As part of a another current project, which I will have more to say about…
Some historical thinking about the Job Guarantee
I noted yesterday that I was appearing at a Seminar via Zoom with my MMT colleague, Pavlina Tcherneva, where we will discuss the concept of a social contract and where Modern Monetary Theory (MMT) fits into that, especially in the context of our idea of employment guarantees. The seminar – MMT and the new social contract: Lessons from Covid-19 – will be held on Saturday, February 27, 2021, from 10:00 Australian Eastern Daylight time and you can find details of how you can participate – HERE. I was thinking about what I would contribute to this workshop and rather than just rehearse the standard discussion about the Job Guarantee I have thought going back to square one would be a good place to start. This is especially a good thing to do, given that I increasingly see progressive people embrace the concept but try to do ‘too much’ with it. That is, place too much emphasis on it, especially in the context of Green Transitions. Pouring all our activist and political energy into getting a Job Guarantee up is not a sensible strategy for reasons I will explain. Second, a lot of critics, especially those who talk big on Twitter about ‘Bill Mitchell wanting people to starve’, clearly haven’t gone back to understand the roots of the concept and where it fits in. So today, I want to further clarify some significant issues that arise when both sides – pro and con – come in contact with the concept of employment buffer stocks for the first time and think they know all about.
As a matter of fact, I always applaud initiatives that propose to introduce a buffer stock of jobs and use it to replace the current unemployment buffer stock approach that devastates the lives of people and wastes human potential.
But I caution against making these initiatives out to be ‘game changers’.
A Job Guarantee is an important part of a new order but it should really be just a very small part of the policy offerings, which I think is a point that is missed by those who think of it as a job creation program rather than the way I conceived of it initially in 1978 as a price stabilisation framework with the added advantage that jobs replaced unemployment.
In this blog post, I am really building on the notions I developed in this post – Setting things straight about the Job Guarantee (July 30, 2020).
Let’s construct our thinking in a logical manner.
Capitalism is a crisis prone monetary production system.
Marx knew it. Kalecki knew it. Keynes got to know it.
The policy interventions that defined the period after World War 2 up until the Monetarist coup were built on that understanding.
We knew that unregulated capitalism would enter crises whenever pessimism increased and spending fell.
We also knew that without government intervention by way of fiscal stimulus, that the capitalist system could get stuck in an equilibrium state which would coincide with very high unemployment.
When people say they are Keynesian, above all else, they are referring to that understanding and that operational sense – for government to intervene into the private system that was stuck in crisis and restore confidence and income and employment growth.
We also formed an understanding from Marx and others that the logic of capitalism was conflictual.
The bosses want to get as much surplus value as they can out of workers while they control their work day and pay them the least they can get away with.
Conversely, the workers that are essential to creating surplus value (which is the source of monetary profits) want to be paid the most they can get and do as little possible work.
That juxtaposition spells conflict.
And that is what the whole history of supervision and control structures in capitalist workplaces is all about – ensuring that the surplus is created and maximised.
With the rise of Communism and the disruption of the Second World War, Western nations had to work out a way to rebuild their wrecked economies while ensuring that Communism did not spread.
Communism was attractive to workers because it held out a liberation from capitalist control. Of more equity and discretion about our workplaces.
That is one of the reasons, social democratic movements formed and were tolerated – because they allowed capitalism to survive by conceding some equity to workers and empowering the state to create public goods such a health and education systems.
Obviously capital still tried to manipulate those developments – for example, by attempting to control educational curricula and the like.
But for a time workers could organise and confront capital as a collective to extract better wage outcomes and working conditions.
Full employment gave tremendous advantages to the working class and allowed for upward intergenerational socio-economic mobility – where children born into poorer families could aspire to transcend that social class and enter the more secure middle class.
And as capital became more concentrated – through takeovers etc, and, trade unions became more powerful, the two conflicting forces obviously gained increasing price setting power.
Firms set prices according to markups which reflected their expected profit return on capital and unions, representing their workforces, could exert power to gain wage increases.
As a result real wages mostly grew in proportion with productivity growth which reduced the likelihood of a realisation crisis (expenditure lagging behind production) but also reduced income inequalities and allowed workers to fast track into middle class life (and mass consumption).
But that increase in ‘price setting’ power brought a new propensity to crisis relating not to unemployment but rather to inflationary biases.
The – 1973 OPEC Oil Crises – triggered an inflationary spiral driven by the ‘battle of the markups’ (the conflictual struggle between capital and labour for real income shares).
The existing Keynesian policy consensus had really only constructed inflation threats in terms of demand pull events – where nominal spending outstrips the capacity of the economy to respond by producing more real goods and services.
There was some delay among policy elites in grasping what a raw material price hike (particularly one that is imported – such as the oil shock) meant when it interacted with the distributional conflict between labour and capital.
The point was that nations as a whole had to take a real income loss because an essential raw material they imported now took a larger share of nominal income.
So who would take that loss?
Capital didn’t want to take it, and, rather tried to pass it onto workers by increasing their markups and pushing up prices, thereby reducing real wages and the purchasing power of workers.
But strong trade unions were not keen to accept that profit push and ‘real wage resistance’ became a force, which was expressed in increased wage demands – thereby restoring the real wage cuts resulting from the price rises.
As both sides had price setting power, a price-wage spiral was easy to trigger and that is what happened.
Before long, inflation was accelerating away and governments, under the influence of the emerging Monetarist paradigm in macroeconomics, sought to cut net spending.
This resulted in rising unemployment coinciding with accelerating inflation, which we called ‘stagflation’ – the twin evils.
The rising unemployment was devastating but airbrushed by the Monetarists as being an essential ‘natural’ adjustment that we just had to tolerate to stabilise inflation.
And so the ‘natural rate of unemployment’ or NAIRU (non-accelerating-inflation-rate-of-unemployment) entered the picture and governments were told that there was no longer a choice to use discretionary fiscal expansion to reduce unemployment.
The only thing that would result from this strategy, we were told, was that inflation would continue to accelerate and only stabilise when the natural rate of unemployment was reached.
I was a young student as all this was going on and mainstream economists were estimating that the natural rate in the late 1970s had risen (due to microeconomic inefficiencies) and full employment could no longer be considered to be 2 per cent or lower, a level that had been sustained for 3 or more decades following the Second World War.
In 1978, I was doing my fourth year studies at the University of Melbourne and one of the units I took as part of the course work component was Agricultural Economics.
As a child from a working class family, the rise in unemployment in the late 1970s and the response of the federal government to create a ‘razor gang’ under the then Treasurer Phillip Lynch, which sought to cut government deficits, was devastating.
Unemployment continued to rise. It was the beginning of high youth unemployment because one of the things the Razor Gang cut was apprenticeships, which were largely offered within the public sector.
Youth unemployment rose sharply (and never returned to low levels again) because its major employer stopped employing! All sorts of mainstream economists starting raving on about excessive youth wages, excessively generous youth unemployment benefits etc but it was as simple as their major employer bailing out due to the erroneous idea that fiscal deficits were dangerous and had to be cut.
So this was the period I was starting out in.
Inflation was very high.
The economics academy had become infested with Monetarist ideas and governments had shifted from seeing unemployment as a policy target to be minimised through public policy to being a policy tool that could be used to discipline the inflationary spiral.
That discipline would come by pushing workers into unemployment, which increased the fear of those still in work of having to endure the same fate if they persisted with their wage demands.
The unemployment and lost income also meant that ‘product market’ conditions (sales and demand) weakened, which made it harder or acted as a disincentive for firms to push up prices for fear of losing market share to rivals.
As I became more aware of economics, causation, class struggle and the rest of it, I realised that this anti-inflation strategy was incredibly damaging to the working class both in personal terms (undermining family stability, rising poverty rates and the rest) but also represented a massive loss in terms of daily GDP that was foregone as a result of the unemployment.
Not having workers who wanted to work working was a massive waste of human potential and income generation capacity.
The rising neoliberalism at the time ignored these losses and started to, instead, worry about whether buses and trains ran on time (the so-called microeconomic inefficiencies).
Micro reform became the policy flavour and led to attacks on conditions of work, attacks on trade union power etc, while the massive daily losses of the macroeconomic failure (the systemic shortage of jobs deliberately created by fiscal austerity) was staring them in the face.
Of course, all of this was a strategy (apropos of the Powell Memorandum and what followed) to undermine the gains made by citizens as a result of the three or so decades of social democracy.
Capital was fighting back and governments were being reconfigured by the neoliberals (supported by my profession) to aid and abet that fight back.
The times were very different to what they are now.
To really understand where the MMT version of the Job Guarantee comes from you have to try to put yourself back into that milieu.
When I was in that Agricultural Economics class, we were studying the wool price stabilisation program and I have already written about that in previous posts – see linked post above.
It was at the time unemployment was rising sharply, which was anathema to me.
So as a young progressive aspiring economist I wanted to devote my project work in that course, but as it turns out, all of my later work through PhD then academic work to countering:
1. The fiscal deficit fetishism that had taken over the profession by the late 1970s
2. The idea that the only way out of inflation was to use unemployment.
3. The idea that markets would deliver optimal outcomes if left unfettered from government spending interventions and regulation.
4. The idea that there was some natural rate of unemployment that we had to accept was a market phenomena that government could do little about.
That was my mission and why the idea of the Job Guarantee was an early expression of that mission was because I got the idea from the Wool Price stabilisation scheme, which was a government run buffer stock mechanism that effectively always ensure there was full employment of wool each year (no excess demand or supply) and stabilised the price of wool at a level agreed to be acceptable to the sheep farmers and government.
I wasn’t so much interested in wool but was very interested in labour and unemployment.
So a moment’s lateral thinking one cold winter’s day in Melbourne as I stared out the window of the lecture theatre onto Royal Parade shifted me from thinking about buffer stocks of wool to thinking about and sketching a plan for a buffer stock of jobs.
That sketch became my final paper in that course.
But you have to be clear it was a scheme to address the inflationary crises endemic to late industrial capitalism where capital and labour are in conflict and both had price setting power.
It was not conceived as a job creation program. It certainly had that additional advantage.
But it was conceived as a way of addressing the distributional struggle and the price-wage spiral without having to create unemployment.
I understood that a solution within capitalism had to be found because I hadn’t identified any revolutionary armies forming in the suburbs that might overthrow that particular (and pernicious) system of ownership and production.
That understanding didn’t suggest I supported capitalism. It just reflected the reality that while these revolutionary armies might have been a figment of ideation in the minds of the urban guerrillas that spent a lot of time talking over coffee in university cafes about overthrowing capitalism, the cold hard facts were that working class people were enduring massive hardships because they were being forced into unemployment as front line soldiers in the government’s fight against inflation.
So in ordering my priorities I decided the daily human suffering that was before my eyes, in the streets, in my own parent’s home, in the homes of my friend’s parents, etc was more pressing than the revolution which would have to come a bit later.
As I became an academic and developed the idea further in the 1990s, I was often confronted with critics – self-styled Marxists etc – who accused me of being an apologist for capitalism because I was proposing what they referred to as ‘palliative care’ for the workers which would lead them to have better lives and reduce their propensity to engage in revolutionary action.
Most of the criticisms came from academics with tenured, well-paid jobs.
They wanted the precariat to have to endure the perils of unemployment and become revolutionaries while they enjoyed relatively secure and high paid jobs.
You can imagine what I thought of their position.
The point of all this is that to understand the Job Guarantee in MMT you have to see it in this historical context.
It was a means of dealing with the inflationary biases at the time in capitalism which led governments deliberately creating unemployment as a vehicle to arrest the distributional struggle between capital and labour.
It was obvious to me at the time that the price the government was prepared to pay for labour as it absorbed workers released from the non-government sector as it tightened policy settings to choke off the inflationary pressures would ultimately set the price of the currency.
It could not be any other way.
The only question was how large the buffer stock of labour had to be to complete the task.
Some years later, when I came in contact with Warren Mosler, we discovered that we had come to the same conclusion from quite different starting points, which was both interesting and exciting.
And this idea of the buffer stock which was the terminology I introduced (given the agricultural beginnings of my thinking) then became central to our development of MMT.
We have discussed this a lot over the years.
Neither of us saw the Job Guarantee as being purely a vehicle for creating work.
It was always a price anchor.
Neither of us consider the Job Guarantee should be the first response to a downturn in spending by the non-government sector.
Neither of us want the Job Guarantee to be very large in size.
In the late 1970s, as I worked on the idea for my final paper in the Ag Ec course, I came to realise that in the Post World War 2 period, the only way that Australia had maintained low unemployment (below 2 per cent) for all that time was because it was actually running an implicit job guarantee scheme.
Jobs could always be gained in public utilities, infrastructure departments (housing, roads), railways, post and telecommunications, local governments etc.
There was an effective buffer stock operating all that time implicitly that allowed the most disadvantaged workers to always be able to work.
These jobs were accessible to those who the private market would never employ – people who had mental disabilities but could function episodically, people who were in and out of the prison system, young musicians that were often broke, and other cohorts.
So while I saw the Job Guarantee as principally my answer to dealing with the inherent inflationary propensities within capitalism, I also understood that for some, the jobs would be permanent and so it could not be a stop-start sort of program.
Which meant that I saw it as being the most basic part of a progressive economic policy structure that could help in the inflation struggle without creating unemployment but also provide accessible and stable employment at socially inclusive wage rates to those who the private market wouldn’t touch.
That latter cohort though important was typically relatively small.
And that is why I don’t use Warren’s terminology of a ‘transitional job’. For those who would occupy the Job Guarantee pool almost permanently it would be their careers.
But both Warren Mosler and myself were always clear that the first thing a government should do if it wants to create work is spend to create well-paid, high productivity jobs in the regular public sector.
And that is especially the case if there is no stagflation problem.
In a normal economic downturn, which arises because the non-government sector becomes pessimistic, relying purely on a Job Guarantee to solve the unemployment problem that arises, is likely to be a poor policy choice.
It would be there for sure to absorb some workers.
But overall governments should be about creating high-paid jobs not minimum wage jobs.
That is another misconception out there – that MMT just wants to create lots of minimum wage jobs.
Well Warren and I, who were there at the beginning of this MMT sojourn, have never seen it that way.
We want to create as few of those type of jobs as possible and only rely on the Job Guarantee in any significant way if inflation is rising fast.
Otherwise, our attention is not on disciplining the distributional struggle but on spending up to full employment.
Finally, this sort of thinking also allows one to see my criticism of Basic Income strategies in a historical setting.
Essentially, an income guarantee means the government is spending – via the agent receiving the basic income – at market prices.
So this increases the inflation risk of that spending, especially when capital and labour are engaging in distributional conflict.
The question then arises is how does the government then deal with those inflationary biases in capitalism, which are endemic?
Well without a buffer stock of jobs, the only other functional (effective) option is to create unemployment.
So we are back to that.
The so-called ‘freedom’ that basic income recipients enjoy (allegedly) comes at the expense of those who want to work being forced to be front line soldiers in the fight against inflation.
Essentially, basic income advocates have no answer to that question and problem. They are essentially in denial of the realities of capitalism.
And when they Tweet their heads off about MMT just wanting workers to be enslaved in shocking capitalist jobs, they miss the point that the Job Guarantee jobs would be in the public sector serving the communities, but they also fail to recognise that the basic income recipients are being reduced to the most elemental and crude unit that capitalism can offer – a consumption unit without any of the social advantages that work brings.
Conclusion
There is more I can write about these matters.
But it is crucial when considering the Job Guarantee in MMT to understand the historical context.
Otherwise, you will just waste your time Tweeting inane things about our work that might make you feel good but misses the point entirely.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.
Great article!
Thanks Bill for writing about the historical trends over the past 70 years or so.
Very educational.
Basic Income fans are the “We Eat for You” layer from the famous pyramid of the capitalist system.
Too Woke to Work.
Hello Bill
Thanks for a delightful historical overview and a well argued case for a socially progressive Job Guarantee.
Yet I’m not quite convinced.
I accept your objection to UBI that: basic income advocates are essentially in denial of the realities of capitalism. But surely, that’s the point? Some people choose to live most of their lives outside the ‘realities of capitalism’ for, what are to them, good reasons. They include surfers, gypsies, junkies, hippies, artists, nomads, crafters, conservationist, tinkerers, carers, musicians, tree huggers, hermits, scholars, philosophers, dancers, doodlers, permaculture warriors, etc.. Without UBI they are slaves.
The ‘realities of capitalism’ demand money. If I understand you, it is this demand that sets the price of money. But the ‘realities of capitalism’ are not the realities of life on Earth – most of those are mere capitalist externalities: art, culture, caring, nature in all its radiant glory, the universe, joy and sheer delight in fine jazz. A job guarantee might help one live in their capitalist world but it does not free one from slavery to their ‘realities of capitalism’. Perhaps a UBI might?
“Well Warren and I, who were there at the beginning of this MMT sojourn, have never seen it that way.”
Dear Bill,
“Sojourn” (meaning a “temporary stay”) is probably not the word you really meant to use to describe your MMT… journey, adventure, voyage, expedition…etc!
Best, Mr S.
The post war order with real full employment started as an idea in th 30’s, it lasted for approximately 4 decades, we now have had neoliberalism for 40 years and it seems to strengthen over time. it’s now stronger than ever.
Those who in real time experienced the Labour situation in the post war period are soon dead and gone. People that wher borne from the 70’s and onwards have never lived in anything than a neoliberal system.
I’m thinking there’s an analogy here with a control strategy often used in engineering, where an output variable is controlled with two feedback loops operating at different scales. In this analogy, fiscal policy is used at a coarse scale in an outer control loop, and the job guarantee works at a finer scale with a faster response time.
@/lars
Quite true. And its nastiness continues.
Nonetheless it is possible to devise programs that improve people’s lived conditions. During the past 30 years a parental leave program was introduced in Canada some time in the 1990s. It provides about one year of modest benefits to mothers and fathers and the right to take the time off. It should be better but nonetheless is a big improvement over the preceding situation. When my first child was born (1989) my boss granted me the generous favour of one week off with pay. I appreciated it and was grateful.
Further, in the province of Quebec where I live, we have an excellent publicly supported non-profit childcare program instituted in the late 1990s. The centres are run by the parents and financed in part by their contributions but mostly by those of the provincial government. Apparently it has been widely studied by other countries. Successive neoliberal governments have undermined the program but have been unable to do away with it. It still accounts for at least one half of all childcare. What the neoliberals have done is make it easier for private for-profit childcare facilities to be established.
At the 2017 (or 2018?) MMT conference in New York City many people saw the Job Guarantee as a way to introduce various worthwhile social programs through the back door. As Bill points out here that is not its purpose. Nor will it work. The only way to get those programs is through organisational strength on the ground.
As has been written many times MMT provides a lens for what is possible in a country with currency sovereignty. It nullifies much of the propaganda of neoliberals. However it does not displace all the hard work on the ground that still needs to be done to make the world a better place.
The U.S. C.I.A. played a role in overthrowing Mossadegh in Iran and replacing him with the Shaw in 1953. Concern over a stable supply of Mideast oil to the U.S. had to have a great deal to do with that. If the concern was that enormous, the U.S. Government should have realized the need for a massive R&D program to replace Mideast oil. If that began in 1953, two decades later the nation’s vehicle fleet could have been dominated by electric vehicles and oil, if not all fossil fuels, could have eliminated for electricity production. Then, the 1970s stagflation would not have happened in the first place.
Dear Bob (at 2021/02/25 at 10:17 pm)
So your people who you claim “live most of their lives outside the ‘realities of capitalism'” eat food produced by workers being exploited, live in houses built by …, wear clothes made by … and on it goes.
They are happy to take the products of the labour of others but do not want to give back to the collective.
And, given most people still think that taxes pay for government spending, your “gypsies et al” are content to see other workers taxed to allow them an income free of any obligation to give back.
That is not a sound basis for a healthy society – capitalism or not.
best wishes
bill
Excellent and revealing explanation by Bill of the genesis and purpose of the JG. But his apparent desire to delink it conceptually from more ambitious progressive policy proposals raises a few questions in my mind. Why couldn’t the JG also be thought of as the cracking open of the door to that larger public employment program Bill and many of us desire? And why couldn’t that larger public employment program lead to a widening of the crack in the door from neoliberal capitalism to so-called “capitalism with a human face?” And why couldn’t “capitalism with a human face” then swing the door all the way open to some form of eco-socialism, which would seem to be an existential imperative? And if all of these steps could be so sequentially linked, then why not think about them and advocate for them as interlocking pieces of one great socioeconomic puzzle?
MMT is definitely the most advanced theory.
“However it does not displace all the hard work on the ground that still needs to be done to make the world a better place.”
Agreed.
“Why couldn’t the JG also be thought of as the cracking open of the door to that larger public employment program Bill and many of us desire?”
Because a large public employment programme has to be paid for by taxation and transfer. A guaranteed job does not.
The reason why you cannot use the JG for a wider programme is straightforward. A recovering private sector will bid those workers away and at the peak of the business cycle you will have nobody working in the public sector.
Taxes have to be sufficiently high to ensure the needed public sector remains fully staffed at the top of the business cycle.
Job Guarantee work is only suitable for those activities that can be shelved for later. It is a nice to have.
Bob. RE UBI I agree on all counts.
The 4 year trial in Dauphin Canada highlighted many benefits of a UBI and also showed a very small drop in workplace participation.
I believe we should have the choice of working for others (Employment) or not to if that’s what some may choose to do.
“The 4 year trial in Dauphin Canada highlighted many benefits of a UBI and also showed a very small drop in workplace participation”
The 100 year trial of the UBI known as the ‘Old Age Pension’ (available to people of a certain age with a wider currency zone, rather than living in a certain area within a wider currency zone) shows the opposite. With much greater data depth.
What the oil price shock of 1973 did was expose what was wrong with the way economic systems had evolved – they had become dependent on oil for transportation and coal for electricity. When the rapid rise in the price of oil triggered a wage-price inflation spiral in the 1970s, the inflation should have been quelled at the time by transitioning economic systems towards renewable resources, thus expanding the options available to fuel the economic process. As Bill says, ‘we’ chose instead to use unemployment as the inflation buffer. It eventually dealt with the inflation problem, but destroyed many lives in the process and merely masked the underlying problem – that economic systems were and are addicted to oil.
We are seeing something similar in relation to climate change. It exposes our reliance on coal. We haven’t dared put an appropriate price on carbon in fear that it would do what the oil price rise did in the 1970s – cause inflation. So we have managed to avoid inflation but are destroying the Earth’s climate system in the process.
We need to accept that when inflation arises because of a structural deficiency of our economies – caused by bad policies of the past – that we wear the inflation as a price for bad policy and rid our economies of the structural deficiencies, which takes time. Inflation isn’t nice, but it’s a signal that something isn’t right. When the inflation alarm sounds, we should react by doing what is needed to stop the alarm from sounding, not smash the alarm box thinking that it deals with the underlying problems.
What a wonderful post! Thanks so much. Just a quickie for you…
“Neither of us consider the Job Guarantee should be the first response to a downturn in spending by the non-government spending.” – sector?
Dear JonM (at 2021/02/26 at 8:41 pm)
Thanks Jon and lovely to see you pop up here again.
Fixed now.
best wishes
bill
Bill, you only partially address your critics in this piece.
Let me see if I can clarify a few things, and with a perspective drawn from many years personal experience on both sides of the ‘unemployment’ and employment activation fence, which almost no MMTers I’ve ever come across get remotely close to.
There is a move, quite obvious in the US, from MMTers to use the JG as integral to a Green New Deal policy to target not just unemployed, but existing workers into GND programs, which are likely to be permanent at least for a couple decades minimum.
Well, I am one of your critics, Bill (I’ll get to that), but on this point I entirely agree with you (& Warren) – JG is a buffer stock, macro efficiency mechanism, primarily. Otherwise, it’s just another public sector spending program, and subject to political challenge, likely risking future termination of JG on these grounds.
There’s two things here, in emphasising – in fact, barely mentioning the buffer stock efficiency aspect – a ‘right to work’, and/or JG as a minimum wage ‘green’ public works program.
Both emphases miss the apolitical benefit that JG maximises use of the labour ‘real resource’. JG, by definition, must be better than an unemployed buffer, which is the only other alternative, since unused labour remains a ‘real cost’ whether productive or not (indeed with extra costs from social deprivation), unless the unemployed are let starve, homeless etc., which should not be acceptable to anyone on moral grounds, and Gov should be the guarantor of such a basic right – not to starve etc.
The second point is that ‘green’ investment and services provision needs to be permanent on a multi decades basis considering the massive transition we need to make, from where we are. As such, it should be undertaken on ‘normal’ permanent public sector employment terms, with appropriate wage scales etc., as exist now in the public sector.
Why open themselves up to the accusation of getting the public sector action on climate and ecological mitigation measures with minimum wage labour, ‘on the cheap’?
It may be that programs may use a lot of minimum wage, minimally ‘skilled’ jobs anyway, but still no excuse to confuse these activities with the quite different core intention of JG – the buffer stock.
A subset of these ‘use JG for GND’ advocates, typically also advocate JG as a vehicle to pay presently unrecognised ‘work’ in the home, for care of children or relatives etc. Again, these should be permanent supports (which do exist eg. here in Ireland, already), not part of a ‘buffer stock’, and subject to a different area of political calculation.
Now, another important aspect I see routinely ignored by all, is the distinction between what we might expect to see JG address in the immediate situation, suffering from decades of neoliberal brutality toward labour, versus what we would hope to see in a more steady state situation, as JG and other programs reach some fruition in reversing all the social and economic waste/harm already done.
I doubt that ‘steady state’ – which we might consider to be much improved economic stability, minimal involuntary unemployment (outside JG, in ‘normal’ sectors), and relatively small fluctuation in and out of JG – will take much less than a couple of decades to achieve. Not least because of enormous disruption in labour activities which appropriate climate mitigation measures are going to create – indeed following a pattern of increasingly rapid redundancy of trades and occupations that we’ve already seen in the last few decades. (ie My father’s generation could expect to learn a trade & perform it for their whole working life, as he did – in my generation, that has rarely been the case.)
Thus, in the short to medium term, we should not be surprised to see a significant number preferring to go on, and stay on JG, including from existing employment, if the JG wages & conditions are set even approaching a decent ‘living wage’ income, with job security etc., as morally should be the case.
But our aim should be to see such numbers retrain, upskill etc., and reduce their presence in JG, over a period of a decade or two, and aim JG supporting measures at encouraging that (slow, high quality) transition.
Thus, the numbers remaining on JG for long periods (many years) versus those moving in & out much faster, are important metrics to facilitate program improvements over time, and fine tuning the ‘economic signals’ of JG versus other welfare benefits must also be part of that management equation.
So, I agree – more with Warren, than Bill, perhaps – that JG, in the longer term, should aim to be a true ‘transition’ job program, but with high quality aspirations, and taking account also of the kind of labour market disruptions that Gov itself will force as a result of the urgent, likely decades long, green transition societies need to make.
Over arching all this, will be future political input, as citizens – voters – take a view as to the value of JG, especially in its initial phase of moving to reverse the social and economic harm built up over the neoliberal era.
If we do JG well, aiming for quality above all, in personal and social economic outcomes, I would (hopefully) like to see voters become more sympathetic generally to public/social benefit programs of all kinds – perhaps programs that JG ‘pilots’ initially as transitory programs – and then vote to make such programs part of permanent public sector provision they value highly.
So, what I’m suggesting here, is do not try to fight every political battle for social benefit and justice with JG from the get go. Emphasise quality and labour ‘buffer stock’ goals initially, and let the the JG, and other permanent programs it could spawn, develop organically, as, especially, local communities of voters see the real value delivered, and on the highest basis for both JG and community, *mutually*.
Which brings me to my final point – the specific criticism by myself and a few others, that Bill – yet again, sadly – refuses to address properly – the question as to whether JG is truly ‘voluntary’, or de fact ‘mandatory’ – ie do JG, or have no income, if you are unemployed.
First off, let’s get rid of the diversion (confusion?) that Bill has used previously. People declared sick or disabled sufficiently to be considered unable to work should be looked after by separate, targeted incomes and services, on a parallel to ‘living wage’ basis, much as they are now, to greater or lesser extent in most developed countries.
But, we must recognise that these services and disability assessments, that have been developed and existed to date, are very far from being fit for purpose. A credible study for the UK indicated that in the last decade alone, some 120,000 people have died prematurely, many through suicide, as a direct result of the removal of income and other disability benefits.
Further, the ‘job activation’ industry which has developed over the last decades, has been specifically aimed at demonising and punishing the unemployed – those not assessed ‘disabled’ – for not ‘finding’ employment, that we know has largely not existed.
From personal experience, I can tell you that even in relatively benign Ireland, these ‘job activation’ services are little more than a form of psychological torture of the unemployed (including for political ‘optics’), in a situation where we MMTers *know* that grossly insufficient job opportunities exist, even at the exploitative terms typically on offer to this least able, and most vulnerable, cohort of the labour force/class.
Yet, we are told by Bill and other MMT academics that these very ‘Job Centres’ are the ones that, by superficial logic, will be tasked with implementing and running the new JG programs.
These are the organisations & management structures presently responsible fore all the ‘sanctioning’ – removal of already barely survival level incomes – for these most vulnerable groups.
Let me tell you, again from direct personal experience – on both sides of these interactions (not as Job Centre worker, but as Co-op & Community business dev worker in inner city area) – that staff who have much any capacity for empathy toward their ‘clients’ (their term), or to a quality service provision, do not stay in employment any longer than they have to in these places. And most certainly do not rise to manager or supervisor status. (They are not ‘bad’ people as such, but I will just refer you to the Stanley Milgram experiments of the early 60s, to explain, if you can’t see how this kind of ‘Gresham’s Dynamic’ evolves in this area.)
So then, to Bill’s worst, most egregious, ‘blind spot’, that he inexplicably refuses to specifically address… no income if you refuse to take up a JG offer. This could not be more dangerous to the *whole* project of JG, MMT and its progressive political impetus. Seriously, that’s not hyperbole. Bill & others *must* change their view on this point… read on.
JG must *never*, *ever*, be anything but meaningfully ‘voluntary’ for its participants. Because, even with some goodwill, eventually, and especially starting from where we are, JG participants and its programs, *will* be abused, and continue to cause immense damage. Ultimately, imo, leading to the complete discrediting of JG’s value, in both personal and social measures, and its demise – exactly as the neoliberals will try to do. Discrediting everything associated with JG, GND and all the rest. (Media power of the capital class will anyway attempt to do this – we should not give them any help – and they are way more powerful than Bill realises, frankly. Details will *matter* massively in design of JG and accompanying policies – there may not be much opportunity to correct serious screw ups or corruptions arising.)
For JG to be meaningfully voluntary, there *must* be a back stop income for those simply declaring themselves unwilling *AND* having insufficient existing income available to them. (Simple bank statement and/or personal signed declaration to that effect.) No other conditionality. So, not a ‘UBI’, at all, but by some peoples’ definition, a ‘basic income guarantee’ of sorts.
However, JG must be properly incentivised, which should be easy to do, since a ‘living wage’ is far higher than present unemployment benefits in any country I know of. Therefore, the ‘BIG’ I define above can reasonably be placed at a significantly lower level, whilst still facilitating basic survival needs.
Though, to make this incentive structure work reasonably well, whilst meeting basic human needs (as opposed to ‘living income’ full participation life), across different household compositions, the best approach is also for Gov to ensure *direct provision* of most if not all basic ‘social’ needs – Universal Basic Services – for all citizens. Which must include at least free healthcare, basic housing guarantee (preferably by public housing ‘buffer stock’), free education & adult further education, and perhaps public transport vouchers or card.
I cannot emphasise enough how important it will be to get this complete formula of social/welfare supports, incorporating JG, and the incentives structure of maximum carrot, minimum stick, as carefully designed as possible, taking all these factors into account.
Frankly, imo MMT should have an entire conference and wider activist and cross discipline consultation focused solely on getting this right & taking a common stance, rather than the ad hoc diversity of view that prevails now.
(And I make no apology for stating here that in my 65+yrs, comprising at least 5 different ‘lives’ in widely different areas of society, that I understand the nuances of this matter better than any *single* MMTer, or other academic, I’ve ever studied or read, over the last decade plus.)
@Mike Hall,
I think you are making the JG too complicated.
Re the transition to green: as many people as needed will be employed to build the necessary infrastructure. (And if indeed time is short, the whole energy production sector should be nationalized, so the central banks can compensate the fossil industry and close it ASAP, and fund the transition as if on a war footing, diverting as many resources as are required to build the necessary infrastructure. ..no time to wait for market-driven activity).
The JG is merely a buffer pool, for anyone who is not able to find himself an above poverty job. Now I’m sure psychologists could help local councils find mutually acceptable and useful work (to the local council and the worker) for the more ‘difficult” individuals.
As I’ve commented on Facebook:
I don’t see much role for a JG here [UK] as there is such an unfulfilled demand for local services which should be provided by the public sector. So obvious since the slashing of central government grants to local authorities since 2010. Volunteering and charities have replaced a tiny proportion.
I think it’s a brilliant tool to have in the box. I just don’t see the demand for labour going down, no matter how much capital is applied. I guess it’s there for recessions, but with the MMT lens these should be short lived. However, I see it as important to promote the JG in the trade unions to establish the MMT lens.
I agree with Mike that there is a need to support ‘transition’. I’m trying to write something for Labour CND which particularly supports a Defence Diversification Agency. I worked for a defence company myself and have experience of the failure of diversification in the wake of the fizzling out of the Cold War. That didn’t last long, did it?
Dear Bill
Thanks for your good wishes.
Perhaps you have misconstrued my comment, and I have failed to communicate wisely. My question was not really about UBI but about whether a Job Guarantee could enable work in the realms of capitalist externalities and help mitigate capitalist money slavery.
I don’t think you really mean to characterise those who are trying to do this work as ‘dole bludgers’ unaware of their dependence on others. I know many people who try (or have tried) to live large chunks of their lives outside the ‘realities of capitalism’, to grow and trade their own food, to make their own tools and clothes, to build their own houses, to make their own music, and to both contribute to community and care for country without attempting to exploit either for selfish benefit. These efforts are work, but often not paid work.
May I rephrase the question?
I contend that the greater part of the real wealth of nations is not found in the amassing of chattel wealth, but in the realms of capitalism’s ‘externalities’; the health of the country (land, water and ecosystems) and of the communities of beings that dwell on it. Without healthy country and healthy communities the chattels aren’t much use. But our country and communities are terminally ill (ecosystem degradation, war, oppression, exploitation, poverty, climate disruption, pandemics, etc.) and there is work to be done, particularly in caring for community and country. How do we enable this? Can a more broadly structured Job Guarantee play a role?
best wishes
Bob
@Mike Hall
Interesting comments. I agree that good quality universal public programs should be available and I would add childcare and long term care to your list. On environmental remediation you are more optimistic than me but that is not what I wish to discuss here.
I would like to focus on the voluntary/involuntary nature of the Job Guarantee (JG) versus the provision of basic income support for those unable to work. Some time ago another commenter (Simon Cohen, I believe), drawing from personal experience with the UK system for welfare provision, also questioned quite convincingly a coercive JG. If I remember correctly Mr Cohen’s experience was that the UK system had been designed to be inhumane and heartless, so he believed the the JG should be voluntary and basic income support had to be available as a fail safe. The 2016 Ken Loach film I, Daniel Blake illustrates the problem very well I think.
I see this as a transitional matter, getting from where we are today with inadequate and sometimes abusive welfare and employment programs, to the better world I mentioned in my comment above. My view currently is that even if a JG were introduced today we would still need basic welfare support for those who are ill served by the current system or they may be brutally treated. Eventually, once good programs are introduced and appropriately staffed, this could be reviewed and adjusted.
On the matter of having a common MMT position on this issue I totally agree. Needless division weakens the attraction of MMT to activists. Our side is weak enough as it.
@Bob
I believe Bill has written in the past that most of the activities you list would be covered by the Job Guarantee. I clearly remember students and people providing care for the frail elderly and those with disabilities. There were more.
“I know many people who try (or have tried) to live large chunks of their lives outside the ‘realities of capitalism’, to grow and trade their own food, to make their own tools and clothes, to build their own houses, to make their own music, and to both contribute to community and care for country without attempting to exploit either for selfish benefit.”
@Bob: Years ago there was a debate in a Land Value Tax group about UBI. I was the opposer and in a minority. A couple of women in the audience told me how hard they worked at home and in their gardens (for the benefit of their working husbands and family) – and that was work. I think one of them came from the Wages for Housework lobby. Since I’ve come to understand MMT, and particularly reading Bill’s blog, I’ve been able to sharpen my reasoning of why UBI is snake-oil. You see, the people you refer to are performing work for their own benefit – which MAY also contribute to the community. Bill’s blogposts have convinced me of the duty to work alongside the right to work.
Mike Hall
“Bill’s worst, most egregious, ‘blind spot’, that he inexplicably refuses to specifically address… no income if you refuse to take up a JG offer.”
You know that I regard you with considerable respect and always defer to your superior knowledge and understanding, but I don’t believe that Bill is saying that at all.
“no income if you refuse to take up a JG offer.”
Of course there is no income if you refuse the JG offer.
The deal is that I will work extra hours to produce extra food and services if you will do the same. That is the state’s offer.
If you refuse that offer, then that is because you have a better alternative. Whether that is a private sector job, redundancy pay or somebody else willing to support you.
It is your choice to refuse it. And personal choices have consequences.
What you can’t do is then expect the state to coerce other people to work extra hours to prop up people who refuse to agree to the deal on offer. That is a transfer from the Workers to the Idlers and is manifestly unfair and unacceptable to the wider Working Class.
The default JG job is to look for a better JG job. There is absolutely no reason on earth why anybody who isn’t old or infirm should refuse that job. And every reason for society to insist that you undertake that work.
This desire to huge swathes of the population as though they are donkeys in a donkey sanctuary rather than real individuals with personal responsibility to themselves and others is one of the problems with those on the Hard Left. It is not an electable position, never has been, and it is time for the people who advocate that position to be ignored. The whole ‘client class’ attitude is deeply offensive to those who work for a living.
Those who want to prop up people who refuse to work should organise that via charity donations. If there are as many people as they believe willing to prop up those who refuse to work then they will have no trouble raising donations – and would get tax relief on it into the bargain.
The lack of that happening tells us how politically popular the position is. And hence why there is this desire to co-opt the coercive power of the state to bring it about.
The backdoor UBI won’t be happening. Those who continue to push for it are part of the problem, not the solution – rendering the UK labour party permanently unelectable amongst working people.
With Permission, I will post an email sent to my mailing list……Many of the phrases are borrowed from Bill.
A double-edged sword.
“Workers must eat whether or not they have jobs. There is the alternative of letting the unemployed starve, but this is more callous than the proponents of “sound” finance would tolerate, so they advocate supporting the unemployed on relief where they produce nothing rather than giving them useful employment where they will add directly to the national income. It is the divergence between the principles of social and private accounting which holds the clue to the inconsistencies of so-called “sound” finance.” (Dudley Dillard, The Economics Of John Maynard Keynes)
I have come to the opinion, that once we remove the thinking that the idea of full employment, however measured, is something beneficial to the overall wellbeing of mankind; contributing to the feeling of self-worth and hope of financial advancement, we are able to conceive of and believe in, any and all manner of economic policy. Such a policy is the Universal Basic Income (UBI). A policy enthusiastically touted by large technology companies and being embraced by some policy makers. One recurring argument is that technology will increasingly deliver productive efficiency above and possibly without, the requirement of full human endeavor. This profit driven, created displacement of labour however, will also reduce the household income required to purchase these new, “efficiently produced” goods and services. Enter the UBI, a level of income granted by the state, to all individual citizens, across all income brackets.
As the need for employment increasingly diminishes, we become free to turn the unemployed citizenry into “consumption units” via the UBI. Governments will be encouraged and cajoled by the corporate sector to pay a continuous subvention to households, in order to maintain levels of consumption. Interestingly enough, once a high enough UBI is implemented and accepted, unemployment as is currently statistically measured, almost disappears. When “currency issuing governments” come to realise (and they will) that domestic financial constraints, as far as the creation and issuance of domestic currency is concerned, are self-imposed and often both locally and internationally politically motivated, they will not thereafter be able to put the “fiscal genie” back into the bottle. The time is fast approaching, if not now upon us, when the public is able to “see through” fiscal excuses.
I am of the opinion that in spite of the probable political obstacles, “full employment” is still a goal worth pursuing, therefore, a “job guarantee” (what used to be called “Employer of Last Resort” or ELR) along with the “reverse tax credit” which we already have here, is a far more humane option than a “permanent” UBI. At Its core; no matter how genuine the cause, the UBI is non-productive and caters only to the elements of demand, with little consideration given to the possible “side effects” of contraction and likely concentration of supply. It is not conceptually difficult. Ultimately a Government will maintain either “an army of occupation” or “an army of the unemployed”. It is a political choice. This idea of a JG over a UBI does not however, preclude some form of income support guarantee. It simply attempts to focus policy on stability through employment, rather than on unemployment schemes.
Mitchell and Fazi (Reclaiming the State) state:
“In a society which accords value to the notion of reciprocity, the guaranteed work model ensures that no social group or individual is solely viewed as a consumption unit – to be fed and clothed by the state but ignored in terms of his/her social needs for work and human interaction within the workplace.
Of course, there will always be people who do not value work in any intrinsic sense, and if confronted with the choice between the JG and a basic income guarantee would always choose the latter option…….”
PHO
Dear Mike,
Support is provided at all levels. Whether in or out of the JG, Bill has said this many times.
I think AB on Twitter has a decent flowchart of one potential way of doing this.
As for the GND, Bill disagrees with using the JG as a transition to the GND. Bill has said many times he considers the JG buffer to be as small as possible. The GND is your regular industrial policy. I believe this is how Bill conceives of it. So it is Industrial policies + the Job Guarantee.
As for existing agencies going from sanctioning to managing a JG framework, they do whatever is on the employment deed contract. That’s their job.
I’m not 100% sure but Bill & other MMT economists recognise more permanent programs may come out of the JG. Many of those projects will transition into your typical programs and out of the JG. Not certain about Bill but many other MMT economists have said this.
I have also seen Wray & Tcherneva agree with you about UBS. That’s just basic Maslow
I could fill in some personal details too for my POV & how I get to it too but I don’t think it is necessary
Dear Bill,
Thank you for this piece. I also attended the webinar this morning. I have a clarificatory question about the Job Guarantee and basic income. For what it’s worth I am not a proponent of UBI (I mention this so that my question doesn’t come across with an adverserial spirit).
You say that a job guarantee is not ‘work for the dole’ – it’s not mandatory work. Such a job is also at the bottom end of the income scale, but offering a minimally decent wage, good enough to participate in all the important aspects of life (including theatre).
If someone can’t work, you seem to be on board, if I understand you correctly, with them getting a ‘basic income’. How would that basic income compare to the job guarantee income? Would it be below a ‘minimally decent wage’?
If someone doesn’t want to work (I have in mind the couch potato, rather than a ‘starving artist’), what happens to them? Do they also get a basic income like those in the “can’t work” category? Would it be below the income of people with a job in the job guarantee category, and therefore below the ‘minimally decent wage’? If they don’t get any income support, is it still fair to say that the job guarantee is voluntary, since it’s a choice between working and starving? If they only get a basic income less than a minimally decent wage, is it still fair to say that the job guarantee is voluntary, since it’s a choice between working and living a less than decent life?
I think that the people in the “don’t want to work” category are rather fringe, and we shouldn’t judge an economic policy based on fringe cases. Nevertheless such fringe cases occupy a disproportionate amount of space in the minds of our opponents and I think it’s worthwhile having clearly articulated positions about the fringe cases.
Thanks for the vital background. I’m heartened by your emphasis on us humans, the ones who have to embody policy.
Nobody told me about the emphasis on eliminating unemployment. Having seen first hand how awful it is, I’m all for that.
A recent University of California-San Francisco report found that, very conservatively estimated, 30,000 Americans died from lack of unemployment benefits; adding those normally excluded from government stats, as many as 200,000 will have died by March. https://www.kqed.org/coronavirusliveupdates/news/11861237/study-shows-tens-of-thousands-of-unemployment-related-pandemic-deaths
Also enjoyed your Modern Money Australia talk with Pavlina Tcherneva. From now on, when I tell friends & family about MMT, I’ll tell them it’s an economics based on never inflicting on anyone the harm of unemployment, based on an understanding of where money comes from and how it actually works.
I’ll only use the Monopoly analogy as a last resort, promise.
@Leon. Those who cannot work would of course be provided with the ‘minimum wage’ + benefits tailored to their needs – just like a state pension. JG would also be important in offering work to those who are unable to participate for the standard hours, as Bill indicates.
@Carol I was primarily focusing on those who do not want to work. The reason for the question is to put to the test the language of ‘choice’ in the Job Guarantee scheme. If not working leads to starvation, or less than a decent life, is it really a choice? I am not in favour of UBI, and am in favour of JG, but if UBI can offer more to those who don’t want to work we need to be honest and clear about that.
Leon, I used to be sympathetic to the view that those who refuse the JG offer should get some support. I changed my mind after reading all Bill’s blogs about right to work and duty to work. I agree with Neil that they should rely on charity. It is a matter of choice for them and principle for me.
Regarding the issue of whether someone should have to work to earn an income, I take care of my disabled wife 24/7. I do it out of love, of course, as she would do for me were our situations reversed. Billions of people take care of loved ones, young or old, in similar fashion for similar reasons. If we need to work “real jobs’ to earn income for our family or choose to do so for personal fulfillment, then we then hire others to do the personal care of our loved ones and pay them for it. Thus taking care of people, if done for money instead of love, becomes a “real job.” Can’t we see the absurdity–no, the inhumanity–in this?
@Newton: not everyone has a partner to give care. Caring should be paid work, not a government transfer (carer’s allowance?) – no means test.
Carol, you may have missed my point, likely because I didn’t express it well enough. Every human being, after reaching a certain age and not being totally incapacitated, has some work that they can do to care for each other or for the planet we share. I used the constant care I give my wife merely as one small illustrative example. In fact, the amount of this work, this caring for people and planet, is endless. If I understand MMT clearly enough, DEEPLY enough, it tells me that this essential work of care can be compensated no differently than the “real jobs” we now choose to compensate–jobs which are largely orientated to profit, not to humanity or ecology, and which so often do harm to both. Fiat money, invested in the compensation of care we give to each other and all other living things, constrained only by the resources available to do this work of caring, is the key. IMHO, even those who understand fiat money remain unable, as of yet, to grasp the utterly extraordinary level of human agency and the radically different, radiantly more beautiful world it can open. It’s people like Scott Ferguson, coming from outside the field of economics altogether, who see this most clearly right now.
@Newton: even those of working age need time to care, sing, play, love. The 4 day week is Labour Party policy – although 30 hours is preferable.
@Keith Newman
Thanks. I agree. This article by Jason Hickel makes some relevant observations.
“Stimulus Is an Environmental Disaster Waiting to Happen”, Jason Hickel, FP, 24/02/21
A public jobs guarantee is the only way to provide economic recovery without endangering the climate. A job guarantee … mobilises labour and resources around things that our communities and ecology actually need and which the private sector is unlikely or unable to provide.
https://foreignpolicy.com/2021/02/23/stimulus-is-an-environmental-disaster-waiting-to-happen/
Leon Leontyev writes: “I was primarily focusing on those who do not want to work”.
This is a very fringe group indeed; possibly involving mental illness capable of treatment.
And local councils might find it beneficial to allow buskers to perform in some localities…the possibilities for employment are limitless.
More on “those who don’t want to work” ….
None of us *want* to “work”…….but Genesis explains why we have to….(original sin). Life in the Garden of Eden would certainly have been sweet enough.
For me work is 50/50 if i am honest.
Work can suck at times because its so exploitative; however, labor makes me smarter, gives me a social role and some self-worth.
I don’t agree that none of us want to work. I like a lot of things but only in short bursts. If I do something for too long, then it stinks.
“I don’t agree that none of us want to work”
Tom, it was a tongue in cheek reply to Leon’s concern for those “who don’t want to work”…