Beyond a Jobless Recovery

An Alternative to Global Joblessness

Whether or not mainstream economics ideas can pull us out of the Great Recession and a jobless recovery, in the long term, the problems posed by increasing automation and environmental concerns suggest that some form of heterodox economics will be adopted in the long term to avoid deeper recessions with more permanent job losses.

There are at least four major alternative forms of social change that we might see in the future to deal with these issues of increasing joblessness in the face of abundance produced through high technology.

These correspond roughly to the alternatives being suggested at the time of Keynes' General Theory in the 1930s, and which lost out to it in the USA, of communism, technocracy, social credit, and a Gandhian swadeshi movement.

In modern terms, these might be considered a gift economy, a resource-based economy, a basic income, and communitarianism (or localism).

These will be discussed in the next four sections in relation to jobs.

Given exponentially increasing technological capacity in AI/robotics and computing/communications and materials/design, each of these approaches are really just different paths to a common converging point of abundance for all, where people only work on things they want to do on a primarily voluntary basis in the context of a sustainable and resilient society.

But how we get there depends on what path we take. These paths are not mutually exclusive.

To some extent, our society is exploring all of them at once right now in various ways, and has been for a long time.

One choice is between emphasizing individualistic control versus emphasizing communal decision making.

The other choice is between emphasizing one-for-one exchanges (like with currency or barter) versus emphasizing acting mainly from values ...

knol 

Gift Economy

Resource-based economy

Basic income guarantee

Communitarianism

Resilience

A different way of doing things

What part can co-operatives play in a 21st-century model of an alternative economy? Could co-operatives become the dominant form of enterprise just as joint stock companies were in the industrial era? Can the state – itself part of the social economy – find a way of working with them in new collaborative ways? Can it indeed internalise not only co-operation’s values but its practices? Can we imagine a model of the co-operative economy that generates as much confidence as once did the various versions of Fordist socialism? Let’s start with finance. Instead of a financial system dominated by a few centralised global banks that have subordinated production to their logic, can we imagine one with a thousand local banks, owned either by their members or municipalities? ... in Britain they would be seen as green utopianism. Yet in Germany they are part of everyday life ...

Red Pepper  May 2012                

More large companies can afford to pay a living wage

Academic waffle from the Resolution Foundation, and the IPPR, gets the response it deserves from blogger Greenways ...

Greenways
10 May 2012 10:44AM

When an economy based on production for exchange and profit becomes completely monopolised as our global economy is now it stops growing and when it stops growing it seeks to compenstate itself for a declining rate of profit by a growing mass of profit.

To do this it increases output until every market is completely saturated i.e. anybody who can afford to buy their product at a price that still gives these monopolies a profit, however small, has got what they are selling.

From then on, with no where to go, the only way to increase the mass of profits is to smash down on the wages and conditions of your workforce.

Problem: as they all do this purchasing power as a whole decreases and adds to the problem of realising a profit.

This situation had come to pass by the late seventies.

The global economy had become monopolised, sclerotic, stagnant. Solution: unleash the most almighty private sector global credit bubble come Ponzi scheme the world has ever seen and ever will see.

Thirty years on the world economy is monopolised, sclerotic, stagnant and utterly, thoroughly and irredeemably bankrupt.

Marx said that no mode of production leaves the scene until it has completely exhausted its potential. We are there. The only thing left to it now is to violently rewind the film of globalisation. Well, if it isn't a Golden Dawn.

Monopolies cannot be reasoned with. They can only be socialised (made public property) and brought under democratic control.

Gdn  10 May 2012

What price a living wage?

Ken Livingstone tells Ed Miliband not to pander to 'discredited Blairites'

The defeated Labour mayoral candidate, Ken Livingstone, has warned Ed Miliband he should stop trying to pander to the "discredited Blairite wing" of the party ...

... he said his one criticism of Miliband was his courting of the "Blairite" wing of the party that he said supported a direction set by former Conservative prime minister Margaret Thatcher based on tax cuts for the richest, deregulation of the economy and the freeing up of the banks.

"For 30 years, Britain has taken a wrong turning. Inequality of wealth has doubled. We were told if we deregulated, if we liberated the banks, the whole economy would rise and there would be a trickle-down effect. Sadly, Tony Blair bought into that, New Labour bought into that. I think we are at a turning point in politics now.

"We have to make something that somebody else wants to buy, we won't just be able to rip off a bit of commission on all the financial transactions. I think a lot of the disillusion amongst working class people, whatever their colour, is that the last Labour government didn't create good jobs for working class people."

Livingstone added: "If I have one criticism of Ed Miliband – and as well as being a friend, I think he is genuinely a Labour leader who will transform Britain in a way that we haven't seen for a very long time – it's that I think he is far too concerned about carrying the discredited old Blairite wing with him who bought into all this Thatcherite nonsense." ...

Gdn  08 May 2012

It’s a simple choice: mass unemployment and recession, or not

The UK and the eurozone in the shifting global economy

How would I propose to change matters? ...

• Reboot the UK economy: Take the pain and turn around to engage fully with the emerging economies; do business with them as economic partner — no more, no less. The emerging economies are now the world's engine of growth: Deal with it.

• Unleash our universities and other thoughtful, creative industries. This is NOT to raise government spending, but just to free up extant restrictions on their operations. UK higher education is hugely in demand by the emerging economies. If there's anything that's going to help re-balance the global economy, this is it.

• Throw out long-standing aesthetics and principles – they're also called prejudices. Become enamoured of what works — whether it's guided capitalism under a bit of state control or anything else we previously thought completely nuts (ie outside the Washington consensus). Celebrate the virtues of working hard, raising productivity, saving for the future – not revile them as many do today for Germany or used to do most obviously recently only for China (and yet might come back to doing so again soon).

PhilipD

13 January 2012 5:19PM

Reboot the UK economy: Take the pain and turn around to engage fully with the emerging economies; do business with them as economic partner — no more, no less. The emerging economies are now the world's engine of growth: Deal with it.

The problem as I see it with this analysis and recommended solution is that it is failing to see the reasons for the 'developing world' being the 'engine of growth'.

Historically, there are only two ways in which countries can achieve very high levels of growth over a significant period of time:

1. Strike oil.

2. Start from a low base, then adopt the technology and know-how of more advanced countries in order to catch up.

Currently, China and India are doing #2. This inevitably means that growth will slow down as they use up the low hanging fruit of borrowed technology, and start having to develop their own ways of achieving productivity growth. South Korea and Taiwan succeeded in this (as did many countries in the past, including the USA which started slow before accellerating past the first adopters of the industrial revolution). But even in doing so, their growth rates have significantly slowed down - in fact, more or less to the rates of the slow growing countries - otherwise known as the technologically advanced nations. Japan and Ireland, to pick just two, showed the problems that can arise, as they confused all growth with productivity growth, and so blythly ignored bubbles that did enormous damage to their economies. All the evidence suggests that China in particular, and probably India too, are likely to fall into the same trap.

As for the other fast growing countries, those like Brazil are heavily dependent on commodity prices staying high. They might... or they might not.

Its very easy, when looking at the current situation, to see being locked into exporting to 'slow growing' economies like Europe and the US as a problem. But for the foreseeable future, these are the biggest economies in the world and will likely remain so. The slow growth is as much caused by the necessity of these countries to engage in the hard work of creating new forms of productivity and innovatory improvements, which is inevitably much harder than simply copying other more advanced countries.

For all the praise given to Germany recently, we forget that as recently as 5 years or so ago everyone was criticizing it for its slow growth and scoleric political system, while the anglo saxon system was supposedly wonderfully dynamic. Before that, everyone was in thrall to the supposedly unbeatable Japanese model. And so on and so forth.

The lesson therefore, is that any policy recommendations that relies on leaping on the current world economic star horse is likely to fail. For the UK (or the rest of Europe for that matter) to succeed, a number of things need to be recognised:

1. High sustainable economic growth over a long period is not possible for advanced economies. The pie is largely fixed, and policy should focus on making the best social use of this pie.

2. The economic growth that will occur will only occur through technological innovation and its real world applications. The current financial system has proven useless at funding this. You either fundamentally reform the financial system, or the government should lead directly on this. Anything else is BS.

3. It may not appear in economics textbooks, but really, the laws of thermodynamics apply to economies too. There is simply not enough available energy in the world for the population of the planet to achieve western living standards. As a matter of urgency, there must be an absolute focus on making more with less energy. The countries that lead on this will lead the world.

Gdn  13 Jan 2012

Many Americans gave up hope last year

Joseph Stiglitz summarises what needs to be done, and why it won't happen ...

... long-term problems – including climate change and other environmental threats, and increasing inequality in most countries around the world – have not gone away.

Some have grown more severe. For example, high unemployment has depressed wages and increased poverty.

The good news is that addressing these long-term problems would actually help to solve the short-term problems.

Increased investment to retro-fit the economy for global warming would help to stimulate economic activity, growth, and job creation.

More progressive taxation, in effect redistributing income from the top to the middle and bottom, would simultaneously reduce inequality and increase employment by boosting total demand.

Higher taxes at the top could generate revenues to finance needed public investment, and to provide some social protection for those at the bottom, including the unemployed ...

The worry, however, is that politics and ideology on both sides of the Atlantic, but especially in the US, will not allow any of this to occur ...

Gdn  13 Jan 2012

New green alliance in savage attack on George Osborne

Osborne's anti-green agenda splits Coalition

Osborne's Goldfinger killing attempts to be "greenest government ever"

A global energy war looms

World oil supplies are set to run out faster than expected

Charity chair pledges to track how cuts are affecting poverty levels

With all the main political parties hell-bent on refashioning the welfare state to reduce its spiralling costs, by siding with hardworking people (the deserving poor) and labelling anyone else as benefit scroungers (the undeserving), it is reassuring to learn that at least the UK's leading voice in social policy research is not adopting this invidious rhetoric ...

Over the next three years, the [Joseph Rowntree Foundation] will pump £23m into research in three main areas: identifying the root causes of poverty and injustice, supporting communities where anyone can thrive, and planning and developing for an ageing society.

In particular, it will track how the coalition government's public spending cuts are affecting levels of poverty and inequality, and how disadvantaged people are coping, or not; the foundation will help to develop practical solutions to reducing poverty ...

Of working across the foundation ... the majority as care workers, many on the minimum wage.

The trust wants to pay ... [its 800 staff] ... something called a "minimum income standard" ...

"We don't yet have a final figure, but it will be way above the minimum wage," he says.

Similar to the living wage then, which is £8.30 in London and £7.20 outside of the capital and designed to provide every worker and their family with the essentials of life?

"Yes, the same sort of thing," he replies ...

Gdn  12 Jan 2012

Minimum wage

Poverty

Social exclusion

Cut the working week to a maximum of 20 hours

Britain is struggling to shrug off the credit crisis; overworked parents are stricken with guilt about barely seeing their offspring; carbon dioxide is belching into the atmosphere from our power-hungry offices and homes.

In London on Wednesday, experts will gather to offer a novel solution to all of these problems at once: a shorter working week.

... the New Economics Foundation (NEF), which has organised the event with the Centre for Analysis of Social Exclusion at the London School of Economics, argues that if everyone worked fewer hours – say, 20 or so a week – there would be more jobs to go round, employees could spend more time with their families and energy-hungry excess consumption would be curbed.

Anna Coote, of NEF, said: "There's a great disequilibrium between people who have got too much paid work, and those who have got too little or none."

She argued that we need to think again about what constitutes economic success, and whether aiming to boost Britain's GDP growth rate should be the government's first priority ...

Robert Skidelsky ... argued that rapid technological change means that even when the downturn is over there will be fewer jobs to go around in the years ahead.

"The civilised answer should be work-sharing. The government should legislate a maximum working week." ...

Obs  08 Jan 2012

Examining the case for a shorter working week

The Great Transition

UK faces US-style jobless recovery

Beyond a Jobless Recovery

Ecological economics

Localise, Localise, Localise

Steady state economy

Cameron in command: politics in the slump

A comprehensive programme for government is not yet required – but Labour does need to come up with a couple of meaty proposals to convey the direction of travel.

A full-blooded national infrastructure bank, for instance, could make the point about selectively investing in order to grow and in turn repay the debt.

A new companies act, meanwhile, could demonstrate how the predatory practices that Mr Miliband condemns are actually going to be tackled.

History has demonstrated that there can be no assumption that the left will win in a slump but, from the Popular Front to the New Deal, it has come out on top when it has given frightened voters a glimpse of how different things could be.

Mumsche
26 December 2011 12:25PM

This would be the time for a new, true leftwing party to form.

You have in effect the Tory Party, then you have Tory-light, then you have a party that is propping the Tories up.

And then you wonder, why turnout at elections is so low... Because there isn't much choice or an alternative, is there?

So - for god's sake, the UK needs a real alternative that speaks to the disaffected!

Gdn  25 Dec 2011

Retrieving Britain's well-being is not all about restoring our ailing economy

"... if you want jobs you have to have growth ..."

Sadly, Hamish, this is something the economists and politicians don't get.

Unless you believe that supplies oil, and for the matter uranium, are infinite, the prospects for growth are going to become less and less, especially for another boom along the lines of 1945-1973 to actually occur.

The task now is to find of a way of getting full employment without growth.

The motto is: Localise Now!

Democratically, and economically.

The distinction between growth and well-being has been explored by many economists and a new report on the subject, How's Life?, was launched by the Organisation for Economic Co-operation and Development last week.

Then, the OECD's secretary-general, Angel Gurría, said:

"We have to consider a broader picture in our policy-making, because a 'growth as usual' approach is simply not enough.

"In the current difficult political context, it is of utmost importance to define core objectives besides level of income, such as improving our citizens' well-being ...."

That must be right.

While there is a strong relationship between GDP per head and life satisfaction, there are other factors that matter even more: good health, a clean environment, a sense of community, good housing and a safe neighbourhood ...

If the next generation is to have both a higher standard of living and a better quality of life than the baby-boomers there will have to be changes in the implicit – and sometimes explicit – contract between individuals and society as a whole.

It is not just a question of later retirement. It is also one of more flexibility in the workforce and in attitudes to life in general: greater willingness to change jobs, to travel further to look for work, to take greater responsibility for one's own health and so on ...

Ind  16 Oct 2011

Can happiness be measured?

Lack of action on jobs risks a lost generation

Re-arranging the deckchairs on the Titanic ...

It is not as if there is nothing the Government can do ...

... the judicious use of planned infrastructure investments could make a real difference.

Contractors bidding for work on large-scale schemes such as road upgrades or the roll-out of high-speed broadband might be required to invest in high-quality apprenticeship programmes, or take on and train unemployed youngsters.

There is arguably even a case for a public housing investment programme, helping to address the looming housing crisis and to boost the struggling construction sector, while also creating job opportunities, particularly for young people.

There are also options on the supply side that deserve consideration.

A structural review of the labour market would help find creative ways to boost flexibility using, for example, short-time working and job-share schemes.

Apprenticeships and internships also need expansion and reform. Previous moves to boost apprenticeship numbers, while welcome, have not gone far enough.

And existing schemes would benefit from a clampdown on the worrying number of companies using them as a source of cheap, or even free, labour and offering little or nothing in terms of training in return ...

Ind  13 Oct 2011

What is the "Green Economy"?

The Great Transition

Prosperity without growth – but how?

Is it time to re-think economic growth?

Prosperity without Growth?

The Global Green Growth Institute

The euro debt crisis must force a re-evaluation of capitalism

Is anything being learned from the debt crisis in Europe? Apparently not.

For what is being passed off to the anxious public as crisis management has nothing to do with the "productive effects" Kocka wrote of.

In the race against "the markets" to rescue the euro, governments are only proving where power truly lies.

Rather than tackle the causes of the economic and political crisis, those causes are being explained away as the solution.

What is still left to the state is that, since 2008, it has had to bear the social burdens of a private financial crisis.

And no sooner had the public budgets been saddled with the cost of propagating private wealth than another diet was prescribed to cure the disease now called the "crisis of state" ...

...

According to a recent poll, two thirds of EU citizens believe that the single market has benefited only large corporations.

Half believe that the European status quo has debased working conditions and that the current state of political integration brings nothing for the disadvantaged.

That says a lot about the character of the Europe that Merkel and others want to save.

What's at stake is no less that this: either the euro crisis will be solved "from above" and will lead to an EU regime of authoritarian austerity, which will restrict room for manoeuvre for policy-making on the ground and reinforce the centrifugal social forces away from the European ideal, or pressure "from below" will force governments to correct their course ...

Gdn  03 Oct 2011

Jürgen Kocka: “Capitalism and crisis”

Theory inches ever closer to practice

For its supporters, an FTT is a no-brainer.

Britain, they say, already has a transaction tax in the form of stamp duty on all share deals, so there is no point of principle involved. What's more, the sheer volume of business churning through the global markets every day means that even a minuscule levy could raise oodles of cash for good causes such as aid. Barroso agrees with most of this analysis, although the signs on Wednesday were that the money raised would be snaffled by European finance ministries.

The FTT has its opponents.

There are those who say it is far too small to "throw sand in the wheels" of big finance, and that Tobin's idea was always flawed. There are those who say that the cost will be passed on to bank customers, raising the cost of finance. There are those who say it will lead to fewer, bigger trades, adding to volatility. And there are those who say it will raise far less revenue than expected, because trades on wafer-thin margins will no longer be worth it once a small tax is imposed.

Gdn  28 Sept 2011

Treasury to oppose 'Tobin tax'

EU will be torn apart if closer eurozone ties leaves Britain in the cold

Tobin Tax

Ed Miliband's 'quiet crisis' is down to capitalism

Capitalism, and the so-called 'free' markets have several problems which make them anti-social.

First, they expect their costs - social (unemployment) and ecological (fossil fuels) - to be picked up by the tax payers and not factored in.

Second, they use greed and 'keeping up with the Joneses' to motivate people to buy their products.

Yes, I agree the fault is also in ourselves on this one.

Third, there is what Joseph Stiglitz calls 'asymmetries' - they seller always knows more than the buyer.

Yes, I agree caveat emptor is the watch-word here, but this assumes that the buyer can get hold of the info s/he needs, which is not always the case.

Fourth - and Marx got this one right - competition becomes monopoly, which is why the US went in for 'trust busting' before WWI.

In the UK the Competition Commission is largely toothless, either by choice or design.

Put those four issues right, and you can count me a supporter of markets.

But they will not be put right because, underpinning the four of them, are the traders who profit by gambling on other people's needs: capitalism is irredeemably social Darwinistic.     [Gdn]

What Miliband is talking about is a crisis of social reproduction – that is, a breakdown in the ability of individuals, families and communities (ie society) to sustain themselves, to educate and care for one another, and to develop.

In many ways Labour's leader is correct. After more than three decades of neoliberal policies – privatisations, marketisation and "new enclosures" – our own individual and collective ability to access social wealth is so entwined with the market and wage-labour that capitalist crisis spells, for many of us, an inability to reproduce ourselves as 21st century humans.

When the markets crash, it's human beings that get burned.

(In fact, as financial trader Alessio Rastani bluntly explains, the crash and burn of the markets and human livelihoods is just another profit-making opportunity.) ...

If the financial meltdown has taught us anything, it's that markets don't work.

If the ever-increasing global temperatures – and other indicators of potentially catastrophic climate change – have taught us anything, it's that markets don't work.

If the Arab spring and movements for real democracy in Greece, Spain, and even on Wall Street, have taught us anything, it's that markets don't work.

In the middle of this quiet crisis, we need to start imagining a future for humanity disentangled from capital, markets and wage labour.

Gdn  27 Sept 2011

'Capitalism is survival of the fittest, and sometimes it's not pretty'

Gambling on our financial future

G20 economies urged to invest in jobs as shortfall heads for 40 million

1. No mention of peak oil, the food crunch, 'parched planet', overfishing, and the multiplicity of threats to the ecosphere - and the biosphere - caused by 'growth', aka greed.

2. No spelling out the fact that the global 'players' don't want full employment: it threatens profits.

The ILO said employment in the G20 would need to grow by at least 1.3 per cent a year by 2015 to recover the 20 million jobs lost since 2008.

However, the slowdown in the global economy and already anaemic growth in many G20 countries suggests employment growth could be less than 1 per cent a year, the ILO said ...

Job creation of 0.8 per cent a year is "a distinct possibility" and would double the jobs shortfall from the start of the crisis to 40 million by the end of this year, with a far bigger shortage to come by 2015 ...

Ind  27 Sept 2011

The trader who lifted the lid on what the City really thinks

Disastrous BAE Systems job losses threaten the wider northern economy

Balls unveils five-point growth plan

... Mr Balls is trying to boost Labour's economic credibility by saying the party will not reverse all coalition spending cuts ...

His five point growth plan includes:

Repeating the bank bonus tax - and using "the money to build 25,000 affordable homes and guarantee a job for 100,000 young people"

Bringing forward long-term investment projects, such as schools, roads and transport, to create jobs

Reversing January's "damaging" VAT rise now for a temporary period

Immediate one-year cut in VAT to 5% on home improvements, repairs and maintenance

One-year national insurance tax break "for every small firm which takes on extra workers, using the money left over from the government's failed national insurance rebate for new businesses" ...

BBC NEWS  26 Sept 2011

Ed Balls refuses to apologise

David Cameron's treatment risks killing the patient

For an intelligent Keynes vs Mises debate, see the blogs to this article

For maximum effect, a growth strategy should not be just a list of desiderata, but an articulated plan of action with measureable objectives and dates, that gathers momentum and builds to a substantive whole.

Now is the time. Finance is extraordinarily cheap. Many large infrastructure projects involve both the private and the public sectors.

Given the continuing pressures on the public finances, the key is to identify those projects which have a high ratio of private to public expenditure.

Does the Treasury have a schedule of such projects? Can suitable projects be accelerated? Is there a schedule of projects which are awaiting a government go-ahead, as opposed simply to government money?

Is there a list of areas where the mere removal of a regulation restricting something would spur private spending?

Has the discount rate on which the efficiency of public investment projects is judged been dramatically reduced?

Is there anybody in Whitehall who is now looking across departments from the point of view of the aggregate demand, as opposed simply to the efficiency, aspects of projects and decisions?

The government shouldn’t hold back on the grounds that some extra public spending may be necessary to get a project started.

The Treasury’s main fiscal rule refers to current rather than investment spending.

So there is scope for an increase in the latter without breaking the rule ...

Tel  25 Sept 2011

Matthew Hancock: tackle bankers' greed or expect history to repeat itself

The book challenges the myth that people and businesses always act in their own best interests, and recommends a series of checks and balances to ensure poor judgments are challenged.

Among the most controversial proposals is the idea for the creation of a "public protagonist" with the remit to question corporate transactions, such as mergers and takeovers, where managements are highly-incentivised to deliver deals that may not be in the interests of stakeholders.

The protagonist would have the authority to convene special shareholder meetings on behalf of the public and publicly test courses of actions planned by the management.

Better decision-making should also be incentivised, the authors suggest, by legislation to create a new crime of professional gross negligence for senior managers of "systemically-important financial institutions", with convictions punishable by imprisonment ...

Banker bonuses should also be subject to a 10-year clawback, the authors suggest, while women should make up at least 30pc of company boards because greater diversity changes decision-making and brings better business performance.

If businesses do not comply within a year with this gender recommendation, the authors believe legislation should force them to do so ...

Tel  04 Sept 2011

The 5 big hurdles on the road to lasting economic recovery

At the Bank of England ... the view is that after a tough few months, the pace of growth will pick up gradually in 2012.

There are alternative views.

Nouriel Roubini, the Dr Doom of economics forecasting, told the Wall Street Journal earlier this month that Marx was right when he said capitalism could destroy itself by continually shifting income and wealth from labour to capital.

The greens say it proves that EF Schumacher had it right when he wrote Small Is Beautiful almost four decades ago, and that the world is now being pushed beyond its carrying capacity by an orgy of excess.

The Austrian school of economics says that the sluggish global economy is the result of central bank governors and finance ministers ignoring the teachings of economists Friedrich Hayek and Joseph Schumpeter.

Rather than prop up failed banks, policy makers should have let them go bust.

The consequence of not doing so is that the west now has a motley collection of zombie banks that are not fit for purpose.

Finally, there are the followers of John Maynard Keynes, who say the problem is that there was a dangerous reversion to economic orthodoxy once the global economy started to recover in the spring of 2009.

The Keynesians see the solution as more quantitative easing, less fiscal austerity and public infrastructure projects to kickstart demand ...

Faced with these five challenges – sovereign debt in Europe, a bombed-out US real estate market, an under-valued Chinese currency, a dysfunctional banking system and high oil prices – it is little wonder policy makers are mulling over what more they can do to keep the recovery going. The global economy has slowed to a stall; it would not take much for it to crash land.

Gdn  30 Aug 2011

The Destructive Power of the Financial Markets

The sector's high salaries tend to attract the best and brightest university graduates.

The members of this youthful elite don't devise new products that make people's lives better, nor do they found new companies that further progress.

Instead, these young financial wizards invest a great deal of money and effort to develop sophisticated financial products, the sole purpose of which is to generate more profit for both their employers and, ultimately, for themselves -- sometimes at the expense of other market players or even their customers.

Many things that happen on Wall Street and in London's financial district are "socially useless," says Lord Adair Turner, chairman of Britain's Financial Services Authority.

The values that are created there are often not real or of any use to society, Turner adds.

Paul Volcker, the former chairman of the US Federal Reserve, once remarked that the only truly useful financial innovation in the past 20 years is the cash machine.

Once upon a time, the sole purpose of banks was to supply the economy with money.

They were service providers, sources of energy for the economy, so to speak, but nothing more.

But now the financial industry has largely disconnected itself from the manufacturing economy, transforming its role from subservient to dominant in the process.

Der Spiegel  22 Aug 2011

“Be Nice to the Countries That Lend You Money”

Tax 'socially useless' banks

Why are the failings of capitalism only being exposed by the right?

From 1989 to 2008, the handsomely remunerated representatives of financial capital ruled the world and dared politicians to challenge their power. No party did.

Chastened by the debacle of communist rule, the democratic left lacked all conviction, while the bankers and speculators were full of passionate intensity.

As the veteran leftwing historian, Eric Hobsbawm, wryly observed of John Paul II's regular fulminations against untamed global markets:

"It is not encouraging when the only person of global importance to condemn capitalism is the Pope."

On Thursday, during his visit to Spain, Pope Benedict was echoing the same theme, stating :

"Man must be at the economy's centre, which is not profit, but solidarity."

Now that the Vatican has a British ally in Charles Moore, the biographer of Margaret Thatcher, the time is ripe for Labour to resume the corrective role that it performed with such distinction in the postwar period.

Different solutions and approaches will be required for a different world, although some of the features of "the golden age" – capital controls and an enhanced role for reformed trade unions – may be worth revisiting.

But the starting point is to recover some of the old moral dynamism that gave the party its reason for being in the first place ...

Obs  21 Aug 2011

I'm starting to think that the Left might actually be right

The moral decay of our society is as bad at the top as the bottom

Italian debt: Austerity economics? That's dead wrong for us

As Paul Krugman has sarcastically noted, many policymakers listen to austerity-obsessed economists simply because those economists are "Very Serious People".

And all of a sudden, these people are serious about forcing Italy to jump off the same cliff as Greece, Ireland and Portugal.

Pass the austerity package proposed by prime minister Silvio Berlusconi and finance Minister Giulio Tremonti, they say, or Italy is doomed.

There are two problems with this idea.

The first is Italian: our government's solutions lack both imagination and credibility.

Italy will not survive this crisis by listening to the very people who got us into it, especially not when they demand that the middle class and poor foot the bill for their failures.

The second problem is European.

Instead of creating solutions adapted to each nation's economy, governments now have an obsessive fixation on employing tighter control of budget deficits to satisfy the European stability pact.

Economic policy has become an exercise in pure dogma, devoid of any real debate on how to make the euro work or promote sustainable growth ...

Gdn  14 July 2011

Italy bond flight flashes red warning signals

Greek bailout deal: What the experts say

Richard Murphy

At its core this deal does not work for a number of fundamental reasons. The first is the euro itself cannot work: even with massive fiscal reallocation of wealth within the Eurozone the stress would remain too great: these economies are too disparate to have one currency.

Then there is the fact that, like it or not, Ireland, Portugal, and almost certainly Spain if not Italy, add debts that they cannot support and therefore, like it or not, European banks holding those debts are at a serious threat of insolvency. This deal does nothing to address that issue.

Just as this deal does nothing to really stimulate growth, it recognises that without growth Greece cannot repay its debts and yet the rest of Europe demands cuts in government spending that can only result in a move towards stagnation or recession across Europe as a whole for decades to come.

In other words, this is a fundamentally flawed deal, and the flaw can be simply identified: it is that this deal puts the stability of money above the importance of real economic activity that generates wealth for the people of Europe.

This is about bankers, yet again, and not about putting food on the table. This is about preserving wealth and not about creating prosperity. This is about maintaining division, but not about delivering hope.

Gdn  22 July 2011

Defaulting rescued Argentina. It could work for Athens too

In December 2001, as the government slapped a limit on cash withdrawals – the so-called corralito – to prevent a destabilising run on the banks, the IMF effectively pulled the plug, saying it could not complete the latest of many reviews of Argentina's economic policies – a condition of it receiving continued financial support.

"Within a month of this announcement," as a subsequent internal IMF review put it, "economic, social and political dislocation occurred simultaneously".

The Argentinian people took to the streets in their hundreds of thousands, banging their pots and pans, and threw out the government.

A caretaker president, appointed to take over from de la Rúa, was also deposed within weeks, giving way to Eduardo Duhalde.

In the depths of the political and social crisis, Argentina risked the wrath of the world's financial markets and the IMF and defaulted on its debts, suspending repayments on some of its bonds.

In early 2002, it abandoned the cherished one-to-one peg to the US dollar.

"Argentina drew a line in the sand," says Mark Weisbrot of the Center for Economic and Policy Research (CEPR) in Washington.

"They said, we're not doing any deal that puts us in the same situation three years from now."

The peso plummeted to $0.25 within months, Argentina became a pariah and the economy slumped.

Yet by the second quarter of 2002, it had bounced back to growth ...

Obs  10 July 2011

Problems deepen at Lloyds Bank ...

Michael Burke argues that the government ...

... could instruct Lloyds to make a sure-fire investment in state-owned housing. The housing shortage in Britain is both chronic and acute, with the lowest number of homes built in 2010 since 1923.

1.8 million households are on council waiting lists and even those who could afford to buy a home cannot find the mortgage financing, where Lloyds has led the way in reducing its lending.

A state-led investment programme in housing, in conjunction with local authorities and financed by state-controlled banks, could produce affordable homes yielding 6% or 7% a year in rents, double the government’s cost of borrowing and so provide a net return to invest further, or to reduce the deficit ...

It would also create 750,000 new jobs in a sector decimated by unemployment. 750,000 new jobs would also have a twofold benefit to public finances, much higher tax revenues from both income and consumption and much lower welfare payments.

Socialist Economic Bulletin  05 May 2011

UK marine energy sector 'could be worth £76bn and support 68,000 jobs'

A government thinktank has predicted that the British marine energy sector could be worth £76bn to the economy and support 68,000 jobs by 2050.

The analysis, released this week by the Carbon Trust, comes only weeks after coalition ministers ended the industry's subsidy programme ... the Carbon Trust says new wave and tidal technologies need to be accelerate at a time when the government's £42m marine renewable deployment fund has been eliminated and the most ambitious marine project – the 10-mile long Severn Barrage – has been given the thumbs down by the energy secretary, Chris Huhne ...

Gdn  02 May 2011

The Government needs to firm up its energy policy to support solar

The Big Danger In Cutting The Deficit

'We need to increase employment--not decrease the budget'

Consider this for a moment: As of January 2011, we had 13.9 million unemployed people in the United States ...

Recommended cuts in the federal budget have ranged from tens of billions to hundreds of billions of dollars.

In practice, what do these represent? They are at the very least a reduction in the wages of Americans who are currently working, if not outright job loss.

This makes them functionally equivalent to a tax increase.

Ask yourself this question: How would raising taxes by tens to hundreds of billions of dollars right now lower unemployment and speed recovery?

You're right, it wouldn't. In fact, it's not difficult to see that it would make it much worse.

Unemployment is not reduced by cutting incomes and destroying more jobs. But that's the policy currently being pursued with great enthusiasm in Washington, and the two parties differ only in degree.

We are on the road to economic suicide. The gun is loaded, cocked and aimed squarely at the American worker ...

... the federal government's budget is unlike your household one, because it issues its own currency.

It can fund spending without taxes or borrowing, and without causing inflation.

Those who argue otherwise are either operating with economic models developed in the 18th or 19th century or they are buying into President Obama's State of the Union address analogy (or have an ulterior motive).

But it simply isn't true ...

The second fundamental difference between a household budget and that of the federal government is that the former does not have the means or responsibility to stimulate the macroeconomy to the point that it employs all willing workers.

This is an absolutely key point that has been almost entirely ignored.

As technology allows us to become increasingly productive, it creates a cruel irony.

On the one hand, we develop the capacity to produce more sophisticated and efficient products for all of us to enjoy.

On the other, we are able to do so by employing fewer and fewer people.

Those without jobs, even though they are willing to work, must go without despite the fact that we have the capacity to meet their demand.

If the government did not act to supplement this, then we would find ourselves in a constant state of poverty amid the capacity for plenty ...

The market can't correct this on its own.

We have no right to expect entrepreneurs to hire more workers than they need or consumers to buy more televisions than they want.

Entrepreneurs' goal is to find low-cost ways to satisfy consumer demand, not generate a jobs for all those who want one.

The federal government, however, is in a perfect position to do this, and when it does so it is a net gain for everyone.

Say it takes an unemployed worker and makes him a soldier. As already explained, paying him requires neither a borrowing nor additional taxation (indeed, the latter would be counterproductive, just as cutting expenditures is right now).

The government could create new money and the result would be an increase in income for everyone, including those in the private sector.

Those who had already been employed would give up nothing. They'd be able to enjoy the same number of goods and services as before, since we were never at full capacity ...

The soldier would obviously be better off, since he'd now have money in his pocket and be able to buy the goods and services society was always able to produce.

And entrepreneurs would get higher sales, which they obviously like, and might even find it necessary to hire more workers to meet the new demand.

All net gains, every single one, because the economy was at less than full employment--a place where the market system tends to leave us ...

forbes.com  18 Mar 2011

Crucial as the deficit battle is going to be, resistance to the cuts is not a political programme in itself.

The most disappointing feature of the (Labour) leadership campaign was how little new thinking about programmes and policy that it produced.

These should be among the main elements of this necessary re-think:

• Democratisation, not privatisation, should be the approach to public sector reform.

• Devolution of powers to local and mayoral authorities, reversing the compulsive centralisation of New Labour reformism.

• A more radical 'proportional' reform of the electoral system than the weak AV version it adopted at the General Election should be proposed. AV offers to benefit only the Liberal Democrats, not the Greens and other parties.

• A 'Green New Deal’ as a response not only to the climate change issues, but also as a step towards reversing de-industrialisation.

• While the contribution of the financial sector to Britain's economy is valuable, its strong regulation and taxation, in the cause of greater equality, should be a cornerstone of economic policy.

• Economic growth is not everything - broader measures of well-being are needed, in each phase of the life-cycle. This includes the balance of family and working responsibilities for families with children, the quality of working life, measures of public health, adapting to an ageing population. Workforces in the public sector should feel enabled, not bullied, by governments, with forms of audit and inspection that encourage public participation and involvement.

• The problems of housing and land values (usefully introduced by Andy Burnham in the campaign), and the disparities between regions, need to be addressed, as one of the largest sources of inequality and unfairness in contemporary Britain.

• There needs to be a serious re-think of criminal justice policy, in particular stopping the prisons being used as dumping grounds for the mentally ill.

openDemocracy  28 Sept 2010   

Localism

The post-election political terrain

Right to Work: In search of a new slogan

In the face of cuts, trade unions are demanding the 'right to work'. Better to rethink work altogether ...

... a new campaign has been launched, backed by a host of trade unions, including the UCU, PCS, CWU, RMT, NUJ and NUT, under the name Right to Work.

What has happened to our understanding of work in the decades between James's slogan and new forms of opposition?

In the middle of a recession in which jobs are being slashed with alacrity, should we be clinging on to employment at any cost, or should we instead be reconsidering what it means to work at all? ...

occurrin
29 Jul 2010, 10:53PM

Nina Power... you should read André Gorz´s Critique of Economic Reason, probably my favourite book, as it happens ...

The main points as far as this article is concerned are:

a. reduuction of working time is necessary to maintain anything like full employment, when productivity growth outstrips economic growth every year.

b. reduction of working time is the only possible meaning we can give to an industrial society. Fulfillment INSIDE work is impossible; the modern division of labour separates us inevitably from fully comprehending what we make and expressing ourselves fully in it. We should spend continuously less time inside the alienated, opaque industrial machine, in order to have a full and human life OUTSIDE of work.

c. "wages for housework" campaigns miss the point, which is that "work" is the problem not the solution. Couching women´s interests in the language of the employment contract destroys the difference between home and work that makes one´s home life worth living. Doing stuff without getting "paid" is intrinsically rewarding and human. We should do more of this, and spend less time in the office to have the chance to. With a 20 hour week men would lose the excuse to doing equal childcare and housework.

Read the book... it´s great.

suitone
29 Jul 2010, 11:56PM

petrifiedprozac posts

'First people have to reject crony capitalism and stop being slaves to consumerism'

It's very difficult to stop being a slave to consumerism. It's the behaviour you have learnt since you sat in a buggy and came through the supermarket checkout and saw the shelves of sweets at your eye-level. You shout for them, you get them.

Consumerism is what you do as a human being.

You live out what you are supposed to live out.

Perhaps it's a new definition of the human being that we need, that the kids evolve, a definition that disregards and throws out consumerism because it is such a blatant, hijacking of the imagination for no other purpose than to make someone else richer than they are already.

Guardian  29 July 2010

Critique of Economic Reason

Earlier this year, the UK's Department for Business, Innovation and Skills commissioned David MacLeod, a management guru, to carry out a review of ‘employee engagement' as a necessary factor in Britain's future prosperity ... the case for flatter, more interactive relationships was made.

... a common assumption about the status of firms in society suggests that they sit in a political vacuum, allowing their decisions and structures to be only evaluated in terms of economic efficiency.

The problem with the managerial ‘participation' rhetoric is that it only values human autonomy to the extent that it contributes to productivity and business performance.

Hence a growing feeling of irony pervades our workplaces, as described eloquently in the sociology of Richard Sennett, and conveyed brilliantly in the BBC sit-com, The Office.

We no longer mean the words we speak to each other at work. The rhetoric of equality and power appears to exert no friction on the dominant, Anglo-Saxon capitalist model, in which management power is unchallenged, so long as value is constantly returned to external shareholders ...

Co-operative structures, in which labour hires capital rather than vice versa, are one institutional form that republicans such as White and Nien-He Hsieh, have celebrated.

The original meaning of ‘profit-sharing' is also worth returning to: the notion is that, once both capital and labour have received their ‘wage', that any remaining surpluses should be split equally between the two.

Companies that were organised to uphold this principle would still be capitalist and profit-making, but they would not be profit-maximising. This represents a positive departure from the neo-liberal, shareholder value-oriented model of the firm.

Yet these are difficult arguments to mobilise in a policy culture that still seeks to diagnose all social ills using neo-classical economics and its derivations ...

Various forms of mutualism and employee ownership deliver exactly this balance between political and economic goods.

They demonstrate that a private sector organisation can be high-performing, well managed and profitable, while offering employees tangible forms of control over their working lives and environments.

Ownership, as republicans frequently argue, brings with it political freedoms as well as economic rights.

Virtuous circles are possible, in which the higher levels of deliberation and responsibility within companies spills over into higher levels of employee commitment and knowledge-sharing ...

openDemocracy  22 September 2009

Reinventing the Firm

Reinventing the Firm.pdf

Mutuo

Employee Ownership Association

• ... The first, and perhaps most shocking to those in government who had not appreciated it, is that the state has absolutely no control over the payment mechanisms on which our fundamental economic order depends. We had no choice but to bail out banks because they were the only people who could actually facilitate the exchange of money in our economy. Social chaos and major economic turmoil, probably associated with a breakdown in law and order, would have occurred if the banks had not been rescued.



• Second ... the government has almost no control over the money supply in the UK. About 3% of the cash in the UK economy is actually issued by the Bank of England.
  
  The rest is electronic money (that) is created by the commercial banks and not by central government. The commercial banks do as a consequence take the profit from this activity.
  
  Unsurprisingly if they make cash out of thin air and then charge people for the privilege of using it they have, they do during a period of massive monetary growth maximise their profit by the creation of enormous quantities of new money through offering debt ...



• Third, as the banks have fallen over it has become very clear that we might end up with very few banks and a wholly uncompetitive market for their services. This seems undesirable to almost everyone.



• Fourth, and finally, it is very obvious that the banks have been unable to regulate themselves, whether that be with regards to capital adequacy ratios, the payment of appropriate incentives, the appraisal of lending, money laundering (to which many of their tax haven subsidiaries appear to have been oblivious) or any other issue.

Network Banking

... It seems to me that any reform of the banking system must achieve the following objectives:

• 1. The basic payment system must be under the control of the state;



• 2. The state must have control of the creation of all money and must profit from the creation of that money



• 3. There must be sufficient banks in the market to both offer choice to consumers and to prevent any one bank becoming so large that its failure could represent a fundamental threat to the economy as a whole



• 4. The banking system must be better regulated and monitored in the future to prevent a recurrence of the problems that have created the current crisis.

...

Tax Research UK 21 October 2008

Zoe Williams' belief that it is daft to give the same benefits to rich and poor (The means to an end, September 12) is misguided. She complains that the newly announced pregnancy grant for women (potentially worth up to £200) won't be means-tested.

"This is the modern way with initiatives," she says. "Especially in the realm of babies, and other sentimentalised demographic groups." She acknowledges that the alternative is complicated, but she adds: "The answer is not to shrug and say, 'too complex, can't be bothered, let's just give the cash to everyone'."

In doing so she shows a lack of understanding of the impact of universal, non-means-tested benefits on reducing child poverty, and the failure of the means-tested approach. The gap between the richest and poorest has grown alongside the increased use of means-testing in the welfare system.

Child Poverty Action Group has long argued that universal benefits are more effective at reaching the poorest families. Targeting financial support inevitably brings more complexity, and is accompanied by stigma, which can lead to reluctance to claim. Overall take-up of the means-tested child tax credit is around 82%, for working tax credit it is around 61%; but take-up of child benefit is around 98%. Universal child benefit has reached more low-income families than any of the means-tested payments specifically designed for them.

The work and pensions select committee's report Benefits Simplification, published in July, slammed the current system as "stunningly complicated". The Department for Work and Pensions alone administers around 40 benefits, each with different rules. As Williams acknowledges, the Treasury-managed tax credits system adds a new layer of complexity, which is far from seamless in its relation to the benefits system. Such is the overall complexity that the taxpayer now loses more money to official and claimant error than to fraud.

We once had less means-testing for benefits (not more, as Williams suggests) alongside more for taxation. This has been reversed, with substantial means-testing of benefits and tax credits, and the value of the remaining universal benefits falling well behind earnings. Meanwhile, taxation has shifted to indirect taxes, which hit the poorest harder.

The consequences for poor children are dire. Yes, means-tested tax credits have helped lift 600,000 children out of poverty. But the most recent figures show child poverty rising again, with 3.8 million children living in poverty. The Joseph Rowntree Foundation has predicted that if we continue to rely primarily on means-tested tax credits to end child poverty, it will cost us around £30bn more a year by 2020. So means-testing will continue to nibble at the edges, whereas universal benefits in tandem with progressive taxation can address the underlying inequalities.

Williams should really be calling for more means-testing in the tax system. With a return to progressive taxation, universal benefits could reduce inequality, without the problems brought by means-testing.

Kate Green is chief executive of Child Poverty Action Group

The Guardian 19 September 2008

Basic income

Basic Income

" ... in the case of nutrition and health, just as in the case of education, the gentleman in Whitehall really does know better what is good for people than the people know themselves." Douglas Jay

After thirty years of relentless centralisation, the credit crunch provided the launch-pad for Dave's 'Big Society'. [BS]

Had the party of Edmund Burke rediscovered the 'little platoons', and the role they play out here in a world beyond government's grasp?    LP

Or was it a 'third face of power' ploy to gull cynical voters in the run-up to the 2010 election?    TFP

The optimism of empowerment's seminal thinker Ivan Illich is shared by John Seddon, Charles Leadbeater and Amartya Sen, but - and here's the important but - their work is implicitly or explicitly grounded in the notion that there is such a thing as society, and that liberty and libertarianism are not the same thing.

There is an important sense in which New Labour's libertarianism - shared by many on the Tories' dominant 'free market' wing - is a partner to totalitarianism, since it offers a camouflage for the real loss of liberty - and democracy - inflicted by neoliberalism, plus it's good for corporate profits.

David Smail's 'sense of agency' warns us not to be deceived by politicians' subterfuge.

The reality is that the neoliberals have substituted consumerism for the loss of power and control over our lives, whereas those thinkers who join Ivan Illich in wishing to see our re-empowerment would remove this deception.

Currently, however, the dystopias imagined by Aldous Huxley - 'Brave New World' - and Ray Bradbury - 'Fahrenheit 451' - are unfolding.

In this context the rise of the misuse of drugs - legal and otherwise - should not surprise us.    [DODS]

Despite subterfuge to the contrary, localism and local democracy have taken huge hits since 1979.

Simon Jenkins has had a great deal to say on this subject in recent years, as the following extracts confirm:

[TT1]    [TT2]    [TT3]

The acid test for the 'democratic centrists' of the two main parties is whether they are willing to take a risk, and delegate powers back to local government, give it the kiss of life with real democracy - [ER] - ensure equality of funding - [SFR] - and then take a back seat.

Ivan Illich's 'conviviality' might emerge from such a regime, but it will not emerge without it, for underpinning the current neoliberal dystopia is the process of commodification of services - and people - which is the bigger enemy of democracy than defective political mechanisms, since commodifying everything is essential to the ultimate 'success' of the 'free markets'.

All else is of marginal significance.

Offe, Claus (1992) "A Non-Productivist Design for Social Policies".

IN Philippe Van Parijs (ed.)

Arguing for Basic Income, Ethical Foundations for a Radical Reform.

Verso. London p. 61-78. p. 69-70.

"There are basically four strategic options that would adopt in response to the uncertainties and insecurities concerning the premises of the welfare state.

I want to specify them briefly and then explore the case for one of them, the basic income proposal.

First, economic liberals propose that since the empirical premises of the welfare state as itemized above are partly and progressively fading away, what remains to be done is to bid farewell to overly generous standards and promises of security, and let market decide. This strategic option involves in part the outright abolition of transfers and services, in part a narrower targeting and means-testing of the clientele of the welfare state…

.. Second, the conservative strategy recommends the selective punishing and rewarding of people’s attitudes towards work, education, health, the legal order and the family…

.. Third, the social democratic version of strategic responses, even to extent that it is prepared reluctantly to recognize the fragility of the assumptions underlying the welfare state, still denies the need for at basic orientation and insist instead upon the need and feasibility of defending and even further expanding the welfare state and its productivist premises…

..Finally, there is poorly defined and clearly undertheorized bundle of strategic proposals that come from what I would like to term the “post-industrial Left” and can be described as left-libertarian in their ideological orientation.

These proposals emphasize the values of security and autonomy, and envisage the possibility for reconciling the alleged antagonism prevailing between the two in relying upon the idea of citizenship and the positive rights and entitlements, such as the entitlement to a basic income, associated with it

The case for citizenship-based entitlements to a basic income differs from some or all of the preceding options in that:

(a) not class, occupational status, earnings or employment record but citizenship is the basis for entitlement to transfers and services;

(b) not paid labour but “useful activities” including activities performed outside employment and labour market and hence escaping formal measurement and accounting constitute the moral justification of the claim to benefits to the receipt of which no behavioural preconditions are to be attached;

(c) not the protection of (relative) status or the rewarding of dessert but coverage of basic needs is the criterion of justice; and

(d) not (absolute) security but a sustainable level of risk and maintenance of autonomous options concerning the citizen’s responsible conduct of his or her is the key value.

..Instead, I believe that a universal and adequate basic income could be designed to become a synthesis of the more desirable features of universalism and selectivity.

Such a synthesis would have to consist of several components:

(i) the most important component is an unconditional, subsistence level, tax-financed right to income based upon citizenship rather than labour-market participation.

(ii) The extreme universalism embodied in such a basic income would have to be complemented by a tax structure that ensured that all those who participate in gainful employment and thus do really depend upon the basic income will contribute – through direct and indirect taxation and I distributive progressive ways – to its financing.

(iii) As it would not be surprising to find a massive middle-class opposition mobilizing against such a scheme – which does, in fact, involve – the arrangement would have to be based upon legislation that provides for something like the following procedural rule: revisions of the scheme that would restrict access to the basic income and/or to say, 90 per cent of the net contributors.

iv) Extensive co-operative and other institutional forms of non-wage labour outside formal employment must be experimentally developed in order to expose the near-monopoly that the institutional arrangement of formal employment holds over the universe of useful human activities in competition with alternative modes of “getting things done”.

... The basic income cannot and should not be presented as a panacea to open the road to a “good society”.

First because, [if] the proposal eventually turn[s] out to be a strategy [to] that end (which I believe it is), it will be only one element in a policy package within which other elements are equally important.

Second, because we cannot claim to know enough about the short-term and long-term effects of the proposal once it is implemented, unpleasant surprises cannot be excluded – or rather, they must be excluded in practice through thoughtful experimentation and cautious exploration of the many questions, problems and potential side-effects about which we simply do not yet know enough.

Third rather than being a formula for the foundation of a new social order, it might be more realistic and honest to argue for [the] basic income in terms of a defensive measure to preserve and expand notions of social justice against a welfare backlash that has already started and must be expected to continue in view of the above structural changes.

As long as almost all wage earners are involved in producing wealth, the problem of sharing wealth is solved by way of each individual’s job.

Once this cease[s] to be the case and this supposedly normal condition has disappeared for good, the problem of distribution can be solved only by establishing specific economic rights that all citizens grant to each other.

A system of this sort can be articulated in terms of three principles.

First, no one has the right to exclude entire categories of the population (according to sex, age nationality, qualifications, and so on) from participation in the labor market.

Second: since adult citizens do not have a “right to work” but instead a right to compete for employment, then all those who voluntarily withdraw from the competition are doing a favour to all those who remain, whose chances are correspondingly improved.

Those who withdraw deserve compensation for [the] duration of their non-participation in the labor market.

It should come in the form of a right to a base income, without any further conditions (such as need, willingness to work, family circumstances), and should be financed from taxes, at a level commensurate with of modes [way] of life.

Third: compensation for withdrawing from the labor market, about which individuals can change their mind at any time, should not simply reward people for taking their labor out of the economy.

It should encourage them to put their labor to uses other than selling it in return for wages.

True, outside the intimate circle of family, such possibilities are not so easy to find.

For as the industrial societies have developed, they tended to force workers into a “modernization trap”: for a long time, the labor market appeared so much more rewarding than any informal and self-sufficient forms of activities that these largely died out, and now, when the market can no longer absorb the volume of available labor, they are not there in reserve for a subsistence economy.

Accordingly, there is no reason to expect that alternative forms of useful activity will crop up spontaneously or on command; they must be reinvented, sponsored, and encouraged.

Systematic reordering of work according to such principles would not eliminate unemployment. But since it is unlikely that there will ever again be enough work to go around, we should embrace an arrangement that will create tolerable conditions and thereby lessen the likelihood of social conflict.

"A Non-Productivist Design for Social Policies"

As of 08 April 2010, I am unable to find this url.

Go to Wikipedia for some further links to Claus Offe

Basic Income