PART TWO: Plutocrats and Taxocrats
CHAPTER V

PRIVILEGE AND PROPERTY

Deprival of the Privileged

When poverty, whether in a dystrocracy or plutocracy, is attacked either by traditional means1 or by the mechanistic methods of taxocracy,² it refuses to go away, or hides its form in new kinds of poorness. Although difficult to comprehend, a war on poverty can reduce large new classes to their own kind of poverty. Poverty should not be approached directly, through statistical aggregations, except in emergencies, but rather kalotic policies should be pursued throughout the social structure. The personal unit is the transacting body.

We have shown some of the formidable aspects of poverty in the dystrocratic regimes, and some of the deficiencies of the "recent progress" of the average person in plutocracies. We can move to higher economic and educational levels to consider the plight of the executive class of modern plutocracies. This class lives an increasingly unmanageable existence, cut off from close affectional ties, mobile, often split between a demanding day job and a suburban nightly exile.

Its moderate increase in material existence, too, is unbalanced by losses in crowding, mental illness, scattered and ungovernable families, overspecialized jobs, and heavy taxes. They who bitterly attribute the decrease in their assets ³ to the

socialist state protest against the violation of their expectations more than against their monetary deprivations. They are caught up in the center of the remorseless system; unlike the poor, and unlike their own children, they cannot turn on, tune in and drop out.

Despite their assets and income, the well-to-do find themselves crowded by the poor. The average man nowadays can move without legal restrictions,4 organize in groups to supply himself with the facilities of a rich man,5 and can hoard resources to spend on a certain highly desired pleasures into which the rich ordinarily place only their marginal resources.⁶

As the work of the executives throughout society is bureaucratized, they find life becoming more impersonal and monotonous. What they once did to the workingclass is now done to them by the ever fewer prime movers. Specialization of functions, new control systems, subjection to the machine, and replacement by automation are the lot of millions of the neopoor.

Recently, fewer new jobs are being created by industry and more by government, an omen of ill fortune. Herbert Simon predicted some years ago that by 1985 machines will dispense with middle management. "It is the industrial archon who ultimately wins out; for with the elimination of both plant and office staff, this man at the very top gains even tighter control over the decision-making process."⁷

There is irony in the institution of a computer-centered time keeping system for United States government lawyers: the professional man, now hired by the hundreds, no longer can save himself from the trap of the over-rationalized society; he must register in code on a card how he spends the twelve minute intervals of his eight-hour working day.⁸ Does this trend move inexorably and will it go on forever? It is true that man was a savage for a million years, but now he has had a vision of something better. At his first chance, he will revolt.

The executives can still feel poignantly what the average and poor people have come dumbly to accept: machine systems enchain men, even while they often increase the product; under the best of circumstances, the men are given the key to unlock themselves from the system once in the while. Literally, but after much collective bargaining, some machine operators are now permitted to stop the machine that they are "running" for a few moments or to change its pace.

Man becomes detached from the machine when he is replaced entirely by full automation of his productive activity. Then, if he owns the machine, he has the potential of freedom. If the machine is enmeshed in some socialized proprietary system, most of the gain in productivity is wiped out by Systemic Absorption, an effect we have observed throughout "progressive" societies. If he has no proprietary right in the machine, he becomes "technologically unemployed," freed from one master to the custody of the society as master.

The machine has meaning that goes beyond the concept of greater productivity. It is one more element in the nightmarish 360ø War that modern man must wage, a creature without heart for good or evil, but with the effects of a conscious will. It can be used not only as a substitute for man in order to gain productivity. It can be used to get rid of men.

The history of the industrial revolution, like most other histories, has been faked and written in a trance. We are all asked to believe that the machine has developed as mankind's helper, even if not much of a helper to the people it displaces.. What is not seen, or, if seen, not stressed, is that the machine is often not mankind's helper but really a slave substituted for a troublesome man on the very site of his work. It is used to rid oneself of the embarrassments of human emotions towards those who are organized into work systems.

Thus are explained many machine systems that are more costly than the human labor they replace. They are intended to avoid the trouble of dealing with people, trouble being a factor of production that is not fully costed in the open light. Many machines are purchased, not really because labor costs too much, but because labor relations, that is human relations are left to be a pain.⁹

Moreover, the costs of machines may be manipulated under present - day financing schemes and laws in ways that men cannot be manipulated. It is easier to borrow money on the collateral of a machine than on the presence of a worker. Laws often permit the rapid depreciation of the costs of machines, beyond their free- market depreciation, thus adding artificially to the productivity of the machine and assisting the process of automation. Actually; the slave has an advantage in this system; He can compete with a machine because he is less trouble to his mater. This is why the southern slaveholders refused to mecha nize, not because they were "backward."

It is not surprising then that the carefully calculated costs of new popular mechanical systems often happen to be just a little less than the price of more manlike systems. In reality their costs (and price) are greater. The "computer revolution" often exemplifies this. It is as blind as a political revolution; the machines are used often in costly and irrelevant ways. Usually, among a work group, there will be one man or woman who will pipe up when his work is senseless. Not among machines; they will never so complain.

All of this now is part of the terror of the executives, the well-to-do. They need a revolution as badly as anyone else. They cannot be happy with the New Industrial State of J.K. Galbraith,¹⁰ Which is largely a summation of the conventional machinations of present-day top managers, and an urge to go farther with them.

The executives are beginning to feel the rising tide of consequences coming from the sheerly countervailing interest groups of society. Economy in plutocratic countries is becoming more and more stuck in group bargaining. The claim of every organized occupation, more or less valid, is to equality of income with every other group within a wide belt of occupations or industries. Thus all public employee groups of New York City contest for equality of pay and perquisites. Firemen, policemen, teachers,sanitation employees and other sections move forward on the same broad front. They do not fear anti-strike laws nor public opinion because they have staffs who are expert in coping with these barriers. The same process occurs in other industries. Soon there may be no recourse in the mercantilist pluralist plutocracy from giving every employee the same pay. Left out would be a few top managers, commission men, entrepreneurs, the rich the politicians, and the negotiators of all the bargains.

What is the effect? Taxocracy, of course. For those excluded from the system will be dragged willy-nilly into it. And those in the system will have to be restricted from going ahead too fast, or going ahead as individuals. And then they can only give less in the way of productivity-since what they want more of cannot be obtained, but what they have promised need not be performed. in many parts of plutocratic society, we have already lost essentially the capacity to control malingering and dysfunctional behavior, whether we speak of the police or the steel workers, the teachers or the postal clerks. Surely nothing can be done about this happening without a reconstruction of society from its very foundations.

"We learned to design bridges, steam engines and other machanisms," declared the late T. North Whitehead, who himself began life as a mechanical engineer, "but we never asked ourselves who might wish to use these things." After turning to the study of human relations in industry, he would finally say, "It is plain that no one really sees how to organize great industrial societies so as to satisfy the longing for such values as freedom, security, adventure, and movement...Other things are needed too, for an abundant life and we do not know how to provide them."

We must reduce all groups to a voluntary basis. We must permit open access to all positions in the economy. We must accord to each person in the economy the right to personal representation via a skilled agent of his voluntary group. We must give to every person the possibility of acquiring proprietary rights in his work (but never in such a way that the rights bureaucratize him, or let others control him). We must collect the decision-makers into new flexible institutions; now they are frozen into their litigations and group-bargaining leadership roles so that the whole nation is frozen too.

Microproperty and Macroproperty

Whatever their past ideology, conservatives and radicals alike must adopt a new idea of property, so as to avoid the equally bad alternatives of rudderless plutocracy and suffocating taxocracy. As Paul P. Harbrecht, S.J., declares:

A man's relationship to things-material wealth-no longer determines his place in society (as it did in a strong proprietary system) but his place in society now determines his relationship to things... Property is so attenuated that the fundamental function of property is not dominant.¹²

Property, like many another "reality" of history, has lost its intrinsic substance and become unreal in the last fifty years.¹³ Property is now a bundle of rights tied together by loose strings of power, myth, and practical fiction. Modern power shuffles readily even nervously, the pack. The myth keeps loosening, and the fiction is no longer practical in some ways. To this enormous social change, a veritable revolution in itself, numerous factors have contributed. Property in its old forms has been raped by so many reform movements, states, and wars, that few people any longer care about the question of its virginal integrity. The social sciences-economics, anthropology, sociology, psychology, political science and jurisprudence-have each in turn discovered little by little, in what amounts to a massive shift in method and approach, that property is a configuration of attitudes and relations, a continuously transforming shape.¹⁴

Let us speak of big property and little property macroproperty and microproperty. Little property is clothing, food, housing, vehicles, one's games and books, one's cash, modest savings, personal possessions, parcel of land, small businesses. This remains in integrated emotic form; its closeness to personality is still recognized: men and women identify with it; they feel nude without it; it is disposable by acts of will at least to the extent that the myth and the practical fiction surrounding little property are strong enough almost to make it a "real thing!" But little property is dissolving nonetheless. Credit agencies own much of microproperty; vehicles are increasingly leased; "renting all kinds of things is having a profound impact";¹⁵ cash and savings are subject to much statal manipulation; small business is heavily regulated and handicapped.

This dissolution of microproperty cannot and should not go farther towards the vanishing point because 1) the self actualizing personality of pneumos requires property, 2) emos or well-being requires a variety of personalized property and 3) personal political autonomy requires property for pneumic independence and dikaic equality:Kalos, the ideal condition of man requires a universal and considerable possession of microproperty; Every man in the world should have his portion of micropriperty; it is not luxury but is psychologically and politically necessary, from both his standpoint and from the standpoint of the world order.

Macroproperty presents a different problem. The machines of production, large landholdings, transportation networks, mines, power plants, and big buildings are big property in which the human sensitivities of the owners, as opposed to the feelings of the users, are not vitally touched. A man will die by his skiff and a woman burn with her home, but a skyscraper can be levelled, a luxury liner sunk, a power plant blasted, and a forest incinerated without a tear being shed. It is wrong to believe that man is therefore irrational-letting great things be sacrificed while small things are defended-for he is psychologically rational:his home is himself, so is his dog and his coat, his garden and his books; these others are his "rational" sphere, that enter into his calculations rather than his heart.

Macroproperty than has to be defined as anything valued or created that is public in its direct effects, even if its indirect effects are important to the condition of microproperty. If conceived as such, macroproperty becomes the subject of public policy, of public philosophy, and public standards of creation, functioning, production, and distribution.¹⁷ All macroproperty is public, as all human organizations are public. Public policy is in large part the system of rules governing macroporperty and group organization.

In our present age this public policy is profoundly agitating, for politicians and intellectuals cling to the old distinction all the more blindly and obstinately as they feel it to be slipping away; even where they have abandoned it, they cannot invent means of organizing the new public system. Contemporary plutocracies will wallow in desperate confusion until their leaders begin to look upon the whole system, not upon a part of it, and acquire a total view, not a partial one, of the system to come. Plutocracy has to resolve into kalotic toparchy and cosmarchy.

The Apex of Wealth and Power

Neither the poor, nor the average American, nor the managers have increased their assets to the points at which the distribution of wealth in the country has been altered. The rich in America, and in many another place, do not become poorer, not absolutely nor relatively.

Half the families of the U.S.A. have less than $1,000 of liquid assets, that is, cash or things that can be converted immediately into cash if they must. Actually a great proportion of these families have debts or obligations that exceed their total assets! Obviously they neither control the wealth of the country nor the policies represented by the management of wealth. More importantly, they cannot fight a medical or mental disaster,a law suit, or a heavy claim. They cannot argue with officials, business leaders, police, or politicians on any question in which they must go out of their way for the shortest time, or pay any expenses. They have truly only a pauper's voice.

Only the hardiest of the poor and the middle classes can assert their view on any question that is legally arguable within the limits of the system. Ninety-nine percent of what these do contest turn to be, from the broadest point of view, trivial personal concerns. The average American is deluded by his flush-toilet, automobile, hamburgers, and T.V. into believing himself a contributing power in his children's destiny. But take them away and he (and his French, British, German, Italian and Australian counterparts) are but Congolese or Indian villagers.

Pressures for value-sharing, including power, are mounting from the lowest value-holders of some societies. As they rise, the social strata that are a little better situated, but still anxious and defenceless, need to move upward and outward. But the upper-middle and upper levels of Soviet,American, Latin-American, and West European society are capable of resisting these encroachments. In fact, they are inclined to make the pressures worse by using their large powers to encourage and facilitate the mobility and welfare of the very poorest and most discriminated against citizens.

As a result, many lower middle groupings begin to acquire a burning hatred against their poorer neighbours. This is happening in the U.S.A. with potentiality grave anti-kalotic results-nothing less than fascism (national socialism). For national socialism (as in Fascist Italy, Nazi Germany, Nasser Egypt) is state socialism plus chauvinism born of perceived social threats within the country plus a social situation that, unlike communism, slaughters worker-leaders and the intelligentsia first, and the well-to-do later.

The Kalists must, therefore, give a great deal of their political energies to the cracking of barriers all the way up the social network and outwards as well. A large part of the American population is discriminated against in every way, though more subtly so than are non-Caucasians. Hence the well-to-do and rich must endure the revolution and its consequences, something that in America, France, and Italy they have refused to do. If the Kalotic Revolution stops with the very poor and the blacks in America, it will simply set the stage for fascism.

With regards to income, before taxes, the top one fifth of American families received in 1947 43% of the total, in 1964 41%. The top 5% of families received in 1947 18% in 1964 15%.¹⁸

The total burden of federal, state and local taxes is approximately proportional to income for 98% of the families of the U.S.A. The poor pay as large a percentage of their income through all the various taxes as do the middle and upper-middle income groups. The 20% of the families with the highest incomes ($15,000 or more) pay taxes, however, at an average rate of 44.1% of their income, as against the average for all families of 30.5%.¹⁹

Persons earning over $100,000 per year in America fall in fact below the 40% tax bracket in their general tax liabilities annually. They are actually able to pay taxes at a lower rate than persons receiving between $15,000 and $100,000. This rate is only twice the lowest bracket and not much higher than professors and plumbers pay. Wealth protects itself well. Numerous tax-avoidance opportunities occur to defeat the progressive income tax. For example, oil depletion allowances, and quick depreciation of drilling costs, reduce treasury receipts by $2 billion. Two-thirds of tax exempt income on state and local bonds goes to the richest 1% of all taxpayers. Property passed at death is undervalued to an extent that costs the federal treasury $3 billion per year. In fact, for most purposes a straight proportionate system would not change conditions much. And, indeed, as we say later in the book, a single per capita tax, which appears to be completely regressive on its, face, is the best system of public finance.

One percent of the population owned 25% of the nation's assets a generation ago. They own the same proportion today. Each dollar of assets which they own controls at least another dollar.A dollar, looked upon as an instrument of control, commands some incremental resource, even if it may earn only 5% per annum in a savings account. But, as the number of dollars a person owns increases, he enjoys a more than proportionate increase in the incremental resource-control of his dollars. Controlled wealth is an increasing multiple of owned wealth (resembling an exponential curve). Thus, a man with $100.00 can earn 5% on his assets, more or less. If he has $100,000 he can expect to govern twice that many assets with his own. If he owns $1,000,000 he can control a $10,000,000 business.²⁰

One percent of the population, then, controls almost half the assets of the country, directly or indirectly, in specific or in generally significant ways. The assumption is that assets are used to control assets, which is true in most cases.

The control of plutocratic economies resembles only in minor part the early history of capitalism. The domination of the marketplace by large corporations seems secure. The regulation of the large and small corporation by the state has gone far and will not be undone. The age of ownership control is passing. Of the 500 largest American corporations, some 150 are controlled by individuals or members of a single family who are large participating shareholders.²¹

The typical great corporation of today is controlled by a mixed group in which prominent private stockholders, company officers, and agents of institutional stockholders are important elements. Most stock is held by a large public with almost no active power. The various tendencies are manifested in the changing character of Boards of Directors. These have moved from reflectors of entrepreneurial personalities and outside syndicate control, towards company executives. And now there are observable tendencies to add to the Boards of Directors functional specialists who can be counted upon for consultation and a share of decision-making, persons of far-ranging public connections, and,to a degree not so firmly felt in America as in Europe, direct representatives of the state, the public, or labor unions. In the language of an authority on the subject:²²

At present, about 15 to 18 percent of all boards in major business and industrial enterprise are still of the constitutional entrepreneur type, and 22 to 25% are of the constitutional-syndicate form. The trends for both these types of control will apparently continue downward.

The phenomenal growth of consultive boards ²³ is very evident... Within three quarters of a century this pattern has become the dominant form of top-level control. It will probably continue to grow in acceptance for the next quarter century, chiefly at the expense of the constitutional entrepreneur structure.

At present, only 1 percent (perhaps fewer) of our major corporations have adopted the collegial-board approach24... Within the next half century, perhaps as many as one third of all major boards will be practicing collegiality.

The communal board is only embryonic in American industry²⁵... It may never become widely used. At present, it might even be said that communal boards do not fit into the American form of enterprise.

The Kalotic Revolution indicates a stepping-up of the rate of change in corporate control and direction towards the communal board, bringing employee, public, and shareholder interests more directly to bear upon corporate decision, but avoiding rigid interest group representation.

The present time is propitious for organizing these changes. An increasing number of companies are being merged into conglomerates. These are intent upon control of diverse companies in order to maximize their financial (and, it should be admitted, personal) power and derive certain stabilizing advantages from a wider range of marketing and developmental possibilities. In 1968 alone, there were 192 mergers involving acquisitions of companies with assets of $10 million or more, the largest number in history. The acquired companies formed about 7.5% of all companies in this category of size. Of them, 74 were acquired by companies already ranked among the largest 200.²⁶

At the same time, numerous banks, constituting themselves as holding companies, were descending upon the business world seeking to buy control of business concerns. With a maximum of $135 billions of bank deposits to work with, they might revise considerably the top structure of American industry. According to President Nixon, this mingling of the money suppliers with the money users, already quite common, would be "bad for banking, bad for business, and bad for borrowers and consumers".²⁷ The answer to both movements that are narrowing the power base of American business, already too narrow, has to be a forcing of the scene by opposite, broadening interests.

The Ruling Elevator

The people reign, but do not rule. Governments, interest groups, and corporations decide, but do not rule, if by rule is meant making a set of consistent and logically arranged decisions that must be followed by all. The process of decision resembles an elevator, which is crowded with people who enter and leave at each floor, where all are strangers and no one controls who gets off at what stop, and the elevator goes up and down incessantly so long as there are people to carry. Not even the rich and the powerful know who are getting on and off, where, and why. And it does not trouble them in principle that they do not know or determine the traffic. They are happy enough, if they can get in and out when and where they personally want to.

Hence, even if the power elite of plutocracy can be described, the description does not solve the mystery of rule. We know that 98% of the people are not part of the elevator traffic. They have no assets except their right to work tomorrow, their immediate loved ones if they can keep in touch with them, the use of a vehicle and other microproperty. Some of these are well-paid, own much microproperty, and get paid by stock-sharing and the benefits of business risks on occasion.

C. Wright Mills specifically says:

...the conception of the power elite does not rest upon the assumption that American history since the origins of World War II must be understood as a secret plot, or as a great and co-ordinate conspiracy of the members of the elite.²⁸

The one percent of the people who form the leading circles of the governments control and own in the name of everybody as much of the country's assets as the top one percent of private persons do. They "own" 25% and they control indirectly another 25%. The total comes to 100%, but, of course, ownership and control are never complete, and there is a continuous contention going on among the top elite and their multitude of representatives over who should determine the fate of the nation's assets. Some proportion of the assets have then to be counted twice, like contested territory in the 360ø wars;29 who controls what is a question that not even expert observers can detect.

An example would occur in the area of banking. Before 1933, the congeries of leading banks of the U.S.A. could be said to govern the deposits that they had garnered and much more that could be ruled by means of the deposits. Today, government has become in every respect the most important and dominating banker who controls the credit, the lending policies, the safety practices, the security-issuing possibilities, and the monopolistic tendencies of all the rest. Yet, since government means in actuality numerous government agencies and many individuals who are under pressure from all sides political, financial, and professional-the statement that government controls banking is so simple as to be meaningless.

Thus the same situation prevails in the banking field as in the military field. There is an ecopolitical-banker complex in every sense in which there is a military-industrial complex, tendencies but not directives, semi-consciousness, but not conspiracy. Heavy non-military industry, the shipping and distribution industry, the communications industry and other areas present the same picture-certainly a complex, but no concerted direction.

To give strength to motives of charity and altruistic endeavour generally, laws favoring so-called tax-exempted organizations promote the creation of groups of large and unreachable economic power; they concentrate assets in static forms. Within a few years, the U.S.A., which again leads dramatically the other plutocracies in the creation of protected enclaves of tax exempt groups, will face a situation much like that of the late middle ages, which helped precipitate the disorders of the Reformation; there the churches and guilds owned so much of the untouchable and undevelopable assets of the countries that both governments and a rising independent business class were inspired to wreck them.30

The plutocratic world is rigidifying into taxocracy, true, but for that no conspiracy is needed, no plan; rather, it needs simply complacence in the face of prevailing ideologies of social pessimism and efficiency in large scale organization. Its great internal stresses are produced, too, from crowding, unmitigated and desperate self-seeking, and stupidity about consequences owing to narrow-minded cost calculations.

The idea of progress is steadily deteriorating, despite all of the pressures of demagogic policies of the old type, the forces of speculative business, and the traditional obsessive optimism of the mass media.

Great occupational classes have major investments in large governments. For instance, the computer industry fosters centralized government because of the high prices of its hardware and software, which only larger treasuries can support. The complicated tax system promotes the growth of ramified, stultified and standardized accounting and legal systems that control in many cases the substantive operations. How the books can be set up determines what, when, if, and how business can be begun, continued, merged, or closed down.

The prevailing theories of organization and administration foster at every turn bureaucratic forms, larger scale, and centralization. Legislative draftmanship is stultified; prohibitionism continues as the major inspiration of law-making in legislatures and executive offices. No means are being devised to diminish or limit the life span of large-scale organizations. Private and governmental agencies have appetites and stomachs but no anus.

With increasing attention being focused upon state central planning and large-scale organization, the awe of the state and its authority-ever lurking in the human subconscious-is enhanced and, when joined with the posture of plutocracy in world affairs (a mixture of excessive defense and aggression), heightens the attractiveness of the integrated nation-integrated domestically, internationally, and of course, in the hearts of the people.