Wednesday, 24 July 2013

Automation and the post-scarcity economy: The economic argument for basic income

Many people have argued for a basic income because they think it would make for a fairer society. The work of Phillipe Van Parijs since the early 1990s is no doubt the pre-eminent example, and a comprehensive bibliography is available online. However, I have more recently seen arguments for basic income premised on its superior economic performance, at least in the long term and if certain trends continue. I will follow my previous blog on basic income and job guarantee programmes by, belatedly, writing on this topic.

There are certain links between Van Parijs’ argument in Real Freedom For All and the economic argument. Both begin from the premise that jobs are scarce and that some people get this scarce resource while others are left out. The economic argument begins by extending trends in robotics and computerisation that seem to reduce the employment available in many sectors. Robots are increasingly cheaper or more efficient than human workers, and so capitalists will gradually replace their workforces with these robots. This is the post-scarcity economy that Marx thought would lead to communism (though he thought that socialism would be a stepping stone to this rather than an economic and political disaster).

If robots are producing more and more it would seem that we would be entering a wonderful utopia, indeed a post-scarcity economy. However, while there would plenty for all many people would have no access to these bountiful goods. The haves will keep it all and less will be shared with workers, since workers will be employed (and presumably at lower wages if there is a surplus of workers). However, if most people have no resources and cannot find work, then who is going to buy all the items that are produced by the robots? The wealthy might well run out of things to buy – there are only so many hours in the day in which the rich can consume. This is the intuitively sensible idea that the poor have a higher propensity to consume their income on which Keynesian arguments are usually based. Coppola therefore refers to this robotic cornucopia as a “demand-constrained economy”

The economic argument for the BI is that it will redistribute to those who are unemployed and thereby increase demand. This demand will be good for the economy as it will provide a market for the produce of the robots, as well—presumably—as increasing demand for non-robot services as well.

One counter-argument to this is to point out that technological advances have been happening for centuries, and people have still been able to find employment. This has largely been through the creation of new products and services, which create jobs which replace the old ones. Indeed, I am unconvinced by the article by David Rotman which seems to have been a catalyst for the economic argument. Rotman mentions this counter-argument in his article and does not really rebut it. Technological advancement might just change the nature of work but not remove the need for it entirely. For example, if there are lots of robots then someone will need to make and fix them. Furthermore, if consumer prices are much lower then paid work could be shared around much more, with more people working much fewer hours than they currently do. If it is cheap to consume then many people might be happy to earn a little and then to retire to a life of leisure.

A further point to raise in response to the economic demand argument for a BI is that the BI is not the only way to redistribute resources. Another policy that will do just as good a job is a state-funded job guarantee scheme (JG), which I presented in the previous post. I prefer the JG to the BI and recently argued for the superiority of the JG in my PhD thesis. I will contrast the two approaches in the following post as well. For now I will highlight that the economic argument applies just as well to the JG scheme in a post-scarcity economy.

If the state were to employ the involuntarily unemployed then this would also redistribute income and create demand in the economy. Coppola of course admits as much. The problem is not that there is a lack of useful work to do, but rather that there is a lack of people wanting to buy the products of labour in the market.

So, if there is a demand-constrained economy then the BI and JG are two equally valid options to improve economic performance. In the final of the three blogs on this subject I will discuss the choice between the two rival policies.

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