Co-authored by the late Professor Ailsa McKay of Glasgow Caledonian university, the report In Place of Anxiety, published by the Jimmy Reid Foundation, describes the current UK benefits system as inherently inhumane.
Prof McKay, an economics professor at the university until her death earlier this month, wrote the report with Willie Sullivan, director of Compass Scotland.
They argue current UK government policy is to "cut or withdraw welfare to make unemployment as painful as possible short of destitution and thereby encourage employment."
However, this disregards the facts, the report claims. "Most people in poverty are already working... There is plentiful evidence that a punitive approach to welfare does not increase economic participation," it says.
The report is part of the Jimmy Reid Foundation's CommonWeal project, to examine policies which could make an independent Scotland a fairer society.
It calls for a minimum income to be guaranteed for everyone, to lift the most vulnerable out of poverty.
It also proposes a national house-building plan to stimulate economic growth and create jobs, while making large longer-term savings on the housing benefit bill.
Overall, the authors say, the UK welfare system "seems predicated on coercing the unemployed into low pay work and then subsidising that low pay."
Robin McAlpine, director of the Jimmy Reid Foundation said: "The welfare debate in Scotland so far has almost all been about which bits of the current system people think are wrong. But scrapping bits and pieces from a bad system doesn't turn it into a good system.
"This is probably the first really comprehensive attempt to ask what Scotland wants from a welfare system and then to follow that through with proposals for a coherent solution that delivers what people want."