Neoliberal economies under COVID massively accelerated inequality – a basic income is key to reverse it.

Income inequality is a feature of neoliberalism in theory and in practice. In theory, neoliberal economists have argued that a free and unfet- tered market would make the most efficient use of scarce resources (Friedman, 1962; Hayek, 1944). It purportedly does so by rewarding actors unequally on the basis of the unequal effort and ingenuity they demonstrate in the market. In practice, neoliberalism has grown income and wealth inequality to levels unseen since the gilded age. Thomas Piketty’s (2014) Capital in the Twenty-First Century extensively cata- logues the evidence for this. Piketty also highlights the clear disjunction between how neoliberal theory explains and justifies inequality and how and why inequality typically develops and flourishes under actually existing neoliberal regimes.

The Covid-19 pandemic has given rise to new questions about inequality. One such question concerns whether, or how, neoliberal theory could explain the massive widening of the income gap generated, not by the market ‘doing its job’, so to speak, but by the pandemic necessitating the suspension of certain ways of working, to the detri- ment of portions of society that were already hard done by under actually existing neoliberal economies. And more than how neoliberal theory might explain it, the pressing question is how neoliberal politics would propose to deal with it. This is the central question of this chapter. I seek to explore a solution to the economic inequality that has resulted from lower-earning people losing income and taking on more debt as a result of pandemic, whilst simultaneously, higher-earning people retained a greater portion of their (disposable) income and grew their savings throughout the pandemic. This is a phenomenon I shall call "pandemic inequality".

I argue that it is possible to make the case, within the parameters of neoliberal politics today, for dealing with this inequality by giving everyone a regular, unconditional cash payment. This would be avail- able to all people, regardless of whether they work, or want to work, and regardless of where, or with whom, they live. I argue that a truly universal basic income (UBI), funded by taxing higher-income individ- uals at the requisite level, is required to stem the current and longer term economic and social impact of pandemic inequality. It would do so by raising the incomes of those at the bottom of the economic ladder at the expense of those at the top to the benefit of society as a whole. I further argue that today’s neoliberal politics can birth such a basic income although the introduction of a basic income would enable a gradual, feasible move beyond the current neoliberal order. My approach is similar to that advanced by the preeminent philosophical proponent of the idea of a basic income, Philippe Van Parijs. In his most recent tome on the subject, Basic Income: A Radical Proposal for a Free Society and a Sane Economy (2017), he argues that a basic income can be defended from every mainstream political theory, including some that he is unsupportive of as a whole. The approach of this chapter maps this by showing that a basic income can be advanced even in the context of neoliberal policy dominance although the author sees that dominance as a bad thing. In Sect. 1, I consider a character of neoliberal politics, namely its adapt- ability (or malleability) to contemporary cultural attitudes, which I think opens the door to the possibility of establishing a basic income in neolib- eral regimes. In Sect. 2, I argue that pandemic inequality necessitates the adoption of a basic income. In Sect. 3, I demonstrate the feasibility of instituting a Universal Basic Income by providing a positive appraisal of recent trials of UBI style projects across different cultures and contexts.

The Adaptability of Neoliberal Politics

Following a tradition of grounding arguments in imagined starting points popularised by John Rawls (1971) and Ronald Dworkin (1981), I will begin by sketching the picture of (the origins of) society implicit in neoliberal theory. Imagine some people suddenly finding themselves on a never-before inhabited island. They have no memories of a life before they all showed up there and they know nothing about each other, although for some reason they all recognise that there is natural equality amongst them. They are all rational, purposeful human beings and have the capacity to create concepts, not just about what their lives (individu- ally and collectively) can be, but also about what their lives (individually and collectively) should be. Each person is equally endowed with the propensity for self-advancement, although of course, it is not certain that all of them will decide to pursue it, or will be inclined to pursue it in the same way. Also, imagine that the new inhabitants of the island, despite not knowing much else, have a certain level of awareness about how the human body functions: they get hungry and they need to eat, other- wise they wither and die, for example. There are animals on this island with whom humans do not stand a chance in one-to-one combat, and our islanders are aware of this fact. They are also aware that there is day and night, and humans need to sleep a certain amount (whether it be during the day or night) in order to continue functioning. The island itself contains a limited range and amount of natural features and resources (every feature is arguably a resource, depending on what the people on the island end up making of them), from fertile ground to rich waters full of fish, to fruit-bearing trees of all kinds, and trees useful for their wood, etc. Now, it remains to be seen what the first communal action would be once each islander discovers the presence of the other people on the island. But according to the neoliberal imagination their drive to self-preservation and self-advancement will result in the islanders autonomously beginning to acquire what they believe themselves to need from the island’s natural environment, which, given their limited nature, will result in a great deal of competition. This competition over scarce resources seems to be the centrepiece of neoliberal thinking. It is also conceivable that these initial self-preserving and self-advancing actions by each of them will result, perhaps after much trial and error (or maybe after much murder and mayhem), in a collective (explicit or tacit) decision to settle on a collectively agreed-upon formula for appropriating and/or using the natural resources on the island. For neoliberals, that formula is or should be a free unregulated (or scantly regulated) market.

Something like the above story is what neoliberal theorists want to tell us about individual and social life. For neoliberal scholars like Hayek and Friedman, the neoliberal market is the formula that should be chosen by the island-dwellers in the story. According to neoliberals, we are all individually endowed with talents and the propensity for hard work. We possess a drive to self-advancement and strive to achieve our own interests in competition with other people striving to achieve theirs. As George Monbiot (2016) argues, neoliberals believe that competition is the ‘defining characteristic of human relations’. Or, put another way, in society, to the extent that neoliberals will admit to the existence of one, ‘men and women need only follow their own self-interest and compete for scarce rewards’ (Metcalf 2017). Neoliberals view society as a kind of “universal market” and the human beings in society as “profit and loss calculators” (Metcalf, 2017). The goal, as they see it, is the most efficient use of natural resources present in the world, and for this to happen, they argue that we need a market. But not simply any market. What is presented as crucial is a market that is unfettered by the state and allowed to function as freely and competitively as possible. Without state interference, neoliberals argue, markets will, almost naturally, ensure that optimal use is made of all of society’s resources; resources will end up with those who need them the most, or can take the best advantage of them. Price is a crucial concept in this connection. As Metcalf (2017) suggests, ‘prices are a means of allocating scarce resources efficiently, according to need and utility, as governed by supply and demand. For the price system to function efficiently, markets must be free and competitive.’ In a free market, the worker will earn what the market can clear. Put differently, the employer will pay nothing but the wage a worker will accept (which could end up being as low or as high as competition for scarce or plentiful jobs require). The wage for a job will thus be set by the demand for that job. If some of people in our story above want the same job, the market-clearing price for that job is the least amount one of them will accept in order to do it. In theory at least, those with the highest incomes are those in jobs with the smallest pool of qualified candidates, or those who have created a business and figured out ways to make lots of money from exploiting “legitimate” market forces. On the neoliberal matrix, these would be the highly-skilled and the entrepreneurs. The reverse is also true. Whether one fails in that matrix depends on what one has made of their natural endow- ments: how hard they’ve worked, which skills (and at what level) they’ve acquired, and how ingenious they are in navigating the market. There is no moral facet to this neoliberal story, except perhaps to the extent that interferences with the market order are seen as stifling the rights of indi- viduals and high taxation is seen as theft, and therefore immoral (Bloom, 2017).

There is a significant gap between this neoliberal theory and what one might call neoliberal political practice. That is, there is a gap between how Hayek spoke about society and how Bill Clinton or David Cameron spoke about it. For example, while on one hand ‘theoretical’ neoliberals might complain about the fact that most markets in the West are regulated to some extent, including regulations that permit labour organising, an activity, which from a neoliberal point of view could “distort” the price of labour, on the other hand, neoliberal politicians, while subversively under- mining each of these regulatory tools, will seldom outwardly make the case against them. There is likewise a significant gap between why people actually end up where they do economically, and the reasons neoliberals offer. Critics of neoliberalism might observe that luck (including being lucky to be born at a particular time, place, or into a particular ethnicity or family, or even with certain talents) plays a crucial role, for example. Historically, access, or proximity to, power, political or social, has similarly been shown to dictate “market” outcomes. But broadly speaking, despite this disjunction between theory and reality, the ideological (Friedrich Hayek and Ludwig Von Mises) and political (Margaret Thatcher and Ronald Reagan) godparents of neoliberalism have arguably achieved what they set out to achieve, namely, ‘lower taxes on the rich, deregulation of labour and product markets, financialisation, and globalisation’ (Stiglitz, 2019). And neoliberal dominance over economic policy in the West today is without question.

So what has neoliberalism’s dominance historically produced? As Nobel Prize winning economist, Joseph Stiglitz (2019) points out, this multi- decade experiment has led to economic stagnation and has seen dispro- portionate amounts of incomes ‘accrued … [at] … the very top of the income scale’. In some ways that was, of course, very much what the godparents of neoliberalism (true believers, all of them) expected. Once the state is out of the way, the market will sort us all out depending on what we bring to it and how well we operate within it. There will be winners and losers. For them, the game is not wrong just because some people lose. Losers don’t get a right to end the game just because they lost. This attitude compliments the neoliberal pioneers’ approach to state welfare. They saw welfare for the poor as dependency-generating and enslaving, and made it their mission to dismantle the welfare policies of previous, more collectivist governments.