Basic Income as Common Dividends: Piloting a Transformative Policy

Basic Income as Common Dividends, by Guy Standing

This is an extract from A Report for the Shadow Chancellor of the Exchequer. To read the full report, click here.

9. Concluding reflections and recommendations

‘A journey of a thousand miles begins with a single step.’
Lao Tzu, c.550 BC

In this report, it has been implicit that whatever is paid as a basic income or common dividend should be paid equally to all who are deemed eligible. There are arguments for paying different groups different amounts. But in the proposed pilots it seems sensible or pragmatic to preserve the strict equality rule, so that all adults who are eligible should receive the same amount, with additional separate benefits for those with disabilities, bearing in mind their special needs and reduced opportunity income.

One view is that the basic income should vary according to the cost of living and income per capita of the region, so that a lower amount would be paid in lower-income regions. This is unlikely to be relevant in the design of pilots. But at national level, the main drawback of such an approach is that it would entrench or worsen inter-regional income inequalities. If the basic income were paid equally, it would represent a higher amount in lower-income regions, and thus be a mechanism for reducing inter-area and inter-personal income inequality, which is a longstanding Labour Party objective. It might even be a factor in leading to shifts of investment and population to lower- income areas, thus boosting their local economies further.

Serious advocates of moving in the direction of a basic income do not see it as a panacea.108 It will not ‘abolish poverty’ or ‘abolish unemployment’. It will not provide perfect freedom or perfect basic security. But it will enhance freedom and strengthen security. It must be seen as part of a new income distribution system suited to a globalising open economy, and as part of a transformative policy package, along with new forms of collective representation and ownership. The socially and economically vulnerable will always remain that way in the absence of collective Voice. A basic income should help in strengthening such Voice, or what sociologists call agency. But nobody should think it could do that optimally without measures to build and strengthen modern forms of unionism. We should reject the libertarian or neo-liberal paradigm, and do so with confidence that enough people will understand the need for a strong social state.

It is also vital to emphasise that a basic income system would enhance the prospects of a more ecologically and socially sustainable form of ‘growth’, via elevation of the value of care work, community work and participation in the life of the commons, and by allowing government to pursue more effective fiscal policies to curb greenhouse gas emissions. It would also do better than any alternative in enhancing basic economic security, personal and ‘republican’ freedom and social justice.

In all these respects, moving in the direction of a basic income or commons dividends would be transformative. Not only would it give an anchor to that new distribution system, in a context of stagnant, increasingly volatile and uncertain real wages, it would also foster work that is not labour and social solidarity instead of utilitarian individualism, which a regime of means-testing, behaviour-testing and workfare inevitably fosters.

One way of situating the British dilemma in 2019 is that, in seeking to build a more progressive income distribution system, there are two starkly different directions in which social policy could go. One is to continue in the direction taken by Universal Credit, which will mean more means-testing, more behaviour-testing, more sanctions, more intrusive directions that inevitably and deliberately limit the freedom of lower- income citizens. This is the utilitarian direction. It will inevitably strengthen the giants of inequality, insecurity, debt, stress and precarity.

The alternative direction is one that would give equal freedom to all, with more trust and less direction and coercion directed to the vulnerable. That way will lead to a steady weakening of those giants. The system that will take shape would have an anchor or base with common dividends, with second tiers of other forms of income transfer, through social insurance, private insurance and needs-based supplements. We need to rebuild the welfare state on new universalistic principles.

The road to the latter will start modestly, but it is the direction that matters above all. Consider the following reality. A survey conducted by Nationwide in 2018 revealed that a third of people privately renting in the United Kingdom – millions of people – after paying  their  rent,  their  gas  and  electricity  and  food,  had  only  £23  to  spend  on everything else each week.109  For such of our fellow citizens, even a low basic income would be enormously welcome.

Moving towards a system in which basic income or commons dividends is an integral part would be a radical return to the great progressive traditions of the United Kingdom. Our progressive journey has been marked by successive waves of emancipation and democratisation, triumphing despite eras of retreat and defeat. Giving ordinary people greater control over their own lives and the lives of their families and communities is central to the progressive journey. Moving towards a basic income as a right to subsistence, a right to a home and a right to work will be part of the renewal of the Enlightenment values of equality, liberty and solidarity. It is vital for all those on the ‘left’ to couch social policy in those terms.

There is a final thought for collective reflection, reiterating a point made earlier. Conservative governments, and some previous Labour governments, have used the power of the state to control people’s lives – treating lower-income individuals and families as supplicants to be reformed or ‘sanctioned’. A progressive government should use the power of the state to empower people, to have agency and greater security and control over their own lives and an ability to forge communities of their own volition. A basic income would help in doing just that.