As it turns out, while working on a new research project (on “Utopia and the Marxian Critique of Political Economy,” for aconference in November), I chanced upon a much earlier discussion of wealth taxes: a speech given by Friedrich Engelson 8 February 1845 in Elberfeld.
Engels argued that communists had no intention of introducing “common ownership overnight and against the will of the nation.” Still, it was possible to move in the direction of “practical communism” by adopting certain measures—such as “general education of all children without exception at the expense of the state” and “a complete reorganisation of the Poor Relief System.”
"Both these measures require money. In order to raise it and at the same time replace all the present, unjustly distributed taxes, the present reform plan proposes a general, progressive tax on capital, at a rate increasing with the size of the capital. In this way, the burden of public administration would be shared by everyone according to his ability and would no longer fall mainly on the shoulders of those least able to bear it, as has hitherto been the case in all countries. For the principle of taxation is, after all, a purely communist one, since the right to levy taxes is derived in all countries from so-called national property. For either private property is sacrosanct, in which case there is no such thing as national property and the state has no right to levy taxes, or the state has this right, in which case private property is not sacrosanct, national property stands above private property, and the state is the true owner. This latter principle is the one generally accepted — well then, gentlemen; for the present we demand only that this principle be taken seriously, that the state proclaim itself the common owner and, as such, administer public property for the public good, and that as the first step, it introduce a system of taxation based solely on each individual’s ability to pay taxes and on the real public good."Occasional Links & Commentary
Piketty and the principle of taxation
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame
If you consider it a right that the govt has received in order to levy taxes then that govt institution has no authority .... because logically another institution has to grant the right. .. this other institution has the authority. ..
ReplyDeleteSo this is all gold standard thinking here from Ruccio and Engels and not applicable to the present context...
this from Worstall at the link:
ReplyDelete"Our problem is that a wealth tax can either be set at a rate at which it can be paid out of income, in which case it’s not actually going to reduce wealth disparity"
He is correct here in that if you look at the gross income as the measure of wealth and the person makes the same amount next year, then that person is still wealthy and nothing has changed...
So this is hard to understand what would come out of a progressive tax increase from a logical and mathematical perspective...
Take a senior manager at a firm, say this person makes $500k. 50% tax bracket nets $250k, then you impose a Picketty tax to the rate of 80%, nets $100k , still makes $500k the following year so nothing has changed....
Here is David Harvey at the link:
ReplyDelete"There is, however, a central difficulty with Piketty’s argument. It rests on a mistaken definition of capital. Capital is a process not a thing. It is a process of circulation in which money is used to make more money often, but not exclusively through the exploitation of labor power."
OK if it is a "process" then, as is the case with any process, it can be described/defined/illustrated via a Process Flow Diagram in accordance with ISO Standards... has he ever done this?
have any Marxists ever produced this Process documentation for the "Process of Capital"?
Dont tell me: "Step 1, dig up or pillage precious metals .... step 2...."
'If you consider it a right that the govt has received in order to levy taxes then that govt institution has no authority .... because logically another institution has to grant the right. .. this other institution has the authority. .."
ReplyDeleteWhat Engels is saying that land and natural resources are part of the commons, and that society is so entangled that no man is an island. There is no such thing as a self-made man. It's an oxymoron. Everyone contributes to and receives from society.
Property rights are not absolute rights of ownership by individuals separate from society but rather rights based on use that are granted by society through the laws that it makes through its process of governance.
It's basically about the individual in relation to community and the nature of rights and duties. As Engels points out, all societies agree that the community is superior to individuals as is shown in taxation for public purpose, conscription for defense, etc.
Engels is saying that owing to the commons as a common heritage, the community that possess it owns it in common and has the authority to decide as a community how the society should be administered and that the idea of ontological individualism that underlies faux liberalism is false because humans are social animals by nature rather than lone predators.
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence,[note 1] promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
Freedom of individuals for humans being being a member of a community that is a free society in which the members of the society govern themselves collectively on an equal basis. This is the basis of popular sovereignty. This requires agreement over basic rights and duties, which is the purpose of constitutional government in a liberal democracy. So fundamental to political equality is essential to liberty, and political equality is only achievable in organized community under the rule of law in which the laws are determined on the basis of popular sovereignty.
Matt, what Marx/Engels and Harvey are describing is monetary production economy similar to the conception of this set forth by Keynes, as opposed to the barter economy with money as veil of neoclassical theory.
ReplyDeleteThe object of a monetary production economy is "making money," rather than producing goods, which is just the means of making money. Actual production is a by-product of capitalism the purpose of which is to acquire wealth.
The objective is to lard one's portfolio not only with ownership of real assets but also financial assets and real assets that also serve as financial assets, like gold, collectibles and so forth that the rich use as a store of value along with real estate and financial assets.
I don't think that PIketty would deny that there are two aspects wrt to capital accumulation, one a process and the other a result measurable in terms of balance sheet items at point in time to determine net worth. Piketty does specifically distinguish these in terms of stocks and flows in national accounts.
As PIketty observes the flows affecting capital, which he defines in terms of total wealth, includes not only income and other revenue but also changes in asset valuation in markets that affect net worth. Since this is all recorded in accounts, both real assets and financial assets are expressed in nominal values based on market prices and affected by the price level.
Piketty is also careful to clarify that he is using "capital" in a very specific way for the purposes he sets forth and warns against assuming that "capital" is a univocal terms in economics. It is used differently (analogously) in different contexts.
Most of the criticism of Piketty assumes that he is doing some other than what he specifies he is doing. I am actually gob-smacked at the low level of professionalism in economics. It's laughable. These people either don't bother to read what they criticize or don't understand it, or are just erecting straw men to attack. Abysmal.
Tom no one has a monopoly on indignation at the sight of socio-economic injustice... we all get that....
ReplyDeleteThey are branching out here into technocratic territory though and they are unqualified to tread there....
"The objective is to lard one's portfolio not only with ownership of real assets but also financial assets "
Its called ERISA and it is the law.... so hence many people are following it.... should we be shocked? When Social Security is inadequate?
http://en.wikipedia.org/wiki/Employee_Retirement_Income_Security_Act
Retirement Assets Total $23.0 Trillion in First Quarter 2014
http://erisariskmanagement.com/retirement-assets-total-23-0-trillion-first-quarter-2014/
This probably doesnt count the stuff in annuity/life insurance schemes... they have about 6T too.... so call it 30T... for retirements....
What are we supposed to do? Defund somebody's retirement to fund somebody else's? As we are "out of money!"
These people are all heart and no brains...
Matt, I didn't bring morality or justice into it. Jus' saying that this is what a monetary production economy is about. Marx and Engels understood the basics and so did Keynes and his followers.
ReplyDeleteNeoclassical economists and their neoliberal followers are out of touch with the functioning of a monetary production economy, hence they get the economics of it wrong based on false assumptions.
From our point of view, we would sum it up as saving that is not offset by another sector results in demand leakage that leads to less than full employment and suboptimal use of available resources, whereas from the neoclassical POV, saving causes investment tending to general equilibrium where all markets clear at optimal efficiency and effective use of all available resources.
The former views sees hoarding as leading to a smaller pie and asymmetrical shares based on institutional arrangements, while the latter sees the biggest pie possible resulting from minimal government intrusion in markets, with the pie being as big as it possibly can with shares based on merit and just deserts.
These views can't both be right. It's a matter of true description rather than morality of processes or outcomes. With a true description it then becomes possible to assess results in terms of fairness, justice, and so forth.
The neoliberalism assume that they have the true description and the issues about unfairness are really the manifestation of envy of one's betters.
The followers of both Marx/Engels and Keynes hold that the neoclassical general description is erroneous and that asymmetry results from social and political choice of institutional arrangements rather than postulated natural laws of economics as neoclassical economists unwarrantedly assume.