The view of capitalism, socialism and a the social welfare state was in the eyes of Van Parijs an unconditional basic income in his theory of “Real Freedom for All” second by the theory advanced by John Rawls of “Justice as Fairness”.
These two theories conclude that it is not only possible to justify an unconditional basic income of real “freedom for all,” but that it is also a justifiable unconditional basic income in Rawls’ “justice as fairness”.
Obama once proclaimed that it was urgent to examine our social compact, the same way this was revised in the 19th century. “Issues like a 40-hour working week, a minimum wage, or the abolishing of child labor seemed, at first sight, unrealistic and impossible to carry out in practice but have now become reality. The concept of an unconditional basic income might be a good solution to deal with some of the future changes in society (Obama, 2016).”
Switzerland and Finland already had a nationwide binding referendum on this topic. The Finnish government will start a national experiment in 2017, with up to 100,000 participants. Other countries like The Netherlands, Canada and France are performing pilot schemes in order to obtain more information.
This initial thrust follows Belgian philosopher Philippe Van Parijs, as the proponent and defender of an unconditional basic income.
His theory of ‘Real Freedom for All’ is based on a normative perspective of social justice. His theory however, lacks consensus for analysis and a more influential theory of justice and perhaps the most accepted to date is that of John Rawls as justice of fair-mindedness.
In a market-economy-model the exchange of supply and demand is established without hindering rules, coercion or government intervention. In this model the forces of supply and demand set prices for goods and services, at a point of equilibrium without any intervention. This free market system differentiates itself from a regulated market where other forces like government regulators play a role.
With this precedent supporters of capitalism will contend that a free market system generates efficiency and prosperity. One of the features of a free market is that everyone acts out of self-interest, and this should not be seen as an iniquity. The idea in the words of Adam Smith is that if everyone acts out of self-interest, which ultimately delivers the highest greatest collective prosperity (1776). Basically, the idea is sound after discounting corruption and undue influence on politics from the marketeers who rip benefits ahead of everyone else as our favored market economies behave today.
Other economist like Milton Freidman has argued that there is a link between economic growth and economic freedom. A similar argument made by Friedrich Hayek states that coercive redistribution by the state beyond the meeting of common basic needs involves an unjustifiable interference with individual liberty. This arguments fall short of considering the weight of subjective markets in the medium of “real politik.”
On the other hand the classic legitimacy of socialism refers to the ideals of equality and social justice because the means of production should be distributed justly and equally. In this model the government has the authority over distribution of the means of production. Socialist theories point out the importance of state intervention to solve social and economic problems which is opposite to the liberal view against such state interventions. However, the biggest disadvantage of a socialist system is it’sinefficient due to central planning and corruption in fewer hands promoting oligarchs in charge of the economy. Another issue is that socialism is a theory inconsistent with human nature as it fails to emphasize economic incentives. Entrepreneurship or making profit is not possible and it fails to reward individual performance, talent and responsibilities. As a result, reduces motivation and productivity of a society which ultimately decrease overall welfare.
The social democratic welfare state has been a political alternative to other social compacts and it is being practiced in similar forms in the United States and Europe.
Danish sociologist, Esping Andersen, distinguishes three types of welfare state models that are all organized slightly different. It is not of great importance to look at the differences, but to summarize the features and variations of social democratic welfare states.
“The welfare state is often defined as a mixed economy (capitalism mixed with socialist features). Broadly speaking, this system is on the one hand capitalistic and has a free market in which most of the means of production are privately owned. On the other hand, the government ensures that inequality decreases through taxation and redistribution of the means of production. There are distributive institutions such as social payments, social security and provision of public goods, such as cheap and universal education, which ensure equality of opportunity and avoid the most excessive forms of poverty.”
Thomas Paine referred ‘agrarian justice’ in a 1797 pamphlet. In this paper he suggested that whoever owned land and resources should pay estate tax to the rest of the society, since these assets belong to everybody and in theory, everybody own these resources, therefore everyone had the right to have a share of the profit. “Hence, everyone should get a benefit in compensation and recognition of the fact that we all own the earth.”
In modern times there are examples that support this argument for instance in the state of Alaska. The state has a system with the concept of an unconditional basic income. The government of Alaska pays a dividend to every resident in Alaska since 1982. The motivation for this dividend is that oil revenues generated by the state shouldn’t exclusively benefit the former inhabitants but it should also benefit future inhabitants of Alaska. This idea be it as it may strongly relates to the notion of Thomas Paine who thought that revenues from natural resources should benefit everybody.
“Belgian researchers Axelle De Brandt, Pierre Catelijn and Ismaël Daoud have designed a calculation model and came to the mathematical conclusion that it is financially possible (Devillé, 2015). Introducing an unconditional basic income of €1500 a month will cost the government of Belgium roughly 187 billion a year. It is possible to save 70 billion on retirement benefits, child support and unemployment allowance. Furthermore, making public administration more efficient can save 25 billion. Increasing tax on capital could finance the remaining 92 billion, which is still a huge number. We have to be careful with such conclusions, since it is almost impossible to precisely predict the financial implications of implementing such major institutional changes.”
Rawls states that equality of opportunity does not require that public offices and positions be open to everyone but that everyone should have an equal opportunity of getting them. That is exactly what Van Parijs means with real freedom. The problem once again is not about equal opportunity but undue influence on the rule makers.
Rawls argues against three institutional structures: laissez-faire capitalism, command economy socialism and welfare state capitalism. Laissez-fair capitalism tends to produce nearly unlimited inequalities in outcome and opportunity which is not consistent the principles of justice. This system is consistent with the idea advanced by the “golden rule—whoever has the gold makes the rules.”
Rawls rejects command economies because in this system the state dictates where a person should live or work and as a result violates his first principle of justice. The system also reduces the number of people making decisions for all.
Finally, Rawls also rejects a welfare state capitalism because it fails to guarantee the value of political liberties and it cannot do achieve equality of opportunity.
Rawls favors a society he calls ‘property-owning democracy, however, he never provided a detailed structure of a fully functioning property-owning democracy or how a society can become one. Nevertheless, an inference can be made that his model would have institutional features similar to those proposed by Paine. In a paraphrase of Paine’s ideas--the land and its resources belongs to the public and “hence, everyone should get a benefit in compensation and recognition of the fact that we all own the earth.”
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