Many understand that one of the damaging effects upon the incomes of working people are frequently schemes to alleviate the economic pain felt by the poor and lower-paid workers. If Universal Basic Income is such a good idea, why has nobody implemented it before now?
Universal (or Unconditional) Basic Income is an idea whose adherents over the centuries have ranged from left-wing reformers to far-right libertarians.
Thomas Paine proposed it in his 1797 pamphlet, ”Agrarian Justice” as a system in which at the “age of majority” everyone would receive an equal capital grant, a “basic income” handed over by the state to each and all, no questions asked, to do with what they wanted.
Modern-day UBI models are more of a reform of the traditional “Poor Laws”. Ever since it emerged into capitalism has had a problem of what to do about “the poor” as those who, for one reason or another such as unemployment, disability or old age, are not able to maintain themselves. Hence the “poor law” and its various successors in Britain (National Assistance, Social Security, Income Support, Universal Credit), payable mainly to the “unemployable”, i.e those no employer is going to employ because of the quality of their labour-power is so low. Even capitalism can’t let such people die and so the State has to provide them with the minimum necessary to keep them alive.
UBI in its basic form, and in any form that is likely to be adopted, is merely a reform of existing “poor law” provisions, as are the various cash handouts that are also being discussed. Most of the trial projects are still based upon the “free money” is conditional on being unemployed under certain circumstances.
Nor would it as intended by various liberal reformers be going down the road of breaking the link between consumption and work. If that is the purpose then we might as well have free access to the cornucopia that technology could produce.
A number of billionaires are calling for a guaranteed basic income. It sounds progressive, their proposals are couched in the moralistic language of caring for the destitute and the less fortunate. But behind this is the stark awareness that the oligarchy such as they have helped to create is so lopsided that working people are plagued by job insecurity, sub-standard wages and crippling debt, that they will be unable to pay for the products and services offered by the big corporations owned by the oligarchs.
A former Goldman Sachs executive, Marty Chavez, thinks that income redistribution via UBI is the only way to stave off revolution as the wealth gap continues to increase.
“At the same time, I’m a big proponent of a universal basic income. My personal view is that if you’re just being pragmatic and looking at inequality – and not thinking about some abstract concept of justice – you don’t want the inequality to be so extreme that it leads to revolution. So you ought to be prepared to pay to decrease that probability. This is what I say to, you know, friends who you might call ‘oligarchs,’ right? Why it would make sense for everybody to have some baseline income and why we should all pay for it.”
We shouldn’t forget that America has had another form for decades in the shape of the Alaska Fund, which pays out an annual dividend where each qualified resident receives the same annual amount, regardless of age or years of residency. In 2019 it was $1,606. A 2018 paper found that the Alaska Permanent Fund “dividend had no effect on employment, and increased part-time work by 1.8 percentage points (17 percent)…our results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment.”
A 2019 study found “a 14% increase in substance-abuse incidents the day after the [Alaska Permanent Fund] payment and a 10% increase over the following four weeks. This is partially offset by an 8% decrease in property crime”. In 2002 the ILO did a study of the Alaska payment (Permanent Fund Divided) which does mention this (and published on the site of the BIEN, the international organisation of those proposing a basic income for all) :
“Even without a PFD induced increase in the labour supply, the PFD could be exerting downward pressure on the wage differential between Alaska and other, lower cost, regions of the United States. If employers could lower the Alaskan wage rate because of the dividend, then determining the impact of the dividend on the distribution of income would be more complicated than simply observing the addition to incomes directly attributable to the dividend. Of course, the dividend could also be driving up the wage rate if, in the absence of in-migration, the labour force participation rate fell.”
The other studies seem to show that the labour supply has been unaffected, i.e., that the labour force participation rate didn’t fall.
“However, another possible effect of the dividend that has been completely ignored might be a reduction in the Alaskan wage rate by the amount of the dividend. If the labour market worked in this way, Alaska workers would be sharing the benefits of the dividend with business owners, non-workers, and non-residents.”
“The average real wage in Alaska has fallen by about 10 per cent in the last decade, but it is unclear the extent to which that is due to other factors such as a change in the mix of jobs and a fall in the relative cost of living. But it does raise the possibility that the apparent higher incomes from the dividend are being partially offset by lower real wage rates.”
All the proponents have erroneously assumed that if the government gives everybody, working or not, a regular income this is going to have no effect on wage levels. They seem to mistakenly believe that this would be in addition to and supplementing income from work, whereas in the real economy, it would exert huge downward pressure on wages and that over time real wages would on average fall by the amount of the “basic” income. In other words, it would be essentially a subsidy to employers leaving most people no better off.
It would be “basic” in the sense of being a minimum income that employers would top up to the level people needed to be able to reproduce and maintain their particular working skills. Don’t they understand how their much-vaunted law of supply and demand works?
UBI is yet another crackpot idea. For those who believe they are communists, how does more money get you to no money?
Radical supporters of a UBI suggest it is a way to end capitalism yet still presupposing its continued existence. If people are free from any compulsion to work for a capitalist company, this would undermine the capitalist mode of production which, after all, relies on the workers to produce the products which are turned into profits. It also relies on the exclusion of workers from these products so that they can become profits. However, at the same time, the same supporters also ask the same capitalist businesses to produce the profits to pay for freedom from them in the form of a UBI. They want both: the continued existence — for now — of the capitalist mode of production where the reproduction of each and everyone is subjugated to profit and the end of this subjugation by providing everyone with what they need. They want companies to make profits, which relies upon and produces the poverty of workers, while at the same time ending mass poverty. They want to maintain the exclusion from social wealth through the institution of private property and end this exclusion by giving everyone enough money. Not possible of course.
Are we, then, opposed to the working class receiving more money? Do we object to workers’ children being better provided for? Our answer is that we are most strongly in favour of the working class being made better off, both parents and children. We oppose the UBI scheme because we deny that it would produce any such result. Wages are based, in the long run, on what it costs the workers to live. Trade unions can be useful resistance to that pressure, but experience shows that the trade unions have not been able to overcome the pressure. When prices rise, it costs the workers more to live, and trade unions can usually secure some increase, if not a proportionate increase, in wages. When prices have fallen, wages have fallen also, sometimes ahead of the prices.
Our criticism of the advocates of UBI can now be more clearly stated. Family allowances would cheapen the cost of living of working-class families. The constant pressure would tend to force wages down correspondingly. Even as regards making the best of capitalism, the UBI scheme is an illusion. It is no substitute for trade unionism.
It does not require much examination to see why the question of opposing the universality of a social benefit is a vital one for capitalism. Capitalism cannot exist without something which will drive the workers to submit themselves to exploitation for the benefit of the propertied class. That something is poverty and privation. The capitalists must have always at their disposal the millions of wage-earners ready to be exploited in order to live. Allow the able-bodied (i. e., profit-producing) workers and the industrial reserve army to have free access even to the most frugal necessities of life and capitalism is ended. For reasons of stability and security of property the rulers must provide something for those workers whose services are not at the moment required, but it must be so hedged about by restrictions that it does not enable workers to receive from all sources more than will barely keep them alive. Any political party which administers capitalism has got to find some means of compelling the workers to produce profits for the capitalists. Nothing but the alternative of deprivation will do it. No appeal, whether in the name of patriotism, religion, social duty or anything else will serve the purpose. Capitalism is supported by force and will collapse if the force is withdrawn.
No government, which administers capitalism, will abolish the means-testing in some shape or form without reintroducing it under another name or something of similar effect. Society must get rid of the class basis and the system of wage labour. It must be so organised that people are no longer offered the alternatives of being exploited or of striving to retain or become an exploiter. Wealth must be produced only for use and without the wealth producers being driven to their uncongenial tasks by the whip of want wielded by the ruling class and their governments.
Capitalism cannot exist without something which will drive the workers to submit themselves to exploitation for the benefit of the propertied class. That something is poverty and the threat of starvation. The capitalists must have always at their disposal the millions of wage-earners ready to be exploited in order to live.
One thing is absolutely certain. Any political party which administers capitalism has to find some way of compelling the workers to produce profits for the capitalists. Nothing but the alternative of deprivation will do it. No appeal, whether in the name of patriotism, religion, social duty or anything else will serve the purpose. Capitalism is supported by coercion and will collapse if force is withdrawn. Capitalism is based on class ownership, class antagonism. The effort to keep the basis but humanise the administration may decrease somewhat the amount of human misery, but cannot solve the problem.
Only socialists offer a solution. Society must get rid of the class basis and the system of wage labour. It must be so organised that people are no longer offered the alternatives of being exploited or of striving to retain or become an exploiter. Wealth must be produced only for use and without the wealth producers being driven to their uncongenial tasks by the whip of hunger wielded by the ruling class and their governments. The incentive must be the common appreciation that work, in which all will co-operate, will be for the good of all. Access to the necessities and comforts of life must be free. There will be no need for “means tests” for anyone. All will be members of society without the privilege of one over the other.
There is always an attraction of simple cures to the ills of capitalist society as opposed to radical solutions such as socialism and the common ownership and democratic control of productive resources. Socialism may seem remote at the present time but at least it is possible.
The policies reformists presently propose may seem practical but they are impossible. No government is going to introduce a jobs guarantee or a state payment to all of an amount more than the poverty line. This goes against the logic of capitalism and the wages system. Such scheme could only be financed out of profits but taxing profits to the extent these reforms would require would provoke an economic downward swing and soon the capitalist class would demand that they be abandoned or watered down; which would be acceded, too, by the government.
They would also require majority support to be attempted in the first place; obtaining which, quite apart from wasting time, would be no easy task. Such efforts would be better directed at campaigning and organising for socialism as something possible. Compared with socialism the UBI proposal is a wild fantasy. Yet they accuse socialists of being unrealistic.