Fully Automated Luxury Communism A Manifesto

Take Saudi Arabia. While it is an afluent country as a result of its oil wealth, as with other countries across the Middle East, much of Africa and south Asia, it has huge solar potential. While it might be unsurprising that the Kingdom is increasingly involved in solar technology, the scale of a deal it negotiated in early 2018 – to build 200 terawatts of solar capacity across the country by 2030 – came as a shock. For context, that is four times the peak use for the whole of the United Kingdom, a country with a population more than twice its size. While Saudi Arabia has the funds to build such historically unprecedented infrastructure – when completed it will be the greatest solar development in history – this is precisely the scale and ambition that is needed to move the world beyond fossil fuels by 2040.

But given that most of the Global South lacks those kinds of resources, any reliance on petrodollars to fund transition is inadequate. Just like the wealthier countries, that will mean National Energy Investment Banks coupled with significant reforms to the World Bank – an organisation which is, at present, primarily responsible for providing loans to poorer countries for capital programmes. Currently comprised of two institutions – the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) – its stated goal is the reduction of global poverty through the promotion of foreign investment and international trade. But while its intended purpose is laudable, there can be little doubt it is failing. That is because its understanding of development is built on an ideological commitment to free trade and a worldview which, in the context of the Third Disruption, makes increasingly little sense.

As our technologies move to extreme supply, such fidelity to market fundamentalism will only serve to entrench poverty rather than eliminate it. Without recognising this problem, global capitalism will under-develop these regions more acutely than ever, meaning that what should be the energy powerhouses of tomorrow will remain unable to even guarantee access to electricity for their citizens.

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Which is why, given the demands of transitioning from fossil fuels in the Global South – coupled with what successful transition might mean for economic development and climate change – a third body should be added to the World Bank Group. This would be called the International Bank for Energy Prosperity, its mission being to help create NEIBs in poorer countries which would be funded by a new ‘One Planet Tax’. The purpose of this tax, global in its extent, would be simple: to channel resources from afluent countries – who are overwhelmingly responsible for climate change – to poorer ones, who are set to disproportionately sufer its most adverse consequences.

The revenues for this tax would be raised by imposing a \$25 fee on every tonne of $\mathrm { C O } _ { 2 }$ emitted in high-GDP countries. As well as helping fund energy transition in the Global South this would also create an additional incentive among the wealthier nations to decarbonise in the decade following 2020, not to mention stimulating a market in carbon sequestration technologies. A reasonable projection is that this alone would raise around \$250 billion a year – not an insignificant sum. If the measure fell short in raising as much, which would represent success from the perspective of decarbonisation, the remainder would be generated from countries paying into the fund based on a GDP per capita basis.

In addition to capitalising EIBs in some of the poorest countries in the world, whose role would be precisely the same as their equivalents in the Global North, the One Planet Tax would also pay for technology transfer and research and development into modular renewable solutions adapted to low-infrastructure, low-income environments. Here the aim would be to create an energy analogue to the mobile phone of the early twenty-first century. The difusion of abundant energy in low-income countries will look nothing like the national infrastructures of the last century. If household PV does spread as quickly as mobile phones have since the 2000s, seemingly unbridgeable gulfs between the world’s rich and poor in electricity, clean drinking water and living standards will be overcome in an extraordinarily short span of time. This would be an energy revolution – with Asian and African characteristics.

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In the event of complete decarbonisation by 2040, as sovereign states not only fund the difusion but democratic ownership of green energy infrastructure, then the achievement will extend beyond averting runaway climate change – as magnificent as that will be. It would also mean those historically poorer countries along the equator would possess some of the most abundant, cheapest energy on Earth. This, alongside the delivery of UBS, would underpin similar leaps forward in health, education and housing, enabling meaningful development like never before and helping sever the chains of economic dependence that have characterised centuries of plunder and exploitation. Amid recent calls for reparations to atone for the historic injustices of the Atlantic slave trade and European empires, a One World Tax would turn a timely idea into a concrete demand. Wealthier countries must pay for the clean energy of poorer ones.

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11 Reforging the Capitalist State

It measures everything, in short, except that which makes life worthwhile.

Robert Kennedy

Money for Nothing

While the state guaranteeing the provision of certain goods has a long history, particularly in the twentieth century, it is the idea of a Universal Basic Income – the ‘UBI’ – which seems to have attracted greater curiosity in recent years. The reason why isn’t difficult to understand. Many are convinced of its ability to address multiple aspects of the five crises, with it being uniquely capable of responding to ‘the conjunction of growing inequality, a new wave of automation, and a more acute awareness of the ecological limits to growth’.

The impulse behind UBI is as simple as Universal Basic Services, except rather than certain goods being free at the point of use for everybody, every citizen is given a fixed amount of money at regular intervals. It is, simply understood, a wage without work.

For those eager to proclaim the radical, disruptive potential of UBI, this severing of payment from work presents a challenge to capitalism itself, undermining its vital disciplinary function over workers who have to sell their labour in order to live. At a minimum, its advocates claim, this would serve to strengthen labour in relation to capital – much as trade unions did in the nineteenth and twentieth centuries – ofering an immediate social democratic solution within the context of automation and technological unemployment.

This may all prove to be the case. The truth is we don’t really know because UBI has never before been tested at sufficient scale before. What we can be certain of, however, is that its consequences would depend on the broader political environment in which it is introduced. Under a progressive or socialist government, UBI might well prove to be a potent measure empowering ordinary people and giving them the ability to demand higher pay. Alternatively, it may just as easily be the means by which to complete the full marketisation of the welfare state, a capitulation to neoliberalism rather than an alternative to it. It is its range of possibilities, from potentially liberatory to Thatcherism on steroids, which explains why two of the most important thinkers in the history of neoliberalism, Milton Friedman and F.A. Hayek, can be counted among its enthusiasts.

A more immediate criticism of UBI, however, and one that is easier to anticipate in detail, is that it would cost a huge amount while not achieving particularly much. In 2016 the British think tank Compass modelled a UBI that paid £284 (\$380) a month to every working-age adult and smaller payments for others. This would stand alongside, rather than replace, extant social programmes adding £170 billion a year to public spending – equivalent to 6.5 per cent of the country’s GDP and more than is presently given to the NHS.

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Yet despite such massive investment, the projected returns prove distinctly underwhelming. Compass predicted that even with this extraordinary intervention, child poverty would only fall from 16 to 9 per cent, while pensioner poverty would stay broadly the same at 14 per cent. As Luke Martinelli put it, ‘An afordable UBI is inadequate, and an adequate UBI is unafordable.’ Given the sums involved, far more progressive measures should be pursued instead.

Which is why a programme of UBS is preferable, with the universal right to particular resources such as housing and healthcare being more politically robust than a wage, and easily integrated within a luxury populism. UBS also makes more intuitive sense to the public at large, being reminiscent of national ownership – whose return is increasingly popular. Compare that to UBI, a policy whose consequences are uncertain to all involved save for the fact it would be, by far, the single greatest government expenditure.

Furthermore, preferring UBS to UBI makes a great deal of sense within the context of the Third Disruption and the turn to extreme supply. As the price for everything shifts ever closer to zero, this will imperil production for exchange and profit, meaning the price mechanism is an increasingly ineficient way of allocating resources. What is more UBS begins the work of communism in the present, articulating resources necessary to a decent life – from housing to healthcare – as human rights rather than potential sources of profit. Necessitous people are not free people, and the UBS decisively ends such necessity.

Central Banks as Central Planners

A fundamental deceit lies at the heart of modern market systems. We are told that the old Soviet economy was centrally planned, with the infamous Gosplan agency at the heart of the USSR’s economic life. Modern capitalist economies, by contrast, are ‘free ’, with autonomous actors participating in market exchange to maximise their own interests and, fortunately, promoting the general welfare too.

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Only this isn’t true. Central planning is a significant feature in ‘free market’ economies, from Walmart to Amazon. The primary site for this is central banks, however, whose decisions – despite claims to being impartially technocratic – are based on political priorities for inflation, employment and asset prices. Private banks perform something similar on a smaller scale, deciding what projects are to receive a share of society’s resources and enforce the ‘judgement of the market’ on those which lose money.

The claim of central bank ‘independence ’, a favoured policy at the apogee of capitalist realism during the 2000s, is as absurd a conjecture as the end of history itself. Here the pivotal actors within modern capitalist economies, who make specific choices that privilege certain groups at the cost of others, think of themselves as neutral with ‘common sense ’ prevailing rather than ideology.

Beyond highlighting the fact that the decisions of central banks are themselves deeply political, the goal for those pursuing FALC should be to openly champion political banking. Rather than joining the cries of ‘end the Fed’, a phrase heard with increasing regularity on the libertarian right, the response should be the opposite: to demand that the intentional, conscious planning at the heart of modern capitalism be repurposed to socially useful ends rather than socially destructive ones. That the Bank of England and US Federal Reserve share numerous characteristics with the Soviet Gosplan should be the basis for political hopes rather than lamented as obstructing the mythical operation of a ‘truly’ free market. Such a thing has never existed, nor can it.

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So what is to be done with the central banks of the early twenty-first century? As with the introduction of municipal protectionism, UBS and the shift to a post-carbon energy infrastructure, change will be both decisive and incremental. What must happen immediately, however, is an end to the monetarist policies which have privileged low inflation at the cost of all else. This central pillar of neoliberalism – sold as part of a broader set of policies during the Thatcher and Reagan years – was identified as necessary in dealing with issues of inflation which increasingly beset the economies of the Global North after the early 1970s. After that, the ideologues said, sustainable economic growth was only possible with low, controlled inflation, and central banks had to play a leading role in the new orthodoxy. Yet, as already discussed, average GDP growth has fallen in each decade since. It has become increasingly hard to argue that the purpose of low inflation is anything other than to advantage asset-holders and creditors over those with debts. In short, monetarism and low-inflation ideology is just one part of the rigged system that serves speculative capital and the wealthy at the expense of everything else.

Which is why in the transition to FALC the role of central banks will change once more, the emphasis moving away from low inflation – at present the Bank of England has a target of 2 per cent – to rising wages, high productivity and afordable house prices. This would be part of a broader programme to politicise central banks as central planners and democratise these supposedly ‘neutral’ institutions.

In terms of how central banks might keep a lid on property prices – presently a major source of value and profit in financialised economies – a paper released by the IPPR think tank in July 2018 is instructive. It argues that the necessary measures are relatively straightforward, with the Bank’s Financial Policy Committee best placed to set a target for house price inflation – similar to how the Monetary Policy Committee is presently tasked with consumer price inflation. Under such a target the Bank of England would aim to keep nominal house price inflation at zero while the UBS of housing was guaranteed through a programme of mass home building by central and local government. The report outlines how that target would be met by using macro-prudential tools such as capital requirements, loan-to-value, and debtto-income ratios while restricting overseas purchases of UK residential property. This, alongside building millions of new homes, would almost certainly mean house prices would fall over the space of a generation.

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In regard to productivity, similar targets would be given to central banks – something recently advocated by the British Labour Party. This would incentivise funding the productive rather than speculative economy while increasing wages alongside the ratio of fixed capital to variable. Automation that serves the needs of people should be the heart of monetary as well as fiscal policy.

Repressing the Speculative Economy

As well as financing the economy of tomorrow – whether it be at the national level with central banks as they turn to meaningful metrics other than inflation, or local and regional banks funding worker-owned business – a critical task remains in shrinking the size and power of the speculative financial economy. In many countries, particularly Britain and the United States, capping house prices would be a major step toward achieving that. And moving the emphasis away from inflation-busting would mean creditors no longer enjoy the structural bias they presently do.

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But it is also clear that additional protocols will be needed in the management of capital flows. A financial transactions tax on currency trading would be an obvious means of capital control. This tax would be levied at two variable rates: the lower one, which could be as little as 0.005 per cent would be imposed on day-to-day transactions in order to curb volatility, while a higher one would be deployed in the case of speculative attacks or large capital outflows – a probability as ever more countries turn their back on neoliberalism. The necessary conditions for implementing the higher rate, which would be akin to a ‘windfall tax’ on profits made from speculative attacks, would again be determined by central banks. Yet regardless of that it would be a crucial instrument against global financial interests whose primary weapon is capital mobility across borders.

But that isn’t everything, because the final piece in changing the financial architecture to enable the transition to FALC is perhaps the most important. It involves the progressive socialisation of finance and capital markets.

A Socialised Capital Market

As the end drew nearer for the USSR and Eastern Bloc in the late 1980s, dissident intellectuals were eager to draw lessons from a system which despite its best intentions was now failing to deliver rising living standards on a par with the West. Włodzimierz Brus and Kazimierz Łaski were two such thinkers, socialist economists and followers of the distinguished Marxist–Keynesian Michał Kalecki. In From Marx to the Market, published in England in 1989, they assessed the prospects for socialist economics with the demise of the Soviet project. Both had been influential proponents of democratic reforms for decades, with Łaski forced to leave Poland in 1968 and Brus in 1972.

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