Compensatory Justice and Basic Income

Abstract

What is the most plausible and feasible conception of compensatory justice (CJ)? What conditions are required to achieve it? The general assertion of this chapter is that the more favorable the conditions under which people can freely choose their labor market careers, the more scope there is for CJ. More specifically, an economy with an unconditional basic income (BI) – one sufficient to cover the basic needs according to the prevailing standard of living – fulfills the conditions required from the (economist’s) viewpoint of CJ, and is better than a conditional system of social security with a guaranteed social minimum at the same or even somewhat higher level. This topic is of interest for welfare state reform proposals in both Europe (characterized by high unemployment, modest income inequality and generous social benefits) and the US (low unemployment, high and increasing income inequality along with the rise of the working poor). If CJ is considered as an important ideal, then the present move from lax welfare to workfare (see Figure 1 in the Introduction) in both Europe and the US is not the right way. In the same vein, to top up the income of the working poor by means of an EITC as is the case in the US, or to give employers marginal wage subsidies to raise the demand for low wage workers, does not improve the bargaining position of workers towards employers, and hence does not help to achieve CJ.