6. Extraction networks

Visible & transparent appropriation

An ancient saying from the misty mountains of China : "what is transparent, may not be always visible !"

A visible extraction network

EXTRACTORS

  • Chiefs
  • Warlords
  • Knights
  • Samurais
  • Priests
  • Usurers
  • Rajahs
  • Kings
  • Emperors
  • Monarchs

PASSAGES

  • Tributes
  • Gifts
  • Loot
  • Taxes
  • Rent
  • Protection money
  • Usury
  • Trade

a transparent extraction network

EXTRACTORS

  • Governments
  • Banks
  • Financial Institutions
  • Investment Companies
  • Insurance Companies
  • Pension Funds
  • Postal Saving Schemes
  • Mutual Funds
  • Corporations
  • Manufacturing Companies
  • Trading Companies
  • Servicing Industry
  • Traders
  • Consultants
  • Managements
  • Bureaucrats
  • Ministers

PASSAGES

  • Excise Duties
  • Custom Taxes
  • Sales Taxes
  • Entertainment Taxes
  • Electricity Taxes
  • Transport Taxes
  • Luxury Taxes
  • Interests on loans
  • Dividends to shareholders
  • Profits
  • Taxes on Profits
  • Income Taxes
  • Rents
  • Managerial salaries and perks
  • Cuts and commissions
  • Ministerial Kickbacks
  • Bureaucratic pilferage
  • Managerial Frauds

6.1 Governmental appropriation
Why is there such a maze of government departments and their pointless accounting exercises among themselves?

In the mid-eighteenth century in Amsterdam, then one of the main centres of world trade, a proposal to introduce a single tax instead of a very complex edifice of many taxes was suggested by some novices in the art of governance. They shelved their scheme soon after, when they learned that it was much easier to impose and manoeuvre a large number of small taxes as opposed to a single tax.1

A single comprehensive tax would make evident the extent to which the social produce is squeezed by the governments in the form of taxes.

Taxation is the prime source of extraction, effected by pure force. It is called exploitation when we refer to a few centuries earlier, but indirect taxation has done wonders to get taxes accepted by tax-payers.

There is resistance to the payment of taxes and there are attempts to 'cheat' the state.Governments try to overcome this by means of force as well as the seduction mechanism. In fact, any reduction in taxation is flaunted as an exemption, a favour done by the state.

Clever administrators like Manmohan Singh (World-Bank official, Ex-chairman of Reserve Bank of India, Ex-finance minister, govt. of India) who increase the total tax collection by decreasing the rates of taxation and spreading the tax-net are hailed as saviours.

The distinction between direct and indirect taxes is a fallacy - an artifice of the managers of seduction. What is pertinent is the total tax that the governments collect. The so-called subsidies given to some sectors are actually cases of returning a small part of the tax collected from them.

Of what are called social welfare activities most are not for the welfare of the people at large. They serve the purpose of human resource development to obtain more extractable humans. Calling them social welfare is deception. A small portion is a palliative and a concession as a result of struggles and resistance or under the threat of large-scale disorders. These are always sought to be cut as threats decline or other threats increase.

A large number of taxes, the web too intricate to decipher, provide an effective way for the state to extract large amounts without pinpointed and direct opposition.

The taxing taxes are not the complete story.

These high levels of taxation are still not adequate for governments and they resort to other mystifications of the market to collect more resources :

  • Borrowing from tax-payers, other governments and institutions. These borrowings are repaid through more taxes and more borrowings.
  • Printing money to devise a redivision of resources by means of inflation has been a major technique in this century.
  • Keynes became the most dominant economist of this century because of this insight : it is possible to lower wages even as money wages increase.
  • Thanks to this insight a wage of 3000 a month today is less than the wage of 30 fifty years ago.
  • Postal savings, bank savings and insurance schemes are also big sources for government revenues. Hence there are provisions of tax 'exemptions' if people use their money in such specified schemes.
  • Provident funds and pension schemes have become a major source of money for governments.
  • Manipulations by governments of these huge amounts, held in trust by governments as trustees, to appropriate large portions of these funds is amongst the latest economic arts being perfected. All these are parts of the effort to bolster the near bankrupt finances of states.

6.2 Corporations & companies appropriation
Interest, dividends, profits, rents, traders' margins, depreciation funds are some of the heads under which approx. 40 % of the global produce is appropriated by banks, lending institutions, companies, firms, etc.

representatives managements of govts companies and institutions

Legalised appropriation:

Salaries, perks, facilities granted gratis, concessions, grants, gifts...

The above scenario of the distribution within the extraction network is obtained when legal documents like balance sheets are used for calculations. However, we are closer to reality if we take into account the extra-legal appropriation by the bosses, their commissions, cuts and frauds. The cuts and commissions of the government and corporate representatives are in the range of 15 % of the global produce.

Workers get a minuscule 1 to 5 percent of the produce, after the expenditures of the governments, institutions, corporates and their representatives have gobbled bulk of the produce.[/i] This allocation tells us why men-women-children-old people all must work just to keep afloat shrinking domestic units and impoverished individuals.

[b]6.3 a crash course in GOVERNMENT-SPEAK

Subsidy - GIVING BACK 10 AFTER COLLECTING 100

Taxation has been imposed in such a variety of ways that everybody is paying a multitude of taxes. The concessions in a specific product or field do not compensate for what we pay as taxes in that or other fields. The much publicised subsidy given to agriculture, for example, is minuscule compared to the taxes (again excise, sales, customs, profit, property, capital gains , ...) collected from products used in agriculture _ electricity, fertiliser, seeds, tractors, farm equipment, transportation, etc. even if no tax is levied on crops.

Translated into real-speak: subsidy is slightly lower taxation.

The welfare state: seduction at work
All "welfare" spending of the state is only a small part of the tax collected. Such spending falls in the following categories:

Human resource development exercises - investments (literacy, health services) or restrictions (prohibition) to keep workers fit so that returns can be maximised.

Spendings which are results of studies which suggest that some welfare measures would actually benefit the government coffers, e.g. governmental interest shown in the recent bans on smoking. These are results of studies suggesting that, in some areas, more money is spent on health insurance because of smoking-related diseases, than the money collected through taxation on tobacco and cigarettes.

Simple deceptions, e.g. subsidy which is actually slightly lower taxation.

Forced spendings on workers: a minuscule fraction of revenue is spent in schemes such as unemployment doles. These are the State's social wages, spent under the threat of discontent and upsurge.

infrastructure
A collection of facilities in the fields of transport, communication, engineering, information, the media, surveillance, etc. meant for work intensification and control. The purpose is to grab more than 95 % of the produce without letting workers' opposition go out of hand .

unemployment
A wage-worker is not employed unless her/his employment produces enough. Enough so that the taxes, interests and profits (and the extra-legal cuts, commissions, kickbacks, bribes) can be generated besides the wages.

Thus, there must be sufficient facilities of production (machines, raw material) and control (managers, surveillance cameras, intelligence agencies) so that workers can be made to produce enough, and enough can be extracted from them to fulfil the above requisites. In the case of inadequacy of such facilities (infrastructure) workers are not employed. This is the real reason for the simultaneous existence of unemployment and over-work.

Labour aristocracy
If a wage-worker produces 100,000 value units, then s/he gets only 500 to 3000 value units out of that. All wage-workers lose upto 99 percent of the produce to the exploitative apparatus. Those getting 5000 a month (usually because they are producing 200,000 units) are accused, and are sometimes themselves guilt ridden, of being a part of the labour aristocracy .

6.4 The global extraction network
The extraction network is a global web of contending extractors. They, nevertheless, have a common interest against wage-workers' resistances to work and extraction. Integral to this perpetuation of extraction, as well as for the confrontations within the extraction network, is the infrastructure of the police and military.

Governments and nations are perceived to be the recipients of extraction from their areas of influence. Companies and products are ascribed nationalities. However, the continuous trading which goes on in currencies, shares, government securities and bonds, commodities and wage-workers implies the existence of a situation in which the various recipients - governments, financial institutions, insurance companies, central banks, corporations, companies, managements, individual bosses and functionaries _ are engaged in continuous bouts with each-other with ever-fluctuating fortunes.

Just the cross currency trade accounts for a volume of one trillion dollars daily. This is nearly five percent of the annual production of the entire world. Added to this is the trade in stocks, shares and government securities, and of course in commodities and wage-workers as another commodity. Some nodal points of these trades are New York, Singapore, Tokyo, London, Bombay, Beijing, Karachi, Cairo, Paris, Buenos Aires ...

These centres for trade in currencies, stocks, securities and commodities are connected by satellite and computer communication systems.

It is a meaningless exercise today to figure out the place of production of the part that anyone of the recipients receives. Our produce has no nationality. All production coagulates to constitute the world produce or the global produce. This total produce is then parcelled out. The parcel size of recipients revolves around their economic, political, diplomatic and military strengths.

The levels of intensity and hours of work, government spending, government debt, investments, workers' resistance, etc. in different industries and areas determine and are determined by this trading. Interest rates, tax rates, currency rates, stock rates and commodity rates are their corollaries. The fluctuations in these rates bring about the changes in the global produce and the parcel sizes of all participants.

Every single product is a result of the activity of an ensemble of companies. Every one of these companies are financed by a number of financial institutions - banks, insurance companies, postal savings, pension funds, mutual funds. These finances are globally mobile and the sources of money are spread all over the world.

However, these companies and financial institutions operate in the territorial jurisdiction of various governments. Although international law is also making its presence felt, governmental jurisdiction helps camouflage the global reality. The cacophony of national versus foreign only aids to divert the discontent towards superficial concerns and counter-productive acts.

It is purposeless and impossible to ascertain from which set of wage-workers an extractor gets its share. Thereby, the various extractors in the extraction network, inspite of their conflicting interests, have a common cause against the workers. a simple case in point.

We consider an example of a product - a car - assumed to be constructed by simply assembling various parts. To make the issue simpler : the steel, rubber, plastic, oil, electricity, machines, designs, etc. used for the manufacture of the parts are not considered. Even after these simplifications the great minds of the U.S. Congress cannot be sure about such a simple thing as to what yardstick must they adopt to define a car as American or foreign for the purpose of differential taxation. The criteria could be weight of the foreign and domestic parts, or the money price, or even more simply the number of parts. They, of course, could not be bothered with simple questions like what is the criteria for designating a nationality to these parts!

After all the deliberations and simplifications the American Congress decreed that any car with 74 percent or more 'U.S. or Canadian-made parts' will be considered made in USA.

To pay lower taxes, the Ford Motor Company used a simple strategy to get its model - the Crown Victoria - designated 'made in USA' even though this car is assembled, like all others, by using parts made in Germany, Mexico, Spain, Japan, etc. It is simply made sure that the imported parts total no more than 25 percent and the car becomes 'a US-made car'. On the other hand, Honda assembles a car called Accord in USA, and uses the right mix to keep the 'U.S.' content just below 75 percent - and gets Accord designated as an imported car in USA - to be able to obtain other benefits ! 2

Made by many companies together - GM, Isuzu, Fiat, Hindustan Motors Exact manufacturer not known.

Many economic categories, such as, ownership/nationality of a company, nationality of a product, place of manufacture of a product, are now obsolete. They do not meaningfully describe the present economic realities. Theorisations based on such categories can be irrelevant at the best, but evidently harmful otherwise.

To elucidate, we give the example of the seamless web of economic inter-relations between world's major automobile companies. General Motors' association with other automobile manufacturers in 1990 exhibits the meaninglessness of the Made by GM and Made in USA labels.

GM's share-holding in other automobile manufacturers : Vauxhall (100%) ; Adam Opel AG(80%) ; FSO(37.5%) ; Isuzu Motors (5%) ; Suzuki Motor Co.(5%).

GM's joint share-holding with other automobile manufacturers: GM and Toyota Motors in USA ; GM and Toyota Motors in Australia ; GM and Suzuki in Canada ; GM and Saab-Scania AB in Sweden ; GM and Isuzu Motors in Japan ; GM and RABBA in Hungary ; GM and AB Volvo in Sweden ; GM and VEB Automobile Works in Germany ; GM and Chrysler in USA ; GM and UAC in Nigeria ; etc.

GM's clients for automobile parts : Renault, Honda, Toyota, Rover and VAZ.

GM's suppliers of automobile parts : Isuzu, Volkswagen, Fiat, Honda and Pininfarina.

GM's distributorship of following vehicles :

Isuzu vehicles in Europe, Canada and USA ; Renault Vehicles in Brazil; Saab AB vehicles in Canada and Brazil ; Suzuki vehicles in USA.

GM's some other arrangements :

GM's cars Espero Sedan and Opel Kadette are designed by Italy's Berton Spa and are assembled by Daewoo Motors in Korea. GM assembles Isuzu trucks in New Zealand, Kenya, Zaire, Portugal, Venezuela, Chile, Ecuador and Columbia.3

Made in one / many locations in Taiwan, Venezuela, Indonesia, China and Canada Exact place of manufacture not known.

6.5 The present extraction network

THE WARRIORS OF HIERARCHIES
Militaries, governments, IMF, World bank, bureaucracies, representatives, policy-makers, police, politicians, judges, corporate directors, company representatives, management gurus, religious gurus, statesmen, media-barons, Nobel-laureates.

The purpose:
To squeeze the maximum from workers.
To get the maximum possible share of this squeeze.

how much, to whom.
All the products in the world which are bought and sold, manufactured no matter where, and all those activities which are arbitrated by exchange and money, form a global whole. This includes tangible material goods and non-tangible services. Money being the representative of accumulated labour, and a very mobile representative at that, the regime of money and exchange not only brings about the formation of the total global produce, but it also decides the division of the total produce.

Given the intricacies of the global extraction network, we can only estimate the approximate shares of the various recipients of the total world produce. These shares are discernible if we divide the price of a single product into its various elements, or if we take a look at the spendings of the many recipients at the global level. The price of a newspaper, or salt, or a washing machine gets divided in the following proportions :

Taxes account for more than 50% of the price.

Excise duty is upto 100%, and even more.

Customs duty could be anything upto 100% and more, to be paid on any components used in the product or equipment required for its production, which is bought from any place outside the country.

Sales tax is paid for everything which is bought and sold for production, and again on the final product.

Electricity tax is paid on any electricity used.

Transport tax is paid on the transport used.

Property tax is paid for land and immovable property.

You may add other taxes (corporate tax, octroi, entertainment tax, luxury tax, etc.) and try to make the list exhaustive.

Interest payments, dividends, margins of manufacturers, distributors and retailers, rents account for around 40%.

Around 90% of the capital employed by companies is loan from various financial institutions. The interest on these loans is a big outlay.

Dividends are paid on the equity capital - the capital owned by the shareholders of the company.

The manufacturing, distributing, wholesale and the retailing companies have their margins.

We remind that the above is a glimpse of what is called the legal parcelling-out. Commissions, cuts, bribes, kickbacks, etc. are universal norms in all transactions. This appropriation of around 15 % is called illegal by the bosses, who are themselves its unrivalled practitioners, and the law-makers.

Of the total price of any product, workers' wages do not constitute more than 1 to 5 percent.

Even from their wages workers pay innumerable taxes whenever they pay for anything, whether it is food or cinema tickets or railway tickets.

At the commencement of the main battle in the war between factions of slave-owners, called the Maha-bharata, an excited Krishna said to a reluctant Arjun :

"karmanaya adhicarastu , ma faleshu kadachen" You have only the right to work, but no rights over the fruits!
This wisdom of Gita has become the centrepiece of our times!

6.6 The priorities of Hierarchies
Militaries
Terrorist organisations
Police networks,Armed gangs
Prisons,Secret services
Bureaucracies,Policy-research
Juridico-legal system
Industrial Surveillance
Physical Infrastructure (transport and communication network, urban planning, irrigation facilities)
Industrial infrastructure
Management institutes Education & Culture (moulding and controlling bodies and minds, and manufacturing consent)
Human resource development
Luxuries

Police in a town in Java, said they plan to start using venomous cobras to break up mass demonstrations and compel suspects to confess.4

6.7: IF WE COMMAND OUR WEALTH, WE SHALL BE FREE
Early in 1980, telephone workers in Australia during an agitation switched off the computers which keep track of the billing of the telephones. Phones could then be used free of charge and people made long-distance calls without having to bother to count seconds or to talk to the point. The telephone workers' action won mass approval for them and accumulated huge unpaid calls for the company. The government and the management got worried by the bonhomie developing between different sections of workers and agreed to the demands of the telephone workers _ a case of choosing the lesser evil.

In 1987, railway workers in France distributed leaflets to passengers appealing to them not to buy tickets and travel free. Passengers readily accepted the leaflets and the appeal. However, in the same year, passengers travelling by bus and metro in Spain and Italy were given no such opportunity of accepting or rejecting workers' appeal when the workers there ran the services but refused to charge the passengers.

In March 1989, railway workers in South Korea gave a free ride to 2.5 million passengers during an agitation. In the summer of 1991, workers of the Bart Railway Company in America distributed leaflets citing the examples of France, Italy and Spain. They also requested the passengers that in case of a strike, the passengers must demand paid holidays from their respective managements.5

Betty Jean Aborn, a homeless, middle-aged woman with a history of depression was confronted by seven sheriffs after lifting an ice-cream from a convenience store. She supposedly brandished a kitchen knife at them. The response was a volley of twenty rounds, eighteen of which perforated her body.

Questioning Global Produce
Our scrutiny and investigation of the balance-sheet of the total produce of humanity has produced some startling findings and obvious inferences.

Findings:

  1. Ninety-four percent of total produce of humanity is used for the maintenance and perpetuation of hierarchies.
  2. More importantly, six percent of the global produce presently suffices for the nourishment and sustenance of the whole of humanity.

Inferences:

  1. If we are able to remove hierarchies, we just won't need ninety-four percent of the produce that takes place today. Consider anything anywhere from medicine to steel, paper to police-stations, elections to olympics, and erase what is required for the maintenance and perpetuation of hierarchies - we will be left with six percent.
  2. With the erasure of hierarchies our work-load will be reduced to one-sixteenth of the present load. This by itself will enormously enrich human life and open up diverse arenas of creativity and freedom. Festivals with month-long festivities will resurrect.
  3. With ninety-four percent of the production done away with, environmental degradation will dramatically diminish and give humanity a long enough breathing space to re-think, re-cast and re-create its production processes to sustain a harmonious human-nature relationship .

Let's Turn Things Around

" The 'youth wage' has become the pretext for a profound revolt among young people. Devalued and rejected before they've entered the 'work world' young people in colleges, high schools and suburbs are faced with massive unemployment.
They already know they've no future in this society. THEY ARE MADE WORTHLESS BECAUSE IN THE MODERN ECONOMY THEIR HUMANITY HAS NO MARKET VALUE ...work no longer makes sense. It no longer corresponds directly to human needs, but serves the insane expansion of consumption and creates a more and more artificial and inhuman order of things.
Work wastes incredible amounts of energy in the production of useless objects that destroy the environment ... Some propose, with a straight face, the 'abolition of unemployment', when it's wage labour and money that needs to be abolished ! ... This society has no hope and no future and we all more or less confusedly know it ... We have no ambitions other than to contribute to the movement, to help it find the reasons for what its already done, and to go beyond what it has yet to accomplish ..."
One of a series of leaflets signed, "Some workers and unemployed", March 1994 France.6

  • 1. Fernand Braudel, 'Civilization & Capitalism, Vol. III', Fontana Press.
  • 2. John R. Munkirs, et al. 'The Automobile Industry, Political Economy, and a New World Order', ibid.
  • 3. James I. Sturgeon, 'What's in a name ? Production Technology and the New Car'. Journal of Economic Issues, Vol. XXVII No2, June 1993.
  • 4. The Pioneer, New Delhi, January 14, 1997.
  • 5. F.MS, March 1994.
  • 6. 'We Are All Hooligans' quoted in The Poor, the Bad and The Angry, Issue 2