Saturday, 23 September 2017

Basic Income and Social Democracy

2017 may prove to be the year when the discussion of universal basic income moved from the realm of technocratic speculation to that of political feasibility. Though UBI fans continue to get excited about limited trials, trade unions and political parties are beginning to debate the idea in the broader context of a post-neoliberal social model. Instead of obsessing about specific amounts of money and levels of taxation (as the UK Greens notoriously did in 2015), the focus has shifted towards the ethical, including such aspects as personal dignity, the distribution of the fruits of growth, and the social relations of capital and labour. Though there are many historical strands and contemporary perspectives informing this debate, from autonomism to automation, it is notable that many of the UBI sceptics in the UK have engaged with the concept in terms of its impact on labourism and social democracy. This has in turn opened up a more intelligent debate about the potential of UBI beyond its value in alleviating poverty or "reforming" welfare.

A recent paper by three LSE researchers, Fred Pitts, Lorena Lombardozi and Neil Warner, entitled Beyond Basic Income: Overcoming the Crisis of Social Democracy?, provides a good example of this fruitful collision, positioning UBI in the context of three inter-related crises: of the society of work, of social reproduction and of social democracy itself (you can read a summary here). The first of these crises concerns the power of labour within a capitalist society: "The political expediency of the traditional labour theory of value has led the left to emphasise the power to resist capital that workers are granted by the material ability to provide or withdraw labour". The concern they articulate is that a UBI might actually weaken labour's power in the workplace, essentially by eroding the solidarity that has historically been the corollary of necessity. When defeat meant destitution or worse, you had a reason to fight. If you can afford to walk away from a job, why bother striking to improve your or your fellow workers' lot?

The argument has a superficial plausibility, but it is based on the belief that there is a marketplace for labour and that the UBI constitutes a means of removing "market frictions" - i.e. allowing market participants to make better-informed and less coerced choices. One could just as plausibly argue that a UBI would make workers more likely to withdraw their labour or work to rule, given that it effectively provides a reliable strike-fund that couldn't be interrupted by an employer's legal action or sequestered by a hostile state. The key error in the "labour market" vision is the assumption that the UBI constitutes a strategic alternative to work, rather than a tactical advantage in negotiation. The individuals who are likely to casually drift in and out of work in response to employer provocations are the ones who were never likely to be militant, so the belief that a UBI would somehow be debilitating to organised labour looks like pessimism about the sincerity and reliability of the working class as a whole, which echoes older fears of embourgeoisement and sails close to simple class prejudice.

As Karl Polanyi long ago pointed out, labour is a fictitious commodity so the concept of a market is clearly ideological. Ironically, it is a model that is shared by both labourism and neoliberalism. The difference is that the former believes the market is best negotiated through collective action while the latter emphasises individual preference. In this context, the UBI biases towards the neoliberal by empowering the individual utility maximiser. In recent years there has been a tendency among centre-left politicians to voice increased support for trade unions (though more in theory than practice), essentially as a way to redress the power imbalance that has led to stagnant wage growth and greater inequality, an attitude that reflects the neoliberal conviction that union weakness is the consequence of regulation as much as material circumstance. This modest revival of labourism has been one of the drivers of scepticism towards a UBI on the left, which is ironic given that the UBI ostensibly steers clear of any idea of seizing control of the means of production, an aversion it shares with labourism.

The LSE authors also flag the potential of a basic income to empower bosses: "Moreover, there are well‐established reservations about the UBI concerning the possibility the measure becomes no more than state subsidy for employers to maintain and proliferate forms of precarious low‐wage employment". This sounds more like a critique of current in-work tax credit schemes. These have the disadvantage that they protect employers from the effect of unilaterally depressing wages. Workers are deterred from moving to another employer offering better pay (because income support is clawed back) or from quitting the labour market altogether (because of delays consequent on making a fresh claim). This helps preserve bad employers that would otherwise be competed out of business (a "market friction", no less). In contrast, the universal scope of a basic income means that no single employer can gain an advantage over another by having the state provide a contingent subsidy. If the UBI is a subsidy for employment, it is a subsidy for all jobs, so it isn't clear how this would privilege "precarious low‐wage employment" in particular.

The charge that a UBI would encourage precarity is also central to the July 2017 report prepared for the TUC by the Fabian Society: "A UBI-based tax/benefit system responds automatically as people cycle in and out of work or change their hours. This is one of the main advantages of the policy. It also provides better rewards for working short hours, so it could increase the numbers in precarious work, at the same time as making their lives a little less precarious". It says something about the ideological ideal of the stable, well-paid job for life that the flexibility offered by the UBI to workers should be couched in such negative terms. Predictably, the Fabians reckon that a properly designed universal credit scheme would better support work, revealing their assumption that flexibility should be a privilege of capital, not of labour. That said, they are right to emphasise the continuing "role of universal entitlements within a multi-layered tax/benefit system designed for the changing labour market", though they are guilty of constructing a strawman when they claim that UBI proponents on the left (as opposed to the right) see it as a single payment that would obviate all other benefits. It cannot be stressed enough that to constitute an ethical advance, the UBI must be "in addition to" not "instead of".

The second crisis that Pitts, Lombardozi and Warner describe is that of social reproduction - i.e. the way in whch labour is reproduced through the social support of public health, education and care. Neoliberalism has simultaneously encouraged women into the world of work and eroded the capacity of the welfare state to support social reproduction, thus creating a greater pressure on women outside of work - i.e. they must increasingly both be breadwinners and make up the shortfall in state support for child-rearing and elderly care. Some states have addressed this by encouraging capital into the sphere of social reproduction - the privatisation of health and care - but this has exacerbated inequality and social exclusion. The UBI potentially alleviates this situation both by providing income support to women and allowing men to devote more non-working hours to their families, however this in itself does not address the erosion of the welfare state and the commoditisation of social reproduction.

Furthermore, a UBI may lead to the revival of older forms of family management if the cost of social reproduction exceeds the scope of the basic income. Quoting Kathi Weeks, the authors note that a UBI might serve "simply to offer more support for the traditional heteropatriarchal family's gender division of productive and reproductive labour, with more men participating in waged work and more women working in the home". Given that a UBI is likely to be extended at a reduced rate to children, it could end up being little different in practice to traditional child support. Central to the authors' case is "the unity of production and consumption in the crisis of social reproduction". In other words, a standalone UBI risks addressing underconsumption (stagnant demand) at the cost of ignoring production, which may produce such retrograde outcomes as increased gender inequality. The need to address the two in tandem opens up the possibility of a revival of the social democratic state, which means that the UBI might be the thin end of a larger wedge.

As the authors put it, "In this the role of the State is still fundamental. UBI should not, therefore, be perceived as an alternative and an opportunity for the withdrawal of the welfare state from its tasks and or from its direct accountability in these areas towards citizens ... For UBI to be successful it would need to be part of a wider systematic project to change society and alter existing power relations and not a sticking plaster in a continuing neoliberal erosion of welfare and workers’ rights". But though the UBI offers the potential to revive the social democratic state, it also presents a fiscal threat to its preservation: "The need to find a means to pay for UBI becomes more pressing and more difficult in the context we assume in our model – that it would facilitate a move towards a system of lower work hours, lower growth and an end to dependence on waged labour". But these are questionable assumptions. Previous UBI experiments (e.g. the Canadian Mincome scheme in the 1970s) suggest that the reduction in hours would be marginal, and may well be offset by improved productivity.

The idea that UBI is necessarily a drag on growth ignores the possibility that people are driven not just by the need for a minimum level of subsistence (wages) but by the potential offered through free-time (reduced work hours). Once subsistence is less pressing, workers may well be incentivised to focus on productivity improvements as the means of securing greater free-time as much as greater income. One explanation for poor productivity growth in recent years is that workers realise that they will capture little of any gain, the lion's share going to employers in the form of increased profit margins (this is currently evident in the way that sterling devaluation has not led to greater exports as firms have simply maintained foreign market prices to widen margins). If productivity is seen less in terms of money and more in terms of time, workers might be more confident of improving their lot. Ironically, the erosion of union power under neoliberalism - which is more about the globalisation and deconsolidation of capital than anti-union laws - might be reversed if workers come to believe that they hold the key to productivity growth, and basic income could be the psychological enabler of that transformation.

Capital's ability to control productivity growth depends on the investment of retained profits, but the current system of rentier interests and executive rewards, along with the opportunities presented by global capital mobility since the 1980s, works against this. It is also the case that the production offshoring option, whereby stagnant or even falling productivity is offset by reduced labour costs through international relocation, is becoming less feasible as developing nations pursue both higher wages and high-skill investment, while the impact of IT on business operations, which peaked around the millennium, is now dissipating. The low-hanging fruit of productivity growth are suddenly in short supply. Securing future growth predominantly through increased labour productivity might, if the rewards are more equally distributed, be a maximising strategy for both labour and capital in developed economies. For this reason, the more enlightened fractions of capital may consider UBI as an acceptable state intervention to boost productivity and thereby support profit growth.

Given the suspicion that the stagnation of productivity growth in economies like the UK is now systemic, rather than a global condition or a temporary phase, the opportunity arises for social democrats to sell UBI as a capital-friendly complement to the welfare state, not as a replacement for it (this is what we might call the left-neoliberal interpretation, as opposed to the right-neoliberal view propounded by Silicon Valley libertarians and others). But this also contains the seed of a more revolutionary outcome. Historically, workers have been relatively blind as to the financial state of their employer, hence wage demands have tended to be geared to industry norms or to outside factors such as inflation. If the struggle of labour and capital is more concerned with time, this will encourage labour to acquire a more detailed knowledge of internal productivity (a move ironically facilitated by the shift towards greater process management and data analysis) and ultimately more say in production management, which will perhaps revive interest in workers' control.

Operating within the social democratic paradigm, the LSE authors struggle to reconcile a decline in the exploitation of labour with the ongoing funding of welfare: "A reduction in the amount of work hours in the economy and in the proportion of wages in people's incomes would inevitably also imply a reduction in the amount of labour income available for taxation. Additional means of funding would therefore need to be found, outside of the labour taxes and growth‐dependent financing upon which the fiscal system of modern industrial states has relied". Momentarily leaving aside the questionable assumption of the first sentence - that reduced work hours are incompatible with increased productivity - the coyness of the second suggests that neoliberal shibboleths about wealth are dominating the radical potential that a UBI presents for tax reform. If we think of the UBI as a social dividend, and thus the product of historic accumulation within a society, it should be obvious that its funding must be geared to wealth (capital) and the natural resources available to that society (land).

This inability to imagine a society in which working hours are steadily reduced while labour productivity steadily increases, despite the clear correlation of the two between the early 18th and late 20th centuries, is a notable blindspot. It highlights the suspicion of the working class that is to be found at the heart of social democratic theory. This is not infrequently voiced in moralising and sentimental terms, such as the vocabulary of Blue Labour. Citing Jon Cruddas and Tom Kibasi in Prospect, the LSE authors note that "Social democratic opponents of the UBI have also expressed concern about the loss of dignity and identity through work and the erosion of a contributory principle contained in the sense of receiving something for nothing". Dignity and identity here sound suspiciously like knowing your place in an ossified social hierarchy, while the contributory principle has long been a divisive trope that demonised the "feckless" and the immigrant. As many have noted, welfare reforms under social democracy are usually designed with at least the tacit support of capital, not in opposition to it. In other words, if social democracy is to embrace basic income, it will be with the encouragement of capital.

1 comment:

  1. It should be a principle that anyone who thinks that people should be compelled to work a 40-hour week for their own good when technological and economic change have made it redundant should not be described as 'left-wing'.