Forum Replies Created
DJP: You are right to say that “the world doesn’t split into nice defined geographical areas where everyone within them form a nice distinct group that share the same interests, identities or desires.” I don’t know of any state that doesn’t contain regional and sectional differences among its population, though there may be one or two. But people sharing the same identities don’t necessarily have the one identity. Most groups I know of have more than one, and some, multiple identities. They are not necessarily mutually exclusive. One identity doesn’t exclude the other. In Australia for example, there are several groups who identify themselves in terms of a foreign country like Vietnam and strongly defend their Vietnamese cultural identity and their Vietnamese kinship group. Many also identify as Catholics. But they also identify themselves as Australian citizens. The unity of nations is defined by what they have in common as against other groups, and not by their internal homogeneity.
I think because you have made much of the separation between the state and its subjects, you may have missed the fact that many workers identify with a nation state as citizens, not as mere subjects. This has occurred where they have been integrated (incorporated, assimilated) into the dominant political institutions and its system of rules, as has happened I think in most advanced capitalist countries with broadly democratic political systems. Where I live, workers generally support their dominant political institutions (representative government etc). Their class identity, ethnic identity, religious identity, has not prevented such workers from seeing the place they live in as in some sense “their country (or nation)”. Class identity etc. did not prevent English, French or German workers from seeing Britain, France and Germany as in some sense “their country” in World Wars I and II. Tragic it surely was, but it’s an historical fact.
The history of the twentieth century shows that national identity has been politically dominant and class identity has been secondary, and that working class consciousness (eg, TU collectivism) is secondary to other kinds of consciousness. Which is not to say that this must always be the case, or that we shouldn’t strive to bring about a truly world-wide society with no nations or national boundaries, as implied in your position that “the working people have no country.” But it is an ideal yet to be realized, and therefore has limited relevance to what’s going on now in Ukraine where what you call “illusory ideas” of nationalism are very much real in the minds of those who hold them and thus help explain why Ukrainian workers, including many ethnic Russians, fight in the name of “their country” against a primordial nationalist like Putin.
PS. Thanks for the reference to gegen-kapital. It’s very long and I haven’t had time to read it yet.
AJJ: You refer to the current war in Ukraine as a “capitalist conflict”. How is that so? It’s not enough to say that Putin is a capitalist, or that he acts on the orders of capitalists or that he acts in the interest of a capitalist class. You would have to show that he invaded Ukraine because he is a capitalist … etc. Like showing that he wants to secure markets or trade routes or gain access to scarce resources, all in the pursuit of profit. But where is the evidence for this? There is (unusually) almost universal agreement that Putin invaded Ukraine in order to incorporate it within the Russian nation state just as it was in Imperial Russia. What’s that got to do with Russian capitalism? Putin believes that Ukrainians and Russians have a common cultural identity and therefore have, or should have, a common state identity. He blames Lenin for having given Ukraine the semblance of a separate nation state. Putin is an extreme Russian nationalist in the tradition of nineteenth century reactionary Slavophils (he reminds me a bit of Nicholas I who saw himself as the saviour of Christian communities under Ottoman rule and ended up triggering a war. Just like Putin seeing himself as the saviour of ethnic Russians in Ukraine).
You ask “Who cares which parasitic class claims to own which patch of dirt?” I imagine the Ukraine workers fighting against Russians don’t give a damn. And I can’t imagine that they are consciously fighting for what you call “the nation state of Ukraine”. Surely they are fighting to defend their own “patch of dirt” because it’s where they live, in their houses, where their children go to school, where their parents, aunties and uncles and friends live, and like all normal people they don’t like someone coming along and blowing it all up and threatening to rule over them rather than themselves deciding who they want to rule. Your advice that Ukraine workers should “flee to safety” rather than resist the invaders would I guess be greeted with derision if you were to say it directly to Ukrainian workers. The idea that they would all be better off advocating socialist ideas is too silly for words, particularly coming from the SPGB which has been advocating socialist ideas for more than a century without apparent effect.
DJP: You suggest that when Ukrainian workers defend their patch of dirt (as above), what they are really doing is “defending the state”. Given your particular theory of the state, I guess that’s a fair assumption. But do you believe that this is what Ukrainian workers defending their patch actually believe? Or even think about? As an advocate “of clear- headed analysis”
I fail to see that your clear separation of the Ukrainian state and its subjects advances understanding of the reasons why Ukrainian workers fight Russian invaders or what motivates them to do so. Surely one can agree with the proposition that the state in capitalist Ukraine is a capitalist state and also believe in defending one’s “patch of dirt”. And what if the workers’ defence doesn’t advance the movement for socialism? It doesn’t advance the movement for liberalism or any other ism either, because that’s not what workers are fighting for.
Robbo says that “Just because a worker says something is in her interest does not make it so. It is called false consciousness.”
When someone says that, the first thing to ask is “what then is true consciousness?” Robbo’s answer can only be – a socialist (SPGB) consciousness. This effectively makes what workers interests ought to be displace their actual empirical interests as they profess them. In making judgments about the rights and wrongs of Ukrainian workers fighting Russian invaders, like Andrew Kliman I’ll listen to what they say, not what anyone believes they ought to say.
If you (DJP, ALB) find the “right to self-determination an incoherent concept” why not change it to “the self determination of peoples”? The Palestinians do not have a nation but they are surely speaking coherently when they call for the self determination of the Palestinian people, and it’s not hard to figure out what they mean. When Ukrainians call for “self-determination” they are merely asserting their right to live in a place which they regard as their own, and having the right to choose their own government rather than having one imposed on them by Putin. Arguments about contradictions in the use of terms like nation and nationalism and national self-determination are arguments about the use of concepts and provide no serious foothold of criticism when making practical judgements about the conflict in Ukraine. Save a few minor disagreements, overall I think Andrew Kliman’s piece in MHI is very good.
DJP, in your comments on Andrew Kliman’s piece in MHI, you say: “My view is that it is in the interests of the people living in Ukraine that the conflict stop right away by whatever means necessary even if this means the Ukrainian state losing territory and influence”.
You represent this as a socialist view. But how is it different from a pacifist view?
Me: “the unstated premise here is that labour power always exchanges at its value (the so-called Law of Value)”
ALB: “In challenging this you are challenging a key concept in Marxian economics – that labour power is a commodity whose price reflects its value”.
What is this “challenge”, and with respect to what exactly? My post (#224800) where the above sentence is found doesn’t challenge anything you said, in fact it implies agreement. I have always argued that the application of the LTV to explain how a change in tax can trigger a proportionate change in money wages via the operation of the law of value and the collective action of workers such that wages are restored to their real pre-tax level, in which case the tax burden initially on the worker is transferred to the capitalist, is a coherent position. While there are caveats I would want to add to that, I believe it is deducible from Marx’s LTV in relation to real wage determination. But if you read again what follows immediately from what I said on that para. you will see that the same argument cannot logically support the standard SP claim that “in the long run taxes are a burden on the capitalist only”. That is simply not true in relation to the full amount of tax which workers are obliged to pay to the tax people. I gave the example of a weekly wage of $1700 which bears tax of $400. You haven’t explained yet how it is that the $400 which comes out of the worker’s pay and is thus a burden on him, eventually becomes a burden on the capitalist only. It’s a real mystery, which SPer’s dispose of by treating the worker’s gross wage, from which the worker’s tax obligation is paid, as “theoretical” (“A to Z of Socialism”) which makes his gross wage and the tax paid from it appear unreal, thus removing them from view.
In saying that the value of labour power is only what is “necessary” to keep a human alive, I was considering the 1909 article you posted – “Where Labor is Robbed” – where that word is used. I said that the “necessary” cost of reproducing workers’ labour power was equated to the “subsistence” cost, around which “wages always hover”. So I took the view that the author held the subsistence theory of wages. However, I am aware that talking of “necessary costs” within a Marxist context can carry an expanded meaning, by including an historical/social/moral component in addition to the physiological minimum subsistence level. And given the significance in Marx’s model of the role of the reserve army of labour in pushing the price of labour power down towards its value, then the long-run equilibrium price of labour power or its “necessary cost” will be fairly near to its value. This is Marx’s model of wage determination in the context of early capitalism, and I see it as broadly agreeing with your statement that “(labour power) tends to (exchange) at its value in the long run etc. etc.” But since Marx’s time there has been a massive increase in real wages (at least regarding countries of advanced capitalism) and as a result the price of labour power need no longer correspond with its value. The possibility ought at least to be considered. But this cannot be done if the value of labour power is defined in terms of the level of real wages. It reduces Marx’s theory of wages to a tautology.
I have no interest in entering into a long debate on Marx’s theory of wages nor the LTV which has always raised problematic issues given the unique character of the commodity labour power. And in any case, in this debate on tax, I don’t see a need for it. You have already shown how by quoting from a non-Marxian economist in Investopedia who notes the obvious link between wage levels and the cost of living. Nothing unusual there! And no need to talk about the value of labour-power. You can’t say anything definitive about the relationship between wages, taxes and the cost of living without using money quantities. So let me repeat my numbers: an average worker on $1700 pw pays $400 in tax, leaving $1300 as the net wage. Question: Is $1300 pw enough to cover his cost of living, commensurate with social norms of what it means to live in modest comfort in a modern civilized capitalist state? Answer: Yes. So how is it that the $400 becomes a burden only on the capitalist?
I am still hoping that you can tell me why you think that workers “just don’t get it” (the SP position on tax). The answer given by Wez (#224814) is that workers are “manipulated and conditioned” by capitalist propaganda “within a bourgeois culture which is dedicated to normalizing the sick ideology of capitalism”. All I can say to that is that if true, it makes the workers look less than bright, if they can so easily be manipulated and conditioned. Not very encouraging of the prospects for socialism.
ALB, aren’t your first two paragraphs repeating the standard SP case of what happens when there is an increase or a decrease in the direct or indirect tax paid by the worker? You say “An increase or decrease in a worker’s income tax will affect the money wages paid”. Yes, a direct tax increase on income will lead to a reduced after-tax wage (net wage). You then say that this won’t necessarily affect what workers consume or their standard of living. To any ordinary person this will surely sound counter intuitive. Like, if disposable income is now reduced, wouldn’t this affect a worker’s level of consumption and therefore standard of living? Same thing if the indirect tax paid on consumer goods goes up, wouldn’t this also affect the level of consumption and standard of living, assuming no change in his money income?
Your answer is in the second paragraph where you say that the standard of living will not be permanently increased if direct or indirect taxes are reduced or removed, as money wages will eventually adjust to the decreased money cost of living. Of course the unstated premise here is that labour power always exchanges at its value (the so-called Law of Value), so that money wages must always adjust directly to changes in a tax impost, leaving the worker no better off. The same applies where tax is increased – it will eventually lead to a proportionate increase in the worker’s money wage. So in either case, an increase or a decrease in the tax eventually means a return to the status quo.
But what is the status quo here? It is a prevailing level of taxation in a tax structure which is the product of a long period of contestation and class struggle which has established a fairly stable consensus on what is fair and reasonable regarding individuals’ tax obligations. So when there is a change in tax, as in your example of a tax increase or a tax reduction, all wage negotiations and contestations occur within that context. Returning to the empirical example I gave before (#223996), the “prevailing level of taxation” is $400 from a gross wage of $1700. The tax increase of $33 pw is a change in the prevailing level. It is the increase of $33 which is the target of worker contestation, not the $400. And regarding that increase, the SP model as you have applied it (and let’s all remember, it is but a model!) makes sense. It may cry out for empirical evidence to back it up, but as far as a model goes it is logical and internally consistent. The problem is that the SP doesn’t make clear that when it talks about tax, it’s only talking about a change in tax, as in a situation where tax reform so-called is part of a public political debate. And so people will continue to wonder what you mean when you say that in the long run the worker’s tax falls only on the capitalist, because they will be thinking of their prevailing level of tax (in my example, $400) which certainly doesn’t fall upon the capitalist.
Re your last paras. The phrase ‘“necessary” cost of reproducing labour power’ was taken from the article you posted (#224691). It belongs to a subsistence theory of wages, as held by Ricardo and Marx whose views are often cited by SPers today to prove the case about taxes falling only on the capitalist. The subsistence theory of wages hardly has any traction in today’s world of advanced capitalism because average wages are well above a subsistence level. I’ve taken “subsistence” to mean what it meant to Marx and to the writer of the article and to Fitzgerald amongst others, as the minimum required to reproduce the aggregate of a worker’s mental and physical abilities exercised in the production of use values. Returning to my example of a real life contemporary wage level, yes, I am saying that the wage of $1700 pw is well above a subsistence level, which means that the tax people can take $400 out of it, leaving the worker with more than enough disposable income to maintain this modern worker’s labour power.
That’s it for me ALB. But I would like to ask you: given awareness of the failure of workers to understand the SP position on tax – I refer again to the FAQ “The Tax Argument” Parts 1 and 2 where the lead speaker says “workers just don’t get it” etc. – can you tell me why workers don’t get it? My answer is that workers don’t get it because the argument is unsound (illogical, misplaced context etc.) but for you it must be something else. Like, a problem of communication for example. So what is it in your view?
If, as ALB says, “our (SPGB) position on taxes and the working class was held by others..” I am wondering why I cannot find in the posted article any explicit reference to the SP central proposition – that which started this thread – that the burden of taxation falls on the capitalist only. In the penultimate paragraph, the writer says that the great majority of workers don’t pay tax because they have nothing to tax. John Keracher said the same thing twenty-six years later when I imagine worker’s real wages were higher than in 1909. Simple common sense I’d call it. Nothing about burdens or tax incidence there. The second sentence in that paragraph refers to a worker who possesses a “small property” (not many of those I think in 1909!) and so may pay tax in the form of rates. These taxes “enter into the cost of living, and, again, the necessary cost of living determines the wages.” He doesn’t define what he means by “the necessary cost” but his general statement in the first paragraph makes it fairly clear: “wages always hover about the cost of subsistence”. So the necessary cost is the cost of reproducing labour power just sufficient to ensure that the “(employer’s) wage slave is in working condition”. Just like the farmer’s horse that needs hay. So a rational capitalist must increase the worker’s wage to cover the tax impost which has reduced his wage below the level where his labour power can be reproduced. What capitalist is going to kill the goose that lays the golden egg? So in the case of the worker who pays rates, likewise the worker who has to pay rent, the cost of housing is usually included in official measures of standard of living. Fair enough.
But what if the “necessary” cost of reproducing labour power is well below the average wage, as it is in most countries of advanced capitalism today? Marx suggested it could be because of an historical/social/moral component in determining the cost of re/production of labour power. Which makes labour power an exception to the “law of value”. If the worker’s wage is set well above the “necessary cost” of reproducing labour power, then the State can take a chunk out of the worker’s wage but not so big a chunk obviously that the after- tax wage is reduced to bare subsistence level. Since the State doesn’t produce any wealth or income from its own activities it can only get funds to pay for what it does from those who do receive income and/or own wealth. So the worker’s income is taxed, the capitalist’s income is taxed, the landowner’s income is taxed, the financier’s income is taxed, all bar the worker’s tax coming out of profits, rent and interest, the money equivalents of surplus value. But the worker’s tax (income tax) comes out of his/her wages which are paid out of variable capital, and they are not transferred or redistributed to fall as a burden on the capitalist.
I’ve just been reading a piece by Jack Fitzgerald, published in 1904, called The Bogey of the Taxes. It reads very well despite being written 117 years ago. Again, I can’t find anything in it which suggests that the burden of taxation falls upon the capitalist only. Fitzgerald’s argument seems to be that tax imposts (he’s talking about a tax on consumption goods)
do not have a determinate relationship to prices. He uses empirical evidence to make his case. Eg: “articles that are easily produced are often taxed without affecting the retail price at all, as shown in the taxes on beer, tea and spirits”. And “when duty was removed the wholesale price of corn rose”. What I found significant is that Fitzgerald’s argument at heart is that workers should forget about taxes because whether high or low, they have no effect on the worker’s wage because “subsistence is all that upon average he obtains”. The upshot of all this is that the tax issue obscures the only real issue that matters, which is that while the worker produces all the wealth in existence, he only gets a small share of it – the rock-bottom socialist argument. Forget so-called tax robbery, this is the real robbery, so “tax reform” is not something that workers should concern themselves with. This is much the same as the conclusion in the posted article “Where Labor is Robbed” (last para). And when I listened to Parts 1and 2 of the FAQ on taxation, I began to think that this was the main point being made. One of the participants suggested that if workers get concerned about the inequities or whatever of the tax system, they are prone to believe that they “have a stake in the system”. But according to him, workers don’t have a stake in the system. OK, I can accept all that, but why stick with a crappy theory about tax burdens falling only on the capitalist, using a blinkered reading of Marx’s LTV, when it’s unnecessary? You already have an appropriate response to tax reform etc. under the SP’s common policy on reforms and reformism. Why build a sound socialist political strategy on bad theory? I guess I’ll never understand it.
When I read the comments here by PJS and ALB I think at last I can understand what Wittgenstein was getting at when he said that the meaning of a word is given in its use in a particular “language game” – a human rule -governed activity integrated with social behavior which is context dependent and purposeful. It’s clear that SPers and I are in different “language games” and so our opposing arguments, and the words we use, pass “like ships in the night.” Take for example ALB on income tax deducted at source as in any PAYE scheme: “Workers can’t even be said to pay that, let alone it being a burden on them. It doesn’t come out of their pocket. They don’t even see the money. It is paid by the employer direct to the tax people.”
For Marxists who put so much store on emphasizing the difference between appearance and reality, I find this very odd. Since when does “seeing the money” mean that money belongs to you only if you can see it – when it’s already in your hand so to speak? The reason that workers don’t see the money is, as ALB says, because “it is paid by the employer directly to the tax people”. But that doesn’t make it the employer’s money. The employer’s money pays the employer’s tax – company tax, profits tax, payroll tax etc.- not the worker’s tax. Here we can see the confusion in conflating different meanings of the word “pay”. There is pay(i), a verb, which means to give money due for a debt incurred, like eg. the debt the worker owes to the tax office; and pay(ii) a verb, which means to pass on or transfer a money payment from debtor to creditor via a third party, like when an employer passes on the employee’s tax to the tax office.
Perhaps I can make my position clearer by referring to two examples, similar but different to the tax business. When I worked for a while in a government department, my union dues, payable each fortnight, were paid directly to the union by the department (my employer). I didn’t see this payment. It was shown on my fortnightly pay slip, along with my tax deduction which I also didn’t see. Does this mean that my union dues were not actually paid by me? Certainly the union never thought so: when I left I received a notice from them asking where my dues were (they hadn’t caught up with my change of job).
Second example: I once worked with a guy who had been through a bitter divorce. As a result, he was ordered by the court to pay maintenance to his two children. For a while he succeeded in avoiding this, but the state eventually caught up with him and then ordered his employer to garnishee his wages to cover the amount he had to pay to his former partner. Again, the money payable under the garnishee order was taken directly from his pay, same as his tax. He never “saw” either. So, applying SP logic, does that mean that in fact he did not pay maintenance to his family? Of course he did. The money was taken directly from his wages. It was his money.
The anecdotal evidence cited by PLS shows that a business pays its workers’ wages on one day of the week and sends money off to the tax office on another. But that tells us nothing about the source of the money that is paid on different days to different people. The source surely is the same; it’s the workers’ wages. The employer pays the workers’ tax out of the workers’ gross wage, and pays what’s left – the net wage or take-home pay – to the worker on pay day. There is no rule saying that these two payments must be made by the employer on the same day from the same pot of money surely? Listening to the participants in the SP’s FAQ The Tax Argument (Pt.1) responding to PLS’s question left me feeling that they saw the two day/two pot theory of employer payments as “proof” that the burden of tax falls upon the capitalist. I haven’t yet listened to Part 2.
ALB doesn’t see the problem with the $400 I referred to in my example of tax paid by the worker which, in my view, is a burden upon the worker and not upon the capitalist. Whether or not the $400 is reflected in the level of wages is not part of the “problem” I was referring to. As the $400 would become state revenue it would probably end up being part of the income of an unproductive worker, like a bureaucrat or whatever, whose income would also be taxed just as it was for the worker who paid the initial $400 to the tax office. The $400 considered as a direct money payment like council tax or whatever may indeed enter into the reproduction cost of labour power. OK, but I wasn’t discussing that.
What does “burden” mean in a discourse on taxation? Reading the SPGB position (from the FAQ webpage) I learn that “In the long run, taxes are a burden on the capitalist class only”. So what I logically infer from this is that taxes are not a burden on the working class. So I then reasonably assume that, according to the SP, the workers don’t actually “pay” income tax because it is reasonable for people to think that if you actually “pay” for something you bear the cost (the burden). But ALB says that this is not the SP case. So what I now infer is that although workers do indeed pay tax, the amount of tax they pay is – in the long run – passed on or transferred to the capitalist, which then means that it is the capitalist only who bears the burden of tax initially paid by the worker. This formulation does agree with the conventional meanings given to tax burden or tax incidence, which can be read in any one of a number of dictionaries of economics or, as ALB has indicated, from Wikipedia.
Now when SPers unpack this formulation to show how valid it is, I have noticed that they always use the example of a change in tax, like a tax increase or a tax cut – which is the sort of thing at the centre of so-called “tax reform” by the state. In that context, the SP position is coherent because it adverts to two factors to explain why, say, a new tax impost on workers’ wages will eventually be transferred to the capitalist: the operation of the Marxist “law of value”; and the effect of collective action of workers via TUs to force the capitalist employer to increase their money wages . The successful outcome (never automatically guaranteed of course) is that the workers net wage after the new impost returns to its pre- impost level and real wages therefore are restored (assuming no price increases in the meantime). And the capitalist now bears the burden of the tax increase that initially was imposed upon the worker. I have no problem with that. But hang on – what about the bulk of the tax I regularly pay to the state? That hasn’t changed. Like, where I live, average FT weekly earnings are around $1,700 and the average tax (at 24%) on that would be around $400. A tax increase from 24% to say 25.5% would raise my weekly tax burden by around $33. Now, as explained, the typical SP response to this tax increase would be to say that ultimately or in the long run, the burden of that $33 would fall upon the capitalist. Accepting the major assumptions behind this reasoning, I agree. But what about other $400? This hasn’t been passed on to anyone, so the burden of the workers tax doesn’t fall upon the capitalist.
I have never read any convincing answer to this question. Because any answer to it invariably must focus on the difference between gross and net income, most responses I have read treat (or are logically compelled to regard) gross income as something of a “mystery” or as “unreal”. Which of course it isn’t. So this response cannot resolve the problem of understanding what is meant when you say that “the burden of tax falls upon the capitalist”, when your average worker knows that it doesn’t. The upshot of all this is that we are bound to expect a response of incomprehension or failure to understand when workers respond to the SP position on tax. As some evidence for this, I recently listened to the SP’s FAQ The Tax Argument (Pt.1) where the lead speaker refers to the tax issue as a “well-worn trope” and says “workers just don’t get it, and when I try to explain it they still don’t get it. Or they see it as a technical curiosity with no wider significance, or more likely just glaze over. Has anybody found a good way to put this argument so that the workers do get it?’ Has anyone bothered to think that maybe workers don’t get it because the SP argument on tax defies common sense?
ALB, yes I have read Ricardo’s writing from Chapter 16 on taxation. I always feel a bit uneasy when, in answer to questions about the SP position on tax today, I am given remarks made by Ricardo in 1817, when no worker in the UK paid income tax and wages were at a minimum subsistence level (Ricardo was a Malthusian after all). Ricardo’s model is far removed from the reality of capitalist economies and their tax structures today. Because he strongly believed that wages and profits were always inversely related, then of course a tax on wages, because they could only be paid by the capitalist as part of the workers gross wage, will mean an equivalent fall in profits – effectively becoming a tax on profits. I can’t see how this helps answer my question above.
I’ve just seen the two quotes on your last post ALB. Bax and Quelch say that the workers “..have nothing wherewith to pay taxes” (because their wage on average is at subsistence level). John Keracher, the US Marxist, made much the same point in 1935 when he said that because workers’ wages were always at subsistence level, they can’t pay taxes because they don’t have the necessary money: “They could pay taxes if wages were just about double what they are at present” he said. This commonsense claim rests on the primary assumption that average wages are at minimum subsistence level, a view held by both Ricardo and Marx , but it doesn’t bear upon my question because average wages in all advanced capitalist societies today are well above subsistence level.
I think the MIA glossary statement is not too bad actually. It recognises that workers’ concern over tax levels is a genuine and justified concern. And this suggests to me that reducing tax inequality in capitalism is a feasible political aim for the working class. But crucially, it clearly implies that reducing income inequality under capitalism is not possible. For that, you would need socialism. Why can’t this be made the SPGB position, rather than persist with the abstruse and ill-defined views on taxation which you still hold?
AJ: Your quote from Marx 1847 is from the same source as mine, but I fail to see how it has any bearing on the SP position on tax which says that the burden of tax falls upon the capitalist and not upon the worker. Marx’s comments are directed against the Prussian state monarchy where in 1847 around 40% of tax was indirect (a tax on consumption goods) and only 29% was direct (a tax on income). In advanced capitalist states today, the position is more than reversed. Marx and Engels both took a strong line against any attempt by the state to alter the tax take by increasing the tax on consumption goods and lowering the tax on income, clearly because this would disadvantage the worker and the poor generally but give advantage to the capitalist. In Marx’s example wages would be reduced “if all taxes bearing on the working class were abolished root and branch.” That’s because the worker’s wage, being at a minimum, would have to cover the tax on workers’ consumption goods since the tax is included in the price of those goods (a tax on flour, a tax on bread, a tax on beer etc.) So in Marx’s hypothetical example, the removal of all these taxes would of course reduce the worker’s wage by the same amount he needed before to pay tax on his consumption goods. The employer’s profit would rise by the same amount (all other things being equal) because he now has lower labour costs. Marx’s alternative scenario is much more realistic: the employer now pays the worker’s tax directly to the state, so the employer now becomes a tax collector – what Marx refers to as “an alteration in the form of tax collecting.”
His profit levels remain the same and the worker’s real wage remains the same. But my question still is: what has any of this to do with SP position on tax? The only sense in which one can speak of a “burden” is the burden placed on the employer now that he has to collect the worker’s tax and pass it directly to the state.
I don’t have much to say about your other paras. AJ. You are looking at the tax issue arising from a change in tax where TU action can shift any tax increase on the worker onto the employer – as can happen. Of course, the employer can then shift it onto the consumer by raising prices, so the initial tax impact shifts from the worker to the capitalist to the consumer (who if poor may not have any protection, being outside the class struggle). In the long term tax ends up being borne by people who are least able to transfer it to another group or jurisdiction (the SP as far as I am aware sees this process of tax burden transfer in a limited way because it ends with the capitalist).
ALB: I am uncertain what you mean when you say “(I) have missed the key passage which states the situation from the point of view of what is now called Marxian Economics ..etc.” You cannot be referring to the source (MECW Vol. 6) used by myself and AJ, because no such passage can be found there. I didn’t know Marx had a “Law of Wages”. I know about the so-called “Iron Law of Wages” which as you know Marx rightly rubbished. Marx certainly had a theory of wages, which is derived from his Labour Theory of Value because the economic relation between capital and labour is an exchange relation. None of the old-time Marxist political economists (Dobb, Meek, Sweezy) refer to Marx’s “Law of Wages” as far as I know. I agree as you say that the price of labour power tends to reflect the money cost of creating and maintaining it, and if taxes are part of this cost then that would be reflected in the total money cost of wage goods. You then say that the taxes that workers pay are “passed on” to the employer and it is this that in effect constitutes the “burden” on employers. But this is to use “burden” in a completely different sense to how it is conventionally used in any discourse on tax, because there “burden” refers to the actual “imposition” of tax on the employer, not the mere “passing on” to the state. Your sense of burden on the capitalist is no burden at all, because he is merely a collector and passer-on of the tax paid by the worker out of the worker’s gross wage who continues to suffer the real burden of paying tax on his wages.
Re your provisos: 1 and 2 I agree with. On no. 3 I agree that taxes on capitalists come from surplus value as does all profit, rent and interest. But a tax on workers comes out of their wages, which are not part of surplus value. Unless of course you mean that workers pay all taxes because labour alone produces all wealth. But that is just a truism having no explanatory value IMO. As to the claim in the 1853 article re “the middle class man generally indemnifies himself..etc”. it is an anomalous statement I guess, but I thought Marx is referring to how the middle class man can transfer his own tax imposition by paying his employees less and so maintain his level of profits, or he can increase the price of the goods he sells. So he can “indemnify himself.” The worker however has no such luck, because he cannot transfer his tax imposition or burden on to anyone (except he may via the class struggle – but this is 1853 after all). Of course as ALB indicates, we need to add an “all other things being equal” caveat to that.
“The Socialist Party takes the uncommon, but very much the orthodox Marxist position that the ultimate burden of taxation, despite a few minor exceptions, falls upon the capitalist class.”
Well, I can agree about the “uncommon” bit, though “unique”
would be more accurate. On what evidence from Marx (or Engels) do you claim that the SP position on taxation is “orthodox Marxism?” Marx wrote very little on taxation. Most Marxist economists say little or nothing about Marx’s views on taxation. But what he did write – mainly in his journalism and letters – suggests a position at odds with the SP position. Take for example Marx writing on the Prussian monarchy in 1847: “The monarchy, like every other form of state, is a direct burden on the working class on the material side only in the form of taxes. Taxes are the existence of the state expressed in economic terms.” And here is Marx excoriating Whig finance policy in 1853: “…it lightens the burdens of the rich and increases the burdens of the poor. As to saying that the Income Tax does not effect the working man, it is a patent absurdity, for under our present social system of employer and employed, the middle class man generally indemnifies himself for additional taxation in diminished wages or increased prices.”
What these two examples indicate is that Marx acknowledged the importance of tax as a burden on the working class and the poor generally. And reading them in the wider context it is clear that Marx (and Engels) had a strong preference for direct over indirect taxation, largely for the reason that many do today: indirect taxation (on consumption) is inherently regressive, direct taxation (on income) is not. Despite the different tax landscape in Marx’s time compared to the present, the principles governing tax policy and debate are much the same. To say that the SP position on tax is “very much the orthodox Marxist position” is a nonsense.
L Bird says “Marx was a democrat”. No, Marx was not a democrat! At least, not in the same way we might say that J S Mill was a liberal, or Edmund Burke a conservative. To Marx, democracy defined a political state, conventionally associated with a democratic republic which he saw as the “logical form” of bourgeois rule. Beyond that, democracy was seen as a means (a “mere means” according to Engels) and not an end in itself. Regarding Marx’s socialism, democracy was a means for the proletariat to gain power.
As far as I know, there is nothing in Marx’s work where he explicitly states that socialism/communism will be a “democratic” society. Not in Critique of the Gotha Program where it might be expected to be found. There is no mention in CGP of democracy – neither in the lower phase nor the higher phase of socialism/communism.
Nor in Capital 1 where he talks about “a community of free individuals carrying on their work with the means of production held in common”. Since Marx identified democracy with a political state, and given that socialism would bring an end to state and politics of any kind, then it made sense for Marx not to call socialism a “democratic society”. I am not suggesting that Marx was anti-democratic. Far from it. I think he was committed to an ideal of direct democracy (best understood through his early works). But he never addressed the important procedural issues of what concrete forms of collective choice and decision making would apply in a socialist society. He didn’t provide recipes for the cookshops of the future.
It is not enough to call socialism “democratic social production”. The SPGB definition appropriately identifies property and purpose as central to an adequate definition: a socialist society holds economic resources in common (no-one owns) under democratic control, and production is for use, not profit. L Bird’s definition would better fit Britain’s early 20th century Guild Socialism than it would revolutionary socialism. Calling Marx a democrat would have him rising from his grave in Highgate cemetery.
Hi L B Neill
As someone living in Oz, but in NSW, I was very interested in your remarks on the Victorian Socialists and the recent Federal Election, where I see your candidates in the three seats contested each gained between 4 and 5 percent of votes cast. On a realist measure, this is a good result. But you say that those who voted for these candidates voted for socialism. I’ve just looked through VicSoc Federal Election policies and can find no reference whatever to socialism. There are policies re tax increases on the wealthy; nationalisation of mines and banks; aboriginal land rights; protection and support for asylum seekers; anti-racism; GBI for all; raise pensions; real climate action (100% renewables in 10 years); women’s rights; LGBTQI rights; free healthcare; increase funding for the national broadcaster (ABC); animal welfare, and more. This puts the Victorian Socialists in the Left of Labor spectrum, although many of its policies resonate with those of Labor and also the Greens. In the UK context, I guess these policies would be shared by many members of Momentum, although considering the structure of the Vic. Socialists perhaps a better comparison would be with the (now defunct) TUSC. Both were formed as alliances with existing left parties – in Australia, Socialist Alliance and Socialist Equality – and both have/had a strong TU component. Perhaps the only difference is the prominent “identity politics” element in the Vic Soc policy mix.
What I can’t understand is why you appear to identify your position as more or less consistent with the SPGB’s political aim of socialism. But they are light years apart. In the eyes of the SPGB, the Victorian Socialists is a reformist organisation. Reformism is the prime cardinal sin to the SPGB, and always has been. The SPGB would argue that the Victorian Socialists is a party supporting capitalism, albeit trying to make it kinder – which in the end serves the interests of capital, not the worker. You say that the workers who voted for your candidates in the recent election “intentionally, consciously deliberately” voted for socialism. In SPGB eyes, they were voting for capitalism. How do you square this with your obviously sincere and conscientious beliefs?
Sympo's original question as to what is "decisive" in the making of history (re Engels to Bloch, 1890) clearly places the meaning of "decisive" in the context of Marx's theory of history, and the bedrock of that theory is that the expansion and development of productive forces occur regardless of social form, ie. there is throughout history a perennial tendency to productive progress, exceptionally so in capitalism. In this context, M&E saw economic factors as "decisive" when the productive forces are "fettered" by the social relations of production. Because the social relations divide people into classes, class conflict is an expression of the conflict between forces and relations of production. Ultimately, in a period of class struggle and social revolution, the social relations are changed and "the entire immense superstructure is more or less rapidly transformed" (Marx, 1859). The forces of production are "unfetttered" for a further round of development.Fairly clearly, the "history" of the MCH is epochal history, the history of modes of production and of social formations which may evolve over hundreds of years. So the problem I have is how to relate Marx's architecture of grand theory to major historical events, like say the Bolshevik revolution and the subsequent formation of the Soviet Union. I gather that twc regards economics as "decisive" in this case, because economic conditions in Russia at that time determined that any attempt to build socialism in Russia was bound to fail. But while there is some truth in this argument, it owes nothing to M&E's historical materialism IMO. Where is the evidence that Russia's productive forces had developed to the point where they came into conflict with the relations of production? Sure, economic conditions are an important factor in explaining the Bolshevik revolution. We might even say that they were a necessary condition – impoverishment as a result of war, peasant revolt and the breakdown of the traditional agrarian commune etc. – but they were not sufficient conditions. The decisive (because sufficient) condition was Lenin and his vanguard party without which there would never have been a Bolshevik revolution. So in this case I would say that it was politics that was "decisive", not economics, which is my answer to Sympo's question:"Why exactly weren't the Bolsheviks decisive in the making of history?" They were.LBird wrote:I suspect the Engelsist ideology that you hold, but seem to be unaware of, which tells you that there are only two alternatives, materialism and idealism, leads you to always see only a dichotomy, and since Marx stresses 'theory and practice' (which requires both ideas (consciousness) and inorganic nature), you have to ignore this and categorise any talk of 'ideas' as idealism.
This is Engels in Dialectics of Nature: "Natural Science, like philosophy, has hitherto entirely neglected the full influence of men's activity on their thought; both know only nature on the one hand and thought on the other. But it is precisely the alteration of nature by men (Engels' emphasis) , not solely nature as such, which is the most essential and immediate basis of human thought, and it is in the measure that man has learned to change nature that his intelligence has increased".These remarks of Engels are hard to reconcile with LBird's view that Engels' materialism makes 'matter' the 'active' side. Isn't he saying much the same as Marx about the "unity of theory and practice" which LBird recognizes as central to Marx's epistemology? Fairly clearly, Engels' remarks are completely at odds with Lenin's view that thought is a "copy" of the real world (the copy theory of knowledge). Anyway, to believe that Lenin's materialism, via Engels, leads inevitably to Leninist politics (elite control over workers, autocratic rule etc.) is one of the weirdist ideas I have ever encountered. When Lenin declared that, left to themselves, Russian workers would never get beyond a trade union consciousness, he was speaking as a realist, not as "Engelsian materialist". Materialism and Empirio-Criticism had zero influence on his political strategies even though it was the one "philosophiocal" work on materialism which he wrote. It may be worth noting that Bogdanov, a major subject of Lenin's hostile polemic, said that the most characteristic feature of Lenin's attitude in M and E-C was its authoritarian quality, embodied in the way he tried to parade his philosophical erudition to impress his readers, and to persuade them of their own ignorance in philosophical matters in order that they would believe him; that they would regard him as an authority. Now who does that remind me of?DJP wrote:FWIW. I'm working on something for the 75th anniversary of the start of the Spanish civil war.
You had better hurry, the 75th anniversary of the start of the Spanish Civil War was in 2011.