It’s no surprise that most people and news agencies glaze over the big question behind the Paradise Papers and Panama Papers: how did so much money get into the coffers of the elite in the first place (not to mention that which sits in their possessions from toilet paper and toothpaste, to vacations, second cars and homes, or yachts etc.)? The focus of the news is on how they are skipping taxes on this loot…more on this irony later. The money sits in offshore (and onshore) banks because the thieves’ steal it at the workplace, and the marketplace.
In the marketplace most items are sold above cost at a profit. Is this wrong? Well, if your mother or significant other gave you $20 to get bread, milk, and sugar, and they only cost $17 dollars, would you return the extra $3, ask if you could have the extra $3, tell them they owe you a fee/tax/tariff, or just keep it without asking as a means to lead them to believe the cost was $20? This analogy is of course is compounded by the fact the the bread, milk, and sugar may already be sold at a profit, but besides that, the point is that most people aren’t willing to cheat their family, and expect to pay a fair price, and if given the choice would opt to pay what something “truly” costs, and no more. ‘Cost should be the limit of price’ Josiah Warren, or similarly: “the labor theory of value recognizes no distinction between profit and plunder” SEK3. Capitalism circumvents this logic and it’s modus operandi is to pilfer what it can from workers and consumers via profits.
Profits are theft in that the seller is adding a cost on top of the cost to produce it- cost plus. Profit is the surplus taken from prices above cost. Some of the profit is generated by high prices, some of it generated when labor produces a surplus or isn’t paid their full production, i.e. their cost is below the price. This theft is an unseen tax, it doesn’t show up on receipts as “profits,” although most of the time we know we are being bled, or paying more than x costs. The Paradise Papers and Panama Papers reveal massive surplus pools that most people overlook in small daily transactions, but now there is an actual paper trail to the paper currency they pick pocketed.
The irony is that taxes are plunder too. The companies and people with offshore accounts are trying to escape theft in the form of taxes, taxes on their own theft via capitalism. Both the theft of capitalists in the form of profits or cost plus, and the theft by governments in the form of taxes or cost plus are coercive hierarchical nonsense that most people take as a given or fail to see at all.
For some reason there is a disconnect in that many people take profit and taxes as necessary and/or right. They may cry foul that xyz is not paying their fair share of taxes, but few cry foul that the profits of xyz are not only not fair, but illegitimate as well. If given the choice most people wouldn’t want to pay taxes on top of the charges they pay for goods and services. That’s why taxes are taken by force, not choice. The same could be said for profits because to obtain item x we often have no choice, we have to pay a price above the cost.
Related to the marketplace markup, there is another piece of the profits pie alluded to above, profits stolen at the workplace. Some of the money sitting in those offshore accounts belongs to the workers who brought the goods and services to the market. If we used the same “cost the limit” logic for paychecks as we did for price, then there would be no profits in the market nor the workplace. Both workers and consumers would benefit. Workers would get paid the market value of their labor, or at “true” cost, no more no less, and consumers would pay the market value for goods and services at “true” cost, no more no less…no more capitalism, no more theft before items make it to the market by stealing form workers, and no more theft by adding a cost above cost to steal from consumers in the form of profits.
Another oversight of the media and public is that a money monopoly ultimately allows people to amass large sums of money. Abolishing the money monopoly is the beginning of the end for being able to accumulate vast sums of money.
In a genuinely free banking market, any voluntary grouping of individuals could form a cooperative bank and issue mutual bank notes against any form of collateral they chose, with acceptance of these notes as tender being a condition of membership.
Abundant cheap credit would drastically alter the balance of power between capital and labor, and returns on labor would replace returns on capital as the dominant form of economic activity.
As compensation for labor approached value-added, returns on capital were driven down by market competition, and the value of corporate stock consequently plummeted, the worker would become a de facto co-owner of his workplace, even if the company remained nominally stockholder-owned.
Near-zero interest rates would increase the independence of labor in all sorts of interesting ways. For one thing, anyone with a twenty-year mortgage at 8% now could, in the absence of usury, pay it off in ten years. Most people in their 30s would own their houses free and clear. Between this and the nonexistence of high-interest credit card debt, two of the greatest sources of anxiety to keep one’s job at any cost would disappear. In addition, many workers would have large savings (“go to hell money”). Significant numbers would retire in their forties or fifties, cut back to part-time, or start businesses; with jobs competing for workers, the effect on bargaining power would be revolutionary. [Prices would start to meet costs, i.e. profits would fall with prices.]
Under industrial capitalism, [Benjamin] Tucker argued, the money monopoly reinforced the monopoly of land and capital. Site rent, as such, depended mainly on the enforcement of absentee land titles. The availability of all vacant land for homesteading would cause ground rent, as such to fall to zero through competition. But in built-up areas, the value of improvements and buildings outweighed that of the site itself. And the availability of interest-free credit would, likewise by competition, would cause house rent to fall to zero. Nobody would pay rent on a house when he could get the wherewithal, interest free, to build one of his own. And by the same token, nobody would accept significantly less than his labor product in return for the use of the means of production, when he and his fellow workers could mobilize the interest-free capital to buy their own.
In addition to all this, central banking systems perform an additional service to the interests of capital. First of all, a major requirement of finance capitalists is to avoid inflation, in order to allow predictable returns on investment. This is ostensibly the primary purpose of the Federal Reserve and other central banks. But at least as important is the role of the central banks in promoting what they consider a “natural” level of unemployment–until the 1990s around six per cent. The reason is that when unemployment goes much below this figure, labor becomes increasingly uppity and presses for better pay and working conditions and more autonomy. Workers are willing to take a lot less crap off the boss when they know they can find a job at least as good the next day. On the other hand, nothing is so effective in “getting your mind right” as the knowledge that people are lined up to take your job. more
So don’t fight for $15 per hour, fight to smash capitalism, fight for ownership and full product, fight for no profits or cost plus, fight against human rentals, and the money monopoly.
Capitalists, often using the state, mould the economy to their will. They, unlike our notion of the small-time or innovative entrepreneur, are not subject to the whims of shifting economic forces. Compare the large capitalist merchant or financier’s power over the market to the humble shopkeeper, craftsman or inventor. All participate in the market as risk-takers, but there is something unique about the capitalist. In order to interrogate the legitimacy of capitalism, we need a historically informed definition of the capitalist…
“Capitalism needs a hierarchy. […] Capitalism does not invent hierarchies, any more than it invented the market, or production, or consumption; it merely uses them. In the long procession of history, capitalism is the latecomer. It arrives when everything is ready. In other words, the specific problem of the hierarchy goes beyond capitalism, transcends it, controls it a priori. […] For this is indubitably the key problem, the problem of problems. Must the hierarchy, the dependence of one man upon another, be destroyed? ‘Yes,’ said Jean-Paul Sartre in 1968. But is such a thing really possible?” [11]…
The market economy and capitalism are not the same. The market economy is composed of daily, local exchanges such as “wheat and wood being sent to a nearby city.” Braudel would “even include trade on a broader scale, as long as it is regular, predictable, routine, and open to both small and large merchants; for example, the shipping of Baltic grain from Danzig to Amsterdam during the seventeenth century, or the oil and wine trade between southern and northern Europe.” [14]
The market is defined by “transparent exchanges, which involve no surprises, in which each party knows in advance the rules and the outcome, and for which the always moderate profits can be roughly calculated beforehand.” Trades only involve two or three people: Self-employed producers, clients, and perhaps an intermediary. The transactions are said to have been “eye to eye and hand to hand.”
“John Kenneth Galbraith talks about ‘the two parts of the economy’ the world of the ‘thousands of small and traditional proprietors,’ (the market system) and that of the ‘few hundred highly organized corporations’ (the industrial system).
Lenin wrote in very similar terms about the coexistence of what he called ‘imperialism’ (or the new monopoly capitalism of the early twentieth century) and ordinary capitalism, based on competition, which had, he thought, its uses. […] Then alongside, or rather above this layer, comes the zone of the anti-market, where the great predators roam and the law of the jungle operates.”[15]…
“The capitalist’s proper sphere is the international world of long-distance trade and banking, the sphere of historical grandeur and of grand profits where kingdoms and fortunes are made and unmade by virtue of the ability of the capitalist to cross frontiers and to profit from regional and national differentials in supply and demand.”[16]
Opportunistic profit seeking could benefit those in need. “Let a famine break out in the Mediterranean—a famine such as that in the 1590s—and international merchants representing major clients would divert entire ships from their usual routes […].” [17]
“…It is obvious that here we are dealing with unequal exchanges in which competition—the basic law of the so-called market economy—had little place and in which the dealer had two trump cards: he had broken off relations between the producer and the person who eventually received the merchandise (only the dealer knew the market conditions at both ends of the chain and hence the profit to be expected); and he had ready cash, which serves as his chief ally.” [18]…
“Thus, the modern state, which did not create capitalism but only inherited it, sometimes acts in its favor and at other times acts against it; it sometimes allows capitalism to expand and at other times destroys its mainspring. Capitalism only triumphs when it becomes identified with the state, when it is the state…
Braudel critiqued the modern notion of the capitalist benefactor on three fronts: Refusal to specialize, avaricious speculation, and monopoly control. He also questioned the supposed antagonism between the “public” state and private market—they actually work in concert to privilege the elite. Capitalism itself is not good or evil, rather a system with costs and benefits; enabling immense value to be squeezed out of people and resources while distorting prices, creating scarcity, and entrenching an exploitative, domineering state-capitalist class.
Free-market anti-capitalists assert that the good associated with exchange within the agora can be preserved in spite of the abolishment of the slave-master relationship between the MBA-wielding executive and the third world sweatshop worker, the poisoned consumer and those millions killed in resource wars, sacrificed upon the altar of Mammon. more
