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The Limits of Basic Income

A basic income would be useful during a pandemic, but in the long term it would deepen the power of the market – instead, it's time to fight to limit the influence of the market over the services we all rely on.

Over the past decade, there’s been a resurgence of interest in the universal basic income. Instead of having a complex series of means-tested social benefits, a basic income would provide everyone with a set amount of money every month, regardless of employment status or income as long as they’re a citizen.

Activists have been trying to push the program for years, but aside from a few limited trials in places like Finland and Canada, there’s been little progress in Europe or North America – at least until the pandemic hit.

With people stuck at home, business closed, spending in free fall, and governments looking for a policy tool to ensure people could keep their homes and maintain access to essentials as they were losing their jobs, basic income emerged as the obvious solution to many. Just give people the money, and they could take care of things themselves. The idea resonated, and became one of the primary demands of the left.

In March, more than 170 British MPs and Lords signed a letter calling on the government to implement a basic income. They were joined by hundreds more politicians and academics from around the world calling for the policy to happen around the world. By the end of April, a YouGov poll found 51% of the British public supported a basic income.

There’s no problem with short-term income support – indeed, in such an extraordinary situation, it’s warranted – but the discussion about a basic income always seems to leave out the fundamental flaws in the policy. Instead of giving everyone a lump sum of money, it would be better to direct that spending into decommodifying services so people wouldn’t have to worry about paying for them in the first place.

Basic Income Requires Worker Power

Supporters of a basic income make a lot of big claims about what it can do for us: it will lift everyone out of poverty, ensure unpaid care workers are compensated, give more power to workers without needing a union or even minimum wage laws. Its main boosters give in to right-wing plans to fund it through consumption taxes or a flat income tax and court Silicon Valley billionaires who like basic income as a way to buy off the working class as they eliminate jobs or make them much more precarious, increasing unemployment in the process. But the market fundamentalism at the core of the policy has a massive blind spot when it comes to power.

If everyone were to be handed more money starting tomorrow, what protections are in place to stop landlords and other rent-seekers from raising rents to capture it for themselves? None. Similarly, a basic income isn’t actually enough for most people to live off without a job, so rather than granting individual workers more power, it allows employers to play workers off one another, especially without full employment. Basic income doesn’t provide the power its backers think it does.

When Inc Magazine writer Max Chafkin did a profile on Norway’s economic model, he not only praised it, but the strong unions, the social supports they’d won for workers (including generous unemployment benefits), and commitment to low unemployment actually made him conclude that “a worker’s threat to quit is more credible than it is in the United States, giving workers more leverage over employers.” The welfare state and safety net that grant workers that leverage was not handed to workers by business or the state; it was won by workers through collective organising – and that’s what many basic income supporters don’t understand.

Replacing the safety net with an unconditional payment would not grant workers power without taking on the power of capitalists, and to even achieve a basic income in the first place would require power to be in the hands of workers. As Alex Gourevitch and Lucas Stanczyk write in Catalyst,

A basic income high enough to provide workers with a genuine ability to exit the labour market would require expropriating today’s employers out of vast amounts of present and future potential business profits. Hence it should be understood that there is no chance of its passage until there is a working class with the social and political power already adequate to extract it.

We’ve already seen billionaires are increasing their wealth while everyone else is stuck at home, and tech barons like Amazon CEO Jeff Bezos are unashamedly putting workers danger to expand the company’s dominance over the economy. Capitalists are not going to simply give up their power because we’re in a pandemic, and if we’re going to have to fight, why would we simply demand a bit of free money instead of taking on the system that’s so hostile to our wellbeing?

Decommodify Essential Services

Calling attention to Norway isn’t to say we simply need to embrace the Nordic model, but there is a lesson we can take from the Norwegian experience. In Viking Economics, George Lakey writes that rather than a welfare state, Norway has a “universal services state” where people refuse “to think of themselves simply as objects of mysterious ‘market forces’” and “everyone benefits from quality health care, schools, transportation and pensions.” The key piece of that model is that since the programs are universal, rather than narrowly targeted at certain populations, they enjoy broad political support.

As such, instead of focusing on a basic income that leaves the working class at the whim of those “market forces” and the power games of capitalists, the focus should be on decommodifying more aspects of society so people don’t need to worry about paying for necessities in the first place.

There are many forms this can take, starting with progress that was made during the pandemic. After Labour’s plan for free broadband was smeared as “broadband communism” during last year’s election, the Conservatives took measures to ensure people who couldn’t pay their bills would still have access to phone and broadband services during the pandemic. The government’s own report found that public broadband would better serve the public. This opportunity should be seized to make broadband a public service, ensure it’s available for free all across the country, and eradicate the digital divide.

Similarly, Transport for London made bus trips free, but only after 26 of its workers had died of the virus. The campaign for free transit has grown in recent years, and it should be retained and expanded to cover the Underground. The UK also housed more than 14,000 homeless people since the start of the pandemic, but now there’s talk of putting them back on the streets. Not only can that not be allowed to happen, but there must be a massive reinvestment in council housing to the ensure the poor and working class aren’t being gouged by a private rental market that’s much more concerned with luxury housing.

And this isn’t just a British phenomenon. In Australia, childcare was made free during the pandemic and families are planning to fight to keep it. Meanwhile, Canadians are demanding that long-term care facilities be absorbed into the universal healthcare system after seeing how more than 80% of Covid-19 deaths were of elderly people in care homes, with private homes in particular failing to deliver adequate care.

Rethinking Economic Growth

Targeting services which have already taken steps toward decommodification during the pandemic would be a great first step toward a universal basic services programme comprising millions of new council houses, a free food service, free transit, free telecom services, and more. Instead of handing people a bit more money for rent-seekers to capture, this approach would remove more aspects of life from the market, both relieving people of stress and helping them see society in a different way.

As calls for the economy to go back to normal escalate in the face of a staggering death rate, a programme of decommodification becomes even more important. On top of the security it would provide to people, as more of social and economic life exists outside the whims of the market, it would force us to rethink our economic model. Instead of being so focused on private profits and GDP growth, we should adopt measures that prioritise human flourishing and the public luxuries that would enrich life for everyone.

Basic income would be little more than a plaster on failing system. After the pandemic put capitalism’s inability to keep people safe and healthy on full display, the need for a more radical approach to take services out of the market altogether is clear. The pre-pandemic “normal” will not return, no matter how many lives they sacrifice for it.