Basic Income Stud. 2016; aop 2 E. Manjarin and M.

Szlinder

Edgar Manjarin and Maciej Szlinder* with very useful intellectual tools – to start with, class analysis – for under-
standing and criticizing capitalism in its logic, as well as its historical and
A Marxist Argumentative Scheme on Basic spatial developments.
Income and Wage Share in an Anti-capitalist One of the crucial inspirations we can take from Marxist way of thinking is the
constatation that we cannot elude how capitalist economies are still profoundly
Agenda rooted in class conflict. Nor we can escape the fact that achieving a higher level of
conditions for living and freedom goes necessarily through addressing, politically,
DOI 10.1515/bis-2016-0010
this boisterous human crust of modern times. Therefore, regarding basic income, a
Abstract: In this article, we present an anti-capitalist argument for basic income fundamental question for any anti-capitalist mind is how, in this very concrete
based on its predicted effects on the wage share dynamics and its relation with the historical period, an economic reform as such can impact on class struggle
working class’ bargaining power. Our considerations are located in the Marxist dynamics in order to improve the conditions for superseding the monetary econ-
tradition and based mainly on contributions to the Marxist analytical framework omy system based on exploitation and dispossession, i. e. contemporary capitalism.
made by Rosa Luxemburg and Michał Kalecki. We argue that basic income should Many thinkers from the Marxist tradition have based their work on this
lead to a rise of the share of wages in the GDP, by significantly improving workers’ ground, notably Rosa Luxemburg and Michał Kalecki among them, who
bargaining position in various ways: through increasing the effective demand and mastered the art of giving political answers to – apparent – economic pro-
investments by redistributing income to the advantage of the poorer groups of the blems. And yet basic income has received very few contributions from their
society; through guaranteeing the realisation of basic needs outside the labour particular angle on political economy. In this article we present an anti-
market; through positive influence on the collective bargaining power, especially capitalist argument in defence of basic income regarding this issue. Our
during a strike; and through enhancing engagement in alternative relations of pro- general purpose lays in rising some questions following the analytical frame-
duction as well as in political struggle for a better situation of working people. We also work of both authors, about the possible outcome of applying a political
distinguish some necessary conditions in a realistic historical scenario where the program – for which there may be some reasons to consider it opportune,
positive, anti-capitalist dynamic launched by basic income could be set into motion. at least in most of European countries – that includes basic income under
some specific conditions.
Keywords: wage share, basic income, Marxism, economic democracy

Introduction The anti-democratic core of capitalist economies

After a long course of history full of reforms, counterreforms, and constitutive In Capital Marx presents labour power as a commodity, but always with the
democratic achievements in several scopes of social life, many countries have attribute “specific”. It is a specific commodity because it cannot be separated
political and economic regimes that enable a certain level of conditions of well- from its seller and it is the only commodity that in the process of its (productive)
being and freedom. Nevertheless to realistically expect a significant step forward consumption is creating value. The value of labour power is also specific
with regard to those values, we need to get rid of the capitalist mode of because its determination “contains a historical and moral element” (Marx,
production as well as capitalist social relations. If we want to make a case for 1976, I:275). More precisely, it contains a particular1 historical element, that is
economic democracy from an anti-capitalist perspective, we should relate our to say that the value of labour power is determined by the current state of class
considerance to the achievements of the Marxist tradition, which provides us struggle between capitalists and workers. However we can also say that it is
specific because its own value is not, as it is with every other commodity,
*Corresponding author: Maciej Szlinder, Department of Philosophy, Adam Mickiewicz
University, Poznan, Poland, E-mail: [email protected]
Edgar Manjarin, Department of Sociology, Universitat de Barcelona, Barcelona, Spain, 1 The value of most of other commodities is also historically and culturally determined, but in
E-mail: [email protected] the case of labour power this determination of class struggle is crucial.
 A Marxist Argumentative Scheme 3 4 E. Manjarin and M. Szlinder

socially necessary labour time needed to produce it.2 The value of labour power real wage can rise at the same moment that the relative wage falls.6 In fact,
is “the value of the means of subsistence necessary for the maintenance of its according to Luxemburg, the struggle fought by labour unions that is con-
owner” (Marx, 1976, I:274). These means of subsistence are of course bought by centrated only on real wages plays an “organic role” in the capitalist wage
the workers from their wages which are prices paid by the capitalists for using system, because these unions legitimize capitalism as a system which can
their labour power. favour workers. The same possibility of rising the rate of exploitation while
To understand different types and aspects of wages we have to look into rising the real wages (wealth) of workers opens possibilities for the consensus
the works of Rosa Luxemburg. In her Introduction to Political Economy between capitalists and workers.7 However the struggle over the relative wage,
Luxemburg distinguishes two types of wages: absolute wage and relative she writes, is an anti-capitalist struggle: “The struggle against a decline in
wage. The first one can be expressed as a nominal wage, i. e. a sum of relative wages is thus no longer a struggle on the basis of the commodity
money, or as a real wage, that is “a sum of means of subsistence that the economy, but rather a revolutionary, subversive initiative against the exis-
worker can buy for this money.” (Luxemburg, 2014, p. 287) However the tence of this economy, it is the socialist movement of the proletariat.”
relative wage3 is defined by Luxemburg as “the share that the worker’s wage (Luxemburg, 2014, p. 286)
makes up out of the total product of his labor” (Luxemburg, 2014, p. 283). One of the greatest followers of Rosa Luxemburg, Michał Kalecki, convin-
Therefore it implies a reversed rate of exploitation.4 According to Luxemburg cingly opposes two points of this approach. Firstly, the capitalist system does
in the capitalist mode of production the absolute wage (both nominal and not need to rely on exports to the other parts of the world, because it can
real) can rise, but the relative wage can only continuously decline, because of create necessary demand through budgetary deficit spending (Kalecki, 1991).
“the progress of technology that steadily and relentlessly reduces the share of Secondly, the struggle to rise the wage share in GDP is not directly an anti-
the worker.” (Luxemburg, 2014, p. 285) In her opinion the fall in the relative capitalist move – in fact, it can be also functional to the accumulation of
wage is “a simple mechanical effect of competition and commodity production capital as well as the better use of productive capacities. By creating ade-
that seizes from the worker an ever greater portion of his product and leaves quate effective demand, a greater wage share enables the surplus value to be
him an ever smaller one, a power that has its effects silently and unnoticeably realised and become profits. However, even if a higher wage share means
behind the back of the workers.” (Luxemburg, 2014, p. 287).5 Therefore, the more profits (absolutely, not relatively), it also may strengthen the working
class position and (together with small or none unemployment, which is the
direct effect of more opportunities for profitable productive investments cre-
ated by the greater effective demand) become an obstacle to discipline the
2 Marx writes that “The value of labour-power is determined, as in the case of every other
workers in the workplace. Workers’ relative power against capitalists’
commodity, by the labour-time necessary for the production, and consequently also the repro-
duction, of this specific article” (Marx, 1976, I:274), but when he equates the value of labour
becomes greater, which enables them to fight for a higher degree of influence
power with the value of means of subsistence he clearly shows that it is different to other
commodities, the value of none of which is reducible to the value of commodities used in its
production (constant capital). In fact, as Michael Krätke puts it, Marx “treats the process of 6 Which was obvious also for Marx, who in 1847 in the work Wage Labour and Capital writes
consumption as an automatism that requires no human labour input” (Krätke, 2009: 164) and explicitly that “[r]eal wages may remain the same, they may even rise, nevertheless the relative
does not add any new value to the value of the means of subsistence to create the value of wages may fall.” (Marx, 1847) This clearly shows how incorrect were all those who attacked
labour power. Marx by attributing to him a theory of the absolute impoverishment of the workers under
3 Marx also uses the notion of relative wage in his Wage Labour and Capital. In his view it capitalism, e. g. Pareto, von Mises, Schumpeter and Popper (as well as Marxists like John
“expresses the share of immediate labour in the value newly created by it, in relation to the Strachey or Fritz Sternberg). (Mandel, 1976: 69–70)
share of it which falls to accumulated labour, to capital.” (Marx, 1847) 7 According to Luxemburg this consensus (and capitalism itself) cannot last forever. On one
4 According to Marx the rate (degree) of exploitation or rate of surplus-value is surplus value hand the rising rate of exploitation is the only possibility to constant accumulation of capital,
divided by variable capital. (Marx, 1976: 326) but on the other hand reducing the share of wages creates a situation of underconsumption, i. e.
5 This law is perfectly consistent with Marx’s theory of the extraction of relative surplus- the lack of necessary effective demand for the produced goods (the problem with realisation of
value. It is worth to remember that the relative wage can be also diminished by the the extracted surplus-value). These can be solved by extension of capitalist markets through
prolongation of the working day (extending the production of the absolute surplus value). appropriation of non-capitalist ones, but obviously this solution has its geographical limits.
(Marx, 1976: 645) (Luxemburg, 2003)
 A Marxist Argumentative Scheme 5 6 E. Manjarin and M. Szlinder

over the process of production and to establish a more propitious ground rate.8 The existence of a huge group of unemployed or, as Marx puts it, the
towards the abolition of capitalism. Therefore struggle for the rise of the industrial reserve army, creates a downward pressure on wages, because it
wage share is eventually anti-capitalist but not because of direct, economic plays a role of a scarecrow discouraging the workers from struggling for their
reasons, but indirect, political ones. (Kalecki, 1943) rights, better conditions of labour and higher wages. As this role is directly
In the late sixties and seventies many economies came close to this proportional to the level of unemployment, the smaller it is the lesser intimi-
“kaleckian moment”, in which the intrinsic, power tensions between classes dated the workers are.
became strong enough to lead to a political turn. In the face of rising Secondly, basic income would increase the wage share, because it would get
trade union conflicts and the threat of a systemic change, capitalists the workers away from the tight corner – as long as this benefit would exist, they
launched a counter-attack based on the globalisation strategy, which would never have to worry about the survival of themselves and their families.
gave birth to the new neoliberal era, as has been convincingly developed Therefore, in the worst of cases they could resign from some particular job if
by many authors (Duménil & Lévy, 2004, 2011; Harvey, 2005; Saad-Filho & they perceived it as not satisfactory (in terms of wage or working conditions) and
Johnston, 2004; Toporowski, 2010; Varoufakis, 2013). This neoliberal era have time to look for a better job (also in a different city or region). In this sense
was characterised by high unemployment rates, smaller growth and signifi- a basic income would obviously improve workers’ bargaining position, espe-
cantly lower wage shares in GDP. To achieve that, the neoliberal reforms cially in the pay negotiations (Vanderborght, 2006, p. 5–6).
used liberalisation of trade, deregulation of labour markets and gradual Thirdly, apart from an individual bargaining power, a basic income could
dismantlement of the welfare state. As a result of this globalisation strategy also have a positive effect on the collective bargaining power, especially during
“the global supply in the globalising economies trebled” (Standing, 2011, a strike. As Yannick Vanderborght puts it:
p. 28). After the beginning of the current crisis in 2008, it seems to be
more and more obvious the need to launch a new strategy to fight for a … a BI would make each single strike less harmful financially, since workers would keep
their entitlement to a guaranteed income floor outside the labour market. With a BI,
greater wage share.
strikers would be able to face long-lasting resistance from employers, and the collective
powers of unions would therefore be enhanced. (Vanderborght, 2006, p. 5)

Finally, basic income, by giving security and time, guarantees everyone the
Basic income and wage share possibility to engage in alternative relations of production, such as cooperatives,
build alternative non capital-labour relationships (by decommodifying different
To evaluate if a proposal is a revolutionary reform, i. e. leads to strengthening
aspects of social life), and organize politically to struggle for a better situation of
workers to enlarge their possibilities to put an end to capitalism and establish a
working people (including using the state policies and institutions). So it can
new mode of production, implies asking about its effects on the wage share. This is
foster non-capitalist social activities, which are worth in and for themselves, as
what we propose that should be done with universal basic income, one of the most
discussed proposals in recent years. How should it affect the dynamics of wage/
profit share? 8 The rise of effective demand can cause two effects: the increase of prices (price adjustment)
We argue that a basic income should lead to a rise of the share of wages in or the increase of production (quantitative adjustment) (Bhaduri, 2007: 19). The first one is the
the GDP, by significantly improving their bargaining position in various ways. most preferable with relation to resources and agricultural products, because their supply is not
Firstly, the bargaining position of workers would improve due to the macro- flexible in the short term. The quantitative adjustment is mainly referred to those products the
prices of which are cost-determined (like industrial goods, finished stock and services).
economic consequences of implementing a basic income system. This reform, by
Therefore a part of the increase of effective demand due to the introduction of basic income
redistributing income to the advantage of the poorer groups of the society would can cause a rise in prices, but the other part would stimulate the increase of production. That
increase internal effective demand creating a better ground for profitable invest- means that a basic income which would be adjusted to inflation cannot turn into a hyperinfla-
ments. That should induce investment, which depends on sales and expected tionary spiral, but rather to a diminishing one (because not all of new “basic income” demand
profitability, which may increase employment and decrease the unemployment would cause rise in prices, the subsequent adjustments of its amount would be smaller and
smaller). The concrete relations between quantitative and price adjustment would differ accord-
ing to the structure of the concrete economy.
 A Marxist Argumentative Scheme 7 8 E. Manjarin and M. Szlinder

well as helping directly and indirectly to the emergence of collective action with Therefore the possible positive influence of basic income on wage share should
anti-capitalist goals. be significantly larger than those of Job Guarantee.12
Basic income, because of its effect on the wage share (due to the aforemen- Obviously the same can be said about various Conditional Cash Transfers
tioned four elements) may be considered an exemplary case of a pro-labour which do not provide full security (the level of it depends on the level of
policy, that would lead to a greater growth of GDP in a wage-led regimes, i. e. conditionality and on the administrative culture of the particular state). They
most of the developed and big economies like United States, Germany, United may give more time, but not the quality time (which is precisely this time
Kingdom, France or Italy (and certainly the eurozone as a whole) (Lavoie & needed for political activity…), because they usually force applicants to
Stockhammer, 2012, p. 19–20).9 Those economies are wage-led even when we make a lot of work necessary to get those transfers (filling in forms, waiting
take into consideration the negative impact of the increase in wages on the trade in queues, submitting to verification procedures), and are often connected
balance. That means that the neoliberal project in lowering wages went further with additional work-for-labour clauses (looking for jobs, submitting count-
than the requirements related to the process of globalisation. less job applications and participating in job interviews etc.) (Standing,
Moreover, in these economies the same increase in wage share can create 2011, p. 120–121). Furthermore they rather weaken labour movement, not
higher output and, plausibly, greater employment, thus enforcing the bargain- strengthen it, by opposing the workers to the unemployed, who get money
ing position of workers even more. Because this would again rise the wage precisely because of not labouring, which might seem to be unfair for the
share, we may face a reinforcing cycle, a progressive dynamic leading (or at labouring people.
least getting close) to the full employment (a new “kaleckian moment”). The There are nevertheless some necessary existing conditions in a realistic
limits to that dynamic are created by “the feedback effects driven by the historical scenario where this dynamic could be set into motion. The first has
productivity regime. Fast output growth may not entail fast employment growth, to do with the level of basic income: it can only make sense if the monetary
because of the rise in productivity growth generated by Kaldor-Verdoorn effect” amount given to all members of society is sufficient to reduce worker’s uncer-
(Lavoie & Stockhammer, 2012, p. 25). But those limits because of the rise of tainty over their expected income, a certain amount that therefore tends to
productivity don’t escape the realm of other possible economic policies.10 compensate the average minimum cost of living. If this quantity is sufficient,
Therefore basic income strengthens workers’ bargaining position by giving even if this scheme was funded only from wages, we see very few general
them basic security, and providing them some quality time11 to struggle for assumptions needed to expect that the standard of living would rise, and what
higher wages and engage in political struggle for more progressive reforms, concerns us even more: that the wage share would increase as well. Part of these
and give them more freedom to choose those types of activities they want to assumptions motivates us to point out in the final part of this article some
perform. In these aspects basic income clearly outstrips a proposal often com- factors that leave essential questions open.
pared to it i. e. the Job Guarantee, which provides everyone with security, but The second condition is in fact a set of conditions related to a political
not with time, forcing people to perform a full-time labour. Moreover it does not context that must be sufficiently propitious for achieving a rise of the effective
give freedom, because it cannot provide jobs that are suitable for needs and demand: a certain amount of social and political support in favour of
preferences of all those who can’t find a job in the private labour market.

12 There is also one additional danger connected with the influence of Job Guarantee on the
9 It is worth adding that Lavoie’s and Stockhammer’s post-Kaleckian analysis adopts the wage share, at least when Job Guarantee is understood as William Mitchell and Martin Watts
investment function, not the original Kaleckian one. That means it assumes that investment is (Mitchell & Watts, 2005: 70) do, that is, as guaranteeing jobs with wages set at the minimum
the “function of the rate of utilization and the profit share” (Lavoie & Stockhammer, 2012, 10) in wage level. In all cases in which these guaranteed jobs are duplicating the existing, better-paid
a way that Bhaduri and Marglin (1990) do, making it closer to Marxist approach, than classic jobs in the private labour market, it could create a downward pressures on wages for these kind
Kaleckian one, which perceives the expected profitability as depending mainly on past of jobs (because otherwise the public employer would outcompete the private ones).
profitability. Furthermore Job Guarantee does not really put an end to unemployment, because there can
10 See Mazzucato (2013) for posing the problem and Reich (2015) for a proposal of a solution. be a significant amount of people that cannot find a job on the labour market and do not agree
11 On the concept of quality time, which is “time in which we are not distracted, nervous from to take any of the proposed by the state guaranteed jobs (especially for a wage below the
insecurity or spent from labour and work, or by the sleeplessness induced by it” see Standing minimum wage). The government would have to give those people unemployment benefits or
(2011, 128). artificially deem them non-looking for a job (therefore out of the labour force).
 A Marxist Argumentative Scheme 9 10 E. Manjarin and M. Szlinder

maintaining welfare state institutions, mainly social security13 and public ser- scientific developments trying to make a better judgement of their present time.
vices, as well as some political regulation in order to put boundaries to con- So is the case for the concept of class. For this very reason, what constitutes
centration of power in markets. These are some basic aspects that could prevent collective bargaining and “class consciousness” in a broad sense include a vast
a potential neutralization of the effect of basic income because of existing diversity of experiences and envisioning ideas that should not be narrowly and
oligopolistic forces.14 This implies a public intervention to guide investment, statically described before a real basic income program is put into practice, but
that is to say to undertake proper industrial policies. And, in turn, this implies rather addressing them as a political problem with the best of the analytical
also restricting the powers of financial actors to boost speculative activities, tools within reach.
particularly around those goods that can easily form bubbles when they are However, Kalecki’s unattended warning should be regarded very seriously:
more intensively commodified. In coherence with this agenda, therefore, only a if basic income was an actual part of a new “new deal”, an anti-capitalist
government ready to reject the current trend of economic policies, at least on perspective would require not only that the conditions of bargaining and resist-
these aspects, can successfully apply a basic income scheme. ing be empowered, but also, in a propitious moment, that this move be auda-
ciously followed by a more radical agenda against the power of economic elites
under the threat of rebellion.

Basic income and the political business cycle Funding: Maciej Szlinder received funding for preparation of PhD thesis from
Polish National Science Centre as part of PhD scholarship decision DEC-2015/16/
The intervention of a basic income in the crucial dynamics of the wage share and its
T/HS1/00295. Edgar Manjarin is a PhD student in University of Barcelona and his
possible resulting transformations in the structure of bargaining leads to several
research leading to these results has received funding from the European
concerns regarding an anti-capitalist strategy. As Kalecki pointed out, capitalists
Research Council under the European Union’s Seventh Framework Programme
can partially agree on raising wages, but only up to the point where rising the wage
(FP7/2007-2013) / ERC grant agreement n° 249438 – TRAMOD.
share is still creating full employment – over that point their bargaining power
becomes critically challenged. At this “BI-led kaleckian moment”, “the ‘sack’ would
cease to play its role as a ‘disciplinary’ measure. The social position of the boss
would be undermined, and the self-assurance and class-consciousness of the work- References
ing class would grow” (Kalecki, 1943, p. 327). This circumstance is predictably the
hardest obstacle that eventually a basic income program will have to get past. Arcarons, J., Raventós, D., Torrens, L., & Domènech, A. 2014. “Un Modelo de Financiación de La
Renta Básica Para El Conjunto Del Reino de España: Sí, Se Puede Y Es Racional.”
It is crucial to take into account at this point that capitalism itself is an
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