by Louis O. Kelso and Patricia Hetter

“Needism” is our proposed term for a body of economic thought flourishing today under a variety of names across the entire political spectrum, which has yet to be formally identified as a school, unified by one central idea. The idea is not new; only its popularity is. The upsurge began when J. K. Galbraith, recognizing that economic output in the U.S. economy had become subordinate to income and employment, launched his search for a “device for breaking the nexus between production and income security.”¹

At face value the proposals for eliminating poverty that emanate from this school seem heterogeneous. They include the guaranteed income of the Ad Hoc Committee on the Triple Revolution;² “The American Dream” of Richard Cornuelle, calling upon corporations and associations to take over more of the growing welfare burden of government;³ the negative income tax;⁴ expanded social security; income subsidies disguised as prolonged education; government employment of the otherwise-unemployed; accelerated and broadened welfare programs; the guaranteed life income visualized by some labor unions;⁵ universal maximum unemployment compensation;⁶ the surplus food-stamp program; government subsidies to agriculture, mining, industry, and such earlier proposals as Social Credit’s national dividend. But diverse as they may seem, all these concepts are based upon the distributive philosophy of the old utopian maxim: “To each according to his need.”

The number of ways in which purchasing power may be diverted from those who produce the economy’s useful goods and services, either through their labor or through the productive input of their privately owned capital, is virtually unlimited. That is to say that while there is but a single logical way in which outtake can be related to input, there is no logical limitation upon the variety of ways in which input and outtake can be unrelated. The following categories by no means exhaust the ingenuity of needist thought.

1. Some Needists emphasize the infinite potential of government employment. As Professor Parkinson so delightfully documents, the world is growing more and more inured to government employment that neither accomplishes any useful human purpose, nor is intended to.⁷ We estimate that of the eleven and one half million employees (exclusive of the military) on government payrolls in the U.S. today, in excess of three million are engaged in various forms of redistributing wealth and income.⁸ The ambitious politician naturally favors increased government employment because of its enormous possibilities for patronage, for “buying votes,” and for perpetuating a political administration through the economic dependence of constituents. Since government make-work employment is supported by taxation on the sector of the economy that produces useful goods and services, it may be classified purely and simply as redistribution according to need.

2. Some needist proposals take the form of growth worship. Of course, anything that increases the gross national product may provide some increases in employment. However, growthmen are careful not to inquire whether the employment their proposals will create is legitimate employment — that is, employment necessary to the production of useful goods and services, or even employment incidental to the proper and necessary functions of government, as distinguished from government employment required to effect needist redistribution.

3. Some Needists openly advocate featherbedding, i.e., pretending to work without producing anything. Recognizing the psychological need to be productive, and the human hatred of being a ward of charity, they encourage the appearance of useful employment gutted of its reality.

4. Some Needists concentrate only on the mechanics of redistributing income from those who produce it to those who, in the redistributors’ view, need it. Again the means are various. One faction may emphasize ease of administration; thus it will favor the method that is most administratively efficient, even though the hated charity or welfare principle is openly exposed. The negative income tax (an avant-garde euphemism for a positive income dole) is a case in point. It is claimed that direct payments to those whose incomes fall beneath a certain floor would eliminate the vast costs of administering welfare schemes more graciously disguised. These “costs,” however, represent the wages and salaries of the welfare administrators. Eliminating the one would eliminate the other. Shorn of their professional employment, most members of the welfare bureaucracy would thereupon quickly qualify to receive the very “services” they formerly dispensed. Another Needist faction may advocate that method which most cleverly conceals the alms basis of redistribution, even at the price of a complex and cumbersome administrative procedure and the opportunities for fraud and graft that such complexity generally entails.

5. Other Needists play on the Horatio Alger awe of education. They attempt to disguise vast need distributions as subsidies to education, or government-sponsored research or tax-supported retraining, either for jobs that must be synthesized through subsidy or for real jobs that, in the judgment of the business world, are best learned by on-the-job experience. The heavy shift from liberal arts education to vocational training, with special emphasis on those branches relating to synthesized tax-supported vocations (space scientists, professional researchers, welfare workers, etc.), demonstrates the spectacular progress made in recent years by the educational Needists.

6. Still other Needists specialize in redistributive non-work compensation. This concept involves paying repeatedly for work performed once, if at all. Techniques invented so far include permanent and universal unemployment “compensation,” “earned leave,” economic security by “right,” automation pensions, guaranteed annual retirement payments, etc.

7. Some needist solutions benefit the affluent far more than they help the poor. Take, for example, the government stockpiling of humanly useful goods such as agricultural surpluses, pharmaceuticals, machine tools, and other goods that are produced with high capital input and relatively low labor input. “Creating” employment by governmental subsidy of capital-intensive industries is, as we will emphasize later, far more beneficial to the owners of concentrated holdings of capital than to the employees, otherwise incomeless, who are thus given wages because they need them.

8. Still other Needists would disguise the use of the need principle by automatically raising wages from time to time through legislation and other coercive measures. Such wage increases are justified, it is explained, by the “rising productivity of labor.” But the facts reveal that there is no corresponding increase in labor input; in virtually all cases, actual labor input decreases. The “productivity of labor” is rising because it is defined as “increase in output per man-hour.” But the cause of the increase is invariably additional and/or more efficient capital instruments.

The rhetorical use of the private-property principle of distribution to disguise needist redistribution by attributing it to the rising productivity of labor is nowhere better illustrated than in the “wage guidepost” officially advocated by the U.S. Council of Economic Advisers since its Annual Report of January, 1962. “The general guidepost for wages is that the annual rate of increase of total employee compensation (wages and fringe benefits) per man-hour worked should equal the national trend rate of increase in output per man-hour.”⁹

Interpreted in the light of the fact that the physical cause of all increases in output per man-hour is improved capital instruments and additional capital instruments being put into production, thus increasing output per man-hour more than enough to offset declines in the actual labor input per man-hour, the wage guidepost is nothing but an official sanction of the needist doctrine of distributing the increased output produced by capital to the non-owners of capital, i.e., labor, on the basis of labor’s recognized need for more income. Stated another way, the wage guidepost is a formula for the relentless erosion of private property in capital, since the essence of private property is that it entitles the owner to receive the wealth produced by what is owned.

Now that labor unions, driven by the inadequacy of one-factor solutions, are repudiating the wage guidepost in the United States and corresponding wage guidelines in other economies in favor of even more radical measures of needist redistribution, it is clear that either (1) the rate of erosion of private property in capital will accelerate, moving those economies more quickly toward total economic communism, or (2) the erosion of private property in capital will be slowed down through increasing profit margins on goods and services, thus bringing about spiraling inflationary prices.

At this point, one thing must be made clear. We fully agree that labor does need more income. Since affluence is the product of the non-human factor, only a few highly paid professionals would be able to produce, under competitive conditions, an affluent level of living through their labor power alone. The only rational overall goal for an economy is that of universal capitalism: general affluence. Until that goal is achieved, any individual or any family that is not affluent (if the economy is physically able to produce affluence for all) does need more income.

FOOTNOTES

¹ John K. Galbraith, The Affluent Society (Boston: Houghton Mifflin Co., 1958), chapter 21, “The Divorce of Production from Society.”

² See program of the Ad Hoc Committee on the Triple Revolution published in Liberation, April, 1964 (Glen Gardner, J.J.: Libertarian Press).

³ Richard C. Cornuelle, Reclaiming the American Dream (New York: Random House, Inc., 1965).

⁴ Milton Friedman, Capitalism and Freedom (Chicago: Univ. of Chicago Press, 1962), chapter 12.

⁵ A.H. Raskin, “Payment by the Hour? The Week? The Year? For Life?,” New York Times magazine section, September 4, 1966.

⁶ Galbraith, op. cit., chapter 21.

⁷ C. Northcote Parkinson, The Law and the Profits (Boston: Houghton Mifflin Co., 1960); In-Laws and Outlaws (Boston: Houghton Mifflin Co., 1962); Parkinson’s Law (Boston: Houghton Mifflin Co., 1957).

⁸ Wall Street Journal, April 18, 1967, p. 1. According to a Commerce Dept. study, federal civilian employment climbed 10.5% in the year through October 1996 to 2.9 million. State government payrolls swelled 9% to 2.2 million workers; local government employment, at 6.4 million, rose 7%.

⁹ The Economic Report of the President, together with the Annual Report of the Council of Economic Advisers, January, 1966, p. 89.

— First published in TWO-FACTOR THEORY: THE ECONOMICS OF REALITY (New York: Vintage Books, Random House, Inc., 1967), pp. 18-24