Tuesday, 2 March 2021

The Poison Fruit of The Magic Money Tree - Part 1 of 6

In a recent article, Paul Mason sets out a series of arguments as the basis of how he thinks Labour should respond to the Tories economic plans, and to the economic situation that Britain will face in the aftermath of the government imposed lockouts, and from Brexit. In these arguments, Paul's drift into the ideas of Stalinism, manifest in some of his more recent political writings, becomes increasingly apparent, with the Stalinist ideas of economic nationalism forming the centrepiece of his proposals. In his 2014 book, Postcapitalism, Paul cited me in the acknowledgements at the front of the book. I have to say that there is nothing in what I have ever written that has any lineage to the ideas that Paul is now putting forward. I'd urge him to seriously consider his current trajectory.

That being said, there are some general statements I would agree with. Its when we move from generalities to specifics that the problems with Paul's solutions arise. For example, Paul says,

“... the Labour leadership and the left should stop arguing about corporation tax and start arguing with the British people about an alternative.”

I agree. Marx always made clear that nothing substantial could be changed by tinkering around with the tax system. Distribution is a function of production, and so long as control of capital is in the hands of capitalists that will determine distribution, whatever attempts are made to redistribute via the taxation system. That is inherent to the functioning of the capitalist system itself. Unfortunately, Paul, when he talks about the need for this alternative, does not address this issue – what Marx and Engels describe in The Communist Manifesto as “the property question” – but only talks about the role of the capitalist state in spending, and borrowing to finance that spending as an alternative to taxation, as though the need for the state to, at some point, pay back that borrowing is a non-issue.

Here, Paul sets out in clear terms that old Stalinist solution of the big bureaucratic state, implementing the Stalinist ideas of building Socialism In One Country – except, here, its not even that, but merely a more benign, social-democratic capitalism – that ignores basic truths of political-economy, and introduces the fantasy of being able to disregard the market and those economic laws, simply by the use of government diktat, and the printing of endless supplies of money tokens to be plucked from the Magic Money Tree. Its the same economic strategy that was used by the Stalinists in Russia in the 1920's, which led them to disaster, except they, at least, had the benefit of controlling a Workers' State, rather than having to operate within the confines of, and facing opposition from, a hostile capitalist state. Its the same approach that Stalinists and their fellow travellers have attempted in numerous other places, each time with disastrous results. Venezuela being, perhaps, the most obvious recent example.

The fetish of raising Corporation Tax, i.e. a tax essentially on the profits of larger companies, is a symptom of the petty-bourgeois nature of much of the Left. Rather than seeking a more rapid development of capitalism, and of the productive forces by it, as the best means of heightening the contradictions within the system, and so leading us more quickly to Socialism, that petty-bourgeois Left seeks to hold back the development of large-scale capital, much as did Sismondi, attacked by Marx in The Communist Manifesto, Theories of Surplus Value and elsewhere, as well as those like Proudhon, or the Narodniks in Russia, attacked by Lenin.

In fact, what the Left should be arguing is not for an increase in Corporation Tax, but for workers and managers to have control of the capital of those corporations. As Marx sets out in Capital III, Chapter 27, and he and Engels discuss this further in Anti-Duhring, that capital, as socialised capital, is, in fact, the collective property of those workers and managers within each firm. Even in law, the capital belongs to the firm itself, not to the shareholders, who, like bondholders, a bank that lends money to the company, or a landlord who lends land and property to the company, are just creditors. It is simply that, because of the political power of the capitalist class, when company law was formulated, they gave themselves, as shareholders, the legal right to exercise control over this capital they do not own, and denied it to its actual legal owners, the associated producers within the company.

In principle, there is no difference between the socialised capital of a workers cooperative and that of the joint stock company or corporation. The difference is only one of legal definitions, established purely on the basis of the position of the bourgeoisie as ruling class. If workers had control over corporations, in the same way they do over worker cooperatives, then why on Earth, would a socialist want to see the profits of such companies hit by a Corporation Tax, levied by a capitalist state? It would play the same role as high levels of interest levied by money-lending capitalists, or high rents levied by capitalist landlords, in draining profits away from the workers. No, what socialists would want to see would be, instead, low, or, better still, no Corporation Tax, and instead high taxes on the dividends received by shareholders, on the interest received by other money lenders, on the rents received by capitalist landlords and so on. And, that is what we should want to see now, so that the profits of these corporations go to finance new capital accumulation, which will create new jobs and grow the economy, whilst payments out of profits to dividends, interest and rents are discouraged.

What is more, the petty-bourgeois, economic policies being proposed by the Tories, and echoed by Labour, and large sections of the Left, follow the same approach as that put forward by the Narodniks, glorifying the role of small producers in contrast to the large companies. They seek to hand out even more in subsidies to these small producers, who have been supported by petty-bourgeois politicians for the last forty years, to the great detriment of the development of capitalism, and of social productivity. Instead, all such subsidies to small capital should be scrapped, and we should seek a significant increase in the Minimum Wage, as well as improved working conditions and so on. Those small businesses would either be the innovators they claim to be, and increase their productivity accordingly, or they would go bust, enabling that capital and labour to go to where it can be more efficiently utilised.

The proposals of the Tories, to be announced in the Budget, of providing further bail-outs to High Street retailers follow a similar pattern. It was clear, long before the government imposed lockouts sent the economy into a tailspin, that these businesses were a thing of the past, unable to compete with the more efficient online retailers. The lockouts have simply accelerated that process. Throwing good money after bad to prop them up is silly, and again simply reflects the extent to which the Tories are in hock to these small capitalists that make up the core of Tory membership and voters. But, taxing the internet businesses, in order to be able to compensate those small businesses, or high street retailers, is even more insane. Its like, at the start of the 20th century, introducing a tax on motor vehicles, simply on the basis that they were more efficient, and so were undercutting horse drawn transport! Rather than taxing these more efficient businesses, they need to be encouraged, so as to more quickly grow the economy, and develop the productive forces, which is the basis of enabling the transition to Socialism.

The solution again is not taxation, which would slow such growth, but is raising the property question, of engaging in a political struggle to wrest control out of the hands of the shareholders, and place it in the hands of each company's workers and managers, where it belongs. In that way, those workers would seek to use profits to grow the business, to provide additional employment to other workers, to enable decent pay and conditions, rather than inordinate amounts being paid out as dividends or other capital transfers to a tiny number of large shareholders, and their representatives. They would increasingly take the existing plans and cooperation between businesses, and extend it on a qualitatively new level, so that the economy would become increasingly integrated like one big machine, and would, thereby, significantly reduce the potential for shocks to the system leading to crises. But, of course, everything we know shows that this can only be done on an extensive, international basis, at least on the scale of the EU. And, that too is totally at odds with Paul's acceptance of Brexit, and proposals for developing his economic proposals on a purely British basis.

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