Beyond the mainstream

In this post, I continue the draft of sections of my forthcoming book, “Marxian Economics: An Introduction.” This, like the previous two posts, is for chapter 1, Marxian Economics Today.

Beyond the Mainstream

This is certainly not the first time people have looked beyond mainstream economics. There is a long history of criticisms of both mainstream economic theory and capitalism from the very beginning. Although students won’t have read about them in traditional economics textbooks.

Those texts are generally written with the presumption there’s only one economic theory and one economic system. The existence of Marxian economics opens up the debate, creating space for both multiple ways of thinking about economics and a variety of different economic systems.

Criticisms of Mainstream Economic Theory

In the history of economic thought, criticisms of the mainstream approach were formulated early on. Adam Smith, David Ricardo, and others (such as Jean-Baptiste Say, Thomas Robert Malthus, and John Stuart Mill) developed classical political economy in the late-eighteenth and early-nineteenth centuries, when the new economic system we now call capitalism was just getting off the ground—and almost immediately their approach was debated and challenged.

The classical political economists developed a labor theory of value to analyze the value of commodities, the goods and services that were bought and sold on markets. They utilized that labor theory of value to then argue that capitalism, based on increasing productivity and free international trade, would lead to the growth of industry and an increase in the wealth of nations.

The early critics of classical political economy included a wide variety of writers, especially in the United Kingdom and Western Europe, from Thomas Carlyle (an English Romantic who expressed his opposition to the market system, because it rewarded “salesmanship” and not hard work) and John Barton (a British Quaker who argued that the introduction of labor-saving machinery would permanently displace workers who would not be absorbed by other branches of industry) to Jean-Charles-Léonard Simonde de Sismondi (a Swiss historian who viewed capitalism as being detrimental to the interests of the poor and particularly prone to crisis brought about by an insufficient general demand for goods) and Thomas Hodgskin (an English socialist, critic of capitalism, and defender of both free trade and early trade unions).

In the middle of the nineteenth century, Marx (along with his friend and frequent collaborator Friedrich Engels) became a close student of classical political economy, developing his now-famous critique. During the course of his writings, he expressed both admiration for and opposition to the methods and the conclusions of the classical political economists. Over the course of this book, we will examine in considerable detail the ways Marx and later Marxian economists both built on and broke from classical political economy.

But the debate about early mainstream economics didn’t stop there.

In the late 1800s, a new school of economic thought, neoclassical economics was created, which represented both an extension of and break from classical political economy, although in a manner quite different from that of Marx. The early neoclassicals—such as William Stanley Jevons, Karl Menger, and Léon Walras—rejected the classicals’ labor theory of value, in favor of consumer utility, but accepted the classicals’ celebration of capitalism’s rising productivity and free trade. Hence, both the “neo” and the “classical” of their name.

The neoclassical economists’ basic argument was that, if all markets are allowed to operate freely, all consumers would maximize utility, all firms would maximize profits, and the economy as a whole would reach full employment. The “invisible hand” became the central thesis of contemporary mainstream microeconomics.

And it had general validity within mainstream economics until the Great Depression of the 1930s, when in the United States and elsewhere capitalist economies crashed and the unemployment rate soared to over 25 percent. Not surprisingly, the neoclassical orthodoxy was challenged at the time by many economists, including John Maynard Keynes. Keynes’s idea was that, because of fundamental uncertainty, especially on the part of investors, it was highly likely that capitalist economies would regularly operate at less-than-full employment. The need for the “visible hand” of government intervention to achieve full employment was the basis of the mainstream macroeconomics.

Attempts to combine neoclassical microeconomics and Keynesian macroeconomics—the invisible hand of markets and the visible hand of government fiscal and monetary policy—have defined mainstream economics ever since. That’s why, today, in most departments, mainstream economics is still taught in two separate courses, microeconomics and macroeconomics. And very few of them include any references to other approaches, especially Marxian economics.

Criticisms of Capitalism

Just as mainstream economic theory has been challenged from the very beginning, so has capitalism, the economic and social system celebrated by mainstream economists.

Perhaps the most famous early mass movement against capitalism was directed by the Luddites, a radical faction of English textile workers who in the early-nineteenth century attacked mills and destroyed textile machinery as a form of protest against low pay and harsh working conditions. While the name has come to be associated with anyone opposed to the use of new technologies, the actual historical movement objected to machinery that was introduced to speed up production and change the terms of negotiation in favor of employers and against workers.

Later, when workers were able to form labor unions—against a great deal of opposition from their employers and governments that backed those employers—they developed new strategies to challenge the ways they were considered and treated within capitalism. They often demanded higher pay, more secure employment, additional benefits, and even a say in how the enterprises in which they worked were managed. Depending on the situation, they set up picket lines, went on strike, occupied their workplaces, and organized unemployed workers. In many cases, while the workers were primarily concerning with meeting their daily needs, their activities were treated as attacks on capitalism itself.

That was certainly the case in the campaign for an eight-hour workday, which reached its peak in May 1886 in Haymarket Square in Chicago. It began as a peaceful rally to limit the length of the workday (at the time, workers were regularly required to labor much longer—often 10, 12, or more hours a day, without overtime pay) and then, when the police intervened to disperse the gathering, it became a full-on riot with a number of casualties. Ironically, in commemoration of the rally, 1 May has come to be celebrated around the world as Labor Day—except as it turns out, in the United States, where Labor Day was pushed back to the first Monday in September and no law has ever been passed to limit the length of the workday.

While many of the movements that have challenged capitalism have emerged from, been based on, or allied with workers and labor unions, many others have not. Students may recognize the names of some of the early utopian socialists and utopian experiments (although you probably read about them in courses other than economics): Charles Fourier, Henri de Saint-Simon, Robert Owen, and Henry George. Beginning in the nineteenth century, in the United States and around the world, groups of individuals (often, but not always, influenced by various strands of socialist thinking) formed “intentional communities” and cooperative societies. The Shakers (in the United States) and Mondragón (in Spain) are perhaps the best known.

And the list of critics of capitalism—both individuals and movements—goes on. It includes, of course, a wide variety of left-wing populist, socialist, and communist political parties (some of which have come to power, either through democratic elections or revolutions). A fundamental questioning of the capitalist system has also emerged from and influenced many other individuals, groups, and traditions, from civil rights leaders (such as Martin Luther King, Jr., in the United States) and religious groups (for example, the liberation theologians in Latin America) to independence movements (Angola and Mozambique are cases in point) and transnational protests (like Occupy Wall Street).

What can we conclude from this brief survey? From the very beginning, both mainstream economic thought and capitalism have brought forth their critical others.

Divergent recoveries—pandemic edition

The existing alphabet soup of possible recoveries—V, U, W, and so on (which I discussed back in April)—is clearly inadequate to describe what has been taking place in the United States in recent months.

That’s because there’s no single path of recovery for everyone. For some, the recovery from the pandemic crisis has been just fine, while for many others there has been no recovery at all. Instead, things are going from bad to worse. In other words, there’s a growing gap between the haves and have-nots—or, as Peter Atwater has put it, “there have been two vastly divergent experiences.”

That’s why Atwater invented the idea of a K-shaped recovery.

I think he’s right, although I don’t divide the world up in quite the same way.

The stem of the K illustrates the quick and deep crash that almost everyone experienced as the pandemic spread and large parts of the U.S. economy were shut down. Then, as time went on, with massive federal bailouts and businesses reopening, the arm and leg of the K have moved in very different directions.

For the small group at the top—including large corporations and wealthy individuals—there has in fact been a real recovery from the pandemic crisis. The downturn has turned out to be nothing more than a bump in the road. Businesses that were declared essential were able to purchase the labor power of workers and continue their operations, while others have been free to get rid of whatever workers they deemed unnecessary to making profits. And, in both cases, corporations on both Main Street and Wall Street were showered with support from an extraordinary array of government programs—from low interest-rates and Fed purchases of private bonds to forgivable loans and tax breaks—with little accountability or oversight.

The best illustration of their path to recovery is the rebound in the stock market, which by any measure (such as the Standard & Poor’s 500 or Dow Jones Industrial Average indices, in the chart above) has regained most of the ground lost in the crash earlier this year. The S&P, which stood at 3368.68 in mid-February, and fell to 2405.55 in mid-March, ended yesterday at 3251.52. Similarly, the DJIA, fell from a peak of 28996.11 to a low of 20117.20 and yesterday reached 26680.87. This rebounds both signals that investors are betting on a continued recovery in corporate profits and represents a growing claim on the surplus produced by workers.

The small group at the top of the U.S. economy is quickly climbing the arm of the K-shaped recovery.

Meanwhile, everyone else is headed in the opposite direction. They’re the “essential” workers who have been forced to have the freedom to continue to sell their ability to work to their employers and to either labor at home with little control over their working conditions or with the threat of spreading infections in their existing workplaces, or the tens of millions of other workers who have been laid off, had their hours shortened, or suffered pay cuts. We know how different their own experience has been from those at the top because initial claims for unemployment benefits are now more than 50 million, hunger and food insecurity are spreading, and they’re having difficulty paying their rent and mortgages.

The extent of the economic and social disaster for those at the bottom is perhaps best represented by the loss of employment income for households making up to $100 thousand a year (and therefore about half of American households). According to data assembled in the the Census Bureau’s weekly Household Pulse Survey, the share of households in those income groups has grown from just under 50 percent (for 23 April to 5 May, the first week when the survey was conducted) to 53.44 percent (for the latest week, 2 to 7 July).

The situation of American workers is clearly the leg at the bottom of the K, which represents no recovery at all.

The fact that the United States is currently undergoing a K-shaped recovery from the pandemic crisis should come as no surprise, and not just because the administration of Donald Trump and his allies in Congress have promoted and adopted policies that have both worsened the pandemic and shifted the burdens of the economic crisis to those who can least afford it. It’s also because the American economy and society were already characterized by grotesque levels of inequality stretching back at least four decades, which were in turn reinforced by the uneven recovery from the Second Great Depression under the previous administration. Trump and the “hacks and grifters” around him have only nudged things along in the same direction, creating even more powerlessness and hopelessness for the majority of the population.

The problem is, the majority of Americans at the bottom haven’t been heard for too many years, from long before the pandemic started to ravage the country. In the late 1960s, shortly before he was assassinated, Martin Luther King Jr. called their protests “the language of the unheard.”

Even earlier, the late John Lewis wrote (but was never allowed to deliver) a frank description of the situation in the United States that is eerily prescient of the current predicament:

This nation is still a place of cheap political leaders who build their careers on immoral compromises and ally themselves with open forms of political, economic and social exploitation.

That’s why, he wanted to tell those who participated in the 1963 March on Washington, “if any radical social, political and economic changes are to take place in our society, the people, the masses, must bring them about.”

The K-shaped form of the current recovery is both a testament to the compromises of the latest generation of “cheap political leaders” and a reminder that the “the people, the masses” are the ones who must bring about the necessary changes in American society to create a more equal social, political, and economic recovery.

 

The condition of the black working-class in the United States

Before he was killed, George Floyd worked as a truck, a bouncer, and a security guard. Ahmaud Arbery worked at his father’s car wash and landscaping business, and previously held a job at McDonald’s. Breonna Taylor was a certified Emergency Medical Technician who had two jobs at hospitals in Louisville, Kentucky. Eric Garner worked as a mechanic and then in New York City’s horticulture department for several years before health problems, including asthma, sleep apnea, and complications from diabetes, forced him to quit. Trayvon Martin was the son of a program coordinator for the Miami Dade Housing Authority and a truck driver; he washed cars, babysat, and cut grass to earn his own money.

All of them, and most of the other African Americans who have been killed in recent years (by the police or other Americans), were members of the black working-class in the United States.

The history of the black working-class begins, of course, with slavery and then continues—with almost-incessant violence, from slave patrols through lynchings to beatings and deaths at the hands of law enforcement and incarceration by the criminal justice system— through southern sharecropping, the Great Migration out of the rural South to the urban factories of the Northeast, Midwest, and West, and the panoply of jobs that currently exist in the public and private sectors of the United States.

For the purposes of this post, I want to focus on the most recent period—thus, from the end of the Great Migration, which roughly coincided with the assassinations of the two great Civil Rights leaders of the period, Malcolm X and Martin Luther King, Jr.

Even at the end of the Great Migration, more than half of the black working-class population remained in the South. But the region itself was changing, in large part because of the infrastructure associated with the spread of military bases and the subsequent industrialization of cities and towns in the non-cotton south—without however eliminating the anti-union, low-wage legacy of southern economies.

Meanwhile, in the North (both the Northeast and the Midwest), a large portion of black migrants managed to secure factory jobs. But the same migration channeled other black workers into the high-unemployment ghettos of northern cities, which if anything were worsening with the passage of time.

While in the first half of the twentieth century, labor unions had been anything but a positive force for black workers, by 1973 unionization rates among black men were over 40 percent, while rates among white men were between 30 and 40 percent.* And by the late 1970s, almost one quarter of black women—nearly double the share of white women—belonged to a union.

But, in 1972 (the first year for which data are available), the black unemployment rate was more than twice (2.15 times) that of white workers—which has persisted as an average, through the ups and downs of both unemployment rates, for the entire period down to the present.

What about workers’ wages? In 1973, average (median) real wages of black workers were only 78 percent of white wages—and, while the percentage has varied over the decades (reaching a high of 84 percent in 1979, no doubt due to the influence of labor unions), by 2019 the percentage had fallen even lower, to 76 percent.

The wages of the black working-class (just like those of the white working-class) exhibited a clear hierarchy based on gender in the early 1970s. Black women earned on average 69 percent of what black men did (while white women’s wages were even less, about 62 percent of their male counterparts). But then some of the gaps began to decrease: between black women and men (as well as between white women and men). In fact, by 2019, black working-class women’s wages were 94 percent of those of black men (although, by then, white women’s wages were higher than both black men and women). But the wage gap between black and white men had actually grown—from 24.5 percent (in 1973) to 31.7 percent (in 2019).

The gender composition of the black working-class both reflected and contributed to the changes in wage gaps over the past five decades. In 1972, the labor force participation rate of black men was much higher than that of black women: 78.5 percent compared to 51.1 percent. But the gap between the two rates has declined dramatically over time, both because the rate for men has fallen (largely due to the increased incarceration rate of black men) and the increase in the rate for women (as they became increasingly engaged in employment outside the household). So, even though both rates have fallen in recent decades (mirroring the nationwide decline in the labor force participation rate, the gray line in the chart), the changes between 1972 and 2019 for both groups are striking: the rate for black men had declined to 68.1 percent while that of black women had increased to 62.5 percent.

The result is that black women, who in 1972 made up 44.9 percent of the black civilian labor force, now comprise 52.5 percent. The share of black men has thus declined—from 55.12 percent to 47.5 percent.

While the victories of the Civil Rights Movement in dismantling Jim (and Jane) Crow laws were appropriately celebrated, the movement never succeeded in eliminating systemic or structural racism—from employment and housing discrimination through health disparities to the racial biases of the prison-industrial complex. Moreover, the initial progress in narrowing the wage gaps within the working-class coincided with a new assault on American workers and the dramatic growth in inequality in the U.S. economy as a whole. Racial capitalism in the United States therefore changed beginning in the late-1970s, leaving the American working-class—and, even more so, black (and Hispanic) workers—further and further behind the tiny group at the top.

By 2020, the increasing precarity of the black working-class made its members more exposed to physical attacks and police murders, the ravages of the novel coronavirus pandemic, and the negative effects of the economic crisis.

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Last year, 24 percent of all police killings were of black Americans when just 13 percent of the U.S. population is black—an 11-point discrepancy. Mapping Police Violence also showed that 99 percent of all officers involved in all police killings were never charged.

The latest overall COVID-19 mortality rate for black Americans (compiled by the the APM Research Lab) is 2.3 times as high as the rate for whites, and they’re dying above their population share in 30 states and, most dramatically, in Washington, D.C.

Even as the rate of layoffs has largely slowed over the past two months, black job losses rose in May and June relative to those of white workers. In fact, according to the New York Times,

For long stretches of the pandemic, black and white employment losses largely mirrored each other. But in the last month, layoffs among African-Americans have grown while white employment has risen slightly. Now, among all the black workers who were employed before the pandemic, one in six are no longer working.

And all indications are that the economic recovery, if and when there is one, will be both long and painful, especially for the African American working-class.

It has become increasingly clear, especially in recent weeks as a national uprising has responded to the deaths of Floyd and many other members of the black working-class at the hands of the police, that these incidents did not happen in isolation. It is therefore time for the American working-class—black, brown, and white—to overcome its divisions and confront the problem of racism head-on. That’s certainly how the Executive Board of the Communication Workers of America sees things:

The only pathway to a just society for all is deep, structural change. Justice for Black people is inextricably linked to justice for all working people – including White people. The bosses, the rich, and the corporate executives have known this fact and have used race as one of the most effective and destructive ways to divide workers. Unions have a duty to fight for power, dignity and the right to live for every working-class person in every place. Our fight and the issues we care about do not stop when workers punch out for the day and leave the garage, call center, office, or plant. . .

Thoughts and prayers aren’t enough. No amount of statements and press releases will bring back the lives lost and remedy the suffering our communities have to bear. We must move to action.

 

*According to Natalie Spievack,

In 1935, when the National Labor Relations Act gave workers the legal right to engage in collective bargaining, less than 1 percent of all union workers were black. Union formation excluded agricultural and domestic workers, occupations predominantly held by black workers, and largely left black workers unable to organize.

By the late 1960s and early 1970s, unions began to integrate. The manufacturing boom brought large numbers of black workers north to factories, the civil rights movement focused increasingly on economic issues, and the more liberal Congress of Industrial Organizations organized black workers.

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“Capitalism was built on the exploitation and suffering of black slaves and continues to thrive on the exploitation of the poor”

50 years ago, Martin Luther King Jr. was assassinated, just days after joining a march of thousands of African-American protestors down Beale Street, one of the major commercial thoroughfares in Memphis, Tennessee. King and the other marchers were demonstrating their support for 1300 striking sanitation workers, many of whom held placards that proclaimed, “Union Justice Now!” and “I Am a Man.”

The night before his assassination, King told the striking sanitation workers and those who supported them: “We’ve got to give ourselves to this struggle until the end.  Nothing would be more tragic than to stop at this point in Memphis. We’ve got to see it through.” He believed the struggle in Memphis exposed the need for economic equality, social justice, and human dignity that he hoped the Poor People’s Campaign would highlight nationally.

The struggle hasn’t ended—nor have the conditions that provoked the Campaign in the first place.

Today, according to an analysis by 24/7 Wall St., Memphis is the fourth most segregated city in the United States—following only Detroit, Chicago, and Jackson, Mississippi. Just 2.3 percent of white Memphis residents live in neighborhoods where are least 40 percent of the population are poor, compared to 20.5 percent of the black population.

Moreover, data collected by Elena Delavega (pdf) of the Department of Social Work at the University of Memphis show the city to have an overall poverty rate of 26.9 percent—32.3 percent for blacks and 44.7 for children. In 2016, Memphis reverted to being the poorest Metropolitan Statistical Area with a population over a million people.

As recently as last year, the local Chamber of Commerce noted that Memphis offers a “work force at wage rates that are lower than most other parts of the country.”

King understood well the connection between poverty and capitalism. The year before his death, on 31 August 1967, he delivered “The Three Evils of Society” speech at the first and only National Conference on New Politics in Chicago.

When we foolishly maximize the minimum and minimize the maximum we sign the warrant for our own day of doom.It is this moral lag in our thing-oriented society that blinds us to the human reality around us and encourages us in the greed and exploitation which creates the sector of poverty in the midst of wealth. Again we have deluded ourselves into believing the myth that Capitalism grew and prospered out of the protestant ethic of hard word and sacrifice. The fact is that Capitalism was build on the exploitation and suffering of black slaves and continues to thrive on the exploitation of the poor—both black and white, both here and abroad. . .The way to end poverty is to end the exploitation of the poor.

That’s the kind of analysis that made King so controversial in mainstream circles in his later years, and that has remained buried for the past 50 years under the exclusive focus on dreams and mountaintops.

Today, in Memphis and across the country, Americans would do well to remember the sanitation workers’ strike and the “radical redistribution of economic and political power,” as part of the new “era of revolution,” that King called for in launching the multiracial Poor People’s Campaign.

As Michael K. Honey puts it,

Remembering King’s unfinished fight for economic justice, broadly conceived, might help us to better understand the relevance of his legacy to us today. It might help us to realize that King’s moral discourse about the gap between the “haves and the have-nots” resulted from his role in the labor movement as well as in the civil rights movement.

In addition to remembering the eloquent man in a suit and tie at the Lincoln Memorial in 1963, we should also remember King as a man sometimes dressed in blue jeans marching on the streets and sitting in jail cells, or as an impassioned man rousing workers at union conventions and on union picket lines.

 

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