Opinion | Universal Basic Income: Why the most popular solution to automation-driven problems fails in the long-run

By Salaar Maghazeh

There seems to be little doubt now; the forces of automation are presenting a catastrophe of major job losses for huge swathes of the working class within the near future. This could put untenable amounts of people on the streets looking for work, unless some sort of welfare measure is put forth to mitigate this. The most popular measure being considered right now is the concept of a Universal Basic Income (UBI), in which the state hands individuals a certain amount of money to be spent or used without any strings attached. Yet, it seems that such a mitigating policy can only act as a short-term, roundabout band-aid on capitalism. We could much more effectively solve the problems posed by automation when we consider it from a socialist perspective.

The numbers are troubling. A 2017 report by the McKinsey Global institute found that in 60 percent of occupations, a third of the work could be automated by 2030. The report goes on to say that potentially 375 million jobs could be displaced in the same time period on a global level. Not all sources predict the same numbers. As a counterpoint to an authoritative 2013 paper from Oxford University, which predicted that 47 percent of jobs in the US are at a significant risk of being automated, the OECD predicts that 13 million American jobs will be lost. Clearly then, even a conservative estimate remains worrisome.

Optimists may offer that retraining programs can alleviate such losses, but the statistics are not consistent with such cheeriness. The Trade Adjustment Assistance program, a federal program for retraining displaced manufacturing workers, only has 37 percent of its program members in their new field that they received training for. Similarly, research by Mathematica Policy Research found that job training failed to bring higher employment and earnings for workers.

Automation has only exacerbated existing economic problems across the U.S. such as rising income inequality and wage stagnation, illuminating the need for some policy response. A study done by the Urban Institute found that 40 percent of Americans struggled with basic utilities such as food or rent in 2017. The top 1 percent of earners just hit a record of 157 percent growth in the last 30 years while wages for the bottom 90 percent of earners have continued to essentially stagnate in comparison at 22 percent, regardless of worker productivity increasing dramatically since 1979. Larry Elliott, Economics editor of the Guardian, suggests that this stagnation may be a sign that capitalist automation has already had a negative effect on workers.

An answer to such agonizing consequences of capitalism that has gained favor, even with some free-market economists, is UBI. This would act as a basic safety net for society and, in response to automation, would help prevent individuals or families from falling into utter destitution after job loss while trying to recoil into financial stability.

Cities are already testing UBI in trial runs, perhaps putting forth a model to follow for others. This year, the city of Stockton in California will experiment with a UBI program, handing $500 per month to certain low-income families to spend at their discretion. The program was implemented after the city itself faced economic problems and expressed worries about the displacement created by automation, as voiced by mayor Michael Tubbs. Hamilton, a city in Ontario, Canada, is currently running a 3-year UBI plan, giving double the amount that an individual on welfare would receive in Ontario. Director of the Hamilton Roundtable for Poverty Reduction Tom Cooper has praised the model for already bringing positive results, most notably what he calls a “restoration of dignity.”

Indeed, it seems there are merits to the UBI program. It would allow for individuals thrown into unemployment by forces out of their control to maintain access to basic needs. A list of studies compiled by Innovations For Poverty Action also points to a range of potential benefits. Studies done on cash transfers have demonstrated that they can possibly aid educational attainment, investment in businesses, food security, psychological health, life expectancy, long-term living standards, and long term earnings. Of course, short-term cash transfers and a UBI program carry differences between them. A UBI program would be given to all citizens over a longer term, and must be adequate to meet basic needs. Furthermore, the idea that UBI could replace other welfare benefits (which may appeal to right-wing market fundamentalists in the interest of “cutting bureaucracy”) is dubious; the OECD discovered that reducing existing benefits to create a basic income could actually have a negative impact on poverty. Nevertheless, the little research that does exist shows promise for UBI.

However, one may ask these questions: Why do we need UBI in the first place, or more specifically, why does automation have to mean destitution at all? Contrast the anxieties over automation with a view from one of the most influential thinkers in the entirety of human history: Karl Marx. Marx, as he laid out in his unfinished manuscript, Grundrisse, stated that progress made with automation in a post-capitalist (or collectively owned) society would allow all people to have an increasing amount of leisure time for the “free development of all individualities” in the sciences, arts, and other creative spaces. In other words, he believed that automation would bring liberation from work rather than imprisonment in poverty. Why then does the word “automation” instill worry upon its very utterance? The keyword in Marx’s analysis here is “post-capitalist,” and this brings us to the deficiencies of UBI in a capitalist society. The myopia of those supporting UBI (or other welfare/social programs for that matter) as the primary be-all and end-all solution to rising problems caused by automation reveal their failure to understand the very structure of capitalism. The only reason why automation will bring about such a problem-ridden future for the most vulnerable in society (i.e. the working class and the poor) is precisely because of the manner in which production is organized under capitalism. Retaining capitalism’s structure will not help eradicate the ills created by it.

In capitalism, there exists the capitalist and the worker; these two are distinguished by their relation to the process of production. A capitalist, by virtue of his place in society, owns capital or wealth and thus invests in pursuit of private accumulation. The capitalist owns the means of production in a firm (i.e. factory machinery, factories themselves, technology used to produce goods, offices, etc.) and hires a worker (who does not own capital and must therefore rely on renting out his labor power to a capitalist in order to live) whom he pays for a wage. However, in order to make a profit on the products sold, the wage paid to the worker does not and can not nearly reflect the value created through their labor, illustrating how poverty and inequality are baked into the very innards of production following capitalist principles.

At the heart of capitalism lies the structurally-required, incessant (and yet perhaps untenable) expansion of profits. This is precisely why automation could cut so many jobs, as it provides another cost-cutting measure to expand profits. UBI then plays its role to try and reduce poverty and rapid job loss as well as put money in the hands of consumers to maintain the economy, allowing capitalists to continue massive capital accumulation. Suddenly, the reason why capitalists like Elon Musk and Mark Zuckerberg, who will pay the taxes that provide funds for UBI, support the program becomes clear; it is likely not because they want to share their brilliant vision for the benevolence of society in hopes for a better future. Those among the capitalist class have a set of “class interests” because of their place in production. UBI as a solution falls in line with these interests precisely because it preserves capitalist profits and alleviates social instabilities fomented by poverty that would threaten the place of capitalists in society.

Imagine a society in which workers organized production itself and collectively owned the means of production by democratically managing their enterprises. The change of structure would wipe away this fright of automation, as the fruits of new technology incorporated into production would go straight back to the workers, rather than a parasitic capitalist at the top. Workers would make use of their increased productivity and have time to spend their lives, well, living. Though it probably could be provided, the pressing need for UBI would diminish because workers would reap the full profits of their work (rather than a wage that does not represent the value created by their labor.)

With this new socialist lens, one can see that the application of UBI in a capitalist system is essentially like cutting oneself in order to put a band-aid on. It seeks to fix the problems of distribution of wealth by redistribution as opposed to striking the heart of the problem at the level of capitalist production that births such horrendous levels of inequality. To borrow a few words from Adam Booth at Marxist.com, “the greatest irony regarding UBI is that those on the Left calling for it openly recognize all the glaring contradictions present in capitalist society, but then choose to turn the problem on its head, suggesting everything but the solution itself.”

Another problem that UBI pretends to solve is the question of instability in a different context: the ever-growing “gig economy.” Labor markets based on freelance and temporary work (as opposed to stable careers) define this sort of economy. It is hailed as revolutionary because of its supposedly decentralized and peer-to-peer nature. Again, when we rid ourselves of a capitalist framework of analysis, the romantic veneer painted by labels like “revolutionary” and “decentralized” become obvious. This gig economy throws out the idea of worker benefits and pensions, instead opting for unstable wages and then framing the instability and precarious nature of gigs as “freedom.” One can only wonder what kind of “freedom” is found in the anxiety of worrying if you will have enough work in the month to pay for rent and food.

Historical parallels cannot be forgotten either when considering the failures of UBI on a long-term scale as they illuminate its vulnerability to the ruling class. In the 1930s, the working class won many gains through militant labor action and the presence of a mass revolutionary party pressuring centers of power from below. Many of these gains are found in the New Deal. Of course, the New Deal was not an altruistic project on the part of the ruling class, but an effort to “save the systems of private profit and free enterprise,” as Roosevelt said. Over time though, much of the collective power of these unions has come under assault from both the capitalist class and globalization. The vulnerability of reforms from erosion by the capitalist class applies to UBI as well. As soon as it seems UBI won’t be necessary to preserve a consumer base and its purpose for capitalists is fulfilled, it can be attacked.

Of course, UBI is not useless. Quite to the contrary, UBI has demonstrated its ability to help alleviate pressures of those in dire poverty. The existing literature suggests its potential efficacy, and socialists have a duty to analyze and fight for reforms that will benefit the working class and the poor. However, UBI cannot be the ultimate solution as it is presented by progressives to evict the poverty built into the very core of the engines of capitalism. Only with a radical restructuring of production in society can we overcome poverty and usher in an automated future that works for all. For Marxists, UBI is simply a bucket used to dump water from a sinking ship soon to be consumed by the tides of the internal contradictions in capitalism. For the impoverished, it is the only stability they have left in an ever-changing technological marketplace.  

The views and thoughts expressed by author(s) in the opinion section represent theirs only and do not reflect InSight Magazine as a whole.

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