What is Money for Nothing?
Note: The welfare state exists. In this country, it has existed in one form or another since the Elizabethan Poor Law. Its principle has overwhelming support. It may even be necessary, bearing in mind that we do not live in a free market economy, and bearing in mind that some kind of welfare can be defended as a secondary intervention to offset primary interventions. The question, then, is how best a welfare system can be run. I used to sneer at the idea of a basic income. On further thoughts, it could be cheaper than the existing jumble of entitlements; it would be less demeaning to its recipients; it would be a rollback of the patronage state. The questions outstanding are how to stop it from becoming a huge burden on net taxpayers, and how to stop it from becoming a subsidy to deliberate idleness. SIG
What is Money for Nothing?
Michael Gibson tries to demonstrate the infeasibility of a universal basic income by showing that people actually like to work, as evidenced by the increase of hours relative to increased prosperity witnessed during the 20th and 21st centuries. According to him, a UBI would not work as major disincentives are created, which Gibson shows by looking at parallel examples from lottery winners who have not achieved the Marxian dream of free producers but have instead gone down a path of destructiveness and despair. Thus are the effects of “money for nothing”.
But what is money for nothing? Is it really so simple to say that people won’t work or do other productive activities simply because they are given money with no strings attached. Well the evidence doesn’t suggest so. Instead of looking at the rather petty examples that Gibson gives (which don’t exactly provide compelling evidence as even the author admits), lets actually look at experiments that are versions of a basic income. The experiment in Manitoba that lasted from 1974 to 1979 showed individuals choosing to work less and spend more time with their families or completing education, thus choosing social and cultural enrichment over the supposed productive enrichment of work. Equally, the My Basic Income lottery, an experiment designed to understand the behaviour of those who receive a basic income, showed people “using the cash to offset their expenses while getting a degree, quitting a bad job, or starting a business”. Similar results have been recorded in Uganda, where “the program increases business assets by 57%, work hours by 17%, and earnings by 38%.”, and Madhya Pradesh, India, where there was an increase in economic activity and business start-ups.
The evidence fundamentally disproves the accusations made by Gibson. If anything, it increased productive economic activity in some of the cases noted. Instead of individuals deciding to reject work, they instead made qualitative decisions about the type of work they wanted to do. This then leads to another of the assertions Gibson makes, that people fundamentally enjoy working because working hours have increased despite increases in productivity and technology which were supposed to decrease working hours. The conclusion drawn by Gibson (as well as Tyler Cowen) that this then means people enjoy working and the modern work-life of 9-5 hours and commuting from homogeneous suburbs to city centres is a massive over-assumption of the structures of power in capital-labour relations and the psychological effects of heterogeneous workplaces.
Gibson seems to be assuming that we actually have anything close to a free market, instead of a series of rigged markets and networks of skewed and unjustly gained power. The reality is there have been multiple interventions by the state which limit the extent and scope of economic activity, leading to monopolisation and skewed power relations. Trade union activism has been destroyed by “progressive” reforms during the New Deal, and then with subsequent reforms under neoliberal regimes. Occupational licensure and anti-competition clauses limit the capacity for wannabe entrepreneurs to start a business due to skewed power relations favouring employers and corporate lobbyists. Intellectual property regimes act as international tariffs, limiting the availability of products and technologies and enclosing them in corporate trade agreements and trade law. Transport subsidies and systemic entry barriers allow for large businesses to externalise the costs of overproduction and management-related knowledge problems onto the taxpayer.
All of these lead to the effect of higher working hours, even with relative increases in technology and prosperity, as employees are massively disempowered by the unfree markets of modern capitalism. Because of corporate enclosures of modern technologies through IP, and because of the entry barriers created by occupational licensure (something usually supported by established firms so as to maintain their monopoly position), individuals are forced into their current role as wage labourers, with their major choice being to get a job, or starve. As a result, employers act as monopsonists in rigged labour markets and effectively set hours relative to the need to move the massive capacity of goods produced. In the world of modern consumerism and advertising, this means more hours working, particular in the service sector. Higher working hours is not an example of a choice to act more productively or choose work over leisure, but one monopoly firm power. If you also take into account the increasing costs of living due to property, sales and income taxes, as well as housing rents, the choice is one of survival for employees who are faced with unfree labour markets.
“People need stimulating experiences. They need to feel engaged and the stakes have to be real. To exercise their bodies and minds in challenging tasks that make a significant difference to something larger than themselves, something valuable”. Gibson is right in saying this. People enjoy engaging themselves in certain activities. For some its philosophising, for others its 3D printing. But to go from this to the idea that modern wage labourers, including those on zero-hours contracts in non-securitised jobs, are somehow trading in leisure for this mind-numbing crap is the height of ignorance. Qualitatively, those with the highest job satisfaction are those who are more independent in their workings. They aren’t reliant on the over or under-communication of management, but instead guide the direction of how they work and what they work on.
To take a personal example, my girlfriend works 8 hours a day and 5 days a week as a hairdresser on minimum wage. If she were allowed to receive the full value of her labour, as represented by her takings, she could afford to work less hours and make more qualitative decisions about how and when she works. The only reason she can’t do this is because of occupational licensure, minimum wage laws and planning laws which limit her capability to become self-employed or open her own salon. Her capability to work independently is limited by the corporate-state nexus and its regulatory mechanisms.
The vast majority of modern workers are part of a state-controlled and led economy, where “the process for evaluating and deciding is detached from any kind of democratic challenge or validation and exercised by minority (financial, economic, political, etc.) groups”. Decision-making is entirely centralised, with the costs of operation that disseminate from these regulatory apparatuses being pushed upon the self-employed and independent worker.
In a freed market, truly independent forms of work and decision-making would proliferate. Entrepreneurial spirits are unleashed and clustered, ultra-competitive markets develop and evolve. Mass production would become obsolete with the removal of systemic state intervention, and with it much of modern retail and services become unnecessary as low-paid workers aren’t required to work long hours to push the sweatshop-produced products of subsidised corporations. Instead, small-scale artisanal production through self-employed firms, worker-owned factories, small pooled-capital corporations and many other variations of ownership and firm organisation become possible and eminently more desirable for independent members of the entrepreneuriat. With IP becoming unenforceable without the coercive arm of the state, enclosed technologies become open to use by many different firms and entrepreneurs, allowing for increased productivity and the integration of technology with a human scale of economic activity.
A UBI would be very helpful for moving towards such a socio-economic paradigm, as evidenced by the increase in self-employment and business start-ups in UBI experiments. Outside statist/governmental action, a UBI is still possible. In cryptocurrencies there are mechanisms built in which encourage the development of a basic income amongst its users. Altruism is developed within tight-knit networks of consumers and producers who use the currency for transacting. In Bitcoin protocols, there exists the ability to “periodically pay dividends to all of its members” through “an opt-in method of efficiently distributing funds free of coercion”. These are based around webs of trust and certification that get recorded on the Blockchain. Such schemes allow for risky entrepreneurial activity in an environment where banks aren’t even lending to conventional small businesses.
The idea that it is simply money for nothing is a perfect example of the kind of vulgar libertarianism that infects modern discourse, where such a person is confused as to whether we live in a free or rigged market. The increase in work hours as evidence for a desire among people to value work over leisure or even other types of work would be correct if you based your opinion on simplistic statistics. However, if you take into account the monopoly position of multiple firms in the rigged market system that governments and corporations have created, such a view is completely untenable. UBI would be one step toward freeing workers and the entrepreneurial spirits of a huge range of individuals, allowing for the creation a of market freed from state coercion and control.
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