Capitalists better smarten up

The people of Canada who own the resources have allowed investors to help themselves to some of it in order to make them do what they do so well. But they've been stealing too much and the people have the power to put an end to it if and when they choose, as they've shown in history

by Kevin Potvin <kpotvin@republic-news.org>

For all their praise for the magic of capitalism, investors forever fail to admit the one true source of most of their wealth: natural resources. Lying in rich veins underground, in thick forests across the land or deep down under the sea, natural resources store uncountable levels of wealth. Capitalism has never generated any new wealth itself; it has only ever converted what wealth already exists into other forms handier for capitalists to hoard and carry away.

Granted it's hard to say what a barrel of oil is actually worth when it's still underground. We only know its value after someone's pumped it up, brought it to market and sold it. Because it has an unknowable value, economists skip this accounting problem by assigning the convenient value of zero to it. They therefore can keep their books balanced by simply assuming that the act of pumping up the oil and taking it to market is what accounts for the entire value the oil fetches when it's sold at market.

But we know intuitively that anything stored away does indeed have value. Whether we put a can of beans on the shelf for next week or nature puts away a reserve of oil under Queen Charlotte basin a million years ago, both the beans and the oil have a real value, whether we can say what it is or not. But after economists took the expediency of assigning a value of zero to untapped natural resources, it looked to capitalists as though they were responsible for creating all the wealth in the world. It is instead their misunderstanding of a simple bookkeeping method.

They should have known better because it simply doesn't make intuitive sense to believe that wealth can just be created out of nothing. Wealth is a form of stored up energy. And we know from science class that energy can neither be created nor destroyed, only transformed. It stands to reason then that wealth cannot really be created or destroyed either, but only transformed and transported.

So how can we account for the apparent accumulation of huge stores of wealth by the very rich in the last few hundred years? Simple: it wasn't created, it was merely converted from another form and transported to a different place. The men whose names are on the street signs of Vancouver's Westend didn't become so wealthy so fast by some magic of the capitalist system. All they did was convert the wealth stored in the trees into wealth stored in bank deposits, and then they transported that wealth away from the Westend forest and into their Shaughnessy mansions or back home to England.

While it's true that resources are worth more once they are dug up and carried to market for sale, it's hard to say how much more. Karl Marx also thought that resources still underground had no value. That way, he could say that the total value added to those resources by the workers actually doing the digging and carrying to market must be exactly equal to the profits the capitalists got when they sold them. He was able to conclude therefore that any profits the owners got, plus the wages they paid their workers, must together be equal to the true value added to the resources by the workers. Therefore, all capitalist profits justifiably belonged to the workers. Any evidence of a capitalist enjoying profits was evidence of a criminal enjoying the avails of theft—theft from workers.

But what Marx could not account for, and what therefore led to Marxist-inspired calls for violent revolution and destruction of the system, and what ultimately led to the utter failure of revolutionary communism, was the bewildering spectacle of workers actually happy enough to work in capitalist systems for wages that were low enough to still allow for significant profits for the owners. The Russian communist revolution was not exportable to places where capitalists parted with enough of their profits—in the form of higher wages, but also in the form of taxed contributions to state social programs—to keep the workers from becoming too resentful. The New Deal in the US and redistributive taxation in Canada forestalled revolution in North America 70 years ago and remain the only reasons for little talk of it today.

Since the workers in a successful capitalist system, like in Western Europe and North America, do not generally consider all profits to be theft of their rightful wages, then it can hardly be true. And since it also is the case that no profit is generated by magic inherent in the capitalist system, there must be some other source of wealth to account for capitalist profit.

The answer is obvious: it is the wealth contained in resources while they are still where nature put them—underground, on the land, or out at sea. Knowing this, economists should now be able to calculate exactly what value resources must have had while they were still underground. All they need to do is count up all the profit earned by capitalists in a system where the workers are generally happy with their wage rates. Canada, despite some complaints here and there, is one such place.

Last year, all companies in Canada together reported about $150 billion in profits (after they paid all mining fees, stumpage rates, and so on). We can therefore declare that last year alone capitalists converted $150 billion worth of wealth locked up in our resources into wealth transported into investors' own pockets. It isn't theft from the workers, but it is theft from the land. It is a very significant amount of theft and it goes on day after day, year after year with no police investigations, no court appearances, and no jail sentences for anyone.

That's because this enormous theft is justified by investors and legalized by their shills in Parliament and in the courts as the just rewards for the risks they took in stealing these resources. Fair enough, but in a well-functioning capitalist economy, it doesn't alter the fact that all profit is still theft—only it's theft from the land, not the workers. In fact, most workers, especially the executives among them, are happy accomplices in this racket and are paid a generous cut of the action.

That would still be fine if that was all there was to it. But the problem is, the resources that lie underground, on the land, or out at sea are not owned by those capitalists or the workers, and they are not just sitting out there owned by no one. They are owned by the Crown; that is, they are the exclusive property of the Canadian people. We the citizens of Canada are the victims of this huge and ongoing robbery—an armed robbery if you include the police in the racket.

Now, of course, if no companies were ever allowed to steal any of our wealth, investors wouldn't likely choose to engage in any of the activity that gets the resources out from under the ground to sell in the market. And if nobody did that, there'd be no wealth unlocked for anyone else to enjoy, workers and citizens alike.

So, people who form their own government, like us, tacitly make a devil's bargain with capitalists: we will let you steal from our pools of resources enough of the wealth therein contained to keep you interested in doing the work. But any extra you haul out of the ground you must give to our agents who will hand back that wealth to the citizens who already own it, perhaps in a transformed state like schools, hospitals, roads, buses, and so on, in order to make a more creative and comfortable society for all.

That, in a nutshell, is known as the social contract. And like all contracts, if one party or another does not live up to his side of the agreement, the other party has the right to seek justice and redress. How much of the $150 billion in stolen wealth did companies in Canada give back to the citizens from whom they stole it? About 19%.

Back when the deal between democracy and capitalism was first struck 200 years ago, they were forced to give back more than 90%. And they did all right back then, as evidenced by how fast and powerful capitalists grew even under those onerous tax conditions. But over time, capitalists undermined democracy by sneaking in company men to pretend to be representatives of the people, like Brian Mulroney, Jean Chretien, Paul Martin and Gordon Campbell, and once in, to rewrite the rules and the tax rates over and over again, a little at a time, until that 90% we used to get back of our own wealth has been whittled down to the 19% we get today.

Ten percent was sufficient back in the day and it ought to be sufficient now. Last year, all companies in Canada paid in total about $28 billion in income taxes. To be fair, corporations ought to be paying about $135 billion. The difference of $107 billion represents excessive theft above and beyond what is necessary to allow them to steal so they keep on doing their work.

I have done my own calculations and I have determined that the average Canadian citizen should get $12,000 annually as their cut of the theft from their own resources. This is in addition to their claim on the resources that is already returned to them in other forms, like government services, schools, hospitals and welfare. But it does not include the total cut of the theft already taken by well-paid workers, be they executives or school administrators with excessive pay, or anyone already making what they admit is pretty good money. I figure there are about nine million Canadians who are underpaid or not paid at all, and so probably not receiving any of the $12,000 cut of the action they deserve, on average.

It so happens that my calculations balance out: topping up the shortfall in those roughly nine million Canadians' share of the proceeds of theft so that everyone is getting their $12,000 cut of the action adds up to about $107 billion annually—exactly what I earlier calculated as the extra taxes that corporations should pay if we restore the original corporate tax rates.

That would be what is fair, but it is a far cry from what is the case today. Obviously it varies from person to person and from company to company, but generally speaking, the injustice of the political system in Canada has been corrupted to the point where investors as a group openly and brazenly steal $12,000 every year from each one of the poorest third of our fellow citizens.

Just because that theft is probably not recoverable does not alter the fact that a lot of stealing is going on and is enabled by the organized crime syndicate operated by our thoroughly corrupted Parliament, court systems, and police agencies. Investors living off the avails of this organized crime racket can only blame themselves if those nine million Canadians for whom they neglected to cut a decent slice of the action come looking someday to take back what is rightfully theirs.

Investors can mitigate the risk of severe property damage or even personal loss of life by simply cutting more people in for a bigger slice of the action—to buy them off, in other words. They can start, for example, by investing more of their $150 billion in annual profits into social housing, environmental relief, and better welfare rates, for just three examples.

They need only go back 70 years to find what the people are capable of plotting against them if they don't. If they took the time to eavesdrop on conversations going on in less wealthy parts of the city, to slip in the back of seminars and speeches taking place in the shadows of their buildings downtown, to stop and read some of the posters on the lampposts going up all over the place, or to attend screenings of recent popular documentaries and cast a look around at who is in the theatres and in what sort of numbers, they might cotton on to the fact that a 1930s kind of sentiment against them is once again brewing among the people. The longer they leave this pot unattended, the costlier it's going to be to clean it up after it boils over.

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