New Internationalist

Free money is no longer the stuff of utopia

Workers [Related Image]
If your income was guaranteed, what work would you do? USACE HQ under a Creative Commons Licence

For 40 years now I have been advocating for an unconditional Basic Income (BI) – a regular state payment to each citizen of the affluent societies, regardless of work status or household role, also called ‘Citizens Income’. During this time, the arguments in its favour have enormously strengthened. What seemed in the 1970s to be long-term threats to employment security, income equality and free civic participation, have become grim realities, especially for the youngest generation.

Advocates like me were always accused of idealism – of postulating a utopian society in which all would willingly co-operate for the common good. While advanced capitalism supplied growing real earnings for the majority of households (even if two or more members in employment were required to achieve this), why should that majority pay higher taxes to liberate unskilled – and perhaps unmotivated – claimants, made redundant through technological progress? Conditional, means-tested, ‘targeted’ benefits seemed more appropriate, as well as far cheaper.

Democratic arithmetic meant that the idea could never command political support until those on middle incomes began to feel the pinch. We can now see that this was happening long before it was widely recognized; average real earnings have been falling in the USA since the early 1980s and since 2000 in Britain. It was only the vast expansion of bank credit that disguised this shift, leading to the financial crash of 2008.

The prevailing economic orthodoxy of that period told us that as mass production was transferred to the newly-industrial countries of Asia and Latin America, new micro-technologies would provide better-paid work, demanding more sophisticated skills. Tax-benefit systems should facilitate this transition, while education and training enabled it. A Basic Income scheme presupposed a more radical transformation of societies than was necessary or desirable.

But the new IT revolution was quite unlike its nineteenth century equivalent in manufacturing. Instead of enhancing the productivity of a new class of workers, it created opportunities of immense wealth for a few innovative individuals. In February 2014, Facebook (started by a couple of Harvard students) paid US$19 billion for WhatsApp that was invented in 2007 by two down-at-heel computer engineers. The latter had only 55 employees.

New technology concentrates well-paid employment and leaves many with university degrees and skills training without security of income or work. Many middle-class young people are among the staggering 789,000 claimants on whom benefits sanctions (reductions or removals of regular payments) were imposed between November 2012 and November 2013 in Britain. In Italy, Spain and Greece, demonstrations against austerity policies have been led by well-educated protesters.

Meanwhile, the financial crash of 2008 showed that bank credit was an unsustainable basis for household incomes. The convergence of all three of these factors – the declining real value of salaries, a punitive and inappropriate benefits system and the lack of access to credit – makes this the first generation of young adults for whom the radicalism of Basic Income is its potential appeal.

A citizen’s wage would supply an egalitarian floor on which careers could be built, offsetting the insecurity of employment and polarization of rewards in transforming labour markets, but allowing enterprise and creativity to flourish. It would protect against the adverse effects of globalization by sharing some of the wealth generated by highly-mobile capital amongst less mobile human populations.

It would also supply a kind of credit which stabilized the financial system rather than propelling it between boom and bust. ‘Social credit’ was the term used by the 1930s movement that first framed the demand for BI; the need for a sounder source of financial security is as obvious today as it was during that crisis.

Ironically, in Britain, the introduction of the misleadingly-named Universal Credit gives the game away. It admits that radical reform is needed, but does little more than consolidate out-of-work benefits with the rapidly expanding tax credit system for those on low pay. Universal Credit will institutionalize means-testing more comprehensively, with all of its poverty traps and coercive sanctions.

The tragedy for the young generation is that the advantages of a Basic Income scheme have not been publicized. Until they are, demonstrations and protests will lack a coherent agenda to reverse the increasingly oppressive regime of global capitalism.

What do you think? In April’s magazine, Francine Mestrum and Barb Jacobson go head to head in our debate over the merits of a Basic Income.

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