As the debate about Universal Basic Income continues to rage, economist Brian O’Boyle agrees with left proponents of a UBI that inequality needs to be tackled urgently, but argues that a UBI isn’t the solution.
Universal Basic Income (UBI) is a proposal to pay every adult citizen a weekly amount regardless of their income or wealth. Unlike traditional welfare payments, UBI is also received regardless of employment status, meaning there is no trade-off between this form of state support and earning wages.
Historically, the idea has attracted support across the political spectrum with Jean-Luc Mélenchon on the left and Milton Friedman on the right arguing for different versions of a basic payment.
UBI has also gained policy credibility more recently, thanks to the rise in precarious employment associated with neoliberalism and the threat to lower-paid workers associated with the pandemic.
Several European states have implemented UBI pilot schemes with a view to ascertaining whether they should be rolled out more generally. In 2017 for example, the Finnish government paid 2,000 volunteers €560 a month for two years regardless of their employment status. A version of UBI has also been piloted in Barcelona, where 1,000 randomly selected poorer families were given €1,650 per month for two years and in Utrecht, in the Netherlands, where 250 families are being given €1,050 a month indefinitely.
In 2019, a more substantial version was briefly touted by the British Labour Party after a report they commissioned into UBI made what their Finance Spokesperson, John McDonnell, stated was an “important contribution to the debate around inequality, austerity, poverty and…a just economic system”.
The author of the report, Professor Guy Standing, is one of the more articulate defenders of a left-wing UBI and his ideas are taken up more extensively below. In 2016, Social Justice Ireland put forward a UBI of €150 per week to be paid for through a flat income tax of 40%. They have also welcomed calls from the Arts and Cultural Recovery Taskforce for a basic income to be paid to arts and culture workers in the wake of the pandemic.
Should socialists follow suit in arguing for a progressive UBI? This article1 will argue that, on balance, there are better demands for radicals to make in a period of crisis for the capitalist economy, ones that would more clearly redistribute wealth and power and would help to rachet up the struggle against capitalism itself. Before this, however, it outlines what many believe are the important benefits of UBI for working people and the poor.
The case for a Progressive UBI
The left case for UBI must be understood in the context of neoliberalism. In the post-War era, trade union density was on the increase, real wages tracked productivity and there was increased security for families through an expanding welfare state.
Socialists didn’t see this as a cure for exploitation of course, but for Professor Standing and others, the link between income and work was defensible, as people became progressively better off through their work and through a welfare state linked to employment.
Over the last 40 years, however, workers have suffered a series of defeats at the hands of global capital. Trade union rights have been reduced, real wages have been held down, the welfare state has been weakened and pension provision has been rolled back. Over the same period, the cost of providing welfare has been shifted from capital onto labour. The tables below capture the decline in union power and real wages in the neoliberal era.
One consequence has been wealth and power flowing increasingly to rentiers – those who earn without producing – while increasing numbers are forced to the margins, sometimes working in precarious employment, on other occasions relying on a welfare system no longer fit for purpose. This has created a world of “unstable jobs, low and erratic incomes, and insecure lives”, which, according to Standing, can only be tackled by breaking the link between income and working.
By ensuring that everyone has enough to live on irrespective of their role in the capitalist economy, Standing argues that a UBI would encourage individual freedom and human flourishing, enhance security for all, reduce the inequalities associated with gender and race; deny space for the far right and decouple our lives from economic growth.
If people at the lower end of the socio-economic spectrum had a guaranteed basic income, they would be less vulnerable to poverty and predatory employers – particularly relevant in the era of zero-hour contracts and increased automation. People at the lower end of the income scale would also gain relatively more from a UBI as the marginal benefits of a hundred euro are much higher when someone has less to begin with.
This would allow people to reach more of their potential whilst avoiding dependency relationships that are unsafe, exploitative, or degrading.
A UBI sourced through progressive taxation would also begin to rebalance the inequalities that capitalism creates around race and gender. Because women and people of colour are structurally disadvantaged through the market economy, Standing argues that these groups would benefit disproportionately by breaking the link between well-being and employment – supporting women who need to exit abusive relationships for example.
A progressive UBI would also reduce the despair and anger created by neoliberalism which has acted as a recruiting sergeant for the hate-filled politics of the far right. Finally, by recycling unpopular carbon taxes to every person as a UBI, Standing feels governments could better convince their populations to take the difficult medicine associated with a Just Transition to a sustainable economy.
If these are some of the progressive outcomes associated with a UBI, procedurally there would also be benefits, as a system of universal income would be far more efficient to administer. It would also uphold the universality of rights long championed by the left and end the problems of stigma, marginalisation and poverty traps associated with the current targeted system.
These are extremely strong claims that hinge on the ability of some social force – crucially not defined by Standing – to deliver what would have to be an enormous shift in the power dynamics of capitalism. They also rely on a level of income that would genuinely protect people from poverty and insecurity, but in a context of weak trade unions and declining levels of social protection neither of these conditions are likely to be met.
Reflecting on the fact that UBI seems to gain popularity in periods of defeat for the working class, Daniel Zamora argues that the paradox is that what seems like a practical policy to end the insecurity of low pay is actually a utopian fantasy that risks further capitulation to the market system. To see this, consider two central questions that must be answered before advocating for a UBI – how much would it give to working people and, in whose interests, would it likely be implemented?
The Left Case Against Basic Income
The most striking feature of the UBI literature is the gap between its abstract promise of social improvement and the amount of money typically proposed as a payment. To allow people to avoid unsafe and degrading work a progressive UBI would presumably have to ensure a living wage.
According to the Low Pay Commission in Ireland, this would mean €12.30 per hour or €460 for an average working week. With 3.5 million adults in the country this would cost €83 billion annually or more than the total amount of public spending in a normal year.
To put this in context, the social protection budget for 2021 was just €25 billion meaning at least a threefold increase that would have to be paid for by taxing the rich. A progressive UBI would also have to protect the current level of service provision, meaning at least a doubling of public spending overall.
Even if the rate was reduced dramatically to €1,000 per month for every citizen, it would cost €42 billion annually – far more than the current system could sustain without an enormous transformation in power relations. Faced with these realities, progressives typically capitulate to neoliberal common sense, arguing for a UBI set at a fraction of these figures.
In his report to the British Labour Party for example, Professor Standing references several potential models, each of which would give people a tiny fraction of what they require to live with dignity – between £50 – £100 per week. He also references a pilot scheme advocated by the think-tank, Compass, which would give people £292 per month and simultaneously take away their existing entitlements. Even the authors of the Compass Report admit that, set at such a low level, UBI would be catastrophic, with child poverty estimated to increase by 10%, pension poverty by 4% and poverty among the working poor by 3%.
When contrasted with these proposals, Social Justice Ireland’s seems more appealing, proposing a UBI of €650 per month. This would cost €40 billion annually, however, requiring a universal flat income tax rate of 40% and the loss of all core social welfare payments, except illness and disability benefits. Once again, the idea of living with dignity would be replaced with the dystopian reality of less money for welfare recipients and regressive taxes on the rest of us.
Despite coming from progressive sources, each of these schemes inadvertently reproduces Milton Friedman’s vision of a UBI, replacing hard won social gains with a minimal weekly payment. Far from supporting a progressive challenge to neoliberalism, this would be a capitulation to it for two interrelated reasons.
Firstly, it would be a step towards a purer form of market society as the cash nexus becomes more prominent and privatisation becomes more likely. Over the last 40 years neoliberals have attempted to wedge the market ever further into our lives, while dismantling key parts of the public sector.
Once a UBI became generally acceptable, it is likely that a neoliberal state would put major pressure on the provision of public services, in favour of opening up spaces for capital to profit. In a society that has already commodified much of the housing stock it would potentially be a trojan horse for the private sector in healthcare and education.
Thus, rather than de-commodifying our lives, this would extend the logic of capitalism instead of reducing it.
Secondly, it would encourage employers to reduce their wage bill, safe in the knowledge that workers already had a minimal payment and no alternative welfare to fall back on. Viewed in this light, a UBI could very well represent a transfer from workers to unscrupulous employers who already have a track record of paying low wages topped up by the welfare state.
To sum up this part of the argument, a genuinely progressive UBI would have to be.
- Paid for through progressive taxation; be supplementary to welfare services and certainly no lower than current rates of social protection.
- Constructed so that the UBI could not be a substitute for a living wage or undermined by inflation by the owners of capital.
None of these conditions seem likely in the context of neoliberalism, placing the onus on progressive forces to show that a pro-worker UBI is not only possible, but that there are social forces that can deliver it.
Beyond the feasibility of a genuinely redistributive UBI, there is also the question of whether there are better demands for the working class to make. In this context, it is surely better to argue for a living wage fought for through revived trade union militancy than to argue for a cross-class utopian strategy to pay every adult a basic weekly amount.
If the trade union movement took up the call for a living wage, agitated around it and won concessions, this would be redistributive by its very nature – coming from the profits of the ruling classes. This would not only lift wages across the system, it could help to rebuild the combativity of the workers movement at a time when this has never been so important.
Victories won by the working class would also be more difficult to take back versus a UBI issued by the state and vulnerable to inflation. An economy owned and controlled by the ruling class is one in which any UBI paid for through progressive taxes would be one that would also be vulnerable to higher prices administered by employers.
Politically, it is also more tangible to argue for a significant increase in the core rates of social welfare than to call for the tens of billions required for a pro-worker UBI. While it is very unlikely that every adult would be given €1,000 per month, workers have become accustomed to receiving €350 from a Pandemic Unemployment Payment and would likely respond well to any social movement that fought to retain this alongside a living wage.
This payment of €1,516 would make an enormous difference to those on social welfare at the same time as it would put pressure on low-pay employers (we already have evidence of this from the pandemic) to pay a living wage. If we want the security that motivates progressive claims for UBI, it is better to argue for targeted measures for living wages, a basic payment for specific groups of workers (for example arts workers and taxi drivers), universal basic services and core welfare payments that allow people to live with dignity.
These demands link workers to a set of struggles that will increase class consciousness and point towards the need for more resistance to the system. A UBI issued from above and received on a cross-class basis achieves none of this and will, if anything, allow the ruling class more control over people’s lives.
Universal basic payments will not end the exploitation and insecurity that so worries the progressive wing of the UBI movement. For that we need left-wing demands that prepare the working class for a socialist revolution.