The digitization of our economy will bring with it a new generation of radical economic ideologies, of which Bitcoin is arguably the first. For those with assets, technological savvy, and a sense of adventure, the state is the enemy and a cryptographic currency is the solution. But for those more focused on the decline of the middle classes, the collapse of the entry-level jobs market, and the rise of free culture, the state is an ally, and the solution might look something like an unconditional basic income. Before I explain why this concept is going to be creeping into the political debate across the developed world, let me spell out how a system like this would look:
- Every single adult member receives a weekly payment from the state, which is enough to live comfortably on. The only condition is citizenship and/or residency.
- You get the basic income whether or not you’re employed, any wages you earn are additional.
- The welfare bureaucracy is largely dismantled. No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension.
- Employment law is liberalised, as workers no longer need to fear dismissal.
- People work for jobs that are available in order to increase their disposable income.
- Large swathes of the economy are replaced by volunteerism, a continuation of the current trend.
- The system would be harder to cheat when there’s only a single category of claimant, with no extraordinary allowances.
This may sound off-the-charts radical, but here’s why you’re going to be hearing a lot more about it:
1 – The Middle Classes Are In Freefall
As Jaron Lanier points out, Kodak once provided 140,000 middle class jobs, and in the smouldering ruins of that company’s bankruptcy we have Instagram, with 13 employees. It’s an extreme example, in most cases the economic misery is largely confined to young people, with entry-level workers trapped in a cycle of internships, ever-lengthening education, and debt. The result is that young people are not being allowed to grow up. In the 1960s the average first-time house buyer was 24 years old, and as late as 2002 it was 28. The average is now 37. The path to economic selfhood is being stretched by market forces, too many people chasing too few jobs, and a continuation of the status quo is likely to push that lifeboat out even further.
In stripping out inefficiencies and pushing digital goods to near-free prices, the Internet kills middle-class jobs. Digitization has already largely de-monetized academia, film, music, journalism, and lots more besides. More industries will feel the pain, including the legal professions, real estate, insurance, accounting, and the civil service, all of which are built on inefficiency, and all of which will be stripped of jobs in the years to come. As it becomes clear to those with established positions that there are no jobs for their children, they’ll push for a more radical solution.
To put this in econometric terms, wages as a share of the economy have been in long term decline and recently hit a new low in the United States. Meanwhile corporate profit margins have hit an all time high. The last few years of economic turmoil has allowed industry to reduce staff numbers and reduce entry-level pay, without reducing capacity. If that trend continues, wealth creation will increasingly be confined to those with capital, and things start to follow a Marxist logic. The middle classes (and their elected representatives) will not let that happen.
2 – Demand For Human Labour Is In Long Term Decline
Imagine a point in the future when robots do more of our physical labour, computers do more of our mental labour, and our mechanized-digitized economy is ten times more efficient. We don’t need to agree on a date, this could be 2050 or it could be 2500, all we need to agree on is that current trends are likely to continue in the same direction. Between now and then two things can happen, either we do 90% less work, or we demand ten times more goods and services, or a bit of both. The first option requires that we drastically revise downwards our expectations of how much work people do, the second requires that we drastically redistribute purchasing power to consumers.
We’ve redefined work in the past, so there’s no reason we can’t do it again. The concept of “a job” as something that happens outside the home and for someone else is a largely Victorian creation. Even after it was formalized into an obligation to the market economy, we always accepted that certain people do not have to work. We do not expect infants, the elderly, or the disabled to work, and these categories are relatively fluid. The expectation that children work inside and outside the home has been in steady decline ever since the industrial revolution, while the default retirement age has crept ever later, pushed by governments avoiding a pension crisis and senior employees hanging on to their established social roles. While men were forced out of the home to do paid work, women were kept in the family home to do unpaid work. During the world wars, everyone was expected to work. During a world cup final, almost nobody is expected to work. We regularly change our expectations of who works and how. Forcing the unemployed onto a jobless market on the basis that “everybody has to work” is at best misguided and at worst cruel.
In 2012 the average working year in South Korea was 2,226 hours, and in the Netherlands it was 1,381 hours, 38% less. You can have a rich, developed economy on relatively little work. If we stop stigmatizing the non-employed, we can stop pushing people into jobs that offer little collective benefit. From telemarketers to chuggers to sign holders to beggars, huge numbers of people are forced to eek out an existence on the fringes of the economy in roles that have almost no marginal economic output.
3 – Cultural Production Is Detaching From The Market
We already have a society of volunteers and creators, and that’s a good thing. That Wikipedia article you just read, the parkour YouTube video you just watched, that Russian electronica you’re listening to, the code that powers your browser, all were probably given away for free. Everyone expected an information economy, and instead we got an information culture.
When people are locked out of the jobs market, some may sit at home all day on the couch, but many will go out into the world and produce cultural goods that they then give them away for free. I don’t buy into the myth that unemployed people are lazy. I’ve lived in a country that had a period of “full employment” and now has 14% unemployment, and I don’t see how anyone can be so misanthropic to claim that those 14% of people just got lazier. Employment doesn’t just give people an income, it also gives them an identity, status, confidence, a sense of mission, and a network of peers. Anyone given access to those rewards will work for them. As the fantastic talk by Dan Pink puts it, we are motivated by autonomy, mastery, and purpose, but not money. As machines take over more of our work, we are going to have to find other ways of letting people fulfil these human needs. Forcing them to send 500 CVs out every week is not a good start.
How would we pay for it?
We could start by getting corporations to pay their taxes. As I mentioned above, corporate profit margins have hit an all time high, and that money will circulate far faster if it’s placed in the hands of consumers. For salaried workers a basic income would likely be a repackaging of tax free allowances, although they would likely need a net gain to buy into it. The scheme would also yield savings elsewhere in the public sector, from a reduction in the size of the bureaucracy, to an increasing role for volunteers and charities. The scheme would also stimulate economic activity, as shown by the PPI scandal in Britain which forced the transfer of £10 billion from banks to customers, and led to a GDP growth boost of 0.1% because consumers were so much quicker to spend it.
Frankly, in an era when communities can create their own currencies, capital can sneak across digital borders despite being legally frozen, and economic production is increasingly decentralized, finding ways of fairly collecting revenue for the public good is going to be one of the big questions of the century, regardless of whether or not we have an unconditional basic income. Under the current set of rules, most developed world governments are bankrupt, but as the bank bailouts proved, the rules can be rewritten when needs be. Money is a device we use to help us allocate resources, it is a symbol and an understanding, seemingly solid in the short term, but flexible and evolutionary in the long term. If you burn all the notes in your wallet right now, you haven’t made the world any poorer, you’ve simply reduced your personal claim to available resources. There is always more money.
As has become increasingly clear, austerity is not working, and should never have been expected to work. An unconditional basic income would be the Keynesian response that should have been launched as soon as it became clear the financial sector had a rotten core. In other words, it would be a bailout for consumers.
This piece has been translated into French.