Why now? Why them?

The crisis in capitalism signalled by the financial meltdown of September–October 2008, caught the left, and most of the social policy community, asleep. Unlike the crash of 1929–31, it evoked little in the way of new ideas around which to mobilise political protest. Centre-right coalitions have continued to prevail in elections in the larger EU countries, including the UK; only those states in extremes of distress, Greece and Iceland, turned to social democratic parties, and they adopted orthodox responses.

A few commentators suggested that it would be better to distribute money directly to the people than to bail out the banks (Jenkins, Reference Jenkins2008), as indeed was done to a very modest extent in the USA, Japan and Australia; some linked this proposal to 1930s schemes for alternative currencies and systems of credit (Monbiot, Reference Monbiot2009). But the basic income proposal has, with few exceptions, remained part of an academic debate, more philosophical than practically political. Although the Liberal Democrats had campaigned for the idea in 1992, only the Greens (2010) included it in their election manifesto. Commenting on the crash and its aftermath in an interview in the New Statesman on 29 October 2009, the controversial political theorist Slavoj Žižek (Reference Žižek2009: 3) considered the proposal as the only radical one an offer:

On this analysis, the very last political force to adopt the principle would have been the party of Margaret Thatcher. But this supposes, as most basic income advocates have done, that the route towards the new principle would take the high road, via a new stage of ‘decommodification’ (Esping-Andersen, Reference Esping-Andersen1990), and an enlightened awareness of the demands of justice in co-operation, or of the needs of the environment. Instead, Duncan Smith's proposals set off along the low road, arguing from the system's failures of means-tested benefits for those of working age, and the need to address social polarisation and exclusion.

This rather bold direction involves the explicit rejection of a major element of Thatcher's legacy: namely, the creation of a huge range of different selective benefits, targeted at people whose needs arose from a number of distinct income shortfalls – a tradition further developed under New Labour. This was the counterpart to the even more explicit rejection of the version of popular capitalism espoused by Thatcher in the work of Phillip Blond (see below), and hence contributed to a new development in Conservative policy across a broad front: the Big Society.

The unacknowledged prototype for the CSJ scheme was the work of the High Tory, Hermione Parker, a passionate critic of Thatcher. In a chapter entitled ‘1948–88: Genesis of an Underclass’ (1989), she attacked both the directions taken by Thatcher's governments, and the attempts they made to find new solutions to the situation of the 40 per cent of the population who would have been in receipt of withdrawable benefits, if take up of these had been 100 per cent.

Her arguments for a root-and-branch approach to tax-benefit integration were echoed by Duncan Smith in his preface to the CSJ Report. After criticising the whole impact of the tax-benefit system on work incentives, marriage and saving, he concluded:

In the twenty years between these two critiques, Labour Party debates about welfare reform had shifted from obsessions with the distinctions between social insurance and selective benefits (demolished by Parker), to obsessions with the need to treat tax credits as quite different from other kinds of income support (attacked by Duncan Smith). But the timing of the coalition government reform does not seem to stem so much from the crisis in public finances as in the attempt to align the benefits system with the main thrust of Conservative social policy – the idea that social divisions can be overcome, and the economic exclusion of poor people reversed, by changes to the rules on active participation by claimants.

New Labour's model for regeneration of deprived districts and for activating those ejected from labour markets during the Thatcher–Major administrations relied on ‘partnerships’ between commercial companies, public bodies and local groups, together with the pressures exerted by welfare-to-work ‘advisers’ and ‘counsellors’ on individual claimants (Department of Social Security, 1998), along with the attractions of tax credits and the minimum wage. But the approach, like everything else New Labour did, was managerial and technocratic; it relied on an analysis of social relations derived from economic theory, in which rational, self-responsible citizens would seek advantage in a competitive environment (Jordan, Reference Jordan2010).

This left a space for the ‘community politics’ pioneered by the Liberal Democrats, but Cameron decided to elevate this to the status of a kind of moral crusade, appealing to the disillusion felt by many voters about aspects of the new civic culture. Without being able to substantiate many of their accusations against expanded public services – on poverty, inequality, social mobility and the development of impersonal attitudes towards service users – the Conservatives succeeded in portraying the government as more concerned with formal compliance to its own regulations, contracts, targets and standards than with improving the social relations of ‘Broken Britain’, and this did strike a chord with voters, even those who failed to grasp the Big Society message.

It seems unlikely that the comfortable fit between Phillip Blond's nostalgic appeal to associationalism, mutuality and co-operation at the local level, and Iain Duncan Smith's scheme for integrating taxes and benefits, came about by design. In all likelihood, it was a lucky coincidence, but fit they did, and this seems to explain how this unlikely first step towards basic incomes reached the political agenda.

Rationale for the reforms

The political opportunity offered by New Labour's failures was an ambiguous one. On the one hand, there was enough evidence of economic misjudgement in the collapse of the financial sector and the size of the public debt – but Cameron could also recognise a chance to bid for longer-term advantage in a focus on the moral shortcomings of the Third Way. This was a risky strategy, because it involved appeals to a vision of new social relations, at odds with the dominant individualism which had been launched by Margaret Thatcher. He acknowledged that this implied a long-term shift, in which people would redefine social issues as challenges for local collective action, rather than demanding self-responsibility or state provision – his Burkean ‘little platoons’ as the antidote to both rational egoism and the Big State (Cameron, Reference Cameron2009), justifying the claim that ‘we are the radicals now’ (Cameron, Reference Cameron2010).

Duncan Smith's reforms could only complement this bid for the moral high ground if they offered a new ethical perspective on welfare-to-work, and this was supplied by his assertion that the existing benefits system trapped claimants, and that to expect them to work without adequate additional reward was hypocritical. Thus, although the vast bulk of the CSJ report dealt in technical detail, it was underpinned by the proposal that marriage and saving should be rewarded, that those doing small amounts of paid work should gain more from it, and that taxes and benefit withdrawal should not adversely affect the incomes of the lowest earners. This in turn supported by a long list of New Labour policy failures, in terms of child poverty, inequality, the number of workless households and the number of young people not in education, employment or training (NEETS) (CSJ, 2009: 20–2).

The report recommended that the assessment process should be reduced to two elements. Eligibility for universal work credits (which would replace jobseeker's allowance, income support, incapacity benefit and employment and support allowance) would roll up those elements related to being outside the labour market in the present benefits system. ‘Universal life credits’ would replace housing benefit, council tax benefit, disability living allowance, working tax credit and child tax benefit, thus combining all those elements relating to living costs in the present system. The effect would be to create one payment acting as a combined benefit and tax credit, the first part of which would be withdrawn as people increase, from very low levels, the amount that they work, and the second for those on slightly higher earnings, with the effect of the withdrawal being at the same rate right up the scale. All benefits would be paid by a single agency, regardless of whether someone was in work or not, and withdrawn through the PAYE income tax system. Application for awards and disregards would have nothing to do with how much someone earned (CSJ, 2009: 27). The authors of the report claimed that these simplifications and changes would make the reform self-financing, if there was a new, more generous disregard of earnings, allowing claimants to keep their benefits for the first few hours of the week they worked. The effect would be an even 55 per cent withdrawal rate for their subsequent earnings (across the board, post-tax), and to reduce the penalties for couples, mortgage-holders and low-income savers (CSJ, 2009: 25).

This would, it was claimed, give five million households an extra £1,000 a year, and take 800,000 of them out of poverty. Employment was estimated to increase by 600,000 and GNP to rise by £4.7 billion, making the reforms revenue-neutral in the medium term. The report made almost no mention of measures to induce claimants to take available work, instead emphasising improved incentives for employment, family formation, saving and home ownership.

Although there was no reference to the idea of basic income, the proposals were similar to those of Parker (Reference Parker1989: 361–76) and myself and colleagues (Jordan et al., Reference Jordan, Agulnik, Burbidge and Duffin2000: chapter 2), both offered as first steps towards that principle. Indeed, the coalition's adoption of the Liberal Democrat proposal to increase tax allowances, so that no-one earning less than £10,000 a year could be liable for income tax, would strengthen the similarities. The CSJ proposal was more of a negative income tax than a basic income; it assessed households, not individuals, and it was proposed to be combined with cuts in universal benefits, such as the Child Trust Funds. But it introduced a new direction in welfare reform, a step from which the obvious next one is towards basic income.

This is partly because their integration into the tax system is a move towards destigmatising benefits, by making them more like automatic entitlements such as tax allowances. But it is also because it then becomes less and less feasible to link forms of income support to roles such as ‘student’, or ‘carer’, or ‘single parent’. The thrust of policy becomes one of encouraging active participation more generally, without sharp distinctions between paid and unpaid roles.

Clearly, this fits easily with the Big Society approach, in which all citizens are enabled to combine employment and voluntary activities in new ways, as part of a movement towards taking more social provision back into the sphere of local collective action. Surprisingly, this had echoes both of the historical underpinnings of Blond's writings about associational politics (the Distributist movement of the first half of the twentieth century, notably Belloc and Chesterton), and of the ethical arguments for basic income (from the Guild Socialism of G. D. H. Cole to more recent socialist advocates).

Because in 2010 the coalition government gave priority to reducing the budget deficit, neither half of this programme was immediately adopted. Duncan Smith has been forced to delay his reform plan and drop several aspects of tax-benefit integration; Blond's distributist schemes remain a distant aspiration. The implementation of cuts and the zeal with which conditionality has been strengthened have led to strong suspicions that the Big Society and the welfare reform plans have been cloaks for a new phase of Thatcherite neo-liberalism. Even so, it seems worth tracing the historical links between these proposals.

The complex history of an old idea

Basic income is not a new idea; it had roots in the writings of Paine and Jefferson in post-revolutionary America, of Fourier in nineteenth-century France, but, above all, in a social movement in the UK after the First World War. More surprisingly, that version (the Social Dividend or National Dividend) shared its origins with some of the writings that inspired the Big Society initiative.

Žižek was right to say that the best-known present-day justifications for basic incomes are found in the work of Van Parijs (Reference Van Parijs1995), and that his analysis takes the form of a search for pure and abstract principles of justice, based on a Rawlsian contract between people with only very schematic abilities and characteristics, of the kind recently criticised by Sen (Reference Sen2009) and Sandel (Reference Sandel2009). His argumentation does indeed seek ideal institutional arrangements for ethical relations between members of a counterfactual utopian island; and he does indeed reach the conclusion that a pure basic income scheme at an adequate level would simultaneously justify capitalism.

However, the interwar connections of the idea were quite different from this, and included (as was perhaps inevitable in that troubled period) some dirty laundry that its present advocates would disown. It was one of the proposals in a movement which sought the radical decentralisation of power, both through ‘economic democracy’ (workers’ control of industry) and through the empowerment of communities and individuals. The best-known proponent of this approach was the guild socialist, G. D. H. Cole, whose disagreements with the Fabian socialists Sidney and Beatrice Webb were definitive of the movement's philosophy (Hutchinson and Burkitt, Reference Hutchinson and Burkitt1997; Van Trier, Reference Van Trier1995, Reference Van Trier2009a). But it was also strongly influenced by the Liberal Hilaire Belloc (Reference Belloc1912), whose most-quoted text denounced Lloyd George's social insurance scheme; by the heterodox economist, C. H. Douglas, whose work inspired the Greenshirt movement (Drakeford, Reference Drakeford1997); and later by Richard Acland's Common Wealth Party, and Lady Rhys Williams, who advocated a basic income alternative to Beveridge's social insurance scheme (Parker, Reference Parker1989).

The disagreement between Cole and the Webbs centred on the nature of political sovereignty. The Webbs thought that workers’ co-operatives and community associations could never reflect the interests of the whole of society; the worker should produce under political authority, ‘subject to the instructions and directions of those he is helping to satisfy’ (Webb and Webb, Reference Webb and Webb1911: 845). Cole thought that parliament could not claim the right to subordinate and supervise vast numbers of complex organisations, nor was this goal practicable (Cole, Reference Cole1919). The principles of decentralised power and active participation in co-operative work were central to all his writings, but from 1935, in parallel with – though without acknowledgement of – the work of C. H. Douglas, he started recommending ‘Social Dividends’ for all citizens as means to these ends.

A link between this unlikely pair was A. R. Orage, the editor of the influential New Age and long-time supporter of Guild Socialism, who published Douglas's articles from 1919 onwards (Hutchinson and Burkitt, Reference Hutchinson and Burkitt1997; Van Trier, Reference Van Trier1995). The focus of Douglas's critique was initially the supply of credit for production – both the fetters placed by bankers through interest charges, and the illusions of ‘super-production’, when ‘sufficiency’ (or sustainability) would have been a better goal (Douglas, Reference Douglas1918, Reference Douglas1920, Reference Douglas1922). But after the crash of 1929–31, he turned his attention to credit for consumption, and recommended ‘dividends’ which were effectively basic incomes for all citizens (Douglas, Reference Douglas1931, Reference Douglas1932). Although derided by Keynes (Reference Keynes1936) and rejected by the Labour Party, Douglas had a large international following (especially in Canada and New Zealand, where Social Credit parties flourished for over fifty years), and his proposal for Social Dividends was adopted by James Meade (Reference Meade1938, Reference Meade1988), and echoed by Cole (Reference Cole1935, Reference Cole1944).

Meanwhile, the other strand of the movement for the radical decentralisation of power, the Distributists, were moving towards similar conclusions on parallel lines. Their leaders, Belloc and Chesterton, combined a robust assertion of traditional English liberties with an admiration for the ‘organic’ local cultures of the Southern European countries and Ireland. As Catholics, they expressed equal ethical revulsion towards big business, high finance, state organisation and all ‘machine-driven’ forms of work and ways of life, leading them to propose the re-allocation of property in favour of small producers – farmers, artisans and co-operatives (Belloc, Reference Belloc1912, Reference Belloc1936: Chesterton, Reference Chesterton1926).

Belloc and Chesterton both published in the New Age, and they held several positions supportive of the Guild Socialists, who in turn used some of their terminology about exploitation of workers by industrial capital, and how the state reinforced this (Hutchinson and Burkitt, Reference Hutchinson and Burkitt1997: 15–16). Their ideal was one of each family being an independent economic unit (Van Trier, Reference Van Trier1995: 396–401). It is to their appeal for the redistribution of all corporate- and state-owned property to these and local communities that Blond owes his inspiration. Belloc and Chesterton did not specifically advocate basic incomes, and nor does Blond – though he gives the idea a positive mention (Blond, Reference Blond2010: 32) – but the intellectual affinities in the historical traditions are strong.

Blond specifically identifies the failure of Thatcherism as lying in the fact that her attempt to create ‘popular capitalism’ did not produce a Distributist outcome, but instead led to increasing monopoly control over the global economy by international corporations and banks (Blond, Reference Blond2009a, Reference Blond2010). His solution, not so far taken up by Cameron or the Conservative Party, is to break up the nationalised banks and building societies, giving rise to funds for compensating the poorest members of society for their losses during the crash (Blond, Reference Blond2009c, Reference Blond2010, chapter 9). He suggests that these in turn should take the form of ‘investment vouchers’, to fund social enterprises, providing improvements in income, employment and the local infrastructure. He also proposes asset credits, financed out of local housing bonds, providing income streams for poor people; rights for communities to buy up local buildings and land for development; and new variants of community investment funds and pensions.

So his version of the Big Society relies on extensive redistribution to individuals and communities as the basis for associationalism, mutuality and co-operation, an approach not unlike that of Douglas as well as the Distributists. Indeed, a recent scathing attack on Blond by Raban (Reference Raban2010: 19) makes exactly this parallel. He claims that Blond does not acknowledge the whole of his debt to Belloc and Chesterton because ‘it would be too like admitting that he was a fan of Major Douglas's Social Credit scheme, of which I was also reminded when reading his book’.

Raban goes on to scoff at Blond's nostalgia for village life in the style of The Archers (a long-running BBC radio drama based in a fictional English rural village), and to inform his readers of the implicit endorsement of Mussolini in one of Belloc's works. Douglas (Reference Douglas1932) too indulged in anti-Semitic paranoia in his later works, which blamed the banks for the Great Depression, and the Greenshirts contained some dubious elements during their period of uniformed mass direct action in the 1930s.

But the point of this condensed historical review is to emphasise that the origins of the British version of basic incomes lie in the search for a moral vision of a society in which participation and co-operation are strengthened, and local collective action is empowered, not in the left-libertarianism with which it is identified today. Furthermore, its emergence was part of a movement towards step-by-step reductions in injustices, such as exploitation and disempowerment, rather than a grand design for perfectly just institutions – the approach of Sen (Reference Sen2009) and Sandel (Reference Sandel2009), rather than Rawls (Reference Rawls1971) and Van Parijs (Reference Van Parijs1995).

‘Real freedom’ versus gradual emancipation

Of course, it would be stretching a point to argue that basic incomes are intrinsically linked with decentralisation of power and resources in social policy debates. Like social insurance, the idea is capable of taking on a number of different guises in the hands of political forces or regimes with various ends, and in the contexts of a diversity of economic circumstances. After all, what do Alaska, Brazil, Namibia and Mongolia, the current sites for small- and large-scale experiments with the principle, have in common (beyond the fact that all have economies with great mineral wealth, as well as large indigenous groups in deep poverty)?

In Van Parijs's justification of basic income, in terms of the freedom of each to choose the life he or she might like to live (to do whatever he or she might want to do), the methodologically individualistic approach of analytical socialism was deployed to show how markets and flexible employment contracts enabled the best possible distribution among population with diverse tastes and aptitudes. He rejected ‘any particular substantive conception of a good life’ as ‘perfectionist’ (Van Parijs, Reference Van Parijs1995: 25), but concluded that the ‘emotional basis’ for such a society might require institutions (if necessary with compulsory powers) to achieve ‘a significant level of social cohesion’ (1995: 230–2). But although it has been Van Parijs's work which has done most to bring basic income to the attention of moral and political philosophers, the strength of the idea has continued to be its ability to appeal to a number of different constituencies, for a variety of reasons (Fitzpatrick, Reference Fitzpatrick1999). This is because, again like social insurance, it seems to be able to serve several socially desirable purposes at once, and to reconcile principles which otherwise appear to be in perpetual conflict.

These include the need to ensure the performance of ‘socially necessary tasks’, such as care for the environment and for vulnerable individuals, and the avoidance of exploitation in employment. Both liberals, such as Brian Barry (Reference Barry and Franklin1997), and socialists, such as Erik Olin Wright (Reference Wright2004), argue that, by giving each worker enough for subsistence unconditionally, fully adequate basic incomes would mean that work of this kind was undertaken by choice, not under state compulsion, or the compulsion of need. Better still, basic incomes would also allow people to take part in politics, the arts and recreation – or, indeed, in collective action of the ‘Big Society’ kind.

Feminists have been more ambivalent about the proposal, because they were concerned that it could provide a rationalisation for a return to the traditional division of household and public labour (Lister, Reference Lister1990). But more recently some, including Carole Pateman (Reference Pateman2004), have been persuaded that it could be a step towards women's emancipation, as long as its level allowed women to negotiate in a set of fully democratised domestic and workplace relations. Finally, environmentalists have been among the most enthusiastic adherents to the approach, because it would allow a steady-state economy (Douglas's ‘sufficiency’), and free people to participate in projects for conservation (Fitzpatrick, Reference Fitzpatrick1999).

All these theorists emphasise the importance of a basic income sufficient for subsistence if these gains in freedom and equality are to be achieved. But this seems to assume that the idea can be implemented in a ‘big bang’, in which the whole of the existing structure for income support is replaced. In the real world of messy compromises, there would almost inevitably be a stage at which elements of the old systems survived, distorting the purity of the principle or, worse still, discrediting it. And this is very obviously the risk when its introduction is attempted by a market-minded government in the middle of an economic and fiscal crisis, whose motives have nothing to do with emancipation.

The French Marxist André Gorz, in a piece specifically attacking my (Jordan, Reference Jordan and Van Parijs1992) account of a possible rationale for the introduction of basic incomes, forcefully argued that it was in the labour market, and specifically in the performance of regular, full-time, accredited jobs, that people were recognised and recognised each other as free and equal citizens: ‘To feel anyone's equal, you also need to feel that you are useful to that society as a whole, and that it needs whatever skills or capabilities you may have’ (Gorz, Reference Gorz and Van Parijs1992: 180).

Gorz argued that volunteering, caring or working for a self-help association conferred no such recognition; they were not done on society's behalf, but for the sake of one's family, kin, neighbours or associates. Implicitly, then, he rejected the Big Society notion of citizenship and social integration. He also deplored what he saw as the likelihood that the introduction of basic income could accelerate the fragmentation of the labour market.

Does this savage attack apply to the Big Society idea? Obviously it does, and there is a real danger that the Duncan Smith reforms will not be the first step towards a more just and equal order, but the consolidation of a profoundly unequal and exploitative one. Gorz thought that it would be far more equitable to redistribute work and working time, reduce working hours, and make state support conditional on labour-market participation – more like New Labour's tax credits scheme.

It was therefore surprising that Gorz changed his mind, and came out in favour of basic income, only a few years after he published this piece (see Gorz, Reference Gorz1997, Reference Gorz1999, Reference Gorz2003). He announced that he had been persuaded by the realisation that working time no longer reliably measured productive contribution, because work in advanced economies was predominantly intellectual and creative; that workers were required to be constantly adapting and retraining; and that income should eventually be proportional to the growth (under late capitalism) of wealth to be (re)distributed, not to work effort (now receiving diminishing wages). But he also thought that basic income was the best instrument for protecting the voluntary and communal character of informal co-operation and associative participation (Gorz, Reference Gorz1999: 86–7). Although there are some mysteries about why Gorz changed his mind, and some signs that he retained many of his previous views on the links between labour markets and citizenship (Van Trier, Reference Van Trier2009b), it seems that his final position was rather closer to the Big Society view.