It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. Attributed to Mark Twain
Rapid or profound change can wrong-foot anyone. Political parties in the UK now face a challenge. Economic developments are making a number of public attitudes out of date or even obsolete. Confronting those attitudes risks electoral retribution. Not confronting them makes it difficult or impossible to address problems voters themselves will face.
This is a particular problem for politicians on the left who believe in democracy and the good sense of the average elector and have a horror of being called elitist. Moreover the Labour party is starting from a position where it has forfeited, however unfairly, the trust of the public in its economic management. Who wants to pick another fight? Certainly the current leadership for all its claims to radicalism shows no appetite for doing so.
The profound economic changes which are leaving public opinion off the pace are themselves well known. Globalisation is partly a political choice but it is also driven by technology leading to the fragmentation of supply chains and the hollowing out of manufacturing industry in the West. Despite anti-trade rhetoric from President-elect Trump, these trends cannot be reversed. Manufacturing in the UK, even if it revives, will never again be a source of mass employment. Indeed no export industry in the UK will ever be a source of large-scale unskilled employment. On current trends the gig economy – with extensive insecure self-employment – will expand, with most people engaged in what has come to be termed the foundation economy. That is a fancy name for the occupations and services that exist in any community of people, however poor, like wholesaling, retailing, house and property maintenance and various personal services.
Indeed if the promises of growing computerisation, the rise of the robots and artificial intelligence are fulfilled a whole swathe of service sector jobs previously considered skilled will be swept away, including driving, clerical work, accounting and even some routine medical services. There is a chance, usefully exaggerated by Paul Mason, of an even more profound disruption whereby it becomes impossible to price and charge for certain services and they become public goods or are not produced at all except as free goods by volunteers. The cost of reproducing software code or musical recordings is so low that much disruption is experienced in the industries providing them – although “freeware” has yet to undermine the position of Google or Microsoft.
Current developments threaten but also put a high price on social cohesion. Any national or other community will, broadly, have three classes of people: those with the particular skills that are still required who can occupy well-paid jobs, those who own capital in companies or surviving commercial entities and who can live as rentiers, and others with redundant or inadequate skills who – on current trends – will be obliged to do the best they can in insecure or casual employment providing low-paid services for each other or the other two groups. The risk is that this third group will be more numerous than the other two.
It is obviously in the general interest that there is a limit on the social inequality which seems inherent in this scenario. That is true both for social peace and for there to be adequate levels of effective demand for the goods and services that society could provide.
As society is currently ordered, those in skilled jobs are held to earn and have an unquestioned right to the salary they bring in and rentiers similarly are entitled to the fruits of their ownership. There are of course taxes and transfers but it is generally believed that these must be kept low, both to encourage business investment in the jurisdiction in question and to discourage indolence and demoralisation among the poorer groups. Collective ownership of enterprise or the means of production is generally held to be a 19th or 20th century idea. In recent times, when governments occasionally have to resort to it in emergencies, as in the nationalisation of banks after the 2008 crisis, their stated intention is to return the nationalised entities to private ownership as rapidly as possible.
Yet here is the essential problem. No-one has provided any plausible solutions to the dystopian situation of rising inequality and a growing precariat facing intermittent poverty that we see emerging as a result of technology. Protectionism, the scapegoating of foreigners and an escape to the past via Brexit are not solutions, though they currently enjoy growing support. The orthodox approach is to point out that while no solution is evident, past episodes of technical change led eventually to human improvement and the fears of Malthusians and Luddites alike were proved to be unfounded. Just as free or free-ish markets and liberal societies came through past upheavals, let us avoid anything radical in the hope that everything will be all right this time too, the establishment tells us. Somehow, in ways we cannot foresee, individual human ingenuity will see us through. This line is commonly held by orthodox economists. Far from being a “gloomy science” economics has become the source of Panglossian optimism. Things look ominous but have faith and keep to the straight and narrow way of market orthodoxy, we are told. All may yet be well.
Contrary to the drift of the past four decades the situation calls for collective action and some collectivist solutions. There are no purely individualist answers. People enjoying prosperity at a time of widespread relative impoverishment are enjoying economic rents that deserve to be diluted in the general interest. This can be effected in one of two ways, either a substantial increase in tax-transfer levels back towards post-war levels or, more plausibly, the collective ownership of a material part of the productive apparatus of society. These things are deeply unfashionable and politically undeliverable. But without them, do we have any plausible solution to the growing problems other than to accept the economists’ faith that all may yet be well?
Here are two elements of a solution. First, a community fund invested in a wide range of private businesses in the UK and abroad. The dividends and receipts of this fund, a democratic version of a sovereign wealth fund, would provide resources, which cannot be obtained from orthodox taxation, to finance essential public services and make necessary transfers. Second, a citizen’s income paid to all citizens at a subsistence level that enables them to have some degree of choice about the kind of work they do. This would free people to be creative and enforce a change in relative wages for the more soul-destroying types of work. It would also alleviate poverty.
The aim must be to leave the direction of the economy to private enterprise but to ensure the fruits of enterprise are distributed more advantageously. And redistribution must be such as to encourage not discourage individual initiative. Distribution requires some passive collective ownership of capital because capital receipts cannot easily be taxed in a globalised economy. Encouraging individual initiative means an unconditional payment avoiding the poverty traps caused by progressive withdrawal of conditional welfare payments
The attitude of politicians to these proposals is instructive. The public currently has an aversion to what it sees as a ‘something for nothing’ culture. There is a natural human tendency to believe: ‘I am entitled to what I get but that other people are getting things to which they are not entitled – probably at my expense.’ This feeling has meant the Conservatives have paid no electoral penalty for their cuts to social security. Courting of the “Jams, or Just about Managings” is designed to distinguish them from the really poor. The response of Labour politicians of the Blue Labour persuasion has been to urge Labour to reconnect with not just the interests but also the prejudices of its traditional supporters. That means emphasising the contributory principle and a strong opposition to any talk of a citizen’s income.
It should be obvious to anyone paying attention, however, that these attitudes are completely inappropriate in the face of the current and emerging reality. In conditions of marked and developing inequality and the potential economic redundancy of a section of the population, the contributory principle is the deadest of ducks. And if we cannot foster and depend on a degree of social solidarity there is no mitigation of the dystopia that confronts us. It may well be that fostering the requisite degree of social solidarity means some restrictions on immigration. That would be a necessary concession to current attitudes. Sometimes one has to choose the lesser of two evils.
Here are two bits of essential reading for Labour politicians in the hope that they will be emboldened to oppose to the current drift and energetically pursue truly radical solutions. They must, in Nye Bevan’s words, be equal to “the imperious needs of the times”. Philippe Van Parijs’ book “Marxism Recycled” makes the philosophical and political case for a citizens’ income. Angela Cummine’s book Citizens’ Wealth examines the possibilities for community funds. If Labour is to regain the political initiative it has to reject not “austerity” but the whole framework of current discussion, to set out the deteriorating situation faced by many and propose solutions that might work. Command and control socialism is justly dead. Enlightened contemporary collectivism is the best hope for our people. Only Labour can propose it.