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Friday, 13 February 2015

Raging Bull

In terms of the Overton Window, the idea of a basic income has moved from unthinkable to radical in recent years. Though Natalie "Turbine" Bennett fumbled the chance to push it towards acceptable in her notorious bout with Andrew "Slugger" Neil, it would be wrong to see this as a setback. The basic income was always going to be treated as a risible undercard before the big election fight, and the socio-economic forces driving it aren't going away. Where the Greens went wrong was in proposing a revenue-neutral scheme that matched the current cost of selective benefits (in this they were influenced by the Citizens Income Trust's 2013 proposal for a £71 weekly income). This means starting the debate from the wrong place, both because existing benefits may not be adequate or well-targeted (or even fully taken up) and because a benefit-substitute case ignores the wider role of the basic income in society and the economy.


The Greens' proposed weekly basic income of £72 is equivalent to the current adult income support and JSA rates. Since 1980, unemployment benefit has been up-rated in line with prices, excluding housing costs, rather than earnings. While median wage growth has been stagnant, this obscures two countervailing trends: the increase in real housing costs and the fall in real commodity prices. The end result is that the ratio of benefits to wages has roughly halved from 20% in 1970 to 10% now. The Greens' proposed basic income is little more than the minimum deemed necessary to avoid destitution, rather than the basis for a flourishing life, and thus the principle of less eligibility in modern guise. A scheme that merely substitutes for inadequate benefits is not worthy of the name. A universal basic income must be driven by human dignity, not administrative efficiency or parsimony.

The decline of unemployment benefit since 1980 also emphasises the importance of the uprating mechanism chosen for the basic income, a topic on which the Greens have been notably quiet. The level of income must be sufficient not only to avoid poverty but to enable a minimum of self-respect (e.g. buying new clothes occasionally and yes, a flat-screen TV and some booze), which means closer to £150. If the basic income were to be tied to prices (excluding housing), then its value relative to wages would progressively decline. Linking it to median wages would be better, however continuing job polarisation means that median wages will grow more slowly than average wages (because of higher growth at the top of the wage scale), so a basic income will not reduce inequality beyond the initial recalibration.

Unlike organised labour or universal suffrage, a basic income cannot address the social relations of capital and labour, in the sense that it provides no mechanism for the democratic control of capital. In particular it provides no mechanism to control the "social dividend" of economic growth - i.e. how productivity gains are divided between capital (profit), labour (wages) and society at large (the basic income plus pro-social taxation). If the basic income is to escape the straitjacket of "welfare", it needs to directly address the issue of uprating and thus the question of how we divide the fruits of growth. Given their growth-averse principles, you can see why the Greens might be shy on this point.

Instead of following the sterile lead of the mainstream media and quibbling about whether a particular scheme would be "affordable", it is worth looking at the wider arguments in favour of a basic income in light of these three key aspects: personal dignity, the distribution of the fruits of growth, and the social relations of capital and labour. Here are ten arguments that I think are worth thinking through. A basic income would ...

1. Allow us to "rethink how and why we work" and "reward unpaid contributions" --- This is essentially an argument focused on self-actualisation and esteem, which assumes that basic needs (food, shelter, safety etc) are taken care of. It tends to be people of independent means who can afford to rethink how and why they work. On £72 a week, you probably can't afford the travel costs and incidentals to do much volunteering, let alone buy a converted windmill in Suffolk and set yourself up as an artisan baker. That said, this is not a bad argument, but it might be better reformulated as: a basic income would reduce anxiety and depression and help raise levels of life satisfaction. This might have a greater positive impact on the NHS than any mangerial reform.

2. Make workers more choosy --- There's an ethical argument for giving everyone sufficient power to choose their circumstances, but we should recognise that for most people this is a matter of being able to desert a shitty employer rather than give up work altogether (there is much truth in the maxim that people don't leave jobs, people leave people). Just as most of us don't want to be entrepreneurs, so few of us want to be lonely potters or unappreciated watercolourists. A basic income would encourage employers to either improve conditions or invest in automation, both of which would boost productivity. Ironically, the greater resilience of workers between periods of employment might also allow for more labour market flexibility - i.e. we might see easier hiring and firing as well as greater labour bargaining power. It may not sound like much, but allowing workers to be "more choosy" might have a profoundly energising impact on the economy.

3. Enable lifelong learning --- This presumes that sufficient course places are available and can be provided for free (or near-free). It is unlikely that enough teachers would volunteer to run such courses for no pay, and there would still be the cost of facilities to cover, so this seems like wishful-thinking. In practice, this would bias heavily towards MOOCs (massively open online courses), which means a lot of this learning would be on a par with watching Countdown. I'm not being dismissive in saying this, merely noting that we can't all sign up for tutorials with Mary Beard. I suspect the reality would be a combination of self-study and volunteer-led symposia (so pretty much like a book club). Again, the biggest benefit might be seen in health and happiness.

4. Encourage education and training --- The "human capital" argument assumes that a more educated society will lead to a higher-skilled economy and thus higher wages and tax revenues, however the evidence of recent years is that the returns to education (outside of elite institutions) are declining. What a basic income might do is enable more workers to go part-time in order to pursue skills training. With more eighteen years olds prepared to opt for a gap-decade, start a business, or acquire a degree in parallel with work, a basic income might help redress the traditional imbalance between vocational and academic education. The outcome might be a lot more disruptive of the higher education sector than MOOCs.

5. Reduce bureaucracy and benefit fraud --- Given the number of means-tested benefits that would remain, such as for children, housing and disability, it isn't obvious that a basic income would reduce either substantially. Income support, JSA and pension credit (which would be replaced by a basic income) together account for 37% of all benefit fraud. The big-ticket item is housing benefit (27%), which is only going to be reduced through building a lot more homes (to push down rents) and/or by providing rent-free social housing. As a rule, arguments for a basic income should focus on effectiveness rather than efficiency.

6. Redistribute the fruits of technological progress --- The argument for this is a variation on the "standing on the shoulders of giants" meme, but with the added recognition that every innovator depends not only on his or her intellectual predecessors but on the contribution made by contemporary society as a whole to innovation (e.g. taxes invested in education and infrastructure). This is also an argument that addresses the classic problem of luck - i.e. the idea that financial rewards may only be partially attributable to the recipient's talent or hard work and that a portion is down to "right place, right time". By redistributing some of the rewards through the social dividend of a basic income, everybody gets to share in that luck, which is another way of saying that we ameliorate bad luck or disadvantage.

7. Encourage entrepreneurialism and innovation --- A basic income de-risks the choice of the individual to start a business or develop an innovation. It should be stressed that this is less about providing "seed corn" (£150 a week won't go far) than instilling confidence. Conversely, a basic income might help prolong the life of inefficient micro-businesses that would otherwise go to the wall. On balance, the trivial sums make this a trivial issue. The greater benefit is likely to be the support provided to innovation. With the cost of research and development in many areas falling due to the impact of software and the advance of "maker" technologies, the basic income could lead to a significant expansion of the "garage" sector of the economy. Though only a small fraction of these innovations will be successful, the aggregate impact could be large.

8. Encourage social cohesion and strengthen democracy --- Social cohesion is an argument for a universal, unconditional flat-rate basic income scheme, as opposed to either a narrow substitute for benefits (i.e. a dole) or a negative income tax that tapers the basic income to zero for higher incomes (and thereby divides society into classes). The negative income tax approach is favoured by the right and is bound up with lower tax and greater self-reliance, i.e. severely curtailed public services. There is a danger that the basic income could weaken democracy, specifically if an increase in taxation on higher-paid workers leads to support for the right-wing claim that those who pay tax should have greater rights over fiscal policy than those who depend solely on the basic income ("no representation without taxation").

9. Provide a fiscal stimulus --- The higher marginal propensity to spend of those on lower incomes means that a basic income would probably increase aggregate demand, but only if it distributes from rich to poor. An income neutral scheme, such as the Green Party's proposal, wouldn't. A persistent increase in aggregate demand means lower income inequality, and the basic income is just one way of achieving this. The problem with the stimulus argument is that there are (arguably easier) alternatives means to the same end, such as increasing the value of benefits, which would keep us stuck in the paradigm of welfare.

10. Reduce inequality --- Beyond any initial redistribution through the introduction of a basic income and the reform of the tax code, a basic income could be redistributive via two uprating mechanisms. First, if the combined growth dividend for the basic income and for wages exceeds the dividend for profits, this will gradually shift the balance from capital to labour (in this definition, "labour" includes the basic income and workers gain the combined benefit). Second, the growth dividend for wages could be split between cash (to cover price inflation) and reduced working time. Combined with a maximum working week that was gradually reduced (thus encouraging further productivity growth), this would progressively narrow the spread in income between the bottom and top deciles of the income scale.


A basic income worth fighting for would be one that increases personal dignity, progressively distributes the fruits of growth across society, and redresses the current imbalance in power between capital and labour. Insofar as the details have been worked through, the Green Party proposal does none of these things. Advocating a revenue-neutral scheme without any progressive uprating mechanism entrenches poverty, undermines the social benefits of a basic income, and leaves the proposal vulnerable to potentially pernicious alternatives such as a negative income tax. If nothing else, this should make the conservative roots of Green policy even more obvious. Just as a basic income scheme cannot be designed in isolation from the wider tax system, so it is naive to imagine it is unrelated to working hours and housing affordability. A basic income must be transformative, not apologetic. Seconds out; round two.

12 comments:

  1. It was the arguments of Andre Gorz that 'converted' me to the idea of a basic income, one which is effectively dependent on a reduction in working hours and intensified use of technology in order to reduce the amount of time devoted to production of basic needs and to eliminate wasteful capitalist economic growth. Unfortunately this kind of radical discourse is moving further from the minds of the Green Party, which is increasingly tied to Westminster standards of 'respectability' and a position akin to that of their German counterparts, where more stress is placed on the consumer rather than capitalist production, and where the exploitation of a niche middle-class electoral base seems to be the major priority.

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  2. AFAIK, the Green Party have never subscribed to anything radical in the area of working time, so I think you're being generous suggesting they have moved towards the conservative orthodoxy. They've always been there.

    A central strand of Green philosophy is the belief that consumers can't avoid making bad choices (The Tragedy of the Commons etc). This is the traditional belief that the common sort are irresponsible: they'll loot the public treasury and trash the countryside, given the chance.

    Related to this is the traditional fear of working class free time ("the Devil finds work for idle hands"), which is equal parts ideology (maximising surplus value) and a pragmatic calculation that busy/numbed workers are less trouble.

    As Gorz recognised, the truly revolutionary change is to give people back their time, which is the source of all value. A basic income that does not progressively reduce working time will end in disaster, either because it immiserates the unemployed or because it creates conflict between workers and non-workers.

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    1. Does the rampant criminality in Paris's suburban ghettos (where benefits aren't especially stingy but jobs are virtually non-existent) lend credence to "the devil finds work for idle hands"?

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    2. I'm not sure if you're trying to be ironic, but citing the misanthrophic reactionary Theodore Dalrymple seems - how shall I put it? - provocative. You might as well cite Louis-Ferdinand Céline (there are quite a few similarities between the two).

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    3. Herbie Kills Children18 February 2015 at 17:56

      "Does the rampant criminality in Paris's suburban ghettos (where benefits aren't especially stingy but jobs are virtually non-existent) lend credence to "the devil finds work for idle hands"?"

      Spain's crime rate is lower than the UK's yet unemployment is higher in Spain. Even on the face of it, explaining crime as "the devil finds work for idle hands"?" seems cretinous in the extreme and I you don't have to delve deep to find evidence that it is!

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    4. Thanks for that counter-example Herbie -- incidentally, why (in your opinion) are the French banlieues so much worse (more lawless) than the "mill and mosque towns" of Lancashire and Yorkshire, which have a very similar problem (ethnically- and religiously-distinct population imported in the past to work cheaply in industries that have since closed down)?

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    5. George, what evidence do you have that the French banlieues are much more lawless than towns in the North of England?

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    6. I haven't checked out the crime stats myself -- it's just that the French banlieues (like American black ghettos) are strongly associated with crime by the media, while former mill towns in Lancashire and Yorkshire are not.

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    7. The "other" is always assumed to be incipiently criminal, but we vary the crimes to suit our prejudices. For example, Rochdale and Rotherham are now indelibly linked with child sex abuse in a way that Oxford isn't. This is because the media have decided that child sex-grooming is a Muslim problem.

      Similarly, reporting on crime in London focuses on gangs, knives and drive-by shootings, because these are seen to be characteristic of modern urban blacks. 30 years ago it was drugs and muggings, reflecting a fear of belligerent Rastas. 60 years ago it was shebeens and pimping, reflecting a fear of miscegenation.

      Historically, those cities in the UK assumed to have the worst general crime records were those with large Irish immigrant populations, notably Glasgow and Liverpool. This was because the working class Irish were assumed to be feckless, violent drunks or thieving tinkers, warped by a backward religion.

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    8. I was thinking about acquisitive crime rather than sex crimes -- I suspect one reason why London and Paris have big problems with gangs (in London's case I think Somalis rather than Caribbean blacks are the most feared gangsters now) is because both are extremely gentrified cities, with concentrated of wealth relatively near concentrated poverty.

      I wonder if Japan's low crime rate may have something to do with liberal Japanese land use policies (which allow very high-density development in the vicinity of train stations, where such density is most useful)?

      By contrast, Europeans strongly dislike tall buildings (which results in a shortage of floor space in CBDs) and prefer roughly uniform density in residential neighbourhoods (which makes it almost impossible to densify without government subsidies). While North Americans are more accepting of towers in the CBD, but impose big-lot detached houses with an iron fist in most of the rest of the built-up area.

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  3. Herbie Destroys the Environment15 February 2015 at 12:05

    "one which is effectively dependent on a reduction in working hours and intensified use of technology in order to reduce the amount of time devoted to production of basic needs"

    But on the other hand hand it has been argued by you and David that neo liberalism is built upon this technology?

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    1. There's nothing inherently wrong with the technology. The issue is the political exploitation of it. Automation can either be remitted to labour in the form of reduced hours (and/or increased wages) or to capital in the form of increased profits. Neoliberalism privileges the latter.

      A distinguishing characteristic of neoliberalism is financialisation: the idea that everything must have a price and that all social relations must be mediated by markets (more so than was the case with classical liberalism). This discourages the idea that value can take a form other than financial capital - i.e. that time has an intrinsic value other than its exchange value.

      The consequence is an ideology that treats the failure to convert time to money as social failure, so the well-paid are deemed to be "constantly working" or at least in training (hence the iconic role of gyms and running), and time off can only be justified if it is a "priceless" experience, while the poor are reminded of their weakness through zero-hour contracts and under-employment and intimidated by "shirkers vs strivers" rhetoric.

      The fundamental problem of modern politics is that it focuses on money - public expenditure, taxation, benefits etc - which serves the neoliberal discourse. The underlying reality is a struggle for control over labour time. It is no coincidence that the historic trend to collectively reduce working hours came to an end (in the late 70s) when neoliberalism came to the fore in politics.

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