Stewart Lansley, A Sharing Economy: How social wealth funds can reduce inequality and help balance the books, Policy Press, 2016, xii + 150 pp, pbk, 1 44733 143 8, £9.99
As the author puts it, we are becoming a society divided between affluence and poverty, and we need new a economic model ‘that shares prosperity and delivers greater security across the divide, economic and social’ (p. viii).
Chapter 1 outlines the roots and effects of growing inequality, and credibly predicts yet more inequality and the economic and social disruptions that that will bring. Chapter 2 relates the increasing concentration of capital in a relatively few private (often foreign) hands, and the problem that some corporations are now so large that governments dare not let them fail, thus making governments the prisoners of private capital. Wages fall, companies hoard cash rather than invest, public assets are sold to foreign companies, and the public sector is squeezed because governments’ taxation policies are largely controlled by corporations. The author quotes Mark Carney: ‘unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself’ (p. 24). It is not that capitalism needs to be replaced. What is required is inclusive capitalism.
In chapter 3, natural resources such as oil, gas, and water, and a variety of other assets, such as radio spectrum, are described as the ‘common wealth’, which suggests that some of the revenue generated from it ought to be shared across society as a whole, rather than the whole of it ending up in private hands. A social wealth fund that captured and invested revenue from the common wealth (for instance, via a Land Value Tax) could be used for the benefit of society as a whole, thus returning to society the proceeds due to it. Chapter 4 discusses the secretive sovereign wealth funds of such countries as China and Saudi Arabia, and the very different social wealth funds on New Zealand, Norway and Alaska, which are more democratically accountable and are designed to serve social goals. Chapter 5 suggests a number of ways of paying for the UK’s first social wealth fund: revenue generated by public wealth and natural resources, existing taxation, financial transaction taxes, and taxation of company profits and share ownership. He makes an interesting suggestion, that a number of different funds should be created: a public ownership fund, funded from the revenues from public assets, to pay for infrastructure and other public projects; a public investment and social fund, perhaps funded by financial transaction taxes, to pay for urban renewal; a social housing fund, to recycle sales proceeds into new social housing; and a social care fund, to enable social care to be funded from a hypothecated tax on housing wealth.
In 1965 James Meade predicted the economic and social effects of automation, and suggested a fund that would pay an equal social dividend to every citizen, and chapter 6 suggests that such a fund could be paid for by a levy on capital ownership and could pay out either an annual citizen’s dividend or a regular Citizen’s Income. Chapter 7 lists numerous advantages of a Citizen’s Income, and also discusses a number of common objections. Lansley pays particular attention to two Citizen’s Income Trust’s illustrative schemes: one that retains means-tested benefits in order to reduce losses to low income households, and another that implements a Citizen’s Income one demographic group at a time. He then offers his own proposal of a higher Citizen’s Income that would enable most means-tested benefits to be abolished and that would be partially funded by the proceeds from a social wealth fund paid for by a shareholder levy.
Chapter 8 discusses a current trend that mirrors a social wealth fund: the amalgamation of public pension schemes into a significant investment fund. It then discusses expressions of support for social wealth funds, such as George Osborne’s suggestion of a fund that collects revenue from shale gas mining and uses it to benefit the North of England. Lansley also discusses the progress of the debate on Citizen’s Income, and various experiments that have taken place or are now planned. As he quite rightly states: ‘the debate on its merits – and downsides – needs to [be] extended from campaigners and researchers into the public domain … Although a citizen’s income would raise issues of its own, it would tackle many of the problems with the existing system. Such are its strengths, its time is surely coming’ (pp. 116-17). He concludes that ‘there is some evidence that with more and more establishment figures calling for a new model of capitalism, the tide is turning, that the current bias towards inertia may be coming to an end. Social wealth funds and a citizen’s income should be an essential part of this new tide of change’ (p. 123).
This book, like 101 Reasons for a Citizen’s Income, is a Policy Press ‘Shorts: insights’ paperback. It costs only £9.99. Buy two. One to give to a friend, and one to read – and then give to a friend. Both the author and the publisher are to be congratulated on a timely and well-argued book that brings together arguments for social wealth funds and for a Citizen’s Income, and that suggests an important connection between them.