Thursday, December 14, 2017

Somebody Made the 'Precariat' and They Did It With the Power of the Vote

We have come to believe that our governments no longer control capitalism. What ails us economically is beyond Ottawa's command and, hence, not to be blamed on our federal governments. Everything from inequality (of wealth, income and opportunity) to precarious employment in the "gig economy" and so much more, it's someone or something else's doing, not our elected representatives'.

That's all nonsense, utter self-serving crap. Nobel laureate Stiglitz in "The Price of Inequality" illustrates how most inequality is neither market- nor merit-based but, instead, is legislated. It springs out of obscure policies that lavish tax breaks and deferrals, grants and subsidies, and the delivery of public assets either free or at far below market value to very narrow but powerful interests. It is the triumph of the private interest over the public interest.

In today's Guardian, the paper's economics editor, Larry Elliott, explores how governments in developed nations have played a bit of economic subterfuge on the public.

Humans have ...this predator-prey model. It is best demonstrated by the workings of the labour market, where there is a constant struggle between employers and employees over the proceeds of growth. Unlike the world of nature, though, there is no self-righting mechanism. One side can carry on devouring its prey until the system breaks down. Over the past 40 years, employers have been the predators, workers the prey.

Consider the facts. By almost any measure, the past decade has been a disaster for living standards. Unemployment has fallen from its post financial-crisis peaks across the developed world but workers have found it hard to make ends meet. Earnings growth has halved in the UK even though the latest set of unemployment figures show that the jobless rate is the lowest since 1975.

The reason is not hard to find. Unions are far less powerful; collective bargaining in most of the private sector is a thing of the past; part-time working has boomed; and people who were once employed by a company are now part of the gig economy.

These changes in the labour market are by no means confined to the UK or US. European countries that were at the sharp end of the financial crisis – Greece, Ireland, Portugal, Spain, Cyprus – found that the cost of help was a programme of wage cuts, austerity and privatisation.

Seen in the simplest terms, the story of political economy over the past four decades is a class war between capital and labour, which capital has won hands down. The battlefield is littered with evidence of labour’s defeat: nugatory pay awards, precarious work, the collapse of collective bargaining, and cuts in public spending.

And to the victors have gone the spoils: higher profits and dividends; lower personal tax rates; a higher share of national income. Life for those at the top has carried on much as before, even as the average worker has experienced the worst decade for wage growth since the 19th century. Unsurprisingly, it sticks in the craw for those whose living standards are going down to see the 1% whooping it up. Nobody likes to have their nose rubbed in it.

There was a time when parties of the centre-left would have been the beneficiaries of this resentment. Yet the German Social Democrats have just had their worst electoral result since the second world war; the French Socialist party has been reduced to a rump; the Greek socialist party Pasok has been wiped out; Hillary Clinton managed to lose the race for the White House to Donald Trump. In Spain and the Netherlands the story is the same. Everywhere there is palpable unhappiness about what is seen as a rigged system; but other than in the UK, it has not translated into support for parties of the mainstream left.

An explanation for this is provided by William Mitchell and Thomas Fazi in their book Reclaiming the State: the left has given up on the politics of class and concentrated on the politics of identity. And while this has led to some worthy victories, none of them has actually challenged turbo-charged capitalism, which has had the field to itself.


It is a big – and debilitating – modern myth that the neoliberal revolution of the 1970s and the 1980s weakened the power of the state. What actually happened was that parties of the right refashioned and repurposed the state to undermine the power of labour and strengthen the power of capital. The enduring power of nation states was highlighted in the 2008 financial crisis, when it was only the willingness of governments to wade in with public money and taxpayer guarantees that prevented the entire global banking system from going bust.

So here are the options. Parties on the left can carry on believing that capitalism can be tamed at a transnational level, even though all the available evidence is that this is not going to happen. They can seek to use the power of the state for progressive ends, even though this will be strongly resisted. Or they can sit and watch as the predators munch their way through their prey. Even for the predators, this would be a disastrous outcome.

All this talk of "class war" sure sounds like the ravings of a socialist firebrand. When Elliott mentions it, perhaps, but not so much when the same warning crosses the lips of one of America's wealthiest tycoons, Warren Buffett. The investor king didn't pull any punches when he said, "There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning."

And, while they've been winning, the people we elect to protect our interests, Parliament, have spent decades looking the other way. After all, we keep returning them to power and paying their considerable pensions, what have they got to lose?

Think Trudeau's Liberals aren't in on this? Think again. Think back to October, 2016, when Trudeau's multi-millionaire finance minister, Bill Morneau, told Canadian plebs that they would simply have to get used to a future of "job churn." 

With that crude dismissal, Morneau was serving notice that the Trudeau government, like the Harper government, was abrogating its democratic responsibility to the Canadian people. It was on the side of the other side. As Elliott points out, we've lost sight of just what the Trudeaus and the Morneaus are supposed to be doing, who they're supposed to represent. You would have to go back to the pre-Layton NDP to see our political caste truly fighting for the Canadian people.

But just to refresh memory, perhaps to help you recalibrate your political compass, I will again call on the progressive thinking of such legendary Americans as Abraham Lincoln and Theodore Roosevelt.

Let's begin with Abraham Lincoln who declared:

“I hold that while man exists it is his duty to improve not only his own condition, but to assist in ameliorating mankind.”

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.

If it is, indeed, man's duty "to improve not only his own condition, but to assist in ameliorating mankind," how is he to do that when his government consigns him to the precariat and tells him to "get used to it"?

If Labour is "the superior of capital" how is it that your government chooses to stack the deck so that capital prevails at the direct cost and damage to labour and our society?

Now let's turn to Teddy Roosevelt who observed:

"In every wise struggle for human betterment one of the main objects, and often the only object, has been to achieve in large measure equality of opportunity. In the struggle for this great end, nations rise from barbarism to civilization, and through it people press forward from one stage of enlightenment to the next. One of the chief factors in progress is the destruction of special privilege. The essence of any struggle for healthy liberty has always been, and must always be, to take from some one man or class of men the right to enjoy power, or wealth, or position, or immunity, which has not been earned by service to his or their fellows."

At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth."

"Practical equality of opportunity for all citizens, when we achieve it, will have two great results. First, every man will have a fair chance to make of himself all that in him lies; to reach the highest point to which his capacities, unassisted by special privilege of his own and unhampered by the special privilege of others, can carry him, and to get for himself and his family substantially what he has earned. Second, equality of opportunity means that the commonwealth will get from every citizen the highest service of which he is capable. No man who carries the burden of the special privileges of another can give to the commonwealth that service to which it is fairly entitled."

"There is a wide-spread belief among our people that, under the methods of making tariffs which have hitherto obtained, the special interests are too influential. Probably this is true of both the big special interests and the little special interests. These methods have put a premium on selfishness, and, naturally, the selfish big interests have gotten more than their smaller, though equally selfish, brothers. The duty of Congress is to provide a method by which the interest of the whole people shall be all that receives consideration."

"The right to regulate the use of wealth in the public interest is universally admitted. Let us admit also the right to regulate the terms and conditions of labor, which is the chief element of wealth, directly in the interest of the common good. The fundamental thing to do for every man is to give him a chance to reach a place in which he will make the greatest possible contribution to the public welfare.  ...No man can be a good citizen unless he has a wage more than sufficient to cover the bare cost of living, and hours of labor short enough so after his day’s work is done he will have time and energy to bear his share in the management of the community, to help in carrying the general load. We keep countless men from being good citizens by the conditions of life by which we surround them."

"The object of government is the welfare of the people. The material progress and prosperity of a nation are desirable chiefly so long as they lead to the moral and material welfare of all good citizens. Just in proportion as the average man and woman are honest, capable of sound judgment and high ideals, active in public affairs, — but, first of all, sound in their home, and the father and mother of healthy children whom they bring up well, — just so far, and no farther, we may count our civilization a success."

Like Warren Buffett's class warfare warning, these passages from Lincoln and Roosevelt aren't the ravings of radicals. These are two of America's greatest presidents. Their faces are carved into Mount Rushmore. 

They're not radical. Buffett isn't. Lincoln and Roosevelt weren't radicals. Yet in this cesspit of degraded democracy we endure today, this parliamentary dung heap of Harpers and Trudeaus and Morneaus, those words sound utterly radical and that can only be the measure of our democratic degradation. Think about that, mull it over.


Anonymous said...

The whole system will collapse when the precariat don't have enough money to pay the bills. The only thing holding the system together now is debt. When the banks come collecting, we'll see a depression like we've never seen before. Something will have to happen then.

In the meantime, our politicians have no backbone and won't stand up to the capitalists for fear of losing their political donations that help keep them in power. I find most politicians disgusting...they totally lack morals. Just look at the US Senate.

The Mound of Sound said...

I share your distaste for our political caste, Anon. There was a time they at least pretended to serve the nation and a time before that when they genuinely did. Now governance is focused primarily on achieving power or retaining power. That puts the political interest squarely at odds with the public interest and, in weakening that bond with the people, encourages the political caste to cut side deals with private interests for their mutual benefit at the public expense.