Bertram Schefold is recognized internationally as an outstanding economist. He has made major contributions to the development of economic theory and particularly to economic thought. His contributions to economic theory include his work on Sraffian economics and its implications for the theory of value and distribution, capital theory, growth and technical progress.
This book consists of ten papers by distinguished economists from Europe, the United States and Japan. The papers cover a range of topics chosen according to Bertram Schefolds main fields of research, from Wicksell's principle of just taxation to Sraffa and the Universal Basic Income to Marx's Theory of Value.
Covering Schefold's main areas of academic interest, this is an important and comprehensive volume which is a fitting tribute to one of the foremost economic thinkers of our age.
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Sraffa's work has been generally taken as a basis for a critique of the orthodox economic theory, with particular reference to the supposed weak notion of ‘capital’ contained in the latter theory, with the consequence that much effort was devoted to the comparative evaluation of the analytical structures of the theories involved, instead of focusing attention on some relevant features of the alternative theoretical scheme proposed by Sraffa himself, such as the notions of ‘productive consumption’ and of ‘sustenance’ for the workers.2 These notions are the essential ingredients of the far more important conception of ‘human subsistence and reproduction’, which is at the basis of the alternative Sraffian ‘surplus approach’ and the connected production price theory. Within this very approach, an exploration is made in the present chapter in order to ascertain whether the notion of Universal Basic Income (UBI) can find a proper place.3
I
The UBI, according to a definition given by one of his most ardent supporters Van Parijs (2001: 5), is a monetary income paid by a government at a uniform level and at regular intervals, to each adult member of society. It is given independently of the economic and social condition of the people involved, as well as independently of their willingness to work. It is thus a universal and unconditional income, with no link whatsoever to work and production.
Its roots can be dated to the 1500s, with Thomas More's Utopia (1516), in which the idea of any person being provided with her/his own sustenance is explicitly stated. However, it is the well-known Speenhamland Law, introduced in England in 1795 during the period of the Industrial Revolution, that can be considered, from the point of view taken in the present chapter, as the crucial event. That law, in fact, set out the principle of assuring a minimum income to the poor irrespective of their earnings, in an environment in which a dramatic transformation was taking place for labourers: their labour force was becoming a commodity in the market. The immediate and obvious implication of this was the coming into being of a neat separation between the wage, on the one hand, and the necessaries of life, on the other – a separation which had no reason to exist before the Industrial Revolution.4
In this connection, it is interesting to consider briefly some viewpoints of the old classical economists on some aspects concerning wages and labour.
In the initial chapters of Adam Smith's The Wealth of Nations (1970 [1776]: 44), the wage is defined as the ‘maintenance of the labourers’, or as ‘the real quantities of the necessaries and conveniences of life which it can procure to the labourer’ (ibid.: 69). Besides these definitions, which make exclusive reference to commodities, Smith, in the final chapters of The Wealth of Nations, refers instead to ethical and moral elements, linked to the freedom and dignity of any one labourer as a person:
By necessary I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life. [. . .] But in the present time, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt.
(Smith, 1970 [1776]: 351–2)
David Ricardo defines the wage as:
[t]he natural price of labour . . . that price which is necessary to enable the labourers . . . to subsist and to perpetuate their race . . . [it] depends on the price of the food, necessaries, and conveniences require for the support of the labourer and his family.
(1970: 93; italics added)
Finally, John Stuart Mill (1987 [1849]: 212–14) seems very keen on the idea, previously expressed by Charles Fourier, of assigning sustenance to each member of the community, independently of her/his ability to work.
Classical political economy was thus certainly clear enough in distinguishing a natural from a market wage. The former was ultimately defined as a set of commodities needed for the subsistence of the worker and of his family, in given circumstances of place and time.
By contrast, within the tradition of postclassical economics, that distinction – in the profound sense previously given to it by the old classical economists – collapses altogether. The notions of ‘subsistence’ and of the ‘right to live’, the latter explicitly contemplated by the Speenhamland Law and duly emphasized by Polanyi (1944: 79), completely disappear from that theoretical framework. And, by far more than this, a crucial step of moving further away from the classical tradition was accomplished, by considering labour force not only as a commodity priced on the market on the basis of its relative scarcity, but also as a commodity having its own exchange value strictly linked to its corresponding contribution to production.
II
It therefore comes as a surprise that some economists, generally considered sympathetic to the postclassical economic philosophy, have sometimes taken an unorthodox approach in relation to the orthodox view on work and its remuneration. Pigou (1932) can perhaps be taken as the most representative example of this position.5 In the Preface of the 1928 edition of The Economics of Welfare, he begins by stating:
The complicated analyses which economists endeavour to carry through are not mere gymnastic. They are instruments for the bettering of human life. The misery and squalor that surround us, the injurious luxury of some wealthy families, the terrible uncertainty overshadowing many families of the poor – these are evils too plain to be ignored.
(1932: vii)
Moreover, according to Pigou, the large-scale industrial production by then attained had generated a physical separation between employers and employees, which produced, at the same time, also a ‘moral’ separation, as expressed by workers’ uneasiness of their staying in the condition of wage-earners. As Pigou put it: ‘the feeling that the industrial system, as it is to-day, deprives the workpeople of the liberties and responsibilities proper to free men, and renders them mere tools to be used or dispensed with at the convenience of others’ (Pigou, 1932: 16–17).
Within the Pigouvian analysis so far referred to, the notion of ‘minimum standard of real income’ finds its place – a notion very much affine to the classical notion of ‘subsistence’. Pigou's ‘minimum standard of real income’, however, ‘must be conceived, not as a subjective minimum of satisfaction, but as an objective minimum of conditions’ (Pigou, 1932: 759; italics added). He goes on to say:
The conditions, too, must be conditions not in respect of one aspect of life only, but in general. Thus the minimum includes some defined quantity and quality of house accommodation, of medical care, of education, of food, of leisure, of the apparatus of sanitary convenience and safety where work is carried on, and so on. . . . The State must not permit anywhere hours of child labour, or of women's labour or conditions of housing accommodation incompatible with the minimum standard.
(Pigou, 1932: 759–60; italics added)
The above-quoted sentences make secondary Pigou's recourse to the cardinal measure of utilities and to their interpersonal comparisons.6
III
The UBI, following the definition given to it by Van Parijs, has the characteristic features of being universal, unconditional and individually granted. These features are patently in contrast to the general tenet and spirit of the postclassical approach, according to which any form of remuneration must be definitely linked to the corresponding contribution to production. The UBI, therefore, cannot find any place within the postclassical economic theory. Not so much, however, as we look at the Sraffian approach.
One of the key features of the latter from the very beginning, in fact, is the existence of commodities ‘as sustenance for those who work’ (Sraffa, 1960: 3; italics added). This is a reflection of the fact that a society is considered ‘which produces just enough to maintain itself’ (ibid.; italics added). In this way, the primary objective of the society is immediately recognized, that is, that of being viable.
It should be noted that viability, in the sense given by Sraffa, rests not only on the mere ‘technological’ know-how, but also – as has been made evident above – on the dimension and composition of the sustenance for the workers, which inevitably implies the recourse to value judgements, as reflected by ethical, moral, political, institutional and religious features of the given, historically determined, society taken into account.
Obvious as it is, it should nonetheless be noted that the sustenance for the workers is not correlated in any way to the system of production. The basic elements which subsistence refers to are of physiological and social nature. This fact emphasizes the circumstance that subsistence is given to workers not so much for their evident connection as labourers to the productive system, as primarily instead for their belonging to the by far more vast human community. From this perspective, the qualitative and quantitative dimension of subsistence can considered an element of freedom with respect to the system of production.
It should also be noted that the ‘viability’ feature of Sraffa's representation of the economy gives much emphasis to the necessity of the system to be reproduced. Reproduction, however, means the actual possibility for the life of all the members of the community to continue, not only that of the workers but also that of the non-working people beyond the narrow boundaries of the productive system, such as children, the elderly and the disabled, to the effect of making life continue, possibly in a decent way.7
IV
At this juncture, it may be convenient to formally write down some basic equations as reference for the discussion that follows.
Let us suppose for simplicity's sake a single-product industries framework composed by n distinct industries, and let M be the n × n input matrix of the quantities of commodities jointly used as sustenance for the workers as well as means of production, and
be the n × n diagonal output matrix. Let p stand for the n × 1 vector of production prices. Then a viable economy producing with no surplus will be represented by the following equation:
or, equivalently, by taking into account unitary levels of production:
where A′ stands for the n × n input matrix of the quantities of commodities jointly used as sustenance for the workers and as means of production per unit of output.
It is also convenient to detach, one by one, from of the matrix A′ the commodities used as workers’ sustenance and to write a for the n x 1 vector of commodities composing the subsistence bundle. Then the income accruing to each unit of labour, obviously equal to the value of the subsistence bundle, will be
. Equation (2) can then be written as follows:
where A stands for the n × n input matrix of the quantities of the commodities exclusively used as means of production per unit of output and l stands for the n × 1 vector of the quantities of labour employed per unit of output.
If the economy were supposed to produce with a surplus, the latter amount entirely accruing to the owners of the means of production and distributed in proportion to the respective values of those means of production, then equations (1) and (3) would be written as follows:
where r would stand for the uniform rate of profits and
would now stand for the subsistence wage.
V
The framework so far considered seems perfectly suitable for inserting in a consistent way the UBI. In this connection it must first be noted that the subsistence income perceived by the labourer can be viewed from two distinct angles: on the one hand, the labourer gets the income as a worker; on the other, however, she/he gets it as a human being, so that the composition of the bundle is not dependent on the kind of work done and not even on the fact that work is done, but it is exclusively based on necessity dictated by human survival.
Although the UBI, as any income in a monetary economy, is given in money form, it must be thought to possess a real counterpart, corresponding to some set of commodities. Among the reasonable hypotheses which can be made, a UBI covering subsistence is one of those.
From a formal point of view, each worker can be viewed as an instrumental ‘unit of account’ and his subsistence income raised in an appropriate proportion to cover the stated ...
