(OPE-L) Re: taxation and public finance

From: OPE-L Administrator (ope-admin@ricardo.ecn.wfu.edu)
Date: Wed May 26 2004 - 04:59:16 EDT

Jurriaan regretted the tone of his last message and suggested
that the following edited version be posted./ In solidarity, Jerry

----- Original Message -----
From: "Jurriaan Bendien" <andromeda246@hetnet.nl>

I cannot find the exact quotes I am looking for just now, regret to
say. I  have quoted on OPE-L what Marx said about it just before
publishing Capital Volume 1, but, he also raised the topic in many other
discussions e.g. about free trade, in the Grundrisse, in other economic
manuscripts, and in Das Kapital. As Angus Maddison noted, Marx wrote
about 12,000 pages of unpublished manuscript in total and then you could
go many ways with it. Marx said things about taxation also in regard to
Ricardo, and in fact if you go to http://www.marxists.org and type in
'"tax" you will find 385 references. Or have a look at
http://www.mlwerke.de/me/me09/me09_075.htm or
www.praxisphilosophie.de/hosswert.pdf and so on. From memory
there was an article in Marx-Engels-Forschung about Marx on taxation,
but I cannot recall an exact reference. For a brief article by myself on
tax (in reference to John Kerry's proposals), see:

Basically Marx considered taxation as a derived source of income, the
levying of which is responsive, or reacting, to more basic
socio-economic relations and value-creation processes on which it
Therefore, a struggle over taxation itself, does not yet get to the
fulcrum of the conflict between social classes. But Marx also admits,
that tax becomes part of the cost-structure of social production, and
that it can can independently influence commodity prices,
and alter value-magnitudes. That is, taxation has an important effect on
real investment behaviour, commercial trade, and pricing. The larger the
amount of capital involved, the more important the tax levy becomes.
Marx defines surplus-value usually in terms of profit+interest+rent, but
tax is often a larger portion of income than net interest receipts and
net rent receipts.

The Marxist treatment of taxation is often too simplistic I think,
because people don't recognise the importance of  Marx's dictum that
"capitalist production is the unity of the production process and
circulation process." And Marxist-fundamentalists often say oh well "tax
is just surplus-value" and forget about it, but this I think is a
mistake. The core class content of taxation was sketched by Karl Marx in
his brilliant
article "Moralising Criticism and Critical Morality; A Contribution to
German Cultural History Contra Karl Heinzen" (in MECW Volume 6, p. 312,
October 1847). This satirical article, if you read it through, is in
some ways more important than ""The German Ideology" in understanding
Marx's rapid  evolution in those years from a democratic liberalism to a
communist/socialist position. I will just quote a few passages leading
up to the essential quote:

"We are therefore faced with two kinds of power, on the one hand the
of property, in other words, of the property-owners, on the other hand
political power, the power of the state. "Power also controls property"
means: property does not control the political power but rather it is
harassed by it, for example by arbitrary taxes, by confiscations, by
privileges, by the disruptive interference of the bureaucracy in
industry and trade and the like. In other words: the bourgeoisie has not
yet taken political shape as a class. The power of the state is not yet
its own power. In countries where the bourgeoisie has already conquered
political power and political rule is none other than the rule, not of
the individual bourgeois over his workers, but of the bourgeois class
over the whole of society, Herr Heinzen's dictum has lost its meaning.
The propertyless of course remain untouched by political rule insofar as
it directly affects property. (...) The question
of property as it has been raised in "our own day" is quite
unrecognisable even formulated as a question in the form Heinzen gives
it: "whether it is just that one man should possess everything and
another man nothing.... whether the individual should be permitted to
possess anything at all" and similar simplistic questions of conscience
and clichés about justice. The question of property assumes different
forms according to the different levels of development of industry in
general and according to its particular level of development in the
different countries. (...) The question of property, which in "our own
day" is a question of world-historical significance, has thus a meaning
only in modern bourgeois society. The more advanced this society is, in
other words, the further the bourgeoisie has developed economically in a
country and therefore the more state power has assumed a bourgeois
character, the more glaringly does the social question obtrude itself,
in France more glaringly than in Germany, in England more glaringly than
in France, in a constitutional monarchy more glaringly than in an
absolute monarchy, in a republic more glaringly than in a
constitutional monarchy. Thus, for example, the conflicts of the credit
system, speculation, etc., are nowhere more acute than in North America.
Nowhere, either, does social inequality obtrude itself more harshly than
in the eastern states of North America, because nowhere is it less
disguised by political inequality. If pauperism has not yet developed
there as much as in England, this is explained by economic circumstances
which it is not our task to elucidate further here. Meanwhile, pauperism
is making the most gratifying progress. (...) But by "the connection
between politics and social conditions" Herr Heinzen actually
understands only the connection between the rule of the princes in
Germany and the distress and misery in Germany. 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. Civil servants and priests, soldiers
and ballet-dancers, schoolmasters and police constables, Greek museums
and Gothic steeples, civil list and services list - the common seed
within which all these fabulous beings slumber in embryo is taxation."

So there you have it: "Taxes are the existence of the state expressed in
economic terms." and then the issues are the class content of taxation
and the socio-political mandate for taxation. If Marxists try to derive
the form of the state from the "logic of capital" they forget that the
bourgeoisie historically took over an existing state apparatus, and then
modified it, and that the struggle over tax collection and spending was
crucial to the bourgeois bid for state power in the first place. I have
time to work on these issues now but have a look at

and then you will see that the total tax take equal to between a
quarter and
half  of the annual value-added in developed capitalist societies, yet
the Marxist literature has little to say about it. I mentioned
previously that the US
federal tax take only (this does NOT include US state & local taxes) is
equal to the official GDP value of the Russian federation. It would
therefore be unwise to ignore the importance of taxation for value
theory. We are  talking about a gigantic claim on the new wealth
created. The ideological importance of taxation is that, if everybody
pays PAYE tax, including unemployed people and so on, then the
impression is reinforced that everybody has an equal stake in the state,
and that the state is there for everybody. That is to say, the inclusion
of all citizens in the aegis of tax collection suggests that the state
represents everybody, on a pluralistic democratic basis - even if the
reality is much more
contradictory. A Marxist economist who thinks ahead, rather than being
backwardlooking, would concern himself with taxation and intellectually
prepare the radical movement for what is to come.



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