Free markets? Democracy? High or low taxes? ... We're in an era when lots of commentators are in favour of "let the market decide". I was struck by this, funnily enough, when looking at the much-blogged and much-discussed opinions of Dominic Cummings. His writing has plenty of interesting detail, and a good understanding of technology, and of course there's plenty to agree with or disagree with. This is the quote that struck me:
"Economic theory, practice, and experiment have undermined the basis for Cartesian central planning: decentralised coordination via market prices is generally a better method for dealing with vast numbers of possibilities than Cartesian or Soviet planning, though obviously markets have problems particularly with monetary policy and financial regulation."
These aren't the problems that come to mind when I think of market mechanisms. The more fundamental are democracy, and equality of opportunity. You don't need to "pick a side" (not even the left side) in order to agree that market mechanisms have a "rich get richer" outcome baked into their core. "The rich get richer" is not an axiom, but it's an unavoidable consequence and inseparable from the processes that make markets "efficient".
By the way - "efficient", here, means that prices in the market reflect all available information about the values of the things in that market. Informally, it's the claim that markets are the best way of deciding what to do, once you've written down what value you attach to things and outcomes.
The claimed efficiency of markets has been a long-running debate. What we can see from recent history, though, is that the "free market" idea does generally seem to be effective in the sense that once you've set the rules of the market, all the different actors in that market (people, businesses, investors) play their part and it all adds up to produce something like the designed outcome. There's lots to criticise about markets, in particular "negative externalities" (bad things that aren't factored into the pricing - e.g. CO2 emissions), but let's not get into that right now. We should recognise the important core appeal: essentially, a market system is a way to loosely coordinate the brains of all concerned in finding an optimal outcome, and this is its key advantage over "central planning" in which we have to rely on the brains of whoever's in the central planning authority.
The fundamental democratic problem with free markets is as follows. They lead to an outcome that reflects value, but the actors involved don't all end up with the same treatment. Some get rich, some get poor. (See "Free market pros and cons".) They then have different amounts of leverage within that market: some have lots of power, some have very little. In some markets that's fine, but in anything that involves actual citizens, it's a recipe for inequality. We can tax profits, we can tax capital, and that's important so that at the very least, governments can provide essential services and a social safety net. But people on the economic right don't like such taxes, arguing that they reduce the incentives for market players and thus act as a drag on market efficiency.
Hence we arrive at the basic philosophical conflict between the economic right and the economic left. Market efficiency versus democratic fairness.
Now into that picture comes this other idea that has been in the ether for at least the past decade: universal basic income. Universal basic income (UBI) simply means giving a sum of money to every citizen, e.g. a lump of money every month or every year. It's unconditional - it doesn't matter if you're employed or not, for example.
There are various motivations for UBI, but one is that this is a much more efficient use of government money than the current alternative: a complex tangle of benefits, each with its own bureaucratic eligibility criteria, and the tangled benefits system leading to strange undesired outcomes. For example, unemployment benefits can often mean that some people end up losing money by accepting a low-paid job offer. In the world of UBI, there's no disincentive: accept the job if you want it, and you get extra income as well as your UBI.
UBI has been debated plenty during the 2010s. It has its advocates on the left and on the right. And its critics: critics on the right ask "but who's going to pay for it all?" and "wouldn't people just stop working and start freeloading?", while critics on the left ask "isn't this a right-wing excuse to slash the welfare state?"
Although there may be some well-reasoned criticism out there, I want to return to the fundamental issues. We have big debates and disagreements about how to organise our societies. We want the outcomes to be efficient as well as fair. We have many people passionately wedded to socialism, and many people passionately wedded to market mechanisms. The fundamental political question is, how do we get from here, to some better situation?
UBI seems to be one answer. Not just one answer - it's the only answer I know of that could appeal to people of many shades of the political spectrum, and is also something that can be tried, can be piloted within our existing countries without having to rewrite or dismantle decades of complex policy. The key is that UBI directly resolves the conflict between market mechanisms and fairness. It doesn't fix everything (negative externalities, for example), but it allows us to move to a situation where democrats and market fundamentalists can work together to produce efficient outcomes for all.
I know there are many implementation details of UBI to talk about, and I'm sure there are some imperfections in general. But can we afford to dither about the details, when we have so many problems to solve, and so many winners and losers from the current economic systems in place around the world?