Roundtable
Dear Robert
First, I did not mean to say that the New Deal was bad, only that it completely failed in its main objective: to restore full employment. Throughout Roosevelt's first 8 years, unemployment did not fall below 15%.
In Canada, a small business is defined as a company that employs fewer than 50 people. It turns out that the average hourly wage is considerable higher for the employees that work for big businesses than for small ones. Moreover, the average duration of employment is longer for people who work for big businesses. Small businesses go broke more often. Conclusion: on average, it is better to work for a big company than a small one, at least in Canada.
In a modern capitalist society, most people are employees and derive their income from wages. They have an obvious interest in high wages. However, to capitalists, wages are costs, which they seek to minimize. In that sense, yes, the interests of capitalists are at odds with the interests of the broad majority.
Still, if there is no collusion between employers, competition among them will eventually insure that productivity growth will result in higher wages.
Let's illustrate this. There are 1000 people, of whom 10 are capitalists, who each employ 99 people. Each employee produces 1000 widgets per year at 10 dollars per widget. Each employer can then gross 1000 x 99 x 10 = 990,000. Let's assume that the raw materials for each widget cost 2 dollars and that a worker earns 5,000 per year. Each employer can then make a profit of 990,000 - 693,000 = 297,000.
Now let's suppose that one employer finds a way of doubling the productivity of his workers. He can now sell 198,000 widgets per year. To increase his market share, he offers the widgets at 9 dollars. He can now make a profit of 198,000 x (9 -2) - 5,000 x 99 = 891,000.
However, people will start buying more of his widgets because they are cheaper. This means that he will have to hire more employees. To entice them from his competitors, he will offer them higher wages, and that's how wages are supposed to rise as a result of productiviy growth.
Firms that are the first to succeed in increasing the productivity of their workers can afford to sell their product cheaper and thereby increase their market share. Since this means that they need more workers, they'll start offering higher wages. It isn't altruism, just the old-fashioned profit motive.
Competition among employers is just as important for workers as competition among producers is for consumers. Competition is the invisible hand that can make the profit motive socially beneficial. It isn't that greed is good. It is that competition tames greed. Unrestrained greed is indeed socially harmful. That exists under monopoly. Just imagine if one capitalist owned all the water inside the US. It would be very, very bad news.
Housing is a special case because houses need land. Suppose that in a certain area the land for housing is fixed. Then the price of houses will be determined by land and not by the cost of building a house. It is no accident that housing prices rose much faster in places like San Francisco than in a Midwest city. There is very little buildable land in SF. Wages in the construction sector were no doubt depressed by all the illegal immigrants.
I quite agree that in capitalism the government should not fall under control of the capitalists. That would be plutocracy. How to avoid that capitalism turns into a plutocracy is indeed a very serious problem. Democracy must by its nature have some anti-plutocratic tendencies because the majority of people have very little capital but they do vote. One man one vote is a counterforce to one dollar one vote.
As David Hume pointed out, real power always lies with the many. That's why the ruling few need an ideology to convince the many that what is good for the few is also good for the many. Under feudalism, peasants have to be convinced that they have every interest in submitting to the landlords. Likewise, the Republican plutocrats try to convince ordinary Americans that what is good for business is good for everybody.
Regards. James
First they broke the unions, then they hired the illegals. The exact same thing in many manufacturing plants, especially meat processing. Slaughterhouses, poultry-processing and seafood processing plants all used to be good union jobs with high wages. First they took out the unions, then they brought in illegals or other immigrants to the work. Many other fields besides construction have been taken out by illegals, including painting and landscaping. My White friends did all of these jobs and made good money doing it. Having your own landscaping business is still a good way for young White men to earn some decent money. So much for Americans won't mow lawns. This is all gone now as most of this has gone straight on over to illegals.
Your argument operates only in the cases of a labor shortage. With a vast surplus of labor, an "army of labor" as the capitalists call the teeming hordes of unemployed, there is not much need to raise wages to compete with other businesses for top employees, as there are 5 guys waiting to take the place of the guy who quits.
The notion that unions are not necessary for workers to have good working conditions is unique to union busters. If unions are superfluous, do nothing but harm workers, and don't even raise wages or improve conditions, why would anyone join one? Better yet, why would capitalists oppose them so ferociously? The record all over the West seems to be that the more unionized a labor force is or was, the higher wages were. Economic growth used to be spread out among all income classes in the US back in the 1950's and 1960's.
In the 1970's, this started to decline to the point now where, from 1980-1992, only the top 20% gained money and the entire bottom 80% of the population lost money. I would argue that this is exactly how the capitalists wanted it. This occurred during the pro-business Reagan and Bush Administrations. Furthermore, the decline in US wages and the lack of filtering down of productivity dovetails perfectly with the devastation of US unions. Not only that, but the war on US unions, along with the theft of workers' productivity growth, was all part of a project by US business. To say that in the US, the businessman is the worker's friend stretches reality. Unless the worker organizes to get a good wage, a share of economic and especially productivity growth and better conditions, thing look quite bleak.
The social market that you praised in Europe is also the project of massive labor union mobilization in Europe. I would also argue that it was created by devastating the European Right first by killing 10 million of them (10 million dead fascists in WW2), next by making rightwing ideology toxic for many years after the war, and finally by revolutionary pressure from the Far Left before and after the war, which led the business sector to seek out a class compromise and a social contract mostly to ward off revolution. Even the Swedish model mostly came into play in the 1930's when the nation was wracked by violent, radical and revolutionary labor actions all up and down the land. This so rocked the business and ruling classes that the Swedish model was created as a lesser evil alternative to ward off revolution.
Even in Costa Rica, radical pressure helped create Costa Rican social democracy, now deteriorating after Reagan ordered the Costa Ricans at gunpoint in the 1980's to get rid of it. After WW2, Costa Rica outlawed the Communist Party, killed 6,000 Communists, instituted a social democracy to buy off social unrest and got rid of the military as a rather interesting way to top it off. Without revolutionary pressure in 1946, Costa Rican social democracy may never have occurred.
Mexico today has some semblance of socialism and at least has a land reform that enables to poor to own small plots and at least survive and eat if they cannot find work only because 20 million during Pancho Villa's revolution that at least put Mexican feudalism in the grave forever. In the same way, in El Salvador now, one can at least farm a small plot, eat and survive, something often not possible before the Revolution started. For that meager reform, 70,000 people died. Lenin said power never gives up without a fight. And all social reforms in capitalism have come on the heels, tragically, of a river of blood. Or at least a small stream.
Without pressure from below by revolutionaries and radicals, it is uncertain how many of the nice social contracts in place in world would exist.
I would agree with you that the New Deal did not create full employment. Many said that the Depression existed until the war. The war was what took us out of the Depression.
I would say that history has taught Capitalism that free Education and Law and Order run by the state is essential for capitalism to work, as without those things capitalism fails.
It looks like Capitalism is learning across the globe that free and equal health provided by the state is also essential for capitalism to run (from a free market economic point of view).
Socialism wants national health and education for the benefit of the people, Capitalism wants national health and education for the benefit of the market and growth as an economy with higher skilled more versatile workers who are in good health is a more productive one.
I consider myself vey left wing and technocratic, and Im deeply in favour of the Free Market, but only if the state provides good free education and health for all, minimum wage, povery benefits, unemplyoment benefits and the chance for adults to get apprentiships and qualifications for free when ever they need to or want to (within reason) so as to allow the lower skilled workers to keep up with the fast pace of the free market and all the jobs cuts and creations that come with it.
The Free market is humanities best hope for destroying poverty, but only if it is galvanized by the state correctly where by social mobility and equal oppurtunity and social justice and lack of social deprivation is followed through. This makes both moral and economic sense.
The Labour Government of the UK (left wing/progressive) is in the process of implementing a scheme whereby people whove been on unemployment benefits for over a year will have to do at least 1 month of community service while still being paid by the state with unemployment benefit, before being given the option of doing a free Apprentiship of other qualification (while still getting unemplyoment benefits) in order to allow them to get a decent paid job or continuing with paid community service until they chose the former option. This makes both moral sense and economic sense, as unlocking the talents and skilling up unemployed people benefits the induvidual unemployed person and the economy and the local region's prosperity and wealth.
anyway, anarcho-capitalism would'nt work as it would eventually lead to a feaudal state.
Democracy is the only tool underwhich capitalism or socilism values can work. Anarcho capitalism would lead to feudalism and human slavery (for the ruling monarchy), socialism to communism leads to a dictatorship which has often lead to human slavery (for the state). and slavery is bad for the economy, not just the people.
If you look at the 3rd World, they do want public education and they certainly do not want state health care. Even here in the US, the capitalist class has waged all out war on public education and national health care through the Republican Party, although the Democratic Party also now seems to oppose national health care. In places where national health care has been put in, the capitalists and their rightwing parties quickly wage ideological warfare to get rid of it.
In Europe, even the capitalists have gone along with naitonal health care, although in the UK they have been whittling away at it since Thatcher. In China, national health care is apparently gone as a right. In Russia, too, it scarcely exists anymore. Same with some of other East European states like Bulgaria. The first thing the hero of both US parties, Violeta Chamorro, did when the Sandinistas were overthrown was to get rid of free public education and free national health care. In Canada right now, the rightwing party and the business class have declared war on the national health care system, but it is popular, so they have to tread lightly.
Only in Europe has a Gramscian revolution taken place whereby the social market is supported by the media and the elites. So you have a situation whereby corporate executives actually support social democracy because they love the free health care and the long vacations.
If the business classes in the US supported public education and national health care, we would not have a decades-long war against them waged by the Republican Party and supported by the business class in its entirety. It is true that some more enlightened capitalists (esp big businesses) do support public education and even national health care, but they are an exception.
In this way, the small business class is even more reactionary than big businesses. The small business class supported Ross Perot and Ron Paul and are often far to the Right of the corporate guys. This rightwing populism can and does lead to fascism. Small business and the petit bourgeois were the army behind fascism in Nazi Germany and have led many far right movements in the US too. The petit bourgeois resents the plutocratic elites for screwing them, but on the other hand also resents the working classes for being unionized and making good money via union wages. They feel oppressed by both groups. Also, many did not go to college. They work in offices, banks and stores as clerks, tellers, low-ranking managers, etc. It's often equated with something like the lower middle class. They often have no class consciousness at all, which is why they are often fodder for the Far Right.
What you are advocating above is socialism in one of its many forms. This form being the social market or social democracy. I am a strong supporter of social democracy along the lines of the European model. So you are not really advocating free market capitalism at all. The social market is a regulated capitalism with many government programs as a safety net and considerable government involvement in and even ownership of parts of the economy. In Sweden, 93% of the economy is private, but almost everyone, including managers and office workers, is unionized.
Government involvement in the economy takes the form of guidance as a corporatist element. Ownership of aspects of the economy takes the form of ownership of large industries like aircraft and ship building, national airlines, vehicle manufacturing, national rail, etc. It's worked quite well. Keep in mind that capitalists are loath to invest invest in industries like ship building in which it may take 100 years to make your first profit. These industries need to be state-run for a long time. Further, passenger rail is almost never profitable for the private sector, so they just don't run passenger trains. Since it operates at a loss as its nature, it must be run by the state.
This is what is so sick about the endless demands on Amtrak to make a profit - it is almost impossible for Amtrak to make a profit, becuase large passenger rail networks almost never do. In order to profit, they would have to charge so much money that they would hardly get any passengers. In the same way, city busses never run at a profit either, hence we never see the private sector running passenger busses inside cities. Do you see any private rail lines running passenger rail in any areas of the US? Of course not. Because it's not profitable. Passenger rail must be run by the state for it to exist at all. Demands for Amtrak to run a profit are perverse, dishonest and wrong. How many Americans think Amtrak needs to run a profit? Of those with an opinion, possibly most. This is what propaganda will do to you.
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