The new fashion for the old idea of a universal basic income is misguided. It's still a bad ideaby / June 16, 2016 / Leave a comment
Published in July 2016 issue of Prospect Magazine
“The joy and moral stimulation of work no longer must be forgotten in the mad chase for evanescent profits,” said President Franklin D Roosevelt in his first inaugural address of March 1933, a speech more famous for its observations on the nature of fear. And now, an idea has resurfaced that poses a direct challenge to this notion of “joy” and “moral stimulation.” That idea is the Universal Basic Income (UBI), the proposal that governments should pay all citizens a basic income, irrespective of whether they work.
In advocating this, some political thinkers on both the right and the left, in Britain and overseas, appear to be moving away from this concern with work towards what should be termed an “ideology of idleness.” The core of their argument is that technological advances—the combination of artificial intelligence, automation and distributed production—will eliminate the necessity of work for many people.
The proponents of UBI describe it as a great emancipating step: a form of human liberation that frees people to choose their own paths in life. In the past, it has won support from, among others, the late Milton Friedman, the monetarist economist and favourite of Ronald Reagan, and Charles Murray of the American Enterprise Institute, both of them firmly of the right. It is also supported by Erik Olin Wright, the Marxist thinker at Berkeley and Yanis Varoufakis, the former Greek Finance Minister, both of them on the left.
In June, the idea of UBI was put to a popular vote in Switzerland. The proposal was that each month, every Swiss citizen would recieve a payment of 2,500 Swiss Francs, equivalent to £1,800. The Swiss government campaigned strongly against the idea, saying that the scheme would mean additional taxes of around 153bn Swiss Francs (£110bn). The Swiss rejected its introduction by a margin of 77-23 per cent. In Britain, this idea has its supporters in the Labour Party, the Liberal Democrats, the Greens and the Scottish National Party. Two recent books, PostCapitalism: A Guide to Our Future by Paul Mason and Inventing the Future: Postcapitalism and a World Without Work, by Nick Srnicek and Alex Williams, uncritically support the idea. The idea has also been proposed by politicians and thinkers in Alaska, Ontario, Namibia, Iran, Finland and India.
In May, Compass, the think tank, published a report titled Universal Basic Income: An Idea Whose Time has Come? The paper proposed starting with a modest weekly payment of £71, with a calculated annual cost to the Treasury of £8.2bn. The report also recommended scrapping the income tax allowance. In response, John McDonnell, Labour Shadow Chancellor, promised to give the idea close consideration. This openness to new and bold ideas is sorely needed and is warmly welcomed. Since his appointment McDonnell has created a renewed energy and vitality around Labour’s economic thinking and his engagement with UBI takes it to the centre of domestic policy discussions around the future of work and the welfare state.
Universal Basic Income, as the name suggests, would be universal, and would replace all benefits and entitlements. Since it would be paid to everyone, both to those who work and those who do not, it would eliminate disincentives to work, such as when rising wages replace benefits. It would also mean that some people could simply choose not to work at all, regardless of their circumstances.
And yet, despite these superficial attractions, the idea of a universal income should be dismissed. Bold new economic ideas are urgently needed to confront the challenges posed by stagnating wages and weak productivity growth in Britain and other economies. But UBI is not the answer: it would discourage work, perpetuate inequality, would be expensive and politically extremely unpopular. Supporters see no social obligation arising from a universal income, and fall back on the notion that individuals, having received universal income, would take it upon themselves to do socially useful things. This is utopian in the extreme.
The idea of a basic income is not new. Thomas Paine’s 1797 pamphlet Agrarian Justice suggested its introduction, and that it should equal three-quarters of the average income. UBI was always a part of a socialist vision of the distant future—Marx famously described a time when “society regulates the general production” which would enable us “to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner.” But this vision has no place in modern Britain. After all, communist society produced no such result; why would a modern western economy be any different? There is no articulation of how this post-capitalist nirvana would arise, nor of any struggle to achieve it. It requires a state that encourages its citizens to be passive and simply receive benefit rather than struggle for it. It is difficult to see such a state as being very fruitful.
More recently, beginning in 1994, ideologues within New Labour developed a narrative comparable to the one used by today’s proponents of UBI. They predicted fundamental changes in patterns of work and foresaw a coming revolution in economic relations. Just like today, they cited globalisation and technology as the drivers of change in work and employment.
At the centre of this New Labour idea was the new “knowledge-based economy,” a vision of what working life in the 21st century could be. It was notably described in 2000 by Charles Leadbeater, the former adviser to Tony Blair, who argued that “smart” technologies and globalisation were driving the emergence of a new economy, centred not on heavy industry and the production line, but on the exploitation of so-called “intangible assets.” “The real wealth-creating economy is de-materialising,” he wrote. “The private and public sectors are increasingly using the same sorts of intangible assets—people, knowledge, ideas, information—to generate intangible outputs, services and know how.”
The old structures and labour markets associated with large public and private sector organisations, the New Labour argument said, were being replaced by networks of independent, small-scale companies. These networks replaced the old hierarchies—conflicts between worker and boss were to become a distant memory. Future economic prosperity was to be driven by the production of knowledge and intangible assets, while traditional manufacturing and heavy industry would decline. In short, the distinction between worker and employer was assumed to be withering away, taking with it the entire wage-labour system.
Within the New Labour Party, this ideological analysis of the world of work resolved, at a stroke, the historic dilemma faced by previous Labour governments, which had felt compelled to support manufacturing and heavy industry. Now, however, that “old economy” offered diminishing returns. Concessions on labour market regulation had to be forced out of the Labour government, which viewed them as a necessary but distasteful sop to “Old Labour” and the “old economy” that it represented. Meanwhile, the main focus of economic policy was on investment in human capital, captured in the famous focus on “education, education, education.”
This view gave intellectual legitimacy to the brilliant political repositioning of New Labour away from its historic base and towards middle England. The party had effectively freed itself from the working class, a section of society that—so the theory went—would wither in the new era of the knowledge economy. But this unrealistic view of the future is the first reason the idea of UBI is a bad idea.
Rather than a New Labour nirvana where knowledge generates returns for the many, the current real-world economy is beset by productivity problems and is seemingly unable to provide a decent standard of living for enough people. There is an odd disconnect between this reality and the vision of a future in which many do not have to work.
This unreality is only part of the case against the UBI. There is crucially, a positive case for work itself, as well as a deeper set of flaws in the idea.
Work improves lives, and brings dignity. In his monumental 1942 report, Social Insurance and Allied Services, the economist William Beveridge identified idleness as one of the “five giants” standing in the way of social progress. He distinguished idleness from want and squalor precisely because he recognised that idleness in itself is a problem for society. Proponents of UBI describe a utopian society where people would voluntarily do socially useful things, from caring to canal clearing. Yet it is hard to believe that many wouldn’t choose to sit back, relax and tune into daytime television. That is a desperately lonely and unfulfilling vision of the future which contains no collective politics: no political struggle to get there, no political struggle when we are there. It is in some ways a logical, if absurd, conclusion of liberalism: the ultimate triumph of the individual, completely freed from any social institution of any description. It would mark the total, final and irreversible atomisation of labour.
It is also antithetical to the values of most British people, who believe in the value of work; in the dignity that comes with self-sufficiency; in the pride that comes with purposeful activity. There is overwhelming evidence that having a job is crucial to good mental and physical health. It provides a sense of purpose and a vital set of relationships and social networks.
Embedded in the idea of universal basic income is the assumption that some jobs are worthwhile, and others not. Some may sneer at “McJobs”—but cleaners in McDonald’s stop infections, just as cleaners in NHS hospitals do. We all enjoy clean streets and benefit from well-stocked shops. Proponents of UBI ignore the value of such work: it only makes sense to be emancipated from an obligation that is inherently undesirable.
Yet the universal basic income institutionalises the gap between the disproportionate and increasing rewards for the few and stagnant wages and poor prospects for the many. It fails to broaden the scope of useful work, which includes activities that have a significant social benefit but an economic cost. Issues of class, economic ownership and the productive capacity of the economy are collapsed into lazy utopian remedies.
Its supporters do not see the enormous potential for social division that universal basic income would bring with it. For those on the right who are convinced that the world is divided between “wealth creators” and everyone else, it would be a brilliant tool to discard much of society. It is not terribly hard to imagine the arguments: why care about large portions of the population who can’t be bothered to work? If they have their universal basic income, why would they need more? What need is there for public goods in a world where everyone has enough to survive?
The new paradigm is based around rational, atomised economic exchange, where class has neither economic nor political relevance. Just as the neo-classical takeover of modern economics removed the moral and political insights supplied by Marx, Smith, Mill and Ricardo, theorists of the new economy have eliminated these same insights for the contemporary left, just as they did in the 1990s for New Labour. This explains why UBI has also gathered so much support on the political right. It is an extra- ordinary modern paradox that so many on the radical left are set to embrace the neoliberalism they claim to despise.
Finally, the advocates for an ideology of idleness must recognise that it is politically toxic. Imagine how poisonous the debate would turn over the question of whether immigrants should receive UBI. Would it replace all benefits, or only some? Where would the money come from to pay for it? Income tax is the government’s single largest source of revenue—if that were to decrease, would the government have to borrow more?
Not a single Swiss parliamentary party backed the idea in the June referendum. And yet, the proponents of universal basic income sincerely believe they have found the defining progressive cause for the modern age. The only question that remains is how much collateral damage will be done to the historic mission of improving working people’s lives. There is real intellectual work to be done. And if renewal is to come, we had better get on with doing it, rather than dreaming of a future that is not feasible any time soon, and which may never be desirable. Sadly, the left has all too often been seduced by magical thinking at times of political defeat. In a sense, this is very much business as usual.