Wealth, Income and Value
After lunch, David Fishman (independent researcher and consultant) discussed wealth, income and value. David offers an unequivocal value measure, explores the links between wealth, income and value, as well as their implications for a UBI.
David opens his talk by defining these three concepts – a surprisingly challenging task. Wealth is the value of financial assets, plus real assets, minus their debts. Personal wealth, or net worth, is the value of the assets owned by individuals net of their debts. David notes, however, that the definition of wealth incorporates “value” that (in this context) refers to the market price or marketable value – something that may appear circular, but just stands for monetary amount. Breaking wealth down further, David explains how non-financial wealth (or ‘real’ assets’), such as buildings and land, can be seen as wealth from the past. Whereas financial wealth, such as equities and bonds, can be seen as wealth from the future.
Turning his attention to value, David describes its three foundations: value; value-exchange; and, use-value. Similarly to wealth, the foundations of value can also be seen through the chronoscopic perspective of past, present, and future. He then explores the two triads of value and time, the valuing of assets, capital, and measures of valuation – illustrating the complexity involved when attempting to define intangible economic concepts – before turning his attention to how these concepts relate to UBI.
David presents a hypothetical basic income scheme in the UK that consists of an annual payment of £10k for everyone aged 20+ (with half this amount for children and teens). The annual cost of these hypothetical scheme is approximately £600 billion. The net cost, however, is approximately half of this. This £300 billion can be converted to a capital value of £3 trillion, equating to approximately £44k per capita. David acknowledges that, whilst this is a considerable amount of money, it needs to be put into perspective – total personal wealth in the UK is £16 trillion, so the UBI capital value of £3 trillion is less than 20% of this. Nevertheless, we need to ensure we funded a UBI in a way that does not burden future generations. In this regard, David argues that we could focus on the £8 trillion of wealth in the UK that is property and land (i.e., past wealth). He also points out how charities, trusts, and other not-for-profits are (largely) free of any fiscal burden due to tax breaks and subsidies, meaning that they have accumulated large quantities of wealth. He notes how the main site of Downing College itself (the location of our conference) pays £32k in business rates – the same amount as a small, basic restaurant in Cambridge – and its commercial enterprises pay no corporate tax due to offsets. In total, Downing College alone has approximately £230 million in declared net assets.
To close, David summarises how value under capitalism is social and the value of commodities is expressed in money – value, whether abstract or concrete, cannot appear directly, but can only arise through the exchange of money.