Basic Income and Institutional Transformation

Louise Haagh

Friday, 24 February 2017

Most misunderstandings concerning basic income arise from exaggeration about what a basic income can or ought to achieve. This is illustrated in reasonable points raised by Ruth Lister in her recent piece in this series. For me the basic income addresses some fundamental problems in institutional design. Tackling those problems will make a contribution to solve a range of contemporary challenges, but this contribution is contingent on other changes.

Like Lister, I was attracted to the idea of UBI because it invokes inquiry into first principles. On what basis does the welfare state support individuals? What should the function of the social state be in today’s society? These are questions that need to be asked and examined with fresh eyes at the current juncture.

It is curious to me how the approach to the guarantee of income subsistence has retained the moral and social class bias of a bygone age, whilst universal and unconditional delivery of social services goes without question. The clue lies in the word ‘income’. People rightly worry if they are given the impression the idea is to replace income from work. When some basic income supporters say that want to separate income from work, they ought to add that they want to make a partial separation of income and work. This would make it easier to see how it is possible to think of basic income security in the same way as we think of services we already guarantee on the premise that doing so is enabling of individuals and of senses of basic equality and community. This includes many aspects of health, education and care. The basic idea entailed in consolidating basic income security is represented in the logo of the Basic Income Earth Network, an international society that fosters informed debate about basic income. The logo represents a side-ways view of a staircase.  The bottom is the widest part of the structure. This base is shared by everyone. Having this base guaranteed allows persons to climb. Some climb higher than others. This represents their opportunity to earn additional income and do a range of different things besides. This image with respect to income is not really that different from how we treat other opportunities in society, e.g. education given initially free of charge irrespective of parents’ social contribution, and health, also delivered without conditions such as living a healthy life style.

So introducing a basic income does not entail a general separation of income from work. There are many advantages to money-based recognition of contribution, including as money is a neutral medium that permits social negotiation of contractual conditions that are important to stabilise expectations. Basic income should not be seen in this sense as a replacement of earnings, but as a basic source of security. Besides being a medium of exchange, and a currency of recognizing and planning contribution over time in the form of employment, money is necessary simply to live. A more civilised society separates out the different functions of money. A basic income is a part of doing so that is long overdue. Basic income is a floor below which no one should fall. Through tax subsidies and the tax-free allowance, citizens of different income already receive a basic amount. The BI is not essentially about redistributing money, but about the basis on which distribution is done.

Rethinking conditionalities does not then entail devaluing social contribution, as Lister and others rightly worry, but invites much needed rethinking about how contribution is incentivised and sustained. The current welfare bargain has shifted responsibility for these matters too far onto individuals, absolving society and policy-makers from difficult questions concerning how to devise more effective educational and occupational planning.  From this vantage point, the main change entailed in a basic income reform is the removal of conditionalities on basic income support.

Conditionalities on income support aim to incentivise, but there is a thin line between incentive and punishment when risk of losing basic subsistence is ever present and basic security is conditional on taking any job offered. Current policy is not designed to punish vulnerable groups in particular, but this can become the effect. Policy debate rightly focusses on how to alleviate the poverty trap, which refers to the lack of incentive to earn when withdrawal rates of basic support are high. This representation of the poverty trap, however, fails to take account of other sources of human motivation besides immediate earnings. There is more than money at stake in the poverty trap. The income poverty trap is also a security trap. There is a lot of evidence that fear of losing basic security invokes short-term self-preservation behaviours, whereas opportunity to think long-term motivates more sustained and expansive strategies. In Working-Life, Well-Being and Welfare Reform (World Development, 2011, 39:3) I summarise and provide new evidence to this effect. The current institutional strategy is to motivate people in the short-term, with a heavy dose of stick. The aim ought to be to enable long-term personal strategies. This is good for individuals, families and society as a whole.

What about the risk that a few persons will feel motivated to contribute and live a very modest existence on a basic income all their lives – something they could not now do without penalty? It is undeniably true that this does raise some tricky ethical questions. However, I do not think these are unique to basic income, but perennial in human society. Most institutions that support formal employment also have other independently valuable functions. Producing more market income is not the only objective of a basic income, just as it is not the only objective of public education. If someone decides to be a housewife or husband, presumably we might still think the education they received is useful in some way. There are people who undertake risky sports that it costs the majority that do not do those sports to insure. Prisons are costly. In other words, there are many areas of public expense that do not have a direct market productive value but we value all the same. We could value giving citizens basic security on the premise that this generates safer communities. It is important to consider that the incentive to earn and progress is not diminished by definition by a basic income reform. 

There is an emergent consensus in Britain that policy needs to incentivise persons to aim higher and stay in education for longer. There is an urgent need to train new nurses and doctors, and to give care a real professional status. Devising systems to encourage new forms of social saving and finance for care are needed. These challenges cannot be solved by a basic income directly. Some entail regulatory changes to promote better pay and occupational status for care services employment. A basic income however can play a part in the institutional changes required. A basic income can shift a person’s motivation to stay in or return to education and support long-term prospects in labour market integration. A basic income is a floor that can help motivate long-term savings strategies and – together with other regulatory changes – can form part of a re-design of social insurance in a way that this can support a broader affiliation base.

This takes me back to concerns raised by Lister. As is clear from my advocacy of development policy, I do not see a basic income – as idea or practice -as a challenge to the work ethic. The mistake lies in thinking this is the job of the basic income in the first place. It is this line of thinking that needs to be challenged. Why reproduce the problematic assumption that persons will not work if they have basic security?  Easing or preferably lifting conditionalities on basic subsistence is only a small step to address a range of more complex problems, but it may be an important step all the same. Local municipalities are experimenting with lifting conditionalities across European countries because they find they are not working. It is important however to consider changes to income support systems alongside policies to create occupational and long-term savings incentives that are also needed because existing systems are failing. If we think of basic income in this triangular context then basic income is part of a process of better differentiating economic institutions in society with a view to support long-term incentives.

If this is done right then there is every chance that a more structured incentive structure could result which rewards contribution to a greater degree than it is now. Hence, Atkinson’s concern about contribution, which Lister reiterates, is important, but direct conditionalities may not be the best solution, because these risk generating moral hazard and costly measurement problems. Atkinson tried to solve too many objectives in one single policy. In Policy and Politics (2011, 38:1) and Basic Income Studies (2015, 10:1) I argued there is no principled or indeed practical reasons to view basic income as in conflict with more complex welfare systems that – such as in Nordic states- pursue human development more intentionally.

Does basic income support feminist concerns? Again, my answer is the same. It is not necessary to stake all problems facing women in modern society on a basic income reform. The basic security a basic income entails will be more valuable for some groups and situations. Because women on average face greater and more complex forms of insecurity than men, women will benefit especially. But basic income cannot solve a range of the problems that make it harder for women to attain control of their work and time which are collective problems that require a regulatory and shared-risk response. Genuinely affordable child-care and more balanced work-load expectations and gender-balanced recognition of performance in employment are matters that require coordinated solutions.

This finally points to a wider set of arguments that can be made for some form of transition to a more stable form of security at the base of society. I agree with Lister that impending automation is not the fundamental basis for a basic income reform. However I would go further and add nor is a rising precariousness of many areas of work the fundamental reason forms of transition to basic income may be warranted. There is a case for basic income as response to systemic change. In one version of this argument a guarantee of subsistence is the only watertight response to the uncertainty generated by more complex and rapidly changing patterns of employment. A reason however that many groups – including trades unions – are often unhappy about this kind of argument is that is strikes a passive note.

In truth basic income does have crisis-alleviating functions, but its long-term role is more positive. Even if free trade regimes are experiencing a backlash, it is undoubtedly true that global employment patterns will continue to undergo complex change. In this context, a basic income is not a substitute for a growing need for more proactive development policy and regulatory responses at the state level. But it is potentially a key source of democratic pressure to enact this kind of response. Technology can be converted into an opportunity to redirect human energies to other forms of work, like care, the promotion of health, and conservation. A basic income will not do that directly, but it may have an indirect role to play in ensuring more balance of power in society. The most important systemic argument for basic income is in general terms of democratisation.

On this basis labour unions should not view basic income as a threat to their interest in shaping the form of employment in the future. Basic income can help support new collective forms of working, organising and sharing risk. It may support a rethink of rights in relation to welfare and work in broader terms. The quality of employment is not a separate question to the quality and availability of care in society, to take one example. The current use of social policy to control the individual’s contact with the labour market atomises individuals and segments society. Basic income has the potential to enable a new set of more direct relationships among citizens, and a more balanced relation of citizens with the state.

Other relevant recent articles by Louise Haagh include:

Haagh, L. (2015) Alternative Social States and the Basic Income Debate: Institutions, Inequality and Human Development,’ in Basic Income Studies, Special Issue on Thomas Piketty’s Capital in the Twenty-First Century, August, ISSN (Online) 1932-0183, ISSN (Print) 2194-6094, DOI: 10.1515/bis-2015-0002, August 2015, http://www.degruyter.com/view/j/bis.ahead-of-print/bis-2015-0002/bis-2015-0002.xml

Louise Haagh (2012) ‘Democracy, Public Finance, and Property Rights in Economic Stability: How More Horizontal Capitalism Upscales Freedom for All’ in Polity, October, Volume 44, No. 4. pp.542-587

Louise Haagh (2011) ‘Working Life, Well-Being and Welfare Reform: Motivation and Institutions Revisited‘, World Development, March, Vol. 39, No.3.  pp.450-573. Also available at: http://econpapers.repec.org/article/eeewdevel/v_3a39_3ay_3a2011_3ai_3a3_3ap_3a450-473.htm

Louise Haagh (2011) Basic Income, Social Democracy and Control over Time, Policy and Politics, January, Vol. 39, No.1, pp. 41-64.

This piece is part of our new blog series ‘Universal Basic Income: Security for the Future?’. You can read the other articles here. 

Topics discussed:

Universal Basic Income

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