One of the examples of real utopia put forward by Wright is the idea of a Universal Basic Income (UBI). In its simplest, and arguably most utopian form, the idea is that every member of the community would receive a payment sufficient to sustain a decent standard of living. Implementing a UBI in this fashion would pose a huge, arguably insuperable, financing challenge in the context of a market economy. The same isn’t obviously true of a closely related idea, a guaranteed minimum income (GMI)
A simple calculation using Australian data illustrates the point. A person over 65 with limited income and assets, and who does not own a home, is entitled to a pension of a little over $20 000 a year, including rent assistance ($A currently trades near parity with $US, but purchasing power is about $US0.80). This amount has been set to provide a minimum standard of living above the poverty line. (Other lower benefits, such as those paid to unemployed workers are assumed, not always accurately, to be temporary, and are admittedly inadequate for a decent standard of living on a long-term basis).
If everyone in Australia received this payment on an unconditional basis, the cost would be nearly $500 billion a year, or close to 40 cent of national income. There would be a limited offset from the replacement of existing benefits (amounting to around 10 per cent of national income in Australia). Given the need for public spending on health, education, defence, public infrastructure and so on, this would require governments to spend at least 60 per cent of national income, more than the Scandinavian social democracies at their peak.
So, there’s no doubt that such a policy would represent a substantial transformation, sufficient to justify the ‘utopian’ label. On the other hand, it’s reasonable to ask whether it can be made ‘real’, in the sense that there is some plausible path by which we might reach this position from our present starting point.
The obvious route would be to start with a small payment and increase it gradually to an adequate level. But if the payment was less than the value of the benefits it would eventually replace, it would make no difference to most people, while still requiring higher tax rates. It’s hard to see how to mobilize support for such a policy, and easy to see how it would attract opposition.
Now think about a closely related alternative, a guaranteed minimum income. This could be achieved by raising existing income support benefits to the target level, then making access to the basic income unconditional for those with no other source of income. I calculate here that this could be done for around 6 per cent of national income.
The guaranteed minimum income obviously lends itself to an incremental approach, based on gradual increases in rates and relaxation of conditions. To quote myself:
We can imagine a few steps towards this goal. One would be to allow recipients of the minimum income to choose voluntary work as an alternative to job search. In many countries, a lot of the required structures are in placed under ‘workfare’ or ‘work for the dole’ schemes. All that would be needed is to replace the punitive and coercive aspects of these schemes with positive inducements. A further step would be to allow a focus on cultural or sporting endeavours, whether or not those endeavours involve achieving the levels of performance that currently attract (sometimes lavish) public and market support.
An Australian example might help to illustrate the point. Under our current economic structures, someone who makes and sells surfboards can earn a good income, as can someone good enough to join the professional surfing circuit. But a person who just wants to surf is condemned, rightly enough under our current social relations, as a parasitic drain on society. With less need for anyone to work long hours at unpleasant jobs, we might be more willing to support surfers in return for non-market contributions to society such as membership of a surf life-saving club. Ultimately, people would be free to choose how best to contribute ‘according to their abilities’ and receive from society enough to meet at least their basic needs.
Compared to a universal basic income, then, a guaranteed minimum income seems a lot more feasible. On the other hand, while a guaranteed minimum income would certainly represent a radical challenge to social values, it certainly seems a less utopian. It’s easy to imagine a capitalist system similar to the one we have today, or at least to the one that prevailed during the postwar ‘social democratic moment’ coexisting with a guaranteed minimum income – much less so with a universal basic income.
At least, that’s the way it seems to me. It’s worth observing though, that, in a certain sense, the two are theoretically equivalent. Think about a universal basic income, financed by a 40 per cent tax on market income. For people whose market income is more than the universal basic income, it would make administrative sense to use the some or all of basic income as an offset against the tax liability, so that the tax system would become, in effect, a flat tax with a threshold equal to the basic income. On the other hand, an income-contingent guaranteed minimum income could be implemented with a combination of a clawback rate and a marginal tax rate equal to 40 per cent over the relevant range, and a 40 per cent marginal tax rate on incomes above that level. I don’t think, however, that this equivalence would hold precisely in reality.
I’m going over this somewhat esoteric dispute because I think it raises some crucial questions regarding how we should think about utopian ideals. In particular, can utopia be realised within the context of a market economy, with significant private ownership of capital? If so, we can imagine a path of radical but incremental reform, starting by regaining some of the ground lost to global financial capital over the last few decades, and then revitalising the social democratic project that seemed, in the 1960s, to be on the verge of victory.
Such a program is well outside the bounds of current political reality, but political reality can change fast. In particular, the change in US political debate over the last couple of years has been striking. The facts about growing inequality and declining social mobility have finally been admitted, and the elite consensus on the need for drastic cutbacks in ‘entitlements’ has been shattered. The Occupy movement made a big contribution to this movement. In a negative way, so did the Tea Party, which emphasised the extent to which the Republican party base is disconnected from reality. In Europe and the UK, the failure of austerity policies is becoming clear to the general public, and opens the way for a radical challenge to grow out of current defensive struggles.
Leaving aside the political obstacles, we must confront the question of whether such a program is economically feasible in an economy where most production of goods and services is undertaken for the market. In such an economy, capital and profit would have to play an important role, but would nevertheless be subject to social control, through the state and through expanded ownership of capital by workers (as, for example, in the Swedish Meidner plan).
The crisis of the 1970s, and the subsequent resurgence of financial capital and market liberal ideology raises some important questions. My response, argued in more detail Zombie Economics, the crisis of the 1970s was the result of over-reach and excessive wishful thinking, rather than fundamental defects in the Keynesian social-democratic analysis and program. But that’s a minority view.
If, on the other hand, the only feasible utopias are those involving a complete end to capitalism, then the path must involve changes that make capitalism untenable. In this context, the impossibility, or great difficulty, of organizing a universal basic income within our current economic appears as a positive merit.
To sum up even more simply, there’s an inherent tension between the ‘real’ and the ‘utopian’ in Wright’s title. Any idea that appears capable of being realised can be criticised as falling short of the ideals that would justify the term ‘utopian’, and vice versa.
That doesn’t mean that this discussion is pointless. Even the prosaic goal of regaining the ground lost over the last three or four decades is far outside the range of ideas considered realistic within the frame of standard political debate. If we are ever to motivate large numbers of people to demand something more than an alternation between ‘centre-right’ and ‘centre-left’ versions of capital managerialism, we need a utopian vision, and maybe more than one.