Posts Tagged ‘government’

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The usual suspects have attacked Bernie Sanders’s proposal for the federal government to guarantee a job paying $15 an hour and health-care benefits to every American worker “who wants or needs one.”

According to Robert J. Samuelson, “The proposal would add to already swollen federal budget deficits. . .Then there’s inflation. The extra spending and higher wages might push prices upward.”

After listing a number of other “unavoidable” problems, Samuelson concludes:

Americans are suckers for great crusades that make the world safe for the pursuit of happiness. In this context, Sanders’s job guarantee seems a masterstroke. The chronically unemployed need jobs; and states and localities have large unmet needs for public and quasi-public services. It’s a bargain made in heaven.

Back here on Earth, the collaboration looks less noble. The object is to appear good and buy political support. Many of the suggested jobs seem best described as make-work. The irony is that, by assigning government tasks likely to fail, the advocates of activist government bring government into disrepute.

And here’s Ed Rogers:

Democrats want to talk about Republicans living in the past, but the new progressives, as they like to call themselves, are in fact a lot like the old socialists. They want free college, free cash, free health care, new mandates for this and that, and so on. The latest progressive policy du jour to be gaining traction among Democratic Party presidential hopefuls is the so-called “job guarantee.”

What they have in common, in addition to the usual red-blooded American red-baiting, is they both cite a liberal critic of the Sanders proposal, Mother Jones blogger Kevin Drum:

even our lefty comrades in social democratic Europe don’t guarantee jobs for everyone. It would cost a fortune; it would massively disrupt the private labor market; it would almost certainly tank productivity; and it’s unlikely in the extreme that the millions of workers in this program could ever be made fully competent at their jobs.

Let’s face it, Drum is right. The proposal would cost a fortune; it would massively disrupt the private labor market; it almost certainly would lower the official level of productivity; and millions of workers would probably never be fully competent at their jobs.

But that’s only because of how bad things are for workers in the United States right now. According to my calculations (illustrated in the chart at the top of the post), a quarter of full-time American workers currently earn less than $15 an hour. We’re talking about something on the order of 32 million people. And that’s not even counting part-time and unemployed workers. Plus all the workers, whether or not they currently have a low-paying job, who have costly or substandard health insurance.

Employing all those people—at $15 an hour, with medical benefits—would cost a fortune. But not employing them at decent wages already costs the United States a fortune, in individual and social costs. Moreover, there’s no doubt that, if people had a good shot at a federally funded job, they’d be more able to refuse the paltry pay and the indecent kinds of jobs private employers are currently offering. And workers on a federal jobs program might not achieve high levels of productivity—but they would be doing jobs, to repair the economic and social infrastructure, most people would benefit from. Finally, such workers might never become fully competent at their jobs. However, they would develop competencies above and beyond what they can manage to acquire when they’re unemployed or underemployed at their current low-paying jobs.

What Drum and others think is a hard-headed, realistic criticism of a job guarantee turns out to be a stinging indictment of American capitalism itself. The fact that there are “50 million people who would be better off with a government-guaranteed job than with the job they have now” calls into question the way the U.S. economy is currently organized.

That’s what’s really insane—sticking with the existing labor market, not the idea of proposing a Federal jobs program.

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The economic crises that came to a head in 2008 and the massive response—by the U.S. government and corporations themselves—reshaped the world we live in.* Although sectors of the U.S. economy are still in one of their longest expansions, most people recognize that the recovery has been profoundly uneven and the economic gains have not been fairly distributed.

The question is, what has changed—and, equally significant, what hasn’t—during the past decade?

DJCA

Let’s start with U.S. stock markets, which over the course of less than 18 months, from October 2007 to March 2009, dropped by more than half. And since then? As is clear from the chart above, stocks (as measured by the Dow Jones Composite Average) have rebounded spectacularly, quadrupling in value (until the most recent sell-off). One of the reasons behind the extraordinary bull market has been monetary policy, which through normal means and extraordinary measures has transferred debt and put a great deal of inexpensive money in the hands of banks, corporations, and wealth investors.

profits

The other major reason is that corporate profits have recovered, also in spectacular fashion. As illustrated in the chart above, corporate profits (before tax, without adjustments) have climbed almost 250 percent from their low in the third quarter of 2008. Profits are, of course, a signal to investors that their stocks will likely rise in value. Moreover, increased profits allow corporations themselves to buy back a portion of their stocks. Finally, wealthy individuals, who have managed to capture a large share of the growing surplus appropriated by corporations, have had a growing mountain of cash to speculate on stocks.

Clearly, the United States has experienced a profit-led recovery during the past decade, which is both a cause and a consequence of the stock-market bubble.

banks

The crash and the Second Great Depression, characterized by the much-publicized failures of large financial institutions such as Bear Stearns and Lehman Brothers, raised a number of concerns about the rise in U.S. bank asset concentration that started in the 1990s. Today, as can be seen in the chart above, those concentration ratios (the 3-bank ratio in purple, the 5-bank ratio in green) are even higher. The top three are JPMorgan Chase (which acquired Bear Stearns and Washington Mutual), Bank of America (which purchased Merrill Lynch), and Wells Fargo (which took over Wachovia, North Coast Surety Insurance Services, and Merlin Securities), followed by Citigroup (which has managed to survive both a partial nationalization and a series of failed stress tests), and Goldman Sachs (which managed to borrow heavily, on the order of $782 billion in 2008 and 2009, from the Federal Reserve). At the end of 2015 (the last year for which data are available), the 5 largest “Too Big to Fail” banks held nearly half (46.5 percent) of the total of U.S. bank assets.

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Moreover, in the Trump administration as in the previous two, the revolving door between Wall Street and the entities in the federal government that are supposed to regulate Wall Street continues to spin. And spin. And spin.

median income

As for everyone else, they’ve barely seen a recovery. Real median household income in 2016 was only 1.5 percent higher than it was before the crash, in 2007.

workers

That’s because, even though the underemployment rate (the annual average rate of unemployed workers, marginally attached workers, and workers employed part-time for economic reasons as a percentage of the civilian labor force plus marginally attached workers, the blue line in the chart) has fallen in the past ten years, it is still very high—9.6 percent in 2016. In addition, the share of low-wage jobs (the percentage of jobs in occupations with median annual pay below the poverty threshold for a family of four, the orange line) remains stubbornly elevated (at 23.3 percent) and the wage share of national income (the green line) is still less than what it was in 2009 (at 43 percent)—and far below its postwar high (of 50.9 percent, in 1969).

Clearly, the recovery that corporations, Wall Street, and owners of stocks have engineered and enjoyed during the past 10 years has largely bypassed American workers.

income

One of the consequences of the lopsided recovery is that the distribution of income—already obscenely unequal prior to the crash—has continued to worsen. By 2014 (the last year for which data are available), the share of pretax national income going to the top 1 percent had risen to 20.2 percent (from 19.9 percent in 2007), while that of the bottom 90 percent had fallen to 53 percent (from 54.2 percent in 2007). In other words, the rising income share of the top 1 percent mirrors the declining share of the bottom 90 percent of the distribution.

wealth

The distribution of wealth in the United States is even more unequal. The top 1 percent held 38.6 percent of total household wealth in 2016, up from 33.7 percent in 2007, that of the next 9 percent more or less stable at 38.5 percent, while that of the bottom 90 percent had shrunk even further, from 28.6 percent to 22.8 percent.

So, back to my original question: what has—and has not—changed over the course of the past decade?

One area of the economy has clearly rebounded. Through their own efforts and with considerable help from the government, the stock market, corporate profits, Wall Street, and the income and wealth of the top 1 percent have all recovered from the crash. It’s certainly been their kind of recovery.

And they’ve recovered in large part because everyone else has been left behind. The vast majority of people, the American working-class, those who produce but don’t appropriate the surplus: they’ve been forced, within desperate and distressed circumstances, to shoulder the burden of a recovery they’ve had no say in directing and from which they’ve been mostly excluded.

The problem is, that makes the current recovery no different from the run-up to the crash itself—grotesque levels of inequality that fueled the bloated profits on both Main Street and Wall Street and a series of speculative asset bubbles. And the current recovery, far from correcting those tendencies, has made them even more obscene.

Thus, ten years on, U.S. capitalism has created the conditions for renewed instability and another, dramatic crash.

 

*In a post last year, I called into question any attempt to precisely date the beginning of the crises.

NEWSWEEK FEB. 16 COVER

Just nine years ago, in the midst of the Second Great Depression, Newsweek declared that “we are all socialists now.”

Now, it’s true, editor-in-chief Jon Meacham demonstrated little understanding of the term socialism, identifying it simply with more government spending and regulation in a capitalist economy—something akin to “a modern European state.”

This is not to say that berets will be all the rage this spring, or that Obama has promised a croissant in every toaster oven. But the simple fact of the matter is that the political conversation, which shifts from time to time, has shifted anew, and for the foreseeable future Americans will be more engaged with questions about how to manage a mixed economy than about whether we should have one.

And that may be what millions of Americans—especially young Americans—think of when they express a favorable image of socialism. But I suspect there’s something more to it, and that their interest in socialism also includes a desire for less inequality and more fairness in economic and social outcomes and support for proposals that others (including probably Meacham himself) consider utopian: universal healthcare, free public higher education, large increases in workers’ wages, a guaranteed basic income for all, and so on.

But that still leaves us a large step removed from—and frankly far behind—the trenchant criticisms and ambitious projects of the utopian socialists of the late-eighteenth and early-nineteen centuries. I’m thinking of such figures as Henri de Saint-Simon, Charles Fourier, and Robert Owen. They sought both to radically remake people’s understanding of how human beings and social relations operate and to transform society itself by designing new economic and social institutions, all in an attempt to improve the condition of the working-classes of the time. They criticized everything, from private property and the structure of the family to the role of money and the degradation of workers being forced to submit to their employers and then sought to correct those problems—not just by promoting more government involvement, but by imagining and implementing radically different ways of organizing economic and social life.

There is a great deal to admire, then, in the ambitious theoretical and practical work of that first generation of utopian socialists. And yet today, utopian is a label that is invoked to dismiss any and all suggestions that things could be radically different—that socialism, however defined (beyond, of course, Meacham’s restrictive conception), is simply a pipe dream.

Unfortunately, people continue to hold to the idea that Marx and Engels, still the most important source for contemporary socialist thinking, likewise dismissed the ideas of the utopian socialists as unattainable or fanciful hopes or schemes. Yet, nothing could be further from the truth.

The main source of that view is, of course, the Communist Manifesto—specifically, chapter 3 on “socialist and communist literature.” There, Marx and Engels do in fact refer to “castles in the air” and the “fanatical and superstitious belief in the miraculous effects of their social science.” But they’re only talking about the disciples of the utopian socialists, those who in the middle of the nineteenth century continued to “hold fast by the original views of their masters,” because from the perspective of Marx and Engels they attempted “to deaden the class struggle and to reconcile the class antagonisms.”

But the authors of the Manifesto held a much more positive view of the writings of Saint-Simon, Fourier, and Owen. Marx and Engels credited them with attacking “every principle of existing society.”

Hence, they are full of the most valuable materials for the enlightenment of the working class.

They used the utopian label to refer to the practical measures proposed by the early socialists—”such as the abolition of the distinction between town and country, of the family, of the carrying on of industries for the account of private individuals, and of the wage system, the proclamation of social harmony, the conversion of the function of the state into a more superintendence of production”—that did not lead to “political action on the part of the working-class,” which by the mid-nineteenth century was beginning to take place.

The voluminous writings of Marx and especially Engels include many other discussions of the utopian socialists, many of them much more flattering than in the polemical Manifesto.

For example, Engels, of scientific socialism renown, wrote a series of articles on the development of radical social movements on the continent, between 1842 and 1844 in, of all places, Robert Owen’s periodical The New Moral World. They include this paragraph on Fourier:

Nearly at the same time with Saint-Simon, another man directed the activity of his mighty intellect to the social state of mankind — Fourier. Although Fourier’s writings do not display those bright sparks of genius which we find in Saint-Simon’s and some of his disciples; although his style is hard, and shows, to a considerable extent, the toil with which the author is always labouring to bring out his ideas, and to speak out things for which no words are provided in the French language — nevertheless, we read his works with greater pleasure; and find more real value in them, than in those of the preceding school. . .It was Fourier, who, for the first time, established the great axiom of social philosophy, that every individual having an inclination or predilection for some particular kind of work, the sum of all these inclinations of all individuals must be, upon the whole, an adequate power for providing for the wants of all. From this principle, it follows, that if every individual is left to his own inclination, to do and to leave what he pleases, the wants of all will be provided for, without the forcible means used by the present system of society.

We also need to take into account a much later text, the three chapters of Engels’s 1878 Herr Eugen Dühring’s Revolution in Science, which were published two years later as the famous pamphlet, “Socialism: Utopian and Scientific.”

There, Engels explains the appearance of utopian socialism in the late-eighteenth and early-nineteenth centuries by the disappointment with the social and political institutions created by the “triumph of reason” of the French Revolution.

All that was wanting was the men to formulate this disappointment, and they came with the turn of the century. In 1802, Saint-Simon’s Geneva letters appeared; in 1808 appeared Fourier’s first work, although the groundwork of his theory dated from 1799; on January 1, 1800, Robert Owen undertook the direction of New Lanark.

What follows is what can only be considered effusive praise for the ideals and ideas of Saint-Simon, Fourier, and especially Owen. Here he expresses his admiration at some length for Owen:

At this juncture, there came forward as a reformer a manufacturer 29-years-old – a man of almost sublime, childlike simplicity of character, and at the same time one of the few born leaders of men. Robert Owen had adopted the teaching of the materialistic philosophers: that man’s character is the product, on the one hand, of heredity; on the other, of the environment of the individual during his lifetime, and especially during his period of development. In the industrial revolution most of his class saw only chaos and confusion, and the opportunity of fishing in these troubled waters and making large fortunes quickly. He saw in it the opportunity of putting into practice his favorite theory, and so of bringing order out of chaos. . .Whilst his competitors worked their people 13 or 14 hours a day, in New Lanark the working-day was only 10 and a half hours. When a crisis in cotton stopped work for four months, his workers received their full wages all the time. . .

In spite of all this, Owen was not content. The existence which he secured for his workers was, in his eyes, still far from being worthy of human beings. “The people were slaves at my mercy.” The relatively favorable conditions in which he had placed them were still far from allowing a rational development of the character and of the intellect in all directions, much less of the free exercise of all their faculties. . .

His advance in the direction of Communism was the turning-point in Owen’s life. As long as he was simply a philanthropist, he was rewarded with nothing but wealth, applause, honor, and glory. He was the most popular man in Europe. . .But when he came out with his Communist theories that was quite another thing. Three great obstacles seemed to him especially to block the path to social reform: private property, religion, the present form of marriage.

He knew what confronted him if he attacked these – outlawry, excommunication from official society, the loss of his whole social position. But nothing of this prevented him from attacking them without fear of consequences, and what he had foreseen happened. Banished from official society, with a conspiracy of silence against him in the press, ruined by his unsuccessful Communist experiments in America, in which he sacrificed all his fortune, he turned directly to the working-class and continued working in their midst for 30 years. Every social movement, every real advance in England on behalf of the workers links itself on to the name of Robert Owen.

I could go on. Clearly, Engels admired both Owen and his utopian socialist proposals and projects.

There’s no doubt that Marx and Engels engaged in running battles with other radical (socialist, anarchist, and so on) thinkers of their own time, reserving particular scorn for Pierre-Joseph Proudhon (best exemplified by the Poverty of Philosophy) but, even then, they retain their respect for the utopian socialists, both of which we can see in Marx’s 1866 letter to Ludwig Kugelmann:

Proudhon has done enormous harm. His pseudo-critique and his pseudo-confrontation with the Utopians (he himself is no more than a philistine Utopian, whereas the Utopias of such as Fourier, Owen, etc., contain the presentiment and visionary expression of a new world) seized hold of and corrupted first the ‘jeunesse brillante’ the students, then the workers, especially those in Paris, who as workers in luxury trades are, without realising it, themselves deeply implicated in the garbage of the past.

But we do know, of course, that Marx and Engels did in fact reject “utopian socialism” for their own time, in the middle of the nineteenth century, during the formation and development of the First International. On what basis?

As I see it, their rejection of utopian socialism (and their defense of so-called scientific socialism) rests on two main pillars: the role of the working-class and the project of critique.

There’s no doubt, Marx and Engels envisioned the movement beyond capitalism not in terms of realizing some ideal scheme, no matter how well inspired and worked-out, but as the task of the growing working-class. In other words, the idea was that capitalism produces its own grave-diggers. The growth of capitalism—the widening and deepening of capital—was accompanied by the growth of a class that had both the interest and the means to overturn the rule of capital. A class that could challenge the pretensions of capital to become a universal class, by posing its own universal aspirations—not for everyone to become a laborer but to criticize and eventually abolish the wages system itself and lay the basis for a different, noncapitalist way of organizing economic and social life.

Today, as capitalism continues to produce ever more obscene levels of inequality and to leave workers in ever greater depths of despair, we need both to defend utopian thinking—to recover the radical spirit of earlier utopian socialists and their critics—and to take up the challenge of defining what a socialism for our own time will look like.

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