The Capitalist Production of Consciousness

May 1, 2020
Oshan Jarow
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Table of Contents

Assessment: Progress & Consciousness

1. Troubles of Progress
2. The Law of Human Progress
3. The Capitalist Production of Consciousness

A Response: Universal Basic Income

1. Universal Basic Income
2. Critiquing UBI
3. Next Steps: A Modernized NIT

Beyond: Post-capitalism & the Economic Problem

1. Beyond UBI
2. Conclusions: New Trips, New Problems

...

WE cannot much longer ignore the discomforting truth that the economies we’ve inherited from the twentieth century are poorly designed for the production of human beings. As digital technologies weave economic logic deeper into the temporal fabric of everyday life, we’re debasing economic society’s most complex, valuable, and neglected production: human consciousness.

The psychedelic community uses the term set and setting to describe how the kind of trip one has after ingesting a shriveled mushroom, or a tab of acid, deeply depends on the social, mental, and environmental conditions present throughout.

But what we experience as “ordinary consciousness” is itself a psychedelic state: the mind manifested in tune with its set and setting. Society functions as the set and setting for the everyday trip of ordinary consciousness.

As economic development interlaces all aspects of society with economic incentives, ordinary consciousness is molded by economic forces. Left undisturbed, the invisible hands of capital will set the trajectory for human development, adjusting the production of human beings in the interests of capital.

Redesigning the economy to elevate that trajectory requires comprehensive reform, but we can begin with a universal basic income (UBI). By decommodifying a basis of time for all, UBI changes the logic of everyday life. Altering the imperatives governing this most elemental level of society - the everyday - produces effects that ripple throughout. As new ways of living are made viable for all, exploratory behaviors yield new developmental possibilities that arise from within the shell of the old.

II. Contemplative Economics

I made this connection between economics and consciousness during my 11th month in Asia. I was sitting on the floor of a dusty bookshop in Northern India, rolling my gaze across the tilted book spines. It turns out, after spirituality and meditation books, the most popular subject left behind by decades of angsty travelers was economics. Strange, I thought.

This was a connection I sought while studying economics and philosophy in college. It felt intuitive, but the bridge between economics and subjectivity was a dead end in my department (indeed, it remains a dead end in most mainstream economic discourse).

And so it wasn't until after graduating, when I set aside the idea of an economics that concerns itself with human consciousness, that I began discovering the broader inquiry of heterodox economics and critical theory. Asia's used bookstores supplied me with the broader education school hadn't.

Nearly 100 years ago, German Marxists of The Frankfurt School harped on this link between economic conditions and the production of consciousness. Capitalism, they argue, produces an individual’s subjective experience just as it does a Ford automobile. But this line of criticism largely died with them. At precisely the moment in history when digital technology began globalizing capitalist cultural conditions, the countervailing schools of criticism tapered off.

I didn't find God or enlightenment out there. But I did discover a direct theoretical grammar, a way of looking at the unnecessary human suffering caused by the under-scrutinized relationship between economics and consciousness.

This grammar was lost not only to economists, but contemplatives too. Economists are trained to stay in their lane, avoiding any evaluative, normative judgments of values and preferences. Economists do not concern themselves with the kinds of humans economic systems produce.

But contemplatives, too, neglect how the socioeconomic structure of society is dominating the conditions of conscious experience. India was full of meditation retreats populated by white westerners, but few discussed how to democratize the economic privileges that made their meditation trips possible. Few asked whether we might structure society in such a way that we don’t require retreats from it in order to probe life’s deeper questions.

In the 60’s, psychedelic psychologist Timothy Leary coined the motto: Turn On, Tune In, Drop Out. But too often, dropping out was misunderstood as exiting from society, whether for an ashram in India, or a commune on your father’s golf course. As technology globalizes capitalist cultural conditions, the capacity to ‘drop out’ is an illusion of privilege. For most, society is not an optional game, but a mandatory set and setting for their ordinary consciousness.

As philosopher Zachary Stein puts it: “Our entire lives are shaped by the ways we interface with the wage labor system—we are only as free as the ways available to us to make money."

The Frankfurt School detested the kind of consciousness capitalist environments produce, but hardly suggested remedial action beyond condemning capitalism and making vague gestures towards emancipatory art and mass revolution. But you cannot critique a new world into being. You must design for it.

I’ll explore universal basic income (UBI) as one possible intervention in the hyper-capitalist distortion of human development. By securing decommodified time for all in the form of universal, unconditional income, UBI enables behaviors, relations, and projects - ways of living - that transcend the logic of capital.

III. Hyper-Capitalism and Human Development

Hyper-capitalism is a term economist Thomas Piketty uses to describe the confluence of neoliberal capitalism and the digital revolution. Neoliberalism refers to the variety of capitalism that arose in the 1970’s. It emphasizes deregulation and privatization, discourages all taxes (especially on capital), and promotes free-market individualism over state-mediated collectivism. Combined with the globalizing force of the digital revolution, neoliberalism evolved into hyper-capitalism:

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Hyper-capitalism combines existing tendencies towards the commodification of physical space with new digital and algorithmic capacities that convert attention into capital, incentivizing the total commodification of time.

The totalizing commodification of both space and time drives hyper-capitalism’s monopolization over the production of consciousness. The set and setting of everyday life is increasingly imbued with commodity logic. The emergent consciousness cannot help but follow suit.

On the physical plane, hyper-capitalist expansion is remaking our public spaces into advertising zones and business plazas. Cities are designed by the profit motive. But “the question of what kinds of cities we want,” economic geographer David Harvey writes, “cannot be divorced from the question of what kind of people we want to be, what kinds of social relations we seek, what relations to nature we cherish, what style of daily life we desire”. As adaptive creatures, the logic embedded in our physical environments plays a causal role in the humans we become.

While the commodification of space is at least visible to us, the commodification of time occurs out of sight. Hyper-capitalism commodifies time either by freeing up surplus time through productive innovations and feeding that surplus back into the production process, or by pushing deeper into previously un-commodified areas of life.

What the culture industry began by reducing leisure time to commodified passivity was picked up by machine learning algorithms. Attention is now converted into capital by capturing behavioral data to improve the algorithms. All time is now ripe for commodification; uncaptured time is unrealized value.

Commodifying time reduces optionality, constraining the potential behaviors we pursue within it. The logic of capital accumulation becomes the arbiter of viable behavior inside commodified time.

Expanding across and commodifying both frontiers - space and time - hyper-capitalism conditions our behaviors, ideas, and ways of relating with each other. It conditions the very kinds of humans we’re becoming.

While hyper-capitalism is an unparalleled system for accumulating capital, it’s a dubious guide for human development. The past 50 years of capital-led development created an adaptive cycle that reproduces and entrenches commodity logic in the evolutionary process.

This logic favors standardization over diversity, undermining the social complexity that drives robust evolution. Commodity logic cannot recognize human interiority as a value in itself; only as a factor of production. Unseen and undervalued, mental health languishes. If the trajectory of social development over the past 50 years constitutes ‘progress’, the process has derailed.

At the same time, a global society participating in a shared division of labor and connected by digital information flows makes possible cooperative leaps of progress unlike history has ever seen. To be sure, hyper-capitalist afflictions are balanced by a staggering list of advances. Medicines, mortality and literacy rates, hygiene, and innovative technologies. But the good can no longer justify the bad. The balance is broken.

We must revisit what progress means, and how it proceeds. To do so, I’ll draw from Henry George’s law of human progress, Karl Widerquist’s work on the physical basis for voluntary trade, and the post-capitalist visions of Martin Hägglund and Thomas Piketty.

UBI can play a vital role in this process. By decommodifying a basic level of time for everyone, it makes behaviors beyond commodity logic viable. These new diversities of behavior could introduce new directions for human development by enabling exploratory behaviors from the bottom up, rather than imposing ways of living from the top down.

UBI is not a panacea, but perhaps what George calls a “true reform”: one that makes all other reforms easier. This is nowhere more clear than its role in addressing what I call the paradox of markets. By decommodifying our foundation of basic needs, UBI shores up the basis of voluntary exchange that activates socially desirable markets.

But I’m not here to evangelize for UBI. We’ll complement positive appraisals with a sobering account of its criticisms. We’ll ask whether UBI is a capitulation, rather than alternative, to neoliberalism. We’ll consider human nature, and whether securing decommodified time for all might simply lead to widespread idleness. And since UBI is a tax-funded program, we’ll ask whether UBI is an unjustified transfer of income from those who earn it to others who simply receive ‘something for nothing’.

Of course, there are more straightforward reasons why UBI is becoming a policy of vigorous debate. But here, my focus is on the farther reaches of UBI: how, by decommodifying time, it alters the production of consciousness and the direction of human development.

My aim is twofold: first, analyze how hyper-capitalism produces consciousness, and why the present mode of production is problematic. Then, explore how UBI decommodifies time, opening up new forms of participation and possibilities that transform the system from within.

The Troubles of Progress

“…the social difficulties existing wherever a certain stage of progress has been reached, do not arise from local circumstances, but are, in some way or another, engendered by progress itself.”
~ Henry George

AT the frontiers of progress, we find the jarring juxtaposition of society at its best and worst simultaneously. Henry George, the most celebrated political economist of the late 19th century, noted how the worms that rot the core of civilizations tend to emerge internally, from the process of progress itself. The progress of past civilizations, he notes, has always given rise to the means of their own downfall.

It’s not yet an indictment to say that capitalism produces consciousness. All socioeconomic environments create conditions for particular modes of subjectivity to evolve. Economies play a natural role in shaping the environments for human development.

But the corrosive properties of our development were amplified by the coalescence of neoliberalism and the digital revolution. Digital technologies sharpened the existing logic of neoliberalism, where capital accumulation is the sole proxy for social development.

These two forces spiraled together, creating history’s first true world-system. A world-system is a single set and setting stretched across the globe. A homogenous, standardized evolutionary environment. It maintains coherence across vast geographical spaces through a shared division of labor with global markets for its goods and services. Instantaneous global information and capital flows circulate like blood coursing through the world-system’s internet-connected veins.

Zachary Stein writes that there has been, at least since the 1970’s, “a truly planetary culture. Or better: a global ideology broadcast from a polycentric capitalist world-system touching every corner of the Earth.”

The digitization of capitalist cultural conditions goes beyond globalizing the existing set and setting. It’s transforming the internal structures, the mediums that connect us to the logic of capital. Markets and economic institutions are no longer confined to atoms, but exist as diffused, digitized bits. As we’ll explore, digital technologies dematerialized economic institutions. Factories and assembly lines defined the capitalist environments of 1945 - 1971. The internet deterritorialized these modes of production, as media theorist Jonathan Beller notes:

“Cinema brings the industrial revolution to the eye…and engages spectators in increasingly dematerialized processes of social production...mass media, taken as a whole, is the deterritorialized factory, in which spectators do the work of making themselves over in order to meet the libidinal, political, temporal, corporeal, and, of course, ideological protocols of an ever intensifying capitalism...The media, as a deterritorialized factory, has become a worksite for global production.”

But the metaphor doesn’t go quite far enough. If the industrial revolution was brought to the eyes, hyper-capitalism extends through them, into the brain. Digital technologies drive the conflation of capital growth with social development deeper into the human being.

It’s in this new neuronal space of dematerialized social production that we begin to see the consequences of human development subordinated to capital. As the dematerialized logic of capital streams into our brains - those windows into the soul that are now always plugged into screens designed to mine the capital of attention - these influences pervade and remake the neuronal space itself.

According to philosopher Byung-Chul Han, 21st century humans suffer from a new signature affliction unique to hyper-capitalism’s immaterial modes of production: neurological illness. The digitally amplified logic of capital remakes neurons into factors of production. Immaterial exploitation under hyper-capitalism does not incite revolution, so much as depression, anxiety, and burnout:

“Every age has its signature afflictions...From a pathological standpoint, the incipient twenty-first century is determined neither by bacteria nor by viruses, but by neurons. Neurological illnesses such as depression, attention deficit hyperactivity disorder (ADHD), borderline personality disorder (BPD), and burnout syndrome mark the landscape of pathology at the beginning of the twenty-first century. They are not infections, but infarctions; they do not follow from the negativity of what is immunologically foreign, but from an excess of positivity.”

Note the distinction: these pathologies aren’t foreign, from outside the system. They arise from within the system itself, as the “excess of positivity”. The process of turning humans into products of hyper-capitalism generates externalities that manifest as neurological illnesses. Here we witness George’s theory in action. Our progress is giving rise to the means of neurological, civilizational decay.

Hyper-capitalism mass-produces, at a global scale, these means of decay. Fashioned by this process, we reproduce the systems that make us. We propagate the means of our pathologization. We’re creating, and spreading, the worms that will rot the core.  

But as the psychedelic lens suggests, by redesigning our environments, we can redesign ourselves. By redesigning our environments, we can nudge the trajectory of social evolution. Henry George provides a framework to understand where our systems of progress went wrong, and how we might redesign them for the better. He calls this framework the law of human progress.

The Law of Human Progress

“The tower leans from its foundations, and every new story but hastens the final catastrophe.”
~ Henry George

IN Henry George’s Progress and Poverty, he derives the law of human progress: “the law under which civilization advances.” For George, healthy progress depends upon two conditions: association, and equality.

Association refers to the size of the network of humans peacefully cooperating to do what needs doing. Today, we refer to this network as the division of labor. The larger this network, “the greater the possibilities for improvement.”

This suggests a world-system is not inherently problematic. A world-system with a shared division of labor and cooperative political institutions is a realization of George’s condition of association.

Where progress creates problems - whether that of poverty which troubled George so, or the invasive commodification and global homogenization that we address here - is by failing to adhere to the second condition of progress: equality.

Equality, for George, was indistinguishable from justice, or freedom. Today, his notion of equality more closely resembles what we refer to as equal access. George’s equality is a commitment through which we secure the advances made by each generation as common property for the next. That is to say, progress yields advances that are to be sedimented in an ever-rising ground of common property on which everyone stands. The less of one’s resources they must spend gaining access to the advances already made, the more resources they can devote to exploring further progressive purposes.

Without a commitment to equality, civilization rests upon uneven foundations. The fruits of progress are available only to those lucky enough to be born onto high ground. By treating progress as collectively owned common property, its fruits must be democratized.

“Thus association in equality is the law of progress. Association frees mental power for expenditure in improvement, and equality, or justice, or freedom - for the terms here signify the same thing, the recognition of the moral law - prevents the dissipation of this power in fruitless struggles.”
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In George’s time as in ours, we have powerful association with meek equality. We’ve seen tremendous surges in our capital stock and productive capacity. And yet, for a vast portion of the population, wages still tend towards the minimum that affords a bare living. It isn’t that wages don’t allow access to the basic elements of life in the modern world. But for most, affording access to that supposed common property of progress leaves nothing leftover. The inequality does not manifest in access, so much as in time.

The severity of time inequality suggests why an equal decommodification of time for all citizens could be a radically progressive strategy. By treating a basic level of income as the unconditional common property of all citizens, even those lowest on the income distribution can begin to achieve access to what they need without trading all of their time in exchange. People gain optionality in how they spend their time.

Taken to its extreme, this logic culminates in the case made by philosopher Martin Hägglund. He argues - in harmony with Karl Marx - that the surplus time created by capitalist innovation should be treated as common property. Doing so requires collective ownership of the means of production. In the past, labor unions succeeded in capturing a portion of surplus time for workers with the creation of the weekend and 40-hour workweeks. But relying on labor advocacy accepts the inherent conflict between workers’ interests and capitalism’s growth imperative.

For Hägglund, collective ownership of the means of production dissolves the conflict. It leads to collective ownership of the surplus time capitalism generates. In this logic, the ownership of time creates the conditions for freedom and progress: “In short, our freedom requires that we can own the question of what to do with our time. For Marx, political progress is measured by the degree to which it allows for such freedom.”

This is one way to think about progress: the progressive democratization of free time. Not that we all miraculously get more free time, but we gain more agency in deliberating how, and where, the surplus time created by progress is invested. Marx drew a distinction between the realm of necessity and the realm of freedom. In the former, our actions are dictated by pursuing the means for survival. For Marx, freedom implies that necessity does not control our actions. Progress means the democratized transfer of time from the realm of necessity to the realm of freedom.

Applying George’s conditions, free time is not something we purchase on the market. It’s a product of progress that we must collectively own as a sedimented layer of common property beneath our feet. As progress builds, that foundation grows.

By increasingly separating the totalizing logic of capital from how we spend our time, we begin dismantling the mechanism that monopolizes the production of consciousness and co-opts human development. To begin, we can study the interwoven history of capitalism and consciousness. Understanding how they came together better equips us to take them apart.

The Capitalist Production of Consciousness

IN a sense, consciousness has always been a product of economics, at least indirectly. An economy is what emerges from the network of arrangements and technologies a society uses to fulfill its needs, survival predominant among them. Michael Pollan - a writer who studies the interplay of nature and culture - writes in his study of psychedelics: “Most of the time, it is normal waking consciousness that best serves the interests of survival - and is most adaptive.”

What is adaptive for survival within an economy becomes an invisible hand that shapes “normal waking consciousness”. Normal consciousness is a function of what is adaptive for survival, mediated through economic arrangements.

The economic project of arranging ourselves to optimize for survival - what economist John Maynard Keynes calls the economic problem - governs what modes of consciousness are most adaptive for survival within that network of arrangements. The most adaptive modes of consciousness become normalized as the default consciousness within that society.

This is the logic behind calling society a set and setting for the everyday trip of ordinary consciousness. There’s nothing new about it. But while consciousness has always been economized, it has not always been commodified.

I. Edward Bernays

The indirect economization of consciousness occurred as economics created the schedule, possibilities, and prevailing time uses of daily life. By defining existential possibilities, economics indirectly shaped the environments where consciousness develops. The conditions that would lead to the commodification of consciousness bloomed when a direct relationship was established between economic logic and the structure of consciousness. Few did more to create these conditions than Sigmund Freud’s nephew: Edward Bernays.

Like a puppeteer who discovered hidden strings controlling the human mind, Bernays used Freud’s discovery of the unconscious to manipulate conscious behavior. From the 1920’s on, he taught companies how to market and appeal directly to the unconscious, turning consumption into a psychological activity. This created a two-way bridge connecting economic growth with the psychology of citizens.

In his 1928 book, Propaganda, Bernays writes:

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of...we are dominated by the relatively small number of persons [...] who understand the mental processes and social patterns of the masses. It is they who pull the wires that control the public mind, who harness old social forces and contrive new ways to bind and guide the world.”

This was a perversion of psychoanalysis, employing it for profit by capitalizing on repression rather than wrestling shadows to light. Identifying repressions became the stimulus behind consumerist culture.

If hyper-capitalism is the total integration of the logic of capital with the fabric of society, this early bridge made the integration possible. Though the mid-20th century is often hailed as the ‘Golden Age of Capitalism’, market society overwhelmingly dominated and shaped social psychology.

II. Markets and Behavior Regulation

Market societies are complex systems that regulate behavior, often by imperceptible means. It’s no accident that Adam Smith’s famous hand was invisible. Even with no tangible, explicit force that governs how individuals in a market society behave, there are nevertheless regulatory dynamics that align behavior with market structures.

Markets always arise from an edifice of conditions. Those conditions govern the tendencies of behavioral adaptation therein. The mistaken notion of “free” markets merely sublimates the mechanisms of control they claim to transcend.

Some conditions that underlie markets are beyond our control, others are the result of choices we make, or neglect to make. Public and regulatory policies, long derided as intrusions upon free markets, are actually conditions that determine what market dynamics emerge. This frames market design as a project for human development. Designing markets is to design the environments we adapt to.

The system dynamics we’re awash in - homogenized behaviors that erode social complexity, neurological afflictions, and gaping inequalities - are problems of market design, rather than markets themselves.

Like computer programmers, we can go back through the design code to locate the bug. In this case, the market design of neoliberal capitalism traces back, in large part, to Friedrich Hayek. The bug lies in his inadequate understanding of the necessary conditions for meaningful freedoms in a market society.

Hayek was well aware of the intimacy between economics and the structure of our lives, quoting approvingly in his seminal Road to Serfdom from Hilaire Belloc’s history of capitalism: “The control of the production of wealth is the control of human life itself.” Hayek saw markets as technologies to decentralize and democratize the power that previously accumulated in centralized governments.

But Hayek failed to properly account for the invisibility of market dynamics that regulate and control outcomes just the same as government. Without sufficient democratic institutions in place, markets merely took power away from the government and placed it on auction, for the highest concentrations of unregulated capital to claim.

As Martin Hägglund points out, Hayek saw no relevant difference between negative and positive freedoms. For Hayek, “liberty”, or the absence of explicit, tangible coercion was sufficient to constitute meaningful freedom. But this fails to account for all the invisible hands at play in the economy.

The notion of positive freedom suggests that we need more than the absence of explicit oppression. Positive freedom recognizes those meaningful freedoms in a market society that require further conditions and resources to act upon or realize one’s freedoms. A young black woman born in poverty in the South Side of Chicago does not have the same freedoms as a young white male born into a wealthy family in Manhattan. But the relevant unfreedoms are implicit, the result of invisible hands that Hayek’s theory of freedom neglects.

This neglect at the base of Hayek’s political philosophy skews all that was built upon it. Market design informed by his theory, which dominated the landscape from 1971 - 2008, failed to deliver on the promise of democratizing and decentralizing freedoms:

“Hayek cannot see the problem in question, since he reduces freedom to liberty. As long as we are not directly coerced to act in one way rather than another - i.e., as long as we have formal liberty - we are free in the relevant sense for Hayek…As long as we can make a choice without anyone forcing us or telling us what to do, we are free. Such a formal conception of freedom, however, is utterly impoverished…Freedom requires the ability to participate in decisions regarding the form of life we are leading and not just the liberty to make choices.”

Unregulated markets - by means such as the loosening of controls on capital and dismantling the Bretton Woods Agreements in 1971 -  were the first condition for the global eruption of hyper-capitalism. The inadequacy of Hayek’s freedom was embedded in the globalized system. With free rein, capital converted the global environment into that which best serves its commodity logic: a system of mass-production. A global market society emerged that was simultaneously everywhere (the same across the globe) and nowhere (invisible).  

Mass-producing the conditions for human adaptation runs counter to the logic of evolution. In evolutionary terms, the development of life thrives when the spectrum of mutations are as diverse as possible. More distinct mutations mean more options for advantageous adaptation.

Globalizing economic coherence does move in the direction of George’s first condition of progress: widening our spheres of association. But it falls short of the second, equality, which for George was synonymous with freedom.

This is why we can’t merely reject globalization. Scaling from isolated localities to a global division of labor affords unique opportunities. The relevant questions become how to maintain differentiation across connected adaptive environments? How do we imbue market design with democratic institutions that actually decentralize power? How do we decouple homogenization from globalization?

But before we can answer these questions, we must explore the second condition that enabled the hyper-capitalist world-system: the digital revolution. New forms of digital media would amplify the rapidly expanding logic of capital. It did not only expand outwards, but inwards, colonizing and remaking human perception to the specifications of capital.

Drawing By Marc Ngui
Drawing By Marc Ngui

III. Dematerialization: Where Have the Factories Gone?

“Technologies such as cinema and television are machines that take the assembly line out of the space of the factory and put it into the home and the theater and the brain itself, mining the body of the productive value of its time, occupying it on location. The cinema as deterritorialized factory, human attention as deterritorialized labor.”
~ Jonathan Beller

The means of production, the infamous French duo Gilles Deleuze and Félix Guattari write, relocated from buildings to brains. The factors of production evolved from assembly lines to neurons. The digital revolution deterritorialized factories, as if dissolving solid matter into millions of pixels that are streamed, transmitted, injected via new financialized media platforms directly into the mind.

Deleuze and Guattari reference the dominant forms of media in their time - television and cinemas - but all forms of media are communication platforms between cultural logic and individual subjectivity. Media is inherently interactive and educational, in that we learn through participation. As we consume media, media consumes, alters, and reproduces us.

Media theorist Yves Citton names the process by which digital media reconfigures human subjectivity electrification:

“Electrification is in the process of reconfiguring our collective attention, at a global level, according to self-reinforcing dynamics that profoundly restructure the way in which we perceive and evaluate our lived experiences.”

As omnipresent screens electrify attention, their governing logic remakes perception itself. From behind the iPhone, laptop, and television, companies vie for attention – the most prized form of capital. But screens run two ways. From our end, while we occupy every stray moment with aimless scrolling, we are engaged in the kind of repetitive doing that underlies our process of becoming. Electrified desire does the work of coercion, opening time, attention, and psychology to the preferences of capital.

The result is what Jonathan Crary calls a revolution in the means of perception:

“Capitalist modernity has generated a constant re-creation of the conditions of sensory experience, in what could be called a revolutionizing of the means of perception.”

Deterritorialized factories dissolved into thin air, but there they remain, unseen. As neurons become the factors of production, commodity logic pervades the entire substrate of thought. There is no quarantined time. All time is mined as a source of value for the growth of capital. In an environment of perfectly commodified time, what else can we become but instruments of capital? The self, as subjectivity ensconced in monopolized time, becomes commodity. The pure commodification of time is the total commodification of the self.

But we can invert this logic to understand why policies like UBI can intervene in the production process. Decommodifying time opens the self to ways of living beyond commodity logic.

Universal Basic Income

“Capitalism: a system that generates artificial scarcity in order to produce real scarcity...The artificial scarcity - which is fundamentally a scarcity of time - is necessary, as Marcuse says, in order to distract us from the immanent possibility of freedom.”
~ Mark Fisher

IF progress is conceived as growing our collective ownership over free time - time with both the negative freedom from necessity, commodification, and coercion, and the positive freedom to engage with the world and exercise our capacities - we might frame this as pursuing a zone of universal basic decommodification.

Making decommodified time common property means it must be universal, while the realities of our resources, needs, and capacities, dictate that it must remain basic. There are many reasons UBI is swinging back into popular discourse today: some fear robots will automate away the labor we depend upon to earn our livelihoods; as a means to end domestic poverty amidst 21st century plenitude, some prefer universal programs to targeted welfare; others see UBI as a way to decrease the imbalance of power and wealth between labor and capital; and still others believe UBI might herald the dawn of a new society. Here, I’m interested in UBI as a means for achieving this universal basic decommodification of time.

At present, decommodified time is distributed through a cosmic slot machine. Luck and privilege are the main determinants of who receives it. Those who maintain that a strong work ethic is the main driver of success fail to grasp how one’s work ethic is itself the product of a complex and arbitrarily received latticework of luck and privilege.

I’ve spent the past five years studying UBI. I’ve inhabited every position along the spectrum, from starry-eyed supporter enthralled to its promises, to disillusioned skeptic, dismissing UBI as a well-intentioned, though naive lurch for utopia.

Applying these various perspectives to UBI, we’ll explore three positive dimensions: universal basic decommodification, the betterment of well people, and the paradox of markets. And three dimensions of UBI criticism: the capitulation problem, the human nature problem, and the free rider problem. We’ll complement these discussions with a splash of pragmatism (conspicuously absent from most UBI advocacy), grounding them in the realities of how much UBI would cost, and how we might pay for it.

Universal Basic Decommodification

“Economy of time,” Karl Marx writes, “to this all economy ultimately reduces itself.” Even invoking social complexity by a different name, he writes: “…the multiplicity of its [society’s] development, its enjoyment and its activity depends on an economization of time.”

In harmony with Marx, Frankfurt School philosopher Theodor Adorno writes that “free time depends on the totality of social conditions.” There is no separation between how we spend our time and the socioeconomic arrangement of society. Hyper-capitalism is the total economization of time. Appropriating time is the fuel to hyper-capitalism’s monopolization of consciousness.

Without direct intervention, this dynamic is unlikely to relent. The commodification of time is not arbitrary, but the very engine of capitalist growth. "The expanding commodification of natural resources and life-activities is not optional but necessary for capitalism to sustain itself”, Hägglund writes.

Here’s how it works: the profit motive drives innovation that creates technological progress and improves productivity. Increasing productivity decreases the necessary production time for existing goods and services, creating surplus time. But capitalism cannot recognize surplus time as inherently valuable. Value is only measured, only shows up in the calculus of capitalism, once it generates a quantifiable return. So that surplus time is reinvested back into the production process, creating surplus value, or higher profits that show up on the accounting sheets. Capitalism sustains growth through this cyclical generation of surplus value.

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By decreasing necessary labor time, more surplus labor time is generated that can be reapplied back into the production process. Surplus labor time reinvested back into production generates surplus value - increasing the labor input to production increases the value created.

Capital depends upon this surplus labor time to feed the recursive cycle of growth. This is one reason why predictions of 15-hour work weeks from luminaries and economists alike, from Bertrand Russell to Keynes, always fall flat. The time made available by new technologies is always reclaimed by the logic of capital. “Capital is interested in the expansion of only one type of unbound time,” writes political economist William James Booth, “namely, surplus labor time. More briefly, we might say that capital frees time in order to appropriate it for itself.”

The existential implications cannot be overstated. Time envelopes us. Time is the matrix of development. How we spend our time, what we do with this moment, and that one, steers the process of our own becoming. Author Jorge Luis Borges takes this a step further, insisting that not only do we become in tune with our time, we are time:

“Time is the substance from which I am made. Time is a river which carries me along, but I am the river; it is a tiger that devours me, but I am the tiger; it is a fire that consumes me, but I am the fire.”

Earlier, we noted how invisible hands align human behavior with market design. Here, as we become time, we take on its qualities. Commodified time makes the self into a commodity because the self is made through time.

Inside such a system, the universal provision of unconditional income functions as a blockade erected against the total commodification of time. Time is indeed money, and money is time. With a UBI, we are given greater capacity to maintain a dimension of our lives beyond the logic of capital. As these dimensions are maintained for everyone, they empower alternative rationalities to gain momentum from the bottom up.

Sociologist Erik Olin Wright adds: “UBI...expands the potential for a long-term erosion of the dominance of capitalism by channeling resources towards noncapitalist forms of economic activity…[it] does so in ways that puts in place a building block of an emancipatory alternative.”

These spaces must be built inside the hyper-capitalist world-system, for there is no longer an outside. This is why, for Marx, shortening the working week was the prerequisite for “the true realm of freedom.” UBI is just a different approach taken to the same cause: decommodifying time by claiming some of the surplus time generated by productivity gains for ourselves, rather than for continued growth.

What UBI achieves, inside the context of the hyper-capitalist world-system, is universal basic decommodification. Each receives a dividend of decommodified time from the collective ownership of social progress.

The Betterment of Well People

As psychedelics finally begin recovering from the 60’s, there is a concerted effort to reintegrate their use via more prudent and culturally accepted channels. Beginning with terminal cancer patients and PTSD victims, psychedelics are being introduced through medical and therapeutic channels that focus on the lowest extremes of the mental health spectrum.

But by focusing on only the tail-end extreme of mental health, we promote adaptation to a norm that elides critical reflection. Focusing on suffering, without a complementary inquiry into what constitutes “health”, merely assimilates those who suffer into an uncritically accepted notion of health. As that old Jiddu Krishnamurti quote goes, “It is no measure of health to be well adjusted to a profoundly sick society.”

This state of affairs conflates mental health with adaptation to society’s norm, which is itself merely the default consciousness that results from its set and setting. There are no assurances that society itself has been designed to promote a healthy form of default consciousness. There is little investigation into whether the default mode is itself healthy.

The psychedelic community is aware, even wary, of this conflation. To point to the broader applicability of psychedelic potential, the community minted the term: the betterment of well people.

When Michael Pollan interviewed Roland Griffiths, head of psychedelic research at Johns Hopkins, Griffiths acknowledged: “Culturally, right now, that’s a dangerous idea to promote [the betterment of well people]...[but] We are all terminal, We’re all dealing with death. This will be far too valuable to limit to sick people.”

Just as psychedelics are too valuable to restrict to sick people, improving our economic conditions is far too potent to restrict to the poor. The middle class that targeted welfare programs strive to assimilate the poor into is itself unwell.

All, whether poor and traumatized or well-off and healthy, are enmeshed within the totalizing logic of capital. Our subject is not confined to the extremes, but prevalent throughout the entire income distribution. When the norm is sick, it’s the entire system that requires change.

There is perhaps no better recent work that demonstrates the illnesses of normalcy, and motivates the economic betterment of well people, than anthropologist David Graeber’s bullshit jobs.

Bullshit Jobs

“There is something terrible, ridiculous, outrageous going on, but it’s not clear whether you are even allowed to acknowledge it and it’s usually even less clear who or what can be blamed.”
~ David Graeber

Graeber’s book Bullshit Jobs is a series of case studies that suggest something is terribly wrong with the normalized, default mode of consciousness society produces. Our focus of reform must extend beyond merely the poor to include the betterment of so called “well people”. Poverty is not the last loose end of capitalist society - the “spiritual violence of modern work” plagues the entire income distribution.

A bullshit job is a form of paid employment so pointless and meaningless to society that even the employee cannot justify its existence. The spiritual violence that results is insidious, because it’s practically invisible.

“Huge swathes of people, in Europe and North America in particular, spend their entire working lives performing tasks they secretly believe do not really need to be performed. The moral and spiritual damage that comes from this situation is profound. It is a scar across our collective soul. Yet virtually no one talks about it.”

Graeber contends that bullshit jobs are not bugs, but features of the variety of capitalism that arose in the 1970’s. When the economy loosened international controls on capital, dismantled pro-labor social policies, began privatizing industries into deregulated markets, and spawned an oversized financial sector, the nature of the system changed. It no longer fit the vision of Adam Smith, Karl Marx, or even Ludwig Von Mises. This was the beginning of what I refer to as the hyper-capitalist world-system, a departure from anything recognizable to the very theorists invoked to justify it.

In Graeber’s analysis, we find the familiar notion that society is an evolutionary environment that guides human development. As we design our economic environments, they, in turn, design us. They constitute a set and setting that gives rise to a default consciousness, a norm which is then assumed to be the standard measure of health. But as Graeber cautions, “there is something very wrong with what we have made ourselves”:

“I would like this book to be an arrow aimed at the heart of civilization. There is something very wrong with what we have made ourselves. We have become a civilization based on work - not even ‘productive work’ but work as an end and meaning in itself. We have come to believe that men and women who do not work harder than they wish at jobs they do not particularly enjoy are bad people unworthy of love, care, or assistance from their communities. It is as if we have collectively acquiesced to our own enslavement...This is a disastrous state of affairs. I wish it to end.”

The trajectory of human development, Graeber agrees, has gone awry. To end this ‘disastrous state of affairs’, in which the hyper-capitalist world-system recreates the entire globe into a set and setting that engenders this form of spiritual violence, Graeber proposes a safe-word theory of social liberation.

The safe-word he has in mind is UBI: “Basic income in this sense would, indeed, give workers the power to say ‘orange’ to their boss.” Equipped with a safe-word that grants people the capacity to opt out of exploitative relations, what would remain is an economy woven of willful participation.

The safe-word theory of social liberation envisions UBI functioning as the safe-word that remakes society upon a basis of voluntary, rather than forced, participation. Bullshit jobs would largely cease to exist (or be forced to offer more attractive compensation), as workers would have substantial bargaining power and little reason to accept such employment.

We can develop this insight further by applying political philosopher Karl Widerquist’s work on the physical basis for voluntary trade. This leads us into what I will call the paradox of markets.

The Paradox of Markets

“There is no reason why in a society which has reached the general level of wealth which ours has…that the security of a minimum income should not be guaranteed to all without endangering general freedom.”
~ F.A. Hayek

Progressive ideologies tend to splinter over the role of markets in society. Some see markets as the problem, defining the progressive project as one of curtailing the extent of markets in society. Others believe redesigned markets, together with more democratic institutions, are the solution. Here, I’ll attempt to synthesize both perspectives by exploring UBI as a design tool that simultaneously curtails the coercive extent of markets, while redesigning their foundations so that markets become more just, efficient, and socially desirable.

I call this the paradox of markets: basic levels of decommodification are the necessary preconditions for markets to function as the mechanisms of free exchange and decentralized complexity that economic theorists have long praised them as. Basic levels of decommodification actually make for better markets. A UBI that decommodifies our basic needs by providing for them unconditionally improves the outcomes in all markets that rest upon this decommodified base.

But what is to be decommodified? What does this mean in practice? For this, we turn to Karl Widerquist, who answers the question by deriving the physical basis of voluntary trade.

The Physical Basis of Voluntary Trade

Market economies are built, justified, and legitimized on what economists call voluntary exchange. Voluntary exchange describes the process of freely and willfully buying and selling goods and services, where each participant is free to accept or refuse the trade. Capitalism, Milton Friedman declares, is ‘the freedom to choose’.

Voluntary exchange, writes Widerquist, is the foundation upon which the house of modern economics stands:

“...when neoclassical economists theorize about the world, they assume voluntary exchange is taking place. Building on this assumption, neoclassical economics goes on to conclude a variety of important results such as that market activity is efficient, that free trade has net positive effects and that markets in which economic agents participate voluntarily make them better off...Although the legitimacy of the market economy is premised on voluntary trade, without a reasonable exit option, the trading system as a whole lacks an acceptable alternative.”

As with any foundation, if voluntary exchange falls, all that’s built upon it follows. Widerquist argues that there exists a physical basis for voluntary trade, without which participants in market economies have no capacity to refuse certain trades. For market exchanges involving life’s essential needs, participants have no exit option, no reasonable alternative. Without access to basic shelter, food, water, and essential goods and services, individuals lack the capacity to refuse certain exploitations and are coerced into trade.

Without options for meeting the physical conditions necessary for truly voluntary exchange outside the scope of markets, there will always exist a dimension of involuntary, coerced exchange. In pre-capitalist societies where private property had not yet claimed all available land, individuals were hypothetically free to cultivate their own land, gather their own resources, and fend for their own survival. But today, all land is privately owned, there are no reasonable alternatives to participating in subsistence markets.

Widerquist concludes that we’re left with two options: the system, as the only realistic option, must unconditionally provide everyone with the physical means required for truly voluntary trade, or we must abandon the appeal to voluntary trade as a justification for the market economy.

Widerquist proposes UBI as the optimal method for providing the physical basis for voluntary trade. By providing a sufficient amount of unconditional income that always allows individuals the realistic option to refuse trade without sacrificing their basic human needs, the pervasiveness of involuntary trade is curtailed. Citizens receive an exit option, the capacity to refuse trades they deem exploitative. Or, in Graeber’s language, a safe-word.

This is the first leg of the paradox of markets: voluntary exchange in a global market society requires the unconditional provision of basic needs.

The Physical Basis for Social Complexity

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
~ F.A. Hayek

The lack of meaningful alternatives to market participation at the individual level scales up to system dynamics. Especially if we recall the earlier point, that market societies are complex systems that align individual behavior with market incentives. By providing no choice but participation, no ground to enable experimentation, hyper-capitalism functions as a closed-system with a gravitational pull towards the norm. Its default consciousness sits at the center, and all that circulates in orbit is drawn inward.

Existing within a closed-system that erodes our capacities to explore different ways of living has an ideological effect. Cultural theorist Mark Fisher calls our present closed-system of ideology capitalist realism. The way we organize ourselves is so thoroughly, so singularly consumed by one particular ideology, that we are losing the capacity to imagine alternatives. Our patterns and habits of thought are coming into increasing alignment with the hyper-capitalist commodification of society. We’re losing touch with the ‘outsides’ that place pressure on, or sometimes pierce, a standardized way of thinking.

It’s in this all-consuming sameness of economic ideology that Theodor Adorno concedes to Milton Friedman that capitalism provides the freedom to choose, but subverts the optimism by adding it’s only: “the freedom to choose what is always the same.” The means of control free markets claimed to transcend were merely sublimated into more culturally palatable forms.

Rolling these all into a single point - hyper-capitalism’s tendency to homogenize ways of thinking, Fisher’s capitalist realism, Adorno’s freedom to choose what is always the same - each condemns hyper-capitalism for laboring against, rather than for, the conditions that encourage social complexity.

We can define social complexity as the diversity of possible arrangements and relations in society. For example, a society where everyone lives in monogamous relationships and nuclear families is less socially complex than one where these social arrangements exist alongside polyamorous, communitarian based family structures. The more differentiation among social patterns, the more social complexity.

But hyper-capitalism, a polycentric world system that controls all land and resources under the legal protection of private property, imposes an initial bottleneck on differentiation. As this closed system evolves, an eternal sameness sets upon the world. Frankfurt School philosopher Herbert Marcuse called it “the closing of the universe.” He continues: “By virtue of the way it has organized its technological base, contemporary industrial society...precludes the emergence of an effective opposition against the whole.”

Complexity in action, a Penrose tiling fractal by António Miguel de Campos
Complexity in action, a Penrose tiling fractal by António Miguel de Campos

But a UBI that decommodifies our basic needs loosens that bottleneck. It rolls back the eternal sameness. Making the atomic units of market societies - individual market transactions - increasingly voluntary also scales up across the entire economic rationality. As each of these atomic units are afforded the basic needs that make alternatives more realistic, the system floods with increased differentiation from the bottom up.

Differentiation would occur increasingly unbound by the bottleneck of capital accumulation. Social complexity thrives as people’s optionality increases. Affording each individual the means to say “no” raises the optionality threshold of all.

With a realistic exit-option, society then remakes itself as an increasingly voluntarily chosen system. Voluntary participation functions as approval of the system, providing an ongoing democratic election process for the structure of society itself. Those who ‘opt out’ are enabled to construct alternatives that exert healthy pressure from those lost outsides, rather than left stranded without resources.

This is the second leg of the paradox of markets: decommodifying our basic needs creates a foundation that enables precisely the kind of decentralized complexity to emerge that free-market theorists valued.

Since our beginnings, a significant chunk of human time has always been subservient to doing what’s necessary for survival. Societies evolved atop this substratum of necessary activities.

But global society coupled with new technologies and increasing returns to scale offer an unprecedented opportunity. We can complement our expanding spheres of association - George’s first element of progress - with a structural commitment to reducing time inequality. This may allow us, for the first time in history, to design a system that guarantees human needs without exploiting human labor. The market societies that emerge from this substratum would be fundamentally different from those we’ve seen so far.

By designing economic policies with the paradox of markets in mind, we can bolster the foundation of justice and voluntary exchange that theory assumes, while creating better conditions for the kind of complexity to emerge that markets were meant to spur.

Critiquing UBI

THE more radical a proposal, the more scrutiny it should receive. A UBI pegged to the poverty level could occasion the first society built on a foundation of voluntary participation in history. Livelihood has never been provided by a society irrespective of one’s labor inputs.  The scrutiny brought to UBI should reflect this scale of magnitude.

Contributing to the scrutiny, I’ll explore three dimensions of UBI critique: the capitalution problem, the human nature problem, and the free rider problem.

The Capitulation Problem

In a brilliant polemic against UBI, sociologist Daniel Zamora lays out the progressive left’s critique: UBI is not an alternative to neoliberalism, but a capitulation to it. Rather than fighting for deeper structural reforms, UBI simply accepts the market’s monopoly over human life.

Recall Hägglund’s critique of capitalism: it must commodify ever more of our lives in order to survive. Its mechanism for doing so is by creating markets where previously there were none, and intensifying the commodification of existing spheres of activity. For Zamora, a UBI simply concedes to this transmutation of all life into the commodity form. He calls UBI a “bioindicator” that indexes neoliberalism’s progress. “In fact”, he writes, “the most viable forms of basic income would universalize precarious labor and extend the sphere of the market - just as the gurus of Silicon Valley hope.”

But as Zamora notes, whether UBI is an alternative or a capitulation depends on the amount of unconditional income it provides and the broader conditions of its implementation. He does not believe that a meaningful UBI is theoretically impossible, but is realistically unaffordable. Surveying a few flimsy funding proposals, he concludes: “an affordable UBI is inadequate, and an adequate UBI is unaffordable.”

The balance between capitulation and alternative boils down to whether UBI can provide at/above the poverty line without defunding all other social programs. Anything below fails to provide the physical basis for voluntary trade, further sedimenting our dependence upon coercive markets.

To assess the critique, let’s introduce the cost of UBI, and how we might pay for it.

The Cost of UBI

UBI has two relevant costs, gross and net. The gross cost reflects the total revenue the government must raise to fund the program. But since funding UBI requires progressive taxation, an upper portion of recipients will wind up paying more in new taxes than they receive from UBI. This creates a canceling out effect, where one receives $12,000 in UBI, but pays $14,000 in higher taxes. The effective cost to them is $2,000, rather than $14,000. The cost of UBI that takes these effects into account is the net cost (For all cost estimations and sources, details may be found in the appendix).

The gross cost of a UBI equal to the poverty level in 2019 ($12,490) for all citizens older than 18 would’ve been roughly $3.2 trillion. Adding a 50% UBI for minors would increase the gross cost to $3.6 trillion.

Moving from gross to net cost is difficult to forecast, as it depends on the specific taxes used to fund it. But to offer a ballpark idea of the disparity between gross and net costs, Widerquist used a series of simplified assumptions to estimate the net cost of a UBI with a $3.42 trillion gross cost: $539 billion, or 15.7% of the gross cost. Other net cost estimates include $900 billion, and $1.69 trillion.

How to Pay for UBI

What would it take to raise $3.6 trillion annually? No single tax is sufficient. UBI is only possible in partnership with broader progressive tax reform. Here, I’ll gather 12 options to raise revenues, including projections that range from the most conservative estimates to the most optimistic for each proposal.

Progressive Marginal Income Tax Rates

Projected annual revenues: $18.9 billion - $70 billion.

Example: Adding an eighth tax bracket for incomes above $10 million taxed at 70% is projected to raise anywhere from $18.9 billion, if no other tax changes are made, up to $70 billion if a broader progressive taxation system is in place.

For a more first-principles approach, readers may consider the idea of a monotonically increasing tax rate that does away with brackets altogether.

Raising Capital Gains taxes

Projected annual revenues: $6 billion - $170 billion.

Examples: Shifting to a carryover tax basis is projected to raise $10.4 billion annually, and taxing capital gains of the top 1% on an accrual basis could yield $170 billion. These projections are for changing methodology, rather than raising rates.

Revenue projections for raising capital gains rates are complex, because outcomes depend on the broader system of taxation. As such, models that predict a $6 billion annual raise in revenue by raising capital gains taxes from 20% to 24.2% are tenuous.

Wealth Tax

Projected annual revenues: $118 billion - $375 billion.

Example: A 2% tax on wealth above $50 million, cranking up to 3% on wealth above $1 billion, is projected to raise $275 billion, annually.

Raising Corporate Taxes

Projected annual revenues: $9.6 billion - $135+ billion

Example: Reforming how the corporate tax is levied often offers more potential revenue than raising the rate. Still, the 2017 tax cuts reduced the corporate rate from 35% to 21%, leading to a $135 billion decline in corporate income tax revenue.

The congressional budget office (CBO) estimated the revenues for a mere 1% increase in the corporate tax rate, finding a $9.6 billion annual increase.

Folding Redundant Welfare Programs

Projected annual revenues: $100 billion - $771 billion.

Example: While total welfare expenditures hover near $771 billion, Wiederspan, Rhodes, & Shaefer (2015) isolate means-tested programs that a UBI or NIT would make redundant, totaling savings of $207 billion.

Land Value Tax

Projected annual revenues: $100 billion - $750 billion.

Example: LVT projections are scant. The most recent academic work we have dates back to 1985. The author estimated that a full LVT could raise 28% of national income, yielding $658 billion in 1981 (28% of national income in 2018 would yield $5.8 trillion).

More recent and sober estimates range from smaller, targeted LVT rates that yield closer to $100 - $200 billion in annual revenue, up to a 5% LVT that raises $750 billion.

Value Added Tax (VAT)

Projected annual revenues: $600 billion - $1.3 trillion.

Examples: CBO estimates for a 5% VAT tax range from $190 billion to $290 billion annually, depending on details. Committees have expanded these findings to estimate that a 10% VAT tax would raise approximately $600 billion per year.

Estimates on broader-base 10% VAT tax expect revenues of $1.3 trillion per year.

National Income Tax

Projected annual revenue: $1.2 trillion.

Example: A national income tax was proposed by Emmanuel Saez & Gabriel Zucman in 2019 as an alternative to the VAT, which economists worry is avoidably regressive. The tax applies to all income - capital and labor - at a single flat rate with no deductions or exemptions. They estimate a 6% national income tax could raise $1.2 trillion annually.

Financial Transaction Tax (FTT)

Projected annual revenues: $60 billion - $75 billion.

Example: A o.34% broad-based FTT could raise a maximum of 0.4% of GDP, or $75 billion.

Greenhouse Gas Emissions Tax / Cap and Trade

Projected annual revenues: $100 billion - $210 billion.

Examples: A tax of $25 per metric ton on most greenhouse gas emissions in the US could raise slightly over $100 billion annually, while a tax of $49 per metric ton of carbon dioxide could raise closer to $210 billion annually.

Reducing Defense Department Budget

Projected annual revenues: $59 billion.

Example: Reducing the defense department’s budget by 10%, phased in over a 10-year period, would save $59 billion annually.

Social Security Reform:

Projected annual revenues: $200 billion - $500 billion.

Examples: By replacing one of every three dollars of social security received with UBI, recipients could increase their overall receipts while saving $324.2 billion.

Alternatively, raising the cap on social security payments up to $250,000 would raise an extra $80 billion, while subjecting earnings greater than $250,000 to a 12.4% payroll tax could raise $122 billion, annually.

Total Range: $2.6 trillion - $5.6 trillion.

I am under no delusions that we could sensibly enact all these reforms and raise $5.6 trillion. These taxes cannot all be implemented at their upper projections, and implementing some would eliminate the possibility of implementing others.

For example, in Gabriel Zucman & Emmanuel Saez’s 2019 book, they propose a tax plan that combines four of the above: a wealth tax, corporate tax, higher marginal income tax rates on both labor and capital, and their proposal for a national income tax (a flat tax with no deductions on all labor and capital income). They project these four taxes would raise $1.8 trillion annually:

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Given the spectrum of possibilities, together with a concrete view of how these taxes can come together, hopefully we generate a sense of the possibilities at hand. We can push back on Zamora’s diagnosis. An adequate UBI does appear affordable. Rather, it’s a question of tradeoffs and incentives.

Capitulation, or Alternative?

Whether UBI functions as a capitulation or alternative to neoliberal capitalism depends on whether it stimulates or hinders broader reforms, which mostly comes down to how it’s paid for. For example, the first serious proposal for a guaranteed income in the US economy came from Milton Friedman, a version of which nearly came to fruition during Nixon’s presidency.

Friedman supported a relative of UBI: a negative income tax (NIT). He supported it as a justification for eliminating all other welfare programs. His NIT was a ceiling that prevented any further social programs, rather than a floor creating a more stable foundation for progressive reform.

In practice, a NIT and UBI are quite similar. NIT monitors people’s incomes and only pays out the amount required to have their incomes raised to an agreed upon income threshold (like the poverty line). Whereas UBI would give everyone the cash equivalent of the poverty line, avoid administration costs of monitoring incomes, and adjust taxes to achieve the desired distribution.

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What made the difference for Friedman was funding the NIT by folding all existing welfare programs into it. By contrast, a NIT funded only by eliminating a few means tested programs (earned income tax credit, for example), and progressive taxation (perhaps an income tax on both labor and capital), would not dismantle the welfare state, but place it on firmer ground.

This is why funding proposals are crucial to the question of capitulation. They determine whether the balance tips one way or the other. Engaging with the variety of funding options can help us evolve the conversation away from writing off an adequate UBI as impossible.

Instead, we can begin scrutinizing how various funding proposals would alter the economy, and explore what kinds of alterations are both feasible and desirable.

The Human Nature Problem

Then, there’s the question of human nature. If we manage to decommodify significant amounts of time, will we just waste it? Is it worth enacting the largest program in American politics if it enables citizens to just spend more time watching Netflix and going to the beach?

The first response is to recall that the justice of market economies rests upon voluntary exchange. If we agree with Widerquist that a physical basis is required for voluntary trade, the question of how we might live in the aftermath is irrelevant to the imperative of ensuring justice at all scales of market transactions. The specter of UBI recipients watching more Netflix is not sufficient cause to maintain and legitimate an unjust economic world-system. What people do with their time is their prerogative.

But here, there is a profound question at play that ties back into the relationship between economic conditions and human development. Is human nature a fixed essence, or an adaptive process? To what degree can changing socioeconomic conditions actually change the kinds of humans we become?

For seminal economic theorists from Karl Marx, Henry George, on through John Maynard Keynes, decommodifying time has always been associated with the ongoing transformation of human nature. There is no fixed essence of human nature that defines how we’d behave in radically altered conditions. Behavior is adaptive. It is the evolution of material and social conditions that gives rise to new behaviors, and so new humans. This is what Marx means when he writes, “all history is nothing but a continuous transformation of human nature.”

George foresaw this human nature critique, writing:

“But it may be said, to banish want and the fear of want, would be to destroy the stimulus to exertion; men would become simply idlers, and such a happy state of general comfort and content would be the death of progress. This is the old slaveholders’ argument, that men can be driven to labor only with the lash. Nothing is more untrue.”

In worrying about the Netflix-ization of time with an adequate UBI, we’re projecting the kinds of humans we are now into a hypothetical society with radically altered conditions. We’re failing to account for how human nature would itself adapt and evolve alongside new conditions of decommodified time. The projection that we’d waste our time with idling activities like Netflix and the beach neglects that most working class humans today are overworked and barely getting by. Current notions of how we spend our ‘leisure’ time are products of, and responses to, our life conditions.

A recent New York Times headline covering Angus Deaton and Anne Case’s recent book reads: How Working Class Life is Killing Americans, In Charts:

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Deaton and Case note the disparity in conditions between those with a college degree and those without as influential in these trends. Further studies build on this. A 2013 Nielsen report noticed a trend where increasing educational attainment correlates with decreasing TV consumption:

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In both cases, suicide and TV consumption, educational attainment is strongly correlative with different behavioral outcomes. Higher educational attainment, as Deaton and Case explicitly mention, tends to indicate better material conditions. Different environmental conditions are implicated in different behavioral outcomes.

For George, progress is to democratize the improvement of material conditions by sedimenting them beneath society’s feet as common property. “And out of these bounteous material conditions”, George writes of a not-so-distant future where want and necessity are vanquished, we “would see arising, as necessary sequences, moral conditions realizing the golden age of which mankind has always dreamed.”

George is exuberant, imagining “the man with the muck rake drinking in the glory of the stars”, but the point remains: the decommodification of basic needs (by affording access to them as common property unconditionally available to all) creates the conditions for new kinds of humans. Released from the totalizing grip of needs, desire would remain a propulsive force behind progress:

“Want might be banished, but desire would remain. Man is the unsatisfied animal. He has but begun to explore, and the universe lies before him. Each step that he takes opens new vistas and kindles new desires. He is the constructive animal; he builds, he improves, he invents, and puts together...Man must be doing something, or fancy that he is doing something, for in him throbs the creative impulse; the mere basker in the sunshine is not a natural, but an abnormal man.”

Perhaps so. Even if not, there is a deeper assumption that motivates the human nature critique of UBI. Who are we to judge how others spend their time?

In terms of UBI, what often motivates the time-use critique is the fact that tax dollars are used to fund the program. If some UBI recipients use the money to sustain lifestyles I reject, like smoking weed and watching TV all day, why should I be forced to fund those lifestyles?

This is commonly referred to as the free-rider problem.

The Free Rider Problem

A poverty-level UBI of $12,490 is hardly a living wage for even the most ascetic of citizens; most will continue to work and earn additional income. However, it is plausible to imagine at least some percentage of the population who choose to live off their UBI alone.

These folks will be living off tax-funded income without participating in forms of employment that contribute to that tax base. In other words, they are ‘free riding’ off the earned income of others. Is this fair? Do we owe this kind of financial freedom to each other?

How might this criticism change if we apply it to parents who choose to stay home and raise their children? Does the same sense of unfairness come into play when recipients use UBI to fund socially valuable activities that markets fail to compensate? Surely a devoted parent is worth more to society than an unmotivated office administrator, or insurance salesman?

What about aspiring scientists who use the newfound financial and time freedoms to focus on exploring new theories? Or artists who dedicate their time to creativity? In this sense, UBI functions to extend earnings to those engaged in socially valuable pursuits that markets fail to compensate for.

Where free riding turns problematic is the assumption that willfully unemployed UBI recipients will live in ways that do not create value for society. Receiving “something for nothing”. But this is not only assumed, it stands in direct conflict with empirical studies on how UBI affects labor force participation rates. Even beyond the question of whether UBI would stimulate or stifle economic activity, a larger question looms: are we comfortable letting markets be the judge of what constitutes value?

Using wages as the prime indicator of value-creation solidifies the market's role in determining social value. But much of the progressive left’s movement is about displacing earnings as sole indications of social value. There are forms of value markets systematically fail to recognize, and forms of socially valuable (usually long-term) investments that markets fail to incentivize. Not to mention the forms of negative value that markets stimulate.

In this sense, the free-rider problem might not be a problem at all, but a solution. It functions alongside the market to stimulate forms of social value that markets leave behind.

Another proposed response to the free-rider problem is to shift the narrative frame of UBI. Since progressive taxes that draw from high-earning sectors of society would fund UBI, some claim that UBI is not redistributing the rightful ‘earnings’ of others, but distributes the portion of collective wealth that’s captured by high private earnings. In this sense, UBI is more of a social dividend that formalizes the collective nature of value creation on modern economies.

Consider how this logic of social dividends applies to raising the corporate tax rate, for example. Mariana Mazzucato has demonstrated how much of the iPhone's signature technology is a result of publicly funded R&D. Although taxpayers effectively socialize the risk of this R&D, the financial returns on that investment are privatized, none of which goes back to the taxpayers who (partially) funded the investment. Should not a small portion of the financial earnings from publicly funded innovation return to those who funded the initial research? Isn’t the public entitled to share in the financial returns on innovations our tax dollars paid for?

Similar logic is at play for many high-earning sectors of society. From Google, Apple, to Tesla, Mazzucato shows how stories of value creation systematically neglect the role of public investment. Framing UBI as a social dividend formalizes the collective nature of value creation, paying dividends on the public’s investment in innovations that spur private fortunes.

A common example is the Alaska Permanent Fund, which taxes all mineral (primarily oil) royalties a minimum of 25%. They reason that Alaskan oil belongs to all Alaskans, rather than whoever manages to dig it up first. The tax revenues are deposited into an investment portfolio that each Alaskan shares an equal share in, receiving annual dividends that fluctuate with the stock market. Applying this logic nationally, Matt Breunig’s proposal for a social wealth fund makes every American an equal shareholder in a collectively owned portfolio.

Framing UBI as a social dividend only makes sense if the funding mechanisms draw from areas of society where large private earnings are bolstered by neglecting public contributions. To sufficiently appease free-rider concerns, UBI advocates must demonstrate what sectors of society wind up paying for UBI under their funding proposals.

Futures of UBI Debate

Clearly, the debate surrounding UBI is vast. On one side, it reaches down into the very foundations of market economies. On another, it raises questions about the mutability of human nature. My hope is that as the economic feasibility of UBI weaves its way into public discourse, and we cease writing it off as impossible, we’ll begin widely engaging with these deeper questions of its desirability. We’ll collectively explore how it changes the conditions of the economy, and through them, human development.

No discussion of UBI should neglect the possibility that alternative policies may prove more desirable methods for pursuing the basic decommodification of time. Whether universal basic services, job guarantees, or reducing working hours while maintaining wages.

But there is a particular, perhaps unique way UBI provides basic security while increasing optionality. It assures our necessities by opening, rather than diminishing, our agency to make choices. No one decides for us what we need - we each retain the responsibility to make these judgements for ourselves, leaving the conditions for innovation in the realm of basic needs intact.

Next Steps: A Modernized NIT

BUT for all the promise of UBI, there’s no denying the political barriers to enacting a program that requires upwards of $3 trillion in funding. Without engaging with the realities of our political climate, this may all amount to nothing more than howling in the wind. Some consider advocating for a direct leap from where we are today into a fully funded UBI a hopeless endeavor, a “nonrealist political philosophy” that’s “disjoined from real politics.”

Of course, much of the momentum behind UBI is precisely a disillusionment with hyper-capitalism’s brand of political realism. We should not concede to the strictures of hyper-capitalist political realism, but if our aim is to begin decommodifying time as quickly as possible, we must engage with them.

Accordingly, we could consider a modernized NIT as a strategy that finds common ground, implementing a realistic and prudent step forward. A modernized NIT can begin to decommodify time and improve the conditions for social complexity, while remaining within the realm of immediate political and economic feasibility.

By “modernized NIT”, I mean an unconditional NIT paid out to all individuals below an income threshold set above the poverty line, with a low phaseout rate, funded by progressive taxes that include capital, using the latest digital technologies to minimize bureaucracy, that complements rather than replaces existing and future social programs, and made available at a minimum of monthly installments.

It’s true that UBI and NIT are similar beneath the surface. But their superficial differences - together with the very real difference in revenues required to fund the programs - create an immense gulf in political and economic feasibility.

We can imagine three societies on a spectrum: society today, society with a modernized NIT, and society with a full UBI. Rather than jumping right from where we are now up to the full UBI, beginning with a modernized NIT allows us to incrementally, prudently scale and adjust our course.

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Even at this intermediary phase, we can forecast relatively radical changes in the structure of society. With a poverty level income threshold, Individuals who drop out of paid employment altogether would receive a monthly minimum of $1,041. Hardly enough to live comfortably. But for those who’d prefer to devote their lives to something - whether poetry, learning, art, science, reading, or even video games and beer (the percentage of the population who’d actually do this is often overrepresented in UBI criticisms) - this would enable them to focus most of their time on whatever they deem important enough. Beyond individuals, groups might collaborate and pool their NIT revenues to fund experimental communities.

By gathering data on behavioral responses to a modernized NIT, we can begin to model how the economy might respond to a full UBI. We may also grow more familiar with the administrative costs required to monitor incomes for NIT, nudging us towards accepting the combination of universality with progressive taxes as better means for adjusting the payout distribution. Or, perhaps we’ll find the means testing system works better than we thought.

Experience can help us make better informed decisions on how to structure policy to balance decommodifying time with maintaining a vibrant economy. Given the unpredictability of these changes, scaling towards UBI by way of a modernized NIT creates room to adjust along the way.

Beyond Basic Income

“The control of the production of wealth, is the control of human life itself.”
~ F.A. Hayek

BUT there is an inherent limit to the decommodification of time under capitalism. UBI, NIT, and the spectrum of social democratic reforms that run alongside them depend upon a redistribution of wealth. Redistribution depends upon an initial accumulation of capital in the first place, which itself relies upon a society organized around capital growth.

Hägglund, who places the freedom of time at the center of his critique of capitalism, takes a strike at UBI:

“...for the advocates of UBI - the problem of capitalism merely concerns the distribution of wealth, whereas the production and measure of wealth under capitalism are never interrogated...The point is...to show that capitalism can keep itself alive only through a pernicious and self-contradictory dynamic, which is inimical to the production of real social wealth.”

Where capitalism measures social wealth by proxy of capital growth, a process that Hägglund claims necessitates the exploitation of the surplus time generated by technological progress, he suggests a new principle for the measure of wealth: socially available free time. So long as capital growth proxies social wealth, capitalism will tend to extract, rather than create, value.

If Hägglund is correct, and capitalism survives only by the progressive commodification of our lives and natural resources, then a UBI that seeks to decommodify time and capitalism are destined to remain in contradictory tension.

This is why Marx, to posit a real economy of freedom, had to move beyond a capitalism that exploits wage labor to generate value. While his emancipatory vision of communism was vague, his derivation of the impossibility of true freedom of time under capitalism was sharp.

Hägglund, finding himself at the same point of forced departure from capitalism as Marx, derives a theory of democratic socialism built upon three principles: the measure of wealth as free time, collective ownership of the means of production, and the familiar dictum: labor pursued from each according to her ability, to each according to her needs.

“The aim of democratic socialism is not to answer our economic questions once and for all but to enable us to ‘own’ the questions as the most important questions of our shared lives. The three principles of democratic socialism therefore express the recognition of the inseparability of economic and spiritual life.”

Like Marx, Hägglund’s vision is built of principles, rather than policies. But he explicitly ties the economic organization of society to the spiritual dimensions of human life. They are inseparable, as each bears an intimate connection to the nature of how we spend our time.

Where Hägglund develops an abstract and philosophical case for socialism, Thomas Piketty’s Capital and Ideology (2020) suggests relevant policies for the transition. Piketty shares Hägglund’s critique of short-sighted social democratic reforms, writing: “the word ‘socialism’ still deserves to be used in the twenty-first century to evoke that tradition even as we seek to move beyond it. And move beyond it we must if we are to overcome the most glaring deficiencies of the social-democratic response of the past four decades.”

Piketty’s vision employs steeply progressive taxes on wealth (property and inheritance), income (both labor and capital), and carbon to establish a universal capital endowment (like an inheritance for everyone upon turning 25), basic income (that phases out), and an array of public goods from healthcare to education. Complementing redistributive reforms, Piketty advocates for codetermination models that want to place workers at the seat of power: company boards. Though it may strike American ears as far-fetched, Germany has mandated precisely this model at the national level since the 1970’s.

Piketty envisions these two elements - steeply progressive taxes promoting economy-wide circulation of capital, and social ownership of firms decentralizing power - as the foundation for a new developmental trajectory of the economic system. In our terms, Piketty’s reforms seek to implement equality, our deficient element of Henry George’s law of human progress.

“The study of history”, Piketty writes:

“...has convinced me that it is possible to transcend today’s capitalist system and to outline the contours of a new participatory socialism for the twenty-first century...what makes historical change possible is above all the existence of social and political mobilizations for change and concrete experimentation with alternative arrangements.”

Our study of UBI and social complexity places it directly in this category of mobilizing strategies for “change and concrete experimentation with alternative arrangements.” UBI, by securing basic human capabilities outside the scope of markets, makes available these sorts of experimentations for all, rather than only the privileged wealthy who can afford it.

These economic strategies - UBI, codetermination, capital endowments, public goods like universal healthcare - move us in the direction of progress, if we understand progress as taking collective ownership of the surplus time created by interdependent economic forces.

By making production more democratic and distribution more progressive, capital circulates more widely throughout the economy. Instantiations of growth and wealth do not clump and clot in localized areas of the system. They decompose back into the rising ground of common property upholding all of society.

Social evolution begins to mimic natural cycles, with individuated instances of growth and differentiation that, after the course of a lifetime, decay and recycle back into the undifferentiated whole.

Conclusions: New Trips, New Problems

SOCIETY, whether capitalist, socialist, or an insignificant cosmic blip, is the most pervasive psychedelic in circulation today. There is nothing natural about what we experience as ordinary, default consciousness. Every society functions as the set and setting for a particular variety of default consciousness. Wherever you fall on the question of human nature - fixed or adaptive - history is one continuous transformation of the conditions conscious experience adapts to, and refracts through. Whatever it felt like to live with the consciousness of a hunter gatherer, I suspect what it feels like to be alive today is quite different. As economic institutions continue dematerializing and globalizing, economic logic will continue to permeate every aspect of the psychedelic - mind manifesting - quality of society.

But since the economy is a system we actively design, this gives us leverage. A ‘way in’ to participate in the process of our own development. More than ever before, we have agency in designing the environments that recursively redesign us.

While the commodification of consciousness is peculiar to recent times, I’ve noted that any society’s default consciousness has always been economized. Default consciousness and the economic problem have always been intimately connected through survival adaptivity. Affording a basic level of decommodified time as common property to all would do more than begin to decommodify consciousness. It would begin to untether human development from its historical subservience to basic needs.

What is adaptive for basic survival would no longer dominate the psychedelic composition of society. Keynes writes:

“Thus we have been expressly evolved by nature-with all our impulses and deepest instincts-for the purpose of solving the economic problem. If the economic problem is solved, mankind will be deprived of its traditional purpose.”

Deprived of the economic problem, our traditional purpose, what’s next? What new invisible hands will shape the environments that sculpt adaptive behaviors?

Throughout this essay, I’ve tried to suggest this is an open question to which we can design the answer. Historian Yuval Noah Harari suggests we’ve been designing the adaptive mechanisms that determine our default ways of living ever since the Cognitive Revolution near 70,000 BC:

“The Heated debates about Homo sapiens’ ‘natural way of life’ miss the main point. Ever since the Cognitive Revolution, there hasn’t been a single natural way of life for Sapiens. There are only cultural choices, from among a bewildering palette of possibilities.”

From 70,000 BC - 30,000 BC, Harari contends that the emergence of intersubjective fictions - stories - gave us the capacity to engage in existential design. This was the time when “history declared its independence from biology.” But human history could not yet declare independence from economics. How we chose to maintain our own survival remained the dominant adaptive force. Consciousness remained economized.

This is why I suggest UBI is an economic policy with psychedelic implications. A basic decommodification of time would alter the governing dynamics of daily life - our set and setting - that have reigned for millennia. UBI cannot provide enough decommodification to ‘drop out’ of modernity. But it can afford enough to make real novelties, variations, and alternatives possible. It could allow us a broader exploration of that “bewildering palette of possibilities” now before us. And all this experimentation could still occur within global society, enabled by the wide division of labor and collective ownership of the surplus time it produces.

This essay has traced an ecology of interaction between economics, consciousness, and human development. The hyper-capitalist world-system creates an evolutionary environment that commodifies time to feed growth, and through time, consciousness, and through consciousness, human development. We live in ways that reflect our adaptive environments, so as products of hyper-capitalist human development, we recreate these systems that made us. This provokes a cyclical reproduction of the hyper-capitalist world-system whose incapacity to steward societies of the future is revealed with each crisis it faces.

The universal basic decommodification of time intervenes at the roots of this tangled process. Achieving this decommodification by affording the physical basis for voluntary trade outside the scope of markets not only secures a basic zone of exploratory time for all, but solidifies the foundation upon which all further market activity builds.

Creating this decommodified foundation for society is an unprecedented possibility, brought within reach only through generations of cascading accumulations of capital, technology, and ingenuity (as well as violence, imperialism, and brutality).

It is within our capacities to design a set and setting that departs from the traditional economization of time, consciousness, and human development. We can explore new textures, capacities, and kinds of default consciousness. We may discover new experiences of joy, conviviality, and meaning, Or, true enough, we may plunge into new pathologies.

What kinds of societies may take shape from such new influences, we cannot know. Uncertainties abide. But the diverse crises of the 21st century - war, economic collapse, viral pandemics, inequality, the meaning crisis, and ecological devastation, to name only a few - make clear that whatever stage of evolutionary development our social systems presently occupy, we’ve reached the end of nothing.

History must continue, new ways of organizing ourselves must emerge. And they will. By leveraging our agency in the process, we can participate in the design of what collectively emerges. Learning from dogmas of the past, we can design for decommodified time and social complexity, allowing new directions to arise from the bottom up. We need not all cohere to any singular creed beyond that inexhaustible human endeavor of expanding our horizons of possibility, in association and equality.

- fin(ally) -

Get in Touch!

If you’ve read this far, you might have some thoughts. This essay is exploratory - the ideas are loosely held waypoints along an open-ended, ongoing inquiry. Don’t hesitate to reach out with responses, collaborations, (constructive) criticisms, suggestions, etc.

You can contact me via email, or on Twitter.

In addition to essays, I explore these themes through a few different projects:

  • I host the Musing Mind podcast, where I get to speak with guests who bring contemplative philosophy and economic theory into dialogue with each other.
  • I write Mind Matters, a newsletter exploring the connective tissue between economics, culture, & consciousness.

Thank You’s

This essay was greatly improved by the attention & feedback of some wonderful editors, reviewers, and friends. In particular, I’d like to thank: Anirudh Pai, Kasey Klimes, Rhys Lindmark, Paul Millerd, and Joseph Wells. And to my sister, Maika Jarow, for turning my sloppy drawings into snazzy illustrations.

I wrote this essay as part of the Write of Passage Fellowship - where 7 other participants wrote some wonderful essays - you can find them here.

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The Capitalist Production of Consciousness

Oshan Jarow  -  May 9th, 2020

The purpose of this document is to facilitate sense-making on what’s become a complex, tribal, and absolutely vital subject of debate: universal basic income (UBI).

Think of this as a not-so-brief policy brief. A policy long, if you will. What policy briefs offer in brevity and distillation, they sacrifice in complexity and nuance. UBI’s surging popularity is producing an abundance of briefs, but a scarcity of longs. Briefs present fixed ideas, whereas longs reveal the flux and uncertainties beneath them.

Ironically, I only encountered UBI after receiving a degree in economics. I spent the next 5 years studying UBI, and the broader terrain of economic thinking that’s usually left off university curriculums.

Regarding UBI, I’ve occupied every position along the spectrum. I’ve been the starry-eyed supporter enthralled to its promises, and I’ve been the disillusioned skeptic, dismissing UBI as a well-intentioned, but naive lurch for utopia.

My hope is to provide an easy-to-navigate document that offers exposure to the many questions and conflicts driving the UBI debate. Hopefully, by offering the depth so many UBI puff-pieces lack, this policy long might help unsteady some of our fixed ideas, and lead us deeper into the labyrinth of considerations a UBI provokes.

Here’s a map of what’s covered below. Feel free to click & jump around to whatever interests you:

The Basics
What is UBI?
How much is "basic"?
What does UBI Cost?
Critiques Against UBI
It won't change anything
Humans would become lazy
Free riders
Who will clean the toilets?
Long-term sustainability
Price inflation
Political tyranny
Optimizing UBI
Poverty level
Split-tier payouts
High-end phaseout rates
Complement, not replacement
How to Pay for UBI
Taxes & programs
Putting taxes together
Alternatives
Negative Income Tax
Universal Basic Services
Universal Job Guarantee
Codetermination
Shorter Working Weeks
Social Wealth Fund

Next Step: Modernized Negative Income Tax

After exploring each of these areas in relative depth, I’ll conclude with a broader sentiment: economic insecurity has a dampening effect on human consciousness. The world is far more mysterious, wonderful, and stimulating than human perception can grasp, but economic insecurity further inhibits our capacities, like a horse with blinders on.

Despite being surrounded on all sides by enchantments, our lives are too often squandered in forms of suffering and anxiety that, in the 21st century, are preventable. The motivation behind UBI is one we all share: it’s time to build a better world. The motivation behind policy analysis is to ask: would UBI move us in that direction?

I recently published an in-depth exploration of the impact UBI might have on human development, consciousness, and social complexity. You can read that essay here.

What is Universal Basic Income?

UBI is an unconditional cash payment provided to all citizens, in an amount sufficient to meet their basic needs, on a (minimum) monthly basis. Most proposals include a reduced rate for minors.

Universal: Given to every individual, regardless of employment status, earnings, or demographic.

Basic: Sufficient to meet basic needs

Income: cash.

How Much is "Basic"?

The most common UBI amount - $1,000 per month - is based on the federal poverty line. The 2019 poverty line was $12,490, or $1,041 per month. Equating “basic” with the poverty line is consistent with the work of seminal economists and philosophers such as Amartya Sen and Martha Nussbaum.

Pinning the UBI amount to the poverty line requires adjusting the payout level for both inflation, and changes to how we define poverty.

How Much Would UBI Cost?

UBI has two relevant costs, gross and net. The gross cost reflects the total revenue the government must raise to fund the program. The net cost reflects the actual expense to taxpayers.  

Since funding a poverty level UBI requires progressive taxation, an upper portion of recipients will wind up paying more in new taxes than they receive from UBI. This creates a canceling out effect, where one receives $12,000 in UBI, but pays $14,000 in higher taxes. The effective cost to them is $2,000, rather than $14,000. The cost of UBI that takes these cancellations into account is the net cost.

The gross cost of a UBI equal to the poverty level in 2019 ($12,490) for all citizens above 18 would’ve been $3.2 trillion. Adding a 50% UBI for minors would increase the gross cost to $3.6 trillion.

Moving from gross to net cost is difficult to forecast, as it depends on the specific taxes used to fund it. But we can establish a range for the net cost from existing estimates. Political philosopher Karl Widerquist used a series of simplified assumptions to calculate the net cost of a $12,000 UBI for adults and $6,000 for children, totaling a gross cost of $3.42 trillion. His estimates yielded a net cost of $539 billion, or 15.7% of the gross cost.

For a similarly designed UBI, Scott Santens estimates a $900 billion annual net cost.

On the upper bound of the spectrum, economist Philip Harvey estimated the net cost of a similar - though not identical - UBI at $1.69 trillion.

Why UBI?

Elsewhere, I’ve written on the philosophy of UBI, exploring it as a means of decommodifying time and diversifying human development. But in popular discourse, there are at least six categories of motivation for UBI:

I. Immediately ending official poverty in the US
II. Reducing the imbalance of power & wealth between labor & capital
III. Boosting demand by raising purchasing power of lower income groups
IV. The threat of automation & detaching a basic amount of livelihood from labor
V. Improving markets by providing for basic needs outside of markets, making remaining exchanges more voluntary
VI. Beginning to implement the cultural conditions for 'post-scarcity'

Automation

“There is no reason why in a society which has reached the general level of wealth which ours has…that the security of a minimum income should not be guaranteed to all without endangering general freedom.”

— F.A. HAYEK

Automation is simultaneously the easiest narrative to stir up support for UBI, and the weakest one to build it upon. There is no critical consensus as to whether impending waves of automation will be any different than ones we’ve witnessed throughout history. Whether or not automation lives up to the hype, the case for UBI remains.

But there's a nuance in this argument worth pulling out. How will automation benefit society? How can we distribute and democratize the gains? How do we keep society from devolving into a class struggle between those who own the robots and those being replaced by them?

The question of who benefits from automation is firstly a question of power. If we’re concerned with power dynamics within firms, we can explore policies like codetermination, where worker representatives are given direct seats on company boards. This gives workers’ interests direct voting power in company decisions. Democratizing decision making power changes how productivity gains are implemented and realized in the first place, rather than relying on redistribution to take care of those who are left out of the gains.

But the sentiment of detaching labor from livelihood goes beyond automation. Since at least the 1800’s with Henry George’s Progress and Poverty, the stubborn tendency for wages to remain at the minimum that affords subsistence despite massive gains in capital accumulation has raised questions. As our accumulated wealth increases, why can we not guarantee a basic degree of livelihood irrespective of labor?

The case for UBI in this dynamic is best presented by a dialogue across 150 years, between George and the great novelist Marilynne Robinson. In 1879, George asked: “Why, in spite of increase in productive power, do wages tend to a minimum which will give but a bare living?” A century and a half later, Robinson ventures an answer: “because they can, neither ethics nor laws intervening.”

If livelihood is to untether itself from labor, it will not occur as a natural outcome of economies informed by neoclassical economic theory. Rising tides may lift all boats, but without explicit interventions, the distance between working class wages and subsistence levels in society will remain minimal.

UBI, whether as a response to automation, global pandemic, or whatever other shocks unsteady the economy, strives to ensure a basic dimension of survival security to all. By instituting an earnings floor in the economy that lifts the bottom up, it increases the distance between the lowest wages and the subsistence level.

Poverty

“The association of poverty with progress is the great enigma of our times...From it come the clouds that overhang the future of the most progressive and self-reliant nations.”

— HENRY GEORGE, 1879

In the 21st century, domestic poverty in the US is a choice, rather than necessity. It is an outcome of policy choices (and lack thereof), rather than an enigma of progress, as it was in George’s day. And yet it rages on.

The cost of directly ending poverty for every citizen in the United States, by simply providing them a tax subsidy equal to the amount that would raise their incomes to the poverty level, would cost less than $200 billion. That’s 29% of the defense department’s budget.

Simply giving everyone exactly the amount they need to reach the poverty line creates all sorts of work disincentive problems. But the closest functional approach to formalizing that logic comes in the form of a negative income tax (NIT).

Rather than giving people the exact difference between their income and the poverty line, NIT’s use a phaseout tax rate that slowly decreases NIT benefits as earned income increases. This helps preserve work incentives and avoid poverty traps.

Incidentally, although NIT and UBI might appear quite different on the surface, the closer you look, the more difficult it becomes to tell the difference between NIT and UBI.

Economists agree that NIT and UBI would have the same net transfer effects, meaning the overall redistribution of income is identical either way. UBI gives everyone the full poverty-level amount, and then taxes some of that payout back - known as the clawback rate - from those higher in the income distribution. In UBI’s case, the clawback rate is implicit.

NIT, by contrast, adjusts payout levels to people’s incomes, avoiding the necessity to tax it back. The clawback rate is explicit. Studies suggest implicit clawback rates have psychological advantages. But the debate over which policy is preferable, UBI or NIT, is far from settled, and will hopefully come into full bloom as we commit ourselves to the eradication of poverty.

The 21st century US exhibits a confounding juxtaposition of poverty with prosperity. What Henry George wrote in 1879 is all the more true today:

“It is as though an immense wedge were being forced, not underneath society, but through society. Those who are above the point of separation are elevated, but those who are below are crushed down.”

Policies like UBI and NIT seek to reposition the wedge of progress underneath society, so that all are lifted.

Inequality

But crucially, UBI is not merely a measure to eliminate poverty. Framing UBI as just a countermeasure for poverty sells its reformative potential short, like a grandparent who uses an iPhone for nothing but phone calls.

Prior to the 1960’s, poverty was rarely considered separate from wider inequalities between labor and capital. Poverty is only the tail-end of inequality, a white-cap on the surface of a vast and deep ocean. Narrowing the focus of social reform from inequality to poverty, as sociologist Daniel Zamora wonderfully documents, was a project closely associated with the rise of neoliberal, free-market ideology.

It’s no coincidence that the first serious NIT proposal was made by none other than Milton Friedman, whose edifice of economic ideas supported the rise of neoliberal economics that dominated the period from 1972 - 2008. Zamora writes:

"In his view, a focus on “poverty” was the only reasonable social policy within a free market system. If we followed a policy that tended to reduce inequality we would inevitably affect 'the heart of the dynamism of the market economy.' A program directed specifically against poverty, on the other hand, as argued by Friedman himself, 'while operating through the market' would 'not distort the market or impede its functioning,' as did Keynesian programs.”

But at least since Thomas Piketty’s landmark 2013 book, Capital in the 21st Century (not to mention his more recent, and more ambitious Capital and Ideology), the broader spectrum of inequality is back in the spotlight of popular discourse.

UBI critics on the progressive left are concerned that UBI, on its own, is not only insufficient to combat inequality, but might actually further entrench the forces that generate inequality in the first place.

From this angle, UBI is categorized as merely a redistributive reform, doing nothing to change the underlying dynamics that create wealth inequality, and so power inequalities, in the first place.

These criticisms are important, but partial and often misleading. UBI can be considered alongside reforms that more directly target power dynamics. However there is no reason to use an either/or framework, rather than a both/and. UBI offers a unique kind of power distribution that other reforms such as codetermination cannot.

Where codetermination democratizes power inside firms, UBI increases the bargaining power of labor from outside. This is often referred to as the power to "say no” to exploitative labor contracts. With UBI, workers have a foundation of security that allows them to more readily reject undesirable working conditions. This appeals to a broad base of economic thinking, as it’s in line with Adam Smith’s vision for “perfect liberty”.

For Smith, perfect liberty meant every worker is free to choose what job suits them best, and to change as often as they like in search of the best fit. He writes of perfect liberty as a state:

“…where every [hu]man was perfectly free both to choose what occupation [s]he thought proper, and to change it as often as [s]he thought proper. Every [hu]man’s interest would prompt him to seek the advantageous, and to shun the disadvantageous employment.”  

An adequate UBI creates an environment in which workers enjoy greater fluidity between jobs, enabling their search for the right fit. But once they accept a job, UBI’s effects on power subside. Within firms, codetermination can then take over, giving workers greater say over how their places of employment make decisions.

UBI Fixes Markets

What are the necessary conditions for freedom in a market society? Prior to enclosure movements that began claiming all land under the legal jurisdiction of private property, individuals had a choice. One could participate in 'society’, whatever that entailed. Or, if society was of no interest, you were free to find a plot of land, cultivate the earth, and survive on your own.

But ever since all available land was swept up into private ownership, this ‘exit option’ is off the table. In order to access the resources we need to survive, the only choice available to most people is participating in the market economy and earning enough income to buy what you need.

Effectively, people lost the power to say “no” at a basic level. Participation in market society is the only option, and this creates opportunities for exploitation. UBI recreates the lost exit option. By unconditionally providing people enough to meet their basic needs, UBI empowers people with the means to exit exploitation.

By giving workers the power to say no, UBI provides what political philosopher Karl Widerquist calls the physical basis for voluntary trade. From a different angle, anthropologist David Graeber frames UBI as the safe-word in a safe-word theory of social liberation. By affording people the real option of saying no, of opting out of exploitation, it increases the freedom with which we can say “yes”.

Extending UBI to everyone, the social and labor relations that hold society together would be remade. People could opt out of exploitative relationships without sacrificing their basic needs. The relations that remain, and the new ones that take shape, would be based on increasingly voluntary decisions.

Without these sufficient conditions that assure all transactions in a market economy are voluntary, the entire theoretical justification of market economies collapses. Widerquist writes:

"...when neoclassical economists theorize about the world, they assume voluntary exchange is taking place. Building on this assumption, neoclassical economics goes on to conclude a variety of important results such as that market activity is efficient, that free trade has net positive effects and that markets in which economic agents participate voluntarily make them better off...Although the legitimacy of the market economy is premised on voluntary trade, without a reasonable exit option, the trading system as a whole lacks an acceptable alternative.”

We are left with two choices. Either unconditionally provide everyone with the physical basis for voluntary trade, or abandon the appeal to voluntary trade as a justification for market economies.

UBI Stimulates Demand

Whether UBI would shrink or grow the economy depends on a dazzling web of interdependent factors, making all predictions tenuous at best. As you might expect, economists have constructed models that give all sorts of contradicting reports. Some models predict UBI stimulates growth, while others expect precisely the opposite.

But most models agree on one important element: The lower one is on the income distribution, the higher the likelihood they will spend any additional dollar they receive. Conversely, the wealthier one is, the more likely they are to save each marginal dollar they receive. This has important implications for forecasting how UBI might stimulate economic activity.

Even if UBI does not increase economic growth, and functions as a pure redistribution of income from the top towards the bottom, economic activity would likely increase. Shifting money from those at the top who are more likely to save, to those at the bottom who are more likely to spend, we can expect an increase in aggregate demand. High income inequality, writes John Maynard Keynes, “causes a separation between the power to consume and the desire to consume.”

By redistributing money to where the desire to consume is highest, overall consumption will increase.

Post-Scarcity

The 2008 financial collapse stirred our socioeconomic imaginations. Business as usual lost its appeal. But what comes next? The term post-scarcity is a phrase used to gesture towards a society where scarcity is no longer the organizing principle of human behavior. As the economic historian Robert Heilbroner writes:

“For the introduction of technology has one last effect whose ultimate implications for the metamorphosis of capitalism are perhaps greatest of all. This is the effect of technology in steadily raising the average level of well-being; thereby gradually bringing to an end the condition of material need as an effective stimulus for human behavior”

Reaching all the way back to Keynes, post-scarcity refers to a society where the marginal value of capital goods drops to near zero. Consider a pencil today. We have no problems asking each other to borrow pencils. It’s considered rude, if you have extras, not to give someone a pencil who asks. And most tellingly, if you forget to give the pencil back, it isn’t a big deal.

This is because the marginal value of pencils - a capital good - is near zero. People’s lives are hardly improved by gaining additional pencils. They’re easily accessible at low costs. Keynes imagined a society where all capital goods were as common as pencils, and therefore shared with those who need them without so much as a second thought. He writes:

"The course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed. The critical difference will be realised when this condition has become so general that the nature of one’s duty to one’s neighbour is changed. For it will remain reasonable to be economically purposive for others after it has ceased to be reasonable for oneself.”

With material goods receding to occupy a negligible portion of our aspirations (not because we somehow become less materialistic, but because everyone has abundant access to all capital goods they could want), new stimuli for human behavior would naturally emerge. Different forms of immaterial capital (social, cultural, etc) would become the focus of our energies.

UBI, a program that gives everyone a baseline of unconditional income (access to capital), begins to implement these conditions of post-scarcity. In market economies, unconditional income (for which one needn’t trade any time, labor, or money) provides immediate access goods and services we’d otherwise need to trade our time in order to receive. The more unconditional income provided, the less of one’s life-time that must be traded to acquire the goods and services we need.

This lowers the threshold of earnings required for people to meet their basic needs and, should they choose to, devote their time to unpaid activities. Human behavior becomes unbound from the imperative to earn income. Unpaid activities become more viable life-choices.

The theory of post-scarcity has to do with marginal value and rate of return on capital. But the praxis of post-scarcity shows up in the kind of cultural logic that emerges out of a society with wide-spread decreasing returns on capital goods.

As the scholar Robert Chernomas writes: “Keynes’s concern is with achieving the logic, humanity, and culture of a society that could be built only when preoccupation with economic concerns becomes unnecessary."

UBI does not achieve post-scarcity. In fact, some critics suggest the redistributional nature of UBI precludes it from ever being able to fully realize post-scarcity. Since UBI is restricted to redistributing existing wealth, it remains dependent upon a society organized around the accumulation of financial capital. If capital accumulation withers away, no longer the central stimulus driving human behavior, the overall quantity of wealth created will also shrink, reducing the available funding pool for UBI.

These criticisms are important, but not damning. While it is theoretically conceivable that a networked economy with increasing returns could actually skim off enough of those returns to fund a post-scarcity inducing UBI, in practice, this remains beyond immediate reach.

But a UBI can still create spaces of post-scarcity within the interstices of the broader capitalist system. These interstitial post-scarcity spaces allow us to begin experimenting and exploring with new ways of organizing ourselves. These shallows of experimentation, however incomplete and piecemeal, are vital for developing our imaginative capacity to design new systems.

The Problems of UBI

The more radical a proposal, the more scrutiny it should receive. Given the magnitude of UBI, in terms of both implications and costs, it merits abundant scrutiny. I’ll cover a range of critiques, responding to them where possible, and indicating those that remain unanswered.

Here’s a navigable menu:

I. UBI won't change anything
II. Couldn't UBI collapse the economy?
III. We'll all become lazy & dependent
IV. Who will do the ugly jobs?
V. What about free riders?
VI. Won't prices increase?
VII. Won't the majority of net recipients just demand more and more UBI from the rich?

UBI Won't Change Anything (The Capitulation Critique)

Counter-intuitively, one of the sharpest polemics against UBI comes from the progressive left. In Daniel Zamora’s brilliant The Case Against a Basic Income, he writes:

“UBI isn’t an alternative to neoliberalism, but an ideological capitulation to it. In fact, the most viable forms of basic income would universalize precarious labor and extend the sphere of the market — just as the gurus of Silicon Valley hope.”

This view builds from Luke Martinelli’s assessment: an affordable UBI is inadequate, and an adequate UBI is unaffordable. If all that’s affordable is a UBI well below the poverty level, then these critics argue that nothing will fundamentally change. An inadequate UBI fails to grant workers sufficient means to reject exploitative jobs, fails to eliminate poverty, and fails to establish the physical basis for voluntary trade. Effectively, all an inadequate UBI would do is provide a cash stimulus to existing markets.

Moreover, even an adequate (poverty level) UBI could function as a capitulation to neoliberalism if it’s conceived as a full replacement, rather than supplement, to existing welfare and social programs. When Milton Friedman proposed his guaranteed income in the form of a negative income tax, this is precisely what he had in mind. Same with Charles Murray’s more recent UBI proposal.

The validity of this critique then relies on two factors: the UBI amount, and how we pay for it.

But as Zamora himself notes, funding an adequate UBI is a question of political, rather than economic feasibility. Of course we could fund an adequate UBI. The capitulation critique does not doubt this. Rather, they doubt that it’s realistic that the necessary taxes could make it through the political process.

The capitulation critique, then, does not apply to a poverty level UBI funded by progressive taxation. It merely doubts its political viability. Far from a nail in the coffin, this points to the conspicuous lack of rigor applied to existing progressive funding proposals for an adequate UBI. If we are to overcome this sense of politically impossibility, we need to put forward realistic funding models.

Won't We Just Become Lazy & Dependent (The Human Nature Critique)

If we manage to fund an adequate UBI, won’t we all just become idlers? Won’t we just waste the free time we’re afforded? Is it worth enacting the largest program in American politics simply to enable people to spend more time watching Netflix and going to the beach?

At heart, this is a question of human nature. How would humans behave if they weren’t compelled to act by the threat of starvation and homelessness? Is human nature fixed, or does it adapt to changing social circumstances?

In fact, this is one of the main divergence points between Adam Smith and Karl Marx. Both believed that society thrives by maintaining an artificial scarcity. But Smith believes maintaining artificial scarcity is the only way to incentivize humans to engage in socially productive activities:

"And it is well that nature imposes [artificial scarcity] upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind. It is this which first prompted them to cultivate the ground, to build houses, to found cities and commonwealth, and to invent and improve all the sciences and arts, which ennoble and embellish human life"

Marx held a more adaptive, evolutionary view of human nature. He believed that how we spend our leisure time is inextricably linked to the working conditions and modes of production present in society. He writes that “all history is nothing but a continuous transformation of human nature.”

Both John Maynard Keynes and Henry George side with Marx on this question. The transformation of material and social conditions, they believe, will lead to the transformation of human behavior. George writes, in what I suspect is a direct counter to Smith:

“But it may be said, to banish want and the fear of want, would be to destroy the stimulus to exertion; men would become simply idlers, and such a happy state of general comfort and content would be the death of progress. This is the old slaveholders’ argument, that men can be driven to labor only with the lash. Nothing is more untrue.”

Worrying that UBI would amplify our idleness, our ‘time wasting’ behaviors, is a fallacy that assumes present behaviors would continue unchanged in radically altered social conditions. It fails to account for how economic distress presently weighs upon, and influences, how workers spend their ‘time off’.

As I’ve written about elsewhere, an adequate UBI must be considered in light of its implications for human development. The kinds of humans we become by living in society would likely change.

But there is a deeper assumption that motivates the human nature critique of UBI: that we have a right to judge how others spend their time.

In terms of UBI, this assumption arises because people’s free time would be, in part, funded by redistributing the earned income of some to all. Do we owe this kind of financial support to each other?

This critique is commonly known as the free rider problem.

The Free Rider Critique

The free rider problem suggests that even if UBI wouldn’t create “universal basic idling”, it isn't fair to redistribute earnings from hard-working citizens towards those who don’t contribute value to society. By receiving tax-funded income without contributing their own labor income to the tax base that funds UBI, they’re ‘free riding’ off the earned income of others. In this view, UBI gives people “something for nothing”.

A poverty-level UBI of $12,490 is hardly a living wage for even the most ascetic of citizens; most will continue to work and earn additional income. However, it is plausible to imagine at least some percentage of the population who choose to live off their UBI alone. It’s more likely to see a proliferation of full-time workers drop to part-time. UBI could make up enough of the difference so that they can maintain relatively similar lifestyles, while generating fewer taxable wages for the overall pot.

How might this criticism change if we apply it to parents who choose to stay home and raise their children? Does the same sense of unfairness come into play when recipients use UBI to fund socially valuable activities that markets fail to compensate? Surely a devoted parent is worth more to society than an unmotivated office administrator, or insurance salesman?

What about aspiring scientists who use the newfound financial and time freedoms to focus on exploring new theories? Or artists who dedicate their time to creativity? In this sense, UBI functions to extend earnings to those engaged in socially valuable pursuits that markets fail to compensate for.

Where free riding turns problematic is the assumption that willfully unemployed UBI recipients will live in ways that do not create value for society. Receiving “something for nothing”. But this is not only assumed, it stands in direct conflict with empirical studies on how UBI affects labor force participation. Even beyond the question of whether UBI would stimulate or stifle economic activity, a larger question looms: are we comfortable letting markets be the judge of what constitutes value?

Using wages as the prime indicator of value-creation solidifies the market's role in determining social value. But much of the progressive left’s movement is about displacing earnings as sole indications of social value. There are forms of value markets systematically fail to recognize, and forms of socially valuable (usually long-term) investments that markets fail to incentivize. Not to mention the forms of negative value that markets stimulate.

In this sense, the free-rider problem might not be a problem at all, but a solution. It functions alongside the market to stimulate forms of social value that markets leave behind.

Another proposed response to the free-rider problem is to shift the narrative frame of UBI. Since progressive taxes that draw from high-earning sectors of society would fund UBI, some claim that UBI is not redistributing the rightful ‘earnings’ of others, but distributes the portion of collective wealth that’s captured by high private earnings. In this sense, UBI is more of a social dividend that formalizes the collective nature of value creation on modern economies.

Consider how this logic of social dividends applies to raising the corporate tax rate, for example. Mariana Mazzucato has demonstrated how much of the iPhone's signature technology is a result of publicly funded R&D. Although taxpayers effectively socialize the risk of this R&D, the financial returns on that investment are privatized, none of which goes back to the taxpayers who (partially) funded the investment.

Should not a small portion of the financial earnings from publicly funded innovation return to those who funded the initial research? Isn’t the public entitled to share in the financial returns on innovations our tax dollars paid for?

Similar logic is at play for many high-earning sectors of society. From Google, Apple, to Tesla, Mazzucato shows how stories of value creation systematically neglect the role of public investment. Framing UBI as a social dividend formalizes the collective nature of value creation, paying dividends on the public’s investment in innovations that spur private fortunes.

A common example is the Alaska Permanent Fund, which taxes all mineral (primarily oil) royalties a minimum of 25%. They reason that Alaskan oil belongs to all Alaskans, rather than whoever manages to dig it up first. Anyone who uses the oil must compensate all other collective owners for excluding them from using it.

The tax revenues are deposited into an investment portfolio that each Alaskan shares an equal share in, receiving annual dividends that fluctuate with the stock market. Applying this logic nationally, Matt Breunig’s proposal for a social wealth fund makes every American an equal shareholder in a collectively owned portfolio.

Framing UBI as a social dividend only makes sense if the funding mechanisms draw from areas of society where large private earnings are bolstered by neglecting public contributions. To sufficiently appease free-rider concerns, UBI advocates must demonstrate what sectors of society wind up paying for UBI under their funding proposals.

Who's Gonna Scrub the Toilets? The Division of Labor Critique

In Zamora’s polemic against UBI, he asks a cutting question: if an adequate UBI gives workers the ability to say “no” to undesirable labor, how can we be sure all the work that needs doing, would get done?

“...a ‘utopian’ [by which he means at least poverty level] UBI raises questions about how the distribution of work — that is, the division of labor — would be determined in a society where we could choose not to work...A “utopian” UBI...simply assumes that in a society liberated from the work imperative, the spontaneous aggregation of individual desires would yield a division of labor conducive to a properly functioning society; that the desires of individuals newly freed to choose what they wish to do would spontaneously yield a perfectly functional division of labor. But this expectation is assumed rather than demonstrated.”

First, it’s worth nothing that by “utopian” UBI, Zamora means a poverty level, or $1,041 monthly UBI. This is hardly enough for even the most ascetic citizens to live on alone. We should certainly expect radical changes to the labor market. But the work incentive, while perhaps marginally dampened, is far from “liberated” by such a UBI.

Liberation aside, Zamora’s point remains. What if nobody chooses to work as a janitor anymore? What if no one is willing to clean the sewers? Unless technology fulfills its promise and automates all of the work humans would rather not do, the full division of labor required to maintain society may include jobs that people, given the means, simply wouldn’t take.

This is one of the greatest fissures in UBI discourse. The ‘work imperative’ is both the glue that holds the system together, and a bleak reality that suffocates working classes. We cannot yet outsource all undesirable jobs to robots. While a work incentive remains even with a poverty level UBI, critical attention must be turned to reflecting on how to maintain the necessary division of labor.

On one hand, David Graeber believes with a UBI, bullshit jobs might simply disappear, because people wouldn’t take them. Alternatively, those unattractive jobs that still require doing for society to function may be forced to offer higher wages. The ways in which wages might respond to UBI lead us into the fascinating territory of the sustainability critique.

The Economic Sustainability Critique

We can imagine that huge amounts of people may choose to drop from full to part-time work, supplementing the gap in income with UBI. On the whole, this may lead to a decrease in taxable wages. As taxable wages decrease, so does the pool of money taxes draw from to fund the UBI.

The magnitude of this decrease depends largely on what kinds of taxes are used to fund the UBI. A system that relies heavily on income taxes would face serious issues with a decreasing taxable wage base. But if UBI were funded with land value taxes, carbon taxes, wealth taxes, consumption taxes, capital gains taxes, etc., UBI’s dependence on taxable wages would be lessened.

Still, what if UBI, by dampening the work imperative, succeeds almost too well in allowing people to engage in more unpaid activities? What if the size of the formal economy shrinks, tax revenues wither, and UBI winds up eroding the very capital flows that sustained it?

There’s a relevant concept in economics known as the Laffer curve. It says that as you increase a tax rate, you'll raise more revenue until a certain point, after which the tax rate is so high that it discourages people from engaging in the activity, and the tax revenues begin to decline.

For example, imagine a carbon tax. If a carbon tax increases the price of gasoline from $2.50/gallon, up to $2.85/gallon, most consumers won’t change their behaviors. They’ll consume just as much gasoline, yielding higher tax revenue.

But if the tax shot the price up to $10/gallon, many consumers would change their behaviors to consume less gas, yielding less tax revenue:

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We can apply the Laffer curve to UBI, asking how overall tax revenues respond to the level of UBI. Just like the Laffer curve, beginning with a UBI of 0, we’d have today’s present tax revenue. As the UBI increases to $50, $100, $200, we’d expect tax revenues to increase for two reasons.

First, because of the increased tax revenues required to fund the UBI. Second, a UBI funded by progressive taxes redistributes money from higher ends of the income distribution to the lower. The wealthy are less likely to spend each marginal dollar they receive, while lower income groups are more likely to spend any additional dollar they receive. So we can expect that UBI would stimulate economic activity, leading to more taxable revenue.

But as the UBI increases, the imperative to work decreases, and the progressive taxes required to fund the UBI grow steeper. At some point, we reach the peak of the curve, beyond which overall tax revenues begin to decrease as people stop working, and others cease chasing large fortunes that would just be reclaimed by taxes.

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In this case, we’re faced with a design project: find the optimal level of UBI that maximizes the payout without decreasing tax revenue.

But the sustainability question can go a step further. What if we find this optimal balance point that provides a sufficiently high UBI to cover people’s basic needs without eroding its own tax base or tanking the economy. How does the economy change? As we explored in the division of labor section, a high enough UBI threatens to eliminate the incentive to do undesirable work.

In a wonderfully provocative 1986 paper - The Capitalist Road to Communism - Philippe Van Parijs and Robert van der Veen explore this question. Assuming a sustainable and adequate UBI, they hypothesize a “twist” in capitalist logic, whereby wage rates for undesirable work will increase to attract workers, while wages for desirable work will decrease, since people have enough to cover their basic needs and are more free to accept more interesting work for lower pay. “Consequently,” they write:

“...the capitalist logic of profit will, much more than previously, foster technical innovation and organizational change that improve the quality of work and thereby reduce the drudgery required per unit of product.”

How will the twist in capitalist logic create incentives that reduce the “drudgery required per unity of product”? Consider the cost of human labor relative to its automatized equivalent. Presently, it’s usually cheaper to hire human workers than invest in the machinery and automation that can perform equivalent work. But already, we’re seeing roaming robots replace supermarket workers, self-driving cars replacing drivers, and tablets replacing waiters at restaurants.

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If this twist of capitalist logic drives up the wage rate for undesirable work, the cost relation will flip. It will become more expensive to hire humans at higher wages where machines can do the equivalent labor. The costs of automation will become a rational choice for capitalists when the equivalent cost of labor surpasses it.

These are uncertain speculations, to be sure. And the assumption that there exists an optimal level of UBI that covers basic needs without grinding down its own tax base is little more than an assumption. We have economic models that suggest UBI would decrease growth, while others say just the opposite.

In the face of these uncertainties, we may nevertheless rest assured that UBI would fundamentally change the economy, and in so doing, the kinds of lives we lead. We should speculate as widely as possible, and survey the many possibilities as diligently as we can.

If we can conclude anything from these concerns and speculations, perhaps it’s that moving in the direction of UBI merits prudence. While we must understand that how the economy responds to a $250 UBI cannot be extrapolated to suggest its response to a $1,000 UBI - the two are fundamentally different - we do have the option of moving towards UBI, rather than diving straight into the unknown.

The "Won't UBI Inflate Prices?" Critique

If everyone receives an extra $12,490 annually, won’t producers raise prices to absorb this extra capital? Won’t landlords raise rent, retail stores raise prices, ultimately absorbing the UBI entirely such that no meaningful changes remain?

In brief: maybe a little bit, but probably not much.

Inflation is not so simple as: people receive more money, therefore producers increase prices. Inflation only occurs when aggregate supply is unable to keep up with increasing demand. So long as people’s purchasing power increases, and supply can scale to match, there is no inflation.

Moreover, most UBI proposals do not even propose to increase the money supply. UBI funded by progressive taxes just shuffles existing money around. But even if a UBI were funded entirely by printing the requisite $3.6 trillion every year and adding it to the economy, it’s not clear how much inflation would actually occur.

While prevailing logic assumes such an action would cause so much inflation as to render the idea obviously detestable, the matter is far from obvious. For example, Ellen Brown writes that, by virtue of how money is created, “our money supply is in a chronic state of deflation.” When banks approve a loan, that money is created and assimilates into the economy. But the subsequent interest owed is not created, so money creation always furthers the deficit that divides money owed from money circulating in the economy.

This gap between debt owed and the money supply creates a buffer against inflation. Any increase in the money supply that closes this gap (i.e., UBI money used to pay existing debts) causes no inflation.

But few UBI proposals rely on deficit spending - most use progressive taxes to redistribute money downwards. In this case, the money supply does not increase, but spending patterns and purchasing power do.

The lower on the income distribution one falls, the higher their propensity to spend each additional dollar they receive. So if progressive taxes redistribute money downwards via UBI, we can expect aggregate spending in the economy to increase. So long as supply can scale up to match increased demand, no inflation occurs.

Inflation only occurs when supply hits its maximum, and increasing demand cannot be matched by increasing supply. So the degree to which the economy can increase its supply also provides a buffer that absorbs inflation.

For example, since 1982, every Alaskan citizen has received a partial UBI through taxes levied on oil revenues. Each year, citizens receive anywhere from $1,000 - $2,000. From the introduction of their partial UBI to the present, Alaska has experienced lower inflation than the rest of the nation. This, despite every citizen receiving an extra ~$1,500 annually.

Similar results were found when the Mexican government conducted experiments across a network of villages. Villages where people received direct cash transfers experienced no statistically significant changes in prices.

Results from the Alaska, or rural Mexican villages can only tell us so much about how the entire US economy would react to a UBI. A more representative study looked specifically at how a UBI funded by progressive taxation (specifically, by progressive income taxation, which is a more distortionary UBI than most proposals that use forms of taxation other than excessive income taxes) would affect housing prices in New York City. They find that a $5,000 household UBI (another departure from actual UBI proposals, that distribute benefits per individual) would increase aggregate welfare of the bottom 50% of the wealth distribution. Most notably, they find that this UBI would actually decrease housing prices.

All models should be taken skeptically, as there always exists inherent limitations in our ability to actually model UBI. Not to mention the varying assumptions required to construct models that often differ from the actual UBI proposals these models are used to evaluate. Nevertheless. Each successive experimental context related to UBI and inflation suggests the same finding: there is no obvious causality between unconditional income transfers and price inflation.

The Political Tyranny Critique

Another common concern goes like this: funding a UBI requires progressive taxes that fall mostly on the wealthy. But the wealthy constitute only a minority in society. If the majority of society are net UBI recipients, meaning they receive more in UBI than they pay in increased taxes, what’s to stop them from leveraging their majority and voting to raise the level of UBI, exploiting the rich minority?

This concern can be handled in the same way we handle voting for presidential impeachment, an event too important to leave up to mere majority rule. For the senate to impeach a president, they require a supermajority consensus. This is just a higher threshold of consensus than other measures require. Requiring a supermajority to change UBI levels can help prevent partisan exploitations and tyrannical majorities.

How to Pay for UBI

At the moment, how to pay for UBI is the most important question of the discussion. There’s plenty of theory, there are well-reasoned arguments on all sides. What we need to develop are realistic funding proposals that we can subject to scrutiny.

The relevant question isn’t can we pay for UBI, but should we pay for UBI. Of course we can. We could finance the entire program through deficit spending, just creating the money and handing it out (as banks do daily when approving loans). But that probably isn’t a good idea, because the inflationary consequences of doing so likely outweigh the benefits.

How we pay for UBI determines everything from how economic incentives change, to whether it functions as a floor or ceiling for social policy. A handful of proposals for UBI exist, but they mostly lack the attention to detail that enables a transition from politically impossible to politically viable.

No single tax is sufficient to fund UBI. Raising $3.6 trillion in revenue requires a coalition of progressive taxes. But this also presents an opportunity to meaningfully redesign and update economic incentives for the 21st century.

Here, I’ll gather a list of relevant taxes and strategies, together with revenue projections. There is no agreement on how much a wealth tax, for example, would raise. So I’ll include the range of revenue projections, from conservative skepticism to passionate optimism.

Progressive marginal income tax rates

Projected annual revenue: $18.9 billion - $70 billion.

Example: Adding an eighth tax bracket for incomes above $10 million taxed at 70% is projected to raise anywhere from $18.9 billion, if no other tax changes are made, up to $70 billion if a broader progressive taxation system is in place.

Background: According to research by Emmanuel Saez and Gabriel Zucman, 2018 marked the first time the wealthiest members of society paid a lower effective tax rate than the poorest:

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The conversation on how to implement a more progressive tax system is now booming. One facet of the broader project of progressive taxation is marginal income tax rates. Marginal income tax rates in America on the highest income groups used to exceed 90% (with effective rates closer to 60%), while today, the highest bracket faces a tax rate of 37% (with far lower effective rates). All incomes above $400,000 are treated to this same rate.

Research by Zucman, Saez, and Stantcheva (2014) attempts to derive the optimal top rate of taxation to maximize revenue, in relation to the Laffer curve for income taxes. They find that a rate of 83% on the highest incomes maximises revenue.

But recent progressive proposals to simply add an 8th bracket on incomes above $10 million leave the space between $400,000 and $10 million unchanged. We need more nuance in how we tax incomes.

A first-principles approach might draw from the idea of a monotonically increasing tax rate that does away with brackets altogether. Every additional dollar earned is subjected to a slightly higher tax rate, achieving a truly progressive tax on income that adheres to Adam Smith’s original guideline:

“The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

But to avoid such predictable responses to higher income tax rates as capital flight and fiscal manipulation (realizing earnings as capital gains rather than personal income to avoid higher tax rates), any progressive income tax must be part of a broader program of tax reform.

Raising and reforming capital gains taxes

Projected revenues: $6 billion - $170 billion.

Examples: Shifting to a carryover tax basis is projected to raise $10.4 billion annually, and taxing capital gains of the top 1% on an accrual basis could yield $170 billion. These projections are for changing methodology, rather than raising rates.

Revenue projections for raising capital gains rates are complex, because outcomes depend on the broader system of taxation. As such, models that predict a $6 billion annual raise in revenue by raising capital gains taxes from 20% to 24.2% are tenuous.

Background: Capital gains are the second most prevalent mode of realizing income, functioning in tandem with labor income taxes. This is why considering capital gains and income taxes alongside each other is so important: at upper levels of the income distribution, gains are often transferable between these two categories.

Wealth tax

Projected revenues: $118 billion - $375 billion.

Example: A 2% tax on wealth above $50 million, cranking up to 3% on wealth above $1 billion, is projected to raise $275 billion, annually.

Background: Many European countries tried wealth taxes, most proved ineffective. Recent economists advocating for a wealth tax acknowledge that we must learn from these failures to design an effective wealth tax.

European wealth taxes failed for a variety of reasons. Foremost among them was the low bar of wealth subjected to the tax. European wealth tax rates kicked in around $1 million, whereas US proposals kick in at either $34 or $50 million. This alone eliminates most liquidity issues that plagued european wealth taxes.

Additionally, it’s quite easy to switch residency within EU countries, moving wealth into those with weaker tax regulations and lower rates. This kind of residency evasion is much less likely in the US, where changing one’s country of residence has a higher bar.

Carbon tax/cap-and-trade dividend

Projected revenues: $100 billion - $210 billion.

Examples: A tax of $25 per metric ton on most greenhouse gas emissions in the US could raise slightly over $100 billion annually, while a tax of $49 per metric ton of carbon dioxide could raise closer to $210 billion annually.

Background: There are two important elements to the debate over carbon tax. First, a successful carbon tax would yield diminishing revenues, moving towards zero. Second, there’s a design question: a carbon tax sets a price on carbon and lets emissions calibrate organically, while a cap-and-trade approach sets an emissions level and lets prices calibrate organically.

Each strategy has particular strengths and weaknesses that may complement each other well in a mixed approach.

Raising and reforming corporate taxes

Projected revenues: $9.6 billion - $200+ billion

Example: Reforming how the corporate tax is levied often offers more potential revenue than raising the rate. Still, the 2017 tax cuts reduced the corporate rate from 35% to 21%, leading to a $135 billion decline in corporate income tax revenue.

The congressional budget office (CBO) estimated the revenues for a mere 1% increase in the corporate tax rate, finding a $9.6 billion annual increase.

Background: 379 of the Fortune 500 companies paid an effective federal tax rate of 11.3% on their 2018 income, 9.7% less than the actual corporate tax rate of 21%. 91 of those corporations - including Amazon, Chevron, IBM - paid $0 in taxes on their 2018 income.

Discussions about the corporate tax rate often focus on the stated tax rate, rather than the effective tax rate paid. These situations are made possible by various deductions, allowances, and loopholes. Corporate taxation reform should begin with a reevaluation of how the tax is applied.

Land value tax

Projected revenues: $100 billion - $750 billion.

Example: LVT projections are scant. Some of the most recent academic work for full-scale national projections dates back to 1985. The author estimated that a full LVT could raise 28% of national income, yielding $658 billion in 1981 (28% of national income in 2018 would yield $5.8 trillion).

More recent and sober estimates range from smaller, targeted LVT rates that yield closer to $100 - $200 billion in annual revenue, up to a 5% LVT that raises $750 billion.

Background: A land value tax (LVT) was Henry George’s big idea. He sought to socialize land (place it all under collective, rather than private, ownership) and replace all government taxation with a tax on land values. While the notion of replacing all taxes today with a land value tax is far-fetched, smaller-scale land-value taxes are theoretically possible. Indeed, small scale LVT’s are used around the world.

LVT’s are attractive in theory, but treacherous in practice. Implementing a LVT at a national scale would present a series of administrative challenges. These are far from insurmountable, but require magnitudes of attention and innovation to transform the conversation from fantasy to reality.

Value added tax

Projected revenues: $600 billion - $1.3 trillion.

Examples: CBO estimates for a 5% VAT tax range from $190 billion to $290 billion annually, depending on details. Committees have expanded these findings to estimate that a 10% VAT tax would raise approximately $600 billion per year. Estimates on broader-base 10% VAT tax expect revenues of $1.3 trillion per year.

Background: A VAT is used in most of the developed world. 166 of 193 countries with UN membership have one in place. While varieties of VAT proposals are gaining momentum, progressive economists caution that the burden of taxation is ultimately regressive.

VAT’s were conceived in the post-war 20th century, when industries that define 21st century economies were relatively small - finance, insurance, education, and healthcare. Today, these high powered industries would either be beyond the reach of the VAT, or able to pass on the cost burden to consumers.

National income tax

Projected revenue: $1.2 trillion.

Example: A national income tax was proposed by Emmanuel Saez & Gabriel Zucman in 2019 as a progressive alternative to the VAT. The tax applies to all income - capital and labor - at a single flat rate with no deductions or exemptions. They estimate a 6% national income tax could raise $1.2 trillion annually.

Background: In their 2019 book, Zucman & Saez propose a new tax innovation to ‘leapfrog’ the VAT:

“The United States can leapfrog the VAT. It can pave the way in the creation of the fiscal institutions of the twenty-first century—as it did during the twentieth century. How? By creating a national income tax.”

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Its virtue, by including both capital and labor with no exemptions, is the comprehensiveness of national income subject to the tax. This makes it possible to raise high revenues with low rates. The reason such a tax has never been implemented is largely because it incentivizes capital flight - wealthy entities basing their assets in other countries to avoid higher rates.

Accordingly, this kind of tax is only realistic in partnership with reformed taxation of multinational companies and tax havens.

Financial transaction tax

Projected revenues: $60 billion - $75 billion.

Example: A 0.34% broad-based FTT could raise a maximum of 0.4% of GDP, or $75 billion.

Background: A FTT, beyond raising revenue, has a significant corrective effect on the unbridled incentives of the finance industry. By discouraging high-frequency, short-term trading, a FTT discourages the short-termism that has plagued the economy since deregulation loosened capital controls in the 1970’s.

Folding redundant welfare programs

Projected revenues: $200 billion - $771 billion.

Example: While total welfare expenditures hover near $771 billion, Wiederspan, Rhodes, & Shaefer (2015) isolate means-tested programs that a UBI or NIT would make redundant. They project savings of $207 billion.

Background: As I’ve mentioned, the progressivity of UBI depends on whether it supplements, or replaces existing social programs. The full spectrum of which welfare programs should supplement UBI and which should fold their revenues into funding merits widespread critical discussion. But with a total welfare budget of $771.4 billion in 2019, a notable portion of funding can be derived from existing welfare expenditures without threatening progressivity.

It should also be noted that even if most welfare programs are left in place, their costs would greatly shrink in response to a UBI that elevates most citizens beyond their eligibility requirements.

Reducing defense department budget

Projected revenues: $59 billion.

Example: Reducing the defense department’s budget by 10%, phased in over a 10-year period, would save $59 billion annually.

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Social security reform

Projected revenues: $200 billion - $500 billion.

Examples: By replacing one of every three dollars of social security received with UBI, recipients could increase their overall receipts while saving $324.2 billion.

Alternatively, rather than reducing payouts for those who’ve already paid in, after passing UBI we could justify reducing the 6.2% tax rate on employees that pays into social security, since SS payouts wouldn’t need to remain as high after being complemented by UBI.

Finally, raising the cap on social security payments up to $250,000 would raise an extra $80 billion, while subjecting earnings greater than $250,000 to a 12.4% payroll tax could raise $122 billion, annually.

...

Total annual revenue range: $2.6 trillion - $5.6 trillion

Putting Taxes Together

I am under no delusions that we could sensibly enact all these reforms and raise $5.6 trillion. These taxes cannot all be implemented at their upper projections, and implementing some would eliminate the possibility of implementing others.

The complexity and nuance at stake in accounting for how taxes interact with one another is why we need an influx of proposals from experts of all stripes. But they can be pieced together into cohesive, broad-spectrum proposals.

One example comes from Zucman & Saez’s 2019 book. They propose a tax plan that combines: a wealth tax, corporate tax, higher marginal income tax rates, higher taxation of capital gains, and a national income tax (6% flat tax on all income, labor and capital, no deductions). They predict this combination would yield $1.8 trillion in annual revenue:

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This leaves on the table: financial transaction taxes, carbon taxes, any redundant welfare programs, social security reform, expected gains from economic growth, and deficit spending, to name a few.

It’s also worth noting that the point of a UBI funded by progressive taxes is to reduce the tax burden on most people. The taxes used in Saez & Zucman’s proposal, for example, only raise taxes on society’s wealthiest sectors. But for full UBI proposals, taxes will inevitably be raised on some portion of the middle class. It’s important to delineate exactly whose taxes will be raised, and where the breakeven point occurs along the income distribution.

I won’t attempt to suggest a better constellation of taxes - I’m not the guy you want doing that. But it’s demonstrably possible to put together a functional proposal, and we need more of them.

Optimizing UBI

The particular form UBI might take is shrouded in ambiguity. In light of our tour through the relevant considerations, I’d like to propose a few elements worth considering if, following wide-spread democratic discourse and critical reflection, we wind up pursuing some form of UBI.

I. Poverty Level UBI

For UBI to achieve decommodification, rather than serve as a subsidy for capitalists, it must provide, at minimum, the physical basis for voluntary trade. Building off the work of Martha Nussbaum, Amartya Sen, and Karl Widerquist, we can equate this level with the poverty line, yielding a 2019 UBI level of $12,490, or $1,041 per month.

II. Split-Tier Payouts

The poverty-level UBI must be guaranteed, which requires reliable and stable sources of funding (modest LVT, national income tax on both labor and capital, financial transaction taxes, reallocating existing revenues, etc).

But what to do with revenues from taxes with more volatile revenues? Wealth and carbon taxes, for example, will change behaviors and lead to fluctuating, and likely decreasing, revenues over time. These are taxes implemented not primarily to raise money, but to alter economic incentives. In this same category of taxes with fluctuating revenues we can include taxes on natural resources (like Alaska’s Permanent Fund), data dividends, and rental revenues on collectively owned assets like broadband spectrum rights, land, or a social wealth fund.

These can all be treated as revenue-neutral taxes, where revenues are equally divided amongst citizens in the form of a social dividend. The social dividend could form an additional, fluctuating layer of benefits atop the guaranteed poverty level that is free to evolve, grow, and shrink alongside capital flows without threatening the basic income.

In fact, an interesting dynamic emerges when there exists a social dividend that can facilitate revenue neutral taxes. Each dollar spent by the government must justify why it is better off going into government expenditures rather than the social dividend pot. All government spending then ‘trades against’ per capita distribution, creating an incentive alignment that optimizes both, while promoting citizen oversight of government spending.

This is what I call a split-tier UBI. The bottom layer must be adequate to provide the physical basis for voluntary trade by meeting the poverty line, while a fluctuating social dividend may layer atop the base to provide a commonly owned stake in certain capital flows.

III. High End Phaseout Rates

One of the most common critiques of UBI goes something like: “Why would we pay Mark Zuckerberg $1,049 a month?!” In practice, his UBI acts as a minor tax credit on his much larger tax payment. He pays far more than he receives.

While UBI advocates use this logic to dismiss the critique, the question can be pressed. If a billionaire doesn’t receive any UBI payment after taxes are accounted for, why pay it at all? Why provide a tax credit on larger tax payments (the reason given is usually to avoid the administrative imposition of means-testing). Taking this logic to its conclusion winds up replacing UBI with NIT: only those who need the money most should receive it.

However, a basic income with high-end phaseout rates is different, falling somewhere between NIT and UBI. Columbia’s Poverty Center released a 2020 report analyzing a basic - but not universal - income program with a phaseout rate that kicks in at $150,000 and phases benefits out by $200,000.

We saw this same logic applied to the $1,200 stimulus checks provided by the US government during the Covid-19 pandemic. Individuals earning up to $75,000 received the full amount. Beyond that, the payment began phasing out, reaching zero for those who earned $99,000 or higher.

Using high-end phaseout rates effectively makes the cost burden more progressive by eliminating the payments that function as tax credits for individuals above the breakeven point.

It remains an open (and highly pertinent!) research question whether these savings would offset the additional costs of means-testing.

Since any guaranteed income proposal must be funded by progressive taxes, there will always be some who receive, and some who pay. The tradeoffs should be explored: what do we lose by violating universality with high-end phaseout rates? Whether the differences would justify abandoning the principle of universality merits significant discussion, but it’s worth considering.

IV. Broader reform

Crucial to the efficacy of UBI is that it’s understood as a floor, rather than ceiling to social policy. Narrative framing is important, but the real decisive factor in this balance is how the UBI is paid for. UBI proposals must be clear about which programs would fold in order to fund it, which would remain alongside, and the broader projects UBI can facilitate.

Alternatives

Some of the strongest critiques of UBI come in the form of alternative proposals that accomplish similar reforms through more modest methods.

Raising the gross budget required for UBI - $3.6 trillion - we could fully fund universal healthcare, a poverty-eradicating negative income tax, and have over $1 trillion leftover. Alternatively, if we implemented reforms like universal healthcare, affordable housing, and mass transit programs that reduce the need for personal vehicles, we could reduce the required individual monthly spending on basic needs by an amount equivalent, if not greater, than a poverty level UBI.

With this all in mind, let’s survey some of the leading proposed alternatives to UBI.

Negative Income Tax

I’ve mentioned NIT throughout the essay, and will return to it in the conclusion. Here, I’ll briefly describe how it works.

NIT is composed of two variables: an income floor, and a phaseout tax rate. The income floor sets the amount an individual with $0 of annual income receives from the program. The phaseout rate determines how much of the NIT is phased out for each dollar of earned income. Together, the phaseout tax rate and the income floor create a third element: the breakeven point. This is the earnings level at which NIT benefits reach $0.

Anyone who earns less than the breakeven point receives a proportion of the difference between their earnings and the breakeven point. That proportion is determined by the phaseout rate.

For example, consider a NIT with an income floor of $13,000, and a phaseout rate of 33%. This sets the breakeven point at $39,393. Anyone who earns below $39,393 receives 33% of the difference between their earned income and the breakeven point.

This means if I earn $0 annually, I receive 33% of $39,393, or $13,000. As my income increases, my NIT benefit slowly phases out, reaching zero when my income surpasses $39,393.

Depending on where the income floor and phaseout tax rate are set, annual cost estimates for NIT range from $179 billion, all the way up to $1.09 trillion. Here’s a list of a proposals, from one of the best recent papers on NIT, with income thresholds at 75%, 100%, and 133% of the poverty line, with phaseout rates that maintain benefits until earnings exceed 150%, 266%, and 403% of the poverty line:

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Recall the differences between UBI and NIT. Since NIT payouts must constantly adjust themselves to fluctuations in income, a system of income reporting and administration is required to maintain the program.

If NIT payments are to be distributed monthly, as UBI proposals are, this requires a monthly system of income reporting, rather than the yearly we’re currently accustomed to. This is why UBI proponents prefer giving everyone the same amount and using progressive taxes to adjust the distribution. It greatly reduces the bureaucracy and opportunities for error and exploitation in the program, while achieving a similar net transfer effect.

Personally, I see this as one of the most potent areas for digital innovation. A monthly NIT would be difficult with the present state of income reporting and governmental capacities. But modernized digital programs could significantly reduce the frictions, perhaps even automating the process entirely.

Universal Basic Services

Universal basic services (UBS) refers to a comprehensive provisioning of public goods and services, including various combinations of healthcare, housing, transportation, internet services, food, and so on.

Crucially, UBS proposals are inconsistent on whether or not UBI is part of the package. A UBS that includes income - and therefore a UBI - as one of the unconditionally provided features is hardly different from most progressive proposals for UBI. This UBS just formalizes the insistence that UBI alone is insufficient, and must be complemented by a broader program of reform.

But some prominent proposals for UBS advocate for services instead of income, providing the physical means for voluntary trade in kind, rather than in cash. These UBS proposals arose out of the UBI movement, sharing their intent while believing direct provision of services is a better use of available funds than direct cash transfers.

But while UBI has a long history of scholarship, theory, and discourse, UBS proposals are scant. For example, the Institute for Global Prosperity (IGP) is perhaps the leading advocacy group for UBS. In 2017, they released a full proposal under the heading of UBS that proposed anything but. They estimated it would cost $53 billion annually to provide housing, food, transport, and basic communications services (cell phone and internet access) to all UK citizens.

2017 UBS proposal
2017 UBS proposal

Of these four elements, two - food and housing - were means-tested (decidedly not universal), and universal transportation amounted to little more than free bus rides. Means-testing is a significant break from the philosophy of most UBI advocacy. Their subsequent 2019 report recoiled, offering no cost estimate and striking both food and housing from the proposal, including childcare and adult social care instead.

Guy Standing, a leading advocate for basic income, concludes his comparison of UBI and UBS by pleading with UBS advocates to “stop juxtaposing the idea of more and better public services with giving people basic income security.” The either/or dichotomy is misleading, because “they address different needs and stem from different rationales.”

Perhaps the greatest difference between UBI and UBS is optionality. With UBS, what services one needs are determined by a centralized group. What constitutes sufficient food, housing, communication, are all determined, and monitored, by the government. This way of thinking is an extension of 20th century social democratic reforms to expand welfare states.

By providing the cash equivalent for basic needs, UBI increases people’s optionality in how best to spend the money, and what on. Doing so also maintains the incentive for innovation in these industries.

If these two approaches are brought together, how can we determine what areas of life should be directly provided, and which should be provided as cash equivalents? Why do progressives prefer universal healthcare to just giving people enough money to buy private health insurance?

Here’s a basic heuristic for making sense of this: in markets with significant market failures (like healthcare, or prisons), direct provision of services may be preferable. In well functioning markets, cash equivalents afford greater optionality and maintain the conditions for innovation.

Universal Job Guarantee

Another increasingly popular alternative to UBI is a federal jobs guarantee (FJG). A FJG would provide a ‘public option’ for employment to all those who want it, paying a livable wage plus benefits.

Cost estimates range from $46 billion, up to $550 billion, to $750 billion, giving an idea of the diversity of proposals that go under the head of a FJG.

To compare, we might contrast a FJG with the previously listed motivations for UBI. The question of detaching livelihood from labor is the single largest point of divergent between these two approaches. A FJG does not decouple, but reinforces, the connection between labor and livelihood.

Proponents do suggest that a FJG could effectively eliminate poverty to all those able and willing to work. This amounts to a conditional elimination of poverty, and so a necessarily partial result. In terms of inequality, a FJG does have indirect effects on working conditions. The federal jobs program could put pressure on the private sector, forcing private jobs to at least match public benefits. Why take a $12.50/hr job in retail when you could get a $15/hr government job with benefits? In this fashion, a FJG could create an implicit minimum wage through competition, rather than federal mandates.

Compared with the status quo, both a FJG and UBI offer a likely improvement. But for all they share, their differences are sharp. Consider the worst-case scenario for each.

With a UBI, one of the public’s greatest concerns is a recipient may move into their parents basement and do nothing but watch television, drink beer, smoke weed, and eat chips all day. The UBI, taxed from the earned income of others, would support this lifestyle.

By contrast, if basic livelihood is afforded through a FJG, imagine the spiritual plight of a worker consigned to meaningless, pointless labor merely in order to satisfy the work requirement for receiving a living wage. If the government is unable to provide quality work for all participants in the program, the outcome is dystopian.

The question of the best means to provide everyone with their basic needs may come down to the question of human nature: do we empower people to decide for themselves how their time is best spent, or utilize labor requirements to make sure no one receives taxed benefits without contributing to society in a way that labor markets deem valuable?

Put differently: who do we ultimately give the power to determine the best use of their lives, people, or the government?

Codetermination

Codetermination, while not a direct alternative to UBI, should be included in these discussions. Much UBI advocacy centers around power. The “power” to say no, and so on. Earlier, we mentioned how UBI gives workers power outside firms, while codetermination decentralizes power within firms. Though a national mandate to place worker representatives on company boards sounds politically far-fetched, Germany has had just such a system in place since 1976.

By giving workers voting rights in company decisions, codetermination places a check on the forces of short-termism plaguing the American corporate landscape since the 1970’s. And at no cost.

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Empirical evaluations of German codetermination are yet to reach consensus, but find generally encouraging results. Across the spectrum of studies, most (but not all) find positive gains in productivity, a decrease in share buybacks, improved working conditions, and less unequal distribution of rents. Less positive findings include slight declines in profitability rates and stock prices.

The German board structure differs from that of the US. Germany has two boards, supervisory and executive, while the US corporate model only has one. Nevertheless, plans exist that adapt the German model to the US structure, notably reducing the required representation from 50% of the German supervisory board to 40% on US boards.

Shorter Working Weeks

At least since Marx, reducing working hours without reducing pay has been the heart of labor-driven reform. “The true realm of freedom,” he writes, “can blossom forth only with this realm of necessity as its basis. The shortening of the working-day is its basic perquisite.” The labor movement made this sentiment a reality through their fights to create the weekend, and 40-hour working weeks.

While average working hours have steadily decreased ever since, the rate began leveling off in the 1980’s:

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Around the same time, wage growth also began leveling off, while productivity continued its climb:

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Add to this the familiar graphs showing how income shares of the top 1%, corporate executive compensation, and stock buybacks have all rapidly increased since around this same time in the 80’s, and the case for shorter work weeks gains momentum.

Shortening the working week without decreasing pay lets workers share in the gains they’ve missed out on the past 50 years. In practice, this might be achieved in at least two ways. One possibility, likely through codetermination, is individual firms voting to decrease the workweek, perhaps by eliminating Fridays. Workers could still receive payment through some form of paid leave for Friday’s lost wages. This was the strategy used by Microsoft Japan when they tested 4-day work weeks, yielding promising results, both morally and economically.

Another, more decisive path is through federal legislation. Congress could amend the Fair Labor Standards act, and the President could sign into law a reduction of the workweek from 40 hours to 32 (by reducing the threshold where overtime pay begins from the former to the latter).

Social Wealth Fund

A social wealth fund is a collectively owned investment portfolio. Every American receives one share of ownership, and so receives a universal basic dividend (UBD). As the portfolio value increases, so does the dividend payment.

The fund can grow by accumulating assets (stocks, bonds, real estate), levying taxes on land, capital, or natural resources (as Alaska’s Permanent Fund does), or monetary seigniorage (where the Federal Reserve creates money to purchase assets).

A proposal was put forward by the People’s Policy Project. In their projection, the UBD is set at 4% of the five-year moving average of the fund’s market value. Assuming a $10 trillion average - in line with the proposals projections - the UBD would yield between $1,000 - $2,000 annually per person, depending on specifics.

As such, social wealth funds, while excellent strategies to democratize investment in the economy’s capital stock, cannot yet provide enough income to meaningfully displace UBI or similar proposals.

Next Steps: Modernized Negative Income Tax

But for all the promise of UBI, there is no denying the political barriers to enacting a program that requires upwards of $3 trillion in funding. Without engaging with the realities of our political climate, this may all amount to nothing more than howling in the wind. Some consider advocating for a direct leap from where we are today into a fully funded UBI a hopeless endeavor, a “nonrealist political philosophy” that’s “disjoined from real politics.”

Accordingly, we may consider a modernized negative income tax as a strategy sharing the sentiments behind UBI, while remaining well within the boundaries of economic and political viability.

By “modernized NIT”, I mean an unconditional NIT paid out to all individuals below an income threshold set above the poverty line, with a low phaseout rate, funded by progressive taxation, using the latest digital technologies to minimize bureaucracy, that complements rather than replaces existing and future social programs, made available at a minimum of monthly installments.

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For example, Wiederspan, Rhodes, & Shaefer (2015) estimate the cost for a NIT with an income floor set 33% above the poverty line, a phaseout tax rate of 33%, and thus a breakeven point at 403% of the poverty line at $635 billion, annually.

Using 2019 numbers, this translates into an income threshold of $16,611, providing benefits until citizens earn above $50,335. Every additional dollar one earns from $0 up to the $50,334th dollar, one loses $0.33 of NIT benefits. Their cost of $635 is given in 2007 dollars. Adjusting to 2020 dollars yields a cost of $791 billion.

A significant portion of the cost could be covered by folding existing means-tested programs that NIT makes redundant. These might include the earned income tax credit ($59 billion), supplemental security income ($58 billion), temporary assistance for needy families ($16.7 billion), and the supplemental nutrition assistance program ($64 billion). Together, reallocating these revenues into funding the modernized NIT covers $198 billion, annually.

On the subject of reforming existing federal expenditures, we might revisit the $540 billion spent (in 2013 dollars) on tax programs (tax credits, deductions, exclusions, exemptions, deferrals, and reduced rates) that overwhelmingly benefit the highest tiers of the wealth distribution. At the least, this could mean eliminating the home mortgage interest deduction and the real estate tax deduction, freeing up at least $89 billion annually.

We could fund the remaining $504 billion by any number of progressive tax combinations. Perhaps the simplest method would be to update the income tax conventionally used to fund NIT, making it more progressive by applying it to capital as well as labor. We could do so by phasing in a version of the national income tax proposed by economists Gabriel Zucman and Emmanuel Saez (2019).

They estimate a 6% flat rate nation income tax applied to both capital and labor income with no deductions would raise $1.2 trillion, annually. We could phase in this income tax, beginning at the breakeven point where NIT benefits subside (in this example, $50,335). Using the 2018 income distribution, this tax would apply to over 60.1% of households and still the majority of income earned in the economy. A top rate of 3-4% would likely be sufficient to fund the entire remainder of the modernized NIT.

Alternatively, a combination of a financial transaction tax, carbon tax, wealth tax, and raising the effective corporate tax rate could comfortably fund the remaining $437 billion, with minor deficit spending available for discrepancies.

Conclusions

Basic income (BI) - whether UBI, modernized NIT, or non-universal basic income with a high-level phaseout rate -  is one of the most important cultural conversations of the early 21st century. Considered alongside something like codetermination, we could structurally redesign socioeconomic dynamics to birth a new system from within the old.

There are things we know about the human condition that are yet to be made part of our social systems. We may not know how much happiness money can buy, but poverty certainly buys misery. Misery and poverty create their own gravitational culture that traps people inside. Through the pull of these invisible forces, poverty begets more poverty.

BI could eviscerate the deflationary, inward-pulling culture of poverty. But as I have argued elsewhere, BI is about more than poverty. It’s about redesigning the socioeconomic forces that guide human development.

Unconditional income is an opportunity to decommodify our lives. The more money we unconditionally receive, the more accessible it becomes to shift ourselves towards the projects, actions, and behaviors - ways of living - that we accumulate money for. These ways of living are qualitatively different, in that they are for themselves, rather than for money.  

As anxieties over income that pervade most of our ways of living recede, our social institutions would reconstitute themselves. How might education evolve if most students weren’t preoccupied with securing a high-paying job? How might work evolve if we were more interested in the products of our labor than the paychecks we receive?

The speculations at hand are intoxicating. But as with all intoxication, the process of integration requires thoughtful diligence. The work of translating basic income from wishful vapors into a real policy option requires evaluative rigor.

Towards that end, I hope I’ve done less to convince you of my own opinions, than provoked you to develop your own.

UBI Reading List

Here’s a selection of some of the more interesting reads I’ve collected about basic income. Both positive and negative perspectives are mixed in.

Essays

Papers

Books

I’d like to thank Evan Kasakove for providing feedback and helping edit this piece.