This recently released paper from the Institute for Global Prosperity, UCL, helps to explain the modern history that has led us to the current, highly financialised, world.
Universal Basic Prosperity reviews the struggle in advanced societies to develop their technical economies. Technical development creates pressure to both broaden and deepen the three essential elements of human society: safety, opportunity, and participation. More of the population needs to be more specialised, so that some can specialise even more deeply.
Specialised people need their basic safety assured more reliably, and that sets up a conflict between their safety and their motivation. Somewhere just under half of all resources (42% on average) are allocated to collectively providing safety in technically developed societies today. Leaving just over half for motivation. That’s appears to be a sustainable balance. But it is not done well enough — yet.
The inefficiency of safety provision means that the safety available is insufficient to maintain their specialisation without extracting resources from other societies and the global commons, aka exploitation and pollution.
It is internally logical for any individual society to want to attract the best talent and use as much resource as possible to aid their development. But it is not holistically coherent. We cannot all exploit and pollute at the same time as we all advance.
To be sustainably technically advanced, societies will have to be internally and externally coherent. That means providing enough safety to enable the emergence of specialisation in the population, enough rewards to elicit the specialisations of as many as possible, and enough communication to arbitrate priorities. Resources, freedom, and communication. Safety, opportunity, and participation. These are not separately optimisable. The social market economies of the late 20th C were an attempt to balance all three. Soviet communism failed, mostly, because of the lack of participation, so decision-making became very low quality, missing the input and direction of the great majority. That stifled opportunity, which led to safety failures. And then the whole system collapsed. But social systems can collapse from the failure of any of the three essentials, as they are inextricably interdependent.
The social market societies of the 20th C were dependent on exploitation and pollution to make their systems look like they were working. In reality, they were failing to deliver sufficient internal safety to maximise the specialisation (productivity) of their own populations. To maintain enough resources for motivation, to elicit deeper specialisations, they relied on being able to extract and pollute to keep their internal safety costs down. This Ponzi scheme has an obvious endpoint: the returning costs overwhelm the established, delicate balance. This is what climate change presents. The return of costs that were externalised to make late 20th C, technically advanced, societies look like they worked.
Social market societies will fail if they do not resolve their conflicts between safety and opportunity. Their participation systems have become battlegrounds and will be sorely tested in the coming decade. Antiquated, early editions of democratic practice still dominate in the US and UK. If those systems are not reformed, they will be overwhelmed. Populism, the herald of fascism, is massed at the gates.
At the root of these problems is safety. The ability of societies to remove enough fear from their people, that allows those people to develop their talents. Closing, not filling, the safety gap is the key metric for the survival of free, prosperous societies the world over.
What’s the difference between filling a safety gap and closing it? A safety gap is a deficiency of safety expressed in the portion of total production allocated to providing safety. The need to maintain incentives means that more resources cannot be allocated to safety. Safety has to be increased with the same, or maybe even less, resources than are currently allocated in most countries. We cannot fill our safety gaps with resources that would reduce incentives because that will reverse development. Remember that we have already developed beyond the safety available using our current methods, by relying on exploitation and pollution. If we want to maintain our current levels of development, we have to change our method of safety. We have to deliver more safety with less resources. We have to be more efficient.
This is where Universal Basic Services come into play. The only way to deliver more safety with less money, is to focus on the safety. The most efficient way to make sure that everyone has shelter, is to provide basic shelter. Et cetera. Compensatory redistribution must fund market failures and information asymmetries. And we simply cannot afford to do that. We have tried that, and it does not work.
We have sacrificed the real freedom of choice of action, for the poverty of consumption selections. In a genuine desire to honour the ability of people to make little choices, we have robbed them of their larger choices. We have compelled people into gratitude for a system that deprives them of the choices that would make their lives meaningful. That will not, and should not, stand. (Replacing them with the hungrier and more desperate is just a deeper layer of ignorant resistance promulgated by a coddled cadre of beneficiaries of the existing imbalances. Makes my blood boil to hear people use pseudo humanitarianism to justify their economic self-interest at the expense of their neighbours. The advocacy coalition with empathic utopians is one of the more grotesque features of these times.)
But, as the UBP paper makes clear, we cannot drive down the cost of safety until it is a universally shared quality. While safety is something that some get and others give, reforming the way we do it will remain stuck. To get to a place where how we do safety is something that we can all legitimately participate in the reform of, we need to overtly establish the common and collective interest in that safety. Which leads us to tax reform.
For more on how our lives become so dominated by finance, and on the possibilities of building a future in which all the qualities are in balance and development continues, read the paper.