IS THE PRESENT CRISIS AN UNPRECEDENTED OPPORTUNITY FOR BASIC INCOME?

1. IS THE PRESENT CRISIS AN UNPRECEDENTED OPPORTUNITY FOR BASIC INCOME? Robert Boyer Plenary session 2 – Reforming social protection system and basic income 13th International Conference – BIEN 2010 Brazil.

2. INTRODUCTION The three objectives of this presentation • Present the origins of the crisis and its structural nature • In this context assess the new opportunities and constraints upon the implementation of Basic Income programs • Embed the issue of basic income into the specificity of modern societies, both capitalist and democratic

3. I. A STRUCTURAL, SYSTEMIC AND GLOBAL CRISIS • The crisis of the asymmetric power of finance • Financialization as a reaction to widening inequalities • The structural unbalanced the world economy and the diffusion of the crisis

4. The crisis of the asymmetric power of finance At the core of the crisis: the erosion of the directresponsibilityof credit decision

5. 1. At the core of the crisis: the erosion of the direct responsibility of credit decision…. Various financial entities buy these derivatives Risk transfer Need of hedging Securitisation by investment banks Lehman Brothers Swaps against credit default AIG Externalization of the risk Mortgage financial institution Real estate buyers Credit contract Deepening of the gap between financing and risk taking Incentive to take more risk Figure 1 – The hidden origin of subprime crisis: a perverse division of labor within finance Collapse of the joint responsibility of contract Systemic crisis

6. … This deterioration of quality is permanent of MBS from 2003 to 2007 Graph 1 Source : Yuliya Demyanyk, Otto Van Hemert (2008), p. 1

7. Thespilloverof all the destabilizing mechanisms not corrected during the previous crises… The endof a finance-led growth regime… An unprecedented crisis generated by financial laissez-faire…thatdiffusesto the rest of the world

8. The end of a credit led household consumption boom Source : Artus Patrick (2008), « Plaidoyer pour la création « d’acheteurs d’actifs risqués en dernier ressort », Flash économie, n° 416, 23 septembre, Natixis, Paris, p. 6 et« La finance peut-elle seule conduire à une crise grave ? », Flash économie, n° 429, 2 Octobre, Natixis, Paris, p. 3.

9. Financialization as a reaction to widening inequalities • The crisis of the asymmetric power of finance

10. Stagnating median income, but explosion of CEOs remunerations Source: Piketty, Saez (2003), QJE, p. 33, figure 11.

11. A general widening of income inequalityThe share of the top deciles income share, US 1917-1998 Source: Piketty, Saez (2003), figure 1, p. 11

12. A clear correlation between financial bubbles and wealth concentration Source: Phillips Kevin (2002), p. 79.

13. The structural unbalanced the world economy and the diffusion of the crisis

14. The 2000s: new unbalances of the world economy • The de facto but paradoxical and conflict prone interdependence between the United States and Asia, especially China • The emergence of rentier economies as key actors • The impact of Chinese strategy upon developing and emerging economies

15. Towards a duopoly at the world level?

16. II.THE CONSEQUENCES OF THE CRISIS: OPPORTUNITIES AND CONSTRAINTS UPON BASIC INCOME

17. The more immediate consequences of this highly specific crisis Disciplining finance: a matter of efficiency in reducing the frequency of crises and an issue concerning social justice Taxing finance : is it a method for financing Basic Income ? Priority to domestic led growth via Basic Income: an alternative to laisser-faire globalization.

18. A response to a new wave of pauperization in developed and developing countries

20. III.IS BASIC INCOME COMPATIBLE WITH EXISTING OR EMERGING FORMS OF CAPITALISM?

21. Not a single form of capitalism

22. The relation of citizens to State: a specific domain

23. A multiplicity of interactions between capitalism and citizenship

24. Alternative configurations for capitalism and citizenship Market relation IV. Monopolistic Administered Van Parijsian capitalism Society wide, solidarity Basic Income Bismarkian capitalisms Solidarity among wage earners : social contribution II. Oligopolistic I. Capital/ labor relation Purely competitive Inexisting A form of market relation Organized Institutionalized Minimalist Significant III. Beveridgian capitalisms segmented solidarity: general taxation Organic Citizen/State relation

25. A possible virtuous circle between Basic Income and some forms of capitalism

26. Figure 5 – Capitalism and citizenship: a possible synergy

27. SOME DILEMMA AND TENSIONS IN THE IMPLEMENTATION OF BASIC INCOME

28. A general overview

29. An optimist vision: a minor variant for income negative tax

30. A pessimistic appraisal: a core contradiction in work discipline and capitalist ethos

32. A POLITICAL ECONOMY TO BASIC INCOME

33. How to build viable compromises among balkanized workers and citizens?

34. How to finance Basic Income?

35. CONCLUSION C1 – Any analysis about the future of basic Income has to take into account the novelty of the present crisis. It means that the globalization without regulation, the excess of financialization and the lack of social and environmental sustainability have come to an end.

36. C2 – One observes a society wide backlash against capitalist logic and its destructive nature. Citizenship has to discipline it and basic needs about education, health have to be satisfied and put a stop to the legacy of consumerism. C3 – Basic Income might be a relevant response to contemporary most urgent problems: the jobless recovery, the expansion of the working poor, the continuing excesses of financial remunerations, whereas many workers are loosing their job, house and health insurance.

37. C4 –Basic Income schemes appear as an emerging and promising paradigm for many developing countries: Quite effective in fighting extreme poverty, and some programs with moderate costs have been promoting employment A wave of social inclusion, i.e. a rupture with respect to the trends typically observed in Latin-America. A stimulation of the domestic market, Clear political dividends for the governments A vibrant epistemic community. C5 – Do not reiterate “The same size for all” error. International comparisons display a variety of national strategies along quite specific domestic political compromises when comparing Brazil, India or Alaska.

38. C6 –The societies with already a well developed welfare State experience major difficulties in designing and implementing this strategy: The inertia of segmented social allowances A threat concerning the dismantling of past compromises, The diversity of welfare components, built upon different risks. A basic dilemma: should its level be low and/or a variant of a negative income tax … …or should it be high and initiate the transition towards a radically new form of society?

39. C7 –More research on Basic Income is needed: How general and universal are its ethical foundations? Can one prove logically its economic coherence with the typical social relations of capitalism? Can one explore the nature of the political alliances that could trigger its emergence? Practically, how to design such a system and how to promote the transition towards such a new socioeconomic regime?

40. Many thanks for your attention Robert BOYERCEPREMAP (Paris) – GREDEG (Sophia Antipolis)140, rue du Chevaleret 75013 PARIS, FranceTél. : (33-1) 40 77 84 12 e-mail : robert.boyer@ens.fr web site : http://www.jourdan.ens.fr/~boyer/