By rethinking the economy and work, we could turn crisis into a utopia with a universal basic income. There is abundant research indicating that a utopian view could become a reality. The main challenge is to change our perception from an economic and utilitarian view that at its extreme sees the emergence of a class of economically useless people when conventional jobs are gone, to a humanistic one where the focus is placed on our freely chosen activities and the joy we take in engaging in them. Expanding the limits
In his book Envisioning Real Utopias (2010) Erik Olin Wright boils the road to real utopias down to democratic egalitarian social empowerment. Wright's advice is that we should try, as best as we can, to create new institutions which expand the limits themselves. In doing so we not only envision real utopias but contribute to making utopias real.
We are here faced with two separate spheres. One part is sustained by ample research and here political will is required, which means putting politicians / legislators to work. This way great changes can be achieved. But, perhaps the greatest challenge of all is one that concerns all of us, to change our perception of the economy and work. A universal basic income would be a decisive first step.
What prevents us from introducing a universal basic income? At least no lack of empirical evidence and research data on its positive effects. All basic income pilots have shown considerable positive effects both on people receiving a basic income and on the surrounding society. The pilot findings are amply documented. Yet, we're faced with the paradox that despite democracy we face poverty and inequality in societies that have adopted human rights standards. Human dignity is a fundamental aspect, as is so well expressed in a Council of Europe document “Living in dignity in the 21st century, Poverty and inequality in societies of human rights – the paradox of democracies, (2013). In addition to emphasising the need to free ourselves from the prevailing perceptions of the economy and work, I will rely on research that from different angles tackles these challenges and show how the paradoxes of democracy can be overcome and people's dignity made a reality by extending the limits of prevailing canons. The economy
The British economist Geoff Crocker may set the economic scene. He has on his agenda to reinvent the economic paradigm because the system as it now works generates seriously dysfunctional outcomes. Here are his arguments: From 1948 to 1995, we lived from earned income, and labour income was more than sufficient to fund consumer expenditure. But from 1995 on, consumer expenditure is consistently greater than labour income, and the gap is increasing fast. As a consequence, we have economic crisis, actual or likely to repeat; pervasive debt, both household and government debts; continuous austerity policy; extensive poverty; low pay jobs; increased inequality as well as ecological damage. Crocker's solution is basic income and sovereign money as a means of avoiding economic crisis and austerity policy. He stresses that his proposal requires a radical re-think and economic system re-engineering. Crocker observes that he by no means is alone in this endeavour, but emphasises that what is specific about his proposal, is that it brings together two ideas, basic income and sovereign money. Crocker notes that his proposal lies within the established thinking of Keynesian economics that aggregate demand is the key policy target and tool in modern economic analysis and policy formulation. This is one illustration of expanding the limits of the prevailing neoliberal economic paradigm.
Crocker's point of departure is that technology is one major factor that has led to a decrease in real earnings as compared to work output. In this situation, debt-free sovereign money is required and justified to supplement consumer income and sustain public expenditure.
The massive increase in consumer debt was a main factor triggering the 2007 economic crisis. Crocker explains that replacing consumer debt with basic income will avoid such crisis. Equally, if governments issued direct sovereign money and defined this to be debt-free, i.e. issued without the matching sale of government bonds, the government expenditure funded by this sovereign money would no longer be defined as deficit spending. Thereby, public sector debt would not be incurred, and austerity policy would then not be necessary to reduce government deficit. This would do away with escalating debt that in some counties may equal, or in some cases even exceed, the entire gross domestic product, GDP. Geoff Crocker's book Basic Income and Sovereign Money: The Alternative to Economic Crisis and Austerity Policy (2020) is underpinned by a three-year research project at the Institute for Policy Research at the University of Bath in the UK. Working life At the turn of the millennium, there was a promising move in the European Union, EU. On the invitation of the European Commission, a group of lawyers and economists led by the French legal scholar Alain Supiot, looked at the needs for reforming labour law. The committee's mandate was "to conduct a prospective and constructive survey on the future of work and labour law within a Community-wide, intercultural and inter-disciplinary framework". The result of that work is documented in the publication Transformation of labour and future of labour law in Europe (1999).
Three fundamental observations were made in the Supiot report: - the employment relationship in its existing form has reached its limits as many firms need more flexible relationships with their employees than it can currently provide; - tinkering at the edges with special types of employment contract for different categories of workers has diluted protection without increasing new jobs; and - reform of the employment relationship poses severe problems for labour law, collective bargaining and social insurance because they have all based themselves on the standard employment relationship (Marsden & Stephenson 2001).
The committee proposes a solution that in an admirable way extends the limits: "Rather than the concept of social protection, social citizenship might synthesise the objectives of recasting labour law and social law in general. Despite the disparate national definitions of citizenship, this concept may be acknowledged as a suitable instrument for shaping European social law. The advantage it has to offer is that it is extensive (it covers many rights, not just social security); it links up social rights to the notion of social integration, and not only to the notion of work. Above all, it enshrines the idea of participation. Indeed, citizenship assumes the participation of the people concerned in the definition and implementation of their rights." (1999)
This proposal extends the limits by providing an important link between working life and democracy. Unfortunately, politicians were not ready to act on these proposals although they are in line with what was later to be established in Article 2 of The Consolidated Version of The Treaty on European Union (2008). "The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail."
Nevertheless, the report is an important step in the right direction and hopefully, its proposals could pave the way for a universal basic income. As the Supiot report already exists in the EU archives, it would be worthwhile to revive the Committee's proposals. Work as a human value – a challenge to GDP
Another limit that needs to be extended is the perception of work itself. At this point, my target is the gross domestic product, GDP. Ever since the GDP was introduced in the 1930s as a means of measuring economic performance, its suitability for this purpose has been questioned. Many alternative measurement models have since then been developed. One that extends the limits looked for here, is a proposal presented by the Stieglitz – Sen - Fitoussi Commission convened by the former French President Sarkozy to measure economic development and social progress. Sarkozy's goal was to address the gulf of incomprehension between the data presented by experts and the citizen's experience of life that are completely out of sync. Nothing is more destructive of democracy, Sarkozy observed. The Commission gave its report in 2009, Report on the Measurement of Economic Performance and Social Progress. There is solid economic knowledge behind the report as it is headed by two Nobel laureates, Professors Joseph Stiglitz and Amartya Sen together with the French economist Jean-Paul Fitoussi.
The report can be seen as a game changer. The commission considered that if its recommendations are followed, they can have a decisive influence on how governments' policies are designed, implemented and evaluated. The commission's advice was simple, to change the focus of the statistics from economic production to factors affecting the well-being of today's and future generations. This report has been followed up by a High Level Group on the Measurement of Economic Performance and Social Progress (HLEG), hosted by the Organisation for Economic Co-operation and Development, OECD. The group was working further on the initial report of 2009 for more than five years (from 2013 to 2018). The latter report has the revealing title Beyond GDP: Measuring What Counts for Economic and Social Performance, OECD (2018).
That the high level group was working more than five years to develop further on the proposals of the 2009 report indicates that the problems associated with GDP have been a hard nut to crack. But the results are encouraging as the report reveals how misleading the simplistic calculations of GDP can be and the consequences they can lead to. It sheds light on the gap between the experts' knowledge and the citizens' experiences that Sarkozy pointed to. The recovery from the economic meltdown of 2008 is a revealing example. The high level committee points to the disparity between what was happening on the ground and the announced economic “recovery”. This disparity almost surely contributed to the growing lack of trust in governments by so many citizens over this period. In their report Beyond GDP the high level group observed that a more adequate set of indicators, reflecting the true depth of the downturn and its long-term economic implications, might have allowed governments to respond more forcefully, with special attention to those parts of the population that were feeling the full brunt of the recession. Reliance on the wrong indicators, with governments announcing a recovery when large parts of the population were not experiencing any improvement in their well-being, might also have contributed to the distrust in public institutions and the rise in discontent and anti-globalisation sentiments (2018). Political philosopher Michael Sandel's verdict is: "The elites "do not see that the upheavals we are witnessing are a political response to a political failure of historic proportions." (2020)
The Stieglitz – Sen - Fitoussi Commission wanted household data to be registered in the national accounts and OECD is now recommending time use as a means of measuring societal value creation. Here are some random picks: Statistics Finland estimated in 2018 that the value of unpaid household work corresponded to 36 % of GDP. Daniel Susskind gives in his book A World Without Work (2020) the following information: In the UK, the combined value of household routines is estimated to count for more than four times the size of the manufacturing sector. And it should be added that most of this work is done by women. Most caregiving is also unpaid. In the UK, around 6.5 million caregivers provide unpaid care worth up to £100 billion (Susskind, 2020).
In addition to work in the homes, we also have work in the creative sector, that now exceeds the turnover of several industrial sectors. The problem here is that artists seldom get proper compensation for their work. The same goes for work in civil society, which is poorly registered in GDP. Taking account of all these activities is a quick and effective way to record an increase in national wealth and 'employment'.
The Stiglitz – Sen – Fitoussi Commission’s Report on the Measurement of Economic Performance and Social Progress in 2009 and its follow-up by the High Level Group on the Measurement of Economic Performance and Social Progress (HLEG) Beyond GDP: Measuring What Counts for Economic and Social Performance in 2018 represent a decisive extension of the limits.
The next big challenge is for politicians and national finance administrations to change their perception accordingly and apply these well-founded proposals.
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* This blog post is based on my part of a joint contribution with Martin Schoenhals From crisis to utopia by rethinking the economy and work to the BIEN 2022 world congress
and my contribution Work as a Human Value – a Challenge to GDP in the pamphlet Basic Income Cornerstone of the Nordic Welfare State
- Crocker Geoff, Basic Income and Sovereign Money: The Alternative to Economic Crisis and Austerity Policy, 2020
- Marsden, David and Stephenson, Hugh Labour law and social insurance in the new economy: a debate on the Supiot Report. Centre for Economic Performance, London School of Economics and Political Science, London, UK. 2001
- Sandel, Michael J., The Tyranny of Merit, What's Become of the Common Good? Penguin Books Ltd. 2020
- Supiot Alain, Transformation of labour and future of labour law in Europe, European Commission, 1999
- Wright, Erik Olin, Envisioning Real Utopias, London: Verso, 2010