Some 20 years ago…this would have seemed outmoded. But it needs another look, following the increase in concentration of wealth and income.” These are not the words of a socialist but Samuel Brittan, the Thatcherite columnist for the Financial Times, giving his summary of Karl Marx’s analysis.
In the 19th century Marx explained that capitalism created a trend, with brief interludes of growing prosperity, towards the concentration of wealth and power in an ever decreasing number of hands at the top of society, with increased poverty and misery at the bottom. This has never been truer than today.
Marx was right
So overwhelming is the similarity between Marx’s analysis of capitalist crisis and the reality we face today, many capitalist economists have been forced to declare that ‘Marx was right’.
Capitalism is a bankrupt system. As it lurches into a new phase of the ‘great recession’, billions of people around the world face growing poverty.
The economic crisis has not, however, meant increased hardship for the few billionaires at the top of society. In Britain bank CEOs who brought the economy to the brink of meltdown, with bank collapse only prevented by £850 billion of tax payers’ money in 2008, have seen their bonuses increase by 130%.
But it is a sign of the bankrupt nature of modern capitalism and its political representatives that taxation of the rich is so low some of them are asking to pay more.
Warren Buffett is the world’s richest man – worth $62 billion at the last count. In an act of self-flagellation he has demanded to pay more tax. He ‘feels guilty’ because he only pays 17.4% of his income in tax ($6.9 million last year), while his staff pay an average of 36%.
In Italy, the chairman of Ferrari has also offered to pay more in tax – but in doing so demonstrated why the working class must always beware of billionaires bearing ‘gifts’ – the Ferrari boss is only willing to pay more if the government accelerates its programme of privatisation.
The Socialist Party demands that it is the rich – not the working and middle classes – who pay the price for the economic crisis. We want a huge increase in taxation of the rich – all that Buffett and Co are offering – and far more.
Over the last 30 years the pursuit of ultra neoliberal economic policies – where mammon alone is worshiped – has left taxation of corporations at historically low levels.
In Britain for most of the 1970s the tax rate for the highest band of income was 83%. Likewise for most of the 1970s, big corporations paid 52% of their profits in tax, but that percentage has been reduced step-by-step ever since, to now being just 26% – with the government planning to lower it to 23% in three years’ time.
The ‘feral rich’
And as the PCS trade union has pointed out, even with the existing low levels of taxation for the rich, more than £120 billion goes uncollected every year, as the ‘feral rich’ avoid paying even the puny taxes they owe.
The Con-Dem government, far from increasing tax on the rich, is mooting the possibility of reversing even the minor measures introduced by New Labour at the start of the economic crisis – such as the 50% rate of tax on income over £150,000.
Nicolas Sarkozy, president of France, partly reflecting the less short-sighted character of French capitalism – but also the nearness of the French presidential elections – has said he favours a temporary tax of 3% on taxable earnings above €500,000. But this is chicken feed, especially in comparison to the billions that Sarkozy has given to the rich in tax breaks.
Worldwide there is enormous latent anger at the growing gulf between rich and poor. In Britain 72% of people support a dramatic increase in taxation of the rich, in the US it is 76%. It is partly because the super-rich fear the growing anger against them and their system that a few of them are offering to pay a bit more, to give some crumb of credence to the idea we ‘are all in it together’. We need to organise a mass movement to make them pay.
But while we favour taxing the rich, we also recognise that the logic of capitalism – a system driven by the blind need to maximise profits – means that the capitalists will never meekly accept dramatically increased regulation and taxation. The response of the capitalist media in the US has not in the main been to welcome Buffett’s proposal but to ridicule him.
The only permanent and lasting solution to the crisis is a socialist solution. Capitalism has led to enormous economic destruction. In Britain around 10% of wealth has already been lost as a result of the recession, due to factories and workplaces closing, resulting in 2.5 million and rising officially unemployed. Nor is there any prospect of a return to healthy economic growth.
That is why a crucial step towards solving the economic crisis would be to take the big corporations and banks that dominate Britain’s economy into democratic public ownership, paying compensation on the basis of proven need. This would then allow for production to begin to be planned for need and not for profit.