Archive for July, 2015


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Should capitalists plan on putting The Doors on their karaoke machines?

According to Paul Mason they should. Me, I’m not convinced.

Before discussing Mason’s argument, let me get a few things out of the way. First, Mason implies he invented the word “postcapitalism,” which makes as much sense as the idea that Al Gore invented the internet. (But maybe Mason gives credit to the long line of other postcapitalist thinkers in the book, which I’ll have to read when it’s published.) Second, I’ve long been suspicious of technological determinist arguments, that is, the attempt to explain history and society (mostly or solely) on the basis of changes in technology. (That’s not to say technology doesn’t matter; just that it’s a mistake to treat it as the essential cause of everything else.) Finally, the bit about Marx’s “Fragment on Machines” (pdf) represents a terrible misreading. (The passages from the Grundrisse are not, as Mason would have us believe, about “an economy in which the main role of machines is to produce, and the main role of people is to supervise them,” but a form or stage of capitalism in which laborers become appendages of machines as a condition for the existence of more, relative surplus-value.)

There is, in fact, a great deal to appreciate in Mason’s discussion. I’m thinking, in particular, of his critique of neoliberalism (which “has morphed into a system programmed to inflict recurrent catastrophic failures” and to create mostly “low-value, long-hours jobs”) and the problems mainstream economists have had in making sense of both information (since they start with the presumption of scarcity) and the rise of new kinds of economies (such as parallel currencies, time banks, cooperatives and self-managed spaces, which they mostly ignore as irrelevant to the “real” economy). I even like Mason’s discussion of the new opportunities for collaboration and the reduction of work time created by recent changes in information technology (although many of us are actually forced to have the freedom to perform more, not less, labor as a result of digital information and information-based automation).

For me, the biggest problem with Mason’s treatment is his two-part argument: that capitalism will necessarily fail when it comes to dealing with new information technologies and that such technologies will necessarily usher in a new, noncapitalist economic and social order, ushered in by “a new agent of change in history: the educated and connected human being”). I just don’t see it.

Let’s consider each of the two parts in order. First, the idea that capitalism will come crashing down as information grows. The key element, for Mason (and for many others before him, such as Jeremy Rifkin), is that the new communication technologies are reducing the marginal (per-unit) cost of producing and sending information goods to near zero, which means that if information goods are to be distributed at their marginal cost of production (zero) they cannot be created and produced by capitalist firms that use revenues obtained from sales to consumers to cover their costs and to realize profits. And that’s the rub: it is precisely the existence of private property (and the other conditions of existence of private commodity production) that keeps the cost of information from going to zero. Information may “want to be free” and capitalist property is certainly an obstacle to the flow of more information but that doesn’t mean information is or will be costlessly produced or utilized. For every Wikipedia there are hundreds of Microsofts—and thousands of other capitalist enterprises that utilize proprietary information to produce still other commodities.

The other side of the argument is thus also questionable: there’s nothing about new information technologies that necessarily lead to forms of economic organization different from or beyond capitalism. Would but that were the case! It’s certainly possible that a democratically organized, worker-owned enterprise would be able to take advantage of networking and other new forms of organizing information but the mere existence of such information technologies does not bring new forms of noncapitalist enterprise (or other socialist or communist forms of economic organization) into existence. I do think we need to pay attention to the way “educated and connected” human beings are utilizing new information technologies (as I often remind my students, they permit such activities as “stealing” the digital information in music and videos and then “sharing” that information within and between communities). But, we need to remember, lots of people have organized noncapitalist forms of economic organization long before the new information technologies were imagined, and they’ll continue to do so (perhaps in different forms) within and at the margins of “cognitive capitalism.”

But to get there—to allow such noncapitalist forms of economic organization to be imagined and put into practice—we need more than new information technologies. We need a ruthless critique of the existing economic order and forms of political organization (aka a political party) to produce utopian discourses and concrete interventions to move us in that direction.


While I’m on the topic of postcapitalism, let me also take up the case for socialism recently made by Gar Alperovitz and Thomas M. Hanna. Once again, I’m sympathetic—especially since the more talk about socialism these days the better. And Alperovitz and Hanna do make a convincing case for public ownership and control, including the fact that we already have lots of examples (from the Texas Permanent School Fund to the Tennessee Valley Authority, from publicly owned electric utilities to public internet systems) in our midst. Great! There are lots of ways for the state to distribute the surplus to meet social needs and there’s no reason to limit ourselves to tax-and-spend policies. Why not let the state take direct control of economic activities? But then let’s also talk about how the surplus is produced and appropriated within such state enterprises. If we don’t, then we’re just talking about expanding state capitalism (capitalist enterprises that are owned and/or regulated by the state) and not about eliminating capitalist exploitation itself.

Both Mason and Alperovitz and Hanna seem to overlook that particular aspect—the class dimensions—of the critique of political economy.


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As usual, the Wall Street Journal gets only part of the story: German exporters have certainly benefited from the euro.

The relative weakness of the euro versus a hypothetical Deutschmark is an advantage for Germany. In addition to the fiscal orderliness of Germany, the currency union also includes countries like Italy, Spain, France and Greece all of which haven’t been as successful as Germany in recent years.

This weighs on the euro’s strength, which helps German exporters. As is well known, exports are a key driver of Germany’s economy. A stronger currency would almost certainly make life harder for German exporters by making products more expensive on a global market.


But then they forget the other part of the story: the role of wage repression in helping German exporting enterprises. The decline of real wages for German workers has massively increased German price-competitiveness in comparison to its Eurozone trading partners and has thus boosted exports—including, of course, to Greece.

It’s the combination of domestic wage repression and fixed exchange rates within Europe that have made German exports competitive and led to the spectacular growth of the trade surplus Germany has enjoyed during the past decade and a half.


Certainly not in the United States.

According to the most recent study by the Annie E. Casey Foundation,

Nationally, 22 percent of children (16.1 million) lived in families with incomes below the poverty line in 2013, up from 18 percent in 2008 (13.2 million), representing nearly 3 million more children in poverty. The child poverty rate among African Americans (39 percent) was more than double the rate for non-Hispanic whites (14 percent) in 2013.

In 2013, three in 10 children (22.8 million) lived in families where no parent had full-time, year-round employment. Since 2008, the number of such children climbed by nearly 2.7 million. Roughly half of all American Indian children (50 percent) and African-American children (48 percent) had no parent with full-time, year-round employment in 2013, compared with 37 percent of Latino children, 24 percent of non-Hispanic white children and 23 percent of Asian and Pacific Islander children.

As the authors of the report make clear,

Growing up in poverty is one of the greatest threats to healthy child development. Already high compared with other developed nations, the child poverty rate in the United States increased dramatically as a result of the economic crisis. The official poverty line in 2013 was $23,624 for a family of two adults and two children. Poverty and financial stress can impede children’s cognitive development and their ability to learn. It can contribute to behavioral, social and emotional problems and poor health. The risks posed by economic hardship are greatest among children who experience poverty when they are young and among those who experience persistent and deep poverty.

It’s quite possible (given the decline in unemployment) the indicators of economic well-being for children will improve when the 2014 data are available. However, I’ll venture to guess the rates of poverty and of parents’ lack of secure employment will still be much too high—so high they’ll demonstrate that, in the United States, children simply don’t count.


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Capitalism, as we know, has become more and more exclusive—benefiting a tiny minority at the very top and leaving everyone else further and further behind.

Not surprisingly, there are all kinds of schemes to make capitalism more inclusive. The latest, from Hillary Clinton and endorsed by Joseph R. Blasi, Douglas L. Kruse, and Richard B. Freeman, is to spread the benefits of economic growth to workers via profit-sharing.

In the United States last year, close to 20 percent of private-sector employees owned stock, and 7 percent held stock options, in the companies where they worked, while about one-third participated in some kind of cash profit-sharing and one-fourth in gain-sharing (when workers get additional compensation based on improvement on a metric other than profits, like sales or customer satisfaction). An exemplar was Southwest Airlines, which paid $355 million of its more than $1 billion in corporate profits last year to union and nonunion workers and managers, on top of salaries.

Our research found that these programs, when combined with worker participation in solving problems, and increased training and job security, raise productivity and benefit workers.

I’m all in favor of workers getting more, whether in the form of higher wages, more generous benefits, or receiving a distributed share of the profits.

The problem, of course, is that—as we’ve seen in the case of the auto industry—workers only benefit when profits are high. And profits are high in part because workers’ wages are low. Plus, workers have no say in determining the conditions under which their enterprises decide if, when, and how they will realize profits in any given year or over a period of time.

Why not get rid of the middle-men (the shareholder-elected boards of directors and the top executives who currently make the key decisions in enterprises) and let the workers themselves decide, as a group, how their enterprises will operate? Let the workers get together on a regular basis and discuss how much surplus there will be and how the surplus they produce will be utilized—how much of the surplus will be put back into their enterprises, how much will be distributed to the communities in which they live, and how much they’ll take home in their pay packages.

Now that would be a real way of sharing the profits and making the economy more inclusive.