Wednesday, October 5, 2022

ECONOMY | 19-08-2022 16:29

Guy Standing: ‘I've come to believe that a basic income is a right of every individual in every society’

British labour economist and University of London professor on unconditional basic income, the poverty trap and the ‘precariat.’

British economist and professor at the University of London, Guy Standing is a researcher specialising in labour economics and socio-economic security. 

An advocate of unconditional basic income and co-founder of ​​the Basic Income Earth Network (BIEN), the 74-year-old explains his vision and the results of the experiments where it was applied. 

In his research, Standing created the concept of a new emerging social class – "the precariat" – and in a feature interview, he details the supplicant characteristics of those who compose it.


In your books, you talk about the crisis of the welfare state after World War II, and with it, the income distribution system that emerged from the irremediable collapse of the welfare state. To deal with this, you propose basic income as a way to combat the ‘eight giants.’ Could you share with our audience the concept of basic income that you develop in your book? And what would these eight giants be in broad strokes?

I developed my interest in basic income when I was doing my PhD at Cambridge [University] in the 1970s. It was clear at that time that the Keynesian welfare-state era was coming to an end. And we had a revolution in economics, which was led by what we now know now as neoliberalism.

It was clear from very early on – and I wrote several books about this in the 1980s – that the result would be an enormous increase in inequality and an enormous increase in insecurities for millions of people in every part of the world.It was clear that the welfare state's social policies of unemployment insurance, pension insurance and various things connected with the Beveridge system and the Bismarck system of welfare state capitalism were no longer fit for purpose. That was the first sense of my involvement in basic income. Since then, I've come to believe that a basic income is a right, an economic right of every individual in every society.

Now, let me begin by defining what I mean by a basic income. A basic income means that every man and every woman in one society would be entitled to a modest amount paid each month by the state unconditionally, in the sense that they wouldn't have to have done anything in particular to receive it, and they wouldn't have to do anything in particular to continue to receive it. It would be individual so that it would not be paid on a household basis. That's vitally important for women, so that women would receive their own individual basic income. Men would receive theirs, and a smaller amount would be paid for children, paid to the mother or the surrogate mother, and that it would be non-retrievable, in the sense that the state could not take it back for whatever reason. If a crime is committed, that is a different matter that is dealt with separately. 

Now the essence of the justification for basic income is that it's a matter first of all of common justice, and what I mean by common justice is that all of us belong to societies in which our inherited public wealth is due to the efforts and achievements of the many, many generations that have come before us. And we don’t know whose ancestors – yours, mine or others – contributed more or less to the public wealth of today. And if we accept private inheritance of private wealth, which every government does, then surely we should treat public wealth in the same way.

Moreover, every society and every legal system has recognised the existence of the commons. The commons were enshrined in ancient Roman common law, the Justinian codex of AD 5 to 9, in which a differential differentiation was made between private property, state property, no property and common property. But throughout history, governments and private elites and armies and so on have taken away from our commons. Now the commons belong to all of us equally – the air, the land, the sea, the public amenities that we inherit as a society. And therefore, if anybody is taking from the commons, through pollution or through enclosure or whatever, they owe it to the society and to the commoners to compensate us as commoners. So for me, this is a matter of justice. The third matter of justice is that, as Pope Francis has recognised in coming out in favour of basic income, Pope Francis recognises that God has given people unequal talents, unequal skills, unequal abilities and in a sense, a basic income is a compensation for those who don't have the gift of those talents. I can understand the logic, the rationale of that, but basic income is also a matter of freedom. I'm an economist, a political economist on the left, if you like, and I believe passionately that freedom is a matter of the left. But what do we mean by freedom? The first freedom is the freedom to say no. The people who exploit, the people who oppress the ability to say no. So important. 

When we've done basic income pilots, one of the beautiful findings is that women have walked out of abusive relationships because they have a little financial security with which to make a decision that they want to make – that's freedom. But we also believe in liberal freedom. And for me, this is important because liberal freedom is the freedom to be moral, it's the freedom to make a decision. Because I believe it is right. It is the proper thing to do. But if you're insecure and if you don't have security, you can't be moral. You just have to do what you have to do to survive. And a basic income enables us to say this is a matter of your moral freedom. Finally, freedom is a matter of Republican freedom. Basic income means not only that I am free of constraints by other people, but I am free from the potential constraints of those people. And that is so important. 

So for me, basic income is ethical, but it is also a vital need in the economic system, which I've characterised as rentier capitalism. It's no longer neoliberalism, in which chronic insecurity and the growth of the ‘precariat’ are the main characteristics. 


You are a founder of the Global Basic Income Network, BIEN according to its acronym in English. What is it and how does it work? 

In 1986, a group of us met who were young radical philosophers, economists, activists, and several people from the left. We decided to form a network to inform ourselves about the arguments for basic income. And I came up with the idea of calling ourselves ‘BIEN’ because in French ‘bien’ means good, and it has a nice sound! And it meant at the time, the European basic income network. After that, many people from Latin America and the United States and Canada and Australia and then India and then Africa started to join up, and when I was chair in 2004 at the Barcelona Congress, we changed our name. We wanted to keep the same acronym, but to change it to the Earth Network. And I'm very proud of the fact that we have had a number of major meetings in Latin America, including one of our congresses in 2010, in São Paulo, when I had the privilege of meeting [then-] president [Luiz Inácio] Lula [da Silva]. He told me that he was very supportive of a basic income, and I think that was a high point in our journey. But every year now we have our congress in different cities in the world. We just had one in Glasgow. The next one is in Brisbane, Australia in September and we alternate in different countries at different times.


In your book, you talk about the emergence of a new social class, which you call ‘the precariat’? Could you explain the concept? What are the characteristics of this new social class and why is it emerging now? 

For many years I was working in the International Labour Organisation, based in Geneva. I worked in some 26 countries and everywhere I went you could see that the labour process was fragmenting. We were not working, living in a neoliberal age. The rhetoric of neoliberalism continued long after neoliberalism had changed character altogether. And we were seeing a different form of class structure emerging in a system of what I've called rentier capitalism. 

Rentier capitalism is the triumph of private property rights over market forces. We do not have a free-market economy. Anybody who thinks that we still have a neoliberal free-market system just doesn't understand the political economy of what has been happening. I wrote a book called The Corruption of Capitalism, but it's basically about rentier capitalism. Property returns have gone up and up, and the returns from labour have gone down and down. And a new class structure that has emerged, with a plutocracy at the top [headed by] billionaires who are rentiers. All their income comes from different forms of property – financial, intellectual, physical property. 

When I was at Cambridge, we were taught basically that by the end of the 20th century, everybody in rich, industrialised countries would have employment security pensions, paid holidays, paid maternity leave, paid medical leave, etc., but they're shrinking in every part of the world. And below that the old proletariat have been withering and dying. The new emerging class below the old proletariat is the precariat and one defines the precariat in three dimensions. It's very important to recognise that these three dimensions define what it is to be a class. 

The first dimension is a particular relations of production to use a Marxist term. In other words, a pattern of labour and work. People in the precariat have to accept a life of unstable and insecure labour. People in the precariat do not have an occupational narrative to give to their lives – I am becoming an economist, I am becoming a journalist, I am becoming a lawyer, I am becoming a surgeon, etc. You're in the precariat, you don't have that. You don't know what you're going to be doing. And here again is another important aspect, which is that this is the first mass class in history whose average level of education is above the level of the type of job they can expect to get. That's never been the case before. And again different from the old proletariat – the precariat has to do a lot of work, work that is not recognised as work, but unless you do it, you pay a heavy price. This uses up a lot of your time. You don't get paid for it. You have to wait in queues. You have to do this, you have to put in forms, you have to apply for jobs. I use the term ‘multiple application syndrome.’ In the precariat, you have to spend a lot of time just applying for jobs or benefits or whatever. It takes up time. It's work. 

The second dimension is distinctive relations of distribution. And here what I mean is that unlike the old proletariat, the precariat has to rely almost entirely on money wages. It doesn't get non-wage benefits like pensions or paid holidays or paid medical leave. And moreover, unlike previous classes, it is systematically exploited through debt. Debt is an institutional mechanism of exploitation. Finance, capital, which is dominant in rentier capitalism, wants everybody to be in debt. That's how they make their money. And the precariat is living constantly on the edge of unsustainable debt. 

And the third dimension. It is that the precarious has a distinctive relationship to the state. What I mean by that is that if you're in the precariat, unlike any class in past history, you are systematically losing the rights of citizenship – you're losing civil rights, you're losing cultural rights, you're losing economic rights, you're losing political rights because you do not see in the political spectrum politicians or parties representing you. 

You don't have rights. And in the end, you feel a bit like a beggar. And that is why I say the key thing about being in the precariat is you feel like a supplicant. That’s undignified.


You speak of the poverty trap that exists with respect to the subsidies that poor people receive. What is the difference between these subsidies and the basic income that you propose? 

There's a huge difference. A basic income means that you or I or any individual in Argentina or elsewhere would receive each month a basic amount, determined by the capacity of the state to pay it independently established, independent of the government of the day, and it would not be withdrawn. In other words, you wouldn't lose it if your status changed. It's a right as an individual, as an Argentine living in Argentina. 

A means-tested benefit is quite different, it creates a poverty trap because the idea of a means-tested benefit – which is what Argentina and many, many, many, many other countries operate – is that it says we are only going to give to you if you prove you are poor, and therefore, if you make an effort to become non-poor, you lose that benefit. You go slightly up the scale and you lose more than you gain. That's called the poverty trap. It's ridiculous, but that's what we have. 

In many countries, the poverty trap turns out to be about 80 percent. What that means is if you increase your income by 100, you lose 80, whatever the denomination might be. Now that is a situation which makes people not make the effort, or to go into the shadow economy and go illegal because of the unfairness of that situation. That's the poverty trap. 

If you're in the precariat, it's made even worse because you don't get benefits straight away, you have to apply for benefits, you have to wait for benefits. You have to prove with paperwork, and therefore you wait for a few weeks before you actually start receiving those benefits. And then along comes say an employment official and says, on the other side of Buenos Aires there is a short-term casual job, you must take it. You would be crazy to do that because not only would you be going from a poverty situation, but very quickly you could expect to be out of a job again and applying and waiting again to get some low-level benefits. 

This is a huge difference from basic income. A basic income is your right and you start paying the standard rate of tax for each dollar or whatever you start earning once you're in a job, but whatever. But that is not a disincentive for you to take jobs or try to improve your income. With the poverty trap situation that we have with means-tested benefits. It's a huge disincentive for poor people. It's unfair. 


Is the basic income that you propose applicable in any country? What is necessary in economic conditions? 

Well, I'm very intrigued by the fact that since we started working on basic income – and I've been working on it now for over 30 years – to start with, people said, ‘Well, it's only possible in rich industrialised countries because only they have the resources.’ Now I'm more likely to find people who say, well, it's possible in developing countries, but not so easy in rich countries. So it's a very strange turnaround in thinking. 

My belief is that every country can afford to pay a basic income that is related to their standard of income. We did a big pilot in India, which is a poorer country than Argentina, and we provided thousands of people with a basic income and we did a randomised controlled trial and examined the impact that basic income had for those communities and those individuals compared with people who didn't have the basic income in similar communities. And what we found is that the basic income recipients had huge improvements in their nutrition, in their help, in their schooling, it increased the amount of work they did. Increased investment had a greater income multiplier effect so that it basically paid for itself. This is a basic rule of economics, a multiplier effect of investing in people leads to lower demands on public health, it leads to less malnutrition, it leads to increased economic activity, economic cooperation. 

But I also believe that we need a long-term and a short-term approach to basic income. In the financial crash of 2008 – Argentina has had many financial crashes too, as we know – the governments and the central banks bailed out the banks, in the United States, in Britain, in every country that you can imagine, they paid out billions of dollars and pounds and euros to prop up the banks. They found the money, they gave the financiers vast amounts of money, to enable them to recover and make more money. So what we saw was an increase in poverty, an increase in homelessness, an increase in inequality, but the government had found the money.  I calculated that you could have given every individual in Britain £50 a week for three years with the amount of money that the government handed out without having to repay to the financial markets. The same with Covid – what happened was the governments introduced measures which helped the financial markets, which gave big corporations billions of dollars or euros or whatever in loans, and hardly helped the precariat at all. So we see higher levels of inequality, higher levels of poverty, more debt, indebtedness amongst the precariat today. But they had the money, they paid it out, they just paid it out to the wrong people. So that's the short term issue. 

The long term issue is this: I believe that every government, including Argentina, should create a common capital fund, a form of sovereign wealth fund, independently and democratically managed, in which levies on those who take from the commons should be put into the fund. The fund invests in ecologically sustainable investments and then, as the value of the fund rises, dividends should be paid out as a form of common property right, which is another name for a basic income. Now we have examples of how that works – they have such a fund in Alaska, in the United States, it works very well. It's very popular, was set up in the 1980s and has been paying out each year a dividend to the population of Alaska individually. There is a wonderful fund in Norway which has been built up and is now the most capital-loaded fund in the world. It means that every Norwegian is effectively a millionaire. I think we need to do it through levies on ecological bads, ecological things that we need to restrict, and that includes the carbon tax. We need a carbon tax, we need a high carbon tax if we're going to get a downward trend in fossil fuel consumption. But of course, a carbon tax by itself is politically unpopular because it is regressive. It means if you apply a carbon tax on fossil fuels, on dirty diesel, for example, that a low-income person pays a higher proportion of their income than a rich person. But it becomes progressive if you guarantee that all the revenue from the carbon tax is recycled to help pay for basic income. In my new book, The Blue Commons, I have gone through all the varieties of levies that you could build such a commons fund, which would be ecologically very important, socially, very important and economically functional, regardless of your politics. 


In your conception of basic income, you stress that it's not universal. It's basic, but not universal. What would be the difference between basic income and universal basic income?

If I were a philosopher king and you woke me up on a Sunday morning and asked me that, I would say ‘I want everybody to have a basic income. I believe in universalism.’ But I think for practical political considerations one has to realise that if Argentina, for example, were to introduce a basic income tomorrow, it would have to make it a [apply] only for those who are usual resident, legal resident Argentines and people who are legally resident in Argentina. In other words, you would have to say ‘Sorry, but we cannot include every migrant from all over the world.’ We can't include every Argentine who might be living in a far distant country, making money and living there. We are making it for our people who are living in Argentina.’ 

I don't use the term universal simply because it creates misunderstanding. I believe in the concept of universality, I believe that we should all be equal, I believe that we should all be treated equally. But because the concept of basic income has to be introduced in a step-by-step way, we have to be realistic and gradually build it up so that as the person comes into Argentina from any part of the world, they would have to wait for a period to get the basic income. That doesn't mean you would give them no help. But that help would have to be given from outside the basic income system.


We are almost at the end, but I want to give you the opportunity to transmit something else about your ideas of basic income. 

​​The feeling I have is that the basic income would give people a sense of control over their time, and we don't have a politics of time. A politics of time would be to say that time is a precious resource. Time is the only thing we have, and yet we waste most of it and we cannot control how we use our time. Having a basic income would enable me or anybody listening or reading this to have a greater sense of control. Those of us who have fought for that sense of control, of our time, know how precious it is. And everybody should have that right. 


Production:  Sol Bacigalupo and Sol Muñoz.

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Jorge Fontevecchia

Jorge Fontevecchia

Cofundador de Editorial Perfil - CEO de Perfil Network.


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