Towards a Marxian Economics: Chapter 7/32

After a two-month hiatus, I am back considering Paul Krugman and Robin Wells standard economic text and how Marx lines up with neoclassical economics. My argument is that Marx adds nothing, or nearly nothing to neoclassical economics, of which he was among the earliest authors. What he adds, and what nearly every department of economics lacks, is a social and historical framework within which to grasp the validity of their framework and models. This means that most economics departments, including the University of California, Berkeley, where I taught for six years, cannot grasp the social and historical validity of their own models. This is both unfortunate and unnecessary.

Chapter 7 in Krugman and Wells is a no-brainer. It deals with taxes. This is one of the subjects that economists have grasped intuitively since the 18th century. There is absolutely no mystery that, for the individual who is taxed, on the goods for which she is taxed, taxes shift the choices that individual makes, the value she enjoys, and the goods she produces, the volume and the price she charges for these goods.

Marx disagrees with none of these observations. Communities smaller than fifty individuals, in which direct communications and direct assessments are sufficient, need not worry about taxes. Larger than fifty, stories are required to convey the need the community suffers and therefore the demand they make on others. This is simply true. In communities larger than fifty, an assessment story needs to be told and needs to be believed.

The story might be a very simple one. You pay me, or I kill you.

But, more often, it is a story about the gods, or virtue, or the temples, or the poor. The story might be very elaborate, or it may be very simple.

Nevertheless, everyone — everyone — understands that taxes draw upon an individual’s marginal product.

They might also understand that taxes contribute to everyone’s marginal benefit: fewer criminals, fewer vagrants, more beautiful gardens, cleaner water, more secure walls, stronger ramparts, better equipped soldiers. And so on.

The contribution that Marx makes to this discussion is marginal. And, for us, it is relatively non-controversial. Taxes generally reproduce the dominant social formation. They reproduce the conditions that benefit capital accumulation for the communities that have created the taxing authority.

Marx was not so dense as to feel that this always or inevitably led capitalists to oppose taxes. Taxes might actually benefit capitalists, either because those who are taxed are those at the bottom of the income hierarchy, as in Great Britain or the US today, or because the taxing authority invests the taxes in ways that benefit those who are taxed, as in Germany, where taxes finance education, health, and welfare and create an employment pool of superior workers and generate a data base that benefit all investors. All of this fits unproblematically within Marx’s mature social theory.

But Marx was not satisfied with these surface forms of appearance. He was more interested in the dependence of this framework upon labor. Sharing, after all, is a good thing. And taxes sound an awful lot like sharing. But, so long as taxes are drawn upon the marginal product, they are drawn upon MPL, the marginal product of labor. That is, they are drawn upon ΔQ/ΔL, where the efficiency of labor (or capital) invokes a line whose destination is never reached. Taxes are drawn upon the efficiency of labor (or capital) whose goal is never, ever, reached. How much more efficient can labor become? How much more efficient capital? The point is, should this line ever flatten or, God forbid, begin to rise, then the marginal value from which taxes could be drawn is relatively less. And this means that our goal is, by definition, Sisyphean.

Marx is not opposed to taxes. Nor is a he fan. He simply wants to point out that taxes are not the solution. Indeed, given that taxes have been around forever, they are not really the problem either. The problem is that taxes are drawn upon a social form that cannot by definition be satisfied. They feed back into a social form whose aim is not satisfaction.

Taxes might be leveraged instead to reduce the role that labor plays in the marginal product. Taxes might be leveraged to reduce this role to zero. What then? In that case, we might decide how we want our extraordinary wealth to be used by us all, together. How would that work? You know, like democracy. Like res publica, the wealth we hold in common. What?

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