Charting America's Future: 13. Overcoming Capitalism's Death Wish
TYLER, GUS
CHARTING AMERICA'S FUTURE BY GUS TYLER 13. OVERCOMING CAPITALISM'S DEATH WISH Not only has the bourgeoisie forged the weapons that bring death to itself; it has called into existence the men who...
...Reform is chloroform," he proclaimed...
...it simply was a poor posture politically...
...The old compulsion continued to pulsate...
...The conflict provides the creative tension for action...
...That seems the obvious thing to do when the budget is going ever deeper into the red...
...The process of confrontation and compromise is a mixture of two evils-confrontation" is a form of disorder, "compromise" a form of surrender-that may, like the explosive elements of hydrogen and oxygen turn into the calm, cooling, cleansing element of water when properly combined...
...The death wish would work its fiendish way...
...As a dominant philosophy, it was replaced by the short-lived Laffer Curve...
...The tax cut failed to spur either buying or investing...
...Marx said it...
...If A.W...
...He had little use for the "Utopian Socialists" who believed they could transform the world by an appeal to reason and virtue...
...One version advanced by two economists at Stanford University, Robert Hall and Alvin Rabuska, would mean that "those with incomes below $50,000 would find themselves paying higher taxes, while those above that point would receive tax reductions, huge ones at the top...
...But ideology is, as we know, not the exclusive instrument of those who would speak on behalf of the proletariat...
...They are increasingly wary of a definitive and final solution in terms of who shall own the means of production...
...In his own case, Marx viewed ideology as a source of instruction and inspiration, a weapon in the struggle of his favorite class...
...It would probably be best for those who hold to this vision of "revolution" to do nothing to reform the system...
...With the development of industry," they wrote, "the proletariat not only increases in numbers...
...Leave it to the capitalists...
...The Laffer Curve, unlike the Phillips Curve, was based on no research...
...In their efforts to further accumulate the nation's wealth, the top bananas were too successful...
...In the great debate between the De-Leonists (later the Socialist Labor Party) and the "reformers" (later the Socialist Party), the latter won-carrying with them many militantly revolutionary elements, including Eugene V. Debs and followers of the Industrial Workers of the World...
...requires-forgive me, old comrades-class collaboration...
...The Laffer Curve fell flat swiftly...
...Nor did it take much for many to realize that the billions of dollars in transfer payments was one of the reasons America did not have a deep deep depression by late 1982, and weakening this shock absorber would jolt the nation into early collapse...
...This was precisely the process that Marx foresaw as producing capitalism's gravediggers...
...It was the rationale for manufacturing a recession...
...In the process, they willy-nilly helped to underpin rather than overthrow capitalism...
...The preceding pieces in this series were: "The Great Debate"(NL, November 30, 1981, "Those New Deal Years (1933-1938)"'(NL, December 28, 1981), "Undoing the New Deal (1939-1981) " (NL, January 25), "Responses-1" (NL, February 8), "The Roots of Stagflation" (NL, February 22), "Responses-2" (NL, March 8), "The Politics of Productivity" (NL, March 22), "Re-sponses-3"(NL, April5), "Supply-Side Trickle-Up" (NL, April 19), "The Budget Balancing A ct" (NL, May 31), "Farewell to Fairness" (NL, June 28), "The Deindustrializalion of America " (NL, August9-23), "Responses-4"(NL, September6), "Left About-Face "(NL, September 20...
...In previous installments of this series we have examined the majority of these notions...
...it becomes concentrated in greater masses, its strength grows, and it feels its strength grow more...
...In short, those tax cuts that made the richest richer were not being touched...
...The Administration was even toying with the idea of taxing unemployment compensation, an old notion of the President's economic advisor, Martin Feldstein...
...He did not sufficiently anticipate that the battles of the proletariat would reform capitalism in ways which would lessen the love for and likelihood of revolution...
...The Tax Bill of 1981 became the embodiment of the Laffer injunction: It cut income taxes by 25 per cent over three years, a deed that gave no reduction at all to the lower and middle income classes after allowing for bracket creep and Social Security taxes, but did provide a bonanza to upper-income groups...
...This made the economy even more top-heavy than it was...
...Most theoreticians for American business, by contrast, have in recent decades chosen to "think up" theories that reinforce the self-immolating impulses of any capitalist system...
...At the end of 1982, steel was running close to 40 per cent of capacity...
...it has called into existence the men who are to wield those weapons????the modern working class, the proletarians . . . . What the bourgeoisie, therefore, produces above all are its own gravediggers...
...Plato said it best and briefest of all in The Republic when he had Socrates advise his disciples: "Any city, however small, is in fact divided into two, one the city of the poor, the other of the rich...
...After all, a candidate for President could not expect to be elected by telling the country that it must choose between unemployment and inflation...
...After all, why bother writing a Manifesto or Das Kapital if words work no wonders...
...the bargain of the combatants bespeaks man's place in the human family...
...For President Nixon in 1970, it provided the scientific basis for "cooling the economy," for holding "actual growth" below "potential growth...
...It was the medicine, the bitter pill, to end inflation...
...Once the capitalists were given enough capital, we would all be given the good life...
...whatever puts more capital in the coffers of the capitalists is in the best interest of society-An obsession to "accumulate" that Marx quite properly saw as the self-destruct mechanism of capitalism...
...Nevertheless, during this period when capitalists have had more to invest and when a higher saving rate has made more money available for investment, the unemployment rate has risen from less than 8 per cent to 10.8 per cent and the economy has been sluggish and laggard and showed a minus growth rate...
...The deficit was not due to excessive spending...
...But unless a sense of societal direction, social conscience, national purpose, economic equity, and planned plenty becomes an essential part of our national process and program, then Marx may still be right...
...He counted on instinct to be the engine of revolution...
...Whether these seeds of the social contract-from the Mayflower Compact to the settlement of the football players' strike-can be nurtured in America to blossom into a comprehensive process for the nation is uncertain...
...Together, capital and labor and government and whoever is part of the act should consultatively and collectively elaborate programs that redound to the greater good of the country...
...They proposed to cut spending and to increase taxes...
...their corporations were taxed too heavily...
...We detailed the fallacies of the Phillips Curve in "The Roots of Stagflation" (NL, February 22...
...In traditional Marxist circles class collaboration was the cardinal sin...
...It stems from the simple fact that they are people, with all the instinctive urges of people: to survive, to protect themselves against future hazards, to exert influence and wield power...
...In some respects all this should come easily to Americans...
...The unprecedented, self-inflicted deficit is striking evidence of the death wish at work...
...The Constitution of the United States was a grand social contract, in the first instance, among 13 independent states...
...Quite contrary to the Marxist prediction, it is in countries like Russia and China, where "the development of industry" was backward, where the proletariat was not numerous, not concentrated in great masses, not strong, that "socialist" revolutions have taken place...
...rather it was the difference in the way they secured their income...
...A swift review of the two most prominent latter-day dogmas suggests the fertility of the human mind and the futility of inhuman avarice...
...Politics demanded that a formula be found that would promise less inflation with more employment...
...And if taxes had been genuinely cut for middle America and not reduced at all for the economic elite, the Federal government would be running surpluses...
...Today, one hears little of the Phillips Curve...
...Its only result, aside from its maldistributional impact, was to deprive the Federal treasury of needed income and thereby contribute to bringing on the biggest deficit in the nation's history-by far...
...Many of them, especially in 20th-century Europe and Japan, recognize the inherently self-destructive tendencies of capitalists and propound the need for a social (socialist...
...Karl Marx and Friedrich Engels, Manifesto of the Communist Party It was about 135 years ago that Marx and Engels described the suicidal impulse of capitalism...
...A recession would force out their less affluent competitors, generally stigmatized as "inefficient" operations...
...Once exposed to the recurrent economic crises of capitalism, the working class realizes that the bourgeoisie is "unfit to rule because it is incompetent to assure an existence to its slaves within its slavery...
...Within 24 hours after the proposal to soak the poor was floated, it was withdrawn under the heat of a firestorm from every home that had tasted idleness in recent years, from every heart that cried out against the inherent inhumanity of the suggestion...
...By this forecast, socialism would arrive first in those countries where capitalism, as embodied in modern industry, was most advanced...
...corrective, for "countervailing forces"-to use the felicitous term of America's John Kenneth Galbraith...
...They lacked capital because they were taxed too heavily...
...Inflated prices further narrow the market by restraining buying...
...Phillips were alive, he would hasten to protest that his research was misinterpreted and misused...
...Comes the revolution...
...But, no...
...shall be all...
...by late 1982, President Reagan actually was proposing that the reduction begin earlier than scheduled...
...Ironically, Marx was so wrong in his prognosis of the future because he was so right in his diagnosis of the past...
...and in either there are many smaller divisions...
...Vat is a hidden sales tax at every point of production and exchange, ultimately to be passed on in its totality to the consumer-not visibly but as part of the purchase price...
...He saw that it was not any difference as humans that caused people to clash with one another...
...It was due, first, to the low growth rate dictated by Nixon in 1970 and continued by every subsequent President...
...It would, notes William Nordhaus, John Musser Professor of Economics at Yale, "lead to a wholesale redistribution of after-tax incomes from middle income groups to the rich...
...long-term progress should predominate over short-term profits...
...if taxes rise to 100 per cent of income, nobody will bother to work or to invest-consequently, while some taxes are necessary, excessive taxation is counterproductive...
...Logically, he concluded that the struggle would go on into the capitalist era and end in the overthrow of capitalism, just as other class wars had ended in the overthrow of slavery and feudalism...
...The thinking of most other critics of capitalism-both its ethics and its economics-has moved from program to process...
...The 25 per cent reduction in income taxes was not revised or modified either...
...In this mission they were not alone: the New Dealers, the Progressives, the Farmer-Laborites, the Populists, the Grange, the Free Soilers, even the Working men's Parties of the 1820s, each and all added their bit to the remaking of the system...
...Holding down costs involves, among other things, holding down wages and salaries...
...This is not to say that Marx discounted ideology...
...Yet the tax on the jobless was momentarily abandoned not because its proponents thought it was a bad idea economically...
...In this context class collaboration does not mean that conflict between classes will end, either now or in the foreseeable future...
...He wanted no half a loaf, not even a slice or crumb, for fear that it would dull the workers' appetite for the revolution...
...The social contract must move toward a global contract...
...Conflict is inherent and inevitable between economic elements that derive their income in different ways or in different quantities...
...Capitalism may produce its own gravediggers, who, in fact, in the fury of their frustration, may bury us all...
...The bourgeoisie also has its thinkers...
...So, those who have it don't spend it (they couldn't spend it all) and they don't invest it, they speculate-in stocks, bonds, money funds, coins, stamps, guns, horses, houses and, above all, in the merger mania...
...The battle bespeaks man's roots in the tribe...
...Tax expenditures," the hundreds of billions of dollars lost to the Treasury annually through loopholes for some of the richest persons and corporations in America, were not cut...
...Not so long ago it was very popular-the Solution...
...It was a silly statement of the obvious: If there are no taxes, the government will be without revenue...
...Marx called his brand "scientific socialism" because it counted on certain normal forces, on compulsive social urges, to work great change...
...They do not want the state to own everything...
...And, as suggested in our previous piece ("A Global Strategy," NL, November 15), the process and the program must reach beyond national boundaries...
...Although useless as economic ad-vice, Laffer was useful as political propaganda...
...But there is a discernible difference between the Old and New World-especially between the United States and Western Europe-in their understanding of the dialectic dynamic they have been involved in...
...Capitalism needs a corrective counter-power to make " free enterprise" workable economically and bearable politically...
...the collaboration provides the bed for mutual satisfaction...
...Expenditures for social programs-education, school lunches, medical research, aid to the handicapped and aged and indigent, etc.-were cut...
...they will do the wrecking and will provide the shovels for digging their graves...
...The Mayflower Compact was a social contract, an almost perfect case of the Rous-seauan formula, with the Pilgrims agreeing to set up a social order that called for self-rule and at the same time pledging allegiance to the British Crown...
...Remember the Phillips Curve...
...Such natural behavior is in the long run suicidal, for it dries up the market of a market economy...
...According to the Administration, such cuts were merely directed at eliminating waste and fraud...
...The Constitution was constructed to accommodate a societal pluralism in ways that would create a strong "union," even while allowing for states' rights...
...As the petite bourgeoisie weakened or fell by the wayside, the haute bourgeoisie could either buy them up cheaply or just grab their piece of the market...
...By 1982, it was a time for responsible parties to cry out, mea culpa, and to mend their ways...
...At the turn of the century, he inveighed vitu-peratively against those who sought to soften the brutalities of capitalism...
...To hide their sins, the folks who gave us the deficit demanded a constitutional amendment to mandate a balanced budget...
...In labor-management, the contract is the core of the relationship...
...No matter how "red" they might be, they sensed that it was unreal to postpone the daily struggle in the here and now in the hope that gaining nothing today would gain everything tomorrow...
...if kept down or depressed, the market is kept down or depressed...
...The accumulated savings and profits have not gone into productive investment because in our market economy it is imprudent and dangerous to build or expand a plant if your present one is running at only 70 per cent of capacity...
...They've got the money, but the rest of the people don't have the cash to buy...
...these are at war with one another...
...the economic recession, especially as it grew into a depression, would spur the victims of bad times to act in bad temper...
...Then they proceeded to put forward specific measures to balance the budget, or at least keep the deficit from rising to better than twice the size of even the largest previous deficit...
...Whether what follows will be a society of "peace, plenty and freedom" is still a debatable matter if the Soviet Union is the model-As it has been for many since 1917-of what issues from the chaos of social collapse...
...The new pitch was a necessity for the 1980 campaign...
...Our nation (the world...
...the personal savings rate in the country was too low...
...They have come and gone with remarkable speed: As we were writing, one fad faded and another bloomed...
...Transalated into pop talk, it was interpreted to mean that, if taxes were lowered, workers would have incentive to produce more and investors would have incentive to invest more...
...They further weakened the market...
...In practice, it turned out that the Laffer Curve was merely another way for our society to continue its pursuit of the death wish...
...The answer offers further insight into the suicidal syndrome...
...But conflict does not necessarily exclude collaboration...
...Such a social contract was quite repulsive to some early revolutionary unionists, who saw the signed agreement as a form of class collaboration, which it indeed is...
...The 20 per cent limit on capital gains taxes was not increased...
...Many European capitalists realize the role that labor and Socialist and populist movements have played in rescuing capitalism from its own death wish...
...What happened in the United States happened in Western Europe in different modes with the same result...
...Viva la muerte...
...From our experiences since 1970, at least, it is clear the the capitalist mechanism cannot be entrusted to the capitalist mind: It is self-immolating...
...Wages and salaries are the base and bulk of the market...
...The idea was as irresistible as it was simplistic, especially since to Tommy the Taxpayer it simply meant lower taxes...
...Marx understood the essence of this dialectic...
...Expressed economically, this means that capitalists (as a class, again) will naturally seek to optimize their circumstances by minimizing outgo (costs) and maximizing income (prices...
...The death wish of capitalists (as aclass) does not derive from any peculiar moral defect inherent in the bourgeoisie...
...and the continuing myth of laissez faire that eschews collective action and governmental initiative or intervention...
...National needs should take precedence over personal gain...
...in the second instance, among the diverse interests-economic, ideologic, ethnic, religious-that made up "the people...
...The emergence of a Communist Party in the United States, following the Bolshevik Revolution in Russia, renewed the debate among American radicals...
...Raising income requires raising prices whenever the market allows, or whenever the market can be so manipulated as to force a price increase...
...Although much in our history favors this kind of evolution, much in our past works to the contrary: our diversity, our regionalism, our individualism...
...They have advanced one rationale after another to make a social gospel out of the capitalist compulsion to apply the Midas touch that turns the agora into a gold-plated desert of dust and ashes...
...It enjoyed a longer than usual period of popularity, from 1970-80, as it posited the existential dilemma that full employment meant inflation and therefore the only way to check rising prices was to thro w more people out of work...
...So we reduced taxes on the affluent individual, we reduced taxes on corporations to zero, and by the end of 1982 we will have added $250 billion to our savings...
...To Marx, however, an ideology was an expression of class attitudes, a formulation of feelings into a coherent Weltanschauung, a conscious insight into unconscious sentiments...
...The process calls for a new kind of social contract in which the various classes within a nation recognize that they must, in the first instance, be concerned with the common weal and the commonwealth...
...It maintained that the economy was failing because in our capitalist society the capitalists did not have the required capital to make investments, the sine qua non of progress in a free enterprise system...
...Taxes were also raised selectively...
...Underlying these many self-contradictory and self-defeating inventions and innovations is a theory about capital formation...
...Yet, under the circumstances, it was the wrong thing to do, for it failed to address either of the deficit's basic causes...
...The working class provides a counter thrust to this suicidal syndrome-not because the proletariat is graced with superior morality, but because it acts under the same human urges as the capitalists...
...they fear that this is economically inefficient and politically oppressive...
...Be that as it may, his formula did suit the needs of a class...
...hence, as in the years since 1970, they have been siring their own gravediggers...
...It fit neatly into the sentiments and schemes of those who wanted to hold down or beat down wages and salaries...
...The effect, of course, would be stagflationary: higher prices and, consequently, less buying and more unemployment...
...It is noteworthy, moreover, that no matter how varied they were, all reached the same conclusion: The "bottom line" is the bottom line...
...Throwing people out of work would loosen the labor market, make it easier to resist wage demands from individuals or from unions...
...It is in the museum of past postulates, exerting little influence except in the machinations of those who run the Federal Reserve Board and who, like the Bourbons, forget nothing and learn nothing...
...On the other hand, they do want a society where productive potential is utilized at its maximum and where income is distributed equitably...
...taxes were to go up on gasoline and on other consumer items...
...Indeed, if unemployment was high enough, employers might even demand and win wage reductions, as they have been doing...
...and second, to the 1980 giveaway to the affluent...
...Growth Without Inflation, " (NL, October 18), and "A Global Strategy, "(NL, November 15).in-tothered...
...Yet in Western Europe, the United States and Japan-where capitalism made its initial appearance and has achieved its greatest development-the "system" continues to survive and, taking the years 1848 to the present as a whole, even to thrive...
...Madison said it even better than Marx...
...The idea was not to take the edge off the struggle but to sharpen it in preparation for "the final conflict"-when those who " have been nought...
...In its place, the maldistributionists readied two other kinds of levies: the Value Added Tax (vat) and the Flat Tax...
...Regardless of how "revolutionary" the American Communist Party may have been at any given moment, though, it never fell into the DeLeonist mold: As the self-proclaimed "vanguard of the proletariat," the party threw itself into every struggle for "immediate demands...
...But it is collaboration following confrontation...
...What Marx did not en vision was how this particular class conflict conducted by his chosen people-the proletariat-would change the nature of capitalism and the behavior of capitalists...
...It is impelled to seek a more equitable distribution of income for intestinal, not intellectual, reasons...
...The day of Armageddon would be the day of eternal Armistice too-with lasting peace among all people and all nations, one class in one world...
...He saw all history as the history of class struggles...
...The Flat Tax, in its popular conservative variation, would do away with the principle of progressively graduated income tax...
...The ranks of the proletariat would be swollen with the recently declassed petite bourgeoisie...
...Whatever the case, the cuts did mean a reduction in the buying power of the families that had been the beneficiaries of these "transfer payments...
...In addition, the Administration thinkers cut spending and raised taxes in ways that could only push the society into deeper depression...
...In so doing it restores the market, without which capitalism becomes a cadaver, a candidate for the grave...
...The only question the Laffer Curve did not address, being an unresearched tautology, was at what point taxes became too much...
...Vat and Flat come to the same thing as the Phillips Curve, the Laffer Curve, the cut in social programs, the Tax Bill of 1981: the transfer of income and wealth from those who have little to those who have much, the impoverishment of the real market and the enrichment of the stock market...
...Although not one of these movements succeeded in achieving its ultimateaim, all of them were repeatedly successful in forcing reforms of American capitalism...
...Instead of levying higher rates on higher incomes, the Flat Tax would set a single rate for everyone, rich or poor...
...according to critics of the Administration, they were merely meaness of spirit...
...The Phillips equation was particularly pleasing to big businesses with abundant cash reserves...
...the labor-management pact is the contract that flows from conflict...
...If the economy were running at 100 per cent of capacity instead of at the 70 per cent attributable to the man-made recession, government revenues would be great enough to cover all costs, and more...
...As one forthright young lady once put it to me in an un-subtle hint at marriage: "I know how to quarrel and how to make up...
...Then jobs would increase in response to investments, and with workers joyously stepping up their production the supply-side economics" held out the promise of fuller employment and less in-mise of fuller employment and less inflation...
...One prominent American Socialist, Daniel De Leon, did foresee the effect of reforms forced upon capitalism by Socialist and labor movements...
...The unions, of course, whether led by conservatives or radicals, always opted for the momentarily realizable-A penny more, an hour less, a fringe here or there, whatever their dreams about the central issue of the daily battle...
...Few American capitalists possess a similar appreciation...
Vol. 65 • December 1982 • No. 24
