This and my next few posts are going to be somewhat news-houndy. I’m going to select a few ‘mainstream’ articles and highlight what I see as deficient in their reasoning. In a few weeks’ time, subsequent posts will lay out what I believe to be the best alternative to the current money system, an idea – Infomoney – that would require and encourage sufficiently deep change. Absent a sufficiently deep, broad and loving – not fearful – revolution, things will continue to slip away towards the abyss, no matter how well-meaning any particular proposal that only tweaks the status quo.
In a recent post, Yves Smith of Naked Capitalism analyses what she calls a past guaranteed income scheme that failed horribly: the Speenhamland System of the late 18th and early 19th centuries. I had not heard of the scheme, so was interested to read about it. The point of her article is to dissuade readers from supporting the guaranteed income idea, and promote her preferred alternative, a job guarantee programme. This post is my response to her analysis.
It is also intriguing that this historical precedent is likely to resemble a contemporary version of a basic income guarantee. Even though some readers call for a stipend to everyone, that simply is not going to happen, at least in terms of net results. It is massively inflationary, since most of it would fuel consumption.
This is a pragmatic argument, at least on the surface. All we can realistically expect, Yves Smith reasons, is some watered-down “version” of a guaranteed income, which is what Speenhamland was. In other words, not a guaranteed income worthy of the name, but a tweaked welfare scheme that favours existing power structures and vested interests. The powers that be are, after all, very powerful, and will only allow to come to fruition that which serves their interests. Therefore, a guaranteed income scheme worthy of the idea “simply is not going to happen”. Further, the more genuine the guaranteed income, the more it will fuel consumption and thus spur on environmental damage, and nobody wants that.
This is a fair argument if we don’t think outside the box and if we want to accept things are more-or-less fine as they are (as the elite would have us believe). But the faux pragmatism on display above sidesteps what I see as the whole raison d’être of a guaranteed income, which I expand on below. Basically, this opening gambit renders the rest of hercritique superfluous. By its logic, there can be no guaranteed income realistically speaking, so don’t want one. Why there can’t be is not addressed in any detail, so we have to take it on faith. My sense is that Yves Smith believes the money system can’t accommodate it. For example, “Taxes would therefore need to be increased to offset those [inflationary] effects.” The strong implication is that this “is not going to happen” either.
Indeed, taxes would have to be increased to ‘fund’ any basic income guarantee worth its salt, particularly if we don’t revolutionise other key institutions like the money system, Big Government, property law, education, agriculture, etc. Anything less will be an insufficiently deep revolution – if a revolution at all – and would fail to introduce and sustain steady-state economics, a vitally needed change if we are to end our systemic addiction to perpetual economic growth. Perpetual economic growth is in my opinion the most pragmatic consideration we face, far more so than (apparently) having to accept the money system as it currently stands. Such argumentation betrays real wishful thinking: the money system is the main driver of perpetual growth (more below), an impossibility on a finite planet.
The justices of Berkshire decided to offer income support to supplement wages, with the amount set in relation to the price of bread and the number of children in the household, so that the destitute would have a minimum income no matter what they earned.
Speenhamland was a means-tested supplement to wages and was about preventing outright destitution and starvation. It was not about freeing people to contribute to society from their passions, nor was it about dissolving class divisions based on money-wealth. The article is thus comparing apples and oranges while insisting a genuine guaranteed income ain’t gonna happen anyway. A guaranteed income would be guaranteed, or unconditional, and would enable all its recipients to refuse shitty jobs. Arguing that something Speenhamland-like is all we can expect is, in essence, a strawman argument. It is also defeatist in that it echoes elitist TINA reasoning, thus (unwittingly?) arguing for the very system Yves Smith purports to challenge at her blog. Indeed, the whiff of elitism is detectable throughout the article, e.g.:
People need a sense of purpose and social engagement. Employment provides that. [... snip …] Too many of the fantasies about a basic income guarantee seem to revolve around a tiny minority, like the individual who will write a great novel on his stipend. Let’s be real: the overwhelming majority of people who think they might like to write a book don’t have the self-discipline to do so in the absence of external pressure.
Note the judgmental language rooted in elitist ideas about value. Is the insufficient self-discipline alluded to a result of ‘human nature’ and thus insoluble? Are humans ‘lazy by nature’ after all? Yves Smith appears to be propagating an elitist point of view here, siding with Hobbes’ observation that nothing gets done unless the Iron Hand of Big Government or The State is there to threaten the masses to coordinated action. Implied in this argument too is that the only value (a vital word in all of this) in e.g. writing a novel lies in its greatness. Does this mean that we should prevent people from writing unless they produce a Great Work? And who judges greatness? Those academic experts who Know What They’re Talking About? This rhetoric applies to all forms of artistic expression of course. And what of more ‘lowly’ ambitions like learning languages, gardening, permaculture, musical instruments, dancing, etc.? Is all of that a waste of everybody’s time unless ‘greatness’ is produced, or widgets for sale? And are the current delusions of grandeur of a “tiny minority” really an argument against guaranteed income? Surely they are the result of a broadly defunct social system, the very system Naked Capitalism purports to challenge and expose.
Not only “employment” provides a sense of purpose (I’d say employment-as-job distracts from the deep and abiding absence of purpose most strive to ignore until retirement finally exposes it). Passionate interest provides a robust sense of purpose when it emerges from our inner being, and also gives rise to heartfelt social engagement as a calling. To get people in touch with their passions, their loves, to foster durable confidence in them and thus in their calling, we need a deep revolution in education, in city design, in distribution systems, in government, etc. Basically, any sufficiently radical change in one area requires correspondingly radical change everywhere else. Hence a guaranteed income scheme worthy of the idea can only work alongside other fundamental changes. Plopping a scheme of whatever shade onto society as it currently stands will not work, just as Speenhamland did not.
Yves Smith argues for a job guarantee. I’m wary of this idea because I’m wary of the centralised decision making it would require. Further, I could (disingenuously) argue that we tried a job guaranteed programme already. It was called state communism and didn’t work out. Modern proponents of a job guarantee argue that local government would decide what jobs are created based on local needs (a good thing), but where would their budget come from? I assume central government combined with local taxes (a bad thing), otherwise there’d be autonomous local money systems, something I don’t see proposed. If it’s the money system that is doing the ultimate affording, decision making about state-funded jobs will be centralised to a significant degree.
Also, absent other changes, a job guarantee would increase consumption and perpetuate economic growth, as Yves Smith argues of ‘guaranteed income’. In other words, whatever change we introduce, be it a new welfare system or a job guarantee programme or guaranteed income, unless we also end our addiction to perpetual growth we’ll just be rearranging deck chairs on the titanic. Indeed, we’ll probably accelerate towards the iceberg if all we do is give more people more spending power. As William Ophuls argues in Immoderate Greatness, “As a process, civilization resembles a long-running economic bubble. Civilizations convert found or conquered ecological wealth into economic wealth and population growth.” I fail to see how this core, destructive civilizational pattern can be ended unless the money system is revolutionized (alongside other changes). The best alternative I have seen is Franz Hörmann’s Infomoney, and I’ll be laying it out here at Econosophy in a few weeks’ time.
In conclusion, the arguments levelled by Naked Capitalism at guaranteed income (or some roughly similar scheme) can be levelled at all similar proposals. My point here is that there is no silver bullet. The deep driver of perpetual growth – the elephant in the room that Yves Smith, to give her her due, is prepared to address from time to time – is the underlying money system as the expression or sustainer of the state (civilization) project. If money continues to be created as interest-bearing debt that is extinguished from the economy upon repayment (debt-money must thus be continually issued to ensure a sufficient supply into the economy, exponentially more than was initially created to cover interest owed and prevent deflation); if, further, money and money equivalents are viewed at the cultural level as wealth and stores of value that earn interest (grow exponentially); if, in sum, being money-rich is better than being money-poor as a defining property of the system, then we have a system that cannot help but require perpetual economic growth if it is not to collapse. Changing this system fundamentally such that it no longer drives growth requires correspondingly fundamental changes to private property (which undergirds the money system in the form of collateral), to the state itself (which protects private property) and by extension to state institutions like education, law and the market (what is market without private property). Calling for such radical change is only unrealistic and thus pointless if infinite growth is possible on a finite planet.
A guaranteed income fits well into the radical changes I touch on above. It trusts people to make the best choices regarding how they, as individuals, keep society going (we need love-based not fear-based solutions, i.e. people are lazy and have to be controlled or everything will just rot). It would help demote money from its current too-lofty position as primary indicator of social rank, and help shift focus to actual accomplishments that would be valued in more nuanced and humane ways. As such, guaranteed income marries up well with the Demote money, promote wealth direction that, in my opinion, resource-based economics would be. Until we are able to establish cultural institutions, myths, and systems that have as their focus ecological and human health, we will likely allow ourselves to be guided by abstractions thereof, which historically have had to do with simplistic numerical measurements (e.g. GDP, price) of subjective but central concepts like value and wealth. These deep social concepts are pivotal issues in this broad debate, for we cannot be guided by mere numbers towards the richly nuanced and healthy relationships with Self and Other a humane and sustainable future surely requires.