Rethinking capitalism in Switzerland

Ever since the deregulation of the world’s financial centres in the 1980s, politicians and economists have puzzled over the inequality that has accompanied, and often undermined, the neoliberal vision that lies at the heart of globalization. Although stock markets have soared on both sides of the Atlantic, income disparity has grown too large to ignore and nearly every Western democracy has produced angry grassroot critiques of the new system.  After the 2008 financial crisis, the Occupy movement turned the public’s main grievances — housing foreclosures, a lack of credit for small businesses, unemployment — into slogans about Wall Street’s manipulation of the system to  “privatize the profits” of its exotic new financial products and to “socialize the losses” whenever its fortunes were threatened by a market correction. The Occupy movement raised awkward questions about the US government’s willingness to neglect the “99 percent” whose future was being repeatedly jeopardized by plutocrats with undue political influence.

After some initial success, the Occupy movement lost momentum. Its lack of leadership and the vagueness of its demands made it easy to dismiss; few were surprised when the protests dissolved after a couple of months without achieving any noticeable results. An overhaul of Wall Street and a change in the way the US government tackles poverty, welfare and social inequality seemed too ambitious for few thousand loosely organized protesters, even though they had altered the public conversation for a little while.

A few years later, however, it seems as though one of the Occupy movement’s main ideas is not only alive and well but en route to a referendum in one of the most sober and conservative parts of Europe. The Basic Income Initiative headed by the activist and filmmaker Enno Schmidt has gathered signatures from 100,000 Swiss citizens asking their government to consider dispensing a US$2,800 monthly income (a little more than 40 per cent of the country’s average per capita income)  to every citizen—with no strings attached.  (The equivalent figure in the United States would amount to approximately US$1,750.)

Schmidt describes the initiative as a way giving each person the breathing space to pursue jobs that are fulfilling, rather than forcing them into the labour market in order to pay their bills. Surprisingly, he cites the 1960s  “negative income tax” proposed by Milton Friedman — a leading neoliberal economist — as one inspiration for the new measure.  Unlike the Occupy activists, however, Schmidt has no time for arguments about class warfare, nor any interest in efforts to curb executive compensation. For him a Basic Income would acknowledge the value of each citizen, as a basic human right, rather than act as an ideological strike against the rapacity of unfettered free markets.

Proponents argue that a Basic Income could be financed by taxes on consumption and that rather than harming productivity it would incentivize people to pursue skilled jobs that would let them earn more and raise their standard of living even higher. There is already evidence from similar, limited initiatives in the US — from municipalities in several states that tried a version of Friedman’s negative income tax in the 1960s and 70s — that these schemes can work. In 1980 Alaska established an extremely popular Permanent Fund to share its oil wealth through annual payments that went directly to each citizen. Furthermore, a recent project  in Kenya called “Give Directly” — partly funded by Google and Facebook — also  found that people who received reasonable amounts of money (US$1,000) with no strings attached, tended to use it for essential repairs and investments rather than simply squander it — as many modern economists have feared they would.

Like any other radical change, the basic income initiative will undoubtedly face political compromises before it can be implemented elsewhere. However, it is worth noting that the proposal does not fall neatly onto either side of the ideological spectrum — where else can neoliberal economists and anti-globalization activists both claim partial ownership of an idea?  It is also being considered seriously in one of Western Europe’s least adventurous countries, historically speaking. Enno Schmidt’s emphasis on the need to recognize the worth of each citizen is a welcome advance on both the reductive approaches of neoliberal economics, which tends to view every political question only through the lens of market forces, and to the unfocussed compassion of the anti-globalization movement, which has excelled at pointing out the flaws of modern capitalism but proved much less capable of providing feasible alternatives.

If the Swiss can make the Basic Income initiative work, the innovation could prove to be politically transformative, not least because it would make it much harder for any other government to argue against the economic wisdom of pursuing a similar strategy amongst its own population.

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