Basic Income Economics (Parts 3 and 4)

Table of Contents 

Part 3


Feudal society is the type of civilisation, generally associated with predominantly small-scale agricultural production, based on traditional patterns of land-ownership and territory, in which the rights and duties of every member of society is defined by traditional inheritance and kinship relations.

Feudal society differs from tribal society in being a class society, in which quite different and unequal rights and duties are enjoyed by different families, according to land rights, wealth and social status inherited from previous generations.

Feudal society differs from slave society in that every class in feudal society has rights and is regarded as human, however lowly, whereas slaves have no rights at all and are treated as property rather than people.
This is not to say that slavery could not exist in feudal society, but it cannot be the principal mode of production. The feudal serf is the main producer, and has inalienable rights to his land and well-defined political rights; the king likewise is not a law unto himself like the ancient despot of slave civilisations, but must act in accordance with law, and his nobles likewise have very specific duties both as his subjects and towards their own subjects.

Feudal society differs from bourgeois society because bourgeois society operates outside the constraints imposed by traditional rights and ethics, being governed only by what can make a profit, by the market.1

Generally speaking, feudal society is the mode of production most suited to small-scale agricultural forces of production. Slave society flourished in the tilling of large estates where overseers could control the work of large numbers of slaves. In order to take advantage of the benefits of small-scale farming, the labourers had to be given rights in their land, since an insupportable number of overseers would be required to govern their work. Initially, in the British Isles, it was the introduction of sheep and cattle grazing which began to undermine the foundations of feudal society, because the demand for labour was small and large tracts of land were required on which to run herds. This led to the Enclosures in which vast numbers of Scottish and English peasants were brutally and illegally evicted from their land to make way for sheep. The landless paupers created by the enclosures wandered the land without any possible means of living and throughout Georgian times these people were hounded from pillar to post as vagrants, but ultimately they provided the propertyless labourers who would work in the factories of the Industrial Revolution and give rise to the modern proletariat.[1]

Capitalism definition:

Capitalism [kap-i-tl-iz-uh m]
1. an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.2

State capitalism exists when a non-democratic government such as the USSR owns and controls the means of production, distribution, and exchange of wealth. The USSR can almost be viewed as a large factory owned by state capitalists and administered by state managers.

As a further pretty result of the credit given by the workmen to the capitalist, we may refer to the method current in many English coal mines, where the labourer is not paid till the end of the month, and in the meantime, receives sums on account from the capitalist, often in goods for which the miner is obliged to pay more than the market price (Truck-system). “It is a common practice with the coal masters to pay once a month, and advance cash to their workmen at the end of each intermediate week. The cash is given in the shop” (i.e., the Tommy shop which belongs to the master); “the men take it on one side and lay it out on the other.” (“Children’s Employment Commission, III. Report,” Lond. 1864, p. 38, n. 192.)3

State-owned wealth can only be regarded as cooperatively owned by the public under democratic conditions.4

The Marxists Internet Archive Encyclopedia5 defines 'capitalism' as:

The socio-economic system where social relations are based on commodities for exchange, in particular private ownership of the means of production and on the exploitation of wage labour.6

Capitalism develops through various stages. Since capital is both a pre-condition and outcome of capitalism, a period of primitive accumulation marks the beginning of capitalism; this may involve outright theft and plunder, and in particular the creation of a class of people who no longer own any means of production – a proletariat.[6]

Capitalism requires a basic income to function fairly and properly. A basic income is a non–means tested monetary allowance provided to every citizen regardless of income from other sources at the same intervals and in the same amount. The basic income should not be taxed.

Basic income–capitalism is a simple concept. The first principle is that all non–democratically-distributed property is theft from the collective.7 Thomas Paine discussed this in Agrarian Justice (1795) where he points to public dispossession of the resources of the earth without adequate compensation as the root of society's ills:

It [non-democratic claim over land] has dispossessed more than half the inhabitants of every nation of their natural inheritance, without providing for them, as ought to have been done, an indemnification for that loss, and has thereby created a species of poverty and wretchedness that did not exist before.8

This dispossession without compensation is what allows the capitalist to exploit wage labour. A basic income is required to compensate for this and should be considered a right, not charity.

I have already established the principle, namely, that the earth, in its natural uncultivated state was, and ever would have continued to be, the common property of the human race, that in that state, every person would have been born to property; and that the system of landed property, by its inseparable connection with cultivation, and with what is called civilized life, has absorbed the property of all those whom it dispossessed, without providing, as ought to have been done, an indemnification for that loss.[8]

In advocating the case of the persons thus dispossessed, it is a right, and not a charity...[8]

In addition to basic income (compensation for dispossession) being a natural right, there are many other reasons why basic income should be implemented:

1) Efficiency Reasons:
a) Basic income allows the Self-Dissolving Principle to be enacted which comprises support of automation.
b) People want job security; even more decent individuals will block progress in technology and other sectors in to maintain job security. For example, if I am a receptionist I might block phone automation to keep my job. If I was confident the basics of life were guaranteed, I would allow this automation to occur. I could then live off my basic income.
c)In our society today, jobs require far greater training and are far more standardized than in the past. Thus, people also require sufficient time to properly transition from one job to another. People can live off basic income alone while transitioning from one job to another.
d) Following the Self-Dissolving Principle (which includes support for automation) and giving people the ability to transition to areas they are actually needed is far better for the economy overall.
e) People naturally want to work, to feel they are making a difference in the community, to feel they are useful, to look like they are not lazy, to look healthy, to be doing well relative to their peers and people in the community, to keep ahead or keep up with the group etc. These factors will drive people not only to work, but to do that which is of maximum value to society.
f) On top of this, people will work to have luxuries. Video games, jewellery, and fancy cars are not commodities people will be using their basic income to purchase. Market forces are still considered valuable to set prices for these non-essential commodities.
g) Basic income is superior to regular welfare. Regular welfare is removed once somebody reaches an income threshold; basic income is not. Welfare discourages people to do paid work because it is removed once a particular income is reached. Basic income is maintained regardless of income from other sources and, thus, people are encouraged to take on paid work to have additional income to the basic income.
h) Competition can be of value when not overdone. When children play soccer, the competition drives them to do better. However, no matter how poorly a child performs on the field, they are still fed at the end of the day and still get to sleep indoors. This should be applied to society at large.

2) Cultural and Societal Reasons:
a) Painters, poets, writers, and those working in other artistic realms should not be subject to traditional market pressures as this destroys the true nature of genuine art. Additionally, many artists only become recognized posthumously.
b) True piety, integrity, and altruism cannot exist when people feel their livelihood is at stake. This occurs in any type of work environment where people fear unemployment and/or homelessness. For there to be true freedom of speech, a basic income is necessary.
c) True genius in scientific, humanitarian, and artistic realms is deterred when the rights to the basics of life are removed. True genius does not always conform to mainstream public or mainstream academic thought. Thus, for social progress itself, it's important for some people to use basic income as their sole source of income.
d) Also, those involved in spiritual realms who do not belong to well funded religious institutions must also use basic income for subsistence.
e) True genius requires far more time than currently provided by current economic systems and cannot be assessed through standardized testing such as IQ tests. True spiritual mastery requires even more time and is even less discernible using any type of standardized measure.

Talent hits a target no one else can hit; Genius hits a target no one else can see.

-Arthur Schopenhauer

3) Medical Reasons:
a) Healthcare practitioners say repeatedly that “an ounce of prevention is worth more than a pound of cure.”
b) Studies have proven that low income increases one's risk for heart disease and other morbidities.9 Studies have also shown a link between low income and obesity. The explanation is simple. Healthy, nutritious food such as salad is expensive. High calorie, low nutrient food like McDonald's is cheap. People with higher income have less stress, more opportunities, and can purchase gym memberships and healthy foods. People with low incomes suffer from greater stress, less opportunities, and can't always afford proper exercise equipment and nutritious foods.
c) Allowing greater human freedom, transition and choice will decrease stress levels which has multiple untold benefits – not the least of which being a decline in the rates of mental illness such as anxiety disorder and depression.10
d) Low income is linked to lower life-expectancy.11
e) Greater sickness prevention saves the system healthcare dollars.

4) Solution to Inequality:
a) The wealth inequality and income inequality in the world and within developed nations is severe.

Eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity, according to a new report published by Oxfam today to mark the annual meeting of political and business leaders in Davos.12

Basic income will reduce income inequality which will eventually reduce wealth inequality or at least slow the growth of wealth inequality. Basic income can always be increased if wealth inequality continues growing.
b) People’s current relative economic standing is maintained. For example, the first, second, and third richest people in a country will still be the first, second, and third richest people in that country after basic income implementation. Basic income is more about closing the gap.
c) For a child to win in a sparring competition only because others were underfed and malnourished is not something that garners great praise or respect. Thus, the achievements of the rich are not noteworthy unless there is a level playing field.

5) Simple Transition:
Transition isn’t difficult. You merely increase progressive taxation and other taxes and abolish obsolete forms of social assistance like welfare. Some people support funding basic income by merely printing more money rather than increasing the taxes on the rich. This will only result in inflation. The most efficient basic income method is a negative income tax.

Imagine a group of 5 people. They have an income distribution of $10, $20, $30, $50, and $100. Someone gets the BIG idea of everyone putting 40% of their money into a hat, and dividing the result equitably between everyone.

That means $4, $8, $12, $20, and $40 goes into the hat. That’s $84 which when divided by 5 is $16.80.

Another way of looking at this result is that the amounts paid were -$12.80, -$8.80, -$4.80, $3.20, and $23.20. The poorest three people paid negative amounts (negative taxation), meaning they received money, and the richest two people paid positive amounts (positive taxation), meaning they lost money.

If we add up the negative amounts and the positive amounts, we see that the poorest three received a total of $26.40, and the richest two lost that same amount. That is the amount of money that physically changed hands, even though everyone put money into the hat, and everyone got money from the hat.

Okay, so here’s the question: How much did it cost to make sure everyone received $16.80? Was it $16.80 multiplied by 5, so $84? Or was it $26.40?

The answer is $26.40, which is 31.4% of $84. The true cost is less than one-third the false cost!

The true cost of basic income is thus the amount of money provided to net receivers, not net payers (who all cost nothing), minus the amount net receivers put into the hat.13

I support negative income-tax with progressive taxation. Under a circumstance where the basic income level desired by society exceeds the amount that can be extracted from income-tax, other forms of taxation can be used to fund the amount.