Analysis by Keith Rankin.
“Broad growth is only going to come when you put money in the hands of people, and that’s why we talk about a Universal Basic Income”. [Ritu Dewan, Indian Society of Labour Economics]. (From How long before India’s economy recovers, ‘Context India’, Al Jazeera, 31 Oct 2021.)
India may be to the ‘Revolution of the twenty-first century’ that Russia was to the ‘Revolution of the twentieth century’. India may prove to be ‘ground zero’ for the coming struggle for economic rights.
Universal Basic-Income (UBI) versus Basic Universal-Income (BUI)
I sense that the increased groundswell in the west, in favour of adoption of a Universal Basic Income (UBI) has gone cold. Perhaps less so in India, where there are a billion or so people with minimal (if any) economic rights.
In New Zealand, and perhaps other western countries, UBI seems to be much more ‘on the table of options’ when there is a centre-right government than when there is a centre-left government. UBI was widely discussed in the 1990s and the 2010s, even by the New Zealand Labour Party when in opposition.
One problem is that there are at least two distinct schools of thought. One might be called the European ‘basic income’ school; the other might be called the anglo-hispanic ‘universal income’ school. The former is focussed on people’s needs; the latter focusses on people’s rights. I firmly belong in the latter camp. While the name ‘Universal Basic Income’ is the one that has stuck for the wider (if stalled) groundswell, ‘Basic Universal Income’ is the name that better fits the radical centrist emphasis on universal income as a basic economic and democratic right.
In a recent allegory, Who’s the Thief?, I alluded to four different perspectives on economic rights:
- primitive capitalism
- primitive communism
- property-owning democracy
- democratic capitalism
Primitive capitalism represents the abstraction under which humankind lives at present, and has done so in broadly its present form for 500 years.
I have little to say about the Marxist socialist abstractions, through which economic rights – indeed near-universal economic rights – are granted through an all-powerful state. This, however, has, in the last 150 years, been presented as the one alternative abstraction to primitive capitalism.
Primitive communism represents the largely prehistoric world, before the neolithic agricultural revolution, of hunter-gatherer tribal societies. Today it serves as a useful reference point, especially for anthropology and human evolution, but not a viable option as a modern abstraction for economic rights.
Property-owning democracy is the ‘economic liberalism’ of ‘liberal democracy’, and represents in particular the imagined world economic order following the 1940s’ post-war ‘reboot’. Conditions around the 1950s and 1960s were favourable to a broadening acquisition of private property, following unfavourable periods in the eighteenth century and in the interwar years of the 1920s and 1930s.
However, under conditions of ‘private economic freedom’ where only private (or private-like) property confers economic rights, changes in fate and fortune, trade and debt, mean that private property eventually concentrates into fewer hands, and with the majority of property concentrating into very few hands; property-owning democracy morphs – indeed has morphed – into naked primitive capitalism.
Democratic Capitalism
My allegory Who’s the Thief? exposes primitive capitalism as a ‘false’ ruling abstraction, and also points to ‘democratic capitalism’ as an alternative and viable abstraction which can help humankind emerge from its present intransigent ‘existential’ problems. Democratic capitalism represents a sustainable organising abstraction, and is the natural (albeit radical) territory of the political ‘centre’ in the twenty-first century.
There are echoes of this in the Queen’s Question (and see Can you Explain the Crisis to the Queen?, Guardian, 27 July 2009); and, very recently, a former New Zealand Prime Minister’s recent speech (refer Former prime minister Jim Bolger denounces capitalism, says National Party ‘disappointing’, NZ Herald, 28 November 2021; and noting that Jim Bolger did not denounce capitalism, rather he said the National Party needs to “reimagine capitalism”).
(We may also note that the writings in the 1930s of JM Keynes ‘saved capitalism’ in an era of economic and political crisis in which capitalism itself was subject to existential threat.)
The realisation of a Basic Universal Income is a direct and necessary consequence of the adoption of democratic capitalism as humankind’s ruling abstraction. Democratic capitalism – by definition – confers economic rights which belong alongside political rights.
Democratic capitalism can be understood as a nuanced form of commonism(definitely not ‘communism’!) whereby it is understood that market production depends on a mix of private and inherently public inputs, and that the rightful distribution of economic outputs should reflect this mix of inputs. Democratic capitalism accepts the global system of nation states as reality, so therefore rights-based access of people to economic outputs would need to be organised within nation states. Democratic capitalism also accepts the distinction between minors (essentially children) and adults, and that full democratic rights only apply to adults.
Primitive Capitalism
My allegory Who’s the Thief? points clearly to the unsustainability of primitive capitalism. People without economic rights have no choice but to depend on, in varying proportions, exploitative labour (including various forms of self-deprecating self-employment, and including forced labour), transfers of economic provisions (charity, including begging), direct theft (as in ‘smuggling’ and ‘trafficking’), and through unsustainable practices that destroy our ‘unowned’ commons (such as fossicking for firewood, and disposing smoke into the air and plastics into the water). Under primitive capitalism, economic growth is required to accommodate these unsustainable means to families’ survival. There is no way out, except to reject primitive capitalism in favour of a sustainable organising abstraction.
Liberal Mercantilism
The ideology that continues to underpin primitive capitalism may be called ‘liberal mercantilism’ (refer to my Liberal Mercantilism and Economic Capitalism, Scoop Independent News, 28 September 2018).
For those educated in the history of capitalism, this phrase will be self-explanatory, though also – in a sense – an oxymoron. After all, the only serious critique of early ‘merchant capitalism’ and its political and economic assumptions came from the direction of ‘economic liberalism’ that was forming in Europe in the latter part of the seventeenth century.
The subsequent conflation of mercantilism (essentially the rule of money, and ascribing magic qualities to money; a ruling ideology most associated with early-modern capitalism) with economic liberalism cemented itself very quickly. In the 1970s and 1980s, it became the capitalist world’s predominant ideology. In the 1990s’, its predominance as a ruling abstraction came to be seen as ‘the end of history’. Liberal mercantilism is an ideology that is well-seeded in both the centre-right and centre-left elites of the present ‘millennial’ era. What began as the ‘win-lose’ ideology of international trade in the sixteenth century – the age of sovereign piracy – has become the core ideology of late-modern public finance.
The liberal-mercantilist metaphor for economic activity is that of goldminers extracting wealth (ie of ‘making money’), whereas the democratic capitalist metaphor is that of a human beings seeking food (and ‘song’, another metaphor) as sustenance.
There are two main differences between liberal mercantilism and democratic capitalism: one puts money (treasure) first and the other puts people (demos) first. The second is that, with the liberal mercantilist approach to economics, the ‘supply-side’ comes first (people are first and foremost ‘wealth creators’ making money; miners of money); whereas under the democratic capitalist approach, people are first and foremost creatures with wants and needs, placing the ‘demand-side’ first. Under liberal mercantilism, ‘supply creates demand’; under democratic capitalism, ‘demand’ (reflecting all people’s needs and wants) ‘incentivises supply’. Under liberal mercantilism, the economy is a remorseless growth machine, creating consumerism as a means to dispose of the by-products of money-making. Under democratic capitalism, supply waxes and wanes in response to people’s changing needs and wants. Life under democratic capitalism can be sustainable; under liberal mercantilism, it cannot.
In our culture, ‘economics’ (a social science) is firmly in the camp of democratic capitalism, but most economists are firmly in the camp of liberal mercantilism. As in other fields of enquiry, there is a distinction between ‘what the science says’ and ‘what the scientists say’.
Basic Universal Income and the coming Democratic Capitalist Revolution
I am an optimist. Nevertheless, all revolutions are hard won, and many are misconceived. India, soon to be the world’s most populous nation, may well be foundation ground for this important development of both democracy and capitalism. ‘Broad growth’ can be understood as the growth of human potential, including tribes of humans’ potential to live in sympathy with other tribes, and to live in harmony with their planetary environment. For all practical purposes, as the placards say, there is no Planet B.
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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.
