Regressive taxes, fees, and the price of commodified services
The preeminent economist Anwar Shaikh outlines the main way that central banks and governments attempted to save capitalism was to driving down interest rates and undermine wage growth.
The collection of these policies was dubbed neoliberalism by detractors and transformed much of the world economy during this time.
Social changes including attacks on unions and the transition of individual greed from sociopathic vice to morally justifiable position helped neoliberalism along. However, it is the restructuring of the public sector where the largest negative impacts may have been felt – and the wholesale plundering of the commons that really saved capitalism from the collapse of profits.
Shaikh outlines the main culprit of the neoliberal program for the capitalist sector: the structural changes to finance that increased the distance between interest rates and profit rates – driving up real profits. But, capital needs products and services to make profit from producing and selling. And, like the process of imperialist theft or natural resource extraction, there were plenty of public goods that could be newly exploited for profit.
The process was simple: capture a "public good", shove it into a newly constructed "market" for exchange, and put a price on these new commodities. A process known as commodification and marketization.
Subsidizing the transfer of wealth
This process is broader than simply taking a public service that was provided by the state and start charging for it. It is about a mind-set that looks at all interactions between people (and the planet) as exploitable for revenue generation and profit. It is about convincing people that they can only really pay for things properly at the point of exchange – instead of through collective stewardship. The neoliberal program set out to convince us that there was "value" locked away in these public services that could enrich us all.
Of course, all this newly found value was just transferring wealth from the public to the capitalist. There are very few things in society that have escaped this mad push to commodify our public goods. The ideology is so pervasive in most of the advanced capitalist countries most people now think that only through commodification can we regulate our environment effectively.
It is the changes to the tax system structured around how we pay for these public goods that allowed this to happen gradually enough that working people did not seem to realize it was happening. Tuition fees, fees for health services, fees for school supplies, sports fees, park fees, carbon pricing, road tolls, transit fees, drivers licence fees, health card fees, water fees, fast rising electricity/energy fees, hospital parking fees, health insurance costs, airport landing fees. The list is nearly endless.
These fees are the move from public taxes (designed to reduce the burden of payment from those who cannot pay) to up-front charges. This is the first step to commodification of services. Followed closely by increased fees to "market" values while shoving the entire service into the private sector to generate profit. A theft of the public commons that was subsidized the entire way through those once progressive taxes.
A segment of taxes are no longer used to pay for supporting public services and goods, but to subsidize the privatization of those goods. Publicly funded initiatives are numerous and include:
- commericalization/technology transfer offices in universities
- public grants for social service start-ups, social finance initiatives, and social impact bonds
- specialized public private partnership funding
- funding for strategic reviews of municipal and public institutions to help implement corporate consultant-driven restructuring and outsourcing.
- public commissions into government efficiencies that start and end with the notion that the private sector is always more efficient.
Governments spend tens of millions of dollars simply to identify potential new sources of "profit" to transfer to the private sector.
It is easily shown that it is nonsense that privatization, commodification, and marketization of public services makes public services and products better. But, this process has nothing to do with this stated goal and everything to do with subsidizing profit rate stability.
Prices for free
It is natural for people complain when prices go up. Some even complain when products and services become so expensive (or wages so low) that they are out of reach for regular people. But, few push back these days when things go from being universally accessible to having a price that you pay at the point of use. This is because capital has spent a lot of money trying to convince us the theft of our public commons is in our own interests and that selling that back to us allows us to correctly "price" these goods and services.
As taxes become fees, this transfer of wealth from privatization drives inequality at the point of exchange and reduces capacity to provide other services. A cycle results, gutting universality of public services and limiting the access and production to needed goods. This process of limiting supply of a universal public good is known as "marketization".
It is a well worn game that has been played since the 1980s when the neoliberal era began. The problem is that while it saved capitalism, it created the dire situation we have now with huge inequality, inability to respond to easily predicted crises, and insufficient buffers to protect people during the crises. Ultimately, the solution for the public good is a return to public ownership and expansion of public production of goods and services.
The "market" is not necessary and indeed continues to limit our actions. We must wake-up from the dream of a capitalism that functions to support us, to the reality of a system that is limiting our human potential.
Commodification was profit through transfer, not profit through production. Capital stole our publicly owned goods and then leased them back to us. There is no value added in this process.
Understanding this history shows a clear response to the current concurrent global crises created by a system out of control: de-commodification is going to be necessary to pay for and get the services and products we need to get the future we want. The transfer of wealth from capitalist owned systems back to broad public, democratic, and universally accessible systems is the only way to stop the profit skimming, directly regulate production and service to reduce social and environmental harm, and direct these services towards solving the economic, environmental, and health needs.