The case for a basic income – time to rethink incomes and work

Britain is facing a cost-of-living crisis, one that is driven by falling real pay.  There is growing concern, not just about the level of unemployment, but about under-employment; people who are in theory in work but in practice cannot earn enough to make a decent sufficiency.  The biggest cohort receiving benefits is people in work; and more generally, nearly all the benefits of economic growth  – such as it is – in recent years have been drawn by rentiers, not wage-earners.  Put these together, against the background of an ongoing austerity project that David Cameron now says is a matter of long-term political strategy rather than a response to a specific crisis, and the longest economic depression since the 1870s, and you have something that looks like a pretty fundamental crisis of capitalism.  We as a society and an economy face a crisis every bit as pressing as that which motivated Keynes and Beveridge; a crisis that demands thinking that is just as bold and challenging as theirs. The question that Keynes addressed – is capitalism capable of generating a decent level of well-being that will underpin a stable and functioning society – is now more urgent than it has been for more than eighty years.

There’s a longer-term trend at work here too, which will be most obvious to those like me who grew up in the 1960s and 1970s; the fact that people are working longer and longer hours to earn the basic sufficiencies of life, which a single income bought comfortably a few decades ago; a society in which personal indebtedness has become the norm.

Among economists, the idea of a basic income has been gathering strength.  The central idea – that every citizen should receive a living income as a matter of right – is economically and politically radical; our political and social outlook is fundamentally based on the idea of wage-earning.  But it seems increasingly to me that the basic income – though not without its own problems – is looking like the only game in town to transform both our economy and to engineer a fundamental shift in economic and political power back towards what we currently regard as working people and away from a rentier social and political elite.

Advocates of a basic income point to its inherent equality, and the fact that it would be far cheaper to administer than the existing benefits system, would ensure that there was no fraud, while ensuring that everyone had a basic standard of living.  It would also recognise that circumstances change, and since it would be a matter of universal entitlement there would be no place for the demonisation of the allegedly underserving.  The evidence remains that it is affordable: of course as a society we already do pay a basic income to a very large part of the population in the form of old age pensions.   An oldish blog post by Chris Dillow sets out many of the advantages of a basic income.  It makes it clear why some on the Hayekian right support the Basic Income idea; it can in some circumstances offer a rationale for the dismantling of the welfare state; a reminder that basic income must be part of a wider political approach.

But for me the most interesting aspect of basic income is the potential it has for changing the way we view work, and for shifting the balance of power away from the rentier class, reversing the shifts that have taken place in what one could describe as the neoliberal era.

The major argument deployed against basic income is that it rewards free riders – it allows people to expect something for nothing.  Australian economist Bill Mitchell explores that argument at some length in this blog post, in which he compares it with a jobs guarantee – a variant on what centre-left parties in Britain and elsewhere offer –  and argues that there is moral hazard inherent in offering a living income for nothing; although his definition of work is certainly far broader than that of the political mainstream.  But for me the problem with the jobs guarantee is that while it certainly offers a short- to medium-term fix, it does not address the fundamental problem that the state ends up paying subsidies for low pay, which, along with workfare policies, acts to bid down real wages.

I think we need to go much further, and accept that there is a crisis of work in Western economies that both offers a challenge and an opportunity for the Left.  To understand this we need to go back to William Morris’ great essay Useful Work versus Useless Toil, which – coincidentally – was written during the economic crisis of the late 19th Century which our own, current slump increasingly resembles.  Morris contrasts the work which confers dignity and self-worth with the mechanised, alienated labour of the factory system under which the owner of capital pays the worker a price that undervalues his work –  a concept that Morris of course takes straight from Marx.  Morris shrewdly notices that the ideology of the dignity of work is preached most vigorously by those who do not need to work to live; that concepts of the deserving and undeserving poor are a rationalisation of the demands of capital for a cheap and obedient workforce.  It’s an assumption that we can see re-emerging in attitudes to work today: an article in today’s Guardian by Alex Andreou takes a well-aimed pot-shot at the ideology of hard work, pointing out the assumptions that have given it such a central place in our political discourse.  The paradox of course is that in classical economic thinking a contract of employment is a neutral document describing mutual obligations in a factual way; but in the neoliberal dialogue employment has become a concept laden with ideology.

And of course the assumption people need an incentive to work is both insulting and tendentious.  Work – meaningful work – as Morris and others since have argued, is simply part of the human condition.  The point is that the political rhetoric is based around a very narrow definition of work – namely, work that is undertaken for remuneration.  There is an enormous amount of work in the broadest sense that simply does not fit into that category – one thinks immediately (and in no particular order) of internship, voluntary work, caring, parenthood, charitable fundraising, amateur dramatics, evening classes, political canvassing, blogging.  All of these obviously provide value in its broadest sense, but are equally obviously not monetised; when politicians talk about “hard-working” they mean work that is paid and from which people derive a living – what a Marxist might call alienated labour. But arguably all the things I’ve mentioned have value; they are part of a collective process of civilised life.

And it is these things that the concept of basic income liberates.  Moreover, it removes – at a stroke – the coercive power of fear of losing one’s living.  It does not mean that essential things will not be done; but that we will have to find more co-operative ways of doing them that do not involve the coercion that comes from their being essential to putting a roof over one’s head and food on the table.  The call-centre of contact targets and monitored toilet breaks would be a thing of the past; as would supermarkets run on cheap workfare labour.  Service industries might start offering service again.  Now this is radical stuff; a system of economic activity in which labour cannot be coerced is obviously going to look very different from what we have now.  But there’s no evidence – none whatsoever – that the essentials would not be performed in such a society; but there is more likely to be a mature and democratic debate about what those essentials are and how they are organised.  In other words, the shift of power away from rentiers and managers could be substantial and, in my view, wholly beneficial.

Utopian?  Perhaps.  These are big changes which fundamentally alter the power structures that support late capitalism, and it’s hard to see that power being surrendered without the mother and father of fights – except that, with capitalism looking increasingly flaky and less capable by the day of providing the kind of decent living for citizens that it needs to remain stable, the political attractions of such a change may look increasingly like enlightened self-interest.  And moves towards a basic income will doubtless be incremental; but as its advocates have argued, there are likely to be basic efficiencies that are achievable very quickly if we can move away from a means-tested, complicated and – yes – morally-judgmental approach to work and social security.  And there is no reason why a move towards a basic income in the medium-to-long term should be incompatible with short-term policies that would bring immediate efficiencies and benefits, like a substantial increase in the minimum wage and a move towards a living wage.   And in any event it seems far more rational to have a policy that’s driven by a view that most people want to work and contribute than one that focusses on a small perceived problem of fecklessness, and uses that perception as a rationale for ever harsher and more damaging economic and social policies, backed up by an ever-more-complex matrix of benefits and sanctions.

The economic case for thinking more deeply about a basic income has been set out elsewhere – notably in the blogosphere by Chris Dillow and Frances Coppola and there is no point in repeating their arguments.  Basic income on its own is not a panacea; it can become a rationale for dismantling the state and therefore moves towards a basic income must be part of a much broader political strategy.  But as a long-term political aim its seems to me to match our economic and social needs closely, and offers an opportunity to move towards a more equal and democratic society, and to reclaim some of the political power that has been grabbed by economic and social elites through austerity in response to crisis.  It’s a revolutionary idea that ought to be at the heart of political discussion on the Left; it could just be the Left’s next big idea that changes the world.

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10 thoughts on “The case for a basic income – time to rethink incomes and work

  1. If a basic income scheme is to come about, it won’t be because of pressure from the low-paid or the Left, but because of pressure from the “squeezed middle”, in much the same way that the NHS was the product of crippling medical costs for “hard-working families”, rather than an upsurge in compassion or a swing to socialism.

    It is therefore bound up with the future prospects for what Dave Graeber has characterised as “bullshit jobs”: the supernumerary and distributive roles that clutter up both the private and public sectors. The early signs of increased job polarisation as we exit recession, and the continuing trend towards lower average wages, point towards an emerging crisis, which is ultimately driven by technology and automation.

    I expand on the mechanics here: http://fromarsetoelbow.blogspot.co.uk/2013/09/the-nature-of-jobs.html

  2. I believe that the digital revolution will provide the primary impetus for a basic income over the coming decades. Computerisation and automation is estimated to remove the need for a human in up to half of all current conventional occupations. If the full employment socioeconomic orthodoxy is not abandoned, an enormous portion of the population will really struggle to survive.

    With a basic income, we would be able to ensure that all people are guaranteed a reasonable standard of living, regardless of the number of occupations available and the state of wages. As you mentioned, it would also allow for something of a renaissance of nonconventional occupations which are usually not economically viable, such as parenting, creativity and the arts, and volunteer work in philanthropy, activism, and politics.

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  4. I confess I am not aware of Chris dillow or Francis coppola’s blogs, but you appear to be unaware of mine. I have been linking the citizens’ Basic Income with the need to get away from a dependence on growth for 40 years,publishing a book in 2003, updating it in 2011, and finally being taught how to blog http://www.clivelord.wordpress.com
    a year ago. Naturally I endorse nearly all of what you say, but you fall into the common trap of dismissing right wing support as a problem, and apparently believing the CBI can co-exist with a living wage. It probably could in an economy which still takes growth for granted. I see the CBI as a possible basis for a reconciliation between anti-capitalistst and those they currently thin of as their foes.

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  7. If there is a basic income it will have to come with land value tax or rent controls so the increase is not merely used up by landlords.

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