17.03.2016

Basic income urgently needed

Defence mechanisms against the iniquities of capitalism are needed now, argues Chris Gray

The aim behind the Tories’ ‘universal credit’ welfare payment system, launched in 2013, was to integrate six means-tested benefits and tax credits into a single monthly payment for those who qualify. The six include jobseekers’ allowance, working tax credit, child tax credit and housing benefit.

There are obvious advantages in consolidating various welfare payments into a regular monthly payment, but, as outlined, the legislation has several drawbacks. Guy Standing has drawn attention to some of them. For example, unlike a system based on a basic income, which he supports, “Topping up low wages with tax credits is expensive, distorting, inefficient and inequitable, as well as moralistic [ie, discriminatory] in its selective conditionalities.”¹ Furthermore,

Universal credit, combined with raising the amount a person can earn without paying tax, will mean that, for every £1 of extra income, benefits will be cut by 65p. The £1,000 increase in the personal tax allowance in 2013 will give £200 per year to every basic-rate taxpayer except those on universal credit, who will gain only £70.²

Standing notes that the new scheme places tougher demands on jobseekers and provides for sanctions for up to three years if they fail to carry out jobcentre demands. To summarise, there are three main criticisms that can be made of universal credit: l It is means-tested: ie, not everyone gets it as of right. l Benefit is still paid if you find employment - but, unlike a system based on a basic income, it is taxed away if you ‘don’t really need it’. l It is subject to disciplinary scrutiny: the ‘undeserving poor’ are excluded. Paul Mason, in his recent book Post-capitalism: a guide to our future (2015), comes out in favour of basic income as a building block in the transition to “post-capitalism”. He writes:

The idea is simple: everybody of working age gets an unconditional basic income from the state, funded from taxation, and this replaces unemployment benefit. Other forms of needs-based welfare - such as family, disability or child payments - would still exist, but would be smaller top-ups to the basic income.³

Paul meets the obvious objection head on:

Why pay people just to exist? Because we need to radically accelerate technological progress. If, as [a recent study] suggested, 47% of all jobs in an advanced economy will be redundant due to automation, then the result under neoliberalism is going to be an enormously expanded precariat.

He writes eloquently on the expanded choices which would be open to people if a basic income were available:

A basic income paid out of taxes on the market economy gives people the chance to build positions in the non-market economy. It allows them to volunteer, set up co-ops, edit Wikipedia, learn to use 3D design software, or just exist. It allows them to space out periods of work; make a late entry or early exit from working life; switch more easily into and out of high-intensity, stressful jobs … Suppose, in the UK, we set the basic income at £6,000 [£115.38 per week] and hike the minimum wage to £18,000. The advantages of working remain clear, but there are also advantages to be gained through not working: you can look after your kids, write poetry, go back to college, manage your chronic illness or peer-educate others like you.⁴

Historically, it could be argued that the idea of income as a citizen right goes back to ancient Athens: there, Guy Standing tells us, “a stone device called a kleroterion was used to select a random 500 people to make policy, out of 50,000 citizens”.⁵ Perikles won popularity in Athens for introducing payment for officers of state. However, this was not payment for just being alive, but for carrying out duties which all citizens were expected to perform. Tom Paine Guy Standing alludes specifically to the work of Tom Paine (1737-1809): namely his Agrarian justice (1797). Paine’s argument, as summarised by Standing, runs as follows:

Every affluent person in every society owes their good fortune largely to the efforts of their forebears and the efforts of the forebears of less affluent people. If everybody were granted a basic income with which to develop their capabilities, it would amount to a dividend from the endeavours and good luck of those who came before.⁶

Standing adds pointedly: “The precariat has as much right to such a dividend as anybody else.” Paine, it appears, explicitly declared that “Every individual in the world is born therein with legitimate claims on a certain kind of property, or its equivalent.”⁷ But his Agrarian justice has received scant attention from mainstream historians and political scientists. If you read it, you will see why: Paine shows a definite anthropological awareness - something that was evident in the 18th century enlightenment⁸ and developed later on in the 19th century. Paine writes:

To understand what the state of society ought to be, it is necessary to have some idea of the natural and primitive state of man; such as it is at this day among the Indians of North America. There is not, in that state, any of those spectacles of human misery which poverty and want present to our eyes in all the towns and streets of Europe. Poverty, therefore, is a thing created by that which is called civilised life. It exists not in the natural state. On the other hand, the natural state is without those advantages which flow from agriculture, arts, science and manufactures.⁹

Paine rightly rejects any idea of returning to the ‘state of nature’:

It is always possible to go from the natural to the civilised state, but it is never possible to go from the civilised to the natural state. The reason is that man in a natural state, subsisting by hunting, requires ten times the quantity of land to procure himself sustenance than would support him in a civilised state, where the earth is cultivated.¹⁰

He immediately introduces a sentiment - an ethical precept - which any hunter-gatherer would accept, as follows:

the first principle of civilisation ought to have been, and ought still to be, that the condition of every person born into the world, after a state of civilisation commences, ought to be no worse than if he had been born before that period.

Implicitly, Tom Paine agrees with the judgement expressed by Leon Rosselson in his song about the expropriation of common land by the ruling classes: “By theft and murder they took the land. Now everywhere the walls spring up at their command.” Paine writes: “Every proprietor … of cultivated lands owes to the community a ground rent” (original emphasis). He therefore proposes to

create a National Fund, out of which there shall be paid to every person, when arrived at the age of 21 years, the sum of 15 pounds sterling, as a compensation in part for the loss of his or her natural inheritance, by the introduction of the system of landed property.And also the sum of 10 pounds per annum, during life, to every person now living, of the age of 50 years, and to all others as they shall arrive at that age.¹¹

This payment should be a universal right:

It is proposed that the payments … be made to every person, rich or poor. It is best to make it so, to prevent invidious distinctions. It is also right that it should be so, because it is in lieu of the natural inheritance, which, as a right, belongs to every man, over and above property he may have created, or inherited from those who did. Such persons as do not choose to receive it can throw it into the common fund.¹²

Paine comes close to stating that the expropriation of surplus value by the ruling classes is the cause of the existing destitution:

If we examine the case minutely, it will be found that the accumulation of personal property is, in many instances, the effect of paying too little for the labour that produced it; the consequences of which is that the working hand perishes in old age, and the employer abounds in affluence.¹³

“Personal property,” Tom Paine avows, “is the effect of society”. Hence the wealth accumulator has an obligation to repay society for the contribution made therefrom to individual wealth accumulation. This is not some thing that can be left to charitable feeling or to the Islamic obligation of zakat (funds given to the poor by the wealthy). Updating Paine Guy Standing’s proposal for a basic income brings up to date Tom Paine’s plan for a payment due to individuals as of right:

The core of the proposal is that every legal resident of a country or community, children as well as adults, should be provided with a modest monthly payment … with add-ons for special needs, such as disability. In most rich countries, it would be less radical than it may appear, since it would mean consolidating many existing transfer schemes and replacing others that are riddled with complexity and arbitrary and discretionary conditionality …. It would not create a poverty trap, in which, as income rises, the benefit is lost, acting as a disincentive to labour. The person would retain the basic income, regardless of how much is earned from labour, just as it would be paid regardless of marital or family status ... If the state wanted to limit the amount going to the affluent, it could claw it back through higher tax on higher incomes.¹⁴

The principal objection would no doubt be: ‘Why reward people for doing nothing?’ This is eloquently answered:

The vast majority would not be content to live off just a basic income. They want to work and are excited by the possibility of improving their material and social living. To hound a tiny minority for their ‘laziness’ is a sign of our weakness, not our merit. In that regard a little experiment, conducted in the backstreets of London in 2010, had heart-warming lessons. Some homeless vagrants were each asked what they most wanted; their dreams were modest, as befitted their situation. The money to fulfil those dreams was provided without conditions; a few months later, nearly all of them had ceased to be homeless and a burden on the local authorities. The savings for taxpayers of giving that money amounted to 50 times the cost of giving it.¹⁵

The whole approach makes sense. Standing suggests that the value of basic income could be varied in order to counteract the effects of the economic cycle, but how would the payments be financed under current economic arrangements? The solution is right to hand:

Sovereign wealth (or capital) funds, which already exist in 40 countries, are a promising way of doing that. If the income accruing to such funds could be shared, the precariat would gain a means of control over their lives.¹⁶

It might be alleged that provision of a basic income would undermine the desire of workers to push for income increases. However, all depends on the level at which the basic income is set: it should be sufficient to prevent starvation, but not enough to erode a legitimate desire to earn more by taking employment.

However, there is an overwhelming reason why the capitalist class would adamantly refuse to accept the idea, and that is its propensity to undermine the efficacy of the industrial reserve army: if the unemployed are given such income that they refuse to offer themselves for super exploitation, then this undermines the desired degree of competition in the labour market (as tends to happen under ‘full employment’) and enables workers to demand remuneration at a level equal to or in excess of the value of labour-power. That, in turn, would exert an adverse influence on the rate of profit and would, therefore, create additional difficulties for employers.

The introduction of a basic income would indeed tend to lower the supply of labour, but that would not necessarily be a bad thing. Increased productivity might be the result. As for inflation, it might well be that a basic income requirement might fuel inflation in a set of circumstances in which the forces of capital and labour were equally balanced, so that a wage increase spontaneously provokes a price rise. In any case, such a complaint should not bother us: it is necessary to strengthen the power of organised labour, in order to abolish the current mode of production, which is an obstacle to the overall wellbeing of humanity.

The objection that a basic income is ‘unaffordable’ is laughably inept, for reasons outlined above. As for abuse by populist politicians, there is practically no socialist or progressive proposal that could not be so utilised - including calls for the abolition of capitalism - by irresponsible demagogues. It is necessary to unmask the demagogy. Paul Mason, as indicated above, emphasises the greater choices available to individuals if we establish a basic income. Paul advocates instituting such a basic income as part of a programme for the supersession of capitalism. While that would obviously be a good thing, a basic income, as a necessary support for those disadvantaged in the current rat race, is needed now. Defence mechanisms against the iniquities of capitalism are needed now.

The left should launch a campaign for the introduction of a basic income as a matter of urgency.

Notes

1 . G Standing A precariat charter London 2014, p321.

2 . Ibid pp240-41. 3 .

P Mason Post-capitalism: a guide to our future London 2015, p284.

4 . Ibid pp284-85.

5 . G Standing op cit p180.

6 . Ibid p173.

7 . Quoted in ibid p339.

8 . Cf Denis Diderot’s 1772 Supplément au voyage de Bougainville.

9 . P Linebaugh Thomas Paine: rights of man and common sense London 2009, p299.

10 . Ibid p300.

11 . Ibid p302.

12 . Ibid p303.

13 . pp309-10.

14 . G Standing op cit pp171-72.

15 . Ibid p174.

16 . Ibid p176.