The notion of tax-driven money is easiest to understand in relation to an exogenous tax such as a property tax or simple head tax. Demand for a state money is most effectively driven by exogenous taxes, not endogenous ones such as income taxes. Even so, in a hypothetical system with a tax imposed solely on income, the tax would still drive demand for a state money. It is worth considering why this is the case, because it also indicates why some level (but not any level) of a basic income would also be consistent with currency viability.
In the previous post, it was argued that there is good reason for unearned income of landlords, rentiers and capitalists to be redistributed at least partially to all citizens. In this post, I want to consider briefly the way in which the establishment of a nationalized bank could facilitate such a policy. The political viability of this institutional change no doubt varies from country to country, but does not seem out of the question. In Australia, for instance, where strongly neoliberal policies are pursued, there is some survey evidence indicating that a strong majority of voters would be in favor of the establishment of a government-owned bank and that less than a quarter would oppose such a move.
It is sometimes argued that a basic income guarantee (BIG) would be unfair because it requires no reciprocation from the recipient. Personally, I reject the principle of reciprocity, but many do not, so it might be worth briefly considering how the principle, if held, ought to be applied in the present social system. In a system of private property ownership, I would argue that the reciprocity argument against a basic income is clearly false. Would-be recipients are already reciprocating, before any such introduction of a basic income, by agreeing to go along with the private-property system. Why should individuals, especially those not born into private property, respect private property rights unless they are given something in return for their cooperation with the arrangement? It should go without saying that they are entitled to an income as reciprocation for not demanding the end to private property. If we are going to appeal to reciprocity, the onus of reciprocation should be on those who derive property income.
One concern with a job guarantee being proposed in isolation is that opponents clearly attempt to paint the policy as workfare and, worse, right-wing advocates or implementers of the policy would attempt to introduce it in that pernicious form rather than in the way that the job guarantee advocates clearly intend, which is as a job with minimum wage and basic conditions attached. There is no doubt that the job guarantee, as intended by modern monetary theorists, is very different from workfare.
Many appear to object to the notion of an unconditional basic income. In particular, of those who would prefer to remain in a job, many seem to resent the thought of others opting out of a job and still being guaranteed an income. Here, I want to consider this attitude in the case of a ‘job or income guarantee’ (JIG), a policy that would give everybody a guaranteed job if they wanted one, or a basic income if they didn’t. Newer readers can find earlier posts on this topic in the ‘Job & Income Guarantee’ category.
I would say that in the area of economics I have only ever had three light-bulb moments: perceiving the source of surplus value (Marx); encountering the principle of effective demand (Kalecki, Keynes); and understanding the implications of monetary sovereignty (MMT). Each of these insights had a big impact on me and made sense of a lot of other things all at once.
The provision of a guaranteed income to every man, woman and child would give each individual a greater degree of independence and enhance real freedom. This would best be accomplished in combination with free universal access to various forms of real income, most notably decent housing, high-quality education, healthcare, and an expanded commons, including free internet access to all available written, musical, televisual and cinematic materials. The guarantee could take the form of a basic income, participation income, broadly defined job guarantee, or some combination (e.g. JIG).
I have suggested in recent posts that both freedom and equality would be promoted by ensuring that all individuals: (i) are guaranteed a job if they want one; and (ii) can opt out of paid employment if they wish. The first ideal would be met by a job guarantee and the second by an unconditional basic income scheme. Accordingly, I am in favor of a combined job or income guarantee in which all adult citizens are guaranteed a job and/or basic income as a matter of right. This raises questions about the implementation of such a policy.
A majority of my posts over the past couple of months have been concerned in one way or another with a possible transition to a freer and more equal society. This has been largely motivated by the diverse commentary of regular contributors, which is really helping to move my understanding forward. Although the connections between the various threads are quite clear in my own mind, and probably pretty clear to regular commentators, even some of the basic connections might be lost on occasional visitors. The purpose of this post is to summarize the major connections I perceive and my current position. There are disagreements on all these issues, and my own thinking is in flux as I continue to reflect on the various arguments being expressed. The quality of the commentary enhances the blog immeasurably. Thank you to all contributors.
I have been reflecting on the role an unconditional basic income could play in the transition to a freer and more equal society. One set of considerations concerns the viability of the policy. Would it be technically feasible? Would it destroy the currency? Another set of considerations concerns the beneficial dynamics the policy might be expected to set in motion. By liberating individuals from the fear of poverty, everybody would be freed to focus on the all-sided development of human capabilities.