Universal basic income: utopian dream or libertarian nightmare?

Universal basic income (or UBI), an unconditional payment to all citizens, has become part of the economic zeitgeist in recent times, embraced by advocates on both the Left and the Right as a solution to the symptoms and sores of the crisis-ridden capitalist system.

John McDonnell, the veteran Labour left and Shadow Chancellor, has announced recently that he and his team are exploring the idea as a centrepiece of Labour’s economic programme. Across the Channel, Benoît Hamon, the so-called “French Corbyn” and Socialist Party presidential candidate, has promised a UBI if elected. Meanwhile, the possibility of a UBI has even gained traction in India, where the policy has been seriously suggested as a simple alternative to the complex web of welfare provisions currently on offer.

But what would be the real impact of UBI? Why has it suddenly risen to prominence as a demand in the past few years? And, most importantly, who is actually raising the proposal – and in whose interest?

Race against the machine

An apocryphal tale is told about Henry Ford II showing Walter Reuther, the veteran leader of the United Automobile Workers, around a newly automated car plant.

“Walter, how are you going to get those robots to pay your union dues,” gibed the boss of Ford Motor Company.

Without skipping a beat, Reuther replied, “Henry, how are you going to get them to buy your cars?” (The Economist, 4th November 2011)

The story recounted above is likely fictional. Nevertheless, it draws upon – and highlights – a very real and grave concern amongst the more far-sighted bourgeois commentators today: the threat of “technological unemployment” – the so-called “race against the machine”.

Far from welcoming the advances in modern technology and the vast potential for liberating humanity that automation offers, the rapid pace of technological development today is seen as a dangerous and uncontrollable force that could make vast swathes of the working – and even middle – class obsolete in the not-too-distant future.

Who, in this scenario, the above anecdote asks, will buy all the plethora of commodities that the world economy’s vast productive forces continue to churn out?

Above all, this question of automation and machinery has begun to shine a light upon the contradictions of the capitalist system, exposing the rank hypocrisy of those politicians who demand austerity and attacks on ordinary people, whilst in the same breathe venerating the billionaire “entrepreneurs” who, between just eight of them, control as much wealth as half the world’s population put together.

It is becoming increasingly clear to those who have eyes to see that an army of robots has helped to create a “reserve army of labour”, as Marx described it: a mass of unemployed whose presence puts a downward pressure on wages for those in work. Those replaced by new technology are not retrained and re-educated in order to give them the skills required to keep up with this ever-accelerating treadmill of capitalism; instead they are thrown onto the scrapheap and forced into the rapidly expanding “gig economy” – a shadowy netherworld of bogus self-employment, insecure work, and zero-hour contracts.

The result is that, despite the array of automation and technology deployed in production, the growth in productivity across the economy has actually stalled; it is cheaper, from the point of view of the parasitic profiteering capitalist, to recruit from the ranks of the “precariat” desperately looking for a job than to invest in machinery that actually reduces the need for labour. From the perspective of capitalism, then, there is both “too much” automation – in terms of “technological unemployment” – and, simultaneously, “too little”, with the stagnation of productivity.

The system is broken

It is this context of a broken economic engine that we see the emergence of the demand for a “universal basic income”, or UBI: a uniform payment given to all in society, regardless of wealth or needs.

The idea behind the UBI, in theory, is that it would break the link between work and pay, providing – on the one hand – workers who have been made redundant by robots a safety net that prevents them from getting stuck in low-paid, precarious jobs, whilst also allowing them to transition from obsolete industries into new, more productive sectors. And – on the other hand – enabling the capitalists to invest in automation and new technology without the moral anxiety (or, more importantly, the practical concern) of adding to society’s legion of the unemployed. Et voilà! The wheels of capitalism are well and truly greased: investment goes up; productivity increases; the economy grows – and meanwhile workers are able to smoothly move from one job to another for the rest of their lives.

Would that it were so simple. The reality is that productive investment today is at an all-time low, not because of any principled apprehension about the fate of sacked workers, but because of the enormous levels of overproduction – or “excess capacity” as the bourgeois like to euphemistically describe it – that hang like an albatross around the neck of the global economy. The capitalists invest, not to provide jobs, meet needs, or develop the productive forces, but to make profits. If goods cannot be sold because ordinary families do not have the money to buy them, then industry will be mothballed. And if the bosses can get more profit out of ten exploited workers than from one shiny new machine, then the workers will stay in place and productivity will remain sluggish.

Indeed, the relationship between work and pay has already been broken – but not in any positive sense. In all countries – both in the advanced capitalist countries and the so-called “emerging” economies – the share of wealth going to labour has decreased, with real wages remaining stagnant despite an increase in GDP. The working week grows longer, and yet take-home pay stays the same.

In whose interest?

Despite being raised on the basis of fundamentally false premises, the call for a UBI has nevertheless found an echo in this epoch of eye-watering inequality. Already, social and economic experiments involving UBIs are underway in a variety of countries, including Canada, Finland, and Holland. In Switzerland, a proposal for a SFr30,000 per annum (around £24,000 per year) UBI was rejected by 77% to 23% in a referendum on 5th June 2016. In Britain, meanwhile, the demand for a UBI has been raised by the leaderships of both the Labour Party and the Green Party.

For those on the Left, the UBI is proposed as a progressive demand: a reinforced safety net, beyond the sticking plaster of the current welfare state, funded through increased taxation on big business and the rich. Raised in such a manner, it is clearly a demand – like any genuine reform – that should be supported and fought for.

UBI, however, is not an inherently left-wing or progressive measure. The idea of a universal payment, in fact, has many advocates on the libertarian right. Indeed, even prominent bourgeois economists such as Milton Friedman have made similar proposals in the past, with his idea for a “negative income tax”.

For these respectable ladies and gentlemen, the concept of a UBI has great appeal as an extremely streamlined version of – or, worse still, replacement for – the welfare state. In one fell swoop, these small government zealots suggest, one could “simplify” (read: slash) vast swathes of the taxation and benefits system, “eliminating bureaucracy” and “reducing market interference”.

At the same time, one can clearly see the attraction of the UBI to the Schumpeterian liberals who preach the virtues of the invisible hand and the powerful transformative forces of “creative destruction”. Provide a primitive safety net, eradicate “barriers” to job creation such as the minimum wage, and give the anarchy of the market a free hand to destroy industries and jobs, without any planning or provision of education and retraining. It’s a libertarian’s dream – and a nightmare for the working class.

Some free-market fanatics, meanwhile, have even advocated the idea of a relatively large UBI payment, but (and here’s the catch) only on the proviso that pesky public services – such as healthcare and education – are scrapped, i.e. privatised, and opened up to profit.

Far from strengthening the conquests made by previous generations, therefore, one can see how the demand for a UBI can equally be raised by those looking to roll back and destroy such gains. Rather than increasing the welfare state in a progressive way by redistributing society’s colossal wealth, a UBI could instead become a deeply regressive fig leaf for a wholesale attack on – and privatisation of – public services, bolstering the capitalist market instead of weakening it.

Marxists will fight for any reform that genuinely improves the living standards of workers and the poor. But in order to ascertain whether we can support this-or-that demand, we must first ask: is it really a reform that is being proposed, or – in fact – a counter-reform?

In this respect, the call for a UBI in the abstract is meaningless. The devil is in the detail. Above all, it is necessary to analyse the question from a class point of view and look at who is raising the demand, and – most importantly – in whose (class) interest.

Who pays?

As with all such reforms, the most pertinent question is: who pays? Where, one must ask, would the money come from? Indeed, it is this key point that right-wing opponents to UBI highlight.

In the case of the Swiss referendum last year, the government came out against the £24,000 per year that was being proposed on the grounds of this amount being unaffordable (to put the proposed level in perspective, however, bear in mind that the cost of living in Switzerland is painfully high, and average salaries are around twice this suggested UBI amount). In places such as Finland, the “more reasonable” UBI suggested is the miserable sum of approximately £5,700 per year – a value that would be small change to the millionaires receiving it (don’t forget, it is an unconditional universal payment, after all), but that would actually leave the poorest who currently rely on the provision of means-tested benefits worse off.

In order to provide a UBI payment better than what is currently on offer through the welfare state, some fairly significant tax increases would be required, as the Economist highlights with some hypothetical estimates:

“Setting up a basic income would be no easy matter. To pay every adult and child an income of about $10,000 per year, a country as rich as America would need to raise the share of GDP collected in tax by nearly 10 percentage points and cannibalise most non-health social-spending programmes. More generous programmes would require bigger tax increases still.”

Before continuing, let us make one thing crystal clear: the money clearly does exist to provide a decent UBI payment to all – and at levels far beyond $10,000. As has already been noted, according to the recent Oxfam report on global inequality, just eight billionaires own as much wealth as the poorest half of the world’s population. Meanwhile, big business in the USA sits on an idle cash pile of around $1.9 trillion dollars.

The problem, however, is not economic, but political. To implement a genuinely progressive UBI would constitute the most ambitious and radical shake up of the redistributive taxation system since the cradle-to-grave welfare state was introduced in the post-war period. And yet, at a time when all these gains of the past are under attack from austerity, we see various well-meaning left-wingers calling for the UBI and proposing a titanic challenge to capital, with huge tax increases on the rich and corporations.

Everywhere we look, social democracy and reformism is in retreat as a result of the crisis of capitalism. Elected “left” governments, such as Syriza in Greece and Hollande’s “Socialists” in France, far from carrying out progressive programmes of tax-and-spend, have been forced by the dictatorship of the banks to implement cuts and counter-reforms. But never mind all that: double or nothing!


In this respect, the demand for a UBI is only the latest utopian proposal from a naïve layer of the left who imagine that austerity is ideological, and that we can – somehow, surely – persuade the rich and wealthy to kindly and quietly pass over the money for the good of society. This, at root, is what the advocates of UBI are relying on and hoping for: the benevolence and philanthropy of the capitalists and the establishment politicians who represent them.

Whilst the occasional multi-billionaire such as Bill Gates might well part with a small portion of their vast fortune voluntarily for charitable causes (and even then, often only as a cynical PR stunt), the capitalist class as a whole – in the final analysis – are in business to make a profit. And they do not – and never have – appreciated having their private wealth forcibly taken from them to fund the rest of society; hence the almost farcical tax-dodging schemes that the world’s biggest businesses are scandalously embroiled in. As Warren Buffett, the renowned billionaire investor, stated emphatically after pointing out that he pays less tax than his receptionist: “there’s class warfare, all right – but it’s my class, the rich class, that’s making war, and we’re winning!”

Again, we should stress that the wealth is most definitely there in society to fund a genuinely progressive UBI system. But the only way such a reform would ever actually be introduced in any meaningful way is if the capitalists felt threatened to the point that they feared losing everything; that is, if the class struggle reached such intense and heightened levels that the ruling elites offered reforms from above to prevent revolution from below. And even then, in such a situation, the demand would have to be not for UBI, but for socialist revolution!

If the demand for UBI is to be posed and fought for by the Left, then it cannot be done so in a manner divorced from the question of class struggle. We cannot rely on the altruism of the rich and the compassion of the capitalist state, the essence of which – as Engels explained and Lenin underlined – consists of “special bodies of armed men” in defence of the property and interests of the ruling class.

Particularly at a time when governments everywhere are prostrating themselves before the “invisible hand” of the market, therefore, it is pure utopianism to suggest that the capitalists will happily and calmly agree to hand over their wealth to fund a decent UBI, or that the bourgeois state would ever be willing to begin on undertaking such a task.

Distribution vs production

The main limit of the call for a progressive UBI, as with all reformist demands, is that it fails to pose the question from a class perspective – that is, to analyse who actually owns and controls the wealth and technology in society, and, most importantly, how they have come to have such control in the first place.

The problem with the UBI (and reformist policies in general), in other words, arises from its almost exclusive focus on the issue of distribution, rather than production. As Marx comments in his Critique of the Gotha Programme (a similarly reformist and utopian programme put forward by Marx’s socialist peers, the Lassalleans):

“Quite apart from the analysis so far given, it was in general a mistake to make a fuss about so-called distribution and put the principal stress on it.

Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of non-workers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labour power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one.

“Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution. After the real relation has long been made clear, why retrogress again?” (our emphasis)

These words ring even more true today. By focussing on the question of taxation and redistribution, the modern leaders of the labour movement actually end up aiming their fire at the wrong people, alienating the middle classes with talk of taxes on incomes and personal property, rather than attacking the super-rich of the capitalist class, whose wealth is tied up in profits and capital – often far beyond the reaches of the state’s tax collectors.

The emphasis for socialists, therefore, as Marx stresses, should not be on redistributing the wealth that has already been created in society (through taxation and welfare, etc.), but rather on having collective and democratic control over the means by which new wealth is created – that is, the means of production. If such a rational plan of production was implemented, then questions of taxation, inheritance, redistribution, welfare, and so on, would quickly disappear.

For Marxists, the question of inequality, whilst important, is secondary. At root, our criticism of capitalism lies primarily not with these symptoms of the senile system, but with its fundamental disease: the laws of capitalism itself; the barriers of private ownership, competition, and production for profit, which stand in the way of the development of the productive forces – of industry and science, technology and technique, and art and culture. As Leon Trotsky, the great Russian revolutionary and theoretician, commented in his Marxist masterpiece Revolution Betrayed,

“The fundamental evil of the capitalist system is not the extravagance of the possessing classes, however disgusting that may be in itself, but the fact that in order to guarantee its right to extravagance the bourgeoisie maintains its private ownership of the means of production, thus condemning the economic system to anarchy and decay.” (Leon Trotsky, Revolution Betrayed, chapter 1)

Today we see this “fundamental evil” of “anarchy and decay” vividly displayed by the contradiction of enormous cash piles in the hands of the big business alongside historically low levels of investment and stagnant productivity growth; by the absurdity of the potential for mass automation alongside fears of technological unemployment; by the concerns over forced idleness for millions, instead of the realisation of voluntary leisure for all.

UBI, for all its attempts to paper over the cracks, does nothing to stop this anarchy of the market and resolve the crisis of overproduction that has led society to this impasse. Indeed, as Marxists have always emphasised, no amount of reforms can unravel these fundamental contradictions of capitalism. Only the revolutionary transformation of society can cut through this Gordian knot.

“Wages for housework”

Notably, there are also feminist advocates of UBI who support the demand on the grounds that a payment of this nature would challenge present notions about work, demonstrating the value of currently unpaid – but socially necessary – labour, such as housework. But the associated call of “wages for housework” is not a socialist demand. Marxists do not wish for women (or men) to be compensated monetarily for their domestic labour – that is, to create wage labourers in the home alongside wage labourers in the workplace.

Instead, Marxists wish to do away with the concept of domestic work altogether: to take these currently privately performed tasks out of the hands of individual families – out of the walls of isolated homes – and to organise these socially necessary tasks in a social manner, as part of a rational plan of production. Only by socialising the question of childcare and domestic tasks, and removing this burden of labour off the shoulders of working class women, can we expect to achieve genuine gender equality in society.

As Engels remarks in Origins of the Family, Private Property and the State:

“The emancipation of woman will only be possible when woman can take part in production on a large, social scale, and domestic work no longer claims anything but an insignificant amount of her time. And only now has that become possible through modern large-scale industry, which does not merely permit of the employment of female labour over a wide range, but positively demands it, while it also tends towards ending private domestic labour by changing it more and more into a public industry.” (Frederick Engels, Origins of the Family, Private Property and the State, chapter 9)

The only way to instigate real, permanent change in society, therefore, is not to pay women for their domestic work, but to take domestic, unwaged labour outside of the individual home altogether; to make this labour a social task that is the responsibility of society as a whole; and ultimately to invest in new machinery and technology that allows for us to abolish this work altogether.

The invention of household machines such as the microwave, the dishwasher, and the washing machine have helped to massively reduce the time needed for domestic duties. The challenge now is to take this technology and put it under public and democratic control; to socialise these tasks as part of a socialist plan of production; and thus to liberate both working women and working men from the scourge of domestic labour.

Wages, income, and the UBI

Within modern capitalism, where the working class has managed to secure for itself – through struggle – publicly-funded services, such as the NHS, and a welfare state, the “income” a worker receives is effectively split into two parts: a wage paid by the employer in exchange for labour-power; and a “social wage” of publicly-provided benefits and services that are free at the point of use and provided on the basis of need, without any money being handed over.

Under socialism, the ratio between these two components would shift dramatically towards the latter. The unseen “social wage” would vastly increase, whilst the wage paid in exchange for labour-power would be diminished (in relative terms – the total would of course increase as society’s wealth grows). Instead of just receiving healthcare without any monetary transaction required, transport, housing, electricity, food, clothes, etc.: all of these, and even things currently considered “luxury items”, could be provided without any exchange as part of a socialist plan of production. The concept of value would gradually become meaningless and the money system would wither away.

With UBI, however, a third income variant is introduced: alongside the paid wage and “social wage”, we now have also the unconditional monetary payment of the UBI. For those on the libertarian right who are in favour of UBI, the introduction of this universal payment acts not to strengthen the socialist element of the “social wage”, but to weaken it, (as discussed earlier) by using the UBI as a pretext for opening up public services to privatisation.

Similarly, the introduction of UBI might also be used to justify the elimination of important reforms such as the minimum wage, putting workers on the back foot in the battle against the bosses. Far from eroding the power of money and the market, then, the UBI could serve to consolidate and bolster these forces.

Those on the Left who most enthusiastically and unthinkingly call for a UBI must therefore be careful what they wish for. Again, rather than embracing the ambiguous and dubious demand of UBI, the leaders of the labour movement should be pushing the call for nationalisation and workers’ control back to the fore.

For a socialist society

The greatest irony regarding UBI is that those on the Left calling for it openly recognise all the glaring contradictions present in capitalist society, but then choose to turn the problem on its head, suggesting everything but the solution itself. They see the irrationality of mass unemployment alongside overwork; of inequality increasing whilst technology advances; of automation that enslaves us rather than liberates us: and yet they accept these irrationalities as a given fact – admitting to capitalism’s failings, but refusing to recognise capitalism as the root of the problem.

As with all reformist demands, the advocates of UBI are willing to propose the most extraordinary and utopian measures, as long as these do not challenge the one right that they consider to be the most inviolable and sacrosanct of all: that of private property. Indeed, it has even been suggested that UBI could be a “capitalist road to communism” – that is, to Marx’s maxim, “from each according to their ability; to each according to their needs.”

For such venerable ladies and gentlemen, competition and the pursuit of profit may be responsible for the scourge of inequality, unemployment, and economic crisis that blights society – but to suggest abolishing the anarchy of the market is pure blasphemy. After all, as we revolutionaries are so frequently reminded – we must be realistic!

Indeed, for some, as Thomas Paine – the English-American Enlightenment political philosopher and one of the Founding Father of the United States – argued, a form of UBI would be a tit-for-tat entitlement to all citizens conditional on them accepting the very existence of private property. As the Economist notes:

“Thomas Paine would have relished such a prospect. His case for a basic income justified it as a quid pro quo for the existence of private property. Before the advent of private property, he believed, all men had been able to support themselves through hunting and forage. When that resort is taken from them, they should be compensated by means of a ‘natural inheritance’ of £15 to be paid to all men every year, financed from a ‘ground rent’ charged to property owners.”

The ultimate limits of the UBI, however, are succinctly outlined by Shannon Ikebe of the Jacobin in an article entitled The Wrong Kind of UBI:

“The fundamental dilemma of a basic income is that the more achievable [“achievable”] version — in which basic needs go unmet without supplementary paid employment — leaves out what makes it potentially emancipatory in the first place. Indeed, many commentaries cite basic income experiments to argue it does not significantly reduce work incentives.

“This contradiction is directly tied to the fact that a basic income only addresses the question of distribution, while ignoring that of production. The kind of freedom from work — or freedom through work, which becomes ‘life’s prime want’ — that an LBI [liveable basic income] envisions is, in all likelihood, not compatible with capitalism’s requirements of profitability.

“The dramatic strengthening of working-class power under a robust LBI would sooner or later lead to capital disinvestment and flight, since capital can only make profits through exploitation and won’t invest unless it can make a profit. But slowing production would undermine the material basis of an LBI.”

“The only way out is to continue producing even if one can’t make a profit. Thus, an LBI would sooner or later force onto the stage the age-old question of the ownership of means of production.”

At best, then, the call for a UBI would be a transitional demand: a reform proposed to improve living conditions, but used to expose the irrationalities, absurdities, and contradictions of capitalism; a demand linked to the fight for the nationalisation of the key levers of the economy and the question of workers’ power.

The concerns over “technological unemployment” and the proposed palliative of UBI clearly highlight a ludicrous paradox whereby advances in automation and society’s ability to produce more wealth with less work are seen not as progress, but as peril.

At the same time, to lay these contradictions bare also highlights the potential for a genuine socialist society, where mankind and machine exist in harmony: a society of superabundance; of “fully automated luxury communism”, where the motto “from each according to their ability; to each according to their need” can finally be realised in practice.

In his speech In Defence of October, Leon Trotsky, explaining the historic gains of the Russian Revolution, the centenary of which we celebrate this year, pointed the way forward for humanity:

“Technical science liberated man from the tyranny of the old elements – earth, water, fire and air – only to subject him to its own tyranny. Man ceased to be a slave to nature to become a slave to the machine, and, still worse, a slave to supply and demand.

“The present world crisis testifies in especially tragic fashion how man, who dives to the bottom of the ocean, who rise up to the stratosphere, who converses on invisible waves from the Antipodes, how this proud and daring ruler of nature remains a slave to the blind forces of his own economy.

“The historical task of our epoch consists in replacing the uncontrolled play of the market by reasonable planning, in disciplining the forces of production, compelling them to work together in harmony and obediently serve the needs of mankind.

“Only on this new social basis will man be able to stretch his weary limbs and – every man and every woman, not only a selected few – become a citizen with full power in the realm of thought…

“Once he has done with the anarchic forces of his own society man will set to work on himself, in the pestle and retort of the chemist. For the first time mankind will regard itself as raw material, or at best as a physical and psychic semi-finished product. Socialism will mean a leap from the realm of necessity into the realm of freedom in this sense also, that the man of today, with all his contradictions and lack of harmony, will open the road for a new and happier race.”