Establishing the Basis for Solidarity
Myron J. Frankman
May 31, 2001
It is neither necessary nor desirable that national boundaries should mark sharp differences in standards of living, that membership of a national group should entitle to a share in a cake altogether different from that in which members of other groups share.--Friedrich A. Hayek (1944)
The extension of solidarity beyond the face-to-face required the construction of what Benedict Anderson calls "imagined communities." Building national communities required ingenuity and sustained effort over lengthy periods.For those of you who have added a European identity to your basket of loyalties, the possibility of adding at least one more allegiance should appear to be a plausible project.For most of the rest of us, this is likely to seem an unthinkably giant step.Nonetheless, building world-scale democratic institutions may well be the only peaceful and sustainable way out of our increasingly strife-prone global race to the bottom.
FREE TRADE: THEORY AND PRACTICE
Todayís most active global project is not that of shaping solidarity, but rather of extending the domain of free trade and free markets. Partisans of this political agenda argue, based on the theory of comparative advantage, that overwhelmingly benign outcomes can be expected to result from the opening of a countryís markets to free trade: income differentials between countries are expected to diminish. In the most elaborate theoretical expression of the free trade model, wages in two countries trading exclusively with each other will equalize (as will the returns to the owners of capital), without international migration (or movement of capital).
The past fifty years has been a period of rapid expansion of world trade and a general tendency toward the opening of external markets.Has the equality-increasing promise of free trade been realized on a global scale?While no definitive test of assumption-ridden abstracteconomic models is possible, there is sufficient evidence to suggest that free trade on its own has failed to produce the outcome which is its principal justification. To cite but a few signs of growing income inequality:The UNDP's Human Development Report 1999 reported that the ratio of the income share of the one-fifth of the world's people living in the richest countries to that of one-fifth living in the world's poorest countries has gone from 30:1 in 1960 to 61:1 in 1991 to 86:1 by the late 1990s and that the assets of the world's three richest individuals exceeded the combined GNP of the 600 million people living in the world's poorest countries.
There seems to be a means-ends confusion in the espousal of free trade.If the real objective is reducing the divergence in income differentials and free trade is merely a vehicle for doing so, then it seems appropriate that either other policies must accompany free trade or a different means be sought.Within nations, we have long offset the income (and power) concentrating effects of market activity with combinations of regulation, taxation and expenditure.Living together sustainably and in peace would seem to require that such offsets be established at the global level.
Foreign aid & GROWTH:
The Limits of Charity Andtrickle down
Foreign aid was one of the institutional responses that was to lift developing countries out of poverty.Thirty years after the goal of 0.7% of GNP for foreign aid was first enunciated by the developed countries, we find this very modest objective again reiterated in A Better World For All, a policy statement co-issued in June 2000 by the OECD, the World Bank, the International Monetary Fund and the United Nations. In 1998 the ratio of net official development assistance to GNP for the 21 country members of the OECD's Development Assistance Committee was only 0.24, with the ratio for the United States at a mere 0.10. The goal has been regularly attained only by Denmark, theNetherlands, Norway, Sweden.In fact, even if that goal had been reached in 1998 it would have amounted to only US$150 billion (compared to the actual total of US$52 billion) and had the money been allocated as unconditional grants in its entirety to those countries identified in the World Development Report 2000-2001 as low income,it would have amounted to a mere $63 per capita for each of the 2.4 billion people living in those countries, a sum that would likely be insufficient to pay for an evening's dinner for one person, including wine and tip, in an upscale restaurant in any of the high income countries of the world.Depending on largesse from today's "dominant' countries with strings of conditionality attached seems hardly to be the manner in which to construct a planet-wide human partnership. That the four institutions that issued the report have nothing fresh to offer in the realm of global public finance than an obsolete formula for charity which is unequal to the task at hand belies their lack of serious commitment to building a peaceful and just democratic global order.We should not forget that there once was serious commitment to sharing with others: in 1949,during the Marshall Plan years, the United States extended $6.3 billion in grants for economic purposes to countries in need (principally in Europe and East Asia), an amount which represented 2.5 percent of US GNP.
In 1978 Robert S. McNamara, then President of the World Bank, wrote in his Foreword to the first World Development Report that despite a "quarter century . . . of unprecedented change and progress in the developing word" 800 million people continued to be trapped in absolute poverty.His remedy was substantial acceleration of growth in the developing countries, without which, given population increase, "numbers of the absolutely poor will remain unacceptably high even at the end of the century." In fact, there are now 1.2 billion people reported to be living on less that $1 per day and another 1.6 billion living on less than $2 per day.Think about it: after one-half century of freeing of trade and commitment to fostering development,2.8 billion people, constituting 47 percent of the World's population, are living at the material, political and social margin.The preceding facts suggest that solidarity has decreased rather than increased in recent decades and that the results of our efforts to close the income gap between the rich and the poor have been nowhere near the proportion desired.
CITIZENíS INCOME AND GLOBAL EQUITY
The Universal Declaration of Human Rights affirms that "Everyone has a right to life, liberty and security of person." (Article 3). These rights, in my view should be sought directly and not as some hoped-for residual of the pursuit of other objectives.One mechanism for securing the "right to life" is through the establishment of a planet-wide citizen's income.
Writings advocating a minimum income for all under the name of a guaranteed income, social dividend, basic income, citizenís income or negative income tax, while differing in design, all address the desirability, if not the right, of all people to a guaranteed minimum annual share of the revenues of either individual countries or of the world.As the case for a citizenís income is amply developed in documents that can be found on the World Wide Web (http://www.bien.be/), as well as in papers on the conference Extranet written by the other two members of the McGill delegation, Clarisse Kehler Siebert and José Uribe, I shall limit my discussion of the concept to the essentials.
There is an intellectual record of proposals for guaranteed incomes under various names, dating back at least to the time of the French Revolution, when Thomas Paine advanced a plan which dissociated in part reward from effort and recognized as a "right and not a charity" the just claim of all to a share in produce of the soil, which he regarded as being originally the common property of the human race. In the middle of the 19th century John Stuart Mill spoke of our common inheritance.In a manner similar to that of Paine and building on Mill, Thorstein Veblen referred to our "joint stock of knowledge."
More recently, in the 1960s and 1970s, the "common heritage of mankind" was used in the discussion of global sharing of the proceeds from the economic exploitation of regions that are not part of the territory of any sovereign state (res nullius).Yet in the very forum, that of the Law of the Seas, in which the notion of common heritage was being frequently invoked,a great sea grab took place assigning resources not in proportion to need, but rather in proportion to length of coastline and the richness of the resources located there.As William Cline pointed out, the creation of exclusive economic zones represented yet another extension of property rights, quite inconsistent with the notion of the common heritage.As long as thinking about our common heritage is limited to what is no country's land, then the domain which is left as the common heritage is what little remains after all else is appropriated.The residual territorial common heritage is scarcely likely to provide the hoped for revenues to finance global public purposes, among which is the quest for greater equity in the distribution of the world's income.
In the mid-1970s we find a suggestion from Nobel Prize winner Jan Tinbergen for an even broader application of the common heritage concept "to new domains such as mineral rights, science and technology, means of production and other sources of wealth."In terms of the present discussion, animportant point to note is that an open-endedinterpretation of the common heritage of humanity can be invoked to provide philosophical underpinning for the case for a global system oftaxationto finance both the maintenance of international order and global income redistribution intended to universalize concretely the "right to life".
Expenditures in support of global equity and global order can also be thought of as investments in the maintenance and expansion of our global joint stock of knowledge.Paul Streeten made this argument in 1972,suggesting that there is a harmony of interest between the fulfillment of basic needs and the pursuit of sustainable growth:
It is not only a moral duty to enable human beings, wherever born, to develop theirfacilities, but it is in the interest of all that these human resources should be fully developed, so that, instead of being a drain on the world's resources, they may contribute to their growth.
No less than four Nobel Prize winning economists (James Meade, Milton Friedman, James Tobin and Herbert Simon) have all espoused one version or another of a minimum income guarantee and another Nobel prize winner, Amartya Sen, has insisted on the centrality of entitlements.The essential rationale is quite simple:all earned income takes advantage of pre-existing institutions, knowledge, communication and transportation nets, which are part of what is commonly regarded as social capital (a topic addressed by Sue Jones in her Extranet paper). While social capital, like so many concepts, is generally spoken of in a national context, it can also be viewed from a global perspective.Herbert Simon, in what was likely his last published paper prior to his death in February 2001,put the case most strongly:
I personally do not see any moral basis for an inalienable right to inherit resources, or to retain
all the resources that one has acquired by means of economic or other activities. . . .
When we compare the poorest with the richest nations, it is hard to conclude that social capital can produce less than about 90 percent of income in wealthy societies like those of the United States or Northwestern Europe. On moral grounds, then, we could argue for a flat income tax of 90 percent to return that wealth to its real owners.
To the extent that each of us is a common beneficiary of the cumulative global process of civilization, we are entitled to some reasonable monetary dividend and thosewho reap the greatest gain should be subject to charges for the use of the collective social capital of our increasingly globalized society.
CITZENíS INCOME: AN EXAMPLE
The actual form that the citizenís income takes is at this juncture not the issue, it is the principle that needs to be accepted nationally and globally.Nonetheless, one brief example can be instructive.One recent variation by Patrice Spadoni suggested that the citizenís income be set at no less than 50% of a countryís per capita income.A phase-in arrangement for a planet-wide citizen's income intended to narrow the global income gap might set the initial annual, unconditional stipend to all at 20% of either a countryís per capita income or the world per capita income, whichever is greater.By this criterion the citizens of all countries of the world whose per capita income is below the world average would qualifyfor an income supplement related to the world per capita income.The universal entitlement version of a guaranteed income that I have chosen here is probably the most costly of the possible versions of the social dividend schemes, although it may be the least expensive in terms of associated administrative costs. My choice in part reflects a wish to illustrate that embracing the income redistribution implications of taking global solidarity seriously will not "break the bank."
That A Better World for All envisages reducing the share of those living on less than $1 a day from the current level of 20 percent of the world population to 15 percent by 2015, suggests a lack of any sense of urgency.In contrast, a citizen's income equal to 20 percent of the world average per capita income in 1999 of $4890 would come to $980, equivalent to about $2.70 per day, an amount which would more than double the income of half the world's population. The payments to the 20 percent of world's population living in the poorest countries would be equivalent to 4.7 percent of the income of the 20 percent living in the richest countries.
An example involving the largest European country, the Russian Federation (which will be represented at this meeting), might be instructive. The per capita income of Russia is reported to have been $2270.The transfer to each of the Russian people of $980 per yearwould, if this had been in place in 1999, have come to $143.8 billion, which can be contrasted to receipt by Russia of official development assistance in 1998 of $1.0 billion($7 per capita) in 1998 and net private capital flows of$19.3 billion. In fact, the unconditional hypothetical transfers would have amounted to 78% of Russia's total outstanding external debt of $183.6 billion, the management of which carries with it countless externally imposed conditions.
The intent here is not to minimize the effort that would be required to implement any such scheme, butrather to illustrate that the magnitudes involved are not unrealistic.The far more difficult roadblocks are our preconceptions that first lead us to insist that individuals and countries must earn their living and then lead us to blame the victims when their earnest efforts fall short.
CITIZENíS INCOME,VOLUNTARISM AND A NEW RENAISSANCE
A Citizenís Income sufficient to assure a reasonable level of subsistence could have a profound effect on the time devoted unpaid activities for which a lack of remuneration is currently a distinct barrier and a basis for social exclusion.A partial listing of such activities include household work, voluntary activities, democratic political participation, creative endeavors, cultural representations, sports and learning.John Collett made the point in his Extranet paper: "participation in society does involve having a disposable income Ė something that benefits do not provide."
Voluntarism, in particular, might receive a significant boost from the creation of a citizen's income. The vast majority of the students that I advise in the International Development Studies program at McGill,would, I believe, be on their way right now to do volunteer work with NGOs in Africa, Asia or Latin America if they were recipients ofa citizenís income and they would also probablyabandon their part-time school year jobs in favor of volunteer work with NGOs in Montreal.Instead, many are shut out of voluntary participation by the need to work throughout the yearin whatever unskilled job is available to finance their education.
Indeed, in todayís neo-liberal context, voluntarism is often either exclusionary and/or exploitative.Fro example, tudent internships are increasingly offered without either remuneration or any allowance for living expenses.I know of at least two McGill students who were offered unpaid internships with the United Nations in New York for this summer.One was desperately seeking funding sources; the other has resolved to work evenings and weekends as a waitress in a New York restaurant to be able to take advantage of the opportunity.When voluntarism excludes those who canít shoulder the financial burden, it does not serve as a source of solidarity.While a citizen's income would not completely level the playing field of possibilities and opportunities, it could reduce the slant significantly.
Writing in 1969, Buckminster Fuller fully imagined that within a decade an income support scheme would come into being. He preferred to speak of it as a "life fellowship in research and development or in just simple thinking." He firmly believed that this would allow each person to "be able to dare to think truthfully and to act accordingly without losing his franchise to live." For Fuller, an income guarantee has the potential to unleash both human creativity and "humanity's unique capability -- its metaphysical capability."
Aplanet-wide citizen's income supported by a global system of public finance could free individuals and nations from the pursuit ofenvironmentally and socially destructive policies pursued in thenameof competitiveness.In the words of Philippe van Parijs, one of today's foremost advocates of the introduction ofnational income guarantee systems, a universal social dividend would provide "real freedom for all."In my view, the achievement of a world-wide socio-economic system in which people matter requires the shaping of a political system in which people matter, namely the crafting of democratic institutions and practices at all levels from the local to the global. 
In a market economy, entitlement to income is related in part to property rights, relative bargaining power, market conditions, legal constraints and position within a family.Without property, job or family, one's claim on a share of a community's flow of income may be limited or even nonexistent.And even one's claim to a limited share may be subject to severe restrictions and limitations. In effect, if one doesn't "earn a living", one may not have the "right to live".
Assuring the "right to life" is part of the task of building global social justice. A next step in this direction might be to create global citizenshipcarrying with it as a start and as a minimum a global system of guaranteed entitlements to income, goods and services which would be supportive of the development of human capability.
I contend that theexclusion and inequality generating effects of free-market globalization-from-above require that a world-wide system of entitlements to services and income (a citizen's guaranteed income or social dividend) be created if ourcollective commitment to the preservation of human rights, including world-wide freedom of movement in the fullest sense (including the "real freedom" not to migrate),is to berespected and if world peace is to be preserved.