Welfare for Markets exposes the neoliberal links of basic income, and helps to explain why it is not a useful demand for the left, argues Dominic Alexander

The pandemic brought a revival in advocacy for the idea of an unconditional basic income, as governments quickly had to find ways to support populations in lockdown while economic life was frozen. The politically most notable aspect of the policy is that it gains warm support from a variety of figures from both the right and the left. Leaving aside for the moment any discussion of whether it could be either a feasible or progressive programme, the intellectual history of the idea is an important way of orientating an analysis of its virtues or otherwise.

There are claims that basic income has a long and distinguished history, connecting the present programme with radical figures of the past, such as Tom Paine and Thomas Spence, the agrarian communist who was a contemporary of Paine, and even back to ancient Rome (p.14). However, Anton Jäger and Daniel Zamora Vargas in Welfare for Markets firmly debunk that notion of radical roots. Pre-industrial class societies always threw up questions about rights to property, particularly when inequalities grew stark, with large proportions of the population driven from the land, and from their subsistence, by the growing concentration of land in the hands of the aristocracy.

Hence the late Roman republic had to institute grain distributions to support the urban ‘proletariat’, and demands for land reform were taken up by some popular leaders. However, none of this, from the Gracchi to Thomas More’s Utopia,should be considered as part of the intellectual lineage of basic income, argue the authors, pointing out that all of these supposed antecedents were part of an altogether different discourse around questions of the distribution of land.

This remains the contrast with more recent figures as well. Thomas Spence’s plans, for example, involved the abolition of private property in land. Modern notions of a basic income are quite distinct from all these examples, precisely because they do not involve challenging the structure of property in any way, while Paine, Spence and others were concerned at least to abolish the great landed aristocracy; in the Rights of Man (1791), Paineoptimistically asserted: ‘I do not believe that monarchy and aristocracy will continue seven years longer in the enlightened countries in Europe’.ⁱ

The authors emphasise a different distinction, however, which is that pre-industrial schemes, such as Thomas More’s, involve the provision of support in kind rather than money, which they take to be the defining aspect of modern proposals for a basic income (p.19). However, More’s Utopia also envisaged communal rather than private property, unlike modern basic-income programmes. The fact that these supposed predecessors to twentieth-century basic income proposals all challenged existing property relations would seem to be the more crucial distinction. Modern ideas of the basic income involve no structural challenge to property at all.

Cash and the market

The centrality of money as the vehicle for a basic income does, nevertheless, come clearly into view in the post-war discussions, where cash functions as an alternative to the ‘concrete universality’ of the welfare’s states provision of services, which took whole areas of social life out of the reach of the market. The idea of a basic income provided by cash was seen by some thinkers precisely as a market-friendly alternative to social-democratic collectivism (p.9).

Apart from a few marginal examples, modern basic-income proposals originate in the milieu of early neoliberal thinkers in the 1940s, with Milton Friedman’s concept of a negative income tax. This stirred some interest on the right, clearly due to its potential as a mechanism to roll back the encroachments of welfare-state ‘collectivism’ on capitalism: it was a way ‘of offering minimal provision that did not impede the functioning of the market’ (p.4). It also chimed with Friedrich Hayek’s ideological claim that social democracy was inevitably authoritarian. ‘Money was “the greatest instrument of freedom ever invented” (quoting Hayek, p.5).

Basic income provided a mechanism whereby the issue of poverty could be separated from management of the economy: ‘poverty would essentially be tackled without heavy state intervention in the economy, by simply altering the distribution of income rather than by public work programs or social security systems’ (p.4). In so far as Friedman’s idea had any traction, it is clear that it did so because the right was searching for a counterattack against the social-democratic Keynesian consensus of the time.

However, while the post-war economy was booming, nascent neoliberalism had little purchase. The first signs of impending crisis in the 1960s meant that basic-income policies began to get some attention on the left also. Fears about the impact of automation were the first spur to considerations of such ideas. Certainly in the US, a significant loss of manufacturing jobs was central to a growing crisis in the inner cities, which impacted upon black Americans particularly. Nonetheless, the patchiness of the US welfare system sharpened the problem, and probably explains the relatively greater interest on the US left, than in the UK at the time.

The retreat of the left

In 1963, a manifesto from a liberal US think tank argued that the ‘left, as they saw it, needed to “form a new consensus” centered on the realization that “the traditional link between jobs and incomes [was] being broken”’ (p.56). The statement gained a host of prominent signatories, including significant figures from the New Left, such as Michael Harrington and James Boggs. Later Martin Luther King Jr. would also express interest in the idea. The authors show that this manifesto certainly established the idea of a basic income in the public debate.

However, it might also be remarked that the statement showed liberal-left thinkers in particular responding to mounting difficulties in the post-war consensus by adopting a market-friendly policy favoured by the right, rather than arguing for an extension of the welfare state or economic planning as a response to problems created by capitalist development. Other responses were certainly possible. A major Keynesian economist, Hyman Minsky, characterised basic-income ideas ‘as indicating “an inability to make the production process respond to social goals”’ (quoted, p.7.). However, rather than deepen a critique of capitalism, many liberals and figures on the right of social democracy preferred to give way to critiques of ‘welfarism’, and to accept an agenda that takes the social impacts of capitalist production as unavoidable. Intellectually, there was a short journey from this to accepting the neoliberal mantra ‘there is no alternative’.

The argument to which the Welfare for Markets builds is that the increasing popularity of arguments for a basic income maps the intellectual growth of neoliberalism, and then its actual impact upon society, making it seem more and more of a natural and appropriate solution to the ills of capitalism. However, this is in part precisely because the neoliberal policy agenda succeeded in setting the parameters of the discussion. From the start, it was important for the right to separate the issue of poverty from issues of social inequality, so the argument could be about ‘solutions’ to poverty which would not entail major structural changes to society (pp.61-2). Hence when the debate took hold in Britain, one left commentator, James Heartfield, argued that accepting the basic income was a counsel of despair, retreating from any attempt to control capitalism’s heart, ‘the sphere of production’, so in fact ‘locks in defeat’. Rather than forcing incomes upward, in setting a minimum, the basic income would more likely ‘induce “a downward pressure on pay claims” and casualize the remaining Fordist jobs’ (p.124).

The end of development

In the developing world, the turn to cash transfer policies (from child support to microloans) as a strategy, which the authors consider to be related to basic income, coincides quite closely with the breakdown of earlier developmentalist economic strategies, and the neoliberal regime enforced by imperialist states, through the IMF and international debt. Instead of the potential for development to threaten the interests of imperialist countries, ‘a narrower understanding of poverty alleviation and basic needs would be promoted, brushing aside the problem of global inequality and the division of labour’ (p.144).

The increasing use of cash transfers in developing countries in the 1990s was hoped to stimulate local trading activity, within the neoliberal policy straitjacket, but was also a response to the disastrous results of structural adjustment programmes imposed by international bodies (p.151). In any case, this policy turn was clearly born of the defeat of hopes that a post-colonial era would mean that poor nations could escape the structures of imperialist exploitation.

The defeat of attempts to roll back inequality in the developing world therefore tracks the international victories of neoliberalism. However, the authors show sections of the Western left embracing the idea of a basic income somewhat earlier as part of a rejection of the welfare state as patriarchal and authoritarian. In Dutch anarchist circles from the 1970s, an ‘anti-work’ current moved towards the basic income in response to ‘the destabilizing consequences’ of new ‘cybernetic techniques’ on society, and ‘at a time of retreat for the frail Dutch labor movement’ (p.98, and p.95).

In other words, fears about automation, among other problems, drove some to assume that the ability of organised labour to challenge capital had been broken, and that the left needed to find completely different approaches. Although the early wave of automation did affect some major industries, with ill social effects in the US, with its feeble version of a welfare state, the argument that this entailed the end of the line for industrial-based class organisation was hugely overstated. The economic crisis and political defeats of the 1970s, however, cemented this defeatist tendency in sections of the left.

Neoliberal era

The self-imposed retreat of intellectuals of the left reached even to the point that André Gorz wrote, absurdly, in 1994, that if socialism was about workers’ liberation ‘then socialists are merely the elitist ideological spokespersons for those 15 per cent who still define themselves chiefly by their work’ (quoted, p.175). Gorz, had by then become convinced that the working class was no longer, if it ever was, the central revolutionary subject as Marx had posited, a direction in which a whole range of left intellectuals went during the 1980s in particular. This turn, often towards various forms of postmodernism, was certainly in part a product of defeats for the workers’ movement: ‘Many leftists turned to basic income as a substitute for forlorn utopias’ (p.175). For a number, this went along with a wholesale abandonment of the very concept of class in the Marxist sense.

Curiously, the authors of Welfare for Markets appear to accept some of these positions, referring at one point to the left’s ‘workerist dogma’ (p.95), perhaps because they see neoliberalism as having fundamentally changed society, making it more atomised and marketised, and so hostile to the values of the social-democratic welfare state. However that may be, it is no dogma to see labour as being key to capitalism and the struggle against it. Gorz’s railing against ‘workerism’ is particularly misplaced; regardless of how people ‘define themselves’, for the great majority of people, work remains life-defining, whether we like it or not. The victories of neoliberalism have meant, worldwide, a decline in working conditions in sector after sector, with pay stagnating in the long term for most, and hours worked increasing.

Despite technological advances, labour is still the only source of surplus value for capital, and organised workers retain immense potential power. The reconfiguration of capital during the neoliberal period has certainly meant a shift in the precise locations of workers’ power. Logistics, for example, are increasingly important, but equally, the functioning of the economy depends upon service workers of all kinds, from teachers to transport workers. It must be remembered that the automation wave of the ’50s and ’60s in the end fell short of the apocalyptic predictions of the end of jobs. The same is likely to be true of the current technological wave. Hype over fears of a techno-apocalypse for the power of labour is a useful weapon with which capitalists can discipline workers. It is also to be remembered that the companies involved in AI and related tech are generally funded by advertising, so hype is also their bottom line.

Workers still have power

Current struggles over the cost-of-living have the potential at least to reset the balance of class forces in society. Workers thought to be unorganisable are organising, in the ADCU, for example, or at Amazon. Those who claimed that neoliberalism had brought a terminal atomisation of society are being proved wrong. At the end of the nineteenth century, it was thought that only skilled workers could be unionised, but the New Unionism of the 1880s unionised whole new sectors, most famously of the dockers. We can hope that such a turn is beginning to happen again, but agreeing to fight on neoliberalism’s own ground is no way to crystalise that possibility.

Basic income has been attractive to the right for some time, and is currently championed by notable tech billionaires, such as Mark Zuckerberg (p.3). Originally, the policy was attractive to the right partly in order to separate the issue of poverty from inequality, and eliminate the role of ‘trade union activity, public ownership or central planning’ (p.8). The world the right-wing proponents of basic income envisage is one where cash transfers would replace the provision of public services (p.166). Tech-sector philanthropy wonders ‘if we’re going to invest you know a dollar in a hospital might it be better to provide that dollar in cash for people to be able to go and find the health resources that they need?’ (quoted, p.168). For the right, basic income would open the door to demand the full and final privatisation of all public services, health and education included.

As the authors note at various points, there have always been strong arguments that such services as health care cannot be decently provided on an individualised basis, and are only collectively feasible. Before the NHS was crippled under the sustained attack of four decades of underfunding, and stealth privatisation, it proved that such collective provision was the most efficient way of providing very good health care to the whole population. Even now, the contrast with health care in the United States is stark.

Supporters of basic income on the left might object that, of course, that’s not the direction their programme would take. However, it comes down to a question of structural power. Instituting a basic income does not challenge capitalist class power one jot. This is in contrast, for example, to the original nature of the NHS, which insulated a major part of social life from the market, which is why the ruling class hate it so much. Therefore, once any basic-income system was instituted, the pressure would be on to push the minimum-income level downwards and discard remaining public services; at the least economic downturn, the call would be that the nation can’t afford such a high level of provision, and it must go down for the sake of competitiveness, or the national debt, or whichever pretext lies most easily to hand. Equally, all public services would be even more vulnerable to the demands of austerity than they are already.

Then there is the question of the level at which a basic income would be set, which the authors note was always a tricky debate: ‘adequate basic incomes were unaffordable, while affordable basic incomes remained inadequate’ (p.88). If the left and the labour movement had sufficient political weight to make a basic income adequate, then we would be able to achieve much more than such a policy. Regardless, basic income would do nothing to build or safeguard working-class power in itself, and therefore with whatever intentions it was instituted, it would leave capital with the unimpeded ability to attack living standards with one simple lever. In a class society, matters always come down to the balance of power between classes. Basic income as a policy seeks to avoid that question of power, and therefore cedes the ground to the capitalist camp. Welfare for Markets is a well-chosen title for an illuminating analysis of the intellectual history of basic income.

i Thomas Paine, Rights of Man (London: C. A. Watts &Co. 1937), p.127