by Francisco Nobrega | Jun 12, 2015 | Opinion
The debate and protests over the importance of an unconditional basic income policy for our time have been spreading worldwide and gathering momentum. Here in Brazil we keep an open ear due to the success of conditional transfer policies (The Bolsa Família program) and also because we have a moot 2004 law that says that such universal and unconditional money transfer is to be inaugurated in Brazil, “in steps”. Most view Bolsa Família as one such “step”. I have been following the idea for over five years together with other activists, trying to implement a basic income pilot program here, in a small city. This is a distilled reflection of my current view about how to make utopia turn into a “protopia”, a term proposed by Kevin Kelly as a “gradual improvement in humanity” or a viable utopia.
The camp of supporters in the world is diverse and we can see two distinct and extreme interpretations of the idea:
One group sees basic income as a way to increase government through social welfare and “eliminate” work that they see as exploitative and envision complete maintenance of social services and centralized decisions, besides the monthly unconditional grant, independent from work.
Another group embrace basic income as a tool to drastically reduce government, replacing the social programs with the monthly grant independent of work.
These polarized views also disclose an important characteristic of the idea: it attracts people from the entire political spectrum, something that certainly will help future implementation. There is another surprising coincidence in all basic income visions reported in writing and video: the unanimous presentation of what I will call the “classical model”: the monthly grant will be bestowed upon all: rich, middle-class, poor and unemployed. I seldom met anyone who dared to challenge the idea of rewarding people with economic means and a job. To me this is in contrast with was in fact a strategy to eliminate poverty and the attached main evil of social welfare programs: the “poverty trap”. This is a phenomenon in which you punish economic success by removing the benefit as soon as someone is employed or becomes an entrepreneur. The poverty trap creates an incentive to stay put and avoid the risk of relinquishing the subsidy and face the competitive world outside.
A basic income payment is a right for everyone without a decent earning, whatever the reason. The logical justification is that society as a whole has been unable to provide opportunities for everyone either as an entrepreneur or an employee with the government or the private sector. Additionally the increasing efficiency in production, and the great advances in microelectronics, artificial intelligence and robotics are on the way to eliminating jobs on a massive scale. Brynjolfsson and McFee1 have shown that notwithstanding a continuous rise in productivity, the last two decades exhibit a marked reduction in job opportunities. Frey and Osborne2 released a very interesting study of 702 occupations, identifying many that are on the road to extinction due to the modern trends mentioned. In the US the authors estimate that 47% of jobs are at risk of being automated within a decade or two. This will add to the jobs already lost by “off-shoring” manufactories. Also a fundamental psychological barrier exists and resides in the deeply engrained notion that income has to be linked to work. People will have to overcome this notion just as we had to overcome certain prejudices in the recent past related to slavery, torture and the rights of women and minorities, finally embracing solidarity in the economic realm.
It is our duty as a civilized society to provide a monthly grant that will allow those without means to provide for their basic needs. But the classical model of basic income is unjust in handing over cash to those who are well off. This practice could be acceptable if we suppose that a given population was living within the same level of their means. Then the grant would be a benefit equal to all. In all countries we have a centuries-old history of inequality. In Switzerland just about one citizen in 13 is poor and needs help from the state. In Brazil about one-quarter of the population is poor and are presently helped by the Bolsa Família program. The cost of benefiting everyone will be a formidable barrier to implement the idea besides being unjust. The classical model was probably born out of our prejudice against people receiving money without pay. Apparently to appease the well off, the most indignant against giving “money for doing nothing”, the classical model wants to “buy” them as beneficiaries of the idea. But we have to give cash “for doing nothing” because the affluent societies of today have to be responsible for the lack of job opportunities. Giving cash to the needy and letting them choose what to do with it has been shown to be not only just but also cost effective. Among other pilot experiments like the one in India3 it is noteworthy to remember the success of giving cash to homeless people in London4 or home for the homeless in Utah5. The excellent results cost less than the usual city expenses for caring for the homeless in both cases. The winning GiveDirectly initiative in Kenia and Uganda also reinforces the idea of addressing the poor. Many other experiments exist with excellent results.
The social services network present in all countries should be used. The first measure I propose, considering Brazil, is to remove all conditionalities linked to Bolsa Família or to unemployment benefits. The bureaucracy should analyze requests from the needy, families or individuals without income. After entering the monthly grant system the newcomer would have a generous time interval (years) before the grant expires. This longer interval will remove the “poverty trap” long enough for progress out of the grant system. In case a lack of income remains, the person/family will apply, near the end of the allotted time, to stay in the system. So whoever is in need will be helped and whoever falls into economic need will be supported. The amount paid should be enough for the basic needs of the person/family. Recipients who want to advance economically will pursue whatever full or part-time jobs are available or even start a business. The basic monthly cash should be followed with provisions of communal facilities for support and education for the beneficiaries whenever appropriate. In parallel, some of the suggestions exposed6 in the “Get America Working!” study could be implemented to reduce the cost of having workers by means of a tax rearrangement that would drastically shorten the current payroll expenses and many more jobs could be created.
Reducing economic uncertainty will have multiple benefits for society: the mental health value of reducing the anxiety and stress linked to insecurity, the social environment will be safer, and most importantly, the poverty trap will be neutralized, unleashing the creative potential of men and women.
Francisco G. Nóbrega
MD, PhD, is President of the Municipal Council for the Citizen’s Basic Income in the city of Santo Antonio do Pinhal, SP, Brazil. francisco.nobrega@gmail.com
The opinions expressed here are solely those of the author. I thank Jim Hesson for improving the English and suggestions by him and Marina P. Nobrega.
1- Race Against the Machine – how the digital revolution is accelerating innovation, driving productivity, and irreversibly transforming employment and the economy. Erik Brynjolfsson and Andrew McFee, 2011, Digital Frontier Press, Mass, USA
2- The future of employment: how susceptible are jobs to computerization? Carl Benedikt Frey and Michael A. Osborne, 2013, https://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf
3- Basic Income: A Transformative Policy for India. Sarath Davala, Renana Jhabvala, Soumya Kapoor Mehta, and Guy Standing. New Delhi: Bloomsbury Publishing India, December 2014.
4- The London experiment: https://www.washingtonpost.com/opinions/free-money-might-be-the-best-way-to-end-poverty/2013/12/29/679c8344-5ec8-11e3-95c2-13623eb2b0e1_story.html
5- The Utah experiment: https://www.newyorker.com/magazine/2014/09/22/home-free
6- Get America Working! site: https://www.getamericaworking.org
by Citizens' Income Trust | May 24, 2015 | Opinion
Donald Hirsch, ‘Could a Citizen’s Income work?’ A paper commissioned by the Joseph Rowntree Foundation as part of its Minimum Income Standard programme, and published in March 2015. www.jrf.org.uk/publications/could-citizens-income-work
The Citizen’s Income Newsletter usually mentions relevant think tank research and working papers in the ‘news’ section, or occasionally in the context of an editorial, but Donald Hirsch’s paper is particularly significant and so demands a full review. Its importance is twofold: it evaluates a number of Citizen’s Income schemes for viability; and it identifies the changes that might be required in the ways in which the public and policymakers think about income maintenance if a Citizen’s Income were to be a possibility. The paper therefore tackles a number of different feasibilities: financial feasibility, psychological feasibility, and what we might call institutional or policy process feasibility.
The paper recognises that a Citizen’s Income would address some very real problems experienced by the UK’s current largely means-tested benefits system. For instance: a Citizen’s Income would not be withdrawn as earnings rose, and so would not impose the employment disincentives that means-tested benefits currently impose; no stigma would be attached to a Citizen’s Income; and a Citizen’s Income would be simple in structure and so would not suffer from the complexities of much of the current system. The full list of arguments on page 4 of the paper is a model summary of the case for a Citizen’s Income.
The major contribution of the paper is the way in which it outlines the three ‘seismic shifts’ that would need to occur in public attitudes if a Citizen’s Income were to be implemented. The public and policymakers would need to be convinced
- ‘that everyone should be given some baseline level of financial support from the state, even if they choose not to do anything to try to earn money for themselves;’ (p.5)
- ‘that the basic marginal tax rate should be substantially higher than it now is, since otherwise almost everybody’s net income from the state would rise, and there is no obvious way to finance this.’ (p.5)
- ‘potentially a reduced role of the state in ensuring that each citizen can afford particular essentials, notably housing and childcare, through income transfers, if a citizen’s income replaced means-tested payments for these.’ (p.3)
Hirsch says of the first two of these seismic shifts:
Politicians are likely to perceive both of these as unacceptable to voters, a view supported by evidence on social attitudes. It can be argued that both of these conditions could become more acceptable under a regime with a citizen’s income than they are now. Persuading the public and politicians of these arguments, however, would not be easy. (p.5)
And he says of the third:
Under a system of largely market-based rents, it would not be easy to include a simple rent element in a citizen’s income payment without creating shortfalls for some or large surpluses for others. (p.5)
Particularly in relation to the first two seismic shifts, Hirsch’s conclusion is that ‘a debate about the principle of a citizen’s income may thus contribute to a long-term reconsideration of policies and attitudes towards state support’ (p.3).
The paper contains a useful study of the differences between Universal Credit, Negative Income Tax, and Citizen’s Income; a discussion of the ways in which Income Tax would have to rise to pay for different levels of Citizen’s Income; an exploration of the different ways in which Citizen’s Income schemes might tackle differing housing costs; and a discussion of the way in which abolishing tax allowances, such as the Personal Allowance, rather than simply raising Income Tax rates, could pay for a Citizen’s Income. It also contains a description of the differences between the levels envisaged in various researched schemes and the Minimum Income Standards researched by the Joseph Rowntree Foundation ( – although it has to be said, of course, that the current benefits system does not come anywhere near to the levels of the Minimum Income Standards). Then follow descriptions of the kinds of households to which a Citizen’s Income would tend to redistribute income, and the important statement that ‘all the [paper’s] calculations make the simplified assumption of no behavioural change. Knowing what would actually happen to earned incomes as a result of a citizen’s income is very difficult, but is likely to affect outcomes quite profoundly’ (p.16). Then come discussions of household and individual assessment units, the effects of different approaches to meeting housing costs, and lifecycle redistribution. A particularly important section is a discussion of a Partial Citizen’s Income as a stepping stone towards a full one. A partial Citizen’s Income would be likely to impose losses on low income families if means-tested benefits were abolished, and to impose additional complexity if they were not. Hirsch suggests that a Partial Citizen’s Income might be useful if it could be implemented as one stage of an already agreed plan to implement a full Citizen’s Income. There is much merit in this suggestion.
Hirsch describes the Alaska Permanent Fund, and the Namibian and Iranian schemes, but not the more recent Indian pilot project. He correctly points out that these schemes have not reduced employment market activity, and might also have said that in the Namibian pilot project a significant increase was in evidence.
Hirsch makes the important point that income is different from such services as healthcare and education because households generate income as well as require it. This means that it is important to ensure that a Citizen’s Income scheme does not inadvertently reduce the amount of income created, and that both removal of the Personal Tax Allowance and higher Income Tax rates might have such effects on earned incomes. In his concluding section, Hirsch suggests that a Universal Credit with a lower taper rate might be a useful step in the direction of a Citizen’s Income. He might also have pointed out that Universal Credit is not universal, is not based on the individual, is not unconditional, is still means-tested, and is regressive.
When it comes to the study of particular Citizen’s Income schemes in the paper’s appendices, the paper makes two valid points: that the immediate implementation of a ‘full’ Citizen’s Income is unlikely to be feasible in the short term; and that, because a ‘partial’ Citizen’s Income would not fully replace means-tested benefits, it could make the system even more complicated.
Following a description of the Citizen’s Income Trust’s 2013 illustrative scheme, Hirsch proposes changes and lists their additional costs, which is useful, but is not itself a criticism of the scheme as published. He then studies the Institute for Social and Economic Research working paper proposals (reprinted in the previous edition of this Newsletter), and correctly recognises that in order to reduce losses in disposable income, a means-tested system needs to be retained and that this would create an additional level of complexity.
Hirsch’s descriptions of these recently researched Citizen’s Income schemes are largely accurate. There are places in the discussion at which a broader canvas would have been helpful. For instance, the discussion of the higher rates of Income Tax that would be required might have included consideration of overall gains and losses – for if a household’s Income Tax rate rises, but the overall effect of the Citizen’s Income, increased Income Tax, and alterations in other benefits, leaves the household with the same disposable income, then for households originally on in-work or out-of-work means-tested benefits, it really is no problem that Income Tax rates have risen – except that, as Hirsch correctly points out, Income Tax rates are a psychological issue as well as a fiscal one: and it is in the area of the psychological issues related to Citizen’s Income that his paper makes a most useful contribution. An additional important issue is that where households are not currently on means-tested benefits, and Income Tax rates rise, then even if there is no overall loss in disposable income at the point of implementation of a Citizen’s Income, those households’ marginal deduction rates will rise. This might result in behavioural change in the employment market.
A further issue to which Hirsch correctly draws attention is that of redistribution. For schemes in which means-tested benefits are abolished, redistribution effects could be substantial. Hirsch evaluates a particular scheme of this nature, and concludes that
the overall distributional effects would include, but not be restricted to, a redistribution of income from better to worse off groups. There would also be a significant redistribution from people without children to those with children among lower earners, and also some losses for those with very low part-time earnings. Finally, … among groups presently receiving transfers from the state, couples would do relatively better than single adults (with and without children). (p.15)
So either such redistributional effects would need to be justified, or a different kind of scheme would need to be selected. Hirsch does not study in detail the redistributional effects of Citizen’s Income schemes that retain means-tested benefits, where those means-tested benefits are recalculated by taking into account households’ Citizen’s Incomes as existing income. This would require the kind of microsimulation work contained in the Institute for Social and Economic Research working paper (Torry, 2015). The low levels of gains and losses generated by such modelling of the alternative schemes in that working paper suggest that redistributional effects would be far less significant than for schemes that abolish means-tested benefits. Clearly further research is needed in this area.
In relation to those same alternative schemes, and to his discussion of housing costs on p.13, Hirsch might have mentioned that the schemes researched in the 2015 Institute for Social and Economic Research working paper are clear that housing costs support would be left as it is under the current system. A further issue that Hirsch might have discussed is that the ISER paper employed the Euromod modelling software and Family Resource Survey data to generate entirely robust costings and results on gains and losses. As he recognises on p.26, his own paper does not calculate precise tax rates and income outcomes. It would have been able to do so if his suggestions had been modelled using Euromod.
This review cannot do proper justice to the detail contained in Hirsch’s well-researched and well-ordered paper, but we hope that it will encourage our readers to read his paper for themselves, to study his arguments, and to ponder his conclusions. Any future study of the feasibility of a Citizen’s Income, and of particular Citizen’s Income schemes, could do a lot worse than set out from the arguments of this paper.
Hirsch has already done the Citizen’s Income debate a significant service, and we hope to see further such analysis and argument in the future. What would be particularly useful would be to have a side-by-side evaluation of the current benefits system and of a Citizen’s Income scheme (both with and without accompanying means-tested benefits), treating the two systems as competitors on a level playing field, and evaluating them according to a set of clear criteria. As Hirsch says,
the present system suffers from strong negative perceptions and a consequent lack of political support, which has helped the implementation of recent cuts in the real value of benefit levels without obvious political fallout. If a citizen’s income or any other reform could command public confidence, this would help strengthen the underpinning of a system which ensures that nobody in the UK lacks a basic level of income. (pp.4-5)
by Marlies Kunnen | May 19, 2015 | Opinion
The Case For Universal Basic Income, 14th February 2015
What will be the impact of technological change on society? We are often told that people whose jobs are automated will simply retrain and find work in new occupations, the same way farmers became factory workers following industrialisation. However, will this continue to be true now that the pace of change is much higher than it was in the age of the Industrial Revolution? In an attempt to explore the relationship between technology and the economy and society, the London Futurists invited Barb Jacobson and David Jenkins of Basic Income UK to Birkbeck College on the 14th February to talk about Basic Income.
David explained why Basic Income should be unconditional: to give people the means to live and to flourish, to provide people with the freedom to do what they want to do, to acknowledge the value of unpaid work (which accounts for 25% of GNP), to rein in the state’s bureaucratic reach, to distribute the means of consumption, to strengthen the labour movement so that people can demand a shorter working week, and to disrupt unjust social practices. In order to perform the above functions Basic Income will need to be high. In parallel, other provisions are needed as well: for example, an increase in housing supply.
Barb pointed out that the most important work ( – the work that keeps society going) attracts the least money in the labour market. Basic Income would address this. It is not a new idea: Thomas Paine was already advocating it in 1795. Virginia Woolf, who would undoubtedly have been a member of the London Futurists were she alive today, expected Basic Income to be introduced by 2029.
Our current levels of government surveillance and bureaucracy were illustrated by photos of a recent 6 a.m. police raid on a house inhabited by a suspected ‘benefits cheat’. Do we really want a government that spends its resources on spying on its citizens in order to find out if a separated couple has really separated and is not claiming £50 per week too much?
Potential ways to fund Basic Income that were discussed included patents, copyright, dividends, a Tobin tax, and the closure of tax loopholes.
In the question and answer session there was discussion on the implications for industry, and for money as a motivator ( – when people get paid for doing something are they more or less motivated to do it?). Someone worried that no one would do the ‘nasty work’ like sewer cleaning. It was suggested that people would demand better pay for doing this work and therefore it would become more efficient to automate it. There was also discussion on inflation and whether Basic Income would drive consumption of unsustainable resources. Will people buy more goods, or will they buy better quality goods? Research from India suggests the latter. A futurist suggested that we should view Basic Income as an investment because it will pay for itself by reducing the crime rate. It was also pointed out that we already have a Basic Income for the wealthy in the form of quantitative easing.
Someone suggested that first the right to create money should be transferred from corporations to governments; and the suggestion was also made that if politicians never agree to introduce Basic Income then people might introduce it themselves anyway, perhaps through cryptocurrencies.
Futurists are of the opinion that within the next thirty years robots will become smarter than humans. Let’s hope that before we reach that point humans will be smart enough to introduce Basic Income.
by Brent Ranalli | Apr 13, 2015 | Opinion
Debt: The First 5,000 Years, by David Graeber (New York: Melville House, 2011). Review by Brent Ranalli
Most histories of money are histories of coins, tokens. But coins come and go with empires. Money has much deeper roots in the forms of obligation that bind together even the simplest societies. It takes an anthropologist to write a truly universal economic history, and that is what David Graeber has accomplished with Debt: The First 5,000 Years. With its wide scope, Debt offers valuable perspective on contemporary issues. The problem of economic insecurity that makes Basic Income so urgent today is not a unique feature of modernity or capitalism (though modern technological advances make possible for the first time a universal Basic Income as a solution), but has been with us since the development of money per se-that is, financial credit, or debt-at the dawn of civilization. The number of people that get into debt today because of money issues and not being able to earn enough to live, is astounding. Luckily there is help out there, such as advice from Debt Consolidation USA, reading books like Debt, etc. to help people get back on their feet if they have had to take a financial blow. They may advise you on the best strategies to removing yourself from such a stressful situation with tools that are available to you, such as life settlements. If you are over the age of 65 you can sell your life insurance policy for a little extra cash and subsequently pay off any debts you may have. There are other ideas too, this is to name but one. The important thing is for people, who have got too far into debt that they find themselves in a situation where debt collectors are at their door, is to ensure that they are aware of the debt collection state laws so that nothing bad happens during the process so that it is all above board.
The book is divided into two parts. The first is analytical, and the second is synthetic. Graeber begins by demolishing conventional myths of economic history, starting with the notion that before money and markets were invented, barter was the normal mode of exchange. In fact, as anthropologists have tried to explain to economists for over a century, barter is almost unheard of in traditional societies. Within communities, food, clothing, tools, and other everyday items might simply be distributed freely from one person to another in accordance with a strong sharing ethos, or distributed from a communally managed stock, or exchanged in a tit-for-tat fashion (so-called “gift economies”), or exchanged as debits and credits in a “virtual” currency that never actually changes hands. Many so-called “primitive currencies,” high-status items like cattle or hand-woven cloth, change hands primarily for purposes of rearranging human relationships (e.g., sealing a marriage contract or compensating the family of a murdered individual). Barter, when it does occur in traditional societies, tends to crop up on the margins of economic life, when people trade with strangers and potential or actual enemies. The modern triumph of money and markets can be seen to represent, in a way, the remaking of society as a collection of strangers or potential enemies a la Hobbes.
Similarly, Graeber turns on its head the conventional notion that the state and the market stand in opposition. In the grand scheme of history, markets (where strangers meet to buy and sell) have been handmaidens of the state, especially the war-making state that needs to provision armies. Only in rare circumstances (e.g, medieval Islam) have markets been sustainable without being substantially propped up by the state for enforcement of contracts, etc.
Meetings of strangers (at the interstices of traditional societies, and in the ancient and modern marketplace) always hold the potential for violence, and one of the themes of the book is the actual violence and constant threat of violence that went into making the seemingly polite modern bourgeois economic order: from the degradation and dispossession of women, whose exchange holds together traditional patriarchal societies, to debt-peonage and debt-slavery, to the war-making that created a demand for markets that could satisfy the appetites of soldiers carrying state-minted coins and war booty, to the extraordinarily harsh laws of early modern England (for example) that criminalized traditional credit-based modes of exchange.
Credit systems preceded the use of coined money in the ancient civilizations of Eurasia. But regardless of whether money is tangible or virtual, the normal, predictable course of events in every society that employs money is for money to be lent (often at interest–an ancient Mesopotamian innovation), and for some or most debtors to become trapped in debt. And the normal endgame of debt in the ancient world was for the debtor’s family members, and in extremis the debtor himself, to be reduced to slavery. In both the ancient and modern worlds, Graeber chillingly demonstrates, enslavement (and other forms of compulsion–peonage, indentured servitude, wage slavery) and trade in slaves has been intimately bound up with debt. Time and again, debt has been the siphon that sucks victims into the system of exploitation, and also the motor that drives the exploiters–both the grand masters (monarchs, conquistadors) and the petty functionaries–to take the desperate step of destroying others’ lives.
The story of civilization is in large part the story of how different societies have coped with the perennial debt trap that afflicts all societies that employ money. Mesopotamian kings offered periodic amnesties, erasing personal debts and freeing slaves to return to their families. The ancient Israelites adopted the practice and formalized it in the custom of Jubilees. Some groups prohibited the charging of interest, or set conventional bounds (that interest should not exceed five percent, or that the total interest charged should not exceed the value of the principal). The ancient Greeks and Romans met their debt and slavery crises by programs of imperial expansion that generated viable new economic opportunities for younger sons and filled the public coffers with booty and tribute–money that could be directed to the poorer classes of citizens to prevent them from falling into the debt trap, via direct payment (like the stipends Greek democracies paid their citizens for jury service, a sort of BI for the demos) or subsidies (like the Roman breads and circuses). Through custom or law, some societies took the more radical steps of abandoning or outlawing slavery and/or establishing bankruptcy protections for debtors.
Graeber detects a general pattern in the (Eurasian) history of monetary practices and debt-coping strategies, and the second half of the book is devoted to explicating that pattern–essentially, retelling the traditional story of civilization through the lens of money, debt, and slavery. The earliest Mesopotamian civilizations were pioneers of the use of money (credit money), and early victims of the debt trap, which their leaders periodically reset with general amnesties. Desperate debtors not infrequently took matters into their own hands as well, and fled with family and flocks to the outlying hills to join the fearsome “habiru” (a word that meant outlaw, fugitive, mercenary). Periodic waves of these groups descended to prey on and take control of civilized urban Mesopotamia, as their presumed counterparts the Hebrews to their West descended in strength upon Egyptian Canaan.
The “axial age” is a recognized watershed in Eurasian history. There was simultaneously in China, India, and the Mediterranean world a flowering of empire and cultural creativity. Graeber convincingly links these political and cultural developments to the (still mysteriously simultaneous and independent) invention of coined money. With the invention of coin and the establishment of markets, ancient states could raise, feed, and field massive armies, and engage in wars of conquest on scales previously unknown. The use of coin facilitated anonymous economic transactions, and deepened and widened the debt trap (except for the lucky subsidized few in the successful imperial powers like Athens and Rome, at least while those empires continued to expand). Expansive war also meant taking large numbers of captives, and these too became slaves. Slavery became an enormous and intrusive social institution, part of the fabric of everyday life.
As coined money entered public consciousness, intimating that everything could be weighed and measured, materialist philosophies arose in all the great ancient civilizations. And idealistic and humanistic philosophies and religious movements arose in defiant protest, these latter being the great philosophies and religions for which we remember the axial age–Greek philosophy against the sophists, Indian Buddhism against Vedic ritualism, Chinese Confucianism against legalism.
Graeber traces the contours of a gradual and staggered transition from the axial age to the “middle ages.” The general story is that the axial empires run out of steam and collapse, coin is replaced by credit (often still denominated in old imperial currencies), pre-market forms of traditional exchange (trust-based, community-based) re-emerge into prominence, social and/or state safeguards are developed to minimize or eliminate the debt trap, and the institution of slavery is abandoned. The story varies from region to region though, providing some interesting contrasts and highlighting the ingenious variety of different societies’ solutions to common problems. In China, for example, the axial imperial system never collapsed–it merely adapted, and used state power in various ways to marginalize the merchant class and protect the poor–or be overthrown by a new regime pledged to do a better job. In India, the state more or less shriveled away, and rural society governed itself via custom and caste–again, the money-managing merchant class being put in its place among the lower orders. In Islam, a thorough and unprecedented separation was achieved between church and state. Merchants took a leading role in religion, and collectively abandoned the practice of usury on religious grounds. As the merchant class was effectively governed by a religious code of honor, no intervention by the state was necessary to enforce contracts. Rather than meddling in economics or religion, then, the state in the Islamic world devoted itself to continued imperial conquest–and continued to capture and employ slaves, paradoxically arming them and employing them as soldiers for further conquest (a practice that religious leaders condoned, since captured enemies–unlike debtors–could legitimately be regarded as having forfeited life and liberty, and using foreign slaves as soldiers eliminated the messy business of Muslims bearing arms against Muslims). In Europe, markets, money and state shriveled nearly away and traditional modes of exchange blossomed. The Church (at least at first) took a hard line against usury; popular sentiment militated against the institution of slavery.
Around 1450, the pendulum swung the other way again. There was a new era of imperial conquest, of war-oriented cash economies, of mining and minting, and of slavery, centered in Europe. As sophisticated credit instruments imported from Islam were married to a metals-based cash economy, yawning new debt traps opened up, ensnaring people of all station, from kings and magnates to common soldiers and traders, while tearing apart other societies on multiple continents. There was at the same time a new cultural Renaissance in Europe, with a surge of materialism and an attendant backlash of more humane philosophies and religious movements.
Graeber perceives, or anticipates, a shift in our own day back in the other direction, away from imperial war, cash, and markets, back in the direction of stability, community, safeguards against the debt trap, and new and traditional forms of trust-based credit. He is light on predictions, and contents himself with arguing that our contemporary global financial system is in a likely terminal crisis (which, for the sake of convenience at least, he dates from Nixon’s 1971 decision to make the dollar a free-floating currency).
The book is an extraordinary feat of synthesis, and most of it is convincing and well-argued. I take issue with only a small handful of points. The weakest point, it seems to me, is Graeber’s conviction that capitalism is necessarily doomed. He makes a strong case that capitalism is by no means the end of history, that it is morally flawed, and that the financial sector in particular is careening out of control in a manner that could destabilize the whole. But his confident and repeated assertion that capitalism with free wage labor is impossible, that under capitalism the world’s population could never, even in principle, achieve middle class living standards, appears to be special pleading. In world history, the institution of the market had its origins in war and violence, but today (as Graeber himself acknowledges) it has left those roots behind and become tame and bourgeois. Capitalism too is historically rooted in brutal exploitation. But could not capitalism too eventually become as tame, hasn’t it already made extraordinary progress in that direction since the days of Dickens and Marx? If every last Chinese peasant finds a job with a dental and retirement plan, it would seem to signify not the demise of capitalism, only that consumers will pay incrementally more for Chinese products. Graeber’s pronouncements about the imminent demise of capitalism are particularly ironic, coming as they do practically in the same breath as his observations that for centuries economists and industrialists have been expecting the system to collapse and it has not done so.
Graeber has essentially acknowledged in post-publication interviews that the collapse of the ~1945-1975 “deal” that gave U.S. and European workers a modest share of the economic pie was not a matter of structural limits: rather, it was a matter of what concessions those at the top of the pyramid were willing to make. Those at the top might have made other choices, and one might argue that they were foolish not to continue investing in expanding the pool of middle-class consumers. They still might make better choices, or their hand might be forced, without anything that resembles an end to the current economic order. Establishment of a Basic Income Guarantee is one scenario that would facilitate transition to the less exploitive economy Graeber envisions while leaving the current system of finance and production intact.
Graeber’s analysis of debt and slavery helps us to make sense of the economic crisis we find ourselves in. Politically and morally we moderns find slavery abhorrent, and as a global society we have succeeded in legally abolishing it. But the logic of debt continues to push many participants in today’s economy close to the edge of slavery and sometimes over the edge; the legal and moral and political consensus starts to buckle. Globally we see a flourishing traffic in poverty-induced sex slavery and illicit organ harvesting. In the U.S., we see the political class weakening bankruptcy protections while consumer debt and student debt soar to crisis levels. And the poorest and most vulnerable in the U.S. are liable to be sucked into a burgeoning prison industrial complex whose work programs constitute de facto slavery. We do appear, as Graeber suggests, to be living in a period of transition; it remains to be seen whether the moral and legal sanctions against slavery will hold up under stress, and whether the debt burden that contributes to the stress can be moderated or eliminated in a timely fashion by policies like Basic Income.
Credit photo: CC Steve Rhodes
by Josh Martin | Apr 3, 2015 | News
Howard’s post is framed in the modern slavery debate, where a world opposed to slavery still has failed to eradicate it. He argues that a basic income could help fight slavery through its emancipatory nature by citing the recent pilot project in India that freed many of the poorest people from needing to work with moneylenders to make ends meet. Basic income empowers people to say no to bad jobs and say yes to the good ones thanks to economic security.
Neil Howard, “Basic Income and the Anti-Slavery Movement”, Open Democracy, 12 March 2015.
