Capitalism and Inequality

Quote: “Since 1974, the top 1% and the bottom 50% have swapped their relative shares of the national income… Unless we radically transform our capitalist system, which will require building a movement capable of challenging and overcoming the power of those who own and direct our economic processes, working people in the United States face the likelihood of an ever-worsening future.”

Reports from the Economic Front

Defenders of capitalism in the United States often choose not to use that term when naming our system, preferring instead the phrase “market system.”  Market system sounds so much better, evoking notions of fair and mutually beneficial trades, equality, and so on.  The use of that term draws attention away from the actual workings of our system.

In brief, capitalism is a system structured by the private ownership of productive assets and driven by the actions of those who seek to maximize the private profits of the owners.  Such an understanding immediately raises questions about how some people and not others come to own productive wealth and the broader social consequences of their pursuit of profit.

Those are important questions because it is increasingly apparent that while capitalism continues to produce substantial benefits for the largest asset owners, those benefits have increasingly been secured through the promotion of policies –…

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Organizing for the Future

A review at the London Review of Books caught my eye because the two books discussed both have the word “Postcapitalism” in their titles. Who doesn’t want to know what’s coming next?

The review didn’t convince me that anyone knows. Two possibilities are mentioned: Full Automation and Universal Basic Income. Presumably, “Full Automation” refers to automating as much as possible. More robots and smarter software should lead to fewer people having jobs. That might lead to everyone being guaranteed a basic income. Or it could lead to mass sterilization, with only lottery winners and good-looking people being allowed to reproduce.

What I found more interesting were some remarks about “austerity”, the recently popular attempt to stimulate world economies by reducing government spending:

In both books, the critical fronts are a total opposition to austerity and neoliberalism, and a focus on the possible consequences of increased automation, including the creation of a ‘surplus population’. The ‘real austerity project’, Mason argues, is ‘to drive down wages and living standards in the West for decades, until they meet those of the middle class in China and India on the way up’. As a result, ‘the next generation will be poorer than this one; the old economic model is broken and cannot revive growth.’ Those places which, in their different ways, have managed to insulate themselves – authoritarian China, Russia or Iran, residually social democratic northern Europe – will not be exempt: ‘By 2060, countries such as Sweden will have the levels of inequality currently seen in the USA.’

Further down in the article, there’s some practical discussion:

What the historical labour movement did, in Srnicek and Williams’s eyes, was set itself goals and demands – for pensions, social security, fewer working hours – and fight for them inside and outside the workplace. What they are really proposing … is that a new set of demands be agreed and doggedly insisted on, in the manner of the old left.

But how could enough of us agree and doggedly insist on a new set of demands? Maybe the authors of the books being reviewed have an answer, but the only way I can see that happening is through the creation of a mass movement like the labor movement of the 19th and 20th centuries. 

In his very good book The Age of Acquisition: The Life and Death of American Resistance to Organized Wealth and Power, Steve Fraser describes how organized labor contributed to the general welfare after the New Deal and World War 2:

…the labor movement of those years of uproar created – more than any other institution, public or private – a standard of living envied everywhere. In 1945, 40 percent of American families lived below the poverty line… By 1970, only 10 percent lived in poverty… Not only did the economy grow at an annual average of 4 percent during the postwar era, but that growth favored the poor more than the wealthy…it was the organized labor movement that compelled broad sectors of American industry still unwilling to engage in the new mechanisms of collective bargaining to nonetheless match the standards of living (wages, hours, vacations, holidays, pensions, health care and more) that unions were winning for their members….

An “American standard of living” and the forms of industrial democracy that made it possible … shattered the old order [196].

Perhaps globalization means that a race to the economic middle (or even the bottom) cannot be stopped. But it was organized labor and other progressive organizations that demanded and achieved progress in the past. I think it will have to be organized human beings, whether or not they have traditional jobs, who demand and achieve progress in the future.

Which Side Are You On?

Journalist Edward McClelland lays it on the line at Salon in “The ‘Middle Class’ Myth: Here’s Why Wages Are Really So Low Today”.

Some key points:

In the relatively recent past, an “unskilled” worker straight out of high school could get a union job and earn enough to buy a car and rent an apartment.

Workers aren’t simply paid according to their skills. They’re paid based on how much they can get from their employers.

The anti-union movement’s biggest victory hasn’t been the elimination of existing union jobs. It’s been preventing the unionization of other jobs.

Companies claim that low-paid jobs were never meant to support a family or lead to a career, but that’s simply a way to justify paying low wages. And they can do that because they don’t have to deal with unions.

Today’s workers have to stop thinking of themselves as middle-class, just because they don’t work in a factory or they went to college: “Unless you own the business, you’re working class”.

“The smartest people I ever met were guys who ran cranes in the mill…They were smart enough, at least, to get their fair share of the company’s profits.”

It’s an excellent article and not very long. 

While we’re on the subject, Pete Seeger sings “Which Side Are You On?”, written in 1931 by Florence Reece, the wife of a union organizer, during Kentucky’s Harlan County War.

PS – Wikipedia says Florence Reece took the melody from a Baptist hymn. Pete Seeger was only 12 in 1931.

Moe Should Have Watched “The Wire”

David Simon, the creator of The Wire, spoke recently at a conference in Australia. The Guardian has an edited transcript of his talk here. Some selected paragraphs:

You know if you’ve read Capital or if you’ve got the Cliff Notes, you know that [Marx’s] imaginings of how classical Marxism – of how his logic would work when applied – kind of devolve into such nonsense as the withering away of the state and platitudes like that. But he was really sharp about what goes wrong when capital wins unequivocally, when it gets everything it asks for.

That may be the ultimate tragedy of capitalism in our time, that it has achieved its dominance without regard to a social compact, without being connected to any other metric for human progress.

From this moment forward unless we reverse course, the average human being is worth less on planet Earth. Unless we take stock of the fact that maybe socialism and the socialist impulse has to be addressed again; it has to be married as it was married in the 1930s, the 1940s and even into the 1950s, to the engine that is capitalism.

Mistaking capitalism for a blueprint as to how to build a society strikes me as a really dangerous idea in a bad way. Capitalism is a remarkable engine again for producing wealth. It’s a great tool to have in your toolbox if you’re trying to build a society and have that society advance. You wouldn’t want to go forward at this point without it. But it’s not a blueprint for how to build the just society. There are other metrics besides that quarterly profit report.

And that’s what The Wire was about basically, it was about people who were worth less and who were no longer necessary, as maybe 10 or 15% of my country is no longer necessary to the operation of the economy. It was about them trying to solve, for lack of a better term, an existential crisis. In their irrelevance, their economic irrelevance, they were nonetheless still on the ground occupying this place called Baltimore and they were going to have to endure somehow.

Moe really should have watched The Wire.