Sunday, 5 April 2015

Here Comes Everybody: Basic Income, the Precariat and beyond

Last month, when releasing a report showing that 100,000 children went hungry in Britain in 2014 because their parents’ benefits were stopped or cut, Niall Cooper, chief executive of pressure group Church Action on Poverty, made a simple yet devastating analogy.

“If you commit a crime, no court is allowed to make you go hungry as a punishment. But if you’re late for an appointment at the Job Centre they can remove all your income and leave you unable to feed you or your family for weeks,” he said.

In fact, there is evidence of people stealing in order to be sent to prison and guaranteed three meals a day.

This is the most urgent justification of a basic income. More than 900,000 people in Britain used the food banks of just one provider, the Trussell Trust, in 2013-14 and the most common reasons were benefit sanctions or benefit delays. Always cruel, many of the reasons are arbitrary and absurd. So there is a critical need, you could even call it a demand, for an unconditional income floor – an income that cannot be whisked away at a moment’s notice, at the whim of a bureaucrat with a target to meet. Everyone has their basic subsistence covered. Period.

That seems to be the rationale behind the UK Green Party’s “long term aspiration” for a basic income of £3,700 a year. And while the Greens are mulling it over, 19 well-known economists, including Guy Standing, have called on the European Central Bank to introduce an unconditional income of €175 a month (€2,100 a year), as an alternative to alleged economic stimulus of quantitative easing. Similarly, the Spanish anti-austerity party, Podemos, wants an unconditional income for the unemployed, though like the UK Greens, Podemos is committed, in principle, to a basic income.

Obviously, no-one can live on €2,100 a year, or £3,700 for that matter. These are policies for unconditional income support, rather than a liveable basic income. But they are edging their way towards a minimum income for everyone. For argument’s sake, let’s put the level at £7,000 pa. As one American supporter of basic income writes. “Without an income floor set at the poverty level as a bare minimum, I believe poverty and inequality will continue to grow, the middle classes will continue to shrink, and the livelihoods of all but the top fifth of society will continue to slip away.”

This is one kind of basic income. An income floor for the increasingly numerous precariat. 13.5 million people in Britain live on incomes at or below 60% of the median, which is about £21,000.

But there is another kind of basic income and it has far more ambitious horizons. The Swiss 
Generation Basic Income group who will spearhead a referendum campaign for the introduction of a basic income in Switzerland in 2016, want it to be much more than a subsistence fall-back. They are calling for it to be set at 2,500 Swiss francs a month, the equivalent of £20,000 or US$ 30,000. Another advocate of an unconditional income, the Australian trade union organiser, Godfrey Moase, sets the bar at AUD$30,000 (about £15,000). A universal basic income is not just for the precariat, says Generation Basic Income’s Enno Schmidt, it is for everyone. It is not a product of class struggle, he insists, it does not exclude the rich.

Each kind of basic income obviates the problems thrown up by the other kind, though in turn generates new issues.

To take the first sort of income floor basic income. Though few can doubt its necessity, the intrinsic problem with this kind of unconditional income it that it is only relevant for the bottom 30 or 40% of society – people who can’t get enough hours to support themselves or their dependants, the working poor or unemployed, adults in education or simply those who would gladly trade a stressful job for substantially less money but the freedom to choose the life they want.

The dilemma this variant of basic income provokes is that you can easily imagine it inculcating a reverse politics of envy. The excluded two-thirds or 60% of society will feel they are financially carrying the lucky minority who have the freedom not to work, or work less, and devote themselves to freely chosen pursuits. Astonishingly, this inverted politics of envy is already being avidly stoked in Britain by the Conservatives and their ‘strivers v shirkers’ rhetoric. A basic income would probably elevate this sentiment to astronomical proportions. Once introduced, it is conceivable that a basic income would engender an exodus of people from the world of work to the Saturday morning world of unconditional income. But that would still leave a resentful 50% with the perception of an even greater burden and the pressure from the other side to raise the basic income. Although you can foresee a new social dispensation taking shape, there would be immense social strife in the meantime.

The other, more ambitious, kind of basic income avoids stirring up envious feelings. Set at a much higher level, it is overtly an unconditional income for everybody. Basic income doesn’t exclude,” says Enno Schmidt. “It’s about humans.” It is clear that the social problems that have prompted an interest in an unconditional income are not restricted to the precariat. Anxiety and depression are rampant across social classes and a sense of powerlessness and control by outside forces affects people with full-time, well paid jobs as much as those on the fringes. “Who, experiencing for years the daily toll of intense corporate pressure, could truly escape severe anxiety?” wrote Alan Lightman in his 2001 novel, The Diagnosis.

Beyond the issue of how to pay for this kind of unconditional income (which I will come to in part 3), two questions arise. One is why pay a basic income to rich people, or people with moderate but secure incomes for that matter, and secondly, what exactly would they do with it if they received such an income? The frequent justification for a basic income that it represents a new attitude to work and would act as a balm for feelings of stress, burn-out and anxiety. “We’re facing a shift of the paradigm of what work means to us, and it is this generation who is ready to express this shift”, said Marilola Wili of Generation Basic Income in 2013.

The fact that a basic income would be paid to all adults, not households, means that, set at a generous level, it would certainly enable those that wished to, to swap their jobs for less demanding ones, or pack in work altogether. But for those that didn’t choose those options, a basic income would just mean the amassing of a lot of additional money. Maybe the possibility of escape represented by the mere existence of a basic income, would engender a seismic change in the culture of work. That could be one effect, but it’s also possible that the repercussions of introducing a basic income would be much more modest than its advocates envisage.

Pilot studies in basic income undertaken in the US and Canada in the 1970s indicate that participants responded by only slightly reducing their working hours.  Such findings have been used to assuage fears that, with the introduction of a basic income, industrial civilisation would grind to a halt and everyone would sit around, doing nothing. But another conclusion is also possible – why go to all the trouble of introducing a basic income if the results are so meagre?

Because in the real world society we inhabit, it is a neo-classical fiction that, even with a basic income to fall back on, people in employment would have the choice to reduce their working hours. They could leave their jobs, certainly, or maybe switch to a less demanding job, or become self-employed. Within households, one partner may leave their job while the better-paid one stays on. But it is my hunch that many would people make the decision to stay in their jobs, working similar hours, and so the only palpable effect of a basic income for many would be to supply a large extra income. You could argue this would reduce inequality but it also has the potential to be funnelled into buying property, stoking an even bigger housing bubble than the one we have now.

I think here we can see the limitations of what a basic income can do. Basic income is not the same thing as Bertrand Russell's 'organised diminution of work'. It can immeasurably strengthen the hand of the individual as they negotiate with the world of the work. That feature should not be underestimated. But in choosing to leave what goes on in that world untouched, basic income reveals itself as impotent in dealing with the ‘daily toll of intense corporate pressure’. Many institutions, in pursuing targets or profits or simply impact of some kind, are now intensely oblivious to the welfare of the people that populate them. And, ironically, I can sense in basic income the same reluctance to challenge the behaviour of large institutions and the distribution of property and profits that used to be exhibited by welfare state leftism – the very movement whose demise is giving such momentum to the movement for a basic income. On its own, a basic income is not enough to really change society.

In part 3, I want to look at the ways in which a basic income might be funded, and whether that can be done in an equitable, not acrimonious, way.

Here is the first part

Tuesday, 24 March 2015

The return of capitalism's contradictions

A version of this essay was presented at the Ecological Challenges conference in Oslo in September 2014. It has now been published as a chapter in the compendium Social Ecology and Social Change, just released by New Compass Press.

One of the animating beliefs of twentieth century social ecology was that capitalism had tamed its dangerous contradictions. “The unprecedented fact remains that capitalism has been free of a ‘chronic’ crisis for a half century,” wrote Murray Bookchin in his 1989 essay, Radical Politics in an Era of Advanced Capitalism “Nor are there signs that we are faced in the foreseeable future with a crisis comparable to that of the Great Depression,” he went on. “Far from having an internal source of long-term economic breakdown that will presumably create a general interest for a new society, capitalism has been more successful in crisis management in the last fifty years than it was in the previous century and a half.”

Indeed, a robust, incessantly growing capitalism, shorn of past weaknesses and instabilities, was precisely the nub of the problem. With the help of the state and Keynesian economic innovations, capitalism had subdued its internal contradictions. But this success left in place a “new, perhaps paramount” external contradiction. The “clash”, as Bookchin put it, “between an economy based on unending growth and the desiccation of the natural environment.”

It is true that social ecology did not exclude the possibility that capitalism could relapse into a chronic stagnation nor believe that the system’s contradictions had somehow vanished. Bookchin regarded capitalism as “one of the most unstable economies in history” and inherently unpredictable. But the “traditional radical notion” that periodic or chronic crises would unfailingly occur was “uncertain”, he averred, and the prospect of capitalism sinking into a “major chronic crisis” remained unexpected.

I think we need to face the fact that the unexpected has happened, and both capitalism’s internal and external contradictions have come to the fore. I believe the economic events of the last few years have demonstrated that, in the advanced capitalist countries, rumours of the death of capitalism’s contradictions have been greatly exaggerated. The crisis that has emerged is unmistakably chronic in character and cannot be mistaken for a periodic downturn. This has important implications for how a post-capitalist, ecological movement relates to masses of people whose material underpinnings are declining and unstable.

But it is equally important to recognise that, contrary to the hopes of leftists in previous eras, crisis and stagnation does not mean that capitalism is about to self-destruct. Nor are there legions of class-conscious proletarians ready to, in Marx’s famous words, “expropriate the expropriators”. What makes this crisis unique is that it has emerged after capitalism has vanquished all meaningful opposition, borrowed deeply into society, and expanded across the globe.

I would like to proceed from an agreement as to what capitalism is. In line with social ecology, I’d argue that capitalism is primarily a system in which money is invested to make more money, and so on ad infinitum. This creates an insatiable necessity for growth. Zero-growth capitalism is a contradiction in terms. “To keep to a satisfactory growth rate right now would mean finding profitable opportunities for an extra $2 trillion compared to the ‘mere’ $6 billion that was needed in 1970,” says Marxian geographer David Harvey. “By the time 2030 rolls around, when estimates suggest the global economy should be worth more than $96 trillion, profitable investment opportunities of close to $3 trillion will be needed.”

But in the core, advanced capitalist countries – the US, Western Europe and Japan – the growth rate, though still positive, has not been satisfactory for some time. Between 2001 and 2011, the rate of economic growth in the US was 63% below that of the 1960s. In Japan, growth between 1973 and 2008 was just one quarter of the level it reached between 1950 and 1973. In Western Europe, it has contracted by more than half. In the UK, the rate of GDP growth was 2.7% in the 1980s, 2.2% in the 1990s, 1.8% between 2000 and 2010 and 1.3% between 2010 and 2014. In the core countries, decline is in evidence virtually everywhere.

There are differing theories as to what lies at the root of this stagnating growth. One culprit that looms large in many explanations is a drop in the purchasing power of the mass of people. A 2011 report from the UK Resolution Foundation, Painful Separation, describes an extreme “decoupling” of average incomes from the rate of economic growth. Since the 1970s, the report says, median pay has grown at less than half the rate of economic output in the US, Canada and Australia. In Britain, France and Germany, median pay tracked economic growth for a long period, but, in the past decade, has increased by less than half the growth rate. Only in Scandinavia and Japan has the divergence between economic growth and average pay been “mild”, the report concludes. In recent years, this contraction of wealth has been intensified. According to the US Russell Sage Foundation, the net wealth of the typical American household declined by a staggering 36% between 2003 and 2013. In the UK, real wages, the value of wages when you factor in the effect of inflation, have dropped by 8.5% since 2009, the largest fall since the 19th century. Four out of ten of the new jobs ‘created’ in Britain since 2010 are self-employed and well-paid managerial posts are being replaced by more ‘elementary’ jobs such as cleaning.

So you are left with a stand-off between two intractable features of the economy. On the one side, a ‘wall of money’ (as one English economist, Harry Shutt, puts it), demanding more and more profit-generating opportunities and, on the other, the declining purchasing power of the majority of people. This is not a recipe for economic health. The unavoidable consequences are, in the absence of productive investment for which demand is lacking, an increase in speculation (the buying of assets, currency futures or collaterized debt obligations for example, in the hope their value will rise), and spiralling household debt. These are both prime underlying causes of the 2007-9 economic crisis, and revealingly, nothing that has happened subsequently has done anything to ameliorate them. It can be argued that privatisation, which began in the 1980s, was another way to utilise all this ‘surplus capital’. But state-owned services and assets are obviously a finite resource. And despite the best efforts of governments like that of the UK, the gravy train cannot go on forever.

It is very hard to escape from this situation. To do so would require reversing the war on organised labour that has occurred since the 1970s, and I can sense no appetite among employers to do this, or placing restrictions on credit and raising interest rates, which though they may reduce household debt, would have the unfortunate side effect of sinking the economy.

Given this, the official government reaction has been to put the economy on life support through the printing of enormous sums of money (officially known as Quantitative Easing), pioneered by Japan and now part of the economic toolkit of the US, UK and most recently, the European Central Bank. This is done in conjunction with near zero interest rates, which makes the borrowing of money incredibly cheap. Meanwhile, the political and economic authorities feel they have no option but to reboot and reinstall the casino economy.

But if nothing is done to change the underlying conditions which brought forth economic crisis, merely a smoothing over of the cracks, then the extreme likelihood is that further crises will erupt in the near future. In fact, the current crisis has yet to play itself out fully, as the economic torpor in the Eurozone aptly demonstrates. Not for nothing is this called ‘the Great Recession’. The economic engine of capitalism is clearly sputtering, despite huge government action and financial rescues. The successful “crisis management” that, at the end of the 1980s Bookchin credited capitalism with, has been transformed into a series of desperate measures. Capitalism’s contradictions, thought to have been banished to the history books, have emerged resurgent.

However, there are important caveats to be made before we become engrossed in making comparisons with the last great crisis of capitalism, the Great Depression of the 1930s. The first concerns poverty. The inhabitants of the wealthy core capitalist countries are clearly getting poorer but, in the main, they cannot be classed as poor. Contrary to the predictions of Marxism, the working class in these countries enjoyed burgeoning wealth throughout most of the twentieth century, particularly in the decades after the Second World War. According to the economist Thomas Piketty, whose book Capital in the 21st Century predicts growing inequality in the coming decades, the emergence of what he terms a “patrimonial middle class” in the 20th century should not be underestimated. Tens of millions of individuals in Europe or 40% of the population, says Piketty, “individually own property worth hundreds of thousands of euros and collectively lay claim to one-quarter to one-third of national wealth: this is a change of some moment.” These people are not destitute and “do not like to be treated as poor”, Piketty asserts. Despite the fact that the 1%, and especially the 0.1%, seem to inhabit a different universe, both materially and spiritually, to the rest of us, we haven’t suddenly jumped in a time machine and travelled back a hundred years to an era when the top 10% owned virtually everything and the bottom 90% nothing. So Bookchin was not being blinkered when he noted in the 2002 essay The Communalist Project that “almost 50% of American households own stocks and bonds, while a huge number are proprietors of one kind or another, possessing their own homes, gardens and rural summer retreats.” It is just that, many millions of people in the wealthy countries are now going, in the words of one recent book, “down the up escalator”.

The second qualification is that low growth and recurrent economic crises are malaises that seem peculiar to the wealthy capitalist countries. Yes, China was affected by the global financial crisis and economic growth slowed there, but it still reached over 7% in 2012. China, with its chronic air pollution reducing life expectancy, is contending with problems generated by a vigorous capitalism, not a faltering one. Likewise, the Turkish economy expanded by 8.5% in 2011. So called ‘emerging markets’ have the advantage of increasing populations and a rising middle class. Economically speaking, they are more sustainable.

But the most important caveat to understand is that a dysfunctional capitalism displaying contradictions that are harder and harder to hide, is not simply going to disappear. Bookchin’s departure from the Marxist orthodoxy of the early twentieth century stemmed from an exasperation with the idea that, because of its internal development, capitalism would inevitably collapse and give way to socialism. This old leftist conviction was entwined with a resolute faith that a class conscious working class would be ready and willing to take over when capitalism faltered, and guide society to a communist future. “For generations,” Bookchin wrote in his 1989 book, Remaking Society, “radical theorists opined about the ‘inner limits’ of the capitalist system, the ‘internal’ mechanisms within its operations as an economy that would yield its self-destruction. Marx gained the plaudits of endless writers for advancing the possibility that capitalism would be destroyed and replaced by socialism because it would enter a chronic crisis of diminishing profits, economic stagnation and class war with an ever-impoverished proletariat.”

What makes the current period of economic stagnation and chronic capitalist crisis unique in historical terms is that, in the palpable absence of a revolutionary alternative, capitalism shows no signs of self-destructing or meekly conceding to “socialism”. It was, ironically, Lenin who remarked that there were no “absolutely hopeless situations” for capitalism. And the present situation is far from hopeless. Capitalism will, despite its attendant shocks and contradictions, and despite growing evidence in its heartlands of stagnation and decline, inexorably go on. There is no such thing as a “last stage” of capitalism while capitalism still exists. The last stage can only be identified retrospectively when, and if, it is replaced by another economic system. The system will not jump, it has to be pushed. And no-one is pushing.

The fact is that the overwhelming majority of people, even in the wealthy countries, are wage and capital dependent. They need jobs and money and a functional economy. This means that they have a clear interest in re-installing the economic system whenever it breaks down. “So long as the basic institutions of capitalism remain in place, it is in rational self-interest of almost everyone to keep the capitalists happy,” wrote American mathematician David Schweickart in his 2002 book, After Capitalism. “Economic growth is in the immediate interest of virtually every sector of society – growth in the straight-forwards sense as measured by GDP”.

This truth holds in spite of low growth and recurrent recessions or crises. Consider the clamour to do ‘whatever it takes’ to restore business as usual after the 2008 crash when the system really did threaten to break down and there was the immediate danger of ATM machines not dispensing cash and companies not being able to pay their workforce. With no alternative on the horizon, political elites were always going to intervene with trillions of dollars of taxpayers’ money. That is why it’s presumptuous to describe any of capitalism’s increasingly visible contradictions as fatal. The aforementioned David Harvey, lists 17 contradictions of capital in his latest book, but maintains only one of them is “potentially fatal”. “But it will turn out so,” he elaborates, “only if a revolutionary movement arises to change the evolutionary path that the endless accumulation of capital dictates. Whether or not a revolutionary spirit crystallises out to force radical changes in the way in which we live is not given in the stars. It depends entirely on human volition.”

So is there any value in being aware of capitalism’s resurgent contradictions if they are probably not fatal and even if they result in economic breakdown, simply produce a clamour on the part of the public as well as elites to restore the system to, if not health, at least basic functionality? The point, I would suggest, is that there is a crying need for a post-capitalist, ecological movement to articulate an alternative to a capitalism that is seriously not delivering for millions of people, and not delivering in a way that hasn’t been true since before the Second World War. I was brought up with the idea that, although capitalism may have terrible side effects, it delivered the goods in terms of rising wealth and consumerist distractions. That, from where I’m sitting, is simply not the case anymore. Whereas, not so long ago, politicians promised a better future, however much those promises were empty PR flannel, now their message is conspicuously negative. Politics has become nasty and vicious (and in its treatment of the unemployed and the disabled verging on the sadistic) and all about adapting to the demands of a creaking economy. Forget the sunlit uplands, the future comprises differing gradations of pain.

I believe a social ecology and assembly democracy movement that wishes to thrive and become a genuine rival to capitalism has to respond to this new situation and mood. If I were to crudely summarise the message of social ecology up to this point, it is along the lines of capitalism incessantly grows, creating soulless and energy draining urbanisation and megacities. And at the same time as it destroys the natural environment and pollutes, the market economy steadily remakes society in its own image, commodifying more and more aspects of life and imposing a buyer-seller relationship. But explicit within the concept of ‘post-scarcity’ was the assumption that the material foundations of people in wealthy capitalist countries were assured.  The post Second World War era, Bookchin wrote, was infused with “a buoyant sense of promise” and this feeling of optimism was “clearly materialistic. A radical ethic developed, he asserted in Remaking Society, possessed of “the reasonable certainty that the abolition of oppression in any form – of the senses as well as of the body and mind – could be achieved even on the bourgeois grounds of economic instrumentalism.” The trouble with the capitalist machine, as well as its potential, was not its internal contradictions, but that it had become remarkably stable and successful. I am not arguing that capitalist growth is no longer a problem. Even during the ‘crisis years’ of 2008 to 2012, the advanced capitalist countries grew by around 1% a year, which is high by long-term historical standards. Economic stagnation in Japan has been accompanied by a rise, not a fall, in carbon emissions. And commodification has, if anything, intensified post-crash as the rich countries try to resuscitate growth. However, what cannot be ignored is that capitalism is no longer the prosperity machine of old for millions of people in the rich countries. A growth in absolute poverty, mass unemployment, under-employment, low-paying self-employment, declining incomes, housing precarity and evictions, and a disavowal of responsibility to vulnerable people dependent on vanishing state welfare benefits, are all features of this new landscape. The buoyant sense of promise Bookchin discerned in the spirit of the 1960s has been transformed into virtually its polar opposite – an atmosphere of dread and fatalism.

What this signifies is that if social ecology wishes to really make headway as a movement for ecological transformation, it needs to invigorate its social dimension. It is revealing that, Kurdistan aside, the outbreaks of assembly democracy that have occurred in recent years have all taken place in countries suffering from economic breakdown and trauma – namely Argentina, Greece and Spain.  In addition to assemblies of indignatos, co-operative economic alternatives, in energy, food and housing, for example, have flourished in Spain post-crash, partly for the prosaic reason that the dominant capitalist economy has simply ceased to be a reliable presence in people’s lives. If capitalism fails, alternatives will happen, that is an absolute guarantee. The question that remains is what will be the relationship of the economic alternatives to the popular assemblies that also spring up. As a theory, libertarian municipalism, the political dimension of social ecology, is strong on how political power can be reclaimed from the state, but less so about how it can be wrested from capital. There is little doubt that representative democracy has failed. It has exposed itself as simply a component in the economic and political oligarchy that rules Western societies. But to take on that oligarchy requires an assembly democracy to, for example, provide public oversight of and control over a new public system of credit and banking. And even if it is agreed that that state is the crux of the oligarchy, the issue remains that millions of people are dependent on state public services and benefits. To merely leave them to the wolves in an existential rejection of the state and all its works, is not an option. A post-capitalist movement must be defensive as well as creative.

Despite the proliferation of sages, no-one really knows what will happen to capitalism in the wealthy countries in the coming decades. The only certainty is that we are in a period of uncertainty. “The validity of a theory and a movement will depend profoundly on how clearly it can see what lies just ahead,” Bookchin said in 2002.  Yet what lies just ahead is far from clear. It is quite possible that a new and overwhelming financial crisis will occur, leaving the state unable to bail out financial institutions and other corporations and thus precipitating a wave of bankruptcies and a destruction of capital value comparable to the Great Depression of the 1930s. This will leave some form of state capitalism as the only possible option and create millions more ‘superfluous’ people – superfluous in capitalist terms. Capitalism is no longer capable of playing the role assigned to it by social ecology in the past: that of well-tuned, efficient machine that spews out endless change in all directions, from compound growth to urbanisation, from work to climate change, from ethics to popular culture, while itself remaining free of volatility and disequilibrium. The machine itself is now malfunctioning. This changes everything.