UBI: A Progressive Solution to the Crisis of Capital?

?

“All animals were born equal, but some more equal than others” – George Orwell’s quote in his acclaimed novel “Animal Farm”. It is a simple, yet poignant abstraction, that goes to the heart of society, and particularly the globalized world we live in today. Indeed, it does not take a clairvoyant to know the distribution of capital, capabilities and resources is heavily skewed. When institutions like the International Monetary Fund and World Bank cast doubt over the very same neoliberal policies they once vested unwavering belief in (like austerity), we may very well be approaching or within a “crisis of capital”.

South Africa like several of its global counterparts, finds itself in a position in which government, business, civil society and other stakeholders are at a loggerhead in trying to develop and implement policies that can provide citizens with the necessary material security – an income, housing and basic health care.

Growing inequality and the possibility of automation usurping many jobs across all industries but particularly in manufacturing, could place increasing pressure on South Africa’s already delicate socio-political positon.

The question now is how do we respond? Elon Musk, Mark Zuckerberg and various other Silicon Valley tycoons in the U.S.A have touted Universal Basic Income (UBI) as a possible solution. UBI is a sort of welfare program in which citizens receive a regular payment from the government as an unconditional income to meet an individual’s basic needs (essentially an amount at or above the poverty line). The structure of this stipend has varied from nation to nation who have experimented with UBI pilot projects such as Fort Portal in Uganda, Finland, Kenya, Canada and India.

Considering the practicality and feasibility of a Universal Basic Income in South Africa, it would be prudent to assess some of the advantages and disadvantages associated with this form of welfare. It has firstly been argued that the sudden influx of disposable income amongst citizens will cause inflation with the potential knock on effect on poverty rates.  Secondly it has been argued that UBI may reduce the incentive to work thus crippling levels of productivity in the economy.Thirdly it has been argued that UBI causes reduction in taxable income. As such, government may find itself stretched when attempting to cover other social safety net expenses such as health-care, education, transport etc.

UBI’s proponents have argued the distribution of stipends directly to citizens, leaves less room for government to squander precious resources and capital through corruption and rent-seeking. This would have the added effect of rearranging complex governmental arrangements and tax-rebates into a more efficient system. Secondly, it would serve as a counterweight to the increasing insecurity workers on short-term contracts face and moreover, it could boost labor mobility as workers would fear moving occupations much less given the security of income. Thirdly, other proponents have argued the effect on marginalized groups such as women will be positive as UBI plays the role of guaranteeing a minimum financial independence whilst also recognizing the often gendered unpaid work in domestic households.

The arguments from both approaches has been far from exhausted, yet they represent some of the key arguments propelled when discussing basic income models. Be that as it may, a conceptual analysis of UBI’s pros and cons should not divorce itself from the societal framework in which it will be implemented in. That is to say, the implementation of any UBI model has to take into account the prevailing economic and political ideologies in conjunction with the balance of forces at play in the economy and broader society.

Taking this into account, it may be theoretically possible to construct a basic income model that takes into account the need to continually support key social services sectors such as housing, health care, education, transport etc.. However,  such a model will operate within the framework of current market force pressures such as large-scale privatization. Free-markets advocates have suggested UBI usurp the role of social provisions, effectively creating consumers for which the product is privatized social infrastructure. So for those who advocate UBI from a neoliberal standpoint – UBI would essentially replace existing social welfare structures.

A second pertinent critique arises from progressives who believe the implementation of UBI would partially addresses the problems of distribution, but fail to address a key structural issue, namely production and ownership. A significant increase of the relative bargaining power of the working class would inevitably lead to capital pursuing conditions more favorable to creating profit. Furthermore, the undermining of production would undercut the material basis on which UBI rests, doing little to change patterns of ownership. UBI will depend on capital creating profits and creating profits is contingent on the extracting of labor from workers at the lowest marginal cost (exploitation).

 

Although UBI may have its shortcomings, it may provide an entry point on conversations around rethinking social policies in the face of the current socio-economic paradigm which falls short of providing answers to humanities most pressing contemporary issues. It is one of several options to consider given the current and global “crisis of capital.”

 

By Bongi Maseko