Who bailed out the bankers? (2010)

From the February 2010 issue of the Socialist Standard

They tell us that we “the taxpayers” did? But it’s not as simple as that

People are angry at the banks. They blame them for causing the crisis. They blame them for having to be bailed out and then still paying their top people obscene bonuses. They see them as producing nothing, just making money out of shuffling money around.

Some of these criticisms are justified. Some are not. Banks don’t produce anything useful, even if they perform a useful, in fact an essential role, under capitalism. On the other hand, they didn’t cause the crisis, even if they did overstretch themselves like any other capitalist business does when faced with easy profits. It is this general capitalist drive for profits that causes crises from time to time. They were bailed out, but not by us.

Not by us? Weren’t they bailed out by the taxpayers and aren’t we the taxpayers? Yes and no. They were bailed out by the government, whose main source of income is taxes, but, no, we are not “the taxpayers”.

True, anybody in employment can produce their payslip and point to a deduction for income tax. But who actually pays this to the state? You don’t. Your employer does. In fact you never see the money that is deducted from your gross pay. It was never really yours. Putting it on your payslip is a bit of creative accounting. What’s important is the bottom line – your net pay, what you actually take home.
Even if you did have to actually pay income tax yourself, as you do with some taxes (council tax, for instance), it wouldn’t make much difference since it’s your net pay – what you have to live on – that’s important for the labour market. Apart from the fairly short term this has to reflect the economic fact that, if you are not paid enough, you won’t be able to keep your working skills in proper working order and your employer won’t be getting what they are paying for.

If, instead of your employer paying “your” income tax, you had to pay it yourself the employer would have to let you take home more to cover this so as to allow you enough after-tax money to keep your skills in working order.

It’s the same with sales taxes such as VAT. This increases the cost of living, and so the amount of money you need to fully reproduce your working skills. It’s not really paid by you, but is passed on to your employer.

In the end, then, whoever physically pays them to the state, taxes fall on employers (and other property owners). We wage and salary workers are not the real taxpayers. They are.

It is true that the profits, out of which members of the capitalist class pay taxes, originate in the surplus value that productive workers create over and above the value of the mental and physical energies they sell to their employer for a wage or a salary. So, yes, ultimately taxes and bailouts to banks do come from the wealth workers produce. But not directly. We’ve already been fleeced. Taxes fall on those who have fleeced us. They are the ones who, via the state, bailed out the banks.

They didn’t like having to do this, even if they recognised its necessity. And they don’t like the banking capitalists exaggerating. Hence their attempt, via the media, to mobilise us against “the bankers”. But the excesses of the bankers, outrageous as they are, are not really our problem. It’s a case of thieves falling out, over what’s already been robbed from us. Certainly bankers are useless parasites, but parasites on parasites – on those who directly exploit productive labour.

Not all the money to pay for the bail-outs came from taxes. Some came from money the government borrowed – from other capitalists. The capitalist class, as taxpayers, don’t like this either because it means that a portion of the taxes that fall on them has to go to repay with interest those capitalists who lent the government the money. That’s what servicing the so-called ‘National Debt’ (actually the debt of the capitalist state) involves: a transfer of wealth from one section of the capitalist class to another section. So, again, not our problem. It’s their debt not ours.

Except that the capitalist class – and their political representatives in the Labour, Tory and Liberal parties who are vying with each other with talk of a ‘new Age of Austerity’ and ‘savage cuts’ – have started a campaign to defray some of the costs of these payments to their fellow capitalists by cutting down on the payments and services they reluctantly provide for the working class. But then, under capitalism, workers always get the shitty end of the stick. Which is one good reason why we should not put up with capitalism any longer.

Adam Buick