The core fallacy of Leftist basic income schemes

by Jehu

I am spending some time looking into the argument for basic income made by some of its defenders. In the course of my surfing, I came across this article by Carl Gibson, “The Case for a Basic Guaranteed Income for All”, which attempts to popularize the argument of basic income advocates.

logo-UBIEAccording to Gibson:

“By providing a basic income for all citizens through ending tax loopholes and preferential tax treatments for the super-wealthy, we’re directly correcting the ever-growing gap between the few who have more than they could ever spend in multiple lifetimes, and the vast majority fighting over crumbs.

More importantly, we’re also giving the poorest Americans a fighting chance at fulfilling their dreams, rather than spending their best years slaving away for a corporate giant that doesn’t respect basic human needs. We can’t call ourselves a free country until working Americans are freed from poverty wages and dead-end jobs.”

From the point of view of getting completely beyond capitalist society, basic income poses at least two obvious problems: First, a basic income does not and cannot get beyond money relations. Second, a basic income cannot get beyond the state. If basic income cannot get beyond money and beyond the state, it cannot get beyond labor despite what its defenders argue.

Why can’t basic income get beyond labor when so many of its defenders claim it can? The reasons are simple: First, although almost all basic income supporters never realize this, money itself is only an expression of socially necessary labor time. Typical of the sort of thinking in our society, most basic income supporters simply see money as a numeraire, not an expression of value. Second, the state itself is wholly funded by surplus value.

These two facts together mean basic income itself is funded by the surplus value, (i.e., the surplus socially necessary labor time) of the working class.

Making Capital Pay?

This presents us with the bizarre situation where one section of the working class lives parasitically on the surplus value squeezed from another section of the class. The typical response of basic income supporters to this bizarre situation is that this is not necessarily true. Instead of adding taxes to the employed sections of the working class, the fascist state could garnish some portion of already idle capital.

Carl Gibson, for instance, proposes the following measures to employ the excess profits of capital to fund a basic income scheme:

“The cost of guaranteeing every adult citizen (approximately 225 million, according to census figures) $12,000 a year is roughly $2.8 trillion. That sounds like a lot, until looking into just one of the least-mentioned sources – offshore tax havens.

Currently, $32 trillion is stashed in offshore accounts in notorious tax havens like the Cayman Islands and Bermuda. Much of that is profit made in the US by American corporations, but booked overseas to avoid taxes. And as journalist Nicholas Shaxson wrote in “Treasure Islands,” much more of it is held in blind trusts operated by oppressive authoritarian regimes, drug cartels, human traffickers, and other unsavory characters. $2.8 trillion isn’t even 1/8 of that amount. We aren’t asking for the whole pie, just a piece. And we’ll even save them a bite.

A few commonsense loophole closures like getting rid of the “carried interest” loophole, eliminating transfer pricing schemes like the “Dutch Sandwich” and “Double Irish” tax loopholes, and instituting a one percent sales tax on all financial transactions on Wall Street would be more than enough to cover the cost of a universal guaranteed income for all. And we still haven’t even discussed other widely-supported, commonsense initiatives like turning wasteful Pentagon spending like the F-35 project into money set aside for a universal basic income, taxing investment income at the same rate as real, actual work, raising the inheritance tax to pre-Bush levels, or creating new tax brackets for millionaires and billionaires.”

Thus, Gibson believes capital can be made to pay the cost to support idled workers through a combination of taxes on offshore accounts, closing loopholes, ending defense contracts and raising inheritance and capital gains taxes to pre-Bush administration levels.

This proposal, however, is simply a shell game since the origins of this idle capital is none other than the excess labor time of the worker. Assuming all of these forms of subsidy to capital were eliminated, we would still face the same problem — only now the capitalists would be intermediaries for an indirect tax on the employed workers. The capitalist would extract surplus value from his wage slaves and split the proceeds with the fascist state. The fascist state would then hand out the loot extracted from the workers by capital to the unemployed.

Although it appears as if capital is being taxed to maintain those unable to find work, in fact one section of the class is being made to support the other by working longer hours than is necessary.

Unemployment and Poverty as the Product of the Employed Worker

Supporters of basic income argue the scheme would make it possible for a large portion of the class to withdraw from the labor market; giving freedom to some workers to live entirely without laboring. In fact this is only true for that portion of the class that has already been rendered superfluous to productive labor. So long as the portion of the working class that composes the surplus population depends on value squeezed out of the employed section, the “freedom” to live without labor is materially limited by the rate of surplus value.

In any case, the mass of surplus value extracted from the employed workers must be equal to the average rate of profit, plus the expenditures of the fascist state, plus the basic income paid to those not working. The social spending formerly undertaken by the fascist state has not disappeared at all — it has only been reorganized. In place of a host of targeted programs, we now have a cash allotment handed out to those who have already been rendered surplus by capital. Assuming the program is revenue neutral, it only represents a change in the form of distribution of social spending and who receives it.

By and large the supporters of basic income will not listen to this argument, since they are not familiar with labor theory or think it is wrong. In their view, money and profit has no necessary relation to labor time. Money can be created out of thin air and is simply a numeraire, while commodities enter circulation without values: in this confused argument, the commodities only actually acquire value in the market when they are bought and sold. Thus, profit is produced by capital, not labor, and can be taxed without any impact on labor time generally.

Finally, there no recognition of the connection between the excess population of workers on the one hand, and the overwork of the employed. If there is any connection acknowledged in this regards, it is only that the unemployed represent a threat to the employed by holding down the wages of the latter. The essential role the employed workers play by actually producing the unemployed workers is never acknowledged.

Along with a steadily growing mass of commodities, resulting from improvement of the productivity of labor, the employed workers produce a steadily growing mass of workers who cannot, under any circumstance, find a place in productive employment. The unemployment of one section of the working class is, thus, the aim and purpose of the activity of the other. The employed worker never realizes this, until she is confronted by a mass of unemployed who attempt to undercut her wages by offering themselves on ever more desperate conditions. The worker, therefore, never recognizes these competitors as her own special product — the direct product of her own labor.

The advocates of basic income believe this mass of workers, who are now utterly dispossessed even of their labor power, can be made to disappear simply be taxing capital. This is their ignorance, their stupidity: they refuse to recognize that their own labor is the sole basis and fundamental premise of capital and its profits.