David Reisman, The Social Economics of Thorstein Veblen

by Citizens' Income Trust | Mar 21, 2014 | Opinion

David Reisman, The Social Economics of Thorstein Veblen, Edward Elgar, 2012, vii + 338 pp, hbk, 0 85793 218 1, £90

The dust jacket suggests that Thorstein Veblen’s writings are ‘difficult to read and understand’. Perhaps they are, but most of the many passages quoted in Reisman’s book are not. ‘The institutional structure of society subsists and we live within its lines … with more acquiescence than dissent’ (quoted on p.7). ‘The propensity for achievement – the instinct of workmanship – tends more and more to shape itself into a straining to excel others in pecuniary achievement’ (quoted on p.54). Advertising shifts ‘given articles of consumption from the footing of superfluities to that of necessary articles of livelihood, necessities by conviction of morals and decency rather than by requirement of subsistence or physical comfort’ (quoted on p.150).

As Reisman shows, it was the waste at the heart of capitalism that bothered Veblen rather than any exploitation of the workers; and whilst we might now question Veblen’s enthusiasm for the Russian revolution – an enthusiasm understandable from within his own context – we shall understand perfectly his perception that aggressive nationalism can trump economic rationality.

Reisman has constructed a coherent structure out of Veblen’s thought. Whether that structure is Veblen’s or Reisman’s must remain an  open question, because Veblen’s thought, as represented in Reisman’s book, could equally well be understood as a somewhat rambling exploration of the fascinating complexity of the institutions of the world of his time. But what is clear is that Veblen – correctly, in the view of this reviewer – thought the life of human society to be best understood as a changing network of changing institutions. Reisman shows that Veblen saw himself as a somewhat Darwinian social scientist, attempting to understand the causes of things, and that for him the social caused the economic rather than the other way round. Human interaction therefore ‘belongs in the field of the sociologist’ (quoted on p.2), and economics belongs in that context, not vice-versa.

This is all rather salutary. It suggests that however much we might reason the economic feasibility and desirability of such social policies as an extension of universal benefits to new demographic groups, if this is not the direction in which society is evolving then we might be wasting our time. On the other hand …

Karl Widerquist and Michael W. Howard (eds), Exporting the Alaska Model: Adapting the Permanent Fund Dividend for reform around the world

by Citizens' Income Trust | Feb 28, 2014 | Opinion

Karl Widerquist and Michael W. Howard (eds), Exporting the Alaska Model: Adapting the Permanent Fund Dividend for reform around the world, Palgrave Macmillan, 2012, 1 137 00659 2, hbk, xix+ 291 pp, £65

In 1797 Thomas Paine suggested that, because in principle the land belongs to everyone equally, those who occupy it should pay a ground rent to the whole community. We can generalise the profits that landowners reap from the occupation of land into the concept of  ‘economic rent’: if someone uses natural resources that belongs to all of us in order to make money, then any income greater than the cost of production is ‘economic rent’. Paine would have made the point that the economic rent belongs to all of us.

Oil companies extract oil from Alaska, and the Alaskan State Government taxes the oil companies and pays a proportion of the tax revenue into a permanent fund. The fund pays an equal annual dividend to every citizen of Alaska. Thus the economic rent relating to oil extraction benefits the whole community. The Alaskan Permanent Fund Dividend is not a Citizen’s Income because it is an annual payment and it varies with the profits made by the Permanent Fund. Recently the dividend has been rather lower than previously – but, as the book points out, wherever economic rent arises from the exploitation of natural resources, a government can collect tax on private profits and use the tax revenue to pay a Citizen’s Income.

The editors are candid about the genesis of this book: it contains material by a variety of authors that would not fit into their earlier Alaska’s Permanent Fund Dividend: Examining its suitability as a model; but having said that, all of the material is directly relevant to the theme expressed by the title of this second book.

Part I employs the Alaska model – natural resource tax revenue, a permanent fund, and an equal dividend to every citizen – to ask where similar circumstances might make a similar dividend possible. Hamid Tabatabai tells how Iran has stumbled into paying a Citizen’s Income ( – though here natural resource tax revenue pays directly for  a Citizen’s Income without building a permanent fund). Angela Cummine asks why other similar permanent funds do not pay dividends to citizens, and concludes that the root reason is probably government desire to retain control over the funds and their incomes; Alanna Hartzok suggests that the Alaska Permanent Fund should be invested in more environmentally and socially responsible ways before the idea is exported; and Groh asks what will happen when oil revenues dry up.

Part II asks how the Alaska model might be applied where natural resources are not being extracted. Flomenhaft shows that if other such public assets as water, public forests, broadcast spectrum, and land value were to be treated in the same way as Alaska treats its oil, then taxes on the exploitation of such common resources could easily fund a permanent fund that would pay a dividend at least as large as Alaska’s. Segal shows that employing such a policy in developing nations could cut world poverty by half. Hickel finds that South Sudan could fund both a substantial dividend and infrastructure improvements by employing the Alaska model. Hammond suggests that Iraq should employ the Alaska model to enable all of its people to benefit from oil revenues ( – Jay Hammond was the Governor of Alaska who achieved the Permanent Fund and the Dividend, and his chapter is published posthumously). Howard suggests that governments should cap carbon emissions and then sell the rights to emit carbon up to this cap in order to fund a permanent fund and therefore a dividend. Widerquist studies the feasibility of a US fund paid for by taxing the exploitation of a variety of common resources, and suggests that this approach should be employed in Alaska in order to maintain the fund and dividend as oil revenues decline.

Part III explores Widerquist’s proposal for capital accounts ascribed to each individual citizen at birth. The funds’ owners can spend the dividends whenever they wish, but cannot spend the capital, which is passed on to their future generations.

The editors’ final chapter suggests that the Alaska model should be viewed more as a list of questions inviting answers than as a fixed detailed policy to be applied in its entirety: Does the government wish to capture some of the economic rent generated by resource exploitation? Does the government wish to create a permanent fund? Does the government wish to pay a dividend to citizens? How large should it be? What proportion of tax revenue will relate to natural resource exploitation? Does the government wish to pay a variable annual dividend, as in Alaska, or does it wish to pay a more regular and less variable Citizen’s Income?

As the proportion of gross domestic product distributed as wages declines, and a greater proportion accrues to capital (an inevitable process in a globalising economy), and as taxing corporations becomes increasingly difficult (another consequence of globalisation), governments will need to find new ways to fund both government expenditure and individuals’ incomes. The obvious way to do this is to tax the value of common resources, and particularly the value of land and of natural resources extracted from it (because however global the economy, nobody can remove land or the resources contained under it, including water).  Using the proceeds to fund a Citizen’s Income would benefit both society and the economy. If economic rent from declining natural resources is used to fund a Citizen’s Income then a permanent fund will ensure that revenue can be generated when the natural resource runs out. If economic rent from the exploitation of a natural resource that is in constant supply (such as land) is used to fund a Citizen’s Income then a permanent fund is not required.

This book is a most useful companion to Alaska’s Permanent Fund Dividend: Examining its suitability as a model, and is a book that any government concerned about falling tax revenues should read.

Danny Dorling, The No-Nonsense Guide to Equality

by Citizens' Income Trust | Dec 27, 2013 | Opinion

Danny Dorling, The No-Nonsense Guide to Equality, New Internationalist, 2012, 176 pp, pbk, 1 78026 071 6, £7.99

Dorling’s egalitarian tract is, as Richard Wilkinson suggests in his foreword, ‘multi-faceted and rich in insights’ (p.7). Throughout the book, countries in which inequality is greatest are compared with those exhibiting greater equality ( – Dorling is, after all, a geographer), and by the end of the book the deluge of facts and graphs has delivered the same message as Wilkinson’s and Pickett’s The Spirit Level: that inequality is bad for us, and as bad for the rich as for the poor. But there are some major differences between The Spirit Level and this book. Wilkinson and Pickett attempt to show by statistical methods that income inequality causes other kinds of inequality, and their passion lies under the surface of cool statistical description. There is little attempt at prescription. Dorling’s book, on the other hand, is a passionate denunciation of inequality in all of its forms, a somewhat utopian desire for greater equality, and a clear prescription of what is required.

It is of the nature of such committed essays that argument is cumulative rather than linear, and that is the case here. We are treated to a ‘multi-faceted’ approach, and what we might call a holdall of a book. We are told that we are going to experience a positive exposition of equality rather than a polemic against inequality, but in fact we are treated to frequent oscillation between the disbenefits of inequality and the benefits of equality. On a single page (for instance, p.53) we find wide sweeps of history, the evolution of public schools, and how religions evolve, and such diversity of material is far from unusual. This all makes for an unnerving ride, but it isn’t without its excitement. The book is divided into chapters: ‘Why equality matters’, ‘What is equality?’ ‘Winning greater equality – and losing it’, ‘When we are more equal’, ‘Where equality can be found’, and ‘How we win greater equality’. But each chapter is in fact a somewhat random selection of inequalities and what’s wrong with them, and of more equal countries and what’s right with them – including the final chapter, which contains a clear prescription preceded and followed by yet more material on inequalities and the need for equality.

None of this is a criticism. The book is a compelling read, and you finish it utterly convinced of the damage done by inequality, and of the necessity for greater equality – for equality defined broadly as ‘being afforded the same rights, dignity and freedoms as other people’ (p.41).

The prescription? The book contains numerous carefully researched and argued denunciations of the damage done by educational segregation ( – including a devastatingly cool description of how wealthier and more privately educated Bristol gets a lower proportion of its children into higher education than does poorer and less privately educated Sheffield), so we expect the final chapter to suggest that the abolition of private education, or at least the removal of its charitable status, would contribute to greater equality in the UK. But we don’t. Instead we find several pages of advocacy for a Citizen’s Income. (Dorling is right to suggest that children in the UK receive such a universal benefit, but mistaken to suggest that elderly people receive one – they don’t: they receive National Insurance and means-tested benefits, though they will receive something closer to a Citizen’s Pension if the recent Department for Work and Pensions consultation gives rise to legislation for a single tier state pension.) Dorling has previously been somewhat less convinced about the usefulness of a Citizen’s Income, but his passionate exploration of inequality, his longing for greater equality, and his reading of Callinicos, have persuaded him of both the desirability and the feasibility of an unconditional, nonwithdrawable income for every individual as a right of citizenship – though he remains well aware of the political obstacles in the path of its implementation.

I’ve called The No-Nonsense Guide to Equality a book. Yes, in some ways it is a book, but it might be better to call it sustained, well-argued and passionate journalism. Whether or not you find yourself sympathetic to the political stance represented by The New Internationalist, the publisher, if you are concerned about growing inequality and would like to see greater equality then you will enjoy this book and will find it an inspiration.

The publisher is to be commended on the price.