The Limits of Basic Income

Providing people with cash payments has benefits, but guaranteed employment and public services are a better option for transforming our economy.

Universal basic income (UBI) has captured the attention of many progressives over the past several years. Simply put, it’s the idea that every citizen should receive an unconditional transfer of money on a regular basis, ideally sufficient to meet their basic needs. UBI has been promoted by a range of prominent figures, from Thomas Piketty to Pope Francis, and featured as a central plank in Andrew Yang’s 2020 presidential campaign in the United States. Many of the core principles of basic income are strong, including the idea that everyone rightfully deserves a share of what we collectively produce. And small-scale experiments have demonstrated encouraging results when it comes to alleviating poverty. But basic income also suffers from several critical limitations—and a crippling lack of popularity—that make it unsuitable as a primary vehicle for achieving the radical economic transformation we need.

The key thing to understand is that UBI considers the economy, and problems with the economy, in terms of generic income and consumption—in other words, without regard to any specific goods and services. It seeks to ensure that everyone has a certain minimum quantity of purchasing power over the stuff the country already produces. (Yang, for instance, wanted everyone in the United States to receive $1,000 per month.) 

But UBI fails to transform anything about the underlying system of production. It accepts the existing system on its own terms: it does nothing to change who controls production, what kinds of goods and services are produced, under what conditions, and for whose benefit. This is one of the reasons that plenty of neoliberal capitalists, including Milton Friedman, have been perfectly comfortable with the idea. But ignoring the system of production is a problem, because the system we presently have—capitalism—is profoundly destructive and cannot address the multiple crises we face. 

The core defining feature of capitalism is that it is fundamentally undemocratic. Yes, many of us live in electoral political systems, where we select political leaders from time to time. But when it comes to the system of production, where we spend most of our waking lives, there is little or no democracy. Under capitalism, production is controlled primarily by capital: large corporations, major financial firms, and the 1 percent of wealthy individuals who own the majority of investable assets. They decide what we produce, and how our massive productive capacities—our labor and our planet’s resources—should be used. And for capital, the primary purpose of production is not to meet human needs or to achieve obvious social and ecological goals, but to maximize and accumulate profits. That is the overriding objective.

So we get perverse forms of production. Capital mobilizes our labor and resources to produce things like SUVs, fast fashion, fossil fuels, cruise ships, weapons and industrial beef—which are both unnecessary and ecologically destructive—because they are profitable to capital. But we suffer critical shortages of urgent and socially necessary things like high-quality public housing, public healthcare, public transit, renewable energy, healthy food produced under ecologically regenerative conditions, and so on, because these are less profitable to capital or not profitable at all. 

The result is that despite very high levels of production, and high levels of ecological impact, our economy still fails to meet many basic human needs. Deprivation is obviously most extreme in the global South, which is subject to longstanding dynamics of imperialist appropriation, and where billions of people do not have basic things like healthcare, sanitation systems, refrigerators, and clean cooking stoves. But it is also evident in the global North—in the richest countries in the world—where tens of millions of people live in substandard housing and do not have adequate healthcare or nutritious food.

It is not enough simply to redistribute purchasing power within this economy, when the economy itself—the objectives and content of production—must be transformed.

People can only buy what is being produced. Having a basic income does not enable people to buy good affordable housing or public healthcare if those things are not being made in the first place, or are not available in large enough quantities. Basic income will not help you access public transit if there’s not a public transit network in your city. Or, for a particularly striking example, take the climate crisis. We know we need to achieve a rapid transition to renewable energy, but capital does not invest in expanding renewable energy infrastructure and other green technologies at the required rates because it is not sufficiently profitable to do so. No amount of basic income will change this.

Basic income also does nothing to change who controls production, leaving it in the hands of undemocratic capital. It does not change the extent of commodification in our society—in other words, the extent to which a person’s access to essential goods and services is determined by prices, which may remain out of reach. And it does little to change the labor conditions under which production is carried out. Yes, a UBI may give workers the freedom to walk away from a job, and thus increase their leverage to demand improved wages and conditions—but on the other hand, employers may treat it like a wage subsidy and attempt to reduce wages accordingly.

Given the social and ecological crises we face, we need to mobilize labor and our productive forces to produce the necessary goods and services that are currently underproduced or not produced at all. There is a tremendous amount of work to be done, and it must be done quickly—particularly when it comes to addressing the climate emergency. Basic income alone cannot accomplish this. Yes, proponents of UBI have correctly pointed out that when people are liberated from the necessity of paid employment, they tend to use their time in socially useful ways. People want to contribute to creating a better society. But there are limits to what individuals can do by themselves. Even if we may want to build a transit system, or produce solar panels, or innovate more efficient appliances, we obviously cannot do these things alone. This sort of production requires training, coordination, machines, factories and materials.

These problems can be addressed by implementing a program of universal public services, together with an emancipatory public job guarantee. Such an approach would fundamentally change the nature of the economy, including production, in addition to ensuring sufficient income for all. 

By universal services, I mean not only healthcare and education, but also housing, public transit, nutritious food, renewable energy, water, communications, recreational facilities and childcare: in short, all the necessities of human life. (I have described such a system in more detail here.) These should be attractive, high-quality, democratically managed, properly universal services, not the piecemeal and purposefully underfunded systems that we see in the U.S. and other neoliberal countries. This approach ensures that necessary goods and services are always produced in sufficient quantities and available to everyone. Provisioning these in a decommodified way also protects people against cost-of-living crises like the one that’s currently ravaging the United Kingdom, by literally reducing the cost of living.

A public job guarantee, for its part, would permanently end involuntary unemployment (something that capitalism cannot achieve). It would ensure that anyone who wants to can train to participate in the most important collective projects of our generation: expanding renewable energy capacity, regenerating ecosystems, improving public services, care work, and so on. People could do urgent, socially necessary work with living wages and workplace democracy. 

Partisans of basic income sometimes dismiss the idea of a job guarantee as “make-work,” but in fact it’s exactly the opposite. Such a program would directly orient labor and production toward necessary social and ecological ends, rather than the bullshit jobs that proliferate under capitalism, or tasks that exist solely to help the rich get even richer. And this would not be about providing labor to private corporations, but rather mobilizing public works to achieve key social objectives that capital is unable or unwilling to do. There are many historical examples of this, including in the U.S. during the New Deal era, when the Roosevelt government spent about $4 billion directly employing people to build new roads and public buildings.

Crucially, another powerful benefit of a job guarantee program is that it can be used to set progressive standards for wages, working time, and workplace democracy across the whole economy, without needing to wait for piecemeal legislative changes. Whatever standards the job guarantee sets, private firms would quickly come under pressure to match them, or risk losing staff. After all, why would people continue to work for long hours at minimum wage doing things to maximize profits for shareholders, under demeaning hierarchical conditions, when they could instead work for dignified wages doing socially meaningful projects under conditions of workplace democracy? 

This approach—universal public services and a job guarantee—can be funded with public finance. Instead of waiting for capital to make the necessary investments, which it will never do, governments that have sufficient monetary sovereignty can issue currency to do it directly. As Keynes pointed out: anything we can actually do, in terms of productive capacity, we can pay for. Of course, if all the new public production stretches the capacity of the economy (the available labor, energy, and materials), it would be competing with private firms for these resources and drive prices up. But this problem can be avoided quite easily by reducing demand elsewhere, such as by using taxation to cut the purchasing power of the rich, and by regulating commercial bank lending to discourage investments in destructive industries like fossil fuels and SUVs, which we need to scale down.

While these programs must be funded by the currency issuer, they should be democratically managed at the appropriate level of locality. This ensures that decisions about production are geared toward meeting people’s actual real-life needs. The level would depend on the project: large undertakings like an inter-city rail system would require national-level coordination, but more local projects like a solar power installation, recreational facilities, or care work should be managed at the local level. The democracy aspect is critical here, as several studies have demonstrated that when people have democratic control over production they tend to prioritize human well-being and ecology

A job guarantee has very strong advantages over basic income when it comes to the all-important question of political feasibility, too. In Europe, support for basic income is middling at best, ranging from 29 to 55 percent in seven EU countries. In the United States, a majority of people oppose it, which may help explain why Andrew Yang’s campaign was never able to break through. By contrast, a job guarantee is highly popular in polls. In the U.K., 72 percent of people support it. In the U.S., it’s 78 percent, and in France it’s 79 percent. There are few policies of any kind that enjoy such widespread support, and research shows a job guarantee can appeal strongly to working-class voters who otherwise feel alienated from the political process.

Of course, basic income can still play a role as a component of such a system. It can and should be made available as an unconditional alternative to anyone who cannot work, or who for whatever reason chooses not to (and there are many valid reasons one may wish to opt out of paid employment: to get a degree, to recover from an accident, to care for an ailing loved one, etc). This would protect a core value—freedom to walk away from paid employment—that proponents of basic income seek to establish. 

An integrated approach along these lines would permanently abolish economic insecurity, ensure good lives for all, and enable us to achieve vital social and ecological objectives. It is more powerful toward these ends than a basic income alone, because while basic income ensures a certain monetary minimum, it does not guarantee access to the real goods and services that people need in order to live well (healthcare, housing, transit, clean energy, and so on). It cannot ensure they are produced and available at affordable prices. Universal public services and a job guarantee can accomplish this, while also democratizing production and radically transforming labor conditions. 

Achieving this goal—abolishing economic insecurity—would have important additional effects. For one, it would break the political logjam over climate action. Right now it is politically impossible to take the steps necessary to achieve rapid decarbonization, including scaling down fossil fuels and other destructive industries, because people fear this will jeopardize jobs and exacerbate the insecurity they already suffer. These are real concerns that must urgently be addressed. Universal public services and a job guarantee would end this uncertainty, and provide an ironclad mechanism enabling people to transition seamlessly out of sectors like oil and gas production as they’re phased out. They would enable bold climate action to be pursued without anyone getting hurt. This is the bread and butter of a just transition. 

Guaranteed public services and employment would also take the wind out of the sails of right-wing politics. Right-wing narratives play on people’s fears of economic insecurity—and the pervasive sense of competition for scarce jobs and resources that people experience under capitalism—to whip up hate toward immigrants and other minoritized groups in order to obtain support for reactionary political agendas. (This is a core component of Donald Trump’s politics, to name the most obvious example.) Universal public services and a job guarantee would not only help abolish people’s economic fears, it would also provide a mechanism for rapidly integrating all people—including immigrants—as active and equal participants in building a better society. Here too, this approach has strong benefits over basic income. One can imagine how the right would try to cast any proposed UBI as a “handout,” and accuse recipients of being a “drain” on society (a claim that basic income proponents have soundly rejected). But with a job guarantee—where people’s contributions to the betterment of the collective are clear for all to see—such claims would be impossible to sustain. Attempts to demonize immigrants and divide the working classes would fall flat, and new possibilities for working-class politics would emerge.

These policies can galvanize mass popular support for a transformative political agenda, and they have the power to radically improve any country where they’re implemented. They would address the real, material needs of working-class communities, ending societal evils like poverty and homelessness once and for all, and they would enable us to achieve elusive ecological goals, helping humanity overcome the threat of climate change that currently endangers our world. Indeed, this may well be the only approach capable of adequately addressing the urgent crises we face. 

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