UBI and the ‘Radical Transformation of Society’: Some questions for Peter Frase

by Jehu

miltonfriedmanIn a post, Curious Utopias, Peter Frase defends the idea of universal basic income (UBI) employing arguments that raise at least as many questions about the idea as Frase attempts to answer. While I am not completely dismissive of the idea of a UBI scheme in general, I want to state my reservations in hopes he or someone else will address them.

RESERVATION ONE: Reform or revolution:

Frase begins his defense of UBI by tackling that old chestnut of Leftist silliness, reform versus revolution. Like him, I think this debate is a complete crock, but it manages to fester among Leftists as a sort of litmus test for anti-capitalism.

My problem is not with Frase’s attempt to put an end to that sterile debate, but with how he attempts to put an end to it by adopting Gorz’s concept of “revolutionary reforms”. These are reforms that Gorz argues, “advance toward a radical transformation of society”. Would I be wrong to sense more smoke and mirrors in this formulation than a serious attempt to put an end to a sterile debate? Well, let’s see. Gorz says of his “revolutionary reform”:

“A non-reformist reform is determined not in terms of what can be, but what should be. And finally, it bases the possibility of attaining its objective on the implementation of fundamental political and economic changes. These changes can be sudden, just as they can be gradual. But in any case they assume a modification of the relations of power; they assume that the workers will take over powers or assert a force (that is to say, a non-institutionalized force) strong enough to establish, maintain, and expand those tendencies within the system which serve to weaken capitalism and to shake its joints. They assume structural reforms.”

I am particularly interested in the formulation: “a modification of the relations of power” to “expand those tendencies within the system which serve to weaken capitalism”. I would ask how this differs from the formulation found in the Communist Manifesto that the working class will raise itself to the position of ruling class in order to develop the productive forces as quickly as possible?

Gorz formulation, it seems to me, adds nothing new to the agenda of the working class that has not already been acknowledged for quite a long time. What is the “non-institutionalized force” asserted by the class and how does this differ from its own association of producers? What tendencies are to be established, maintained or expanded that weaken capital except those already existing, the progressive increase in the productivity of labor?

RESERVATION TWO: Money and exchange relations are not neutral in our society:

Money is not, as it is often portrayed a neutral factor in our society. To the contrary, money is the very embodiment of alienated labor and abstract socially necessary labor time, or value. The fundamental premise of labor theory is that value has nothing whatsoever to do with use value or the production of material wealth. Although this is not obvious in simple analysis, UBI is associated with value, not with use value or production of material wealth. The result is that it appear UBI can address one of the outstanding problems of modern society, poverty, although it does not in the least.

To add to the above problem, what we now use as money is not even money — it is a fiction of money, an inconvertible fiat currency. The currency used in this scheme is controlled by Washington, which can create it in any quantity it desires. This currency itself has no value and faces no practical limit on its creation; its creation is not tied to the production of any use values at all and implies no additional production of use values simply because the state can force this counterfeit into circulation.

Why might this be a problem?

Let’s do a thought experiment to see why this is a problem. Assume, for sake of argument, the state could double the wages of every employed worker with a dollar for dollar match up to $20,000. For the sake of simplicity, assume also that there is no unemployment and that each worker earns at least $20,000. Workers each making a minimum annual wage of $20,000, $30,000 and  $40,000, would now make $40,000, $50,000 and $60,000, respectively, with the addition of the UBI.

Money wages would now increase by $20,000 for each worker, however there has been no increase in the mass of commodities that could be purchased by this new “income”. Rather than increasing the real wage of the working class, the wage measured in terms of the actual commodities these workers could find and buy in the stores, the additional income would simply depreciate the purchasing power of the currency held by each workers. The change here is simply a change in the quantity of valueless fiat tokens in circulation; no matter what the change in the quantity of fiat in circulation, it can only be used to purchase the commodities that are actually in circulation to be purchased. Since the value of commodities in circulation has not changed with the change in the quantity of fiat, prices simply increase, or, more accurately, the currency depreciates. The core fallacy of UBI is the unstated assumption that additional money wages in the pockets of the workers means more wage goods are available, however, while the amount of money wages can be increased simply by crediting the bank account of each worker, additional commodities that can be purchased with the additional wages can not be increased this way.

RESERVATION THREE: Labor, wages and subsistence of the working class:

The theoretical context of Frase’s argument is not all that clear to me. He clearly wants to detach income from labor, but the consumption of individuals would still be determined by their income. As we saw above, this effort could not succeed: the material relation between consumption and labor would assert itself through the depreciation of the purchasing power of the currency in the hands of the working class proportional to that additional fiat currency forced into circulation.

Part of this at least could be explained by a comment in another context where Frase argues workers do not desire work, but wages:

“[A] job provides a source of income: we often talk about the need to create jobs when what we really mean is that people need income. Most of the unemployed don’t actually want jobs–that is, they don’t just want a place to show up every day and be told what to do. The real problem these people have is not that they need jobs, but that they need money. We’ve just been trained to think that the only way to solve this problem is to get people jobs.”

The problem to be solved, in Frase’s opinion, seems to be how to provide income for people even if they do not have a job. This, however, overlooks the fact that people do not need money, either in the form of wages or a basic income, but actual means of consumption, i.e., food, clothing and shelter. Counterfeiting currency and handing it out to the working class as a substitute for, or an addition to, wages does nothing to solve the problem of providing them with food, clothing and shelter. If the aim is to provide actual use values to the working class, we are more likely to require labor than we are valueless inconvertible fiat currency issued by the state. There is no reason why if labor can be reduced or abolished entirely, wages can not be reduced or abolished with it.

RESERVATION FOUR: UBI and radical transformation of society

There are various schemes for UBI mentioned by different advocates from all over the political spectrum. This suggests widely varying ideas of what UBI should be, how it should be structured and what purpose it is intended to serve. At a minimum, this should give pause to anyone on the Left who might also be attracted to the idea. Let me add another reason for pause, that just might prove insurmountable from the point of view of a radical transformation of existing social relations.

So far as I can tell, all of these schemes involve the present state as the administrator of the program. Whether expressly mentioned or not, all present schemes for UBI do not involve, as Gorz offered, “a non-institutionalized force” strong enough to “establish, maintain, and expand those tendencies within the system which serve to weaken capitalism”. The schemes instead assumes the state, which is at present the capitalist within society, takes almost complete and direct control over the purchase and sale of labor power, and the subsistence of the working class.

Thus UBI is indeed a radical transformation of existing relations, but is it the sort of transformation the Left wants?

Now this might not be a cause for concern by such “radical” thinkers as Milton Friedman, Daniel Patrick Moynihan or  Charles Murray over at the American Enterprise Institute — indeed it was Milton Friedman who first proposed the fascist state should be able to deduct its portion of surplus value directly from our paychecks — but it does create concerns for me.

And I think it should cause some real concerns for anyone who advocates social emancipation, including Peter Frase.