Reacting to Guy Standing’s position on basic income

It is astonishing to see the many arguments, based exclusively on very thin air, always coming back in discussions on a Universal Basic Income (UBI). No, the cost of a UBI is not too high (where are the numbers?), it will give people freedom (three different types of freedom!), we will tax the rich (when? how?) and basic income will even make an end to rentier capitalism (how?). The reasoning starts with the non-evidenced statement that the ‘COVID-19 pandemic has brought into sharp relief the irretrievable breakdown of the post-war income distribution system’ (really? how? where? when?).

In this contribution I want to highlight three points, the question of cost, the link between work and income and finally the hidden message of these biased reasonings in favour of basic income.

But let me start by two points progressive advocates and opponents of UBI fully agree on: yes, work has to be re-defined, this is an old social demand of the workers’ movement and more particularly of feminists, so that the now all too often unpaid care work can be integrated into economic thinking. And yes, income security is crucial, it is a source of mental and material wellbeing and should be a priority for all policy-makers. There is not one single argument to state that these two demands can only be met with a universal basic income. On the contrary, a comprehensive universal social protection system, or social commons, can do the job far much better.

The cost of a universal basic income

This argument is usually used at the end of a long series of points in favour or against UBI. I want to start with it because it is of utmost importance and determines the non-sustainability of all UBI proposals. Attentive readers will understand that the World Bank, the International Monetary Fund (IMF) or the International Labour Organisation (ILO) and even the major advocates of basic income such as Philippe Van Parijs and Rutger Bregman cannot be accused of only making ‘back-of-the-envelope calculations’. Yet, they all come to the conclusion that indeed a UBI at the level of at least the poverty line, that is an income allowing for a more or less decent living, is far too expensive and would require far too high taxes.

“In conclusion, financing a nonbudget-neutral UBI in a fiscally sustainable way would represent a substantial, and for low-income countries with high poverty incidence daunting challenge. Even in countries with lower poverty incidence, and thus a more manageable fiscal cost, sustainable financing of a UBI would require the simultaneous use of several of the policy options discussed in this chapter—in particular both significant savings in other spending programs and increases in income and consumption taxes. This in turn would significantly complicate the political economy of introducing a UBI …”[1]

“If it were set at 25 percent of median per capita income, the fiscal cost would be about 6−7 percent of GDP in advanced economies and 3−4 percent in emerging markets and developing economies.”[2]

“If we consider that children were to receive half the benefit of an adult person, the cost of UBI would range from 17.9 per cent of GDP in Middle East and North Africa to about 25 per cent of GDP in Asia, Europe and Latin America – the lion’s dent share being in Sub-Saharan Africa where a UBI would cost 50.3 per cent of GDP. ….. A UBI at a lower level, in order to become budget neutral and thus well below the poverty line, cannot be in conformity with ILO standards.”[3]

Philippe Van Parijs and Rutger Bregman both come to the same conclusion and decide it is therefore better to not make the basic income universal but to limit it to the people who need it. A very wise conclusion, but unfortunately for them, it also undermines their claims on the new freedom people would gain with a basic income.[4]

A basic income that is not universal is called a guaranteed minimum income, a social demand that is on the agenda for several years now and is supported, in the European Union, by the anti-poverty network.[5] In market economies, the income deficit is at the heart of all poverty. And yes, the means-tested and stigmatising social assistance mechanisms have to disappear and make room for individualised minimum incomes for those who, for one reason or another, cannot be on the labour market. This is perfectly doable for a small extra budget in most countries. It does not require a despicable targeting mechanism. The status of people can automatically be read from their social security status. It does require a decent administration and governance capacity, something all countries should at any rate be working at if they do not have it yet.

‘Taxing the rich’, ‘taxing back’ and ‘eco-taxes’ are all very positive ideas that can be supported, but they will not be enough and they are not for to-morrow.  These demands have to be encouraged and once achieved we will see what they mean and how much basic income we can pay from it or how it can be used for better health care.

To sum up, a universal basic income at the level of national poverty lines is not financially sustainable and the needed income security of people can better be achieved with a far cheaper reformed and de-stigmatised system of guaranteed minimum incomes, in the context of a comprehensive and universal social protection system.

Incomes and labour

Why is a comprehensive and universal social protection system better than a universal basic income?

The answer is linked to the definition of labour. Standing’s statement that we have to re-examine the whole question of jobs, employment, labour, care work, etc. is correct. This is particularly important at a time when precarious work is indeed growing, where young people do not want to step into a 9 to 5 job anymore and where many jobs might get lost due to the digitalization of our economy.

These are all very important elements that have to be taken into account. However, two crucial considerations have to be pointed at.

First, there is indeed socially necessary work, well beyond the care for neighbours and family. The production of food, shelter, clothes, energy, transport, health care etc. are the most obvious examples, and indeed, it is not only morally unacceptable but also socially unsustainably if some people can withdraw from these tasks and leave them all to others. The best example can be taken from Philippe Van Parijs’ surfer in Malibu. If he (or she) were allowed to go and surf and leave all the work to others, conflicts in society would soon emerge. Socially necessary labour has indeed to be shared by all. It is a basic condition for our peaceful co-existence, for the survival of our societies.

Moreover, this socially necessary labour has to be paid for. There is no reason why some would be paid for the production of, let us say bread, while others are not paid for caring for elderly people. The old division in productive and reproductive work cannot be maintained, and de-commodifying work does not mean de-monetising work.[6] Welfare states typically have integrated health care and a whole range of public services. While much of the care work is still in the hands of women – though not exclusively – it is wage labour, difficult to separate from men’s and women’s productive labour. The re-productive work can be purely commodified in the private sector, or non- commodified but paid in the non-profit sector.

Both types of work do produce value, though not necessarily exchange value but use value. Contrary to liberal economic thinking stating that non-market activities have to be considered as ‘costs’ to be paid out of the results of productive work, one can also state that non-profit activities such as education and health care are the results of productive work. They create value in themselves, not validated by the market but by society itself. They are paid for by taxes and social contributions. This means that market as well as non-market activities create economic and monetary value. Non-market does not mean non-monetary.[7] De-commodifying care and public services, does not mean that people should not be paid anymore.

Advocates of basic income pretend to highly appreciate all care work but are in fact de-grading it by refusing to pay for it. They hide their de-basing of women’s work behind a reasoning on financing the UBI. Standing states that public spending can be reduced when paid jobs become unpaid care work. Its is a nice formula for saying that women should not get wages anymore.

No Speenhamland

The second element is as dangerous. If all citizens receive a UBI, it is obvious, as the IMF[8] confirms, that employers will be the first net winners, as wages and social contributions will go down. Advocates of UBI claim the bargaining power of workers will be more important because unattractive job offers may be refused. That last part is correct, but one forgets that in our globalised world, a whole reserve army of migrants and refugees – without UBI – is waiting to take the jobs at any wage. Exit the bargaining power.

Furthermore, with a UBI, citizens will not need a full time job with a full wage anymore. This means the door is wide open for all kinds of mini-jobs at particularly low wages and with bad working conditions. Employers do not have to care since public authorities will pay for the rest, while workers do lose their power to organize and demand collective bargaining on better wages and working conditions. UBI can become a kind of wage subsidy, comparable to the mechanism that was so brilliantly described by Karl Polanyi relative to the Speenhamland experiment in the 18th century. It delayed the emergence of a strong labour market with unions and collective power.

Finally, there is a strong moral argument about the de-linking of work and income. Employers, who make a living – and acquire wealth – from the work of others, their workers, have a moral duty of paying wages that allow for the survival and decent living conditions of their workers. There is no argument to have any doubts about the severe exploitation of workers from the moment their employers have no responsibility anymore for their income, their health care, the education of their children or their housing. Welfares states with a collective responsibility of employers, workers and public authorities are the basis of social citizenship and the basis of workers’ counter-power.[9] This is a major achievement of welfare states that should not get lost.

Shifting the moral responsibility for income and welfare from employers to public authorities is a major gift to corporations who can consider their workers as replaceable tools for whom they have no responsibility whatsoever. In the long term, this is not even in their own interest. This can only be in favour of the further development of rentier capitalism instead of making it disappear.

The hidden messages

One of my major problems with the reasoning about UBI is the silent acceptance of current developments on labour markets.

Yes, precariousness is growing, but should we accept that young working people have no labour contract, no health care, no pension provisions? Our welfare states are the result of a decades long social struggle, because rights never fall out of the sky, they are the result of strong demands and shifting power relations. It is a major error to just accept what is happening and fall back on public authorities’ responsibility to pay a basic income. If the global precariat is growing, we have to fight this development, we have to demand better working conditions and the respect of economic and social rights. If there are serious social problems during this coronacrisis it is precisely because of this, there is nothing inherent in the crisis itself but much is wrong with the way people have been left without any protection or safety net whatsoever. What this crisis has to teach us is the obligation to fight for universal health care and protection of income security. Dropping these demands can only make the situation much worse, since, with a UBI, people will depend on the goodwill of a government that, in crisis times, can easily lower their budgets for basic income.

Another element is linked to the financing of the UBI. Standing speaks of the ‘compensation for loss of the commons’. Again, why compensation and not a social struggle to get these commons back? There have been worldwide protests and marches these past years of people claiming back their commons, from forests to water, clean air and public services. These social struggles should be supported and the loss of commons cannot be taken as an irreversible given.

There are more hidden messages and risks. When citizens get money they can spend as they wish, there is no reason for public authorities to provide health care, education or other public services. In fact, what happened in many low-income countries is that these services were privatised, then became too expensive for poor people to use and then States decided to give poor people a small cash allowance so they had access to these public services. In other word, these cash benefits were a kind of indirect subsidy to the corporations offering the health care, the schools, the buses, etc. Universal basic income is no incentive for organising public services, on the contrary, it allows for services to be privatised and gives corporations a public with purchase power to buy them.

However, these public services are as crucial for people as their income security itself. If we believe in the importance of preventive health care, so important in these times of pandemic, we need responsible public authorities to organise this, from the local to the national and the global level. If people with a low income, which the UBI will at any rate be, constantly have to make a choice between going to a doctor, sending children to school or take a bus to the city, chances are real one or the other will not happen. A full range of public services, from health care to education and housing are so much more important for the wellbeing of people and can ensure the effective access to them. This is out of reach for a UBI.[10]

Conclusion

If the introduction of a UBI would really have all the advantages mentioned by their advocates, how come it has never ever been introduced in any country? All we see are partial pilots for groups of unemployed or poor people, guaranteed income schemes or negative income tax systems. Only Mongolia and Iran have for a short period experienced with a low amount of UBI. All trials have been abandoned. The UBI does not exist anywhere.

There are good reasons for this. Apart from the cost, I want to mention two of them in conclusion to this contribution. The first is the false and impossible promise of unconditionality. This has never ever existed, nowhere. All societies are based on reciprocity, this is what makes and shapes our societies. Breaking this rule is destroying societies and it would be irresponsible to contribute to such a development. The second reason is linked to this. Our welfare states, however imperfect they are, are based on solidarity of all with all. They are based on horizontal and structural solidarity confirming and strengthening our interdependence. Universal Basic Income is based on a vertical solidarity from the State to the citizen, and another citizen and another citizen. In this is revealed its fundamental liberal and individualistic ideology.

Progressive opponents and advocates of UBI do agree on the need for re-defining work and for guaranteeing income security. The best way to do this, I think, is not a UBI but a reformed, modernised welfare state. My organisation goes for social commons, based on participation and democratization, because in whatever way you look at it, our economic and social rights, our social protection is ours and it should remain ours. We want to build another world instead of just surviving in this really existing world. At heart this is a very political question. If some call this ‘old-style laborist social-democratic’, so be it.

 

Francine Mestrum

 

 

Francine Mestrum has a PhD in social sciences and worked at the European institutions and several Belgian universities. Her research concerns the social dimension of globalisation, poverty, inequality, social protection, public services and gender. She is an active member of the International Council of the World Social Forum and co-coordinates the social justice cluster in the Asia Europe People’s Forum. She is the author of several books (in Dutch, French and English) on development, poverty, inequality and social commons. She is the founder of the global network of Global Social Justice and currently works on a project for social commons. www.socialcommons.eu

 

 

 

 

 

[1] Ugo Gentiloni et al. (eds.), Exploring Universal Basic Income. Navigating Concepts, Evidence and Practices (Washington: World Bank Group) 2020, p. 177.

[2] IMF, Fiscal Monitor. Tackling Inequality (Washington: IMF) 2017, p. x.

[3] Isabel Ortiz et al., Universal Basic Income Proposals in light of ILO Standards: Key Issues and Global Costing, ESS Working Paper 62 (Geneva: ILO) 2018, p. ix.

[4] Rutger Bregman, ‘Zo maken we het basisinkomen werkelijkheid’, De Correspondent, 15 November 2017, https://decorrespondent.nl/6705/zo-maken-we-het-basisinkomen-werkelijkheid/257773725-c5393c4c ; Philippe Van Parijs & Yannick Vanderborght, A Radical Proposal for a Free Society and a Sane Economy (Cambridge, Massachusetts : Harvard University Press) 2017.

[5] EAPN, Guaranteed Minimum Income, EMIN2 Final Report, December 2018.

[6] F. Mestrum, ‘Les communs, la reproduction et le revenu de base’ in C. Laval et al. (sous la ,direction de) L’alternative du Commun, (Paris : Hermann) 2019.

[7] J.-M. Harribey, ‘Repenser le travail, la valeur et les revenus’ in Alaluf, M.. et al., Contre l’Allocation universelle, Québec, Lux Editeurs, 2016.

[8] IMF, 2017, op. cit., p. IX.

[9] T.H. Marshall, Class, Citizenship and Social Development (New York: Doubleday and Company, Inc.,) 1964; Robert Castel, Les metamorphoses de la question sociale. Une chronique du salariat (Paris: Fayard, ) 1995.

[10] Jonathan Portes et al., Social Prosperity for the Future: A Proposal for Universal Basic Services, (London: Institute for Global Prosperity) 2017.