HAVANA TIMES — The government of Ecuadorian President Rafael Correa is facing a difficult political situation owing to the bill he advanced before Congress, calling for the taxing of inheritances on the basis of a progressive scale of 2.5% for sums greater than $35,000 dollars and up to 47.5% for inheritances higher than $500,000 dollars (see the bill sent by the president to the Chair of the National Assembly, Official Letter T 7212-SGJ-15-440).
A segment that called for a 77.5 % tax on inheritances larger than $840,000 dollars was eliminated. Inheritances smaller than $35,000, under this new bill, would be exempt from taxes.
Another related bill calling for taxes on “surplus value” has also prompted protests. When Ecuadorians speak of “surplus value,” they are not referring to the classic Marxist concept describing the surplus produced by the workers which the capitalist secures, but to the rise in the price of goods, particularly real estate, buildings, housing, residential buildings, farms and lots of land.
According to Correa, the aim of such laws would not be to collect but to re-distribute wealth. To distribute, one needs to have with what to distribute, and the main way to do this is to collect.
Both projects unleashed irate responses from the upper and middle classes, which consider the taxes excessively high. Political associations of workers and natives and left-wing organizations have also protested over the preponderant role of the Executive and the State in general in the control of the country’s wealth. The protests led to violent actions on the streets and large-scale campaigns on social networks.
We should recall that, in the last elections for mayors, the ruling party lost in Quito, Guayaquil and Cuenca, Ecuador’s thee most important cities, where the middle class and the largest incomes and fortunes are also concentrated.
According to the government, the new laws would only affect 2.5% of the population. The opposition maintains that the number of people affected would be much greater.
Inheritances, it’s true, are one of the ways in which the capitalist system of exploitation and large social differences is maintained. They represent an institution as old as property itself and they have always been in the sights of utopian socialists, but to establish a tax so high on such sums is tantamount to dynamiting one of the fundamental foundations of big and mid-scale capital. It would appear to be a highly radical measure.
It has been demonstrated, however, that history cannot be forced in a particular direction. Those who have tried to “do away” with capitalism on the basis of decrees and impositions have ended up doing away only with themselves, that violence engenders violence, and that there are many ways of exercising such violence. Nothing of this nature seems to be able to help level society, and promises rather to complicate its functioning and artificially intensify its contradictions, as is happening in Ecuador right now.
No, that does not seem to be the road to follow.
Within this context, the President called a massive demonstration in downtown Quito to secure support for the government and accused the opposition of wanting to overthrow the citizens’ revolution, but this did not manage to appease protesters. The mayor of Guayaquil, one of the main leaders of the opposition, called on locals to continue protesting. Folks, Ecuador is profoundly polarized and this is not good for the so-called citizens’ revolution.
Faced with this reaction, the Ecuadorian president rectified this measure and decided to temporarily withdraw the measure and call a broad, nationwide and democratic debate on the issue, particularly about the type of society in which Ecuadorians wish to live. The opposition insists that the law must be totally revoked.
In his address, the president pointed out that poor people aren’t poor because they want to be or because they are less capable, but as a result of the profoundly unjust societies that affect people from the time of birth. This is very true, but it does not justify the measure.
I respect many of the measures of Correa’s government, but a party that lost the last elections in three of the country’s most important cities and aspires to a controversial third mandate should measure the reactions to its policies more carefully.
Many tend to react in defense of left-wing governments when faced with the protests of the opposition and immediately invoke “imperialist aggression” without analyzing the concrete causes of these protests or bearing in mind that, whatever the nature of the government in power, and even when it has a parliamentary majority, it must govern for everyone and not just certain sectors.
These types of laws stem from an old conception that seeks to arrive at a better distribution of wealth on the basis of decrees from above, something which has failed everywhere, prompted harmful confrontations and unproductive societies and loses more and more supporters among the continent’s Left every day.
It wasn’t the same, but it was in essence what happened in the socialist bloc, with its conception of a “worker’s” State that re-distributed resources and the intention of imposing equality at the expense of those who had the wealth. This is also what’s taken place in economies characterized by inflation, when States with social democratic, highly authoritative and distributive policies have prevailed.
Seeking to establish equality by forcefully bringing down the standard of living of the higher classes is a mistake that stems from the idealism and voluntarism of left-wing childishness, and such measures end up failing sooner or later, for they unnecessarily exacerbate the “class struggle” and place other, more important revolutionary achievements at risk.
Robin Hood belongs to the Middle Age
This is also what has happened in Cuba to a certain extent: a paternalistic State that hands out what it doesn’t have, that has to take it from someone and super-exploits those who work in order to maintain populist and egalitarian policies and feed an enormous State apparatus that depletes the existing budget and treasury.
To reduce social inequality, one must raise the standard of living of the dispossessed, the vulnerable sectors, those who have the least, not at the expense of those who have more, but by creating conditions such that those below can improve their lot through their own efforts.
Of course that requires capital, State support, resources and financing, but, most of all, it requires constructive and comprehensive policies capable of harmonizing all of the interests of the society that actually exists, and the will of people to work their way up from the bottom.
Here, we come back to that Bible parable: it is not a question of giving the hungry fish, but of teaching them how to fish.
No, imposed egalitarianism is not the solution.
The essence of these types of egalitarian policies stems from the social-democratic conception of socialism, which seeks to solve social problems through tax collection and redistributing wealth more equitably through the State.
Looking for socialism in distribution and not production was a move criticized early on by Marx, when he established that relations of distribution are consubstantial with relations of production and that the latter had to be changed in order to change the former, and not vice-versa.
Socialism conceived as a State apparatus that better distributes a nation’s wealth is the social-democratic school that emerged at the end of the 19th century and flourished in Germany after Marx’s death. It shares the notion of the State’s central role with neo-Stalinist “State socialism.” Strong and centralized states end up becoming bureaucratic and trampling on everyone’s rights in order to maintain themselves.
This idea does not belong to the socialism of the 21st century but the socialism of the late 19th and early 20th century.
The socialism of the 21st century will not be reached through imposition or decrees from above, nor because the State controls more wealth and is able to distribute it better.
It will be reached when free individual or collective labor and forms of self-managed production (cooperatives, mutual unions and different associations) demonstrate they are superior to capitalism’s salaried labor at all levels and spread extensively, hand in hand with new technologies of every sort, financing for individual or collective entrepreneurs and full freedom to produce, buy and sell.
Most importantly, it will be reached through increased, direct and democratic participation by citizens in all of the important political and economic decisions, including those having to do with taxes and distribution, and the development of participative budgets at all levels, when the interested parties are the ones who decide what to do with the money collected.