Letter: The Capital Levy (1923)

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

To the Editor of the Socialist Standard.

Sir,

In response to your invitation to continue the discussion, it seems to me that there are three fundamental differences between us.

Firstly I hold that among the “economic forces” which under a capitalist system determine real net wages (i.e. the purchasing power of money wages) must be included the power exerted by capitalists through their possession of war loan. You apparently exclude this factor.

Secondly I hold that a levy on capital is a step towards ending the present system of wealth distribution which enables some individuals to live in idleness on the fruits of others’ exertions. You apparently think, either that it would not be a step at all, or that it would be so small as not to be worth taking.

Thirdly I envisage the capital levy as one of the several reforms which will not only improve the immediate position of the workers, but will at the same time help to build up the new order of society necessary to take the place of the decaying capitalist system. You, I gather, regard such efforts at best as futile, and at worst as buttressing up the capitalist system and delaying its overthrow.

If I have correctly stated our respective standpoints there is nothing further to be said.

Yours, etc.,

F. W. Pethick Lawrence.

Reply.

Mr. Pethick Lawrence says that “the power exerted by capitalists through their possession of war loan” is apparently excluded by me from the economic forces which determine real net wages. Now I readily agree that within the framework of the State, and subordinate to political control, which is the ultimate source of power, the accumulated wealth of the capitalists is an important factor in the struggle about the level of wages. But I do not see that it matters one jot whether that wealth exists as war loan, or whether it take some other form.

Lest it be said that this huge debt is the cause of present unemployment, let me recall two things : (1) that before the war we had some permanent unemployment, as well as protracted periods when it was acute; and (2) that France, with a like indebtedness, and a much worse financial position generally, has no unemployment.

If the Capital Levy meant a real appropriation of a large part of the wealth of the capitalists, there might be something in the argument, but in Mr. Pethick Lawrence’s own words, “Payment of the levy will, in effect, be carried out by means of a reshuffling of the title deed’s of wealth among-wealthy persons. …” (Forward, May 5th,. 1923).

This brings me to his second point. I still fail to see how this “reshuffling,” which leaves the total wealth of the capitalist class untouched, and merely changes the form of some of it from war loan to industrial capital, can at the same time be a step towards the ending of the present system of wealth distribution. If the capitalists lose nothing, from what source do the workers, gain ?

As for the last point, Mr. Pethick Lawrence has not yet answered the charge that the levy, if successful, would buttress up the capitalist system. Assuming that a capitalist state were in dire need of some measure to re-establish its financial stability, then it seems obvious to me that a capital levy which served this purpose would strengthen the hands of the capitalist class, and give new life to the system on whose continuance their privileged position depends.

Actually I think that it is unlikely that the British capitalists can now have any use for the levy. At the time, just after the war, when it might have proved very useful to them, they were not ready to accept it, and now the need has largely passed.

Edgar Hardcastle