Homo Oeconomicus 31(1/2): 147-157(2014) 147

www.accedoverlag.de

Basic Income for All: Unaffordable Dream or

Real Option for a Civil Society? 1

Peter Ulrich
Institute for Business Ethics (IWE), University of St. Gallen, Switzerland.
(eMail: [email protected])

Abstract: In the debate on basic income, questions of normative guidance are

often confounded with questions of financial feasibility. Even though financial
feasibility is important in the overall view, we must not forget that basic income is
essentially intended to be an element of a fair society and not a measure of
economic policy. To systematically distinguish between the two questions it is
expedient to proceed from the idea of a basic income implemented without
changes in welfare state expenses. Basic income will probably not be instantly
sufficient for subsistence under this restraint. However, this goal can be
pragmatically pursued as a dynamic project for generations, if we are convinced of
its normative preferences.

JEL Codes: I 31, I 38

Keywords: Basic income, civic society, civilized market economy, emancipatory

politics, welfare state.

1. Introduction

This is financially not feasible! Such is the reflex response to nearly all
proposals that aim at a more just (or at least a somewhat less unjust)

1
Translated, with the help of the author, by Ulrich Steinvorth; the translation is
authorized by the author.

2014 Accedo Verlagsgesellschaft, Mnchen.

ISBN 978-3-89265-114-7 ISSN 0943-0180
148 Homo Oeconomicus 31(1/2)

society and thus imply social redistribution; hence, also to the idea of an
unconditionally granted basic income. The response is usually based on
cost-benefit analysis of an economy, that is, from a (Pareto) efficiency
point of view. However, if the issue is social justice, economic arguments
against social redistribution are of relative validity only. From the
viewpoint of economic ethics it is a common yet grave category mistake to
reduce justice to efficiency. Rather, justice and efficiency are two
fundamental dimensions of rational economic activity or socio-economic
rationality (cp. Ulrich 2008: 105ff.).
Indeed, efficiency handling scarce resources and goods with
economic rationality is inextricably pegged into the question of justice
handling social conflicts with ethical rationality: for whom is an
arrangement efficient and at whose expense is it made? Judged by ethical
and political priorities, justice in the basic constitution of a society
precedes efficiency of a national economy. So before discussing the
financial feasibility and limits of a basic income, we have to clarify the
issues of economic and social ethics and politics.
In any case, what is perceived as affordable or unaffordable always
depends on value judgments about priorities, hence on normative premises.
Superficially, in what is called realpolitik, there is a debate on the
distribution of monies, but on a deeper level, there is a clash of
incompatible worldviews, life designs, and social ideals. In a chaotic mess
of questions of fundamental orientation how in the future do we want to
live together in a good and just way? and of questions of pragmatic
feasibility how can this be implemented and financed? all too often
new ideas of orientation fall by the wayside. For, as a rule, in real politics
decisions are made by those who hold the reins of money (and defend their
privileges) rather than by the heads with the best ideas.

2. Quality and quantity

To counter the mess, first of all it is useful to disentangle things in thought.

It makes sense to distinguish between the qualitative question of the
meaning an idea such as that of an unconditional basic income has for a
future sustainable society, and the quantitative question of the gradual
implementation, of the specific amount of a basic income.
Methodologically, the idea suggests itself first to design and evaluate the
new quality of an unconditional basic income on a level that is cost-
neutral compared to the status quo of a welfare state. That is, we start
from the working hypothesis that introducing basic income does not
change the proportion between the presently existing and democratically
legitimized state expenses for social welfare and the gross domestic
product (cp. Jrimann 2010, Kndig 2010). Thus, we can discuss the pros
P. Ulrich: Basic Income for All 149

and cons of the idea of a basic income independently of questions of

financial feasibility. If we approve this new idea of social progress, then
we can discuss pretty pragmatically the economically feasible quantitative
level of the implementation in real politics. So, perhaps, as a result, after
cautious first steps into the implementation at a later time, when positive
experiences have accumulated, the amount of the basic income can be
gradually raised.
It is crucial first to qualitatively change fundamental principles of social
organization. My basic claim is: Basic income is not a matter of traditional
compensatory social policy but of an emancipatory society into which we
have to embed a literally civilized market economy (Ulrich 2010). Wed
nip the fundamental socio-political import of an unconditionally granted
basic income in the bud if we considered it as just another form of welfare
state redistribution or even simply as a means to quantitatively increase
redistribution.

3. From compensatory social policies toward emancipatory politics

Traditionally, social policies are based on demand or need (on welfare in a

broad sense) in the main. Such policies fight the symptoms of an
increasingly unequal primary distribution by means of welfare state
redistribution in hindsight, without changing at all the causes of the
increasing neediness of more and more people. The root of the evil is
chronically high unemployment and the wage pressure originating in the
global competition between regions and spreading the situation of working
poor. Today, unlimited employment contracts and uninterrupted
biographies of employment in well paid jobs with full social security, once
the rule, have become the privilege of a minority in most OECD countries.
This is particularly conspicuous in Germany. We are undergoing a new
precarization of the world of employment that bites into former middle-
class strata with qualified professional educations, resulting in a more or
less creeping or galloping loss of civil status, life style, and self-
confidence. Not only they but also an increasing majority of the population
more and more feels that the conditions are unjust. Consequently, the
existing societal relations suffer a profound loss of legitimacy. Empirical
evidence was unambiguous and gloomy even before the financial and
economic crisis (cp., on Germany, e.g., Vehrkamp and Kleinsteuber 2007).
This spreading socio-economic reality partly is hidden by the present
compensatory social policies, but partly even exacerbated think of Hartz
IV and other doctrines of workfare. Putting the needy under the
increasing pressure to accept an employment despite lack of workplaces
and shunting them in a dubious but fast growing low-pay sector, the
welfare state tends to degenerate into a welfare police state. Nevertheless,
150 Homo Oeconomicus 31(1/2)

despite rising costs (paid in fact by whom?) the welfare state more and
more desolately lags behind the widening gap between rich and poor.
Where will this journey lead to in the end?
In contrast, emancipatory politics tackles the central cause of the mess,
the traditional linkage of income distribution to market-controlled
employment distribution, a linkage that at least exists for all people who
cannot live off yields of capital. In the present late stage of industrial
society, the labor market cannot cope with this double task. The present
stage is characterized by the tightening of good, stable and decently paid
employment offers due to the progressive rationalizing of all jobs that can
be mechanized, automated, or computerized as well as to their transfer to
more cost-effective threshold countries as part of the global competition
between regions. Under these conditions, the anachronistically tight
linkage of income distribution to the labor market requires denying or even
fighting the social potential of progress implied in the economic increase
of productivity, as the anachronistic ideal of full employment is
propagated to prevent the disintegration of society along with all its
threatening consequences (loss of legitimacy of the market economy,
macro-economic crises, social unrest, and in the end the danger of
authoritarian suppression of democratic reform efforts). Still, real
politics, no longer very realistic, unperturbed banks on economic growth
and the long-known politico-economic recipes, even though these recipes
have caused the social problems in the first place and go on aggravating
them. In fact, in this politics of trying more of the same a fox is set to keep
the geese because our main problem today is not lacking economic
productivity and competitiveness. Rather, the problem is the qualitatively
insufficient coping with the social implications of a highly productive
economy. So it is not an economic but a sociopolitical problem.

4. Civil society beyond capitalism and laborism

Today, what is at issue, under fast changing socioeconomic conditions, is

to restore an institutional framework of the market economy (as a system
that in itself is highly productive) conducive to a good life for all members
of society, by means of a more intelligent social organization. For many
people it seems difficult to recognize and acknowledge the maturity of
such a leap in quality, mainly because such recognition is opposed by
normative convictions. The opposing convictions are comparable to the
two sides of a coin. On the front it shows a capitalist imprint (motto: The
value added in a cooperation based on the division of labor belongs to the
owners of capital, after compensation of all other factors of production).
On the back, the coin shows a laborist imprint (motto: He who does not
work, neither shall he eat).
P. Ulrich: Basic Income for All 151

This linkage of the distribution of the social product to the distribution

of gainful work running short and primarily offered or reduced according
to capitalist interests is not wrong as far as it corresponds to the principle
performance should pay off. But by todays standards, the linkage is too
dominant, as two factors have a tyrannical impact (Walzer 1983: 17ff.)
on the entire human life: (a) the capitalist factor of being born into a
wealthy family and inheriting capital assets or of not being born into
such conditions, (b) the laborist factor of having inborn talents at ones
disposal, of having gotten a good education and being successful on the
labor market, allowing a good and stable income or of lacking all this.
Both factors foil the ideal of a truly civil society. A civil society is
based on the unconditional mutual recognition of all citizens as being free
and equal. This civic status must not be undermined by grossly different
life conditions. The struggle for existential self-assertion in market
competition must not render the civic form of life a privilege of the
successful this is the basis of welfare state merits that civil society claims
for itself. The (capitalist) principle of heritage is compatible with the
principles of a well-ordered society of free and equal citizens only with
restrictions. Strictly speaking, it is a (neo-)feudal principle of assigning
privileges anyway that without restrictions makes a mockery of the liberal
performance principle and the postulate of equal opportunities.
However, also the performance principle, if made absolute, will lead
astray; not only because it does not take account of the under-achieving but
also because it contradicts an elementary economic insight: in an economy
based on a complex division of labor the social product is the result of a
social and joint achievement indeed, which principally excludes an entirely
individualized assignment of achievements. How absurd the attributions of
an exaggerated individualization of the distribution of the social product
have become is sufficiently shown by the exorbitant performance-linked
payments and bonuses of top managers who appear to attribute the gains
(yet rarely the loss), produced cooperatively by all the employees of a firm,
by and large to themselves as their individual achievement. In contrast,
they are capable of perceiving the wages of their cooperators only as costs
which are generally known as a matter of minimization for the sake of
maximal profits Thus, as part of a neoliberal mindset and politics of
deregulation, in the last thirty years the share of wages in the social
product of nearly all countries has distinctly fallen and the share of net
income from business and assets has risen. Impressive numbers attesting to
this development of the last three decades using the example of Germany
are adduced by Afheldt (2003).
Considering these developments, what is at stake today is not only to
unfold but first of all to uphold a civil society that is still worth the name.
From its inception, the decisive starting point of the idea of a society of
152 Homo Oeconomicus 31(1/2)

free and equal citizens was to strengthen the rights of citizens and thus to
make the citizens really free. This seems to me to be the epoch-making
sociopolitical perspective in which to clarify and discuss the idea of an
unconditional basic income for all citizens: as a possible contribution to an
economic and social system that allows as many citizens as possible a
really free and autonomous conduct of life and thus protects civic society
against a relapse into a pre-modern, neo-feudal society. Such a society
would be socially disintegrated, split into unbridgeable life conditions and
opportunities, with classes that depend on the families and the social layers
they have been born into.

5. Unconditional basic income as an economic citizenship right

For the sake of a truly civil quality of the society, today the important thing
is to establish, beyond the basic personal rights and the rights to political
participation, appropriate economic and social citizenship rights; rights not
only for all nationals but also for all economic citizens. Economic citizen is
everyone who has the right of work and residence in a state, actually has
the residence in it, and last but not least discharges his or her tax liability.
Thus, economic citizenship rights are defined neither by nationality nor the
mere residence in a country but the actual (and legal) participation in the
economic production process. A universal basic income is to be
understood as such an economic citizenship right; so the set of
beneficiaries would be clearly defined by the criteria mentioned (cp. Ulrich
2008: 240ff.).
There are even two socio-economic aspects that suggest, today more
than ever, introducing an unconditional basic income as an economic
citizenship right. First, as explained, the labor market is no longer capable
of offering a decently paid workplace to everyone able or (because they
need the wages or for other reasons) willing to be employed; thus, it fails
to secure every citizens fair share in the social product. Second, an ever
greater part of the social product is no longer distributed by the labor
market (as wages) anyway, but is flowing, as returns on equity, for the
most part to a small stratum of capital owners. To correct both of these
aberrations, in my opinion we have to shift the distribution of the social
product to a sustainable three-tier-model. According to this model, civic
income (a base income every economic citizen has a right to) plus wages
(for gainful work) plus capital income (from assets) make up the total
income of every citizen. A balanced three-tier-model of the distribution of
the social product requires a politics of an adequate participation of as
many citizens as possible in all three tiers, that is, a literally civilized
politics of basic income, labor and capital assets. Of course, the details of
this distribution are to be determined by democratic procedure.
P. Ulrich: Basic Income for All 153

It is in the frame of such a three-tier model that a universalized basic

income, whether at an amount that secures subsistence entirely or only
partially, may in many respects convince as an element of a progressive
social politics (though not the only saving one). We can succinctly list its
essential interactions, without explicating them thoroughly. (For an
overview, see Vanderborght and Van Parijs (2005).) Unconditional basic
income
makes it possible for the majority of the population, the financially
weak, to emancipate themselves from the coercion to sell themselves,
during a fully employed working life, on the labor market at almost
any price (in Germany literally for 1-Euro-jobs);
relieves the labor market of those employment seekers who seek a full
time job only to secure their subsistence, and offers to many people a
chance to choose a workload that fits their individual or family
conditions and their stage of life;
makes, with its increase, an ever greater part of the traditional
compensatory social benefits superfluous and thus efficiently resolves
the poverty problem;
saves, with its increase, more and more citizens from the fear of being
humiliatingly stigmatized as a welfare case and grants them the
existential security appropriate to a progressed society;
thus liberates people from the traditional mental fixation on the daily
struggle for bread, triggering a profound cultural impulse (Kultur-
impuls, see Werner 2008: 74ff.) in the direction of a post-laborist
activity-oriented society;
has interesting macro-economic effects, as the more equally distributed
purchase power and the end of existential fears stabilize the propensity
to consume and the (domestic) economy.

6. Basic income for all gross and net

Lets have a short glance at the quantitative implementation in the

following, after having kept it flexible in our reflection until now. What is
the part of the social product that can be made available for the tier of the
basic income without breaching the welfare state cost neutrality postulated
above? To get a strict conception of this neutrality we start from the share
of social benefits, defined by international rules as the share of social
expenditure minus administration costs. In Switzerland, for instance, this
share makes up somewhat less than 25 percent of the gross domestic
product (GDP). The Swiss GDP in 2013 amounts to pretty exactly CHF
600 billion, which results in a per capita monthly income of around CHF
6250 for every resident of Switzerland. Hence, the existent share of social
benefits amounts to a little more than monthly CHF 1500, which could be
154 Homo Oeconomicus 31(1/2)

used as a basic income if the shift to basic income is ideal typically

complete.
However, those citizens who without basic income own a rich income
from wages and/or capital, can and should return their basic income,
partially or entirely, in form of higher taxes or in the case of a more
transparent mutual funds solution to fund and distribute basic income in
form of a special payoff, in analogy to the AHV funds (a Swiss social
security funds). What is left to the diverse income layers as a net value
depends on the form of tax tariffs or the special payoffs, which of course
have to be adapted to the amount of basic income. The gross income can
be assessed to be correspondingly higher. For example, if in the net
calculation half of the population return the basic income entirely and a
quarter return it partially (half of it on the average), then according to the
guidelines of the Swiss Conference for Social Benefits (SKOS) a basic
income that secures livelihood of around CHF 2300 to 2500 can be
granted, as has been calculated by Jrimann (2010). A more modest basic
income requires less steep tax compensations. It is up to democratic
politics to decide on this question, of course with due regard to the
economic side effects.

7. Basic income as a dynamic generation project

Due to the fact that the complex dynamics of the cultural, social and
economic effects of basic income are hardly predictable in detail, there are
some reasons to plan its introduction as a dynamic generation project and
to start with a partial basic income that at first cannot yet secure
subsistence but nonetheless liberates to some extent from the inherent
necessities of self-assertion on the (labor or entrepreneur) market. It is here
appropriate to remember Van Parijs (1995: 38ff.), who always has pleaded
for an economically sustainable basic income. For some decades, such a
basic income may be less than the cultural existence minimum, measured
by the usual standards. However, the further progress of productivity
would win back a horizon of meaning serving life and society. Rather than
being felt as causing unemployment it would be felt to allow successive
increases of the unconditional basic income.
Thus, experiences with the complex impacts on the economy and on the
life projects of the citizens could be made and taken into account step by
step. In contrast, abrupt changes of the system might be disastrous in
particular for the weaker people, especially if strong bandwagon effects
on the wage level or massive financial gaps occurred.
A partial basic income does provide a partial liberation from the
coercion of finding an employment after all and still might avoid abrupt
and possibly uncontrollable, macro-economic crisis effects and cautiously
P. Ulrich: Basic Income for All 155

start socio-cultural and politico-economic learning curves. Within a

period of experience and testing, whose length would be democratically
specified, basic income, if experience is positive, could successively be
built up to an amount sufficient for subsistence. In return, the present need-
based compensatory benefit systems could successively be reduced to zero,
except for special benefits in cases such as invalidity that require higher
expenses and have arisen through no fault of ones own.

8. A Swiss path to the basic income for all

Lets finally return once more to the special qualitative perspective in the
Swiss context. Perhaps in no other country can the idea of an economic
citizenship right to basic income connect to existing civic traditions as
immediately as in Switzerland. The distinct republican spirit and the direct
democratic procedures of decision-making have produced numerous
institutions that express the principles of civic autonomy and equality as
well as of the cooperation and solidarity of civil society. They can be built
on; indeed, they shape the elements of citizens rights already existing in
the Swiss welfare state (Patry 2010). In particular, the Alters- und
Hinterlassenen-Versicherung (AHV), the insurance for old-aged and the
bereaved, comes fairly close to the idea of a basic income for no longer
employed seniors, since all economic citizens (not only Swiss nationals but
also foreigners who are or have been residents in Switzerland) receive the
minimal pension in the amount of no less than half the maximal pension if
during the necessary years of contribution they have regularly paid their
modest, nearly just symbolic premiums. This strong element of solidarity
of an old age insurance for all citizens (rather than just an insurance
against loss of income) is financed by those members of society who pay in
the full shares of their high labor incomes, whether they earn them as self-
employed or as employed persons. Because of this universalistic aspect of
an insurance including all economic citizens (even though it is limited to
their old age for now), this first tier of the Swiss old-age insurance
increasingly attracts interest also in foreign countries as a model of a soft
garantism (Opielka 2005).
Thus, for Switzerland, the proven and highly efficiently administered
AHV might well become the nucleus of a future basic income system (cp.
Ulrich 2007). The minimal pension of the present AHV might serve as a
basic income for all adults before their retirement age, an income that
admittedly does not yet secure subsistence, hence is only a partial basic
income. It could be gradually introduced by successive extension of the
entitled age cohorts from the present AHV-age down to the younger
cohorts and at the same time by successive extension, from the young to
the older, of a child- and education pension, still to be introduced (for
156 Homo Oeconomicus 31(1/2)

instance at the amount of a quarter or half of the basic income for adults).
In this way, those hardest threatened by poverty and unemployment
(people beyond the age of fifty, job starters, and children from financially
weak partnerships) would become relatively soon entitled to basic income.
Only after universalizing over all cohorts in a next pragmatic step the
gradual increase of the universal basic income would be put up for debate.
If in addition the Swiss system of blanket supplementary benefits, also
reliable because it is oriented towards basic rights, is in advance extended
to all cohorts, this will contribute to a faster reduction and supersession of
all other social transfers based on proofs of need. Such blanket needs-
based minimum benefits can be conceived as equilibrium between an
unconditional citizenship claim right on one extreme and forms of benefits
dependent on case, problem area and discretion on the other extreme. The
base income paid to everyone is to be assessed so as to allow the vast
majority of the citizens to get along without problems and only a small
minority, continually shrinking with the successive increase of the basic
income, has to apply for additional support. The claim right to such a
civic income supplement (Brgergeldzuschlag, see, e.g., Opielka and
Strengmann-Kuhn 2007: 111) is to result from a limited number of more or
less blanket, non-stigmatizing criteria (in particular taxable income and
family situation). Such a two-tiered approach will be expedient at least for
a transitional phase.
Following the outlined path, the specifically Swiss form of civil society
may open up the chance for this country to belong once more to the
vanguard of an epochal sociopolitical innovation a country that was a
beacon of Enlightenment and the progress of civilization because of its
successful liberal citizens revolution, when establishing Switzerlands
federal constitution in 1848. Actually, a popular initiative for a
constitutional amendment in favor of an unconditional basic income,
though in a rather abstract formulation, has come about in fall 2013 by
more than the necessary one hundred thousand signatures and will likely
be balloted in 2015. Even though, considering the massive resistance to be
expected from those who still think in both capitalist and laborist terms and
cling to the model of an industrial society, the chances of acceptance are
rather small, yet the initiative already now has triggered a broad public
debate. Perhaps, in a first step, in the debate the epochal political will to
democratically implement the option of a civil society of the 21st century
will unfold. Without doubt, in this initiative, a dynamic approach to basic
income rather than a dogmatic one has a better chance to pragmatically
convince a majority, at least in a country like Switzerland where the people
have the final say.
P. Ulrich: Basic Income for All 157

References

Afheldt, H. (2003), Wirtschaft, die arm macht. Vom Sozialstaat zur

gespaltenen Gesellschaft, Munich: Kunstmann.
Jrimann, A. (2010), Das Verrechnungsmodell (Clearing-Modell), in:
BIEN-Schweiz (eds.), Die Finanzierung eines bedingungslosen
Grundeinkommens, Zurich: Seismo, pp. 60-86.
Kndig, B. (2010), Mischfinanzierung eines Grundeinkommens in der
Schweiz, in: BIEN-Schweiz (eds.), Die Finanzierung eines bedin-
gungslosen Grundeinkommens, Zurich: Seismo, pp. 29-59.
Opielka, M. (2005), Der weiche Garantismus der Schweiz. Teilhabe-
rechte in der Sozialpolitik, Bulletin des Schweizerischen Nationalfonds
zur Frderung der wissenschaftlichen Forschung, NFP 51, Nr. 2, Bern:
Schweizerischer Nationalfonds.
Opielka, M. and Strengmann-Kuhn, W. (2007), Das Solidarische
Brgergeld. Finanz- und sozialpolitische Analyse eines Reform-
konzepts, in: M. Borchard (ed.), Das Solidarische Brgergeld.
Analysen einer Reformidee, Stuttgart: Lucius & Lucius, pp. 13-141.
Patry, E. (2010), Das bedingungslose Grundeinkommen in der Schweiz.
Eine republikanische Perspektive, St. Galler Beitrge zur Wirtschafts-
ethik, Volume 45, Bern: Haupt.
Ulrich, P. (2007), Das bedingungslose Grundeinkommen ein Wirt-
schaftsbrgerrecht? Paper at the 2nd Deutschsprachigen Grundein-
kommenskongress, Oktober, 5-7, 2007, at Basel, http://www.archiv-
grundeinkommen.de/ulrich/20071007-PUlrich-Basel.pdf, and
http://www.alexandria.unisg.ch/publications/42105.
Ulrich, P. (2008), Integrative Economic Ethics: Foundations of a Civilized
Market Economy, Cambridge/New York: Cambridge University Press.
Ulrich, P. (2010), Zivilisierte Marktwirtschaft. Eine wirtschaftsethische
Orientierung. Neuausgabe, Bern: Haupt.
Vanderborght, Y. and Van Parijs, P. (2005): Ein Grundeinkommen fr
alle? Geschichte und Zukunft eines radikalen Vorschlags, Frank-
furt/New York: Campus (orig.: LAllocation Universelle, Paris:
Editions La Dcouverte 2005).
Van Parijs, P. (1995), Real Freedom for All. What (if anything) can justify
capitalism? Oxford: Clarendon.
Vehrkamp, R.B. and Kleinsteuber, A. (2007), Soziale Gerechtigkeit 2007.
Ergebnisse einer reprsentativen Brgerumfrage, Gtersloh: Bertels-
mann.
Walzer, M. (1983), Spheres of Justice: A Defense of Pluralism and
Equality, New York: Basic Books.
Werner, G. (2007), Einkommen fr alle, Kln: Kiepenheuer & Witsch.
Copyright of Homo Oeconomicus is the property of ACCEDO Verlagsgesellschaft and its
content may not be copied or emailed to multiple sites or posted to a listserv without the
copyright holder's express written permission. However, users may print, download, or email
articles for individual use.