The antagonists of wealthy youtubers: the state, redistribution, social spending and taxation

23 January, 2021 · Marxism> Foundations

Let’s keep on debating youtubers and Andorra. In the first part of this article we demolished the discourse turning the owners of capital and organizers of the exploitation of labor into wealth creators. By dismantling the ideology about value, capital and wealth, we were able to finally see professional youtubers for what they are: a minor by-product of an already anti-historical capitalism. Their income appears as the result of a competition deformed by the relative shortage of markets. A relative shortage that systematically hampers production, forcing to subtract resources from production itself in order to allocate them to the struggle to win market shares at all levels: from militarism between national capitals to advertising in the competition between oligopolistic companies.

In this second part, we will critique the ideology used by the detractors of tax-evading youtubers. According to the former, evading taxes would exemplify a lack of solidarity because social spending depends on tax collection and because, in addition, taxes would allow a redistribution of wealth capable of curbing the trend towards the concentration of income in the hands of capital.

What is the role of the state?

Colored detail of the first title page of Hobbes’ “Leviathan” by Abraham Bosse, 1651. The state appeared to the bourgeoisie as an all-powerful, collective monster, the sole guarantor of the perpetuation of all social life – for the bourgeoisie was incapable of imagining a society without exploitation.

The state is a relatively new social form in the history of our species. For hundreds of thousands of years, Humanity lived without it, organized under a mode of production called primitive communism that ended up organizing large numbers of people over vast territories and building cities for thousands of them. Today archaeology teaches us that the state was not born from agriculture and the first cities, but from the fracturing of that communal and clan-led society into antagonistic social classes only about 8,000 years ago. It is the result of the class struggle from its beginnings. It is an institution whose aim is to constrain the contradictions of class society by propping up the maintenance of the system of exploitation and the power of the ruling class during each era.

When a certain mode of production enters into historical crisis the state tends to hypertrophy in order to respond to the increasing level of contradictions and conflicts produced in society by an already anti-historical system.

Characteristic of these periods of civilizational crisis is the increase in social control and the amount of resources devoted to war preparation, the concentration of power and the reorganization of the ruling class in and around the state. The Roman imperial decline during slavery, the early modern and absolutist state during feudalism and the state capitalism into the decadence of the current system, they all clearly show this process.

No, the function of the state has never been to guarantee well-being or the common good. It is an apparatus which attempts to keep the system going by ensuring by various means the cohesion of the ruling class, the development of its interests and the social acceptance – dressed up as the general interest – of its domination over society as a whole. At a time when the state is showing every day that it puts the priorities of investments over human lives by giving free rein to successive waves of pandemic slaughter, the need to remind people of this seems odd.

What is social spending?

President Roosevelt inaugurates the Hoover Dam, the world’ s largest at the time, a symbol of how the concentration of financial capital under state direction promised to create new productive applications to an increasingly destructive capital.

As capitalism met objective limits to its free growth and thus ended the era in which it was progressive for mankind, the contradictions implicit in the system began to manifest themselves with increasing violence. We tend to focus on the consequences of imperialism for competition between national capitals. This makes sense: it led to colonial partition, two world wars, a cold war and is still present today threatening humanity with new wars. But within each national capital these consequences were no less dramatic.

From the first stages of what was then a new historical phase, industrial and commercial capitals began to merge in and through the banks. Finance capital as we know it today was born. The various attempts at monopolistic planning, the development of militarism and war, the need to strengthen social control and repression, prompted an ever closer relationship with the state bureaucracy. Different forms of fusion and coordination between the various bourgeois strata appeared in the first decades of the 20th century, increasingly in need of the state to keep the system going. The result was the extension under different models – from the stalinist to the American liberal one – of state capitalism. Today, this concentration within the state of capital and ruling class leadership is the universal form of organization of capital and the bourgeoisie.

One of the features of all this gigantic movement of concentration and centralization of capital around the state has been the homogenization of the conditions of exploitation and the mutualization of part of its costs. By fixing the conditions of exploitation of labor, the state responded to several needs. On the one hand, it reduced competition between capitals and equalized the conditions of the different applications of capital, making it easier for capital to move more fluidly towards the most efficient application from the point of view of profit generation. On the other hand, it allowed capital to definitively absorb the trade unions as just another monopoly, selling the rationalization of its game rules as social conquests.

One of the features of all this gigantic movement of concentration and centralization of capital around the state has been the homogenization of the conditions of exploitation and the mutualization of part of its costs. By fixing the conditions of exploitation of labor, the state responded to several needs. On the one hand, it reduced competition between capitals and equalized the conditions of the different applications of capital, making it easier for capital to move more fluidly towards the most efficient application from the point of view of profit generation. On the other hand, it allowed capital to definitively absorb the trade unions as just another monopoly, selling the rationalization of its gameplay as social conquests.

The sources of the move and that fact that they are not workers’ conquests, becomes clear when we realize that the great systems of social protection were imposed following catastrophic defeats of the workers: in Spain, no less than by Francoism; in Europe after two world wars and the crushing of workers’ revolutionary movements; in the USA the New Deal was not the reaction to an emerging class movement, but the expression of its impotence during the crisis of ’29, impotence that was reflected during the strike movements of the war years allowing American capital to marginalize the same unions it had counted on during the New Deal, in order to create its own welfare model in the postwar period.

The extension and legal imposition of generally applicable labor agreements in a sector or a country, the contractual protections of workers, the development of legislation on occupational hazards, etc. all expressed forms of rationalization and reduction of a competition that had become too chaotic and counterproductive. Part of the same rationalizing movement was the implementation of healthcare systems tending towards universalization, compulsory education, social security… all that was pompously called social justice. But what was it in reality? The mutualization in the state of the general costs of the exploitation of labor.

If we again raise our sights and understand that capitalism is fundamentally a system of exploitation of one class – the working class – by another owning or managing capital, social spending is but a part of the total cost of labor power to capital as a whole. That part it provides through the state or in a framework tightly controlled by the state.

By collectively shouldering these overall costs of exploitation through the state, national capital attempts to ensure that the conditions for the efficient exploitation of labor power are homogeneously provided by facilitating the placement of capital and efficient competition among capitals. Leaving it in the hands of business and the market would come at a higher cost. We see this in the so-called American liberal paradise, which opted for relatively more lax forms than the European ones. The degradation of public education since the 1980s is the cause generally cited in order to explain the problems and costs for American capital of the de-skilling of a significant part of the workforce. And regarding the health system, there is no need to even mention it: if the impact of Covid has been more destabilizing for American businesses than for European ones, it has been precisely because of the absence of a sufficiently universal and affordable hospital system.

It is no coincidence for Biden to have reached the presidency with a program focused on moving closer to the European social model: unions, extension of the health system, improvement of the level of public education… measures with which he hopes to strengthen the national capital and that contrary to what propaganda says are far from an improvement in the living and working conditions of workers in that country.

Do taxes redistribute production toward workers?

Wage share in Spanish GDP since 1978. The labor share only grows when capital crashes and has not yet had time to attack wages, spending on labor power maintenance and working conditions even more.

The idea that taxes are what allows social spending to be paid for and that any improvement or maintenance of health care or public schooling requires raising taxes is a legacy of the ideologies of austerity. The you can’t spend what you don’t have of the Merkel’s and Rajoy’s, was an ideological tool to impose budget cuts in the general operating costs of labor. In other words, to impose a transfer of income from labor to capital.

It is obvious that the so-called social spending represents only 20-30% of state budgets, but that is not the important point. Saying that the state could increase social spending at the expense of military spending or subsidies and aid to banking or industry for example, is not enough. From the point of view of capital, all these expenditures, practically the entire state budget, are also part of the general expenses necessary to keep accumulation going and to compete with its rivals so that its internal contradictions do not become radicalized to the point of endangering accumulation itself.

The important thing is to understand where those resources used by the state come from. And in reality they can only come from capital income or labor income. As we see in the graph above, the slice of total production that workers received through their labor has declined since the 1970s. Before the current crisis hit, it had declined by 20%. In other words, the share of production that capital appropriates as dividends grew by 20%. The decline is almost constant and is only momentarily transformed during the first moments of major crises and recessions when the state has not yet reacted and enterprises go bankrupt or take losses but the labor conditions of the previous period persist.

Now let’s compare it with the tax burden, that is, the percentage of total output that went to taxes.

What we see is that in the decade of the Moncloa Agreements and the great industrial reconversion (78-88) the tax burden rose steadily -these were the years in which the IRPF (personal income tax) and the current tax system were implemented- while at the same time the percentage of production reaching the workers fell. A new crisis, which reached its peak in 1992, led the González government to a moderate tax cut which coincided with an accelerated loss of labor purchasing power. Then, the tax burden rose again during the Aznar and Zapatero governments, while workers’ income continued to lose its share in production. A new crisis in 2009, a dramatic drop in tax collection and a parallel drop in the relative income of labor.

But in order to draw conclusions we need at least one more element. The balance between direct – progressive – taxes such as personal income tax and indirect – regressive – taxes such as the VAT.

Throughout the period, both the collection and the number of personal income tax returns has risen on an almost constant basis. The amount collected as a percentage of GDP ranged from 4.2% to 7.9%. One can see the collection effect of the different tax policies – under Aznar it went as low as 6.3% of GDP.

All in all, tax revenues have more or less followed GDP, but there are certain variations, with punctual effects on the capital-labor distribution, on the ratio between direct and indirect taxes, and on the weight of the corporate income tax, which is levied on corporate profits.

This is not only due to drops in profits – and consumption – during crises. In general, as we can see in the graph below, European states have tended to reduce the percentage they charge in taxes on business to encourage accumulation during crises.

Summarizing: taxes have not modified the trend related to the sharing of the economic cake of production between capital and labor. Labor loses a percentageof its share. The logic of accumulation is not corrected by taxes. Of course, tax changes – higher VAT, lower corporate taxes – have served in times of crisis as a defibrillator for capital: they help to recover the trend, interrupted by the crisis, by setting in motion the transfer of income from labor to capital and thus assisting investments to recover short-term profitability at the expense of workers. Something similar has happened with austerity, that is, with the forced reduction of spending that capital carries out, through the state, on the general conditions of exploitation.

Is it true that the level of social spending depends on tax revenue?

No, of course not. As we can easily infer from the graphs above, the recovery of the state’s revenue-raising capacity after the recessions has not translated into sustained increases in public spending on social services, education or healthcare.

For capital and its state, social spending, is a fundamental part of those overhead costs necessary for the exploitation of labor. And in a historical phase like the one we live in, in which the tendency to crisis is permanently present, it continuously aspires to lower them as much as possible in order to increase its overall profitability. There is no respite.

To be continued….

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