Letter: The Capital Levy. (1923)

Letter to the Editors from the October 1923 issue of the Socialist Standard

To the Editor of the Socialist Standard.

Sir,

In your issue of August last you express your opposition to the Capital Levy and to my line of reasoning in defence of it. With your permission I propose to answer your criticism, and will be as brief as I can.

To begin with, let us see how far we are in accord. Firstly, I agree that “a small class does own the bulk of the means of producing wealth in this and other capitalist countries.” In my book on “The Capital Levy” I have demonstrated this (for Britain) by overwhelming figures.

Secondly, I agree that this small capitalist class in the main controls to-day the political machine. Thirdly, I agree that capitalists pay wages not because they are philanthropists, but because they are compelled by economic forces. Finally, I agree that the system of capitalism has many inherent evils and that there is no way out except by Socialism.

I do not agree with you however either (1) that under capitalism the workers as a whole have no “surplus over their minimum needs,” or (2) that under Socialism the burden of the National Debt will be automatically lifted.

With regard to (1), you yourself in another part of your article recognise that wages must be “broadly regarded” as based for “different section of workers under different climatic conditions, and with different social standards and different lines of historical development on their standard of living.” This is surely a much more elastic view than is implied by the words “minimum needs.” But, even so, I cannot admit your case. What I will admit is that standard of living and weekly wages are intimately connected. Take two men—a skilled mechanic earning £4 and a labourer earning £2 10s. The family of the former have a standard of living at the £4 rate, while that of the latter live at the £2 10s. rate. I suggest it is much nearer the truth to say that the standard of living depends on the wages, than that the wages depend on the standard of living.

If you ask me, “On what then do wages depend?” I will answer in your own words, “on the economic forces,” and these economic forces include such complex questions as the amount of unemployment, the state of trade, foreign competition, world prices, and so on.

Of course, this distinction between us is vital, for if once it is recognised (as I hold) that wages depend on something other than an automatically-assessed standard of living, then the worker is vitally interested in the lightening of the load of taxation, and stands to gain by a Capital Levy, which will enable taxes on tea, coffee, cocoa, sugar, etc., to be taken off, and that on tobacco reduced. If, on the other hand, you are right, it would make no difference to the workers if the income tax, super tax, death duties, etc., were done away with, and all the revenue were collected from beer, tobacco, tea and the food of the workers. I would remind you that the apologists for the old French Aristocracy took this view in the middle of the eighteenth century and that the revolution followed.

Turning now to the other principal difference between us, I submit that even under Socialism there will be many important problems to be solved. I would remind you that Socialism does not imply the equal subdivision of all wealth, nor the collective ownership of all wealth. But unless Socialists are prepared to tackle the grave evil of maldistribution they will seriously disappoint their supporters. The first step in this direction is to get rid of the National Debt by placing it on the holders of the existing wealth of the country ; and I submit that this step if not already taken during the establishment of Socialism would certainly have to be taken immediately afterwards.

I should exceed the space you can afford me if I were to attempt to answer all the minor points you have raised, but as these two major differences go to the root of the whole matter they will probably suffice.

Yours, etc.,

F. W. Pethick Lawrence.

Reply.

I must first point out that I did not say that the workers have “no surplus over their minimum needs,” although, as a matter of fact, few of them indeed are able to accumulate any property worth mentioning. What I did was to take two alternatives—”the workers either receive a surplus … or they do not “—and to try to show that, whichever be correct, taxation could not affect them as a class. It was not necessary to say which is correct, and I did not do so, as without further explanation of “minimum needs” such an assertion would be misleading.

The assertion I did make was that referred to by Mr. Pethick Lawrence as “a more elastic view,” and I hoped when I wrote it that I had make it quite clear that the workers’ standard of living is not in my opinion “an automatically-assessed standard of living,” but is “elastic.” It is the resultant of a number of factors which change continuously, and moreover which include the workers’ political knowledge, assertiveness, and mental independence.

I need not labour this further or deal with Mr. Lawrence’s discussion of the relation of wages and the standard ol living, because I think he has not gone to the root of our disagreement. I will therefore restate my view.

The standard of living is not measured simply by the amount of money wages received. It consists of the amount of real wealth, food, clothing’ and shelter, etc., finally consumed by the working class. The relation this amount bears to the whole product of the labour of the workers depends at any given time on the interaction of the “economic forces.” The capitalists, who are the legal owners of the whole, give to the workers just as much as they are compelled to give. Now, unless the Capital Levy disturbs this equilibrium of forces in the workers’ favour, their standard of living will not be improved. Or, as I put it in my article, “Would the capitalists, if there were no taxation at all, give the workers a larger share of the wealth produced, and if so, why?” This basic question has not been answered.

To say that some workers or all workers receive £4 and have to return £1 as taxes, only means that at the given moment £3, and not £4, is the money value of the standard of living produced by the existing forces. If that were not so, the workers would be able to demand and to get an increase of, say, £1 per week. Their ability to make such demands is limited always by the control the capitalists have over the key position, the political machinery.

Of course, Socialist Society will have its own problems to solve, but the National Debt will not be one of them. We are some of those rare people who, in spite of calling themselves Socialists, actually desire Socialism. Under Socialism—that is, a “system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth”—there will be no room for individuals to live by their ownership of some of society’s resources. We do not aim at the “equal” (or unequal) “subdivision” of anything; nor would we be so foolish as to advocate the “collective ownership of all wealth.” Wealth, as distinct from the means of producing wealth, does not permit of being collectively owned.

In view of Mr. Pethick Lawrence’s subsequent remarks, I must dissent from his opinion that he and I are agreed that, “there is no way out except by Socialism.” To me his “way out” seems to be merely a way cut into the wilderness. The Capital Levy is not Socialism ; it does not lead to Socialism ; and it still remains to be shown how its introduction would in any way better the position of the working class within the capitalist system.

Edgar Hardcastle.

[Mr. Lawrence can, if he wishes, have space to explain further his position and to deal with the points raised in the reply.]