Universal Basic Income - shortcut to a better society?
by Noah Tucker
“The idea is simple: all adults receive a no-strings-attached sum from the state to cover the basic cost of living. The amount is paid to everyone, regardless of their employment status, wealth, marital status, or any other circumstances” (definition from an article in The Independent, 31st July 2018.) The attractiveness of universal basic income (UBI) derives in large part from its combination of such apparent simplicity with the huge improvement in human welfare which one can imagine would result.
With proponents in different parts of the political spectrum, who would define themselves as being in the radical left, the soft left, the neoliberal right-wing, and the centre, another reason for the lure of UBI is that despite being such an ambitious ‘big idea’, it is presented as being feasible and achievable. The major political problem with seeking to achieve a massive step forward (for those who need it most) in material living standards by moving towards a socialist society is that, to use the words of Karl Marx, “this cannot be effected except by despotic inroads on the rights of property, and on the conditions of bourgeois production”. Measures of this kind are of course very hard to achieve, as they are opposed by the wealthy and powerful by every and any means at their disposal. Could UBI, on the other hand, without challenging capitalist property relations or depriving the top 1% of their wealth, give hope of at least reversing the impoverishment of so many millions of people which has resulted from the reversion towards full blooded capitalism that has unfolded over recent decades? After all, even in Donald Trump’s USA, a one-off version of a universal payment has been implemented as a response to the Covid-19 crisis, and trials of basic income schemes have been proposed or actually conducted by centrist or right-wing governments in other countries, most recently in Finland.
And further, could UBI even be a step in the direction of a better form of society altogether? Some on the left who are promoters of UBI assert that it would help the transition to a post-capitalist society by “challenging the ideology of work that makes one’s job a signifier of social purpose and worth”; meanwhile, it is claimed, it would disrupt the exploitative labour market by allowing workers to reject unsatisfactory jobs, thus forcing capitalists to invest in creating high quality, high productivity employment. (1) This view was popularised among left and leftish intellectuals by a 2015 book entitled Inventing the Future: Postcapitalism and a World Without Work. (2) In it, the ‘left accelerationist’ theorists Nick Srnicek and Alex Williams asserted:
“A UBI therefore unbinds the coercive aspects of wage labour, partially decommodifies labour, and thus transforms the political relationship between labour and capital […thus] making work voluntary rather than coerced”. Calling for a shift from remuneration based upon ability or effort to remuneration based upon ‘basic need’, the writers argued that: “… we are all responsible for reproducing society: from informal to formal work, from domestic to public work, from individual to collective work. What is central is not productive labour, defined in either traditional Marxist or neoclassical terms, but rather the more general category of reproductive labour. Given that we all contribute to the production and reproduction of capitalism, our activity deserves to be remunerated as well […] All the genetic, historical and social variations that make effort a poor measure of a person’s worth are rejected here, and instead people are valued simply for being people.”
Putting aside for the moment the question of whether it is useful to seek to break the ‘ideology’ which links work to social purpose and value, it is important to note that Srnicek and Williams concede that UBI could also be used to achieve the very opposite of their goals:
“The demand for a UBI, however, is subject to competing hegemonic forces. It is just as open to being mobilised for a libertarian dystopia as for a post-work society – an ambiguity that has led many to mistakenly conflate the two poles […] The risk is that, if set too low, UBI becomes just a government subsidy to businesses […] The conservative argument for a basic income – which must be avoided at all costs – is that it should simply replace the welfare state by providing a lump sum of money to every individual. In this scenario, the UBI would just become a vector of increased marketisation, transforming social services into private markets.” In order to avoid such a catastrophic outcome, the authors of Inventing the Future propose that: “In demanding a UBI, therefore, three key factors must be articulated in order to make it meaningful: it must provide a sufficient amount of income to live on; it must be universal, provided to everyone unconditionally; and it must be a supplement to the welfare state rather than a replacement of it. The first point is obvious enough: a UBI must provide a materially adequate income.”
This lack of clarity on the level at which UBI payments would be set points to a huge problem, which will be returned to later in this article. For now, it can be noted that the ultra-capitalist dangers inherent in UBI are potentially very real. Indeed, backing for UBI encompasses neoliberal ideologists, Silicon Valley billionaires and others, for whom an income delivered via the state to each individual would be a way to help entrench the capitalist system. Among the various expectations for UBI from these viewpoints is the aim of facilitating further reductions in public services as the recipients of the universal payments would purportedly be able to purchase their own services from the private sector on an individual basis.
Expressing particular concern about the implications in terms of services and benefits for disabled people, Disabled People Against Cuts observed in a 2019 article: “If disabled campaigners weren’t previously worried about growing support for the idea of a Universal Basic Income, then following the publication of the World Bank’s draft annual report for 2019, they should be now. This document clearly articulates the link between intensification of the neoliberal agenda and provision of a basic income, putting forward a policy programme of extensive labour deregulation including lower minimum wages, flexible dismissal procedures and zero-hours contracts, compensated in part by a basic income ‘modest in size’ so as to ‘be complementary to work’ and financed largely by regressive consumption taxes (i.e. increasing VAT).” (3)
Other positives conceived for UBI from a pro-capitalist viewpoint include fostering a more ‘entrepreneurial’ dynamic among the population as people would supposedly use the basic payment to help them start up their own businesses; and propping up a society which continues to function on a capitalist basis even though, as some predict, the majority of the working age population will become unemployed as further automation renders most jobs and professions redundant. (In fact a look at the history of capitalism reveals many waves of unemployment as technological changes displace workers; however new industries and services have always arisen through which the investors can exploit people in order to create profits.) And UBI might not merely subsidise business as such, it could potentially encourage the most unscrupulous employment practices, allowing employers to successfully offer more insecure jobs, and work at pay rates below a realistic living wage, as employees would initially be able to manage to get by on their meagre or intermittent salary plus the allowance from the state. Even where workers currently are on reasonable pay and conditions, a slide to generally lower living standards could ensue as trade union organisation and collective bargaining with the employer become less relevant in determining workers’ overall incomes.
Spanning the centre and left arguments for UBI, there is the view that it would assist both the capitalist offering zero-hours type employment, and the impoverished who are victims of both the changing capitalist economy and the penalties built into the current benefits system, along with those among the workers with creative or innovative aptitudes. In her foreword to a widely cited paper on UBI published by the ‘soft left’ think tank Compass in 2016, Professor Ursula Huws proposed that a form of UBI should replace the existing state benefits system, because the latter: “…penalises claimants whose messy and complex lives do not fit neatly into its anachronistic categories. But that is not all. It also disadvantages employers who, in a competitive global economy, want to access labour flexibly on demand, and artists and innovators who want to develop new ideas without starving. In other words, it does not just damage social cohesion, it harms the very economy it is supposed to help.”
But Professor Huws is aware also of the dangers which accompany UBI. In addition to the neoliberal drawbacks outlined above, she concedes another difficulty. Often referred to as a ‘citizen’s income’, UBI could reinforce and worsen the inequality and exclusion which are already features of our labour market and our system of access to benefits and services. In an article in Open Democracy, Ursula Huws asks: “If a UBI is defined as a right of citizenship, then this raises the question of entitlement: who is, or is not, a citizen? And on what basis is their right to UBI established? A final serious risk associated with the introduction of UBI is that it could become linked to a narrow definition of citizenship from which some people (for example refugees, asylum-seekers or residents who do not hold UK passports) are excluded. In addition to the support this could give to racism and xenophobia this could also lead to a two-tier labour market in which people who are not entitled to UBI become an exploited underclass.” (4) She therefore argues for safeguards, e.g. “that the introduction of a UBI should be embedded with policies that protect the scope and quality of public services and their collective and universal character”. However, she is not specific about how such protections could be assured, calling instead for “a debate, not about the abstract idea of a UBI, but about how it could be introduced in the real world in a way that is genuinely compatible with social-democratic and feminist ideals”.
TRIAL AND ERROR
In May this year, political commentator Paul Mason tweeted: “Well blow me down! The Finnish UBI trial shows it works”. This evaluation was based on the partial conclusions of a study in Finland in which 2,000 people, who were unemployed at the start of the experiment, were paid an unconditional allowance of €560 per month, an income which continued to be paid irrespective of whether or not they became employed. These subjects were compared with a similar group of people who were not paid the allowance. Unfortunately the Finnish study, as with similar experiments in other countries, was not a trial of a universal basic income given that the money was only paid to people who were unemployed at the outset of the experiment; but perhaps its findings and their interpretation might help illustrate or untangle at least one aspect where the claims for UBI are contradictory. Would an unconditional state income facilitate people to accept low paying work, thus subsidising exploitative employers? Or would it have precisely the opposite effect, with people using the financial independence provided by their universal income to reject such unsatisfactory work?
In 2015, Paul Mason wrote a Guardian article asserting the latter. Entitled Paying everyone a basic income would kill off low-paid menial jobs, the article proposed a UBI set at £6,000 a year per person while abolishing state pensions and basic welfare benefits. Mason predicted enthusiastically that of the positives of UBI: “The first would be to eradicate low-paid menial work. Why slave 10 hours a day with mop and bucket for £12k when you get £6k for free? Corporations would rebalance their business models towards a high pay, stable consumption, lowish profit world, and the tax take would rise as a result. All tax relief for the poor would end.” (5)
Somebody unfamiliar with Paul Mason’s intellectual output might imagine, therefore, that the ‘successful’ Finnish study on which he later triumphantly tweeted, had demonstrated that many among the 2,000 recipients had refused low paying jobs, and thus either were more likely to remain unemployed or to successfully hold out for higher quality work. But those who had set up this pilot scheme had envisaged quite an opposite result. As Professor Heikki Hiilamo, Professor of Social Policy at the University of Helsinki, explained: “The basic income experiment was more than anything else set out to study how the social security system could be reshaped in a way that promotes active participation and gives people a stronger incentive to work. That means employment outcomes were the focal point of the endeavour. In simple terms, the idea was to test if the carrot works better than the stick in encouraging the unemployed to accept new job offers and to seek income from entrepreneurial activities.”
In fact the Finnish study provided no evidence for either of these theses. Prof. Hiilamo concluded: “With that respect the results were disappointing. Basic income recipients did not have more work days or higher incomes [from work] than those in the control group. Despite the fact that basic income recipients had clearly better incentives to work, there were no statistically significant differences between the groups.” (6) Among the reasons for this lack of any significant effect one way or the other, it could be surmised that firstly, the ‘stick’ of benefit sanctions (which are in force and becoming more punitive in Finland, contrary to impressions of social democratic Scandinavian beneficence) works only to degrade and further impoverish the unemployed, rather than ‘incentivising’ people into employment; and secondly, that the €560 a month, a comparable amount to Paul Mason’s suggested £6k per year, is well below subsistence level and hardly provides the financial independence needed to refuse to seek or accept ‘low paid menial jobs’.
THE LEFT HAND GIVETH, BUT THE RIGHT HAND TAKETH AWAY
But of course, an unconditional income provided via the state, for all members of society and not just a couple of thousand jobless individuals, and set at a level far above £6k per year, so that it might really create the possibility of avoiding unsatisfactory employment or even of ‘challenging the ideology of work’ might have outcomes very different from those suggested by the Finnish study. And a high enough level of universal benefit would make possible one practical result, which is claimed or implied by some proponents of UBI: that means testing for state benefits could be ended. But there is a serious problem here, which is that the calculations usually given for the cost of implementing UBI, which claim to show that such a scheme is potentially affordable, are based on a low level of UBI payments which would not allow the realisation of the lofty aims which UBI is supposed to achieve. Moreover, in these ‘affordable’ schemes most of the money paid out to people is to be recouped by the abolition of some existing state benefits and increases in taxation, including the taxes paid by the lower paid.
Paul Mason calculated in 2015 that his scheme, involving giving everyone a mere £6k while abolishing state pensions and most welfare benefits, would cost approximately an additional £160 billion per year. In March this year Daniel Susskind proposed, in the pages of The Financial Times, a scheme with a somewhat higher level of payments: “For instance, handing out £1,000 cash per person per month would cost the government about £66bn a month — a fraction of the nearly £500bn bailout the UK needed to stay afloat during the 2008 financial crisis.” (7) Susskind’s proposed UBI, although better than Mason’s meagre £6k a year, would still be set at a level below what could be considered as providing a reasonable standard of living for a single person. But Susskind’s scheme did not involve partially or wholly clawing back its cost by the abolition of existing welfare benefits or increases in taxation. It is important to note that the projected feasibility of his £66 billion a month proposal was based on the assumption that it would be strictly for a temporary period, to help prevent the economy crashing during Covid-19 lockdown. Based on Susskind’s figures, a permanent scheme on these lines would cost almost £800 billion a year- equivalent to over 35% of the UK’s GDP, more than the total annual central government tax revenue, and about four times the total declared annual profits of companies listed on the UK stock market. Even if part of that cost were reclaimed by means of abolishing all state benefits including pensions, that would still leave an overall cost approaching £600 billion a year. Hence the scheme could be implemented for a few months only and, it can also be assumed, would be financed not from immediate tax revenue but by a big increase in state borrowing and/or quantitative easing. (In the event, the government opted instead for the much cheaper option of the furlough and the self-employed income support schemes.)
The paper issued in 2016 by the ‘soft left’ think tank Compass, entitled Universal Basic Income: an idea whose time has come? is the study which is most widely cited by UBI advocates as proving the feasibility of UBI. This paper is worth looking at when comparing the promises versus the costs of projected universal income schemes. The various options which are set out in the Compass paper involve payments per working age adult that are very much lower even than Mason’s annual £6k, ranging from £51 to £73.10 per week, with the cost of the payments being (partially) clawed back through abolition of some current welfare benefits and (partially) paid for by rises in taxation. Notably, it concludes in regard to the possibility that UBI could remove the need for means tested benefits: “a full scheme that replaced all or most of the existing [benefits] system would be difficult to implement in the present circumstances; it would be too expensive and there would be too many losers among poorer households”
So, this kind of UBI scheme would make a lot of poor people even poorer. Why? Because, to prevent the overall cost looking frighteningly expensive, the amount of the universal payment has to be less than what many low to middle income people would lose due to tax and benefit changes which are part of the scheme. And although described as ‘full schemes’, the most palatable of the more far-reaching models considered in the paper still involves the continuation of housing benefit, council tax support, and other benefits; despite which, several groups including single parents would lose out, and there would be big increases in child poverty and pensioner poverty! Although in these schemes the basic rate of income tax would rise from 20% to 30%, and the higher rate from 40% to 50%, there would still be a gap of £35 billion to £43 billion a year in terms of funding the UBI payments.
The partial UBI schemes projected in the Compass paper, which involve keeping existing means tested state benefits and increasing taxes (although the UBI payment itself would be taken into account when doing the means testing) would also involve some people on lower incomes losing out. In these models, single parent families and couples with children would become financially better off, but at the expense of single pensioners and working age people without dependent children. By the authors’ calculations, the overall cost of the ‘best’ of these partial schemes (which would pay £71 per week to working age adults over 25) would be an annual £168.8 billion net after deducting the savings from reduced payments of welfare benefits and tax credits. This would be mainly defrayed by abolishing the income tax personal allowance and increasing income tax rates, including a rise in the basic rate from 20% to 25%. According to the Compass paper, this would still leave an overall funding gap of £8.2 billion a year.
Even less ambitious, although more straightforward in its method, is a proposal outlined in a paper by Alfie Stirling and Sarah Arnold for the New Economics Foundation in 2019. In fairness to the authors of this proposal, they do not claim that it amounts to a UBI as such, but it has similarities. It would involve paying every adult with a national insurance number a ‘weekly national allowance’ of £45.68 a week in Scotland, or £48.08 in the rest of the UK (the difference being due to slightly different income tax rates either side of the border). (8) Under this proposal, the expense of the weekly payments would be more than recouped by increased tax income, gained by scrapping the income tax personal allowance, and also by making people’s income from the new ‘national allowance’ subject to means testing and income tax; and the surplus would be used to increase child benefit (to return it in real terms to its 2010/11 level). While the authors calculate that this would reduce overall inequality, when the figures in the paper are looked at in detail it becomes apparent that- as with the models proposed by Compass- there would be substantial numbers of people on below average incomes who would be made worse off through the scheme- including single parents, and families with four or more children. Therefore, as the paper concedes in one of the appendices, under the scheme, “Adult poverty falls significantly but child poverty remains largely unchanged”. It also needs to be noted that the redistribution under this scheme would take place almost entirely within the bottom 95% of income earners, with almost no perceptible cost being borne by the top 1 or 2%.
Thus, to put it simply, the closer a scheme gets to achieving the advertised goals of UBI, the less affordable it becomes; and conversely, the closer we get to the nuts and bolts of a feasible scheme, the further we get from any thoughts of a transition to ‘post capitalism’, or even from not worsening the financial position of many less well-off people.
STEPS TOWARDS SOCIALISM
But, even if it were possible to construct a version of UBI that would go some way towards the aspirations of those on the left wing of the array of pro-UBI voices; and avoid leaving significant numbers of working class people worse off; and somehow combine it with cast iron safeguards against it being used for neoliberal or xenophobic purposes; and be a relatively inexpensive scheme that would require ‘only’, for example, around £170 billion a year (as in the ‘best’ partial Compass scheme) to be raised mainly from additional tax revenue - would that make UBI a worthwhile demand for the labour movement?
Two questions need to be raised here. One is whether we want to attack the link between productive labour and social value and income.
Paradoxically, despite removing millions of people from their workplaces, the Covid-19 crisis and its economic consequences have come as a dramatic reminder of the importance of productive work, and of the use value of some forms of economic engagement as opposed to others. People’s understanding of the usefulness of the labour of workers in health and social care, refuse collectors and teachers, workers in production, distribution and retail (in contrast to the activity of property speculators, city traders and other dealers in and receivers of income from the ownership of wealth) has been increased.
The role of labour has always been a key part of the socialist understanding of society and of our critique of capitalism; it is reflected in the words of the Labour Party’s old ‘Clause 4’ which aimed: “to secure for the workers by hand or by brain the full fruits of their industry […] through the common ownership of the means of production, distribution, and exchange.” That demand, and the acknowledgement of productive work as the source of wealth and value, needs to be emphasised and can, if anything, find readier support and understanding than before the current crisis.
The second question flows from the fact that we already have demands and policy proposals, that, in a capitalist economy, would need to be paid for by increasing the government’s tax income. The additional spending envisaged in the 2019 manifesto for a Corbyn Labour government would have required a total annual revenue of £82.9 billion to be raised by changes in taxation. Encompassing very modest tax increases on corporate profits, capital gains, the incomes of people earning over £80,000, and action to tackle tax avoidance and evasion, the rises in state expenditure which this was to allow were equally modest: on education including abolition of tuition fees, on health and social care, restoring cuts in public sector pay, reversing some of the cuts in state benefits, and other very moderate steps in a better direction. (9) Unless these proposals for restored or improved collective provision are to be dropped, the additional scores of billions for a UBI scheme would have to be funded by very much greater tax increases, on top of those set out in the 2019 manifesto. If it is seen as viable to propose such huge tax rises - and there is at least a very strong case for much higher taxes on the super-rich and on corporations than was proposed in last year’s Labour manifesto - it does not at all follow that the entirety, or almost the entirety, of these hard-gained extra funds should be used to create a UBI scheme.
One use for additional tax money, costing a tiny fraction of what a UBI would cost, could be for increases to state welfare benefits well above those set out in last year’s Labour manifesto, combined with removing the punitive and inhumane sanctions regime. Another would be for an extensive programme of nationalising firms and setting up state owned companies, which would be subsidised to ensure that they provided mass, well paid, unionised, secure employment and free training. A hint of such a plan could be found in the Corbyn-era Labour manifestos which included a national investment bank, the state led ‘green new deal’ and the extension of broadband provision via the nationalisation of BT Openreach. On an ambitious enough scale, these proposals, alongside a big expansion of public services, would not only end the pressure on people to accept low quality, badly paid work, but would allow our economy and society to be rebuilt, on the basis of productive and well rewarded labour, in the interests of ‘the many not the few’- in other words, taking steps towards socialism.
We have just seen, and are still seeing, how mooting even the most modest steps in that direction arouses enormous and fierce resistance by the establishment – but there is no short cut to the achievement of a better society.
Often referred to as a 'citizen income', UBI could reinforce and worsen the inequality and exclusion which are features of the labour market...