Were
this the result of a general economic collapse, wherein the blight of
plummeting living standards was spread more or less equitably throughout
society, it would be sad but understandable.
However this is not the case. It
is the result of the largest transfer of wealth from the many to the few ever
seen in this, or any other, nation. According
to the Economic Policy Institute, the wealthiest one percent of Americans has a
greater net worth than the bottom 90% combined.
And if we can believe Forbes
Magazine, four hundred Americans have more wealth than the bottom one
hundred and fifty million Americans put together.
To
punctuate this litany of mass misery there is one statistic that more than any underscores
the growing inequality of wealth and income and goes a long way to explain it. The bottom 80% of Americans owns a meager 4.7%
of financial wealth, i.e. have an ownership stake in the productive engine of
our country's economy. The top 5% owns
72%. And the top 10% owns 85% of our country's
productive assets. It is this, the productive
capacity of the nation--its factories and machines, its raw materials and
natural resources, its telecommunication and transportation facilities--wherein lies
the source of our nation's wealth. You
just knew, when President George W. Bush began spouting slogans about America
being the "ownership society," that the greediest asset grab in history was
underway, and that the ownership of what really matters, the ownership of the
nation's productive resources, was being sucked up and siphoned off by a tiny
few whose hands held the levers of economic power.
On
February 20th Michael Kinsley published an online article for Bloomberg View titled "The Wage-Earner's
Case for the Minimum Wage." [1] From both a stylistic and conceptual
perspective the singular feature of the essay is its fundamental
incoherence. I mention this not in an
attempt to beat up on Mr. Kinsley, whose writings are in the main intelligible,
if ideologically narrow, but as a paradigm case of what happens when a social
liberal tries to grapple with the contradictions of our political economy.
The
essay begins with a juxtaposition of the liberal and conservative views on the
issue, an exercise Mr. Kinsley finds ideologically ironic. For the conservative, who stands ready to
condemn any government meddling with economic laws, the argument against
raising the minimum wage "sends a terrible message about the dignity of work
when working full-time doesn't earn you enough to live a decent life." On the other hand, "even a committed liberal
who's concerned about the growing income inequality ought to have some doubts
about the minimum wage" [since it] reduces employment" by pricing people out of
the market."
In
the battle between labor and capital (and here Mr. Kinsley, true to his liberal
instincts, refers to the antagonistic parties as "workers" and "bosses,"
thereby hiding the class nature of the opposition) there are, he assures us,
two equally legitimate sides of the story, to wit: --the minimum wage restricts workers as well
as bosses: It forbids both categories of
economic actors from making a deal they wish to make." Since "no one is forced to take any job" by what right and what logic" he asks
rhetorically, " do we step in and say:
No, this is a deal you're not allowed to make?"
But
above and beyond the questionable validity of the government's right to
interfere with the rights of the individual to freely enter into a labor
contract, even one at starvation wages, such interference is tantamount to
"violating the principle of free markets by having a minimum wage at any
level." His good intentions aside, the
President's proposal will assure that "anyone whose hourly work is worth more
than $7.25 but less than $9 will become unemployable." Such action would be especially onerous to
those seeking entry level positions, for "if you can't even start the great
game of life until you're worth $9 an hour, the challenge is greater." To which Mr. Kinsley adds in summation, "What
kind of favor is this to them?"
To
those conservative critics who see in the minimum wage nothing more than "a sop
to people who don't believe or don't understand the basic principles of
economics," Mr. Kinsley turns his liberal cheek and proclaims that "many
government policies violate basic principles of economics and therefore reduce
our prosperity," but, he adds, "So
what? A prosperous society such as the
U.S. can afford to give up some prosperity in exchange for more equality or
some other social goal." So while "it's
possible that a policy such as the minimum wage might be bad for society," it
might nevertheless be desirable since "it's good for the individuals most
closely affected by it." Concluding his
analysis with a shot across the bow to the critics of a minimum wage, Mr.
Kinsley challenges them to "go and tell someone making $7.25 or even a whopping
$9 an hour that you want to eliminate the minimum wage for his or her own
good. I'm not going to."
Well
bully for Mr. Kinsley. His reluctance to
kick the lowest rungs of the economic ladder out from under the working poor is
matched only by the acrobatic contortions of his liberal apologetics. When all is said and done, the case he makes
for raising the minimum wage, for all its ideological meanderings, boils down
to a straightforward ethical one: the
laws of economics be damned if government policy can alleviate the suffering of
our most economically disadvantaged.
Other liberals take a different tack:
they flatly deny the conservative premise. To this end they point to various states in
the country that have raised their minimum wage, with no apparent damage to
their economies. They are not, mind you,
denying the ineluctable laws of economics; rather they question the validity of
the conservative's deduction from these laws that a $1.75 raise in the minimum
wage would result in a net loss of jobs.
No one, no liberal that is (and certainly no conservative), thinks to
critically assess these so-called laws of economics. But this is precisely where the proverbial
rubber meets the road. So what do you
say we cut to the chase.
Economic
laws (granting there are such) are not laws of nature like the law of
gravity. They are specific to an
economic system. Such laws as the
inverse relation on prices brought about by changes in supply and demand, or
the law of diminishing returns (a variant of the above), or Say's Law [2]
that supply creates its own demand (an economic conjuring act that forms the
cornerstone of supply side economics, known to the public as trickledown
economics, but to the monied class as "I got mine, now you get yours") are
laws, if laws at all, of a free market capitalist economy.
Leaving
aside the fact that a century ago free market capitalism was transformed into, or
replaced by, monopoly capital, the issue nobody wants to address is that,
unlike the law of gravity and other laws of nature, economic systems and their
laws are manmade. Of course this is not
to suggest that somewhere at some time a group of people sat down and drew up
the economic principles that would govern how they went about producing and
exchanging their goods and services.
Rather, economic systems, like legal systems, religious institutions,
ethical norms, educational practices, cultural standards, et. al. come into
being, develop, mature, and decay not as the result of a social decision, much
less an individual act, but "behind the backs" (so to speak) of
individuals. We are, each of us, born
into a society with its institutions and practices, and a major part of our
education consists in having the legitimacy of these institutions and practices
instilled in us from early childhood. In
a word, we are taught to obey. No such
deliberate inculcation is necessary to make us "obey" the laws of nature: to defy them (whatever this might mean) is a
physical impossibility. Not so with
society's "laws." Although they are
revered as if they were handed down from on high, they are in fact grounded and
fortified by the continual consent, in word and deed (especially in deed), of
each individual living under them. But
as such they are, each and every one, potentially subject to question and
modification, even to the extent of being rejected and replaced.
Even
so, social norms and societal practices die hard. A strong conservative instinct, manifested by
a mass adherence to society's entrenched institutions and embedded normative
practices, even in light of their incipient failure, is a fundamental survival
instinct for any society. That is why a
flagrant transgression of an embedded norm is met with immediate sanction, be
it social ostracism, or coerced consent, or punitive interdiction. Add to this the condition that a particular
social set up may prove enormously beneficial to those holding the reins of
political and ideological power, it becomes almost impossible not to take the
"cultural laws" of society, above all its economic institutions, to be as
binding as the laws of nature. So it is
with our capitalist economic system: to
challenge its validity, to even think of "violating the principle of free
markets" (Kinsley), to even hint that it may not reflect the "natural economic
order," but in fact might be contrary to the natural needs of those subject to
it, is akin to blasphemy, or is at the very least a mark of ignorance.
This
compulsion to take our capitalist system, with its putative economic laws and
market imperatives, as a natural social order (in the sense of being a social
regime ordained by nature) is reflected in, and in turn propagated by, the
academic discipline of economics.
Textbooks in economics treat the economy as a mechanical apparatus whose
inner workings can be expressed in mathematical formulae. The paradigm here, as is so often the case in
the so-called social sciences, is a closed physical system subject to the laws
of nature. By doing so two elements are
automatically excluded from the outset:
history and human beings.
In
trying to understand economic reality in terms suited to studying an apparatus, modern economic theory
fails to locate the capitalist mode of production within history, as a stage in
the ongoing development of social forms, impactful but transitory. In so doing the modern economist unwittingly
becomes an apologist for the current scheme, since if the laws governing the
capitalist apparatus are transhistorical and are part of the natural order like
the laws of physics, then to question them would be as foolish as it would be
to question the law of gravity. This is
what puts liberals such as Mr. Kinsley into such a bind. If it is an economic law that raising the
price of a commodity reduces the demand for it, then certainly raising the
price of the commodity called "labor' will reduce the demand for workers: ergo
fewer jobs. In the grips of this bind
Mr. Kinsley, out of empathy with the plight of the working poor, can do no more
than recommend raising the minimum wage despite the consequence that it
will "reduce our prosperity" and will be
"bad for society." Such are the
fabricated lunacies one is forced to adopt when trying to reconcile the
mathematical models of modern economic theory with the conscience of a social
liberal. In fact, though, what passes
for economic theory in the academy is not that at all: it is in reality business cost accounting dressed
up as theory.
The
other consequence of treating the economy as a mechanical apparatus is that it
eliminates the human element. By this I
mean that it necessarily fails to comprehend the fact that at the center of any
economic system are relations among human beings, and that in a capitalist
economy, as in many before it, the relations are ones of domination and
subordination. A capitalist economy is a
hierarchical system in which a few at the top, those who own the resources and
machinery of production, receive most of the market value produced by those
further down whose labor creates this value.
This is not an oversight: modern
economic theory must, by design, hide these human economic relations; otherwise
the inherently exploitative nature of the system would be exposed. The ideas and formulae found inside economic
textbooks are therefore ideological concepts:
their role is to feign an explanation of the reality under investigation
while all the time masking its real nature.
That is why the liberal, who adopts whole hog the formulations of modern
economics, stands mystified before the contradictions and inequities of
economic life.
To
my mind the statistical facts of growing economic disenfranchisement cited at the top of this
essay ought to bring into question the legitimacy of our capitalist
system. The very category of the working poor should be taken as an
irredeemable indictment of our socio-economic regime. That a person contributing to the social
good, spending the better part of life producing goods or rendering services
desired by his or her fellow citizens, should be consigned to the indignities
of poverty, is not so much an argument to raise the minimum wage as it is a
knockdown case against the wage system in its entirety.
What
is the wage system? It is an economic
regime in which work, along with the produce of that work, is reduced to a
commodity. And as any commodity, work
has its market price. So it is with a
straight face that Mr. Kinsley can speak of someone "whose hourly work is worth
more than $7.25 but less than $9 an hour;" or of the challenge "if you can't
even start the game of life until you're worth $9 an hour;" or of the threat of
being "priced out of the market."
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