JEDDAH, 17 January 2005 — In essence, there are only two ways to acquire wealth. The first method is by producing a good or a service and voluntarily exchanging that good for the product of somebody else. This is the method of exchange, the method of the free market; it’s creative and expands production; it is not a zero-sum game because production expands and both parties to the exchange benefit. Let us call this method the “economic means” for the acquisition of wealth (free market capitalism). The second method is seizing another person’s property without his consent, i.e., by robbery, exploitation (indirect taxation), looting. When you seize someone’s property without his consent, then you are benefiting at his expense, at the expense of the producer; here is truly a zero-sum “game”— not much of a “game,” by the way, from the point of view of the victim. Instead of expanding production, this method of robbery clearly hobbles and restricts production. So in addition to being immoral while peaceful exchange is moral, the method of robbery hobbles production because it is parasitic upon the effort of the producers. We can call this method of obtaining wealth “the political means.”
Thus we could define the state, or government, as “the organization of the political means,” i.e., the regularization, legitimation, and permanent establishment of the political means for the acquisition of wealth (through taxes and its subsidiaries such as taxes for customs, imports, fuel, cigarettes, etc.)
It is true that many people seem to believe that taxation is not imposed without their consent. They believe that taxes are something like club dues, where each person voluntarily pays his share of the expenses of the club. But if you really think that, try not paying your taxes sometime and see what happens. No “club” that I know of has the power to come and seize your assets or jail you if you don’t pay its dues. In my view, then, taxes are exploitation — taxes are a “zero-sum” game. If there’s anything in the world that’s a zero-sum game, it’s taxation. The government seizes money from one set of people, gives it to another set of people, and in the meanwhile of course lops off a large chunk for its own “handling expenses.” Taxation, then, is purely and pristinely robbery.
In other words, the state (whose revenue is from taxes) is organized theft, organized robbery, organized exploitation. And this essential nature of the state is highlighted by the fact that the state ever rests upon the crucial instrument of taxation.
There is very little difference between state monopoly capitalism, or corporate state capitalism, whatever you want to call it, in the United States and Western Europe today, and the mercantilist system of the pre-Industrial Revolution era. There are only two differences; one is that their major activity was commerce and in today’s Western world is industry. But the essential modus operandi of the two systems is exactly the same: Monopoly privilege, a complete meshing in what is now called the “partnership of government and industry,” a pervasive system of militarism and war contracts, a drive toward war and imperialism;
“Social power” is essentially is the productive energies released by the free market, by voluntary exchanges, people interacting voluntarily and peacefully. “State power” is parasitism, exploitation, and the state apparatus in general — organized taxes, regulation, etc. what has happened in the twentieth century is essentially that state power has taken over social power; they’ve moved in on society and destroyed it.
State capitalism inevitably creates all sorts of problems which become insoluble; as one government intervention into the system to try to solve problems only creates other problems, which then demand further interventions, etc., and so the whole process keeps snowballing until you have a completely collectivist, totalitarian system.
It is beginning to become evident that the Western type economic “mixed system” is breaking down, that it doesn’t work. It’s beginning to be seen, for example, that the governments do not tax the rich and give to the poor; they taxes the poorer to give to the richer, and the poor in essence pay for the welfare state. It is beginning to be seen that foreign intervention is essentially a method of subsidizing favored multinational corporations instead of helping out the poor in the undeveloped countries. And it is now becoming evident that the great Western economists have no way of getting out of the present mess at all, except to cross their fingers and their econometric models and pray.
Today the individual sees in the state the great provider. Together with his fellows organized as a pressure group, he expects material assistance from the authorities. He is convinced that the state’s funds are inexhaustible as it can fleece the rich endlessly.
The state from which the citizens are getting subsidies cannot remain democratic. People competing with one another for bounties submit humbly to the candidate for dictatorship bidding the most.
What the masses in their thirst for money do not see, is that they themselves will have to pay the costs of the “presents” the government gives them. Inflation, the main source of the Santa Claus state’s funds, makes their savings wither away. While investors in real estate and common stock profit from the progressive weakening of the monetary unit’s purchasing power during an inflation, the investments of the less wealthy strata, predominately consisting in savings deposits, bonds, and insurance policies, melt away. The popularity inflationary measures enjoy among the masses of wage earners, who are victimized by them more than the rest of the nation, shows clearly their inability to see what their genuine interests really are.
(Abdelmenem Jamil Addas ([email protected]) is a professor of financial markets, at the College of Business Administration. He is based in Jeddah.)
