Noel Ignatiev's Blog

Still More on Business as Usual

In a previous entry I reviewed Paul Mattick’s book, Business As Usual: The Economic Crisis and the Failure of Capitalism. In my review I quoted one passage that struck me as especially valuable, but also difficult, and expressed the wish that Paul had written more on it. My request led to the following exchange:

Dear Noel,
Thanks for the kind words. I’d be happy to reply if you would indicate
where the problems in understanding lie—otherwise I’m afraid I would
just say the same things again, without clearing up the difficult
Best, Paul


Dear Paul,

OK, the burden is on me. I confess to having a hard time with political economy (and the critique of political economy). In trying to understand it, I often find I have to start with the ABCs and retrace the argument one step at a time. For me it is a bit like learning to play the cello: as you probably know, music for the cello is written in the bass clef, which I do not read fluently. In learning a new tune, I begin by counting off the notes from the bottom line on the clef, G, and proceed from there. Let me see if I can do that here. Recording the steps in my reasoning may help others.

1. Taxes taken from workers’ wages are part of the surplus value, like profits, interest and rent (Marx’s Holy Trinity), the value produced by workers above what is returned to them in wages. They go to the state rather than to the manufacturer, the banker or the landlord. Got it.

2. Therefore, the channeling of tax revenues to any sector of capital, either through government contracts or direct bailout, is simply a redistribution of the total surplus value among different sectors of the capitalist class. Like a rise or fall in rent, it may increase or decrease the profit of one sector relative to another, but it does not affect the overall amount of the surplus produced. That makes sense. (Is this true also of a rise or fall in oil prices?)

3. Therefore, government spending cannot solve the problem of insufficient profit generated within the system as a whole. QED.

Do I have it? Anything you care to add?

Best, Noel


Dear Noel,
You have it completely. And yes, the same is true of a rise in oil
prices, or rents/monopoly prices in general–this just redistributes
surplus value. This is such a fundamental point but one fundamentally
Best, Paul


Dear Paul,
The key was your pointing out that taxes are part of the surplus, which I had not thought about before. Let’s pursue the point: Is a struggle to reduce taxes paid by workers a struggle to reduce the surplus? Since some part of tax revenues are spent on social welfare measures, which make up part of workers’ consumption, is it worthwhile to defend those programs against cutbacks (with all the caveats about sinking into reformism)?
Best, Noel


Dear Noel,
I can’t think of a struggle against taxes on workers’ income—I guess
a struggle against sales taxes would be one. In general any regressive
tax hits workers more than it hits capitalists. But anti-tax efforts
usually amount to shifting tax costs from higher to lower
income-earners. On your other question, it seems obvious that people
might as well try to hold onto any source of income. This will lead to
reformism when successful, and not when unsuccessful, as such
struggles are likely to be now.

There is an interesting issue of the International Journal of
Political Economy
22 no.3 (Fall 1992), in which a couple of
articles showed that in the cases of Spain and Germany, despite the
contribution of tax revenues to social welfare, overall there was a
net transfer of income from the working class to the capitalist
class–if you add welfare, health, etc. payments to wages but subtract
taxes. I assume the same is true in spades for the US, but I haven’t
seen a study of this.
Best, Paul


Dear Paul,

I had in mind a struggle against sales and other regressive taxes. While I agree that anti-tax struggles are usually a cover for efforts of bourgeois and petit-bourgeois to cut their tax bills and also cut social services to the poor, I have mixed feelings about them. A few years ago the college teachers’ union in Mass. (of which I am a “member”) supported an increase in state income taxes in order to maintain teacher’s salaries. Needless to say, the “right” opposed the increase. In a quixotic moment I spoke against the union’s position at a meeting, saying that I could not ask my next-door neighbor, who holds three jobs, to pay higher taxes, and suggested instead a campaign to cut back on prison construction. Of course I was dismissed as a utopian.

Reformism is a danger in any reform struggle, win or lose. Yet revolutionaries must take part nonetheless. What is the alternative, abstention?

Best, Noel


Dear Noel,

Reformism nowadays generally leads nowhere also—your own experience
at your union meeting is a case in point. But the contrast “reform or
abstain” misstates the issue anyway. Most American abstain from voting
because they sense, correctly, that it won’t get them anything much,
however often they’re told that “the best is the enemy of the good.” That doesn’t mean that they might not take some other action when it seems likely to yield results. People can abstain from pointless efforts at reform while participating in more rewarding activities.

Best, Paul

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