The Beginning of the End of Capitalism

The Guardian reported yesterday that Four Seasons Health Care, a private care home provider that looks after 17,000 residents, could go into administration after talks aimed at staving off its collapse were derailed by haggling between private investors. The Guardian article goes on to point out that Labour has criticized the role of high finance in social care.

Is this a sufficient response from Labour? At the root of the problem is a long held reluctance by social democrats to tax wealth and to recognise the contradiction between the need for ‘homes’ for all and the use of housing as private investment. The former requires declining house prices and the latter requires ever increasing ones.

The Labour Party 2017 Manifesto, For the Many, not the Few calls for a comprehensive National Care Service but avoids the question of the provision of care homes and how to pay for them. Under current arrangements we all play the Alzheimer’s lottery game under which some home owners get to pass on their investment to their children while others find they must liquidate their investment to pay for a place in a care home. However, with escalating house prices, essential if housing is to act as an investment, even the children of those who win the Alzheimer lottery may not be able to buy their own homes due to the escalating house prices essential for housing investment.

The other big omission in the Labour Party Manifesto is the taxation of wealth. Despite some recent expressions of interest by Jeremy Corbyn and John McDonnel, it does not feature in For the Many, not the Few. Yet it was included in the Labour Party Manifestos of 1974, 1979 and 1983 before being dropped. Why was this?

For Labour, a wealth tax has always been seen as something to “make the distribution of the tax burden accord more closely with taxable capacities” [i], not a means of redistributing wealth. The essential distinction is whether the tax can be paid for out of income or out of capital. References to ‘taxable capacities’ imply the former. The latter implies the start of what Marx called “expropriating the expropriators”[ii], i.e. the beginning of the end of capitalism.

As Howard Glennerster’s paper Why_was_a_wealth_tax_for_the_UK_abandoned? demonstrates, there will be resistance to even modest proposals for a wealth tax paid out of income. Proposals for a tax paid out of capital are likely to provoke a hysterical response from those required to pay it. No social democratic party, even a Left Labour led by a principled politician freed from the shackles of an entrenched Parliamentary Labour Party, is going to risk provoking such opposition.

The Communist Party has no such inhibitions. Our aim is not to manage capitalism more humanely, it is to replace it. Thus in our pamphlet From Each according to their Means[iii] we proposed an initial annual wealth tax of 2% per annum, with higher rates for the mega rich. Even without these higher rates, a wealth tax would raise £90 billion per annum, sufficient to break the link between housing as investment and housing as a need and also finance a truly comprehensive National Care Service. Most significantly, however, a 2% + wealth tax would signal the first step in the abolition of capitalism. Let’s start promoting it now.

References

[i] Labour’s Green Paper following the 1974 election.

[ii] Karl Marx, Capital, Chapter 32

[iii] From Each according to Their Means, Communist Party, 2014. £2.50 from CP shop

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