Alan Cottey: UEA Personal Web Pages
It is time to take seriously the idea of limiting the assets and incomes of humans as individuals. Taken together, we humans are already consuming more resources than the earth can sustain, and we are emitting wastes, notably carbon dioxide, beyond the level that the earth can sustainably absorb. The books Slow Reckoning: The Ecology of a Divided Planet by Tom Athanasiou, and Something New Under the Sun: An Environmental History of the Twentieth Century by John McNeill, and the websites Choose Climate and Intergovernmental Panel on Climate Change provide persuasive evidence for this. We are also reducing the world's biodiversity at an alarming rate, yet the human population continues to increase, currently by about 14 percent per decade (Population Action International).
As if this were not enough, the disparity between the rich and poor is growing. This intensifies the struggles for resources and power. Conflict increases - wars, guerrilla struggles, ethnic strife, and crime. To cap it all, strife and poverty feed back in a cycle of environmental devastation. Forests and soils are destroyed even more, and the effects of natural disasters are amplified, as when shanty towns are built on the sides of denuded hills.
It is widely recognised, intellectually, that current trends cannot continue much longer. Something has to change and no-one wants that change to be a general collapse of civilisation. Nearly all of the rich appear to be putting their faith in an engineering solution. They hope that ways of producing abundant, cheap, renewable, pollution free energy can be found in the near future, together with ways of allowing all to consume freely while generating little pollution. Such a hope is unrealistic. The scale of consumption, pollution and strife, and the short time available, preclude an engineering solution without profound social adjustments. A detailed, coherent argument for this may be found in Richard Douthwaite's The Growth Illusion.
When, on the global scale, the problems over over-consumption and the gap between rich and poor are discussed, the focus is usually on rich and poor nations. The Global Commons Institute, for example, advocates "Contraction and Convergence ... the global [CO2 emissions] budget contracts whilst the distribution between countries gradually reaches equal per-capita levels."
Yet, great as is the disparity between the richest and poorest nations, it is dwarfed by the disparity between individuals. The combined 'wealth' of the richest 200 people in 1999 is reported to be about a trillion US$, that is, one million million $. Meanwhile, a considerable fraction of the world's six billion people suffer intolerable poverty. See the link, below, to the UNDP's Human Development Report 2000 for details.
The rich do not, of course, each eat thousands of meals per year, but their consumption is enormous in numerous very destructive ways, for example by excessive air travel. Further, poor and moderate-income people are led to desire and imitate a profligate lifestyle.
Today, it is accepted that the essentials of a good life for all - clean water, tasty nutritious food, health care, education, comfortable housing, telecommunications and transport - are an appropriate aspiration for our global human culture.
When we hold in mind simultaneously all the elements of humanity's current ecological situation, we see that a business-as-usual solution - everyone becomes profligate, courtesy of economic growth and engineering efficiency - is a pipedream.
In particular, redistributive taxation cannot solve the problem of over-consumption. Direct taxes on assets and income which have already been legitimised as the property of the individual are strongly resented. Further, the response to a redistributive tax regime is for rich and middle-income people to demand even higher baseline assets and incomes. Redistributive taxation does not begin to address the problem of over-consumption - it might even make it worse.
AIL is different. It is not 100% taxation above a threshold. AIL denies the legitimacy of an individual holding assets and income above whatever limits apply to him or her.
On first hearing the AIL proposal, most people quickly ask 'what are the limits?' Although it easy to see how this question just pops out spontaneously, it is a mistake. Numerous proposals for income limitation have been made in earlier periods. I believe that an important reason why they remained marginal is that they were simplistic and naive, notably by naming maximum figures without regard to place, time or person. The important points are
Other proposals made over the millennia have been much more radical, demanding for example a strong egalitarianism, or even the abolition of property. I consider such radical proposals to be for the long-term future, on a time-scale of centuries or millennia. AIL is here given as conservative a formulation as possible, consistent with making a significant contribution, on a shorter time-scale, to the solution of humanity's urgent global ecological problems.
According to the UNDP's Human Development Report 2000 (page 82) the combined wealth of the top 200 billionaires was over one trillion (ie, one thousand billion) US$ in 1999, whereas the combined incomes of 0.6 billion people in all the least developed countries was $150 billion. The statistic about the super-rich is derived from Forbes World's Richest, an impressive annual source of statistics and celebration. I have rounded the figures provided by HDR2000 but even so the extremes of wealth and poverty are so great as to raise questions about the meaning of numerical measures, and indeed of the terms used. It is regrettable that the meaning most commonly attached to wealth is sum of assets convertible into money. In this exposition of AIL, I may sometimes use the term wealth when reporting conventional thought, but this does not imply that the usage should be accepted uncritically. It would be helpful if the term assets were used for those possessions which can be converted into money and if the words weal, commonweal, commonwealth, well, welfare, wellbeing could be reconnected with wealth.
Wealth in this sense is not the same as being rich in the monetary sense. In some respects the super-rich lack wealth, since
Robert M. Young's paper Some Reflections on the Psychodynamics of Wealth gives a vivid impression of the downside of riches. Many other references and links can be found at Affluenza: PBS Program on the Epidemic of Overconsumption.
There are few recent writings on income and asset limitation. Searching the Web for the phrase "asset and income limits" does produce quite a few hits, but those pages are concerned with something interestingly different, namely the limits above which the USA's Medicaid or SSI (Supplementary Security Income) will not be paid. These limits affect the less prosperous in the USA, not the rich!
I interpret the lack of current interest in the limitation of assets and income to be a reaction to the simplistic nature of earlier proposals. Useful historical surveys are given in Henry Phelps Brown's Egalitarianism and the Generation of Inequality, and in Sam Pizzigati's The Maximum Wage: A Common-Sense Prescription for Revitalizing America - By Taxing the Very Rich. Pizzigati is one of the few recent authors to propose an income limitation scheme. As the title already shows, it is not clearly thought through - 'wage' is not the same as income (and his scheme does not, of course, really propose the limitation of wages only); the whole problem is difficult and controversial, far transcending 'common sense'; and 'revitalizing America' has a tenuous connection with 'maximum wage'.
In a practical and acceptable AIL scheme it must be impossible for an individual legitimately to acquire assets or income beyond the limits that apply to him or her. Further, a means of achieving this end is needed that encroaches on the individual's liberty as little as possible. These conditions can be met with a scheme of asset and holding accounts. Each person, of whatever age, is personally linked with two basic bank accounts, an asset account and a holding account. The asset account records all the property of the individual, which he or she may trade, invest or spend as desired, subject to restrictions imposed by various laws. (I mention this qualification about spending constraints for exactness, but this is not a point specific to AIL. Already there are numerous restrictions on how people may trade, invest or spend their own assets, for example not spending on illegal substances, or on bribes.) People may disperse their assets in various forms and in various subsidiary accounts. Thus freedom to invest in ways appropriate to the individual is preserved. The 'market' can, if it is desired, be as 'free' as now, or indeed more genuinely free than now. The new feature is that the net income and expenditure of an individual must be accurately reflected in the asset account.
AIL is applied to the individual by two constraints on his or her asset account
What happens when an inflow would take a person's income for the year, or their assets, above the relevant limit? AIL is designed as a pragmatic response to the world's problems of overconsumption and extreme inequality. It is intended to restrict the individual's short-term freedom as little as possible, in the higher interest of maintaining long-term freedom (sustainable living) for all. AIL will be applied in a discriminating way, taking note of the individual's circumstances. To divert a person's potential inflow so that it immediately became the property of some social institution would be profoundly unpopular, and rightly so. Yet allowing the income to enter a person's asset account, thereby taking it over the limit, is also not an option. A major principle of AIL is that income and assets above the person's limits are never legitimate. To allow excess incomes and then to take them away would be a conceptual and a practical mistake.
The instant of a possible overshoot is too soon to tell whether that income really cannot, in the light of later developments, be taken by the individual. The holding account provides the solution. The asset account is always up-to-date and (the balance of) any new potential income which would take either the asset account or the annual income over the applicable limit would be paid into the holding account. The holding accounts must be administered by a trusted institution, independent, as far as is possible, of the citizens, the AIL administration and the treasury. Funds in a holding account are in escrow - in the custody of a third party until it is determined whether they can legitimately be transferred into the asset account or have to go into a social, collective account. This latter account might be in a special segment of the treasury of the nation-state. Such a segment might be called, or be part of, the Inland Revenue but it should not be called a tax department. AIL is nothing to do with taxes.
Example of the use of the holding account: Mrs Atherlimit dies and bequeaths her estate to her two children, one of whom, Mr Goodjobwithyoungfamily, has income near the limit but little savings. The rules permit a person in such circumstances to receive a substantial sum, and have it considered equivalent to income spread over several years, provided it is a genuinely exceptional income. Time will be needed to allow Mr Goodjobwithyoungfamily's accountant to negotiate, with the institutions that administer AIL and other social revenue matters (such as taxes), the way of dealing with this case which is best for Mr Goodjobwithyoungfamily, while remaining within the AIL rules.
I hope that even that brief discussion of How AIL Could Work makes it easy to see that simplistic statements of figures for the limits are inappropriate. They would betray a lack of appreciation of the potential of AIL to become a sensitive, practical and generally accepted measure. The asset and income limits will depend on
Some may suppose that AIL is associated with some general political philosophy, possibly socialism. Making this presupposition is perhaps understandable, but a mistake nonetheless. The starting point of the argument for AIL is that - in today's world of cheap and easy processing of raw materials, goods and information - unlimited assets and income for individuals are unsustainable. AIL has become a practical necessity, independent of numerous dimensions of political and cultural ideology.
A culture embracing AIL ...
So, AIL is liberal in the sense of being open-minded and tolerant in relation to a wide range of economic, political and cultural patterns. Although AIL has at its core a novel and strictly applied constraint on individuals, this constraint is restricted to what is necessary at the present stage of human culture. Reducing humanity's net consumption is an absolute requirement, if a collapse of civilisation is to be avoided. AIL should be viewed, not as step onto the top of a slippery slope descending to dirigisme, but as a practical necessity analogous to other limits which apply to the individual, such as a motoring speed limit, or a limit on number of spouses.
In emphasising AIL's liberal credentials, I do not imply that AIL is a magic bullet, which will, by itself and independent of all other variables, solve humanity's problem of over-consumption. Many other changes, towards a 'green' sustainable culture, are needed. The current form of capitalism - in which scarcity, over-production and waste co-exist - requires, at the very least, some radical modification. In today's conditions, when over-production is a greater danger than under-production, new concepts of the good life have to be understood and internalised. The natures of competition and cooperation in human society need to be re-evaluated, so that current and future stresses can be resolved without catastrophe. The increase of the world's population of humans must be slowed, halted and put into reverse. I suggest that AIL is a piece of the jigsaw which has been overlooked.
'Wealth' as generally understood - that is, sum of assets convertible into money - has, in the upper range, a largely symbolic character. What people most crave is approbation and status. It is likely to remain so. This need not be a problem. All that is needed is that everyone be restrained from activities that harm the environment severely - of which excessive emission of CO2 is one of the worst.
A sustainable world must be much more just than ours is, but it need not be strongly egalitarian. Talented, determined or lucky people might have much more glamour, or respect, or fame, or honour, or power than other people. Here are some the ways in which, AIL notwithstanding, some people could be privileged ...
AIL is a long way from the socio-economic arrangements currently dominant in the world. Economic and political power is concentrated in the hands of people whose assets and incomes lie far above any useful AIL. Surely the rich won't limit themselves, and won't allow themselves to be limited?
This objection could be made against numerous social advances. In the early stages of the Industrial Revolution, new technologies were exploited rapidly, with little thought for the social and moral implications. This made a limited number of people rich and powerful, but workers became even poorer and more disempowered. Despite this, humanitarian concerns did spread gradually in all classes of society. Eventually, moral and political thinking did address the new conditions - to an extent. Pragmatism (enlightened self-interest) played a role, since some of the excesses, such as bad sanitation, were harmful even for the rich. Moral and political ideas do evolve, albeit slowly. Now, two and a half centuries after the beginnings of the Industrial Revolution, conditions of industrial and other employment have improved enormously in some countries but in many parts of the Third World they are still appalling. Yet moral concern about this does continue to spread, and finds effective expression in, for example, Fair Trade movements.
It is tempting to think about the problem of global over-consumption on a shorter timescale than this, a timescale of decades. Widespread concern about the global environment is only a few decades old. It is, however, a mistake to focus exclusively on this timescale, for, if we do so, most radical ideas for conscious policy change, based on foresight, will be instantly dismissed as unfeasible. The rise of global consumption and emissions can be understood better by looking at the whole of the period of capitalism to date; that is, over the last half-millennium. This helps one to appreciate just how deeply internalised in our global society are tacit assumptions about the individual's assets and income. Limits on them are scarcely thinkable by mainstream opinion, and, if thought, are rejected out of hand as an intolerable encroachment of individual liberty.
But now, as the limits to growth are becoming more clear, it is also becoming more clear that limits to the individual's assets and income are not an encroachment of liberty. On the contrary, they are needed, if any liberties at all are to be preserved. Just as motoring speed limits preserve people's liberty to travel by road with a degree of safety, so AIL could, in the future, preserve the individual's liberty to enjoy a fulfilled, secure life - but only at a price. That price is giving up the traditional notion that anyone may accumulate assets and income without limit.
How best to work for this change? In earlier centuries those concerned about economic and social injustice often talked themselves up, using fiery and aggressive rhetoric. The history of such ideology-based political revolutions is not encouraging. It has verified that base means, even if sincerely motivated by the expectation of noble ends, merely subvert those ends.
Demonising the rich in an AIL campaign would be just such a base means, and therefore counter-productive. Harmful attitudes and practices concerning the environment may, indeed, be found among the rich and poor alike. It is better to try to understand the complex situation in which we all find ourselves together, to propose practical programmes for making our culture sustainable, to achieve a degree of consensus about implementation, and then to bend every effort to implementation. All this cannot happen quickly, but if the mistakes of recent centuries are clearly understood, and if Earth is so kind as to warn us gradually, not suddenly, there may yet be time.
Harvey Weiss and Raymond Bradley have written a concise summary (What Drives Societal Collapse?, in Science, vol 291, 26 January 2001, pp 609 - 10) of the mounting evidence, supplied by many examples from the last 13,000 years, that climate change is correlated with societal collapse. In some cases the disasters, while extremely disturbing, may also have evoked creative social adaptations, such as change in means of subsistence, or change in population density or habitat-tracking. At the end of their review, discussing the present phase of climate change, Weiss and Bradley point out that "We do, however, have distinct advantages over societies in the past because we can anticipate the future."
I propose that two of the most important elements of such anticipation are
Alan Cottey, University of East Anglia, Norwich NR4 7TJ, UK
The basic version of this page was created in 2000 and the page was last modified on 6 November 2013.