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

Supporters of Universal Basic Income (UBI) either entertain illusions in a top-down palliative measure for the miseries of capitalism or look for an impossible shortcut for organizing the working class.

Esteban Mercatante

August 7, 2018
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image credits: Estrategia & Negocios

Universal basic income, a guaranteed, no-strings-attached income for the entire population, is presented as a progressive solution to the “end of work.” But those who promote a UBI are doing one of two things. They either entertain illusions in a top-down palliative measure for the miseries of the capitalist system, or they are searching for an impossible shortcut to the challenges of organizing the working class, the only social force that can overcome capitalism. In either case, they lack any sense of realism.

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. According to the International Labour Organization, over 3.2 billion individuals are employed today.

While this supposed “end of work” has escaped serious analysis, the idea that a UBI could secure an income for those who can no longer expect to find gainful employment has become more popular. 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.” 1

Talk of the “end of work” is permeated with a fetishism of robotics. But in the conditions of the “secular stagnation“ of modern capitalism, the use of robotics does not produce sufficiently high rates of capital accumulation to present a real threat to most people’s jobs. More generally, the idea that capitalism can impose generalized robotization clashes with capital’s need for ever increasing exploitation of the only source of its profits – labor power.

Advocates of UBI 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 a growing sector of the working class. The ILO estimates that 42 per cent of workers suffer from “vulnerable employment”, including self-employment, temporary jobs etc., which has increased among young people and especially women. 2 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 3, such generalized job insecurity, seen as inescapable by those who propose UBI, has much more to do with capital’s advance against the historic gains of the working class than it does with supposedly irreversible changes in capitalism’s material processes.

Thirty years ago, the most left-wing proponents of UBI, Robert J. van der Veen and Philippe Van Parijs, considered it “A Capitalist Road to Communism.” 4 But what these proponents see as UBI’s “progressive” side is in fact its fatal flaw: accepting the premise of the “end of work” and sidestepping this problem by fighting not for socialism but rather for a UBI. 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 throws growing numbers of workers to 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 capitalist state already outlays considerable sums, which in some cases are universal, such as the cash transfers offered to families with children by many states in Latin America, what major roadblocks could stand in the way of taking one more step, however great, down the same path?

UBI proponents are certain that it is within reach, and this feeling 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 gave his book about UBI the title Utopia for Realists. 5 This book summarizes the experiences from different times and places and also examines the arguments for and against UBI.

One of the main objectives of Bregman’s book is to disprove the claim that handing out money for nothing leads to laziness. 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 NGO Give Directly, 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.

Focusing on the poorest sectors of society is of course not the same as implementing a UBI sufficient to lift everyone above the poverty line, regardless of their employment status, income and wealth. Bregman does refer to one experiment that took place from 1974 to 1978 in the Canadian town of Dauphin with 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 new government, the program was canceled without any investigation of the results. Thirty years later, a study analyzed the program’s impacts on health statistics compared with similar populations that did not receive this benefit, and it showed 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. A “citizen’s wage” is even included in the program of the government coalition formed by 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. Finland announced a few months ago that its two-year program, in which 2,000 unemployed people between 25 and 28 years old received 560 euros a month tax-free, was ending on December 31, 2018. This decision was motivated by fiscal austerity as a result of a slowing economic growth, and has nothing to do with the program’s results, which, according to its organizers, can be assessed only after six years. Still, the amount of money provided was 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 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 the United States, for example, there is the SNAP program (“food stamps”) to provide food to people who cannot afford it. Payments such as this ameliorate the situation of the poorest sectors, but they do nothing to reduce income inequality between capitalists and workers, which has particularly exploded in the US since the 1980s. This type of program just allows this unequal income distribution to continue but with a bit less tension. Such a basic income that comes “from above” as a public social security policy will hardly be universal. Capitalist production is dependent on not only an active labor force, but also a pool of unemployed and underemployed that are ready to take up any vacancy. This “reserve army of labor” exerts a constant downward pressure on wages and has a disciplining effect on the employed sector of the working class. A government-provided allowance that enables workers to fully withdraw themselves from the labor market would dismantle this key mechanism of any capitalist system. For this reason, it will be focused only on very low-income sectors and will not even amount to a basic income, but be 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 modern capitalism in decline requires, especially in backward and dependent countries, but also in the richest imperialist economies.

Basic income is a long way from being a progressive reform that ensures a decent income for all citizens. Public policies are caught between the demand for fiscal austerity and the need to contain discontent and make capitalism’s continued social degradation somehow bearable.

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.” 6

UBI or the Redistribution of Working Hours?

Tens years after the Great Recession, some have proclaimed that the world has turned a corner, even if the turbulence of more the last couple years discredits such claims. The capitalist class is preparing new attacks on the living standards of the working class, which it must do in order 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 public policy and citizenry. This could be of great service to the capitalist class as it continues its attacks on the working class. 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 and social security expenses.

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 working class greater bargaining power, since all workers would have a credible “exit” strategy. This position is defended by, for example, David Calnitsky in Catalyst. 7

However, this argument has some major weaknesses. All efforts by capital in recent decades have aimed at creating job insecurity, flexibility and fragmentation of the workforce. Calnitsky is right that working class power is today at a historic low. So, can we really expect the government to come up with a proposal for UBI that gets any closer to a livable income? Doing so would be naïve. Then, what we need to focus on is not a policy proposal that shifts the attention away from class struggle, but the task of organizing at workplaces, in the unions, for the working class to become again a force that needs to be reckoned with.

Of course, the argument of those who propose a “dignified” basic income is not that it will come from state generosity, but that it must be achieved through struggle. However, as Alex Gourevitch and Lucas Stanczyk argue in Catalyst,

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.8

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 powerful social force. If anything, it can facilitate the new attacks of the ruling class. The “progressive” proponents of UBI are thus caught in a vicious circle.

UBI is not a shortcut to the independent organization of the working class that its progressive proponents imagine. In contrast to 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 US 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 longer 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 increase its appropriation of surplus value at the expense of labor. Therefore we must raise the demand for the reduction of the working day by distributing the available 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 seeks to question the seemingly “natural” character of the industrial reserve army. The conditions have been created for everyone to work fewer hours. But while capital is in power, some must continue working as many hours as workers did many decades ago while a growing part of the population is transformed into a “relative surplus population.” Thus, we have to question the private monopoly of the means of production.

The IG Metall strike in Germany last year, in which hundreds of thousands of workers fought for the reduction of the working day,9 showed that this is an idea that can resonate deeply in important sectors of the working class (even if in this case the strike was called off by the union bureaucracy after it imposed a salary cut in exchange for a shorter working day).

What stands in the way of distributing all available work among all those who want to work, decreasing everyone’s working day? Why should some of us have exhausting working days while others are condemned to unemployment and underemployment (with or without a UBI)? Why can’t we use technological advances to reduce the working day to everyone? Why do the workers who produce all the social wealth have to settle for crumbs from the capitalist state, while eight billionaires own the same wealth as 3.5 billion people?

Capitalism has created the conditions for reducing the time required to produce all socially necessary goods. But for the vast majority of the world population to benefit from this enhanced productive capacity, we need to question the mechanisms of exploitation that sustain the current mode of production. Then the only “realistic” thing to do is to fight to abolish the capitalist system. We must clear the path for a mode of production that is no longer based on private profit but rather on meeting the social needs of everyone.


1. Paul Mason: Paying everyone a basic income would kill off low-paid menial jobs, The Guardian, February 1, 2015.

2. ILO: World Employment Social Outlook 2018.

3. Interview with Leo Panitch: ¿Podrá el imperio norteamericano sobrevivir a Trump?, Ideas de Izquierda, June 17, 2018

4. Robert J. van der Veen, Philippe Van Parijs: “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 explain just what this “post” world will look like.

5. Rutger Bregman: Utopia for Realists: And How We Can Get There (London, Bloomsbury, 2014).

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

7. David Calnitsky: “Debating Basic Income”, Catalyst, #3, Fall 2017.

8. Alex Gourevitch and Lucas Stanczyk: “The Basic Income Illusion”, Catalyst, #4, Winter 2018.

9. Bastian Schmidt: Metalworkers’ Strike in Germany for Shortened Workweek, Left Voice, February 8, 2018.

This article was first published in Spanish at Ideas de Izquierda on July 1, 2018. It has been updated and modified for an U.S. audience.

Translation: Sean Robertson and Wladek Flakin

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Esteban Mercatante

Esteban is an economist from Buenos Aires and a member of the PTS.

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