Basic income and the 21st century working class

Submitted by AWL on 23 September, 2014 - 6:40 Author: John Cunningham

Until reading Guy Standing’s book A Precariat Charter I had not come across the term “precariat” although I understand that it has been in circulation for some time, as early as the 1950s. So what is it?

According to Standing, the precariat is “an emerging class characterised by chronic insecurity, detached from old norms of labour and the working class”. The precariat has few of the democratic rights associated with citizens and are, in fact, denizens — another word that had me reaching for the dictionary.

A denizen is an outsider, someone who is frequently denied many of the political rights of the citizen, someone who was once described (in the nineteenth century) as in “a kind of middle state between an alien and a natural-born subject”.

As Guy Standing points out the precariat is not homogenous. He divides it into three main sub-groups. The first is people who have been “bumped out of” the traditional working class. These tend to be less well-educated, their job-skills are redundant, they are inclined to look to the past and are “more likely to listen to populists peddling neo-fascist agendas”.

The second group is the more traditional denizen — migrants, refugees, Roma, ethnic minorities, asylum seekers — whose anger at their lot may be tempered by “a pragmatic need to survive”.

The third group is growing constantly and consists of the educated, “plunged into a precariat existence after being promised the opposite”.

If we accept these divisions it is easy to see how, for example, those in the first group might come to resent those in the second.

Standing gives his reader a brief description of Italy’s Five Star Movement (M5S) as an example of the precariat (or something approaching it) “in action”. With unemployment at 11%, 9 million in poverty and all the major political parties discredited there was a political vacuum in Italy into which stepped the M5S. In the 2013 national elections the M5S won 163 senators and parliamentarians. Although the M5S certainly caused a stir, as Guy Standing points out, “Sadly, it did not offer a threat to neo-liberalism; its economic populism had more than a tinge of neo-fascism”.

M5S made a strong appeal with its advocacy of environmental issue, a basic income for everyone and a call to end “prestige projects” such as high speed train lines. Other policies however, were little short of disastrous, with calls for more freedom for capital, public sector job cuts and attacks on welfare. The author suggests that this movement is still at “the primitive rebel stage” and it will be some time before a sober assessment of its significance will be possible.

During the recent European elections other groups, such as Spain’s Podemas (“We can”) made quite stunning electoral impacts. Podemos appears to draw its support from many sectors of Spanish society but particularly the unemployed and calls for a retirement age of 60, a guaranteed minimum income, abolishing tax havens and tackling corruption, which is endemic among the Spanish elite.

The majority of the book, just over half, is given over to a detailed rundown of the “Precariat Charter”, a grand total of 29 articles. There is not enough space to discuss these 29 articles in any kind of depth and, certainly in this respect, the book defies easy summary. Instead, I want to concentrate on what I suspect will be one of the most contentious issues wherever this book is discussed. This is the advocacy, in article 25, of a “universal basic income”. The full article:

Article 25: Move towards a universal basic income

Governments should move towards instituting a basic income as a citizenship right. In a global market economy, uncertainty and inequality will only worsen unless new measures are introduced. It is vital to overhaul the social protection system.

A universal basic income, as defined by Guy Standing, entails the state paying a guaranteed basic income: “a monthly amount sufficient to provide every legal resident with basic security”. At the centre of the struggle of the precariat is the need for economic security, something on which social democracy has reneged offering only various forms of means-testing, “behavioural conditionality and workfare”. The basic income will provide basic security for everyone regardless of age, gender, race, marital status, labour status and so on. The basic income should be paid in cash (no restrictive “coupons” which can only be exchanged at specified outlets) and should be available to everyone as an individual, not for example, to family units. Probably most important of all there should be no restrictions placed on it.

This will be cheaper, less bureaucratic and, importantly, more dignified than welfare payments as there is no provision for “means testing” — a potentially stressful, intrusive and humiliating experience which should be avoided on basic humanitarian grounds. The amount paid out should be enough for every individual to “survive on but not enough to provide full security”.

He then goes through the various justifications and objections to the idea of a basic income. This is quite a lengthy discussion and I can only try and summarise a complex set of arguments. He outlines first, the ethical justification which has almost existential dimensions. The essential point is that the wellbeing and prosperity of any person in society is a result of a complex process which is the end product of the labours of past generations: “Why should people living in these well-endowed places [in southern England] have lives so much more comfortable and secure than the descendants of those who built the country’s wealth and power?”

Standing then discusses the economic justifications of the basic income. This mainly revolves around globalisation and the changed nature of the labour market, in particular its flexibility.

With the demise of the old certainties regarding work and welfare, “more workers will be paid wages that are uncertain and inadequate to provide a dignifying standard of living, however hard they labour. Topping up low wages with tax credits is expensive, distorting, inefficient and inequitable, as well as moralistic in its selective conditionalities. A basic income would not be distortionary, as it would be universal and allow bargaining and freedom of choice”.

Now we come to the criticisms of the basic income idea. The main points (accompanied by my summary of Standing’s reply in italics) are:

1. A basic income is unaffordable. Income is derived from dispensing with subsidies, tax-breaks and means-tested benefits. A basic income would actually generate more tax revenue (workers would move out of the shadow economy) and have beneficial cost-saving effects on health and schooling.

2. It would be inflationary because it would stimulate demand and raise prices. Basic income would be phased in to substitute for other spending while increased demand would stimulate the supply of goods and services produced within local economies.

3. A basic income would reduce pressure to pursue full employment. At present full employment means pressuring people into low-paying, unsatisfying, resource-using labour. There are better ways of organising our lives and work should be chosen by the individual, should not be forced into a job they don’t want.

4. A basic income induces idleness. This is an insult to the human condition. The available evidence (from studies in Canada and Brazil) suggest that this claim is simply wrong and people would not be content with just a basic income. “The real disincentive to labour is means-tested benefits, as poverty and precarity traps make it irrational to move from benefits to low-wage labour”.

5. It would encourage migration. Any benefit justifies pragmatic rules and in this case it would be sensible to restrict entitlement until people have been in legally in the country for two years.

6. It would encourage lower wages. This is what tax credits already do. The bargaining position of workers would be strengthened by the basic income enabling them to fight exploitation.

7. There are claims that a basic income would undermine the solidaristic base of the welfare state. This solidarity was always rather limited and now hardly exists. “A universalistic base would set the scene for a broader form of solidarity”.

Clearly there is much to debate here, for example how would the broader form of solidarity mentioned in point seven be achieved? The Charter also aims to abolish subsidies — what does this entail? Where do existing organisations (trade unions, tenants’ associations, consumer groups, charities, co-operatives etc.) fit into the scenario outlined by Standing? His attitude to the existing “traditional” unions is relatively clear, although not spelled out in detail: they need to adjust to this new world or face extinction at worst or marginalisation at best. Standing argues that the basic income would enhance collective social action rather than diminishing it.

In 1980, the French theoretician André Gorz wrote a book, translated into English (in 1982) as Farewell to the Working Class: An Essay on Post-Industrial Socialism. Some of what he argues pre-empts A Precariat Charter.

In his book Gorz argued that, “The right to a ‘social income’ (or ‘social wage’) for life in part abolishes ‘forced labour’ only in favour of a wage system without work. It replaces or complements as the case may be, exploitation with welfare, while perpetuating the dependence, impotence and subordination of individuals to centralised authority.”

I’m not sure if any of Standing’s ripostes answers the point Gorz is making and, again, there is clearly room for debate here.

To sum-up, I think this is an important work which deserves a thorough discussion on the left, however uncomfortable this might make us feel. In this year of the 30th anniversary of the miners’ strike — that last great fight of the “old” proletariat — there can surely be no greater service to the memory of that struggle than to seriously discuss why it was, without a doubt, the last of its kind and what has now taken its place. This is not a discussion about whether or not the working class still exists (of course it does!).

It is more a discussion of what it means to be working class in the 21st century. The answer to that question should not be a defensive knee-jerk reaction but a robust, open, no hold barred debate, in which Guy Standing’s book will, I think, play an important role.