Capitalism is a coercive economic system that creates persistent patterns of economic deprivation.
Governments have typically dealt with capitalism’s more misery-inducing tendencies by creating institutions of labor protection — such as the right to organize unions — and by building out modern welfare states. Although these policy programs have been fairly successful, especially in the countries that have pushed them the furthest, they have not fully eliminated coercion and deprivation. To secure freedom and prosperity for all, it may ultimately be necessary to supplement the welfare state with a universal basic income — a program that would provide all citizens with a basic level of financial support, regardless of whether they’re employed.
By now, it is well established that capitalism is fundamentally built upon threats of force. As libertarian philosophers Robert Nozick and Matt Zwolinski have explained, the only way to turn unowned natural resources (such as land, minerals and other goods) into privately owned property is by violently preventing all others from using them. This one-sided exclusion destroys freedom of movement and cuts many people off from the things that they need to survive.
When the physical resources necessary for production are privately held in the hands of very few, as in the United States, the majority of the population is forced to submit itself to well-financed employers in order to live. The precarious position of most workers in this position — desperate for employment but aware that they could lose their jobs at any time — is coercive on its face and susceptible to exploitation and abuse.
Labor protection in the form of safety laws, collective bargaining and prohibitions against harassment and discrimination have helped cut down on many of the worst employer abuses. But no amount of labor regulation can ever undo the fact that workers are confronted daily with the choice between obeying a supervisor or losing all their income. The only way to break the coercion at the core of the employment relationship is to give people the genuine ability to say no to their employers. And the only way to make that feasible is to guarantee that working-age adults, at least, have some way to support themselves whether they work or not.
Even as capitalism makes some workers’ lives miserable, those who can’t work are in even worse shape. Even after counting some or all public welfare benefits, the U.S. poverty rate in 2013 was anywhere from 15 percent to 18 percent. Most of this poverty is endured by vulnerable populations that markets discard as useless. According to my own calculations of the 2014 Annual Social and Economic Supplement, more than 80 percent of the officially poor are either children, elderly, disabled, students, caretakers or the involuntarily unemployed. Because they cannot work or they have a diminished ability to work, these groups often receive little to no direct income from the market and suffer a high risk of poverty as a result.
The United States’ relatively small welfare state kept 39 million people out of poverty in 2013, cut the overall poverty rate by 38 percent since 1967 and radically reduced the poverty rate of the elderly by as much as 72 percent since 1960. Globally, the countries with the highest levels of welfare spending — Denmark, Finland, Norway and Sweden — are also those that have the lowest levels of economic hardship. But even in these countries, poverty is not zero percent and small numbers of people still register an occasional inability to acquire basic needs such as food and housing. Supplementing the existing welfare state with a basic income would, if successful, ensure that nobody falls completely through the cracks of the social welfare system and thereby finds himself or herself destitute.
True freedom requires freedom from destitution and freedom from the demands of the employer. Capitalism ensures neither, but a universal basic income, if successful, could provide both.
Matt Bruenig is researcher of poverty and welfare systems at the think tank Demos.