Basic income versus the economy of coercion

 Proving basic income is affordable is merely the first skirmish in long war

In 2015, an academic from Birmingham University asserted that, contrary to the beliefs of sceptics, basic income was eminently affordable. Using Canada as his example, Richard Pereira quantified the likely effects of savings from the abolition of existing social security benefits, reductions in bureaucratic costs, a smaller burden on public health care and a crackdown on tax avoidance and evasion. His conclusion was that you could introduce a basic income at a ‘decent level’ without additional personal taxes. In fact, basic income might even enable reductions in personal taxes.

One of the priorities Pereira identified in making basic income affordable was plugging ‘tax leakage’ by multinationals and the rich. “Vast wealth is channelled away from public goods though … shady and secretive offshore jurisdictions,” Pereira wrote. “Some of the largest multinational companies are paying zero tax and receiving tax refunds and subsidies simultaneously.”

The release of the Panama Papers has lent Pereira’s claims about the affordability of basic income a distinct air of, to use a contemporary political buzzword, credibility. According to the Tax Justice Network, global offshore wealth amounts to $21-32 trillion. Get hold of that vast wealth and the whole political landscape shifts. Austerity loses its justification and basic income becomes a feasible aim. “Some may disagree with the notion of an unconditional cash grant, or object to it going to everyone. Just don’t say we can’t afford it,” noted one Panama Papers post-mortem.

The realisation that a colossal trove of wealth exists to fund basic income is coupled with a growing awareness that punitive welfare systems don’t even succeed in meeting their most elemental aim – that of saving money. All that checking on people’s fitness to work and whether they have applied for 47 jobs that week as they promised in their job search agreement, costs an inordinate amount of money. According the UK’s National Audit Office, the cost to the taxpayer of the private contractors carrying out fit to work tests is at least £600 million more than the government is forecast to save in benefits reductions. The ‘age of austerity’ should be renamed the ‘age of needless pain’.

But there is a danger that basic income advocates are lulled into the belief that all they need to do is rationally convince the public and policy-makers that a basic income is affordable, will lighten the burden on multiple public services and vastly increase personal freedom. People will slowly see the light.

This, however, is less than half the battle. A great many, very powerful people will not want basic income regardless of how affordable it is. They will fight against it mercilessly precisely because it will vastly increase individual freedom, and their entire worldview rests on human subjection.

The great German psycho-analyst and socialist Erich Fromm advocated a basic income sixty years ago his book, The Sane Society – he called it a ‘guaranteed subsistence minimum’. After refuting the idea that basic income sounds too ‘fantastic’ to be affordable, Fromm was less sanguine about convincing everybody that a basic income was necessary and right. “However, the suspicions against a system of guaranteed subsistence minimum are not unfounded from the standpoint of those who want to use ownership of capital for the purpose of forcing others to accept the work conditions they offer,” he said.

Even more than in Fromm’s day ownership of capital is now overtly predicated upon forcing people to accept the work conditions that are on offer. Economic recovery after 2008 rests upon low wage, insecure service sector work. According to economists, all the net growth in jobs in the US since 2005 has been in ‘alternative work arrangements’, such as contract and temporary posts. In Britain, zero hour contracts have mushroomed during recovery from recession, while other forms of flexible work contract have proliferated. In continental Europe, massive political weight has been expended to make it easier for employers to fire workers. In France, the Nuit debout protests are against a planned labour reform that would place the country’s entire labour laws up for negotiation with employers, including the 35 hour week.

All these changes are inherently about increasing coercion. “The labour market is never free,” says Paul Mason is his book, Postcapitalism. “It was created through coercion and is re-created every day by laws, regulations, prohibitions, fines and the fear of unemployment.”

The rise in sanctioning people on benefits in Britain for not looking for work with sufficient ardour and the hounding of sick and disabled people is not primarily about saving money because, as is evident now, money is conspicuously not being saved. The reason is to force people to take work at wages they can’t live on, make life on benefits so astoundingly awful that zero-hour contracts seem attractive, and to sound a clear warning to those in work that they need to knuckle under and obey. “Economics is the method,” said Margaret Thatcher. “The object is to change the soul.”

By contrast basic income threatens to undo all the hard work of neoliberalism in shoring up the power of employers. At present, as one basic income advocate says, “all negotiating power is in the hands of those offering the jobs and not those looking for them”. Basic income will grant palpable bargaining power to individuals in the labour market, and, for the first time, allow genuine personal choice. Erich Fromm thought basic income would be the beginning of real freedom of contract between employers and employees. Work will have to be interesting, or well-paid enough for people to want to do, or will be automated because no-one will.*.

But to the rulers of our societies this represents, not a dream of liberation, but a nightmare of the collapse of social coercion. Who knows where such a society will lead. Marilola Wili of the Swiss group, Generation Basic Income, contends that basic income will “unpredictably set human forces free in ways one may have never thought about”.

“Work for a salary is the bedrock of the system,” says Paul Mason. “We accept it because as our ancestors learned the hard way, if you don’t obey, you don’t eat.” Basic income will loosen that bedrock and quite possibly, in time, smash it completely. For that reason, many people at the summit of society will do anything to ensure it doesn’t come to pass. Let’s not kid ourselves, achieving basic income will be an almighty struggle. But it’s a struggle we need to embrace.

*Automation represents another danger basic income might pose to capitalism. According to Karl Marx, ‘the most fundamental law of capitalism’ is the tendency for the profit rate to fall as machines replace human labour, which is the ultimate source of value. If basic income cause a spurt in automation and a reduction in labour intensive employment, as unpopular jobs are increasingly mechanised, then profit rates may well, in time, crumble. Capitalism in the West has become reliant on low-wage, low productivity but labour intensive service sector jobs, which do not have to be done by people and in the future almost certainly won’t be, regardless of whether basic income is adopted. But basic income will accelerate that process. Human, sweatshop labour in China and East Asia has provided an enormous boost to profitability for multinational corporations, but that source of profit is drying up as the Chinese economy, and thus globalisation, slows. It is also true that, according to Marxian economics, various forces counteract the tendency for profit to fall, such as increased wages boosting consumer spending. Basic income could also be an offsetting force to falling profits, so its economic impact may be complicated.