While John is often portrayed as a wild-eyed Bolshevist burning with the ambition to collectivise the FTSE 100, his speech contained very little that might suggest expropriating the expropriators is on his mind. Still, city slickers might get a bit angsty over his desire to do something with the huge piles of cash big business are sitting on. This graph from Michael Roberts demonstrates the problem:
How to unlock this cash? John said Britain needs to look at "ways to change our corporate tax system and work constructively with companies to give them the incentives to invest wisely ... a higher tax on retained earnings should be investigated." That seems quite reasonable to me and anyone not ideologically committed to stuffing the maws of corporate accounts with even more gold in the hope that someone, somewhere will invest as per Osborne's illiterate and dysfunctional long-term economic plan.
Some might take this as evidence of Labour's anti-business stance, though being super business-friendly has never stopped the Tories enunciating such. Yet, again, what is on offer here isn't socialism as such but rather a kinder, fairer capitalism. As John notes, what he's seeking is a "compact" between government, business, and science to plan for growth. This would mean addressing skills gaps in increasingly crucial sectors, turning attention to the threats and promises of automation, as well as providing a context for more profitable investment. Think of it as capitalism as if rationality mattered. And, as you might expect, John takes a swipe at the idiocy of Osborne's austerity.
I've said it before, and I'll say it again. Putting aside the PLP froth and different approaches to matters of terrorism and war, economically speaking a great deal unites Labour. Compare John's scheme with the more "mainstream" vision outlined by Liam Byrne. I don't think there are differences of kind here, merely of degree and emphasis. Unfortunately, our opponents are aware of this even if we're not, and will say and do anything to keep the political focus away from the economy - even when there's a spending review imminent.
Re "a higher tax on retained earnings should be investigated". At present, it is more tax-efficient for well-off shareholders if the company either holds profits as retained earnings on the balance sheet or uses them to buy back shares (both of which increase the share price and thus allow for realisable gains), than if it distributes them via dividends. Top-rate CGT is 28%, top-rate dividend tax is 38%. A tax on retained earnings would simply lead to more share buybacks.
ReplyDeleteTo divert this profit to productive investment would require an increase in corporation tax and thus the value of capital allowances (i.e. pre-tax deductions). In other words, the root problem is the gradual reduction of the corp tax rate to 20%, which has diluted incentives. Add to this the secular impact of technology (notably software) in lowering the unit cost of investment, and the burgeoning cash piles are a result of the weakening of both push (incentives) and pull (necessity).
McDonnell's focus on retained earnings, rather than broaching the subject of corporation tax, shows the extent to which public debate has been corrupted by "business-friendliness" these past 25 years. Like the anger over tax-dodging multinationals (a focus on "paying" rather than what constitutes a "fair share"), this avoids the central issue: why capital should get the benefit of public goods (transport, education, health) at a much lower price than that paid by labour.
David,
ReplyDeleteI wrote, some time ago, that I would actually scrap Corporation Tax. Its open to all sorts of fudges, and the use of opaque allowances and so on that encourages an entire tax dodging industry around it.
As I set out in that blog, in fact, Corporation Tax where its levied is usually on the profits of he larger socialised capitals. What socialists and social democrats desire is that these capitals grow as quickly as possible.
Scrapping Corporation Tax is a basic way of encouraging the accumulation of capital by reinvestment. In conjunction, the tax on dividends and capital gains, including those from other forms of capital transfer to shareholders, would make that easier to achieve.
Boffy seems to want to repeat the mistakes of many 19th and 20th century Marxists in their obsession for developing the productive forces. Capital is far too powerful as it is, without encouraging further accumulation. Marxists should be thinking about smashing or transcending capitalism, not pursuing the chimera of thinking they can make it work better than the capitalists.
ReplyDeleteThe way of transcending capitalism is by the further development of capital, which, as Marx and Engels points out, had already become socialised by the latter part of the 19th century - joint stock companies, co-operatives, statised capital. That is why today we have a division between this socialised capital, and the individual private ownership of money-capital, and the contradictory interests of the two, as Marx describes.
ReplyDeleteThe way of transcending capitalism is, as Marx says to seek the further development of the socialised capital, particularly the worker owned producer co-operatives, because as Mar says, these are the transitoinal forms of property between capitalism and socialism.
Boffy,
ReplyDeleteCorp tax does not impede the growth of larger capitals. Indeed, the historic record suggests the opposite. Higher marginal income tax, dividend and corp tax rates pre-Thatcher encouraged capital investment. If this caused any problem it was over-capacity - i.e. inefficient allocation of capital (ultimately an issue of political and industrial control).
As the UK has progressively lowered corp tax rates, productivity growth has slowed and R&D investment has stagnated. While there are other factors at work in this trend, there is no evidence that lower corp tax rates alone encourage investment. Countries with high levels of R&D and productivity growth tend to have higher rates of corp tax coupled with generous capital allowances (e.g. the US and Germany).
This is because the value of investment to the business is inflated by corp tax - e.g. if the CT rate is 40%, £1 spent on R&D is worth £1.40 on the balance sheet, assuming a 100% allowance. If CT is reduced from 20% to zero, a company could distribute all the "saved" monies as increased dividends. As the average dividend yield is about 4% of earnings, this means that dividends could increase six-fold (to 24%).
Even if the top-rate dividend tax rate were increased from 38% to 80%, this would be a net cash gain - e.g. if the original dividend was £1, net £0.62, the new payout would be £6, net £1.20. For small shareholders who pay a lower rate, the net gain would be even greater. In other words, cutting CT and increasing DT would cause shareholders to vote for a compensatory increase in the dividend, not for increased capital investment.
David,
ReplyDeleteI think the important caveats in your comment is that "other things were going on", and "Corporation Tax on its own".
If you lower Corporation Tax, without dealing with the issue of taxing dividends and other capital transfers to shareholders/and executives, at source, then yes the likely consequence is that the tax saving on Corporation Tax, will simply be distributed as revenues to these above groups, unless the normal process of competition between capitals requires increased competition.
Marx's point about the way money-capital, in the hands of share and bondholders, and centralised in the hands of banks and financial institutions works to undermine production, and cause economic crises, however, also suggests that it is precisely because capital itself - productive-capital - becomes socialised, whereas wealth for capitalists becomes almost exclusively in the form of fictitious capital (shares, bonds, derivatives, property) as the capitalist class are divorced from their social function in production, and that role is taken over by professional managers drawn from the working-class itself, then even the role of competition between capitals, to require accumulation becomes undermined. That is, in fact, the process of capital "eating itself" that Andy Haldane at the Bank of England and Hillary Clinton in her "Quarterly Capitalism" speech, have referred to. Both of them concluded that it points to a crisis in. and requirement for reform of corporate governance structures.
So, here is the point. If you allow socialised capital to retain the profits it produces, rather than allowing to capitalist state to get its hands on it, alongside the individual money-lending capitalists, and if you tax at source any dividend payments or other capital transfers, that will of itself tend to encourage accumulation without the need for complex tax allowances to achieve it.
But, what it indicates is the need for that reform of corporate governance. Germany has had such reform of its corporate structures since WWII, the EU in the 1970's, looked to introduce similar laws on co-determination, just as the UK was looking at that in the Bullock Report. Both of the latter two got shelved as conservative regimes replaced social-democratic governments, and those conservative regimes have looked after the interests of fictitious capital, and the capitalists that own it, at the expense of real productive capital. That is one reason de-industrialisation, lack of investment, falls in productivity were exacerbated.
But, the experience of VW shows why the German co-determination is not enough. German unions elect half of the supervisory boards on all but the smallest companies, yet VW undertook the attempt to subvert the emissions laws. Unless you believe that the action was that of individual technicians, then you have to believe that the supervisory boards, and so the union appointed representatives on those boards knew about it and sanctioned it, for competitive advantage.
The supervisory boards have a built in majority for shareholders, because they elect the Chairman who has a casting vote, but that doesn't change the above scenario. It can only mean that the other alternative is that to get round it, there is some alternative unofficial structure so that some information and decisions are not taken to the supervisory board.
So, it means at the least that any reform needs, as Bullock proposed to give the unions a majority of appointees to the Board, and in reality it means as Marx stated, that this can only really be effected by worker owned co-operatives. Even then there is no reason why workers might not do undesirable things for competitive reasons, or for their own immediate advantage, which is why Marx and the First International argued that the co-operatives had to be part of a national co-operative federation, rather than act as individual units.
Doesn't the capitalist state get most of the corporation tax? So isn't it true that the capitalist state get to use this money for their purposes and furthermore isn't the capitalist state socialised capital par excellence? So you are taking money from a semi socialised capital and giving it to a wholly socialised capital?
ReplyDeleteAnd who more than the state takes action to avoid economic 'crises'?
The inference in Boffy's argument reflects that of the libertarian right rather than Marx, economic crises are not caused by the fundamentals of capitalism but by government tax policy!
I would have thought that history shows that capitalism needs huge state intervention in order to function properly and if we take away the safety net then private business would be in all sorts of trouble.
As I understood the point, the aim was to point out that its better for the corporation tax to be used to create investment that leads to more workers being employed, so that workers become stronger, rather than hand it to the capitalist state to pay out to subsidise inefficient capitals, landlords and so on.
ReplyDeleteSurely the point was that handing taxes to the capitalist state is the same as handing dividends to shareholders. The state is not using that tax as "socialised capital", but only as revenue. The other point I took from it was that workers can never exercise any control over what the capitalist state does with that money, including when the state uses it to create or operate actual socialised capital. The last Miners Strike, and the inability for workers ever to obtain meaningful workers control over nationalised industries shows that.
The last thing I took from it, was that even in the case of VW, where workers elect half the board members, they don't have control, and so, as Marx said its only the co-operatives that provide a basis for real control, because its only there that the workers directly own and control the firm. So, although things like reform of corporate governance are all well and good, they can never replace actual workers ownership and control of the means of production.
The capitalist state may use the revenue it obtains in taxes to smooth over some of the contradictions of capitalism via welfarism, and the support of inefficient small capitals. And that may be the dream of social democrats of an endless harmonious relation, but its not the aim of Marxists, who want to drive that contradiction to its greatest extent.
For example, Marx argued that his reason for supporting Free Trade, as opposed to Protectionism (and the use of taxes to support inefficient businesses and so on is a form of Protectionism) was that Free Trade pushed that contradiction to its widest extent.
In short, social democrats might worry about the safety net causing capital all sorts of trouble, Marxists don't.
Matthew
"As I understood the point, the aim was to point out that its better for the corporation tax to be used to create investment that leads to more workers being employed, so that workers become stronger, rather than hand it to the capitalist state to pay out to subsidise inefficient capitals, landlords and so on."
ReplyDeleteA few problems with this logic. Firstly the capitalist state employs workers, for example, doctors, nurses, engineers of various kinds, social care staff, accountants, IT folk, inspectors, researchers, teachers etc etc.
So why isn't the argument as follows, instead of handing the money to inefficient capitalists let's hand it to employ more of these workers?
"The other point I took from it was that workers can never exercise any control over what the capitalist state does with that money"
That is true of all the capitalist enterprises, unless of course workers take control. The same goes for the state. if workers take control they exercise control.
"Surely the point was that handing taxes to the capitalist state is the same as handing dividends to shareholders."
So Boffy's argument is not just about corporation tax but taxes in general? I don't think Boffy was saying this, he wants the capitalist state to have the same amount of money, just that it is taken from the left pocket of the capitalist rather than the right pocket.
But there is another way of looking at what Boffy says, instead of having money for doctors, nurses, engineers of various kinds, social care staff, accountants, IT folk, inspectors, researchers, teachers etc etc he wants it to go to 'socialised capital' to further exploit burger flippers, pound shop assistants, tax accountants, PR and marketing people etc etc. Or whatever shit these people decide they want to get into, which we have no control over!
"The capitalist state may use the revenue it obtains in taxes to smooth over some of the contradictions of capitalism via welfarism"
It doesn't only do this of course, it also takes those command and control decisions and invests in things like road building, which is a social or public good.
"And that may be the dream of social democrats of an endless harmonious relation, but its not the aim of Marxists, who want to drive that contradiction to its greatest extent."
No, the state is an absolute necessity for the functioning of capitalism, which is objectively proved by history. The labour movement can hardly present a programme to the working classes that states, "we are implementing these policies because we believe they will lead to social breakdown!"
Saying we should take money from the capitalist state and hand it to capitalists is surely reactionary.
The capitalist state does employ people, and taxes are required for that where the things produced by those people are not sold. My understanding of what Boffy was saying, and he would have to correct me if I'm wrong, is that Marxists should not encourage the capitalist state, any more that private capital to take on those functions, because although these types of capital are socialised capital, they are types, which are different from the socialised capital represented by a worker's co-operative.
ReplyDeleteThe difference being that workers directly, from the start have and exercise control over the means of production in their own co-operative, but, as Kautsky, Trotsky and others described will never be given real control over the means of production in a firm where private capitalists, or the capitalist state already have control, other than at the point where that state itself is about to be overthrown.
So, handing to money to the capitalist state as taxes is the same as handing it to private capitalists as dividends, because, firstly there is no reason why either of the recipients will use it to employ more workers, or if they do they may just as easily use it to employ unproductive workers rather than to accumulate capital. The capitalist state can simply waste it on nuclear weapons and fighting wars, shareholders can waste it on cocaine.
I don't know whether Boffy wants the state to have the same amount of money or not, but the logic of his argument against subsidising inefficient capitalists, would seem to suggest that he would want it to have less, at least by the amount of that subsidy.
"Or whatever shit these people decide they want to get into, which we have no control over!"
But, you could have contrasted the money being accumulated as capital to employ people as burger flippers and so on, with the money being used by the capitalist state to employ soldiers to attack foreign countries, to buy cruise missiles, or to employ police to break miners strikes. Would you prefer the latter over the former?
"No, the state is an absolute necessity for the functioning of capitalism, which is objectively proved by history. The labour movement can hardly present a programme to the working classes that states, "we are implementing these policies because we believe they will lead to social breakdown!"
What do you think a social revolution is if it isn't a breaking down of the existing social relations? The question is under what conditions that occurs, whether workers are already in a commanding economic and social position in society.
Workers cannot simply take over the capitalist state as you seem to think. That is the mistake of social democrats. As Marx and Lenin said that state has to be smashed.
"Saying we should take money from the capitalist state and hand it to capitalists is surely reactionary."
You say that as though the capitalist state was not as Marx and Engels described it the capitalist par excellence! What Boffy actually said was that the money should not be handed either to private capitalists or to the capitalist state, but should be used to accumulate additional socialised capital, because that is what strengthens workers position, which sounds a logical argument to me, whether you agree with it or not.
Matthew.
Boffy's argument seems to me to be the old scratched record of encouraging the contradiction between the productive forces and social relations in order that the 'fetters' of the current social relations are inevitably overthrown by proletarian revolution.
ReplyDeleteThe problem is that the contradictions have already created a situation that should be 'overripe' for revolution, yet that self-same revolution seems as far off as ever. This suggests that the productive force determinism argument might be overripe for the dustbin.
Matthew,
ReplyDeleteI would not normally respond, because I make a deliberate point of never reading anything that known trolls like BCFG write. I also know from past experience that he uses a number of sock puppets, some of which argue a range of different perspectives. However, you have raised a number of questions, so I will respond briefly.
In relation to your first paragraph, your statement is correct. Engels in his Critique of the Erfurt Programme argued against the German socialists proposing a National Insurance and welfare state, for that very reason, saying that it was contrary to their opposition to all “state socialism”. Marx, in the French Socialist programme that he co-wrote with Guesde, argued for the state to keep its hands off all of those social welfare funds and functions that the workers had established via their Friendly Societies, and trades unions. In the Critique of the Gotha Programme, he says that it is wholly objectionable for the state to be involved in the provision of education.
Marx and Engels wanted to keep the state out of all these aspects of workers' daily lives, and limit its growth. He argued specifically that tax should be no more than was required for the actual functioning of the necessary administration of government. That was because anything more, undermined the potential for workers self government. In the programme he wrote for the First International he says that clearly.
But, as he also sets out, where the capitalist state has already established some functions that are of benefit to workers, we would not demand that it did not do so. We would instead point out the need to go beyond the limited nature of what had been established. Lenin makes the same point in Imperialism against Kautsky's argument for limiting monopolies. We do not advocate monopolies, but they represent a higher stage of capitalism than 19th century free competition, and we have no interest in proposing a move backwards.
That also answers your other question about whether I think the capitalist state, or any other state, should have more resources/taxes and so on.
Marx makes clear his position on pushing capitalism forward so as to bring the contradictions and the antagonism between capital and labour to their maximum, in the last paragraph of his Speech On Free Trade.
In Capital III, Marx says that socialised capital, whether it is that of the joint stock company or the co-operative, represents the transitional form of property between capitalism and socialism. But, points out that workers exercise control over the latter, but not over the former. That difference is even more marked with state capital. Kautsky, in the Erfurt Programme set out why the capitalist state would never nationalise anything for the benefit of workers, and why it was more oppressive than privately owned capitals.
Trotsky makes the same point about Workers Control. In Russia after February 1917, in Italy in 1920, France or Spain in the 1930's, i.e. revolutionary situations, it may be possible for workers, guns in hand, to gain workers control, but not under currently existing conditions, so the demand is utopian, and misleads workers.
"The problem is that the contradictions have already created a situation that should be 'overripe' for revolution, yet that self-same revolution seems as far off as ever. This suggests that the productive force determinism argument might be overripe for the dustbin."
ReplyDeleteThat's only if you have a wholly mechanistic interpretation of that process, which I don't. The whole point of my approach, which was also the approach of Marx is that the development of the productive forces to create socialised capital, of itself leads to the need to raise questions, and also calls for the establishment of new forms, which in turn create a different level of consciousness.
If we take the highest form of socialised capital, that of the capitalist state, in the form of nationalised industries, then it becomes fairly obvious that this confronts workers as an oppressive force. Just ask the miners in 1984/5. It raises the idea that this capital, which pays dividends to coupon clipping bond holders has had its time. The bond holder, like the private shareholder fulfills no useful social function, and yet absorbs vast quantities of social wealth in interest payments.
Outside revolutionary situations, there is no possibility that workers can obtain any meaningful control over this capital. If social democrats propose it, via calls for reform of corporate governance, Marxists have no reason to oppose it - as Trotsky also describes in relation to Mexico - but we point out that it is limited, and that the only way to exercise real control is via the establishment of worker owned co-operatives.
As Marx sets out in his Inaugural Address to the First International, however, once workers begin to extend those co-operatives on a national/international basis, via the creation of a co-operative federation, the capitalists will seek to use the capitalist state to stop them. So, workers will be led to the need to form their own revolutionary party, geared to the introduction of these new revolutionary forms of property, and social relations built upon them. They will be led to the need to create their own forms of democracy and organs of state, such as defence squads, militia, workers councils and so on, which arise in direct antagonism to the existing state, and bourgeois democracy, and pose the need for the overthrow of the latter.
But, neither I nor Marx suggest that just because the material conditions tend towards such developments, they happen automatically, it requires real human beings to pursue those ideas that flow from it. In fact, co-operatives have continued to grow across the globe, despite the fact that many who called themselves marxists have opposed them, and instead of those Marxists advocating workers self government they have advocated reliance and faith in the existing capitalist state.
In fact, that reflects the actual strength of the existing material conditions, and the development of socialised capital, because those social-democratic ideas of reliance on the capitalist state, are exactly what flows from the dominance of socialised capital, as a transitional form, and the role of the "functioning capitalist", i.e. the professional day to manager, within it.
“The capitalist state does employ people, and taxes are required for that where the things produced by those people are not sold.”
ReplyDeleteNo, what you need are actual people with skills who can do the work. Taxes don’t lift anything, never apply their skills to solve a problem and never use implements to transform nature. People do that.
“My understanding of what Boffy was saying, and he would have to correct me if I'm wrong, is that Marxists should not encourage the capitalist state,”
No, Boffy was calling for less state and more private, let us call it encouraging greater exploitation, which I can’t remember being one of Marx’s rallying cries. Boffy once said that China was more progressive than the USA because it had more state involvement, and trying to reduce state involvement was reactionary. In reality no capitalist system can function without a huge state, history has objectively shown this! The only people who ignore reality and believe capitalism can be reformed by less government are right wing libertarians, oh and now Boffy!
“So, handing to money to the capitalist state as taxes is the same as handing it to private capitalists as dividends”
Except as you say in the former case the money gets spent building hospitals or bombs and in the latter case it goes to buying the next luxury car or yacht!
“but the logic of his argument against subsidising inefficient capitalists, would seem to suggest that he would want it to have less, at least by the amount of that subsidy.”
But all that would happen here is that we would get less doctors, nurses and teachers and the same level of subsidy for the ‘inefficient’ capitalists! Unless we have a workers government! And of course we seem to be ignoring the fact that government can swing from left to right, it doesn’t seem to factor anywhere in Boffy’s so called logic. For some reason Boffy thinks handing more money to ‘socialised private capital’ is somehow not reformist but giving to the state is. There is no logic here just dogma. And this logic is entirely based on the flimsy idea that co-ops can penetrate and take over the capitalist world market. Marx called co-ops useful experiments; Boffy thinks they are the be all and end all.
“But, you could have contrasted the money being accumulated as capital to employ people as burger flippers and so on, with the money being used by the capitalist state to employ soldiers to attack foreign countries, to buy cruise missiles, or to employ police to break miners strikes. Would you prefer the latter over the former?”
When the budget gets cut the imperialists will still have the ability to launch murderous wars against anyone they please! So it is never a question of military might vs flipping burgers but always between more social care or more burger vans.
“What do you think a social revolution is if it isn't a breaking down of the existing social relations? “
Social relations are different to social breakdown. Show me where Marx wrote a political programme that called for trashing workers services and living conditions.
“Workers cannot simply take over the capitalist state as you seem to think. That is the mistake of social democrats. “
Well then if they can’t take over the state I presume they can’t take over big capitalist enterprises. So what exactly can they take over? And it is surely easier to smash something you have under your control than trying to throw stones at it from afar?
“You say that as though the capitalist state was not as Marx and Engels described it the capitalist par excellence!”
This begs the question why does Boffy want to take money off the capitalists par excellence and give it to the more inefficient capitalists? I thought the whole point of the argument was to take money away from the most inefficient, whatever that means.
“People do that.”
ReplyDeleteBut, if none of the product of that work is sold, to cover the wages of these people, how do you pay their wages, other than by the need to levy taxes?
Boffy has now answered your point that he wants less state and more private, and your statement is shown to be wrong. He says,
“We do not advocate monopolies, but they represent a higher stage of capitalism than 19th century free competition, and we have no interest in proposing a move backwards.”
There is a difference between not advocating an expansion of the state and advocating an expansion of private capital. Besides what Boffy spoke about was not more private capital, but the further accumulation of socialised capital, in the shape of co-operatives and joint stock companies, which as he says, Marx called the transitional forms of property between capitalism and socialism, which also deals with your comment that Mrx thought they were only useful experiments.
“In reality no capitalist system can function without a huge state, history has objectively shown this!”
That is true, which is why the Tories austerity measures are against the interests of capital, but since when did a Marxist want to ensure the functioning of the capitalist system, rather than to build alternatives to it, so as to replace it?
“Except as you say in the former case the money gets spent building hospitals or bombs and in the latter case it goes to buying the next luxury car or yacht!”
So, no difference at all then, because some of the dividends also gets used to accumulate additional capital, to produce kidney dialysis machines, or CT scanners and so on!
“But all that would happen here is that we would get less doctors, nurses and teachers and the same level of subsidy for the ‘inefficient’ capitalists!”
That doesn't follow for at least two reasons. Firstly, if large socialised capitals retained profits, which were then accumulated, they would expand relative to the smaller, inefficient capitals. The latter only exit, because the former's expansion is restricted by the payment of tax. Secondly, if socialised capital retained the surplus value it produced, then, particularly for co-operatives could provide workers owned and controlled healthcare, education and so on, as Marx and Engels preferred, as Boffy sets out in the various links to Marx and Engels position.
Boffy did say that allowing socialised capital to retain more of the surplus value it produced, so that it could expand faster was a reform! But, there is a difference between supporting reforms, and advocating reformism, i.e. the idea that capitalism can be simply reformed away The point surely is which reforms strengthen the position of workers, and which the position of capital, which enable the workers to develop so as to be able to challenge the power of capital, and bring about a revolutionary transformation.
Matthew.
ReplyDelete“Show me where Marx wrote a political programme that called for trashing workers services and living conditions.”
Why does a social breakdown have to take that form? It can take the form of workers providing those services, and creating better living conditions for themselves, at the expense of provision in the interests of capital, by the state, or the representatives of money-capital.
“Well then if they can’t take over the state I presume they can’t take over big capitalist enterprises. So what exactly can they take over?”
Boffy has answered that point. They can establish and extend co-ops, they can create their own alternative state and democratic institutions, and thereby act to limit the power of capital, prior to smashing its state, and enabling thereby the further free expansion of worker owned property. As Marx suggested using credit.
The fact that state capital is the most mature form of capital does not at all mean that it is the most efficient. As Lenin said in Imperialism, monopolies are more mature than free competition, but it does not mean they are more efficient. State capitalism is the ultimate monopoly, and Marx saw the revolutionary aspect of capitalism as breaking apart that monopoly under feudalism via competition.
Matthew.
The whole problem with the idea of creating 'alternative state and democratic institutions' is that in a predominantly capitalist economy this does not 'thereby act to limit the power of capital'. For the power of capital to be limited this would require a massive popular upheaval on a wide scale- ie. revolution. A piecemeal approach just leads to co-ops and worker enterprises being swallowed by the logic of capital and acting according to its dictates. When it comes to public services, without some kind of massive distribution of wealth and power, and the drastic reduction of working hours, you are left with a situation little better than Cameron's laughable 'big society'.
ReplyDelete"For the power of capital to be limited this would require a massive popular upheaval on a wide scale- ie. revolution."
ReplyDeleteI disagree. To overturn the power of capital would require that, but not to limit it. When capital grew within feudalism, as Marx describes, that is precisely what happened.
When workers are strong, they can even temporarily, and within bounds, limit the power of capital. Other workers organisations can limit that power in other ways.
The idea that its possible to go straight from where we are to a revolution, is a non-starter. Even Lenin points out that a revolution is usually the culmination of a whole series of previous reforms that lead up to it.
“Besides what Boffy spoke about was not more private capital, but the further accumulation of socialised capital, in the shape of co-operatives and joint stock companies, which as he says, Marx called the transitional forms of property between capitalism and socialism, which also deals with your comment that Mrx thought they were only useful experiments.”
ReplyDeleteNo, Boffy wants a law that gives more money to private capitalists. If we cut through the theory let us say I want less patients in hospital corridors, more bus routes etc and you and Boffy want more deck space on the yachts of the rich and powerful. After all you call joint stock companies ‘socialised capital’ but the richest own most of the shares. Share ownership is an unequal as wealth is generally in a capitalist system. In order to make this medicine palatable you throw in the sweetener that some of the money could be used to extend co-ops. There is enough Marxists literature out there that dismantles this argument.
“Since when did a Marxist want to ensure the functioning of the capitalist system, rather than to build alternatives to it”
So is your position one of giving more or less to inefficient capitalists? If you want society to be dysfunctional sign up for Austerity and start campaigning for the Tories.
“because some of the dividends also gets used to accumulate additional capital, to produce kidney dialysis machines, or CT scanners and so on”
These are usually hugely subsidised by the state. By your logic, this should stop as these inefficient capitalists should go to the wall! Compete or die.
“Secondly, if socialised capital retained the surplus value it produced, then, particularly for co-operatives could provide workers owned and controlled healthcare, education and so on”
Well, surely the co-op would then have to give up a portion of its surplus value to be used by a national federation of co-operatives in supplying health care etc? In other words it would be giving up just as happens when it is given up a portion to the state. You have done the five card trick here, moved the argument onto something different in the hope no-one would notice. If you are arguing that services would be better if they were controlled by workers rather than by capitalists then we are agreed. But this isn’t what you were arguing! You are claiming giving more money to capitalists will improve workers position in society. So on one hand you think the more workers control their own destiny the better but on the other hand you want more control for capitalists, giving them even more power over workers lives. Let the market decide our fate, seems to be your motto. Again I can’t find this in Marx. Whichever way we look at it, all you are arguing for is yet more wealth and power for the 1%. Like they don’t have enough already!
Your whole argument is built on the idea that co-ops can, by themselves, transform and replace capitalism. Though for some unfathomable reason you also seem to think joint stock companies can fulfill this role too. Your whole argument collapses once you recognise this as the bullshit it is.
"Boffy wants a law that gives more money to private capitalists."
ReplyDeleteNo, he doesn't. He specifically argued for higher dividend taxes, and other taxes on unearned income from capital gains and so on! Increasing those taxes, whilst scrapping Corporation Tax encourages the profits to be retained by the socialised capital, for accumulation, to employ more workers and so on, rather than going to private money capitalists to spend.
"So is your position one of giving more or less to inefficient capitalists? If you want society to be dysfunctional sign up for Austerity and start campaigning for the Tories."
Actually, I was just pointing out that your statements about what Boffy said, are untrue. I have no desire to give more or less to inefficient or efficient capitalists. Nor was that what Boffy he said. The argument is about whether the capitalist state should continue to take capital away from efficient, socialised capital, and give it to inefficient smaller usually private capital. There is no reason why a Marxist should want the capitalist state to be able to do that.
"These are usually hugely subsidised by the state. By your logic, this should stop as these inefficient capitalists should go to the wall! Compete or die."
Generally, these are produce by large companies that are efficient, and profitable, but there is no reason a Marxist should support those that are not.
"But this isn’t what you were arguing! You are claiming giving more money to capitalists will improve workers position in society."
Except I have argued no such thing. I have merely pointed out that your claims about what Boffy said in that respect were untrue, and that applies again here. Boffy made no comments about giving money to anyone! He only argued AGAINST taking money away from socialised capital in Corporation tax, in order to give it to largely private small capitalists, in the kinds of subsidies that the state provides through in work benefits, and AGAINST giving it to private money capitalists, by arguing for a rise in dividend taxes and capital gains taxes. The very opposite of what you are claiming!
Matthew.
ReplyDelete"So on one hand you think the more workers control their own destiny the better but on the other hand you want more control for capitalists, giving them even more power over workers lives."
Again I argued no such thing, and nor did Boffy. In fact, Boffy argued for taking control away from those capitalists, by referring to the fact that logically it is the workers in the factory, as in Germany, as much as the capitalists who lend money to it, who should have that control. His point, as I understand it is that its only in Co-ops where that can be properly achieved.
" Let the market decide our fate, seems to be your motto."
Quite the opposite. Your point earlier about co-ops handing over surplus value to a federation as a comparison with handing tax to the state is wrong, because the healthcare and so on would be paid for out of social insurance payments made by workers into their own funds, out of which these commodities would be bought, thereby reproducing the capital consumed in their production.
But, within a co-op federation, run on that basis, it would be the workers who would decide how much to pay in contributions to cover the purchase of commodities like healthcare and so on, and to allocate the resources required for their production. They would do that to meet their own health and social needs.
By contrast, the capitalist state sets those limits, in accordance with the needs of the market for labour-power and so on.
"Your whole argument is built on the idea that co-ops can, by themselves, transform and replace capitalism."
In some ways, as Marx points out they have already replaced capitalism, within the confines of the capitalist system itself. because they have abolished capital as private property in large part.
I haven't argued that they can simply just replace capitalism and nor has Boffy. The capitalists will resist that transformation, and will have to be defeated. Then as Marx says, it will be possible to use credit, to extend co-operatives nationally and internationally, to create the Co-operative Commonwealth that Marx described.
Matthew.
Matthew,
ReplyDeleteYou may find this blog post useful - Socialised Capital.
The capitalist state is ‘socialised capital’ par excellence! Why are you making a distinction between ‘socialised capital’ and the capitalist state? As Engels said in Socialism, Scientific and Utopian,
ReplyDelete“State-ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.”
So for Engels state ownership brings things to a head more than co-ops or joint stock companies! And Engels calls for taking over these productive forces, he does not call for them to be smashed! Boffy is re-writing Marxism in his image. There is no conception in Marxism that co-ops will take over the capitalist world market by itself. As Engels says all the existing co-ops show is that we have no need of the manufacturers and merchants!
“The argument is about whether the capitalist state should continue to take capital away from efficient, socialised capital, and give it to inefficient smaller usually private capital.”
But if we, workers, cannot take over the state, how do we stop them using the money to give handouts to ‘inefficient’ capitalists? This is your problem, you claim we have no control over the state but make demands on how they should use the money!
As I said earlier your whole argument is this: should we take from the left or right pocket of the capitalist.
Boffy’s argument is that shares undermine ‘production’. But if this is the case how then can joint stock companies be ‘socialised’ capital, i.e. a transitional form of production while at the same time being a leech on real production? Are shares the problem or not? If Boffy wants ‘socialised capital’ to retain its profit but wants that same ‘socialised capital’ to not pay out dividends then what is socialised about this capital! You want to undermine the thing that makes it socialised in the first place! If a shareholder sees no value in holding shares what form does the company take? And where does the capital then come from? Also, a company decides when and how much to pay in dividends.
Dividends are effectively paid out of profits, if you give the capitalists more profit why wouldn’t they just pay out more dividends? Boffy seems to be saying that we have an accumulation problem because corporation tax is too high and the state take too much of it. My understanding is that companies have huge cash reserves but are not investing, so the problem isn’t one of a lack of accumulation but a lack of profitable outlets for investment. But if it is true that the state is effectively strangling capital accumulation and growth why the hell don’t they do what Boffy says! For example in China corporation tax is 25%, and was 33% but this didn’t curtail production in any way whatsoever. In fact in recent years China has gone in the opposite direction, it has reduced tax on dividends for those holding shares for more than one year. Wouldn’t this be a smarter approach to the problem, for those wishing to tinker with the capitalist system? Germany has consistently had higher corporate tax rates than the UK, has this affected their production in relation to the UK? I am just not convinced by Boffy’s logic. It doesn’t seem to fit in with the empirical evidence. It is all theory without evidence.
We haven’t even got onto effective tax rates and how these differ from the official corporation tax (and are always less!)
A fuller explanation of how workers build an alternative to capitalism, here and now, as described by Marx i set out in a series of posts here.
ReplyDeleteMatthew.
Does my comment get posted or not? Have I been banned for some reason?
ReplyDeleteOut of courtesy please let me know as then I won't bother posting.
Sorry BCFG. Your previous comment was caught by the spam folder.
ReplyDeleteThe capitalist state is ‘socialised capital’ par excellence! Why are you making a distinction between ‘socialised capital’ and the capitalist state? As Engels said in Socialism, Scientific and Utopian,
ReplyDelete“State-ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.”
So for Engels state ownership brings things to a head more than co-ops or joint stock companies! And Engels calls for taking over these productive forces, he does not call for them to be smashed! Boffy is re-writing Marxism in his image. There is no conception in Marxism that co-ops will take over the capitalist world market by itself. As Engels says all the existing co-ops show is that we have no need of the manufacturers and merchants!
“The argument is about whether the capitalist state should continue to take capital away from efficient, socialised capital, and give it to inefficient smaller usually private capital.”
But if we, workers, cannot take over the state, how do we stop them using the money to give handouts to ‘inefficient’ capitalists? This is your problem, you claim we have no control over the state but make demands on how they should use the money!
As I said earlier your whole argument is this: should we take from the left or right pocket of the capitalist.
Boffy’s argument is that shares undermine ‘production’. But if this is the case how then can joint stock companies be ‘socialised’ capital, i.e. a transitional form of production while at the same time being a leech on real production? Are shares the problem or not? If Boffy wants ‘socialised capital’ to retain its profit but wants that same ‘socialised capital’ to not pay out dividends then what is socialised about this capital! You want to undermine the thing that makes it socialised in the first place! If a shareholder sees no value in holding shares what form does the company take? And where does the capital then come from? Also, a company decides when and how much to pay in dividends.
Dividends are effectively paid out of profits, if you give the capitalists more profit why wouldn’t they just pay out more dividends? Boffy seems to be saying that we have an accumulation problem because corporation tax is too high and the state take too much of it. My understanding is that companies have huge cash reserves but are not investing, so the problem isn’t one of a lack of accumulation but a lack of profitable outlets for investment. But if it is true that the state is effectively strangling capital accumulation and growth why the hell don’t they do what Boffy says! For example in China corporation tax is 25%, and was 33% but this didn’t curtail production in any way whatsoever. In fact in recent years China has gone in the opposite direction, it has reduced tax on dividends for those holding shares for more than one year. Wouldn’t this be a smarter approach to the problem, for those wishing to tinker with the capitalist system? Germany has consistently had higher corporate tax rates than the UK, has this affected their production in relation to the UK? I am just not convinced by Boffy’s logic. It doesn’t seem to fit in with the empirical evidence. It is all theory without evidence.
We haven’t even got onto effective tax rates and how these differ from the official corporation tax (and are always less!)
“And Engels calls for taking over these productive forces, he does not call for them to be smashed!”
ReplyDeleteExcept, Engels says no such thing. Engels agreed with Kautsky and the position set out in the Erfurt Programme that the capitalist state would never nationalise anything in the workers interest, and it is impossible for workers to simply take over the state, or aspects of the state such as nationalised industries! It is why, as Engels said they were opposed to all “state socialism”. It is why Engels opposed the idea of calling on that state to set up a national insurance scheme and welfare state. It is why Engels says,
“It seems that the most advanced workers in Germany are demanding the emancipation of the workers from the capitalists by the transfer of state capital to associations of workers, so that production can be organised, without capitalists, for general account; and as a means to the achievement of this end: the conquest of political power by universal direct suffrage.”
“There is no conception in Marxism that co-ops will take over the capitalist world market by itself. As Engels says all the existing co-ops show is that we have no need of the manufacturers and merchants!”
Boffy, never said they could, and I have pointed out that fact to you several times, so why do you simply keep repeating that lie? He argued that the capitalists would resist, and so workers would need to form a political party to resist that, and would need to develop their own forms of state to resist the use of the existing state against them! But, in fact both Marx and Engels DID argue for the co-operative commonwealth to be developed within that context, by the spread of co-operatives, not by nationalised industry.
“The credit system is not only the principal basis for the gradual transformation of capitalist private enterprises. into capitalist stock companies, but equally offers the means for the gradual extension of co-operative enterprises on a more or less national scale.” (Marx)
“And Marx and I never doubted that in the transition to the full communist economy we will have to use the cooperative system as an intermediate stage on a large scale.” (Engels)
“But if we, workers, cannot take over the state, how do we stop them using the money to give handouts to ‘inefficient’ capitalists?”
Because, it IS possible to win elections, and thereby form the government. The government is not the state! The government is able to take certain decisions, which do not threaten the rule of capital, and which therefore, will not cause the state to rise up in open rebellion against it, as it did, for example, in Chile.
Matthew.
“Boffy’s argument is that shares undermine ‘production’. But if this is the case how then can joint stock companies be ‘socialised’ capital.”
ReplyDeleteBecause shares are not capital. They are only a loan certificate.
“You want to undermine the thing that makes it socialised in the first place!”
Except what makes it socialised is not the fact that there are shareholders, but that the capital is owned by the firm itself, i.e. by the producers (workers and managers) within it, and is not private property. A joint stock company may itself not have any shareholders, because it could buy back all of the shares itself.
“Also, a company decides when and how much to pay in dividends.”
Except, effectively the company does not take those decisions, because with current corporate governance structures, it is the representatives of the shareholders who lend money to the company who have usurped the right to take those decisions. That is why Haldane talks about “capital eating itself”, and why he has himself talked about the need for a reform of corporate governance.
“Dividends are effectively paid out of profits, if you give the capitalists more profit why wouldn’t they just pay out more dividends?”
But, where capital is socialised you don't give the capitalists more profit. The profit belongs to the socialised capital. That is the point! The point is that it raises the question of why shareholders have been allowed to usurp a right that does not belong to them. In Germany that right is limited by the Co-Determination Law, it was challenged in the UK by the Bullock Report, and has been proposed for reform in the EU. Haldane and Hillary Clinton have also now called for reform.
Moreover, its not giving capitalists more profit. Its retaining more of it in the hands of the socialised capital, rather than it being transferred to the hands of private capitalists. If higher taxes on dividends and capital gains are introduced, it encourages capital accumulation.
“Boffy seems to be saying that we have an accumulation problem because corporation tax is too high and the state take too much of it.”
No what he said was that there is an accumulation problem, because too much is taken as dividends by shareholders, and as transfers to other private capitalists, and used also for speculation rather than being retained for productive investment.
“My understanding is that companies have huge cash reserves but are not investing, so the problem isn’t one of a lack of accumulation but a lack of profitable outlets for investment.”
The evidence is that the huge cash reserves are being used to buy back shares to boost share prices, to make capital transfers to shareholders, and to buy the shares of other companies, i.e. speculation rather than investment.
“But if it is true that the state is effectively strangling capital accumulation and growth why the hell don’t they do what Boffy says!”
Firstly, Boffy didn't say the state was strangling capital accumulation. Secondly, decisions on taxes are made by the government of the day, not the state. The current government looks after the interests of money capitalists who lend to socialised capital, not of socialised capital!
“it has reduced tax on dividends for those holding shares for more than one year. Wouldn’t this be a smarter approach to the problem, for those wishing to tinker with the capitalist system?”
No because shares are not capital, and they produce no wealth, so why would you want to encourage speculation in shares, rather than investment in real capital?
“Germany has consistently had higher corporate tax rates than the UK, has this affected their production in relation to the UK?”
Germany also has the Co-determination laws, so that its supervisory boards are more likely to plough back profits into accumulation than to pay them out as dividends to shareholders.
Matthew.
Matthew,
ReplyDeleteYou say, to BCFG
"Boffy, never said they could, and I have pointed out that fact to you several times, so why do you simply keep repeating that lie?"
The answer is simple. Its because BCFG is a troll. BCFG asks other people questions, and misrepresents other people's statements as a matter of course, of perpetuating pointless arguments. But, he objects to answering questions about his own position, because that would expose both his lack of knowledge, and the lack of any logical argument.
He makes silly inflammatory comments purely to provoke a response. Sad really! The best thing is to ignore him, and maybe he'll just go away.
Matthew,
ReplyDelete“Because shares are not capital. They are only a loan certificate.”
I am minded here of something my economics teacher once said, if everyone took their money out of the bank capitalism would be finished. The same is true of shares. If everyone cashed in their shares the system would fall over. So shares are capital, if I borrow money to buy a machine that is capital financing, if I do it to buy a car it isn’t. You are not viewing things in motion.
“Except what makes it socialised is not the fact that there are shareholders, but that the capital is owned by the firm itself, i.e. by the producers (workers and managers) within it, and is not private property.”
For the record I reject the very basis of how Boffy uses the word socialised. I think his definition differs from Marx’s. Most joint stock companies are owned by wealthy shareholders. Most are not owned by the workers and managers. Are you not mixing joint stock company up with co-operatives?
“effectively the company does not take those decisions, because with current corporate governance structures, it is the representatives of the shareholders who lend money to the company who have usurped the right to take those decisions.”
There are companies that have never paid out any dividends. Issuing shares is often a useful way of raising capital from gullible idiots.
“Its retaining more of it in the hands of the socialised capital, rather than it being transferred to the hands of private capitalists.”
‘Socialised capital’ as you like to call it is effectively owned by private capitalists. As Engels said, appropriation is done by capitalists even as production itself becomes socialised. Socialsed capital doesn’t give capitalism its character but the contradiction between socialised production and private appropriation. But if you want to give more power to ‘socialised capital’ why bother with these unproven and tinkering at the margins solutions and instead call for the top 200 companies to be nationalised?
“The evidence is that the huge cash reserves are being used to buy back shares to boost share prices, to make capital transfers to shareholders, and to buy the shares of other companies, i.e. speculation rather than investment.”
What evidence? And there is also plenty of evidence to suggest the reason for lack of investment has little to do with tax policy.
“The current government looks after the interests of money capitalists who lend to socialised capital, not of socialised capital!”
Well corporate tax rates are higher in France, Australia, China, Germany and India than they are here. You focus on tax rates as the problem puzzles me, as there are so many variables at play.
The other anonymous seems to spend his time telling others who is a troll or not. Sounds like the definition of troll to me!
"So shares are capital"
ReplyDeleteMarx and Engels, in Capital, most explicitly state that they are not, and explain, at length why they are not.
"Most joint stock companies are owned by wealthy shareholders."
No. they are not, as Marx sets out. The shares are owned by wealthy shareholders, but as marx demonstrates the capital itself is owned by the firm. It is socialised, as Marx says quite clearly, which is why he and Engels say that it is the abolition of capital as private property.
"But if you want to give more power to ‘socialised capital’ why bother with these unproven and tinkering at the margins solutions and instead call for the top 200 companies to be nationalised?"
Because it is even more difficult for workers to be able to obtain any control, when it is exercised by the capitalist state than when it is exercised by the representatives of shareholders.
But, the same argument would apply that say a nationalised coal firm should retain its profits, so as to be able to reinvest them in productive-capital, rather than be taken as Corporation tax by the state, or siphoned off in other ways by the capitalist state to provide revenue for private capitalists or their state.
"What evidence? And there is also plenty of evidence to suggest the reason for lack of investment has little to do with tax policy."
Michael Roberts recently gave the figures about the increase in the proportion of company cash reserves used for buying shares etc. The argument is about the extent to which profits are being paid out as dividends, rather than invested, as opposed to tax policy per se.
You keep trying to make out that its about investment being limited by the state taking too much tax, but its been pointed out to you several times that that is not the argument.
"The other anonymous seems to spend his time telling others who is a troll or not. Sounds like the definition of troll to me!"
Actually, I think the way you argue, suggests they are right. So, its probably a waste of anybody's time trying to have a sensible discussion with you.
Matthew.
Matthew,
ReplyDelete"Marx and Engels, in Capital, most explicitly state that they are not, and explain, at length why they are not."
No they don't, most certainly not in the way you have framed the question with regard to lowering corporate taxes.
"which is why he and Engels say that it is the abolition of capital as private property."
This is absurd. The point Engels is making is that production is socialised and appropriation is private. It is a contradiction which characterises advanced capitalism. Do you see the distinction and the importance of it?
"Because it is even more difficult for workers to be able to obtain any control, when it is exercised by the capitalist state than when it is exercised by the representatives of shareholders."
Dogma, pure and simple. And not a fact but an assertion. And moreover apologism for private appropriation!
"The argument is about the extent to which profits are being paid out as dividends, rather than invested, as opposed to tax policy per se."
But if they are making such profits why would they need to invest anyway! The logic just doesn't stand up to scrutiny. More likely is that investment is down because the returns on that investment are not forthcoming. And evidence also suggests that companies that pay dividends have higher earnings growth. Your theory is incoherent.
"So, its probably a waste of anybody's time trying to have a sensible discussion with you."
Looking at your last response I would wholeheartedly agree that you are incapable of having a sensible argument with me!
"No they don't, most certainly not in the way you have framed the question with regard to lowering corporate taxes."
ReplyDeleteYes, they do. Shares are fictitious capital, as are bonds and other such certificates. If you don't understand that, you clearly haven't read Capital.
"This is absurd. The point Engels is making is that production is socialised and appropriation is private."
So how do you think production is possible under capitalism without capital? It is that very capital that is socialised, and no longer private property. Moreover, the appropriation itself, in the first instance is also socialised, as Marx sets out in analysing revenues, because no appropriation occurs prior to the surplus value being realised, and the surplus value is realised by and appropriated by the socialised capital. Only then, as Marx sets out is it divided into interest (dividends), rent, and profit of enterprise.
"Dogma, pure and simple. And not a fact but an assertion. And moreover apologism for private appropriation!"
Well if you mean by dogma it was the conclusion that Marx, Engels, Kautsky and Trotsky amongst others arrived at, then that is true. What does it have to do with apologism for private appropriation?
"But if they are making such profits why would they need to invest anyway!"
Firstly, to make more profits, which is the nature of capital, and secondly to be able to beat the competition, which is required for survival.
"More likely is that investment is down because the returns on that investment are not forthcoming."
Except there has been large amounts of profits, and growth of earnings. The point is why would you invest in something that might give you 10%, when you can speculate and make a 50% capital gain?
"And evidence also suggests that companies that pay dividends have higher earnings growth."
Where is your evidence for that? Microsoft, had massive earnings growth for years, but never paid a dividend. But, logic suggests that it is higher earnings growth that enables dividends to be paid, not vice versa. Indeed, that is part of Marx's explanation of the relation between profits and interest.
"Looking at your last response I would wholeheartedly agree that you are incapable of having a sensible argument with me!"
To be honest, looking at your comments in the round, I think I have to agree with others that its impossible for you to have a rational discussion with anyone. And to be honest, I don't think that rational discussion is really what you intend.
Matthew.
“If you don't understand that, you clearly haven't read Capital.”
ReplyDeleteOk, what do you think would happen if tomorrow everyone cashed in their shares? You would have the total collapse of capitalism. Why do you think joint stock companies exist in the first place? The money they raise through issuing shares is used to invest in the company. I.e. they use the money raised from shares to invest in machines, equipmentetc. You are not seeing capitalism as a circuit, as a thing in motion. The way you have framed the question you may as well say that every £1 spent a beer by a worker is a £1 that could have been used by the capitalist to accumulate more!
Investors, i.e. people who buy shares are not just interested in dividends, they are interested in the profitability of the company and its potential for future growth, as this article makes clear:
https://www.boundless.com/finance/textbooks/boundless-finance-textbook/stock-valuation-7/stock-valuation-74/relationship-between-dividend-payments-and-the-growth-rate-335-6420/
And the evidence also suggests that paying out dividends is no barrier to accumulation, as this study shows:
https://www.researchaffiliates.com/Production%20content%20library/FAJ_Jan_Feb_2003_Surprise_Higher_Dividends_Higher_Earnings_Growth.pdf
Your call for lower corporate taxes on the private appropriators is a complete red herring that has no empirical justification. In fact implied in the argument is that we should just reduce the tax burden on the wealthy. Because implied in your argument, whether you admit it or not, is the more money they have then the more they will accumulate and the better off we will all be.
Boffy has completely led you astray because he interprets chapter 32, Historical Tendency of Capitalist Accumulation in volume one of Marx’s Capital to be a story of capitalism, where it is in fact a story of the negation of capitalism and the emergence of socialism. I.e. it is a flight of fancy based on Marx’s historical materialist method. Let us look at what Marx says,
“The capitalist mode of appropriation, the result of the capitalist mode of production, produces capitalist private property.”
Clear as a bell Marx claims the capitalist mode of production produces capitalist private property. Not socialised capital, or the end of private property but capitalist private property.
“The transformation of scattered private property, arising from individual labour, into capitalist private property is...than the transformation of capitalistic private property, already practically resting on socialised production, into socialised property.”
Note here that Marx says capitalist private property rests on socialised production, not socialised capital or socialised property. Engels makes this point clear in Socialism scientific and Utopian. He characterises capitalism as a contradiction between socialised production and private appropriation. This is the real story, not your guff about socialised capital.
But here is the real clincher which proves that Marx was actually talking ultimately about socialism and not capitalism in chapter 32,
“In the former case, we had the expropriation of the mass of the people by a few usurpers; in the latter, we have the expropriation of a few usurpers by the mass of the people. “
Now unless you think that capitalism is a system where a few usurpers are expropriated by the mass of the people it becomes clear that Marx in this chapter clearly characterises capitalism as a system based on capitalist private property, where a few usurpers expropriate the masses.
Boffy actually believes that when Marx says, “The knell of capitalist private property sounds. The expropriators are expropriated.” he is talking about capitalism and not socialism. Boffy’s whole argument rests upon this scandalous misinterpretation of Marx and he is clearly sucking some fools into his devilish scheme.
Read that chapter again and tell me with a straight face that Boffy isn’t completely wrong. And that you haven’t been led astray. And then tell me I am the irrational one!
“If you don't understand that, you clearly haven't read Capital.”
ReplyDeleteOk, what do you think would happen if tomorrow everyone cashed in their shares? You would have the total collapse of capitalism. Why do you think joint stock companies exist in the first place? The money they raise through issuing shares is used to invest in the company. I.e. they use the money raised from shares to invest in machines, equipment, buildings etc. You are not seeing capitalism as a circuit, as a thing in motion. The way you have framed the question you may as well say that every £1 spent a beer by a worker is a £1 that could have been used by the capitalist to accumulate more!
Investors, i.e. people who buy shares are not just interested in dividends, they are interested in the profitability of the company and its potential for future growth.
And the evidence also suggests that paying out dividends is no barrier to accumulation. I will post the links to these articles in another comment.
Your call for lower corporate taxes on the private appropriators is a complete red herring that has no empirical justification. In fact implied in the argument is that we should just reduce the tax burden on the wealthy. Because implied in your argument, whether you admit it or not, is the more money they have then the more they will accumulate and the better off we will all be.
Boffy has completely led you astray because he interprets chapter 32, Historical Tendency of Capitalist Accumulation in volume one of Marx’s Capital to be a story of capitalism, where it is in fact a story of the negation of capitalism and the emergence of socialism. I.e. it is a flight of fancy based on Marx’s historical materialist method. Let us look at what Marx says,
“The capitalist mode of appropriation, the result of the capitalist mode of production, produces capitalist private property.”
Clear as a bell Marx claims the capitalist mode of production produces capitalist private property. Not socialised capital, or the end of private property but capitalist private property.
“The transformation of scattered private property, arising from individual labour, into capitalist private property is, naturally, a process, incomparably more protracted, violent, and difficult, than the transformation of capitalistic private property, already practically resting on socialised production, into socialised property.”
Note here Marx says capitalist private property rests on socialised production, not socialised capital or property. Engels makes this point clear in Socialism scientific and Utopian. He characterises capitalism as a contradiction between socialised production and private appropriation. This is the real story, not your guff about socialised capital.
But here is the real clincher which proves that Marx was actually talking ultimately about socialism and not capitalism in chapter 32,
“In the former case, we had the expropriation of the mass of the people by a few usurpers; in the latter, we have the expropriation of a few usurpers by the mass of the people. “
Now unless you think that capitalism is a system where a few usurpers are expropriated by the mass of the people it becomes clear Marx in this chapter characterises capitalism as a system based on capitalist private property, where a few usurpers expropriate the masses.
Boffy actually believes that when Marx says, “The knell of capitalist private property sounds. The expropriators are expropriated.” he is talking about capitalism and not socialism. Boffy’s whole argument rests upon this scandalous misinterpretation of Marx and he is clearly sucking some fools into his devilish scheme.
Read that chapter again and tell me with a straight face that Boffy isn’t completely wrong. And that you haven’t been led astray.
Links as promised:
ReplyDeleteInvestors not just interested in dividends:
https://www.boundless.com/finance/textbooks/boundless-finance-textbook/stock-valuation-7/stock-valuation-74/relationship-between-dividend-payments-and-the-growth-rate-335-6420/
Paying dividends leads to higher growth, more accumulation:
https://www.researchaffiliates.com/Production%20content%20library/FAJ_Jan_Feb_2003_Surprise_Higher_Dividends_Higher_Earnings_Growth.pdf
You haven't answered the point that shares are not capital! Marx and Engels explain at length that neither shares, nor bonds, nor other forms of loan certificate such as mortgages are capital, but are only fictitious capital.
ReplyDeleteIn fact, would you like to explain what in your opinion is the distinction between a commercial bond and a share?
“Ok, what do you think would happen if tomorrow everyone cashed in their shares? You would have the total collapse of capitalism.”
Shareholders can only cash in their shares by selling them to someone else. If they all wanted to sell their shares, the price of those shares would collapse, but this in no sense means a destruction of capital, precisely because shares are not capital! It would not affect, the companies of whose shares they are, precisely because those companies have already obtained, the money-capital they wanted to borrow in the first place, and have bought real capital with it! In fact, Marx says that the fall in the price of these bonds, and shares is general conducive to capital.
“Your call for lower corporate taxes on the private appropriators is a complete red herring that has no empirical justification.”
Actually, I made no such call. I have simply pointed out that your statements about what Boffy said or didn't say were untrue, and I have pointed out that the arguments you have put show a lack of understanding of what Marx said, or even basic economics. Boffy did not call for lower corporate taxes on private appropriators, and that has been shown several times now, but you keep repeating that lie, which is the behaviour of a troll, not someone interested in a serious discussion. Boffy argued for taxing the private appropriators of dividends, and other unearned income more heavily, as well as increasing capital gains and transfer taxes. That is hardly compatible with the impression you are trying to convey, is it?
He argued for scrapping Corporation Tax as a means of encouraging Corporate profits to be reported in the UK, and accumulated in the UK. You can think that is a good or a bad idea, but it certainly cannot be portrayed, as you are doing, as being about Boffy wanting to increase the wealth and income of private capitalists! In fact, the evasion and avoidance of corporate taxes by big business, and the difficulty of closing loopholes to prevent it, suggest it could be a good idea. It is much easier to tax dividend income at source, wherever the shareholder might live in the world.
“is the more money they have then the more they will accumulate and the better off we will all be.”
And why would I, and why would Boffy want to do that? The argument is nothing to do with the private capitalists appropriating more money. If they are taxed more heavily via higher dividend taxes, and capital gains taxes, as Boffy suggested they would have LESS money, whereas the socialised capital, i.e. the joint stock company or the co-operative would have more money to invest in productive capacity, without going cap in hand to money-capitalist to borrow more of it!! Its your suggestion that supports the private money-capitalists at the expense of the socialised capital, because by taking profit away in tax, that could have been reinvested, you force the socialised capital, to go into the money market to borrow additional money-capital.
Matthew.
The rest of your argument is quite honestly confused gibberish. Firstly, I have not been led astray by anyone, thank you very much. I am quite able to read and understand things for myself. In addition, the argument here has nothing to do with Chapter 32 of Capital Volume1, it, is taken directly from Chapter 27 of Capital Volume III, as well as from Engels comments in his Critique of the Erfurt Programme.
ReplyDeleteYou previously argued that Engels' comments related to the socialised nature of production and private appropriation. But, all of capitalist production is based upon socialised production! That, indeed, is the point about Volume I, Chapter 32. And your interpretation of that that it is about the transformation from capitalist production to socialist production is quite clearly wrong given Engels comments, and given Marx' comments in Capital III, not to mention Kautsky's comments. On the basis of your argument there is absolutely no difference between the private capitalist production of the early period, which is based upon socialised production, but capital as private property, and the socialised capitalist production of the later period, of the joint stock company and the co-operative!
In both these cases, production is socialised. The point is that in the latter case, the capital itself is no longer private property, but is socialised property. The capital belongs to the firm not to the private capitalist, not to the bondholders, not to the shareholders, but as Marx puts it to the “associated producers”, i.e. the workers and managers within the firm!
As Engels puts it,
“Capitalist production by joint-stock companies is no longer private production but production on behalf of many associated people. And when we pass on from joint-stock companies to trusts, which dominate and monopolise whole branches of industry, this puts an end not only to private production but also to planlessness.”
If there is no difference between capital as private property, as in the case of the privately owned firm, and capital as socialised property, as in the case of the joint stock company or co-operative, then Engels' comment above is meaningless, and so is Marx's comment,
““The capitalist stock companies, as much as the co-operative factories, should be considered as transitional forms from the capitalist mode of production to the associated one, with the only distinction that the antagonism is resolved negatively in the one and positively in the other.”
Nor too would Marx’s analysis of how this capital becomes social capital rather than capital as private property make any sense.
“The capital, which in itself rests on a social mode of production and presupposes a social concentration of means of production and labour-power, is here directly endowed with the form of social capital (capital of directly associated individuals) as distinct from private capital, and its undertakings assume the form of social undertakings as distinct from private undertakings. It is the abolition of capital as private property within the framework of capitalist production itself...
It is the point of departure for the capitalist mode of production; its accomplishment is the goal of this production. In the last instance, it aims at the expropriation of the means of production from all individuals. With the development of social production the means of production cease to be means of private production and products of private production, and can thereafter be only means of production in the hands of associated producers, i.e., the latter's social property, much as they are their social products.”
(Capital III, Chapter 27)
Which rather clearly refutes everything you have been saying!
Matthew.
No one doubts that shareholders are interested in things other than dividends. That's partly the point. They are interested in short term capital gains, by share prices being inflated, which is why many only hold shares for very short periods.
ReplyDeleteTo suggest that paying dividends or paying higher dividends is the cause of higher growth, and greater accumulation, is sheer nonsense. A firm that pays dividends does not have those dividends to accumulate. Exactly what consequence of paying dividends do you argue causes growth to increase?
Once again we see the complete collapse into illogicality by BCFG, which comes from being a troll, only interested in perpetuating silly arguments, by denying and opposing, for the sake of it what others say.
ReplyDeleteHe begins by accusing Boffy of wanting to enrich private capitalists. There is no reason Boffy or any other Marxist would want to do that, of course, but making such unfounded allegations are the basis of the arguments put by trolls.
He accuses Boffy and Matthew of "apologism for private appropriation!"
And what does BCFG end up arguing - that the payment of dividends to private money-capitalists, i.e. shareholders is a good thing!!! In other words, the worst kind of apologism for private appropriation!!!
We will leave aside the illogicality of arguing that paying dividends, which are a deduction from profit, can in any sense be argued to be conducive to accumulation, or that Marx showed extensively how the payment of such interest had the exact opposite effect, precisely because it goes to fund revenue rather capital!
Ari.