1 November, 2020

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Capitalism’s Strange Crisis Of Abundance: The Universal Basic Income Headache

By Kumar David

Prof. Kumar David

Prof. Kumar David

Reduction of necessary labour corresponds to free development of individualities and cultural and scientific advancement of all in the time set free”. (Edited). ~ Marx, Grundrisse, (p 706)

UBI is a proposal that the state should give every person a certain amount of money every month. At the level of detail, there are different versions. Should only citizens be eligible or all legal residents? How much for adults, how much for children? Will it be tax free or added to income and made taxable? What current benefits (free or subsidised health and education, state pensions, unemployment payments, or other benefits) will be rescinded? How will it be paid for (higher taxes, higher VAT)?

Striking advances in automation and the marvels of modern robotics are eroding the drudgery of labour. Millions of jobs have been “lost” (sic! What’s the problem if society can produce what it needs to sustain life with less labour?). Millions more will become redundant with the onward march of the productive powers of industry, agriculture and services. On-line retailing is driving main street stores to bankruptcy. How absurd that abundance is a source of deep anxiety and looming crisis for capitalism, the prevailing global order. The productive powers immanent in society can satisfy society’s needs and still leave time for the creative joys of life, but for the capitalist order it is frightening; what a paradox. If goods are plentiful and scarcity abolished an economy whose rationale of existence is profit vaporizes. Who will sell his labour power for less than the value it creates and allow another to usurp the surplus unless driven by necessity? None will if scarcity is abolished. Unemployment will by definition disappear – what can it mean in the midst of cornucopia? Time not needed to labour is leisure time, creative time. Unsalable time, employment and unemployment, are concepts which will no longer have traction.

Marx welcomed automation and advances in productivity; he saw liberation; he celebrated it as escape from necessity to freedom. But he had reservations that it would drive capitalism into irredeemable decline. In this context he notes “Capital thus works towards its own destruction as the form dominating production” (Grundrisse, p.700), but more on Marx later.

The UBI concept is premised on three requirements; immense social productive power, second therefore, an abundance of goods or a post-scarcity society as it is sometimes called, and third a civilisation of global collaboration. The last at a minimum assumes universal access to food, shelter, clothing, education and healthcare at levels adequate to motivate populations to remain in situ. Sans these basics, sustained migrant waves from non-UBI to UBI regions will make today’s European refugee crisis seem a ripple. We Lankans know full well the meaning of the term ‘economic refugee’; even well to do emigrants are in truth in search of greener pasture.

What’s this flap about UBI?

My opening paragraph makes no sense in India, or Africa or Lanka, countries still far from cutting-edge productivity frontiers. Much of the world may never reach such prosperity if taken nation by nation. But this is where Marx has a trick up his sleeve. The socialist utopia (reality only mimics all utopias – democracy, Socrates’ just society, Thomas Moore’s utopia etc.) has no nations; socialism must be global. In a world where abundance prevails in some places, there will be plenty everywhere; and why not? Without profit maximising markets driving all life what is to be done with abundance, an excess of material commodities – throw them in the sea? No, obviously redistribute.

Harbinger of the classless society

Harbinger of the classless society

Therefore what’s happening in Switzerland, Denmark and Finland and making newspaper editorials and debates in Europe and America are not far away irrelevancies. In lesser measure and a generation delayed the outcome of these first experiments will resonate all the way to the developing world.

Let me summarise current events for readers who may not have kept up to date. Switzerland held a referendum on 12 June on whether to introduce UBI; the proposal was to give all adult citizens a monthly handout of $2500 and kids $625. I am not sure to what extent those who accepted would have been disqualified from free state medical care, subsidised education, etc. and ineligible for state pensions. The proposal was defeated with only 23% support; but this was its first outing and the next time or time after it will do better. Within a decade something on these lines will happen. Finland will experimental with a similar system for 100,000 people (presumably volunteers) this year. Three districts in Denmark will experiment, also I believe this year. If these test runs are encouraging the three small Baltic countries are likely to be the next to follow.

But these are small countries; what is more interesting is that a debate has opened up in America, UK in the pages of the Guardian, and in a study by John McDonnell, the shadow chancellor (Labour Party Finance Minister in waiting). In America, Facebook’s Mark Zuckerberg, CNN and Newsweek’s Fareed Zakaria and even right-wing politicians, for whom zeroing welfare, Medicare, Social Security, food stamps and unemployment handouts, are the attraction, are on board. The debate is getting hot and I will summarise the arguments for and against.

Those on the political right who back the idea do so for two reasons. They reckon annulling welfare will save a lot of money and greatly simplify procedures – whole departments can be closed. The other reason is that looking long term they see the writing on the wall. If automation drives millions out of the labour market and to the wall, will the day of revolution and anarchy arrive? Butter won’t melt in their mouth liberals have fairness and a good life for all in their blessed hearts; some on the left see it as recompense for centuries of exploitation of labour by capital. UBI is universal, not means tested poor-relief like samuradhi, but the relative benefit for the poor will seem magnified. Nevertheless left, right and liberals are all much divided and my guess is that the majority in all three camps reject the idea – at least at this point in time.

The propertied classes and I daresay conservatives in the middle class worry about two things; how to meet the UBI price-tag, and secondly, the undermining of an economy premised on a reserve army of (unemployed) labour. I can get across the former objection with one example. If a $10,000 a year guaranteed income is to be provided to every American citizen, tax as percentage of GDP would have to rise from its current 25% to about 35%. Income tax at upper levels would have to increase -marginal rates on the highest incomes by say 20% – and so would wealth and capital gains taxes. A second objection is argued more subtly and moralistically by bourgeois apologists. Let me quote from the Economist (4 June) “The stigma against leaving the workforce would erode; large segments of society could drift into alienated idleness”. Stripped of its moralising mantle what the Economist is fretting about is that capital would find it harder to buy and dominate wage labour, hence to extract surplus value, hence to defend its raison d’etre, hence its cortege would launch.

The left is not enamoured either

Funny, you would think that the left would plonk for UBI; not so. The non-Marxist, social-democratic or soft left reasons as follows: “I fear that this latest plan will drain the energies of the left and divert attention from other worthwhile alternatives: the living wage, boosting trade unionism, free childcare, radical changes in housing policy, reducing working time and green investment”, says Professor Ian Gough of LSE. And in the same vein: “If we return to a taxation regime where there is an extra £50 per person per week fed into the system, then instead of doling it back we can fund public transport, abolish student tuition fees, stop closing libraries and swimming pools, maintain public parks, employ more nurses in the NHS, build council houses, and care for the mentally ill” says Dr Chris Grover of Lancaster University. (Both comments are from the Guardian of 12 June).

A convoy of driverless trucks

A convoy of driverless trucks

Marx’s take on all this is located on another planet. Grundrisse is a mass (and mess) of notes written in 1857-58, dug up (I like to imagine from a trunk under his bed) and first published in German nearly a century later in 1953. Penguin brought out a nine hundred page English version in 1972. It’s a stream-of-consciousness, hard to decipher buddle of notes. I have collated the fragments on productivity and technology relevant to my essay from pages 699 to 708 and the gist is as follows.

The full development of capital takes place when technology and machinery (fixed capital) appear opposite labour as the application of science to the production process. (Of course fixed capital is itself congealed past labour). In this process labour time, the mere quantity of labour turns into the subsidiary element and capital through the exploitation of science and technology (fruits of human social labour) becomes the dominating force in production. The dominance of capital over labour is established

Now comes what, for our purposes, is crucial and displays that the visionary Old Moor got it right 150 years ago: “(Technology) enters not in order to replace labour power where it is lacking, but rather to reduce massively available labour power to its necessary measure. Machinery (automation, technology) enters only where labour capacity is on hand in mass”. The paradox of this dialectic is this: The two fundamental driving forces of capital are competition and profit. The former drives each capitalist to innovate and sharpen, but profit forces him to shed labour to a minimum. But the more capital as a whole sheds social labour, the more capital as a whole will cut the ground under its feet by diminishing its font of surplus value. “Capital’s tendency on one side is to create ‘disposable’ labour time, and on the other to create surplus labour. If it succeeds too well in the former, the more it suffers from surplus production – abundance of commodities – and the absence of surplus value – evaporation of profit”. (I have edited the text).

The Economist laments “UBI might make sense in a world of technological upheaval (read revolution) but before governments plan for a world without work they should strive to make today’s system function better”. Pathetic! But the Editors seem to have dimly perceived this much: “Capital works towards its own destruction”.

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