War and Taxes: Marx plus Pynchon

Marx, in the Grundrisse, makes an interesting remark about war:

War was developmentally prior to peace. The way, through war and armies, etc., certain economic relationships, such as wage labor, machinery etc. are developed earlier than in bourgeois society, Even the relationships of productivity and commerce are particularly visible in the army.

Still, Marx clung to the bourgeois imagining of war as something that is not itself a system: “War is self evidently to be understood as though it were immediately economically the same as though the nation through a part of its capital into the water.”

In other words, Marx ultimately sees war as non-productive – even as he sees that it can be developmentally prior to peace. In his list of war’s innovations, one notices that he does not include credit and taxation. As is well known, Marx did not have a developed sense of credit, which he saw as parasitic on productivity. It is, and it isn’t. A parasitic relationship is not necessarily a subordinate one, after all.

Thomas Pynchon, in the novel Gravity’s Rainbow, has a more acute sense of war as a system. He doesn’t, of course, develop this sense as a “theory”, but it becomes a strong narrative thread in Slothrop’s peregrination through war ravaged Europe.

What was happening on the American home front in World War II has been seen through many lenses: the greatest generation unity of the country, the enormous burst in productivity, the end of the Depression. But the lens that might be most interesting to us right now is that WWII marked a decisive change in the tax structure, which has had an enormous bearing on the peculiar American structure of class feelings – that lack of solidarity and identity of the working class that has determined our politics.

In part, this is simply racism. In as much as the upper class in America has been and continues to be overwhelmingly white, the sentimental outbursts of racism are rarer there. This is why the press, when it looks around for racists, finds plenty wearing baseball caps and having trouble with spelling – and doesn’t look to the almost all white system of prep schools, the Ivy leagues, the boards of corporations, etc.

However, there are other roots of labor’s odd affection for its exploiters.

Which gets us to war and taxes. In WWI, Wilson’s government had a newly established tax system – the internal revenue. Internal revenue was designed as a class tax. Before you had to file a return, you had to make a certain amount of money, far above the average salary. In World War I, this changed – those families with incomes above 2,000 per year, for the first time, had to pay a tax. However, that only added about 3 million to the tax rolls – and eventually that figure rose to 6 million. The government really relied on its hikes on corporations and wealthy individuals. From 13 percent, the tax rate for those making above 2 million rose to 67 percent. Since the major source of federal income before that – the tariff – was, so to speak, in suspension, corporate taxes – billed as taxes on ‘excess war profits” – and borrowing made up the rest of the war expenditure.

The borrowing prevented the Republicans who came in after the war from immediately undoing the taxes on the wealthy.  Mellon, perhaps the most powerful Treasury secretary the U.S. ever had, didn’t really want to abolish the income tax, as the radicals in the Republican party did, and replace it with a sales tax. Rather, he saw the advantages of this kind of revenue, and the advantages that came with tax loopholes – a tool used ever since to nourish one or another wealthy interest.

It was WWII that marked the true transition in the tax regime, however. The income tax remained a “class tax” up to the 40s. The masses didn’t generally pay any income taxes. As Sarah Kreps points out in Taxing War, “At the beginning of World War II, for example, only 3.9 million Americans were paying taxes, compared to 43 million by the end of the war. Income generated through taxes had gone from $2.2 billion in 1939 to $35.1 billion by 1945.² The fiscal sacrifice was enormous, and despite these demands for revenue, public support remained high throughout the war—as did the belief that the system of taxation was appropriate, with individuals stating overwhelmingly that their tax levels were fair.”

In the sixties, leftist critics of the New Deal attacked it as a means to preserve an inherently unequal socio-economic capitalist system. Since the Reagan years, though, the critique has generally vanished. It is now viewed as a gold standard even by lefties. Yet the sixties critics were accurate: the creation of the mass tax turned out to be a great class dissolvent. Both the wealthy and the worker were paying taxes, and sooner or later the wealthy would figure out that a tool had been given to them: that the cry of being taxed too much would echo among the mass of taxpayers, who indeed, one could argue, were being taxed too much, especially in relation to the services provided for them by the government – which, at the same time, were being chipped away by political groups generally working in the service of capital.

Kreps points out that American wars – and pick the year for the last sixty to one hundred years when America wasn’t waging war – used to fall within the liberal framework that claimed that wars were a sacrifice – much like Marx speaking of the nation “throwing” its capital into the water. However, it is not clear that this has ever been so. There is a school – which again was stronger in the sixties – that pointed out the predatory nature of America’s wars. These wars, in short, created the vast geopolitical entity of the United States, with all the resources that went with it. One could say, as well, that the wars undertaken or supported by America since and including World War II have created a world-system on American terms that has been enormously profitable for the American economy. In fact, this perception has long been abroad in American culture: under the official rhetoric about the “sacrifice” of war, there is another that sees war as a solution to economic problems: what we need is a war.

Kreps is right, I think, to see the shift in the way America does war as a symptom of the decline of democracy as an ethos and ideal in the American republic. Not only has conscription gone, allowing American leaders to use their volunteer troops as monarchs used theirs, without fearing any radical public complaint, but the wars are also put on the ticket – taxes are not raised, but even lowered as wars are fought and the war industry grotesquely inflated. Krebs view of democracy is that it requires a certain Pavlovian mechanism – the administration of pain by the governing class should create a response by the governed class. When the pain is anaesthetized, the governing class has a non-democratic leeway, and the governed class feels cheated and baffled.

The governed class is just Slopthrop magnified. Something terrible happened to the child, and the man feels a strange hardon whenever his ESP picks up the presence, or the future presence, of a missile. Pynchon plus Marx: our guide to the present disorder.