“Expropriate” is one of my favorite words. It has a distinct communistic air about it, being used so frequently to described robberies as conducted by Stalin, and then to state seizures conducted by the Soviets and by the Chinese communists. It brings to mind horror and revolution; horror for the haves, revolution for the have-nots. In my imagination, it is the word that strikes fear in the hearts of capitalists everywhere.
If I’m being more realistic, that probably isn’t the case. First of all, the amount of the ultra-rich who know the word “expropriate” is undoubtedly very small; money can’t buy literacy and, as the recent Epstein correspondence release has shown, literacy seems to flee from money. Second, while the term “expropriation” seems to be strongly associated with communists, the act of expropriation happens every day, all over the world. All states have to expropriate.
Now I’m going to bring in a definition: I know you were all waiting for it. According to the Webster’s New World College Dictionary (accessed via CollinsDictionary.com), to expropriate is “to take (land, property, etc.) from its owner; especially, to take for public use or in the public interest, as by right of eminent domain.” That’s definition 1, and the others are pretty closely related. Let’s be cynical and replace “public” with “state” there and we’ll have a general definition we can use. And I hope that something will be screaming out to you about this definition.
That’s taxes.
And that absolutely is taxes. Taxes are a form of expropriation. We often justify taxes by demonstrating that the tax revenues are eventually used to help the taxpayers, but this is a second and coincidental step. That is, the fact that taxes might be used to benefit the taxpayer is actually not why taxes are agreed to. To say that taxation is theft is straightforwardly true in a technical sense: if theft is gaining something from someone you have put under duress, then that is what taxation is. Morally speaking, however, the situation is different.
The relationship between the final tax-collector (which is to say, the state) and those who pay the taxes is not the same as the relationship between the thief and the victim. At the risk of making politics too Oedipal, the state is more like the parent of the taxpayer: the relationship is considered fundamental rather than itself being based on anything else. The taxpayer is subjected to the state, which means that the state has some kind of right to take from the taxpayer. For each taxpayer there is a theoretical limit to the tax they are willing to pay before they cause problems for the existing tax collection regime, but that in no way negates the right of the state to expropriate.
There are some who believe that it is possible to create a state without expropriation. A prominent expression of this point of view is the non-aggression principle. There are others who demand that socialism build itself without expropriating from the state or the wealthy, and that the fact that socialism doesn’t do this is a proof of its essential unfitness. What I want to demonstrate is that any state will expropriate from its society and every state must expropriate from its society. Expropriation is not a matter of justice, it is a matter of practicality. The choice is not whether or not to expropriate. The choice is who should be expropriated from: the lower classes or the upper classes.
The larger part of my argument will focus on the creation and maintenance of money value in a state-society. First, I want to talk about a stumbling block I ran into, and how I thought my way around it. I tell this to help try to make it clear how difficult this subject is to get to grips with, not only for myself but for others. As I will continue to say until I feel I know enough: I am not an economist or an expert in finance. It may be that what I’m going to say is obvious to experts. Anyway, enough stalling.
What you will not find in this article is anything approaching hard evidence. The major reason for this is that, as I said, I’m not an economist. I can’t easily pull together a set of data that will say the things I wanted to. But I can work a spreadsheet, I’m comfortable enough with math, and I can find public datasets. So I went through the information I could find about US tax brackets, income tax costs, income earned, etc. I wanted to find a way to show that, in plain dollars on the page, the rich don’t contribute as much as the poor. After a first little spark, I ran into failure after failure on that front. Nothing seemed to work.
Then I remembered how badly American wages have been held down. That even though numerically wages are higher, by purchasing power, the minimum wage of $7.25 per hour is far below what $2.50 could get you in the 60s. And that made me think back to the labor theory of value, whose employment by others I’ve criticized. But here it was instructive, because it led me to this next insight: the expropriation in the American system has already happened by the time it hits income.
If you just look at the money itself, then sure, it looks like the rich are “paying their fair share” in America. The 1% pays a massive chunk of the American income tax share; 42%, compared to just 2.3% contributed by the bottom 50% of Americans. But it isn’t that the rich simply deserve that money, as if it came to them by right. They have exploited it out of the lower tax brackets already. The business of drawing excess value out of workers is already completed (or mostly so) by the time income tax is charged. Having realized this, it was clear that I wasn’t going to be able to get any evidence by looking at the results of the expropriation process, so I decided that I would have to go without hard evidence for now.
What I do have are the arguments of more skilled and focused thinkers than myself. In this case, I am chiefly leaning on the work of Geoffrey Ingham in The Nature of Money, who himself bases his thought on a close reading of earlier thinkers like Knapp and Innes. As I said, my argument will center on the notion of maintaining money-value and, specifically, how stable money-value is related to the power to expropriate. Through this, I will suggest a reason that states tend to confront the lower classes with expropriation more often than they confront the upper classes; hopefully, this understanding will help to redirect expropriation more usefully in the future.
While I do feel somewhat bashful about this, I will suggest that you read my Theory of the General Crisis if you haven’t already. It won’t be critical to understanding the thrust of this piece, but I am going to begin with these ideas already in my mind and move forward.
When a state-society forms, its cohesion is founded upon the general crisis: the process of dealing with everyday needs in an environment with scarcity. The most basic, minimal state-society is not formed on the basis of the state intervening in every issue, but on the basis of the state being the final arbiter in disputes. The general crisis should be understood not as the struggle of each individual to survive but as the struggle of a community of individuals: this is an aggregate, a group which recognizes continuity but does not recognize permanence.
In the case of the usual general crisis, the already-controlled devices of the state are enough to ensure the continuation of the community. However, even in this case, there may be crises that arise which are beyond the usual powers of the state to deal with. In the case of these megacrises in which the state would (theoretically) expend all its effort and still fail, the state would have only one resource to turn to: its society. It is in this case that the state would have full justification to expropriate from the society, based on the fact that the dependent-subjects of the society will not themselves continue if the state fails (at least, this is the logic of the general crisis).
I believe that some people would argue here that this process could be done voluntarily, that the state would not need to expropriate when the society could willingly donate. This could happen, I agree, but this is not predictable in a mechanistic sense. In other words, a state which relied on voluntary participation in time of great crisis may fail even if the state-society had the resources to survive.
It’s distasteful to remember that cooperation isn’t always automatic but it’s something that can’t be forgotten. As an American, I remember seeing the horrors of Hurricane Katrina: not only the devastating weather itself, but the way that people turned from helpful into harmful, began to act as though their neighbors were their enemies, even murdering them. Think about all those other hurricanes where people refuse to leave, as if they know something everyone else doesn’t. Think about how quickly people were turned against sympathy during the early Covid period. Think about how bigots and contrarians thrive. It might be nice to believe that a society would rally together in the case of any crisis, but it is also nice in its original sense.
If we assume that this state is determined to survive, we see that it must expropriate. Or, to be more exact, it must have the ability to expropriate. This power of expropriation is what allows a state to go beyond its means in order to meet these megacrises like major natural disasters, like disease outbreaks, like poverty, like war. Even if a state contrives a way not to expropriate in most cases, abandoning the concept of expropriation would be to abandon the chance of survival in extreme circumstances; if that is the case, there is no reason for the state-society to stay together in the first place.
It is tempting to then conclude that the society thus has some hold over the state, or that the state has some responsibility to the society, which is inherent in this power to expropriate. This is not the case. As I said, the state is like a parent and the subjects are like its children; the state is a horse and the subjects are flies on its back. As far as the making of decisions goes, the subjects have no say, and there is no inherent responsibility to them on the part of the state. Expropriation is not a right granted to the state for the service of governing, it is a power exercised over the subjects in return for the subjects being permitted to exist within the state’s purview.
The flies don’t stay with the horse because the horse has promised to protect them, but because the horse has warmth and fecal matter and other things that flies like and, most of all, because the horse hasn’t squashed or shooed them off yet. Parents can abandon their children whenever they want; the fact that a child is with them is the parent’s choice, not the child’s. I make this point again because I really want to make sure it’s understood before I move any further. Expropriation is not a negotiation of any kind, it is strictly a power expressed over the subjects in a society.
The eye has independently evolved many different times in biological history. Writing has been developed at least twice independently, and probably at least three different times. It may be that taxation as well came out of different sources. In some places it may have been from the spoils of the conquered. In others, it might have been tributes paid to temples. In still others, it may have come out of donations for megaprojects. The origins do not matter. Regularized taxation is not a gift and it is not exchange: taxation is always expropriation.
Throughout history, taxation has not only been through things of value, it has also been through labor. We should therefore understand that expropriation as well isn’t just limited to money and valuable things, it also encompasses the seizure of time, labor, relationships, etc. As a scheme of expropriation, then, we have to understand that taxation does more than simply raise revenue.
In the case of African colonial wage slavery, Ingham relays this story from another scholar called Wray: “Wray presents further examples of how colonial rulers were able to establish wage labour by enforcing the payment of taxation. Tax levels were set high enough to ensure that the indigenous population had to work continuously to meet their obligations. In a refreshing counter to the increasing emphasis on the role of ‘trust’ as the basis for the use of policy, Wray’s analysis points to the more fundamental role of coercion.” (Ingham 55)
What I want to point out about this passage is something not stated specifically. Yes, the tax levels were set very high; Wray notes that in Kenya during the 1920s, “average taxation was almost 75 per cent of annual wages” (Ingham 76). However, the taxation would have gone to the colonial authorities, and it would not likely have been very much; though the wage levels aren’t noted, colonial wages are by definition exploitative in the extreme. What I am coming to is that the point of the high taxes was not to raise tax money: the point of high taxes was to drive production. Though the taxes did raise some money, the greater thing they expropriated was labor which otherwise would not have been used in colonial projects.
How did the colonial authorities accomplish this? Wray explains: “Now, states could indirectly influence labour towards preferred activities by setting a tax rate and paying for goods and services in the coin acceptable for tax payment.” (Ingham 100) Unfortunately I can’t produce this quote, but I vividly recall hearing a story of Africans under European colonization who would live in their villages for most of the year, then only come down to the cities or wherever for a few months in order to work the jobs that paid cash, because they could only pay their taxes in cash. That is what it is possible to achieve through taxation. These are people who otherwise would have been outside of the colonial production system, who were drawn in by the mechanisms of taxation so that their labor could be exploited.
These accounts demonstrate that coercive taxation of this sort requires two key techniques: enforcement and coinage. Enforcement is the means by which any sort of expropriation or other action opposed by the subjects is carried out regardless. Enforcement is what ultimately ensures the expropriation is completed; in the final calculation, it usually achieves this by death-coercion (in other words, narrowing a designee’s choices to compliance or death).
Enforcement is, however, a delicate balance. In every known case (and almost every imaginable one), the enforcement group of a state is many times smaller than the population of the state-society. Further, many enforcement groups are not completely loyal in every situation, and certain pressures may break the enforcement mechanism apart. In terms of available force, the management of enforcement can be related to fractional reserve banking: a relatively small force which represents a much larger effect. However, this effect can be overplayed and ultimately fail if so much non-compliance happens that the enforcement group(s) cannot respond to it all. An excess of demanded expropriation is one direct way to cause this widespread non-compliance. This means that there is a vague maximum level of taxation that any particular tax scheme can support.
Money requires a much deeper treatment than I’m equipped to do here. Ingham wrote a whole book on it, after all, and it isn’t as if he wrote the last word. There’s also a process called economization which I have tweeted about but I’m still a bit far from writing out; I need to figure out what others may have written, though I’ve found little so far. But as Wray’s analysis of colonial wage labor in Africa shows, it isn’t just the enforcement aspect which gives taxation its particular force: it is also the fact that the tax must be paid in specific kinds of money. Rather than talking about money in general, then, I’ll satisfy myself by talking about cash and coinage.
The terms “cash” and “coins” should be considered interchangeable, except that “cash” is a muchness and “coins” is a manyness. As far as what they are, however, they are the same: portable tokens of purchasing power which are accepted by the state in payment for debts. The burden of expropriation is almost always characterized as a debt, but it differs from “exchange debts” because nothing is received by the subject for which a debt could be weighed. Regardless, we can say that taxation proper occurs when a state (or similar entity) engages in regularized expropriation which is dispensed with not by the performance of a duty (as in corvée labor) but by payment measured in money. Taxation does not require coins, but it does require money; Ingham takes pains to point out that money of account predated money-coins by thousands of years and that money of account often continues to function even when money-coins fail. Still, the development and use of coins is a further step in the economization of daily life.
What differentiates value (as expressed in money) and benefit (which has no essential expression but many equal and different ones) is that value is determined ahead of its use. In terms of the use of money, we can see this in how states regulate the type of thing they will accept for taxation; in other words, the types of things it considers to be money (or money-like). We can imagine a farmer in the USA today going up to the tax office with a cow and saying “this cow is worth such and such a price, accept it for my taxes”, but the tax office would refuse. What the government of the USA wants is for cows to be sold on the market so that it can take its taxation in cash. A farmer can’t make their way simply by raising cows and doing other farm business, they must sell in ways that give them cash that is acceptable to the authorities. This doesn’t mean that the cow is not “worth” the price given, or more or less, only that value and benefit are not the same, and are not even directly correlated.
Value does not come from the inherent amount of benefit that a thing provides, were that even something we could finally calculate; value is imposed upon things by an authority. As Ingham says on page 47: “By declaring what it will accept for the discharge of tax debt, assessed in the unit of account at the public pay offices, the state creates money.” And it is this money of account which is the primary (as in, initial) form of money, not money-coins or even money as a store of value. “Money of account is logically anterior to the market.” (Ingham 34)
The significance of coins is that they allow purchasing power to become movable and tradeable in a commodity which represents money itself rather than having any other benefit. Mitchell-Innes pointed out (as Ingham relates) that ancient coinage, contrary to popular belief, was in no way uniform in metallic content. On page 75, Ingham says “In the metallist theory, it is argued that the purchasing power of money is related to the metallic content of the coins – hence the insistence on a direct link between debasement and inflation. With less metallic content, more coins will be demanded for any commodity. However, there is little evidence of a direct linear relationship.” He follows this on the same page by saying that “[i]f it is acceptable as a means of tax payment, the metallic content is irrelevant.” I emphasize this point just to stress that money is always abstract, it does not reside even in the tokens of money.
Despite its abstractness, the portability of coins resulted in some of the power of the state – expressed as purchasing power – moving out of the state’s direct control so that it could be harnessed by others. “Although coinage was a jealously guarded instrument of state, it inevitably enabled economic power to escape from state control through the massive injection of portable abstract value into the relatively loosely integrated Greek and, later, Roman empires.” (Ingham 100) What this means is that the act of issuing coinage is, in a way, the state lending its own power to help facilitate the payment of debts (and settlement of expropriation). Taxation, therefore, is a recouping in some measure of that power. This does not make the expropriation finally an exchange; expropriation remains expropriation because the power of money-coins was freely given by the state which has no inherent claim on demanding the coin back.
Through the interplay of money-coins and expropriation, what coins come to represent is the ability to induce the state to act on one’s behalf. Even without explicit legal tender laws for non-state actors, the existence of a tax regime which only accepts specific types of money means that the payment of money is not the same as the offer of a thing; the offer of money is not even the same as the offer of a thing. Because of the existence of enforced taxation in specific money, the offer/payment of that money is not just a gift, it is a kind of threat. Every person needs money, and therefore when money is offered, it is an inherently impractical choice to refuse that money. As society becomes more and more economized, with more interactions becoming mediated by money, such refusal becomes more and more fraught.
Think back to the story I half-remembered about the workers who lived in their villages most of the year, then came to the cities for a few months to work. They had to do that for just the one interaction. Now let’s imagine that when they’re at home, they have to pay just to get water, pay to go to the other side of his village, pay if he stays up too late, etc. etc. The need for money grows and grows, and therefore the threat involved in each chance at money increases as well.
One of the megacrises I referred to earlier was war. I refer to war as the greatest test of a state system because it requires the relatively rapid mobilization of a vast amount of resources, even compared to what a state would usually spend. The direct, up-front expense involved in war generally outstrips that involved in any other urgent project. In such a situation, the state must bring to bear as much of its resource base as it can manage. In such a situation, similar to what was found by the African colonialists, providing money was a far sounder strategy than simply employing force. The state’s position as the authority over value allowed it to create new money which it could use to further coerce elements of its society.
I will skip over the ins and outs of credit capitalism. What is important to understand is that the price of money (aka its value) began to obviously show what it had been all along: that it was determined in large degree by the balance of power between the government and its constituents; which is to say the ruling class/cadre and the aristocracy or, in the terms of Ingham, the debtor and the creditors. As credit capitalism emerged, especially in England (at least, for this English reader), the dynamic between the creditors’ willingness to issue loans and the government’s ability to expropriate (i.e. its capability to deliver future tax profits to pay its debt) became an obvious landmark of state policy. The worth of money, and the extent of the government’s money, was based now on its ability to tax.
It is worth restating that this was, in effect, always the case. Taxation rates effectively set the price of money, especially in larger empires with more people affected. At the point of credit capitalism, the change just becomes explicit. This explicit nature, however, gave creditors the confidence they needed in order to lend in much larger amounts to the government. This is the change which effectively heralded capitalism as a new phenomenon. While the power to tax had a significant effect on the price of money before, it now affected the amount of money that the government could raise as well. After all, though the public debt is always expressed as the amount of money which the state must pay, in reality, the public debt is a gamble being made by the holders of the debt that the state will continue to be able to raise tax revenues.
Given that the public debt is to be paid using tax revenues, there are two important things that must be determined. First is the amount of liquid money the state has available. Far more important, however, is the regularity and amount of its income, especially through taxes. As said much earlier, there is a theoretical maximum to the amount of taxation that a state can demand of its society. As long as an amount which is reachable is satisfactory to the state’s creditors, the state is able to keep its loans and perhaps even raise more money. When the amount falls too low, the state faces a financial crisis.
Now, this should bring your mind back even further to where I had that stumbling block thinking about tax rates. Again, when I got to this point in my thinking originally, what I imagined I would say is “Therefore, tax regimes frequently target the lower-income taxpayers as they have fewer options available to defend against taxation.” And it is true that lower-income and lower-wealth taxpayers are easier to target, and also that the highest-income taxpayers avoid and evade the most taxes by far. However, it is also true that I pointed out that the highest income brackets also do pay an overwhelming share of the income tax in the country.
Having gone through this piece, though, you should have come to the conclusion I’ll lay out here: the expropriation of the lower class isn’t reflected in the amount raised from their taxes but in their continued work in the system and the increased profits of their employers. The purpose of hardline enforcement of taxes among lower-income people is not to get the money from them, it is to ensure that they keep working. It’s their employers who “make” the higher salaries that will actually pay the most of the income tax on paper, but those employers can’t “earn” those higher salaries unless all their lower-income workers continue to work. That is how expropriation functions in the United States and most capitalist countries.
If labor is the real foundation of all value, there is unlikely to be a better basis for taxation than labor production. That is to say that if we assume that labor underpins valuations, rather than valuations being related primarily to metal content etc., then it only makes sense that methods to tax labor production, such as income taxes, are the most credible type of tax. If this is the case, then the stability of money in a system is directly tied to the level to which the state can expropriate its tax base. If we take this fact as read, then what is left for us to decide is how the tax will be collected and who it will be collected from.
For those who wish to ease the burden of the lower classes, the obvious choice of who to collect the tax from is the upper class: holders of private wealth as well as business corporations. Capitalists will tend to argue that raising taxes on the wealthy will stifle advancement, but the real danger is something that’s typically brought up only as an afterthought: more capital means more ability to escape taxes, either by legal avoidance or illegal evasion. If taxes are raised significantly on the wealthy, there is the chance that a huge gap in tax revenues might be opened. If the stability of money is based on the regularity of taxes, such a shortfall could produce an economic crisis.
While I have not examined the history of this deeply, it seems to me that taxation as a process is primarily a compromise in the use of the two faces of taxation. To the upper classes, taxation is an expropriation meant to be discharged through payment. As far as it concerns the actual amount of money-cash available to the government, the majority of this is (and indeed must) be paid in by the upper classes, regardless of any avoidance/evasion they engage in. For the lower classes, taxation primarily represents the expropriation of labor. While individual taxes may be crushing or may be bearable, depending on particular situation, the overall aim of taxes for the lower class is not strictly to raise money but to induce the lower classes to work. This inducement is what forces the lower classes into wage labor for the upper classes, ultimately driving the growth of upper class fortunes as the lower classes are systematically exploited. Though expropriation is not exchange, taxation can be thought of as a quasi-exchange, where the state “negotiates” a rate for the upper classes to pay “in exchange” for the state using its access to violence (i.e. death-coercion) to force the lower classes into work.
One challenge any post-capitalist system will have, at least if it views its goal as ending the injustices of capitalism, is how to shift the burden of taxes entirely onto such corporations in a way that does not apply the expropriation of labor to individuals. This appears to be simple to do, but any interest (i.e. potential concentration of value, such as a business) is primary self-interested and constructs its well-being separately from the well-being of its members/participants in aggregate. In other words, whenever a group gets together, it will tend to work on behalf of the group-entity rather than any individuals, even the group-as-individuals. In terms of taxation, this means that corporations and similar groups will always seek to defray what costs they can, which means they will resist taxation as far as they can get away with. Since corporations will always concentrate more value than individuals can, they will always have more resources to protect their position than individuals do.
I am closing in on a theory or hypothesis of economized and non-economized spaces. I’ve certainly tweeted about it before, but I’m not sure if I’ve written anything; it seems I’ve been reading economics a bit longer than I’ve been writing about it. My hope is that such a theory will help lead to the discovery and/or elaboration of a countering force to the business corporation. This would not be a replacing force such as a labor syndicate; such a labor syndicate would, unfortunately, play the role of corporations were they to replace them (though there would be clear differences in operation). Unions also don’t quite play this role, but it’s possible they might. The state may serve as a regulating force but I am not sure that the state itself is the answer.
In any case, my conclusion is that a post-capitalist system will have to free individuals from the burden of expropriation by shifting this burden onto corporate groups. This won’t effectively end the expropriation of the individuals; this is, in the end, the mechanism of social action. Expropriation is a power, but it is also like power itself: we recognize it can be oppressive and we treat it as dangerous, but we must use it; to always shrink from it is to refuse to accomplish anything. The point is not to completely end expropriation, but to mediate it in ways which result in a society that allows people to live free and be expropriated from in times of necessity, rather than living in a state of constant expropriation, reduced to a unit of labor whose only purpose is to be exploited. My hypothesis here is that by placing burdens on collectives rather than individuals, the collectives will be able to distribute the burden effectively. It’s the nature and construction of these collectives which must be figured out. But to understand what they must do, it is essential to understand the role of expropriation in the state-society: both the extent of its danger and the productive uses it can be put to.
Referenced work:
- The Nature of Money by Geoffrey Ingham