Economy’s End

Posted on 27 October 2017

A Knight

“The time for small thoughts and little nudges is past. The time has come for new, radical ideas. If this sounds utopian to you, then remember that every milestone of civilization — the end of slavery, democracy, equal rights for men and women — was once a utopian fantasy too.”
Rutger Bregman

I am going to suggest something radical. I am going to suggest something that hasn’t but should be on the international table. And I am going to do this by busting through a few illusions.

Things as they are.

This is the world we live in.

According to the Global Wealth Report 2016 published by the Credit
Suisse Research Institute:
“Wealth inequality, measured by the share of the wealthiest 1 percent and wealthiest 10 percent of adults, as compared to the rest of the world’s adult population, continues to rise. While the bottom half collectively own less than 1 percent of total wealth, the wealthiest top 10 percent own 89 percent of all global assets.”

This is what Chris Matthews at Fortune magazine has to say about the consequences of wealth inequality:
“So, why should we care that wealth inequality is so much greater than even the historic levels of income inequality? While inequality is a natural result of competitive, capitalist economies, there’s plenty of evidence that shows that extreme levels of inequality is bad for business. For instance, retailers are once again bracing for a miserable holiday shopping season due mostly to the fact that most Americans simply aren’t seeing their incomes rise and have learned their lesson about the consequences of augmenting their income with debt. Unless your business caters to the richest of the rich, opportunities for real growth are scarce.”

Here are further concerns that Elon Musk expresses:
“There will be fewer and fewer jobs that a robot cannot do better. I want to be clear. These are not things I wish will happen; these are things I think probably will happen. And if my assessment is correct and they probably will happen, than we have to think about what are we going to do about it? I think some kind of universal basic income is going to be necessary. The output of goods and services will be extremely high. With automation there will come abundance. Almost everything will get very cheap. I think we’ll end up doing universal basic income. It’s going to be necessary. The much harder challenge is, how are people going to have meaning? A lot of people derive their meaning from their employment. So if there’s no need for your labor, what’s your meaning? Do you feel useless? That’s a much harder problem to deal with.”

In summary:

Under our current social system we are seeing a serious gap in the rich/poor divide. Due to financial insecurity people who are poor or middle class are less interested in spending, which will impact the circulation of funds. It is through the circulation of funds that the upper class is able to accrue wealth by constantly siphoning off a percentage (eg banking transaction fees). The rich have traditionally collected more wealth than they circulate, that’s how they get and stay wealthy.

Add to this technologies that make it possible for industries to cut their costs by reducing the number of human workers in favour of machine labour. So long as people continue to use their services and/or buy their goods, these companies stand to increase their profits. Ultimately, they are creating more insecurity and poverty, and will undermine their own existence.

A few wealthy people are suggesting a Universal Basic Income may be the way out of this conundrum.


Let me deconstruct this by beginning with what may seem to be a heretical statement to some of those on the left: Universal Basic Income is not the answer.

If you follow my writing, you will know that I actually support the installation of a guaranteed living income, but it is only a partial and temporary solution to humanity’s troubles. Businesses want UBI because it will perpetuate a system they understand. Money will again circulate and be available for their extraction.

Some have suggested this money will come from the cost savings of no longer supporting a byzantine system of welfare. Countless hours of determining and policing whether certain people deserve assistance will end. I have yet to see articles suggesting that the money could come from reducing military budgets or by honestly tackling the rich/poor divide by taxing the well-off.

From the Elon Musk quote you can see that UBI is also being used as a way to avoid tackling the issues of unemployment and underemployment. I have seen articles discussing the prediction that we are seeing the end of work. Whether this is true or not, believing this is the case is a good excuse to do nothing.

What concerns me is that we are seeing business people envisioning a world of two classes: a consuming class and a working class. Only how we are definining these classes would put Marx’s head in a spin. The working class would have more money and more assets than the consuming class, whose main purpose is to keep the wheels of industry turning so the working classes can accrue wealth.

Even a system of haves and have-lesses will foment discontent. The amounts of basic income I have seen put forward by groups such as the Pirate Party Australia to support the unemployed are below the poverty line. Pirate Party Australia promises a guaranteed basic income of just over $14,000. If you are not among the poor, think about how much you are paying in rent or mortgage, and with $14,000 how much you would have left for other essentials. With that sort of money how would you afford an education or collect enough funds to launch a new business and jump the class divide? How fair is this system when by accident of birth some will have access to more goods, services, and power than others. Little has changed.

The most critical flaw in this application of UBI is that it holds out a promise that we will be able to continue consuming at alarming rates. The Earth cannot sustain our current levels of consumption. Even a three percent growth in our GDP would negatively impact climate change. According to Tapia Granados, a researcher at the University of Michigan, “If ‘business as usual’ conditions continue, economic contractions the size of the Great Recession or even bigger will be needed to reduce atmospheric levels of CO2.”

Poking Holes in the Illusions

A popular metaphor worth thinking about concerns fish being unable to conceive of water because it is all around them — they can’t see it until they are outside of it. We are all so deeply invested in our capitalist society that it can be difficult to fully grasp where genuine issues and solutions lie in order to overcome our current problems.

> Myth 1

The first myth we need to grapple with is that work is the activity you pursue for money. Anything else is seen as a hobby, or volunteer work, or simple chores. Worse, anything that does not accrue a paycheque is seen as inherently less worthy and of lower status than a “proper job”. None of us would be alive if it weren’t for the free labour of our mothers. This is not about the genuine worth of work. This is entirely about social hierarchy. This is why people feel so free to abuse the poor. We love the rags to riches story, but rarely consider that if the story is indeed true, perhaps we should be treating the homeless better because one day one of them may be our boss.

Valuing only that work which accrues money means that only businesses can bestow livelihood and thereby status upon people. When status is critical to our well-being this is a considerable power for businesses to have. It’s no wonder corporations lobby so hard to ensure the government employs as few people as possible. They want the money to be had from government contracts. They want the money to be had by holding critical services hostage. They talk about the value of competition, but want to knock out any possibility of government competition. They are also out to ensure that a non-transparent, non-democratic system has significant power over people’s lives.

The truth is we have plenty of work in need of doing in this world. We need to clean the plastic from our oceans. We need to remove space debris from our upper atmosphere. We need to actively protect our remaining environmental resources. We need to tend to the less fortunate. All of this is work for which governments could be paying, but aren’t.

> Myth 2

The second myth has to do with a perverse theory of human motivation. People are believed only willing to work if presented with a “carrot” or a “stick”. Either people must be given a significant reward, as are CEOs, to ensure their labour — or they must be threatened with destitution and becoming pariah, as are the vulnerable, to ensure their labour.

I have had people repeatedly ask me, how do you get people to do the dirty or dangerous jobs if there is a basic income? It surprises me that no one considers that perhaps you pay more for those jobs. To rely on coercion to ensure essential services are done is a form of slavery. These are of course the sorts of jobs that should be robotised. In the meantime a friend of mine in Finland, where a basic income exists, suggested that if people really don’t want to do those jobs then perhaps they should be shared out among a number of people who only do them part time.

Mincome, the most famous experiment in Universal Basic Income, made this discovery, “The project’s original intent was to evaluate if giving cheques to the working poor, enough to top-up their incomes to a living wage, would kill people’s motivation to work. It didn’t.” Think about that for a moment. When people’s needs were sufficiently met, they worked anyway. This has been shown to be true in subsequent experiments as well. And why wouldn’t it be true? Humans were around some time before currency was invented. Now let’s take this a step further.

> Myth 3

Believing we need an economy. The problem isn’t that we need more jobs or more money. The problem is that we need fair, equitable, sustainable, and democratic systems of distributing goods and services. We have been trained to focus on the wrong end of the stick. Which end you focus on determines who gets the power.

A community builds a bridge. A knight comes and takes it over. No one has access to the bridge unless they pay him a toll. He threatens violence to anyone who tries to get past him. Later the bridge needs repair. The knight recognises that he will lose his revenue stream if it falls down. So he hires someone from the village to fix it. Does that community need that knight? He gave someone a job, but he took that which was made by and already belonged to the community. He can claim he was the only one with enough foresight to set aside money for repairs. However, the bridge was already built without the need of him or his money. In the meantime he has not offered much in the way of goods or services to the community.

We don’t need corporate knights and we don’t need banking knights. We now have the technological wherewithal to deliver goods and services just because people have asked for them. However, if I give you the spare apples in my garden then neither corporations, banks, nor governments can extract value because no specie was involved. This is what it truly means to have a cashless society, not simply moving everyone to online bank transfers. Community currencies help get around the knights, but they are local and they don’t always provide sufficiently for those who cannot work such as the elderly, the infirm, and children.

We need local, national, and international systems whereby people are made aware of what physical resources are available and what the impact of using those resources would be. We then need the means to agree to how we are going to allocate resources. By removing dollar values it becomes much harder for politicians to disguise the impact of various decisions. When the government chooses to make a cut in support to schools, they can’t simply say they have reduced the budget by some number — they must say they are firing teachers or no longer supplying new books. Suddenly the picture becomes clearer and it is easier to set our priorities. Saying we need to do something because of “the economy” is meaningless. We are then acting out of a sense of abstract virtue, not real world consequences.

Yes, I believe rationing and the elimination of currency is our future. During the war in many ways Britain was at its healthiest and best when it relied on rationing. Sadly, it was only under duress people agreed to it. We may be heading toward a situation where under duress we will have to accept rationing as well. For the planet’s well-being we need to start building a rationing system now.

Yes, we would have to rely more on government to manage the distribution. It is why we need to become more civically involved to ensure our governments are just, transparent, and democratic. If the future really does hold fewer jobs, then that means we should all have more time to politcally engage, as well as spend time bonding with our communities and our support networks. Work becomes a matter of people volunteering to do what needs doing. Most nomadic communities have functioned this way for hundreds of years. If anyone seems to be shirking, instead of punishing them, send them to a counsellor who can help them find their niche for contributing to social well-being.

This vision may sound utopic, but little of this is new, other than the application of technology. We can no longer play around with half measures that keep certain people in their comfort zones. We need to make significant changes that will ensure our future and the future of our children.

In peace and kindness,

Katherine Phelps

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