This article traces John Rawls’s debt to Frank Knight’s critique of the ‘just deserts’ rationale for laissez-faire in order to defend justice as fairness against some prominent contemporary criticisms, but also to argue that desert can find a place within a Rawlsian theory of justice when desert is grounded in reciprocity. The first lesson Rawls took from Knight was that inheritance of talent and wealth are on a moral par. Knight highlighted the inconsistency of objecting to the inheritance of wealth (...) while taking for granted the legitimacy of unequal reward based on differential productive capacity. Rawls agreed that there was an inconsistency, but claimed that it should be resolved by rejecting both kinds of inequality, except to the extent they benefitted the worst off. The second lesson Rawls learned from Knight was that the size of one’s marginal product depends on supply and demand, which depend on institutional decisions that cannot themselves be made on the basis of the principle of rewarding marginal productivity. The article claims that this argument about background justice overstates its conclusion, because the dependence of contribution on institutional setup is not total. Proposals for an unconditional basic income may therefore have a strike against them, as far as a reciprocity-based conception of desert is concerned. If we follow Knight’s analysis of the competitive system, however, so too does the alternative of leaving determination of income up to the market. (shrink)

“Functional finance” is an economic theory within the Post Keynesian school of thought. Especially in the form of Modern Monetary Theory (MMT), it has begun to have two big but opposite effects on the debate over Universal Basic Income (UBI). Some people state MMT in an exaggerated way that implies the government can spend all it wants on UBI or anything else without ever raising taxes or borrowing money as if government spending had no limits of any kind. Other people (...) refer to MMT while arguing that any effort to maintain a livable level of UBI is unsustainable. This article discusses the functional finance implications for the cost and sustainability of UBI, arguing that neither of those exaggerated implications are correct. MMT doesn’t free us for the concern for how to support UBI with taxes, but neither does it give reason to believe UBI is any less sustainable. (shrink)

This paper compares and contrasts the basic income proposal with the alternative policy proposal of the state acting as employer of last resort. Two versions of the UBI proposal are distinguished: one is hard to differentiate from expanded welfare state provision. Van Parijs’s proposal is radical enough to qualify as major egalitarian revision to capitalism. However, while it removes from a capitalist class the power to determine the terms on which others labour, it leaves this class in place and able (...) to exert other powers that distort the macro-economy. These include pecuniary emulation, demand pull inflation, and political resistance to full employment so that the rentier class does not have to contend with entrepreneurs *and* the working class over the distribution of the productive surplus. The state as employer of last resort proposal addresses these deeper issues while also claiming that inflationary pressure will undermine the UBI alternative. (shrink)