Explaining Universal Basic Income

Canada is the latest country to pilot “Universal Basic Income” after European countries such as Finland, and several Dutch cities. The Canadian government will be giving its citizens, in a pilot project, monthly checks of $800 to $1000 dollars regardless of their employment status, ability to work, and age: this is what is called money “without any strings attached”. Capitalism has gift wrapped the idea of Universal Basic Income by describing it as giving people just enough money and the incentive to find their “dream job”,  to “become entrepreneurs”, or to “seek higher education”,  without the pressure to work just to pay for their basic necessities such food and rent. So why is capitalism giving away “free” money to people? Has capitalism really grown a conscience? The idea of capitalism giving away “free money” and “without any strings attached” is making the left spin on its head to try to figure out.

To begin, it’s important to understand what money is. Money, and its value, represents social labour. It is “social” because it is inherently different from the private work you do at home, such as growing potatoes for your own personal consumption. “Social labour” is the work you do for others in the process of production. The “value” of money and social labour is immaterial and invisible. This “value” only exists within a social relation (between you and the capitalist in the process of commodity production), which is immaterial. Money gives this immaterial and invisible social relation (i.e. social labour), a material and tangible form. This is necessary in order to facilitate basic transactions in society and commodity exchange. Thus money can store “value” (social labour), and because money is tangible and material, it can also be accumulated, and it allows for the private appropriation of social wealth.  In this way, without social labour, money would have no real value. It is the worker him/herself that creates the value within the social relation in the act of production.

The money that the worker receives in exchange for his/her social labour in the act of production (his/her wages), is used to buy basic necessities s/he needs to reproduce his/her own labour. If the wages are too low, the worker is unable to exchange it for food and shelter (rent) and other basic necessities that he/she may need. Workers’ wages are also important because they create the “demand” for the very products that are produced in the act of commodity production.

The Keynesian model employed by capitalism until the neo-liberal era (1970’s), was designed to protect the “demand” in the economy. This meant that the capitalist paid the workers comparably better wages, and the capitalist class, through high taxation by the state (up to 90%), paid for healthcare, education and basic infrastructure. Thus, with the Keynesian model, the capitalist class had a greater responsibility, a greater cost, in production and in reproducing social labour. This system allowed the workers to spend more of their wages (money), in the commodity market, thus generating a greater “demand” in the economy. This economic model was called “demand management”.

The neo-liberal era, brought to you by the likes of Ragan, Thatcher and Pinochet, was focused on the supply side of production. The capitalist class, the 1%, pushed back against the working class in the form of a class assault and class war in order to reduce its costs and lower its taxes, thereby increasing profits. The neo-liberal model has reduced the cost of the reproduction of social labour on the capitalist class. It reduced the taxes for the rich and the 1%, and this in turn slowly eroded and liquidated (privatized) the welfare state and basic social services. Neo-liberalism (supply side economics), also employed several instruments (such as globalization of trade and attacks on unions) to lower working class wages. This has left the working class to use his/her lower wages to pay for basic use values including education, healthcare and housing. The neo-liberal era’s inexorable outcome has been a reduced “demand” in the economy due to the lower disposable income of the working class. When wages became too low to generate the demand necessary in the market, capitalism began utilize the classic “buy now and pay later” scheme, in the form of credit, to bridge this gap. Inevitably, this was one of the causal factors of the 2008 crisis.

Nearly a decade has passed since the 2008 economic crisis, and capitalism is still searching for a remedial solution to stimulate growth. Millions of people around the world are still grappling with low wages, liquidated social services, and abject poverty. The capitalist system is still unable to generate real demand in the economy. The truth is, capitalism does not have many options left. It cannot go back to the Keynesian system (demand management), because the oligarchy, the bourgeois, will never vote themselves in to paying higher taxes, and the indebt working class is bereft, and has nothing left to give.

In the context of neo-liberalism, the Universal Basic Income represents the desperation of capitalism to generate demand in the economy. It demonstrates that the system can no longer solely depend on the interest rate of the central bank to stimulate the economy. Also, the money it wishes to redistribute is not coming from an increased taxation of the oligarchs either, but instead the taxation of the working class itself. The Universal Basic Income is in fact an extension of the neo-liberalism assault on the working class, not capitalism growing a conscience.  Insidiously, the UBI will be utilized to put a greater pressure on whatever has remained of social services. The working class will be encouraged to seek private options for their basic social service needs rather than support the unionized social service sector. The bourgeois state will slowly wash its hands of any remaining responsibilities in “managing” society and will take on a more purely economic role.

At a macro level, money, representing social labour, inherits its value from the labour of the working class in the process of production. However, labour is entitled to, and should have ownership of what is produced. Capitalism’s form of production, and the private appropriation of social wealth, robs the worker of the product of his/her own labour.  Capitalism’s Universal Basic Income scheme is like putting lipstick on a pig. It is akin to someone stealing an item from you, wrapping it, and giving it back to you in the form of “gift”.

There is ultimately nothing “strings free” about the Universal Basic Income, as this money is generated from the working class itself. The “income redistribution” it claims is in fact the opposite. Instead of increasing the taxes of the rich and the wealthy, strengthening worker associations, and lowering the cost of living, the UBI will further liquidate the social services by propping up the private markets. Also, UBI will inevitably increase the rate of inflation, making the cost of living even more expensive, leaving even less disposable income in the hands of the working class. Instead of being a real remedial solution to economic inequality and to the crisis prone capitalist system, it will deepen this inequality and the gap between the powerful and the powerless in society.

Universal Basic Income has a different definition under socialism. One of the underlying premises of socialism is restoring the dignity of the working class with a social appropriation of wealth. Basic human needs and use-values, such as housing, education and health care, are no longer paper proclamations but a reality and not subject to the exchange-value market. Where social labour is no longer alienated and exploited for private accumulation and appropriation, but for accommodating for the needs of society and as a contribution to humanity. Money, when necessary, will strictly facilitate exchange of use-values rather than accommodating a class theft of the products of social labour.

By Chia Barsen




Chia Barsen

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