Safeguarding livelihoods against reductions in economic output

Secular stagnation, escalating socio-ecological crises, and the urgent need to scale back resource use in affluent countries make reductions in economic output increasingly likely. In this context, the prevailing vulnerability of livelihoods to a reduction in output poses a fundamental threat, and obstructs stringent environmental policies that reduce production or consumption.

This study explores what creates this vulnerability, and how it might be overcome. We introduce a novel analytic framework that describes the relationship between economic output and the adequacy of livelihoods. Using empirical data for the years around the Global Financial Crisis, we illustrate the vulnerability of livelihoods in the UK. Based on our framework, we show that the vulnerability is not inevitable but arises when livelihoods are dependent on wage labour whilst employment and adequate incomes for workers are insecure, or when adequate pensions are insecure. These conditions are pervasive in contemporary capitalist economies, primarily due to profit maximisation and neoliberal welfare and labour policy. Profit maximisation may in fact actively foster the vulnerability of livelihoods, as the vulnerability can be used as a lever for squeezing wages, and as a pretext for pursuing economic growth and blocking environmental policies.

Finally, we identify a range of interventions that could overcome the vulnerability, including specific versions of universal basic services, a universal basic income, a minimum income guarantee, a job guarantee, living wages, worktime reduction, and a pension guarantee, alongside changes in capital-labour relations and a shift to not-for-profit provisioning. Such interventions could secure livelihoods in volatile or contracting economies, and make stringent environmental policies socially sustainable and more politically palatable.