If the goal of the economy is to provide decent-paying work for everyone, that economy clearly isn't doing a good job at the moment. Real wages for most Americans haven't increased in 40 years. Real unemployment—which includes the "under-employed"—is above 10%. Many jobs are now part-time, flexi-time, or "gigs" with no benefits and few protections. And, we spend a lot of money to subsidize so-called "bullshit jobs": more than 50% of fast food workers receive some form of public assistance, for instance.
And, even for people who are employed, work often isn't that fun. For all the talk of the meaning and purpose of our jobs, most people see them merely as a means to an end. Only 29% of employees in North America say they're engaged (worldwide, the number is 13%). And the reality is that a lot of work will soon be done by computer. Processing-type technology has already eliminated many "routine manual" and "routine cognitive" activities, notably in factories and offices. And new artificially intelligent machines are likely to take away more, even within professional occupations. Forty-seven percent of jobs are at risk over the next 20 years, one study showed.
Of course, there are many conventional ways we could deal with this, including improving education and training (so more people can work up the wage-scale and beyond the ability of robots) and raising minimum wages. But, over the long term, it's questionable whether even these approaches will be sufficient. The fundamental problem could be that work is losing its value. The thing that provided—that allowed families to prosper and individuals to build a sense-of-self—is under attack.
In response, many are now calling for a "universal basic income" (UBI)—where the state gives everyone enough to live on. This would put a floor under the class of people we're calling the "precariat," people for whom work doesn't lead to increased financial security. It would free us from the bullshit, allowing everyone to benefit from automation, not just the lucky few. And it would leave us more time for creative, fulfilling things, enjoying the "abundance" that new technology affords (think how useful and cheap computers are today and imagine what they might let everyone do in the future). There are several UBI trials planned in Finland, Switzerland, and Canada (and, indeed, several reasons why the idea is attractive).
Critics of UBI say it's unaffordable, impractical, and liable to lead to millions of layabouts living off the government dime—and perhaps they're right. These criticisms are reasonable. But before dismissing UBI too quickly, it's important to consider the idea not in the context of our current economy, but of what the economy could become in the future. UBI is not so much an idea for now; it's an idea for an economy where capitalism isn't as socially productive as it's traditionally been.
To understand the type of economy we have and how it's not providing for a lot of people, you need to read Postcapitalism, a profound and important book by Paul Mason, a British economist and journalist. Mason makes the case for UBI, among a larger set of changes necessitated by the failure of the current system. Presenting a long economic history showing how innovation and prosperity rises and falls in waves, he shows how our current arrangements aren't as innovative and prosperous as we tend to think (the invention of Facebook isn't as momentous as the coming of the steam engine).
Mason says we need to move towards a "postcapitalist" economy, where working for money loses its centrality, where goods, information, and intellectual property are shared, and where economic actors collaborate in new ways, whether it's credit union-type financial institutions or co-operative-type retailers. Importantly, Mason also shows how current economic orthodoxy—based around "free markets," globalization and an oversized role for the financial services industry—isn't some historical end-state, perfecting everything that went before. Rather, it's the result of a particular set of choices, starting in the 1980s, that advantage some people over others.
Mason's book contains a lot of refreshing ideas, but the main thrust is that capitalism is creaking under its own weight, and that we need an alternative. He gives three main reasons:
The 2008 financial crisis showed the inherent instability of the current system. We had a crisis because central banks kept money cheap for a long time by keeping interest rates low, maintaining the price of assets and encouraging everyone to borrow. We took on credit cards, auto loans, and mortgages, substituting debt for the weakness of wages (while incomes have stagnated since the 1970s, debt in the U.S. economy has doubled). Wall Street traded our loans in repackaged units, generating profits. But then subprime borrowers couldn't repay what they owed, asset prices fell, and the cards started falling.
But even as the economy collapsed, the banks didn't retreat from their cheap money policies. Following the financial crisis, banks in the U.S., Japan, and Europe have printed $12 trillion in new money, mopping up the old debts and inspiring new ones. And now the seeds of debt-derived disaster are being replanted, only this time it's questionable whether we'll have the resources to bail out the systemically important players.
"The fiction at the heart of neoliberalism is that everybody can enjoy the consumer lifestyle without wages rising," Mason writes. "You can go on creating money forever but if a declining share of it flows to workers, and yet a growing part of profits is generated out of their mortgages and credit cards, you are eventually going to hit a wall. At some point, the expansion of financial profit through providing loans to stressed consumers will break, and snap back."
Western capitalism, Mason argues, is built on financialization (whereby consumer debt is made tradable), fiat or paper money (which isn't based on anything tangible, like gold), and global imbalances between creditor nations (like China) and debtor nations (like the U.S.). It's a system prone to boom and bust that masks an underlying reality: The real economy isn't growing very quickly and probably hasn't for some while.
Modern economies are increasingly based around information. Information "wants to be free"—as the saying goes—but free things are bad for capitalism, because capitalism is about competition and making profits.
Information goods aren't like physical goods. Intrinsically, a computer program is different from a car. Building each new BMW is as hard as the one before; creating another copy of a computer program is easy. Once you've got the recipe, each extra unit is essentially free. That's great for information giants like Google, Facebook, and Apple. It means that once they have a recipe, they can watch the money rush in. But maintaining the idea that what they're selling is valuable requires a certain inventiveness. They need to appeal to intellectual property principles (a notoriously messy area of the law). They need to maintain monopolies, like Google's de facto monopoly over search. Sorry Bing. Or they need to give the product away, then sell something else (Facebook sells your personal data to advertisers). None of these things are intrinsic to the main capitalistic exchange because the old law of supply and demand has broken down. We've moved from an era of scarcity to an era of abundance.
In time, technology is likely to drive many things to "zero marginal cost." Energy, for example, won't be subject to market forces. We'll just have a solar panel on the roof and each kilowatt hour will essentially be free. When we need something for the house, we'll just print it with a 3-D printer. And when we have an Internet of Things, everyone will be connected, enabling unparalleled co-creation and collaboration.
"Today, the main contradiction in modern capitalism is between the possibility of free, abundant socially produced goods, and a system of monopolies, banks, and governments struggling to maintain control over power and information," Mason says. "Everything is pervaded by a fight between network and hierarchy."
Up to now, governments and businesses have said that market mechanisms are the best way to deal with global warming. But all evidence suggests that they're wrong. Consider the numbers. To stay under the two-degree threshold agreed by governments and scientists, we need to burn no more than 886 billion tons of carbon by 2050, according to the International Energy Agency. And yet fossil fuel firms continue to invest heavily in exploiting reserves that, if burned, will result in many times that amount of emissions. In economics-speak, climate change represents a massive market failure.
"The real absurdists are not the climate-change deniers, but the politicians and economists who believe that the existing market mechanisms can stop climate change, that the market must set the limits of climate action, and that the market can be structured to deliver the biggest re-engineering project humanity has ever tried," Mason writes.
In looking beyond the current system, Mason stops short of providing a blueprint. But he says we should socialize aspects of the finance industry (to stop it from taking all the profits while leaving society with bail-out bills), socialize information (so Google and Facebook don't enjoy information asymmetry), encourage collaborative work and nonprofits, and nationalize utilities. In Mason's economy, we would "privilege the free Wi-Fi network in the mountain village over the rights of the telecoms monopoly."
A basic income is key in a non-market economy. It's what allows people to volunteer at nonprofit businesses, set up food co-ops, or design something using a 3-D design module. It wouldn't stop people from working—those with well-paying, satisfying jobs would continue to do them—but it would stop people from having to do things that machines can do more easily and more safely.
A basic income is a way to spread the rewards of work across socially useful activities, only some of which are currently rewarded, economically speaking. "A basic income says, in effect, there are too few work hours to go around, so we need to inject liquidity into the mechanism that allocates them," Mason writes. "The lawyer and the daycare worker would both need to be able to exchange hours of work at full pay, for hours of free time paid for by the state."
The biggest challenges to introducing UBI are political and cultural, say Nick Srnicek and Alex Williams in Inventing the Future, another new book that calls for a basic income. Political, because people naturally resist the idea of giving away free money, just as today they resist traditional welfare. And cultural, because "work is so deeply ingrained into our very identity." Even when work is degrading and miserable, we still associate it with self-reliance, self-realization and something redemptive. (Srnicek and Williams gloss over how to pay for UBI, though they mention reduced military spending and increases in carbon and other taxes).
It's likely that many people will recoil from the ideas of post-capitalism because capitalism is such a normative part of life in America and in much of the advanced world. Most of us here, left and right, believe in the idea of free markets, because we've been told that is what allows the economy to grow, and how people should be: free in our interactions.
Everything else sounds like socialism, even if what Mason is suggesting isn't anything like the old type of socialism. Instead, his ideas are an attempt to run with the grain of technology and accept the world as it is, not the neoliberal paradise we imagine it to be. The fact is that capitalism—with its tendency to income inequality, information monopolies, and financial power—is running out of steam. It's time to start thinking about something new.