Op-Ed; Opinion

OPINION: Capitalism, Socialism and Basic Income

It is always interesting to read detailed arguments for a Citizen’s Income, but might I invite your readers to consider a broader reform programme which would entail a long-term foundation for the Citizen’s Income we all want to see? A reform programme which would reconcile socialism and capitalism? Of course a claim such as this cannot  be fully argued in the space of a letter, but the principles  can be simply stated.

The most important element in a new framework for the economy would be the evaluation of the social costs and benefits of each kind of enterprise and, through a system of levies and grants, their introduction into market prices. Other demands on industry and commerce, most notably taxation of profits, would cease. Taxation would be confined to individual participants in the economy, but in their capacity as citizens or residents paying for the benefits society brings them. The Citizen’s Income should not be paid for out of a levy on economic enterprise.

Society, for its part, should recognise  its capital value as an instrument which makes enterprise possible. And it should translate this value into a practical tool by the creation of a sovereign wealth fund which would invest in stocks and shares at home and abroad in parallel with other funds. Income from the fund would  be dedicated to the citizens, thus providing a funding base for  a true citizen’s income, though the fund could also be used for collective initiatives. The model would be Alaska’s Permanent Fund. I leave on one side the priority support needed by those who cannot be expected to support themselves in the economy, that is: children, who are too young to work; the very elderly, who are past working; and people who suffer chronic sickness or disability.

The size of the fund ultimately required to make it worthwhile should not be underestimated. As to practicalities, nations such as China already have sovereign wealth funds. The way forward will become clearer once the principles and implications are widely understood.  Even if one doesn’t want to go the whole way in redesigning the framework of the economy, the creation of a sovereign wealth fund surely provides a way forward by translating the value of society into a practical reality for the benefit of all its members without imposing a levy on the economy. At the same time, the fund would help to reduce the serious inequality in the ownership of our capital.

The way to pursue the objectives of a basic income needs to be looked at in the light of a reconciliation of socialism and capitalism, which has been the great unsolved problem of the last 100 years. The advent of globalisation has pointed up a way to do this.

The starting point is the recognition that it is no longer satisfactory to treat the economy as if it were simply society at work, the way in which its members make their living. Globalisation has made it as clear as can be that society needs to clarify and redefine the framework within which it allows the economy to operate.

Here are the principal elements of a new framework:

  1. Capitalism must be required to operate in its most competitive forms, subject only to the laws of the land and effective constraints on monopoly ( whilst recognising that some monopolies are an indispensable adjunct of privately owned initiatives ).
  2. Market prices of products and services must reflect social as well as private costs and benefits. These costs would include such things as the use of public communications systems, the consequences of pollution and effects on health of products sold.
  3. The most instructive example of this is the labour market. Employers provide the indispensable benefit to society of gainful work by its members. On the other hand they receive the benefit from  society of a readily available labour force. Recognising their joint interest society and industry and commerce should jointly meet the cost of maintaining the supply of readily available labour. A great advantage of this approach is that  employers of all kinds would immediately apply their minds to the invention and support of all kinds of scheme for reducing and even eliminating unemployment.
  4. Alongside this would be a requirement that all those participating in the economy must insure themselves against the risk of unemployment – through ill health or redundancy for example –  under a system of mandatory minimum cover and optional higher levels. Society would no longer pay benefit to unemployed people capable of working.
  5. Profits as such would no longer be subject to tax, for which there would no longer be any justification. Taxation would be confined to individuals as citizens or visitors.
  6. Society would, of course, continue to play its own direct part in the economy through social enterprises such as health services, and education and, increasingly it seems, local and national collective initiatives.

We turn now to the changes in society itself which will secure the objectives of socialism alongside its wholehearted commitment to capitalism as the best way of maximising the national product. Society’s financial support for its members should be concentrated in the first place on those who cannot be expected to support themselves in the economy, that is: children, who are too young to work; the very elderly, who are past it; and those who are chronically sick or disabled. The funds for this support should be provided by the collective ownership of productive capital. The amount of capital required to generate the necessary income should not be underestimated. But support will gather as taxpayers realise that the  demands on them will fall as the capital increases.

Beneficiaries would receive their income as of right but expenditure would be administered in a three-way partnership  with a  family carer, if any, and the state, normally represented by a dedicated social worker. The  capital funds would be managed by professional investment managers alongside their commercial analogues.

Once we have provided for those who  cannot  operate in the economy  income from the sovereign funds can be used to introduce a basic income for all. It is entirely right that this, rather than the income of working taxpayers, should be the source of the basic income.

About Citizens' Income Trust

has written 123 articles.

The views expressed in this Op-Ed piece are solely those of the author and do not necessarily represent the view of Basic Income News or BIEN. BIEN and Basic Income News do not endorse any particular policy, but Basic Income News welcomes discussion from all points of view in its Op-Ed section.

2 comments

  • Wingnut

    Hi
    An easier and wiser method would be to just remove the price tags from basic life necessities (survival supplies)… which thus eliminates poverty. But even wiser and further advanced… is to eliminate economies (money, ownership, pricetags) completely… and thus remove the ‘racing’ from society, and ensure equality/fairness for all. Such a thing would eliminate monetary discrimination… and make things more like the commune seen in the USA military society. There, everyone is on the same team, custodianship is used instead of ownership, and folks take care of one another and are not issuing billings/demands at each other. The military knows… that to damage ONE member of team, damages all of team. In short, we need to learn that competition is NOT healthy, and never was. Cooperative/Christian-ish values would need to be embraced and made a priority again. I don’t think the USA civilian side is capable of it, seeing it is SO addicted and programmed into racing and every=person-for-themselves policies. “One nation under God” and “in God We Trust” have both been pushed aside to make room for “whatever the market will bear” and “don’t take it personal… its just busyness”.

    Not a single other living creature on the entire planet… uses economies/ownership. Hint hint?

  • “It is entirely right that this [sovereign wealth fund], rather than the income of working taxpayers, should be the source of the basic income.”

    I totally agree with you on this point. But I will put it in a wider sense. The income from sovereign wealth fund and any other commonly owned properties should be distributed to citizens.

    Citizen income is distribution of monies generated from common wealth. It is definitely not redistribution of money from the rich to the poor.

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