Politics for the New Dark Age explicitly disavows a revolutionary approach to political activism. It requires us to engage with our societies, our democracies and our natures as-they-are rather than how we would have them be. As a result I expect to cop some flak from comrades for being insufficiently bold, or even legitimising and defending the liberal (read: mixed capitalist) status quo. Yet I think what I have been successful at showing is that even using only a handful of very basic, shared premises the left can achieve policy progress that is downright radical. Today’s blog will look at one of those bold prescriptions: Guaranteed Minimum Incomes.
The Welfare Principle
For those yet to read it, the central connection I make between rights-based individualism and the need for social cooperation is what I term the ‘welfare principle’. The welfare principle requires that, when competitive institutions or self-help cannot guarantee citizens’ fundamental rights, cooperative institutions must be and are created to do so. Although I will freely admit to borrowing the principle from human rights law, I’ve not seen it used much in political philosophy, much less in socialist discourse. Since society and social institutions exist to guarantee individual’s civil, political, economic and social rights, and self-help through market mechanisms is very often unable or unwilling to procure them, institutions – including the state itself – arise in order to secure the positive enjoyment of those rights for all.
Which brings us to the topic of poverty. In a liberal, rights-based framework, poverty must be understood as the denial of an individual’s fundamental economic and social rights. It is a failure to secure the income and resources needed to acquire an adequate standard of living (given the surrounding society’s level of economic development). In a monetised society, a person’s standard of living can be approximated by their income – which is a measure of their power to obtain ("purchase") goods and services. Since the value of money is essentially arbitrary, we define poverty as falling before minimum income without which a person can no longer be said to enjoy adequate access to essential human goods and services. As Martin Luther King Jr once said, "the solution to poverty is to abolish it."
As I write in Chapter VII of the book:
“[I]f markets operate efficiently to produce full employment, the state would have only minimal cause to intervene to provide incomes directly to citizens. . . . Everyone could obtain a job that provided for their fundamental needs and wants, and upon retirement, workers would have access to either sufficient savings or a workplace pension to see them through their retirement. Such a society would likely see lower levels of taxation and redistribution, but a lower profit outlook for private economic actors; it is a rough approximation of societies like Japan and South Korea.”
But of course, pure self-help does not generate full employment. In additional to the well-known economic literature on market failures, social interdependence means that economic equilibria may very well not be optimal. And even if they were, vast numbers of people, including children, students, the elderly, the disabled and carers would likely not have access to an adequate standard of living. To that end, I propose the guaranteed minimum income as a way of satisfying the right to an adequate standard of living: a way of simplifying and unifying existing benefits schemes so as to ensure that no one lives in poverty if they do not earn a minimum standard of living by market mechanisms.
One of the these things is not like the other
Since I wrote those words, the related idea of a universal basic income (or UBI) has gained a certain amount of popularity (or at least, curiousity) in policy wonk circles. This is perhaps exemplified on the left by the overrated books “Post-capitalism: A Guide to Our Future” by Paul Mason and “Utopia for Realists” by Rutger Bremen. But UBIs are not merely a socialist "fairy-tale": they’re also modestly popular on the right and even in the centre. UBI schemes have been rolled out on a trial basis in several localities in the US and EU. In Alaska, every citizen receives a royalty cheque from the state’s oil production each year, and certain native American groups have had great success addressing poverty and inequality by directly distributing the proceeds from tribal businesses.
The debate on universal or minimum incomes is becoming rapidly complex, so I thought I should clarify my own stance. I tend not to endorse the most common, universalist models of UBI. This recent article in Evonomics provides a useful way of categorising different approaches to basic social incomes. The author, Charles Young, proposes a typology of UBIs which either:
· Recalibrate existing tax and benefit systems (more common on the left); or
· Replace the Welfare State (more common on the right); or
· Communalise the profits from common assets.
Thumbs Up: Universal incomes that satisfy basic needs
In the first category are proposals that
“restructure[e] the existing ‘inefficient’ and ‘unfair’ benefit systems. Advocates tend to offer what is referred to as a ‘no-frills’ UBI: subsistence or sub-subsistence levels of income . . . . . .[Such p]roposals . . . often set out to combat inequality and poverty, including through the dismantling of poverty traps such as the sudden removal of benefits as low-earner's incomes rise.”
My own prescription of a guaranteed minimum income fits solidly in this category. If we want a minimum income scheme to be achievable, we should be iterative and target our interventions where they will deliver the most benefit. While others on the left may see the revolutionary appeal of more grandiose schemes, as you’ll see below, I think such a revolution would be potentially catastrophic for the goals we're trying to achieve.
Thumbs Down: Voucherisation
The second category of UBI is supported by “[e]conomists and political theorists on the right, especially those identifying as libertarian, [who] see UBI as a vehicle through which to reduce government intervention in public and private life at large.” Right-wing support for UBI schemes essentially represent the ‘voucherisation’ of the tax-and-transfer system. Rather than benefits targeted at specific inequalities, conservatives argue that everyone is entitled to the same ‘payout’ from the state’s taxation system regardless of their socio-economic status. Schemes of this type include negative income tax proposals and it should come as no surprise that Milton Friedman is one of the intellectual originators of such ideas.
Essentially, right-libertarians seek to remove any role for collective decisions in the allocation of social resources. The seek to privatise the benefits that accrue from the tax-and-transfer system, hoping that people won't realise that all the power and risks of that system are simultaneously being privatised. As Chapter XI of Politics for the New Dark Age argues, many social costs are distributed probabilitically, and if your basic income doesn't cover the cost of a car accident or cancer treatment, well then you're just unluckly. The privatization of social benefits also (deliberately) restricts the capacity of individuals to band together and bargain collectively; to share risks and costs and arrive at solutions to collective problems that are sustainable at lower cost.
Means testing (i.e. restricting benefits only to those in need) has its flaws, certainly: it imposes administrative costs and tapering effects must be carefully accounted for. But the idea of government cash grants to already wealthy citizens is not only perverse, but unnecessarily costly and inefficient when the wealthy already possess the power and resources to meet their own need. I have doubts that a basic income that was truly universal would have much of effect on alleviating poverty and inequality at all: price inflation would be a huge risk and likely wipe out most of the gains in purchasing power of the least well-off.
A UBI of this model would also put downwards pressure on wages and thus reduce the labour share of surplus value produced by enterprises. Concerns are widely expressed about the ongoing automation of an increasingly large proportion of the economy, which is set to increase the profit share of capital owners at the expense of workers. But despite what UBI proponents like Mark Zuckerberg and Elon Musks would have you believe, a UBI is like the exact opposite of what we would need to do to actually fight inequality. While big business would happily pension off the working class if it allowed them to keep their monopolistic economic and political power, democratic socialists should look for ways to increase democratic control of the means of production and reverse the alienation of workers from the products of their labour.
Probable Also Thumbs Down: Common Resource Rents
The third and final category of UBI consists of proposals that would:
“communalis[e] common assets . . . [such as] the carrying capacity of the biosphere, atmospheric carbon, fisheries and forests, unearned income, or even the productive capacity of automation and technological change. The fundamental assumption here is that such assets – be they physical, biological or cultural – should be respected as the common property of all, rather than be the source of exploitative disparities from unequal access and power.”
I’ve seen such proposals from my own Australian Labor Party (ALP) brethren: often suggested somewhat cynically as way to generate public support for new taxes by promising voters that all the proceeds will go directly into their pocket (so then, I wonder, why bother?).
Certainly, in small, specialised economies with few, but highly productive common assets, such proposals might make sense (although a better approach might be a managed sovereign savings fund to prevent inflation and Dutch Disease). But in a modern diversified economy, such payments are likely to be complex to manage and insufficient to cover the cost of a guaranteed minimum income for all. I also see risks in aligning the interests of voters with particular, already highly profitable, extractive industries. If everyone is receiving a cheque direct from the profits of extractive, gambling or polluting companies, it would create disincentives to properly regulate them (an argument currently made on both right and left about Venezuela). In other words, although the profits would be socialised, the risks of social and environmental harms from those industries couldn’t be. It would align the interests of the majority against those of affected minorities.