The budget, taxes and prices. (1927)

From the June 1927 issue of the Socialist Standard

In the April “Socialist Standard,” we showed briefly that the wages the Workers receive represent only the sum total of the prices of the things required to reproduce them. They cannot, because of that reason, contribute toward the growing expenditure of Capitalist bureaucracy. Though the Press always tells the worker that “he pays,” that is to conceal the truth that the great bulk of their product forms the subsequent wealth of their masters. The introduction of the Budget provided an opportunity to unearth this mouldy illusion. This is how it reads :—

“The broad truth remains that taxes on commodities tend as by a law of nature to be passed on to the consumers.” (Daily Chronicle, 18/4/27.)

Even upon the basis of their own reasoning, this would not be much consolation to our masters, who, by a Capitalist law of surplus value, consume nine-tenths of labour’s product. The statement is really made to hide this ugly fact by the veiled inference that the Workers loom large as consumers. The Budget, in money terms, has risen from 194 million in 1914 to 825 million in the present year, and if this expenditure can be shifted on to other shoulders by the wealth-owners, why the howls that went up from the “business” men of the day? In the “Westminster Gazette,” 5/4/27, bold headlines informed us that “Industry warns the Chancellor,” and of “Trade Leaders’ anger.” Sir Hugh Bell, director (on paper) of a dozen large concerns, bemoaned that :

“Really the country is bankrupt. It will not mend until public expenditure is lowered, taxes reduced and the costs of industry diminished ” —Ibid.

What becomes now of passing on taxes “as by a law of nature” ? But enough, this tripe is only for the workers. In “Business Organisation” (April), is an article by H. A. Silverman, B.A., addressed to “those who maintain high income-tax is prejudicial to the interests of industry and trade.” Those interested in profits get, of course, the facts, though it seems absurd to doubt that they don’t already know them. For those who are only the human raw material in producing those profits any old bunkum will do. Compare this with the statement quoted from the “Chronicle ” :

“… to increase the price is to risk a serious contraction of the market. . . Where competition prevails the seller will hesitate to add the equivalent of the tax to his prices lest his rivals should continue to charge the old price and so capture the market.”—Ibid.

Though prices of commodities are determined at the time of sale by supply and demand, they are ultimately governed by their value, and it is this value that the up-to-date Capitalist is always trying to reduce in order to lower his prices and thus increase his market. The falsity of the raising prices, argument is often a deadly weapon used against the workers when endeavouring to secure wage increases in order to maintain their standard of living. It is argued that such increases will be passed on to them as consumers. A little reflection will show that argument false, for why should the sellers of commodities wait upon such increases? Were they previously taking a lower price than they could have charged? The advice given to the traders supports our contention, they tell them,

“and this is the crux of the matter, that they are, as a rule, already charging the highest prices consistent with maximum profits . . . The case of the “benevolent Monopolist who has been deliberately and consciously charging less than his strict financial interests would permit, but under the stress of income tax is compelled to raise his prices, is so rare that we may disregard the effects on the general position.”— Ibid.

All the ups and downs of prices matter little to the workers in the long run. To understand the cause of poverty they must realise that it is as producers and not consumers that they are kept poor. It is to production that they must look if they would understand how the great thieving trick is done.

W. E. MacHaffie