Ideas & Debates


Universal Basic Income: A Capitalist Solution to the Evils of Capitalism?

Supporters of universal basic income (UBI) either entertain illusions in a palliative “from above” to the miseries of capitalism, or look for an impossible shortcut for organizing the working class.

August 07, 2018

image credits: Estrategia & Negocios

Universal basic income (UBI), a guaranteed, no-strings-attached basic income for the entire population, is presented as a progressive solution to the “end of work.” But those who propose the UBI do one of two things. They either entertain illusions in a palliative “from above” for the miseries of the capitalist system, or they look for an impossible shortcut to the organizational challenges faced by the working class, the only social force that can overcome these miseries. In either case, any sense of realism is sadly lacking.

The “end of work” narrative

A widely held belief suggests that most jobs today are threatened by the so-called “fourth industrial revolution,” which promises to extend robotics throughout production. Unlike previous waves of innovation, according to this line of thought, the fourth revolution will result in fewer replacement jobs. Yet in reality the number of workers exploited by capital around the world has grown as never before.

As Paula Bach points out, talk of the end of work is permeated with a fetishism of robotics. But in the conditions of today’s capitalism’s secular stagnation, the use of robotics does not produce sufficiently high rates of capital accumulation to warrant a real threat to most people’s jobs. More generally, the idea that capitalism can impose generalized robotization clashes with capital’s need to ever increasingly exploit the only source that sustains its profits—labor power.

While this supposed end of work has escaped serious analysis, the idea has gained strength that a UBI could secure an income for those who can no longer expect gainful employment. It is not a new idea. But what gives it a new sense of urgency and more adherents is that, as Paul Mason suggests, it could solve the problem of “the disappearance of work itself”.

UBI proponents also assume that growing job insecurity and precarity, faced by a large proportion of the world’s labor force, are irreversible. It is true that accessing formal employment, participating in the social security system, and so on, are unattainable for an increasing proportion of the working class. In Argentina, over half of those with a job suffer some form of job insecurity (jobs that are unregistered, based on self-employment, changas [temporary jobs] etc.), which has increased among young people and especially women. In some areas, underemployment, self-employment and changas coexist with the overworking of those with formal and informal employment. In Argentina today, a third of the economically active population works more than 45 hours a week. People are working more and earning less than they did decades ago. The length of today’s workday is as long, or even longer, than it was 80 years ago, and in the United States, Germany and France it is being lengthened further. Contrary to what John Maynard Keynes imagined when he considered the economic possibilities of his grandchildren’s generation, we are not even a fraction closer to 15-hour workweek than we were in the 1930s—even though labor productivity has multiplied threefold. But as Leo Panitch points out, such generalized job insecurity, seen as inescapable by those who propose a UBI, has much more to do with capital’s advance against working-class gains than it does with supposedly irreversible changes in capitalism’s material processes.

Thirty years ago, the most left-wing proponents of the UBI, Robert J. van der Veen and Philippe Van Parijs, considered it “A Capitalist Road to Communism.”(1) But what proponents such as these see as UBI’s “progressive” side is in fact a fatal error: taking for granted the premise of the end of work and sidestepping this problem by fighting not for socialism but for a UBI instead. To accept this idea is to accept that the working class has already lost half the battle.

Money for Nothing

Money here and now, because there is no time to wait for great social transformations—that is the slogan of UBI proponents. They want to give every person a sufficient income to acquire the essentials, whether or not they have a job, whether or not they want to work, with no strings attached. Such a decoupling of the income of citizens from the obligation to work seems to some to be the only viable alternative, in a world where the system of production discards growing numbers of the working class by the side of the road. A basic level of economic and social rights would be universally guaranteed—without the need to expropriate the means of production or storm the Winter Palace. Since the state already outlays quite considerable sums, which in some cases are comprehensive and unconditional, like the child allowance in Argentina (received by both employed and unemployed), what major roadblocks could stand in the way of taking one more step, however great, down the same path?

UBI proponents’ certainty that it is within reach is reinforced by the growing number of experiments by public agencies and NGOs to test the effects of implementing a basic income. This has occurred even though there is a great abyss separating “progressive” proposals, meant to ensure a “dignified” income, and state practices that aim only to manage poverty without eliminating it.

It is no surprise, then, that Rutger Bregman called his book about the proposal for a UBI Utopia for Realists(2). This book systematizes the experiences from different times and places and also reviews the arguments for and against the UBI.

One of the main objectives of Bregman’s book is to demystify the criticism that handing out money for nothing stimulates vagrancy. The author presents the conclusions of a pilot scheme implemented in 2009 in London by the Broadway Cares organization, which delivered 3,000 pounds to 13 homeless people. According to this study, in each case the aid “empowered” the beneficiaries. Utopia also presents the results of a study by the Massachusetts Institute of Technology on the performance of the Give Directly NGO, which collects money from donations and delivers it to beneficiaries in poor countries with no strings attached. This study shows a lasting increase in income (on average 38% higher than before the transfer) and an increase in assets and property, including homes (up 58%), as well as a 42% reduction in the number of days that children go hungry.

Other examples abound. According to Bregman, there are different programs based on cash transfers that reach 110 million families in 45 countries (“from Brazil to India, from Mexico to South Africa”), the overwhelming majority of which have been implemented in the last 20 years. Among these we can add the extension of the child allowance to those without formal employment in Argentina.

Focusing on the poorest sectors of society is of course not the same as implementing a UBI sufficient to lift everyone over the poverty line, regardless of their employment status, income and wealth. Bregman does refer to such an experiment that occurred from 1974 to 1978 in the Canadian town of Dauphin and its 13,000 inhabitants. This program secured a basic income for the entire population and ensured that no one fell below the poverty line. Thirty percent of the population (one family in four) received monthly payments that in today’s currency amounted to $19,000 a year. With the arrival of a fiscally zealous government, the program was canceled without any investigation of the results. The analysis conducted by a researcher 30 years later, based on the program’s impacts on health statistics compared with similar populations that did not receive this benefit, shows that it was a success.

There are currently trials that have been advertised as first steps toward a UBI in Canada, Holland, Scotland, Kenya and India. This proposal is even included in the program of the alliance between the Italian Movimento 5 Stelle (M5S—Five Star Movement) and the xenophobic Lega Nord (LN—Northern League), part of a program that also calls for large company tax reductions. In their current stage, these proposals focus on the poor and the unemployed, just like many of the experiments that Bregman refers to. They also continue to run into similar difficulties over time to survive. Finland announced a few months ago that its two-year program, which saw 2,000 unemployed people between 25 and 28 years old receive 560 euros a month tax-free, would end December 31. The reason for this lies quite simply in the fiscal austerity brought on by a declining economy, and it has nothing to do with the program’s results, which, according to those behind it, can be assessed only after six years. The payment amount was also less than half of the 1,200 euros needed to avoid poverty in Finland. This fact shows that the proposals discussed by different nation-states are a long way from the social security paradise of free time without poverty that some leftists like to imagine.

This basic income thus aims to be nothing more than a palliative measure. In Argentina, we have seen this with the universal child allowance. Payments such as this alleviate the situation of the poorest sectors, but they still allow for the unequal distribution of income between capitalists and workers, which in Argentina has been slowly rising since the mid-1970s. It just allows this unequal income distribution to continue but with a bit less tension.(3) Such a basic income that comes “from above” as a public social security policy will hardly be universal. It will be focused only on low-income segments and will not even be basic, but set at levels below the poverty line. This is the only way that a basic income can be compatible with the continued exploitation of labor in the conditions that declining contemporary capitalism needs, especially in backward and dependent countries like Argentina, but also in the richest imperialist economies.

Basic income is a long way from being a progressive reform that ensures an income for all citizens. Public policies, caught between the demand for fiscal austerity and the need to contain discontent and make capitalism’s continued social degradation somehow bearable, point only to a managed poverty, poverty that is held at bay through incomes to ensure that people survive conditions of misery.
As Michel Husson states, “Progressive partisans of an income of 1,000 euros per month may well serve as ‘useful idiots’ for the establishment of a universal income of 400 euros, for a final settlement that also advantageously reduces the operating costs of the welfare state.”(4)

UBI or the Redistribution of Work Hours?

Tens years after the Great Recession, some have proclaimed that the world has turned a corner, even if the turbulence of more recent times discredits such claims. The capitalist class is making a new attack on working-class conditions, which it must do to increase accumulation. A key part of this are the labor and pension (counter) reforms being imposed around the world (from France to Brazil and Argentina). But UBI also has its part to play.

The proposal for a UBI shifts debate from the terrain of class conflict to that of the public policy and the citizenry, and this could be of great service to the capitalist class as it continues its attack on working-class conditions. After all, a dispute about the primary distribution of income always entails the danger that the exploited will question who controls social production and begin to organize. But if the debate is shifted to UBI, it becomes a question of secondary distribution, of income management, social security expenses and how citizens take part in all this.

Some on the Left defend UBI because it will supposedly “empower” the working class in its confrontation with capital. The logic is that an income that can cover the basic cost of living would give the labor force greater bargaining power over capital, since workers would have a credible “exit” strategy. This position is defended by, for example, David Calnitsky in the North American magazine Catalyst (“Debating Basic Income,” no. 3).

It is an argument plagued with inconsistencies. All the efforts of capital in recent decades have aimed at producing job insecurity, fragmentation and labor flexibility. So is it really worth waiting for the government and the social security system to come up with a UBI proposal? Doing so would not be utopian but insane. This system has among its fundamental conditions of operation the permanent existence of a reserve army of labor—that is, a portion of the workforce that is unemployed and available not only to work during times of expansion but also to act as a battering ram that limits the aspirations of the rest of the working class. This reserve army allows capital’s market mechanisms to operate with respect to salaries in a way that is favorable to it, limiting salary growth in boom times and easing capital’s decline in times of crisis.

Of course, the argument of those who propose a basic “dignified” income is not that it will come from state generosity, but that it must be achieved through struggle. But as Alex Gourevitch and Lucas Stanczyk from the United States argue in Catalyst (“The Illusion of Basic Income,” No. 4),
“There is consequently no prospect of the hoped for policy coming to pass until there is a working-class constituency that is organized and powerful enough to be able to extract it, in spite of the predictable resistance of superbly organized capital.” Accepting the “end of work” and fighting for remuneration outside of employment does not bode well for a working class that aspires to become such a social force. If anything, it contributes to facilitating the new attacks of the ruling class. The “progressive” proponents of UBI are thus caught in a vicious circle.

UBI is not the shortcut to the policy of independent working-class organization that its progressive proponents imagine. Against these illusions, there is only one response to either neoliberal austerity or miserable handouts: the struggle to reduce the workweek to six hours a day, five days a week, and the redistribution of working hours among all those available to work.

Around the world, the workload for those who have a job is increasing, while unemployment and underemployment grow alongside it. Data from the United States show that, even though labor productivity has tripled from 1957 to today, the eight-hour day remains unchanged and businesses have found multiple ways to impose even more hours. In the last decades, the time dedicated to work has increased. The same goes for Europe, and even more so for many dependent countries that have joined the networks of transnational production. Far from being “natural,” this is determined by capital’s need to improve its appropriation of surplus value at the expense of labor power. What must be proposed, then, is a reduction of the workday by distributing the hours of work among all those who can work, without any loss in salary, thus guaranteeing all employed people an income based on the cost of living. This proposal aims to question the naturalness of the industrial reserve army. The conditions have been created for everyone to work fewer hours. But while capital is in power, this means that some must continue working as many hours as they did decades ago—or even more—while a growing part of the population is transformed into a “relative surplus population.” Thus, what must be brought into question is the private monopoly over the means of production.

The IG Metall strike in Germany for the reduction of the working day earlier this year, in which hundreds of thousands of workers took part, showed that this is an idea that can penetrate deeply into important sectors of the working class (even if in this case the fight was called off by the union bureaucracy after it imposed the acceptance of a salary cut, and more hours of work for others, in exchange for a shorter working day).

What is standing in the way of sharing work hours among all those who want to work, which would decrease work hours? Why should there be exhausting workdays on the one hand, and unemployment and underemployment (with or without a UBI) on the other? Why can’t we use technological advances to reduce the workday for the whole working class? Why do the workers who produce all the social wealth have to settle for fighting for a bit extra from the capitalist state while eight billionaires have the same wealth as 3.5 billion people?

If capitalism has created the possibilities of reducing the time necessary to ensure that socially necessary goods are produced, this can be carried out only by questioning the mechanisms of exploitation that sustain this mode of production. The only “realistic” thing to do is to fight to abolish the capitalist system. We must open the way to an organization of production that is no longer based on private profit but on serving the social needs of all.

Translation: Sean Robertson

This article was first published at Ideas de Izquierda (IdZ - Ideas of the Left) on July 1, 2018.


(1) “A Capitalist Road to Communism,” Theory and Society 15 (5), 1986. This was written before the fall of the Berlin Wall. Today, most of its proponents do not think of it as a way out of capitalism, but as a remedy to make capitalism, which is seen as inevitable, a bit more bearable. The most “audacious” suggest that it is part of a combination that will lead towards a “postcapitalism,” although they don’t make clear just what this “post” world will look like.

(2) Utopía para realistas. A favor de la renta básica universal, la semana laboral de 15 horas y un mundo sin fronteras (Utopia for realists. In favor of universal basic income, the 15-hour work week and a world without borders) (Barcelona: Salamandra, 2017).

(3) See Esteban Mercatante, La economía argentina en su laberinto: Lo que dejan doce años de kirchnerismo (The Argentine economy in its labyrinth: What twelve years of Kirchnerism has left behind) (Buenos Aires, IPS Editions, 2015), chap. 5.

(4) “Le monde merveilleux du revenu universel” (“The wonderful world of universal income”), Révolution Permanente (Permanent Revolution), March 1, 2017.


Universal Basic Income   /    Capitalism   /    Socialism   /    Workers   /    Labor   /    Ideas & Debates