1920s >> 1923 >> no-228-august-1923

The Capital Levy

The recent war caused an enormous in¬crease in the National debts of most of the belligerent nations, and the burden of finding interest has helped to popularise an old bogey, trotted forward in a new disguise as the Capital Levy. It has been made one of the main planks in the Labour Party’s programme, and was presented in various lights and with varying degrees of warmth by Labour men at the General Election. In the main, it seems to have been useful to that party as a rallying cry for the more aggressive of the industrial workers; and in quarters where the votes were sought of the mentally more slavish section, which goes by the misleading name of the middle class, the local members did their best to explain that the levy really didn’t mean much. Most opponents relied chiefly upon the iniquity of robbing the capitalist of his savings, etc.

We, however, are not concerned with this purely superficial attitude towards the proposal. As Socialists, we are bent on discovering by what means the position of our class may be advanced. Our class consists of all those people who, not being owners of property, must sell their mental and physical energies to those who are owners. This proposal must stand the general test—Is it or is it not one which is useful to the workers?

In the “Forward” (Saturday, May 5th, 1923), Mr. F. W. Pethick Lawrence, a Labour candidate and prominent advocate, sets out what he calls “The Case for the Capital Levy,” with the sub-title, “Lift the Burden of Debt from Industry and Labour.”

Now, we are agreed that there is a burden ; and, further, that people who have burdens are naturally interested in having them lifted; but Mr. Lawrence makes the somewhat important omission of not troubling to prove that the debt is a burden on the workers. If it isn’t, why should the workers trouble to lift the burdens of the capitalist class? And, on the other hand, what are we to think of an organisation which asks them to do so?

Let us consider the matter in an elementary way. First, can Mr. Lawrence deny that a small class does own the bulk of the means of producing wealth in this and other capitalist countries? This is a matter of common knowledge, for which it is not necessary to quote statistics.

Owning the means, the capitalist class also own the products. If you are a boot operative, you know that all the boots, when they are finished, belong to your employer ; and so throughout the productive system in which we live. As a worker you receive wages or salary at certain intervals, the length of which is immaterial. Your wages are drawn from the store of wealth produced by you, but owned by your employer. The reason he gives you something he would willingly keep, is surely not that he loves you. It is a simple necessity that you must have the means of obtaining food, clothing, and shelter, recreation, etc., in order that you may continue alive and in a state of sufficient fitness.

Then, what is it that determines for the workers as a whole the amount given in re¬turn for services rendered? We contend that, broadly regarded, that amount is based for different sections of workers, under different climatic conditions and with different social standards and different lines of historical development, on their standard of living. This may change, and in an immediate sense it fluctuates up or down according as there is a comparatively large or small supply of labour, and according to the degree and method of organisation. Generally, however, the capitalist class must pay away so much wealth for the upkeep of the wealth producers, and the surplus is theirs.

But the matter doesn’t end there. The same class also controls the political machinery, the Government, in all these capitalist countries. It must control politically in order to safeguard its private ownership. But the great and growing State services cannot be run for nothing. The capitalists must dip into their surplus to find the necessary cash—a proceeding to which they all object very strongly.

Needless to say, sections among the owning class are always willing to hand over their share of the burden to their weaker brethren. Now, the top capitalist dogs and the weaker brethren are all alike dependent on the votes of the workers. Without your support they can do nothing.

And this is where we return to our Mr. Pethick Lawrence.

If the burden rested on the backs of the workers it might be worth while trying to throw it off. But if the workers have no surplus, then they cannot be robbed of what they don’t possess ; and, in spite of apparent objections, the workers as a whole do not suffer from high, nor benefit from low taxation. They suffer because they are robbed, and they are robbed whether taxes are high or low, and the degree of the robbery has, over a period, no direct or indirect relation to taxation. As we have seen, the workers receive all the wealth they possess from the capitalist owners, and, further, these owners control at present the machinery by means of which taxes are levied.

Now, the workers either receive a surplus over their minimum needs or they do not. If they don’t, then they cannot be robbed of that non-existent surplus afterwards. If they do, then the capitalists will have given the surplus either because they are philanthropists or because they are compelled by economic forces. If they are philanthropists, then they will not take back the gift they gave; and if they were, compelled to give, then the same forces will prevent them from taking it back.

The burden of taxation for the payment of interest or the National Debt is Not a burden on the workers.

But, say these levy advocates, food prices will be lowered. Possibly this is true, but are you certain you will benefit? Is a railwayman, for instance, worse off on 60s. when it costs 60s. to live, than on 30s. when it costs 30s. to live? And although all workers’ wages do not vary automatically on a sliding-scale basis, is there any grade or industry in which wages are not very closely dependent on the general level of prices?

Mr. Lawrence, with unconscious humour, writes: “The workers out of their poverty are paying for all their old-age pensions, all the soldiers’ and widows’ pensions, the State’s contribution to Health and Unemployment Insurance, etc., etc.”

The pertinent question Lawrence might answer is this : Would the capitalists, if there were no taxation at all, give the workers a larger share of the wealth produced, and, if so, why?

Mr. Lawrence says : “The main principle of the levy is simplicity itself. It is to pay off debt out of wealth. The wealth of the country as a whole is the wealth of its citizens.” This, as I have already explained, is quite untrue. The wealth of the country as a whole is the private property of the capitalist class. Only the owners of property can suffer the burden of taxation, and only the owners do suffer. Some of them want you, the propertyless workers, to pull their chestnuts out of the fire, and Mr. Lawrence and the Labour Party are making a bid for office on the strength of offering to do the necessary publicity work.

Mr. Lawrence admits our charge in full. He writes, “Payment of the levy will, in effect, be carried out by means of a reshuffling of the title-deeds of wealth among wealthy persons, and the actual cancellation of a large amount of war debt.”

This is of vital concern to those who hope to get some good cards out of the re-shuffle, but does it matter the least little bit to us whether Mr. Capitalist A. or Mr. Capitalist B. gets the aces? Perhaps Mr. Lawrence and a few others may be suitably rewarded; and perhaps not, for the master class are notoriously ungrateful where there are so many willing servants.

The fact of the matter is that the capital levy, like any other mere juggling with figures, will not alter the amount of real wealth, land, factories, railways, etc. ; it will not alter the worker’s position in relation to the owners, and, finally, it will not affect the capitalist class except to the extent that it leads to some redistribution of wealth among themselves.

While the capitalists will on the one hand be relieved from the burden of paying the debt interest, they will also, on the other hand, be deprived of the present means of paying that interest. Some will gain by reduced taxation what others lose by the paying off by the State of their quota of the debt and their consequent loss of interest on their bonds. The money paid out will, in its turn, be reinvested in industry, and we shall be as we were.

Funnily enough, while the Labour Party wants the Capital Levy in order to stop paying “a vast tribute to the nation’s bond¬holders” (Mr. Lawrence), this same Labour Party wants to create more bondholders to “draw vast tribute” by nationalising the land and compensating the present owners with 5 per cent. bonds redeemable in 30 years (Mr. Snowden’s Land Nationalisation Bill now before the House).

The National Debt, too, was produced by wars, chiefly the last war. The Labour Party opposed that one up to the 30th July, 1914, and then vigorously supported it until such time as the capitalists thought it wise to call a halt in 1918. The apologists assure us that next time the Labour Party will act differently, and in conference they carried unanimously a resolution “calling upon the Government to summon an International Conference, and propose thereat immediate and universal disarmament” (Daily Herald, 29th June). It was then moved that “The Labour Party in Parliament should vote against all military and naval estimates,” and surely a No-More-War Party could do no less. But, as Mr. Henderson pointed out, “It was absurd . . . we could not do without a Navy. If France continued in her present frame of mind, were we to neglect the possibilities of defence?” Mr. Brownlie (A.E.U.) thought it might “embarrass candidates at a future election,” and it would throw out of work his members engaged on building battleships !

So it seems that all Mr. Lawrence’s work trying to wipe out the last war’s debts is going to be rendered vain by Mr. Henderson’s next war. Incidentally, how could Mr. Henderson advocate the use of the armed forces against strikers if there were no armed forces?

After wiping out this war debt Mr. Lawrence says “there will probably be a balance of over £100,000,000 a year on the right side,” and then he adds, “Great things can be done with this sum.” Glorious ! But who is going to decide what “great things” are to be done? Surely the owners ; and the capitalists don’t voluntarily do great things for the workers. On the other hand, if the workers are of a mind to do so, great things, even greater things, might be done now.

And the workers would stand a better chance of making up their minds if shoddy economists like Mr. Lawrence ceased propagating among them quack nostrums conceived for the salvation of the small fry of the capitalist class. The levy is not to affect owners of £5,000 or less.

Lawrence is aware that “some Socialists contend that it (the Capital Levy) is not Socialism, but only a palliative to buttress up the capitalist system,” and he agrees that “it will leave heaps of evils untouched, and it will not take the place of the Socialist remedy for the reconstruction of society.” He carefully omits to answer the charge that it will bolster up capitalism, and makes the lame excuse that in meeting “the one purpose for which it is designed, viz., that of cancelling a great part of the debt,” it will also remove “some of the worst evils of the present maldistribution of wealth.” He does not say it will remedy the maldistribution, and war could equally be commended, on the same ground as the policy of battleship building, i.e., that it removes unemployment. Lawrence doesn’t even say what those evils are which the Levy will remove.

In short, as cannot be too often repeated, the workers are poor because they arc robbed. They are robbed just the same, high taxes or low taxes or no taxes ; big National Debt or no National Debt; great foreign trade or no foreign trade. At present the workers are often worse off when unemployment is widespread than when trade is booming, but is this not simply because they accept the position? However bad trade depressions may be, do the capi¬talists go without, and, if not, why not?

While there is wealth in existence not being used to maintain the workers who produced it, those people are deliberately or unwittingly playing the capitalist game, who talk about measures to revive “our trade,” whether they be Labour, Liberal, or Communists.

We are Socialists, and do not ask you to seek salvation by reviving capitalist trade. We tell you there is only one solution to your problems.

Lawrence says there are four alternatives before you :—

1. Repudiation.
2. Inflation.
3. A Sinking Fund.
4. Capital Levy.

We say that each and every one of these is a question of no interest or use whatever to the workers. We add a fifth alternative—SOCIALISM. This is the only remedy for present or future working-class ills, and one that can be applied as soon as the workers choose to apply it.


(Socialist Standard, August 1923)

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