7. Liberalism and the Economy – Universal Basic Income


With a framework for the determination of liberal policy constructed, and the bridge between philosophy and policymaking complete, our attention can now be turned fully to policy. As explained in my initial essay, I intend to conduct a broad sweep of each general area of policy, drilling down to specifics over multiple parts. The first of these is the economy, which I intend to examine in multiple parts. This first essay will concern the basic organisation of the economy, which I argue should be capitalist, though acknowledging the current issues with the broken capitalism we have, and then argue for a universal basic income, to eradicate the greatest source of domination: economic uncertainty arising through poverty.

The system at large

The significance of the economy for the liberal project cannot be understated. As explained in a previous essay, it is the underpinning of everything; the single biggest determinant of one’s life chances and quality of life. It is essential, then, that the basic structure of the economy is set up correctly. The basic fabric should be fundamentally capitalistic: the capitalist economy at its most fundamental respects and responds to the choices of the individual, and thrives when our basic freedoms are most respected. But capitalism can be warped – without a proper flow of information, and without regulation, the power that capitalism rightfully deprives from the state in terms of economic control can be transferred almost entirely to private entities, where the domination is no less problematic. True capitalism – liberal capitalism – must regulate free markets to ensure sufficient information is given to consumers to be able to make informed choices, must ensure no entity grows so large that it gains dominative power, and ensure that capital – capitalism’s basic unit – is accessible by the masses. The problem in recent times has been that companies have been owned by an increasingly elite group of people, and free markets have been pursued as an end in themselves, rather than an instrument for the freeing of people. I intend to turn to solutions to this problem in the next essay, where I will argue amongst other things for a radical new employee ownership scheme and bold co-operatisation programmes.

Personal finance and the Universal Basic Income

But if our system is capitalist, then money is of high value. Those with it can do as they please, unstressed and unburdened by the disenfranchising problems of poverty, while those without it feel exploited by a system that doesn’t work for them, and allow them the fruits of society and the economy. Most importantly, and most relevantly for our philosophical framework, poverty means they lack the capacity to participate in society, and from there stem multiple societal problems – disaffection leads to crime, to lower educational standards, to healthcare problems, and so on. Take an example: a single parent having to juggle three jobs just to keep food on the table and a roof over the family’s head would very likely end up stressed, leading to health problems down the line, have no extra time to give to their children, leading to gaping educational disparities between rich and poor, and never own property, leaving them without economic security. This is economic precariousness. It is a burning injustice. And in such a situation, it is clear that a person cannot participate fully in society; they cannot be said to have equal freedom from domination. Fixing that economic precariousness that people find themselves in is crucial, then – it is a source of the highest domination in people’s day-to-day lives, and as liberals, we have to eradicate it.

How? Again, the philosophical framework is useful. If our philosophical priority is getting the poorest to a point where they can participate in society, and precariousness is the target of our action, then there is a very simple answer: unconditionally give everyone a reliable source of income to push them over that line. This is called a universal basic income (UBI), and has been trialled successfully in a few places around the world.

It is superior to the present welfare system for practical reasons: rather than creating a complicated bureaucracy of dozens of elements requiring form-filling, checks, multiple levels of processing, and everything that accompanies it, it is one single payment that everyone gets. For the rich, who don’t need the money, it gets taxed away, but for the very poorest, it completely removes economic precariousness as a source of domination, by knowing that whatever happens, they will have enough money to live off.

Objections to this policy are obvious: giving money to people who don’t work for it seems to be subsidising the lazy. But there are compelling reasons why this is not a persuasive objection. Firstly, in the present social welfare system, there are free-riders, as there will be in any comparable system. It is a constant section of the population, and giving the payment in one tranche and as one payment won’t affect that. And secondly, on a more philosophical level – the money proposed as part of a UBI would be enough to live off. What compelling moral argument is there for someone not to receive the bare minimum to survive? All members of society, regardless of what they do or don’t do, deserve that much.

Another objection is that it would encourage people not to work. But it seems to me that this lacks force as well: very few people are satisfied with earning the bare minimum to live anyway. Indeed, empirical evidence shows this to be true. A UBI pilot in Canada in the 1970s found that there was no change in employment rates, but people did stay in education longer, there were fewer hospitalisations, and mental health admissions sharply declined.

Poverty and economic uncertainty are two of the greatest causes of social and public health problems. Welfare systems are overcomplicated and enormously bureaucratic, leading to eye-watering costs, and also to people falling through gaps and being left in dire need but with no money whatsoever for periods of weeks or months. A universal basic income identifies this source of economic domination, and eradicates it immediately. It is a happy coincidence that it also respects the dignity of the individual, giving them money and trusting them what to do with it. For the philosophically minded, this in particular will satisfy liberal luck egalitarians – people are given money to enable them not to be dominated. But if they choose to squander it (which studies show does not really happen at all), that is the consequence of their choice. It therefore corrects the brute bad luck of being born into a poor family, but not the option luck of using the money badly.

Liberals should be deeply alarmed by the great injustice of poverty, and its distorting effect on society. Rather than tinkering around with minor tweaks to tax rates, personal allowances and other things which fail to attack the core of the issue, we should be unafraid to be bold in our ambition to eradicate economic precariousness for every citizen of our country. A universal basic income does precisely that, and, I would argue, is a liberal thing indeed.

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