The Basic Income Republic
The hidden injuries of class
‘On a clear day you can see the class struggle from here’ is a line from Mike Leigh’s film Career Girls, and one of the clearest places you can see it in Australia is at a Centrelink office.
When I applied for unemployment benefits in 2004, Centrelink required me to attend an all day seminar for detailed instruction — with lectures and videos — about mutual obligation. One video dramatised the experience of a young man who got a few hours of paid work during his fortnight. His failure to declare it to his Centrelink office was presented as a grim parable of moral failure with dire consequences. The tone of the day was that we were the undeserving beneficiaries of begrudging taxpayers — and we should be grateful for it.
I was a student trying to re-enter an uncertain labour market. Having been unemployed before, I had decided to register to get the bureaucratic ball rolling. However because I attended a sandstone university, I had the previous day gone to a ‘networking seminar’ at a yacht club. The enthusiastic presenter’s advice boiled down to ‘never let an opportunity for a conversation go by’. ‘If you’re in a line to buy drinks or concert tickets’ he urged ‘turn around and speak to the person behind you … they might be the head of HR at a major Perth employer’. As I lined up to register for my Centrelink seminar, I decided I was unlikely to be chatting to such a person if I followed this advice.
I learnt two things from comparing these experiences. One was that class was still the door to opportunity. The other was the continuing relevance of what Sociologist Richard Sennett called in the 1970s ‘The Hidden Injuries of class’. Once respect is made the reward for human ability, he wrote
… no matter if the ability is seen as potentially in all, the stage is set for all the dangers of individualism: loneliness for those who are called the possessors, a feeling of individual guilt for those who do not come off as well.
Centrelink ‘clients’ come from a variety of backgrounds, but common message you get is that you are a problem just by turning up. The lack of respect is palpable. The system has not changed much over the years. A 2018 report by the Australian Unemployed Workers Union (AUWU) and the thinktank Per Capita quotes ‘Roger’, an unemployed worker from Melbourne, as saying that
Every communication with the agency and with Centrelink comes with a threat. Every letter explains how they will punish you if you don’t comply.
For Aboriginal and Torres Strait Islander people, the experience of this system is even more authoritarian. In the wake of the Northern Territory Intervention, income management schemes, and the Community Development Programme (CDP), they now have to endure fines and penalties which actively push them into poverty. Communities have been stripped of what financial independence they have been able to gain. Says one participant
To most Aboriginal people I know, they say we’re going back to the ration days where our old people in the [19]20s, 30s had to come to ration depots to get food
It might be argued that being treated with respect by the welfare system is less important than ‘getting a job’, standing on your own two feet etc. Respect comes from work, not welfare! However respect is collective as well as an individual. Societies should start from the proposition that all their members have a basic entitlement to dignity and respectful treatment. Particularly when they are faced with circumstances beyond their control — such as periodic mass unemployment which is an inevitable feature of the capitalist economy. Ensuring that everyone’s basic material circumstances provide for a dignified life should be a basic condition for life if a society is a Res publica — a public affair experienced in common by the people living in it.
Once were wage earners
Australia’s welfare system, with its ‘mutual obligation’ rhetoric and continuous threats to ‘breach’ recipients, is premised on their pre-judged guilt for being in the system at all. My Centrelink experience was that of the post McClure Report welfare state, adopted by John Howard’s government in the early 2000s to set up what Francis Castles called ‘a system of mean, discretionary and moralistically charged social insurance benefits’.
Castles had coined the term ‘wage-earner’s welfare state’ to describe the Australian system of social amelioration through regulation of the wage relationship. The welfare state as such did not need to be more than residual because the benefits that made for a good life were expected to come though employment.
After a quarter century of ‘economic reform’, the wage earners welfare state has been eroded by casualised, insecure, temporary employment, with an ‘acceptable’ number of working poor. However, rather than making welfare and social security policies more understanding of people’s circumstances, there is still a view that unemployment is personal failure, and public assistance is meant to push individuals from ‘welfare to work’.
Becoming unemployed is a catastrophic development for individuals, and society says it ought to be — lest people become indolent and no longer strive. It has long been recognised that unemployment is useful for capitalism as a means of labour discipline: the threat to workers not to make high demands on their employers. Michal Kalecki’s 1943 essay ‘Political Aspects of Full Employment’ described the political changes that would flow if secure ‘full employment’ was achieved
… under a regime of permanent full employment, the ‘sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow.
In Australia as elsewhere, trade unionism was the traditional way that workers struggled for full employment — with the (white male) breadwinner paid sufficient to support a family. However with union membership currently under 20 per cent of the workforce, organised labour — and therefore employment — is a far less certain path to this security. In the second decade of the 21st century being a wage earner does not guarantee a secure full time income, and the welfare state aims to make the disciplining role of unemployment more oppressive, not less.
A basic income for all
Given that employment is no longer provides security, Australians seeking a fairer society have increasingly been considering an idea with previously little traction in our political culture: a universal basic, or guaranteed minimum income for all citizens — whether employed or not.
While seminal industrial tribunal cases such as the Harvester Judgement certainly promoted ideas of ‘basic’ or living wages — these were linked to being employed as the archetypal male, full-time unionised wage earner. The male part of that formulation has given way to increasing female employment since the second world war — although Australia still has a large and persistent gender pay gap. The full-time part has also given way to casualised employment and a growing rate of underemployment. Policies to address inequality by gender and household have often assumed that the way back is through restoring full-time work. While many incomes are bolstered by the tax-transfer system, these go to the ‘deserving’ workers — those who actually have a job. The unemployed, mendicants and failures that they are presumed to be, are forced into pseudo-labour market programs such as Work for the Dole — which provide no benefit to the participants, but pretend for the taxpayer that something is happening.
A universal basic income for all would cut through all this and reframe income as something we are all entitled to as citizens. It is a proposal that could be, in the words of Rutger Bregman, on the right side of achievable while offering the possibility of exciting social transformation.
It is not a ‘left-wing’ idea — Milton Friedman, the theorist of monetarism, proposed a negative income tax scheme to replace the welfare state in his 1962 classic Capitalism and Freedom. Friedman was a staunch critic of government attempts to reduce inequality, however he also recognised that private charity was not enough to relieve poverty ‘in the large, impersonal communities that are increasingly coming to dominate our society’.
Basic income, however, is not just a repackaged residual welfare state. It should be conceived as a citizen’s right: demonstrating the respect that each of us is due as human beings by the society in which we live. Basic income addresses some of those hidden injuries of class that are unfortunately perpetuated by the current version of the welfare state: the judgement on ability linked to respect, with the catastrophic penalty of loss of income. Of course eople will continue to judge themselves and others ability and effort — that is how humans relate to one another. That judgement, however, does not need to be linked to our very ability to survive in the world.
Would people stop working?
The standard objection to a universal basic income is to say that, with no apparent need to work — people won’t. On a practical level this has been the objection to every extension of the welfare state since the earliest efforts at public provision. The phrase ‘bread and circuses’ (panem et circenses) comes from the complaint by the late first century Roman satirical poet Juvenal that the common people have become lazy due to the introduction of a ‘grain-dole’ and free public games. So if people were going to stop working because of welfare — they surely would have done so by now!
We can also see around the world that nations with more generous welfare states, such as the Scandinavian countries, are also more prosperous and productive. Clearly humans have other motivations to work beyond the threat of starvation.
However, let us grant that there would be a large number of people who will just no longer want to work under a basic income scheme (although they will still carry out that other economic activity — consumption). The laziness objection is therefore a valid one, but in the words of basic income advocate Stuart White, ‘an objection can be valid without being decisive’. Any proposal as comprehensive as a basic income scheme will have costs, however those costs need to weighed against the benefits.
A new labour market
Within the labour market itself, replacing the catastrophic threat inherent of unemployment with a basic income would allow the price of labour to be set by its social usefulness, or ‘use-value’. According to Adam Smith
The things which have the greatest value in use have frequently little or no value in exchange … Nothing is more useful than water: but it will purchase scarce anything.
Karl Marx also described how ‘the utility of a thing makes it a use value’
use values become a reality only by use or consumption: they also constitute the substance of all wealth
In the present labour market the most difficult, or dangerous tasks, which must be done because of their high social utility, are among the lowest paid because there is always somebody who will ‘have to do it’. ‘Caring’ jobs have a high social value, but are often low paid. A basic income society would ‘price’ those jobs high enough to reflect their use value.
Benefits, and How to pay
A universal basic income would substantially address those inequalities that the wage earners welfare state and its successors could not overcome, or even acknowledge existed. The gender pay gap for example, barely considered by Australia’s old award system, has only got worse in the era of individualised, insecure work. A basic income would directly address this inequality without being reliant on agreements, awards and equal pay orders. These would still have a role, but their effectiveness would be considerably improved by operating in conjunction with a basic income.
A basic income would also provide for a more just sharing of the fruits of nature — those endowments that none of us produced but from which we all benefit, such as mineral wealth. To listen to certain mining magnates you might think they were the ones who put the iron ore under the ground, rather than stromatolites removing iron from the seas 2400 million years ago.
A universal basic income scheme funded though though taxing resource rents would be to capture the communal benefits of land when only a few have the power to exploit its value. The Rudd government’s Resource Super Profits Tax might have been received differently in the public sphere had it been ‘sold’ not as a new tax (open to the criticism that it was destroying an industry), but as a means of paying for a new universal citizen entitlement.
A basic income entitlement could also be financed by a comprehensive land tax. This is an old tax proposal most eloquently articulated in the nineteenth century by Henry George, and very influential in the early Australian labour movement. According to George’s principle work Progress and Poverty, ‘the equal right of all men to the use of land is as clear as their equal right to breath the air — it is a right proclaimed by the fact of their existence’. However his proposal to realise this right was a tax on all land values ‘the most just and equal of all taxes’.
It falls only upon those who receive a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is taking by the community, for the use of the community, of that value which is the creation of the community.
Neither a resource tax or land tax are, in and of themselves, particularly radical ideas. They were both praised by the impeccably establishment Henry Tax Review which enthusiastically explained that ‘well-structured taxes on land and natural resources are a highly efficient means of raising revenue’.
Universal basic income could also be financed by the re-introduction of inheritance taxes, the infamous ‘death duties’ so reviled in the 1970s when the states began a race to the bottom to repeal them. The late former Finance Minister Peter Walsh, as stringent a fiscal conservative as ever there was, remained throughout his career an advocate for inheritance taxes because they are highly efficient and do not distort current economic activity. For a basic income, they are a tax on the accumulation of wealth. By not taxing people until after they die, they allow individuals to benefit from lifetime labours, but do not allow their descendants unearned benefit from the labour of others. Inheritance taxes would return to society the accumulated benefits an individual gains from living in that society.
The above revenue proposals are, of course three ‘big new taxes’ that the fabled political hard heads always say should never be advocated lest your policy platforms turn into suicide notes. However the justification for all three is a basic income, a direct benefit to individuals, and a broad benefit to society at large. New taxes, such as the ill-fated ‘mining tax’ are often introduced as policies by themselves, with the use of the revenue considered as if an afterthought. This is, as the saying goes, selling the cow instead of the milk.
However, revenue from these taxes could be paid directly into what US writer Matt Bruenig has recently described as a social wealth fund, similar in principle to the Australian Future Fund, or the sovereign wealth fund of resource rich Norway. The dividends from this fund would be the entitlements that go to each citizen as their basic income.
The republican case
One of the more compelling argument for a universal basic income is that it can ensure, for individuals, a life free of domination by others. This is often called the ‘republican’ argument as it looks back to a conception of liberty first articulated in the Roman republic. This aggressive slave state seems an unlikely example to follow, nevertheless the Romans did have a conception of liberty for their citizens (which were not most people who actually lived in the city). After the overthrow of the last King of Rome, Tarquinius, it was resolved by the aristocratic ‘patricians’ that a monarch would never rule again. The citizens of Rome would never have their lives dominated by others. While Rome was never a free or democratic society on our terms, their notion of liberty as non-domination has been proposed by philosopher Philip Pettit as a useful counterpoint to the contemporary liberal conception of liberty — which is freedom from constraints. According to Pettit, republicanism provides for liberty because
You must be publicly protected and resourced in such a way that it is manifest to you … you can speak your mind, associate with your fellows, enjoy communal resources, locate where you will, move occupation and make use of what is yours, without reason for fearing anyone or deferring to anyone.
Liberal freedom however, follows the free market: you are free to do what you wish, including to ‘sink or swim’. Pushed to its absurd yet logical conclusion you are free to sell yourself into slavery. Both radical and conservative critics of capitalism have called it ‘wage slavery’. The reason for having an industrial relations system, as a ‘new province for law and order’ as Justice Higgins of Harvester called it, is the recognition that we sell ourselves into domination by our employers for large parts of our lives. We must do this to survive. We are ‘free’ to do what we have no alternative but to do.
Pettit argues that republicanism’s ‘non-domination’ view of freedom provides the most plausible argument for a universal basic income. If we reconsider liberty as life without domination, we see that freedom is limited when we have to sell it to others to survive. A basic income would make non-domination by others explicit as a citizen right. The present Australian welfare state, with its obligations that amount to a series of petty dominations, would be replaced by a system that has non-domination as a key part of the social contract.
Basic income and the First Nations
Professor Megan Davis has written that the ‘least glamorous part of Australian republicanism has always been the question of Aboriginal sovereignty. And it is yet to be reconciled’. She quotes Gatjil Djerrkura, a Wangurri man of the Yolngu people and a former ATSIC chairman, who in 2003 called for a ‘new debate’
… one in which the republic and reconciliation are not seen as separate movements, but movements which are closely related.
The Uluru Statement from the heart, released in May 2017 calls for
… constitutional reforms to empower our people and take a rightful place in our own country. When we have power over our destiny our children will flourish. They will walk in two worlds and their culture will be a gift to their country.
A basic income republic in Australia needs to take account of the unique status of Aboriginal and Torres Strait Islander people — who are citizens of a state to whose authority they historically never consented. Their situation is especially significant if the basic income is to be funded partially through a land tax. This would be a tax on land that was never ceded.
In Australia the concept of Native Title was introduced into law as a result of the Mabo decision. The High Court ruled that Australia was not terra nullius — a land belonging to no-one — at the time of European colonisation. Native title holders have rights and interests in the land that go beyond ‘citizenship’. However in practice they have found it difficult to extract substantial benefits from big resource operations, even after Indigenous Land Use Agreements (ILUAs). They are often in a poor bargaining position when faced with multinational resource companies backed by governments. They have a right to negotiate, but not a right to veto, developments on land where native title rights exist. Therefore claimants are always at a disadvantage in such negotiations, because the initial power disparities are so large. So the practice of extracting value from land, even if the proceeds are equally distributed, needs to sit well with the spiritual connection of Indigenous people to the land:
We don’t own the land, the land owns us. The land is my mother, my mother is the land. Land is the starting point to where it all began. It’s like picking up a piece of dirt and saying this is where I started and this is where I’ll go. The land is our food, our culture, our spirit and identity.
A significance for land that goes beyond treating it as an exchangable commodity, is something that western economic thought discarded after the ‘neoclassical revolution’. Pre-classical, and classical economists had argued that national wealth could only be determined in reference to land. Adam Smith in The Weath of Nations pointed out that assigning a price to land was a deliberate method of transforming it land from a common asset to a private commodity:
As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them come, even to him, to have an additional price fixed upon them.
John Stuart Mill’s Principles of Political Economy, specifically emphasised that ‘undisturbed’ land provided had value in its own right as a source of contemplative solitude and natural beauty.
…with every root of land brought into cultivation, …every flowery waste or natural pasture ploughed up, all quadrupeds or birds which are not domesticated for man’s use exterminated as his rivals for food, every hedgerow or superfluous tree rooted out, and scarcely a place left where a wild shrub or flower could grow without being eradicated as a weed in the name of improved agriculture. If the earth must lose that great portion of its pleasantness which it owes to things that the unlimited increase of wealth and population would extirpate from it, … I sincerely would hope, for the sake of posterity, that they will be content to be stationary, long before necessity compels them to it
However more recent economic thought on the environmental crisis has made it clear that treating land like any other commodity or factor of production neglects not only the unique services land provides, but the tension between the environment and the economic system itself.
Aboriginal and Torres Strait islander people should still be able to exercise their full rights to make claims for land and exercise effective sovereignty.
Universal basic income entitlements would provide a resource baseline for Native Title claimants while they negotiate. A basic income entitlement would not be a substitute for a Native Title benefit (though there would no doubt be attempts to call it that), rather it would be a way of ensuring a measure of economic security to Native title holders while they negotiate.
A basic income would strengthen the negotiating hand of Native title claimants because as citizens they are no longer threatened by the ‘catastrophic’ consequences of projects not going ahead. At the moment that is the big stick of resource companies, similar to the ‘sack’ discipline over labour by employers.
How to get there is as important as why
Books long on policy ideas are often criticised for having what is called the ‘last chapter problem’. Having outlined carefully what is wrong and what would fix it, the writer has little left to offer on how to actually implement these profound policy recommendations. To the question ‘those are great ideas, but how do we get there?’ The response is often ‘we need political will’ which is always a euphemism for ‘I have no idea how to do this’.
This essay is not free of this problem, so I will just point out that the support for a universal basic income scheme is potentially very wide. Inequality has many dimensions in Australia: household, gender, disability, ethnicity. While these are not all reducible to incomes, without providing a basic income, and therefore a measure of economic security to the people involved, their ability to combine with each other for a common goal is limited. Freedom of association under the liberal conception of freedom is limited by the economic necessity of contracting yourself to others to survive. The benefit from basic income’s overcoming ‘labour-discipline’ is not restricted to workers. Universal basic income is the ‘big idea’ for the Australian Left that offers a common cause for many different struggles.
How not to get there
It is worth pointing out however that how you get to a universal basic income is as important as the goal itself.
As mentioned previously, basic income has been promoted by both the Right and the Left. It has many high profile advocates in Silicon Valley. Their argument for such a scheme is largely that automation and Artifical Intelligence will increasingly make human work obsolete. Therefore, in order to avoid crisis of consumption brought on by mass unemployment, a universal basic income is needed. This would effectively be an ongoing subsidy for capitalism by making sure consumers keep consuming.
It is paradoxical that this version of basic income is often proposed by people with a free market ‘libertarian’ economic outlook. The libertarian criticism of the welfare state has ususally been that it encourages dependency. However their vision of basic income would be precisely this type of system — one that primarily makes you a mendicant capable of nothing but consumption.
A truly republican basic income, as set out in the essay, can only be achieved by a collective struggle that puts the onus to ‘pay’ back on those with the most wealth. A basic income that is ‘gifted’ to us by billionares would not be worth having if it simply maintains a dependent relationship on those billionares.
This is why making the demand for basic income a ‘republican’ cause is so crucial. It is a demand that needs to empower politically as well as economically.
Why do it?
A universal basic income scheme therefore offers Australia a way forward from the abandoned wage earners welfare state. Our current systems of work and welfare are a mish mash of agreements, statutory minima and a begrudging system of welfare provision. Those with work contract themselves into domination, and those without work are regulated by obligations and suspicions.
The basic income would reset our notion of ‘entitlement’ without the need to replace what the state already provides by way of the existing tax-transfer system. Funding it though resources, land and inheritance means we are, in the words of Henry George, ‘taking by the community, for the use of the community, of that value which is the creation of the community’. Basic income reduces our domination by others, thus providing a liberty that cannot be achieved through mere freedom of contract. It is from this basis that true freedom of association can begin. The basic income is the clear day on which you can see what the class struggle is truly about.