Natasha Gaither
Welfare for Markets: A Global History of Basic Income by Anton Jäger and Daniel Zamora Vargas, University of Chicago Press, 264 pp., $32.50
On March 28, 2020, the White House resolved to implement a novel policy in response to the Covid-19 pandemic. As the global economy ground to a halt, Americans would be buoyed by a $1,200 Stimulus Check, transferred directly to the bank account of every eligible recipient. Consumer data suggests that the majority of that first stimulus check—provided by the CARES Act—went to household expenses such as groceries, rent and utilities. However, the portion of checks dedicated to immediate consumption decreased dramatically with the second and third installments of the stimulus packages. Many Americans deposited money into retirement accounts, paid down credit card debt, or chipped away at student loans and mortgages. Someone bought a new raincoat and someone else splurged on $16 moisturizer. Weed sales surged.
Articles entitled “The Best and Worst Ways Americans Have Spent their Stimulus Money” cast a skeptical eye over these expressions of consumer choice. However, the fundamental sovereignty of Americans as consumers went unchallenged. In fact, enthusiasm for universal basic income (UBI) had long preceded the Covid-19 pandemic. Over the course of the 20th century, unconditional cash-transfer programs gained traction as assumptions about labor, social citizenship, and the state shifted. In the face of deindustrialization, depoliticization, and chronic unemployment, UBI emerged as a strategy to achieve “welfare without the welfare state,” as economist Arthur Kemp put it. Crucially, such “market friendly” approaches to ensuring minimum standards of living amid conditions of stagnating growth were welcomed on both sides of the aisle.
But for neoliberals to embrace UBI as they did, policy regimes first had to abandon a “politics of property” for a “politics of income” which endowed citizens with a right to market participation regardless of landholding status. In their forthcoming book Welfare for Markets: A Global History of Basic Income, Anton Jäger and Daniel Zamora Vargas place UBI within a deeper intellectual tradition—one preoccupied with liberty and redistribution as they could be conceived within the evolving bounds of political and economic structures. UBI becomes a “prism” through which to view “transformative visions” of economic justice and social rights.
Jäger and Vargas do a good job of sketching out the successive iterations of basic income schemes. They also introduce us to the cast of characters—New Deal economists, anti-labor Belgian activists, World Bank administrators—who provide its economic and philosophical rationales. The book is too short, however, to tolerate both a plethora of direct quotations and a more critical analysis of UBI. While Jäger and Vargas identify the rising appeal of UBI in the United States as symptomatic of other phenomena, they do little more than list polysyllabic nouns: techno-populism, financialization, deindustrialization. Moreover, they hesitate to adequately address UBI’s shortcomings. From an economic standpoint, the kind of “bottom-up” marketization endorsed by UBI supporters is unlikely to exhibit the returns necessary to support rapidly growing populations. From a philosophical standpoint, UBI has minimized conceptions of social justice: bracing the poverty floor does nothing to crack the wealth ceiling, enabling unrestrained inequality to warp distributions of political power.
The father of UBI, Jäger and Vargas tell us, is none other than political theorist Thomas Paine. In his 1797 pamphlet “Agrarian Justice Opposed to Agrarian Law,” Paine demanded the creation of a National Fund which would compensate young people whose access to land had been curtailed by the introduction of private property. With enough money to buy a cow or a few acres of land, the poor could gain access to the market and become productive citizens. Paine’s proposal would “redistribut[e] land by stealth without interfering with existing property arrangements.” They continue, “Paine inaugurated a new epoch in social justice thinking…turn[ing] relief from a ‘favor’ into a national responsibility.” Jäger and Vargas are correct in identifying Paine’s conceptualization of relief as a civic right—not an act of charity—as novel and significant.
However, as American historian Richard Bell has pointed out, “Agrarian Justice” is not proto-Marxist in its objectives, but rather presents a non-Marxist critique of the free market that does not challenge the underlying property regime. What’s really at stake in “Agrarian Justice” is democracy. In 1795, the French constitution had introduced a censitary qualification which skewed the distribution of political power toward large estate holders. Disenfranchisement of the poor threatened the liberal state: Paine concludes, “Despotic government supports itself by abject civilization, in which debasement of the human mind, and wretchedness in the mass of the people, are the chief criterions.” As such, Paine’s plan for a National Fund was, in essence, an attempt to address political inequalities via economic means, a crucial aspect of systemic reform that modern UBI schemes neglect.
Realizing a “right to property” implied redistributing the modes of production and was thus, according to Jäger and Vargas, politically unviable. By the early 20th century, however, the emergence of large fiscal states presented a new alternative to in-kind welfare benefits (deemed expensive and inefficient). Harping on the magic of the price system, proponents of a “right to income” envisioned leveraging the market structure to achieve effective allocations of goods and services. The logic was simple: if individuals had greater control over the money supply, their aggregate consumer choices would be more reflective of their community’s needs. Indeed, it was axiomatic among laissez-faire theorists that the individual was best positioned to assess their own self-interest.
“In a democracy at least,” Milton Friedman wrote in a 1939 paper, “it is a fundamental premise that in general the individual’s choices are to be accepted; that he is the best judge of what he wants, and of what is ‘good’ for him.” Not long after, Friedman first proposed a negative income tax (NIT), swapping the individual for the consumer. Below a certain income threshold, individuals would receive money from the government instead of paying taxes and could use that money as they saw fit. The NIT would gain traction in the 1970s as the shortcomings of the Great Society programs became clear; in addition to being expensive and inefficient, the Johnson administration’s welfare policies had failed to meaningfully reduce poverty rates in the United States. As the edifice of full employment fell, the NIT promised to be a sleek and simple alternative to an elephantine welfare state.
It was also the most effective “check” on political power. Throughout Friedman’s career, the economist would depict the market as a genuine “system of proportional representation” which protected the diversity of individual preferences. Such an argument only made sense within the context of evolving definitions of citizen, state, and freedom. To neoliberals, citizens were first and foremost consumers, unburdened by contributory duties to the state. The state’s primary responsibility was to manage the incentive structure of the game played by consumers. Freedom was simply the visible absence of state coercion once the game had begun. These definitions “hollowed out” equality of its democratic content by reducing social policy to income concerns.
As the historians recognize, on the one hand, the monetization of poverty disqualified any normative idea of “needs” defined by the political majority which may have been inappropriate or biased. On the other hand, it discouraged policy makers from analyzing structural inequalities based on factors such as race, gender, or geography—inequalities that simultaneously contributed to conditions of poverty and limited opportunities for political redress. Indeed, theorists such as Paine or Tocqueville were highly cognizant of the interdependence of economic and political equalities. Nonetheless, while it briefly acknowledges this decoupling of capitalism and democracy, Welfare for Markets does not provide an extended discussion of how NIT or UBI fails to address the specific political needs of marginalized groups.
While the NIT was ultimately institutionalized as the Earned Income Tax Credit, UBI in its idealized form did not survive the legislative brokering of the 1970s. Instead, cash transfer programs were exported to the Global South, where they transformed the field of developmental economics. Today, nonprofits like GiveDirectly enable individuals to receive cash transfers via their cell phones. “Giving directly through cash transfers is often the most effective way to help…it allows families to choose what they most need—from food to clothing to shelter,” tweeted Rory Stewart, former diplomat and GiveDirectly’s current director. But cash transfer programs are a cosmetic fix at best. For one thing, although they are very successful in societies in statis, cash risks being devalued in zones of active conflict. Moreover, the proliferation of cash transfer programs has encouraged countries in the midst of development to turn away from industrial policy despite acknowledging that only industrialization can create the returns to scale necessary to support rapidly growing populations. But perhaps the greatest issue is the one that Jäger and Vargas gesture at themselves.
The world in which basic income thrived separated poverty as such ‘from the most uncomfortable questions about whether modern poverty in developing countries is fundamentally due to a lack of integration of poor people into local, national and global socio-economic systems, or whether it is due to the manner by which they have already been integrated.’
In other words, focusing exclusively on the global poverty line meant side-stepping difficult questions about structural imbalances in international trade, often entangled with the legacies of colonialism. And while fewer and fewer people are strictly impoverished, cash transfers have not outpaced the widening inequality that jeopardizes the political rights of the poor.
Welfare states are premised on the principle of national solidarity: that it is in the nation’s interest to ensure a minimum standard of living for all. At first, that minimum was justified to enable all individuals to participate actively in shaping the social order, regardless of property or employment status. Welfare for Markets suggests that this justification has faded to the background, and that a profound break has occurred in modern political culture. Clothed in our consumer identities, we place less emphasis on social justice and make fewer demands on our government (save that they don’t touch our stuff). Doing so has meant divorcing political questions from economic ones, blinding us to crucial contradictions in the relationship between capitalism and democracy.