On the capital-labour conflict

Australian economist Bill Mitchell is a known critic of basic income guarantee (BIG) programs and a support of a job guarantee (JG) programs. In this post on his blog, Mitchell presents the following argument against BIG:

Capital-labour conflict remains a central dynamic in our societies and only naivety would lead one to conclude it will go away, or rather, be ‘outside’ this dynamic by giving the unemployed a bare minimum BIG.

Once those who were formerly workers – in direct opposition to capital – become meagre consumption units, then the balance of power is tilted further towards capital.

Despite being a BIG proponent, I will argue that Mitchell has a point here and a BIG program on its own would not be sufficient to create an equitable society. However, I am critical of the JG program as devised by him.

My problem is that neither a job guarantee nor a basic income guarantee will solve the capital-labour conflict. In my opinion only worker cooperatives can in the long run end the exploitation of workers by capitalists and by extension put an end to corporatocracy.

The main problem with a JG program is that it does not create economic democracy. Actually it perpetuates the current system of wage labor by reinforcing hierarchical employer-employee relations as the social norm. The resulting mentality of servility is detrimental to the republican ideal of self-government.

Worker-cooperatives, on the other hand, will promote democratic values as they are owned and run by their own “employees”. Also cooperatives have little incentives to lay down on personnel.

A real progressive government should implement policies to promote worker-cooperatives. Because the current economic system is unfavorable to cooperative, government intervention is necessary to enable the transition to a cooperative market economy with a fair distribution of capital.

Fiscal policy is an essential feature of such a policy and will include, among other measures:

  • preferential treatment of worker cooperatives in public procurement;
  • interest-free loans for setting up a worker cooperative;
  • the establishment of a public lease company to lease capital goods to worker cooperatives.

I will conclude this post by recommending the video below, which explains why the current system is biased against cooperatives:

7 thoughts on “On the capital-labour conflict”

  1. The best way to guarantee full employment is to simply continue the long downward trend in working hours:

    In 1830, Americans worked 69 hours per week
    By 1880, it was down to 60 hours per week
    By 1919, it was down to 50 hours per week
    By 1950, it was down to 40 hours per week

    Americans should been working a 32 hour work week since 1980, IMO.

  2. A 24 hour worker (three days a week) might be compatible with a 32 hour worker (four days a week) if a particular business is run seven days a week– which might be common in a more roboticized workplace.

    But I could easily envision a near future where 32 hour, 24 hour, and 16 hour workers are the norm. A married couple might consist of a 32 hour worker and a 16 or 24 hour worker.

    But I think it would be very difficult to pass a Federal law for overtime pay below 32 hours a week.

    I do agree with the philosophy that– financially rewarding idleness– for non senior adults is socially deleterious.


  3. Even as a Marxist, I think the Lassalleans in Germany were right about the extent of “government interference” required, unlike the more timid social-democratic calls for favourable tax treatment or generous state loans and mortgages.

    You listed only three policy proposals. The kind of taxpayer funding / state aid required at the outset would, in my opinion, “reek” of the dirigisme that was opposed vehemently by Adam Smith and the other classical liberals.

    Consider a multiple-whammy combination of:

    1) obtaining investment funds from a venture capitalist (only here the “venture capitalist” is the state itself)
    2) obtaining those same funds even though the other side knows that the short- and medium-term rate of return won’t be as high
    3) obtaining favourable “management services” arrangements
    4) obtaining favourable credit rating services
    5) obtaining favourable mortgages
    6) obtaining favourable loans and lines of credit
    7) obtaining favourable tax treatment
    8) obtaining favourable treatment in the public-sector procurement process
    9) obtaining favourable labour law treatment from an employer’s perspective
    10) obtaining favourable environmental treatment from a “moderate” polluter’s perspective, and
    11) obtaining favourable miscellaneous regulatory treatment

    Again, all rolled into one.

    Should all the points above be implemented, the growing coops would become the modern version of mercantlism’s “national champions.”

    Of course, I support such a bold move.

    1. >>The kind of taxpayer funding / state aid required at the outset would, in my opinion, “reek” of the dirigisme that was opposed vehemently by Adam Smith and the other classical liberals.

      Contrary, to public myth, classical liberalism does not opposes state intervention per se – that is a caricature created by the proponents of “laissez-faire” capitalism. If one read Locke, Smith, Thomas Paine and John Stuart Mill, one will find all kind of “interventionist” policies.

      >>Consider a multiple-whammy combination of:

      Several of your suggestions, have been mentioned in other articles of this site.

      1: See our proposal for a Domestic Investment Fund
      5 & 6: See our proposals for interest-free loans and cooperative bonds
      8: See our article on public procurement

      1. Fair enough. I’m well aware that proponents of “laissez-faire” capitalism have created a caricature. More importantly, I’m also aware that the classical liberals fought against economic rent, courtesy of economist Michael Hudson.

        That said, the reason I mentioned dirigisme and mercantilism is that a coop version of “national champions” would capture economic rent in the similar manner to the mercantilist monopolies.

        Also consider a proposal of mine that Peter Ranis wrote in greater detail: implementing eminent domain to help form worker cooperatives. For me, the funding should come from dedicated taxes on businesses upfront.

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