In the following excerpted chapter, scholar Frances Fox Piven argues that the guarantee of a universal income would facilitate a new economic fairness and stability to a financial system careening out of control.
Most of the world is now in the grip of hyper-capitalism, what we call neoliberalism. This new system has brought us careening economic instabilities, worsening ecological disasters, brutal wars, a depleted public sector and poverty in the affluent global north, and the prospect of mass famine in the global south.
It seems high time to think about alternatives to the capitalist behemoth. I don’t know whether we will ultimately call the new ways of organizing our society "socialist," but the values that have inspired movements for socialism in the past should inform our search. Those values include a society with sharply reduced inequalities in both material circumstances and social status. Socialist movements also aspire to lessen the grinding toil now imposed on those who work for wages. They dream of an inclusive culture. They fight for democratic practices and policies in which influence is widely shared. And they believe in eliminating the pervasive terror in everyday life that is produced by the exigencies of capitalist markets and the arbitrary power of the state regimes that support those markets.
No matter how successful the new society is in equalizing earnings and assets, however, we will have to be concerned about the potential for poverty and hard times. This might result from exogenous shocks, such as a drought or earthquakes, or from internal economic disorganization, including the instabilities produced by efforts to transform our institutions. Moreover, there will always be people who are not well suited to the work that is available because of their physical health or personal disorganization.
How our society treats these people is of great importance. Morally, it is important because it is unnecessary and cruel for an affluent society to impose impoverishment and humiliation on some of its members. It is less often recognized that the treatment of the poor has a large bearing on the well-being of the entire society.
The poverty policies characteristic of capitalist societies, especially the United States, form a template for what we should not do in the new society. They also suggest an agenda for constructing the institutions that will lead to a more equal, more democratic and more humane society.
In Regulating the Poor, Richard Cloward and I argued that the treatment of the poor in modernizing Western societies could only be understood in relation to the problem of enforcing and regulating labor. That problem became more salient as labor markets supplanted the feudal system, which had shackled people to the soil and the lord. Of course, for much of our history, the majority of working people were poor. But we meant a stratum of people worse off than the main body of workers - people who had been stripped of social respect.
The system of discipline and assistance usually called "poor relief" dates from the early days of capitalism and industrialization. Relief systems were usually inaugurated after outbreaks of disorder by starving people. But their management was more importantly shaped by their role in disciplining workers. They gave meager assistance, and the terms of that assistance were harsh. Just as important, those who turned to the parish or the county for relief were subject to sustained rituals of public degradation.
That harsh treatment and degradation have always constituted a dramatic warning to the mass of working people trying to survive on their earnings. The practices of relief or the workhouse or welfare sent the message that there was a worse fate than low-wage work: to fall into abject poverty and become a pauper.
More recently, as China changed over to capitalism, it, too, developed programs similar to Anglo-American poor relief. The Chinese economy’s astonishingly rapid growth in the past thirty years was made possible by the exploitation of masses of migrant workers from the countryside and what historian Peter Kwong calls the "systematic depreciation of the value of their labor." The old "iron rice bowl" system was dismantled, with programs supporting subsistence farmers cut back and urban workers’ job security reduced.
As the older Chinese system of social benefits attached to employment disappeared, new programs were created, including one billed as a final resort for the most desperate of those laid off, most of whom were chronically ill or unskilled or disabled. The benefits offered were set by local authorities according to the Western principle of "less eligibility," which ensured that no one on the dole would receive as much as the worst-paid laborer. They were distributed in ways that morally stigmatized the recipients, much like our welfare system does.
Extreme poverty and its institutionalized insults have been used to divide and terrify working people for centuries. Now, with shrinking wages, work becoming more insecure and irregular, and the escalation of the war against unions, extreme poverty has again increased. So have its uses to intimidate the workers who are still managing to stay afloat. This strategy has been boldest in the United States. But while there are striking continuities in the law and practice of poor relief across time and across borders, the institution has also been periodically overhauled, sometimes to respond to popular rebelliousness, and sometimes reflecting deep-seated changes in labor markets.
In this neoliberal era, wages and labor conditions have been deteriorating worldwide, as workers in the developed world are pitted against desperately impoverished workers everywhere. Recent cutbacks in the so-called safety net in the United States reflect this. These cutbacks also take into account the vastly expanded domestic pool of wage laborers which include most women, as well as large numbers of African Americans and Latinos after they were displaced from traditional agriculture.
The results have been brutal. And the situation of the poor in the United States is worse than the official poverty figures suggest. For example, in 2006, interest payments on consumer debt put over four million people who were not officially in poverty below the line, making them debt poor. Similarly, if child-care costs, estimated at over $5,000 a year in 2002, were deducted from gross income, many more people would be counted as officially poor. The numbers would be higher still if homeless working people, adult children living with their parents, and doubled-up families had to pay full housing costs.
The United States also employs a different and harsher measure of poverty than most other countries. In the United States, the official poverty line is an absolute measure of subsistence needs. It’s simply three times the income needed to cover a minimal food budget, one created in 1959 and adjusted for inflation in food costs. Most countries, however, measure poverty in relative terms, generally counting people as poor if they make less than half the median income—thus comparing the circumstances of those at the bottom with the society’s overall living standards.
If poverty is measured that way, the United States has far higher poverty rates than other rich countries. Indeed, poverty rates in the United States may be comparable to those in some parts of the global south. The poverty rate in New York City is just under 20 percent. If New York City were a nation, reports James Parrott, "its level of income concentration would rank fifteenth among 134 countries, between Chile and Honduras." Wall Street is less than 10 miles from the Bronx, the nation’s poorest urban county.
Some of this is the result of the rising unemployment and reductions in take-home pay associated with the Great Recession. But it also reflects the high levels of poverty in the United States before the economic meltdown of 2007–2009. In the six years preceding that, the poverty rate actually increased for the first time on record during an economic recovery, from 11.7 percent in 2001 to 12.5 percent in 2007. Poverty rates for single mothers in 2007 were 50 percent higher in the United States than in fifteen other high-income countries. Black employment rates and income were declining before the recession struck in 2007. And there is simply no evidence to support the familiar bromide that poverty in the United States today is a temporary condition associated with youth or hard luck. Our national myths notwithstanding, the United States is a low-mobility society.
Another cause of high and rising poverty levels is the decades-long business mobilization to reduce labor costs and weaken labor organizations in the workplace. That mobilization began in the 1970s, when employers trying to hold down wages became much more intransigent in negotiations. Since then, they’ve busted unions and restructured the labor process to make work more insecure. Business also mobilized to change government labor policies, resulting in National Labor Relations Board decisions much less favorable to workers and unions. Workplace regulations were not enforced. The minimum wage lagged far behind inflation. Safety-net programs for the unemployed or the unemployable became more restrictive, and benefit levels fell—although the Earned Income Tax Credit, which effectively provides a taxpayer subsidy to low-earning workers and their employers, expanded enormously.
Inevitably, this campaign to reduce labor’s share of national earnings increased the proportion of the population unable to earn even a poverty-level livelihood. But the programs that provided assistance to the poor were singled out for especially steep cutbacks, and the poor themselves were singled out in a sustained campaign of venomous insult. A host of new think tanks, political organizations, and lobbyists in Washington carried the message that the country’s problems were caused by the poor, whose shiftlessness and sexual promiscuity were being indulged by a too-generous welfare system.
By the election of Ronald Reagan as president in 1980, this propaganda had smoothed the path for huge cuts in programs for poor people. Means-tested programs (such as food stamps, Medicaid, and Aid to Families with Dependent Children) were cut by 54 percent, job training by 81 percent, housing assistance by 47 percent. These cuts accumulated to erode the safety net that protected workers too, especially low-wage workers, who were primarily women and racial minorities.
By the 1990s, the Democrats had largely joined the Republican campaign against the poor and blacks, as they floundered for electoral strategies to ward off the worst of the Republican demands and to raise campaign funds from business. It was Bill Clinton who campaigned with the slogan "End welfare as we know it."
Much of this effort was played out in state politics as well, with cutbacks in the Aid to Families with Dependent Children (AFDC) and state-level general assistance programs. AFDC was a federal grant-in-aid program targeted to impoverished single mothers and their children. It ceded considerable authority to the states, and often the counties, to set benefit levels and determine who was eligible.
When black insurgency escalated in the 1960s, the federal government issued a series of rulings that restrained state and local governments from their customarily restrictive welfare practices. Not surprisingly, the rolls rose; benefit levels reached their peak in the late 1960s. Then, as the protests subsided, federal oversight was withdrawn. Between 1970 and 1996, the average level of maximum benefits fell by more than half when adjusted for inflation, to the point where the income they provided for a family of three was well below the poverty line.
Finally, in 1996, the AFDC program was eliminated, to be replaced by Temporary Assistance to Needy Families (TANF), a block grant that gave the states almost total leeway to limit access to assistance, and also to steadily reduce benefit levels for those who received it. The law also gave the states a remarkable incentive to limit assistance, since they received the full amount of federal funding regardless of how many people were on the rolls or the benefits they received.
If we want to strive for better policies in a transformed society, at least three principles must be observed. First, we should try to provide at least a subsistence-level income for everyone. Obviously, this would hugely benefit the poor, as many impoverished people are not helped at all by current assistance programs, and the ones who do get aid receive such meager benefits that they remain desperately poor. For example, the maximum benefit for a family of three lucky enough to receive Temporary Assistance to Needy Families in New York City is now $577 a month, far below the cost of renting even a squalid and tiny apartment, with nothing left over for other expenses.
It would not only be the very poor who would benefit from an income guarantee. The old English principle of "less eligibility" was based on the understanding that relief benefits set a kind of floor below which wages could not fall, for the simple reason that many people might then forsake work for relief. The implications of this logic are clear. A guaranteed income not conditioned on work would strengthen the market power of low-wage workers. It would have a liberating effect on many other workers as well. Not only would it reduce the pervasive anxiety caused by fear of losing your job, but at least some of these working people could take advantage of the new income guarantee to explore different endeavors, to try their hand at a new trade, to learn music or write poetry, to develop hitherto untapped potentials for creativity. A transformed society should aim to free people from material anxiety and the tyranny of wage slavery. And if it did, the results would contribute to continuing the process of transformation.
Second, as we know from the experience with American programs to support the poor, income-support policies would confront opposition from both employers and people animated simply by envy and anxiety. So we would need to anchor our income guarantee firmly to garner popular support. This would require more than declaring that income supports should be a matter of right. "Rights" are too easily subverted or ignored. The best way to anchor the guarantee would be by making it universal, applying not only to all citizens but to all residents of the country.
The reason for this last proviso is key. If we exclude permanent immigrants from our income protections (as we now do in a number of programs) we would still have large numbers of people in poverty, as we do now - except that they would all have foreign names.
Finally, a universal income-support program should be administered with a minimum of interaction between the people who receive the supports and the bureaucracy responsible for distributing them. Checks could be mailed, or funds deposited in accounts electronically. That would eliminate the opportunities for systematic degradation associated with welfare programs in the past.
Where would the money come from? The United States is a fabulously rich society. We can afford to fight endless wars across the globe, and at home we let the wealthy cannibalize government and our communities. Even so, we are not as a people so badly off. Social transformation in the pursuit of equality, inclusion, democracy, and social justice requires that we find ways to take back the wealth stolen from ordinary people here and elsewhere by capitalist elites, especially the wealth stolen from those who are the worst off among us.
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Copyright 2014 by Frances Goldin, Debby Smith and Michael Steven Smith. Not to be reprinted without permission of the editors or HarperCollins.