Why we need an unconditional basic income: stagnating economic growth, automation and commons-based peer production

With this post I’m going to try to piece a few things together that I’ve been thinking about in recent years. If you’re not familiar with one argument or line of thought: please follow the links!

The underlying argument is that today’s industrialized societies are finally entering a post-industrial era (and maybe have been in the process of entering it since the 1980s or 90s). This means that the industrial era in the Western world was a 200-year period, roughly ranging from 1800 to 2000. So while current developing and newly industrialized countries may be in the same situation in the near future, a different cultural and historical background, as well as a changing environment, may very well result in a drastically different situation for each of them. That’s why I will limit this discussion to today’s industrialized societies. (For a convincing look at our geo-political future, see Martin Jacques’s When China Rules the World: The End of the Western World and the Birth of a New Global Order)

There are three major trends in today’s industrialized societies that are relevant here:

  1. Economic growth is relatively easy to achieve when industrialization has successfully kicked off, yet the country is still in need of building major infrastructure and accommodation, and its population is in the process of lifting itself out of poverty (e.g. today’s China or 1900’s Europe). Once this has been achieved—even as the tertiary service sector increases to account for the lion’s share of the economy—it doesn’t really become easier to decouple economic growth from the growth in the consumption of physical resources and energy.

    As both John Maynard Keynes and Adam Smith believed, economic growth will taper off at some point. In fact, infinite economic growth is an impossibility. (Karl Marx also hoped to escape capital’s growth imperative to end up in a system beyond class, money and even the state. This hypothetic system was what he called Communism.) The current system, which is built on interest and debt, cannot function without growth. Currently, commercial banks loan money into existence by loaning it from the central bank at the prime lending rate. Then they pass the money on by lending it at a slightly higher interest rate to private and public borrowers (the difference is their profit). Now, a simple thought: if all borrowers payed back their loans plus interest, they would pay back more money than was ever loaned to them. Where does all that new money come from? An impossibility! There are only two solutions: either some of the debtors don’t pay back their loan and go into bankruptcy, or they have to take up even more loans to pay back the old ones. While the pressure of bankruptcy always looms over everyone, to keep this system going relatively smoothly, it is preferable to simply loan ever more money into existence at an exponential rate. So while we continue to cling to the current system, we have no choice but to continue growing. If we suddenly stop growth, the whole Ponzi scheme comes tumbling down, we have an economic crash and unemployment skyrockets. And nobody want to be unemployed, right? It’s a catch-22 that an unconditional basic income can help to break. Meanwhile, politicians and economists see no alternative but work to prolong economic growth on a finite planet by introducing consumerism, throw-away society, financialization, high-frequency trading and the economization of public and everyday-life in general. Examples of economization include transforming ever more services that used to be non-monetary or public into paid products: e.g. professionalization of the care for the elderly and children, privatization of public services, individualization and reduction of reliance on neighborhood, friends and family. All of which helps continue the exponential growth of GDP. But soon, there will be no things left that are still free or voluntarily organized that we can turn into products and sell back and forth to each other. At some point, industrialized societies will have to accept the inevitable and say goodbye to economic growth.

  2. Automation in factories has been key to rising efficiencies ever since the industrial revolution and a steadily growing amount of tasks have in fact been automated. And while hyped for the first time in the 80s, artificial intelligence (or at least machine learning) has actually been making steady progress and is now taking over tasks that were previously thought impossible to do by machines. While Google’s self-driving car is still in the works, mining trucks already drive themselves in the Australian desert. Meanwhile, Oxford researchers say that 45 percent of America’s occupations will be automated within the next 20 years.

  3. And finally, there is the rise of the Internet, and with it the rise of commons-based peer productions like Wikipedia and free and open source software, where lots of volunteers work together, in an open process without traditional hierarchical organization, and the product of their labour is shared and licensed to be freely accessible to everyone. Here’s the story in a nutshell:

    • A computer in every home.
    • Every computer connected through the internet to every other computer.

    What sounds so simple is actually the setup for a revolution—one that has great implications on the economy as well as on society as a whole.

    Computers greatly influence our daily lives. While they can run proprietary software that big companies develop behind closed doors, there exists also a wide range of software which is open for everyone to examine and which everybody is free to copy, modify and redistribute. This kind of software is called free and open source software. The free and open source software developing community is spread around the world and collaborates over the internet. Its poster child is certainly GNU/Linux—a whole operating system that can replace the proprietary Microsoft Windows.

    Copyright law grants an author the exclusive right to copy his work, but only for a limited period of time. During that time nobody else is permitted to copy an author’s book, image, film, etc. and nobody is allowed to use it to create new stuff. However thereafter, the original work passes into the public domain and everyone is free to use it for any purpose. The 20th century was the century of the mass media which tend to produce capital-intensive industrial productions for an audience as large as possible. They started lobbying politicians and copyright got extended over and over again and our culture becomes increasingly property of a few companies.

    With ordinary home computers connected to the Internet, today everybody can easily manipulate, mix and rearrange his own or the data of others and share the creative product with all the world. New distribution mechanisms like peer-to-peer file sharing networks render the record industry with its current business model obsolete. The major record labels therefore react with lawsuits against individuals and use a new technology called DRM to control its customers even more tightly which at the same time prevents others from reusing past culture.

    Copyright, patents and trademarks are often lumped together under the term of intellectual property. This term already implies that intellectual works are analogous to physical property which isn’t the case.

    • Information is a nonrival good: It can’t be used up, information shared is information doubled.
    • Information is a core-prerequisite to creating new information.

    Such exclusive monopoly rights lock information in and prohibit innovation. In a time where the basic tools for information production in form of computers are available to millions of people, the law still favours capital-intensive industries over individuals and small businesses.

    The internet facilitates the collaboration of individuals all over the world. Volunteers as well as professionals come together to participate in a new form of information production: commons-based peer productions – like the development of free and open source software or the writing of Wikipedia. Information is shared, rather than hoarded, and licensed as free content.

    In this digital and networked environment individuals can do more alone or in loose collaboration with others. On blogs millions of people post about anything from music to politics and provide an alternative to the traditional mass media like TV and newspapers. A new informational environment emerges that is more diverse and independent of advertising revenues or the government. If information is shared freely instead of being held back, this is more just, and access to existing information is crucial for impoverished people and whole nations all over the world to catch up in development.

    This networked environment has many advantages over the old information environment. However, there is also strong opposition to those new concepts, originating either from poor understanding or from fear of death of last-century business models. A battle has broken out over the laws and tools governing information production. The claim represented in this text is not that technology will magically lead to a better world, but rather that it provides for diverse possibilities that a given society can choose to use or not.

    For more info, see an introductory text of mine (from where the above is copied), or Yochai Benkler’s excellent The Wealth of Networks: How Social Production Transforms Markets and Freedom, and for a more critical look George Packer’s The New Yorker piece Change the World.

With these three major trends outlined, let’s take a look into our crystal ball. With more and more low-skilled jobs replaced by machines (or in the meantime cheap foreign offshore labour), the workers that the capitalist economy in industrialized nations really needs are highly-skilled, creative, self-motivated and autonomous. Because the only way to get that kind of work done which machines cannot do, is to find highly skilled and passionate people, provide them the means to live and work and then just let them do what they need and want to do. So the organization needs to be very similar to how commons-based peer productions work—except the ‘commons’ is limited to the company. This is exactly what most startups and companies with a startup-like culture (like Google at least used to have) do.

But where does that leave the many relatively unskilled workers? One aspect is that we should change our educational system that was designed to churn out industrial workers that can do a specified task efficiently without creativity or thinking for themselves. But more fundamentally, low-skilled and boring work will be needed less and less by the capitalist economy. And my argument is that this is not a bad thing. In our society, we are so used to defining our self-worth with what job we have and our value by how much we earn. But in a broader historical context, I think this will have been a 200-year anomaly that lasted only during the industrial era. People will continue to do things, but now because they are meaningful to them, because they feel that they are providing value to their community (or to one of their many virtual or local communities). With an unconditional basic income, they won’t have to do useless bullshit jobs to justify their existence. We have to stop equating the value of a human being with how much paid work he or she does. While I’m all for good working conditions, it’s sad to see unions resisting an unconditional basic income because they hang on to the industrial idea that everyone should have a job and get (well) payed for that.

One way or another, most well-off people will have a basic income. Because that’s effectively already what companies with a startup-culture provide their employees or what you get when you have interest-bearing assets. The question is whether we as a society get our shit together and make this work for every citizen, not only the privileged few. It would be the logical next step for the welfare state.


Infinite economic growth, space and population growth

Growth in energy consumption

If we pause to think for a moment, we all know that infinite growth of energy consumption is not possible on a finite planet. This fact can be mathematically proven, assuming the physical laws of thermo-dynamics that is. If you want to see the math, take a look at this excellent blog post – at the current annual energy use growth rate (which has been quite steady for the last 350 years), within 400 years, we will need more energy than what the surface of the earth (including oceans) receives from the sun.

Economic growth

However, the conclusion that economic growth requires a growth in energy consumption cannot absolutely be proven but requires some common sense thinking. Besides the fact that economic growth has historically never been achieved without a raise in energy consumption (see this animation on Gapminder), it could be argued that by some means (e.g. hefty energy or carbon taxes), the economy could be forced to consume less energy (or at least to stop consume more), and be made to grow in the unphysical sector (e.g. services, information economy). It seems unlikely that politicians could ever push through such a regime because the moment something like that is proposed, everybody starts shouting that higher energy prices are bad for ‘the economy’ and we wouldn’t want to risk losing jobs, would we? But even if such a regime were enforced, we would wind up in a pretty strange world were the unphysical sector would dominate the economy and the prices for physical goods eventually became almost zero relative to the whole economic production und thus relative to a person’s income. So food (and all other physical resources) would become so cheap for all the people working in the unphyiscal sector, that it would basically be free. (See the argument in more detail.) I cannot imagine such a world becoming reality, can you? So what that leaves us with is that infinite economic growth implies infinite growth in energy consumption which is impossible on a finite planet.


While expanding into space would buy us some more time, the mathematics of exponentially increasing energy consumption would not even work out in space (see this already mentioned blog post). Additionally, sending energy or physical resources from space down to earth, would only put additional strain on the environment and climate of our small planet. Mind you, I’m all for going to space. But not in order to retain growth (that’s quite impossible in the long run), but simply in order to learn more about our universe as well as to put humanity’s eggs in one than more basket, should one or another catastrophy make our home planet unlivable (think nuclear/chemical war, climate change, major asteroid/meteroid impact, etc). Unfortunately, the political will in the US and Europe to build a permanent presence in space is dwindling (the US has even lost its capability to ship astronauts to the International Space Station, momentarily relying on Russia for that). So our hopes must rest on private companiesChina or Open Source ventures.

Population growth

When you start talking about infinite growth on a finite planet, people often mention population growth. While it is undoubtedly true that infinite population growth on a finite planet is just as impossible as infinite economic growth, I think it is morally quite something different to ask families all over the world to stop having more babies than to ask the drivers of economic growth to stop making more profits. We know that it easier for the economy to grow when population increases and easier to degrow when population would dwindle. But there are plenty of examples of countries having positive economic growth while negative population growth (e.g. Eastern European states in the early nineties) as well as countries being in a recession while still having population growth (e.g. Sub-Saharan African states). Meanwhile, the majority of industrialized countries have a population growth rate of less than one percent while often retaining economic growth rates of more than two percent. (Again, have a look at this animation on Gapminder.)

In a future post I’ll look at the drivers of economic growth…