By: Anton Jäger, Daniel Zamora –
COULD A GLOBAL PANDEMIC give us a Universal Basic Income? About a year ago, this question might have sounded fanciful — speculation for futurologists and bloggers, not a serious issue for statesmen and policy makers. The most prominent political spokesperson for the idea, New York entrepreneur and presidential candidate Andrew Yang, dropped out of the race in February without having ever consistently polled above five percent. The UBI generated buzz, of course, but its implementation still seemed far away.
How far our world has moved in the last month.
In previous weeks, calls to put money in the hands of citizens seemed to transcend the left-right divide, from New York Congresswoman Alexandria Ocasio-Cortez to ex–Goldman Sachs economist Jim O’Neill. Dubbing the idea a “people’s QE” (or Quantitative Easing), the latter has warned that “virtually none of the measures which worked in 2008, particularly cutting interest rates, are going to have the slightest bit of impact.” Instead, O’Neill urged governments to give money “directly to people” in order “to compensate for […] very tough instructions to self-isolate and stop working.” The usual suspects — British Tories, GOP ideologues — voiced their concerns, but cash transfer skepticism sounds increasingly out of touch as the world’s economies grind to a collective halt. In a national upset, for instance, Spain decided to institute the program to alleviate its pandemic woes. For the UBI crowd, the corona crisis feels like a perfect storm.
Historically, this convergence between progressives and conservatives is singular. In 1931, the American right’s response to the Depression was openly punitive. “Liquidate labor,” proclaimed entrepreneur Andrew Mellon, “liquidate stocks, liquidate the farmers, liquidate real estate. […] [E]nterprising people will pick up the wrecks from less competent people.” The left, in turn, had a comprehensive program for national reconstruction: public works, job guarantees, social security, co-determination schemes. Undoubtedly a lot has changed since 1931. If anything, an interesting consensus now seems to be settling on our political spectrum, with Mitt Romney, AOC, and Andrew Yang all heeding the call for transfers. Such swiftness gives off a sense that we are spontaneously heading for a “UBI moment,” in which the proposal figures as the tacit terminus of our age.
There has been far too little reflection on this unanimity, however. Most histories of basic income proposals present them as the outcome of an age-old tradition going back to Thomas More, Guicciardini, and Thomas Paine, ending, unsurprisingly, in today’s UBI advocacy. Even articulate proponents of the scheme such as Guy Standing fall into this trap. In his 2019 book Plunder of the Commons: A Manifesto for Sharing Public Wealth, the sociologist tracks basic income back to the 1225 Charter of the Forest. Although superficially plausible, these claims sound awfully akin to seeing Plato as “the first totalitarian” or Pericles as “the first populist.” In UBI histories, the normative and the descriptive easily shade into one another, often at the expense of history itself.
This is not to say that current basic income ideas have no historical precedents. Civic leaders across history have always concerned themselves with issues of distribution and minimal provision, from Roman Senators to today’s tech barons. Once these previous proposals are examined more closely, however, historians quickly stumble upon significant differences with our own version. Thomas Paine’s 1797 “land grant,” for instance, was meant to shore up property-owning farmers in a world free from wage labor. Free money for “surfers,” as today’s UBI advocates see it, was simply unimaginable to him. Thomas More’s scheme, in turn, was premised on the abolition of private property and a compulsory work requirement — a far cry from the “real freedom” preached by current UBI proponents. All in all, our UBI seems exactly that: ours.
Cambridge historian Peter Sloman’s 2019 book Transfer State is a rare and notable exception. More than a conceptual hagiography, Sloman’s book offers a history of the “idea” of a basic income in British thought over the last 100 years, tracking its travails through policy circles, trade unions, and government cabinets. With its subtitle “The Idea of a Guaranteed Income and the Politics of Redistribution in Modern Britain,” Sloman recontextualizes the UBI within a wider timeline of conceptions of redistribution and social policy.
The book is also about so much more than basic income.
Through the prism Sloman constructs, we can observe our changing views of welfare, social rights, investment, capitalism, and state power, from the 1920s to the 2010s.
Although he has confined his case to the United Kingdom, extrapolations to other national stories are quite obvious. The United States already saw an organized guaranteed income movement in the 1960s, while the Netherlands and France experienced a wave of “basic grant” militancy in the 1980s and ’90s. The 2010s have been equally energetic. Pilot programs have been set up in several cities and countries — Utrecht and Finland are among the active cases — and the Basic Income European Network (BIEN) still hosts its annual conference.
Sloman is right to insist on the specificity of the British case, however. Like its capitalism, Britain has one of the oldest welfare states in the world, shaped by the epochal forces of world war, depression, and stagflation as much as by policy specialists in Westminster. The evolution of its basic income movement thus offers a “distant mirror” to other countries contemplating the scheme — Britain, as usual, both lags behind and leads the way.
Sloman locates the genesis of modern basic income schemes in debates during the interwar period. The success of William Beveridge’s 1942 report, with its vision of a welfare system that would support citizens “from the cradle to the grave,” Sloman notes, cast “into the shadows the alternative visions of welfare which were canvassed by his contemporaries.” But in the 1930s Britain had already witnessed a proliferation of proposals and ideas that were meant to reshape the distribution of income and head off the disastrous consequences of the Great Depression.
Among these was the “State Bonus” promoted by Quaker engineers Dennis and Mabel Milner in 1918, probably the first basic income in the contemporary sense due to its uncoupling from land ownership. The York couple argued that “every individual, all the time, should receive from a central fund some small allowance in money which would be just sufficient to maintain life and liberty if all else failed.” The Milners thus initiated an interesting departure away from earlier grant thinking, which generally tied them to work requirements or property ownership. While social reformers such as G. D. H. Cole were intrigued by the proposal, the idea was rejected by most Labour Party circles.
It was debates concerning the price system, however, with its capacity to optimally allocate goods, that truly boosted the reputation of cash transfers as an effective alternative to tackle inequality. During the postwar years, “liberal collectivists” such as Beveridge or T. H. Marshall had mostly promoted socialized services to raise working-class living standards. These plans rested on what Keynes called “useful expenditure” in goods and services such as education, health care, public parks, school meals — all part of a new “social citizenship.” The state would remove services from the rule of the market and collectively educate its citizenry.
The state’s successes as a collective decision maker were plain to see in the field of policy. As an entity, however, the planning state also came under attack by economists, who by the early 1940s had come around to the idea that cash was a better way of providing minimal welfare without letting the state dictate patterns of investment. In Britain, James Meade’s book Planning and the Price Mechanism (1948) offered a representative version of this view. As Sloman points out, “though Meade was a Labour Party member,” he believed that “‘money and the pricing system’ were ‘among the greatest social inventions of mankind’.” Both of these were, in Meade’s words, “an efficient and secure election machinery with the freedom ensured by secret ballot,” granting “each individual a general command over his fair share of the community’s resources.”
Meade’s argument proved premonitory for later UBI advocacy. In the 1950s, the rise of mass taxation and of the “sovereign consumer” made his individual choice paradigm into an elegant alternative to postwar planning and service-based redistribution. This shift would slowly legitimize what the economist John Kay called “Redistributive Market Liberalism.” In this perspective, even if the state had to retain a “dominant role in matters of income distribution,” it should completely “discharge this responsibility with as little interference as possible in the workings of the free market.”
This “RMT” perspective was best illustrated by the British writer and politician Juliet Rhys-Williams. In 1943, the wealthy heiress advocated a “new social contract” in the form of a universal benefit allocated weekly, replacing “all other forms of payment” and without means test, to each citizen above the age of 18. An alternative to the Beveridge plan, her idea constituted an implicit normalization of casual labor (mostly for rural employers), but it also refused the emphasis on the male breadwinner at the heart of the Beveridge model. “Married women and those acting as unpaid housekeepers,” Rhys-Williams argued, “would receive the benefits of the contract without being required to register for employment.” Though her plan was never fully implemented, the attention she raised around cash transfers financed by general taxation as an alternative way to tackle poverty established, as Sloman notes, “tax-benefit integration […] as a market liberal cause, rooted in a critique of both Fabian paternalism and the labourist assumptions of the National Insurance system.”
In the United States, the most prominent spokesperson for this tax-benefit integration was Milton Friedman.
The Chicago-based economist pushed his own Negative Income Tax while working at the US Treasury Department between 1941 and 1943 (a period that, ironically, saw an increase of the American federal tax base of 1,000 percent). “Failures to recognize the difficulty of the economic problem of efficiency,” he argued, “led to readiness to discard the price system without an adequate substitute.” Cash transfers like Friedman’s NIT were therefore not truly meant to expand the welfare state but rather to rethink its very architecture. They offered, as Karl Popper noted at the first Mont Pelerin Society conference in 1947, “an attractive alternative to socialism.”
By 1951, following Clement Attlee’s electoral defeat, the Churchill government began to move in this more market-friendly direction. Food subsidies were abolished and rent control was replaced by rent subsidies, including rebates for the poorest tenants. Market forces were freed up, and Beveridge’s “giants” now had to be managed through the incentive structures of a modernized fiscal policy. While this approach remained highly contested until the late 1960s, as Sloman shows, it would slowly grow in influence due to two important developments. The first was the increasing fusion between the tax department and the welfare department resulting from the outbreak of the “poverty” issue in the early ’60s — as represented by Michael Harrington in the United States and Peter Townsend and Brian Abel-Smith’s landmark study The Poor and the Poorest (1965) in the United Kingdom. Social policy, in particular after the US’s “war on poverty,” was increasingly “fiscalized” — seen as best managed through the tax system rather than a profligate public sector.
The second development, the “market turn” of the 1970s and newly falling profit rates, accelerated this deconstruction of the postwar settlement. Thatcherism in particular was notoriously averse to welfare claimants and the unemployed. The status of cash grants, however, was more ambiguous. Aggressive deindustrialization — Britain was the only country in the world to see an actual decline in industrial output from 1979 onward — dumped large numbers of people on unemployment rolls or nuclear family support. Much as Thatcherites refused to economize on the NHS to preclude social turmoil, they invariably found themselves drawn back to cash transfers as an off-the-shelf response to postindustrial penury. As Sloman notes, “despite Margaret Thatcher’s ideological suspicion” of the “transfer machine,” the Conservative governments of the 1980s “nevertheless made strategic use of transfer payments to offset the distributional effects of neoliberal reforms, particularly in the housing and labour markets,” and contributed to the further fusing of tax and welfare policy.
Leftists often see the Thatcherite 1980s as a period of universal retreat. In the midst of the crisis, however, a new grant movement also thrived, pushing the British state to ease down on conditionality requirements and let go of full employment policies. The British Claimants Union, for instance, called for “adequate sustenance without means test for all people” and the end of the distinction between “deserving” and “undeserving” poor. Some feminists also began to edge toward a basic income consensus. Spurred by the global Wages for Housework movement in the 1970s, British women’s rights campaigners hoped that guaranteed income schemes would facilitate a move away from the male-centered nature of the Beveridge scheme. Female “economic emancipation,” feminists claimed, required both creches and family allowances, while green activists saw the proposal as a complement to their de-growth plans.
The New Left’s plans of course met with little Tory enthusiasm. Rhys-Williams’s son also tried to reboot his mother’s plan in the 1980s, but he ran into a wall of apathy. The New Left’s turn to free money nonetheless tapped into a shift across developed economies. As the structures of postwar corporatism were dismantled, cash transfers were turning into an elegant substitute for classical welfare programs. Instead of the state putting everyone to work, consumer entitlements became the alternative to top-down nationalization; in the 1990s, the Blair revolution in the Labour Party would complete this curious hybrid.
Few movements did more to reorient the British welfare state around the transfer model than the “Third Way,” as Sloman shows. Blair’s market-friendly variant of social democracy agonized over the question of how capitalism could be reconciled with social justice, and hoped to expand private initiative across society without increasing poverty.
As the 1990s dragged on, tax measures increasingly seemed to fill this hole in the leftist imagination. Blair’s welfare world implied what Samuel Moyn recently called a floor without a ceiling, in which citizens would receive adequate provision but private capital accumulation would continue unabated. This constituted a clear break with Old Labour ideology. New Labour governments, as Solomon Hughes notes, “redistribute[d] money and resources […] increased welfare benefits,” and gave “money to rebuild schools and hospitals worn away by the Thatcher years.” But they did this by “redistributing power away from the base to the corporations.” Together with the new humanitarianism of the Iraq War, Blair’s cash grants became the utopia for a world that had lost faith in all utopias.
The “austerity” of the 2010s is often presented as a stark break with the exuberance of the Blair years. In Sloman’s optic, however, the 2010s actually formed an uneasy continuity with Blair’s tax credit moment. David Cameron’s coalition government duly sought to halt the spending splurge and shrink the state for a “Great Society.” Once the full effects of austerity became visible, however, old habits died very hard: rather than cutting tax credits, Cameron found himself continuing the transfer revolution set in motion by New Labour, notably with the development of Universal Credit.
British UBI advocates have of course found much to criticize in these austerity years. Accelerationists and acid communists, for instance, have championed the UBI as a sign of “public luxury” in a time of austerity. On the surface, they seemed to break with the expansion of the transfer state that had taken place under the Blair and Brown governments. As Sloman notes, “at a discursive level […] David Cameron and Iain Duncan Smith successfully challenged New Labour’s focus on income poverty.”
At the level of policy, however, Cameronism secretly continued the tax credit revolution started by Blair and further expanded the transfer state. “[D]espite the Conservatives’ anti-welfare rhetoric,” Sloman writes, the period after 2010 saw the “development of […] an ambitious attempt to merge tax credits and other working-age benefits into a single system of means-tested income support, subject to new forms of conditionality,” while “efforts to reduce welfare spending have become increasingly fraught.” Behind the Tories’ backs, the transfer paradigm survived intact.
Beyond the obvious strengths of the fiscal anti-poverty strategy, however, there are enough reasons to remain skeptical about the transfer paradigm. When the 1929 crisis kicked the bottom out of the American economy, prominent responses from the left were job guarantees and public works (leaving aside communist revolution). Proposals that might vaguely resemble our current cash transfer proposals, such as Louisiana Governor Huey Long’s “homestead grant,” were still miles away from our current versions. Often enough, they served as counter-cyclical tools meant to shore up consumption, or an intermediate step to homeownership. All of these had the explicit aim of curbing the space in which the market could operate.
Socialists also had reasons for skepticism. When Beveridge composed his plans for the British health system, he remarked that purchasing power had increased propitiously since the end of World War I. But this increase had barely lessened the ills that afflicted British society, from underemployment to disease. “The spending power of the community rose by nearly one-third in the thirty years up to the present war,” he claimed. “That rise,” he concluded, “no doubt conferred great benefits.” It did not, however, “abolish Want” and “left the giant evils of Squalor, Disease and Ignorance still strongly entrenched.” With landlords still in control of land and capitalists in charge of investment, consumer activism was a bad substitute for collective action.
Paradoxically, the triumph of this transfer paradigm might have narrowed rather than broadened the left’s imagination. While Sloman concludes his perceptive and insightful book with a leftist case for basic income, it is noteworthy how much the UBI’s current success reveals the depth of the consensus about the primacy of cash in crisis-fighting. In the United States, rather than clashing over competing visions, Democrats and Republicans focused on narrowly technical parameters: while Mitt Romney first wanted a one-off $1000 transfer, some Democrats argued for a means-tested $500 dollar monthly payment. Leaving aside the timidity of these programs, one feature stands out in the debate: when it comes to cash transfers, left and right disagree on quantity rather than quality.
As cash transfers are increasingly seen as the ideal way to confront the magnitude of the coronavirus threat, it is unclear whether our political imagination is truly up to the task. The current crisis might accelerate rather than decrease our dependency on the market, strengthening capital’s grip on society. Large-scale public works are evidently unfeasible with physical distancing. But, with a clear medical equipment shortage and lacking trained personnel, there is obvious space for public planning responses, and “production for use value” seems ever more necessary. None of these ills will be solved by cash transfers.
As the Belgian economist Paul De Grauwe has noted, helicopter money for bankers will probably mean more hoarding and does not allow governments to take focused anti-COVID-19 measures. Instead, De Grauwe (hardly a socialist) proposes raising temporary unemployment benefits to 90 percent of regular salaries and sending money “to those who see the biggest decreases in their incomes.” “Governments have to spend,” De Grauwe claims, “but not simply at random.” Prioritizing UBI thus risks undermining the narrow momentum for an extended welfare state that has opened up, from increased and expanded unemployment insurance to more public services. And, as Sloman himself notes, the competing demands on public spending that will arise in the months to come will seriously constrain the space for implementing a generous UBI.
These will also increasingly confront us with the stark political choices competing demands require — should we expand public health care or push for basic income?
An even more ominous question was posed by Larry Summers in the early days of America’s quarantine. “Why can’t the greatest economy in the history of the world,” he wondered, “produce swabs, face masks and ventilators in adequate supply?” Some readers may smile at Summers’s cluelessness, but in our globalized, “zero stocks” economy, the question of how and where we produce should be at the center of the left’s concerns. Ultimately, Summers’s question poses a political, and not an individual, choice.
Anton Jäger is a doctoral student at the University of Cambridge, working on the history of populism in the United States. Together with Daniel Zamora, he is currently working on an intellectual history of basic income.