Posts Tagged ‘capitalists’

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Liberals like to talk about all kinds of social ills and identity-laden tensions—but not class struggle. That’s their persistent and enduring blindspot.

Except, it seems, when it comes to Donald Trump.

Thomas B. Edsall is a good example. Over the years, he’s produced a series of solid, insightful surveys of liberal research and analysis on a wide variety of economic and political topics. But he hasn’t written much if anything about class—until his latest, titled “The Class Struggle According to Donald Trump.”

And, to give him credit, Edsall is right about one thing:

Trump campaigned as the ally of the white working class, but any notion that he would take its side as it faces off against employers is a gross misjudgment.

But his view of class struggle is sorely lacking. First, Edsall starts with and highlights the recent work of Alan Krueger and Eric Posner, who criticize “labor market collusion” on the part of large employers and maintain that the ideal labor market is one in which “workers can move freely to seek the most desirable opportunities for which they are qualified.”

Presumably, if the appropriate reforms were made—for example, scrutinizing mergers for adverse labor market effects, banning non-compete covenants that bind low-wage workers, and no-poaching arrangements among establishments that belong to a single franchise—the problem of class struggle would be solved.

Second, Edsall accepts the idea that, until the 1970s, class struggle in the United States had mostly disappeared or been held in abeyance, under the “postwar capital-labor accord.” But there never was such an accord—or, as it is sometimes referred to, a “truce.”

As economists Richard McIntyre and Michael Hillard (unfortunately behind a paywall) have argued,

Recent U.S. historical and industrial relations scholarship rejects the existence of such an accord. . .The existence or non-existence of an accord is not only an important matter of history; it has very definite practical effects. During the 1980s and 1990s especially, many in the labor movement and some radical economists sought “cooperation” between capital and labor as a cure for the ills of the American economy, often harkening back to the imagined “golden age.” But if such cooperation is a historical chimera, the time and energy put into “cooperation” might have been better spent in the self-organization of the working class.

Today, under Trump, Edsall and other liberals are attempting to revive that tradition, hoping that reforming the labor market can serve as the basis for more “cooperation” between capital and labor.

Ironically, both Trump and liberal thinkers like Edsall invoke a nostalgia for the exact same postwar period. In the case of Trump, it was a time when U.S. manufacturing successfully exported to the entire world; for Edsall and company, it’s when labor and capital agreed to cooperate and negotiate peacefully.

But that doesn’t mean there wasn’t intense class struggle during that period—or, for that matter, afterward. Only that the conditions and consequences have changed. And employers have been on the winning side for decades now, long before Trump was elected.

Consider the data Edsall himself cites, which are illustrated in the chart at the top of the post. Since 1970, the wage share of national income (the orange line) has fallen by more than 15 percent. Meanwhile, beginning in 1986, the profit share (the blue line) has risen by 164 percent. For decades now, under both Democratic and Republican administrations, a class struggle has been waged by corporate boards of directors and workers—and the working-class has been losing.

It’s true, they’re still losing under Trump. But they also lost during the recovery from the crash of 2007-08. Just as they did in the decades leading up to the greatest crash since the first Great Depression.

In fact, one can argue that capitalists’ remarkable success in extracting more or more profit from workers is precisely what created the obscene levels of inequality in the distribution of income and wealth that have left the majority of the U.S. population falling further and further behind—and, as a consequence, the election of Donald Trump.

The problem is not, as liberals would like to believe, that exceptional circumstances—market imperfections—have turned the tide against workers. It’s that class struggle is inherent to capitalism, and workers are only useful as creators of the enormous profits captured by their employers.

As I see it, class struggle between employers and workers can’t be solved by reforming the labor market. It can only be eliminated by getting rid of the labor market itself—that is, by moving beyond capitalism.

That’s a real solution to the problem of class struggle that neither Trump nor American liberals are interested in thinking about.

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The history of capitalism is actually a combination of two histories: it’s a history of employers attempting to hire workers and develop new technologies to make profits and expand the reach of capitalism; it’s also a history of workers banding together to improve wages and working conditions and imagine ways of moving beyond capitalism.

The World Bank’s World Development Report, currently in draft form, comes down firmly on the side of employers and their historical role.

The theme of the 2019 report is the “changing nature of work.” As envisioned by the reports authors,

Work is constantly being reshaped by economic progress. Society evolves as technology advances, new ways of production are adopted, markets integrate. While this process is continuous, certain technological changes have the potential for greater impact, and provoke more attention than others. The changes reshaping work today are fundamental and long-term, driven by technological progress, globalization, shifting demographics, urbanization and climate change.

Beneath the typically lofty but vague rhetoric, the two trends that haunt the report are the increasing gap between the top 1 percent and everyone else and the jobs that will be eliminated with the use of automation and other labor-saving technologies—leading to “rising concerns with unemployment, inequality and unfairness that are accompanying these changes.”

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So what does the World Bank recommend for beleaguered workers, who are falling further and further behind the tiny group at the top and whose job prospects are threatened by new technologies?

Here, the World Bank reveals which side of history it’s on. It goes after the kinds of protections workers have long fought for, in both developed and developing countries, but which the world’s employers consider onerous and that make the price of labor power too high. In particular, the World Bank focuses on “high minimum wages, undue restrictions on hiring and firing, strict contract forms” that make workers both costly to hire and difficult to dismiss. In other words, the World Bank recommends exactly what employers have always wanted: flexible labor markets.

Rapid changes to the nature of work put a premium on flexibility for firms to adjust their workforce, but also for those workers who benefit from more dynamic labor markets.

That’s what the World Bank offers to the world’s employers (“flexibility”), coupled with an empty promise to the world’s workers (“more dynamic labor markets”).

But, as even the World Bank recognizes, such changes would leave the world’s workers even more destitute than they are right now. That’s why they shift the focus to a discussion of a a “new social contract. . .to promote fairness and equality of opportunity for people and firms.”

Possible elements of hypothetical social contract could include: (i) creating jobs; (ii) investing early in human capital; (iii) taxing platforms and superstar firms; and (iv) introducing basic income guarantees.

Once again, it’s exactly what private employers want—more workers with additional skills, a redistribution of monopoly rents, and a minimum income for their workers—as long as employers themselves don’t incur any additional costs. Employers retain their control over the surplus, and therefore over both jobs and workers. And the changes proposed by the World Bank promise them even more surplus as they use new technologies and change the nature of the work that is done for them.

What remains intact in choosing the employers’ side of history is that work, however much it is envisioned to change, is still done by employees for their employers. Governments and the rest of society are then charged with the responsibility of cleaning up the mess left by employers, including the dearth of required jobs and the mass of workers who are too impoverished and insecure to satisfy their own needs.

The idea that the worlds of technology and work are quickly moving far beyond the control of employers—well, that’s the side of history the World Bank remains incapable of comprehending.

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U.S. capitalism has a real problem: there don’t seem to be enough workers to keep the economy growing.

And it has another problem: capitalists themselves are to blame for the missing workers.

As is clear from the chart above, the employment-population ratio (the blue line) has collapsed from a high of 64.4 in 2000 to 59 in 2014 (and had risen to only 60.1 by the end of 2017).* During the same period, the average real incomes of the bottom 90 percent of Americans have stagnated—barely increasing from $37,541 to $37,886.

That should be indicator that the problem is on the demand side, that employers’ demand for workers’ labor power has decreased, and not the supply side, that workers are choosing to drop out of the labor force.

But, as I explained back in 2015, that hasn’t stopped mainstream economists from blaming workers themselves—especially women and young people, for being unwilling to work and turning instead to public assistance programs and raising children and being distracted by social media and digital technologies, as well as Baby-Boomers, who are choosing to retire instead of continuing to work.

So, which is it?

Katharine G. Abraham and Melissa S. Kearney have just completed a study in which they review the available evidence and their conclusion could not be clearer:

labor demand factors, in particular trade and the penetration of robots into the labor market, are the most important drivers of observed within-group declines in employment.

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Over the course of the past two decades, U.S. capitalists have decided both to increase trade with China (through outsourcing jobs and importing commodities) and to replace workers with robots and other forms of automation (it is estimated that each robot installed displaces something on the order of 5-6 workers).

That’s the main reason the employment-population ratio has declined so precipitously and that workers’ wages have stagnated in recent years.

Clearly, U.S. capitalists have been remarkably successful at increasing their profits. But they have just as spectacularly failed the vast majority of people who continue to be forced to have the freedom to work for them.

 

*The Bureau of Labor Statistics defines the employment-population ratio as the ratio of total civilian employment to the 16-and-over civilian noninstitutional population. Simply put, it is the portion of the population that is employed. Thus, for example, in 2000, the total number of civilian employees in the United States was 136.9 million and the figure for the civilian noninstitutional population was 212.6 million. By 2014, the civilian noninstitutional population had grown to 247.9 million but the total number of workers had risen to only 146.3 million. The employment-population ratio differs from both the unemployment rate (the number of unemployed divided by the civilian labor force) and the labor force participation rate (the share of the 16-and-over civilian noninstitutional population either working or looking for work).

socialism

Every public opinion survey I’ve seen in recent years shows a growing interest in socialism, especially among young people.*

Socialism is an obvious solution to the most pressing economic and social problems threatening the world today, from growing inequality to climate change. But, as I’ve written before, socialism has many different meanings—both what it is or might be, and what it is not.

John Quiggin [ht: ja] suggests that what we need today is not “soft neoliberalism” (what I have referred to as “left neoliberalism,” of the sort that came to be articulated in the trajectory of the U.S. Democratic Party defined by Bill Clinton, Al Gore, Barack Obama, and Hillary Clinton and the Labor Party of Tony Blair and Gordon Brown), much less the tribalist politics of Donald Trump’s Republicans and Teresa May’s Tories, but a radically new vision—what Quiggin refers to as “socialism with a spine.”

I couldn’t agree more. Moreover, Quiggin is right to point out that,

As it is used today, the term socialism does not reflect a well-worked ideology. Rather it conveys an attitude that could be described as “unapologetic social democracy” or, in the US context, “liberalism with a spine”. It’s expressed in support for proposals that break with the cautious incrementalism of the past, and are in some cases frankly utopian: universal basic income, free post-school education, large increases in minimum wages, and so on.

That’s important, but a real alternative needs more than attitude and a grab-bag of policy ideas. After decades in which the focus has been on critiquing neoliberalism, the task of thinking about positive alternatives is urgent, but efforts in this direction are only just beginning.

But I’m not convinced by much of the rest of Quiggin’s argument, which is focused on looking backward to what he considers to be the “social democratic moment of the 50s and 60s” and forwards in terms of “a genuine sharing economy based on the internet and other technological advances.”

The backwards move uncritically celebrates the supposed successes of Keynesian macroeconomic management and, looking forward, narrowly focuses on the possibilities opened up by digital technologies.

While I’m all in favor of articulating a vision of a “genuine sharing economy”—because, if socialism is nothing else, it certainly means, as Jeremy Corbyn put it, “You care for each other, you care for everybody, and everybody cares for everybody else”—I think we can do better than limiting ourselves to Keynesian full employment and the production of information.

We have to remember that the middle of the twentieth century, which turns out to have been a unique period of sustained economic growth and full employment in developed market economies, also meant long hours of drudgery in factories and offices to the benefit of employers, who retained both the interest and means to evade and ultimately overturn the regulations that had been implemented during the first Great Depression. Which of course they did, culminating in the crash of 2007-08. Why would we want to repeat the mistakes of that period?

And, looking forward, the emergence of new digital technologies, by themselves, doesn’t make socialism any more possible than the waves of innovation we’ve witnessed in the past. And focusing on the new technologies just puts the idea of socialism beyond anyone who is not already enamored of digital connectivity and social media—and therefore all but the youngest members of the working-class.

The task, it seems to me, is to articulate a vision of socialism that is predicated not on a nostalgia for the past or the role of a particular set of technologies, but on the persistent and growing gap that exists between the conditions of contemporary life and the possibilities created by existing forms of economic and social organization.

Thus, for example, instead of railing against Wall Street and increasingly concentrated industries, why not imagine the possibilities that capitalism itself has created both to eliminate the need for capitalists and to easily administer large parts of the economy to the benefit of everyone?

By the same token, why not build on the idea that, today, it is increasingly recognized that decent jobs, healthcare, education, and retirement are rights, not privileges, but that those in charge prevent those rights from being fulfilled?

Socialism is born out of that yawning crevasse between reality and promise—by articulating a set of changes in the existing reality that move us closer to that real promise.**

And here I think Quiggin and I may actually be in agreement:

Socialists have always seen short-term political struggles as part of a long-term project of transforming society for the better.

 

*For example, according to the 2016 Gallup Survey, 35 percent of Americans have a positive view of socialism (itself a remarkably high figure, given the Cold War legacy in the United States), which rises to 55 percent for Americans age 18 to 29. And while only 13 percent of Republicans and Republican-leaners have a positive view of socialism, 58 percent of Democrats and Democratic-leaners view socialism in a favorable light.

**To be clear, it’s not just a question of defining socialism; we also need to discuss the strategic issue, of where and how a reborn socialist movement can build a political and social base. As Bill Fletcher explains, with respect to “the growth in interest in socialism, broadly defined, among a large number of people, particularly younger people.”

That is fantastic!  But it is far from clear that they are wedded to a class project, except in a very abstract sense. And that difference is fundamental. It’s not just an ideological question; it is also a strategic question.