Over at the “Bleeding Heart Libertarian,” Jacob T. Levy’s entry, “A worry about the basic income,” proposes that while the unconditionality of a basic income might be promising in theory, there are serious worries as to a basic income remaining universal for long. He quotes Don Boudreaux to begin,

That policy might well be better than what we currently have, but I fear that the chances are high that we would soon hear – not long after its implementation – cries such as “You are hypocritical to object to government policy X because government is the root source of your income. Because government guarantees each of us an annual income of at least $10,000, our prosperity and well-being and civil peace spring from this policy. As such none of us has any right, or strong grounds on which to stand, to engage in civil disobedience or even to oppose government regulation.

Boudreaux’s worry is apt. The history of modern government welfare stems from 19th century German chancellor Otto Van Bismarck, who stated that welfare was a way to bribe and distract the working class. Indeed, even the more benevolent advocates of the German welfare state admitted that the program was meant to be paternalistic, so that a state had control of a worker’s life. Those who became dependent on the state would be necessitated to obey its commands as Frederic Howe explained,

The state has its finger on the pulse of the worker from the cradle to the grave. His education, his health, and his working efficiency are matters of constant concern. He is carefully protected from accident by laws and regulation governing factories. He is trained in his hand and in his brain to be a good workman.

Not much has changed in the justification for the welfare state or how it is used. American intellectuals took the ideas of Bismarck and over the 20th century transformed America into a vast welfare state. Thaddeus Russell notes that one of the founding documents of today’s welfare state, “The Other America” is highly paternalistic. The author, Michael Harrington, claims that the poor are naturally dependent on their betters, the wealthy.

As will happen, the culture of the elites trickled down into the American subconscious. Today, Americans exist in a reactionary craze over those who, for a plethora of reasons, do not work. This can be unfortunately be seen quite well even among the working class, who rightfully believe they have been overworked and are resentful towards those who can successfully avoid such toil. Levy points out that even when conditions for welfare have no foreseeable economic benefits to anyone, Americans will still demand that discipline be implemented in such programs. Simply put, after working 8-16 hour days, you do not want to be informed that your neighbor sat at home and smoked weed. Why should they, who are not disciplined enough to work, get to enjoy themselves?

As much as some leftists claim that they want autonomy for the poor, people are naturally skeptical of those who they strictly associate with unemployment or shiftlessness. I will here posit a possible explanation for why: people are averse to being ripped off. As a result, a basic income or any other welfare program will inevitably lead to the disciplining nature of being treated as a ward of the State. Libertarians should stop entertaining new schemes for using the violent arm of the state to create social stability. Society is not stable and caging it will not sedate its members.

Leftists are right to point out that employment can be restraining of autonomy, of individual creative action. However, they often ignore that their own worldviews are rarely respecting of autonomy themselves. The Progressive Left rightly knew that control of the poor was necessary in order to maintain societal order. If the poor become too free, too distanced from the prevailing culture of work, discipline and promoting the “social good,” the Progressive path of our culture is in trouble. The point of all welfare schemes is not to allow the individual to flourish for himself, but for the collective to be carefully cultivated for the State’s interests.

We must begin focusing on the liberation of mutual aid if we truly want the end of careerism, of working for the purposes of others through our most vibrant and alive years. Local organizing by lodges and fraternities was the norm in America and England before the Bismarckian ideal of welfare became the enforced norm.

A good example is Mike Konczal’s recent column “The Voluntarism Fantasy” (Democracy Journal, Spring 2014). Konczal repeatedly equates voluntary efforts with “alms given by the wealthy few to the poor” (Truman’s phrase). I know what he means by this. You can’t open up the “Community” or “Society” page of the local newspaper without seeing a bunch of Rotary Club yahoos attending “charitable fundraisers,” handing over giant checks and cutting ribbons. Guess what? I don’t like these people either. My idea of a “voluntary, private” welfare state is a lot closer to Pyotr Kropotkin’s Mutual Aid and E.P. Thompson’s Making of the English Working Class than to the United Way.

Konczal contrasts the 20th century welfare state with what came before — but his historical context doesn’t go back far enough. He is correct that the system of “private charity” that existed before the Great Depression was inadequate. But he fails to note the role of the state in still earlier times in suppressing a thriving ecosystem of self-organized working class mutual aid. As Kropotkin described the process in The State and Mutual Aid, the newly risen absolute states of early modern times suppressed the networks of free towns and horizontal institutions for solidarity and mutual aid like the guilds, on the grounds that — as the Roman jurists put it — associations between private citizens amounted to a state within a state and threatened its preeminence. Thompson recounted the British state’s suppression of working class friendly societies and fraternal organizations during and after the Napoleonic Wars because they were closely associated with radical movements like labor unionism and republicanism, and many forms of mutual aid (like sick benefits and unemployment insurance organized through working class mutuals) strengthened the bargaining power of labor. In fact unemployment insurance organized through working class mutuals frequently amounted, in practical terms, to a strike fund. So the British state’s wholesale suppression of working class mutual aid had a motivation quite similar to that of the Riot Act and Combination Act.

More recently, as described by Colin Ward, the emerging welfare state bureaucracy in Britain actively suppressed working class mutuals, seeing them as atavistic relics of an outdated era. Then when the welfare state came under attack from the Right, the alternatives it proposed all involved “privatization” of state agencies by selling them off to the highest corporate bidder. So in fact the state itself played a central role in reducing the alternatives to a choice between the bureaucratic centralized welfare state and neoliberal “privatization.”

Further, the welfare state as we know it is a fundamental part of the larger system of corporate capitalism. The 20th century welfare state did indeed, as Konczal argues, function as a corrective to the Gilded Age model of capitalism. And he’s entirely correct that the conservative Republican model of voluntary charity would have been insufficient to address the immense human costs of the Great Recession. But both Gilded age capitalism and the late capitalism that led to the Great Recession both resulted from the massive levels of state intervention from early modern times on which were required to create capitalism as a social system in the first place.

As Konczal himself puts it, the modern system of corporate capitalism resulted from a close partnership between government and big business. “From tariff walls to the continental railroad system to the educated workforce coming out of land-grant schools, the budding industrial power of the United States was always joined with the growth of the government.” For Konczal, this is a good thing. For me, this was intervention by the state to build an economy more centralized, more bureaucratic and authoritarian, more exploitative, and less efficient than what would have arisen naturally.

The most natural form for the Second Industrial Revolution — i.e., the introduction of electrically powered machinery into manufacturing — to have taken would have been a decentralized economy of local industrial districts, much like the Emilia-Romagna economy of our day. The original rationale for the Dark Satanic Mills was the need to economize on power from prime movers. Since steam engines were governed by very steep economies of scale, it was most efficient to build them as large as possible and then crowd a large factory with as many machines as possible all powered by belts running to a common drive shaft. The electric motor destroyed this rationale. It became feasible to build a separate prime mover into each machine, which meant machinery could be situated close to the point of final consumption, the flow of production could be scaled to the level of immediate demand, and the machines could be scaled to the flow of production. The ideal economy, given such an approach, would have been small shops with electrically powered, general-purpose machinery integrated into craft production, and frequently shifting between product lines as orders came in.

What we got instead, as a result of this “Progressive” government intervention, was an industrial model based on mass production, with enormously expensive specialized machinery that had to be run 24/7 to minimize unit costs by fully utilizing capacity. This meant divorcing production from consumption, and organizing the entire society around authoritarian supply-push distribution models to guarantee that the output would be consumed. It meant resorting to expedients like manipulative mass advertising, planned obsolescence, overseas imperialism to coercively open markets, and direct intervention by the state to utilize surplus capacity and create new industries (see David Noble, America By Design) as outlets for surplus capital. It meant a giant military-industrial complex and automobile-highway-suburbanization complex as sinks for surplus capital and output. And it meant an entire society organized around interlocking, centralized state and corporate bureaucracies controlled by the managerial-professional classes (whose ideology, by the way, became the basis of 20th century “Progressivism”).

The vulnerability of working people to the “Four Horsemen” — “accident, illness, old age, loss of a job” — results from the basic structural framework of capitalism, which the state played a large role in creating. The wage system itself, as the predominant source of livelihood, is a creature of the state. So are all the artificial scarcities and artificial property rights by which the economic ruling class extracts rents, profits, interest and bloated bureaucratic/managerial salaries from the working class.

The power structure underlying modern capitalism was created at the same time as that of the modern nation-state. Go back five hundred years or so to the same time the new absolute states were using their gunpowder weapons to defeat the free towns, and you find neo-feudal landed elites transforming themselves into agrarian capitalists, abrogating traditional peasant rights of land tenure, enclosing the Open Fields for sheep pasture (and later enclosing common wood, waste and pasture), and reducing the peasantry to at-will tenants. Capitalism was founded on the expropriation — the robbery — of the overwhelming majority of the population. This was coupled with the growth of virtually totalitarian social controls: J.L. and Barbara Hammond, in The Town Labourer, described the policies of the British state in the late 18th and early 19th centuries as taking apart and reconstructing British society the way an occupying army does a conquered population. The Combination Laws, along with assorted police state legislation passed under the various governments of Pitt the Younger, stamped out all freedom of association among the working class and were enforced by administrative bodies unencumbered by common law procedural guarantees. The Laws of Settlement amounted to an internal passport system which prevented workers from voting with their feet in search of better wages; but at the same time it enabled parish Poor Law authorities in overpopulated areas like London to auction off the surplus population from the poorhouses to industrial employers. In settler societies like the United States, government preempted ownership of vacant lands amounting to the majority of the territory and doled it out in enormous land grants to favored mining, logging, railroad and oil interests and land speculators. This enclosure of vacant land, coupled with monopolies on the issue of currency and a host of other entry barriers, protected employers from having to compete with the possibility of self-employment. Federal troops and state National Guards broke strikes on a regular basis.

So the actual dynamic we have here is: 1) the state set up a whole system of artificial scarcities, artificial property rights, monopolies, cartels and entry barriers, which enable an economic ruling class to extract rents of various sorts from the working population; and 2) the welfare state takes a tiny fraction of this surplus (previously extracted with the help of the state) and gives the most destitute of the working class just enough to prevent the disparities of wealth from undermining the levels of aggregate demand needed to keep the system running, and to prevent outright homelessness and starvation leading to political destabilization.

Welfare is an integral part of the larger system of capitalism, just as Konczal says. It’s yet another way in which the state socializes the basic operating costs and risks of capitalism, enabling capitalists to externalize these things on the taxpayer, while they privatize the artificially high profits for themselves.

To repeat, Konczal is correct that — given the existing model of corporate capitalism — a government welfare state is necessary to keep the system in operation. He is correct that, given the economic model we have in place now, a self-organized welfare state made up of the kinds of institutions chronicled by Kropotkin, Thompson and David Beito lacks sufficient resources to fully support the victims of existing capitalism. This is true because 1) the present model has robbed workers of much of the product of their labor and transferred it to the rentier classes so that workers have inadequate means to fund a robust working class welfare state, 2) because in many cases the capitalist state has suppressed such self-organized institutions as a threat both to capitalist labor-discipline and to the power interests of welfare state bureaucrats themselves and 3) the large-scale transfer of income from producing classes with a high propensity to consume to rentier classes with a high propensity to save and invest creates a chronic tendency toward economic crises and mass unemployment. But imagine a society in which most existing land rent, profit, interest, rents on copyrights and patents, and management salaries instead go to workers, and most work is done in local industrial economies immune to the boom-bust cycle, and picture the resources we would have to support our neighbors and comrades in such an atmosphere of abundance.

On top of that, factor in a production model based on extremely cheap micro-manufacturing tools, like open-source tabletop CNC machinery in garage factories, and land-efficient forms of food production like soil-intensive raised bed horticulture. Their effect is to make industrial production once again the affair of skilled craft workers using affordable general-purpose machines. With a major share of consumption coming from self-provisioning in the household sector and the near absence of debt servicing or land rent as a source of household overhead, and the reduced need for an income stream to pay such overhead costs, what income comes in is free and clear, and the distinction between being “employed” and “unemployed” becomes much less severe. The worker’s livelihood becomes much like that of the English cottager before Enclosure, living independently most of the time off the common waste and fen and kitchen garden, and only periodically working at wages for money.

Unlike both Konczal and the conservatives, we of the free market left want to abolish both the welfare state and corporate capitalism. Not only do we want to restore the self-organized working class institutions of social solidarity and conviviality as they once existed in the free towns of the late middle ages, but we want to abolish all forms of artificial scarcity and privilege, like absentee title to vacant and unimproved land, restrictions on competition in the supply of credit, and “intellectual property.” We want all wealth produced by labor, which is currently appropriated by landlords, usurers, capitalists and bureaucrats with the help of the state, to be kept by labor, so that all production is undertaken in response to demand and there is no tendency toward crises of overproduction, and so that we are no longer dependent on employers or governments for the wherewithal to fund a social safety net. We want an economy in which workers’ cooperatives, self-employment, and self-provisioning in the informal, gift and household economies predominate over wage labor as a source of livelihood. And we also want all centralized, hierarchical institutions to be replaced by voluntary associations.

Speaking for myself, I would be quite content to abolish the landlords’ and capitalists’ state-enforced monopolies first, and abolish the welfare state afterward. I see the welfare state as simply a secondary counteractive to the primary injustice of state-enforced rent extraction, and on a much smaller scale — a case of the capitalists’ state cleaning up the capitalists’ mess for them. But I see the welfare state nevertheless as an evil necessitated by the state-enforced model of capitalism, and ultimately destined to wither away along with economic privilege and exploitation.

Tanto o relatório do FMI (“Redistribution, Inequality, and Growth“, IMF Discussion Note SDN/14/02, fevereiro de 2014) quanto o artigo de Schneider confundem “redistribuição” com “igualdade”. São textos que operam sob o pressuposto oculto de que a desigualdade é resultado espontâneo da operação do “mercado”, enquanto uma maior igualdade requer a intervenção estatal no mercado para redistribuir renda e contrabalancear essa tendência natural.

Esses pressupostos não surpreendem, já que são parte constintuinte da ideologia oficial da aliança entre as grandes empresas e o estado que define o sistema capitalista existente. Os atores dominantes na economia corporativista têm o interesse velado de promover a ideia incorreta de que sua riqueza e poder econômico são legítimos porque resultam de seu desempenho superior dentro de “nossa economia livre”, através da “livre iniciativa”. Os defensores do estado regulatório, da mesma maneira, têm um ineresse velado similar em promover a ideia também errônea de que a intervenção estatal é necessária para evitar o aumento da concentração de renda e das desigualdades de poder econômico.

Porém, esses são pressupostos falsos. A ação estatal de redistribuição renda para as classes mais baixas não corrige uma tendência natural do mercado à desigualdade — ao contrário, a desigualdade é resultado da intervenção estatal contínua no mercado para distribuir renda para as classes altas. A função primária do estado é facilitar a escassez de recursos, defender direitos artificiais de propriedade, monopólios, cartéis e barreiras de entrada ao mercado, através dos quais a classe dominante extrai seu excedente de renda — além de subsidiar diretamente os custos operacionais das grandes empresas com o dinheiro dos pagadores de impostos. A maior parte das rendas advindas da terra, dos lucros corporativos e das riquezas da plutocracia são rendimentos resultantes de monopólios estabelecidos e defendidos pelo estado.

O que normalmente é chamado de “redistribuição” é só uma política secundária. Dado que as políticas primárias do estado tendem a desviar a renda das classes que precisam gastar dinheiro para aquelas que o investem ou poupam, o capitalismo corporativo é tomado por uma tendência crônica e crescente ao sobreinvestimento, à capacidade excessiva de produção e ao subconsumo. Assim, o sistema é ameaçado por crises econômicas cada vez piores e pela radicalização das classes baixas, graças à insegurança econômica ou mesmo à pobreza extrema e fome.

A tributação progressiva e o estado de bem-estar — da forma relativamente moderada que existem — envolvem a tomada de uma pequena fração da renda que é redistribuída para cima e o desvio dela para baixo, de forma que sejam evitados níveis desestabilizadores de pobreza entre os mais pobres das classes baixas e que o aumento do poder de compra deles seja suficiente para reduzir a capacidade industrial ociosa. A renda “redistribuída” por políticas assistencialistas estão uma ordem de magnitude (pelo menos) abaixo da renda redistribuída originalmente pelo estado para as classes de proprietários, capitalistas, agiotas, detentores de “propriedade intelectual” e outros monopólios, e para as classes corporativas gerenciais e administrativas. É o equivalente a um assaltante dar a sua vítima o dinheiro do táxi para que ela chegue em casa com segurança, continue trabalhando e ganhe mais dinheiro para futuros assaltos.

Então, a pretensa “redistribuição” para as classes baixas é apenas um corretivo secundário à redistribuição anterior para as classes altas. A única solução realmente justa para eliminar a redistribuição para cima é deixar a competição do mercado e a cooperação voluntária destruírem as rendas da classe corporativa dominante.

Traduzido do inglês para o português por Erick Vasconcelos.

Both the IMF report (“Redistribution, Inequality, and Growth,” IMF Discussion Note SDN/14/02, February 2014) and Schneider’s write-up of it conflate “redistribution” with “equality”: They operate from the unstated assumption that inequality is the spontaneous outcome of “the market,” while achieving greater equality requires government intervention in the market to redistribute income counter to this natural market tendency.

These unstated assumptions are of course unremarkable, constituting as they do the core of the official ideology of the big-business, big-government nexus defining the existing capitalist system. The corporate economy’s dominant players have a vested interest in promoting the erroneous assumption that their concentrated wealth and economic power are legitimate because they result from superior performance in “our free market economy” or “our free enterprise system.” And advocates for the regulatory state have a similar vested interest in promoting the equally erroneous assumption that state intervention is necessary to prevent rising concentrations of economic power and disparities of wealth.

But these assumptions are not true. State action to redistribute wealth downward isn’t a corrective to a normal market tendency of inequality — rather, inequality is the result of continual state intervention in the market to distribute wealth upward. The primary function of the state is to enforce the artificial scarcities, artificial property rights, monopolies, entry barriers and cartels by which the economic ruling class extracts its rents — and not only that, but to directly subsidize the operating costs of big business at taxpayer expense. The overwhelming bulk of land rent and corporate profit, and of the plutocracy’s income, are rents on such monopolies enforced by the state.

What’s normally called “redistribution” is entirely secondary. Because these rents tend to shift income from the classes that must spend money to live to the classes that invest it or save it, corporate capitalism is plagued with a chronic and growing tendency towards overinvestment, excess production capacity and underconsumption. As a result the system is threatened by steadily worsening economic crises and by political radicalization of the lower orders resulting from economic insecurity or outright homelessness and starvation.

Progressive taxation and the welfare state — to the modest extent that they actually exist — involve taking a small fraction of the income that’s redistributed upward, and shifting it back downward to prevent politically destabilizing levels of poverty among the poorest of the underclass and increase popular purchasing power enough to reduce idle industrial capacity. Income “redistributed” through food stamps, welfare and the like is an order of magnitude (at least) less than that originally redistributed upward by the state to landlords, capitalists, usurers, holders of “intellectual property” and other monopolies, and senior corporate management and the administrative classes. It’s the equivalent of a mugger hand his victim cab fare so she can get home safely, keep working and make more money for future muggings.

So so-called downward “redistribution” is just a secondary corrective to the state’s previous upward redistribution of income. The only truly just solution is to eliminate the upward redistribution in the first place, letting market competition and voluntary cooperation destroy the rentier incomes of our corporate ruling class.

Translations for this article:

• Portuguese, A verdadeira redistribuição ocorre por detrás dos panos.
• Spanish, La Verdadera Redistribución Ocurre Tras Bastidores.