Posts Tagged ‘capitalism’

Cartoon of the day

Posted: 22 October 2016 in Uncategorized
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Cartoon of the day

Posted: 15 October 2016 in Uncategorized
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Special mention

nobody_is_haiti__miguel_villalba_snchez__elchicotriste_ unnamed


Yesterday, I argued that capitalism has, over the course of its history, generated movements of masses of people, both within and between nations. However, in the United States, the effects of capitalism’s laws of population are mostly ignored, as are the links between internal and external migrations of workers. Instead, the discussion tends to focus only on the consequences of immigration (and, even then, on only some of the consequences).

And that’s exactly the focus of the new study, “The Economic and Fiscal Consequences of Immigration,” by the Panel on the Economic and Fiscal Consequences of Immigration of the National Academies of Sciences, Engineering, and Medicine.

I won’t attempt to summarize the entire, 508-page study (itself a follow-up to the last major report on the topic by the National Academies, The New Americans: Economic, Demographic, and Fiscal Effects of Immigration, in 1997). However, as I read it, the study boils down to two key questions: First, what are the consequences of immigration, particularly those involving wage and employment prospects, for individuals already established in the United States? Second, what are the fiscal impacts of immigrants for local, state, and federal governments?

The answer to the first question is covered in Chapter 5 of the report, titled “Employment and Wage Impacts of Immigration.” The panel surveys a large, diverse literature, which they summarize as follows (on p. 4):

When measured over a period of 10 years or more, the impact of immigration on the wages of natives overall is very small. However, estimates for subgroups span a comparatively wider range, indicating a revised and somewhat more detailed understanding of the wage impact of immigration since the 1990s. To the extent that negative wage effects are found, prior immigrants—who are often the closest substitutes for new immigrants—are most likely to experience them, followed by native-born high-school dropouts, who share job qualifications similar to the large share of low-skilled workers among immigrants to the United States.

The first result, concerning the effects over a decade or more, should be treated with more than a few grains of salt. That’s because, as George Borjas explains, the finding (that “the impact of immigration on the wages of natives overall is very small”) is actually an artifact of the mathematical assumptions on which the models are built. More important are the shorter-run effects on the wages of workers against whom immigrants are often thrown into competition: prior immigrants and native-born high-school dropouts. Their wages do fall when large numbers of foreign-born workers immigrate and are forced to have the freedom to sell their ability to work within U.S. labor markets. And, of course, one can argue that new immigrants’ wages are lower than they otherwise might have been because of the existence of a large pool of previous immigrants (many of them without documents) and native-born workers without high-school degrees.

So, who gains from immigration?  Clearly, employers benefit from the existing “stock” as well as the annual “flow” of immigrants, especially since foreign-born workers “are more responsive than natives to regional differences in labor demand” (p. 222) and because “immigrants can be employed under arrangements in which payroll taxes are ignored and labor regulations are not observed” (p. 242).* That’s particularly true in the construction industry, where foreign-born workers constitute about 25 percent of the labor force.**

And, of course, there are two other major groups that benefit from an influx of workers: wealthy households that directly employ them, in “child care, landscaping, . . .and other household services” (p. 226); and the owners of the housing stock, who rent to immigrant workers and their families.***

The other major area of academic and policy research, and a key area in the Panel’s report, has to do with the impact of immigration on public finances. As with labor-market effects, estimating the fiscal impacts of immigration is complex (since it involves different levels of government as well as different generations of foreign-born workers and their families). The general conclusion is that the fiscal impacts of immigrants are generally positive at the federal level and negative at the state and local levels (p. 354):

State and local governments bear the burden of providing education benefits, upon arrival and continuing, to young immigrants and to the children of immigrants, but their methods of taxation tend to recoup relatively fewer contributions later from the most highly educated taxpayers. Federal benefits, in contrast, are largely focused on the elderly, so the relative youthfulness of arriving immigrants means that they tend to have positive fiscal impacts on federal finances in the short term. In addition, federal taxes are more strongly progressive, drawing more contributions from the most highly educated. The investment in public education requires public funds and pays public dividends, but a key issue is that the public dividends tend to be absorbed by the federal government, while the public funds are provided by the states. The fact that states bear much of the fiscal burden of immigration may incentivize state-level policies to exclude immigrants. Equity issues between the federal government and across states should be given consideration in future iterations of immigration policy.

It should come as no surprise, then, that especially at the local and state levels, where taxation is generally much less progressive than for the federal government, native-born workers (in additional to small-business owners and others) are forced to shoulder a higher burden of financing the expansion of education and other public programs needed by immigrant (especially first-generation immigrant) workers and their families. Over the longer-run, though, the net fiscal impact of immigrant (especially second- and higher-generation immigrant) workers turns positive, particularly at the federal level—and their future contributions to Social Security and other national programs will take some of the burden off other workers.

And the bottom line? The Panel itself never attempts to combine the labor-market and fiscal effects to determine the overall impact of immigration.**** But it’s clear from the various pieces of information this study provides that, as with all of the other periods of internal and external migration induced by U.S. capitalism, recent waves of immigration have benefited a tiny group of employers at the top, who in turn have managed to shift the costs—through wage reductions and higher taxes—onto workers (both recent immigrants and native-born workers).

The problem in American public debate is, now as in previous battles over immigration, foreign-born workers are scapegoated—and attention is shifted from the real cause of immigration.***** As I see it, American workers have every right to be concerned about lower wages and higher taxes. But they also have to recognize that wage stagnation and their growing tax burden are only partly caused by immigration—and that capitalism, not the influx of foreign-born workers, is what is responsible for their plight.


*As a result, immigrant workers are “more likely to hold jobs characterized by poor working conditions or high risk than are natives” (p. 242).

**Overall, if immigrant labor accounts for a large percentage (according to the report, 16.5 percent) of the total number of hours worked in the United States, the Panel estimates that “the current stock of immigrants lowered wages by 5.2 percent and generated an immigration surplus of $54.2 billion, representing a 0.31 percent overall increase in income that accrues to the native population” (p. 128), most of which flows to their employers.

***For example, according to the Panel (p. 227),

The immigrant share of rental unit growth was 26.4 percent in the 1980s, 60.4 percent in the 1990s, and 31.7 percent in the 2000s; it is projected to be 26.4 percent in the 2010s. The unusually high immigrant share of rental unit growth in the 1990s is attributed to an upswing in immigration in that decade, combined with a downswing in the population growth of native-born young adults, due to the arrival in adult years of the undersized cohort known as Generation X (those born from the mid-1960s to the early 1980s).

****In a footnote, Borjas attempts a back-of-the-envelope calculation of the total wealth transfer—which amounts to $500 billion—caused by immigration:

The calculation of the immigration surplus reported in Chapter 4 of the NAS report assumes that GDP is $17.5 trillion; that 65% of GDP goes to workers; and that 16.5% percent of the workforce is foreign-born. The report also says that “the current stock of immigrants lowered wages by 5.2 percent.”

Because only 65% of GDP goes to workers, that means that the total earnings of all workers is $11.4 trillion (or 0.65 × 17.5). But because only 16.5% of workers are foreign-born, the fraction of total earnings that goes to native workers is $9.5 trillion (or 0.835 × 11.4). The NAS report says that native earnings fell by 5.2 percent, so that the wage transfer from native workers to employers is $494 billion (or 0.052 × 9.5).

****There is, of course, a large nativist lobby that has spearheaded that scapegoating.


Capitalism has, from the very beginning, generated movements of masses of people, both within and between nations. On one hand, the development of capitalism has disrupted and in many cases destroyed other modes of production and ways of life, and forced workers to have the freedom to sell their ability to work elsewhere—sometimes within their home countries (e.g., by moving from the countryside into small towns and large cities), often in other countries (when, of course, it was possible to assemble the finances to make the journey). On the other hand, the emergence and growth of capitalist enterprises have created the means to hire a larger and larger labor force—a demand that has been met by a changing combination of native-born and immigrant workers. Capitalism, in this sense, has demonstrated its own laws of population, including national and international migration.

And, as people have moved, shouldering the costs of their migrations across regions and national boundaries has been as unevenly distributed as the actual wealth those workers eventually created. It should come as no surprise, therefore, that across the history of capitalism the resulting large-scale movements of people have erupted in intense debates and battles over their effects.

The United States, of course, is no exception to these movements and controversies. The development of capitalism within U.S. borders, as well as the transformations it has simultaneously induced in other territories and countries (within the Americas and across the globe), have had the effect of creating both a mass of people who have no alternative but to sell their ability to work to someone else and a much smaller group of employers who have the capacity and interest to hire them. The result has been an ever-changing demography within the United States—as people of different ethnicities, races, and nationalities have been induced to move between regions and from other countries—as well as sporadic but intense debates about the consequences and costs of that ever-changing “melting-pot.”

That debate has, once again, erupted in the United States, in the midst of the current presidential campaign. While the terms of the debate are often couched (and thus mishandled and manipulated) in other terms, Americans are once again attempting to come to grips with the effects of the history of capitalism’s laws of population, which first concentrated and then abandoned generations of migrant workers in some regions and cities (especially in the now-deindustrialized Midwest), while simultaneously creating the conditions for the immigration of masses of people to work on the industrial farms and increasingly across the economy, from construction to services (everywhere else, both North and South).

Since Americans are encouraged to overlook the actual causes of migration and, in addition, to treat the two—internal and external—migrations as separate, independent processes, they end up concentrating only on the consequences of immigration (and, even then, on only some of the consequences). And that’s exactly the focus of the new study, “The Economic and Fiscal Consequences of Immigration,” by the Panel on the Economic and Fiscal Consequences of Immigration of the National Academies of Sciences, Engineering, and Medicine.

I plan to discuss the Panel’s major findings in a separate post tomorrow.


source (pdf)

On one hand, Dave Elder-Vass is absolutely right: “we should see our economy not simply as a capitalist market system but as a collection of ‘many distinct but interconnected practices’.”*

As I have explained before, that view of the “iceberg economy”—which has been highlighted in the work of J. K. Gibson-Graham—represents a fundamental challenge to neoclassical economists, for whom

the entire economy is visible and consists of capitalist markets—or unwarranted constraints on capitalist markets, which should be eliminated. According to iceberg economists, capitalist markets are only the tip of the iceberg, and there’s a proliferation of noncapitalist economies below the waterline.

But Elder-Vass also uses it against Marxists who, in his view, see “one central mechanism in the economy: the extraction of surplus from wage labour by capitalists” and leave out ethical issues.

The problem is, while Elder-Vass credits J. K. Gibson-Graham, especially their book The End Of Capitalism (As We Knew It), with the idea that unified, totalizing metaphors of the economy (like a “capitalist market system”) can make it difficult to think outside the box and imagine alternatives, he forgets that Gibson-Graham themselves used the categories of the Marxian tradition—including the idea of class defined in terms of surplus labor—to decenter the economy.**

He also overlooks the fact that Gibson-Graham (as well as others who have worked with and alongside them in the larger Rethinking Marxism tradition) have insisted on the ethical dimensions of the Marxian critique of political economy—which includes, but of course is not limited to, a critique of the social theft associated with capitalist and all other forms of exploitation (that is, areas of the economy—whether capitalist, slave, feudal, and so on—in which those who perform surplus labor are excluded from appropriating their surplus labor).

In fact, according to two of Gibson-Graham’s close associates, Jack Amariglio and Yahya Madra, ethics are central to Marx’s critique of capitalism and mainstream economics.*** But Marx’s commitment to communism is not governed by an actual model or a fixed morality. Rather, they argue,

The ethical is embodied in Marx’s enduring faithfulness to sustaining a critical position toward the existing state of affairs, not in his particular and changing dismissals of capitalism or in his obscure, partial formulations of the shape communism might take. The lesson of Marx is that, facing the abyss of an unknown communism, the ethical is the will to risk a different social organization of surplus.

To put it in terms of the iceberg economy, the ethical is the will both to recognize the noncapitalist forms of economy below the waterline and to risk a different social organization in which capitalist exploitation ceases to be the exclusive or even predominant mode of appropriating and distributing the surplus.

Contrary to Elder-Vass, then, seeing the economy “not simply as a capitalist market system” is consistent with the Marxian critique of political economy, including the ethical stance that is informed by and embodied in that critique.


*I will try to be careful here because I have not yet had a chance to read Elder-Vass’s book,  Profit and Gift in the Digital Economy. I am relying, instead, on Daniel Little’s review of the book and Elder-Vass’s response.

**Gibson-Graham also borrowed from other traditions, such as feminism, queer theory, and poststructuralism to create their iceberg economy.

***See their entry on “Karl Marx” in the Handbook of Economics and Ethics, ed. J. Peil and I. van Staveren, 325-32 (Edward Elgar, 2009).