Proposals for a Universal Basic Income or Citizen Income and variants thereof enjoy sympathy from different camps: from conservatives like Richard Nixon1, from libertarians who consider themselves disciples of the free market2, from liberals like Martin Wolf3, from social democrats like Paul Krugman4 and from people who consider themselves Marxists5.
However, what each of these proponents actually mean and want with a Universal Basic Income is wildly divergent. Centrally, the Marxists want an end to the “compulsion to work”, liberals and libertarians rather want to provide “incentives to work”.
Yet, despite these differing and at times opposing aims, these proposals share more than just a name: they share wrong premises about the capitalist mode of production and the state which watches over it.
In the following we want to first critique these shared wrong premises about productivity, the welfare state and the budget. Then, we draw out the contradiction of some left-wing supporters who, on the one hand, insist on unity with libertarian, liberal and social democratic Universal Basic Income proposals in order to acquire a whiff of seriousness and, on the other hand, continuously deny this unity.
On October 20th the TUC will march for “a future that works” and against austerity. In a booklet1 the TUC analyses “what went wrong” and spells out what the future should look like. In general terms, the programme is no different from the 2011 march under the slogan “Jobs, Growth, Justice”.2 That is, the TUC effectively invites its supporters to the streets to demand a future of poverty for the sake of the British economy and state.3
The government is undertaking a massive impoverishment programme, part of which is to cut housing benefits. In a (now not so) recent speech1, Cameron argued: “If you are a single parent living outside London, if you have four children and you’re renting a house on housing benefit, then you can claim almost £25,000 a year. That is more than the average take-home pay of a farm worker and a nursery nurse put together.” He added: “For literally millions, the passage to independence is several years living in their childhood bedroom as they save up to move out; while for many others, it’s a trip to the council where they can get housing benefit at 18 or 19 – even if they’re not actively seeking work.”2
Cameron presents us with farm workers, nursery nurses and “literally millions” who struggle to pay for housing. He also presents a simple solution to the problems they are facing: get housing benefits. In fact, under current legislation people in work whose earnings and other income are below a certain threshold (set by the state) are entitled to housing benefits, too. But let us assume for the sake of argument that Cameron’s bogeyman was real: The same solution still applied, if two people working full-time take home less than a single parent on out-of-work benefits. A rational choice could be to stop working and to have kids. As for the millions saving up for their mortgage: that does not seem to be a rational choice either – again, assuming for the sake of argument that Cameron’s picture was correct, which it is not – , if all you have to do is quit your job and get a flat provided by the state.
In 2009 Satoshi Nakamoto invented a new electronic or virtual currency called Bitcoin, the design goal of which is to provide an equivalent of cash on the Internet.1 Rather than using banks or credit cards to buy stuff online, a Bitcoin user will install a piece of software, the Bitcoin client, on her computer and send Bitcoin directly to other users under a pseudonym.2 One simply enters into the software the pseudonym of t
Since late 2009, Greece has been facing a debt crisis. It has not been able to find enough investors willing to lend it money to service old debt under the previous conditions that is. Therefore, in order to get money at all, Greece has been forced to offer higher interest rates to its creditors. The financial markets did not greet this news with joy and queue to collect higher returns, but rather as a result they became even more cautious about Greek debt. For if Greece already had problems, then how would it be able to repay even higher obligations in the future. This raised interest rates on Greek debt even further which Greece would have had to offer on new loans if the Euro Community and the IMF had not intervened in early 2010.
The figure below shows interest rates that various countries of the Eurozone had to pay in the past. What is striking about it is that with the introduction of the Euro, interest rates began to align (Greece joined the Euro in 2001) and then with the financial crisis in 2007 interest rates diverge again.
Credit replaces money – credit cannot be replaced by money
In almost all economically successful states the accumulated debt has reached a level where it is unthinkable for it to be repaid through taxes this would be, and has been for several decades now, impossible.
This situation has come about on the back of the financial industry’s certainty that debt and interest would be serviced on time; which is to say, through credit they themselves will have granted at a future date. This propitious circle must be continuous if the symbiosis of state and financial capital is to be carried out successfully. A bank that has invested in state securities, and which is now waiting for its money, should immediately reinvest in new state securities so that it can then be paid with this (here: its own) newly invested money. In this fashion banks are able to hold on to a permanent stock of, say, British state bonds despite the maturation of given bonds after a few years. If a bank wants to reduce its holdings of state securities, then it demands payment without granting any new credit to the state. For this to work, other banks must be willing to increase their engagement in these securities.