“Sick societies have sick institutions”

The pandemic is once again spiraling out of control. Right-wing commentators and political leaders are doing everything they can to stop any kind of effective public-health response and to divert attention from the severity of the pandemic. And liberals? The best they can come up with is “follow the science.”

Jay S. Kaufman, a professor of epidemiology at McGill University, is having none of it. He rejects that simple—and too simplistic—mantra because it “misses the fact that the same social pathology that exacerbates the pandemic also debilitates our scientific response to it.

The problem is, Kaufman pulls his punches and limits the reach of both arguments. He notes that the pandemic itself is “socially patterned” but then he refers only to excess deaths across countries (such as Peru, Bolivia, South Africa and Brazil), which in his view are tied to political turmoil and weak social institutions. What he forgets about or overlooks is the fact that the severity of infections and deaths with countries is closely related to economic inequality and poorly functioning public institutions. In other words, the people who have suffered most from the pandemic are those who are forced to have the freedom to work at jobs and live in communities where they are more likely to be infected by COVID-19 and where adequate medical care is unavailable, either because it is not provided or is financially unattainable.

As for the second argument, that “science itself is a social process,” he’s right to note that “epidemiologists exist like everyone else inside the social forces that shape the pandemic.” But he’s really only referring to the step from “evidence to policy,” to the “politicization of proven interventions” (for example, under the Trump administration), not the process of gathering and analyzing the evidence itself. Thus, he never questions the science itself. Kaufman seems to be uninterested in or incapable of posing questions about what scientists decided were the basic issues to be investigated in terms of the emergence and transmission of the novel coronavirus, especially the ways the pandemic has both revealed and compounded pre-existing inequalities in wealth, income, and race.

The alternative was, in fact, staring him in the face. Kaufman begins his essay by invoking Rudolf Virchow, the Prussian pathologist who, in the winter of 1848, was sent to investigate a typhus epidemic raging in Upper Silesia, in what is now mostly Poland. As Kaufman explains,

After three weeks of meticulous observation of the stricken populace — during which he carefully counted typhus cases and deaths by age, sex, occupation and social class — he returned with a 190-page report that ultimately blamed poverty and social exclusion for the epidemic and deemed it an unnecessary crisis. “I am convinced that if you changed these conditions, the epidemic would not recur,” he wrote.

Today, Virchow is known as the “father of modern pathology” and as the founder of social medicine. He developed the theory of cellular pathology, which laid the conceptual foundation for modern medicine. But he also had a specific notion of medicine, which is today mostly ignored. In his own words:

Medicine is a social science, and politics is nothing else but medicine on a large scale. Medicine, as a social science, as the science of human beings, has the obligation to point out problems and to attempt their theoretical solution: the politician, the practical anthropologist, must find the means for their actual solution. . .Science for its own sake usually means nothing more than science for the sake of the people who happen to be pursuing it. Knowledge which is unable to support action is not genuine—and how unsure is activity without understanding. . .If medicine is to fulfill her great task, then she must enter the political and social life. . .The physicians are the natural attorneys of the poor, and the social problems should largely be solved by them.

Not only did Virchow conclude, based on his research, that poor sanitation, the absence of basic hygiene, lack of education, and near starvation were the root problems of the epidemic in Upper Silesia. According to David M. Reese, “a few weeks after his Silesian expedition, Virchow manned the barricades beside fellow democrats, armed with a rusty sword and an antiquated rifle.” Following on his participation in the revolution of 1848, Virchow continued to be active in politics: he was soon elected representative to a newly formed Prussian diet, “delivering fiery speeches against the royal family”; in the late 1850s, he was elected Berlin City Councillor, an office in which he served for 42 years (“his achievements ranging from improving the city’s sewer and water supply systems to reforming the arrangement of public hospitals” so that all citizens would have access to basic medical care); and he was a founding member of the German Progress Party, the main left-wing party before the rise of the Social Democrats.

The fact is, more than 170 years ago, Virchow established a practice of both scientific social medicine and politically committed scientist that gives lie to the notion of just “follow the science.” The question, then as now, is: which science?

In the midst of a sick society characterized by sick institutions, we need to critically examine both the economic and social institutions that have generated the profoundly unequal effects of the present pandemic as well as the specific ways scientific methods and protocols have been conditioned by those same institutions.

Age of capital

In this post, I continue the draft of sections of my forthcoming book, “Marxian Economics: An Introduction.” The first five posts (here, here, here, here, and here) will serve as the basis for Chapter 1, Marxian Economics Today. The next six (here, here, here, here, here, and here) are for Chapter 2, Marxian Economics Versus Mainstream Economics. This post (following on three previous ones, here, here, and here) is for Chapter 3, Toward a Critique of Political Economy.

The necessary disclosure: these are merely drafts of sections of the book, some rougher or more preliminary than others. I expect them all to be extensively revised and rewritten when I prepare the final book manuscript.

Capitalism

As we’ve seen in previous sections, we have to understand three major theoretical and political currents—classical political economy, Hegel’s philosophy, and utopian socialism—in order to understand the path Marx traversed in his writings prior to working on Capital. We also have to keep in mind the larger context, the development of capitalism in the nineteenth century.

It was during the “age of capital,” as the illustrious British historian Eric Hobsbawm aptly called it, that Marx formulated his critique of political economy. By the time he landed in London (in 1849), where (after leaving Germany and spending short periods in first Paris and then Brussels) he would remain based for the rest of his life, England had become the epicenter of capitalism.

Today, we think of capitalism as encompassing the entire world.* That certainly wasn’t the case in the first half of the nineteenth century, when most economic and social life around the globe was organized along decidedly noncapitalist lines. In England, however, by the end of the first Industrial Revolution, capitalism was well established, especially in the burgeoning cities (such as London, Liverpool, Manchester, and Birmingham). More or more, both consumer goods and producer goods (from textiles to machinery) were being produced in capitalist factories. In other words, they had become capitalist commodities, created by laborers who received a wage working for the capitalists who owned the mills and workshops.**

Elsewhere, the transition to capitalism, while less advanced than in England, was also taking place and leaving its mark on the existing social order. For example, the conditions and consequences of capitalism were quite evident in France and Belgium, much more so than in Germany; while the United States, as it slid toward civil war, was also creating a hothouse for capitalist industry, especially in the northeast. In all those places, enormous fortunes (accumulated through local and global trade, owning large estates, lending money, putting slaves to work, and so on) were utilized to purchase the ability to labor of workers (many of them former feudal serfs, self-sufficient farmers, artisans, and slaves) as well new technologies and machinery (from the power loom and cotton gin through steam power and iron-making to new modes of transportation, such as canals and railroads).

The age of capital was nothing less than a project for remaking the world, in every dimension. It was a revolution in industrial production that, as Engels wrote in his classic study of The Condition of the Working Class in England, was changing the whole of civil society—from politics and culture to class structure and the organization of work.

Then as now, the captains of industry and supporters of capitalism were confident about their project. It promised to create general prosperity and to universalize the bourgeois individual guided solely by self-interest and rational calculation. And, in many ways, it succeeded. The development of capitalism created gigantic factories, titanic temples of industrial production, and colossal cities, occupied by an escalating number of native and immigrant workers. Traditional ways of life and meaning were cast aside and new habits acquired, with an eye (at least among the middle and upper classes) to accumulate individual wealth and extol the virtues of free and expanding markets.

But, by the same token (and no different from today), the new capitalist order was itself fragile—subject to fits and starts and periodic downturns, and characterized by obscene levels of inequality and widespread misery. The bulk of the population experienced a decline in their living standards, with wages that didn’t keep pace with the prices of necessary consumer goods, plus poor sanitation, inadequate housing, and precarious access to clean water. Moreover, their jobs and skills were threatened by the combination of technological change, embodied in the new factory machinery, and the more detailed divisions of labor that could be instituted once they were collected to labor in one place. In many instances, workers became mere appendages of the machines they once managed. That meant more profits for their employers but, in relative terms, less for their wages.

It should come as no surprise, then, that the capitalist project was contested wherever it took hold. Many readers will have heard of the Luddites, a radical faction of English textile workers that attempted to destroy factory machinery as a form of protest. To be clear, they were not hostile to machinery per se, but were angry with manufacturers who introduced the machines in what they called “a fraudulent and deceitful manner” to get around standard labor practices. This period also saw the resurgence of other labor organizations, especially trade unions (such as Robert Owen’s short-lived Grand National Consolidated Trades Union) and the demand for more democracy (a working-class suffrage movement led by the Chartists)—which, in their growing influence, led to the repeal of laws that had made any sort of strike action illegal.

The development of capitalism led to even more widespread political upheavals, culminating in 1848, during what Hobsbawm refers to as the “springtime of the peoples.” That year was painted with the colors of revolution across continental Europe (except England and Russia) and beyond. Government after government was overthrown and, in the end, over 50 countries—from Sweden to Colombia—were affected. The revolutions were informed by diverse ideologies, including various forms of liberal democracy and socialism, their banners carried by the new social classes created by capitalism, including members of the grand bourgeoisie, their intellectuals, and the middle classes to the masses of rural landless laborers, urban artisans, and industrial workers. In the end, while the revolutions eventually failed and the old regimes restored started in 1849 (Marx argued, in various speeches and newspaper articles, the revolutions were betrayed by many of the liberal intellectuals, who sought an accommodation with the monarchs and governments on their own terms), it was clear that all that was considered solid was melting into thin air.***

It was in the maelstrom of this age of capital—of the widening and deepening of capitalism and of the revolutionary upheavals it provoked—that Marx pursued his “ruthless criticism of everything existing.”

In the next section, we look at some of his best-known texts of that period, prior to the writing of Capital.

———

*That’s certainly how mainstream economists and many others think of capitalism, as characterizing the entire economy in pretty much all places around the globe. As we will see in a later chapter, what they forget or overlook is that many parts of contemporary society, in rich and poor countries alike, include various forms of noncapitalism. Consider for the moment one prominent example: how many households, where of course a great deal of labor is performed on a daily basis, are based on a capitalist mode of production?

**As we will see later in this book, not every commodity is a capitalist commodity. Goods and services can be bought and sold in markets without the existence of capitalism. It all depends on how they are produced. Thus, there can be communist commodities, slave commodities, feudal commodities, and so forth. The mistake mainstream economists make is to presume that markets are synonymous with capitalism.

***This is a paraphrase from one of the most famous texts of 1848, The Manifesto of the Communist Party, which Marx and Engels were commissioned to write by the Commiunist League and originally published in London just as the revolutions of 1848 began to erupt:”All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.” We will discuss the Communist Manifesto in more detail in chapter 9.

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United States of inequality

Obscene levels of economics inequality in the United States are now so obvious they’ve become one of the main topics of public and political discourse (alongside and intertwined with two others, the climate crisis and the impeachment of Donald Trump).*

Most Americans, it seems, are aware of and increasingly incensed by the grotesque and still-growing gap between a tiny group at the top—wealthy individuals and large corporations—and everyone else. And this sense of unfairness and injustice is reflected in both the media and political campaigns. For example, Capital & Main, an award-winning nonprofit publication that reports from California, has launched a twelve-month long series on economic inequality in America, “United States of Inequality: 2020 and the Great Divide,” leading up to next year’s presidential election. And two of the leading presidential candidates in the Democratic Party, Bernie Sanders and Elizabeth Warren, have responded by making economic inequality one of the signature issues of their primary campaigns, regularly describing the devastating consequences of the enormous gap between the haves and have-nots and proposing policies (such as a wealth tax) to begin to close the gap and mitigate at least some of its effects.**

As if on cue, we’re also seeing a pushback. It should come as no surprise that America’s billionaires—from Starbucks CEO Howard Schultz to multi-billionaire hedge-fund manager Leon Cooperman—have gone on the offensive, complaining about how the various tax proposals, if enacted, would reduce what they consider to be the fortunes they’ve earned and undermine two areas they alone control: private philanthropy and corporate innovation.*** And ironically, as Paul Waldman has claimed,

the more billionaires keep talking about how their taxes shouldn’t be raised, the more likely it is that their taxes will in fact be raised, one way or another.

Similarly predictable is the attempt to rejigger the numbers so that inequality in the United States appears to be much less than official sources report. For example, according to the Census Bureau [pdf], in 2018, the top quintile of households (with an average income of $233.9 thousand) had 17 times more than the bottom quintile (whose average income was only $13.8 thousand).**** Phil Gramm and John F. Early argue that “this picture is false” because it focuses only on money income and excludes both taxes and transfer payments.***** Their conclusion?

America already redistributes enough income to compress the income difference between the top and bottom quintiles. . .down to 3.8 to 1 in income received.

There is one kernel of truth in Gramm and Early’s analysis: while the rich pay more in taxes, government transfers make up a much larger share of income of those at the bottom.****** But their calculations dramatically overstate the extent to which taxes and transfers decrease the degree of economic inequality in the United States. That’s because they fail to include unreported capital income, including dividends and interest paid to tax-exempt pension accounts and corporate retained earnings (which are included in other data sets, such as G. Zucman, T. Piketty, and E. Saez, “Distributional National Accounts: Methods and Estimates for the United States” [http://gabriel-zucman.eu/usdina/]).

As is clear in the table above, in 2014 (the last year for which data are available), the system of taxes and transfers only reduces the degree of inequality (measured as the ratio of top 10 percent average incomes to bottom 50 percent average incomes) from 18.7 to 1 to 10.1 to 1. And if we focus on post-tax cash incomes (thus excluding non-cash transfers, essentially Medicaid and Medicare), the resulting correction is even less: to 11.8 to 1. In both cases, the decrease in inequality is much less than in the Gramm and Early calculations.

The fact is, there are severe limits on what taxes and transfers can achieve in the face of the massive changes in the pre-tax distribution of income that have occurred in the United States since 1979. 

As readers can see in the table above, while the average pre-tax incomes of the bottom 50 percent of Americans stagnated from 1979 to 2014, those of the top 10 percent increased by 100 percent and the incomes of the top 1 percent soared by even more, 183 percent.

If we compare the real incomes of the same groups after taxes and transfers, it’s clear that while the incomes of the bottom 50 percent of Americans did in fact inch upward from 1979 to 2014 (by a total of 18 percent, or only 0.5 percent a year), progressive taxes and transfers did not hamper the upsurge of income at the top: the average post-tax incomes of the top 10 percent doubled (by 2.86 percent a year) and those of the top 1 percent grew by more than 160 percent (by 4.8 percent a year).*******

The small group at the top continues to pull away from everyone else, both before and after taxes and transfers.

In my view, the degree of economic inequality in the United States is so severe that it can’t be sidetracked by billionaire complaints or swept away by the calculations of conservative economists. And, for that matter, it can’t be solved by enacting more taxes on the ultra-rich and more transfer payments for the rest of Americans. The problem is simply too large and systemic.

Only by understanding and attacking the roots of the inequality that has characterized the U.S. economy for decades now will we be able to close the enormous gap that has undermined the American Dream and shredded the fabric of political and social life in the United States.

 

*But, contra New York University historian Timothy Naftali, this is not the first time “we are having a national political conversation about billionaires in American life.” In fact, I’d argue, it’s a recurring debate in American history, stretching back at least to the rise of populism in the late-nineteenth century (and perhaps earlier, for example, to Shays’ Rebellion) and including the strike wave after the Panic of 1873, the anti-trust movement of the early-twentieth century, the crash of 1929 and the First Great Depression, and most recently the attacks on finance and the Occupy Wall Street movement during the Second Great Depression. In all those cases, Americans engaged in an intense national discussion of inequality and the role of the economic elite in political and social life.

**Even centrist Democrats have taken up, if only timidly, the banner of the anti-inequality campaign. For example, Rep. Brendan Boyle (D-PA), who has endorsed Joe Biden for the Democratic nomination, told The Washington Post he is crafting a new wealth tax proposal to introduce in the House of Representatives. And Rep. Don Beyer (D-VA), who last month endorsed South Bend Mayor Pete Buttigieg, has released a plan (with Sen. Chris Van Hollen of Maryland) for a new surtax on incomes over $2 million.

***The one area they don’t mention, which they also seek to control, is American politics—through lobbying, campaign donations, and the like. Wealthy individuals and large corporations attempt to exert such control although, as we just saw in Seattle—with Amazon’s $1.5 million campaign to unseat a socialist member of Seattle’s city council, Kshama Sawant—they’re not always successful.

****Money income includes the following categories: earnings; unemployment compensation; workers’ compensation; Social Security; supplemental security income; public assistance; veterans’ payments; survivor benefits; disability benefits; pension or retirement income; interest; dividends; rents, royalties, and estates and trusts; educational assistance; alimony; child support; financial assistance from outside of the household; and other income. The ratio of top to bottom rises to an astounding 60 to 1 in terms of only earnings. 

*****The Wall Street Journal column doesn’t explain how the alternative calculations were conducted. But Early, in a Cato Institute report [pdf], does explain their methodology.

******According to my calculations from the most comprehensive source (from G. Zucman, T. Piketty, and E. Saez, “Distributional National Accounts: Methods and Estimates for the United States” [http://gabriel-zucman.eu/usdina/]), in 2014, the bottom 50 percent of Americans received 74 percent of their post-tax income from transfers while, for the top percent, it was 19.5 percent.

*******What of the billionaires? Between 1979 and 2014, the average real post-tax incomes of the top .001 percent grew by 387 percent (or 11.1 percent a year), almost as much as their pre-tax incomes.

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