Correct me if I’m wrong, but as I understand the way our system is supposed to work, “the capitalist” has three responsibilities. He (let’s be honest the few individuals who control large corporations are usually old white men) must, invest, invest and of course…invest.
The rich men use their accumulated savings to invest in productive enterprises to produce a profit – it’s this investment process that creates jobs for the rest of us and increases the welfare of our whole society. It’s the ethical justification for an undemocratic and inequitable relationship to capital we experience everyday – I don’t get a meaningful say at work about how to distribute the wealth I create because if it’s controlled by one person or a handful of people there will be more jobs and we’ll all be better off.
This cascades into how the State relates to those rich men. Over the last forty years we’ve been constantly hammered with the need to:
– lower the top rate of income tax
– lower the corporate tax rate
– increase “labour market flexibility” (read – make people work for cheaper)
Why? So that the rich have a bigger pot of money from which to invest more. Unsurprisingly, most States have responded and cut the top income tax rates and corporate tax rates, as well as making it harder for people to have a say at work or making people more “incentivised” to work (read desperate to hold their existing job). The flip side of all of this is that the cut in the tax base also reduces the capability of the State to provide a strong welfare system, as well as quality universal health care and educational services. If you really boil the argument down to its remaining essence it’s this – ordinary people across the world have been made/persuaded to lower the quality of their lives so that at some point in the future the quality of their lives will be better.
Now the “no pain, no gain” argument can sometimes be valid but it’s a matter of empirical record. Has there been pain? Well, yes of course. But has there been gain? Somethings have improved for people in Australia at least over the last 40 years but is it a result of pursuing these policies? We’d really only know if there has been (a) considerable increase in overall investment levels relative to total economic activity, and (b) that investment was traceable back to the rich men who benefited from such policies.
For me this highlights a great big gaping hole in our public discourse – have the rich men been pulling their considerable weight? Or, in other words, have these pro-rich policies actually increased overall productive investment? Here the silence is deafening. My gut tells me that if there had been any overall increase we’d have it constantly forced fed down our throats. It would be trotted out everywhere as the excuse for more of the same measures. Two interesting books I’ve read recently indicate otherwise. Both Jim Standford’s Economics for Everyone and Ha-Joon Chang’s 23 Things They Don’t Tell You About Capitalism touch on the problem of falling rates of investment despite the systematic introduction of pro-rich policies that are supposed to fix the problem. Chang writes that “investment as a ratio of national output has fallen in all G7 economies (the US, Japan, Germany, the UK, Italy, France and Canada) and in most developing countries” (p. 145).
It’s an issue we need to talk about more and more. If not all we’ll end up like Wisconsin. How can Republican Governor Scott Walker can solve a budgetary crisis caused by “tax relief” for the rich men by even more of the same for this narrow group of individuals and corporations, while cutting back the fundamental rights of working Wisconsinites to even form unions and organise in the public sector? By using the standard line that the rich need more of a break to invest.
It also leads to another question – if the rich aren’t just going to voluntarily invest in us then what do we do? We’re giving more to a narrow class of people who continue to give less and less back to us.