Roosevelt, Fascism, Woke Capitalism and 'Coups Against Democracy' (part two)

 To utterly mangle a famous Bob Dylan lyric, “history doesn’t rhyme, it swears”.

In April 1938, in a speech to the American Congress, Franklin Roosevelt said that “unhappy events abroad” (meaning Europe) had imparted two “simple truths”.

The first was that democratic government was threatened by the “growth of private power to a point where it becomes stronger than [the] democratic state itself”. That, in essence, was Fascism, he said.

The second was that the “liberty of a democracy is not safe if its business system does not …. produce and distribute goods in such a way as to sustain an acceptable standard of living”.

“Both lessons,” said Roosevelt, “hit home”.

The Hubris of Wealth

Sadly, 88 years on, they are hitting home again. Though our situation is probably more perilous in that the American president is the “essence” of the problem, rather than the one stating its existence.

A general myopia regarding the situation also makes combating it far more difficult. Many understand Roosevelt’s second “truth” – that falling or stagnating living standards provide fertile ground for far right and Fascist parties. Anything from high rents, to failing public services, to a callous ‘welfare’ system are blamed on immigrants or lazy freeloaders, or both.

But the first “truth” – interestingly Roosevelt placed it first so as to emphasise it – is less appreciated. But, as part one I hope demonstrated, “the concentration of private power without equal in history” is now actually worse than it was in the 1930s. And its producing similar effects.

So while Fascism is incubated by social conditions that affect the mass of people and unsolved and misunderstood economic afflictions, it also has a corollary at the top of society.

As Roosvelt noted at a time when Nazism thought it would last a thousand years, economic concentration and the growth of corporate power leads to a hubris among rich capitalists that they can discard democracy and institute a government seamlessly suited to their profit-maximising needs. This allies with the Fascist impulse at the bottom of society to produce a low-tax, deregulatory political project that, on its reverse side, constantly seeks scapegoats to blame for problems that are never addressed.

First on the Fascist ‘To Do’ List

We can see this in the actions of classical Fascism – the political environment that Roosevelt was confronting. The absolute first priority of the Hitler regime in Germany, as befitting its bankrolling by wealthy industrialists, was to repress the Left and puts its activists in concentration camps like Dachau. This started with the Communists in February 1933, and then within weeks extended to the Social Democrats and the trade unions. Only after this had been done, did the Nazis turn their attention to Jews, initially through a boycott of Jewish businesses. “There were relatively few Jews among these early prisoners of the Third Reich,” writes historian Arno Mayer in Why did the Heavens not Darken? “and all of them were arrested for being left-wing politicians, lawyers, or literati.”

The original Fascist regime, Mussolini’s in Italy, ceded a lot of power to a coterie of mainly non-Fascist economic advisers. As shown by Clara Mattai in The Capital Order, they instituted a system of brutal austerity and privatisation, which seamlessly dovetailed with Il Duce’s physical smashing of the workers’ movement, and coincidentally caused a massive, though far from unwelcome, slump in living standards.

Roosevelt, in keeping with someone who didn’t consider himself a socialist, thought the intrinsic problem with Fascism was that it rested on a particular type of capitalism. This was the cartel system – groups of companies that become so powerful they can fix prices, distort markets and take over governments so their interests are tended to.

And it is true that, contrary to the contemporary Right’s absurd portrayal of it as socialistic, Nazism had a private profit-making impulse at its core. As Hannah Arendt relates in Eichmann in Jerusalem (p 40), IG Farben, Krupp and Siemens all had plants in the vicinity of Auschwitz and made a pot of money by ‘employing’ its inmates as slave labour.

Nazism and Cartels

As the Rooseveltian moment reached its zenith – i.e. before the Cold War took root and the US started installing and supporting right-wing military dictatorships across the world – the cartel system was blamed for Nazism. The chairman of the US Senate’s Subcommittee on War Mobilization stated that the cartel system was “in great measure” responsible for the Hitler regime. Roosevelt himself wanted the German cartels eradicated and a “Decartelization” team was dispatched to post-war Germany to do just that (with the exception of IG Farben unsuccessfully).

But as shown by the fact that the German cartels existed prior to Nazism, and in fact were instrumental in helping Hitler into power, cartelisation is always an inherent possibility with capitalism. This is especially the case when – as they have been since the Great Depression –economic downturns are nipped in the bud by government intervention and a widespread destruction of capital is not permitted to happen.

In 2012, two American Marxian economists, in a book called The Endless Crisis said that economic concentration, though frequently denied, was greater than it had ever been in the past. They cited another economist who found 22 “barriers to entry” used by firms to exclude rivals, prima facie evidence of a cartel system. And given what has happened in the interim, including a spate of mergers and acquisitions in the wake of Covid, economic concentration has almost certainly become more extreme.

In such circumstances, the temptation to wield the power of market influence and wealth can become irresistible.

Last year, the anti-monopoly group the Balanced Economy Project and the NGO Global Justice Now, urged an investigation of three pharmaceutical giants who had paused investments worth £1.5 billion as prelude to negotiations with the government over drug purchases by the NHS. This, they said, “showed signs of cartel-like behaviour”.

As it turned out, the Competition and Markets Authority, permeated with the Starmer (read now Burnham) government’s growth mantra and horror of seeming to impair business ‘confidence’ refused to investigate. The subsequent talks, carried out under the shadow of threats to withdraw investments, saw the NHS promise to double spending on new drugs at a cost of £64 billion.

Billionaires and the Far Right

It is not hard to see an echo of the German cartels’ role in the rise of Nazism, and participation in its horrors, with billionaire sponsorship of the far-right today. Elon Musk pays Tommy Robinson’s legal costs, calls for the British government to be overthrown and supports Restore Britain. Palantir founder Peter Thiel thinks freedom and democracy are incompatible, while backing Donald Trump and the far-right. Trump’s immigrant detention centres are built and operated by private corporations.

Conveniently, those supported by these techno-billionaires (or trillionaires in the case of Musk) promise to tear down regulations banish abominations like a wealth tax. According to Facebook whistleblower, Sarah Wyn-Williams, offering electoral campaign tools to the far-right Alternative fur Deutschland and the Front National in France was seen as a way of “getting close to these political parties and helping them into government” so as to “stop government from regulating Facebook”.

Famed economist Daron Acemoglu (co-author of the noted book Why Nations Fail) has even suggested that what he calls “the capitalist state” may be prompted, by growing automation and an ever-rising stock of capital, to launch a “coup against democracy” and institute “repression”. He hypothesizes that for quite rational reasons – the desire to maximise profit – “democratic decision-making will become less and less attractive to capitalists”.

The Questionable Allure of Fascism

But a counter-question can be posed. For most corporations – as opposed to some idiosyncratic ultra-wealthy individuals thrown up by this age of mammoth inequality – is backing Fascism is really necessary or even desirable? As alluded to above, Clara Mattei in The Capital Order showed that in the 1920s, both Britain and Italy imposed brutal austerity – in the form of spending cuts, high interest rates and repression of trade unions. But while the latter became Fascist and abolished elections, the former didn’t. In fact, Britain instituted its recession-inducing austerity policies in the same decade that it experienced universal suffrage for the first time.

The Anti-Trump Corporation

It’s also true that for some corporations, elements of the modern Fascist script stick in the craw, primarily because they alienate senior staff members. Disney, for example, perhaps the archetypical American corporation, publicly criticised a Florida law which restricted teaching about sexuality and gender identity in schools, a kind of American version of Thatcher’s Section 28. This was even at the cost of a two-year long legal battle with the Trumpite state governor.

But though it personified corporate opposition, Disney was far from alone. Altogether 337 corporations, including famous names like Apple, Pepsi, Pfizer, Facebook, Mastercard, Citibank and Amazon  signed a statement bemoaning similar state bills across the country that “single out LGBTQ+” people and “have a negative effect on our employees, our customers, our competitiveness, and state and national economies.”

Some American corporations have also retained their DEI policies in the face of threats from the Trump administration. Clearly the ogre of the woke corporation, invoked by the MAGA movement a few years ago, still exists under the surface. It’s a phenomenon that simply didn’t exist the last time Fascism bestrode the world. The late David Graeber brilliantly diagnosed a “culture of resentment” that hones in on a corporate Left elite of HR managers and administrators who police language and acceptable behaviour. “The mainstream Left largely controls the production of humans,” he wrote, “The mainstream Right largely controls the production of things”.

Despite Trump and Elon Musk and crypto-billionaire funded Nigel Farage and Rupert Lowe and Tommy Robinson, this division within the corporate world is very real. But although sections of the corporate elite may passionately hate contemporary Fascism, they are no more predisposed to “democratic decision-making” than the Right. They may be dissenters in the culture war but in the economic war they are resolutely on-message.  In fact, though universal suffrage is an unadorned fact, few powerful people actually like it. As seen by their reaction to losing control of the UK Labour party a decade ago, centrists loathe democracy too.

Be that as it may, in the absence of a serious working-class left-wing revolt, an alliance between the corporate Left and the corporate Right, though they both detest Marxism and view democracy with visceral distaste, seems unlikely.

The surreally limited vision of ‘democracy’ of Margaret Thatcher’s mentor Friedrich Hayek – representatives serving 15-year terms with electors only able to vote for them once in their lifetimes – may be appealing to right-wing libertarians like Peter Thiel but the schisms run too deep for it to become a charter for corporate freedom.

Acemoglu’s “capitalist state” launching a “coup against democracy” presupposes a unity of purpose that was only achieved sporadically in the 1920s and ’30s and would be even harder to cement today. In any case, the dangerous beast of democracy has been suitably tamed in the last few decades by methods such as austerity, debt and the judgement of financial markets. If all else fails, Machiavellian techniques can be employed to see off insurgencies like those of Corbyn or Saunders.

The Shifting Battlefield

Though this last may facilitate the rise of the far right by channelling grievances in that direction, that too has a function for the corporate elite even if these parties do not attain power. The pressure of right-wing opponents promising a bonfire of regulations and more austerity results in establishment parties, even ostensibly ‘left-wing’ ones, committing themselves to similar, though maybe not quite as extreme, policies. Labour Chancellor John Healey, for example, wants further deregulation of the finance sector, accompanied by “fiscal discipline” (read austerity), while the Tories and Reform scream ‘not enough’. Thus, the battle lines are drawn, while the battlefield itself moves inexorably to the Right.

In 1931, American philosopher John Dewey called politics “the shadow cast on society by big business”. Four decades later the Deweyite Noam Chomsky said that corporations were, “in political terms fascist.” Organisationally, there is “tight control at the top and strict obedience has to be established at every level”. The corporation cannot help but shape democracy in its image. At root the problem is corporate power. While it exists, democracy will always be mutilated. It just depends how badly it is mauled.

Money, money everywhere and not a drop to drink

Water, wealth uncreation and turning the means of life into financial assets

The scandal of Thames Water – £14 billion in debt and seemingly incapable of fixing leaks or avoiding untreated sewage being pumped into rivers – says so much about our allegedly democratic political system.

The Conservatives, naturally, want renationalisation – should it become unavoidable – to be a strictly temporary stop-gap before, as with insolvent banks after the 2008 crisis, water is returned to the good hands of the private sector.

But the other team, Labour, are also against permanent nationalisation. In fact, together with the water industry, they are racking their brains to come up with plausible alternatives to it.

Such an absurd situation, at a time when large pluralities of voters, including Conservative ones, want the water ‘industry’ to be taken back into public hands, is perhaps more understandable in the light of the last New Labour government’s intimate ties to the water companies.

Ruth Kelly, for example, former cabinet minister under both Blair and Brown, is head of Water UK, the trade association for the water companies and naturally regards nationalisation as anathema. Angela Smith, former Labour MP and one of the founders of (Don’t) Change UK, vehemently opposed Labour’s previous policy, under Corbyn, of renationalising water. She was quietly readmitted to the Labour party last year. Ian Pearson, former New Labour environment minister is a non-exec director of Thames Water, the UK’s biggest water company, which also employed the ex-Labour cabinet minister and one time Trotskyist, Gus Macdonald, as its  European advisor between 2006 and 2016.

Such an elite consensus is symptomatic of the British oligarchy which masquerades, less and less convincingly with every month that goes by, as a model democracy. The Conservatives are obviously in favour of the continuation of privately-run water – it was Thatcher who privatised it in 1989. But the opposition Labour party is so well ensconced in the (fraying) order of things, that it is just as ideologically opposed to a change in the status quo. Notwithstanding obvious errors like the Brexit referendum, which released so many exorcised ghosts from the closet, British ‘democracy’ is about persuading the public to acquiesce in a state of affairs they dislike more and more as time passes.

But if the water ‘industry’ illustrates the hollowness of democratic decision-making, it also exposes something fundamentally rotten in the way we approach our economy as a whole. The water companies are, it has been reported, collectively in debt to the tune of £65 billion, up from nothing when they were privatised. “The staggering combined debt pile built up by the UK’s 12 water companies means that huge swathes of cash are being spent on interest payments,” fumed the Daily Mail a few weeks’ ago, “money that could be spent cleaning up polluted rivers or fixing leaky pipes.”

But no-one seems to ask why they are in debt. It can’t have been to fund infrastructure investment as the sewage-tainted rivers and seas and unplugged leaks wouldn’t exist if the infrastructure was properly maintained, let alone upgraded. The real reason is both more prosaic and depressing. Deliberately placing companies in debt, in order to extract money from them, is a core part of the strategy of their immensely wealthy owners.

The technical term for this is a ‘leveraged buyout’. The idea goes back to the 1960s but really only took off in the 1980s and ’90s. One American writer on “asset-manager capitalism” describes it thus:

[Traders realized] they could buy a company with borrowed money, using the company’s assets as collateral for the loan. They then transferred the debt to the company, which in effect had to pay for its own hijacking, and eventually sold it for a tidy profit.

The root of Thames Water’s debt affliction stems from the time it was bought by Australian asset manager Macquarie in exactly such a leveraged buyout in 2006. According to Money Week magazine, “by the time it was sold again in 2017 its debt had ballooned from £3.4bn to £10.8bn”.

Incidentally, Macquarie’s interest in the UK’s Water ‘industry’ has not abated. In 2021 it completed a “debt investment” in Anglian Water and acquired a majority stake in Southern Water.

According to American economist Michael Hudson, asset managers and ‘activist shareholders’ now look upon companies generally as “cash cows”. Rather than “plowing [sic] profits back into the corporation to expand the business by new long-term investment, research and development,” he argues, “the company is urged to pay out its earnings as dividends and buy back its stock to bid up its price.”

Share buybacks, illegal until the Thatcher and Reagan eras, have become routine for corporations. Among UK water companies, the owners of South West Water and Yorkshire Water have both initiated share buybacks. The effect of a firm buying back some of its own shares is to reduce their overall number, thus increasing the earnings per share that shareholders receive. However, there is a cost. The money used could have been deployed to invest in the business or, in the case of water companies, modernise infrastructure or reduce bills. According to one critique, “By systematically draining capital from America’s public companies, the habit … corrupts the underpinnings of corporate capitalism itself.”

Politicians aside, many British people are outraged that these predatory capitalist practices are being used to degrade a vital public service such as water provision, without which life would be unbearably hard. But the uncomfortable fact is that such predatory practices are degrading capitalism as well.

The peril of damaging the delicate flower of ‘wealth creation’ is invariably raised whenever the idea of public ownership or more regulation or taxation is mooted. Sir Keir of Starmer-land, leader of something called ‘the Labour party’, says that ‘wealth creation’ and economic growth must happen first if money is to become available for public services.  But today’s financial managers, in the water industry or elsewhere, aren’t doing anything to create wealth. Instead, by stopping infrastructure or capital investment from occurring, they’re destroying it – to no-one’s benefit but their own.

And this is before the fact that they invariably avoid paying any tax on their ‘wealth creating’ activities is brought into the equation. Because water firms – and many other companies – are drowning in debt, they pay very little tax on their “special dividend payments”. Thames Water, for example, admits it doesn’t currently pay any corporation tax “because of the Government’s Capital Allowances scheme and the impact of our interest costs”.

We have been lulled into accepting the fiction that wealth creation is synonymous with rich people doing whatever it takes to become even richer – that a high share price is a sign of economic vigour  – when, in reality, their labyrinthine money-making schemes can be its utter antithesis.

Arguments contesting the duplicitous concept of wealth creation have generally taken the form of arguing that other people – workers, entrepreneurs or consumers – are doing the real work of creating wealth. The owners, by contrast, do very little, apart from becoming legally entitled to receive it after it has been generated. This is what Marxists call (surplus) value. But even one takes the highly dubious wealth creation ruse at purely face value, it involves the creation of jobs and products or services by someone. How are we to react if, in fact, no value is being created, besides the ‘wealth effect’, the translation of capital gains made in the stock market into luxury consumption?

At this point someone will be sure to pipe up about pension funds. They loom large among the investors in water companies (and electricity firms), either as clients of the private equity investment firms that own them, or as partners in consortia that run water companies directly. For example, the Universities Superannuation Scheme (for academics in the UK) and the Ontario Municipal Employees Retirement System both own large stakes in Thames Water.

But pension funds are as desperate for ‘yield’ as anyone else, in order to pay for the pensions of current and future retirees. They illustrate the absurd quid pro quo we have got ourselves into – that we must accept sewage being pumped into rivers and seas, and bills that keep rising while tax is avoided, in order to ensure barely adequate occupational pensions for thousands of ordinary people.

This is not a choice we should be forced to make. As should be obvious since the financial crisis, the stock market is not, despite superficial appearances and the best efforts of governments through ‘quantitative easing’, an eternally bountiful cash cow – either for money managers or pension funds. The old pension system in the UK – a better basic pension and an occupational (SERPS) scheme – both based on the pay-as-you-go principle offered more stability than endlessly trying to squeeze as much as possible from unwilling companies or privatised utilities that neglect their primary functions in favour of making money.

Still there is something archetypal about water. Along with energy, health services, ports, nursing homes, waste management, car parks, telecommunications etc., it is a real asset with a guaranteed cash flow that makes it irresistibly attractive to asset managers. This is, according to one author, “a society in which the key physical systems supporting social life and its reproduction—so-called ‘real assets’—are increasingly owned by institutional investors [pension funds, insurance companies, university endowments] specifically through the mediation of dedicated asset managers [the plunderers] and their investment funds.”

However, it seems peculiarly odious that water, so basic to the preservation of life, is treated in this manner. One of the first things acts of a Corbyn-led Labour government would have been to renationalise water, while his successor is brainstorming ways to head off the threat of that common sense option being taken. Nothing else illustrates quite so starkly which side they are on.

 

Addendum: Last week ITV broadcast a programme called 'Dirty Water – what went wrong', an investigation into why there were more than 300,000 sewage spills in England & Wales last year. But the programme shied away from the real reason things have gone horribly wrong – privatisation. Specifically a system in which asset managers buy water companies by placing them in debt and then get them to pay for the privilege of being bought out – in the process sacrificing the basic function they are supposed to have, which is to ensure clean water. The programme suggested that bills would have to rise to pay for the investment in infrastructure that will have to take place to avoid the mass contamination of water in the future. But bills have already increased by 40% in real terms since privatisation, with the result of sewage being pumped into rivers & seas across the country. So where has all the money gone?  You don't need me to tell you.

The experience of England is not unique. In the book Our Lives in their Portfolios, author Brett Christophers relates how private equity companies have acquired water systems across cities in America with the result that bills have skyrocketed while the systems themselves have been left in a terrible state. In England & Wales all but three of the water companies in England & Wales have been removed from the stock market by private equity firms.

The incidents are not exceptions, says Christophers. "Rather, they are the more or less inevitable upshot of core features of the model by which asset-managers society operates. They are, in short, a feature not a bug".

I look forward to a TV programme about that.

Should the Left support Basic Income?

This article first appeared on the New Compass website

2016 will see basic income rise up political consciousness. Trials and referenda will take place across Europe. Should the Left support basic income? Half a century ago, the famous psychoanalyst and Frankfurt School theorist, Erich Fromm, examined the psychological effects of giving everyone a guaranteed income. His thoughts are instructive. He thought it a 'great step' but that without other changes, it is not enough to really change society.

From occupying the fringes of debate just a few years ago, basic income – the idea that the state should pay an unconditional income to each person as of right – has swiftly climbed up the political agenda. Finland has announced a basic income trial, Utrecht and 19 other Dutch municipalities are planning to introduce a pilot scheme some time in 2016 paying a small group of benefit claimants €876 a month. Also this year, notwithstanding the opposition of the Swiss Parliament, Switzerland will hold a referendum on the nationwide introduction of a basic income set at a much higher level - US$ 19,800 a year.

What should be the attitude of the libertarian Left to basic income? Is it a way of liberating people from an increasingly cruel and, in any case vanishing, welfare system and exploitative job market? Or does it shovel free money towards the already wealthy and save a dysfunctional capitalism from itself?

Before jumping to conclusions, it is worth weighing the opinions of radical thinkers throughout history on basic income. The idea is far from new. The English revolutionary Thomas Paine proposed something similar in 1797. And the German psychoanalyst and Frankfurt School theorist Erich Fromm advocated ‘a universal subsistence guarantee’ in his famous 1955 book The Sane Society. In 1966, he considered the issue in more depth in an essay entitled The Psychological Aspects of the Guaranteed Income.

Individual freedom

The most important reason for accepting the concept of a basic income, Fromm says, is that it would drastically increase the freedom of the individual. Up to this point in history, freedom has been constrained by the use of force on the part of rulers, but also by “the threat of starvation against all who were unwilling to accept the conditions of work and social existence that were imposed on them.”

A guaranteed income becomes for the first time possible in conditions of economic abundance or, in Murray Bookchin’s phrase, post-scarcity. This lifts the threat of starvation and makes genuine independence feasible. “Nobody would have to accept conditions of work merely because he otherwise would be afraid of starving – a talented or ambitious man or woman could learn new skills to prepare himself or herself for a different kind of occupation,” Fromm writes. “A woman could leave her husband, an adolescent his family.”

This “right to live, regardless”, as Fromm puts it, is the most important justification of a basic income, in my opinion. We live in societies in the West which are stiffening the ‘threat of starvation’ just as economic abundance becomes a realisable possibility. Over 90% of unemployed Greeks and nearly two-thirds of Spaniards, countries where unemployment is staggeringly high, do not receive any unemployment benefits. An estimated 1.5 million people in Britain use food banks. Welfare benefits have become increasingly conditional on satisfactory ‘job search’ activities, conditions which are imposed on sick and disabled people as well, with the withdrawal of income an ever-present threat.

What this means is that many more people than before are dependent on others, often older relatives or partners, and powerless before a labour market eager to exploit them. Or simply destitute. Precarious ‘bullshit’ jobs, or ‘shit work’ as Spanish labour unions call them, have mushroomed. In Britain, research has shown that spiralling flexible employment practices are causing widespread anxiety, stress and ‘depressed mental states’ because of the financial and social uncertainty they entail.

A basic income could restore independence and freedom to people whose lives are increasingly blighted as a result of economic circumstances, performing a role similar to that undertaken by trade unions and collective bargaining in the era of full employment. “Income from labour will be renegotiated,” says Enno Schmidt, one of the organisers of the Swiss group, Generation Basic Income. “No-one can be blackmailed with their existence” to do work they don’t wish to. “With a basic income, I can say no to a bad deal.”

The non-work society

Basic income can liberate people from the necessity of making a living and allow other non-market activities to flourish that, while not materially productive, nonetheless make life meaningful and have important functions. This might be looking after children, artistic creation, managing a chronic illness or education for the sake of it, not utilitarian ‘self-improvement’. “This right to live, to have food, shelter, medical care, education etc,” writes Fromm, “is an intrinsic human right that cannot be restricted by any condition, not even the one that the individual must be socially ‘useful’”.

This principle, of “the right to live regardless”, whatever someone’s personal utility might be, should, in my opinion, adorn any society that does not seek to oppress its members. However that society is organised.

To the above activities should be added democratic self-management of the community. Genuine democracy is not possible in a time-pressed, hurried society. Basic income should increase the free time available to many members of society and make direct management of the community feasible, not just theoretically desirable. The practices of democracy could be learnt by experience if work fades into the background.

To many of its advocates, basic income is explicitly about relegating the centrality of work in people’s lives, permitting a collective breathing space for other, undirected activities to come to the fore. Marilola Wili of Generation Basic Income maintains that the idea represents a paradigm shift in what work means. It can “unpredictably set human forces free in ways one may have never thought about”, she says.

The great step

However, basic income alone will not produce the paradigm shift that is required. “The great step of a guaranteed income will, in my opinion, succeed,” writes Fromm, “only if it is accompanied by changes in other spheres.” The danger of a basic income is precisely that it assumes changes in other spheres are not necessary and merely bolts on to our current capitalist society, leaving its deep flaws intact.

One such area is consumption. Basic income has been presented as a solution to the lack of demand in the economy. Under this justification, basic income becomes the ‘salvation of capitalism’, by buttressing weak consumer buying power and replacing the economically destructive growth of household debt and credit. Basic income stimulates the economy and increases corporate profits while, at the same time, giving workers more freedom and nullifying the threat of impending technological unemployment. What’s not to like?

Actually plenty. Under this scenario, basic income becomes a crutch that permits an ecologically and socially destructive economic system to preserve itself, neutralising its contradictions and performing a redistribution of wealth to blunt its oligarchic tendencies. Corporations can continue selling endless individual gadgets, continue forming monopolies, continue commercialising the pores of everyday life, and continue offshoring production to areas of the globe with dirt cheap labour and transporting the goods back to the rich world, thus causing global warming. They can continue doing this because basic income intervenes to ensure a market for their products in the wealthy countries.

Fromm contrasts two types of consumption; ‘maximal’ consumption which we currently have and ‘optimal’ consumption, which entails consumption for public use through amenities like theatres, libraries and parks. “Guaranteed income without a change from the principle of maximal consumption would only take care of certain problems,” writes Fromm, “but would not have the radical effect it should.”

I believe that a serious post-capitalist Left cannot just pit good collective consumption against bad individualised consumption. Myriad individual products make life function and liberate people from toil. But it is abundantly clear that a radical change in consumption needs to take place. Goods needs to be built to last, disposable consumption ended and the practice of transporting products across the world vastly curtailed. In short, the capitalist engine behind contemporary consumption needs to be switched off. “Such a change from maximal to optimal consumption would require drastic changes in production patterns,” writes Fromm, “and also a drastic reduction of the appetite-whetting, brainwashing techniques of advertising.” This is something basic income alone will not do. And it should be remembered that the western lifestyle of the 1960s, the lifestyle Fromm derided as ‘maximal consumption’, is considered healthy and moderate in retrospect by many climate activists, compared to hyper consumption now.

However, it must be borne in mind that Fromm wrote his essay at the height of the post-war boom and in the wealthiest country in history at the time, the United States. In 2016, it is quite conceivable that basic income will be employed to keep consumption going at ‘basic’ levels should a new and drastic economic crash occur, one that cannot be bailed out by governments. Basic income could, therefore, perform a rescue act to stop society from collapsing. Which is rather a different thing to providing a long-term surrogate for the perpetually expanding market that capitalism requires but cannot itself manufacture.

Not just for the precariat

It should also be recognised that basic income, in its pure form, is not just for the so-called precariat. The Dutch pilots are for benefit claimants only but under most basic income proposals everyone gets the same, wealthy and poor alike. A basic income would be paid to all adults. It is conceivable that a basic income would allow the wealthy or comfortably off to stop working altogether, become self-employed or switch to a less demanding job. These are quite plausible scenarios, and many wealthy people do seek an escape from their high-pressure lives. But, equally, it could also simply supply an additional mass of money to the already wealthy, an issue that applies particularly to the’ basic income max’ proposals of $20,000 or $30,000 a year. This money could be used to buy more property or invest on the stock market. Thus actually reinforcing inequality and bolstering financial speculation.

Fromm concludes that the “full effect” of guaranteed income will only happen if combined with a change in the habits of consumption, a new humanistic attitude and a “renaissance of truly democratic methods”. He envisages a new Lower house (he was living in the US at the time so presumably he means the House of Representatives) which summarises “decisions arrived at by hundreds of thousands of face to face groups, active participation of all members working in any kind of enterprise.” He warns of the danger of a state that nourishes all acquiring dictatorial qualities that can only be “overcome by a simultaneous, drastic increase in democratic procedure in all spheres of social activities.”

I believe a ‘welfare state’ that restricts itself to automatically paying all members of society a guaranteed income would actually have much less power than one that makes welfare provisional on myriad conditions and intrudes shamelessly into the lives of benefit recipients. However, Fromm is right that the ‘great step’ of a basic income is not a panacea. Any just society should grant its citizens economic freedom, and for that reason alone the Left should support a basic income. But basic income does not render other changes in society any less necessary and we should not be lulled into thinking it could.