Friday, 6 November 2015

More welfare or more weekend?


On a Universal Basic Income, full employment and avoiding libertarian traps

It's the summer of 1986. Top Gun and Glasnost and the depths of a renewed Cold War—a war the Eastern Bloc is losing. Reagan is in the middle of his second term. Thatcher is set to win her third in just under a year. Socialist French President François Mitterand has long since abandoned the radical programme he was elected on in the face of capital flight, rising inflation and economic sabotage. It is beginning to be more than clear to some on the left that the rightward turn that began in the late seventies across much of the West is no temporary set-back or routine swinging of the political pendulum that would very soon be corrected with a revival of working class militancy. For the unions have been roundly beaten as well almost everywhere. The balance of forces—political, economic and industrial—are not in the left’s favour.

Amid the spreading demoralization, a paper appears in an academic journal that embraces the despair and yet simultaneously aims to provide new hope. Abandon all aspirations of achieving socialism, a pair of Dutch and Belgian authors declare; it is an unnecessary detour anyway! Instead, look to what they oddly call ‘A capitalist road to communism’:

“Prospects for the Left look bleak indeed. Electoral disasters on the British pattern and policy U-turns on the French pattern have reinforced the suspicion that socialism may forever remain out of reach,” wrote Robert van der Veen and Philippe van Parijs, adherents to a relatively young and ultimately short-lived academic school of thought called Analytical Marxism that attempted to marry the rigours of analytical philosophy with what they claimed to be a stripped-down ‘no-bullshit’ Marxism, shorn of anything that did not hold up to empirical scrutiny.

“Even worse, actually existing socialist societies have repeatedly failed to provide an attractive picture of socialism. Compounded by mounting disillusionment with the achievements of state intervention in the West, this failure has shaken many people’s faith in the very desirability of socialism.”

Van der Veen and Parijs argued that this state of affairs should be accepted, perhaps even welcomed. It does not matter either way, as it turns out that the central principles of communism can be constructed inside of capitalism via the relatively straightforward policy innovation of a guaranteed basic income, bypassing the need for the election of a socialist government, workers’ control of industry, central planning, or the elimination of private property, still less a socialist revolution that increasingly appeared unlikely, if such a violent disruption were even to be wished for.

Capitalist road would prove to be a seminal paper, launching the modern discussion on the left of a basic income—a modest sum “paid by a government, at a uniform level and at regular intervals, to each adult member of society … irrespective of whether the person is rich or poor, lives alone or with others, is willing to work or not.”

Sketches of the idea have existed in corners of left-wing thought since the origins of modern radicalism in the American and French Revolutions. Thomas Paine called for a Citizen’s Dividend for as long ago as 1791 in his Rights of Man, while the revolutionary journalist Marquis de Condorcet proposed a kind of social benefit to be issued to “the entire mass of society”.  In 1836, utopian socialist Charles Fourier argued that civilization owed everyone subsistence enough to cover three meals a day and a “sixth-class lodging”. Nineteenth century liberal reformers also backed similar concepts, as did liberal philosopher John Stuart Mill. Nevertheless, although occasional progressive figures such as André Gorz and Martin Luther King Jr favoured versions of a guaranteed income in order to, as the latter put it, “abolish [poverty] directly”, from the middle of the 19th Century on through the 20th Century really until about the 1990s, the left overwhelmingly favoured a different goal: not mere alleviation of poverty while wealth and power remained in the same elite hands, but an elimination of inequality, full employment and the control of the means of production by ordinary people, or, as we used to call them, the working class.

Yet now, in the second decade of the 21st Century amid neoliberalism’s crisis-ridden senescence and at the dawn of what futurists predict will be an age of unprecedented automation and robotification of labour, we are seeing Van der Veen and Van Parijs’s idea taken up with enthusiasm in a great many jurisdictions, from Greece to the Netherlands to Namibia, and from the far left and Greens to the mushy liberal middle to the Red Tory right and even Silicon Valley libertarians, whom one would normally expect to be horrified as such an extension of the welfare state.

How is it possible that the proposal of a couple of Marxian professors from the Benelux—riffing off some of the more utopian musings of Enlightenment dreamers in a brief outline of an idea that they themselves concluded was only “sketchy and tentative”—has been able to capture the imagination of politicos of every hue in recent years?

Or is this full-spectrum unanimity a sign that something’s not quite copacetic?

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There is one really great selling point to the idea of the basic income for Van Parijs, Van der Veen, subsequent leftist promoters of the concept such as sociologist Erik Olin Wright, various contemporary bright young things around the Novara Media project and Plan C post-work post-autonomists in the UK, the new philosophical school of Accelerationism, and a range of writers in the Jacobin magazine ecosystem--and until now, myself. It undermines the necessity of work, eliminating the need to sell your labour, or, more correctly, your ability to labour, in order to earn a living. If you wanted to live on a small amount and devote yourself to art, music, science, to education, to freelance journalism—that particularly ill-remunerated profession—or just to lazing about, you could now do so. It massively expands the potential for leisure.

The hope would be that freed of such compulsion to enter the labour market, employers would have to offer better pay for unattractive, boring or dangerous work. Bosses would be driven to innovate in such a way to make work as enjoyable as possible in order to not pay as much. Drudgery becomes ever more automated and a virtuous circle of ever improving working conditions would materialise without so much as a grievance, let alone picket line. Parallel to this, the rate paid for work that is actually desirable would steadily asymptote toward zero. “If you extrapolate this trend forward, you reach a situation where all wage labour is gradually eliminated,” writes Peter Frase in an influential Jacobin essay promoting the concept.

It’s a worker’s paradise. So why would elites give it a second glance? And why now?

They have more than reason enough, it turns out.

Automation and robotification and the presumed mass joblessness that will follow has elites petrified that we are on the cusp of a return of the pitchfork. In May this year, tech consultancy Gartner warned that a third of all jobs will be replaced by software and robots as early as 2025. A very broadly cited 2013 study from Oxford futurist-philosopher Carl Frey and roboticist Michael Osbourne predicted that a full 47 percent of jobs in the US are at risk of disappearing as a result of computerization. Some sixty percent of Australian students are studying for careers that will not exist within ten years, according to a similar report, this time by the Foundation for Young Australians.

And this time, they prophecy, it won’t just be assembly line workers or farm labourers. From driverless cars to algorithmic medical diagnosis and legal analysis, this time it will be taxi and truck drivers, construction workers, chefs and even law clerks, real estate agents and doctors whose jobs are threatened. Baxter, a $22,000 general-purpose robot that does not require programming. A human simply ‘trains’ the robot by guiding its arms through the motions required for a particular task, a method that is then memorized. Even sports and financial news reporters are being replaced by ‘computational journalism’ software from companies like Narrative Science.

The choice for billionaires in a world of billions of unemployed then seems to be between the simple solution of some version of a universal basic income (UBI) or barricading themselves in their safe rooms against the hordes outside. Vice magazine can report on Silicon Valley bitcoin boffins fretting about how their apps are displacing taxi drivers and foreign-language teachers while enthusing about how negative income taxes will solve the problem they think they are creating all the while eliminating bureaucracy. Or the Guardian can report on a packed session at the World Economic Forum in Davos where a former hedge fund director talked about how the super-wealthy, with an eye on the apparent rise in social unrest from Tahrir to Syntagma to Maidan to Ferguson are planning how they are going to escape when the furious masses rise up: “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway.”

In August, Citibank chief economist Willem Butler issued a disquieting report discussing growing inequality, “robot angst” amid recent innovation that is “more disruptive” than in the past because automation is substituting for labour more than it has in the past, instead of complementing existing workers and making become more productive, and so destroying a larger number of jobs. A key part of the solution to avoiding the danger that this “bifurcating” world represents is, he says, “a guaranteed minimum income for all, or an ambitious negative income tax … to support those left behind by technological advance.”

Editorialists in the Financial Times and free-market Economist have backed or flirted with some form of UBI, and, moving leftward, as has Robert Reich, the left-liberal secretary of labour under Bill Clinton, who feels it is “almost inevitable” in the US, as well as Nobel-winning economist and fellow neo-Keynesian Paul Krugman. “Today, however, a much darker picture of the effects of technology on labor is emerging. In this picture, highly educated workers are as likely as less educated workers to find themselves displaced and devalued,” he wrote in a widely shared 2013 New York Times column entitled, pointedly, ‘Sympathy for the Luddites’. The only imaginable, possible solution to this conundrum is “a strong social safety net, one that guarantees not just health care but a minimum income, too.”

But the UBI is moving beyond column inches and corporate consultancy recommendations. The UK’s Green Party put it front and centre of its spring election campaign, not hidden away like an embarrassing platform plank backed by the members but seen as cringeworthily unsaleable by the leadership, and costed out to an eye-watering £331 billion but made revenue-neutral via the abolition a raft of other welfare provisions such as housing and child benefit. The presumptive new leader of the Labour Party, Jeremy Corbyn, views the idea favourably, and the author of his economic policy document is a long-time UBI campaigner, although Corbyn himself has not formally backed it. Across the Channel, a May poll put support for the idea in France at 60 percent, up from 45 percent in 2012. Switzerland is to hold a referendum in 2016 on the introduction of a UBI amounting to 2,500 Swiss francs a month (about CAN$3,400). The centre-right Finnish government, one of the wealthiest nations in Europe, considering a basic income pilot project aiming to solve its 10 percent jobless rate, a figure that climbs to 23 percent amongst the young. Greece, the most indebted nation in Europe, is also to move ahead with a countrywide guaranteed income, approved by the Troika. And this fall, 30 Dutch municipalities led by the city of Utrecht—the fourth most populous town in the Netherlands—are to participate in basic income experiments.  

Beyond the west, remarkable reports of success from actually existing UBI programs in India and Namibia, are being held up as proof of concept. In the Indian village of Panthbadodiya, the Self Employed Women’s Association
(Sewa), a 40-year-old trade union that organises low-income women, together with subsidies from Unicef, delivers individuals a regular, unconditional, small sum of 200 rupees (about CAN$4) per month, topping up whatever they earn otherwise. Compared against 12 non-participating villages that serve as controls, researchers found that families are spending more on protein and healthcare, while children’s grades improved in 68% of families, and tripled the amount of time they spent in school. Savings tripled as well, and the number of people able to start a new business doubled.

A similar trial in the Otjivero-Omitara area of Namibia, a group of churches, trade unions, NGOs and Aids organisations, handed out an unconditional basic income grant (BIG) of 100 Namibian dollars (about CAN$9.50) a month. (For comparison, the poverty line is N$316) A study investigating the BIG’s effects found that the percentage falling below the food-poverty line declined from 76 percent of residents to 37 percent; those able to get jobs or become successfully self-employed climbed from 44 to 55 percent; and the amount of non-BIG income per capita grew from N$118 to N$152. The number of underweight children has tumbled from 42 to 10 percent, and, as in Panthbadodiya, school attendance is soaring, with teachers saying pupils are better able to pay attention. Crime rates have declined by 42 percent and household debt has slid from N$1,215 to N$772.

The UBI is having its moment.

The scale of the consensus on the idea is a far cry from a long-buried experiment in the rural Manitoba town of Dauphin in the 1970s, a comprehensive, five-year trial that is now regularly cited by advocates as the strongest proof yet that it works as a poverty reduction strategy. The experiment, known as ‘Mincome’, was jointly bankrolled by the then provincial New Democratic government and Pierre Trudeau’s Liberals, and offered an unconditional annual income to every family. Those that worked had their Mincome cut by 50 cents for every dollar earned. The idea was to offer a cushion for shifting crop prices or crop failures. The governments were interested to see whether such a support would produce a disincentive to work, a town full of lay-abouts. If successful, the long game was to roll out a similar plan nationwide. But the scheme ended up costing $17 million, much more than had been envisaged. It was scrapped as recession hit Canada at end of the decade. Almost 2000 boxes’ worth of data on the trial were packed away, not to be heard from again until University of Manitoba health sciences researcher Evelyn Forget tracked them down in 2009.

She found that there was essentially no reduction in working hours with two notable exceptions: women who were mothers of young children, or had elderly or disabled relatives and who were now choosing to stay home, and teenagers, who now felt free to continue in school and not help out their parents on the farm. Meanwhile, there were fewer work-place injuries, fewer car accidents, less domestic abuse and hospital visits declined by 8.5 percent.

Despite the quiet disappearance of Mincome, there has never stopped being a buzz about the concept of a basic income in the Liberal Party. Even before Mincome, Pierre Trudeau came close to embracing a 1971 parliamentary report recommending a guaranteed annual income, and then the concept made a brief reappearance in 1994 in a never-acted-upon discussion paper from then Liberal Prime Minister Jean Chretien’s administration. And here we begin to see why many in this centrist party are fond of the idea. The paper declared: “the social security system is not working for many Canadians and for the country as a whole,” and suggested it be redesigned as a Guaranteed Annual Income (GAI). The overhaul would be part of a wider transformation of federal social programmes and provincial transfers. The overhaul—a decade of unprecedented cuts to the Canadian welfare state—arrived on time, but the basic income never did. Then last year, the Liberals of Justin Trudeau, battered on their left flank by an increasingly popular New Democratic Party, adopted a Basic Annual Income as a “priority resolution”. Unlike his father, Trudeau fils this time openly backed the proposal.

Hugh Segal, the Red Tory intellectual and one-time chief of staff to Prime Minister Brian Mulroney, has come out firmly in favour of a universal basic income, and is now perhaps its biggest proponent in the country. Self-described as a ‘One Nation’ conservative—a rare breed in Canada these days—he takes his distance from Thatcherite politics, insisting instead upon the obligations that the better owe the poor, all the while emphasizing social harmony between the classes. As we’ll continue to see, this preference for social harmony runs through almost all discussions of why a UBI is necessary.

Segal wants to see a GAI both because decades of existing welfare policy have made no dent in poverty rates in Canada. In a 2012 essay in the Literary Review of Canada entitled “Scrapping Welfare”, he noted that the poverty level in the country has barely changed from the 12.9 percent it was in the mid 1970s to the 12 percent it was in the late 2000s.

We spend billions on programs that address dropouts, reduce substance abuse, assist young people in trouble with the law, encourage nutrition, subsidize housing, provide safe houses for the victims of family violence, run the Children’s Aid, realign incentives in the tax system for the working poor, support First Nations education and fund micro-managing welfare systems,” he wrote, “that do not bring anyone above the poverty line.

All this would be done away with in favour of a simple monthly sum deposited in a person’s bank account. Poor people would no longer be ‘case-load burdens’ borne by “well-paid and unionized civil servants”, as he put it. “They would not have to apply through Plexiglas for enough money to feed their kids.” They would no longer be badgered by petty rules and case officer interference in their lives, “treated as dim creatures, incapable of making decisions.” They would be citizens instead, trusted to make their own life choices. There is something quite seductive to his argument.

By his assessment, the cost of the programme delivering a base income floor of $10,000 a year delivered to all of the 3 million low-income Canadians, and before taking into account the significant savings from the healthcare system, prisons and the now forgone welfare payments, such a system would cost $30 billion. 

Although Segal sees a basic income as a way to streamline existing social welfare programmes and employment insurance into one universal system, significantly reducing public administration, he doesn’t go so far as to say that a UBI should replace the rest of the welfare state. A guaranteed income would just become another pillar alongside universal education and healthcare.

This is not true amongst the libertarian wunderkinds and venture capitalists of of Silicon Valley however, who have fallen in lust with the idea as a “bureaucracy killer”, as one investor puts it in a recent article on the love affair between tech gurus and the UBI—and here they go beyond Segal’s vision to include eliminating what remains of Medicaid, public education, basically anything the government does except police, courts and the armed forces, while the millions on today’s welfare rolls are now liberated to become entrepreneurs.

If this all begins to smell a bit like ‘minarchism’—that version of libertarian philosophy that concedes at least some very tiny, minimalist state might be necessary, it is because it is. Neoclassical economist and libertarian hero Milton Friedman advocated a version of the idea as long ago as the 1960s, a negative income tax, in which below a certain income level, people receive a stipend from the government instead of paying taxes. Richard Nixon wanted to implement such a plan, a move supported by libertarians at the time, although it ran into administrative, cost and conceptual problems that ultimately sank it. Today, the libertarian-inflected Pirate Party of Australia backs the idea, as does Slovakia’s classical-liberal Freedom and Solidarity Party, who were part of the last centre-right coalition government and want to use an NIT to rid the country of the current welfare and tax systems. Sam Bowman of the British free-market Adam Smith Institute says: “The ideal welfare system is a basic income.” And last year, the libertarian Cato think-tank published a series of essays discussing variations on the theme of a guaranteed income. The conclusion is that it is a pragmatic compromise, recognizing that no democracy is about to vote into office full libertarianism anytime soon. But a UBI would take society one step closer. It’s the libertarians’ ‘transitional programme’, if you will.

“A basic income guarantee,” wrote Matt Zwolinski in Cato’s lead essay in the series, “even if it is not ideal from a libertarian perspective, is significantly better on libertarian grounds than our current welfare state, and has a much higher likelihood of being achieved in a world in which most people reject libertarian views.

And if we turn our gaze back to the planned Finnish experiment with a UBI, we find that its architects are just about as interested in a revolutionary paring back of the welfare state as these Californian dreamers. There, it is the centre-right/hard-right coalition government that will be overseeing the pilot efforts, with an explicit aim to provide an alternative to the country’s expensive benefits system. The test will involve paying some 8,000 people in from low-income groups from a limited geographical area four different amounts, ranging from €400 (CAN$590) to €700 ($1030)—very meager sums indeed. Historically in Finland, the Social Democratic Party and the Central Organisation of Finnish Trade Unions (SAK) have strongly opposed a basic income, viewing it as an attack on social security and collective bargaining.

Following the capitulation of Alexis Tsipras’s Syriza government to the EU Troika in July, the new bailout agreement with creditors includes a plan for the national roll-out of a guaranteed minimum income (GMI) by the end of 2016 at a projected cost of €980 million. The previous conservative government had piloted a GMI in 13 municipalities last November, paying out a miserly €200 (CAN$295) for singles, or €300 jointly for a couple, increased by €100 for each adult dependent and €50 for each child.

Until the surrender, the prime minister had opposed the idea. Trade unions, the Syriza base and other left-wing critics continue to view the GMI as another effort by Eurozone technocrats to radically curtail social provision and slash union wages.

Armine Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives, a progressive think-tank, is no fan either. She notes that while Hugh Segal’s back-of-the-envelope figure came to $30 billion, a more realistic sum from Simon Fraser University economist Rhys Kesselman put it at $380 billion. “This equals a huge opportunity cost,” she says. “Even if you got back some of that money, as Senator Segal says would be the case, by scrapping programmes, the poors could be even worse off, depending on which group of poors.”

This is a huge amount of money that could be spent on childcare, transport infrastructure, improving public education, or making college and university free like it is in much of Europe. Above all, some of this could be spent on building more housing to bring down the cost of rent. “The single biggest bit out of our incomes, irrespective of income, is shelter costs,” she continues. The current housing market is so distorted that even a generous basic income will do little to correct this problem. And the problem is getting worse, especially in the big cities. “If you don’t have solid rent controls in place or a much bigger stock of low-rent housing, the money goes into one pocket and out the other—a taxpayer transfer to landlords.”

Kesselman for his part concedes that a paternalistic welfare bureaucracy is “pernicious” in its distinctions between the worthy and unworthy recipients of cash and programmes. But welfare programmes don’t have to stay as they are, he reminds, and made less intrusive into people’s lives. Indeed, it is usually the conservatives now cheering basic incomes that were the ones who originally demanded the introduction of ever more onerous conditionality. He points out that most of these variegated programmes, not just the obvious ones like healthcare and education, but long-term care facilities, pharmaceutical subsidies, mental health services, drug and alcohol rehabilitation, immigrant resettlement, prenatal counselling, school breakfasts, sporting facilities and legal aid—to take just a few examples of the hundreds of different programmes that are offered—do need to be funded and managed separately. They would suffer or disappear if they were replaced by a single lump sum allocated to a person each month.

“Taking even modest initial steps toward a guaranteed income is likely to further starve critically needed targeted cash transfers and diverse in-kind benefits,” he concludes.

Or as John Schmitt, a senior economist with the progressive Center for Economic and Policy Research in Washington DC, put it in an interview with Salon, “My fear is that it’s possible for a coalition of completely well-intentioned and idealistic—with no negative connotation to that—people on the left to support what would be a very generous basic guaranteed income, in a coalition with significant elements on the right, including the libertarian right, that has basically the motivation that this will undermine existing social welfare institutions.”

But what about a basic income as well as existing programmes and not in place of them? A generous UBI instead of a miserly one? Could this be the next step in the welfare state, or even, as Van Parijs puts it, “the culmination of the welfare state”?

So much depends on the balance of forces between capital and labour at the moment of its implementation. If labour is weak, then the likelihood is that it will be conditional, meagre and a replacement for already declining welfare provision. If labour is strong, it would be unconditional, generous and in addition to existing programmes.

But the very attraction of a basic income to Van Parijs and Van der Veen in 1986 and still to many on the left today, is that it appears to offer an alternative to a strong labour movement. It was precisely the world-historic defeat of the working class in the 70s-80s that led Van Parijs to his pessimistic conclusion that it would be better to push for a universal grant than the fuss and bother of the grand old socialist ambition of a system of democratic economic planning, where workers own the means of production, or even the more moderate but no less shattered Keynesian dream of full employment.

While left proponents believe a basic income will strengthen the hand of labour, right proponents back it for precisely the opposite reason.

Capitalism already offers a minimum income to permit the maintenance of life; it’s called a wage. With the introduction of a UBI, employers would have a powerful weapon to force wages down, as they good argue that they needn’t pay as much any more, because they already had enough to maintain their standard of living. Collective bargaining would turn into a process of negotiating by how much wages and salaries should be lowered.

As economists C.M.A. Clark and Catherine Kavanagh describe in a 1996 “conservative case for a basic income”:

By partially separating income from work, the incentive of workers to fight against wage reductions is considerably reduced, thus making labour markets more flexible. This allows wages, and hence labor costs, to adjust more readily to changing economic conditions.

At the end of the 18th Century, the ‘Speenhamland system’ was introduced by law as a method both of rural poor relief and preventing revolutionary uprisings. The poverty wages of farm labourers were topped up by magistrates on a means-tested sliding scale, dependent on the number of children a family had and on the price of bread. The scheme did relieve malnutrition and poverty somewhat, but far from decommodifying labour, the scheme encouraged farmers to keep on paying low wages.

And so more recently, libertarian Scandinavian flexicurity fan* and economics commentator Steve Randy Waldman has tried to sell the idea to his mates by suggesting how a basic income eliminates the need for unions: “Supplementary incomes are a cleaner way of increasing labour bargaining power than unionization. Unionization forces collective bargaining, which leads to one-size-fits-all work rules and inflexible hiring, firing, and promotion policies, in addition to higher wages.”

The UBI is not only a subsidy to employers; it is a union-buster.

Why would any contemporary government, as beholden to capital as they are today, introduce legislation that would strengthen the hand of labour?

If labour had the strength to enforce the introduction of a Good UBI, it would also have the strength to revive the project of full employment. And while even the best UBI only sets a floor below which poverty cannot fall, full employment genuinely strengthens labour’s hand to demand ever greater wages. This is because in a situation of a tight labour market where there is a job for anyone who wants one, if pay and conditions are lousy at one workplace, there is always another, better paying one just down the road that will hire you right this afternoon. Full employment constantly increases labour’s share of the wealth that it alone creates.

Under a perfectly working basic income, those working in drudgery would pay the taxes that covered what, let us be honest, they would view as an idle life of painting, knitting or studying. Under full employment, gains in productivity can be shared out to labour in the form of a shorter work week or longer holidays with no loss in pay—but for everyone. Instead of increased leisure for a few, leisure increases for all.

And here we return to the question of productivity and automation, of the supposed looming robot apocalypse.

It’s just not going to happen.

First of all, while technology has always displaced this or that group of workers—and when you’re one of those workers, it’s certainly lousy if there aren’t decent employment insurance or retraining schemes—overall, across the workforce, technology has never reduced the amount of work. Indeed, it has always created more jobs than it has destroyed.

At the end of the 18th Century, 90 percent of the US workforce was employed in agriculture. As of 2009 (the latest year for which there are figures), less than 0.7 percent are farmers. It’s not the case that now 90 percent of Americans are out of work; they’re now engaged in other, often less back-breaking labour. The percentage of people engaged in hard, dangerous and boring jobs has tumbled. Researchers trawling through English and Welsh census data dating back to 1871 found that while in 1901, some 200,000 people out of a nation of 32.5 million washed clothes for a living, by 2011, with a population nearing 60 million, just 35,000 now worked in this sector. In the last two decades, there has been a 57 percent drop in the number of typists, a 50 percent drop in the number of secretaries, a 79 percent drop in the number of weavers and knitters. Meanwhile, employment in medicine, education, and professional services has soared. Even as the number of cash machines soared from 1980 to 2010, the number of bank clerks actually increased in the US, as they became employed in other financial product tasks. We just tend to notice more the jobs that are displaced by technology rather than the ones that it creates.
The unemployment that we see today is not caused by technology, but is a deliberate product of fiscal and monetary policies introduced in the 1970s and 1980s intended to discipline labour after the abandonment of the full employment strategies of the previous three decades that had produced stagflation, a declining share of national income going to the owners of capital, and, worst of all from their perspective, bolshy unions.

In fact, we should be wanting machines, software and robots to do more and more of the tasks that humans have done. While it doesn’t displace jobs, it does allow us on aggregate to work less while earning more. That’s what sort of what productivity gains are: increased output per hour worked. Workers of course benefit only so long as strong unions are their to hold employers feet to the fire. In 1950, the average US worker spent 1909 hours on the job, but by 1973, this period had plunged to 1797 hours—as US liberal economist notes, this is equivalent to three extra weeks of vacation a year. All the while seeing real wages climb unfalteringly. Over this same period, wages rose at a steady clip of 2.23 percentage points faster than the inflation rate in an average year.

The main driver of new technology adoption is businesses trying to reduce the cost of labour by boosting this output. If a new machine allows your workers to pump out ten widgets an hour instead of two, then, in old Marxist language, you are able to extract more surplus value from them, more profit. But if labour is so cheap much cheaper than labour saving devices, why go to the extra expense?

And for all the chatter about how technology is moving faster than ever before, in reality, businesses just aren’t investing in new labour-saving equipment. American company investment in computers and software has been declining for 15 years. The global total number of industrial robots in 2014, roughly 200,000, was fewer than the average number of jobs created monthly in the US alone.   

It is the very weakness of labour that has inhibited the uptake of new technologies, and the demand for them. It is militant labour that is the motor of innovation uptake. And so, while in the US, labour productivity growth averaged 2.8 percent a year from 1948 to 1973, since the mid-70s, it has slumped, picking up briefly in the 90s, only to sag again since. It is growing but at rates far lower than during the post-war golden age. The economy continues to grow to, but anaemically, by adding more workers, while the total hours worked has flatlined. According to the 2015 Economic Report of the President, had productivity growth continued to keep to its post-war golden age trajectory through to today, the average US household income would be $30,000 higher than it is.

The figures for other countries vary, particularly China of course, but the US is broadly indicative of trends seen elsewhere in the West. 

The point is that the UBI short-cut to more leisure time, less poverty, and strengthened unions delivered up on a platter by a corporate-captured state that has demonstrated for 40 years it is committed to the opposite of all this is a fantasy. If we want more leisure time, we have to get productivity growing again. And to get productivity growing again, labour has to become more expensive. And the only way for labour to become more expensive is for there to be a genuinely global and militant labour movement, on the scale of what had so frightened elites that they conceded to us the welfare state after the war.

What pushed the emergence of the UBI concept in the 1980s and 1990s from arcane corners of left-wing thought to such prominence today was the surrender of the last leftists standing that followed the bleak, horror-filled realisation that not merely socialism but Keynesianism as well had been defeated, at least at the level of the nation-state. Marxist sociologist Göran Therborn rightly castigates the idea as a “curious utopia of resignation.”

Yet the rainbow of proposals for different types of a basic income do not break out of this nation-state-focussed, capitalist realism; they submit to it.

There is no capitalist road to communism. There is only, as ever, the calibre of the confidence of labour.



*Steve pinged me to clarify that while he's not into labels, libertarian is probably not the right term to describe him and that he's more of a fan of Scandinavian-style flexicurity, or, as he put it, a 'left neoliberal'.

29 comments:

  1. Even though I have some reservations about your thesis, I've finally found a writer that speaks to my techie-but-lefty sensibilities.

    Question: The labour movements have always been fraught with corruption just as the current hyper-capitalist movement in America seems to be (Citizens united et al.). The UBI always seemed to be the ideal way to de-centralize that power/corrupition. Empowering just the labour movements seems regressive. Aren't they incentivized to just keep the number of jobs they represent instead of letting the jobs move around for example what incentive does the lawyers union have to let machine learning software hollow out their ranks?

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  2. Calling Mincome UBI was obviously false advertising. If it's reduced by anything whatever, it is no longer unconditional.

    But if it's revolution you want, go for giving everyone on Earth the full rental value of their equal share of the Earth's natural bounty. That is the best UBI, and frees labor and capital to be partners as they were meant to be, rather than both being parasitized by the plague of rentiers we have today (and always have had, by the way). These folks masquerade as capital in "capitalist countries", and as labor in "socialist countries", but they are neither, and by any name the smell is equally foul.

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  3. Prasenjit: Labor unionists are folks who don't see why the rich should get all the privileges. "Freedom is but privilege extended till it's enjoyed by one and all."

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  4. Designing, marketing, and even assembling capital equipment is more creative and desirable labor than operating capital equipment to produce consumer goods. Capital industries are also typically paying a much higher percentage of costs out to labor than consumer industries. These factors should respond well to UBI - a large drop in the value of desirable labor relative to undesirable labor will drastically cut the cost of labor-saving equipment. Also: a modest decrease in total private sector technology investment is no surprise right now as we escape the growing pains of several nascent industries, most notably software. Increasing availability and quality of off-the-shelf solutions combined with ever-climbing engineer salaries has made in-house development less palatable and less necessary.

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  5. This is a dense but interesting piece of musing. I agree in sentiment with many of the theories and inferences, though I would like to point out that one glaring failing in Marxism Communism is ignoring basic human psychology: people do not want to work so that their neighbor can drive a bigger car than them.
    And so guaranteed payments also ignores how 1) the person receiving the money does not value how it was achieved (nor learns the process of enteprise and productivity that would enable a rise in station) and begins to expect or even demand it (i.e. gambling it away is now low risk and maybe high reward) - creating a lower class that are both dependent and risk seeking is not a recipe for a stable society, and 2) as you allude to already existing workers just outside of the "subsidized" range are disincentived to increase productivity and will have difficulty getting critical mass for collective negotations.
    Existing payout programs that tend to focus on temporary assistance for special situations (i.e. life low points and disabilities), job training, etc. will be in direct competition for resources and the naive democracy will vote themselves the least path of resistance to bread and wine, thus codifying a bifurcation of the ignorant needy and permanent powerful givers.

    Perhaps, as you point out, perhaps the pyschological component and effect on existing labor groups and government structures is not being ignored by those wishing to destabilize...

    What's possible with current technology is a virtual economy that is unbounded in it's ability to produce and consume, an excellent vehicle for society to educate and segregate the ambitious from the complacent. Fairness and meritocracy (which tends to increase stability, productivity, and civilization - compare monarchy to democracy) can only be achieved if the "new middle class" of the technology era realize they must negotiate a safety-net-and-advancement system with the "1%" rather than being seduced by billionaire unicorn myths.

    Labor does not always need to become expensive (i.e. pressure necessitates collective bargaining), instead we should encourage disruption via larger access (i.e. anyone in the digital economy can learn how to write an App and sell digitally globally without logistics costs) which increases the pool (and thereby the diversity) of the "winners" that control resources. Power corrupts and the inevitable desire to keep the status quo (i.e. monopoly) leads to tyranny.

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  6. I was following you until the very last part here, where you fall victim to the fallacy that is named, ironically, the Luddite Fallacy.

    You are clearly aware, at least to some extent, of the breadth and adaptability of the developing automation technologies, yet you somehow fall short of the obvious conclusion that ultimately, the scope and pace of this now-ongoing automation revolution will inevitably not just put a lot of people out of work, but remove work as an option for a huge part of the population as a source of any sort of sustainable income.

    Yes, sure, this can be remedied to a certain extent by dramatically cutting work hours and equally dramatically increasing wages. This will even increase productivity. However, it will also dramatically increase the employer's labour costs, which wouldn't be so bad except *there will be ever-increasing focus on automating away what can be automated away*. Once we get to a point where actual AI develops, all bets are off. There is no reason whatsoever to believe that any job that can be done by a human cannot be done by a machine. I would, in fact, argue that it is inevitable that we will get to a point where any job CAN be done by a machine. At that point, the only reason one would want humans to do the work is if you'd want the same humans to buy the products, and you know they'll have no other option for getting that income.

    Now, that last bit there might have some people say, "oh but that works out, then". Because surely you'll want people to buy your stuff, so why would you make stuff if people can't buy it? However, that idea ignores the global marketplace. If you're in England, you don't need Englishmen to buy your products if you can get *literally anyone else in the world* to do so. And there is no reason as of yet for why that would pose a problem, as long as your product is good enough. Of course, this only applies to physical products. Digital products don't even care about the borders in the first place.

    The idea that we can somehow stay ahead of the automation revolution by employing stronger labour tactics (which I'm generally all for; pro-union, higher wages, more free time, stronger protections for workers and all that jazz) and improving education and re-education... it is, to put it simply, a delusion. All of those efforts are at their core mere stop-gaps, and may only succeed in staving off the worst of it for a while. However, the most important measures - education and re-education - introduce systemic lags and capacity problems that will only worsen as machine capacity for labour improves at an exponentially increasing rate. There is absolutely no realistic way of stopping this revolution other than an outright world-wide ban on automation technologies beyond certain levels. And honestly, that right there may be the most unrealistic policy idea that has ever crossed my mind.

    At this point, you cannot get around the inevitability of a society where human labour is rare and unreliable as a source of income. And when that comes around, you need welfare systems in place that allows everyone to live comfortably. I fully agree that meagre sustenance-based guaranteed incomes are not the way to go. Decent, universal basic incomes at levels that allow for a comfortable - even if not luxurious - life, combined with the still-necessary universal welfare bastions of free comprehensive healthcare and education (simply for the sake of education, even!), is not just an ideal way to go. It is the only way to go. It is the inevitable way that it must go. Because those pitchforks? They will come out regardless, unless the basic income that is offered is actually liveable.

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    1. Note: I just realised that the first sentence was poorly structured: I meant to say that the idea that tje Luddite Fallacy is an actual fallacy, is in itself a fallacy, not that you fell prey to it (you appear to claim that others do).

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  7. Thanks for a very interesting and well-researched article. It's good to see a considered disagreement to basic income as opposed to the usual knee-jerk 'no one will work' or 'too expensive' arguments that usually come up. And whether basic income is a trap for the left, or a surrender, needs to be considered.

    I have come to organising for basic income not from reading Van Parijs and van der Veen's article, but from community and feminist organising around issues which never seem to qualify as 'labour' enough for unions to take much notice. Unwaged caring work, for example, and secure, affordable housing. Capitalism does not 'already provide a minimum income' through the wage, if your work is not waged, or you are unable to work at a waged job for whatever reason - youth, inexperience, lack of education, disability both physical and mental. A universal basic income does at least allow us to exist independently of a wage-earner, which no amount of workplace organising for higher wages and better conditions - as much as I do support this - will ever accomplish. Even the best union organisers I know often have to fight their own unions in order to win fights in their workplaces, so the call to merely 'strengthen labour', as much as I agree in principle, rings hollow.

    Unions are also not yet taking on the new gig or 'on-demand' economy, nor do they acknowledge the need and desire for more flexible working. So far this has allowed the flexible working which many people - including myself - see as potentially a good thing to become yet another method of uncontrolled rent extraction. The point here is whether people have real control or not over what and how many hours they do, (also the big issue with the rise of zero-hour contracts where people lose all in-work benefits and control over when they work) and a greater share in the profits generated. Maybe the answer is to build apps which challenge the rent extraction model and spread the money made more equally to the participants; these would surely attract the critical mass of participants upon which these app-based businesses survive. However in the meantime we need to tax these apps - and social media giants like Facebook - to the gills and distribute the proceeds as basic income.

    Unions as they exist have a huge amount of work to do to turn themselves into organising vehicles for a better future and not merely defensive strategists concerned only with full-time permanent workers - the elite of the working class. This article ignores the real weaknesses in union organising over the past 30-40 years which allowed the current onslaught on rights, wages and benefits to happen.

    ...(contd)

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    1. .... (contd) What does a demand for 'full-employment' have to offer us - those who cannot work at a job or want to do things not generally considered 'employment'? While I agree that technology will not necessarily get rid of jobs at the pace suggested by the techno-fizz of Silicon Valley, there are a lot of things which humanity needs to do in order to survive as a species, which capitalism - whether the traditional means of production control system, or as it has become, a powerful rent-extraction system, is not interested in tackling. A basic income could be a means which allows people to take on those collective tasks we need to do, not just 'knitting' or writing poetry. Indeed the internet allows a much greater range of activity, and collective working, than existed before.

      As for some people just 'knitting' on the taxes on others' drudgery, this misses the key contradiction of welfare state policies since World War II (pointed out by Gorz) - that they are paid for by taxes on income earned by working, thus setting them up for the current fall, the 'skivers vs strivers' arguments now successfully used to attack state welfare provision where it exists. Basic income in many of the proposals would be paid from taxes on unearned income - rent extraction from land, copyright, capital, resources. These would redistribute the huge cash piles currently stashed via a variety of tax havens or sunk uselessly into the property market, and are models I support. It is one of the great victories of neo-liberal scorched earthism that everyone, including much of the left, has forgotten that unearned income can and should also be taxed, and taxed at a far greater rate.

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    2. (cont'd) Certainly workfare here in the UK and in the US shows that any 'full employment programme' run by the state can be corrupt and useless, and a point for further rent extraction by capitalists. Opponents to basic income on both the left and the right often seem to regard giving people 'free money' as tantamount to giving them a disease, as though the current economic system is not actually making people sick, in ever larger numbers.

      I am not sure why the other proven benefits of basic income: in terms of less crime, domestic abuse, hospitalisation for both physical and mental ailments, etc are flagged up here but largely ignored. All of these point to basic income possibly creating a smaller need for state programmes to clean up the messes made by the impoverishment and alienation of our current economic system.

      I am also sick of fighting merely defensive battles which might win some short-term gains but never the war for the future.

      All of those battles have been against policy moves by arms of the state bureaucracy, cast as 'beneficial' in welfare terms, but which were in fact done for corrupt, self-serving reasons. We as opponents to those reforms were (are) cast as opposing an inevitable - and inevitably progressive - privatised future, deluded in our supposed conservatism, somehow not 'understanding' the supposed benefits. I've seen many small victories, but most have been of the 'hold on until the wind changes' type, where larger more damaging reforms have made those individual policy changes redundant, or the personnel of the bureaucracy has changed and is interested in something else.

      While I agree with the left's version that basic income has to be on top of other universal programmes for needs such as housing, healthcare and education, through engagement with the people responsible for running those programmes I am now also deeply skeptical of the state's ability to provide these things without grinding down, or removing altogether, democratic control over them. How these programmes and structures could be organised more democratically, so they actually meet the needs of the people they are meant to serve, in a way which at the same time doesn't entirely disempower those beneficiaries - I think we need to start with a basic income to really start dealing with the problems inherent in state bureaucracies, however well-intentioned their aim.

      The fact that some elites are supporting different versions of basic income shouldn't be used to scare people from the left off the idea; it is a measure of how scared the elites - at least the smart ones - are of the world they are currently creating. And they should be. However much they might tell each other that they 'deserve' unlimited wealth at the expense of others, what human really wants to live a life constantly afraid of those left out of our winner-takes-all economy? The 'losers' will always be a majority. The elites who support the idea are right to see the future as either wealth redistribution via UBI or a perpetual panic room no one in their right mind wants to live in. My hope is that by organising for basic income on the left - with unions and civil society organisations - we can make sure it is a truly liberating policy for all, and not just a mean compromise to stave off the pitchforks.


      And if some of those who used to push for more conditions on welfare are now supporting basic income, why is this a problem? Nearly all studies of workfare show that people are far more likely to find (better paid) employment without it. Maybe some of those who pushed for more conditions are finally conceding that they are counter-productive. (contd)

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    3. (contd) I may be deluded, who knows until basic income happens. In the meantime however I've found that it is an idea which strikes people viscerally, whether they react for or against, in a way that tinkering with current programmes or fighting the defensive battles do not. Whether people oppose or support it, basic income opens a door to discussions of many problems, including over-work, make-work, health, autonomy, the environment. No other demand on the left does that, and I think the experiment is well worth trying. I certainly don't consider it a surrender.

      A factual point: the UK Green Party did not propose to get rid of housing benefit with their basic income proposal this year, (or extra provision for people with disabilities) and of course child benefit would not be needed if every child got the £40 a week proposed, nearly twice the current rate of child benefit. £331 billion is not exactly 'eye-watering' in the face of the existing £263 billion bill for welfare payments including state pensions. Added to this there is an unacknowledged extra £35 billion kicked in by the European Social Fund for corrupt and useless Work Programme initiatives around the UK. The NHS here costs another £113 billion, currently barely keeping up with the effects on body and mind of over-work, stress and poor diet.

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