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www.usnews cjones05262015

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Stuart M. Butler thinks we’re being distracted by the Great Gatsby curve (which, remember, posits a positive relationship between income inequality and income immobility).

I agree—but for very different reasons.

Butler’s argument is that we’re focusing too much on inequality instead of mobility, that is, finding ways to move people at the bottom (characterized by “high school dropouts, pitiful savings rates, and the problem of children parenting children”) up the income ladder.

The problem, of course, is, even if some individuals succeed (within or between generations) in moving up the ladder, the existence of the ladder and the growing gap between rungs on the ladder mean we’re still faced with the fundamental problem of grotesque levels of inequality. The only change (if upward and, with it, downward mobility increase) is different people occupy those highly unequal positions, that is, a highly unequal society remains.

It’s a bit like the problem with Paul Samuelson’s famous statement (in “Wages and interest: a modern dissection of Marxian economics,” American Economic Review 47 [1957], 894): “Remember that in a perfectly competitive market, it really does not matter who hires whom; so have labor hire capital.”

The fact is, if labor and capital changed sides, and labor hired capital, it would still be the case that capital and labor occupy different positions in capitalist production: labor receives wages in exchange for their ability to work, while capital gets the profits produced by the laborers.

So, we can either focus on who occupies which rung in the distribution of income (or who hires whom in the capital-labor relationship) or we can focus instead on the obscenely and increasingly unequal distribution of income (and the fact that, in the existing capital-labor relationship, the capital share is growing while the labor share is declining).

If we don’t focus on the real problems of inequality and class, we’ll just continue to be distracted by the Great Gatsby curve.

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I’ve illustrated and discussed lots of different “gaps” on this blog: between productivity and wages, between the top 1 percent and everyone else, and so on. All of them point to growing inequality in the United States.

But here’s another one we should be concerned about: the growing gap between mean and median family income. As the Federal Reserve Bank of St. Louis explains,

The graph above shows real family income in the United States in constant (2013) dollars. The mean is the average across all families. The median identifies the family income in the middle of the sample for every year: half of incomes are higher, half are lower. We quickly learn three things from this graph: 1. Family income has been growing much more slowly since the 1970s. 2. There are several episodes of declining income, and they become increasingly long and deep. 3. Median and mean incomes are diverging.

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The growing gap in family income can be mostly easily seen in the chart above, in which the mean is divided by the median. As is immediately evident, this ratio has steadily increased over many decades (and many presidential administrations, both Republican and Democrat), with a dramatic jump from 1992 to 1993 (the last year of Bush the Elder’s presidency).

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The U.S. economy (measured in terms of total output or GDP) shrank in the first quarter of 2015—declining by 0.7 percent, which overturned the preliminary estimate of an increase of 0.2 percent that was reported last month.

But corporate profits (after tax, without inventory valuation and capital consumption adjustments) continued to rebound, rising 3.1 percent in the first quarter of 2015 from the fourth quarter of 2014, after falling 3 percent in the prior period. Even more dramatic, profits were up 9.2 percent from the same quarter a year earlier, the biggest increase since 2012.

Given the reported decline in economic growth, we can expect renewed debate about the statistical quirks in government data (having to do with seasonable adjustments and the like). But the real debate should be about the fundamental unevenness of the current recovery—with corporate profits soaring and everyone else being left behind.

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While we’re on the topic of keywords, let’s try another one: capitalism.

According to Richard Wolff, critics of capitalism need to be clear about what they mean by capitalism. It’s not free markets or free enterprise, both of which have been present in various forms of slavery and feudalism (and, of course, both of which have been absent in various forms of capitalism). Instead, it’s how surplus labor is organized, in the form of surplus-value.

Whatever distinguishes capitalism from such other systems as slavery and feudalism, markets and free enterprises are not it. . .

So then how should we define capitalism to differentiate it from alternative economic systems such as slavery, feudalism and a post-capitalist socialism? The answer is “in terms of the organization of the surplus.” How an economic system organizes the production, appropriation and distribution of its surplus neatly and clearly differentiates capitalism from other systems.

In slavery, one group of persons, the slaves that are others’ property, performs the basic productive labor. Slaves use their brains and muscles to transform objects in nature into what masters desire. Masters immediately appropriate their slaves’ total output, but they usually return a portion of that output for the slaves’ consumption. The excess of the slaves’ total output over what they get to consume (plus what replaces inputs used up in production) is the surplus. The masters take that surplus and generally distribute it to others in society (e.g., police and army, church, etc.) who provide the conditions (security, belief systems, etc.) needed for this slave organization of the surplus to persist through time.

Feudalism displays a different organization of the surplus. Serfs are not property as slaves are; lords do not immediately and totally appropriate what serfs produce. Instead, serfs and lords enter into personal relationships entailing mutual obligations (in European feudalism: fealty, vassalage, etc.). In medieval Europe, lords assigned land parcels to serfs, whose labor there yielded outputs. Feudal obligations typically included either 1) serfs’ laboring parts of each week on their assigned plots and keeping the proceeds and laboring other parts of the week on the lord’s retained land, with the lord keeping the product of that labor (“corvée”); or 2) the serf delivering to the lord as “rent” a portion of the product (or its monetary equivalent) from the land assigned to and worked by the serf. Corvée and rent were forms of Europe’s feudal surplus.

Capitalism’s organization of the surplus differs from both slavery’s and feudalism’s. The surplus producers in capitalism are neither property (slavery), nor bound by personal relationships (feudal mutual obligations). Instead, the producers in capitalism enter “voluntarily” into contracts with the possessors of material means of production (land and capital). The contracts, usually in money terms, specify 1) how much will be paid by the possessors to buy/employ the producer’s labor power, and 2) the conditions of the producers’ actual labor processes. The contract’s goal is for the producers’ labor to add more value during production than the value paid to the producer. That excess of value added by worker over value paid to worker is the capitalist form of the surplus, or surplus value.

And the alternative? The elimination of the exploitation that is common to slavery, feudalism, and capitalism.

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As it turns out, people on food stamps eat pretty much the same way as everyone else—both poor people who don’t get SNAP benefits and richer people.

In other words, SNAP recipients’ diets are marginally worse than everyone else’s diets, which are terrible to begin with. When researchers controlled for demographic differences between beneficiaries and non-beneficiaries, the differences in diet quality disappeared.