The Limits of Basic Income

REVIEW ESSAY
Welfare for Markets: A Global History of Basic Income
by Anton Jäger and Daniel Zamora Vargas
University of Chicago Press, 2023, 264 pages

In recent years, experiments in basic income have proliferated across the United States. According to a September 2022 report in the New York Times, at least forty-eight trials have been launched since 2020, and several more have been announced this year.¹ A constellation of organi­zations is behind these efforts, with municipalities raising funds for individual pilots either through surpluses accumulated from federal pandemic relief revenue or public-private partnerships.² For leading advocates of basic income, such as Mayors for a Guaranteed Income,³ these developments point to an emerging consensus about the merits of unconditional, direct cash assistance to ameliorate financial insecurity, and thus a critical breakthrough in the politics of welfare after decades of stigmatization by both Republican and Democratic politicians.

On the surface, this would appear to be a victory for a transatlantic Left that has grappled with how to combat austerity and “gigification” in the wake of the Great Recession. Proponents such as the late anthro­pologist David Graeber believed that basic income would simultaneously reaffirm social citizenship and redefine it. Following the anti-statist principles of the 1960s New Left, Graeber argued that a universal basic income would deepen individual autonomy: it would reform, if not greatly shrink, the coercive functions of the welfare state by invalidating the power of bureaucrats to surveil welfare recipients.⁴ In Marxian fashion, basic income would promote the free association of individuals while eliminating the impetus for the social services and workfare bureaucracy; at an amount above mere subsistence, it would foster every person’s true talents and ingenuity. The fruits of labor would be pro­gressively aligned with self-fulfillment and thus separated from compul­sion by capital and the state. Among left-libertarians, this freedom speaks to the imminence of a post-work future, in which humans will at long last be liberated from wage-labor and antiquated Victorian norms about self-reliance and the dignity of work.⁵

Yet progressive celebrations of basic income’s emancipatory promise ignore that its growing legitimacy often stems from different sources. As several commentaries noted during the 2020 presidential campaign of entrepreneur Andrew Yang, whose singular focus on basic income dramatically boosted media coverage of the issue, the concept enjoys a considerable intellectual pedigree outside the Left.⁶ Prior to the 2010s, its most famous supporter had been the neoliberal economist Milton Friedman, whose idea of a negative income tax served as the basis for Richard Nixon’s ultimately abandoned Family Assistance Plan. Fried­man sought to harmonize social policy with market efficiency. Regular, unconditional cash transfers in place of the Social Security system, he reasoned, would curtail state coercion of the poorest welfare recipients, enhancing freedom of choice. Distortions of the price mechanism would correspondingly be averted by eliminating the justification for new gov­ernment programs. For neoliberal enthusiasts more broadly, a basic income would neutralize popular pressure to mount costly political interventions in the economy, thereby winnowing the constituency for a clientelist bureaucracy whose self-perpetuation threatened to diminish private initiative and economic dynamism.

Yet despite its neoliberal proponents, the rise of basic income tends to be construed as a victory for progressivism—if perhaps not the utopianism suggested by Graeber. A thorough understanding of the concept’s evolution, alongside changes in political economy since the postwar era, has eluded most analysis. Basic income’s potential to inte­grate seamlessly with neoliberal governance remains under-examined.

Welfare for Markets: A Global History of Basic Income, a new book by Anton Jäger, a historian of political thought at the Catholic University of Leuven, and Daniel Zamora Vargas, a sociologist at the Free University of Brussels, takes great strides to address this deficit. While acknowledging clear differences between Left and Right conceptualizations of basic income, the authors argue that there is an undeniable convergence at play due to basic income’s very nature as a monetary remedy for the economic difficulties of the individual. “Both left and right,” Jäger and Vargas write, “premised their arguments on a critique of publicly provided, in-kind benefits, which stipulated the collective determination of needs.” In turn, “the hope now became to provide welfare ‘for’ and not ‘outside of’ markets.”⁷ However framed, support for basic income effectively admitted the supremacy of markets and their inexorable march.

Given this fatalism, the authors suggest, the growing popularity of basic income portends the eclipse of social citizenship as it had been constructed by trade unionists, agrarian populists, social reformers, and their allies in government during the first two-thirds of the twentieth century. In the age of “hyper-politics,”⁸ basic income would permit everyone to go their own way, cementing politics as a perpetual (yet increasingly optional) battle of tribes and identities, not the negotiation of the material basis of citizenship.

This tension between basic income and what may be broadly termed the social democratic definition of citizenship is central to the book. Instead of seeking to forge or expand policies that effectively “de-commodify” labor via various forms of social insurance and public provision, basic income is predicated on a straightforward proposition: transfers promote market inclusion—“access” via a floor to support everyday consumption—while respecting individual autonomy. Basic income’s entwinement with market logic therefore contrasts with the normative understanding of market boundaries as articulated by both social democracy and variants of conservatism concerned with the moral and spiritual hazards of limitless commodification.⁹

In other words, there is no assurance of basic income’s social utility (a point Friedman readily affirmed).¹⁰ Prudent beneficiaries may obtain more nutritious groceries or purchase new school clothes for their children, but basic income in itself does not adjust the contours of political economy nor does it establish shared standards and aspirations for what constitutes the good life or a just society. It merely extends a baseline to survive and participate in a market economy—a lubricant to maintain consumption and, by extension, the operation of markets as presently constructed.

This is not to assert that basic income could not be part of a larger political project to transform the social contract. But as Jäger and Vargas show, an array of thinkers see cash transfer schemes as a way to avert social and political unrest arising from unmet expectations. From the perspective of global governance NGOs, philanthropists, and neo-progressive technocrats, perpetual doux commerce is still within reach as long as people have a dependable stream of income. Such market opti­mism, however, profoundly misunderstands the crisis of development in both the Global South and advanced, “postindustrial” countries.¹¹

Defining Needs, Defining Ends

Jäger and Vargas trace basic income’s history by way of an “anti-mythology,” distinguishing basic income from previous ideas for social grants, which themselves differed from traditional poor relief. From preindustrial times up through the nineteenth century, these were typically conceived as a form of land redistribution that would reinforce a producerist ethic.¹² While seemingly radical for their time, most were consonant with the spread of property rights and the expectation that citizens had a duty to contribute to the commonwealth. The purpose was not to build a utopia of radical equality and common ownership, but to mitigate the economic dislocations resulting from capitalism’s ascent.¹³ A common social dividend in the form of land would ensure laboring men retained a stake in their work.

Still, the authors write, Thomas Paine and other philosophers who departed from deeply ingrained beliefs about charity framed their grants as a matter of social justice and republican obligation.¹⁴ The notion of reciprocal duties inherent in these proposals implicitly recognized the coevolution of citizenship and nationhood. Social peace in an age of revolutions could be won by reestablishing, or preserving, the laboring man’s connection to the soil. Yet, while land grant proposals on both sides of the Atlantic intended to uphold agrarian virtue, they increasingly reflected the pressures of industrialization and widespread fears about indigence. In the United States, for example, Henry George’s anti-monopolist land tax scheme rested on the populist hope that a semi-mythic, equitable distribution of property could be regained in spite of accelerating concentrations of industrial ownership.

Early socialists, such as followers of French philosopher Charles Fourier, meanwhile, began to advocate a guaranteed “minimum” for all men, women, and children consisting of essential foodstuffs, household goods, and adequate shelter.¹⁵ Although calls for unconditionality be­came more frequent, Jäger and Vargas underscore that most socialists saw a duty to work as fundamental to building a socialist economy. For both Rosa Luxemburg and Vladimir Lenin, a minimum that eliminated work requirements violated the basis of citizenship in a socialist state; any able-bodied person who did not work forfeited their democratic right to influence economic planning.¹⁶ As with their counterparts who were rooted in liberal or populist strands of productivism, socialists in the early twentieth century were hostile to grants sans stipulations.

Only in the aftermath of the First World War did unambiguous cash-based proposals for basic income take shape and slowly supplant the ownership paradigm.¹⁷ Several of these plans originated on the British left, but whether presented as a “State Bonus” or “Dividend for All,” they proved too heterodox for a Labour Party focused on employment, wages, social insurance, and nationalization of industry. Further steps toward a recognizable basic income appeared in 1943, when the aristo­crat Lady Juliet Rhys-Williams proposed a weekly universal allowance for all citizens aged eighteen or older. Her plan was notable for offering an explicit alternative to the in-kind welfare measures proposed by Liberal reformer William Beveridge, yet it mandated that all recipients sign a contract pledging to find employment according to their ability.¹⁸ If most of these plans judged that “self-improvement” through landownership was obsolete, the duty to work still appeared unassailable: participation in economic life was equated with work, not consumption or loftier notions of personal liberty.

The plan that most clearly broke with hard-wired beliefs about the centrality of work, Jäger and Vargas write, arrived in the form of Milton Friedman’s negative income tax. Though it had many implications for the role of government, its genesis was not primarily ideological but technocratic: Friedman sought the most expedient way to smooth income fluctuations, particularly among the poor, without the need for new divisions of public administration. Following his tenure as an economist in the New Deal state, Friedman developed the idea of a noncontributory negative income tax for low-income people that was completely free of behavioral control. “The idea’s ‘anti-paternalist’ design, especially its disregard for work requirements,” Jäger and Vargas write, “contrasted not only with nineteenth-century poor relief and social security schemes, but also with the modern notion of ‘rights.’”¹⁹

Friedman, however, did not entirely negate the legitimacy of rights. At a moment when left-leaning statesmen were becoming more assertive about the legitimacy of positive rights and modern government’s responsibility to fulfill them—Franklin Roosevelt had called for a Second Bill of Rights in 1944—Friedman homed in on a solution to absolute poverty that appeared to synthesize negative and positive right. It enshrined individual discretion and freedom from state control while affirming that, in a modern industrialized economy, all were entitled to a minimum income that could plausibly cover the cost of living, in lieu of a steady livelihood. As Jäger and Vargas write, Friedman argued his substitute for ethic-centric welfare was a purer expression of democracy. “To escape acts of coercion on behalf of the state and of a priori definitions of needs curtailing freedom,” they summarize, “money appeared to be the ideal solution for letting individuals choose how they wanted to sustain their lives.”²⁰

As an antidote to top-down social policy, Friedman’s technocratic alternative nevertheless acquired an ideological frame that resonated with conservative anti-statism. Even if it were periodically adjusted to reflect moderate inflation or unanticipated exogenous shocks to the price of essential goods, a minimum income was meant to diminish, not amplify, expectations of government; it would divert pressure for policies to guarantee full-employment, health care, and other publicly-provided goods and services while leaving intact the laissez-faire notion that the life chances of poor individuals ultimately rested on self-discipline and thrift. More fundamentally, a minimum income in place of more public provision would not interfere with the expansion of free markets. From the plan’s logic it could only follow that it was imperative to retard the multiplication of social rights that would reinforce the growth of the state, which, left unchecked, would destroy the functionality of the market.

The Limits of Welfarist Statecraft

Here we may interpose a word about basic income’s apparent duality. On the one hand, basic income can be seen as part of a centuries‑old search to establish a “dividend” that would reconcile social justice to political order and the rule of law without aiming for perfect equality. Its emergence was not entirely sui generis; it was analogous to grant proposals in previous epochs insofar as it responded to the economic conditions of its time.

In this light, basic income thus developed, organically, as a solution befitting the maturation of industrial capitalism and the attendant rise of income politics. Land redistribution for outmoded production methods had simply become impractical. Basic income became viable over time in large part because it presented a technologically appropriate solution to the welfare question in modern economies that had become overwhelmingly dependent on consumer spending and the democratization (and, later, digitization) of credit-based transactions.

On the other hand, basic income advocacy clearly sprang from new and changing assumptions about how to best address poverty in an economy primarily consisting of wage-earners and organized around mass production. As Jäger and Vargas argue, the rationale behind Friedman’s negative income tax and similar plans marked a qualitative break not just with previous grant proposals, but with the broader school of in-kind welfarism that, by the end of the Second World War, seemed certain to triumph in the democratic West. Cash-based welfare programs, of course, were not new—pensions and compensation for injured workers, for example, were already familiar to multiple genera­tions of people in parts of Europe and the United States²¹—but Social Security and comparable systems upheld the principle of reciprocal rights and duties. Among more ambitious architects of the welfare state, cash relief was always meant to be conditional and ancillary to the larger goal of removing key sections of economic life from the vagaries of the market.

Indeed, welfare centered on cash transfers conflicted with “the utilitarianism underlying welfare economics,” which was inextricable, the authors write, from a “normative vision of the ‘good society.’”²² In-kind measures combined ideas about justice, security, and uplift; where­as unconditional cash support, in the view of skeptics, could lead to imprudence and vice, risking counterproductive and baleful effects upon national welfare.

Basic income in all its guises took direct aim at such paternalism, challenging hard-fought principles about the necessity of the welfare state and its constituent elements. In the face of significant elite resistance, these principles, though conceived as universal, had been forged and delimited through compromise—their application in specific programs was inseparable from the transactional politics of campaigns and parliamentary blocs, a latent weakness that neoliberals and libertarians would later seize upon. For all its grander promises, the welfare state was also a pragmatic response to industrialism and a search for social order in which the primacy of nuclear families went unquestioned. Even with the confidence and long-term horizons afforded by newly inau­gurated methods of Keynesian pump-priming, building the welfare state entailed shrewd decisions about how to distribute resources drawn from existing engines of growth. As with the reciprocity between rights and duties, the health of the welfare state required conditions that reinforced social cohesion.

For reformers on the “Old Left,” defining public needs depended on a certain fixity to the rhythms of industrial society and the desirability of full employment. Like their Bismarckian antecedents, the structure and distribution of social democratic, Labourite, and New Deal welfare policies presumed the enduring importance of the male breadwinner to labor markets and public revenue;²³ this was reflected as well in programs that were defined in practice by the absence of a male breadwinner, such as Aid to Families with Dependent Children. The practical exigencies of welfarist statecraft therefore required popular understandings of societal goals that enlisted norms about the respective roles of different sectors and demographics.

The course of postwar welfare capitalism, however, would fray these expectations. In fact, the unanticipated pace of change that would vault fairly regimented manufacturing societies into a stage of indefinite “flexibilization”—based to a significant degree around cheap consumer goods, personal expression, and individuated services—had its roots in the early interwar period. Particularly in the United States, the exponential growth of goods and services in the 1920s capped a half century of economic transformation in which questions of social justice, beyond their political feasibility, now also involved their efficient assimilation into corporate capitalism.²⁴ Social corporatist arrangements, even in their truncated New Deal form, plainly manifested this amalgamation.²⁵ Even for those European policymakers who were committed in principle to the socialization of industry, it was understood that the welfare state represented a mediation (or symbiosis) of public needs and private initiative.²⁶ With the rise of mass (and later, customizable) consumerism, however, it became evident that the latter was not exclusive to the province of capital—it extended, as Friedman insisted, to private citizens and their respective choices about how to best fulfill their needs and wants.²⁷

Welfare policy, accordingly, could not be easily segmented from consumer welfare and quotidian choices about household well-being. On this score, as Jäger and Vargas write, Friedman was undeniably perceptive about the friction between normative welfare economics and individual preference. The system that funded in-kind measures and conditional payments, as well as a host of welfare-adjacent public ser­vices, could not easily accommodate changing attitudes in which “self-actualization” through market choices gradually began to supersede the collectivist tendencies of the 1930s and early 1940s. Indeed, Friedman’s arguments called into question the elaborate system of welfare state management and its layers of political brokerage.

With the partial exception of Scandinavia, newly designed welfare states arguably hinged on a precarious consensus about their desirability and authority.²⁸ Taxation of average citizens, whether on income, property, or as value added at the point of sale, had to be sensitive to purchasing power. Additional welfare spending required caution that was not merely conciliatory toward elites but mindful of the unpredict­able ups and downs of middle- and working-class constituents that fell outside the purview of welfare policy. A balancing act between fair prices, fair wages, fair taxes, and perceivable, widely disbursed benefits (i.e., public reinvestment and state-subsidized upward mobility, not only old-age security) was necessary lest right-wing claims that the welfare state exploited labor (and not only the “successful”) for the sake of the indolent gained traction.²⁹ Alongside pressures to control inflation, however, this balancing act was undermined by the welfare state’s bifurcation between universal and targeted benefits.³⁰ Center-left politi­cians understood that a durable welfare state required contributions to the tax kitty across society just so long as they were not felt to be too extractive. At the same time, the acute and confounding problem of poverty amid postwar abundance continued to plague policymakers. In the United States, means-tested assistance—conceived by many as the most just and purposeful use of public revenue—became more conspicuous, even as more and more analysts questioned the efficacy of these remedies to poverty.³¹ From the late 1960s onwards, one consequence of this approach was that welfare access was increasingly construed by its opponents but also its supporters as a fulcrum of movements for racial and immigrant justice, when it previously had been interwoven with policies designed to stimulate economic growth for white majorities and had originally excluded many nonwhites.³² The resulting racialization of welfare, we might add, was inadvertently buttressed by the growth of nonprofits meant to serve distressed or marginalized communities, since their presence in urban landscapes, as entities of social governance that could be misperceived as direct extensions of the state, enhanced the impression that poor minorities were now entitled and encouraged to receive special aid (regardless of how modest welfare and other forms of aid were in practice).

Any vision to expand welfare and the public sector, moreover, had to not only accommodate recalcitrant economic interests and conservative mores, but wrest approval from an economics profession that, while aligned de facto with certain goals of progressive social policy, stressed ever-multiplying trade-offs in the quest for economic growth.³³ Just as American policymakers were especially alert to public accusations of government overreach, so too were they concerned with governing in accord with the latest technical adjustments to the growth paradigm. Friedman’s resolute confidence in the price mechanism, Jäger and Vargas write, was part of a ferment in American economic thought in which an equilibrium between growth and relative price stability took precedence over other concerns—indeed, all social policy was increasingly seen as downstream from, and contingent upon, stable growth.³⁴ Freed from the crisis management of the Great Depression, economic policy had to weigh the effects of expanding bureaucracies—and avert the so-called crowding out of private investment.

By the 1960s, the overriding emphasis on growth threatened to constrict the possibility of more in-kind redistribution and greater pub­lic control of the economy. “Commercial Keynesians” in the Kennedy and Johnson administrations, such as Walter Heller and James Tobin, helped alter the state’s role in economic affairs. Instead of relaunching an activist state that would widen the scope of public interest, the primary responsibility of liberal government became stoking new ventures in the private sector. Depicted as a more efficient form of stimulus than public works, the “Keynesian” tax cuts of 1962 and 1964 augured a streamlined, “supply-side” approach to fiscal policy that would become more pronounced in the Reagan and Clinton eras.³⁵

Welfare, it must be emphasized, would not shrink but expand through the early 1970s. Aside from exploding welfare rolls largely made up of Aid to Families with Dependent Children (AFDC) recipi­ents, the Great Society programs of the Johnson administration preserved much of the in-kind logic that had shaped a previous genera­tion of welfare architects; most significantly, Medicaid and Medicare demonstrated the potential of the American welfare state to “de-commodify” citizenship. (Jäger and Vargas overlook the importance of these programs and the ways they lessened, despite their lack of universality, public acquiescence to zealous free-market and anti-welfare political positions over the following decades.) Community Action Programs, meanwhile, reconceived grantmaking as a mechanism to combine local development with targeted, in-kind assistance for low-income people.³⁶ In these respects, the welfare state was far from a lumbering apparatus but a business in its own right, capable, albeit under intense political pressure, of absorbing new constituencies and innovating new programs. Despite potent accusations that the American welfare state ensnared poor people, and black Americans in particular, in intergenerational poverty, the developmentalist impulses of the Great Society continued the New Deal’s underlying purpose of market inte­gration.³⁷ To keep the mix of private enterprise and public benefits chugging, Great Society administrators understood that entrepreneurialism and skill-building had to be cultivated at society’s margins.

That challenge pointed to the paradox at the heart of American liberalism’s particular synthesis of growth and welfarism, but also the struggles facing center-left parties more broadly. Strong and durable labor market participation required economic development that ad­dressed the struggles of specific regions and demographics, yet development under democratic capitalism increasingly entailed shifts in invest­ment that undermined employment where it had been stable.³⁸ (To the frustration of many underdeveloped regions in the United States, the return of capital’s liquidity preference and increasing trade liberalization would also stunt opportunities for growth in the years before financialization.³⁹) Between the accelerating pace of regional deindustrialization and the sociopolitical upheaval that roiled Western democracies in the late 1960s and early 1970s, the capacity of the welfare state to adapt to further social change appeared to be exhausted.

Market Integration without Development

The crisis of the welfare state was simultaneously a crisis of development. Slowing growth and deeper recessions sundered coalitions that had pivoted on what was, in truth, an often nebulous mix of redistribution and developmentalism. Skepticism over the welfare state’s efficacy—indeed, suspicion over its supposed capture by privileged interest groups—spread from the Right to the mainstream.

Yet despite the backlash against welfare payments incited by the Right, Jäger and Vargas show, the logic of basic income gained sway over growing numbers of politicians, policymakers, and economists. In the United States, Friedmanites and commercial Keynesians increasingly united in the belief that adjustments in the tax code that improved the purchasing power of the country’s bottom rungs were superior to onerous, programmatic attempts to eliminate poverty and shape human behavior.⁴⁰ This conviction only hardened amid the sobering failures of the War on Poverty.

In these opinions, Jäger and Vargas write, basic income’s pro-market wing had unlikely (and sometimes unwitting) allies in the civil rights movement and New Left. Growing support for basic income reflected not so much utopian hopes but a postindustrial realism. Even as official unemployment hovered at historical lows in the late 1960s, civil rights activists, including James Boggs and Martin Luther King Jr., accurately perceived that trends in automation and offshoring would deprive the majority of black Americans of the growth that had fueled white workers’ unprecedented share of national income.⁴¹ By 1967, King had departed from a strong focus on jobs and community development, and he endorsed a guaranteed income by stressing the importance of unburdened consumption.⁴² King’s belief that an income floor would be a critical lifeline for black citizens as productive investment receded dovetailed with a rising bipartisan chorus decrying the stifling and pathologizing effects of the welfare state. Absent meaningful paths for development, the racialized stigma surrounding the patchwork of means‑tested benefits would only worsen. A basic income, at the very least, would ensure a kind of everyday empowerment for black families that, following the implosion of the New Deal order and high tide of black insurgency, seemed less and less attainable through traditional interest group politics.

This cross-ideological groundswell behind basic income ebbed in the early 1970s with the defeat of Richard Nixon’s Family Assistance Plan (FAP) in the Senate. Largely developed by Democrat and Nixon adviser Daniel Patrick Moynihan, the FAP met resistance from a range of potential supporters for predictable reasons. Basic income advocates on the left considered the amount to be too little while the U.S. Chamber of Commerce and other establishment voices expressed the usual concerns that a guaranteed income would disincentivize work.⁴³

Yet there was a partial triumph, Jäger and Vargas write: the Nixon administration successfully introduced the Earned Income Tax Credit, which, while tying the benefit to employment, advanced Friedman’s thesis that cash—in this case an annual federal tax refund—was the best way to help the working poor.⁴⁴ Percolating anti-welfare sentiment and various political misgivings had conspired against the realization of a basic income, but in the decades that followed, progressive technocrats would home in on the EITC and a bevy of other credits to enhance the purchasing power of low-income Americans, quietly injecting a modi­cum of equity in a tax code that otherwise favored the rich and upper-middle class.⁴⁵ Much in line with Friedman’s wishes, welfare in an age of welfare state rollback was becoming less visible and largely instru­mentalized through “the submerged state.”⁴⁶

In Europe, meanwhile, basic income’s revival gestated through the 1970s as the New Left began to coalesce around new ideas about autonomy and the future of work. Whereas in the United States basic income’s momentum had derived from a mixture of liberal disenchantment with the welfare state and a neoliberal push to optimize market efficiency, in Europe it emanated much more from leftwing anti-statism. This amounted to an ideological revolt on several fronts. Workerist tenets that had fueled the Old Left, prominent New Left thinkers argued, had led to justifications of Fordism, bureaucracy, and other modes of social control, disfiguring the socialist project and obscuring the ultimate goal of human emancipation.⁴⁷ The welfare state was no longer a promising midpoint on the road to industrial democracy and a planned economy but a source of stratification and authoritarianism, a distortion of true social justice. Indeed, the state was reconceived as an obstacle to freedom, much as the neoliberal Right had insisted.

Just as significant, the Old Left exhibited a willful blindness to the dialectic between social and technological change in the computer age.⁴⁸ Capitulations to industrial capitalism had seeded backwardness and a jealous protectionism—the creeping defense of closed borders and national identity over solidarity with those most victimized by capitalism. Given the inevitable rise of “cybernetics,” however, many New Left theorists concluded it was only a matter of time before these nodes of resistance would be swept away. Owning the means of production in the traditional producerist sense was destined to become irrelevant.

At the dawn of the 1980s, Jäger and Vargas write, “Leftists thus carried out a double maneuver against both an ‘Old Left’ and an ‘Old Right,’ which had supposedly entered an unholy ‘statist’ alliance.”⁴⁹ In the Netherlands, France, Belgium, and other parts of western Europe, basic income became the organizing banner for a host of anti-statist and ostensibly anti-capitalist impulses. Friedman’s closest counterpart in this orbit was Belgian philosopher Philippe Van Parijs, founder of the Basic Income Earth Network, whose call for an allocation universelle provocatively proposed abolishing the welfare state along with all subsidies for industry.⁵⁰ In a strange parallel to right-wing populists, Van Parijs sought to disrupt the established categories of Left and Right. Yet while key right-populist voices were migrating from a neoliberal tendency to a selectively protectionist-statist axis, Van Parijs sought a “coherent” libertarianism that would leave the left-right axis “pulver­ized” by reconciling the desire to extinguish state authority with “massive” redistribution that curbed the power “of the beneficiaries of the market.”⁵¹

The ambiguity regarding whom those “beneficiaries” were was no doubt suggestive. Not unlike populist denunciations of “special inter­ests” that could be heard across the political spectrum in the United States, Van Parijs’s attack conjured up not only rentier capitalists but so-called labor market insiders and the bureaucrats whose salaries depended on the nexus of private and public enterprise. Van Parijs’s call for redistribution, however, betrayed its own capitulation to the unshackling of markets that was sweeping both the Global North and much of the developing world. In his ideal formulation, highly progressive taxes would fund a “maximal” basic income, in contrast with the right-neoliberal hope that a modest basic income would be sufficient to bury the debate over inequality for good. But this vision of an egalitarian future either failed to reckon with or simply discarded the ends that had justified the buildup of state power on the left: namely, decommodification and the effective insulation of key spheres of human existence from market pressures.

Van Parijs’s prescriptions likewise disengaged from pressing ques­tions about the future of development. As with other left-leaning advo­cates of basic income, this was representative of a broader retreat among progressives from efforts to build state capacity and strengthen infant industry in the Global South. If the welfare state in advanced economies was a discredited project, Jäger and Vargas write of the prevailing outlook, what good was it to repeat the process through overambitious developmentalist projects elsewhere?⁵² Like the tacit, mutual recognition between neoliberals and neo-leftists that Keynesian full-employment models had become obsolete in the United States and western Europe, so too did basic income proponents converge with technocrats who had heralded the end of state-led developmentalism in the wake of the Third World debt crisis.⁵³ Progress for the world’s poor was subsequently narrowed to forms of poverty reduction that were compatible with the fiscal and monetary parameters set by the structural-adjustment loans of international financial institutions. Privatization, the abandonment of industrial policy, and the removal of capital controls forced former Left developmentalists to regard self-determination as Friedman did: as the simple, everyday exercise of agency within the market. The implication for affluent countries that had undergone deindustrialization and shed trade union density was ominously similar. The trend toward mass informalization, and its subsequent treatment by the “transfer state,” was but a fait accompli.

With the exception of a handful of middle-income countries and the East Asian Tigers, globalization thus increasingly meant a form of market integration that maintained informal labor and marginal “entre­preneurialism.” Alongside microcredit, experiments in cash transfers became an attractive way to secure elementary provision without imposing onerous demands on state capacity or chasing investment in value-added manufacturing.⁵⁴ Through a combination of humanitarian grants and fiscal policy loosened up via shrinking public sectors, Jäger and Vargas write, dozens of mostly conditional cash transfer programs had spread across southern Africa by the early 2010s.⁵⁵ Yet the trend toward digital, unconditional “helicopter money” was also taking off. While basic income advocates may have been heartened, positive cover­age of these developments overlooked the fact that start-up organizations like GiveDirectly and the Economic Security Project were blurring the lines between charity and public-private coordination.⁵⁶ As the decade drew to a close, welfare without the welfare state was taking more concrete form, and yet the vision of streamlined tax adjustments overseen by a lean body of technocrats was already in the process of being supplanted by one in which supposedly altruistic private power could dispense digital cash like manna from heaven.

From the Transfer State to Where?

The Covid-19 pandemic marked a caesura in the way people thought of state power, suspending many conclusions about the primacy of markets and the end of history. Emergency conditions, economic progressives hoped, were precipitating a reckoning with the fallacies of market ortho­doxy. Perceptive observers, however, remarked that the most significant interventions in the economy seemed to only reify the rise of the transfer state—that welfare for markets could extend to virtually everyone if a crisis demanded it.

More than one-off checks from the Trump and Biden administrations, the expanded unemployment insurance program in the cares Act that provided an additional $600 in weekly benefits to millions of working- and middle-class Americans—in some cases for a full fifty-three weeks—was a foretaste of what a humane basic income might look like. Now familiar to millions of people who recently experienced unprecedented government transfers, basic income in the United States has nevertheless reverted back to the realm of private start-ups and civil society, rather than becoming a popular rallying point that might be integrated by an enterprising politician into a major party platform. In fact, as most emergency relief measures have expired, hopes for a revitalized American welfare state have been sidelined in favor of an industrial policy centered on tariffs, tax credits, procurement rules, and targeted export controls. This neomercantilist turn—from a Democratic administration, no less—continues to flummox progressive and right-wing neoliberals, as well as those leftists, who, in one pitch or another, dismissed industrial labor as a residual concern for the future of political economy.

These developments have not deterred champions of basic income from professing its elegance as a solution to poverty. Their case can be persuasive: as various testimonials and reports from individual trials attest, basic income empowers people to have more financial control over their lives.⁵⁷ In some limited ways, too, its emancipatory potential was revealed by pandemic transfers. For many nonessential workers in low-income brackets, there was no great pressure to return to lousy jobs, which availed a unique opportunity to find better pay and condi­tions amid tightening labor markets.

This possibility nevertheless underscores the fact that basic income’s efficacy is inextricable from other patterns and shifts in political economy. The freedom to find better work or refine one’s skills without immediate pecuniary demands is qualified by the degree of social and economic development of one’s surroundings. Hence, while it is plausible that, were a universal basic income to be instituted, people would become less dependent on selling their labor power, this freedom, and the corresponding cultivation of the self, would nevertheless be conditioned by the level of security that could be obtained through markets and traditional, means-tested welfare.

That basic income represents a sort of postindustrial noblesse oblige—uplift without the imperative of good works or public works—likewise belies progressive confidence in its potential to transform economic relations.⁵⁸ As Jäger and Vargas illustrate, basic income in itself challenges neither the illusions of “consumer sovereignty” nor the geographic, sectoral, and class-based distribution of economic development. What goes into the pie, how the pie is grown, how the pie is carved up—the questions that have been historically pertinent to political economy, whether under nineteenth-century neomercantilism, social democracy, or Third World developmentalism, are irrelevant to the rationale of basic income. Instead, basic income in many respects promises to circumvent these questions, along with messy attachments to occupation, section, or nationhood.

Despite new geopolitical realities auguring multipolarity and “re­gionalization,” such thinking assumes the ongoing depoliticization of national economic policy. Contrary to prognostications that we are nearing the threshold of automated “communism”⁵⁹—thereby at last proving that the “dis-accumulation of capital” first glimpsed in the 1920s is irreversible⁶⁰—the pandemic demonstrated that globalized transmission belts of mass consumption can be severely disrupted without the endogenous networks of industrial capacity and know-how that once characterized advanced national development. Whether or not one claims allegiance to the Left or Right, support for basic income cannot in the end escape questions of development which are integral to any politics of historical consequence.

Perhaps basic income’s greatest liability, then, is that it offers no clear solution to the disinvestment that has degraded so much of our social and physical infrastructure. In prosperous economic hubs marked by sharp inequalities, a basic income may well curb crime, eliminate finan­cial stress, or provide an exit ramp for those suffering from exploitative work conditions. In many other areas, by contrast, the persistence of market deserts, whether for produce or hospitals, demonstrates that basic income’s utility is limited without incentives for development facilitated and guided by the state. Its ability to quell sources of populist grievance and anomie is thus far more dubious in places that have little economic diversification to speak of. A corollary is that corporations that wield monopoly power may simply sponge it up. If cash assistance is primarily going toward Walmart or Amazon purchases, nothing is being done to diversify the local economy, improve job options and wages, and support municipal revenue. Under those conditions, the associational power of average citizens that has been historically realized through trade unions or other forms of community organization would not revive but continue to wither, to the detriment of local government and its capacity to supply essential services and attract investment.

Basic income, in other words, does not solve issues like contaminated municipal water, declining life expectancy, decrepit educational facilities, postindustrial blight, and other social maladies that fuel desperate choices and depopulation. In all probability, even a generous version in lieu of an expansive developmental agenda would not be enough to foster the entrepreneurship that many of its supporters profess to support.

These are vital insights that can be gleaned from Welfare for Markets, which deftly surveys many of the philosophical and political quandaries that basic income poses. Still, the authors leave open the fundamental question of where cash assistance ends up—how it may aid or defer development, depending on the larger social resources present in the locales where income is spent. In this regard, the book is a springboard for more probing questions about the future of development and the political coalitions that might chart a different course for their societies and the world.

This article originally appeared in American Affairs Volume VII, Number 2 (Summer 2023): 95–114.

Notes