The hidden logic of basic income

From cash transfers in the South to basic income in the North: many social demands are currently more oriented towards money than towards social and economic rights. The implicit risk is a system in which governments pay for people who will work for private interests – for free.

Developments in the South

Development thinking of the past – 1960s and 1970s – had some very clear objectives: less developed countries were said to ‘lag behind’ and to need a more diversified and ‘modernized’ economy with autonomous workers, freed from the constraints of traditional communities. Several documents adopted by the General Assembly of the United Nations confirm this perspective. In the end, it was hoped, less advanced economies would have industries and welfare states.

The crisis of the 1970s and the neoliberal turn of the 1980s with ‘structural adjustment’ programmes totally eroded this optimistic vision. Instead of inequality, a social problem, poverty, an individual problem, became the main concern of international organisations. Globalisation, based on inequality, put an end to all hopes of industrial development. Investments in poor countries happened either in risk-free infrastructure or social services, or in export-zones exempted from compliance with national social, environmental and tax legislation. Instead of contributing to the ‘development’ of countries, economies and societies, their advantages were limited to the new priorities: capital inflows in order to pay the external debt, and employment for some people, even if underpaid and with bad working conditions. All hope for the re-investment of profits, or for structural homogeneity as they called it in Latin America, was lost. Dual societies and dual economies were (re-)emerging. Except for China and a couple of states in South-East Asia, ‘developing countries’ have been de-industrialised.


Developments in the North

In the North, where welfare states had indeed led to more homogeneous societies with a strong middle class, the consequences of the crisis were much slower to appear. Towards the end of the 20th century, most welfare states had stopped their development, but were not dismantled. It is only since the financial crisis of 2008 that people in rich countries are experiencing the same policies, now called ‘austerity’, as were imposed in the South.

The cuts in social expenditures remain relatively limited, but a new social paradigm is now applied. Even if international organisations, including the World Bank and the European Commission, talk of ‘social protection’, what they mean is a system of privatised social services at the service of markets, growth, productivity and stability. They speak of ‘social investments’ and ‘social innovation’. Particularly threatened are pensions and unemployment benefits, since these are unproductive and people should work as long as they can. Governments only have to take care of the poor and have to do everything to try and bring them to the labour market.

Add to this a new discourse on ‘social taxes’, even if many social policies are paid for by contributions of workers and employers. But in the name of a sacred ‘competitiveness’, ‘taxes’ have to be reduced, allowing workers to earn more without the employers having to pay more. More and more special rules are introduced to exempt specific categories of workers – the low-skilled, the long term unemployed, people above 50 … – of payment of these ‘social taxes’. This obviously makes labour cheaper but reduces the incomes of social security and its ability to pay for the growing needs of people.

Austerity policies and high unemployment erode the basis for solidarity in society. More and more voices are heard saying that those who receive allowances have a ‘debt’ towards society and should ‘do’ something for it. Even young, progressive voices, ignoring the past of social struggles, are now promoting ‘voluntary’ work and self-organised community ‘solidarity’.

This is the context in which a new discourse on ‘basic income’ has emerged, proposals to give all members of society, whether rich or poor, an allowance to enhance their ‘freedom’. It is promoted by traditional liberal forces who would love to abandon the welfare states and forget about social and economic rights. And it is also promoted by young progressive people who look at the growing digitalization of the economy and who fear massive unemployment. They also seem to privilege individual freedom instead of social equality.

Back to the South

These developments cannot be separated from what happens in the South. After UN-promoted ‘social development’ had been buried in the 1990s, poverty reduction policies were introduced. In fact, they were nothing else than some kind of legitimation for neoliberal structural adjustment, with temporary safety nets, public ‘workfare’, micro-credits and user fees to be paid for privatized social services. Formally, the millennium development goals were met, since extreme poverty was indeed reduced to half between 1990 and 2015, but this was only possible thanks to the massive poverty reduction in China. In Africa, the ‘poverty policies’ failed bitterly.

In Latin America, several progressive governments came to power beginning of the 21st century. In Brazil, president Lula da Silva introduced a ‘bolsa familia’, a small allowance given to millions of poor families. Several other governments followed and the success was immediate. Poverty and even inequality declined. In a context of growing criticism towards its poverty policies, the World Bank started to promote systems of ‘conditional cash transfers’ in most African countries. They are still limited to the phase of ‘pilot schemes’, but the trend is clear: ‘give money to the poor’ is becoming the new slogan.

A global logic

What a wonderful perspective! Privatize all social services, free governments of social burdens, give some (small) money to the poor and ask them in return to work. Governments in the North are not ready to give a basic income to everyone, and they very probably never will. But they might give a conditional cash transfer to poor people, obliging them to be available for work for whoever needs them. If, up till now, the labour asked of people who receive allowances is mainly in the ‘public interest’, it cannot be long before private corporations will also ask for these same benefits. Whether a ‘conditional cash transfer’ or a ‘basic income’, people will be paid by governments and will work for private companies who offer ‘capital inflows’ and ‘employment’, as had started in the 1980s. Labour costs will be fully transferred to public authorities, this is, to society, while people will be ‘free’ to buy the social services or the insurances they want on the market while being permanently available for those who need them. Waged labour is disappearing.

In the dual societies that are in the making, in North and South, middle classes are being hollowed out, there is now enough evidence of it. Lower classes and lower skilled people will be paid by public money and be available for those who can use them. At the top of society, the highly skilled will be paid by their corporations and benefit from social and economic privileges. For them, very little will change, except that they have no ‘rights’ anymore. In such a system, digitalization or robotization is not an important development, since at any rate there will be numerous economic, domestic and security tasks to be done by those who have to remain available and will have to work ‘on demand’.

This is the hidden logic of ‘conditional cash transfers’ and ‘basic income’, labour costs are shifted to society and employers can have all the workers they want or need for free.  There can be no doubt that poor people need money, since poverty is first and foremost an income deficit. So yes, poor people, in North and South need to receive allowances that allow for a life in dignity. However, this can and should be integrated into systems of universal social protection based on horizontal, structural solidarity. Moreover, in the new economy, if there is less work to do, working time can be drastically reduced. Corporations should be taxed and pay a decent wage to their workers. The main objective cannot be solely individual freedom but should also be more social equality.

Progressive people promoting ‘basic income’ should think twice. However attractive the idea is at first sight, it hides a liberal logic that threatens human rights and cannot make for a better world.