The Problem is Capitalism
(Updated below.)
We are subtly taught that hunger,
poverty, economic downturns, environmental disasters, are all natural
phenomena, like the weather. There’s not much you can do about them, so
the theory goes. The best you can do is hunker down and be ready for what
comes. Really?
At the federal and state levels,
budgets are being slashed. We’re told we need to cut back, lower our
expectations and accept “smaller government”. The US is awash in red ink,
running huge deficits, but the problem isn’t that average Americans have been
living beyond their means.
Our schools are under funded, our
teachers are underpaid, our infrastructure is falling apart, people who have
jobs work longer and harder for less pay, and services that used to be widely
accessible are cut to the bone or available only to those with large
incomes. But as we’ll see shortly, productivity and total wealth have
increased steadily for centuries, both in absolute and per capita terms.
What gives?
There are currently more than 14.8
million unemployed in the US[1]
—the largest number since 1948 where figures are first available[2]—but
it’s not as if there’s no work to be done or money to pay for it.
43.6 million in the US live in
poverty[3];
45,000 die per year for lack of access to healthcare.[4]
The numbers of sick and starving world-wide are bleaker still, but the
problem isn’t lack of food, medicine or resources.[5]
For decades, we’ve endured war after
war and squandered trillions on the military, but we’re less safe than ever[6]
and we’re asked to believe that our enemies are the poor, jobless, hungry,
exploited people who live outside our borders.
The environment is being destroyed,
our food and water are being poisoned, but it isn’t that we don’t know better
or lack the means to prevent it.
The problem is capitalism.
Capitalism: the economic system that
puts profits above human needs. The system whose measure of success is
not what’s good for people or the planet, but simply what gets the greatest
return on investment. And if it turns out that war, racism, unemployment,
exploitation and disregard for the environment are profitable; hey, that’s the
price you have to pay for “freedom”, by which is meant the freedom to make a
profit.
So much of what’s wrong with our
country and the world can be understood when you simply follow the money.
It’s not emphasized in our education or upbringing, but all of the wealth in
our country is produced by working people and working farmers. All
of it. Working people: those of us who go to a job every day, who have
nothing much to offer in the market place but our ability to work, who would
quickly starve if we stopped selling our labor. Working people: 94% of
the population.[7]
Wall Street traders, bankers and
speculators and corporate CEOs produce absolutely no wealth. They extract
wealth from the economy by moving it from one column to another, and for this
they earn large salaries and bonuses. But these professions contribute
nothing to the aggregate wealth of society.
Now consider this:
Productivity of US workers has increased steadily, going back at least to
1900. Some years, productivity increased more than other years, but the
overall trend was up, up, up. Over the decades, every hour of work has
produced more and more value. Figure 1 shows the change in productivity
overall. Figure 2 shows gross domestic product per capita, from
1900 to 2008. What’s crystal clear is that the value produced by an
average worker in a year has increased more or less steadily over the years.
An average worker in 2008, for example, produced 1.7 times as much total
wealth per year as a similar worker in 1981.
So how come we don’t feel
wealthier? How come there isn’t more money for education, health
care, libraries, infrastructure, the arts, and other social services that would
benefit the majority of Americans? Because capitalism doesn’t work that
way. Under capitalism, you don’t get to keep the full value of what you
produce. You’re paid a wage or a salary which partially
compensates you for the wealth you created. What happens to the
rest? The principle of the “free market” says that the value you produced
belongs to your employer. And what does your employer do with the portion
they skim off the top of the wealth that you created? Whatever they
want! They may choose to reinvest some of it in the business; they may
use some of it to pay themselves a large bonus; they may use some of it to
finance an antiunion drive or to fund a political campaign.
Workers produce wealth; some they
keep and some their employer appropriates. What decides how the pie gets
divided? Clearly, the larger the share of the pie that the employer
takes, the less the worker gets. One party’s gain is the other’s loss.
Those at the top siphon off money in
other ways as well. Workers pay taxes to the federal and state
governments. These contributions are supposed to be put to collective use
for the common good. But all too often, tax dollars are diverted into the
pockets of the rich through regressive tax structures and schemes such as the
recent Wall Street bailout. War spending also diverts huge sums from the
common pool into the pockets of the big “defense” industry conglomerates.
So there is no single
“America”. There are two Americas. There is the America of working people
and working farmers, those that produce all the wealth, fighting to keep as
great a share of the pie as possible. And there is the America of the
capitalists, who don’t produce wealth directly but who are deemed to have the
moral and legal right to keep as much of the wealth that working people produce
as they can get away with.
But wait a minute, you say, this
can’t be right. Aren’t workers paid a fair day’s wage for a fair day’s
work? No, not at all. With the invention of agriculture and the
domestication of animals more than twelve thousand years ago, something
monumental occurred in human history. For the first time, the average
person could produce more wealth in a day than they could possibly consume in
that time. And as we have seen, productivity took off from there.
It’s the fact that the average worker produces more wealth in a day than they can
readily consume which makes the capitalist’s slight of hand possible. The
wage you’re paid is what you need to get by, adjusted by how effectively you’re
able to organize and fight for more. The amount the capitalist keeps is
above and beyond what you could use right away, so you don’t miss it…until they
say there’s no money for education, health care social services and the
like. Then you might consider how the wealth you produced could be put to
better use, pooled with others and invested for the common good, instead of
lining the pockets of a few at the top.
But wait, there’s more. Over
time, automation and efficiency in industry increases. This is chiefly
where the steady rise in productivity comes from. However, there is a
perverse consequence of automation under capitalism. As more machines and
less labor go into producing the same products, there is less room for the
capitalist to skim profit off the top. After all, feeding machines half
the electricity or raw materials they need to function doesn’t produce
favorable results. The only place to skim is by paying workers less than
the full value that their labor produces. But as the proportion of labor
embodied in finished goods shrinks with automation, the amount the capitalist can
skim off the top—what they euphemistically call profit—also declines. The
following graph illustrates this trend.
Over time, the average rate of
profit declines. In the face of inexorable automation, there are only two
ways to maintain or increase profits: 1) sell more widgets, or 2) force workers
to accept an even smaller share of the value they produce.
With this way of looking at things,
is it any wonder why workers’ standard of living is always under attack?
Is it any surprise that the our government—which is owned and controlled lock,
stock and barrel by big business—pushes for constant, unsustainable growth and
ever expanding markets? And, since the entire planet, spare Antarctica,
has been carved up into nations, expanding markets and acquiring more resources
means stealing someone else’s, a job the military is uniquely suited to carry
out and has been called upon to do with some regularity.
If you’re going to navigate
difficult terrain, you need a good map. But the map we’re given in school
for understanding our political and economic universe is as useless as the
notion that persisted for millennia that put the Earth rather than the Sun at
the center of our solar system.
A better model recognizes that our
economic system is fatally flawed; that capitalism promotes hunger,
unemployment, inequality, war, and environmental devastation because it rewards
those that profit from them. A better model would recognize there are two
Americas, one of working people and another of big business, each with opposite
and irreconcilable interests.
Ironically, working people are the
vast majority, but the minority that controls big business runs the
country. They control the economy and control the disposition of
society’s collective wealth. They control the government and own both the
Democratic and Republican parties.[11]
In elections we are allowed to choose between the candidates of one or another
of the big business parties, but there is never any way to vote against war,
exploitation, economic inequality or destruction of the planet. Heads
they win, tails you lose.
The first step to breaking any
addiction and beginning to heal is to fully understand and admit to the
problem. The problem is capitalism.
Update:
Capitalism encourages irrational
thinking. In order to move beyond capitalism, we need to be able to see
clearly and understand what’s possible. Let’s look at an example.
Under capitalism, full employment is
impossible. Why? Workers and industrialists have opposite
interests. The more workers are paid, the less profit there is for the
capitalists. If everyone had a good job, the balance of power would be
shifted decidedly in workers’ favor. With full employment, when workers
go on strike, there’s no one the bosses can hire as strike breakers. With
full employment, a threat to fire a worker for union activity or for speaking
out is no threat at all since there are plenty of other good paying jobs to be
had.
But what do defenders of capitalism
have to say about unemployment? They can’t admit that full employment and
capitalism are irreconcilable as this would call attention to one of the
fundamental problems of the capitalist system. Instead, they argue
that “full employment” really means 6 percent unemployed. They
argue, irrationally, that a certain amount of unemployment is natural, normal
and simply to be expected. In the US, 6 percent of the working age
population amounts to 9.3 million people—more than the populations of Los
Angeles, Chicago, Philadelphia, San Francisco and Kansas City combined!
In a rational society, the total
work would be divided among those available by reducing the work week with no
reduction in pay. As productivity increased, individuals would be able to
work less and still produce everything society needs. There would be no
clash of interests between workers and employers because all major industries
would be publicly owned and run by the very people that work there.
[3] http://curiouscapitalist.blogs.time.com/2010/09/16/why-are-a-record-number-of-americans-living-in-poverty/
[4] http://prescriptions.blogs.nytimes.com/2009/09/17/harvard-medical-study-links-lack-of-insurance-to-45000-us-deaths-a-year/
[7] Those making less than $150,000 per year. http://pubdb3.census.gov/macro/032005/hhinc/new05_000.htm. and http://en.wikipedia.org/wiki/Household_income_in_the_United_States
[10] Source Brenner, Robert, 2006, The
Economics of Global Turbulence (Verso), P 7. See also http://www.isj.org.uk/?id=340#115harprof_26
[11] http://www.cfinst.org/Press/PReleases/08-12-10/Heavy_Hitters_Supplied_Bulk_of_Private_Financing_for_2008_Co
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