The Precariat and the Basic Income

January 26, 2015

NOTE: Images in this archived article have been removed.

Image Removed

Guy Standing has more than anyone else been responsible, as an academic and an activist, for pushing the concept of the precariat into political discourse, through his books – The Precariat (free online), The Precariat Charter, and Basic Income – and his articles and lectures. He was a guest last week in London of Goldsmith’s Anthropology Department and its recently formed Political Economy Research Centre. Anything in quotes, except the definition immediately below, was noted while he spoke, but – in the way of these things – may not be exactly verbatim.

The concept of the precariat, from Wiktionary: “People suffering from precarity, especially as a social class; people living a precarious existence, without security or predictability, especially job security.”

After he wrote The Precariat, Standing was asked to do hundreds of talks around the world. From one of these talks, the idea emerged of a Precariat Charter, timed to coincide with the 800th anniversary of the Magna Carta, which he described as being “the first class-based demand for rights and liberties against the state,” albeit that the demands were coming from the class of barons. The Charter of the Forests, two years later, was the first ecological charter.


A “great transformation”

In writing the Charter, there are some contextual starting points.

  • “Every age has had its stupidity about what is work and what is not work.” The 20th century is the only century in which labour – meaning work done by an employee for a boss – is put on a pedestal. The economist Pigou summarised the idiocy of this when he observed that if he hires a housekeeper, unemployment goes down and national income goes up. If he marries her, the opposite happens. “In 2015, we still ignore all types of work that aren’t labour.”
  • We are undergoing a great transformation. Drawing on Karl Polyani’s book of that title, we have gone through a period of “disembeddedness,” dominated by financial capital that pursues policies that detaches people from social institutions and creates insecurities – until there is a crisis. After the crisis, people are “re-embedded” in those social institutions.
  • The disembedded phase was marked by neoliberalism, and has run from the 1970s. It includes commodification, individualism, marketisation, and the systematic dismantling of all institutiions of social solidarity.
  • We’ve also seen the dismantling of other institutions, including the firm. The unbundling and the commodification of the firm has led the firm to disrupt itself and become a commodity.
  • Along with the dismantling there has been a fragmenting labour process. In the 1980s, in the space of a few years, the world’s labour supply all but quadrupled: first China, then India, then Eastern Europe, all workers used to working for far less than an American or British worker. “It unleashed the Great Convergence.” Governments responded by making a Faustian bargain: an “orgy of debt-based consumption” to prop up their economies. The bargain came to an end in 2008 – and the result since then has been austerity.
  • At the same time, the number of the top people in the world whose wealth equals that of the bottom half gets smaller every time someone does the sums. In almost every country the share of wages has gone down and the share going to profits has gone up – meaning an end to Nicholas Kaldor’s belief that these relative shares were stable in the long-run.

The four snakes

The result: there is, in Standing’s view, no real prospect of the incomes of the people at the bottom and edge of the system ever seeing a real wage increase. And more: economies have started to behave in ways that weren’t supposed to happen, at least according to economic theory. Standing calls these “the four snakes.”

  • When productivity went up, wages used to go up in parallel. No longer.
  • When employment went up, wages went up. No longer. Employment goes up, wages go down.
  • When employment went up, tax revenues from employment used to go up. Now it goes down – “a remarkable development.”
  • When profits went up, wages went up. Again, no longer true.

The main reason for this is that we’ve moved into an era of rentier capitalism. And the result is that we have the most “unfree” system of market capitalism ever constructed. So, for example, millions of patents are filed with WIPO every year – and the number is growing every year – which creates a 20-year monopoly. Copyright extends 50 years after your death, longer in some markets. Corporations have become adept at financial games such as share buybacks, which are good for the share price and not much else.

The new class

At the bottom end of the economy, as a result of all of this, we’re seeing the emergence of a new class: the precariat. (He noted that he used to be widely criticised for calling the precariat a “class”, but people mostly seem to be coming round. It’s worth looking at the argument between Jan Breman and Standing on this.)

So the new class structure goes as follows. The plutocracy is at the top – “a hugely powerful group.” Then there is a salariat, made up of the white collar corporate workers, which was once expected to become the dominant employment group. There are the professions, who tend to be project oriented. Then there is the old working class, or the proletariat. That part of the economy is shrinking everywhere in the world. Below them, there is the precariat, and then the lumpen proletariat. But it is important to remember that the precariat is not an underclass.

Distinctive relationships

The precariat is characterised by a number of things:

  1. Distinctive relationships of production: it is habituated and disciplined to accep unstable forms of labour, and of life. There is frequent innovation in forms of precarious labour, such as crowd-sharing and zero-hour contracts, which have forced wage rates down and forces employee effort up. There is no sense of occupational identity: they move between jobs and roles. They have to do a lot of work for labour that doesn’t get counted: training, networking, filling in forms, which all leads to the rise of the “precariatised mind.”
  2. Distinctive relationship of distribution: the precariat is the first class in history that has to rely almost entirely on money wages. It has no access to work-based benefits or community benefits such as the welfare state. Real wages are falling, and are fluctuating much more than they used to, and so the precariat experiences uncertainty, constantly facing ‘unknown unknowns.’ Members also suffer from acute poverty traps. Low wage jobs face a high marginal tax rate as they go into work, much higher than higher income groups or corporations. They also face precarity traps, such as (deliberate) bureaucratic delays in paying benefits.
  3. The precariat has a distinctive relationship to the state. For the first time in history we have a group that is in the process of losing rights – cultural rights, economic rights, social rights. They are being converted into *denizens*.

In summary, then, the ‘4As’ of the precariat life are alienation, anomie, anxiety and anger.

So, he argues, this “new class” is outside of the institutions of social democracy (such as trades unions). But members of the precaraiat are free of the false consciousness of thinking that your job is Nirvana. They have that freedom that comes from insecurity; just, I guess, another word for nothing left to lose. And if they are a class, they are still only a class in the making.

Composing the precariat

There are three elements to the precariat, effectively generated (this is my phrase, not his) by process of class decomposition and recompositon.

  • One group has fallen out of old working class communities. They would like to recover the past, but they know that that’s not going to happen, They are drifting to the political right.
  • A second group is made up of migrants, and the children of migrants, minorities with “no sense of home”. Every so often there are “days of rage” as seen in the 2011 riots in London, in 2013 in Stockholm – and, my addition, in the banlieue in 2009.
  • The third part is an educated minority who leave college and discover that there is no future in terms of the salariat or professional jobs they had been encouraged to expect. And this part is growing, while the first group is shrinking,

In the next post I’ll discuss what this means for political change – and how it links to the idea of a Basic Income.

The image at the top of the post is “The pyramid of capitalist society,” inspired by the famous 1911 poster by the International Workers of the World. More information at the Solidarity Federation’s website.

Andrew Curry

The Next Wave is my personal blog. I use it from time to time to write about drivers of change, trends, emerging issues, and other futures and scenarios topics. I work for the the School of International Futures in London. (Its blog is here). I started as a financial journalist for BBC Radio 4’s Financial World Tonight, before moving to Channel 4 News during the 1980s.... Read more.

Tags: basic income, the precariat