The Capital Levy (letters)
To the Editor of the SOCIALIST STANDARD.
In response to your invitation to continue the discussion, it seems to me that there are three fundamental differences between us.
Firstly I hold that among the “economic forces” which under a capitalist system determine real net wages (i.e. the purchasing power of money wages) must be included the power exerted by capitalists through their possession of war loan. You apparently exclude this factor.
Secondly I hold that a levy on capital is a step towards ending the present system of wealth distribution which enables some individuals to live in idleness on the fruits of others’ exertions. You apparently think, either that it would not be a step at all, or that it would be so small as not to be worth taking.
Thirdly I envisage the capital levy as one of the several reforms which will not only improve the immediate position of the workers, but will at the same time help to build up the new order of society necessary to take the place of the decaying capitalist system. You, I gather, regard such efforts at best as futile, and at worst as buttressing up the capitalist system and delaying its overthrow.
If I have correctly stated our respective standpoints there is nothing further to be said.
F. W. PETHWICK LAWRENCE.
Mr. Pethick Lawrence says that “the power exerted by capitalists through their possession of war loan” is apparently excluded by me from the economic forces which determine real net wages. Now I readily agree that within the framework of the State, and subordinate to political control, which is the ultimate source of power, the accumulated wealth of the capitalists is an important factor in the struggle about the level of wages. But I do not see that it matters one jot whether that wealth exists as war loan, or whether it take some other form.
Lest it be said that this huge debt is the cause of present unemployment, let me recall two things : (1) that before the war we had some permanent unemployment, as well as protracted periods when it was acute; and (2) that France, with a like indebtedness, and a much worse financial position generally, has no unemployment.
If the Capital Levy meant a real appropriation of a large part of the wealth of the capitalists, there might be something in the argument, but in Mr. Pethick Lawrence’s own words, “Payment of the levy will, in effect, be carried out by means of a reshuffling of the title deed’s of wealth among-wealthy persons. …” (Forward, May 5th,. 1923).
This brings me to his second point. I still fail to see how this “reshuffling,” which leaves the total wealth of the capitalist class untouched, and merely changes the form of some of it from war loan to industrial capital, can at the same time be a step towards the ending of the present system of wealth distribution. If the capitalists lose nothing, from what source do the workers, gain ?
As for the last point, Mr. Pethick Lawrence has not yet answered the charge that the levy, if successful, would buttress up the capitalist system. Assuming that a capitalist state were in dire need of some measure to re-establish its financial stability, then it seems obvious to me that a capital levy which served this purpose would strengthen the hands of the capitalist class, and give new life to the system on whose continuance their privileged position depends.
Actually I think that it is unlikely that the British capitalists can now have any use for the levy. At the time, just after the war, when it might have proved very useful to them, they were not ready to accept it, and now the need has largely passed.
To the Editor of the SOCIALIST STANDARD.
With regard to the article on the Capital Levy, I would like you to answer the following questions :—
I agree that all taxes are paid by the rich, and come out of surplus value. The robber pays taxes with the wealth he has robbed. But if taxes go to pay for working-class education, old age pensions, etc., then it is the robbers who are made to pay for services rendered to the workers. So that taxation may be used as a lever by the workers to recover some of the wealth taken from them.
Now again, if the Capital Levy, instead of being used to relieve taxation, is used to pay for more and better social services—then the Capital Levy will help the workers.
It is surer to help the workers than higher wages, because the sliding scale—the fodder basis—neutralises higher wages; while social services cannot be neutralised so easily.
The Capital Levy can be used to pay for the land, and instruments of distribution and exchange socialised. To pay means with the money levied from the whole of the capitalist class—the only class that can be levied.
Mr. Nelt sets out to explain how taxation (or a special form of it, the Capital Levy) “may be used as a lever by the workers to recover some of the wealth taken from them.” He is, however, not logical in his argument. He says quite correctly that the capitalist class pay for education, old age pensions, etc. Then, without any explanation, he alters “pay” into “are made to pay.” The latter, if it were true, would support his argument, the former, which is true, does not. The capitalist class levy themselves to pay for social services, and being in control of the political machinery they decide the form and the amount of the taxation, and the objects to which the revenue shall be devoted. While the workers continue their present attitude of indifference and actual opposition to their own interests, the capitalists will have just that amount of freedom they now possess to order their affairs as they choose. They will tax themselves as they like, and spend their money on whatever object seems good to them. If the workers had the will and the power to destroy capitalism it would be silly to waste that power on the minor reforms Mr. Nelt proposes; while both will and power are lacking it is impossible to “make” the capitalists do even these small things.
Let me also remind Mr. Nelt that the primary object of the Levy, as advocated by Mr. Pethick Lawrence and the Labour Party generally, is not to increase, but to lower taxation. “It could not be justified except for the purpose of debt reduction.” (Mr. Snowden, Morning Post, 28th June, 1923.) Perhaps Mr. Nelt may imagine that after the advent of a Labour Government taxes really would be levied with the deliberate intention of plundering the capitalist on behalf of the workers. Mr. Snowden disposes of that also, and at the same time supports our view that the capitalist system will be as strong and as safe after a Labour victory as before.
“If, of course, the commercial classes and those who would have to contribute to a Capital Levy will not have it, but prefer to go on paying a high income tax without any hope of any substantial reduction, they must bear it, and a Labour Government would have to look in other directions than the Capital Levy for revenue to enable the food taxes to be removed, the income tax on moderate incomes to be reduced and to finance schemes of social reform.”
It is obvious, too, that if capitalist opposition will be able to make the Labour Government give up the Capital Levy, the capitalist will then, as now, dictate their own programme of social reform.
(Socialist Standard, November 1923)