Policy Prescriptions

The Skidelskys sugget a number of policy prescriptions. In essence, they want to share the benefits of productivity growth more widely, and to reduce pressure to consume.

• reducing inequality, partly by raising public sector pay.

Thus the problem which Keynes identified in 1930—“our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour” has not been solved in the way he envisaged. Automation in manufacturing has led not to massive increase in leisure but to a massive transfer of labor to the lower-paid service sector where people have to work longer hours to make ends meet; while those not reabsorbed in the service economy have become unemployed, under-employed or casualized.

We need to reduce inequality of income, because average hours of work will continue to fall only if the real incomes of the majority are raised relatively to those now enjoyed by a minority. ..A sustained effort should be made to raise the share of income received by teachers, doctors, nurses and other public service professionals.

• A basic income, an idea, they say, with a long history. It could be either a capital endowment of suffiicent assets or a guaranteed income, paid unconditionally. It is neither unaffordable, nor would it necessarily destroy incentives, they argue. Nobel Winners in Economics including James Meade and Milton Friedman have suggested similar schemes. Some places, like Alaska, already make payments to citizens. There could be more capital endownments, like Gordon Brown's since-cancelled plans for "baby bonds." Just like heirs, there could be limits on "blowing" capital endowments, like restricting access before the age of 30. And there should be more "education for leisure." A basic income would 'liberate work from the tyranny of the job."
• Less emphasis on the financial sector, "the real driver of contemporary capitalism" and the source of as they see it "socially useless" financial innovation. This could involve Tobin taxes on financial transactions and discouraging the growth of financial derivatives.
• More taxation of consumption rather than income (and a backwards glance at the sumptuary laws of the middle ages).
• reducing the tax deductibiity of advertising. People do not come to advertising with fixed preferences, they say, but advertising helps form preferences and inflames the pressure to consume.
• "honest paternalism" by biasing people's decision in favor of the good life, instead of obscuring or ignoring the ethical choices which are already being made in any case. The state cannot simply maintain that it is acting in the interests of an isolated consumer.
• A retreat from integration of the world economy.

The conclusion we draw is that in order to satisfy the requirements of the good life we will have to retreat from the further shores of economic integration, at least until “catch-up” has become a fact, not an aspiration.

So, as they admit, it adds up to a very "European" way of looking at things, which might not seem that attractive when Europe is in a dire situation (albeit for other reasons.)

 

The material basis for our updated version of Keynes’s “Economic Possibilities” is rooted in the logic that gave rise to his possibilities in the first place: the long-term decrease in the demand for labor resulting from continuous improvements in labor productivity. We can either turn this to our advantage by greatly expanding the domain of shared work and leisure—a solution that at least some European countries have adopted—or continue with the Anglo-American system of want-creation powered by insatiability, maintained at the cost of growing job insecurity and income inequality, and heedless of humanity’s future.

One consistent theme in their approach is they want to be non-coercive - no one should be forced to alter their behavior, given the Skidelskys' basic goods of respect and personality. State powers may be used to promote the basic goods, but "only insofar as this does not damage the central good of personality." Personality is their version of liberal autonomy, with a slight polish of Catholic social teaching.

I think this ducks the issue of incentives, which lurks beneath all of this, and which is their main weakness in the face of libertarian attacks. As with Marcuse, they ignore the fact that some kinds of behavior ought to be actively discouraged. They continually criticise the liberalism of economics, but cannot quite take the step of acknowledging many of the same problems afflict political liberalism as well. Their arguments point away from the liberal shore but they want to stay on land. No doubt conversations at high table would be too difficult otherwise.

I still identify with the grandeur of the liberal project, but we have to ask deeper questions again. I have to think more about how and to what extent autonomy is still important as the prime value.

They identify the right questions to ask the philosophical reasons for our problems. But they give very social democratic answers. They are reasonable arguments, but they are not the only potential answers.