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One example of an alternative approach to capitalism
is Universal Basic Income (UBI). UBI is a policy through which every member of
a population receives a payment from the State to subsidise living costs. UBI
differs from benefits systems as it is not means tested and everyone is entitled to it, regardless
of status or age (Caputo, 2012;
Woodbury, 2017). The idea behind UBI is to offset the inequalities created by
capitalism and helps to alleviate poverty among the poorest groups within a
population (Woodbury, 2017). Ensuring a population a steady income enables them
to access basic needs such as housing, food and utilities (Allahyar, 2014). UBI is
an alternative to capitalism as Government funds are
allocated to those within the population rather than being held
as profits. This system can help to provide a level of
social security that capitalism cannot otherwise sustain (Perkio, 2015; Wright,
2005). To fund UBI, Governments would likely have to increase taxation on the
wealthy. This is another anti-capitalist concept as it helps to reduce the inequalities
between the rich and poor within a society (Woodbury, 2017). UBI is more
beneficial to the less wealthy than current benefit schemes are. Unemployment
benefits can act as a disincentive to work, whilst UBI is unconditional so
won’t be removed once employment is found (Woodbury, 2017). This makes UBI a
good means of encouraging the unemployed to find work whilst further enabling
the self-employed to invest in themselves. Due to the lack of means testing,
UBI is cheaper for the government than current benefits systems (Allahyar, 2014).
Although UBI is a well-known concept, it is not commonplace around the world as
it has to be a
government led initiative. Society can provide pressure
in favour of UBI, but ultimately it must be implemented
by a government. One example of where UBI is currently in use is
the State of Alaska. 

 

The World under Capitalism

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Throughout the mid-20th Century and the 21st Century
capitalism has been the primary financial system around the world. Almost every
country is run by a capitalist government and each country competes
with one another in global capitalist markets. Capitalism is
based upon thriving free markets where goods and services can be
exchanged for money. This system enables companies to make vast profits through
low manufacturing costs and high selling prices. These profits should then in
theory trickle down the economy through workers’ wages, encouraging consumerism
and infinite growth. Capitalism first began to flourish in the
developed world in the decades after World War II, in the decades after the war
production of goods was high and unemployment rates were low in comparison to
recent times (Amin, 2014; Patnaik, 2015). However since this Golden Age of
capitalism, flaws in the system have begun to be exposed and many
groups are beginning to search for alternatives. Socialists argue that
capitalism is a system which helps a few individuals become
exceptionally wealthy whilst the average worker earns very little, creating
major inequality. Furthermore the economic crash in 2008 raised concerns
over the longevity of economic growth under the current capitalist
system (Bellofiore and Vertova, 2014; McDonough et al., 2010).

Capitalism is problematic as it creates a gulf in class between
the very wealthy and the average worker (Freeman et al., 2007). Major
corporations tend to dominate markets and are able to generate vast
profits, these are then distributed among a few individuals within
the company. Subsequently those working lower down in the company receive a far
smaller amount of money for their labours. This system makes it very easy for a
class of super-wealthy individuals to emerge. In capitalist economies
the bottom half of the economy own almost nothing (Patnaik, 2015). These
inequalities in earnings also raise the question of social justice.
Those who earn very little have far less social mobility, this concept means
that John Rawl’s principles of justice are not being observed under the
capitalist system (Freeman et al., 2007).

Similar to the wealth divide outlined above, another issue is that
the wealthy are able to exert power through their financial authority. Wealthy
business owners generally own the means of production required to make money
(Patnaik, 2015). This is problematic as the working classes simply own their
ability to work. As a result of this, the wealthy are able to dictate not only
who they employ but also the working conditions and wages of their
employees. Under this system the wealthy have the ability to govern a number
of individuals as they hold the means required to make money
(Hesmondhalgh and Meier, 2015).

Under a capitalist economy the environment tends to
be overlooked due to the constant desire to make a profit (Freeman et
al., 2007). This often leads to resources being exploited whilst the public are
the ones who often suffer from the issues pollution and climate change bring
about. On current trends of production it is predicted that
environmental catastrophe is imminent (Falasca-Zamponi, 2012; Speth,
2008). It is the environment, not growth, which must be prioritised in
order to run a sustainable economy.

 

The Alaskan Permanent Fund Dividend

UBI has not been widely adopted around the world, however it
is currently used in Alaska. Each resident receives an annual sum of
money from a fund created with profits made from the State’s oil and
mineral industries (Van Parijs, 2004). The Alaska Permanent Fund Dividend
(APFD) was created in 1976 after the discovery of the largest oil
field in North America, Prudhoe Bay (Goldsmith, 2002). This fund was
allowed to accumulate for 6 years before Alaskan
residents received their first payment in 1982 (Alaska Dividend Blog,
2018). The payment qualifies as UBI because the payment is
received regardless of age, income or social status and is
paid to any resident who has lived in Alaska for over 12 months (Hsieh,
2003). The APFD varies each year depending on the profits made in that year.
The APFD peaked at $3269 in 2008 however it is generally between $1000 and
$1500 (Alaska Dividend Blog, 2018). Although the payment value reflects the
success of the oil industry in Alaska, it is often capped
to ensure the longevity of the fund (Basic Income Earth
Network, 2016). The Alaskan government has recognised that oil is not a
sustainable source of income so have set up the permanent fund to ensure the
industry provides long-term benefits to Alaskans (APFC, 2018). The fund
was initially set up following pressure from the residents of Alaska.
In 1974 a $900 million fee was paid by the oil companies to the
Alaskan government in exchange for the rights to begin exploratory drilling in
the state (Goldsmith, 2002). Although the government said they had invested the
money in infrastructure, the Alaskan residents felt they had not benefitted
from the money and wanted change as they believed they were
entitled to some of the profits from the State’s oil industry
(Goldsmith, 2002; O’Brien and Olson, 1990).

In Alaska the APFD provides a valuable source of income, the
annual payment accounts for around 6% of annual household incomes (Goldsmith,
2002). Legislation dictates that at least 25% of the profits made through oil
be held in the APFD and this helps sustain the profits from the oil industry in
Alaska (APFC, 2018). UBI generally is a strongly anti-capitalist policy as it
removes power from the government and large corporations and helps to share
wealth with the population. The policy helps to divert funds away from the
government, meaning they have less money available to spend
and therefore less power to dictate the lives of the populace
(Goldsmith, 2002). The APFD in particular also counters the idea of social
injustice onset through capitalism. Under current capitalism social
injustice is usually brought about as firms exploit the environment for
resources leaving the population to suffer the negative externalities (Speth,
2008). Whereas in Alaska the APFD was set up to ensure that
the residents receive financial compensation for potential environmental issues
caused by the oil industry in Alaska.

Terrains of transformation

In order to create change in an already capitalist society there
are 3 key terrains of transformation. These are power, ownership and the state,
economy and civil society (Wright, 2010). All of these play a key role in
the implementation of UBI in Alaska. The first of the key drivers of
change is power. This can come in a number of forms, in the case of Alaska it
came through social power. The residents of Alaska came together to
protest the way in which the $900 million payment was spent by
the government (Goldsmith, 2002). This social movement
provided sufficient impetus that the Alaskan government felt a change
was necessary to prevent further unrest amongst the population.
Although it was social power which drove the change, it was also government
power which enabled the policy to be introduced. The public
themselves do not have the authority or means to set up the APFD so the government
were required to create the fund and implement the payments.

The second key terrain of transformation is ownership (Wright,
2010). Ownership is key to decide which groups have the rights to certain
resources and physical goods. Whilst giving value to physical goods is
often straight forward, it is more difficult to give value
to natural resources. Natural resources are often given a financial value in
the context of pollution, yet it remains hotly debated as to the true
value of the environment and which groups are entitled to the land.
This aspect played a particularly important role in the APFD being established.
The concept of the APFD is that the land and resources of Alaska have a monetary
value, and therefore this value should be shared. An
amendment was made to the Alaskan constitution that ensured the land
was equally owned by the government and the population (O’Brien and Olson,
1990). The APFD was only made possible by the agreement that the land in Alaska
has financial value and that each member of the state is equally entitled to a
share of the value. More broadly, the concept of UBI is dependent on Governments
deciding that the population are equally entitled to a share
of the nation’s wealth. UBI is only possible where the government gives
ownership to the people.

Thirdly, the state, economy and civil society are also key drivers
of change in the capitalist world (Wright, 2010). These three are key elements
of implementing a change in policy away from the current capitalist ideals
(Wright, 2003). The state provide the institutions which govern the
day to day actions of a society. This is the idea of hegemony and in order
to bring about change it is the institutional norms set out by the
government that must be altered (Wright, 2010). Secondly is the economy,
those in possession of the tools necessary to produce and distribute
goods are key in shaping a society. It is therefore necessary to
decrease the authority of these groups in order to drive
change. Thirdly, civil society is a key group when considering societal change.
As the largest group in a population, civil society provide the means
of enacting social change and are key in moving away from capitalism. In Alaska
all three of these elements played a role. In terms of the state, UBI is a
hybrid of both statism and socialism (Wright, 2010).
The initial driver of the policy was the society demanding change,
however the policy itself was implemented by the state. Moreover
under the terms of the APFD the land is owned by both the
government and the public, making the policy a prime example of a socialism and
statism hybrid.

Obstacles
to Transformation

There
are four key obstacles to transformation as outlined by Wright (Wright, 2010). These
are coercion, ideology and culture, institutional rules and material interests.
The first obstacle the APFD faced
was institutional rules, additional legislation
had to be written in order to
make the fund law in Alaska. This was not a major obstacle as the government
were willing to create the fund, however the specific
details of the policy had to be rigorously studied
before it became part of the State’s
constitution. In terms of ideology and culture, there was a
change required to set up the APFD.
Under the hegemony of capitalist governments it has become largely accepted by
the public that government money is
invested into infrastructure and services rather than going
directly to the people. Therefore to implement the APFD it was necessary to slightly alter the
institutional ideology of the public. This again was a small obstacle as the
population were the ones who pushed for the change and very few people would
argue against receiving essentially free money from the Government. Coercion
and material interests were not significant obstacles in the establishment of the APFD. As this policy was agreed upon between the government and
the population, coercion was not required as both parties were in agreement.
Furthermore, material interests did not pose as an obstacle as under the APFD policy the land was given as an asset
to the population. Therefore this policy added to the material interests of the
populace. Another obstacle to change in a capitalist system is that those with
the money often possess the power
to make the changes (Wright, 2010). This often prevents change as the wealthy
are less likely to want change as it may impact their wealth and authority.
Although this was overcome in Alaska, it is likely to be a major reason who UBI is not a more
global policy, the wealthy are resistant to potentially jeopardising their
position in society.

 

Strategies of Transformation

Although there are three key strategies of transformation, as set
out by Erik Olin Wright, the APFD clearly falls under one of these
strategies. The APFD in Alaska was brought about through
Symbiotic Metamorphosis. Symbiotic metamorphosis is the concept
that change occurs through amicable relationships between the government and
the people through which policy evolves to suit both parties (Wright, 2010).
The system of governance in Alaska is unique within the United States. As
Alaska only became a state in 1959, its constitution is relatively forward
thinking and the state is fairly libertarian (Anderson, 2002). Subsequently,
the Alaskan constitution has been written to incorporate citizens’
initiatives and referendums, this makes it easier to legislate in favour of the
will of the people (Anderson, 2002). It is this the fine print within the
constitution that makes the APFD possible in Alaska and
also explains why it is the only US state currently operating a system of
UBI. It was through discussions between the Alaskan people and the government
that led to the passing of the legislation. Although there was some pressure
applied by the Alaskans, it did
not constitute a ruptural transformation nor an interstitial
metamorphosis. UBI in general would have to be established symbiotic
metamorphosis as the policy comes from the government
and. Ruptural transformation and interstitial metamorphosis by nature
would not lead to UBI being set up as these modes of transformation aim to
be independent of the government (Wright, 2010).

 

Successes and Failures of the APFD

The APFD has been successful in Alaska and the
policy remains in place over 30 years since its inception. The longevity
of the fund suggests satisfaction with the system and that it is being
managed effectively. It is estimated that over $21 billion
dollars have been diverted into the fund which would otherwise have
gone to the Government (Wilderquist, 2017). This is a major success as
this reduces the financial power of the government and gives individuals a
greater say in how the State’s revenue is spent. Despite this, it is
estimated that only around 10% of oil profits enter the fund, rather than
the 25% set out in the constitution. (Goldsmith, 2002). This is a clear breach
of the legislation and goes to show that ultimately the APFD is
dictated by the government and the public have little say in the amount of
money that enters the fund. Another arguable success of the APFD is
that personal income tax has been abolished in Alaska due to the vast
sums raised by the oil industry (Anderson, 2002). Whilst this is clearly
beneficial to the population of Alaska, it raises questions over the
states’ overdependence on oil, a largely unsustainable source of income.

 

Another potential problem with UBI is that the population may
spend the money rashly on unnecessary consumer goods and services. This is a
particular cause for concern with the APFD as it is
paid out at the beginning of the Holiday season in America, a time of high
consumerism (Goldsmith, 2010). This could limit how effective
the APFD is as residents would only experience a short
term benefit. However the APFD has largely been successful as
residents tend to save their money and invest it in more long
term projects, rather than impulse purchases. A survey in 1994 found that
over three quarters of residents saved at least half of their
dividend and used it to address existing debt (Goldsmith, 2010). Moreover
only around 1% of the population admitted to working less due to the UBI
payment (Goldsmith, 2010). This falls under permanent income hypothesis and is
a major success of the policy as it helps improve the long
term prosperity of the less wealthy.

 

Conclusion

UBI is a strong policy in terms of overcoming some of the issues
associated with contemporary capitalism. By nature it aims
to reduce the profits of the central government and helps to
distribute wealth among a population. The APFD is a prime example of
how UBI can be used effectively in the real world.
The APFD has been established to ensure that the
residents of Alaska receive long term benefits from the revenues
produced from oil in the State. This is an important policy as it gives
ownership of the land to the people and helps to limit the economic power of
the state and gives individuals greater financial security.

 

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