One of the underpinning arguments behind those arguing for a Basic Income Guarantee (BIG) , alternatively known as the Universal Basic Income, is that automation is creating a new technological paradigm, where, as Paul Mason describes it:
information technology is preventing the normal adaptation process, whereby capitalism — as a complex system — reacts to crisis, to the exhaustion of old business models, to the low profitability of old businesses and old sectors.
As the argument is very coherently put by Mason, I will concentrate on his presentation of it. He argues that information technology does three things:
First, it dissolves the price mechanism. The economist Paul Romer pointed out in 1990 that information goods — if they can be copied and pasted infinitely, and used simultaneously without wear and tear — must fall in price under market conditions to a value close to zero.
[…] The second impact of information is to automate work faster than new work can be invented.
Around 47% of all jobs are susceptible to automation, say Frey and Osborne (2013). And information does more to transform work: it makes it modular, loosening the link between hours worked and wages; and it makes work possible to do outside the workplace — blurring the division between work and life.
[…] Fortunately there is a third impact of info-tech. It has begun to create organisational and business models where collaboration is more important than price or value. […] But as soon as technology allowed it, we started to create organisations where the postitive effects of networked collaboration were not captured by the market. Wikipedia is the obvious example; or Linux; or increasingly the platform co-operatives where people are using networks and apps to fight back against the rent-seeking business models of firms like Uber and Airbnb.
Let us look at these in turn. Mason argues that the near-zero marginal costs of unit production means that there is “a dramatic downward impact on the cost of production of real things, and the same vortex of cheapening happens everywhere.” He argues that “capitalism responds by inventing mechanisms that put a price on this zero-cost product. Monopolies, patents, WTO actions against countries that allow copyright theft, predatory practices common among big technology vendors.”
This is a fallacious argument, because it confuses the marginal unit production costs with the overall product lifetime costs. As technology matures marginal production costs always fall, and this has typically been associated with a shift of production from developed to developing countries. The shift of production to lower wage developing countries already represents a move, from the point of view of workers in higher wage developed countries, towards dramatic price competition with which they cannot compete.
From the point of view of developing countries, whose economic factor endowments includes cheap labour, but less access to investment capital or high technology, then starting production of technologically mature products allows them to move up the economic food chain at low cost.
From the point of view of developed economies, whose economic factor endowments include higher labour costs but greater access to investment capital and a more developed technological base, then research and development allows the possibility of innovating to create entire new markets. Much research and development may fail to reach the market, but the premium profits gained by intellectual property rights for new technology areas that are successful, means that overall this is a viable economic growth strategy.
Mason’s argument fails to take into account that technologically innovative products will command a price premium, not only because people are prepared to pay those prices for desirable products, but that patents, commercial confidentiality and premium brand value will allow early entrants to recover their R&D and launch costs. The marginal unit costs of production will therefore only be a relatively small component of price for innovative products. As technology matures, whether it is TV sets, mobile phones, computer disk drives or motorcycles, then the early innovators will drop out of the market, as production moves, typically, to lower wage cost countries.
There is nothing inherently different about information technology in that the marginal unit costs of production may approach zero, but the product development costs of innovation are still recovered when the technology can demand an initial price premium. Corporations will continue to invest in science based R&D and technological innovation in the developed countries to leverage on the legacy of knowledge based and physical infrastructure, and because the higher material standard of living attracts the most highly skilled staff necessary for those activities. Particular areas of future growth are likely to be pharmaceuticals and bio-technology, agricultural research and telecommunications in the broader sense of exploiting the advantages of the networked world. The entertainment industry, for example games, TV and film, but also sport and sport science are also growth areas.
To consider his second argument, about the blurring of work and leisure, Mason underestimates the underpinning of the knowledge economy by the material economy. In a Guardian article he uses this example:
You can see the beginnings of the separation on any business flight. Men and women hunched over laptops and tablets, elbows so close that if it were a factory it would be closed on health and safety grounds.
But it is a factory, and they are working – some of the time. They flip from spreadsheet to a movie to email to solitaire: nobody sets a timer – unless in one of the time-hoarding professions like law. At the high skill end of the workforce we increasingly work to targets, not time.
Let us put to one side the naïve conceit that business travelers on a foreign trip are “working in a factory”, and consider the scenario. They are sitting on an aircraft, which is a high tech product at the top of the foodchain, that aircraft is the product of a vast, organized collaborative production network, that has involved mining, petrochemical extraction, raw material processing, machine tool design and production, design and production of instruments, engines, software, seats, and catering equipment. It has involved the development of aviation standards, communications standards, it has involves testing and accreditation. It is flown and serviced by skilled staff, who have travelled to work – needing to be on time – in cars or on public transport, those aircrew will stay overnight in hotels, staffed by other workers. The airport employs thousands of service technicians, air traffic controllers, restaurant staff, cleaners, security staff and baggage handlers. The computers our travelers are working on have also been designed and manufactured. The telecommunications protocols that network their computers together are also based on a vast industry, also at the top of the technological foodchain, where protocols are designed and improved upon, spectrum auctioned at dizzyingly high prices, forcing more innovation for more efficient use of bandwidth. A huge industry exists in the design, manufacture, system integration and deployment of the communications networks, from switches to base stations. The computers and telecommunications protocols are exposed to malware and other security threats that also requires an industry developing and deploying countermeasures.
Mason has made the mistakes of generalising from his own work experience, and entertaining the conceit that he is more skilled than the engineers and technicians whose work provides the platforms upon which he types and travels.
Mason argues that
The automation revolution is possible, but without a radical change in the social conventions surrounding work it will not happen. The real dystopia is that, fearing the mass unemployment and psychological aimlessness it might bring, we stall the third industrial revolution. Instead we end up creating millions of low skilled jobs that do not need to exist.
Certainly, there is a challenge for a developed country whose factor endowments favour high-skilled innovative jobs, in ensuring that the economic benefits are spread across society and not isolated in high tech bubbles. However, the high wage sectors of the economy also provide a market for other productive work.
The amount of labour required to reproduce the living standards of our society is not a fixed constant, as it varies with cultural expectations. We cannot assume that lower production costs will always be desirable. The growth of markets for tattooists, butchers, cake decorators, bakers, brewers and candle makers is a function of a growing demand for higher quality hand-crafted products. Many diary farms have responded to the collapse of prices for milk by moving up the production chain towards craft cheese and yogurt production, these attract premium prices greater than those for mass produced products.
Automation need not lead to a reduction of the amount of human labour from the production process, it can lead to a reduction in raw material, component, transport and informational costs to allow for the expansion of areas of the economy where human creative labour is valued.
Similarly, the advances in medicine and the ageing population are an opportunity for an expansion on the care and social services sector, where government policies and priorites have deliberately suppressed wages below their market value. A shift in social and political priorities to value and remunerate the care sector as professional and skilled jobs, paid for by taxation, would lead to a massive expansion of employment opportunities. The fact that these jobs are currently low paid does not mean that they always need to be, and the staff are already professional, but greater reward and recognition would increase their status and make these sought after jobs.
Mason’s third point about information technology creating emerging networks of cooperation outside of the market is a bit starry eyed. As a professional engineer I once worked on a system for a country with a socialist government, who had specified that wherever possible Open Source software, such as the Linux operating system, should be used. This was more difficult and created more work, not less. He underestimates the degree to which technological innovation, and then integrating that innovation into successful products, requires structured organizational cooperation on an industrial enterprise scale. Perhaps new apps might be developed by a loose collaborative network, but for example to shift the telecommunications infrastructure to 5G needs professional engineering, and industrial capability.
The argument that robots will be taking our jobs, and that to avoid there being millions of low paid, low skilled non jobs we need a universal basic income, is a retreat from the idea that it is possible to value and remunerate high skilled jobs. The biggest current obstacles to the creation of jobs is a government whose economic policies discourage investment, and where care sector jobs are undervalued and underpaid. Both of these are political choices that can be changed.
Danny Glover, Bernie Sanders and NAACP president Cornell Brooks participated yesterday in a march with Nissan factory workers trying to unionize in Canton, Mississippi. It is worth watching the film below, and Brooks is particularly eloquent about why workplace rights are civil rights.
It is also worth reading this interview with Hollywood star, Danny Glover, which is illuminating about how the fight in Mississippi is about the same issues of precarious employment so familiar to us in the UK.
all the employees were initially full-time employees. So the workers have been there 13 and 14 years. And they had benefits, good wages and a relationship with the company. But then the plant resorted to temporary workers who do the same jobs as those workers who are permanent and have been there some time. Now the workforce is about 40 percent temporary workers. Some temporary workers are there for three and four years but don’t have a sense of permanency and make significantly less that the permanent workers. These are the kinds of things that you work out within the union [through] collective bargaining.
However Glover makes the point that Nissan has 45 plants around the world, and the only ones that are non-unionized are in America: in Canton, Mississippi, and in Decherd and Smyrna, Tennessee. He argues that the reason for this is simple: “it is a continuation of the system [of] Jim Crow, which was born out of slavery. Basically, it’s an issue of civil rights—worker rights are civil rights. The South has always been anti-union”
Following Amazon Prime’s recent dramatisation of Philip K Dick’s “Man in the High Castle”, and BBC’s current drama called SS GB, there is clearly a vogue for alternative history imagining a Nazi victory over Britain in World War Two.
It is worth rembering the compelling and controversial “It Happened Here”, a 1960s semi-amateur feature by Kevin Brownlow of what Britain would have been like under Nazi occupation.
Here is a review I wrote of it in 2008
The premise of the film is that Britain was conquered in 1940, and the film is set in 1944 when military resistance to the occupation has began to resurface. What makes the film so remarkable is that it is centred around the experience of collaborators, in the fictitious but all too believable, Immediate Action movement, some of whom are British fascists, some of whom are pragmatic people just seeking to work within the existing political framework, and some are ordinary people misguidedly pushed towards supporting the Nazis through having been caught in the crossfire of anti-fascist partisan violence.
Because of course the political lesson of saying “it happened here” is not that Britain could lose a war and be occupied; but that there would have been willing British hands to participate in pogroms of the Jews, persecution of trade unionists and communists, and murder of the sick and infirm. The genius of the film is the mundanity and domestic familiarity of the British collaborators.
In some places the acting is a little creaky, and the film starts a little slow by modern standards, but is has a great deal of verisimilitude, and is actually thoroughly gripping. Indeed, the film had a little too much verisimilitude and was very controversial because it used real fascists to play key roles, and even included a six minute section where Colin Jordan, leader of Britain’s fascists in the 1960s plays the role of a collaborator being questioned about his anti-semitic beliefs. This section was removed from the original cinema release but is restored to the DVD version.
This of course raises the question of under what circumstances it is permissible to provide fascists with a platform to put forward their views. There is no doubt that the six minute section with Colin Jordan makes very uncomfortable viewing. But the overall context of the film is deeply anti-fascist, and exposing the strong sympathy that the then contemporary fascists had for Hitler’s Germany, and the fact that the British fascists in the 1960s were prepared to boast that they would indeed have been collaborators in an occupation, did more to discredit the fascists than build support for them.
I was delighted to see a strong and successful showing by sensible centre-left candidates in Momentum’s internal elections. Particular commiserations to David Braniff-Herbert in South East region, who came fourth, but failed to be elected due to gender balancing. The full results are here. Turnout was 35%.
These are the candidates elected.
North and Scotland region:
Elizabeth Hayden, Gemma Thornton, Nav Mishra, John Taylor
Midland, Wales, East and West region:
Rida Vaqua, Cecile Wright, Martin Menear, Liz Hames
Christine Shawcroft, Yannis Gourtsoyannis, Puru Miah, Sahaya James
Momentum has been mobilising effectively for the Copeland and Stoke Central by-elections, and under its new leadership I am confident that Momentum will turn outwards away from internal squabbling, and will be working for a Labour general election victory.
The concept of a basic income guarantee (BIG) has gained increasing traction on the left in recent years, for example being adopted as union policy by GMB and UNITE, being a manifesto commitment of the Green Party, and supported by John Mcdonnell, the shadow chancellor.
The concept is hardly new, with subsidized grain for plebian citizens being introduced by the populist Tribune, Gaius Gracchus in 123 BC. Indeed, as one of the currently touted arguments for a citizen income is founded on the idea that automation is creating a sub class of those permanently excluded from work, then the fate of the propertyless Roman plebians, impoverished and marginalized in an economy based upon military plunder, colonial tributes and slave labour, is an apt one.
Economist, Billy Mitchell has produced a number of detailed arguments about Basic Income, in a five part series of articles.
But his general point is well made that the concept is highly elusive and slippery, due to the wide range of political interests that advocate basic income, and the differing reasons that they support the policy:
Tracing the origins of the BIG proposal reveals that the motivations of the proponents at different periods of history have varied from those who desire to cut government spending overall and push the responsibility of maintaining ‘welfare’ onto individuals, to those who were believed that unemployment was a violation of justice but was outside of the capacity of governments to solve it, to, more recently, those who invoke trepidation about the so-called second machine age and claim that robots are going to wipe out jobs on a massive scale (the ‘robot’ justification).
Voices from the left and the right weave various aspects of these motivations, often in overlapping ways, to justify their demands for a basic income to be paid by the state to all individuals (although even then, the unit that would receive the benefit is also a topic of disagreement).
An example of the confusion is that basic income advocacy group, BIEN, has published a muddled history of the concept since Thomas More’s “Utopia” onwards which conflates two distinct and separate phenomena: the state guaranteeing income, and the state providing a finite capital endowment. The second concept, advocated by Thomas Paine, gained limited expression by Tony Blair’s government with the baby bond, based upon research that even a limited access to capital at the start of life, for example to pay for an interview suit and suitable work clothes, or for driving lessons, could have a disproportionate effect in improving life chances. Sadly the Baby Bond was abolished by the Coalition government in 2010.
If we look at the detailed proposal from the Green Party then simplifying the benefit system, removing tax allowances and abolishing tax relief on pension contributions would lead to sufficient savings to fund a basic income of £80 per week for working age people, an increase of child benefits to £50 per week, and an £80 pw supplement for single parents.
A number of immediate objections can be made. Our economy is based upon fiat money, that is currency which is inherently worthless, but which gains value from being underwritten by the government, and its social and commercial acceptability as legal tender. There is therefore no limit to the amount of money in circulation, and payment out by the government of the basic income will undoubtedly be effectively financed by printing money, which will be inflationary over the longer term. Sustained economic growth and prosperity is achieved by investment in the productive economy, not by subsidising consumption.
Furthermore, any taxation and benefit system will modify behaviours, and while the Green Party’s proposals for income levels are relatively modest, they are unconditional. It would be sufficient for a significant number of people to withdraw from the labour market altogether. Furthermore, there would be a substantial number of persons in work, who either would be, or would perceive that they were, subsidizing people who were not willing to work. This is a politically untenable position.
Indeed the Green Party’s own proposal is even more economically inept, and politically incoherent than that. As the Guardian reported:
The Citizen’s Income Trust (CIT), which has given advice to the Green party and been repeatedly cited by the Greens, has modelled its scheme and discovered it would mean 35.15% of households would be losers, with many of the biggest losers among the poorest households.
The trust’s research shows that for the two lowest disposable income deciles, more than one-fifth would suffer income losses of more than 10%.
Even if the policy flaws of the specific proposals by the Green Party could be ironed out, fundamental problems remain.
As Billy Mitchell describes it:
As more an more individuals opted for the basic income without work, output would drop dramatically and material prosperity would be violated.
And Mitchell argues elsewhere:
Payment of a BIG to all citizens would signify a further withdrawal by the State from its responsibility to manage economic affairs and care for its citizens. Young people must be encouraged to develop skills and engage in paid work, rather than be the passive recipients of social security benefit.
Indeed, Basic Income Guarantee marks a retreat by the left from the concept not only that the state should take responsibility for developing skills and full employment; but a retreat from the idea that collaborative productive work is the sound moral foundation of a just society. It is through the collaborative endeavour of building and rebuilding the material world around us, producing through shared human labour our food, shelter, clothing, transport, communication and cultural artifacts that we find expression as social beings conscious of our collectivity.
Well intentioned do-gooders might imagine that freed from the compulsion to work, individuals will flower to become a generation of Shakespeares, Goethes and Mozarts, they are more likely to sit in their underpants watching Netflix. This is not a facetious point, the Basic Income Guarantee sees individuals as consumers of a world that they do not shape, they are the objects of society, not its self-conscious subjects. Passive consumption is not a stimulus for creativity.
The socialist project is to advance the interest of the working classes, and to ultimately build a society where the state acts in the interests of the working classes. Trade unions exist to combine workers to increase their strength through collective bargaining for those in work.
A Basic Income Guarantee would withdraw a number of citizens from the workforce, particularly at the unskilled, low paid end of the job market, whose work would inevitably need to be filled by immigrants. These non-citizen workers would not be entitled to BIG, and therefore the working class would be divided down the middle in such a way as to irrevocably weaken the possibility of trade union organisation.
In contrast to the collective orientation of organized labour, the Basic Income Guarantee is predicated not upon creating communities of solidarity but upon citizens with individual entitlement. It is pessimistic about the possibility of successful political action to achieve a shift of wealth and power to working people, and the possibility of working people democratically shaping society; and instead is fatalistic in seeking to provide ballast against poverty for dis-empowered individuals at the mercy of the gig economy.