Prosperity

The Conversation About Basic Income is a Mess. Here’s How to Make Sense of It.

Its time we treat UBI as the messy fabric that it is.

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By Charlie Young

Universal Basic Income(UBI) is either absolutely bonkers pie-in-the-sky thinking or an ingenious idea whose time has come – depending on whom you ask. A litany of recent articles argue for and against the idea of giving every resident of a society or economy a guaranteed income stream, usually sufficient to live above the poverty line, regularly and into perpetuity. Those arguing for say that it offers a potential new awakening of cultural expression, as well as dismantling the disincentives to work associated with means-tested benefits, while supporting us through an age of automation, and also creating space for reimagining ownership of the commons. Those against say that there’s no such thing as free money, that people would simply stop working, that layabouts get enough as it is, and that it could lead to either the dismantling of capitalism or of the welfare state. Both sides of the argument – each including those from the political left and right – accuse the other of ‘not understanding economics.’ But the fact that people are arguing over whether or not UBI as a whole is a good idea means there’s something very wrong with the narrative. The debate we have today is rooted in a false dichotomy. It should be very difficult to be for or against something as broad and diverse as the ideas parceled up in UBI.

UBI is in fact not a single proposal. It’s a field of proposals that’s perhaps better thought of as a philosophical intervention, a new conception of macro-economic and political structure. It’s unusual to argue wholeheartedly against representative government, taxation or universal suffrage, while it is common to disagree on which party should govern, whether taxes should be raised or cut, and particular elements of voting procedure. In the same way, we shouldn’t argue all-out for or against UBI but instead inspect the make-up of each approach to it – that’s where we can find not only meaningful debate, but also possibilities for working out what we might actually want.

UBI has appeared to make some strange bedfellows; its supporters include anarchists, libertarians, liberal lefties and Republicans (including Richard Nixon). But on closer inspection it is clear that different groups are proposing fundamentally different things. UK think-tank Compass, for example, suggests replacing key elements of the current means-tested benefits system with a basic payment to all citizens, padded by slightly raising the top rate of tax. Economist Charles Murray, on the other hand, advocates paying all US citizens over the age of 21 a sum of $10,000 per year to serve as, in his words, ‘a replacement for the welfare state’. Then there is Dr Thomas Pogge, who suggests a global resources dividend (GRD) whereby current and historical injustices against the global poor are counteracted through the modest taxation of global natural resources – including fossil fuels, land used for farming, mining and destroyed habitats – and redistributing the levy amongst those involuntarily excluded from their use. All of these proposals (and dozens more) fall under the umbrella of UBI.

The most important distinguishing feature between the different iterations of UBI is where the funding comes from. Wrapped up in this are ancillary questions: what would a UBI replace, compensate for, or complement in the rest of the economy? What would the knock-on effects be for social welfare and the government’s responsibility to its citizens? Who gets the money is another question worth looking at (just how ‘universal’ is the income?), as is its amount and regularity. With these distinctions in mind and after reviewing relevant literature, I suggest an initial distilling of UBI into the following three categories:

A. Recalibrating existing tax and benefit systems

B. Replacing the Welfare State, aka ‘Voucherisation’

C. Communalising common assets

Recalibrating existing tax and benefit systems

According to advocates of [A], for UBI to be politically feasible it must be achieved using the existing infrastructure of taxation and spending. UBI is an immense ideological intervention – or so the argument goes – and as such should be funded without radical changes or additions to taxation but instead through restructuring the existing ‘inefficient’ and ‘unfair’ benefit systems.

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Advocates tend to offer here what is referred to as a ‘no-frills’ UBI: subsistence or sub-subsistence levels of income to be supplemented by earnings from employment and/or disability, housing or child benefits.

Proposals found in [A] often set out to combat inequality and poverty, including through the dismantling of poverty traps such as the sudden removal of benefits as low-earners incomes rise (which can in some cases mean marginal deductions for the poor of 80%). They also often look to alleviate the pains of unemployment resulting from automation, which is projected to affect the poor most dramatically , as well as helping the projected expansion of the caring economy (especially important in ageing nations).

The savings from restructuring existing benefits are likely to be very large. Malcolm Torry of the Citizen’s Income Trust claims the administrative savings from dismantling the means-tested benefit system are in the range of £8-10bn. Put simply, it’s very expensive to decipher who is and isn’t deserving of government support, especially when recipients must prove their worthiness. Restructuring benefits to look more like a UBI could not only save money, proponents claim, but also be fairer.

Examples of these kinds of UBI proposals include the work of the RSA, a proposal in the recent manifesto of the UK Green Party, and the work of Philippe van Parijs of Oxford University, co-founder of the Basic Income European Network.

What they all have in common is a shared belief that a politically feasible UBI must be small-scale, sometimes include transitional proposals, and be based on funding from existing tax structures.

Replacing the Welfare State aka ‘Voucherisation’

Economists and political theorists on the right, especially those identifying as libertarian, see UBI as a vehicle through which to reduce government intervention in public and private life at large. From this perspective, a guaranteed UBI would legitimize the dismantling of other forms of welfare provision, as it levels the economic and social playing field. Similar to [A], proponents of [B] argue that means-tested welfare is seen as unnecessarily costly, ineffectual, and fundamentally unjust in that it is an economically and socially distorting form of state charity.

Prof. Matt Zwolinski of the Cato Institute enumerates four libertarian arguments for a UBI. He places them under the banners of: i) reduced bureaucracy, ii) reduced cost, iii) reduced rent-seeking (i.e. under a universal program there is less space for political exploitation or benefit fraud), and iv) a reduction in the state’s ‘invasive/paternalistic’ tendencies, as there is no longer a need to categorise beneficiaries as the deserving poor.

Examples include a proposal from one of the founding fathers of neoliberalism, Milton Friedman, a litany of publications from conservative think tanks including the Cato Institute, and the proposal of Charles Murray’s mentioned above.

One clear difference between the literature making up [A] and [B] is that the former focuses on macro-level indicators of say, inequality, and potential effects of redistribution on such indicators, while the latter focuses instead on changes in individual behaviour resulting from a UBI. The proposals that make up the [B] category put faith in individuals to, given more adequate means, make the world around them in a more effective way than the state can do on their behalf. The poor, in this view, are likely to make intelligent choices about how to spend cash grants, an argument backed up by empirical economic evidence from Uganda to Mexico. Thus, the two kinds of proposals differ in intention, assumed problem, and predicted outcome.

Communalising common assets

The communalising of common assets can be global natural resources, the carrying capacity of the biosphere, atmospheric carbon, fisheries and forests, unearned income, or even the productive capacity of automation and technological change. The fundamental assumption here is that such assets – be they physical, biological or cultural – should be respected as the common property of all, rather than be the source of exploitative disparities from unequal access and power. This set of proposals is more systemically transformative than [A] or [B] as it is predicated on the realisation of new economic institutions and drivers. This category is also more diverse in scope than either [A] or [B], differing not only in terms of funding source but also in geographical distribution – some propose a global UBI.

Peter Barnes and James Boyce outline this range of proposals as charges placed on the access and use of ‘communally inherited assets’ and the redistribution of the resulting revenue[3]. Charges could be placed, for example, on polluting the scarce resource that is the carrying capacity of our atmosphere, or on trades of stocks, bonds and derivatives (the latter of which could raise $300bn per year). Barnes and Boyce claim that charges on a ‘portfolio of universal assets’ could grant US citizens a UBI of $200 a month.

Iterations of wealth tax that could fund UBI include those suggested by Thomas Piketty like progressive capital taxation, and the Georgist land value tax (LVT) as proposed in the UK context by Martin Farley. Farley suggests land ownership be taxed and the raised revenue, coupled with that raised by what he calls Commons Licenses (a version of Barnes and Boyles’ common asset proposals), could fund a £4,500 annual UBI.

Economist Yannis Varoufakis and futurist Kartik Gada, on the other hand, have each suggested that the labour savings from automation could (and should) pay for UBI. Varoufakis’ proposal is one-part wealth tax and one-part ownership restructuring: a small tax is levied on shares from every initial public offering put into a Commons Capital Depository that in effect grants citizens property rights over new technologies that yield financial returns. The Commons Capital Depository would then pay out a UBI to all citizens. Varoufakis sees this as potentially alleviating “irreconcilable political blocs, while […] reinvigorating the notion of shared prosperity,” largely due to reframing understandings of when wealth is a result of hard work vs. context and luck especially in the face of technological unemployment.

Similar ideas have been touted by Silicon Valley entrepreneurs and tech-firms. Y Combinator has even launched its own UBI pilot programme (though this is arguably closer in essence to [A] than [C]).

While some proposals focus on addressing inequality and poverty traps [A], others focus on increasing individual freedoms and reducing government interference [B], and still others attempt to introduce new feedback loops into the economy and restructure the polity of ownership [C]. It is important to note that these are not necessarily mutually exclusive, given that the ideological foundations and value frames associated with each often overlap. However, the ontological differences are worth bearing in mind when speaking of UBI more generally.

Its time we treat UBI as the messy fabric that it is. Only by teasing apart the strands of the various arguments can we have a coherent discussion about whether and how best to implement its specific iterations. It’s especially important that we know what we’re looking at, especially given the recent upsurge in interest. Even if you consider yourself “pro” Universal Basic Income, a UBI by any other name may not smell as sweet.

2017 March 19

*UBI is referred to synonymously as ‘citizen’s income’, ‘unconditional basic income’ and ‘basic income guarantee’

Boyce, J. K. & Barnes, P. (2016) How to Pay for Universal Basic Income http://evonomics.com/how-to-pay-for-universal-basic-income/

PIKETTY, T. (2015). Capital and Wealth Taxation in the 21st Century. National Tax Journal. 68, pg. 457


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  • Steve

    Nice piece. However, all current thinking regarding UBI/Universal Dividend lacks an essential strategically placed and timed second policy aka as a rebated retail discount, the two of which enable a thorough integration of macro and micro-economic theory and policy and simultaneously deal with the 5000 year old problematically dominating and destabilizing business model of Finance. Combining these two policies deals with the three biggest problems of modern technologically advanced economies namely chronic lack of demand, creeping lower bound cost inflation and the keystone unethical structural and paradigmatic force holding most of the world’s economic instability, personal stress and geo-political brinksmanship in continual stimulation. That’s the resolution of a couple of pretty important trinities. Economists, you have to admire the iconoclastic ones, yet they only allow themselves to utilize math and science, which are of course important, but only subsets of Natural Wisdom-Integration which broadens their knowledge of the problems they are observing as well as more effective resolutions of same. If anyone wants to investigate this thinking that will be in my soon to be published book Wisdomics/Gracenomics: The Integrative New Economic Theory they can do so at wisdomicsblog.com

  • Derryl Hermanutz

    You have described a variety of ways to tax-fund a Basic Income, but you neglected to mention money-funding the program with government-issued debt-free money. Adair Turner calls government money issuance to money-fund program spending “overt money funding”. So instead of tax-funding the Basic Income by taking money from some people and giving it to others; and instead of debt-financing the program by selling bonds to banks who create credit to purchase the debt: you money-fund the program by creating the money.

    Friedman may have introduced his negative income tax idea in his 1963 book, Capitalism and Freedom. But you can read an early version of his “transfer payments” thinking in his 1948 policy paper, A Monetary and Fiscal Framework for Economic Stability. As a student of the Irving Fisher Chicago School of monetary system reform, Friedman was aware that in our present system commercial banks create virtually all of the money supply as deposit account credits, to fund their bank loans and bond purchases. It was the sudden destruction of a significant percentage of the deposit account money supply after 1929 that caused what Fisher called the Debt Deflation Depression.

    The first point in Friedman’s 1948 Proposal was to implement a version of Fisher’s 100% reserve banking. All money would be government-issued “fiat” money: no fictitious ‘gold-backing’. Banks would not be allowed to create additional credit, as they do now. Money would not be created by bank loans and un-created by bank loan repayments (and by bank bankruptcies; or by the coming depositor bail-ins) as it is now. Banks would become financial intermediaries who get money from depositors then lend out depositors’ savings to investors and house-buyers. I’ll quote Friedman from 1948,

    “1. A reform of the monetary and banking system to eliminate both the private creation and destruction of money and discretionary control of the quantity of money by central bank authority. The private creation of money can perhaps best be eliminated by adopting the 100 per cent reserve proposal, thereby separating the depository from the lending function of the banking system. …These modifications would leave as the chief monetary functions of the banking system the provision of depository facilities, the facilitation of check clearance, and the like; and as the chief function of the monetary authorities, the creation of money to meet government deficits or the retirement of money when the government has a surplus.

    3. A predetermined program of transfer expenditures…exemplified by the present system of social security… (Outlays) will tend to be high when unemployment is high and low when unemployment is low.

    4. A progressive tax system which places primary reliance on the personal income tax. Every effort should be made to collect as much of the tax as possible at source*” *i.e. tax deducted by the payer of the income, not by the payee

    In Part II Operation of the Proposal, Friedman writes, “Under the proposal, government expenditures would be financed entirely either by tax revenues or the creation of money, that is, the issue of non-interest-bearing securities. Government would not issue interest-bearing securities to the public; the Federal Reserve System would not operate in the open market. …Another reason sometimes given for issuing interest-bearing securities is that in a period of unemployment it is less deflationary to issue securities than to issue taxes. This is true. But it is still less deflationary to issue money.”

    So Friedman advocates stripping commercial banks of their credit-creation privilege; stripping the central bank of discretionary influence over the qantity of the money supply; having a public monetary authority issue all of the money; and money-funding government deficit spending. If we think of a Basic Income like Friedman was thinking of his automatic transfer payments for “relief and assistance”; and if funding the transfer payments put the budget in deficit, then the transfer payments would be money-funded; not debt-financed by selling interest-bearing bond debt to primary dealer banks who create credit to buy the debt, then sell the debt to capital markets investors; and to central banks conducting “open market operations”.

    Friedman got a deserved bad rap for his 1970s neoliberalism. But the early Friedman was a monetary revolutionary and a social welfare advocate. I don’t think Friedman’s heart ever changed: he mentioned printing money and dropping it out of helicopters in 1969; and was only half-joking when he suggested much later that the Fed could be replaced by a laptop computer that automatically increased the economy’s money supply by 2% per year.

    But to be accepted among “the knowing ones”, you have to sing from their song sheet. So in Capitalism and Freedom, Friedman accepted the neoclassical dogma that a buy-sell “for money” economy can be fully described in terms of a barter “trading” economy, where producing a supply of tradable goods produces the medium ot exchange — the ‘money supply’.

    A money-funded Basic Income remains a monetary and fiscal program that can create financial and economic stability out of this credit-debt crisis the world finds itself in today.

    • remmals

      “Basic income will be at the core of monetary policy in the 21st century” May 10, 2016
      http://basicincome.org/news/2016/05/basic-income-monetary-policy/
      “To tackle spiraling deflationary trends, governments and central banks will soon have no other choice but to resort to printing money and giving it directly to the people.”

    • remmals

      The Case for a Capital Homestead Act

      Like the homesteading of land under Lincoln’s Homestead Act of 1862, the Capital Homestead Act is oriented to an open frontier — the technology frontier — which can and should be made equally accessible to all propertyless persons as a fundamental right of citizenship. This is the essence of the American Dream that inspired the lovers of freedom and justice everywhere.

      In today’s US economy productive capital is growing annually in both the public and private sectors at a rate exceeding $7,000 for every man, woman and child. On our present path, that new capital, the source of America’s capacity to produce in greater abundance than other economies, will continue to be financed in traditional ways. That means few, if any, new owners will be created by those traditional processes.

      Over the years this has led to an enormous and growing wealth gap, illustrated by the fact that the two wealthiest Americans had greater accumulations than half the American people combined and the top 10% own 90% of all directly-held corporate stock. Most citizens have not accumulated enough assets to meet their household needs for more than a month or so, if they become disabled or lose their jobs. They are wholly dependent on jobs, welfare or charity to meet their needs from birth to the grave. The non-rich have no independent source of an adequate and secure income.

      Capital Homesteading is designed to close this growing wealth gap, consistent with free enterprise values of private property, free market competition and minimal government intervention with voluntary choices among producers and consumers. In other words, it aims to lift barriers so that the poor and non-rich people can lift themselves up into capital ownership, uniquely without taking existing property away from the rich.

      A New Path

      The Capital Homestead Act is a proposal to provide a package of integrated income, gift, retirement and inheritance tax reforms, combined with monetary policy changes and other structural improvements to national economic policy. These are designed to provide every citizen an equal opportunity to own, control and share profits from productive capital.

      The political rationale behind the Capital Homestead Act is that there is no reason that those who already have capital (and collateral to qualify for capital loans) should have a monopoly or be the exclusive beneficiaries of the government’s control over “social goods” like money and credit that largely determine who will own future capital. A political democracy cannot rest comfortably and sustain itself on a foundation of government-supported economic plutocracy. Decentralized wealth would counter the corrupting influences of concentrated wealth in campaign financing, as America experienced in its recent elections.

      An essential premise of Capital Homesteading is that those who have no capital should have equal access to credit to acquire capital, and that that credit should be made available by the government’s central bank and allocated through local lenders for financing the capital needs of the productive economy. (In today’s US economy productive capital is growing annually at a rate exceeding $7,000 per capita.)

      To address the growing wealth gap in market economies, Capital Homesteading would end the monopoly by those who already have capital (and thus collateral to qualify for capital loans) and who gain when the government fosters the creation of more wealth through extension of capital credit and tax incentives for investment.

      How Capital Homesteading Would Work

      Facilitated by the monetization of capital credit under Federal Reserve policy and reinforced by capital loan default insurance as a substitute for traditional collateral, Capital Homesteading reforms would enable every citizen to establish a tax-sheltered Capital Homestead Account (CHA) at a qualified local lending institution.

      This would allow every citizen to purchase and accumulate dividend-yielding, full-voting shares to supplement retirement income, relieving the burden on Social Security as the aged population expands. As with most ESOPs and in contrast to IRAs, the citizen would put up none of his own money. Through the CHA, he would gain access to self-liquidating capital loans at low service charges to buy equity shares. These shares would be expected to recover their purchase price out of future pretax dividends. The loan insurance, with premiums paid out of dividends, would cover the risk that the loan failed to be self-liquidating.

      CHA loans could be invested in shares of: 1) the company where the citizen or a family member works, directly or through an ESOP; 2) the companies in which the citizen is a regular customer or supplier, directly or through a CSOP or SSOP; 3) a Citizens Land Bank (CLB) to link the citizen-owner to profits from and control over local land planning and development; 4) a Homeowners Equity Corporation (HEC) whose shareholders are homeowners in danger of losing their homes to foreclosure, or renters seeking to become owners; and 5) a variety of blue-chip growth companies with a track record of profits.

      To encourage the issuance of new shares for meeting the financing needs of an enterprise, the double tax on corporate profits would be eliminated for companies that sell full dividend payout, voting shares to CHAs. To secure his economic independence, like homestead exemptions on homes, the citizen would be sheltered from taxes on his CHA accumulations below, for example, $1 million.

      To further promote CHAs, a “National Capital Credit Association” (NCCA) would be set up, to do what Fannie Mae and Freddie Mac do in facilitating and securitizing home mortgages. The NCCA, which could be owned and controlled by CHA lenders and citizens, would package insured CHA loans, create software for helping lenders to scrutinize the feasibility of CHA loans, and set uniform standards for CHA insurers, reinsurers, and lenders.

      The NCCA and competitors qualified by the Federal Reserve would then bundle and take these securitized CHA loans to the discount window of the regional Federal Reserve Banks. The Federal Reserve bank would treat these insured dividend-backed securities (DBSs) as it currently treats government debt paper, using them as substitute backing for the currency. Then as the Federal Government pays down the national debt, the productive assets of the economy — the real economy — would stand behind the nation’s currency.

      Currency linked to productive capital owned and controlled broadly among the people would replace gold as a measure of value and as a safeguard against inflation and irresponsible or non-democratic policies by the nation’s central bankers. Under Capital Homesteading, money will again be a servant of the people, not their master, and will become an instrument to promote humanity’s creative potential and quest for a just market economy. http://www.cesj.org/learn/capital-homesteading/case-for-a-capital-homestead-act/

    • remmals

      “The political rationale behind the Capital Homestead Act is that there is no reason those who already have capital (and collateral to qualify for capital loans) should have a monopoly or be the exclusive beneficiaries of the government’s control over “social goods” like money and credit that largely determine who will own future capital. A political democracy cannot rest comfortably and sustain itself on a foundation of government-supported economic plutocracy. Decentralized wealth would counter the corrupting influences of concentrated wealth in campaign financing, as America experienced in its recent elections.

      “An essential premise of Capital Homesteading is that those who have no capital should have equal access to credit to acquire capital, and that that credit should be made available by the government’s central bank and allocated through local lenders for financing the capital needs of the productive economy. (In today’s US economy productive capital is growing annually at a rate exceeding $7,000 per capita.)

      “To address the growing wealth gap in market economies, Capital Homesteading would end the monopoly by those who already have capital (and thus collateral to qualify for capital loans) and who gain when the government fosters the creation of more wealth through extension of capital credit and tax incentives for investment.”

      http://www.cesj.org/learn/capital-homesteading/case-for-a-capital-homestead-act/

  • GaryReber

    While a Universal Basic Income sounds appealing to those solely dependent on a job or welfare, there is a far better way for EVERY child, woman and man to EARN more income by providing equal opportunity to acquire personal ownership in future wealth-creating, income-producing capital formation using insured (lending protection) capital credit, repayable out of the future earnings of the investments. This would not require anyone to pledge as collateral (past savings/equity as security for repayment).

    Using such new owner-creation financial mechanisms would enable EVERY citizen to contribute productivity to the economy, create demand for a higher standard of living, while not taking from those who already are capital owners through taxation to support otherwise non-productive citizens.

    We should be looking at how “the rich are getting richer,” not on how we can take and redistribute the earnings of the rich and middle class. Obviously, the distinction between the rich and the non-rich is that the rich OWN wealth-creating, income-producing capital assets, the very essence of technological progress, and the poor only have their labor to sell to the wealthy capital ownership class.

    The fact that the core function of technological invention and innovation is to invent “tools” to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive, should surprise no one who is conscious and who has even causally observed the constant shift to non-human productive inputs in the manufacturing, distribution, and sales of products, as well as the delivery of services, that has been occurring during their lifetime.

    The urgency is to figure out means for people to earn an income without dependency on jobs. The focus should not be on a pro-job growth future but an alternative to wage dependency as economists across the board predict further losses as AI, robotics, and other technologies continue to be ushered in.

    Such future invention and innovation should be financed using mechanisms that create new owners simultaneously with the growth of the economy, while respecting the private property rights who now own, and ensuring that any further concentrated capital ownership acquisition will be abated.

    The fundamental challenge to be solved is how do we reinvent and redesign our economic institutions to keep pace with job destroying and devaluing technological innovation and invention so not all of the benefits of owning FUTURE productive capacity accrues to today’s wealthy 1 percent ownership class, and ownership is broadened so that EVERY American earns income through stock ownership dividends so they can afford to purchase the products and services produced by the technology economy.

    A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production.

    The question that requires an answer is now timely before us. It was first posed by Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what capital ownership is. Therefore, by ignoring such issues of economic justice and capital ownership, our leaders are ignoring the concentration of power through monopoly ownership of productive capital, with the result of denying the 99 percenters equal opportunity and access to become capital owners.

    The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and services,” and thus, “how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?”

    There is a solution, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.

    The solution is obvious but our leaders, academia, conventional economist and the media are oblivious to the necessity to broaden ownership in the new capital formation of the future simultaneously with the growth of the economy, which then becomes self-propelled as increasingly more Americans accumulate ownership shares and earn a new source of dividend income derived from their capital ownership in the “machines” that are replacing them or devaluing their labor value.

    The solution will require the reform of the Federal Reserve Bank to create new owners of future productive capital investment in businesses simultaneously with the growth of the economy. The solution to broadening private, individual ownership of America’s future capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” The proposed Capital Homestead Act would produce this result.

    Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.

    Support the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

  • Is there an existing hypothetical study of a real economy like, say, Iceland’s?
    It would be helpful to see pre- and post UBI flows.

    • remmals

      Mr. Roberts, I think the single most comprehensive source of information about basic income proposals, research–including past and present experiments–and regular news updates about all of this is basicincome.org.

  • Ishi Crew

    To me i think there may be basically 5 main UBI variants. 1) The govt just prints money and gives everyone a UBI–anywhere from 5 G to 25G. This may lead to inflation. 2) The govt prints money the same way and gives it a way, but sets price controls so there is no inflation—but you may get resource hoarding. Or, you may get Randall Wray’s view—people just start paying people to work, because everyone can buy something and get paid to produce something. 3) A negative income tax, which is basically a progressive tax and an income grant given to people at some income below a cut off so everyone has a minimal income. 4) In those schemes there is still a welfare state. More radical would be to create a UBI or Negative Income tax and abolish all public services (roads, schools, libraries, national parks) and let people use their UBI to buy those if they want—even military could be privatized. 5) A variant on that would be to just abolish some of the welfare state—eg public health and education are popular, and now roads. if people want those they can buy them with their UBI.
    Taxing the sky (carbon), land, property, robots, corporate perks for CEOs, or govt perks for govt workers, and wealth could all be used as part of the tax base besides income.

  • red_slider

    The real problem with the article is that it begins with the observation of what a complex mess the conversation on Basic Income has become, and it ends with resigning itself to examining the “strands” of that mess. It does nothing to get rid of them, regardless of which side of the economic divide your own inclinations might fall. Going in to the conversation, and its review of the multitude of proposed solutions, Young’s essay really comes down to saying, well, there’s a lot of moving parts here, and some fall on one side [A], and some fall on the other [B], and they fundamentally don’t agree with one another, so it’s a mess. And his cure? Let’s go look at all the little pieces. i.e. no cure at all.

    Is there are solution set? I think so, if one stops realize why [A] and [B] keep rising to the top of the soap-box, carrying on with their perpetual ‘either/or’ war, in which ‘Basic Income’ is being used as a proxy fight for that great sport of kings–socialism v. capitalism. That is, Basic Income, is really serving as a thinly disguised effort to promote one’s own grand ideological interest. Its own interest is in rationalizing the restructuring of the whole economy on the backs of the very poor, which is not what the really poor need at all.

    What the poor need, and should have, is survival regardless of status. A means to access the necessities of life, without having the War of the Economies jumping on stage every time someone asks not to starve to death, or suffer agonizing pain, or be shut out of higher education, or freeze to death during a bad winter, and so forth. Nor, to suffer the humiliation, marginalization, demonization and stigmata we extract from them as the cost of surviving. The poor really only need one small part of the economic conversation to look their way. It is the one that changes the classic question, “Who owns the means of production?” into the term of real relevance to themselves, “Who owns the means of survival?”

    Strangely, the solution set to that problem doesn’t require all these elaborate ‘either/or’ construction of some grand economic schema. It simply requires a mechanism that can insure that basic survival guarantee to every citizen, without further qualification. And it can do that without all the redistribution formula that every other plan requires (some in more disguised forms, some in less). Because, if you’ll notice, whether it is some form of universal capitalized ownership, or just plain old workfare, all the variants of UBI finally depend on some type of redistribution formula.

    What structure would actually do that? I’m not an economist, and I can’t say in any analyzed way. But I can give a demonstration of one thought-experiment that offers a way in which poverty and welfare really cease to exist, and without any redistribution of wealth, nor restriction on the accumulation of wealth (If that is what people prefer). It essentially divides the major, dominant economy of a society into two parts. One remains the major, dominant part, and can be of any type the people living under it wish. The other is strictly reserved to eliminate the problem of poverty at the base level of survival (however a society might wish to define that). It does so without the redistribution of anything, eliminating both poverty and welfare. Again, it is only a demonstration that such solution sets exist if the problems are properly framed. And I know of nothing in economic theory that forbids the possibility of the dual-economy that ‘Paying it Forward’ proposes. What do you think? https://www.facebook.com/notes/red-slider/ending-welfare-and-poverty-binomial-economies/1240394636007363

  • remmals

    I have been a student of economic democracy for more than 30 years, which was also a big part of my doctoral dissertation. So I found Mr. Young’s article quite useful in the context of the increasing amount of thought and discussion about UBI he cited. I also shared his article with colleagues at the the U. of Hawaii’s Research Center for Futures Studies, and was asked to identify any ideas I thought were not mentioned in Mr. Young’s article. My response follows.

    I agree it seems to be a good “initial distilling” of most of the primary ideas I am aware of. I have used similar categories in my past writing about this, but have never attempted to publish any of it. So I think this article provides a useful taxonomy that can help first-time readers begin to wrap their minds around the various possibilities.

    The only ideas I noticed this author did not at least mention in passing were:

    1..The various “internet micropayment” proposals that would utilize crypto-currencies and blockchain (which also would not necessarily be truly “universal” and unconditional, because they could vary from one recipient to the next–IF such payments were linked in some way/s to the quantity and/or quality of individual internet usage);

    2. Using monetary policy–instead of, or in addition to, fiscal policy and/or income-producing public assets–to fund UBI and/or universal capital ownership investment accounts for all citizens (e.g. Helicopter money and Capital Homesteading);

    3. Baby bonds and/or stakeholder accounts (which could be considered a form of basic income, but restricted to lump sum allocations or investments at one or more stages of each citizens life, rather than regular monthly payments);

    4. Some of Marshall Brain’s more whimsical ideas, e.g. funding UBI by selling advertising on currency;

    5. Economist Robert Schiller has proposed both public and private versions of “livelihood” insurance, which would compensate those who lose a job and cannot find another that offers equal or better pay. A publicly-funded version of this could act as at least a supplement–or perhaps as a transition–to UBI, since it also is not truly “unconditional.”

    6. And, of course, it does not include tax incentives and/or tax subsidies to cover all or part of the cost of installing practices and techs that can increase individual energy, water, food, and/or housing self-reliance, which I would regard as a conditional form of UBI that could gradually reduce the need for–and dependency upon–income from all other sources (wages, welfare, charity, investments, and/or UBI). This could also take a more “in kind” form by making cheap or free DIY open-source software available–or at least not restricting its availability–to allow individuals to provide more of their own goods and services without needing a medium of exchange to “buy” them from others.

    7. Also not mentioned–but which I suspect may have been an intentional oversight by the author–were tax incentives encouraging businesses to share profits and/or ownership with employees. Not only are these not new ideas, they also obviously would not be truly “unconditional” forms of income–nor truly ‘universal” for the jobless.

    While fed and some state tax incentives for both have existed for more than 40 years in the US, I think it may be too late for these alone to do much good in anything other than a continued growth/full employment scenario. In any other scenario, e.g. jobless growth and/or mostly low-wage job growth, not to mention various types of stagnation, decline, and collapse scenarios, profit sharing and employee stock ownership could not only be useless, but could also result in employees losing income (especially in the case of stock ownership).

    However, had either become the norm, rather than the exception, in corporate American at least 30+ years ago, they may reduced the increase in income inequality resulting from the combo of automation and outsourcing (job exportation to cheaper labor markets) over the same time period. Such incentives MIGHT still be useful before automation runs its potential full course, but probably less so for the growing number of gig economy workers who are being legally classified as independent contractors rather than employees to reduce and/or transfer more of the firm’s operating expenses to its labor force.

    But the incentives that encourage the retiring owners of small privately-owned (as opposed to publicly-traded) family businesses–who have no successors willing or able to take over and continue the business–to sell the business to its employees might still be useful even in a steady-state economic future.

    I think such incentives could also be created to encourage “stakeholder” corporations, i.e. reducing taxes upfront for large absentee-owned businesses (such as most hotels in Hawaii) which agree to gradually transfer ownership to local employees and/or other local stakeholders over a 20-year period (which could also be made conditional upon becoming “triple bottom line” B corporations in the process).

    More later if anything else comes to mind.

  • Herb the Gardener

    Have a look at what German Thinkers are coming up with, its called unfortunately “plan B”
    but read it. Its only 20 pages.
    Our system is decaying rapidly and we need to set up a new one that fits into a future that has as only energy the sun left.
    I am not saying that “plan B” is the solution but it is an interesting attempt to deal with some aspects.

    http://www.wissensmanufaktur.net/media/pdf/plan-b-english.pdf

  • remmals

    I have been a student of economic democracy for more than 30 years, and this topic was a big part of my doctoral dissertation. I think this article provides a useful taxonomy that can help first-time readers begin to wrap their minds around the various possibilities. I have used similar categories in my past writing about this, but have never attempted to publish any of it. So I would add the following to Mr. Young’s summary:

    1..The various “internet micropayment” proposals that would utilize crypto-currencies and blockchain (which also would not necessarily be truly “universal” and unconditional, because they could vary from one recipient to the next–IF such payments were linked in some way/s to the quantity and/or quality of individual internet usage);

    2. Using monetary policy–instead of, or in addition to, fiscal policy and/or income-producing public assets–to fund UBI and/or universal capital ownership investment accounts for all citizens (e.g. Helicopter money and Capital Homesteading);

    3. Baby bonds and/or stakeholder accounts (which could be considered a form of basic income, but restricted to lump sum allocations or investments at one or more stages of each citizens life, rather than regular monthly payments);

    4. Some of Marshall Brain’s more whimsical ideas, e.g. funding UBI by selling advertising on currency;

    5. Economist Robert Schiller has proposed both public and private versions of “livelihood” insurance, which would compensate those who lose a job and cannot find another that offers equal or better pay. A publicly-funded version of this could act as at least a supplement–or perhaps as a transition–to UBI, since it also is not truly “unconditional.”

    6. And, of course, it does not include tax incentives and/or tax subsidies to cover all or part of the cost of installing practices and techs that can increase individual energy, water, food, and/or housing self-reliance, which I would regard as a conditional form of UBI that could gradually reduce the need for–and dependency upon–income from all other forms (wages, welfare, charity, investments, and/or UBI). This could also take a more “in kind” form by making cheap or free DIY open-source software available–or at least not restricting its availability–to allow individuals to provide more of their own goods and services without needing a medium of exchange to “buy” them from others.

    7. Also not mentioned–but which I suspect may have been an intentional oversight by the author–were tax incentives encouraging businesses to share profits and/or ownership with employees. Not only are these not new ideas, they also obviously would not be truly “unconditional” forms of income.

    While fed and some state tax incentives for both have existed for more than 40 years in the US, I think it may be too late for these alone to do much good in anything other than a continued growth/full employment scenario. In any other scenario, e.g. jobless growth and/or mostly low-wage job growth, not to mention various types of stagnation, decline, and collapse scenarios, profit sharing and employee stock ownership could not only be useless, but could also result in employees losing income (especially in the case of stock ownership).

    However, had either become the norm, rather than the exception, in corporate American at least 30+ years ago, they may reduced the increase in income inequality resulting from the combo of automation and outsourcing (job exportation to cheaper labor markets) over the same time period. Such incentives MIGHT still be useful before automation runs its potential full course, but probably less so for the growing number of gig economy workers who are being legally classified as independent contractors rather than employees to reduce and/or transfer more of the firm’s operating expenses to its labor force.

    But the incentives that encourage the retiring owners of small privately-owned (as opposed to publicly-traded) family businesses–who have no successors willing or able to take over and continue the business–to sell the business to its employees might still be useful even in a steady-state economic future.

    I think such incentives could also be created to encourage “stakeholder” corporations, i.e. reducing taxes upfront for large absentee-owned businesses (such as most hotels in Hawaii) which agree to gradually transfer ownership to local employees and/or other local stakeholders over a 20-year period (which could also be made conditional upon becoming “triple bottom line” B corporations in the process).

    More later if anything else comes to mind.

  • Nicholas Gruen

    You might be interested in my argument that, at least to some extent, the focus on UBI is strategisation

    http://clubtroppo.com.au/2017/03/01/strategisation

    • Steve

      Strategization of UBI-Universal Dividend/Discount, if I understand it right, WILL be engaged in by Finance and anyone they can buy and/or intimidate, in an attempt to thwart, discredit or upon political favor attempt to severely limit its effects.

      • Nicholas Gruen

        I’m not sure what you’re saying. Did you read the link I put in which was intended to explain what I meant by strategization?

  • remmals

    I have been a student of economic democracy for more than 30 years, and this topic was a big part of my doctoral dissertation. I agree this article seems to be a good “initial distilling” of most of the primary ideas I am aware of. I have used similar categories in my past writing about this, but have never attempted to publish any of it. So while I think this article provides a useful taxonomy that can help first-time readers begin to wrap their minds around the various possibilities, I would add the following ideas to the author’s summary.

    1. Various “internet micropayment” proposals that would utilize crypto-currencies and blockchain (which also would not necessarily be truly “universal” and unconditional, because they could vary from one recipient to the next–IF such payments were linked in some way/s to the quantity and/or quality of individual internet usage);

    2. Using monetary policy–instead of, or in addition to, fiscal policy and/or income-producing public assets–to fund UBI and/or universal capital ownership investment accounts for all citizens (e.g. Helicopter money and Capital Homesteading);

    3. Baby bonds and/or stakeholder accounts (which could be considered a form of basic income, but restricted to lump sum allocations or investments at one or more stages of each citizens life, rather than regular monthly payments);

    4. Some of Marshall Brain’s more whimsical ideas, e.g. funding UBI by selling advertising on currency;

    5. Economist Robert Shiller has proposed both public and private versions of “livelihood” insurance, which would compensate those who lose a job and cannot find another that offers equal or better pay. A publicly-funded version of this could act as at least a supplement–or perhaps as a transition–to UBI, since it also is not truly “unconditional.”

    6. And, of course, it does not include tax incentives and/or tax subsidies to cover all or part of the cost of installing practices and techs that can increase individual energy, water, food, and/or housing self-reliance, which I would regard as a conditional form of UBI that could gradually reduce the need for–and dependency upon–income from all other forms (wages, welfare, charity, investments, and/or UBI).

    This could also take a more “in kind” form by making cheap or free DIY open-source software available–or at least not restricting its availability–to allow individuals to provide more of their own goods and services without needing a medium of exchange to “buy” them from others.

    7. Also not mentioned–but which I suspect may have been an intentional oversight by the author–were tax incentives encouraging businesses to share profits and/or ownership with employees. Not only are these not new ideas, they also obviously would not be truly “unconditional” forms of income.

    While fed and some state tax incentives for both have existed for more than 40 years in the US, I think it may be too late for these alone to do much good in anything other than a continued growth/full employment scenario. In any other scenario, e.g. jobless growth and/or mostly low-wage job growth, not to mention various types of stagnation, decline, and collapse scenarios, profit sharing and employee stock ownership could not only be useless, but could also result in employees losing income (especially in the case of stock ownership).

    However, had either become the norm, rather than the exception, in corporate American at least 30+ years ago, they may reduced the increase in income inequality resulting from the combo of automation and outsourcing (job exportation to cheaper labor markets) over the same time period.

    Such incentives MIGHT still be useful before automation runs its potential full course, but probably less so for the growing number of gig economy workers who are being legally classified as independent contractors rather than employees to reduce and/or transfer more of the firm’s operating expenses to its labor force.

    But the incentives that encourage the retiring owners of small privately-owned (as opposed to publicly-traded) family businesses–who have no successors willing or able to take over and continue the business–to sell the business to its employees might still be useful even in a steady-state economic future.

    I think such incentives could also be created to encourage “stakeholder” corporations, i.e. reducing taxes upfront for large absentee-owned businesses (such as most hotels in Hawaii) which agree to gradually transfer ownership to local employees and/or other local stakeholders over a 20-year period (which could also be made conditional upon becoming “triple bottom line” B corporations in the process).

    More later if anything else comes to mind.

  • remmals

    I have been a student of economic democracy for more than 30 years, and this topic was a big part of my doctoral dissertation. I agree this article seems to be a good “initial distilling” of most of the primary ideas I am aware of.

    I have used similar categories in my past writing about this, but have never attempted to publish any of it. So while I think this article provides a useful taxonomy that can help first-time readers begin to wrap their minds around the various possibilities, I would add the following ideas to the author’s summary.

    1. Various “internet micropayment” proposals that would utilize crypto-currencies and blockchain (which also would not necessarily be truly “universal” and unconditional, because they could vary from one recipient to the next–IF such payments were linked in some way/s to the quantity and/or quality of individual internet usage);

    2. Using monetary policy–instead of, or in addition to, fiscal policy and/or income-producing public assets–to fund UBI and/or universal capital ownership investment accounts for all citizens (e.g. Helicopter money and Capital Homesteading);

    3. Baby bonds and/or stakeholder accounts (which could be considered a form of basic income, but restricted to lump sum allocations or investments at one or more stages of each citizens life, rather than regular monthly payments);

    4. Some of Marshall Brain’s more whimsical ideas, e.g. funding UBI by selling advertising on currency;

    5. Economist Robert Shiller has proposed both public and private versions of “livelihood” insurance, which would compensate those who lose a job and cannot find another that offers equal or better pay. A publicly-funded version of this could act as at least a supplement–or perhaps as a transition–to UBI, since it also is not truly “unconditional.”

    6. And, of course, it does not include tax incentives and/or tax subsidies to cover all or part of the cost of installing practices and techs that can increase individual energy, water, food, and/or housing self-reliance, which I would regard as a conditional form of UBI that could gradually reduce the need for–and dependency upon–income from all other forms (wages, welfare, charity, investments, and/or UBI).

    This could also take a more “in kind” form by making cheap or free DIY open-source software available–or at least not restricting its availability–to allow individuals to provide more of their own goods and services without needing a medium of exchange to “buy” them from others.

    7. Also not mentioned–but which I suspect may have been an intentional oversight by the author–were tax incentives encouraging businesses to share profits and/or ownership with employees. Not only are these not new ideas, they also obviously would not be truly “unconditional” forms of income.

    While fed and some state tax incentives for both have existed for more than 40 years in the US, I think it may be too late for these alone to do much good in anything other than a continued growth/full employment scenario. In any other scenario, e.g. jobless growth and/or mostly low-wage job growth, not to mention various types of stagnation, decline, and collapse scenarios, profit sharing and employee stock ownership could not only be useless, but could also result in employees losing income (especially in the case of stock ownership).

    However, had either become the norm, rather than the exception, in corporate American at least 30+ years ago, they may reduced the increase in income inequality resulting from the combo of automation and outsourcing (job exportation to cheaper labor markets) over the same time period.

    Such incentives MIGHT still be useful before automation runs its potential full course, but probably less so for the growing number of gig economy workers who are being legally classified as independent contractors rather than employees to reduce and/or transfer more of the firm’s operating expenses to its labor force.

    But the incentives that encourage the retiring owners of small privately-owned (as opposed to publicly-traded) family businesses–who have no successors willing or able to take over and continue the business–to sell the business to its employees might still be useful even in a steady-state economic future.

    I think such incentives could also be created to encourage “stakeholder” corporations, i.e. reducing taxes upfront for large absentee-owned businesses (such as most hotels in Hawaii) which agree to gradually transfer ownership to local employees and/or other local stakeholders over a 20-year period (which could also be made conditional upon becoming “triple bottom line” B corporations in the process).

    More later if anything else comes to mind.

    • remmals

      “Tax incentives are proposed to provide shareholders a bigger, quicker less risky short term profit in return for changing corporate constitutions to transfer their property rights to stakeholders over 20 years.” http://www.academia.edu/30782591/The_Case_for_Introducing_Stakeholder_Corporations

      • remmals

        “A benefit corporation is an alternative corporate structure. Essentially, it changes the for-profit corporation, which may consider the public interest, into one that legally must pursue greater social goods and regularly report to shareholders on its progress. Failure to do so could trigger a shareholder lawsuit. The certification, administered by nonprofit B Lab, mirrors legislation in most states allowing businesses to become “benefit corporations” that uphold similar goals.”
        https://cleantechnica.com/…/ifyour-electric-utility…/

  • Steve

    If we want to be historically accurate we need to realize that the idea of UBI/”helicopter money” did not originate with Milton Freidman or any liberal counter part, but rather C. H. Douglas the founder of the social credit movement over 90 years ago. Both of his dual policies of a national dividend and a compensated/rebated back to merchants retail discount are also extremely important to be implemented together. Why? Because contrary to the claim by various theorists that inflation would not be a problem so long as incomes did not outstrip productivity the actions of both individuals and individual enterprises could and undoubtedly would undo such theory via arbitrary price inflation. Theory is fine. The freedom of human action can easily create its own realities. Thus the UBI/Dividend must be abundant and the discount percentage at the point of retail sale and for every business model’s retail product must also be concomitantly high to combat this inevitability. These two policies in sufficient amounts and percentage would then effectively enable the seeming impossible, abundant and democratically distributed individual income and simultaneously actual price deflation. These are extentions of C. H. Douglas’ tewo policies and can be referenced at wisdomicsblog.com

  • Rory Short

    We should first sort out our money systems before we do anything else. Because money facilitates exchanges of goods and services, the only activities which comprise the real economy.

    We need money systems which recognise that fiat money is primarily a facilitator of exchanges of goods and services and only after each unit of a currency has facilitated its first completed exchange of goods and/or services can it honestly be used for investment.

    We now have fiat money but unfortunately our money systems continue, where it suits the banks, to treat newly issued fiat money as though it was backed by gold, when it isn’t. Thus they will happily, because it costs them nothing, grant loans using newly issued fiat money. These loans are fraudulent because the money has not yet earned its backing value from its participation in a completed exchange of goods and/or services. Besides this fraud being perpetrated by banks the consequences of this behaviour by the banks is endemic instability in the money system and consequently in the economy.

    We need monetary reform urgently.

    • Rory Short

      For an exchange of goods and/or services to be economically healthy it must be ‘quid pro quo’. Consequently the mechanism employed by the State to dispense any economic assistance offered to individuals, such as a UBI, should not only enable the individual’s consumption, i.e. to spend money, but should also encourage them to receive money in payment for any items, goods or services, that they might provide.

  • remmals

    I think this article from Evonomics today is also relevant to this discussion: “How Land Disappeared from Economic Theory” http://evonomics.com/josh-ryan-collins-land-economic-theory/

    Excerpt: “The classical economists were ‘political’ in the sense that they saw a key role for the state and in particular taxation in preventing the institution of private property from constraining economic development via rent. But at the turn of the nineteenth century, a group of economists began to develop a new kind of economics, based upon universal scientific laws of supply and demand and free of normative judgements concerning power and state intervention. Land’s uniqueness as an input to production was lost along the way.

    “John Bates Clark was one of the leading American economists of the time and recognised as the founder of neoclassical capital theory. He argued that Ricardo’s law of rent generated from the marginal productivity of land applied equally to capital and labour. It mattered little what the intrinsic properties of the factors of production were and it was better to consider them ‘…as business men conceive of it, abstractly, as a sum or fund of value in productive uses… the earnings of these funds constitute in each case a differential gain like the product of land.’ (Bates Clark 1891: 144-145)

    “Clark developed the notion of an all-encompassing ‘fund’ of ‘pure capital’ that is homogeneous across land, labour and capital goods. From this rather fuzzy concept, developed marginal productivity theory. Land still exists in the short-run in this approach – and indeed in microeconomics textbooks – when it is generally assumed that some factors may be fixed. For example, you cannot immediately build a new factory or develop a new product to respond to new demands or changes in technology.

    “But in the long run – which is what counts when thinking about equilibrium – all factors of production will be subject to the same variable marginal returns. All factors can be reduced to equivalent physical quantities – if a firm adds an additional unit of labour, capital good or land to its production process, it will be homogeneous to all previous units.

    “Early 20th Century English and American economists adopted and developed Clark’s theory in to a comprehensive theory of distribution of income and economic growth that eventually usurped political economy approaches. Clark’s work became the basis for the seminal neoclassical ‘two-factor’ growth models of the 1930s developed by Roy Harrod and Bob Solow. Land –defined as locational space – is absent from such macroeconomic models.

    “The reasons for this may well be political. Mason Gaffney, an American land economist and scholar of Henry George, has argued that Bates Clark and his followers received substantial financial support from corporate and landed interests who were determined to prevent George’s theories gaining credibility out of concerns that their wealth would be wittled away via a land tax.

    “In contrast, theories of land rent and taxation never found an academic home. In addition, George, primarily a campaigner and journalist, never managed to forge an allegiance with American socialists who were more focused on taxing the profits of the captains of industry and the financial sector.

    “The result was the burden of taxation came to fall upon capital (corporation tax) and labour (income tax) rather than land. A final factor preventing theories of land rent taking off the U.S. may have been the simple fact that at the beginning of the 20th century, land scarcity and fixity was perhaps less a political issue in the still expanding U.S. than in Europe, were a land value tax came closer to being adopted.”