We are in the midst of a global transformation orchestrated by powerful financial interests espousing an ideology of market liberalisation, commodification, and privatisation. The global market system they advocate increases economic and social injustice, including widespread precarity. In the face of this transformation, how can we create new systems of regulation, distribution, and social protection to achieve a more just society?
Central to the transformation has been the owners’ control of physical, financial, and intellectual property from which they overwhelmingly benefit. Unlike the post-war period when shares of income going to capital and labour were roughly stable, in today’s globalised economy, the income distribution system has broken down irretrievably and the share of rentier capital – that is, income from rents, trusts, and subsidies rather than production or trade — has risen sharply.
This economic transformation has enormous implications for a growing class, the precariat. I define this group as a class because it has distinctive relations of production, relations of distribution, and relations to the state. And it is the precariat that will define the counter-movement in the global transformation.
The precariat faces a life of unstable, insecure labour. As we have seen with Uber, Task Rabbit, and other new non-traditional work structures, casualization has been extended by indirect labour relations in the ‘concierge economy’, while online crowd labour in platform capitalism and on-call contracts has spread. Within the next decade, a majority of transactions may be of this type, as labour brokers and apps become more ubiquitous. The old relations of production, built around direct employer-employee relationships, may become the exception.
Many commentators define the precariat simply on the basis of insecure labour, but this misses an important element: the precariat lacks an occupational identity. Further, these forms of precarious work involve increasing amounts of work-for-labour – think of the time an Uber driver puts in to maintaining a car — that is neither recognised statistically nor remunerated. In addition, many do jobs that require less education than they have.
The precariat is also defined by distinctive relations of distribution, in particular exploitation that undermines social income. Precarious workers rely mostly on money wages, which have been falling in real terms while becoming more volatile and unpredictable. They are also losing non-wage benefits, such as paid leave, medical leave, and occupational pensions, which provided labour-based security for old proletariat and, at this point, still do so for salaried workers. Statistics based on money income ignore these losses, and so they understate inequality.
To compound their insecurity, the precariat has lost rights-based state benefits, which increasingly require recipients to meet means tests. This results in a poverty trap, because moving from benefits to a low-wage job often brings only marginal income increases. And if someone loses a job, they don’t begin receiving benefits immediately, creating what I call a precarity trap. The combination means that taking a short-term job brings a small extra income but also raises the prospect of losing income altogether for a while after the job ends.
Yet it is the precariat’s distinctive relations to the state that are most crucial to understanding this growing class. Members of the precariat are losing rights of all kinds – civil, cultural, social, economic, and political. They are reduced to supplicants, without rights, obliged to be obsequious to gain income or benefits and dependent on bureaucrats to make discretionary judgements in their favour. This is humiliating, intensifying feelings of insecurity. These rights are also forms of social income, and their loss represents extra costs of living for the precariat. This, too, adds to inequality in ways that conventional income measures ignore.
The precariat has been hard hit by the collapse of the old income distribution system. It will be even harder hit by the advance of robotization, which will bring more people into the precariat. Robots may not cause mass unemployment, as many in Silicon Valley predict, but they will be disruptive. Wages will decline, and occupational structures will become more fragmented. The salariat will become part of a growing precariat of para-legals, para-medics, fractionals, and the like. The only people who will benefit are a few elites, whose incomes come from rents and investments.
At that point – and it is coming soon – economists and politicians will either have to accept yawning inequality and all the social and political risks that this entails or build a new income distribution system in which wages will play a smaller role. The base of a new system should be a basic income, funded by taxing the rentier income of the elites.
A basic income is a modest amount paid regularly to each individual legal resident (or ‘citizen’). It is a non-withdrawable economic right, without behavioural conditions. This would have several beneficial effects, including acting as an incentive to work in more ecological ways, such as in reproductive or care work rather than in resource-depleting labour, and improving mental and physical health. To afford a basic income system, governments would tax income gained through financial, physical, and intellectual property. Taxes for the majority would not rise, and public services would not be adversely affected. In a basic income system, everybody shares in the collective wealth generated in the economy.
A basic income will be the anchor of the system, but it should also provide supplements for those who have extra costs of living, such as people with disabilities or parents of infants, and to assist those with below-average earning opportunities. The system will still include wages and insurance benefits, as well as income from normal profits from productive activity.
Sooner or later, basic income will be seen as the only sustainable course. That, in turn, will enhance social justice, freedom, and basic social and economic security.
Guy Standing is a Professorial Research Associate, SOAS, University of London. He is the author of numerous books, most recently Basic Income: A Guide for the Open-Minded and The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay. He will discuss the books at a seminar in Columbia University on October 26, 2017.