Econology Part 4: Emergent flaws of Capitalism, part 2
...immediate continuation of Econology Part 4: Emergent flaws of Capitalism, part 1
Post-Great Depression reforms transferred some measure of economic control to workers and successfully stabilized economy for the post-war boom. But three decades ago, supply side economics came into vogue touting ‘reducing barriers to production’ and ‘ramping up capital investment’ as the means to promote economic growth. This has shifted the balance of power in the economy to where the desires of capitalists guide essentially all government and fiscal policy.
Supply side economists were able to liberalize the definition of ‘barriers to production’ to include ‘cost of production’, making wages fair game.
------------------------------------------------------------------------
Profit = consumer price – cost of production
Cost of production =
labor (worker wages) + facilities + materials + transportation
Facilities (buildings, tools & equipment) = wages + materials
Materials = wages + land + facilities
Transportation = wages + facilities + materials
------------------------------------------------------------------------
With carefully coded cultural references and political doublespeak, the capitalist elite have been extraordinarily successful at loosening regulations and rules to give themselves free reign to prey on workers worldwide. The undermining of labor unions, privatization of government services and globalization have all damaged the ability of American workers to mount significant opposition to their agenda. Repeal of financial, safety and environmental regulations frees capitalists from costs of compliance; international trade pacts give corporations higher legal standing than national governments (global governance through trade agreement); subsidies, tax cuts/breaks/loopholes and government contracts/subcontracts transfer public funds into private hands; government austerity eliminates any need for tax increases. Some policies have the potential to deliver government contracts to private suppliers: military action enriches the military industrial complex and intelligence contractors; war on drugs and immigration policies enriches the private prison industry; charter schools and testing enriches school management corporations and test providers. Then there are social policies (women’s rights, LGBT rights, civil rights, gun rights - added bonus, directly benefits gun manufacturers) which help capitalists maintain their political influence so as to retain their hold on public policy.
Capitalists have translated the farming practices of Dust Bowl into weaponized policy designed to extract more than ‘surplus’ production from their workers. (Ecologically, surplus production is the loss a prey population can sustain with no loss to viability. Economically, it is best defined as profits based on paying workers a fair living wage.) They eliminated or minimized worker defenses against capitalistic depredations (Figure 10) as a way to freeze and reduce wages over time and transfer manufacturing jobs abroad (compare Figure 4B and Figure 11B, see Figure 11H, L). Loss of domestic manufacturing jobs have swelled the ranks of domestic low wage workers (Compare figure 4A and Figure 11A) while expanding the base of (foreign) workers from from whom capitalists can extract even more capital (Figure 11L).
...immediate continuation of Econology Part 4: Emergent flaws of Capitalism, part 1
Post-Great Depression reforms transferred some measure of economic control to workers and successfully stabilized economy for the post-war boom. But three decades ago, supply side economics came into vogue touting ‘reducing barriers to production’ and ‘ramping up capital investment’ as the means to promote economic growth. This has shifted the balance of power in the economy to where the desires of capitalists guide essentially all government and fiscal policy.
Supply side economists were able to liberalize the definition of ‘barriers to production’ to include ‘cost of production’, making wages fair game.
------------------------------------------------------------------------
Profit = consumer price – cost of production
Cost of production =
labor (worker wages) + facilities + materials + transportation
Facilities (buildings, tools & equipment) = wages + materials
Materials = wages + land + facilities
Transportation = wages + facilities + materials
------------------------------------------------------------------------
With carefully coded cultural references and political doublespeak, the capitalist elite have been extraordinarily successful at loosening regulations and rules to give themselves free reign to prey on workers worldwide. The undermining of labor unions, privatization of government services and globalization have all damaged the ability of American workers to mount significant opposition to their agenda. Repeal of financial, safety and environmental regulations frees capitalists from costs of compliance; international trade pacts give corporations higher legal standing than national governments (global governance through trade agreement); subsidies, tax cuts/breaks/loopholes and government contracts/subcontracts transfer public funds into private hands; government austerity eliminates any need for tax increases. Some policies have the potential to deliver government contracts to private suppliers: military action enriches the military industrial complex and intelligence contractors; war on drugs and immigration policies enriches the private prison industry; charter schools and testing enriches school management corporations and test providers. Then there are social policies (women’s rights, LGBT rights, civil rights, gun rights - added bonus, directly benefits gun manufacturers) which help capitalists maintain their political influence so as to retain their hold on public policy.
Capitalists have translated the farming practices of Dust Bowl into weaponized policy designed to extract more than ‘surplus’ production from their workers. (Ecologically, surplus production is the loss a prey population can sustain with no loss to viability. Economically, it is best defined as profits based on paying workers a fair living wage.) They eliminated or minimized worker defenses against capitalistic depredations (Figure 10) as a way to freeze and reduce wages over time and transfer manufacturing jobs abroad (compare Figure 4B and Figure 11B, see Figure 11H, L). Loss of domestic manufacturing jobs have swelled the ranks of domestic low wage workers (Compare figure 4A and Figure 11A) while expanding the base of (foreign) workers from from whom capitalists can extract even more capital (Figure 11L).
As a short term strategy to boost investment returns, the transfer of capital from workers to capitalists was extremely profitable (Figure 11C, D). And having amassed enormous personal wealth and income, capitalists are more intent than ever to extract labor from their workers and effectively syphon capital away from active, domestically productive circulation.
But this volume of capital transfer comes at a price. The consequence of reducing the income of workers is less spending by consumers, or a reduction in market activity [decoupling production (by moving factories abroad) from domestic consumption doesn’t increase domestic consumption when consumers have no income to spend]. This decreases the total amount of productive capital circulating in the economy (compare blue arrows in Figures 4 and 11). Circulating (productive) capital is the food workers and their families eat, the medical care that keeps them healthy, the public services which educates them, the rent and mortgage payments that houses them; in short, all spending. And it cannot be stressed enough in in light of current economic trends, the productivity and spending of the largest strata of workers is the momentum which keeps capital moving and productive. Taking capital out of circulation challenges the resilience and wellbeing of workers and reduces their productivity (compare Figures 4A, B and Figure 11A, B). Continuous drainage of capital sets up a downward spiral of economic decline.
Capitalists defend their predatory corporate policies with the false ‘trickle-down’ meme. They claimed that boosting their income (Figure 11D) would increase their spending output (Figure 11E) which would inject more capital into the system which would eventually ‘trickle-down’ (blue arrows, Figure 11E - F - G - J - A) to boost job creation. And capitalists did spend their extra income: they spent their wealth to build factories abroad and pay foreign workers (Figure 11H, L); they bought risky financial instruments and fueled the housing bubble; they ‘bought’ foreign bank accounts (Figure 11H) to avoid paying U.S. taxes (none of which increases domestic productivity). Fact is, consumer spending of high income earners do not increase with income because they’re already consuming at maximum levels. So any increase in wealth/income of capitalists is ‘spent’ on investments that further their wealth. And in the past several decades, that been not been the domestic economy.
If capitalists continue siphoning away domestically produced capital, consequently contracting the domestic job market, the fear is productivity will eventually decline to subsistence levels. At that point, any predation, no matter how low, becomes unsustainable (Figure 12). As it stands now, workers have been so depleted of capital that capitalists are moving on to bigger prey, the higher tier producers; job contraction is now affecting professional workers (see here and here).
Automation threatens a similar outcome (Figure 13) by bypassing workers. In the absence of earned capital, workers cannot circulate capital. By excluding the major drivers (workers) of circulating capital, automating production under a capitalist economic system risks the cessation of capital movement.
Extreme collapse is unlikely to happen because workers would probably revolt first. It is the responsibility of American workers and especially our policy makers to avert either outcome. It’s job of economic policy makers to establish and maintain a stable sustainable flow of capital.
***
Thus far, this discussion has focused on traditional economic issues through an unconventional lens. This lens also lends itself to viewing non-conventional economic issues from an economic perspective. Discrimination, for example, is a deeply rooted, pervasive social phenomenon which has been discreetly cultivated by capitalists. It serves as a reliable fount of discord to distract workers from their self-interest (‘I don’t trust those so ’n sos…' 'Who knows what trouble they’d stir up in a union.’) and a means to identify a less worthy class (‘I can hire a so ’n so to do this job for a fraction of what you’re asking’). Discrimination further stratifies and fragments workers which disrupts attempts to organize cohesive opposition to capitalists (Figure 14). So some of the responsibility for social unrest, racist incidents, sexism, classism, etc. lies at the feet of capitalists, validating again the precedence of economics. Economies (the wellbeing of workers) not predators should police public policy, whatever their names or titles.
***
The next and final part will describe solutions to our economic woes in the context of the ecological economic cycle.
***
Thus far, this discussion has focused on traditional economic issues through an unconventional lens. This lens also lends itself to viewing non-conventional economic issues from an economic perspective. Discrimination, for example, is a deeply rooted, pervasive social phenomenon which has been discreetly cultivated by capitalists. It serves as a reliable fount of discord to distract workers from their self-interest (‘I don’t trust those so ’n sos…' 'Who knows what trouble they’d stir up in a union.’) and a means to identify a less worthy class (‘I can hire a so ’n so to do this job for a fraction of what you’re asking’). Discrimination further stratifies and fragments workers which disrupts attempts to organize cohesive opposition to capitalists (Figure 14). So some of the responsibility for social unrest, racist incidents, sexism, classism, etc. lies at the feet of capitalists, validating again the precedence of economics. Economies (the wellbeing of workers) not predators should police public policy, whatever their names or titles.
***
The next and final part will describe solutions to our economic woes in the context of the ecological economic cycle.
No comments:
Post a Comment