Photo by Katarzyna Wolnik/Shutterstock.com
Resuscitate me, so that no one is no longer
forced to make sacrifice for a house, a hole
And that which then will be revealed to the peoples
Will surprise all not because exotic
But because it will have somehow remained hidden all along
As it will have always been the obvious
In acute crises, the hidden – truths long buried by the uncritical repetition of life or by ideology – often blooms as the obvious. A few weeks of the coronavirus pandemic sufficed to dispel two myths of vulgar economic thinking. No, governments are not limited to spend what they collect, because they wield the power to issue money (and they do so, especially, to save banks). Yes, it is possible to offer human beings money not linked to work. Nowadays, even the most retrograde governments recognize these facts. In the USA, Trump speaks of the “1,500 dollar check” given to those most affected by the crisis. In Brazil, the Federal Deputy Chamber rejected on March 26 the pittance proposed by president Jair Bolsonaro and economy minister Paulo Guedes, the R$6,66 a day “quarantine voucher”), taking a small but very important step towards a Citizen’s Income.
But there are two main problems with such arrangements. First, they are both limited in time and meager in value, thus unable to secure a dignified life – in particular, in times of pandemic and the collapse of economic activity. Second, they come as the smallest part of huge rescue packages benefiting financial casinos. In this sense, they are more akin to indirect measures designed to help out big business. The population will receive the proposed resources and immediately spend them buying goods and partially settling debts, thus permanently dependent and disempowered. Meanwhile, the Sates are pouring infinitely greater volumes of money to rescue speculators with elephantine bets in the financial markets – exactly those who led us into the present crisis in the first place. In other words: if the present policies are maintained, the West will emerge from the crisis with a lot more inequality and (worse!) a lot more power in the hands of the financial aristocracy, who thirty years ago kidnapped the economy and politics itself.
This text will champion two ideas opposed to such logic – a proposal for immediate application, and a provocation for long-term reflection. First: we need to establish a universal Emergency Citizen’s Income, egalitarian and dignified. It will be paid to complement – and not in substitution of – regular incomes. Its value should be sufficient to protect citizens from the health crisis, (allowing them to remain at home) and from the probable coming economic depression (lest they should perish from the lack of money in a mercantilized society, or those who find themselves bankrupt a few months ahead).
A good initial hypothesis about this Income: a monthly payment around the per capita GDP of each country. In Brazil, it would be R$ 100 a day, or R$ 3,000 monthly [US$ 560: 1USD = 5,35 BRL], for the whole population in the first phase, while the pandemic lasts. The value may seem exaggerated at first glance; but in the course of the text it will become clear that it is not. For the great majority of families, such income will be well above what they get today from their employers or from their own businesses (the monthly family income amounts to R$ 5,426.70, but, due to inequality, 73% earn less then that and 23.9% less than twice the minimum wage). For a small majority, it will amount to little or nothing (the richest 1% earns in average R$ 27.7 thousand a month, and the top 0.1% R$213.6 thousand, or US$ 39,925!). Besides covering the month’s expenses, the Emergency Basic Income will be, therefore, the first movement of great relevance to reduce the abyssal inequality that has stained Brazil for 500 years.
But where is the money coming from? This is the question immediately posed. And the answer should be equally immediate and clear: it will be created out of thin air! Not a cent will be chipped off the Health and Education budgets, or off infrastructure projects, Pensions or civil and military servants’ wages. The Central Bank will pay 700 Social Reals (S$700), each Sunday, into individual accounts created directly – no mediation by private banks – for each Brazilian citizen. They will be accessed by means of an application (those less digitally able will get bills printed as traditional money), endowed with compulsory acceptance and identical purchasing power to common currency.
But, is it possible to print currency out of thin air at all? This question brings us to the most exciting – and potentially transforming – part of the argument. Nearly all of contemporary currency is created out of thin air. The crisis rendered this truth evident, not visible in normal times. On March 12, as the shudderings of the financial markets increased, the USA’s Central Bank (the Federal Reserve, or the Fed) announced, without a hint of debate in Congress or in public opinion, the first big “rescue” intervention. From thin air and without an iota dropping from the country’s budget, 1.5 trillion dollars was created in order to prop up the corporations and banks in crisis. Since then, central banks all over the world have announced that they will produce “unlimited amounts of money”, in order to save speculators and to keep the casinos open. In Brazil, minister Paulo Guedes’ has announced a package of assorted measures, but, on the whole, the bundle allows the financial markets to use R$1.2 trillion – which would amount to R$6,000 to each Brazilian person. The “way out” operated by the States, in order to preserve the global casino that kidnaps economies, is to protect (and further enrich) the very speculators whose greed fed the crisis.
The alternative demands breaking a taboo. Nothing less than the reinvention of currency is at stake. This article will show that currency has lost, in increasingly accelerated ways in the last thirty years, the status of “unit of account”. This technical term designates the Commons aspect embedded in money. It features as the necessary lubricant that propitiates the smooth turning of wealth production and circulation. It renders viable a myriad of economic and social relations that, without it, would be arduous and unnecessarily complicated: buying a shirt, selling a video editing service or renting a house, for instance.
But money is, at the same time, “value reserve” and, under this guise, is a tool of inequality and alienation. It consolidates, amplifies and multiplies wealth differences. It subordinates those who do not have it to the command of those who hoard it. It naturalizes this submission: if I work in a land mines factory, thus involving myself in the killing of children in wars, I do it “for the money” – in order to support my family and myself.
Today, this second feature of currency buries and completely suffocates the first characteristic – that of the Common Good. The need for money condemn us to increasingly insane work. Debts condition all of our plans. As it will be seen, this does not take place due to actions such as the Fed’s. Today, it is private banks who routinely create – out of thin air – almost all of the world’s currency. It is the financial aristocracy that controls and concentrates it. Undoing this huge distortion will demand the transformation of the whole of the monetary and financial systems. The Commons-Currency and Public Banks will be key. But the Emergency Citizen’s Income can provide the spark. The sanitary and economic crisis linked to the coronavirus will reap thousands of lives (unnecessarily in most cases) and will cause immense suffering. But it can also beget a new social order.
From an immediate point of view, Emergency Citizen’s Income is, together with quarantine, the most essential measure to avoid what the UN already calls the “apocalyptic pandemic”. The two measures are complementary and nearly twins. Social distancing is now the only available weapon to reduce the number of infections as we “flatten the curve” of the COVID-19 propagation and to avoid the collapse of hospital services that is wrecking Italy – and the breakdown could be even more catastrophic in countries such as the USA and Brazil. But, in market economies, marked by individualism and by competition, teeming with impoverished populations, thrown into debt and precariousness by neoliberalism, staying at home can spell another form of death: falling into the abyss of exclusion. A significant part of the population does not have savings, and will face difficulties even as they try to eat, to keep a roof over their heads or to follow the indispensable precaution measures against the illness. Many other, although not threatened, will see their life standard collapse, ceasing to meet their financial commitments, and will end up more impoverished and submitted to debts and banks when social life returns. Criminal governments – as Jair Bolsonaro is already doing in Brazil – will exploit this fragility in order to incite the desperate against quarantine and other protective actions.
The Emergency Citizen’s Income can tackle such challenges – provided it fulfill certain conditions. First, its value must be really relevant, that is, sufficient to secure a frugal but dignified life. A good reference is per capita GDP – the basis formulated in this text, of R$100 a day per person. The R$600 a month passed in the Brazilian Congress is very far from this. App drivers, cleaners, bartenders or bricklayers earn, net, around R$100 a day, in the metropolitan regions. Their expenses are compatible with such income. It would be unfair if their standard of living, in nothing luxurious, should tumble, while the financial elite feasts and profits on State resources. As a footnote, it is worth remembering that Brazilian bankers are taking advantage of the majority’s difficulties to impose, after the coronavirus, even higher interest rates and even harsher conditions for the rolling of debts.
The second condition is universality: the Citizen’s Income must be paid to every citizen. From the conceptual point of view, it cannot be seen as “help for the poor”, a palliative or consolation for those not in the market – just as public education and public health cannot be mere options “for those who cannot afford” a private school or a private hospital. On the contrary, it is not a matter of returning to the obsolete idea of “charity”, but it must mean the overcoming of mercantile relationships. In a world where machines increasingly carry out tasks before obligatory to humans, Citizen’s Income is one of the ways to secure that everyone benefits from a part of the social wealth produced in the planet.
From a practical point of view, Citizen’s Income cannot exclude all those who, equally participating in the fight against the virus, have a formal job or income, where they earn over three times the minimum wage. This is even truer for the millions whose jobs demand that they carry on working. Health professionals, plus the workers who produce, among so many other items, artificial respirators, soap and alcohol gel, the oil and butter for the meals prepared at home, beer. The farmers who feed us. The shop assistants who keep supermarkets and pharmacies open and running. The operators who mind that we all get electricity and the internet. Those who keep public transport moving. Journalist who write the texts you read during your quarantine…
It must be clear: yes, under such conditions, Citizen’s Income subverts the usual forms of of income and wealth distribution that our society has got used to accepting uncritically, as if they were the only ones possible. If the state of public calamity is to last 100 days, in Brazil, some 2,1 trillion Social Reals should be distributed in an egalitarian way, and wielding the same monetary power of the present Real. This would give the population an unheard of economic power – individual and collective. Many will pay off their debts, which will make them less dependent on financial dictatorship, and will render banks less powerful and predatory. Imagine that, if you owe R$10,000 in overdraft, and are paying monthly installments of R$1,000 just not to sink further into debt, you could pay off the overdraft (and get rid of the expense that eats up your wages) with the Social Reals you get. Other will plan the purchase of a long-desired good or service: a small refurbishment at home, a new fridge or a sofa, a trip. Some, coming together, will have the necessary sum for starting an enterprise. As for life returning to “normal”, one will not find a multitude of bankrupt individuals submitted to banks and corporations – but social subjects with certain economic potency instead.
Together, the 210 million Brazilians will hold, in a hundred days, a total of S$ (or R$) 2,1 trillion. It will be a good start. In comparison, the richest 0.1% in Brazil now have, in government bonds, immediately convertible in currency, R$ 4.4 trillion – more than double. But the 200,000 people who make up the 0.1% (and whose average wages is R$ 213.6 thousand a month), are part of (and are economically active in) a different world. The S$ 2,1 trillion distributed among the 210 million Brazilians will change the face of the country. Airports will definitely become as crowded as bus termini. Popular restaurants will sprout like mushrooms after the rain – challenging the gastronomic monotony of the central regions, where only international chains prosper. Nobody will be forced to work for a plate of food: there will be, surely, an elevation of the Brazilian average wage, today about 30% less than the Chinese. The classic logic of Brazilian segregation, between Manor House x Slave Pen, will be shattered.
It must also be perfectly clear that, yes, Citizen’s Income will subvert another idea, one even more embedded within the ideology of common sense. Money (i.e., the participation in socially produced wealth) can be associated to many actions and merits, besides those recognized by mercantile logic. Some are operated, almost infallibly, by women. Raising children, cleaning the house, preparing food for the whole the family. Others are underestimated as they do not directly generate value. Playing an instrument in gray metro stations, telling stories in the squares, tending a public garden, offering meals in the street to those who would otherwise would go hungry, writing a novel or a poetry book, giving foreign language or cooking classes – for free. Reporting, grounded on the knowledge of an indigenous people, the experience of using a plant to cure an unknown disease. Entertaining children in a hospital. All of this and a lot more, are motives to justify the Citizen’s Income.
But how will society be able to remunerate, with just R$ 100 a month (something close to the per capita GDP) activities that do not generate mercantile value? Now is the moment to introduce the perhaps most relevant factor in this debate, from the point of view of the social imaginary. Due to its relative expressive character, the Citizen’s Income forces us to think about the mechanisms that produce money in our societies; and about the artifices operated by the financial aristocracy (with the complicity of States) as they take advantage of the crises to concentrate even more wealth, and produce even more inequality and poverty.
The initial data on the economic crisis is as terrifying as the number of dead, or the circumstances akin to “Sophia’s choice” afflicting doctors in the north of Italy. In the USA, perhaps the first country to publish post-crisis unemployment data, the number of those out of work has soared. Three weeks ago, 200,000 people had applied for unemployment benefit. Suddenly, in the seven days before Thursday April 2nd , this number shot up to 6.6 million – almost fifteen times more. Trustworthy economic analyses foresee, for western countries, unemployment rates between 20% and 50% up to the end of the year. From the financial point of view, reality is equally frightening. The banks, a recent text evaluates, are deep in trillions of dollars of debt. A good part of those will not be paid off.
But there is an ideological trick here. Commercial media attributes, uncritically, this collapse to the… coronavirus! Is it true? Elementary logic and the facts suggest that it is not.
When authorities act correctly, the quarantine is short: it lasts a maximum of two months. Consider the case of Wuhan, in China – the spot where the epidemic burst by surprise. The radical isolation was decreed in January 23. The number of cases and of deaths started to decrease as soon as February 5 (thirteen days after) and, since then, has abruptly fallen. So, on March 1, the first of two hospitals hurriedly built to face the disease was closed. Since March 18 (exactly 55 days after isolation having began), not a single case of local transmission has been recorded.
Two months, tough slow to pass, is a short period in people’s total existence – and, even more, in economies’. In Brazil, the average adult life lasts 700 months (840 in Japan…). In societies not plagued by extreme individualism, the quarantine – excluded the pain of the pandemic – could be an opportunity to decelerate, reflect, find oneself and with the problems and beauties of the world. The production of goods and services certainly would fall abruptly. But it would be taken up again soon enough – in most cases, with compensations. A fridge that was needed, and whose purchase was postponed by the quarantine, would be, in any case, bought presently. A trip would be rescheduled. The employees hired will continue to be needed. Why sack them? What is the reason for the drama?
The answer is in something that conventional analyses now seek to conceal. The economic crisis is not a consequence of the pandemic. The minuscule coronavirus was just the trigger that detonated much deeper distortions. A house of cards has collapsed. With it, trillions tumbled.
Two texts published in Outras Palavras, [1 2], grounded on an article appearing in The Economist and the Financial Times, explain this movement in detail. The whole story cannot be reproduced here. This is a synthetic summary of the contagion chain: a) the financial markets regained, as soon as the 2008 crisis waned, the “irrational exuberance” that was such a feature during the whole neoliberal period. Banks were irrigated by tons of money, released by the States under the wily trickle-down logic, according to which the money poured on top of the social pyramid will seep down until it reaches the base; b) in order to carry on profiting irresponsibly, the big global banks lent such money without criteria. As the pandemic exploded, the volume of credit given by banks was greater than the 2008 peek. And the big beneficiaries were, this time, the largest non-financial corporations of global scope. Part of them received money even when technically bankrupt; c) the crisis exposed the folly. Big companies with decreasing incomes (in the civil aviation, automobile and hotel sectors, for instance) will probably be unable to pay for the irresponsible credits offered them by the banks. The realization also caused the collapse of their share prices in the Stock Exchange; d) the next ones to be hit will be the megabanks themselves. They will become insolvent, if a sufficient number of debtor businesses fall into arrears in their own payments.
The accumulation of mountains of credit that make financialized capitalism turn cannot be explained in detail within the limits of this text. In order to understand it, one book is recommended, Just Money, by British economist Ann Pettifor. In her book, Pettifor unveils how money is created in neoliberal capitalism. Contrary to what is suggested by currency’s founding myths, it does not emerge from work carried out, or from something produced. Currency is not anchored in a rare and supposedly precious good, such as gold. Since the 1930’s, currency is created out of thin air by States and banks. In the Keynesian era, currency was managed, in the west, by governments that used it to render viable the great civilizational invention: the Welfare State. From the 1980’s on, neoliberalism appropriated the symbolic money printing machines. It is commercial banks, today, who create nearly all of the available currency. Seeking to incessantly increase profits, they lend an amount of money many times greater than the amount they hold in deposits. This practice is called “leverage”. An eloquent example: on March 23, at the stroke of a pen, the Brazilian Central Bank allowed the widening of leverage by authorizing commercial banks to create money out of thin air, and to lend it, to the tune of 1.2 trillion reals! And this with no debate whatsoever with society or with Congress.
This is the casino that is crumbling down before our eyes, nudged by the spanner thrown by the coronavirus. In normal conditions, a halt in productive activities, limited in time, would have yielded very reduced consequences. A healthy financial banking system would fund citizens’ and businesses’ losses – and would allow them to pay the debt back in the course of time, with remunerative but low interest. But the world economy of today is submitted to a global speculative machine – to a betting market in which the volumes negotiated each day are twenty times bigger than the amount the world trade moves in a year. This is why the faintest whiff can bring down the whole house of cards. This is what happened with the coronavirus.
The drama, both sanitary and human, is unfathomable. But a system erected on a gigantic pile of selfish interests is incapable of self-reform. This is why all of the actions to “fight the crisis” taken by western governments feature one central component: to save the banks and the financial aristocracy. The order of the day is: “whatever the cost”. Most of the 5 trillion dollars “against the coronavirus” released to much hoo-ha on March, 27th, in a G-20 meeting, is geared towards irrigating the casinos. Big corporations, in debt and insolvent, will not be authorized to fail. Global banks, even less. The experience of 2008 has taught us to plot something much bigger. The way out for neoliberalism is to create out of thin air whatever amounts seem necessary. The aim is to keep the wheel of speculation turning, the wheel that created the previous crisis, which feeds the present one and that will beget the future ones.
At the end of each crisis, rubble and inequality is all that is left. In 2008, the corporations used the money offered by the States to “modernize” and sack en masse. When the crisis passed, the buck was hoisted on the lap of societies – forced to drastic policies of reduction of public services and social rights. What will come now, if after one week there are 2 million unemployed, just in the USA?
All over the world today there is an ongoing revolution – albeit silent – in post-capitalist thinking. Those who remain chained to past centuries forms of struggle are losing ground. Little by little, new perspectives emerge, which establish dialogue with social subjects begat by the system’s new configurations. The old proletariat, who sold labor force directly to a boss; and who concentrated in large manufacturing units, has lost the condition of “universal subject” – those who, according to Marx, could only be free when, at the same time, they liberated society as a whole. Little by little, a precariat emerges. Its center is no longer the factories, but the metropolises. It is scattered. Its demands are a lot less homogeneous. There is a common project, albeit hidden and largely undetected among such demands. The precariat desires, as well as its older brother, that the socially produced wealth is shared between all. In this sense, there is a line that links a girl who exposes her body to the coronavirus as she delivers meals in the street all the way to Marx, Bakunin, Kropotsky or Rosa Luxembourg.
There is a wide range of projects in gestation to carry out the idea in the conditions of the twenty-first century. Building and securing a Commons. The Green New Deal, which articulates the social to the environmental agendas as it proposes a big reduction in CO2 emissions, achieved by intense investments in clean infrastructure (wind and solar farms, railway, cleaning of rivers, sanitation etc etc) and the dignified job guarantee to all who wish. In our present context, the Basic Citizen’s Income stands tall among the proposals.
It can be as meaningful to us as the eight-hour shift was one hundred years ago for the majorities and for the struggle to overcome capitalism. It establishes a common and very concrete aim for a very wide spectrum of precariat struggles. Although today these hold a common sense, such struggles are disparate and they click into dialogue only with difficulty. (Think, for instance, of the demand for labor rights by an uberized driver, and the demand by an indigenous people to be rewarded financially for the development of a medicine based on their ancestral knowledge).
Citizen’s Income is blossoming now, besides, because it catches the system on the wrong foot. Two big economic crises – in 2008 and the one opening now – make it clear that it is possible to create money (and, therefore, redistribute wealth) out of thin air. In the face of a pandemic, will it be possible to allow this to be done and favor only the 0.1%? If there is any democracy left in contemporary politics, the answer is no. The crisis can once again be, as so many times in the past, the nudge that will make us wake up from slumber and lethargy.