The "Tobin Tax" and protectionism:
the bankrupt policies of ATTAC

The thousands of people who have joined ATTAC (Association for the Taxation of Transactions and for Aid to Citizens) undoubtedly do so for a variety of reasons and have different political ideas, but very many of these people have turned to this movement as a means of fighting against capitalism. However, the program put forward by the founders of ATTAC is based on an entirely different standpoint.

The main demand of ATTAC is for the introduction of the so-called "Tobin tax". This is a proposal for a very small tax (less than 1%) on certain international financial transactions. Mister James Tobin, the American economist who made this proposal back in 1971, can in no way be considered as a leftist or as a friend of the labour movement. Quite the contrary! Implacably hostile to trade unionism, to socialism, and generally to anything likely to obstruct in any way the workings of the capitalist system, Tobin has devoted his life to stubbornly defending the interests of the most powerful imperialist country in the world. At the height of the Cold War, he was a high-ranking advisor to President Kennedy. He made a name for himself at the time as an outspoken protagonist of "economic blockading" against countries - and against poor underdeveloped countries in particular - who refuse to comply with the commercial and strategic interests of the United States. This particular variety of imperialist bullying has been put into practice on a number of occasions since then, as is the case with Iraq at the present time. The consequences in human terms are catastrophic: an estimated one million people in Iraq, including a majority of children, have died as a result of the embargo. Nevertheless, by a peculiar twist of fate, and above all through the efforts and the rather fertile imagination of the ATTAC leadership, this old reactionary now finds himself elevated to the rank of champion in the struggle against suffering and injustice throughout the world!

But let us leave to one side the political ideas of this illustrious individual and take a closer look and this so-called "Tobin tax". An examination of Tobin's speeches from the seventies shows that he was clearly alarmed by what he considered as an insufficient level of home and foreign investment in the United States, in spite of the low level of wages paid to American workers. Tobin considered that the ease with which huge amounts of money could make what he called "excursions" around the world's financial markets, picking up value by playing on the variations in exchange rates, attracted capital to the detriment of fixed investments. Furthermore, he claimed, the Federal Reserve Bank had too little time to adjust its monetary policy to these movements of capital, given that the "excursions" where profitable even on the basis of relatively small variations in exchange rates. He therefore proposed - without the slightest success - the creation of a minimal tax on financial transactions, which would introduce a small hurdle, or a "peg" so that the exchange rate differential would have to be slightly higher before a speculative operation became profitable. According to Tobin, the time lapse - which may only last a few hours - induced by the introduction of this tax, as speculators waited for differentials to widen, would give national banks extra time to take any measures they judged necessary to defend the value of their currencies on the financial markets. An unnecessary fall in the value of the dollar would tend to undermine profitability in general. In order to reassure the financial speculators in the USA, Tobin underlined the "symbolic" nature of this tax in describing it as nothing more than "a grain of sand thrown into the well-oiled machinery of international finance".

To sum up, this was a proposal designed to protect profits in general by means of a minimal dissuasive measure directed against one particular type of profit. There is therefore not the slightest progressive content in this demand from the point of view of the struggle against capitalism. To claim to contrary, as do Le Monde Diplomatique and ATTAC, is completely ludicrous.

In any case, this tax will never see the light of day. After all, even the numerous (more than 100) MP's in the French National Assembly who are members of ATTAC (some of whom are on the right) themselves voted against the introduction of the tax! As champions of the "market economy", these same members of ATTAC are busily pursuing other projects, such as large-scale privatisation, dismantling the public services, increasing casual labour, attacking pensions and benefits, reducing costs for employers, increasing military expenditure and carrying out many other antisocial measures aimed at increasing profitability for the capitalists. Even if the Tobin tax was introduced, would it really be a problem for the speculators? Not at all! The financial sharks know a thousand ways of avoiding taxes, and especially taxes of this kind. And even if the tax could actually be collected, it would only serve as a lever to favour the biggest financial institutions, which would be able to cope with additional costs than the smaller ones. Although, in reality, if a given government, or even an entire continent, decided to apply such a tax, a 24 or 48 hour boycott by the big banks and financial institutions would suffice to secure its withdrawal.

The Tobin tax was a proposal intended to protect capitalist interests, and in no way to harm them. It would be of no benefit whatsoever to workers. The leaders of ATTAC, however, strive to give a radical and "anti-capitalist" allure to this measure, by insisting on the idea that it is, when all is said and done, a restriction on "speculative capital" which will therefore tend to favour "productive investment". In point of fact, the resources in the hands of the capitalists pass from the financial markets to so-called productive investment only when the latter are more profitable than the former. In spite of the claims of ATTAC, these two forms of investment are inextricably linked. The profits made on the financial markets are invested in production, just as the profits made in industry or in services are often ploughed into monetary speculation., according to the profitability of each type of operation. And we have some further bad news for Messieurs Ramonet et Cassens, who make a formal distinction between "speculative" et "non speculative" capital: all capitalist investment is of a speculative character, without exception. Every franc invested in an enterprise by its owner is precisely "speculation" as to the profitability of the exploitation of its workers. When the bet doesn't pay off, or not sufficiently, the capitalist closes down the operation. The closures at Cellatex, Danone, Marks and Spencer and many other examples are there to prove it!

James Tobin put forward the idea that the money collected through his tax could be used to serve a variety of "good causes". It could, so he thought, be added to the budgets put aside for "aid" to Third World countries. This might seem like a nice idea to some people, but in reality it does not contradict the strategy defended by Tobin himself for bringing poor countries to their knees by means of embargos and starvation. No imperialist country has ever given "aid" to a poor country without strings attached in terms of trade agreements, military bases or other advantages. Tobin, who, unlike the ideologists of ATTAC, felt no need for window-dressing, proposed that the funds gathered from the tax should be managed by the IMF. ATTAC could not follow him on this point, which would sit awkwardly with the "radical" image it is trying to cultivate, et suggests that the money be managed by the UNDP (United Nations Development Project), which has a more acceptable reputation in their eyes. But the UNDP is part of the structure of the United Nations, which in turn is controlled by the superpowers, and in the first place by the United States. Therefore the income from the Tobin tax would never be anything more than yet another arm in the arsenal of the major powers for bullying and intimidating the poorest and weakest countries into giving them what they want in terms of markets and strategic alignment. Take the case of Iraq, for example. Is it conceivable that the money from the Tobin tax would be used to alleviate the terrible suffering which has been deliberately inflicted on the people of this country by the USA and the European Union? Of course not. Therefore, from this point of view also, it is difficult to understand how the Tobin tax can be presented as a progressive measure.

The economic program defended by ATTAC/Le Monde Diplomatique goes beyond the Tobin tax. The managers of the association and of the journal put forward a series of other demands (quotas, restrictions, taxes, and numerous penalties imposed on imports, on exports, on capital transfers, on direct overseas investments etc.) supposedly designed to combat "globalisation".

We have already explained, in a previous article (Free Trade and Protectionism, April 2000), the reactionary character of the mind-boggling proposals put forward by Bernard Cassens as a means of allowing the "democratic" superpowers to harm the economies of those countries judged to be at fault in relation to "human rights". In Le Monde Diplomatique (February 2000) Cassens proposed the setting up of an elaborate system of punitive measures, in the form of taxes to be charged on exports according to a scale of points awarded to every country in the world by the United Nations. In the same article, we examined the protectionist measures demanded by Jacques Berthelot (Agriculture, le vrai débat Nord-Sud, Le Monde Diplomatique March 2000). Berthelot advocates setting up of protectionist barriers to prevent trade between the regional "blocs", for example, between Latin America and Europe, or between Japan and the USA. Berthelot seems to be perfectly unconscious of the dramatic social and economic consequences such measures would provoke. The economies of all countries are inextricably linked together, and the application of these proposals would amount to a worldwide trade war that would plunge the world economy into a particularly deep recession.

In a more recent article, (Un autre modèle pour l'Agriculture Le Monde Diplomatique, April 2001), Berthelot returns to the same theme. He demands that all exports from the "south", that is to say from underdeveloped countries, should by denied access to european markets in order to protect the income of the capitalists who run European agriculture and the food industry. Not a single word, from Berthelot, naturally, about the wages and conditions of the workers in that sector. As for the poor countries, they must learn to be as "self-sufficient" as Europe, says Berthelot in substance.

When one thinks about it, the leaders of ATTAC and of Le Monde Diplomatique are really magnificent! They put forward the Tobin tax, which, so they say, would spread wealth and happiness throughout the poorest parts of the world; and then, without so much as raising an eyebrow, they declare themselves in favour of measures that would drive these countries further down into poverty by denying them all access to the markets of the industrialised countries!

The "globalisation" of the economy is nothing new. Marx and Engels described and explained it in the Communist Manifesto more than 150 years ago. They considered the development of the means of production and the unification of the world economy through trade as progressive historical processes, in that they were creating the material foundation of the socialist society of the future. Through the international division of labour and large-scale production, humanity has reached a very high level of productive technique. This achievement opens the possibility, for the first time in human history, to meet all the basic needs of the peoples of the entire world. If three-quarters of humanity are still living in poverty, if wealth is increasingly concentrated in the hands of a tiny minority, if perfectly curable illnesses and famines kill off millions of human beings every year, this is because these means of production remain the property of the capitalists, and cannot, as a result, be used in a rational and democratic manner in the interests of ordinary people. That is why the solution to the ills that blight humanity lies in the expropriation of the capitalist class and the organisation of the economy along socialist and democratic lines.

To denounce the perverse effects of "movements of capital" is one thing. But the real question is that of who should own and control this wealth. After all, capital is simply the accumulation of the surplus value created through labour - through our labour - by the capitalists. When the capitalist invests "his" capital to make more profit, whether it is on the financial markets, in the production and the sale of arms, in factories or elsewhere, he is using and abusing the wealth created by our work for his own selfish ends. Consequently, the only way to put an end to speculation, to exploitation, to militarism, to wars and to corruption, is by placing the control and ownership of this "capital" in the hands of those who create it, namely the working people.

If one takes account of the various aspects of the program put forward by ATTAC, it can be seen that this is essentially a protectionist program, favourable to free trade within the regional "blocs" such as the European Union, Mercusor (Brazil, Argentine, Uruguay, Paraguay) or NAFTA (United States, Canada, Mexico), but hostile to trade between these blocs. Let us say things as they are: this is a reactionary program, which aims to "protect" the markets and the profits of the "regional" capitalists from "foreign" competition, conveniently forgetting that every protectionist measure would call forth counter-measures of a similar kind, resulting overall in a sharp contraction of world trade and therefore a world slump, which is in nobody's interests, and least of all in those of the people that Ramonet, Cassens et Berthelot claim they want to help.

In France, many militants have turned towards ATTAC because they feel repelled by the mediocrity of the leaderships of the Socialist party and the Communist Party. However, the program of ATTAC offers no alternative. The trade union movement and the left parties make up what is undoubtedly the most powerful force in french society. This force could overthrow capitalism. However, in order to change society, the labour movement requires leadership on the basis of genuine socialist policies by leaders who are sincerely devoted to the cause of the working people and to the struggle against the present system. Protectionism and "grain of sand" taxes will solve nothing. The achievement of socialism will change everything.

Greg Oxley,
La Riposte,
Paris, 18.4.2001

There is also a French version of this article,
Taxe Tobin et Protectionnisme: le programme en trompe-l'oeil d'ATTAC

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