A Guaranteed Annual Income Will Not Work

Ken Collier is a retired professor of social work, social policy, and community studies, now living in Red Deer, Alberta, Canada.  He began reading MR in 1959 and is a long-time MR Associate. See the reply by Stephan Fortunato Jr.

In “The Imperative of an International Guaranteed Income” (Monthly Review, April 2007) Stephen Fortunato Jr. presents a pretty good outline of guaranteed annual income (GAI) issues and how they might apply on an international scale. As a Marxist, I take the view that a GAI won’t work.

In England in 1795, the parish of Speenhamland provided all people with income based on the price of a loaf of bread. Neighboring parishes and towns followed suit. Within months, employers merely subtracted that amount from their workers’ pay. Why should employers pay a decent wage when the government provided basic necessities for them? By the end of two years, the Speenhamland project was ditched. All later GAI projects in Europe, North America, Australia, and New Zealand met the same fate.

GAI is the revenue side of the equation for individuals. The expense side is not dealt with. Unless there is guaranteed (that is, capped) annual rent, interest, transportation costs, and so forth, business owners just jack up their prices to rake off the increased, guaranteed government largess. As examples, seniors in the United States, Canada, and elsewhere get pensions, either universally or for certain qualifying categories. Each time the pension goes up, landlords typically raise the rent, grocers raise their prices—even cities raise transit fares for seniors.

Karl Marx and Frederich Engels proposed a classless, socialist society in which the rule would be “from each according to his abilities, to each according to his needs.” That kind of society rests on the state’s capacity to control or administer both the living costs for individuals and families and the incomes to pay for those costs. The Soviet Union, for all its problems, placed every citizen over the age of eighteen on a basic salary and set prices, rents, and so forth through planning offices—effectively a GAI. Capitalist societies will not tolerate such state intervention, especially on the cost (business) side—even less so now that neoliberal erosion of state capacity is so deep.