The discussion in recent threads of the job guarantee (JG), basic income guarantee (BIG) and ‘job or income guarantee’ (JIG) continue to motivate me to explore the topic further. The comments, perhaps mainly negative but some positive (at time of writing this post), have been of a high quality. I once again would like to register my appreciation. I am learning things even if no one else is! In this post, I will mainly refer to a couple of Dan Kervick’s comments and a point raised in several places by Philip Pilkington, although considerations relating to most other comments will arise implicitly in discussing the various points. The contributions by Dan just happen to provide a good context in which I can elaborate a little more on my reasons for suggesting a JIG rather than a JG.
Before getting into the main issues, Dan picked me up (correctly, I think) in my use of the term ‘formal economy’. I was using it as shorthand to differentiate the activity of basic income recipients from the activity of those employed in the voluntary JG program or the regular economy. Perhaps it would have been better to distinguish the ‘wage sector’ from the ‘non-wage sector’. I think that this distinction is significant because in the former sector income is still tied to labor time performed while working for a wage, whereas in the latter sector income has been separated from labor time. That is, in the non-wage sector, the individual could be putting in many hours of work or very few, but would still be receiving the same income.
Dan then wrote:
But on the broader question of the JIG, I have to say that my moral and social sensibilities are a little bit ruffled by the concept of an income guarantee.
That is fair enough. Our difference here is on a normative question. My view is that normative questions will ultimately be decided politically, hopefully democratically (another normative judgment). We can argue about these questions, and the discussion of them can be very interesting and fruitful, but their provisional resolution at any point in time occurs politically and socially.
I make this distinction not because I am uninterested in responding to the point. I will briefly respond to it below. My reason is to separate this question from another purpose of my previous discussion of a JIG. In the conclusion to his recent post, Bill Mitchell wrote:
I accept the macroeconomic concepts of full employment and price stability as being desirable goals and the way for the economy to achieve public purpose – advance the prosperity and well-being of its citizens.
So based on the body of work that has become known as MMT we understand that a buffer stock of some sort will be used to ensure inflation control. The question becomes what is the “best” buffer stock to employ. MMT demonstrates clearly that it is the employment buffer option that is superior.
In my previous post, although I don’t like the “buffer stock” terminology, I accepted the MMT position that a JG would be more effective at achieving full employment with price stability than the NAIRU approach. However, then I went on to suggest that a JG would be more effective at delivering these two macroeconomic objectives if the JG was offered in conjunction with a BIG. That is, I am suggesting that the JIG would actually outperform a JG in terms of full employment and price stability.
I do not see this suggestion as necessarily contradicting what the academic MMTers have written themselves in the past. They have acknowledged that a JG could co-exist, for example, with unemployment insurance. All I am suggesting, in this context, is that a JIG is superior to a JG if assessed strictly on the basis of the two macroeconomic objectives, full employment and price stability.
But of course, like Dan, I also have an ideological motive for presenting my argument. The superiority I claim for a JIG when it comes to achieving full employment and price stability is not the only – or even the main – motive for raising the issue. My larger consideration is finding a path to a freer society, as I see it. The ideal I have in mind is a society in which individuals and voluntary associations of individuals are socially productive of their own volition but are free to choose work and leisure as they see fit. This obviously requires a level of consciousness in which individuals are interested in contributing whatever they can without placing requirements on others.
It may be that this is not the kind of society people actually want, and perhaps it is not in accordance with their true natures, as Philip Pilkington argues. But, if so, this would become evident through the choices people made. There is nothing in the JIG to prevent people continuing to opt for wage labor, as Philip suggests they would.
Continuing with Dan’s contribution, he argued:
It is unfair to ask those who are working to support those who are not contributing, but who are capable of doing so. It is unfair to hand out social benefits to able-bodied people if they are not reciprocating by contributing their own work to the productive efforts that make those benefits possible. To provide an income to people is to provide them with a claim on the output produced by the society. I don’t see why anyone should be given title to such a claim if they are not reciprocating and are instead living solely for themselves.
From my ideological standpoint, if private property were eliminated, there might be a place for suggesting more be required of the recipient of a basic income. But if people are to be denied access to resources, including land, for the purposes of meeting their own consumption requirements, in my view that is more than enough to require society, by way of mutual obligation, to ensure at least their basic needs are met.
But, in any case, I do not at all believe that the long-term outcome of the JIG would be a large portion of society opting for pure individualized leisure and making no socially productive contribution. If we have psychological and sociological reasons for preferring a socially engaged and productive life over an unproductive isolated life – as the psychological and sociological literature suggests – it seems we would be eager to contribute in socially productive ways, because being of value to others is personally fulfilling.
Dan also provided a link to a post by Bill Mitchell from January 2011 outlining his reasons for preferring a job guarantee (JG) to a basic income guarantee (BIG). I have read the post before, several times, and it is well worth reading, but it does not alter my perspective.
Before briefly considering Mitchell’s main arguments, I should perhaps reiterate that I am not comparing the JG to a BIG, but the JG to a JIG (‘job or income guarantee’). Mitchell was considering the former comparison, not the latter.
Mitchell’s arguments against the BIG mostly fall into the following types:
(a) BIG advocates concede too much to the neo-liberals by accepting that full employment is unattainable alongside price stability, a point on which they are wrong;
(b) A BIG may have “adverse” effects on labor supply;
(c) BIG advocates give too little weight to work in psychology, sociology and other disciplines revealing the human costs of joblessness under prevailing social conditions;
(d) BIG advocates place too little emphasis on the social stigma associated with joblessness.
In relation to (a), clearly I agree that the neo-liberals are wrong to deny that full employment (as opposed to the level of employment associated with the NAIRU) could be maintained alongside price stability. I am not disputing the MMT position on this question. It simply is not an argument I have resorted to in coming to my view of a JIG. The voluntary job guarantee that would form part of the JIG would perform a similar role to the JG in maintaining full employment alongside price stability. Actually, I have suggested it would be technically superior, in this respect, to the JG.
Argument type (b) perhaps indicates a difference in ideology. If the aim is to avoid labor-supply “disincentives”, it may well be the case that a JG is better than a JIG. But clearly my purpose has been to consider a way to assist a transition to less work on the basis of wage labor and more free time. My ideological preference is to enable people to embrace more free time as this becomes increasingly possible through technological advancement and mechanized production. For others, the ideological preference may be to maintain the present system of wage labor, in which socially productive activity is maintained, as much as possible, on the basis of wage labor. Or perhaps this is chiefly a difference in time frames.
Regarding (c), which concerns the human costs of unemployment, and (d), the social stigma of joblessness, the motive for considering a JIG rather than a BIG is to facilitate the transition from wage labor to free time in such a way as avoid such human costs and minimize any effects of stigmatization. The intention is that individuals who are already keen to embrace free time – stigmatized or otherwise – are enabled to do so, while those who remain reticent can opt for wage labor, including JG employment when there is no wage-job available in the broader economy. If, as Philip suggests, people actually prefer wage labor, all they would need to do is opt for it. There would then be little difference in practice between the JG and the JIG. However, the JIG may facilitate the transition to other social configurations if that is the desire. That was the main motivation for my posts on this topic.
In closing, I should perhaps note that as broad and futuristic as my last few posts may seem in one respect, they have actually been quite narrow in another respect. I have not considered explicitly in the last few posts the mix of public and private sector activity in the ‘wage sector’, the extent to which there might be free access to some goods and services, the role of income redistribution, the extent and nature of regulation of market and other activities, the level of democracy and the extent to which decisions are made centrally or locally, or whether we are trying to move toward a more socialistic society or retain essentially capitalist social relations. I consider all these questions just as important, if not more so, than the introduction of a JIG. However, an exciting aspect of a JIG (or a JG or BIG, for that matter) is that such a policy arrangement remains open to a wide range of social choices on these other questions.