At the start of this year, Finland began a trial of a ‘universal basic income’ system, under which 2,000 individuals who were receiving welfare were selected to receive a guaranteed monthly income of 560 euros over the next two years. But can basic income systems really address problems of social insecurity? Neil Warner, Frederick Harry Pitts, and Lorena Lombardozzi explain why a successful implementation of a basic income will require a wider and more radical intervention in the economy.
Credit: Russell Shaw Higgs (CC BY-NC-SA 2.0)
A great deal of recent commentary and discussion suggests that Universal Basic Income (UBI) is an idea whose time has come. Although hundreds of years old as a proposal, it is probably the subject of more attention and mainstream interest now than it has ever been. Forms of UBI are being proposed, discussed and even experimented with both by the right and the left. But it has become especially prominent in recent discussions on the left. It is this debate about UBI among social democrats and socialists that we focus on in a new paper for the Foundation for European Progressive Studies.
In the paper, we argue that its current appeal as an idea is that it seems to answer what we describe as ‘a triple crisis of the social’. The first of these is a crisis of the society of work, sparked by flexibilization and automation. Secondly, there is a crisis of social reproduction due to the severed link between the wage and subsistence and simultaneous cutbacks in the welfare state. The third strand of the triple crisis is that of social democracy itself, as a growing number of people have seized on UBI as a way to regenerate the confused vision and scant intellectual resources of the left.
Yet in the debate about UBI that has followed, powerful underlying forces are treated as givens without social and historical foundation, and both sides tend to miss key questions that need to be addressed. The fundamental roots of these crises cannot be resolved by the implementation of a UBI alone, and the desired aims of its leftist proponents can only be achieved, if at all, by their situation within a wider suite of radical reforms.
Proponents of UBI suggest that basic income is the answer to challenges of flexibilization and automation that are undermining the supply of jobs and the adequate remuneration for work. These proponents argue that it could expand the degree of freedom within the social relations of production by providing a minimum means of subsistence beyond wages. It is also argued that UBI would be able to support more creative pursuits, and the exploration of new ideas without the urge of survival. Yet critics of UBI, particularly in the trade union movement, point out that workers would still lose the capacity to resist capital that is granted by their ability to provide or withdraw labour. The key issue of this disagreement, however, comes down not to the qualities of UBI itself but the wider structure of social relations within which it is embedded
The concept of ‘social reproduction’ helps us to recognise the importance of this wider set of social relations. Social reproduction is how workers, and the mode of production of which they are part, subsist and survive in a particular context. The current crisis of social reproduction is connected to what Nancy Fraser calls a ‘crisis of care’, in which women are increasingly integrated with the waged labour market, but remain at the same time the primary caregivers of society, while state support for care is being withdrawn.
The Marxist feminist focus on social reproduction has helped to popularize calls for UBI, partly via demands around ‘Wages for Housework’. But others, however, have been more circumspect. Whilst broadly in support, Kathi Weeks argues that ‘demand for a UBI does not address either the gender division of household-based reproductive labour or its privatization’. It could relieve budgetary pressures on women, especially those affected by job losses, and could help to ‘reorient’ gender-based divisions of labour. But it could also have the contrasting effect of helping to reinforce traditional heteropatriarchal family structures by leading to ‘more men participating in waged work and more women working at home’.
Recent research suggests that women are the first ones to be cut off from the wage-subsistence relationship with additional and indirect risks of segregation, subordination, and dependence on asymmetrical income relations. Basic income seems unlikely to tackle this danger, and may even exacerbate it. Either way, the existence or non-existence of UBI does not emerge as a primary mechanism for dealing with the gendered division of labour. It is ambivalent in its impact and is contingent upon more fundamental initiatives in the sphere of social reproduction.
Green proponents of the basic income argue that UBI will enable an evolution away from ‘productivism’ and growth-oriented policies. But this misunderstands the contradictory unity of production and consumption captured in theories of social reproduction. There are constraints on our capacity to consume, and these relate to the way we produce, and vice versa. UBI may divert us from the intensive productive activity on which our economic system rests and decelerate our dependency on the exploitation of natural resources. But, without a fundamental shift in the social relations that undergird a society based on the coexistence of overproduction and underconsumption, the possibility remains that it still stimulates the economy in such a way as to exacerbate tendencies towards reckless growth and environmental ruin. Once again, UBI cannot be seen as a standalone policy that in and of itself changes the world.
Additionally substantial new fiscal resources would be needed for a genuinely progressive and meaningful UBI. This problem of finding these resources becomes more pressing in the context of the wider model for the future that its proponents tend to assume – that it would facilitate a move towards lower work hours, lower growth, and an end to dependence on waged labour. A reduction in the amount of work hours in the economy and in the proportion of wages in people’s incomes would inevitably also imply a reduction in the amount of labour income available for taxation. Additional means of funding would therefore need to be found, but this would require significant new departures in taxation, away from the labour taxes and growth-dependent financing upon which the fiscal system of modern industrial states rely.
Additionally, if UBI, as envisioned by left-wing advocates, had a liberating or decommodifying effect that increased the bargaining power of labour, this would have long-term inflationary consequences once the current deflationary situation in the developed world had been overcome. To deal with this would require substantial restructuring of the relations between capital and labour – at the very least amounting to a progressive form of social partnership, or more ambitiously a tradition towards democratic management and/or ownership of companies.
All of these considerations point to the fact that successful and progressive implementation of UBI would require more wider, radical and dramatic, intervention in the capitalist economy. UBI is posited as a remedy for the social insecurity that attends the crises of work and social reproduction, and consequently as a way for social democrats to renew their ideas and their sense of direction. But we can see that it ends up facing the same dilemmas which it purports to solve for social democracy. The question then arises as to whether arguing for or against UBI is a pursuit worth paying much attention to at all, or whether it is a distraction from the fundamental problems that remain much the same with or without UBI.
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Note: This article originally appeared at our sister site, British Politics and Policy at LSE. It gives the views of the authors, not the position of EUROPP – European Politics and Policy or the London School of Economics.
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Neil Warner – Trinity College Dublin
Neil Warner is a PhD researcher at Trinity College Dublin.
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Frederick Harry Pitts – University of Bristol
Frederick Harry Pitts is Lecturer in Management in the School of Economics, Finance & Management at the University of Bristol.
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Lorena Lombardozzi – SOAS, University of London
Lorena Lombardozzi is a Phd Researcher at the School of Oriental and African Studies, University of London.
Sorry, but Basic Income makes no sense what-so-ever. €560 is not a living wage. At that rate, a full 1/8 th of two years of Basic Income would go to the purchase and air-time for an iPhone. I don’t know what the cost of renting an apartment in Finland is, but in France or the UK what the total €560 would buy would be a garbage dump in most cases without water or electricity or even food. So even with that amount you have to work somewhere. Now just not as many hours, maybe, but if you have no skills you won’t get any hours, or they’ll be at minimum wage and you are worse off then under current social programmes.
On the flip side, if it ever goes up to a meaningful amount (say €1,560 / month, which one could live on), a) rents of apartments and costs of everything would go up making it unliveable again, and b) as is pointed out in the article the number of people working would go down thus driving already massive government debt beyond any hope of repair and ultimately tanking any participating economy in a manner most recently seen (for different, although not entirely different reasons) in Venezuela.
One simple way to model Basic Income is this: How will businesses and the top 10% of society be able to fund the bottom 90%? If all the top 10% income and wealth were distributed evenly to the bottom 90% in most countries the Basic Income would only be €200 or thereabouts, which is below any liveable amount by a wide margin. And that’s before businesses switch to robots or outsource production to China to lower their costs and thereby eliminating wage income to tax. So Basic Income doesn’t offer any explanation of where the money is coming from in a reconstructed system.
Another simple way to think of Basic Income is the full welfare packages that were around in the 1960’s and 1970’s. The abuse of them was legendary in their time, and is the direct cause of the structure of the targeted and limited programmes we have now, and as there are no apparent conditions on the Basic Income this would in fact emulate 1960s era full welfare in all its facets inviting 10s of thousands out of the workforce and onto the dole. So Basic Income doesn’t offer any explanation of how to deal with couch potatoes living on the dole.
How is Basic Income going to work when every two employees in the next few years will be funding one baby boomer pensioner’s full pension? Those pensioners will not give up their pensions without the biggest riots ever seen in most countries (yes, granny can, and most certainly will riot if you touch her pension). Especially if Basic Income is less than the full pension. So Basic Income doesn’t offer any bridge transitioning from current programmes which a very large section of society has been expecting and looking forward to and counting on for 65 years.
As to the testing going on in Finland, another in Ontario, Canada and other places, there won’t be useable results from those tests. It’s a few people who are completely surrounded by and able to get full access to the current traditional economy. They’ll top up the amount by sneaking in an unreported night job shovelling someone’s snow for unreported cash. If such a program were adopted nationally that would no longer be the case and would be a very different scenario with likely very different, and very unwelcome, experiences. So Basic Income is not being properly tested and cannot be verified in the field.
The idea of a Basic Income is devoid of practical and necessary data obtained from the study of history and existing science: such as psychological studies based on 1960’s welfare experiences and economic studies centred on basic economic supply and demand theory of labour in the market place, and a review of government income sources in a post-industrial / information age world. Theories which do no incorporate and
in fact lead with the knowledge researchers have spent decades acquiring is very suspect to say the least. And most people will likely find the draconian measures needed to compensate for (externally) known psychological and economic principles unacceptable.
In short, I hope the whole idea is put in the trash heap in which it belongs.