August 8, 2016
It is no longer a question of whether one of the world’s major economies will introduce a universal basic income for all of its citizens, but when. Over the weekend, the leader of the UK’s Labour Party Jeremy Corbyn announced in an interview in the Huffington Post that he was ‘instinctively looking’ at an idea that is already being discussed and piloted in Switzerland, the Netherlands, Norway and Canada. Corbyn may be one of the current glut of what would have once been political outliers in the Western World, but the idea of a universal basic income is one that is increasingly accepted in mainstream economic thinking. The RSA continues to campaign for it and has even put a number on it, suggesting that every UK citizen should be offered £308 between the ages of 25 and 65. Andrew Flowers offers up a masterful and detailed analysis of the economic and political issues involved in this piece on fivethirtyeight.com.
There is no question that it will present a particular challenge for politicians but the very pragmatic reasons behind its appeal should see them through and help them address the discontent people appear to feel for their working lives and political systems. So, while the TUC might see it as a sort of extension of the Living Wage as a way of addressing the increasingly wide pay gap between the wealthy and the less well off, especially those in the growing precariat, it is also a sign of wider changes in the way businesses function.
Perhaps the most obvious of these is the growing disconnect between the wealth of firms and the number of people they employ. As a recent report in the Economist highlighted, the direct link between the number of people employed by a business and the amount of revenue it generates is vanishing rapidly. General Motors was once amongst the largest and most commercially successful firms on the planet and employed people in appropriate numbers. In 1979, GM employed 853,000 people worldwide and was the largest private sector employer in the US with nearly 620,000 employees. Its operations supported hundreds of thousands of other jobs in related industries. It could lay claim to being the figurehead of capitalism if not necessarily the world’s most successful company with turnover of over $66 billion in that year.
This mantle ha s now passed to tech firms. Microsoft turns over around $94 billion but only employs 119,000 people. Similar patterns are evident at Apple ($234 billion with 115,000 people) and Amazon ($89 billion with 222,000). However, these are all companies that actually produce something that people are willing to buy. Several new operations which produce nothing tangible make the point even more forcibly that revenue is no longer linked to employment. Facebook ($13 billion turnover and 10,000 people), Google ($66 billion with 60,000 people) and Twitter ($1.4 billion with 3,900 people).
This is already happening in our post industrial world and was even predicted in the 1920s by C.H. Douglas, a British engineer and a pioneers of the idea of basic income who was one of the first people to recognise that technology was opening up a gap between economic output and the income of staff. So, it requires no leap of the imagination to foresee the consequences the coming wave of automation and robotics and the ways in which they will accelerate this process. The outcome will involve a complete reimagining of our relationship with work and income and the way we spend our time.
That it should come to this has been evident for decades. In 1970, the American polymath Richard Buckminster Fuller famously framed the paradoxes of this era in an interview in the New York Magazine. “We must do away with the absolutely specious notion that everybody has to earn a living,” he said. “It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognising this nonsense of earning a living. We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian-Darwinian theory, he must justify his right to exist. So we have inspectors of inspectors and people making instruments for inspectors to inspect inspectors. The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living.”
The fear of automation and technology appears to rest on the idea that it will leave us without a job and an income so we starve. This is all too often the driving force behind contemporary capitalism and the underlying cause of a great many of the problems both employers and employees face. Universal basic income, coupled with paid work, has the potential to change all of this permanently. If handled correctly it could help to close pay differentials, address the fact that most of the world’s unpaid work is still done by women, help firms to employ more people in skilled roles, support innovation and the creation of startups, encourage individuals to upskill and address all of the ills most commonly cited about modern work such as lack of engagement, insecurity, poor work-life balance and all of the physical and mental ailments we associate with work. It is an opportunity that we seem set to seize and what we make of it is entirely down to us.