Distributive Justice Under Capitalism and Communism

1. Marx clearly had two aims for communism. One was to dramatically improve the material well being of workers. The second was to give them control over their own productive lives, which is, we have seen, is necessary if alienation is to be ended. The first aim is, in many ways, less important. For, on the one hand, the material conditions of workers is, for reasons we see in The Failure of Revolution much better than Marx had expected. And, on the other hand, Marx’s views about distributive justice are not that unique. As we saw earlier in the semester, a strong case can be made for some kinds of redistribution of income on Lockean grounds. But we should pay some attention to Marx’s views of distributive justice, since they do point us towards some important features of our political and social life. Moreover, examining these views will help correct some misimpressions that are often held about Marx and Marxism.
2. Distributive justice was not a central concern for Marx. He did not criticize capitalism on the grounds that the distribution of income was unjust under capitalism.
1. He held that each epoch had principles of distributive justice that were appropriate to it.
1. A great deal of inequality was appropriate to capitalism in that it was the natural result of capitalist political and economic life.
2. He held that it is impossible to dramatically change the distribution of income under capitalism without dramatically transforming capitalism itself.
2. That is not to say that Marx approved of capitalism. As we have seen, he thought that human well-being would be dramatically improved by a communist revolution.
1. The advantages of communism over capitalism were much greater than just the greater equality that would result.
3. Despite Marx’s misgivings about criticizing capitalism because it is unjust, it might be useful us to imagine the kinds of argument Marx might make for injustice of distribution under capitalism.
1. As we saw in The Failure of Revolution, it is evident that a fair amount of redistribution of income can take place even while the politico-economic system remains largely capitalist in nature.
1. The means of production remain largely in the hands of private owners even in countries such as Sweden in which there is a great deal of redistribution of income.
2. One might argue, however, that taken as far as it is in Sweden and some other countries, the redistribution of income does make some fundamental change in the political economy.
1. For political control over 50% of the GDP might plausibly be considered to amount to some degree of common control over the means of production, at least with regard to the right to revenue from ownership of the means of production.
2. So, Marxian arguments about redistribution might be useful in evaluating policies of these sorts.
3. Marx’s fundamental perspective on the nature of production under capitalism challenges the Lockean individualist approach to understanding distributive justice.
1. Locke individualism supposes that
1. There is a pre-political right to property.
2. Production largely takes place through the efforts of individuals ownership or in small businesses.
3. If this is the case, then one could plausibly argue that the amount of property we receive is entirely is the result of our individual effort.
1. This is certainly true in the earliest state of nature.
2. It becomes less true when large estates and inheritance become important in the distribution of income.
2. On the Marxian view of capitalism, the distribution of wealth and income depends upon a social process of production. Thus, our wages and incomes are not wholly due to our own efforts and talents, but also to:
1. The inheritance we receive from our parents.
2. The education we have received due to the efforts of our parents and, where schools are publicly but locally provided, the quality of education where we have grown up.
3. The relative scarcity of our natural and developed talents.
4. The general economic conditions under which we live, such as changes in the unemployment rate, the extent of national and international trade, developments in technology, the weather, and so on.
3. Given that process of production is social.
1. We cannot attribute all differences in wages income to differences between one individual and another: It is an open question how much is due to individual efforts and how much to social factors over which individual have no control.
2. No one can claim any particular wage or income. In particular, we should give no moral priority to the results of exchange under free markets.
1. Just because free exchange markets lead to a particular distribution of income does not make that distribution just.
2. Rather, we must evaluate the background conditions under which that distribution of income takes place.
3. Thus Marxist approach changes how we look at distribution of income.
1. Instead of asking, with Lockean individualists, does society have a right to tax what people earn in the free market?
2. A Marxist approach asks: what justifies inequality? Why should one person receive a higher wage than another?
4. Marx does not argue that all inequality or individual differences in wages should be eliminated in the first stage communism, in the immediate aftermath of a revolution.
1. This is probably the circumstances discussed by Marx in which we might find principles of distributive justice that can, we some adjustment, be applied in liberal democratic capitalist societies rules by labor, social democratic or socialist parties.
2. Marx does not deny that there are individual differences in the extent to which people produce
1. These differences, he suggests, result from differences in our individual talents and our effort.
2. in first stage of communism, these differences must be recognized in differential wages
3. But these wages must be paid only after but after deductions for common provision. In listing these deductions, I will follow and quote from Marx in "The Critique of the Gotha Programme"
1. Some deductions from wages are necessary to allow for continued economic development. Marx says that "These deductions from the "undiminished" proceeds of labor are an economic necessity, and their magnitude is to be determined according to available means and forces, and partly by computation of probabilities, but they are in no way calculable by equity." In a capitalist political community, these deductions would be taken from the profits of capitalists
1. "First, cover for replacement of the means of production used up."
2. "Second, additional portion for expansion of production."
3. "Third, reserve or insurance funds to provide against accidents, dislocations caused by natural calamities, etc."
2. After this first set of deductions, the purpose of the remaining product (or income) is to pay for consumption of individuals. "There remains the other part of the total product, intended to serve as means of consumption. Before this is divided among the individuals, there has to be deducted again, from it:"
1. "First, the general costs of administration not belonging to production. This part will, from the outset, be very considerably restricted in comparison with present-day society, and it diminishes in proportion as the new society develops."
2. "Second, that which is intended for the common satisfaction of needs, such as schools, health services, etc. From the outset, this part grows considerably in comparison with present-day society, and it grows in proportion as the new society develops."
3. "Third, funds for those unable to work, etc., in short, for what is included under so-called official poor relief today."
4. Once common provisions are deducted from the total product, then wages are be paid.
1. Wages are given to extent of contribution: labor measured in terms of what each individual contributes.
2. People are paid, according to how much they labor.
1. "What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges."
2. "Accordingly, the individual producer receives back from society -- after the deductions have been made -- exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another."
3. Note that by labor time, Marx does not mean number of hours worked, but rather how much someone produces
1. This is what Marx means by saying, in the following passage, that one person can supply more labor in the same time.
2. "But one man is superior to another physically, or mentally, and supplies more labor in the same time, or can labor for a longer time; and labor, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labor. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment, and thus productive capacity, as a natural privilege. It is, therefore, a right of inequality, in its content, like every right."
4. Marx points out that the inequality of wages that a results from the different capacities of human beings to produce is compounded by the inequality in family circumstances.
1. "Right, by its very nature, can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only -- for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labor, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on.
5. What justifies these differential wages is that they are necessary to
1. Encourage men and women to work hard and smart.
2. Encourage men and women to work in those jobs that most contribute to the total economic product of the political community.
6. Thus there would likely be substantial inequality even in the first stage of communism.
5. Marx also presupposes that there would be a very strict inheritance tax. Click here for some notes on the question of inheritance taxes.
5. In second stage of communism, distribution would be in accord with Marx’s famous principle: From each according to his ability, to each according to his needs.
1. This principle suggests that
1. Those who can produce more, should do so.
1. Marx essentially assumes that we are talking about conditions "after labor has become not only a means of life but life's prime want."
2. He presumes, therefore, that human beings will want to be productive and will produce pretty much as much as they can. Everyone will work to the fullest of their abilities simply because they love to work. Of course, "fullest of their abilities" must take into account each person’s— perhaps different—need some degree of rest and time for family responsibilities.
1. In other words, we don’t have to worry about motivating people to work when labor is non-alienating.
2. Those who need more, should get it.
1. And Marx seems not really to be talking about need in the narrow sense (that which we need to keep us alive) but about our desires.
1. There would presumably be no questions of how the satisfaction of needs in the narrow senses would be distributed in the highly productive world of the second stage of communism: those who need certain goods will receive them.
2. We would expect that, even after the satisfaction of needs, many more goods or higher will have to be distributed.
2. The basic notion here seems to be that everyone should be equally happy. That is, they should receive those goods that given them—or, more correctly, their families, an equal degree of desires satisfaction.
3. The difficulty with these ideas are
1. Can work ever be so unalienating that we don’t have to worry about motivating people to work hard and smart?
2. Can we easily determine what people or families need to be equally fulfilled. Or, after certain need are met, must we simply distribute the right to goods equally.
3. Can we find some way to coordinate the work of different people without wage differentials.
1. I return to this problem in What is Dead in Marx.
6. A note on inheritance taxes. Since this was a hot topic of conversation in some of our classes, I will add a few notes on it.
1. The case against inheritance taxes.
1. Why should wealth that was presumably already taxed once, as income, be taxed again?
2. It makes little sense to tax small estates, since the costs of administering the tax is relatively high.
1. This makes a great deal of sense, but only 2% of all estates fall under the inheritance tax. An estate must be worth $600,000 before the inheritance tax comes into play.
3. The inheritance tax makes it difficult for small businessmen to pass their businesses on to their children.
1. While this remains true to some extent, new laws and old means of tax avoidance can usually prevent this from being a serious problem.
2. The case for inheritance taxes.
1. Much of the income of the very rich is never taxed or taxed at lower rates than wage income.
1. The capital gains exemption reduces taxes on capital to a maximum of 20% as opposed to a maximum of over 40% on wages.
2. The capital gains "step-up" means that the descendants pay capital gains only on the difference between the value of some stock and bond when they sell it, and the value of the same stock or bond when they inherited it.
1. All capital gains between the time a person bought a stock and bond and the time he or she died is untaxed.
3. There are various other loopholes that allow everyone to avoid income taxes. Capitalists, of course, take advantage of these loopholes much more than workers (or the rest of us, for that matter).
1. There is no tax on the proceeds of life insurance policies.
2. A substantial sum of money can avoid taxation until retirement if placed in a one or another kind of retirement account.
2. There is relatively little progressivity in our taxes—the rich do not pay a much higher proportion of their taxes than the poor or those with middle incomes—when federal income, federal social security, state, and local taxes are all taken into account. Thus the inheritance tax, if administered fairly, goes some way to make for a more progressive tax system.
1. If one believes in progressive taxation, it should not make much difference when this taxation occurs, when income is earned or when it is passed down from one generation to the next.
2. Since the disincentive to working hard or smart might be greater for an income tax than an inheritance tax, it might make sense to have higher inheritance taxes and lower income taxes.
3. Inheritance taxes are necessary if we are to have fair equality of opportunity for everyone.
4. Inheritance taxes are necessary to keep the rich from dominating the political system.