UBI: Red Herring or Wild Goose Chase?

There are some critics of capitalism who realise that something more radical is needed than the ‘baby steps’ that common or garden reformists have been reduced to campaigning for. They can see that such tinkering will not solve the problem they are concerned about. However, instead of proposing socialism (common ownership and production for need), which they dismiss as unrealistic, they advocate something else that they regard as more achievable. Actually, it is the other way around. It’s what they propose that is unrealistic and, in any event, would probably take as much time and energy to get enough support for, if it is be fully attempted, as would getting support for socialism. Universal Basic Income (UBI) is a case in point.

This is the proposal, also known as Citizens’ Income, that the government should pay everyone a regular monthly income of a given amount as of right, i.e. unconditionally and without means testing.

The idea is to free people from worry over not being able to meet their basic needs and having to accept a crap job to do so, and to give them a wider choice of how to organise their life. Some advocate it as a way of dealing with the hypothetical mass unemployment they are expecting to occur as AI is applied to more and more jobs.

The bolder amongst them see it as a first step towards breaking the link between work and income, a way of gradually abolishing the wages system with the proportion of a person’s income paid by the state increasing at the expense of that paid by their employer.

The obvious first question is: where is the money to come from? It would cost a huge amount, the more so the greater the payment agreed on. Governments have no income of their own and depend, for what they spend, on taxation and borrowing. Since workers are on average paid only enough to maintain their particular working skill – i.e. to keep themselves in working order – the taxes they pay, whether direct or indirect, get passed on to employers in the form of a higher money wage and so ultimately fall on profits.

So, UBI is basically a proposition to massively tax profits to pay everybody a free income. And its advocates dismiss socialism as unrealistic!

It is true that, if this were ever to happen, employers would be compensated by not having to pay wages at the same level, since a part of the cost of keeping a worker in working order would then be paid by the government. Some UBIers attempt to deny that their scheme, if implemented, would lead money wages to fall, but this goes against all the evidence of the effect of other payments by the state to people in work.

Others pull in their horns and publish detailed calculations showing that their scheme would not lead to much more being spent on government payments to people than at present, since many existing payments (eg unemployment pay, sick pay, family allowances) would be abolished. So, they end up with a UBI payment at the low end (perhaps not even as high as £500 a month) and so are in effect proposing what used to be called a ‘redistribution of poverty’.

Talk of employers, wages and money income shows that UBIers envisage their scheme being implemented in a society that will continue to be divided into employers (owners of a productive resource) and workers (driven by economic necessity to sell their working skills to an employer for money).

As to gradually increasing the state payment until most of a person’s income is paid by the state and a diminishing proportion by the employer, it’s hard to think of a more unrealistic proposal. Capitalism is based on the wages system, on most of the population being forced by economic necessity to obtain the money to buy the things they need to live by selling their capacity to work to an employer. No capitalist state will ever agree to undermine the wages system by weakening that pressure, as giving everyone a sum of money at anything much more than a minimal amount would. It’s just not going to happen.

The aim of breaking the link between work and the amount you get to live on is laudable; socialism will in fact bring this about by allowing the implementation of the principle ‘from each according to their ability, to each according to their needs’. But this is not something that can be introduced gradually under capitalism. It can only be implemented after capitalism has been ended through replacing class ownership of productive resources by their common ownership by society as a whole. This – socialism – has to come first.

The most that could happen to the UBI is that the idea of an unconditional free basic income is taken up by the state for certain groups it considers deserving and who would otherwise be destitute. Experiments involving this have already taken place. Of course, this would not be UBI as these payments would not be universal. It would completely emasculate the original idea of paying everyone a basic income. Also, the level would be more or less the poverty line which most states bring destitute people up to. Administrative costs would be saved by not having to means-test recipients and check that they continue to be eligible. In the end, then, as a ‘realistic’ proposition UBI would be reduced to a tweak to the Poor Law System (aka the Welfare State). Just another ‘baby step’, but to nowhere.

Rather than waste their time and energy pursuing something that is impossible under capitalism and unnecessary in socialism, those dissatisfied with capitalism are better advised to work for socialism. This will provide the framework in which the problems they are concerned about can be lastingly solved since, with the common ownership of resources by society, the economic laws of capitalism which render reforms such as UBI impossible will no longer operate.


One Reply to “UBI”

  1. Correct. The capitalist market relies upon the discipline of destitution and poverty to maintain the wages system. Otherwise it would collapse. UBI is a fantasy.

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