Debate Magazine

Economic Myths: "Workers Should Own the Means of Production"

Posted on the 26 April 2014 by Markwadsworth @Mark_Wadsworth

... is one of those things which the Lefties like to say.
Whether or not this is a desirable aim in itself, they have sorely missed the point. I have often struggled to explain it to them, to little avail.
The productive economy has a certain level of output, i.e. total sales, the consumer surplus arising from all this goes by definition to consumers, most of whom are "workers". It's difficult to measure but it is a huge figure.
The total amount which businesses receive as turnover/sales can ultimately only go three ways (ignoring taxes and rents for the time being, as these reduce the amount which ends up being split between workers and owners of capital).
a) It can be paid out as wages.
b) It can be paid out as dividends.
c) It can be re-invested in the business, which benefits future workers and shareholders in the same ratio, so we can ignore this.
(Of course, most businesses will spend a lot of money buying stuff from other businesses, but those supplier businesses in turn can only split the money three ways ad infinitum).
So how much is paid out, in the UK, under (a) and (b)?
Total taxable income in 2011-12 according to from HMRC was as follows:
Employment income - £635 bn
Self-employment income - £73 bn
Pensions - £111 bn
Property, interest and dividends - £60 bn

According to Capita Registrars, total dividends paid out by UK companies in second half 2011 and first half 2012 were £77 bn, and total taxable profits of UK companies is around £150 bn (so half it paid out as dividends).
This is more than that declared to HMRC as taxable income, because about half of all dividends are paid to pension funds, so they ultimately show up as "pensions" (which is deferred employment income) rather than as dividends. And dividends are paid abroad, not declared etc.
It gets really tricky once you try to factor in rents and taxes; most rental income in this country (the rental value of owner-occupied homes) is completely off the books, that £200 bn does not show up in these statistics, and the rental value of owner-occupied business premises (about one-third of all business premises) is recorded as business profits, not as rental income.
So although most individual workers have little "control" of the means of production in the legal or day-to-day sense, who's to say that businesses would be run much differently, or that their terms and conditions of employment would be much different if they did? And as it is clear that "workers" receive around eighty or ninety per cent of everything that is paid out, i.e. for every £1 you earn, "shareholders" (around half of whom are former workers receiving pensions), they already sort-of own the means of production.
So why, and this was the second point of the post, are the Lefties so keen to tax workers? Aren't they depriving them of a large chunk of that part of the means of production which they do own (i.e. themselves and their own labour)? Or should we assume that this cancels out, because about half of what you pay in taxes is then paid out as wages or pensions to current or former workers?


You Might Also Like :

Back to Featured Articles on Logo Paperblog

These articles might interest you :

Paperblog Hot Topics

Magazine