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Tech tycoons, beloved entertainers, and dazzling athletes nearly always come up in heated debates over taxes. Don’t you like your iPod? What about Harry Potter? Neoliberal economists argue that figures like Steve Jobs, J. K. Rowling, and LeBron James should make more money than the rest of us. After all, we — the consumers — are the ones buying their products. Their higher pay creates the incentive necessary for the hard work and innovation that even the lazy among us benefit from. Intuitive as it may seem, this view doesn’t hold up. Advocates for low taxes on the wealthy deliberately choose examples from tech and entertainment, suggesting that the elite are great innovators truly cut from a different cloth. But a glance at the list of the top-paid CEOs in the United States tells us otherwise. The highest-paid executive is Discovery Communications’ David Zaslav, who made over $150 million in 2014. His great contribution to the human endeavor? Helping to air Here Comes Honey Boo Boo. Most people understand this and believe the rich should pay more in taxes. According to a 2015 Gallup poll, 62 percent believe that upper-income earners are taxed “too little,” while just 25 percent think they pay their “fair share.” 69 percent believe corporations aren’t taxed enough, while only 16 percent were content with current rates. But the socialist justification for taxes is grounded in a view — not often captured in opinion polls — about how capitalist wealth is actually created. To explore it, we first need to understand what taxes are and what non-socialists think about them. Tax policy does two things in capitalist society. First, it determines what share of the total economic pie will be managed by the public, in the form of government revenue, and how much will be left to the use of private actors like individuals and corporations. Second, it stipulates how that public share is divvied up between the competing needs and wants of individuals, organizations, and corporations. The first is about resource control while the second is a matter of allocation. Even when a government takes in high tax revenue, it does not necessarily put it to progressive ends. Just consider the huge benefits that flow to corporations through subsidies or state-supported research and development, and it’s easy to see how governments can redistribute up, down, or horizontally. In a capitalist economy, where productive resources remain privately owned, socialists call for a significant portion of the social product to be controlled publicly and democratically redistributed downward. However, in the United States today, the libertarian view that “taxation is theft” has seeped so deeply into everyday conceptions of property that even those who support progressive taxation often accept the premise that there is a pre-tax income that people earn and should own outright. Even the liberal credo that everyone needs to “do their fair share” is based on the implicit idea that workers and capital alike pay taxes out of a civic obligation to give up part of what is theirs for the betterment of society. On the same grounds, libertarians argue that if pre-tax income is the direct product of a person or corporation’s own effort, it should be theirs to use as they see fit. In this view, even if the government has decided democratically to tax the rich at a higher rate, taxation remains fundamentally unjust. In the extreme formulation of libertarian political philosopher Robert Nozick, “taxation of earnings from labor is on par with forced labor.” That viewpoint has been rightly criticized by progressives. But socialists should not fall back on the common liberal criterion for taxation: that a person or corporation’s ability to pay should determine the amount they pay. The familiar justification circulates even among leftists, who hear within it an echo of the dictum “from each according to his abilities, to each according to his needs.” This perspective suggests one of two things, both of which are inaccurate. First, that taxes are a kind of necessary evil for those that are being taxed. Even though a person or corporation’s pre-tax income is the result of their own labor, it’s more practical for society to tax some of that income for public purposes than to leave it under private control. Or, alternatively, that taxing the rich more is just being fair. Both of these views get us tangled back in the libertarian thicket — doesn’t such a tax policy still encroach on the rights of the individual? Should fairness then trump individual rights? And doesn’t the socialist argument for heavy progressive taxation ultimately also violate the rights of the individual as well? Why do socialists hate freedom so much? The socialist view of redistribution within a capitalist society must reject an important premise at play in nearly all tax policy debates: that pre-tax income is something earned solely by individual effort and possessed privately before the state intervenes to take a part of it. Once we break from this libertarian fantasy, it’s easy to see that individual and corporate income is made possible only through tax-financed state action. The capitalist economy is not self-regulating. The first precondition for firms to earn profits is state-enforced property rights, which give some people ownership and control over productive resources while excluding others. Second, governments have to manage labor markets to help ensure that the skill needs of firms are met. States do this through setting immigration and education policies. All capitalist states also try to mitigate labor market risks, whether it be the risk of labor scarcity for firms or unemployment for workers. Third, most capitalists want states to enforce anti-trust, contract, criminal, property, and tort laws, as it makes market interactions more predictable and reliable. And finally, the capitalist economy needs a working infrastructure. Even most libertarians argue that state control over the money supply and interest rates is necessary to spur or slow growth when the economy needs it. All of this is done with taxes. In short, the very notion of pre-tax income or profits is a bookkeeping trick. A person’s income or a corporation’s profits are in part the result of governments collecting taxes and actively creating the conditions under which they were able to make money in the first place. In this framework, “tax the rich” isn’t merely a cry of spite or a demand for fairness. The socialist case for taxation and progressive redistribution is built from three basic factors of how capitalism works. First, as just explored, personal incomes and corporate profits are not simply the result of individual work and business competition — instead they are part of a broader social product. The total income generated in a capitalist society is the result of a collective social effort, made possible by a specific social and legal architecture, and channeled through both publicly funded and privately controlled and financed institutions. Second, the class inequality that results from making this social product is relational. Capitalists are able to accumulate large stores of wealth only because workers do not. All things being equal, firms can raise their profits in inverse proportion to the labor costs they bear. The condition for this relationship is, once again, political and maintained through tax revenue. Firms rely on states to enforce property rights and contracts that keep ownership of society’s productive resources — its means of production — in the hands of very few. As a result, in capitalism, most people work for others; they don’t hire others to work for them. And capitalists employ workers only when they believe that those workers’ efforts are going to make the firm more money than they will take out in wages — doing otherwise would be market suicide. Of course, hard work, guile, and luck afford some workers the ability to become capitalists. But the basic structure of capitalism, in which a small number own most of the productive assets, guarantees that the vast majority of people will (at best) spend their lives earning wages, but never profits. Taxation provides a partial remedy to that essential, structural inequality of capitalist society. Third, redistribution through taxation is a means of extending individual freedom — not curtailing it, as libertarians contend. Freedom, according to the liberal theorist Isaiah Berlin, has a dual composition. On one side, there is negative freedom, the absence of coercion or “freedom from” that is the hallmark of most common conceptions of freedom in the United States today. With respect to coercion, taxes fund a variety of public provisions that offer citizens some measure of freedom from the private tyranny of firms. They form the entire basis of the state apparatus that, in a capitalist system, is the only force whose power exceeds that of the capitalist class as a whole. Without laws prohibiting slavery, written by legislatures and enforced in courts sustained by the public coffers, people would be compelled by threat of violence or starvation to work for no money at all. Without regulations, like those that demand at least minimal workplace safety or the ones that compel management to engage in collective bargaining, workers would lose what little say they have in how their work is organized. In the context of tax policy, however, positive freedom matters as well. Positive freedom is the “ability to” — the capacity to do things, and the possibility of selecting goals and making efforts to realize them. Such freedom requires resources. In capitalist societies with low levels of redistribution, positive freedom is a zero-sum game in which a few enjoy a great deal of such abilities at the expense of many others. Tax policy that divides the social product in such a way that allows some people to live opulent lives while others scrape by cannot be said to promote freedom. The public education system, for example, which offers citizens the opportunity to develop knowledge and skills in pursuit of both collective and individual ambitions, is a bedrock of positive freedom that can only be sustained through taxation. In a truly socialist society, the combination of political and economic equality would offer everyone a far greater degree of both negative and positive freedom than they enjoy under capitalism. Until we realize that world, progressive redistribution through taxation is both a means to redress structural inequalities and the primary way we can expand and extend freedom to as many people as possible. But we are headed down the wrong path. Over the past few decades, financial gains from growing labor productivity have primarily flowed to the top while tax rates on top earners have been drastically lowered and now approach pre-New Deal levels. Even a modest increase in the total tax burden on the top 1 percent of earners to a 45 percent rate, far lower than its postwar levels, would bring in an additional $275 billion in revenue. That’s far more than just the $47 billion needed to make all public colleges and universities tuition free. Such increases also go a long way in generating the revenue needed to finance a universal health care system, increase Social Security benefits, and rebuild our crumbling infrastructure. Most would agree that we all deserve to live in a society where we are given what we deserve, are free, and have the capacity to be creative and reach our potential. As unglamorous as it may seem, redistributive taxation is a step in this direction. The rich didn’t earn their wealth — they’re just holding on to it for us.

MMT has become a cause célèbre in recent years for insisting that government spending is not constrained by a budget, in the traditional sense. Cutting against mainstream economic thinking, which sees excessive government deficits and rising debt as an inflationary danger, MMT argues that a government issuing, borrowing, and collecting taxes in its own currency can spend as much money as it wants, so long as it is a fiat currency not tied to a commodity like gold, nor pegged to another foreign currency in a fixed exchange ratio. Governments fundamentally differ from individuals in this way. As a taxpayer, your spending is constrained by the amount of currency in your bank account; for the government that issues that currency, however, no such limit exists, because unlike you it can essentially create money out of thin air, and then get others—like you — to use it. Such a monetary sovereign can, and therefore should, create and spend as much as it needs to secure full employment and mobilize all available resources in its economy, regardless of deficits and limited only by the need to keep inflation under control. Or, in the words of the economist and MMT forefather Abba P. Lerner, finance should be “functional,” evaluated by its results on the economy, rather than "sound," shackled by arbitrary, self-imposed budget limits.3 “Countries with monetary sovereignty, then, don't have to manage their budgets as a household would," says Stephanie Kelton, one of MMT's leading economists. “They can use their currency-issuing capacity to pursue policies aimed at maintaining a full employment economy.”4 If the British aristocrat Keynes was writing at the twilight of the British Empire, now the MMT movement emerges in the darkening glow of another senescent, slowly dying superpower, offering similar remedies to stay the terminal decline of American capitalism.

Kelton herself was the chief economic advisor for the Bernie Sanders campaigns in both 2016 and 2020. For her, a greatly expanded role for government spending and a federal jobs guarantee would yield a “people’s economy,” in which “private enterprise and public investment all combine to raise living standards for everyone.”5 Some take it even further. In a book called Reclaiming the State, William Mitchell and Thomas Fazi enlist MMT as a central pillar in a campaign to rescue the nation state as part of a “progressive vision of sovereignty.” This entails nothing less than a “drastic expansion of the state’s role—and an equally drastic downsizing of the private sector’s role—in the investment, production, and distribution system,” even “a broad renationalisation of key sectors of the economy and a new and updated notion of planning.”6

Unfortunately, MMT is a mirage that ultimately offers little of value and undermines a critical leftist political project: persuading voters of the need for both more government spending and taxation.

What is MMT?

Modern Monetary Theory disorients the Left by peddling simplistic monetary solutions to complex problems of political power.

There is the prospect of electing, within the next few years, a government of the Left in Britain that is committed, in the words of Shadow Chancellor John McDonnell, to making an economy that is ‘radically fairer, radically more democratic, and radically more sustainable.’ These are fine words, but it leaves open the question — how? One answer, promoted by a band of enthusiasts on and offline, is Modern Monetary Theory (MMT), which claims to provide a new way of looking at the economy — and the policy prescriptions to match.

Rather than printing money and bureaucratically managing economic demand, socialists should be calling for economic planning. But you cannot plan what you do not control. And you cannot control what you do not own.

MMT, however, avoids this key question of economic ownership. In fact, it largely avoids the question of capitalist production and the economic laws that govern this altogether. After all, by its own admission, it is not so much an analysis of the capitalist system, but a description of the relationship between government spending, taxes, and the money supply.

Another serious problem with MMT is its embeddedness in a rich-country perspective, and in particular American exceptionalism — in this case the “exorbitant privilege,” as a French finance minister once put it, that comes with issuing the world’s dominant currency. Countries around the world keep their reserves (basically rainy-day funds on a very large scale held by governments at their central banks) in dollars, which make them effectively a captive market for US Treasury bonds (which is how the dollars are kept). Also, major commodities like oil are priced in dollars, forcing countries to accumulate the currency to pay for essential imports. That means the United States, exceptionally, can run giant deficits and borrow on a vast scale with little constraint (so far). Nor do we have to worry about the value of the dollar (for now, though you have to wonder how long the exorbitant privilege will last in a world where US dominance is eroding).

But less privileged countries have to worry about foreign investors dumping their bonds and driving down the value of their currency, which would jack up interest rates and inflation. Salvador Allende’s government greatly increased spending and raised the incomes of the poorest in Chile in the early 1970s; that worked nicely for a while, but then inflation took off. Allende wasn’t operating from the MMT playbook, merely resorting to policies pursued by many progressive governments facing political opposition and resource constraints. But such experiments rarely end well, and similar problems would face a poor country trying to stimulate its way to prosperity today, as we see in Venezuela now.

Far from seeing the collapse of the Bretton Woods system as an historic disaster which dramatically disproved the idea that capitalism could be managed both domestically and globally to provide steady economic growth and full employment, Kelton argues that it gave the United States the monetary sovereignty it had previously lacked to manage its own economic destiny. (With a fiat currency it’s impossible for Uncle Sam to run out of money.) Although they don’t take full advantage of it, she claims other states “like the United Kingdom, Japan, Canada and Australia” also enjoy “a high degree” of monetary sovereignty and “are able to run their fiscal and monetary policies without fear of painful backlash from financial or foreign exchange markets.” (p.142) That’s not how the architect of the “new economic policy”, Nixon's Treasury Secretary John Connally, saw it when he famously remarked that “it’s our currency and your problem”. Nor was there much sign of British monetary sovereignty when, in the face of rising global inflation (as commodity prices reflected the devaluation of the dollar) and the danger of another run on sterling, the UK was obliged to submit to IMF-imposed public spending cuts in return for a loan. Prime Minister James Callaghan famously told the Labour Party conference:

"We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step."

Constitutional federalism has worked almost precisely as was intended by the founders. It was designed to work its influence on American politics in at least four ways: (1) Governmental pluralism- many states but no one state; (2) The specialization of functions between state governments and national government, with states retaining most of the important functions; (3) The special place of city governments in the system; and, (4) The specific type of positive role the national government was designed to play.

(1) Governmental pluralism: Many states, no one state. Charles de Gaulle once complained that nobody can hope to govern a country that produces 265 different kinds of cheeses. But a republic of 265 cheeses is not the same as a republic divided up into 13, or 25, or 50 different governments. In France there is no Republic of Brie or a Republic of Camembert or a Republic of Roquefort, but in the United States there is a Republic of Alabama, a Republic of New York, a Republic of California. This separation of sectionally based interests into separate governments with constitutional guarantees of separate- ness does indeed produce a form of balkanization. This distribution of governmental powers into separate governmental units was appreciated at the time of the founding as a way of permitting the prevailing interest in any section of the country to be dominant in its own section without being able to impose itself by majority vote on other sections. This feature of federalism becomes better appreciated as the other features of federalism are introduced.

‘You have several states with a long history of very cruel racism’

At least when it comes to some of the southern states, the country’s history with slavery plays into current minimum wages, too.

Twenty-three states and Washington, D.C.,  in January. Four more states are poised to do so later this year. , new wages range from $9.95 per hour in Montana to $16.10 per hour in D.C.

While the federal minimum wage  at $7.25 per hour since 2009, many states have continually raised theirs. “States began instituting their own, higher minimum wages during periods of federal inaction,” says , an economist at the Economic Policy Institute. “So the longer the gap between federal minimum wage increases, the more likely some states went ahead and raised their own state-level minimum.”

Workers don’t set prices, the bosses do. And they do so on the basis of maintaining the greatest possible profit margins. If workers’ wages go up but prices stay the same, this would simply mean that a greater share of profits went to workers rather than capitalists. System-wide, workers’ share of the economic pie (i.e., the “national income”) would increase. Falling unemployment, rising wages and increased social spending does not have to automatically translate into inflation of prices if we allow bosses’ profit margins and their share of the national income to decrease.

Even the dire rates of inflation in the 1970s, in the context of a strong labor movement “hurt capital more than it did workers, while neoliberal repression of workers’ power has kept inflation low from the 1980s onward,” sociologists Ho-fung Hung and Daniel Thompson have . The question of inflation is therefore a matter of class conflict over who gains at whose expense.

Working people in the U.S. are facing the worst inflation in 40 years. Gas is at $6 a gallon in many places; groceries are up by more than 10% over the past twelve months; rent is skyrocketing. For millions who were barely scraping by, this is a disaster. And this time there are no government checks coming. 

Official statistics confirm that in May, . . Meanwhile . When prices rise faster than wages, workers lose. In other words, unless your pay went up by at least 8.6% in the past twelve months, you’ve seen a pay cut. Your ability to pay for things has been reduced. 

A more useful measure to look at is a comparison of the rise of prices to the state of wages. If prices are going up faster than wages, then our relative purchasing power declines. But if wages keep pace with inflation, or even outpace inflation, then our purchasing power stays the same, or is strengthened. The reverse is also true. Thus, even though inflation rates have remained relatively low for much of the last few decades, wages have grown even less, meaning that purchasing power for working people declined despite low inflation rates.

Today, wages are finally rising. The New York Times  that about 13 percent of workers have not seen pay increases this year and many retirees receive pensions that are constant. But it has been

Investors, mortgage bankers, developers, and landlords don’t screw over working-class tenants and homeowners just because capitalists are mean people (though many of them are). It’s because if they don’t continually accumulate profit and reinvest it, then they will be thrown out of business. 

This tension is ratcheted up in urban areas where land prices are particularly high. Why would a private housing developer purchase an expensive one-bedroom rental in San Francisco, then rent it at the “below-market” rate of $1,130 per month when the median rent for a one-bedroom is almost $3,300 per month? That’s just bad business sense.

In this sense,  and t are two sides of the same coin. Instead of fighting each phase of the commodity cycle on its own terms, we should address the system of commodified housing that lies at its root.

It will never be as profitable to construct or lease housing stock intended for poor and working-class people as it will be for the high end of the market.

Certain reform-oriented struggles, especially those around  and expanded , offer important opportunities for on-the-ground socialist organizing. But we also shouldn’t be shy about our  diagnosis.

Socialists have to make the case, loudly, publicly, and globally: capitalism can never meet our needs for high-quality, affordable housing. The reason is straightforward: the profit motive.

A word usually associated with deranged Russian oil tycoons is suddenly front and center in many American’s minds thanks to a new study by researchers at Princeton and Northwestern. The analysis of 1,779 recent policy outcomes found that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy,” while average citizens “have little or no independent influence.”

In other words, the U.S. is an oligarchy: a system of government where a small number of elites rule. Everyone else? Not so much.

At least 97 current members of Congress bought or sold stock, bonds or other financial assets that intersected with their congressional work or reported similar transactions by their spouse or a dependent child, an analysis by The New York Times has found.

U.S. lawmakers are not banned from investing in any company, including those that could be affected by their decisions. But the trading patterns uncovered by the Times analysis underscore longstanding concerns about the potential for conflicts of interest or use of inside information by members of Congress, government ethics experts say.

The most critical effect of money is not its outsize influence on a particular politician. In fact, the real issue is that money enables the wealthy to dominate the circulation of political ideas and policies, particularly when it comes to shaping the economic dimension of politics. This form of domination does include campaign donations. But what’s really at stake is that money structures a political agenda that then limits the range of voices, attention to issues, and policy options in the political system. Such structuring of the very terms of debate is manifested less in quid pro quo transactions—Person A paying Politician B to act in the interest of Person A—than in the power of gatekeeping. And gatekeeping affects everything: the candidates who run for office, how politicians prioritize problems, and the evidence used to frame and address public policies.1

This gatekeeping power is not only employed for securing economic outcomes. There is a second dimension of power, which is often ignored because it involves internal factional battles within the political parties. Wealthy partisans engage in fights over the soul of their respective political parties. Sometimes dubbed the culture wars, these are often conflicts related to morality and lifestyle differences. Leverage comes in the form of vital resources—money and activist volunteers—which make the parties highly dependent on these wealthy partisans. Consequently, money also shapes the social dimension of public policies.

In a temporary win for taxpayers, Republicans failed on May 25 to come up with the votes to pass the massive farm bill on that would have set the rules and practices for American agriculture for the next five years. The House bill was full of sweetheart deals, special carveouts for multimillionaires and billionaires, and ushered in no free market reforms.

According to the Congressional Budget Office, the farm bill will cost $868 billion over the next 10 years. Instead of reining in out-of-control subsidy programs and closing special interest loopholes, the legislation preserves Depression-era giveaway programs and dismisses opportunities to pass free-market reforms to modernize the nation’s agriculture industry.