A Critical Examination of Universal Basic Income: Its Limits, Potential, and Impact on an AI-Driven Economy

Universal Basic Income (UBI) has re-emerged as a central topic in contemporary economic and policy discourse, particularly in response to rising inequality, labour market instability, and the rapid advancement of artificial intelligence. While often framed as a simple mechanism of unconditional cash transfers, UBI introduces complex structural, economic, and philosophical questions that extend far beyond welfare reform. This paper provides a critical examination of UBI, exploring its limits, potential, and broader implications within an AI-driven economy. Drawing on established economic theory and empirical studies, including work by Milton Friedman, Thomas Piketty, and Guy Standing, the analysis evaluates key arguments both in favour of and against UBI. These include its capacity to reduce poverty, improve well-being, and simplify welfare systems, alongside concerns regarding fiscal sustainability, labour participation, inflation, and long-term economic viability. The study situates UBI within the context of technological transformation, particularly the increasing role of artificial intelligence in reshaping labour markets and economic production. As automation challenges the traditional link between work and income, UBI is examined as both a stabilising policy mechanism and a potential catalyst for systemic change. Beyond economics, this paper engages with the human dimensions of UBI, including its impact on identity, purpose, and social structure. It argues that UBI represents not only a policy proposal, but a broader reconfiguration of how societies define value and contribution in an increasingly automated world. By integrating economic, technological, and philosophical perspectives, this work contributes to ongoing interdisciplinary discussions on the future of work and the evolving relationship between humans and intelligent systems.