GMI + JG = paid work as a choice for all

I’ve been arguing for a while that a Guarantee Minimum Income (or Universal Basic Income) ought to be combined with a Jobs Guarantee to would make paid work a genuine choice for everyone. To spell this out, the GMI/UBI would make it possible to live decently without paid work, while a Jobs Guarantee would ensure that paid work was available to everyone. As a medium term policy, the best form of GMI would, I think, be the participation income advocated by the late Tony Atkinson. That is, a payment conditional on some form of social contribution, including voluntary work, study and childcare. Support for such a policy entails a direct confrontation with the punitive attitudes behind policies like Work for the Dole, while still maintaining the widely-held principle of reciprocity.

I was going to write more about this, but I just received an article by Felix FitzRoy and Jim Jin, in the Journal of Poverty and Social Justice which presents the argument very well. So, I’ll just recommend that to anyone interested in the issue.

21 thoughts on “GMI + JG = paid work as a choice for all

  1. In principle I agree. I would have to look at the article in detail to flag my agreements and disagreements with it in detail. I’ll try to do that fairly soon.

    We have to get public debates (including on-line debates) about GMI+JG going as much as possible. It would be good if SBS’s “Insight” could run a program on it. It would be great to see John Quiggin and Bill Mitchell front and center in the expert panel on the “for” side. J.Q. for the smooth, compelling arguments and B.M. for the acerbic argumentation needed to rebut aggressive, dogmatic neoliberals and glibertarians.

  2. GMI is a scalar, I presume. What is JG? It seems to me JG is representable by a vector. There is a limit to the substitutability of activities (‘types of jobs’) any one ‘job seeker’ is capable of carrying out. While there may not be a perfect correspondence between the list of types of labour service activities and the list of wages (some bunching is observable), it seems to me the formula “GMI + JG = paid work is a choice” is valid only for the artificial case of micro-foundations of macro-economic production functions where there is ‘K’ (capital) and ‘L’ (labour), ie only one type of physical capital and only one type of labour service.

    In short, for complex economies where the number of elements in the vector ‘L’ is large and there are qualifications required for many of these types labour service and the prices for these types of labour services (‘wages’, ‘salaries’, ‘commissions’….) vary a lot (a large range), the ‘choice’ seems to me to be illusory.

    To the extent that there is unemployment benefit by whatever name, the proposed ‘choice’ is already available.

    So, how is the idea of a guaranteed minimum income and job guarantee supposed to work, assuming the idea is something other than a guaranteed unemployment benefit calculated in such a way that people can actually survive for longer periods of time and a two tired employment system (vastly different incomes for the same type of work) is to be avoided and a convergence to a minimum income for all, except the owners of ‘capital’, is to be avoided?

  3. It is not so much a flaw in the proposed concept as an incopatibility with the Australian context, an economy that is in the mid position of a property Ponzi Scheme that distorts basic operating parameters to extremes, that makes the discussion for us in the here and now purely Utopian.

    Prior to 1995 when property prices tracked the CPI a GMI was realistic as access to accommodation stabilly affordable and expectations were relatively modest. The GMI notion in a country where every piece of land and every space is controlled, ie no place for those with nothing to rest, becomes a social responsibility, else death by deprivation becomes murder by the state. So the minimum a GMI must be is sufficient to sustain a life, but what does that mean from a living space point of view in a country where individual property ownership in an obscenely inflated market is only achieveable for the top ten percent of income earners, and the concept of social housing is a long ago sold off distant memory. Problematic. As is the JG concept.

    Any public guarantee must service the full spectrum of possibilities. So for Job seekers this must assume no knowledge and no skills. How can that work? This

    ……is that reality (the comments are interesting). What else can this be? A national network of widget factories or hoop jumping centres? It becomes very complicated to undertake to arrange other peoples affairs.

    The best that I can come up with would be mentor organised self help discussion groups along the lines of alcoholics anonymous with a requirement to progressively circulate around the groups with a view to find information and or ideas that lead to new employment pathways, self employment initiatives, or the identification of work limiting conditions.

    Governments can’t offer job guarantees, they can only provide resources to promote change, in my opinion.

  4. We might want to bring this sort of thing in just to help fix peoples attitudes. The neoclassicals don’t seem interested in putting together a labour shortage. If we get rid of retained earnings for sole traders, and make sure all loanable funds go at low interest to durable producer goods (and not to land inflation, derivatives and other non-wealth-creating uses) …. That will translate eventually into too many producer goods for the amount of workers available. Hence labour shortages. I think we could use a scheme like the one suggested just to show that we are serious about full employment again. You want employers chasing people down the street to offer them a job. Thats how you get the good society. We are not free peoples unless we can get a job easily. Look for work in the morning and have work by the afternoon. Unless we have conditions like that all talk of freedom is pretty empty.

  5. In news today, Finland has decided to end its basic income trial and is moving to “alternative welfare arrangements”.

  6. A search of the entire paper shows no occurrences of the words “owner”, “owners” or “ownership”. This is diagnostic of a key limitation in the paper, despite its claim to “turn to the radical”. Clearly the proposed solution is not radical enough.

    The theoretical and projected problems we will find within a proposed GMI + JG system will come back to the fact that the ownership issue is not addressed. Neither the ownership of key personal assets, like a domicile, nor the ownership of means of production are canvassed as issues. The Really Existing Capitalism Variant (RECV) of the U.K., or any Western country, is a system. In any system, there are limits to tinkering piecemeal; all components or sub-systems affect all others and the whole. Sometimes the limits to isolated “tinkering” might be quite elastic but they are still there. Working with a GMI + JG implementation alone ignores the key role of ownership in the economy. Radical change requires reworking all components of the economy including ownership. This can be seen if we take a stocks and flows approach along with a consideration of the qualitative differences between income from work and income from ownership.

    Let me take the second issue first. Income from work involves a time opportunity cost which income from ownership in pure form does not. The hours I work for income, if I am diligent and my employer is vigilant, are hours I cannot spend doing anything else, like sleeping, eating or engaging in recreation. Income from ownership in pure form is different. I continue earning income from ownership while I sleep, while I eat and so on. There is no time opportunity cost. Management or stewardship of what is owned is another issue. Management or stewardship is work and has a time cost as does all work. Ultimately, the large owner, as capitalist or rentier, pays managers and stewards to do all or most of this work as this cost tends to be a small component of the total input costs to capital. As a note on this issue, we can see that a GMI does not carry a time opportunity cost unless there are coercive compliance components. A GMI also appears and operates as a valid form of ownership. The citizen essentially owns a fixed annuity from the government (the public purse) for which qualification is, usually and simply, citizenship plus attainment of the age of majority.

    The GMI is an annuity conferred by government and implies a share of ownership in the common wealth of the nation which has a stock generating income flows and taxes which can pay the GMI. Call the GMI a Citizenship Annuity. Include an education component in Civic Education or Citizenship, a subject which certainly should be a component of all primary and secondary education. Let growing people (children) know they are part of a society which cares for them and which will pay them their own fair share of income from nationally generated wealth when they grow up. Yet, at the same time, ensure that it is understood that the citizen has duties and obligations to society in return for this share. Becoming educated, understanding how society functions, how the nation functions, voting, being a good citizen in broad terms, helping others (without reward at times) and so on would be the duties and obligations imposed by the Citizenship Annuity received by an adult.

    Now, turning to a basic stocks and flows approach we can begin to look at what happens to income (a flow) and wealth (a stock) as money makes its circuit in an RECV system which is a mixed economy with a welfare component. A “mere” GMI + JG grants a citizen a small stock share which generates an income (as the GMI) plus an income from the JG. The share in the national wealth implied by the GMI or Citizenship Annuity is and should always remain inalienable. The citizen cannot sell this share nor have it taken from her at source.

    In this sense, the ownership rights over the GMI are limited and do not extend to free purchase and sale as is common with full “property rights” ownership. Thus, the recipient of GMI + JG effectively has, in the first instance, income only but not accrued wealth. Especially, the recipient of GMI + JG begins adult life, in all likelihood, with the ownership of no significant assets (no stock) which could provide a secure residence (a lived-in house or flat as a non-income producing asset) and provide an income (a flow) from income producing assets.

    The citizen in this position has no income producing assets (stocks) and is thus in the position, at the maintenance level of a basic GMI + JG, of being “never able to get ahead”. She will have enough to get by, will be renting and will own only minor personal possessions. A social wage from a high level of public services will partially ameliorate this. The dynamics of late stage capitalism will continue to function overall with a mere GMI + JG in place and no concomitant changes to the ownership of production; meaning no changes to the private property ownership of the capital used for production and thence for an income stream without work.

    As alluded to earlier, the GMI + JG is incomplete on its own. The current macro dynamics of capitalism, as discovered and illustrated by Thomas Piketty, can be summed as follows, “If return on capital is greater than growth then economic inequality increases”. With a GMI + JG we give the recipients chips to keep playing the game but the game still channels all these chips, in the long run, back to the owners of the means of production, the owners of capital with an income stream. Their wealth, control and power increase except for the subtraction effect of taxation (for welfare and other purposes). And we see these days, the problems in taxing capitalists and corporations properly.

    In conclusion, we need a more thorough-going reform than a GMI + JG. Eventually, the issue of a fairer distribution of ownership and control of the means of production must be addressed. This is not to say that a GMI + JG is not a good first step. It is a good first step. It can and will have to be approached in a staged manner moving from the current situation to a full GMI + JG over time. However, we have to remember that the reform of capitalism will not be complete at that point. Mixed economy capitalism-welfarism in only a halfway house. It would still contain in it the seeds of reversion, of recidivism, just as the Keynesian welfare state still contained in itself the seeds of reversion to neoliberalism and market fundamentalism as proven by our actual history, 1970 to the present.

    The wealth of the capitalists, always tending to concentrate via the monopolistic tendencies in capitalism and via “Piketty’s Law” (both being behaviours of the institutionalised formal systems of ownership and income rights) converts to power. Ever concentrating wealth is converted to power and this power can always rise again, always does rise again, as per neoliberalism to roll back reforms which are not thorough-going enough and which do not dismantle the wealth concentrating nexus at the heart of capitalism. Capitalism or more precisely the capitalist ownership and financial system is a formal axiomatic system, via institutional and accounting systems, with these precise qualities, namely the tendency to ever greater concentrations of individual wealth.

  7. As well as sorting the demeaning of people via the social security system, there is the analogously nutty system that also needs resolution, the revenge/paranoia based criminal ‘justice’ prison industrial system especially in the US.

    On top of the crude incaceration and judicial costs of around $US 30K per year per jailbird there are the indirect costs (family ‘disruption’, ‘criminogenesis’, loss of life expectancy) arising just as with punitive social security.

    Its interesting in both cases to see how in these fields economics/cost benefit analysis does not appear to rule, but rather the meanest angels of human nature.

  8. That is a good treatment of the concept, Ikonoclast. I suspect it would work in France. I like the citizen ownership concept. Those MP’s would have found it more difficult to give their foreign citizenship if it was actually a tangible asset. While I was reading it it made me see that the GMI is an extention of the tax system and managed with tax thresh holds (for those who don’t need it it gets clawed back through taxation). At 18,000 for current unemployed that would be around 13 billion, just a bit more than they spent in Nauru.

    I would have to examine this quantitatively to form a better opinion.

  9. One thing the paper does not make clear is what can be done to avoid this being turned into Soviet-style make-work of little value to anyone.

  10. Guaranteed income: the dole.

    Job guarantee: work for the dole.

    But I believe the old wisdom applies: you cannot have a welfare state and open borders. The wretched of the earth will invade your post-work utopia and overload the system.

  11. The Finnish UBI trial did not receive the support of their largest trade union, which declared it to be next to useless. Perhaps the union saw the UBI as a competitor for workers’ support and therefore a threat to their own business plan?

  12. Some interesting statements above.

    “what can be done to avoid this being turned into Soviet-style make-work of little value to anyone?” – Robert Merkel

    It’s a fair enough question but there are answers. After all, our current system has capitalist-style make-work. Is all of the fashion and grooming industry really necessary? Or does it just “make work”. We could easily make and wear functional clothes only and crewcut our hair for a tenth of the effort and resource use. Is all the personal superannuantion-financial-insurance industry necessary? No. We could easily have a single national citizen’s pension-super-insurance scheme. Advertising is a make-work scheme at both ends. It makes work for advertisers and then makes work for other people manufacturing to supply artificially boosted demands. In short, capitalism has massive make-work schemes and they are not all efficacious for humans or the environment.

    The issue is “value”. We measure value in money, and national production as GDP rendered as money, which are an okay approximations for some purposes. But when we cast the value net wider (start considering externalities) we discover that much work we and our machines do is wasteful and damaging to humans and the environment. Perhaps, instead of making work we need to share work, income and ownership better and to ensure the only work performed is genuinely of value to humans and the environment. We could do this by taking a wider view on what is currently left out of calculations as externalities.

    “you cannot have a welfare state and open borders. The wretched of the earth will invade your post-work utopia and overload the system.”

    Yep, the indigenous peoples of the world know that well. We, wretched Europeans invaded their open borders. They already had a pre-work utopia by comparison to the miseries of pre-industrial and industrial Europe. Now, we are overloading their system which was the natural sustainable system of their country guided by their “fire-stick farming”.

    In the modern context, almost nobody is proposing open borders yet, so it’s a straw man argument. Levels of development need to be closer for it to work.

  13. @Ernestine Gross

    I think I find myself in substantial agreement with you in terms of diagnosing a real danger inherent in the GMI + JG proposal. In my long post at #6, I attempted to come at the issue from a Marxian perspective.

    You, on the other hand, have posed the crucial question succinctly:

    “(How is) a convergence to a minimum income for all, except the owners of ‘capital’, … to be avoided?”

    The GMI + JG proposal sets a minimum income condition but it does not set a minimum wealth condition. Expressed in another way, it does not set a minimum ownership condition with respect to tradeable, productive capital. The people on GMI + JG do not get a collective share in private productive capital (the means of production). This leads to the exact possibility you point to namely, “a convergence to a minimum income for all” except for capitalist who can get higher and higher income streams from owning more and more capital.

    A forward-thinking Machiavellian monopoly or oligopoly capitalist could very well support a GMI + JG. It would be a new accommodation with the workers, the precariat and the unemployed. Recognising that neoliberal ideology and practice is under attack, such a capitalist might be looking for a new accommodation. Yet, it would need to be one that keeps the keys to the kingdom, ownership of the means of production, in the capitalist’s pocket. A GMI + JG would achieve this albeit at a cost to the capitalist. The cost essentially would be higher taxes on capital and income from capital. The likely benefits would be any or all of avoidance of revolution, avoidance of societal collapse, avoidance of environmental collapse (this last requiring other measures with popular support). A rational capitalist will choose to be impressively rich and alive over insanely rich and dead.

    Further, our MC (Machiavellian Capitalist) as a monopoly or oligopoly capitalist might intuit that the burden of some businesses going broke under the yoke of the GMI + JG, if any did, would mostly fall on small to mid-size businesses. The shift of business and profit to monopoly capital would be enhanced.

    All this is not a reason to not do a GMI + JG. It is a reason to do it with eyes open and to realise further planks of the socialist program are crucial. A significant portion of productive capital has to be moved into national hands (nationalisation of natural monopolies). A significant portion of productive capital has to become collectively owned as business collectives.

    Thus we need not a GMI + JG but a GMI + JG + COMP (Collective Ownership of the Means of Production. Without the three legs, the program will fail to reform capitalism into socialism. With the first two legs only it can become another accommodating ploy by capitalism; one which again could be wound back at a future data just as Keynesian Welfarism was wound back by monetarism and neoliberalism.

  14. Ikonoclast, I’m not defending the “bullshit jobs” that capitalism generates, of which there are many. However, we have ample evidence to show what happens when “creating employment” is the primary goal of a government program, and the “workers” are de jure or de facto required to be there.

    It’s not beyond our imagination to devise better solutions, but I would suggest that it is something advocates of such a guarantee should directly address.

  15. @Ikonoclast

    My first point, there is only one ‘price’ for all types of labour services, is I believe important even if there is no extreme income inequality at the time of introduction of such a system but taking into account a bit of current conditions such as personal debt (education, housing…).

    If I may suggest, collective ownership of the means of production isn’t literally possible (or do you want me to stop producing my own fried eggs?). The question of ownership of assets that produce essential services (water, electricity, health, education, infrastructure, banking) as well as large scale heavy industry is one that has been examined and continues to be discussed in mainstream economics, defined in an appropriate way that goes far beyond the mental model of the IPA.

    It seems to me there is no unique or universal answer to what is best. It depends on the prevailing circumstances. For example, in countries where the only non-trivially small industry is say oil, one may believe the best ownership is national ownership of the oil exploration, extraction and refining enterprises. But this belief may turn out to be misguided, even though it is well founded in industrial economic reasoning, because the government is corrupt. (Applying a basic notion of risk diversification – outside Finance – would suggest again a mixed economy might be better.)

    But let me make a proposal regarding the anticipated acceleration of ‘automation’ with the ensuing sharp declines in demand for various labour services (ie loss of ‘jobs’), which is easier to match with the current institutional environment.

    I propose that whenever an enterprise (public or private) introduces new technology that requires less ‘labour’ input, then this enterprise has to issues ownership shares to those people who are made redundant. Ownership shares for private enterprises is quite easily defined but the question of how many shares should be issued is not easy to answer, but it is not impossible either. For public enterprises something akin to your ‘COMP’ but defined on tax revenue could be used. If one were to go one step further and abolish depreciation of physical assets and book keeping entries like good will, intellectual property, etc, then the decision to hire people or buy assets (or thing air) would be a little more on a level playing field.

  16. @Robert Merkel

    Yes, I take your point. Many have pointed out that making the average working week shorter will spread the work around more fairly. It does seem to be the case that mechanisation, automation and computerisation are reducing the total amount of necessary work. So work for income is becoming a scarce “resource” in its own right.

    This highlights the need for spreading ownership of the “machines” and thus ownership of the income from the machines. More income streams in future will come from ownership of fixed capital, meaning plant and equipment. The “rise of the machines” clearly obsoletes the labor theory of value, in my view. The labor theory of value was a reasonable approximation probably up until the Second Industrial Revolution or Technological Revolution, which was the era of rapid industrialization in the final third of the 19th century and early 20th century.

    Today, it is clear that more workers are needed in health, dentistry, education, welfare and human services in general. This is one arena where job guarantee workers can be usefully employed after suitable training. Along with this there are probably some public administrative and clerical tasks where we can make decisions to keep some manual processes and thus keep human workers rather than try to automate everything. Then there is the changeover and build-out necessary for non-polluting energy supplies, national infrastructure renewal and environmental remediation (“Green Corp” work). There is plenty of need for human workers in all of those sectors. We can find a considerable deal of real work. It does not have to be make-work.

    Then we can share the work around and also share around the income from machines which come in the form of factories, plant, equipment, computers etc. If a machine creates value why should not all in society share the results equally? Nobody sweated over the actual work of the machine, though some, a relative few, sweated over setting it in motion (inventing, planning, managing and pushing buttons). If the labor theory of value is dead for the most part then there only remains the ownership theory of value which is entirely a moral question. Should one person own great amounts of machine value production while others own none or should all own it more or less equally?

  17. @Ernestine Gross

    You may continue frying your own eggs. 🙂

    You may continue doing this in your personal property fry-pan, on your personal property stove, in your personal property house. That’s the way I see it. Some or even extensive socialisation of standardly economically productive property does not to me imply no ownership of personal property. Income producing property is the issue. And not the petty stuff like a busker’s guitar. I mean the big stuff.

    In the first instance, re-nationalisation of natural monopolies; but apply case analysis for wise exceptions as you note. For example, I would not now advocate nationalisation of coal mines and coal generating plants. To heck with that. Let the rich capitalists suffer the slings and arrows of stranded assets.

    In the second instance, the socialisation and collectivisation, to some degree and by slow degrees, of large corporations. In your last paragraph you note one manner of issuing shares in corporations. There are no doubt several other ways to issue shares in corporations over time. One way would be to issue share bonuses to workers rather than to CEOs.

    In the long run, we need more worker collectives of large scale like Mondragon corporation (a federation of worker cooperatives). Thorough-going institutional change would be needed to support this. However, it is hard to see beyond a form of market socialism with cooperatives competing as firms. This moves the income from successful ownership from the “capitalists” to the workers. But what happens to workers of a firm that goes bust? They lose work income and share income. We still see the need for government welfare and the social wage in various forms. As I say, it is hard to see, speculate or propound beyond that level of change. Neither should we try. We can’t predict conditions in the not-near future.

  18. @Ikonoclast

    There is no law I know of that prevents the creation of a worker cooperative. Have you initiated or joined one? Moreover, worker cooperatives are no obvious solution to automation and associated decline of demand for many types labour services.

  19. @Ernestine Gross

    To be very pedantic, I initiated and worked in a worker’s cooperative for many years. In standard parlance, it’s called a nuclear family. My wife and I worked at unpaid work in the household, raised two children and also went out to full-time or 3/4 time paid work. That paid work was mostly for municipal and government agencies but I also had a work history in private enterprise before our marriage. We pooled all resources, shared all work and for every family member it was a case of “from each according to her/his ability and to each according to need”. Ignoring this sort of reality already creates a perceptual bias where we do not realise how important cooperative work already is in our society.

    In terms of worker cooperatives in the formal economy, which is what you obviously meant, I have not been in a worker cooperative unless we regard the public service as, in a sense, a nationalised cooperative.

    Whilst there are no laws against worker cooperatives (and many small family businesses are essentially worker cooperatives), there certainly appears to be little encouragement in most economies for mid-size firms to corporations being worker cooperatives. I imagine that institutional environment and neoliberal economics is rather more benign to capitalist rather than cooperative ventures. Our laws are biased to this outcome. Australia used to have more dairy cooperatives, egg cooperatives and Friendly Societies (to name a few) than it has today. I suspect the unregulated tendency to market fundamentalism and to monopoly in capitalism(s) and the advantages of being a transnational corporation in terms of cost shifting, intra-corporate loans and tax avoidance are can be rather decisive in stifling any large scale movement to larger cooperatives.

    The Guardian’s list of “The world’s biggest 300 co-operatives” is interesting but I don’t know the definition of “cooperative” being used nor how many of these are true worker cooperatives (full ownership and control by workers) or true worker cooperative corporations.

  20. @Ikonoclast

    Well functioning families are indeed a type of ‘worker cooperative’, IMO. Some smaller IT enterprises have effectively a worker cooperative structure. Some web-design productions seem to me to be another form of worker cooperative structure even though the participating members (IT, artists, photographers) may each have their own business number. My most enjoyable professional experience relates to another type of worker cooperative. An acoustic engineer, an environmental engineer, and an economist had done independent work on a particular topic, met by pure coincidence, so it appeared, but turned out to have been made possible by an entrepreneurial highly intelligent but without tertiary qualifications local person. An advertising person didn’t fit – we had incredible difficulties in preventing this person to blow up our strong empirical results into fantasy land numbers. On the other hand, a geologist joined later without causing any difficulties. In my opinion, a bit more could be done in Economics courses, not to promote worker cooperatives per se, but to expose students to the theory of the core (cooperative game theory) where production technologies are dependent on the combination of people with various skills who form coalitions. This material is a little more difficult than net present value calculations, the go to method in corporate finance.

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