With a single exception, attendees responded with words evoking free markets, individualism, free association, self-determination, respect for property, the ability to create and retain wealth, no interference in peaceful trade, ideological consistency, and so on.

I then told them that they are all absolutely right. And at the same time absolutely wrong.

I said: Capitalism is an exploitative system of privileges granted to wealthy interests to the detriment of the poor.

And that definition is also right, because it lives in the minds of billions.

Discuss.

Canada’s Investment Executive makes a blitheringly stupid set of assumptions in “New rules make renouncing citizenship too expensive for U.S. expats“:

New U.S. expatriation rules, introduced one year ago, governing U.S. citizens or long-time green card holders who wish to renounce their American citizenship are serving as a disincentive for many to make the decision to give up their citizenship.

[...]

Under the rules introduced June 17, 2008, there is a deemed disposition of worldwide assets based on their fair market value on the day before expatriation. A 45% tax is levied on any capital gains above a 2009 capital gains exemption of US$626,000.

[...]

U.S. citizens and green card holders often choose to renounce U.S. citizenship in order to remove themselves from the U.S. tax regime, which, for one thing, obligates them to file a U.S. tax return every year even if they don’t live or earn income in the U.S. They may also make the decision to renounce in order to avoid U.S. estate tax.

Only “covered” expatriates fall under the expatriation rules. Covered expatriates either have a net worth equal to or greater than US$2 million, or have an average tax liability of greater than US$145,000 for the previous five years. Those who have failed to certify compliance with U.S. tax obligations for the last five years — including filing a U.S. tax return — would also be considered a covered expatriate.

Well, I’m a covered expatriate, since the last time I filed a US tax return was 2005. I also happen to be rather broke.

What is so glaringly wrong here are the assumptions made about prospective renunciants of US citizenship which seem to underlie the article:

• That someone with US$2m in net worth couldn’t be bothered to move their assets into structured offshore vehicles in advance of expatriation, and
• That renunciants wouldn’t just say “screw the IRS anyway!” and ignore the law — which is their right under any moral framework which does not permit theft, which is what taxation is.

Of course, the ruling class tools at the OECD and its hated Financial Action Task Force have made the first option increasingly difficult by putting the screws to those few remaining countries which continue to legally permit banking, corporate stock ownership, trust and other asset-holding relationships that allow for privacy, anonymity and tax avoidance. That said, there remain plenty of holes in the global taxation control grid which can be exploited — some legally, and some illegally.

PT combinatorics interlude:

• There are 203 states today. n=203
• For safety and security, you might like to hold an asset in situated in country A with its nominal (corporate, trust) ownership domiciled in country B, all while legally residing in country C. r=3
• Take P(n,r) = n!/(n-r)!, where n=203, r=3
• P(203,3) ~= 8,200,000
• That’s a whole bunch of chances to slide ’round the control grid!

Mind you, n doesn’t really equal 203, since there are some states where you’d definitely not want to hold assets or an ownership vehicle or reside, or combinations thereof. We’re still talking about big numbers here, though.

One last thing, from the article:

Every quarter, the U.S. government publishes the names of those who’ve renounced U.S. citizenship in a federal register.

Well, that’s the Federal Register, actually, but whatever. I’m still looking forward to seeing my name turn up, but it wasn’t there as of a month ago when I did a bit of searching online. Oh well. I don’t really care about the American state’s paper tiger actions with respect to me anyway.

Workers in general do not care about profits nearly as much as they care about their own wages and well-being.

I’m not sure whether or not you fell off the definitional rails here. To the worker, his profit is his wages. More specifically, his profit is his subjective value of his wages minus the subjective value of the opportunity cost and the time+labor he forfeited to obtain them.

Let’s go through a likely and probable scenario for the creation of a new business in an Anarchist system:

1. A group of investors, be they relatively rich people, managers of a planned community or people interested in the boom of a town or neighbourhood, or a private bank acting for millions of normal people looking for a way to make some interest, see an opportunity, and pool their resources together.

With you.

2. These investors attract workers, who become the first owners of the new business. The investors give these workers a starting capital (as well as perhaps an ideal location or new ideas to use) in exchange for a set return on their investment.

Breakdown. Who are these investors? Santa Claus? They just come around and give the “workers” a whole bunch of money AND a great idea, in exchange for a “set return”? I’ve met banks that work that way, but never investors. Is it possible for “workers”, as you go on to describe more in what follows, to become investors? If so, why would their values and motivations change so much?

3. The workers get to work and pay off the investment and interest.
4. Having paid off the investment and interest, the workers are now working solely for themselves (self-management). They decide of their own working conditions and wages. They decide of their management and the future of their business.

The non sequitur just deepens here. Let me try to get this straight, for my own understanding. The investors come together around a great idea which can create a self-sustaining and profitable business for those who own it, and then they just give it away to the people they need twisting knobs, pulling levers and bashing on keyboards to make it real. Why? Would you, if you were one of those investors with the brilliant idea to create wealth and the connections to bring an organization into being that could realize that idea just give it away for a “set return” on investment? If so, sir, you are a true saint and a man of great virtue, one to be admired and sung of down the ages. Funny, I can’t find anyone matching such a description in the phone book or my history texts.

In the world that I live in, investors want to become part-owners. Yes, they want others to perform the labor. But they provide the capital to make that labor possible, especially within the window where success or failure is not known and all money invested may be lost. I doubt very seriously that this dynamic would change in any substantial way minus the state, or that it ought to. To me, it’s simply an observation of human nature, and I believe that it is not human nature that we ought to elect to contest.

The workers would have a strong incentive to make the business grow so they can pay off the initial investment faster, and thus have free reign. But when that’s done, the workers (the only people who legitimately own the business) have a much stronger incentive to secure better wages and work conditions for themselves than they do of making more profits. So businesses (not corporations, obviously, since the corporate status is a creation of the State), as organizations, would seek to improve the quality of their work environment and their service, instead of trying to expand or make more profit.

If we accept a ridiculous premise, we can arrive at all sorts of ridiculous conclusions. I’m using forceful language here because I know you respond to it and because I believe you are a person with his eyes open. The workers in your scenario might or might not be motivated as you suspect. They might be motivated not by potential future security in the maintenance of a self-sustaining and growing business, but rather by the grim necessity of earning a wage to feed their children. They might be motivated instead by a cultural diktat which says that hard work is virtue. They might be motivated by the continuing chance to steal from the cash drawer. They might be motivated by the need to maintain a certain wage in order to maintain a gratifying lifestyle. They may know nothing of economics, and nothing of political theory. They may have extremely short time horizons which renders speculation about their incentives meaningless or at best questionable. They may be insane!

That was a response to the first sentence. Now the parenthetical, “the workers (the only people who legitimately own the business)”: Huh? I do understand there is a historical and moral critique which suggests that those “employed” today ought rightly seize and legitimately own the means of production put at their disposal through employment. I also understand there is a position which states that workers “should” own their means of production. The reality of things is much different, though, even if we imagine starting from a utopian genesis in which all property titles were legitimate and in which coercion were never employed except in legitimate defense. Inequalities of wealth will still occur. They will be based upon such factors as natural resources available in the starting areas and the intelligence of the economic actors, and become amplified over time. Eventually there arises a group of people with the capital to become investors. You or I or the lowliest of our brothers might be members of that class. But they rise from the same stock! They are not going to look around with superhuman virtue, seeking places where they can offer to advance the species for something as shitty as a “set return”! Were you or I in their place, we would rightly and honestly seek better than that.

To the second sentence, I say again that there is a fuzzy barrier here between the concept of “wages” and the concept of “profit”. It’s made even worse now in that the workers have taken over the ownership of the business. What then is to be the logical blade which separates “wage” from “profit”? If I am a co-owner with a few others of the means of our production — and thereby the means of sustenance of our selves, our families, our values, our political philosophies and our blogs — how could this division even exist at all? I will certainly not appoint one of my comrades in the industrial collective as he who shall determine what is “wages” and what is “profit”, especially being that “profit” as defined is that which shall be swallowed up by those who exploit us. The enterprise has input costs and it receives sales revenues. That difference is called net income, or something similar. From that income, that excess, that “gross profit” in a broader sense than the accounting textbooks define, must be derived the fixed wages of all employees (shareholders/members/comrades), plus the amount to be reinvested in expansions (via marketing, territorial growth, hiring, product diversification, etc.), plus the amount that should be disbursed to investors as compensation for their interest, plus amounts to be employed in improving efficiency, etc.

Would the fully-vested co-owner of such an enterprise sit around trying to draw lines between “profit” and “wages”? Surely not! These categories have become meaningless to his calculations, whether those calculations serve only his own aggrandizement or some nobler ideal of group advancement. “Profit” as bogeyman has become meaningless.