South Africa

OP-ED: Universal Basic Income: A progressive solution to the global crisis of capital

Although Universal Basic Income may have its shortcomings, it may provide an entry point to rethinking social policies — as present systems do not provide answers to humanity’s most pressing issues.

All animals were born equal, but some more equal than others,” says George Orwell in the acclaimed novel Animal Farm. It is a simple yet poignant illustration of the heart of our society and the globalised world.

Indeed, it does not take a clairvoyant to know that the distribution of capital, capabilities and resources is heavily skewed. When institutions such as the International Monetary Fund and World Bank accept the widening inequality of the present era and cast doubt over the very same neoliberal policies they once vested unwavering belief in (such as austerity), we may very well be within another “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 loggerheads trying to develop and implement policies that can provide citizens with the necessary material security – an income, housing and basic health care — to lead a dignified life.

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 situation.

The question now is, how do we respond? Elon Musk, Mark Zuckerberg and various other Silicon Valley tycoons in the United States have touted Universal Basic Income as a possible solution. This is a form of welfare programme 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 among nations that have experimented with Universal Basic Income pilot projects such as Fort Portal in Uganda, Finland, Kenya, Canada and India.

To consider 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.

First, it has been argued that the sudden influx of disposable income among citizens will cause inflation with the potential knock-on effect on poverty rates.

Second, Universal Basic Income may reduce the incentive to work, thus crippling levels of productivity.

Third, it has been argued that Universal Basic Income causes a reduction in taxable income. As such, government may find itself stretched when attempting to cover other social safety-net expenses such as healthcare, education, transport and so on.

Universal Basic Income’s proponents have argued first that 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.

Second, it would serve as a counterweight to the increasing insecurity faced by workers on short-term contracts and moreover, it could boost labour mobility as workers would fear moving from jobs much less, given the security of income.

Third, other proponents have argued that the effect on marginalised groups such as women will be positive as Universal Basic Income plays the role of guaranteeing a minimum financial independence while also recognising often gender-specific unpaid work in households.

The arguments from both approaches has been far from exhausted, yet they represent some of the key points raised when discussing basic income models. Be that as it may, a conceptual analysis of Universal Basic Income’s pros and cons should not divorce itself from the societal framework in which it will be implemented.

That is to say, the implementation of any Universal Basic Income 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 and so on.

However, such a model will operate within the framework of current market force pressures such as large-scale privatisation. Free-market advocates have suggested Universal Basic Income usurp the role of social provisions, effectively creating consumers for which the product is privatised social infrastructure. So for those who advocate Universal Basic Income from a neoliberal standpoint — Universal Basic Income would essentially replace existing social welfare structures.

A second pertinent critique arises from progressives who believe the implementation of Universal Basic Income would partially address 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 favourable to creating profit. Furthermore, the undermining of production would undercut the material basis on which Universal Basic Income rests, doing little to change patterns of ownership.

Universal Basic Income will depend on capital creating profits, and creating profits is contingent on the extracting of labour from workers at the lowest marginal cost (exploitation).

Although Universal Basic Income 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 humanity’s most pressing contemporary issues. It is one of several options to consider given the current and global “crisis of capital”. DM

This piece originally appeared on Bongi Maseko is an intern at the Institute for African Alternatives (IFAA), publisher of New Agenda: South African Journal of Social and Economic Policy, and a Law Student at the University of Cape Town (UCT)