Friday, 29 January 2016

Perfect is the Enemy of Good

Though the subject of basic income has been introduced to mainstream media debate in recent years, the political dimensions have largely been ignored, with most discussions on the subject adopting a technocratic and utilitarian approach. Among other things, this means prominence is given to the dubious potential for shrinking the state (the illusion of "less bureaucracy"), the institutionalisation of the "precariat" (justifying further labour market deregulation), and overdue recognition of "homemakers" and carers (diverting the issue of inequality from class to gender and age). The debate is already ideological, and this will only intensify once the political dimensions come into focus.

To get a sense of how this may develop, it is worth considering the treatment of basic income by the "radical left", not because its proposals might gain traction in mainstream debate, but because its approach to framing the discussion might well be hijacked. A good example is Shannon Ikebe's "The wrong kind of UBI", published in Jacobin, in which he highlights that the core political issue of the basic income is that there are potentially "good" and "bad" versions. To this end he constructs a dichotomy between a "livable ... and a non-livable basic income". The former is emancipatory, in the sense of allowing workers to continually refuse shit jobs or to invest their labour in non-waged work. The latter is parsimonious but politically achievable, not least because it chimes with rightwing advocates of negative income tax. In any contest between maximising and satisficing, it is the latter that will win simply because that is the utilitarian premise of the dichotomy. The question is whether such a dichotomy exists in the case of basic income.

In adopting this approach, Ikebe is trying to undermine the notion that there is a "good enough" UBI, which is necessary because most centrist-friendly schemes (such as that proposed by the Greens last year) are parsimonious: "The fundamental dilemma of a basic income is that the more achievable version — in which basic needs go unmet without supplementary paid employment — leaves out what makes it potentially emancipatory in the first place. Indeed, many commentaries cite basic income experiments to argue it does not significantly reduce work incentives". Ikebe's point is that when basic income supporters claim there would be no substantial drop in work hours, usually citing the Canadian Mincome experiment of the 1970s as evidence, they are implicitly advocating a non-livable model. A drop in hours is actually what we should want and expect.

This is true, but it ignores two features of a basic income: time preference and wage bargaining. The first is the flexibility to temporarily stop working or to defer taking an unattractive job until a better one is available. The second is the availability of an "unconditional and inexhaustible strike fund". While these may not be emancipatory, they potentially increase labour's leverage with capital. The result may not be a reduction in aggregate hours worked, but a better distribution of those hours and wages across the population. Assuming the removal of any welfare trap, so marginal hours are not undervalued, one paradoxical result of a non-livable basic income may be a reduction in the percentage of the population who do no work at all. Once the penny drops, you can expect this to be a key selling point across the political spectrum.

What this shows is that Ikebe's dichotomy is false: he is merely flipping the usual dynamic to argue for a maximising outcome rather than a satisficing one. In doing so he is essentially rejecting the social democratic or ameliorative features of basic income, which he associates with the non-livable version. For him, the livable version (the LBI) is attractive not because it is emancipatory but because it is revolutionary: "The dramatic strengthening of working-class power under a robust LBI would sooner or later lead to capital disinvestment and flight, since capital can only make profits through exploitation and won’t invest unless it can make a profit". In other words, an LBI would prompt a crisis of capital that would necessitate the socialisation of the means of production. In fact, this doesn't necessarily follow.

Strengthening working-class power can lead to capital flight, particularly if it is seen as the precursor to expropriation, but normally it leads to greater investment in an effort to increase capital composition at the expense of labour. That was the story of the 60s and 70s in most developed economies, e.g. the USA, Japan, Germany, France etc. In the UK, "decline" was the result of inadequate investment (relative to our peers) in the face of increasing labour costs. Rising wages were the product of a global trend, rather than local militancy, that was transmitted via trade - hence the regular balance of payments crises. This under-investment, which was heavily-influenced by a City that historically preferred foreign to domestic opportunities and speculation to patience, manifested itself in low productivity growth and declining profits. Despite the "retooling" of industry in the 1980s, the underlying trend continues.

Over and above the desire to increase profit through capital investment, the bidding-up of wages by an LBI would cause the relative price of capital to fall, stimulating further investment. We can already see this in action. The offshoring of labour in the 80s and 90s to increase profit rates gave way to capital investment in emerging markets in the 90s and 00s as developing nation labour costs rose. The current fears of a "hard landing" in China reflect a falling off in the rate of capital investment, not a reduction in consumer demand (consumption is growing vigorously). Similarly, the reshoring of some production in developed countries in recent years shows that distribution costs are becoming a more significant element in profit margins as global labour costs equalise.

Ikebe concludes: "Supporting any plan that seems politically attainable and bears the name 'basic income' isn’t a strategy for winning radical change. In the end, there is no feasible way to achieve a free society, or even one close to it, without challenging the power of private capital." This is undeniable. A basic income can be progressive, if it effects income redistribution and locks-in a future social dividend (i.e. progressive uprating of the income level), but it does not in itself change social relations because it does not address the ownership of capital. However, that doesn't mean that we should reject a basic income scheme that is less than maximal. The danger is that a simplistic dichotomy of the sort that Ikebe employs - the LBI versus the NLBI - will frame future discussion as utopian/generous versus achievable/parsimonious, and it should be obvious whose interests that will serve.

This framing is already apparent in the current US debate over Bernie Sanders' single-payer healthcare proposal (he wants to upgrade the US system to something closer to the Canadian model, if not the NHS). Centrist Democrats like Ezra Klein and Paul Krugman are criticising this as politically unfeasible, preferring the more modest (to the point of evanescent) proposals of Hillary Clinton, and even dismissing Sanders' supporters in a manner all too familiar to Corbynites. This is because Sanders, as an orthodox politician, has produced a costed plan rather than a campaign based on the single-payer principle and a commitment to work towards it. It is better to be criticised for a lack of detail if you have a persuasive objective than to have the principle drowned by charges of impracticality. Likewise, the political discussion of basic income needs to expand from a focus on the level of income, which I agree should be generous, to the principles of distributive justice and the social dividend, which are truly transformative.



    Difficulties with BIG.

  2. Yes, ultimate if a basic income is introduced then it is politics that will dictate its level in the long term. You can use the minimum wage as a comparison. When it was created at a derisory level back in 1999 I don't think many people would imagine that it would have been raised to the 'Living Wage' level now, and definitely not by the Tories!

  3. Your closing line that, "In the end, there is no feasible way to achieve a free society... without challenging the power of private capital" is spot on.
    The dichotomy is not NLBI/LBI but rather redistibution/distribution, in other words as you and Ikebe acknowledge ultimately we must address the issue of ownership of capital.
    I agree that this does not mean that the perfect should become the enemy of the good. But we must not accept any proposal so compromised that it structurally thwarts future progress towards the goal of socialized ownership.
    The capitalist development of the means of production creates the conditions for the emancipatory transformation of the relations of production.

    1. Agreed, which is why it is critical to address the principle of the social dividend, which is potentially redistributive.

      It would be better to start with a modest BI that had progressive uprating built-in (i.e. majority of growth remitted to BI), rather than a generous BI that didn't and thus declined in real value over time.