A Marxist critique of the Tobin Tax

Louis Proyect lnp3 at panix.com
Tue Apr 24 10:42:24 MDT 2001


The "Tobin Tax" and protectionism: the bankrupt policies of ATTAC
Greg Oxley, La Riposte, Paris, 18.4.2001

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 propose - 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".

Full article: (http://www.marxist.com/Europe/tobin_tax_and_ATTAC_400.html)


Louis Proyect
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