Posts Tagged ‘capitalism’

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The clear reemergence of and spreading interest in anti-establishment politics in the United States (together with the electoral success of left-wing and right-wing parties in a growing number of European nations) can be blamed squarely on capitalism.

As I see it, it’s the combination of the failures of capitalism and the unwillingness of the existing economic and political elites to effectively deal with those failures that explains the rejection of mainstream (center-right and center-left) candidates and policies and the turn to alternatives. The failures of capitalism go back some four decades—including stagnant wages, rising indebtedness, and growing inequality—and culminated in the crash of 2007-08—after which wages remained stagnant, people were not able to rid themselves of debt, and inequality continued to grow. What recovery there has been in recent years has mostly been captured by large corporations and wealthy individuals, while economic growth has remained slow. Meanwhile, economic elites have continued business as usual (moving production and jobs at will around the world, more interested in lowering costs, avoiding taxes, and inventing new labor-saving technologies than anything else) and political elites do everything they can to save large financial institutions and a business-friendly environment and imposing the costs—of the bailouts, the continued opening and expansion of markets, the refugees from war-torn zones, and much else—on the working and unemployed populations of their nations.

From this perspective, it’s no surprise that, in the United States, both Donald Trump and Bernie Sanders have attracted so much support—or, that, in Europe, both the Left (e.g., in Greece and Spain) and the Right (e.g., in Poland and Austria) are increasingly able to challenge mainstream parties.

To be clear, this is not to say that politics—political parties and movements, voter attitudes and behaviors, candidates and coalitions—are solely determined by the economy (or some subset of the economy, like class interests). There’s a great deal more that affects the rise and fall of political ideas and campaigns—from political practices and institutions through discourses and identities to media and communication technologies. Still, the failures of capitalism and the unwillingness of economic and political elites to solve or mitigate the effects of those failures to the benefit of the majority of the population have played a significant role in the current disenchantment with mainstream parties and the success of left-wing and right-wing alternatives in the United States and Europe.

But it is interesting that there appears to be a determined effort to absolve capitalism of any responsibility for these new political events. Both Greg Ip (writing for the Wall Street Journal) and Peter Eavis (for the New York Times) have attempted to argue that “it’s not the economy” that explains politics, but something else. And, if it’s something else, it can’t be the failures of capitalism that are to blame.

For both writers, “the economy” is economic growth, specifically growth in GDP. In Ip’s case, the difference between the 1960s (when social disarray and political dissension were accompanied by solid growth and “shared prosperity”) and now (when similar levels of voter discontent are occurring with slow growth and high levels of inequality) means we can’t make sense of electoral grievances in terms of economic discontent. For Eavis, most voters are currently “doing sort of O.K.” (with thousands of new jobs and a low unemployment rate). Therefore, he argues, this election can’t really be about the economy.

Desperate as they are to make such an argument, both Ip and Eavis miss two key issues. First, the economy is not just GDP growth. It’s also, at least for the majority of the population, about a great deal more: the tradeoff between wages and profits and the level of inequality, the ability of the government to capture portions of the surplus and to use it for social programs, the degree of security concerning jobs and the quality of the communities in which people live and work, and a great deal more. And second, capitalism doesn’t always exert its effects in the same way: in the 1960s, when both wages and profits were rising and the possibility of using part of the surplus to improve society (both for those who had prospered and those who had been excluded from that first. “Golden Age” decade of postwar growth), capitalist success created rising expectations (including the rethinking of aspects of capitalism that had previously been deemed successes); while now, in the midst of capitalism’s multiple, spectacular failures, the opposite is true (as people demand redress for their low-paying jobs, crumbling infrastructure, obscene levels of inequality, and the corruption of democratic politics by large corporations and wealthy individuals).

So, no, capitalism can’t be let off the hook. It creates and perpetuates the problems it claims to address. And even though economic and political elites want to believe otherwise, holding firm to the notion that people should be satisfied with current economic arrangements, recent developments in the United States and Europe suggest they’re not.

Not by a long shot.

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Blood-sucking vampires are, of course, ubiquitous in contemporary film—from Werner Herzog’s Nosferatu the Vampyre to Jim Jarmusch’s Only Lovers Left Alive (the most recent in a long line that stretches back through Christopher Lee’s various portrayals of the Transylvanian vampire to the 1909 silent film Vampire of the Coast).

Vampires are also, as it turns out, familiar as a critical trope within economics.

Terrell Carver (in Postmodern Marx) notes that Marx used the vampire motif three times in Capital—in the chapter on the working day:

“Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.”

“The prolongation of the working-day beyond the limits of the natural day, into the night, only acts as a palliative. It quenches only in a slight degree the vampire thirst for the living blood of labour.”

“The bargain concluded, it is discovered that he was no ‘free agent,’ that the time for which he is free to sell his labour-power is the time for which he is forced to sell it, that in fact the vampire will not lose its hold on him ‘so long as there is a muscle, a nerve, a drop of blood to be exploited’.”

As Carver explains, “Marx did not accept a commonplace distinction between literal and figurative language, and he did not attempt to avoid the latter in what is taken to be his most scientific work.” Why?

Marx’s critique takes political economy as a textual surface, and by means of a thorough, and thoroughly linguistic analysis he refigures, in a parodic text, a supposedly familiar and uncontentious world as strange (requiring explanation) and problematic (requiring political action).

A more recent example is Matt Taibbi’s reference to Goldman Sachs as “A great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

And now we have Pope Francis calling the people who take advantage of the poor “true bloodsuckers” who “live by spilling the blood of the people who they make slaves of labour.”*

When riches are created by exploiting the people, by those rich people who exploit [others], they take advantage of the work of the people, and those poor people become slaves. We think of the here and now, the same thing happens all over the world. “I want to work.” “Good, they’ll make you a contract, from September to June.” Without a pension, without health care… Then they suspend it, and in July and August they have to eat air. And in September, they laugh at you about it. Those who do that are true bloodsuckers, and they live by spilling the blood of the people who they make slaves of labour.

Vampires are central, then, to the ruthless criticism of mainstream economics, a critique that makes the supposedly common-sense world in which we live—the world of capitalist commodities and wage-slavery—both strange and ripe for fundamental change.

 

*The pope’s reference is to the reading for 19 May 2016, from James 5:

Come now, you rich, weep and wail over your impending miseries.
Your wealth has rotted away, your clothes have become moth-eaten,
your gold and silver have corroded,
and that corrosion will be a testimony against you;
it will devour your flesh like a fire.
You have stored up treasure for the last days.
Behold, the wages you withheld from the workers
who harvested your fields are crying aloud;
and the cries of the harvesters
have reached the ears of the Lord of hosts.
You have lived on earth in luxury and pleasure;
you have fattened your hearts for the day of slaughter.
You have condemned;
you have murdered the righteous one;
he offers you no resistance.

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Capitalism is a giant machine for pumping out the surplus from workers—just like feudalism, slavery, and other class-based economies before it.

That’s from one perspective. But the capitalist machine isn’t just about the “vampire thirst for the living blood of labor.” It also involves various mechanisms for capturing that surplus—in the form of dividends, CEO salaries, interest payments, and so on.

Another, increasingly important such mechanism is hedge funds. And boy are they capturing a lot of the surplus these days!

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The hedge-fund industry continues to balloon in size (after a dip during the financial crash in 2008, and even though 2015 was by all accounts a rocky year), with something like $3 billion dollars in assets under management.

And, as the New York Times reports, the pay of the industry’s leaders has soared.

JPMorgan Chase paid its chief executive, Jamie Dimon, $27 million in 2015. In another Wall Street universe, the hedge fund manager Kenneth C. Griffin made $1.7 billion over the same year.

Even as regulators push to rein in compensation at Wall Street banks, top hedge fund managers earn more than 50 times what the top executives at banks are paid.

The 25 best-paid hedge fund managers took home a collective $12.94 billion in income last year

Yes, billions, with a “b.”

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That’s the list of the top 10 (courtesy of Institutional Investor’s Alpha magazine)—from Griffin (at $1.7 billion) to Joseph Edelman (at $300 million) in 2015.

Not only are Griffin and company capturing a large share of the surplus (even when some of their funds actually lost money for investors last year, just by virtue of their sheer size).* They’re spending it—on everything from art and luxury housing to funding politicians and political campaigns.**

So, with the rise to prominence of hedge funds and other financial instruments, it’s time to revise our definition: capitalism is a giant, vampire-like machine for pumping out, capturing, and spending the surplus from workers.

*Ray Dalio made $1.4 billion in 2015 through Bridgewater Associates, the world’s biggest hedge fund firm with $150 billion of assets under management. Dalio, who founded Bridgewater, is frequently quoted promoting a strategy he calls risk parity. Yet Bridgewater’s risk parity fund, called All Weather, lost investors 7 percent in 2015.

**Griffin was the biggest donor to the successful reelection campaign of Mayor Rahm Emanuel of Chicago.

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We know that the so-called gig economy—in the form of such online platforms as Uber and Airbnb—offers more alternatives in terms of finding transportation and renting property. But it doesn’t overturn the unequalizing dynamics of contemporary capitalism. In fact, it probably makes things even more unequal.

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What about the online platforms for workers, like TaskRabbit and HourlyNerd? They, too, represent a new kind of freedom—and, at the same time, a new way for employers to take advantage of workers.

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A June 2015 report from the McKinsey Global Institute makes clear the advantages for employers: more output (by up to 9 percent), lower costs (by up to 7 percent), and higher profits (by up to 5.4 percent). The idea is that digital platforms enhance recruiting and personalize various aspects of talent management (including training, incentives, and career paths) in the case of high-skilled workers, and improve the screening and assessment of job candidates (thus allowing them to “make better predictions about candidates’ ability to perform tasks as well as the likelihood of their timeliness, reliability, and commitment”) for companies with large low-skilled workforces. It also makes it easier for employers to contract workers for particular projects and then let them go, until the next project (requiring a different group of workers) comes up. So, with better matching, screening, and flexibility, workers produce more, cost less, and create more profits for their employers.

It sounds like a dream come true for employers.* And it is!

The problem, of course, is to sell the new digital labor platforms to workers, both blue-collar and increasingly white-collar. Here’s how McKinsey does it:

Online talent platforms can bring a new dimension to profiles of individual workers: their soft skills, traits, and endorsements from colleagues and superiors. The accumulated ratings and feedback provided to contingent workers through online marketplaces could be valuable, particularly for young people with little other work experience as they seek permanent employment. Accumulating and codifying these reputational elements can help individuals distinguish themselves in the job market and can help employers identify people who are a better fit for the positions they are filling.

In other words, it’s all about freedom and control.

And that’s important to recognize, because capitalism does represent the birth of a new freedom—for example, compared to feudalism and slavery. Under feudalism, workers (serfs) were tied to their employers (lords) in order to gain access to land (and, if the serfs violated those ties, for instance by attempting to attach themselves to a different lord’s demense, there was always the blacklist). As for slavery, workers (slaves) were owned as human chattel by their employers (slaveowners) and could not work for anyone else unless they were rented or sold by their owners (and subject to torture if they didn’t work hard enough).

Capitalism, in contrast, means that workers own their ability to work and are free to sell it to any employer. But it also mean, because their ability to work isn’t worth anything to them unless they sell it to someone else for a wage or salary, workers are forced to have the freedom to sell their ability to work to another group, their employers. (And the employers, of course, appropriate the surplus those workers create—just as their predecessors did from their workers under feudalism and slavery.)

Nothing in the new digital platforms changes that. Workers are still forced to have the freedom to sell their ability to work (and to produce a surplus for someone else, or they won’t be hired). The only thing that’s changed is the amount of data and the kind of analytics that are available to their employers (concerning the positions employers are filling, the skills required, and the paths workers have followed in education or previous positions).

But workers beware: “As data collection and analysis become more sophisticated, users will have to be mindful that every online interaction can affect their professional reputation.” What’s new for workers is they’re now forced to have the freedom to also watch what they do online.

And that’s why workers—both on and off the job—are increasingly being turned into jack rabbits.

 

*It’s also the fulfillment of a dream for neoclassical economists, who in their models spend a great deal of time on issues of job search, screening, and matching—for them, when those issues are solved, the perfect labor market.

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I haven’t been to Josh Kline’s new exhibition, “Unemployment,” and I probably won’t make it in time. But I’d certainly like to have had the opportunity to see his artistic representations of various dimensions of the current economic crises.

Here are excerpts from the press release (pdf) for the installation at 47 Canal gallery:

Fast forward ten or twenty years from our present–half a generation. Another American presidential election is scheduled for Fall 2031. Baggy skater pants are back in style in the suburbs. And increasingly intelligent software has turned out the lights on a hundred million jobs. Most of the middle class will never work again. Considered too old, too expensive, too obsolete, and too set in their ways for the faster-paced time in which they find themselves, the majority of people in middle age—born in the 1970s and ‘80s–have no future prospects for professional employment. Lawyer, accountant, banker, administrator, manager, secretary— these now expendable careers have been starved to near-death, following professions like taxi driver, truck driver, train conductor, and factory worker into automated oblivion. What is to be done with the hundreds of millions of people who will never “earn” another paycheck? What is to be done with you?

And what will you do? Will you prowl the streets scavenging pennies and nickels from discarded plastic and glass? Will you Airbnb your body out to strangers in order to make rent? Your mind has left the real economy, but your body still needs to eat food and spend its days somewhere. In a sharing economy, people subscribe instead of owning, so Suburbia’s growing homeless population can’t sleep in their cars anymore.

Income inequality scales exponentially. And unemployment escalates up the asymptote along with it. The money version of Moore’s Law. 21st Century economic crises come equipped standard with a jobless recovery and more effective, efficient automation. Every recession from here on out will close with an ever more brutally competitive round of musical chairs around a diminishing number of lower and lower-paid employment possibilities. If you’re left standing at the end without a job, it’s your own fault, right?

Surprise—this is your going away party! We bought you this personal-sized little cake in gratitude for your years/life of hard work and service. Your brain is no longer required here…

Sure, you’re 55, but you can retrain… And start over with an unpaid internship. It’ll be fine. XOXO KIT.

Capitalism doesn’t care about you. Economic systems don’t have feelings. In a society designed around planned obsolescence, the inevitable fate of goods and services and the people who provide them is to become waste. The same economic alchemy that transmutes a human being into a product—into “human capital”—also turns them into sentient garbage. The other side of consumption’s cheap coin is disposal. Desired, acquired, used, used up, discarded, forgotten—this is the lifecycle of expendable labor inside a runaway free market.

The first step towards a cure is diagnosing the disease. You are not your job. You are not your career. You are a human being.

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If you look very closely, you’ll see an ever-so-slight turnaround in the capital and labor shares in the past year.

The profit share of national income has fallen (from 15.4 percent in the second quarter to 13.7 percent in the last quarter of 2015) while the wage share has risen (from 49.6 percent in 2014 to 50.4 percent in 2015).

So, Neil Irwin is correct:

In the last two or three years, as the economy has firmed up, workers have regained some of that bargaining power they lost in the recession. But they have not, not at this point at least, gained the power they lost over the last three decades.

Indeed, the profit share remains much higher than it was 30 years ago (6.8 percent in the third quarter of 1986) and the wage share much lower (it was 54.6 percent in 1986).

Remember, then, before releasing those balloons, the history of capitalist instability. It tells us that an economic downturn will—once again, with a regularity that continues to escape the notice or understanding of mainstream economists and politicians—reverse those temporary capital losses and labor gains.