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In our current economic system, most of us earn a living by having a job. Without the money we earn at work, we would quickly find ourselves unable to pay for basics like food, housing and bills. Meanwhile, businesses need customers who have enough money to buy their goods. Without enough customers they have no source of income, so would make no profits for their investors, nor could they afford to pay their workers. If lots of us lacked jobs at the same time, we couldn't buy most of the goods produced, and the economy would grind almost to a halt. This is already a problem all over the world, with estimates that two-thirds of jobs in the developing world could be lost through the increasing mechanisation of work.
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Our economic system works relatively well if the production of goods and services needs lots of human workers. Throughout history, most tasks have been fairly labour-intensive. Farming used to employ most of the population, until new machines and technological systems reduced the number of workers needed. These people were then needed in factories, where the machines needed human operators. As time has progressed, more and more efficient machines have been invented, which need fewer humans to produce each unit of output.
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Information-based aspects of production now need fewer workers too. Producing photographs used to take thousands of employees to manufacture and develop camera film; now digital cameras and web-hosted services allow us all to hold thousands of photographs using hardly any human labour. Calculating paychecks for workers used to require armies of accounting clerks - now the task can be done by just a few people with a database or spreadsheet.
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Other jobs in the service sector are being replaced too. Self-service checkouts are now common in supermarkets. Driverless vehicles are on the horizon, potentially making millions of lorry drivers, taxi drivers and train drivers redundant. McDonalds is even proposing replacing the workforce with robots in order to cut staff costs and boost profits. As technology continues to develop, there may be few sectors left that need large numbers of human workers. And for any jobs that do still need people to do them, an income stream must be found to pay the wages.
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Items and systems that can produce goods and services are known as the 'means of production'. As the means of production become increasingly hi-tech, the owners of them (including shareholders) can produce and sell goods and - because they don't have to pay many workers - pocket most of the proceeds. This is happening all over the world, and hi-tech production affects even those who still work in labour-intensive industries, through its impact on prices and competition. |
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As machines replace workers, how can we earn enough to buy things?
In many ways, these technological developments are great news for humanity. Mass production has helped to ensure that there is enough food, clean water, warm clothing, building materials, energy, medicines and consumer goods for everyone in the world. And far fewer of us are needed to do repetitive and back-breaking work to create these things.
Yet many economists and analysts have identified a problem. As humans become barely needed to produce essential goods and services, how will people earn a living and have enough money to be customers? And when people do manage to be customers, and their money is passed to the owners of the machines that made the things they bought - to factory owners, app designers, and company shareholders, who hardly have to pay any of that money back out as wages - how can that money filter back into the economy again to keep production flowing?
Yet many economists and analysts have identified a problem. As humans become barely needed to produce essential goods and services, how will people earn a living and have enough money to be customers? And when people do manage to be customers, and their money is passed to the owners of the machines that made the things they bought - to factory owners, app designers, and company shareholders, who hardly have to pay any of that money back out as wages - how can that money filter back into the economy again to keep production flowing?
Even if there are many people wanting goods and services, and many people willing to work to provide them, if we do not tie these wishes together as jobs, our human needs for sustenance cannot be met.
How we have kept the money flowing
There are a few solutions to this problem, all of which have already been in use for many years:
Re-employ workers to do different jobs, so they can still earn money to spend.
New consumer needs have appeared (or been created through advertising), and either government-run or private sector businesses have employed workers to fulfil them. This can be great - more healthcare, computer classes, hiking holidays and massages probably improve our lives and represent a good use of human effort. Telesales, alcohol marketing, and the manufacture of shoddy goods represent less positive solutions to our jobs dilemma.
Either way, money still has to be found from the general economy to pay the wages of these workers, and there are still likely to be economic pressures to replace workers with machines. As time goes on, will there be enough jobs left for all of us?
Either way, money still has to be found from the general economy to pay the wages of these workers, and there are still likely to be economic pressures to replace workers with machines. As time goes on, will there be enough jobs left for all of us?
Create extra money and insert it into the economy so people can buy things.
New extra money has been added in to our economy for centuries by banks and governments. Banks create almost all of the money in existence through offering credit - it pings into being when people spend on credit cards and take out loans - while governments use 'quantitative easing' to pump funds into the economy.
This can work well for a time, but problems can arise when the debts are due. If we pay back the debts, the money is effectively un-created, reducing the amount of spending power in the economy and returning us to the original problem. If people and governments do not pay back the debts, financial markets 'lose confidence' and crashes occur. So money creation seems to only delay the problem, rather than solve it.
This can work well for a time, but problems can arise when the debts are due. If we pay back the debts, the money is effectively un-created, reducing the amount of spending power in the economy and returning us to the original problem. If people and governments do not pay back the debts, financial markets 'lose confidence' and crashes occur. So money creation seems to only delay the problem, rather than solve it.
Redistribute money from where it accumulates, back into people's pockets.
Governments have been doing this for decades, through taxation and public spending. Most economic activities, including earning wages, selling goods, and making a profit, are taxed by governments. Governments then spend this money, mostly on paying people to do jobs - everything from teaching to social care to road maintenance.
This gets (mostly) useful work done, and provides jobs for many people, who then have money they can spend on goods produced in the private sector. But spending on public services alone may not keep enough money circulating to be a solution on its own.
This gets (mostly) useful work done, and provides jobs for many people, who then have money they can spend on goods produced in the private sector. But spending on public services alone may not keep enough money circulating to be a solution on its own.
Basic income - the grassroots solution
The three methods discussed above all keep money flowing so that people can buy the items they need to live. Employing workers in new sectors can be positive, but there's a risk as time goes on that we may be forced to create pointless jobs, just so people have an opportunity to earn. Creating money in the form of credit or quantitative easing seems to work only as a temporary fix, and risks financial crashes.
Redistribution by governments, through taxation and public spending, is an essential part of our public life that brings many benefits. However, if this were to become the main way in which we keep money flowing, it puts a huge amount of decision-making power in the hands of a relatively small number of politicians and civil servants. It is difficult for a single central organisation like a government to know what every person in the country most wants and needs - this often works well in sectors where we tend to all want the same things (excellent healthcare, reliable public transport, regular bin collections) but less well when we want different things (most people would rather choose their own food, clothes, books and leisure activities). Sometimes, the best people to decide what goods and services they need are the people themselves.
Basic income is a kind of tax-and-spend that governments could use, alongside spending on public services, to collect up money from where it accumulates (which is increasingly with those who own hi-tech means of production), and redistribute it to us all directly to spend as we see fit.
Redistribution by governments, through taxation and public spending, is an essential part of our public life that brings many benefits. However, if this were to become the main way in which we keep money flowing, it puts a huge amount of decision-making power in the hands of a relatively small number of politicians and civil servants. It is difficult for a single central organisation like a government to know what every person in the country most wants and needs - this often works well in sectors where we tend to all want the same things (excellent healthcare, reliable public transport, regular bin collections) but less well when we want different things (most people would rather choose their own food, clothes, books and leisure activities). Sometimes, the best people to decide what goods and services they need are the people themselves.
Basic income is a kind of tax-and-spend that governments could use, alongside spending on public services, to collect up money from where it accumulates (which is increasingly with those who own hi-tech means of production), and redistribute it to us all directly to spend as we see fit.
World basic income - re-circulating wealth accumulated at the global level
In the same way, a world basic income could collect up a proportion of the immense wealth that circulates at the global level, much of which barely touches-down in national economies at all. The owners of hi-tech means of production (which includes all businesses which use machines and computers to replace human labour, i.e. most businesses) often keep their money offshore, in high-secrecy bank accounts and by buying up assets in far-away countries. National governments often struggle to keep track of these money flows, and therefore they are not always able to tax them effectively or sufficiently. This can especially affect governments of newer democracies, who may lack the political will or the expertise to compete with aggressive tax avoidance by corporations and the wealthy.
A world basic income scheme could tap into the immense amounts of money that flow around the world between corporations, tax havens and the super-rich, and extract a share of it to distribute among people all over the world. People in poor areas, to which practically none of this global money currently flows, would have access to an entirely new basis for prosperity. We would have the basis of an economic system that could thrive rather than suffer from the ever-growing development of technology.
A world basic income scheme could tap into the immense amounts of money that flow around the world between corporations, tax havens and the super-rich, and extract a share of it to distribute among people all over the world. People in poor areas, to which practically none of this global money currently flows, would have access to an entirely new basis for prosperity. We would have the basis of an economic system that could thrive rather than suffer from the ever-growing development of technology.
