Circulation of wealth

Wed Jan 5 22:02:06 GMT 2011

Ilyan wrote: "Wealth  is best recirculated and Capitalism preserved  by a 
Progressive Tax on Wealth  sufficient to clear the National Debts."

Thanks for the comment, Ilyan, but anyone in a position to implement a 
progressive tax on wealth would be in a position to address the deeper problem. 
It makes no sense giving people, with one hand - through inheritance - wealth 
they haven't earned, and then taking (some of) it back with the other, through 
taxation; especially since the giving creates a sense of injustice in those who 
are left out, and the taking creates resentment in those who are being taxed.

It's worth distinguishing between operational and structural factors in the 
economy. Taxation is operational; governments are constantly changing the way it 
works, and who it hits. Introducing a progressive tax on wealth might help for a 
few years, but however long it survives there will always be pressure to get rid 
of it because people will always be aware of it as an imposition.

Inheritance, on the other hand, is essentially structural; it happens without 
any government action, simply as a result of old laws which have never been 
properly reviewed. Reforming it would be a one-off change, which would affect 
one generation but which wouldn't cause any on-going resentment.

"If you try to grow a new society within the framework of the old, you will find 
[...] that power remains in the hands of Politicians."

Power has to lie in somebody's hands. The important thing is to make them 
properly accountable - which is why my previous post focused on the 
constitutional changes I'd like to see.

Malcolm

________________________________
From: ilyan <ilyan.thomas at virgin.net>
To: Malcolm Ramsay <malcolm.ramsay at talk21.com>
Cc: diggers350 at yahoogroups.com
Sent: Saturday, 25 December, 2010 18:40:04
Subject: Re: [Diggers350] Circulation of wealth

Wealth  is best recirculated and Capitalism preserved  by a Progressive 
Tax on Wealth  sufficient to clear the National Debts..

If you try to grow a new society within the framework of the old, you 
will find there are lots of bigotted dogmatic Marxists  incapable of 
becoming scientific Marxists who will  use the tricks of democracy to 
ensure that power remains in the hands of Politicians.   The feuding, 
backstabbing, and splitting on the left is a pretty plain warning that 
Socialism is unlikely to start functioning before the Capitalists 
destroy Capitalism,  and the real bite in that is that simultaneously 
with destroying Capitalism, the Capitalist will destroy Earth's ability 
to support Life.

Anyone got a relevant quote from William Morris?
Ilyan

On 23/12/2010 23:19, Malcolm Ramsay wrote:
> In a previous post, Foundations of social justice, I wrote about the political
> changes which I believe would be necessary to bring our current system of
> government into line with the requirements of social justice. I don't believe
> there's any way to bring those changes about directly, but I think it can be
> done indirectly; by creating a 'private' society with a similar structure to 
>our
> existing system but based on slightly different foundations. It would be close
> enough to what we already have that it would be consistent with the historical
> legacy, but it would avoid the features which create a bias towards injustice 
>in
> our current system. It's aim would not be to challenge the existing system, 
but
> to fill in some of the gaps in it .... and eventually supersede it.
>
> It can only do that, of course, if it can attract enough people that it can be
> regarded as a genuine alternative. I've no idea whether or not what I'm
> proposing will be able to do that, but the only way to find out is to try.
> Conventional wisdom would say it doesn't have a chance, because attracting
> people usually involves appealing to their self-interest, but what I'm
> suggesting does exactly the opposite: it asks people to surrender some of the
> rights they have, under the existing system, to act selfishly - because those
> rights are the root cause of most of the inequality which is so deeply
> entrenched in our world.
>
> I am talking here about a small number of specific rights, which members would
> be expected to formally surrender to the society, either by deed of covenant 
or
> through a legally-binding contract. For the most part these are rights which,
> for practical purposes, exist only as a result of perverse actions by the 
>state:
> specifically, the right to bequeath inordinate amounts of wealth to your
> descendants; and the right to earn interest (above inflation) on surplus 
money.
> For many people in this group these are rights which might seem irrelevant,
> because they don't expect ever to be able to exercise them - but I believe 
they
> are important anyway, for a number of reasons which I'll try to explain.
>
> Critics of the status quo often attack the people who benefit from it - 
>bankers,
> landowners, businessmen and the rich in general - as though they are actively
> and maliciously doing down the poor. Sometimes no doubt they are, but for the
> most part they have no need to - the system works in their favour simply as a
> result of how it has developed, and all they have to do to benefit from it is
> follow the path of least resistance. Most of the time they're guilty of no 
more
> than turning a blind eye to the fundamental bias in the system - and they
> justify it to themselves with the argument that they're only doing what the 
>poor
> would do if positions were reversed.
>
> And that's a valid argument, because it seems to be largely true; when people
> escape from poverty they are keen both to make their own wealth secure, and to
> spare their offspring the experience of poverty - but in doing so they help to
> perpetuate the factors which create that poverty. Economically there are two
> principal reasons for social inequality: one is the fact that we use a medium 
>of
> exchange which, in its base form, can be taken out of circulation by anybody 
>who
> has a surplus - which allows the rich to charge everybody else (through 
>interest
> on loans) for the privilege of using it; the other is the 'inheritance trap' -
> the fact that landowners can designate their successors without regard to the
> public interest, which allows accumulations of wealth to persist long after 
the
> person who earned it has died.
>
> These two factors act to hugely distort the natural circulation of wealth.
> Reformers generally focus on the distribution of wealth, but it's the
> circulation which really matters; as long as that's healthy the system will
> automatically come back into balance, but if wealth is not circulating 
>properly,
> redistribution will produce only a temporary solution. And focusing on
> redistribution can blind us to a simple truth: that control of the system is 
>not
> just in the hands of the rich. Wealth constantly flows - naturally - from the
> rich towards the poor, in the form of payment for services, and a healthy
> economy therefore has a tendency towards equality. There is also a constant -
> natural - flow from the passive towards the active (the industrious and
> creative) which creates a counter-tendency towards modest inequality.
>
>
> Those two different types of flow create a dynamism in a healthy economy. But,
> as we know, there is also a constant - unnatural - flow from the poor to the
> rich, in the form of rents and interest, which stifles much of people's
> creativity and keeps them in poverty. Cutting off those unnatural flows would
> allow the system to return to a natural equilibrium, within a generation or 
>two,
> without the trauma of redistribution. But because they result from laws and
> customs (of inheritance and money creation) which are deeply embedded in our
> society, there are no simple ways of cutting them off (or, rather, there are
> technically simple ways, but because they can only be implemented by 
government
> there are no simple ways of bringing them about).
>
>
> 'Within a generation or two' doesn't make for a very inspiring call to arms; 
>but
> we're looking at a problem which has its roots in the distant past, and which 
>is
> so intractable partly because of the weight of history. It's over 350 years
> since the time of the Diggers and the fundamentals of the problem have not
> changed. If we put all our effort into working for immediate reform, and fail,
> we will leave future generations with the same problems that we've inherited
> ourselves; and those problems will perhaps persist for another 350 years. But 
>if
> we take steps - what steps we can - to make things better for future
> generations, we might find that it also helps us in the present.
>
> The steps I'm proposing - individually surrendering the rights which create 
the
> problem - will only (individually) make a small contribution; but they cost us
> very little and they don't prevent us working for more immediate reform. And, 
>as
> I envisage them, they will create a virtuous circle. I said above that members
> would have to surrender the right to bequeath inordinate amounts of wealth to
> their offspring, but they would not be prevented from bequeathing 'a fair 
>share'
> - that, however, would be conditional on their offspring also joining the
> society. Anyone joining would therefore be, in effect, permanently withdrawing
> their own wealth - however small it might be - from the pool that the rich
> monopolise, and adding it to a pool which would be governed by fairer laws.
>
> In itself, if only relatively poor people join, this would make for very slow
> reform, possibly taking centuries - but there are various side-effects which
> might speed it up. To some extent, people who care about issues of equality 
>face
> a moral dilemma over earning money, because accumulating wealth can be akin to
> joining the enemy. There are all kinds of ways of reconciling that of course,
> and many people who have escaped from poverty find ways of helping others; but
> when it comes to making their will, most of them, I'd guess, find it easier to
> push aside a vague feeling of guilt than risk the resentment of their 
children.
> However, if they've made a legally-binding commitment, years earlier, which
> limits what they can leave, then they are spared that dilemma. It might be a
> minor factor, but for anyone who has made a commitment of the kind I'm
> suggesting, accumulating money becomes a positive contribution to the cause of
> equality.
>
> The most important side-effects, however, will come from the legitimacy it 
>might
> add, both to demands for reform, and to direct action such as squatting - 
that,
> I believe, could bring about major reform within fifteen years or so. To
> understand that, it's necessary to look at the relationship between law and
> justice, and the relationship between the courts and the other branches of
> government - I'm going to leave that for another post.
>
> Malcolm Ramsay
>
>
>

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