The
Tax Justice Network (www.taxjustice.net)
thinks that world poverty
can be effectively tackled by reforming the international system of
taxing profits so as to eliminate tax havens and tax dodging – “profit laundering”
as they aptly call it – by capitalist
corporations.
This
would make no essential difference. World poverty is not caused by
corporations behaving badly. Their “bad”
behaviour as identified and described by the Tax Justice Network is
not bad from a capitalist point of view. It is normal, and in fact it
is not possible to alter it – either by
legislation or by appealing to the “morality”
or “ethics”
of corporate leaders. It’s the way the
capitalist profit system works and can only work. As long as you’ve
got capitalism, in the famous – or
infamous – phrase, there is no
alternative. No alternative, that is, to capitalist corporations
pursuing the maximisation of profits above all else. This is not a
matter of choice by corporate executives. It is not because they are
personally greedy or insensitive and deliberately choose to run their
corporations in this way. It’s the
reflection in their minds of the underlying logic of the system of
which in the end they – like the rest of
us in fact – are just cogs.
But
what is this underlying logic? What is capitalism?
Capitalism
Basically,
it’s the market system. Not just
markets – they existed before capitalism – but a whole economic system
where every
aspect of the production and distribution of wealth takes place via
the market, by means of a vast network of buyers and sellers. This
includes the buying and selling of labour –
or, more accurately, of labour-power, of a person’s
ability to work. In fact, capitalism is based on the existence of a
class of people whose only productive resource is our ability to work
in some capacity or other (whether so-called manual or so-called
intellectual) which we are obliged to sell on the labour market for a
wage or salary. But sell to whom? To those who own the other
resources essential to production: land and natural resources, and
mines, factories, transport, communications. In other words,
capitalism presupposes the division of society into two classes:
those who own the means of wealth production and those who don’t.
This is not a 50:50 division, more like a 5:95 one. So capitalism is
a class society. Like everything else under capitalism, the
relationship between these two classes is a market one, one of buying
and selling.
But
there’s more to this particular market
relationship than to that between other buyers and sellers. In other
cases, it is a simple exchange of something of one value for
something else of an equal value. Such an exchange of equal values is
also involved in the wage contract – we
get as our wage or a salary more or less the value of the
labour-power we are selling – but human
labour-power has the unique property of being able to create new
value. The difference between wages and salaries and the new value
added in the course of producing some good or service is the source
of profit, which it is the aim of every capitalist and every
capitalist enterprise to extract and maximise.
Some
of this profit is creamed off by fat cat directors and owners to
support an extravagant life-style but most of it is re-invested. If a
capitalist firm did not do this with a view to keeping its productive
methods up to date so as to be able to produce as cheaply as
possible, it would lose out in the battle of competition with its
rivals and, eventually, either go bankrupt or be taken over by one of
them. So, under the pressure of market competition, capitalist firms
are forced to accumulate most of their profits as more capital.
This
competitive struggle to make and accumulate profits as more and more
capital is the essence of capitalism. It’s
an impersonal economic mechanism that imposes itself on all
enterprises involved in producing for the market, whether they are
owned by individuals, corporations, the state or even by a workers’
co-operative. The logic of profit always ends by imposing itself,
even on governments, and there’s nothing
that can be done to stop this as long as capitalism lasts.
Taxes
Despite
what some ideologists of a “pure
capitalism” claim, capitalism cannot
exist without the existence also of a coercive state –
and never has. In fact, the state helped capitalism come into being,
as by establishing trading monopolies like the East India Company and
as by driving peasants off the land and into factories. But the state
produces nothing (unless it is itself involved in production, as it
sometimes has been) and so has to be financed by a levy on those who
possess wealth or who control the production of wealth, i.e. by
taxes. As the 19th century economist (and MP) David
Ricardo showed a long time ago, in the end the burden of taxation
falls on property and property-incomes such as rent and profit (any
taxes on wages are passed on to the employer). Taxes on profits of
course reduce the wealth of capitalists but they generally accept the
principle of paying taxes as they recognise the usefulness of the
services that the state provides them, not least the armed force to
back them up in conflicts with other capitalists supported by their
state over markets, trade routes, sources of raw materials and
investment outlets. But they are not masochists; they’ll
only pay the taxes they absolutely have to. And a whole business has
arisen to advise them how to minimise their tax burden.
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