“Welfare without the Welfare State”: Milton Friedman's Negative Income Tax and the Monetization of Poverty

Abstract

Recent years have witnessed a marked revival of guaranteed-income proposals. Among these, Milton Friedman's negative income tax is one of the most successful ideas to establish a universal floor of income for every citizen. Elaborated in the early 1940s, it attracted widespread attention among economists and policy makers in the aftermath of Johnson's War on Poverty. This contribution will, however, focus on the intellectual setting under which Friedman envisioned a new way to think about poverty. Tracing back the origin of the proposal in the context of the New Deal, this article shows how Friedman hollowed out redistributive considerations from the hierarchies of needs, notions of duty, or citizenship that were common in the British welfarist conception and preexisting notions of equality where the state played a key role by replacing it with a monetary and market-friendly conception of poverty.