically, enabling nations to weather the cyclical economic downturns, an unavoidable feature of modern economies.
And thirdly, it restores the balance of power towards labour acting not only as a redistributive mechanism but also reducing the social and economic stress that unemployment brings and thus contributes to improved health and well-being. The empirical evidence of the advantages of having a job are well researched and charted and not just related to having an income.
So how does a Job Guarantee work and what can it offer? The Job Guarantee resolves the problem of the unemployment that government taxation creates, enabling the population to earn the currency. When the private sector cannot employ all workers, especially in an economic downturn, the government can step in by providing public sector employment, at a living wage, to facilitate transition to private-sector employment as the economy grows. Fundamentally, it is a permanent employment programme, fully funded by the currency-issuing national government but locally operated.
It offers local councils, non-profit organisations and charities a funding pool to create local and useful employment, payment for which then circulates in local economies. It supports local communities in the delivery of unmet needs that the market has no interest in providing because they are deemed unprofitable. It is a voluntary scheme (unlike workfare), sets a minimum floor for wages and working conditions and offers employment security and training. To hire from the pool of JG workers, the private sector must offer an improvement on the JG wage rate and benefits.
It also invites us to be creative and rethink the definition of work in relation to a changing world where technology is increasingly playing a role in production and automation is replacing humans. It invites us to challenge the idea that automation is necessarily a bad deal for humans and gives us the possibility of thinking how it can release us from drudgery and dangerous occupations to open up many other possibilities. An opportunity to define roles which have real value and worth to our local communities, with the added advantage of ensuring social inclusion and improved human interaction – from beautifying our parks and public spaces, human services and social care, people using their creativity, skills and talents in our communities to bring worthwhile contributions to their better functioning. Indeed, it invites us to examine the current boundaries of productive labour and think in terms of human enrichment.
As Pavlina Tcherneva, a leading MMT economist and expert on the job guarantee notes there are millions of people who wish to work even at the best of economic times when conventional theory says we are at full employment. An employment guarantee could play a valuable role in helping to address the serious and harmful gaps in public provision to serve the public good. She refers to it as a ‘National Care Act’ which could focus on the creation of well-being not just for individual citizens but for our communities and the nation as a whole.
Such proposals are not pie in the sky; they are serious observations about the catastrophe that economic and political orthodoxy, monetarist thought and austerity has proved itself to be and the need for a revolution in thought and action. Left-wing progressives may have their hearts in the right place in their support for the UBI, but they need to think bigger beyond mitigating for a rotten system which has failed all but the very rich and has brought grinding poverty, rising inequality and environmental degradation. It needs to show a willingness to think out of the neoliberal box and challenge those in whose interests it is to promote such schemes.
As a final thought, why not think about an employment guarantee combined with a basic, living wage income for those unable to work for whatever reason along with access to universal basic services such as education and health and social care free at the point of delivery? And that should be just the start for creating a better, kinder and more sustainable world to ensure the common good and the future survival of our species. The challenges we face are not insurmountable we just need those with the real political will to act for change.