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  1. The Weekend Essay
20 May 2023

The triumph of cash

How universal basic income was adapted for the neoliberal era.

By Oliver Eagleton

The left is defined by its humanitarian impulse as well as its political vision. But these two elements aren’t always complementary. The immediate alleviation of suffering can inhibit more fundamental change and vice versa. Short-term tactics may conflict with long-term strategies. An exemplary case is the proposal for a universal basic income (UBI) – unconditional cash transfers from the state to every citizen – which gained traction during the Covid-19 pandemic, when it seemed to offer an elegant solution to mass job losses. This one-size-fits-all policy, endorsed by critics of capitalism from Yanis Varoufakis to Pope Francis, promised to stave off immiseration with a simplified social safety net.

Yet, as detractors pointed out, an income floor without an income ceiling leaves existing inequalities intact. Recipients would still be reliant on market forces to meet their needs, and the commanding heights of the economy would remain in private hands. Were payments set at a realistic level, they would keep people just above the breadline while subsidising low-wage employment and entrenching disparities of wealth and power. They may even give politicians an excuse to dismantle those meagre welfare systems that survived the age of austerity – accelerating the shift away from public provision towards individual consumption.

Such objections are well-rehearsed. But commentators have rarely explained why many socialists were seduced by an idea that’s so remote from their ostensive principles: nationalisation, decommodification, democratisation, material equality. Had these aims been eclipsed by a frantic imperative to offset the worst effects of laissez-faire? Was their abandonment, in the name of free money for everyone, a symptom of the left’s political weakness, and consequent focus on social relief over structural transformation?

Welfare for Markets, co-authored by the Belgian intellectual historians Anton Jäger and Daniel Zamora Vargas, addresses these questions with a genealogy of basic income, charting its emergence as a pet cause of neoclassical economists in the 1940s and its diffusion across the ideological spectrum from the 1970s onwards. For them, UBI’s popularity reflects a paradigm shift that attended the breakdown of 20th-century social democracy. The policy implies a novel view of the human subject, her needs and her relation to the state – one coloured by the creeping marketisation of society.

The book begins by dismantling the mythological history of UBI, which presents it as a timeless ideal of social justice backed by enlightened thinkers through the ages: Thomas More, Thomas Paine, Orestes Brownson, Charles Fourier and GDH Cole among others. According to Jäger and Zamora Vargas, the supposed progenitors of basic income were anything but. They saw state disbursements as a way of cultivating a particular mode of citizenship rather than simply combating destitution. For Paine, they could be used to create a class of independent landowners capable of participating in republican democracy; for Cole, they were conjoined to a programme of strong work requirements in the cause of building socialism. In this “productivist” tradition, dividends were conditional on contributing to a collective project.

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The post-war welfare settlement was founded on similarly normative principles. It presumed the ability of the state to identify human needs – food, shelter, recreation – and meet them via central planning, often without the mediation of the market. It also strived for full employment, tailoring its interventions to the archetypal figure of “the worker”, who occupied a central role in its industrial programme. This was a discourse of rights and duties. Social security schemes guaranteed the right to certain material provisions, but this came with the duty to act as a productive agent.

[See also: This is the moment for Universal Basic Income]

It was this logic that the right-wing libertarian Milton Friedman set out to undermine with his alternative plan for basic income, or “negative income tax”. For Friedman, the state had no business deciding what people needed, nor should it dictate their actions by imposing an ideal type of citizenship. In a rational society, the individual would be free to choose how he lives, since “he is the best judge of what he wants, and of what is ‘good’ for him”. The optimum way to realise individual preferences was, of course, through market exchange. A planned economy could never account for the myriad desires of its subjects. A decentralised network of buyers and sellers, by contrast, would see production spontaneously adapt to the demands of consumption.

The only problem with organising economic life around free enterprise, from Friedman’s perspective, was the poverty it would inevitably generate, as some workers were thrown out of unprofitable jobs while others languished in poorly paid ones. Since “no democratic society is going to tolerate people starving to death if there is food with which to feed them”, this called for a level of public regulation. The form it must take, were it to avoid the pitfalls of traditional welfare, was a “minimum standard of living” sustained through regular cash transfers. If social housing and employment programmes paved the road to serfdom, granting people purchasing power would secure their liberty.

While Friedman’s idea cut against the grain when it was devised at the outset of the era of Roosevelt’s New Deal, it came to prominence in the late 1960s, as the Great Society was shaken by domestic riots and foreign wars. More than 1,000 economists wrote an open letter to President Lyndon Johnson stressing the inadequacy of welfarism and touting guaranteed income as the remedy. Large sections of the left, rightly critical of the racial and gender politics of the Roosevelt settlement, came to advocate a less overbearing and obtrusive state. Upon entering the White House in 1969, Richard Nixon partly heeded their advice and incorporated a version of UBI into his package of major fiscal reforms. Though it was sunk by opposition from the Senate and Chamber of Commerce, who feared its impact on work incentives, the cash transfer model had a profound influence on subsequent anti-poverty legislation, spanning income supplements and tax credits. Money became the hegemonic means of providing for capitalism’s losers.

Welfare for Markets identifies a series of epochal changes marked by the triumph of cash. The predominant concern was no longer with people’s “needs” but with their “preferences”. The sovereign consumer was elevated above the productive worker. In this new anthropology, man was not a community being but a self-governing individual; the state, rather than shaping the public sphere according to certain ethical principles, was expected to act as a neutral arbitrator between private interests; and the social goal of equality gave way to a targeted campaign against poverty, redefined as insufficient access to funds rather than services.

Even so, the gap between mid-century basic income blueprints and present-day realities remains stark. To begin with, the philosophy of UBI was underpinned by a sense that policymakers couldn’t know what people truly wanted or needed, so it was best to let the people themselves decide. Yet this humility is absent from the welfare programmes designed by contemporary free-marketers, who have implemented ever more restrictive forms of means-testing along with rigorous schemes to monitor and control the behaviour of recipients: forcing them to apply for a fixed quota of jobs each week, attend regular appointments and training courses, meet an increasing burden of proof to demonstrate their eligibility, and so on. Under the Cameron-Osborne government in the UK these conditions were drastically multiplied. Rather than reducing the role of state bureaucracy in everyday life, cash injections were attached to stronger mechanisms of surveillance and coercion.

How can we explain this rift between theory and practice? Why did the so-called “monetisation of poverty” betray its libertarian aspirations – dispensing with the universal, unconditional nature of basic income? Welfare for Markets stops short of raising such questions. One answer, however, is that the Friedmanite dream of a society in which the rulers do not impose their values on the ruled was always illusory. It may have dethroned the post-war “breadwinner” as the model citizen, but it just as soon replaced him with an idealised image of the “market actor”: a nimble, entrepreneurial subject willing to sell his labour where it was needed and express his individuality through his choice of commodities. It also supplanted a belief in state expertise with a cult of market knowledge – conceived of as infinite and all-encompassing so long as capitalists were allowed to compete on a level playing field.

Moreover, neoliberalism ended up instituting a rigid, prescriptive definition of needs. Under the old conception they were seen as politically determined, and therefore liable to change as society developed and its productive forces expanded. Democratic deliberation would in theory allow citizens to collectively decide what counted as a basic need. Whereas under the new conception, the state would use technocratic means to calculate a “minimum standard of living” – which often meant the smallest amount necessary to ensure one’s survival. Were benefits claimants to exceed that threshold, they could be accused of “scrounging” or defrauding the system.

In trying to move beyond the constraints of the New Deal, then, neoliberalism simply posited its own: the entrepreneurial citizen, the omniscient market, the “minimum standard”. The state’s purpose was to ensure that people conformed to these paradigms, which required it to adopt a muscular, sometimes outwardly repressive, character. Individuals had to be coerced into market activity; market rationality had to be protected from distorting influences (including democratic pressure); and welfare recipients had to be policed to ensure they received no more than what they needed. These prerogatives were clearly incompatible with a no-strings-attached salary. Friedman himself appeared to recognise this dilemma in the early 1970s when, having spent years popularising the policies in Nixon’s economic plan, he suddenly switched positions, opposing the legislation on the grounds that it would cause workers to drop out of the labour market.

In this sense, one might speak of two distinct phases of the UBI phenomenon. The policy was first imagined as an antidote to the ailments of the Keynesian welfare state: its top-down imposition of norms, along with its narrow conception of the working-class subject which largely omitted women and racial minorities. But over subsequent decades, “actually existing basic income” proved no less elitist or exclusionary. Right-wing libertarianism turned out to be a contradiction in terms – unable to reconcile the freedom of the individual with the fetish of the market. In this new context, of punitive austerity and bureaucratic moralism, UBI was able to re-emerge as a utopian demand. Amid the populist eruptions of the 2010s, it came to stand for the values of liberty and universality that neoliberalism had promised but could not fulfil. It was the Platonic Form of market society, haunting its degraded reality. In formulating a position on free money, the left of the 2020s must decide whether its horizon of possibility extends beyond capital’s false promises.

Welfare for Markets: A Global History of Basic Income
Anton Jäger & Daniel Zamora Vargas
Chicago University Press, 264pp

[See also: Our new financial masters]

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