Canada: socialism or UBI?

A universal basic income (UBI) is being seriously discussed across Canada, especially in light of the COVID-19 pandemic and the various federal benefit programs. UBI is an unconditional payment made to all citizens and is usually a guaranteed, cash-based payment that all citizens receive regardless of income or tax bracket. There are proposals for UBI coming from both the left and the right. Superficially at least, UBI proposals can look quite attractive for the left, but what position should socialists take? Note: this article was written in December 2020.

The Liberals and UBI

There was considerable noise about a possible UBI reform coming from the Trudeau government towards the end of summer. The Liberal government seemed to be hinting at the inclusion of a proposal for UBI, some sort of Green New Deal, or both in the Throne Speech at the end of September.

Chrystia Freeland at one point said that “COVID-19 offers a fabulous opportunity for [Canada] to have an ‘equitable’ and ‘green’ recovery.” Bloomberg reported that Trudeau was planning “Canada’s sharpest turn left in economic policy in decades,” and that Chrystia Freeland had been “tasked with nothing less than remaking the country’s socio-economic architecture.”

There was considerable noise about a possible UBI reform coming from the Trudeau government towards the end of summer / Image: Justin Trudeau

The right wing lost their minds over this speculation. However, while the right wing froths at the mouth over the prospect of UBI and an increase to the already massive debt, there is nothing inherently left wing or socialist about UBI or Green New Deals. The implementation of some sort of UBI policy does not mean a fundamental change in capitalism, it doesn’t represent a change in property relations, and it doesn’t mean socialism at all.

Rather than a socialist policy, UBI is almost always proposed as a way of saving capitalism, or as a means of papering over the contradictions of capitalism in order to make the system function more smoothly. UBI is not about changing or overthrowing capitalism, but making it better from the perspective of its proponents whether they are on the right or the left.

The reason the right wing loses their minds is not because UBI means socialist revolution, but because it is a question of who will pay for it—and the ruling class does not want to pay. This is why the right wing gets upset and shouts about socialism.

With opposition to the plan on Bay Street, Trudeau and Freeland are now very clearly walking back from their talk of “remaking” the country. Towards the end of October Trudeau started to say that the recovery benefits during the pandemic shouldn’t be seen as permanent changes to the social safety net. He has said that “just because aid programs are helping during the pandemic doesn’t mean they’ll be useful once the crisis passes” and has openly said in relation to the CRB that “[it is] not a measure that we can automatically continue in a post-pandemic world.”

However, because the Trudeau government is backing away from UBI and away from the idea of making the pandemic benefits permanent, this does not mean that UBI is off the table.

The Liberal Party convention was supposed to take place in mid-November. The top policy choice of Liberal MPs was a guaranteed or universal basic income. The Liberal caucus was calling on the government to adopt UBI in a priority resolution for the convention and they designated it the top resolution—which guaranteed that it would have been debated and voted on. Liberal MPs and Ministers who support UBI were publicly expressing hopes that CERB would be transformed into some sort of basic income.

In April of this year 50 Senators wrote a letter to the government. The letter was framed as urging the government to convert the CERB into a form of UBI, but the letter itself seemed to be more about making CERB permanent, and not necessarily universal. However, the Senate is investigating and costing UBI proposals. The discussion on UBI is real, and it is taking place at the highest levels of government.

UBI from the left

What about the left-wing proponents of UBI? The Broadbent Institute recently published a UBI proposal. This was a rather technical proposal about implementing UBI via tax reform and mostly discusses converting provincial social assistance services to federal universal programs, as well as changing the way federal transfer payments to the provinces work.

It reads like a business proposal trying to convince the ruling class that UBI is the rational and more efficient way to run social services, i.e. that the Broadbent Institute’s program is the most efficient way to manage capitalism. Their entire argument is based on trying to convince the capitalists that UBI is really in their best interest.

The Broadbent Institute’s proposal does actually propose some reforms and mentions that these more efficiently run social services would be paid for through progressive taxation and the ending of tax breaks on capital gains and business expenses, but the main thrust is fiscal, legalistic and constitutionalist. It is not based on class struggle but focused on federal/provincial negotiations on reforms and it essentially argues that the more rational organization of social services will be more cost effective and efficient for the capitalists than the current set up.

In August of this year NDP MP Leah Gazan called for the CERB to be converted into a Guaranteed Livable Basic Income. She had a much more openly progressive program for paying for UBI.

Her program says “Divesting from corporate welfare, ending off-shore tax havens, and taxing the ultra wealthy,” and specifically mentions: “A guaranteed livable basic income must be administered in addition to: increased investments in current and future government public services, accessible affordable social housing, expanded health services, and income supports meant to meet special, exceptional and other distinct needs and goals rather than basic needs.”

Even in this case, however, the proposal is ultimately written in bourgeois terms, trying to convince the capitalists and their governments that this is the most efficient and cheapest way to deal with poverty. These proposals are not really based in class struggle. Gazan’s proposal argues that cuts to social assistance ultimately end up costing more because it means lower tax revenues and higher costs for the healthcare and justice systems. Organizations she collaborated with for her bill also couch the arguments for UBI in the same way, that paying an UBI will be more cost effective because there will be fewer indirect costs associated with poverty.

These are ultimately naive demands put forward by those on the left who believe that austerity is ideological or that austerity is a choice on the part of the ruling class. These lefts believe that we can somehow persuade the rich and wealthy to kindly hand over the money for the good of society. The left advocates of UBI are really just hoping for the benevolence and philanthropy of the capitalists and the establishment politicians who represent them.

UBI and CRB

Reformist UBI proposals do, however, call for a reinforced safety net and the expansion of the welfare state funded through increased taxation on big business and the rich. Coming from the left, UBI is like any other progressive demand. As revolutionaries, we will critically support anything that leads to more money in the pockets of workers, but it is not our position and we point out its problems and limitations. We cannot simply argue for the status quo, which means we cannot simply adopt the reform as our own position. Our position is not for the capitalist state to subsidize low wages via UBI schemes, our position is for the workers to fight and directly force the bosses to pay higher wages. While fighting for reforms we point out to the workers that any reform under capitalism is temporary and unsustainable, and the only way to guarantee reforms is for the working class to take over the means of production.

The Marxist position is not for the capitalist state to subsidize low wages via UBI schemes, our position is for the workers to fight and directly force the bosses to pay higher wages / Image: Socialist Appeal

An added weakness of UBI is that even when it is proposed with the best of reformist intentions, the fact that it is also being put forward by the right wing means that it is open to co-option. A Liberal government fighting to survive may rhetorically adopt UBI to steal NDP votes, only to turn around and use it as a fig-leaf for cuts in social programs. An NDP government capitulating to capitalist pressure could do something similar, jettisoning the expansion of the welfare state and corporate taxes, leaving behind only a cash payment funded via deficits and inflation.

The left-UBIers also cannot escape the problem of any proposal to tax the rich while they continue owning the means of production. Any plan that genuinely taxes the rich and redistributes wealth will not be accepted by the capitalists. If you tax the rich they will not invest. They will take their capital overseas, close factories and make millions unemployed. This is why the key question is not taxation and redistribution, but ownership. You cannot plan what you do not control and you cannot control what you do not own.

The question of UBI is similar to our position on the CRB. We are in favour of the working class and small businesses receiving support during the pandemic. But are we in favour of this support in the form of handouts and subsidies for the capitalists? No.

That is fundamentally what the government’s response to the pandemic has been—one massive handout for the bosses and the corporations: the wage subsidy, the forgivable loans, the $700 billion the big banks and corporations received, and even the CERB.

The CERB, and now the CRB, are mainly used by working people to pay basic expenses, i.e. rent, credit card and utility bills, groceries, etc. In this sense, using general tax revenues to keep workers and their families alive during the pandemic is only another form of public subsidy for the capitalists.

While the CRB definitely benefits the working class, many of whom could not survive without it, the CRB is also a subsidy for the corporations, keeping them afloat and even allowing many to profiteer.

All these measures of the Trudeau government during the pandemic have meant one fundamental thing: the rich get richer and the poor to get poorer. Canada’s richest 44 billionaires have increased their wealth by $53 billion over the course of the pandemic. In this sense, i.e. that it was a handout for the bosses, we were not in favour of CERB. Our position is a socialist position: not for CERB but for no bailouts, for nationalizations under worker’s control and for economic planning.

Socialist measures such as these are what can provide the practical measures we have called for to deal with the pandemic: no layoffs, full pay, smaller class sizes at schools, the expansion of public health measures across the board, and support for small businesses.

The working class should have access to paid sick leave, hazard pay, and guaranteed wages—paid by the bosses and not out of the general tax revenue. If the bosses cannot or will not pay they should be expropriated and the company nationalized under workers’ control.

We are not opposed to the CRB helping workers pay the bills, and our opposition to the handouts for the bosses does not mean we are in favour of workers losing CRB funding.

We are not for CRB, it is not our demand, but now that it has been implemented we are opposed to workers having the benefit removed.

Taking away CRB now would be a total counter-reform and attack on the working class. It would leave many in abject poverty, and so we would be opposed to the government taking CRB away.

But how would we oppose this? As socialists, we cannot not simply argue for the status quo. We could not simply stop at saying “Hands off CRB.” Our duty would be to put forward a socialist position, to raise our revolutionary ideas and explain that while CRB is not our position, it is a reform that should be defended and that the bosses should pay for it, not profiteer from it.

Our position would be that taking away the CERB will mean pushing entire sections of the working class into abject poverty. The working class will not pay the bill for the pandemic, the bosses must pay. However, the CERB is ultimately a handout for the bosses, and does not provide a long-term solution to the contradictions of capitalism exposed by the pandemic and the economic crisis. Guaranteed wages, hazard pay, workers’ control for workplace safety are the only way to protect the lives and livelihood of the working class, and these can only be guaranteed through nationalizations under workers’ control, etc.

It is the same with regard to UBI. If proposed as a progressive demand to be paid for with increased taxes on the corporations and the rich, we can support this as a reform, but we put forward our revolutionary program and explain the problems a UBI program would inevitably face.

Reform or revolution?

As a progressive demand based on increased taxation on big business and the rich, the demand for UBI effectively amounts to the classic demand of reformism: tax the rich! Yes, we agree with taxing the rich to achieve reforms. The bosses should pay for the pandemic crisis. We support this and would defend the reforms achieved, but this is not our political program.

Taxing the rich to pay for reforms is the political program of reformism. Our political program is for the expropriation of the capitalists, the nationalization of the commanding heights of the economy under workers’ control, and for a democratically planned economy. Our position is not “tax the rich,” it is for socialism. We would stress that society most definitely has the wealth to fund a genuinely progressive UBI system, but we would also point out that UBI doesn’t solve any of the fundamental contradictions of capitalism.

It should also be understood that the only way such a UBI reform would ever actually be implemented in a meaningful way is if the capitalists felt threatened, i.e. if the capitalist system itself were at risk. History has shown that when the class struggle reaches such a level of intensity that the ruling elites will be prepared to offer reforms from above to prevent revolution from below.

However, even in this case, our demand would not be for UBI, but for socialist revolution. In that situation, why would we support a last-ditch reform to save capitalism, when we could put forward a position for the overthrow of capitalism?

This points to one of the main problems with reformist demands like UBI. The demand is rooted in classical reformism: through their policies and program, what the reformists are really saying is that the capitalist mode of production is fine, the private ownership of the means of production is sacrosanct and must be preserved, and that it is only the capitalist mode of distribution that is distorted and needs correcting, i.e. we just need to lessen the inequality a little bit to avoid the chaos of revolution.

All these proposals and reforms, which amount basically to taxing the rich to pay for social services (or for UBI), only paper over the contradictions of capitalism, they do nothing to solve the fundamental problem.

The reformist proponents of UBI fail to pose the question from a class perspective. They ignore an analysis of who actually owns and controls the wealth in society, and they ignore the question how this control of the wealth was obtained in the first place.

CRB does benefit the workers, but it was implemented under capitalism by a capitalist party running a capitalist government. This means that CRB was ultimately implemented in the interests of the capitalist class. It would be the same with UBI. UBI implemented under capitalism would ultimately serve the interests of the ruling class.

If a universal basic income were introduced, it would be subject to the same pressures and efforts other social services are under. It would come under the pressure of austerity. UBI is an attempt to save capitalism from its own contradictions, but ultimately preserves low-wage work in the private sector by having the state absorb unemployment and getting the working class to pay for the costs through taxation.

A universal basic income would really be a wage subsidy for the bosses, who should be paying higher wages and providing benefits. These are what we should be fighting for in terms of reforms. On this basis, you could see UBI becoming a roadblock to struggles for decent pay, better working conditions, minimum wage increases, etc.

We must fight for vast improvements in the benefits for the unemployed, the poor and the disabled, but rather than fight for UBI, we should fight for decent wages and for the expansion of public services like healthcare, housing, child care, education and public transit. Fighting for expanded social services is part of the class struggle, and in this sense is part and parcel of the struggle for the socialist transformation of society.

Being based on the idea of wage top ups out of tax revenues, UBI essentially amounts to supporting the status quo. This means accepting low wages and precarious work. Social programmes and public services have been attacked and gutted for decades, and the reformists have come to the conclusion that we should compensate for this with a universal basic income rather than fighting against austerity, rather than fighting for increased social services, rather than fighting for the socialist transformation of society.

UBI lets the bosses off the hook of the class struggle and in this regard it actually rationalizes and signals an acquiescence to austerity. UBI means accepting the class rule of the bourgeoisie. It means accepting austerity, low-wages, precarious employment. It fundamentally means accepting the status quo of capitalism in an attempt to paper over the contradictions of the system with a meagre cash payment.

Socialists cannot sell ourselves so cheaply by accepting UBI as part of our program. The emphasis for socialists should not be on redistributing the wealth that has already been created in society through various taxation and social service schemes. The reformists focus on distribution under capitalism, but socialists should focus on production itself, because this is the root of the contradictions that arise in society. We should be emphasizing the collective and democratic control over the means by which wealth is created, i.e. the means of production, where value and wealth are created.

In this sense, the inequality inherent to bourgeois society is a symptom, capitalism itself is the disease. The socialist criticism of capitalism is not directed primarily at the symptoms of the disease, but at the underlying disease itself, i.e. the laws of capitalism and the private ownership of the means of production and the nation state, the contradiction of competition and monopoly, production for profit, all of which stand in the way of the development of the productive forces.

Problems and Solutions

UBI and reformism in general offer no solution to these fundamental contradictions. What are some of the big problems that the proponents of UBI claim it will solve?

There was an interesting letter that a group of 100 CEOs wrote to Doug Ford after he cancelled the Wynne government’s UBI program. They were asking him to bring back the UBI program. They listed a number of reasons for implementing UBI, which the reformists usually also mention. These are the very contradictions of capitalism driving the organic crisis of the system. These include AI and job losses due to automation, precarious and low-income jobs, globalization, monopolization of certain industries such as Amazon in the retail sector.

A group of 100 CEOs wrote to Doug Ford, asking him to bring back the Wynne government’s UBI program, which the reformists also defend. These are the very contradictions of capitalism driving the organic crisis of the system / Image: Bruce Reeve

These put downward pressure on wages, which suppresses demand. Suppressed demand lowers economic growth. There is a wing of the bourgeois that can see the problem here: if there are masses of unemployed due to automation and globalization and the rest of the working class are all working at low-income, precarious jobs and barely able to survive, who will buy all the commodities being produced? The capitalists are concerned: if no one is working or if everyone is poor the market will be severely limited, how can the economy grow under these conditions?

From the perspective of socialists, how does a small, monthly basic income solve these problems? Capitalism is creating the very conditions that are eating away at it from the inside out. It is digging its own grave and creating its own gravediggers. There is rising unemployment due to automation and now the pandemic. This combined with low wages and precarious employment leads to a fall in demand. Falling demand leads to a collapse in investment, and collapsing investment leads to rising unemployment and so on.

This vicious circle is the classic crisis of overproduction, one which is long overdue. The capitalist system itself is unravelling under the weight of its own contradictions, and no amount of tinkering with either supply-side or demand-side economic policies will be able to overcome the crisis.

How does UBI propose to resolve these contradictions? It doesn’t propose resolving them at all. How does a meagre universal basic income resolve the issue of automation, or precarious employment, or low wages? How does it solve the problem of unemployment, low wages, and shrinking demand?

In fact, UBI amounts to subsidizing the bosses by paying wages that they should be paying anyway, and it will only encourage the driving down of wages even further in order to recover slowing rates of profit. But again—this only eats demand, which drives overproduction, which drives down the rate of profit even further.

The great irony with regard to UBI is that those proposing it openly recognise all the glaring contradictions of capitalism. However, they end up turning the problem on its head, and suggest all manner of reforms, everything except the solution itself. They can admit the failings of capitalism, but refuse to see that capitalism itself is the problem.

Instead of calling for a UBI, socialists should be using this question to expose the irrationalities, absurdities, and contradictions of capitalism. Our demand should not be for a UBI, where economic control remains in the hands of capitalists, and where money continues to flow into the pockets of parasitic capitalists. Our demand must be for nationalisation of the key levers of the economy and for workers’ control, for workers’ democracy.

Rather than demand a universal basic income for those made redundant by automation, we should be calling for work available to be shared, with a reduced working day for everyone. Instead of UBI, we should be calling for a sliding scale of wages and working hours.

However, this is only possible on the basis of socialism, an economic system based on needs, not profits. The liberals and reformists raise the slogan of a universal basic income to solve the fundamental problems of capitalism: poverty, inequality, unemployment, automation, and precarious work. But they do not propose doing anything about the root of the problem, i.e. capitalism itself, the private ownership of the means of production, and production for profit. UBI does not do anything about these problems. As socialists, we must put forward a socialist program and fight for a society where the motto “from each according to their ability; to each according to their need” can actually be achieved.

Originally published at marxist.ca on 18 December |