Basic Income is the Next New Obvious
It is now generally accepted that automation renders much of human labor redundant and that that process will continue rather than abate. Automation also has the effect of lowering profit rates which, in turn, throws Capitalism into periodic crisis. Capitalists have pulled all of the monetary policy levers they have and will now have to resort to fiscal policy. Signposts abound as voices on all sides of the aisle have increasingly been expressing interest in some form of basic income.
Washington D.C. is now paying criminals not to commit crime. Silicon Valley has even joined the chorus. Y Combinator, a startup “accelerator”, recently posted a request for research to study the effects of paying people not to work.
I think it’s good to start studying this early. I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale.
Basic income will become the next new obvious idea.
We should be clear, however, that there are as many differing conceptions of basic income as there are of freedom. Many neoclassical theorists since and including Milton Friedman have supported a basic income as a minimally intrusive way to correct market operations. In their conception, cash is given to individuals in lieu of services. People are free to choose whether they would prefer education, healtchare, or hamburgers. Ergo, basic income replaces welfare, housing assistance, Medicaid, etc. The price mechanism of the market takes over and happiness is maximized by letting Capitalism do its thing. This is the Libertarian conception of basic income.
Keynesians take a different tack. For them, basic income is just another way to stimulate demand for goods by giving cash to those persons more likely to spend it. They believe that this type of redistribution is necessary when the wage share of output falls — which it has been doing for some time. But, they don’t want to replace services; they want to increase demand across the board. This is the Liberal conception of basic income.
As Socialists, we must do three things in order to relate politically to the coming upsurge of support for a basic income in a way that steers us away from the Libertarian and Liberal interpretations.
First, we must understand that it will not solve the profitability crisis that has engendered its adoption. Second, we must be clear about precisely what we mean by basic income and what we want to fight for. Third, we must develop a strategy for actually achieving it. Twenty-first Century Marxist Economics informs all three.
On the first point, we need to understand that the decrease in profitability and subsequent crises are caused precisely by the replacement of human labor by non-human labor. Paying people not to work will not ameliorate the situation even though it will ameliorate the worst effects of unemployment.
We should also outline a fully developed idea of what basic income means. We can’t just mean cash disbursements alone because cash can easily be eroded by inflation. That means that the value of basic income would be tied to the healthy functioning of the Capitalist system. Even worse, for example, if Capitalists needed more labor (during a cyclical uptick in the economy) at prices lower than the basic income, they could inject more cash into circulation and erode the value of disbursements. Basic income should be immune to price fluctuations.
Furthermore, living a quality life entails more than just having spending money. Humans want security in our health and housing as well as the chance to meaningfully express ourselves via education. We shouldn’t allow one government program to be pitted against the other, and should conceptualize our basic income as a defined benefits package. That means that, like a pension, it is guaranteed regardless of the success or failure of the Capitalist sector. It should be a basket of goods and services that encompasses all of those things necessary to thrive.
Lastly, we should not simply advocate for basic income as we define it to be applied across the economy. We need to strategically pursue a basic income in a way that ensures its implementation, protects our gains from reversal, and helps springboard Socialists to power.
If it truly is the case that automation is the root cause making a basic income necessary for Capitalism’s survival, we should use automation as a tool to liberate the masses and as a weapon trained on bringing about the end of Capitalism.
The general model would be to use input-output tables to project future impact of automation on workers. Leontief already did this in the 80s. We can run our planned intercessions as simulations and note the effects.
The aim would be to drive up the organic composition of capital (ratio of machines to workers) and therefore decrease the profit rate sector by sector. Capital will flow out of the targetd sector and the price of equity will drop. The state can then come in to run the sector at cost.
The main division we should exploit is that between productive and unproductive industries. Unproductive industries include but are not limited to finance, housing development, and the legal system. Interestingly, these are precisely the areas already receiving populist pushback — Wall Street, gentrification, and runaway cops and courts, respectively. If we lower profits in the unproductive sectors, we help keep the profit rate up overall. Banks aren’t squeezing manufacturers and adding no value, etc.
To take finance as an example, we note that Wall Street is currently under pressure from automation particularly in the areas of core banking (deposits, bill pay, and small loans) and financial advising. In order to increase that pressure we should push legislation that caps certain payments like monthly fees while also lowering the reserve requirement for online banks that aren’t in the business of loaning out money anyway. Likewise, we could also start Socialist run direct banks that compete directly on price.
There are other places in the unproductive economy that we can apply pressure to. There is no reason why we can’t start a co-operatively run alternative to Uber. A co-op could help to increase wages in the entire industry forcing large companies like Lyft and GM to automate more quickly. As profit decreases, the state takes over and replaces our ailing public transit system with a fleet of driverless cars.
If we were to automate Uber drivers out of a job, they would be pushed into competition for lower skill service jobs. That would depress wages for the lowest paid service workers even further. This is, of course, precisely what is happening under Capitalism right now. High-skill workers automate the jobs of middle-skill workers and drive down wages for the majority of the working class. The conflict between workers then gets played out over questions of gentrification.
This is where a basic income comes into play. It sets a floor that protects all workers from the effects of automation. This allows us to automate high-skill but unproductive labor without eroding the living standards of the working class. It also begins to bring parity in pay to all workers. As we automate more jobs, we raise the basic income level in line. The role of high-skill labor becomes the liberation of low-skill workers from drudgery; rather than sending the working class to the unemployment line, they should send them into early retirement.
Ultimately, this strategy is only possible if the US Left can bring high-skill and low-skill workers into the same organization with a unity of purpose. That is the task before us today and it will require some hard thinking about our purpose and values. Most importantly, it will require creative vision informed by 21st Century Marxist Economics.
