The social dividend is the return on the natural resources and capital assets owned by society in a socialist economy. The concept notably appears as a key characteristic of market socialism, where it takes the form of a dividend payment to each citizen derived from the property income generated by publicly owned enterprises, representing the individual's share of the capital and natural resources owned by society.The Social Dividend Under Market Socialism, by Yunker, James. 1977. Annals of Public and Cooperative Economics, Vol. 48, No. 1, pp. 93–133: "The term ‘social dividend’ was introduced in 1936 by Oskar Lange in his milestone essay ‘On the Economic Theory of Socialism’. It refers to the direct distribution equally among the citizen body of property income accruing to the state-owned enterprises under socialism."
Although the social dividend concept has not yet been applied on a large scale, similar policies have been adopted on a limited basis. In both the former Soviet-type economies and non-socialist countries, the net earnings of revenue-generating state enterprises were considered a source of public revenue to be spent directly by the government to finance various public goods and services.The Social Dividend Under Market Socialism, by Yunker, James. 1977. Annals of Public and Cooperative Economics, Vol. 48, No. 1, pp. 93–133: "The social dividend concept has not yet been applied in any important real-world context. Both in Communist and non-Communist countries, the net earnings of state firms are considered a source of public revenue and are spent directly by the government on various public goods and services."
The concept of a social dividend overlaps with the concept of a universal basic income guarantee, but is distinguished from basic income in that a social dividend implies social ownership of productive assets whereas a basic income does not necessarily imply social ownership and can be financed through a much broader range of sources. Unlike a basic income, the social dividend yield varies based on the performance of the socially owned economy.Social Dividend versus Basic Income Guarantee in Market Socialism, by Marangos, John. 2004. International Journal of Political Economy, vol. 34, no. 3, Fall 2004 The social dividend can be regarded as the socialist analogue to basic income. More recently the term universal basic dividend (UBD) has been used to contrast the social dividend concept with basic income.
Overview Social dividends are a key feature in many models of market socialism which are characterized by publicly owned enterprises operating to maximize profit within a market economy. In such a system, the social dividend would grant every citizen a share of the property income generated by publicly owned assets and natural resources, which would be received alongside any labor income (wages and salaries) earned through employment.Philosophy and the Problems of Work: A Reader, 2001, by Kory Schaff. . (P.344): "A citizen in this society will receive income from three sources: wage income, which will vary depending on her skill and the amount of time she works, income forthcoming by savings, which will also vary across households, and the social dividend, that will be, in principle, approximately equal across households." In contrast to cooperative variants of market socialism, where the profits of each firm are distributed among the members/employees of each individual firm, a social dividend benefits the public at large.Social Dividend versus Basic Income Guarantee in Market Socialism, by Marangos, John. 2004. International Journal of Political Economy, vol. 34, no. 3, Fall 2004: "It is argued that market socialism is the only rational form of socialism, and that market socialism with labor-managed firms is by far the best form of market socialism (Jossa and Cuomo 1997: xiv). This is something quite different from the theoretical models of market socialism debated and quite different from command economies (Schweickart 1993: 90). The market socialist model proposed in this paper differs from the preceding models in that it does away with the J. E. Roemer–P. K. Bardhan–J. A. Yunker social dividend-coupon economy and substitutes it with a basic income guarantee." A social dividend would also eliminate the need for the social welfare and income redistribution programs, along with the administrative costs they incur, that exist in capitalist economies.
The benefits of a social dividend include broadly sharing the benefits of economic growth and technological progress, greater autonomy for individual citizens, greater social and income equality, and eliminating class differences in society arising from labor income and property income. The social dividend also has advantages over a basic income by addressing the criticism that a conventional basic income can be used as justification to weaken labor protection laws and unemployment compensation, creating a population dependent upon the subsistence levels of income afforded by the basic income, and might serve to further impede the transition to a post-capitalist society.
There are many institutional forms a social dividend can take. Generally, they are regarded as being universally distributed without constraint, even to unemployed individuals. However, the exact institutional arrangement varies among different proposals, for example, there might be certain constraints on the receipt of the dividend payment imposed on the unemployed.
Notable economists and political scientists who have articulated social dividend models in their models of socialism include Oskar Lange, Abba Lerner, James Meade, James Yunker, John Roemer, Pranab Bardhan, David SchweickartSocial Dividend versus Basic Income Guarantee in Market Socialism, by Marangos, John. 2004. International Journal of Political Economy, vol. 34, no. 3, Fall 2004. and Yanis Varoufakis.
Theoretical history
Origins
As a precursor to the social dividend concept, Léon Walras, one of the founders of neoclassical economics who helped formulate the general equilibrium theory, argued that free competition could only be realized under conditions of state ownership of natural resources and land. Walras argued that nationalized land and natural resources would provide a source of income to the state that would eliminate the need for income taxes.
In Karl Marx's critique of political economy, property income is a component of surplus value, which refers to the net value above the total wage bill. The surplus value is distributed among a small minority of passive owners – capitalists and private shareholders. The capitalists appropriate the product of social labor by holding ownership titles to the means of production. While Marx was opposed to the distribution of property income under capitalism, the way property income is distributed was not the instrumentality of capitalist collapse nor was it the primary reason for the desirability of the abrogation of capitalism in Marx's view. In Marx's view capitalism was not to be opposed due to any supposedly moral defect in its distribution, but because its underlying dynamic of capital accumulation and surplus value appropriation was unstable and ultimately internally unsustainable. For Marx, socialism implied an end to this class dynamic, where the surplus product generated by the social means of production would be appropriated by all members of society.The Social Dividend Under Market Socialism, by Yunker, James. 1977. Annals of Public and Cooperative Economics, Vol. 48, No. 1, pp. 93–133: "It is abundantly clear from the writings of the founder of scientific socialism, Karl Marx, that he viewed the distribution of property income under capitalism as morally reprehensible. To Marx, property return must be identified with 'surplus labor value', namely the excess of total labor value over the total wage bill under conditions of a subsistence individual wage. This surplus value is distributed over a small minority of owning capitalists. Although the value is created by labor and is therefore the legitimate property of labor, the capitalists are able to extort it from the proletariat by virtue of their ownership of the capital instruments of production...Nevertheless, while Marx employed the surplus labor value theory to undermine the moral foundations of capitalism, it was, in his view, neither to be the instrumentality of capitalist collapse, nor was it the primary reason for the desirability of the abrogation of capitalism...Surplus value was seen as providing the fuel for the cyclical engine and therefore as the fundamental cause of the impending dissolution of capitalism."
The term "social dividend" was put forth by British economist George Douglas Howard Cole in his 1935 book In Principles of Economic Planning to refer to the distribution of the net social product in the form of a cash disbursement for a socialist economy. Prior to this, most socialist economists assumed the net social product would be remitted to the population in-kind. In Cole's model, income would be distributed on the basis of work performed and on the basis of citizenship, the latter representing the social dividend that recognized "...each citizen's claim as a consumer to share in the common heritage of productive power." The aim would be to make the dividend large enough, through greater economic growth and efficiency, to cover the basic needs of every citizen.Principles of Economic Planning, 1935, by G.D.H Cole. Macmillan and Co.. . (P.234-235): "How will incomes be distributed? There are two possible ways – payments for work done, and 'doles', or, to give them a less coloured name, 'social dividends'. I believe the system of distribution will be a combination of these two, but a very different combination from that which now exists. ... There will remain, broadly, two sources of income – work and citizenship. Incomes will be distributed partly as rewards for work, and partly as direct payments from the State to every citizen as 'social dividends' – a recognition of each citizen's claim as a consumer to share in the common heritage of productive power.."
Proposed models