Saturday, November 1, 2014
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Playing by the Rules

In a recent article, ‘Sympathy for the Luddites’, Paul Krugman looks at the impact of automation on the future of work. He argues that the old conflict between labor and capital is entering a new phase. In the past technological progress displaced unskilled labor; now it is knocking out skilled labor as well. There are no (or not enough) skilled jobs to go round.

Keynes, writing in the 1930s, referred to Krugman's problem as “technological unemployment”; he viewed it as an opportunity to shift the activity of society away from work and towards leisure. In our recent book, How Much is Enough?, My son Edward and I took the same view.

Together with Krugman we advocate a guaranteed basic income. In support of this, Krugman writes:

If the picture I’ve drawn is at all right, the only way we could have anything resembling a middle-class society — a society in which ordinary citizens have a reasonable assurance of maintaining a decent life as long as they work hard and play by the rules — would be by having a strong social safety net, one that guarantees not just health care but a minimum income, too. And with an ever-rising share of income going to capital rather than labor, that safety net would have to be paid for to an important extent via taxes on profits and/or investment income.

What does Krugman mean here, though, by the phrase ‘as long as they work hard and play by the rules’? He seems to see his strong ‘social safety net’ as a top up to wage income – a kind of in-work benefit. He has argued for an increase in the minimum wage in the US along exactly these lines. But he has also said that there will not be enough skilled jobs for the middle class to go to. It makes no sense to top up non-existent wages.

Our proposal deals directly with the Keynes/Krugman problem of growing technological unemployment. We advocate a universal basic income, received by all citizens on an unconditional basis: that is, detached from the labor market. This offers a choice between work and leisure. It would make it possible for ordinary citizens to live - eventually comfortably - outside the labor market, in the same way the rich could always do. To offer such a choice is both a fruit of an affluent society and a solution to the problem of technological unemployment.

A universal basic income does away with the necessity of working hard and getting on, at the same time as automation – by eliminating jobs – is doing away with the possibility of doing so. Without the constant demand to find paid work in order to live, a whole range of possibilities opens up outside the labor market. If work becomes scarce, that is the perfect opportunity to question its central status in our lives. Krugman is surely right that such an income would have to be financed from the proceeds of capital. This would require a new political consensus about who should reap the benefits of technological progress. But if it becomes obvious that “hard work” no longer pays that no longer sounds like mere utopianism.

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  1. CommentedShane Beck

    The 1% in the global system make the rules and they have no desire to share their wealth with the middle to lower classes. Ever. They will continue to minimize and avoid paying taxes by every means possible. The middle class will be destroyed by the ever increasing taxation burden of the state and technological obsolesence until they are relegated into the serfdom of unemployment and underemployment. Europe's lost generation is just the start.

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