Recent use of the term "class warfare" reminds me that I still have some posts to write about language (in which, incidentally, I will be able to explain more fully the name of my blog). For now, I will once again set language aside and focus on one particular argument being made by those who decry "class warfare."
The essence of their argument is that taxes should not be raised on wealthier people because it will reduce their incentive to keep doing the things that made them wealthy in the first place - the very things that create jobs and grow the economy, thus raising the standard of living for everyone. Hence, the wealth of the country's richest citizens must be protected for the sake of the economy as a whole.
The first point (taxes reduce incentives) is more obviously ridiculous. It mirrors the argument that intellectual property rights are necessary to cultivate creativity, which I have already refuted. But beyond this, just think about what this claim is actually saying: in effect, that people would willingly choose to have less money (post-tax) so that they don't have to pay more in taxes. (Think, just as an example to illustrate a general principle: if somone could make $100,000 and pay $10,000 in taxes or $100,000,000 and pay $250,000 in taxes, who would really choose to have $90,000 rather than $750,000??) If someone really desires a lot of money, the likelihood that they will be deterred by tedious calculations concerning the increase in profit in comparison to additional required effort is fairly slim. Furthermore, there actually is not a proportional correlation between rate of profit and time/energy expended, so one cannot assume that "efforts" are any real consideration in this trade-off. It would really just be a matter of someone settling for less money overall so that they could pay less in taxes, and that is just silly, if the whole problem with taxes in the first place is that it diminishes one's income.
What about part 2 of the argument, then? Does capitalists' ability to accumulate large profits create jobs and grow the economy? The answer is "yes" according to neoliberal ideology. It is "no" according to empirical evidence and structural analysis. First, one must consider what "job creation" and a strong economy means, from a structural standpoint.
I have already commented on the role of fluctuating employment rates in a capitalist system. The important points are that 1) there is an optimal unemployment rate (and it is not zero!) to maximize profitability, and changes in employment are driven primarily by changes in productivity (in large part a matter of how the production process is organized); and 2) the creation or growth of a succesful business does not by any necessity result in more jobs. Business owners and entrepeneurs are not in that sense "job creators."
The strength of an economy is a matter of regional constraints to competition and the global organization of space/division of labor that is required for the capitalist system to function. Thus, while the economy in one area of the world may be strong, higher purchasing power/wages in one locale requires poverty in others. As a capitalist gets wealthier, some other people may become richer as a result, but overall, a lot more people will become impoverished. Everyone is linked within the global system.
Economic expansions (of the system as a whole) occur when, for a variety of reasons, capitalists are able to maintain regional constraints to competition, widen inter-regional inequalities, and keep supply within the bounds of demand. Yes, capitalists will become more prosperous, and, yes, so will some people in some regions of the world (most people will become significantly poorer), but that does not mean there is any causal relationship between capitalists' profits and the perceived "strong economy" in the "lucky" regions. Both are effects of the structural manipulations that allow for economic expansion.
For the past few decades we have been experiencing a global economic contraction. A LARGE one. It is, at its root, a crisis of overproduction. That means, quite simply, that capitalists have invested in the capacity to produce far much more than what there is demand for (or even what demand could be manufactured by the government). Our economic crisis is a crisis of too much stuff! Encouraging enterpernuership and investment will not save the economy. It will make it far, far worse.
At this point there can only be massive structural reorganization. Wealth will have to be redistributed, if only because the current distribution is so skewed as to render it unsustainable. Ironically, it is redistribution of wealth that could actually create the conditions that would allow capitalists to once again construct exploitative relationships from which they could glean massive profits. I hope that doesn't happen.
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