Posts Tagged ‘class’

 

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Almost five years ago, I suggested we start calling things by their correct names.

Take the working-class—people who are forced to have the freedom to sell their labor power for a wage. We refer to them as members of the middle-class (which needs to be “rebuilt“) and working families (who need to be helped) or, now as workers’ wages stagnate and the real value of the minimum wage declines, as the “feral underclass” (especially in theUK, in the aftermath of the riots) or the working-age poor (as in the recent AP report on the demographic composition of those living in poverty [ht: ja]).*

What’s the problem with calling it as it is? What are we afraid of? It’s the working-class, and its member are becoming increasingly impoverished. People who work for a living, or want a full-time job but can’t find one (whether or not they’re actively looking for one, since it’s getting increasingly difficult to find a decent job), represent nearly 3 out of 5 poor people. . .

So, from now on, in political and economic discourse, let’s call things by their correct names. The vast majority of people in the United States are members of the working-class. And they’re getting shafted.

Well, it seems, Americans are still struggling with the notion of the working-class (and of class more generally).

The best Donald Trump was able to come up with were “the great miners and steel workers of our country.” (Really? Trump wants to send American workers back into the mines and steel mills? Those jobs are mostly gone, and that’s a good thing.) Even Elizabeth Warren and Bernie Sanders weren’t able to refer to the working-class, preferring instead to use terms like “working people,” “hard-working families,” “workers,” and “working families”—although, in their case, when counterposed to corporate profits and CEOs, it was pretty clear they were referring to the growing class divide in the United States.

As Tamara Draut [ht: ja] explains, the American working-class is in fact changing.

the blue-collar, hard-hat, mostly male archetype of the great post-war prosperity — is long gone. In its place is a new working class whose jobs are in the now massive sectors of our serving and caring economy. And so far, neither Trump nor Clinton have talked about this new working class, which is much more female and racially diverse than the one of my dad’s generation. With Trump’s racially charged and nativistic rhetoric, he’s offering red meat to a group of Americans who have every right to be angry — but not at the villains Trump has served up.

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“Long gone” may be an exaggeration. There are still more than 12 million workers employed in manufacturing in the United States (out of a total of 150 million employed people). And, according to the Economic Policy Institute (pdf), the American working class (which they define as people with less than a bachelor’s degree) is still a majority non-Hispanic white.* (It is projected to become majority people of color in 2032.)

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What we have, then, is an increasingly diverse working-class that together, “regardless of race, ethnicity, or gender,” has been receiving wages that fall far short of increases in productivity for more than three decades.

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The result, as I showed earlier this month, is that

the average income of the bottom 90 percent fell between 1979 and 2015 (from $34.6 thousand to $33.2 thousand), while the average income of the top 10 percent rose (from $149.1 thousand to $273.8 thousand) and that of the top 1 percent soared (from $370.2 thousand to over $1 million).

That dramatic rise in inequality—along with, as Dustin Guastella explains, “the rise of precarious labor, the proletarianization of white-collar work, the rise in real unemployment, [and] the persistence of underemployment—are what have propelled class issues back into the public debate.

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That combination is certainly what has convinced Millenials, the members of Generation Y, to see themselves less as middle-class and more as working-class. They may be better educated than their predecessors and for the most part they’re not working in traditional working-class jobs (like manufacturing or other blue-collar tasks) but their low wages and precarious employment make them identify with the working-class—”a feat in and of itself considering the narrow American cultural understanding for who qualifies as working class.”

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The fact is, as many Americans self-identify as working-class as they do middle-class, which is “striking given how uncommon the term working class seems to be in both the media and political speech these days.”

As I argued a year and a half ago,

Our political language has served to ignore the working-class status of most so-called middle-class Americans and, as a result, to confine the working-class (understood as workers without a college education), when it is mentioned at all, to a relatively small segment of the population. In other words, the working-class has come to be defined as the working-poor and the middle-class as something else.

As I see it, we’ll get a more accurate representation of our economic and political landscape if we redefine what we mean by the working-class. The fact is, what others understand to be working-class and middle-class actually have a lot in common. They may have different levels of education (high school, a year or two of college, and a four-year college degree), different color collars (blue, pink, and white), and work in different sectors (manufacturing and services, private and public) but they’re all pretty much in the same boat: they are forced to sell their ability to work to someone else in order to make enough money to support themselves and their families. That’s a very large part of the population. It basically excludes two relatively small groups: the capitalists at the top (who get the profits) and managers and supervisors (who manage the labor of others and get a cut of the profits).

So, we’re talking about 80 or so percent of Americans who, in one way or another, are members of the working-class.

They know it and we know it—even as mainstream economists, politicians (both liberal and conservative), and social surveys downplay or deny the existence of a large and increasingly distressed American working-class.

The next question then is, what kind of language are we going to use to characterize the not-working-class, the class that takes and otherwise lives off the surplus produced by the working-class? Right now, we have the “upper class” and, more recently, the “1 percent” and the “billionaire class.” Clearly, we need something better, a term that describes not just the rung at the top of the income ladder but a place in relation to that of the working-class, thus giving us a pair of positions that define the central relationship within the current economic system.

It’s going to take more than a bit of struggle. But, once we have that term, we’ll be well on our way to calling things by their correct (class) names.

 

*And that’s one of the reasons the presidential race right now is so close. Trump leads among white registered voters without a college degree, a significant portion of the working-class, by a margin of 58 percent to 30 percent.

Class myths

Posted: 7 July 2016 in Uncategorized
Tags: , ,

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As I argued back in May, “American politics has always been about class. And this presidential election is no different.”

Nancy Isenberg agrees that “the 2016 election is about class.” So, she sets out to debunk 5 myths about class in the United States.

Class myth number 1: The working class is white and male.

America has never housed some monolithic entity called the “working class.” As early as 1791, Alexander Hamilton argued that those best suited for factory work were women and children, which became the norm in textile mills until child labor laws were passed in the 20th century. Chinese workers built the Transcontinental Railroad; immigrants labored in the Ohio steel industry; whites and blacks toiled side by side in 20th-century Louisiana sawmills.

Today’s working class is even more diverse. A recent study found that more than half of all Hispanics and African Americans identify as working class. Additionally, about 50 percent of women see themselves as working class. Another report predicted that people of color will make up the majority of the American working class by 2032.

Class myth number 2: Most Americans don’t notice class differences.

The desire to erase class divisions goes all the way back to Benjamin Franklin, who believed that the North American continent would flatten classes into a “happy mediocrity.” . . .

Today, record inequality divides the rich and the poor. Our country’s wealthy “1 percent” takes home 20 percent of all pretax income, double their 1980 share. For most middle-class and lower-income families, income has either stagnated or fallen. In short, Americans have not escaped class hierarchies, but reinvented them generation by generation.

Class myth number 3: Class mobility is uniquely American.

Since America’s founding, its politicians have promised a society unbound by class. . .

But in reality, it’s harder to rise above your class in the United States than in just about any other developed country; economic mobility is much more possible in places like Japan, Germany and Australia.

Class myth number 4: With talent and hard work, you can rise above your class.

It’s a tale as old as Horatio Alger: Anyone can make it in America, no matter their upbringing. As CNN put the notion , “Through hard work and perseverance, even the poorest people can make it to middle class or above.”

But actually, it’s hard to rise above your income level. In cities such as Atlanta, New York and Washington, a child raised in a poor family has a less than 10 percent chance of becoming wealthy in his or her lifetime. It’s not much better in other parts of the country.

Class myth number 5: Class oppression isn’t as significant as racial oppression.

Class power takes many forms. Its enduring force, its ability to project hatred toward the lower classes, was best summed up by two presidents 175 years apart. In 1790, then-Vice President John Adams argued that Americans not only scrambled to get ahead; they needed someone to disparage. “There must be one, indeed, who is the last and lowest of the human species,” he wrote. Lyndon Johnson came to the same conclusion in explaining the racism of poor whites: “If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”

There is, of course, a lot more that can be said about class in the United States, including the fact that not everything in politics can or should be reduced to class.

However, dispelling some of the significant, oft-repeated myths about class is an important first step in recognizing and eventually eliminating the class problems that affect—and infect—the American polity.

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Clearly, mainstream economists don’t like it when their advice is ignored. But that’s what seems to have happened with Brexit, Britain’s decision to exit the European Union.

In the lead up to the 23 June referendum, 12 Nobel Laureates and 175 U.K.-based mainstream economists launched their version of Project Fear to warn voters about the economic dangers—recession, inflation, falling investment, lower growth, and higher taxes—from deciding against Remain. But the people ignored the dramatic pleas for economic stability on the part of the “high priests of capitalism” and voted instead to Leave.*

Jean Pisani-Ferry sees the result as one example of a much broader “angry attitude toward the bearers of knowledge and expertise”—but one that is specifically aimed at mainstream economists. Why? The presumed expertise of mainstream economists was compromised because they “failed to warn them about the risk of a financial crisis in 2008,” they’re biased toward “mobility of labor across borders, trade openness, and globalization more generally,” and because they “tend to disregard or minimize” the effects of openness on particular classes or communities.

While Pisani-Ferry gives greater weight to the third explanation, the fact is they’re related. The thread running through all three factors is the issue of distribution. Mainstream economists tend to treat the inequalities that are both the cause and consequence of capitalism as either irrelevant (because everyone gets what they deserve) or as exogenous (created outside and independent of the economy itself). Thus, they ignored the role of inequality both in creating the conditions leading up to the crash of 2007-08 and as a consequence of the way the recovery was crafted and took place; and they tend to model and support economic globalization—in people, trade, finances, and much else—as if everyone benefits, rather than seeing winners and losers. Because mainstream economists relegate issues like power and class to (and, in many cases, beyond) the margins, they literally don’t see for themselves or show to others the unequal distributions that are either presumed by capitalism or that follow from capitalist ways of organizing economic and social life.

Neil Irwin, too, has expressed his concern about the rejection of expert opinion with respect to Brexit (and, he adds, the success of Donald Trump’s campaign). And draws much the same lesson: mainstream economists (and, more generally, the members of the economic elite whose views they tend to celebrate) focus their attention on efficiency and economic growth—with respect to issues ranging from rent control to international trade—and not on the unequal outcomes of those policies. Thus, he asks, “what if those gaps between the economic elite and the general public are created not by differences in expertise but in priorities?”

In the end, the problem identified by Pisani-Ferry and Irwin is not really one of economic expertise. It is, rather, a question of priorities and perspectives. Mainstream economists hold one set of theories, according to which capitalist markets lead to (or, at least can, with the appropriate policies, end up with) efficient, dynamic outcomes from which everyone benefits. But other economists—both other academic economists and everyday economists—use different economic theories, many of which highlight the unequal conditions and consequences of capitalist activities and institutions. In other words, each of these groups has a different expertise, informed by a different way of organizing their knowledge about the economy, including the effects of economic practices and policies.

What we’re seeing, then—with Brexit, but also after the most recent financial crash and the uneven recovery, the success of the campaigns of both Trump and Bernie Sanders, not to mention the battles over austerity and much else across Europe and the rest of the world right now—is a widespread challenge to the self-professed expertise of mainstream economists. It’s also a challenge to the economic and social system glorified by mainstream economists and by the elites that both govern and gain from that system.

Those academic and economic elites are clearly worried their opinions, backed up by their presumed expertise, no longer hold sway in the way they once did. And for good reason.

All they have to do is remember the fate of their predecessors who suggested the downtrodden and everyone else who had been marginalized or otherwise beaten down by the system just eat cake.

 

*As Rafael Behr explains, “People had many motives to vote leave, but the most potent elements were resentment of an elite political class, rage at decades of social alienation in large swaths of the country, and a determination to reverse a tide of mass migration. Those forces overwhelmed expert pleas for economic stability.”

 

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Mainstream economics has clearly had a great fall.

Just two days ago, I argued that—after the crash of 2007-08 and, now, Brexit—mainstream economists have had “nothing to offer, either in terms of insight or a path moving forward.” Also recently, Antonio Callari challenged Brad DeLong’s attempt to reduce economics to the mainstream debate between supply-siders and demand-siders and his argument that there’s no room for economists as public intellectuals.

Now, Mark Thoma has stepped forward to explain why it is that “in recent years the public has lost faith the in the economics profession.” And since by the “economics profession” Thoma is essentially referring to mainstream economists, he’s absolutely correct.

One reason for the lack of faith is the failure to predict the Great Recession, but the public’s dismissal of macroeconomists is based upon more than the failure to foresee the dangers the housing bubble posed for the economy. It is also due to false promises about the benefits to the working class from globalization, tax cuts for the wealthy, and trade agreements – promises that were often used to support ideological and political goals or to serve special interests.

Even more, mainstream economists simply don’t have “a solid understanding of the mechanisms that drive the economy.”*

Therefore, in Thoma’s view, economists need to exercise more humility and flexibility:

more humility about what we do and do not know, more willingness to change our minds when the evidence disagrees with our favorite theoretical model, and the willingness to acknowledge disagreement within the profession. But most of all we need to take a strong stand against those inside and outside the profession who misuse economic theory and empirical results for political and ideological purposes.

I’m all in favor of theoretical humility and flexibility. I certainly do not hold to the idea that our processes of producing knowledge can, or even should aim to, give us access to a complete or definitive model of the world. And I’m quite willing to admit—against the pretensions of most mainstream economists—that all we have (and can have) are partial and local and incomplete knowledges, which themselves are always changing.

But, while a good start (given the arrogance and rigidity with which much mainstream economics has been and continues to be produced and disseminated), that’s not enough. The real challenge, it seems to me, is to go beyond that and criticize both the theoretical models utilized by mainstream economists and their self-identified status as scientists who are somehow outside and independent of the world of politics and ideology.

There are, according to all three of us (Callari, Thoma, and myself), good reasons why mainstream economists have fallen in the eyes of the public. And try as they might, it’s doubtful “All the king’s horses and all the king’s men” can or should put mainstream economics back together again.

What’s needed is a fundamentally different way of doing economics and of thinking about the role of economists—economic theories that focus on issues of power and class (instead of relegating them to the margins) and a conception of economists as real public intellectuals (who play “a galvanizing role in the production of public knowledge and policy, where ‘public’ means not just ‘for’ the public, the people, but also ‘of’ and ‘by’ the people”).

I recognize that’s a radically different way of defining economics compared to the mainstream tradition. But, as it turns out, it’s a move Humpty Dumpty himself would have recognized.

“The question is,” said Alice, “whether you can make words mean so many different things.”

“The question is,” said Humpty Dumpty, “which is to be master—that’s all.”

 

*Thoma’s list of issues on which mainstream economists simply don’t have answers includes the following:

  • Why has productivity fallen? Will it stay low in the future?
  • What has caused the decline in labor force participation?
  • How strong is the economy’s self-correction mechanism in recessions, and how does it work?
  • Is there a Phillips curve (i.e. a reliable relationship between inflation, inflation expectations, and unemployment)?
  • How are expectations formed, and do they converge to rational expectations over time?
  • What is more important in the determination of wage and capital shares of income, marginal products or bargaining power and other institutional features of labor markets?
  • What frictions should we focus on? Price and wage stickiness? Financial frictions? Both? How do these frictions vary over the business cycle?
  • How high can the minimum wage be raised before there are significant employment effects?
  • What is the cause of inequality? Is it baked into the capitalist system, or is it the result of political and institutional forces?

And, according to Thomas, “that’s nowhere near a complete list of the things we don’t fully understand. We don’t even agree about what caused the Great Recession.”

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A couple of weeks ago, I discussed a recent study about class and air rage. In the meantime, things have only gotten worse—on the ground.

Most people attempting to fly these days are forced to endure long security lines, all the while knowing that airlines are raking in enormous profits ($25.6 billion last year, a 241-percent increase from 2014) with low fuel costs, lots of additional fees (for baggage, reservation changes, food and drink, and much else), and shoe-horning economy-class passengers into tighter and tighter spaces.

Gail Collins is absolutely right:

The airlines have maximized profits by making travel as miserable as possible. The Boeing Company found a way to cram 14 more seats into its largest twin-engine jetliner by reducing the size of the lavatories. Bloomberg quoted a Boeing official as reporting that “the market reaction has been good — really positive.” We presume the market in question does not involve the actual passengers. . .

Rather than reducing the number of bags in security lines, the airlines would like the government to deal with the problem by adding more workers to screen them. And the perpetually beleaguered Transportation Security Administration is going to spend $34 million to hire more people and pay more overtime this summer. Which, it assured the public, is not really going to solve much of anything.

(Who, you may ask, pays for the security lines anyway? For the most part you the taxpayer do. Also you the passenger pay a special security fee on your tickets. Which Congress tends to grab away from the T.S.A. for use in all-purpose deficit reduction. I know, I know.)

A spokesman for Delta Air Lines, which took in more than $875 million on baggage fees last year, told The Atlanta Journal-Constitution that bowing to the extremely modest Markey-Blumenthal request for a summer suspension of the baggage fee wouldn’t “really help alleviate a lot.” It would also, he said, require a “considerable change to the business model.”

Heaven forfend we mess with the business model.

So, this summer, we can expect more rage not only in the air, as economy-class passengers are forced to put up with physical inequality on airplanes, but even before they get on the plane, knowing the extra fees they pay and the long security lines they’re compelled to endure are part of the airlines’ “business model.”

And that model is not about people, but only about profits.

Joseph Stiglitz usefully explains that there’s more than one theory of the distribution of income. One theory, he writes, focuses on competitive markets (according to which “factors of production” receive their marginal contributions to production, the “just deserts” of capitalism); the other, on power (“including the ability to exercise monopoly control or, in labor markets, to assert authority over workers”).

In the West in the post-World War II era, the liberal school of thought has dominated. Yet, as inequality has widened and concerns about it have grown, the competitive school, viewing individual returns in terms of marginal product, has become increasingly unable to explain how the economy works. So, today, the second school of thought is ascendant.

I think Stiglitz is right: with the obscene levels of inequality we’ve seen emerge over the course of the past four decades, the notion of “just deserts” is being called into question, thereby creating space for other theories of the distribution of income to be recognized.

The only major problem with Stiglitz’s account is he leaves out a third possibility, an approach that combines a focus on markets with power, that is, a class analysis of the distribution of income (which the late Stephen Resnick begins to explain in the lecture above).

According to this class or Marxian theory of the distribution of income, markets are absolutely central to capitalism—on both the input side (e.g., when workers sell their labor power to capitalists) and the output side (when capitalists sell the finished goods to realize their value and capture profits). But so is power: workers are forced to have the freedom to sell their labor to capitalists because it has no use-value for them; and capitalists, who have access to the money to purchase the labor power, do so because they can productively consume it in order to appropriate the surplus-value the workers create.

That’s the first stage of the analysis, when markets and power combine to generate the surplus-value capitalists are able to realize in the form of profits. And that’s under the assumption that markets are competitive, that is, there is no monopoly power. It is literally a different reading of commodity values and profits, and therefore a critique of the idea that capitalist factors of production “get what they deserve.” They don’t, because of the existence of class exploitation.

But what if markets aren’t competitive? What if, for example, there is some kind of monopoly power? Well, it depends on what industry or sector we’re referring to. Let’s take one of the industries mentioned by Stiglitz: health insurance. In the case where employers are purchasing health insurance for their employees (the dominant model in the United States, at least for those with health insurance), those employers are forced to transfer some of the surplus-value they appropriate from their own employees to the insurance oligopolies. As a result, the rate of profit for the insurance companies rises (as their monopoly power increases) and the rate of profit for other employers falls (unless, of course, they can cut some other distribution of their surplus-value).*

The analysis could go on.** My only point is to point out there’s a third possibility in the debate over the distribution of income—a theory that combines markets and power and is focused on the role of class in making sense of the grotesque levels of inequality we’re seeing in the United States today.

And, of course, that third approach has policy implications very different from the others—not to force workers to increase their productivity in order to receive higher wages through the labor market or to hope that decreasing market concentration will make the distribution of income more equal, but instead to attack the problem at its source. That would mean changing both markets and power with the goal of eliminating class exploitation.

 

*This is one of the reasons capitalist employers might support “affordable” healthcare, to raise their rates of profit.

**The analysis of wage or consumer goods would be a bit different. But I don’t have the space to develop that here.

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The other day, in a conversation with a friend (who happens to be an avid reader of this blog), I was asked why I don’t write more about events in Brazil, especially the most recent coup. I explained that, while I have been following events there pretty closely, I simply didn’t have the time to do what I considered the appropriate amount of research to offer an analysis that offered something different from what I’ve been reading.

I did, however, suggest to them that, given the class nature of the coup, the first thing the new government would do would be to set about undoing the legacy of the Workers Party.

Well, as Jonathan Watts reports, that’s exactly what’s happening:

It is just a week since Michel Temer became interim president of Brazil, but his new centre-right administration already has begun scaling back many of the social policies put in place by Workers’ party governments over the previous 13 years.

Moves are under way to soften the definition of slavery, roll back the demarcation of indigenous land, trim housebuilding programs and sell off state assets in airports, utilities and the post office. Newly appointed ministers also are talking of cutting healthcare spending and reducing the cost of the bolsa familia poverty relief system. Four thousand government jobs have been cut. The culture ministry has been subsumed into education.

For the interim government and its supporters, these austerity measures represent sound fiscal management as they attempt to rein in the government’s budget deficit and restore market confidence in Brazil, which has seen its sovereign debt rating downgraded to junk status over the past year.

For critics, however, they represent a shift toward a neoliberal economic policy by the old elite that ousted elected president Dilma Rousseff, who is suspended pending her impeachment trial in the senate.

That, in the end, is what the coup was about: not eliminating corruption (which is how it’s been covered here in the United States) but changing the class content of the policies of the Brazilian government.