Basic Income and Neoliberalism’s Legitimization Crisis

This blog is based on an article in the Journal of Social Policy by Tom McDowell. Click here to access the article.

The covid-19 pandemic has brought the need for enhanced income supplements into acute focus. As governments have responded to the crisis with emergency cash support, calls have grown louder for these programmes to be converted into permanent basic or guaranteed income schemes. 

This has occurred in the context of rising interest around the world in basic income, evidenced by the dozens of pilot projects conducted since the middle of the 2010s. However, what can account for this interest in basic income as a policy solution to income inequality? Are there identifiable historical or political variables that can explain why basic income has suddenly re-entered the policy dialogue after decades on the fringes? 

In “Basic Income and the Legitimization Crisis of Neoliberalism,” recently published in The Journal of Social Policy, I contend that momentum for basic income can be grasped in the context of the political legitimization crisis of neoliberalism and the dissolution of what Nancy Fraser has called the “progressive neoliberal” governing bloc that secured its hegemony from the mid-1990s to the mid-2010s. 

As the myth that neoliberal social and economic policies could deliver widespread prosperity began to unravel in the wake of the 2008 financial crash, the political coalition that secured its dominance for two decades was also shattered. This has led to an “unstable interregnum” period, in which the balance of political forces has been destabilized and new alignments have the potential to take shape.  

Despite however this crisis of legitimacy, neoliberalism – in most countries – continues to serve as the default policy option, remaining hegemonic despite its declining popular support. This has resulted in neoliberalism taking on a zombie-like quality, in which it “threatens to lurch haphazardly onward…until an alternative sociopolitical programme begins to fill the attendant vacuum.” 

Applying the essential tenets of Marxist state theory, I argue that there are three foreseeable alternatives to the present interregnum in the short and medium terms: 

  1. Forces could organize around a legitimate, counterhegemonic Left alternative that would propose a transformative social policy. However, given the lack of a meaningful organized alternative on the Left, this solution seems unlikely in the short-term. 
  2. The rise of nativism and chauvinism on the right has raised the prospect that neoliberalism may be entering a right-wing authoritarian phase in which the political discontent caused by the shortcomings of the market have been mobilized towards the politics of cultural grievance. 
  3. The centrist, progressive neoliberal bloc that secured neoliberalism’s hegemony for the first two decades of the twenty-first century could reconsolidate itself around a new redistributive policy regime that addresses the social policy failures of the neoliberal order, while remaining devoted to the broader themes of market-based governance. 

That is, basic income – given its logical consistency with neoliberalism’s core theoretical principles – is uniquely positioned to consolidate its hegemony during this political interregnum, since it offers the prospect for a new redistributive politics around which the centrist coalition that stabilized neoliberalism for more than two decades could reconstitute itself.

While it is commonly assumed that neoliberals opposed all forms of social redistribution, this is not the case. Seminal neoliberal thinkers Friedrich Hayek and Milton Friedman both expressed support for a guaranteed income as an efficient and non-coercive way to redistribute income and as an alternative to the welfare state. Basic income could allow recipients to exercise economic liberty, while also strengthening the legitimacy of a neoliberal order by dulling the sharp edges of the market. 

There is doubtless more than a kernel of truth to the argument made by those on the Left who have expressed concern basic income is a “neoliberal trap” that further risks eroding the foundations of government programming, charting towards what Jäger and Zamora have termed “welfare without the welfare state.” 

Indeed, in the 1960s Milton Friedman noted that one of the benefits of a guaranteed income scheme was that it weakened the institutional foundations of the welfare state by making individuals less reliant upon it. He suggested that were the Left to embrace such a programme, it “will find that it has bought a Trojan Horse,” since it will provide citizens with “reasoned alternatives to present programmes that will permit a gradual withdrawal from them.” 

At the same time however, recent basic income pilots have shown transformational benefits for participants, suggesting that an adequately funded programme, which supplements rather than replaces the welfare state, could help improve recipients’ lives and fortify social security. Research has also shown that basic income has decommodifying benefits for workers, enabling them to say ‘no’ to employment that does not suit their needs. 

However, arguably the most compelling explanation for basic income’s recent popularity, and a reason to be optimistic about its immediate prospects, is that it is one of the few policy solutions in the mainstream discourse that holds the potential to both address rising inequality while also stabilizing neoliberalism’s political crisis of legitimization during this interregnum.  

In so doing, it could repel a descent into what Standing has called a “politics of inferno,” amongst an increasingly alienated and atomized working class, by offering a consensus issue around which a new ‘progressive neoliberal’ governing coalition might emerge. 


About the author

Tom McDowell is Lecturer at Toronto Metropolitan University.

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