George Monbiot's Guardian article this morning asks what is the next big idea. He concludes it could be land value taxation and a citizen's income.
I have no doubt land value taxation has to be part of a proper tax system. I also have a paper coming very shortly, with Howard Reed, on a citizen's income. But whilst I think they are important I am not sure either is the next 'big idea'. They're important, but not enough to change everything.
Curiously George hints at what is needed, saying:
These ideas require courage: the courage to confront the government, the opposition, the plutocrats, the media, the suspicions of a wary electorate. But without proposals on this scale, progressive politics is dead. They strike that precious spark, so seldom kindled in this age of triangulation and timidity — the spark of hope.
Here he and I agree. In my book The Courageous State I argued (chapter 13, when introducing the third part of the book on solutions to the problems we face):
Based on the arguments in the first two parts of this book I hope it is now clear that the Courageous State has three goals.
First, it wants to run its own economy in accordance with its democratic mandate to achieve a balanced outcome that is sustainable and that permits as many of its resident population to achieve as much of their potential as possible.
Second, the Courageous State wants to cooperate internationally so that other states can achieve the same goal for themselves.
Third, it wants to provide as much freedom as it can to its population to explore their potential while imposing only those constraints necessary to ensure that a balanced society results. The result should be personal courageous states where individual risk-taking — not just economic, but across the whole spectrum of life — is possible.
It is important to note that these goals are fundamentally different to the those of the feral, neoliberal state we now have. That state that sings to the neoliberal tune and runs its economy to primarily meet the needs of the financial /speculative economy that exists largely outside the real economy in which real people live, work and exchange. Internationally, the neoliberal state succumbs to the demands of international finance represented in popular myth as ‘the bond markets'.
It is also important to say that the Courageous State is also different from the post-war consensus. In a nutshell that consensus offered a bargain with the people of the developed world, offering better material living standards for all now, and for their children thereafter. In the process it ignored the constraints of the planet. Oil found it out and led to its downfall.
In contrast to the post-war consensus, the feral neoliberal economy offered a different bargain with the people of the world: it offered (relatively) stable consumer prices, an illusion of wealth through asset inflation and cheap, readily available credit so that people could have whatever they wanted as soon as advertising succeeded in persuading them of their desire for it. The mountain of debt this created as an elite accumulated unsustainable wealth has found this model out and has led to its downfall.
The Courageous State offers a different bargain with the people of the world. It offers those people the chance to fulfil their potential, both economic and otherwise, in a world that offers them and their children sustainable hope for their future. No-one has done that before, but the Courageous State is a not a twist on what we've had: it is about creating politics fit for the 21st century.
In saying that I know, of course, that the degree to which any state can be courageous depends to some degree upon the eventual extent of international cooperation there is on these goals; there is no point pretending otherwise. But for all those who say that is unlikely to happen, it is wise to recall that for many years neoliberals thought they had no hope of overturning the post-war Keynesian consensus that delivered the greatest period of sustainable increased prosperity the world has ever seen. However, they did just that. Circumstances gave them the opportunity and they took it. The current world economic crisis provides the opportunity to create the Courageous State. To put it another way: without courage, the Courageous State will not happen, but the time for it to be created is now.
It's vain to suggest you have the big idea, and I definitely don't. But I offer some big ones in that book. And for good reasons: the world needs them.
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I am surprised that the citizens income idea is gaining ground on the left because I have always considered it part of the libertarian georgist paradigm. I know the argument that citizens will be unwilling to relinquish their dividends and that it would embed LVT and I know how successful has been the Alaskan Permanent Fund.
However, there are so many good things to do with the revenue from LVT that I can see no scope for a surplus. And until robots can perform all labour (nursing?) we need to have an incentive to work for wages, whilst of course supporting those who cannot. When we discussed this at a meeting a few years ago there were several women of my own age who seemed to think that they should be paid for the housework they do (and presumably the gardening).
The problem with citizen’s income, is that the right think they’re doing it with Universal Benefit. The question becomes not about guaranteeing income, but at what level that should be set.
How can you win support for minimum income, if today the Tories are talking about freezing or reducing the Minimum Wage? We can’t even get support for a Living Wage!
So we have a struggle on our hands…
So be it
It’s wrong to link minimum wage policy with a discussion on a citizens income. A wage is the value that an employer puts on labour, with a view to his objectives (e.g. profit). An employment contract should be, as far as is possible, voluntarily entered into by both parties and whatever terms they are both happy with.
A citizens income is based on the value from society. It’s universal. We all pay in via taxation, and we share it out.. equally.. irrespective of whether the recipient ‘earns’ it in the traditional economic sense.
A key benefit of a strong citizens income would be to enable us to do away with a minimum wage. It is, after all, society that has decided that there are minimum income standards that people need.. so society can meet those standards rather than ask employers to do it (which works well in many cases, but at marginal levels where the value of someone’s labour is less than the minimum wage, it has negative effects.)
In theory, a citizens income should cause wage growth anyway, because people would be freer to refuse paid work. However, where someone was willing to work for sub-minimum-wage, there’d be no reason to stop them.
I hope Monbiot is right, and that these are the next big ideas. Or, more correctly, the next big idea (singular) as it seems to me that they are a natural fit with each other. What better way to pay the citizens income than with the ‘rent’ (LVT) paid for occupation of the citizens’ land?
” . . . the post-war Keynesian consensus . . . ”
Was it. in the U.K., ‘Keynesian’?
“Most notably by R.C.O.Matthews in his article ‘Why Has Britain Had Full Employment Since the War ?’ (Economic Journal, September 1968). For Matthews, the question was provoked when he found it difficult to identify direct evidence of a Keynesian stance of fiscal policy in the U.K. He noted that, rather than a budget deficit designed to support a high level of aggregate demand, the government had persistently had a budget surplus, although he recognized that a surplus observed ex-post is not necessarily inconsistent with a deficit intended ex-ante. P47.
Matthews did not dispute this, but pointed out that :…throughout the post-war period the government, so far from injecting demand into the system, has persistently had a large current account surplus.
From this he inferred: Fiscal policy as such therefore appears on the face of it to have been deflationary in the post-war period, quite strongly deflationary in fact, rather than the reverse.”
P197
http://www.press3.co.uk/publications/to_full_employment/chapters/