Ontario is planning to pilot a guaranteed minimum income program this spring. So far, the policy debates have centred largely on the practicality of GMI as it applies to low-income Canadians.

But with a systemic labour market shock creeping over the horizon, Ontario’s pilot may offer important insights into how developed economies might tackle the inevitable spread of automation.

Technology is transcending human labour. Automation has placed manual labour on a path to obsolescence, and as technology engulfs the entire economy, even specialized, knowledge-based labour will gradually be supplanted.

Given the advent of diverse technologies — from neural networks to autonomous cars — the notion that we can ‘retrain’ workers to adapt to the new economy is a fantasy. In every sector, established companies that employ tens of thousands will succumb to disruption from digital competitors that employ just dozens.

These technologies are unlocking immense productive efficiencies — but by eroding the intrinsic value of labour, they also will sap the purchasing power of consumers. This is the fatal flaw in the system: New products and services won’t spur growth if no one can buy them.

The economic woes of the working class do not reflect a failure in the creation of wealth, but a breakdown in the way we trade for goods and services. In order for individuals to participate in a capitalist economy in the first place, they must sell their labour. But in an economy where labour is intrinsically less valuable, corporations and their shareholders share an incentive to hoard cash rather than hire workers. Capital grows while consumer demand shrinks.

Indeed, from 2007 to 2015 cash holdings by American non-financial companies increased from approximately US$750 billion to nearly $1.7 trillion, and it’s no coincidence that Apple, Microsoft, Google, Cisco and Oracle claimed the largest cash reserves, holding a combined $500 billion in cash and cash equivalents.

The accumulation of cash, and the derivative concentration of wealth, isn’t just irrational. It’s a sign of a capitalist economy in a state of atrophy. The accumulation of cash, and the derivative concentration of wealth, isn’t just irrational. It’s a sign of a capitalist economy in a state of atrophy.

At its conceptual core, money is merely a mechanism to facilitate what we otherwise would call ‘barter’. Nobody needs money as a thing in itself. What we want is what money can buy — food, shelter, entertainment. This may seem obvious but it’s an essential philosophical distinction. Money is merely the go-between in the act of trade — the means, not the ends.

Understood in this way, the accumulation of cash, and the derivative concentration of wealth, isn’t just irrational. It’s a sign of a capitalist economy in a state of atrophy, rendering scarce the means through which we consume, notwithstanding our actual productive wealth as a society.

Demand, rather than production, will be the primary economic challenge of our time. Corporate tax cuts won’t help. Neither will deregulation, walls or tariffs. This new reality emerges not from poor trade policies or foreign antagonists, but from a structural shortage of demand in First World labour markets and an ever-declining equilibrium clearing rate for wages.

The only solution that looks viable now is the guaranteed minimum income.

As individuals, we have two key attributes within the broader framework of a capitalist economy: We possess some measure of intrinsic economic value, and we have economic wants and needs. We participate in an economy by monetizing our intrinsic economic value — we sell our labour, and we use the proceeds to purchase the goods we want and need. But when machines eliminate the demand for our labour, we have no inherent first-order mechanism through which to participate in the economy. We need some measure of liquidity to ensure continued demand in consumer markets, notwithstanding demand in labour markets.

The particulars of a guaranteed income regime will evolve with new technological realities (Bill Gates’ recent tax proposal is an interesting one). The goal here should not be to dissuade automation, but to normalize and expand the revenue governments collect from it.

The underlying framework for a guaranteed income program is financially and fiscally sensible, and the system has the potential to unlock a new era of growth in the developed world. It would allow individuals to consume freely, and would require relatively little bureaucratic oversight.

Technology holds the potential to increase our productive capacities exponentially. Ensuring a minimal demand benchmark in the economy will be vital, if only to blunt the economic and subsequent political impact of the mass labour disruptions we can see already on the horizon.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.