Democracy and Capitalism

Patricia Cohen has an interesting essay on democracy and capitalism published by the International Herald Tribune.

Here's the link: http://www.iht.com/articles/2007/06/13/news/letter.php?page=1

A Different Globalization for Labor

It is commonly acknowledged among scholars and activists who identify as “progressive,” “liberal,” or otherwise left-leaning that globalization is bad in many ways for workers in developed countries such as the United States. While there is always tension between the interests of capital and labor, there have been moments when the economic interests of the two somewhat converged in specific contexts. In the case of “globalization” as currently practiced, with its “just in time” production, the outsourcing of manufacturing, and increasingly service, jobs, and free trade agreements conceptualized primarily in terms of free movement of goods and services (but not of workers), this is very much not the case. Rather, the interests of labor and capital (or corporations or “the economy”) are in some ways becoming highly divergent in developed nation contexts. (See also my recent posts on these topics: How Unique or Radically New is Our Current Situation Today?; Three Things Karl Marx Didn't See Coming; The "Sameness" of Republicans and Democrats)

Another common assumption is that such globalization processes are also bad for labor in the developing nation contexts that manufacturing and service jobs are being outsourced to, e.g. promoting sweat shop labor conditions. Robert J. Flanagan has recently published an important book on this topic, Globalization and Labor Conditions (Oxford University Press, 2006). Flanagan closely examines the available data on labor conditions around the world. He is clearly sympathetic to critiques of globalization, but comes to the conclusion that overall, globalization has led to improved conditions for labor in much of the world. He in no way implies that globalization processes make things wonderful for workers in developing countries. As he documents, there are things like sweatshop labor associated with globalization, but there are more overall jobs and fewer jobs with the worst labor conditions in more open developing economies – hardly what I’d consider a ringing endorsement, but still having more lousy jobs available might be better than having fewer or no lousy jobs available, even while still not good.

The argument Flanagan makes that I find most interesting is that workers in poorer countries would be well served by an even more open trade regime, one more open to the movement of labor. He writes (p. 181):

“Few people actively support poor labor conditions; many advance proposals for improving them. How should one sort through the flow of proposals to decide which ideas deserve serious attention? A very useful first principle of policy choice is to favor policies that expand, rather than contract, opportunities for target groups. The mechanisms of globalization fare very well by this criterion. The evidence developed and presented in this book and reviewed in the early part of this chapter shows how international trade, international migration, and multinational companies contribute to improved working conditions and labor rights. Contrary to the indictment of globalization outlined in the first chapter, the world’s workers would gain from fewer restrictions on these mechanisms of globalization. This conclusion applies most strongly to the world’s poorest workers. Relaxing barriers to international migration offers the most promising opportunity for expanding the positive impact of globalization on labor conditions, but prospects for international action to promote the international movement of labor seem dim at the beginning of the twenty-first century.”

Freer movement of labor (which wouldn’t have to mean unregulated or unmonitored) would benefit labor by allowing tools such as modern transportation technology to benefit labor as well as capital. As Flanagan suggests, this would most benefit the poorest workers, but by helping the cheapest labor not be stuck in place, easier movement would indirectly aid other workers as well by making the strategy of chasing the cheapest labor via outsourcing a little less effective.

As Flanagan also points out, international action to promote freer (and regulated) movement of labor is unlikely soon. For starters, it’s not in the interests of capital (though having some available undocumented immigrant labor to mercilessly exploit in developed nation contexts is in capital’s interests). Second, freer movement of labor is understandably resisted by labor in developed countries – more immigrants are more competition for jobs that are already being reduced through outsourcing.

A recent commentary in The Nation (May 7, 2007, p. 8) by Deepak Bhargava and Angelica Salas makes a case for immigration reform, including regulated but freer movement, being in the interests of all labor and a worthy progressive cause. Freer, but documented and regulated immigration could contribute to eliminating the abuses of undocumented laborers and the problems for resident laborers in terms of wage competition. Also, as argued above, a move towards a free trade regime that emphasizes not just free movement of goods and services but of labor as well would most benefit the poorest, but would indirectly benefit labor in general by reducing capital’s ability to locate and fix in place the cheapest labor (because those laborers could simply move elsewhere for higher wages, contributing to upward pressure on wages in general).

Like it or not, we’re stuck with capitalism and globalization. That’s simply not going to change anytime soon. We’re not so clearly stuck with the precise details of capitalist globalization as it now functions. For those of us seeing ourselves as progressives, it makes sense to contribute to efforts at modifying globalization so that it serves the interests of labor as much as capital.

2006 and 1930

In the April 30, 2007 issue of The Nation (pp. 16 – 20), Lawrence Cooper argues for what he calls “The Coming Party Realignment.” He bases this on a historical parallel with the early 1930s. In 1930, with voters newly disaffected from the effects of the Great Depression and seeing President Hoover seeming to do nothing to help, Democrats picked up a substantial number of seats in Congress. In 1932, the slight realignment of Congress was followed by a sort of political tidal wave, with Democrats gaining overwhelming control of Congress and picking up the presidency with FDR’s first term. Cooper sees 2006’s slight realignment of Congress to the Democrats as parallel to 1930, to be followed in 2008 by a parallel to 1932. He sees the causes of the 1930 and 2006 shifts as parallel as well – public anxiety over economic crisis. “For generations to come, American historians will doubtless be comparing the period 1930 – 1936 to 2006 – 2012 as years of crisis for capitalism.”

I find Cooper’s article interesting – and I’d like to think he’s right that a political tidal wave will largely sweep the Republicans away in 2008, though I’m not confident that will happen, and while he does point out some interesting parallels, I’m skeptical of his totalizing comparison of the two eras.

In both the 1930 and 2006 mid-term elections, the shift of seats in Congress from Republicans to Democrats represented a sort of informal referendum on Presidents Hoover and Bush, indicating voter dissatisfaction with them. But the causes of voter displeasure are not so parallel as Cooper presents (and the consequences in 2008 likewise need not parallel 1932). The election of 1930 represented displeasure and anxiety over the Depression as Cooper argues. While economic anxiety (and perhaps some disgust over the handling of things like Hurricane Katrina) may have been part of the backdrop for voters’ motivations in voting as they did (and more on economic anxiety in a moment), the primary issue in the 2006 election was clearly the Iraq War. Barring an extreme downturn in the economy, Iraq will probably be the main issue again in 2008, with economic anxiety, health care, and the Bush Administration’s various scandals as important, but distinctly secondary campaign issues. If things in Iraq continue as they are now, 2008 may see major victories for Democrats, but not really for the reasons Cooper argues.

1930 and 2006 are both periods of economic anxiety for many middle class Americans, and Americans in general. They have that in common, but 1930 and 2006 aren’t otherwise particularly comparable. Today, we see crisis and much anxiety for some workers, but capitalism is not in crisis, whereas in 1930 both workers and capitalism were in crisis.

Further the degree of crisis and anxiety, even for workers, is quite different in degree and kind. Middle class workers are rightly anxious today, about not going deeply into debt, about paying for a top college education for their children, about their job being outsourced and having to take a lower paying job, about their home losing value in a housing bubble, in some cases about having to shift from owning a home to renting. In 1930, many middle class workers were worried about having any sort of job and about whether there would be food in the short or long term. Things are serious for the American middle class today (and even more serious for those below the middle class), and that will likely have political repercussions, but it’s no Great Depression.

How Unique or Radically New is Our Situation Today?

Thomas Friedman’s book The World is Flat has been widely reviewed, read, and discussed. The book provides an engaging perspective on the current situation of globalization, even if the metaphor of the world being flattened becomes tiresome after about the twentieth or thirtieth repetition. There is one element of the book that I wish to disagree with here. This is the sense (not original to Friedman but very much present in the book) that most of us have much of the time that we live in a unique moment in history (though who hasn’t), with much that is radically new transforming how human life and culture work.

There is much that is new about our current situation, with much of it discussed intelligently by Friedman, including the importance of the internet and world wide web, personal digital technologies, shipping containers and mega-ships, just in time production, outsourcing of jobs – at first mainly manufacturing jobs but increasingly digitally based “information” jobs as well, 24 hour cable news, etc. All these and more do have immense impact on all of our lives, and this gives us the sense that we live in a unique moment of radical transformation. It’s more that we live within a world that is being continually socially transformed, but this has been happening continuously for a good century and a half, with the sense of living in a uniquely transformative moment occurring to people throughout this same period of time.

Modern life is characterized by a number of things that make it different from other ways of living. Some of the most important features of modern life are fast (and global) communication, fast transportation, mass media, and the dominance of a capitalist mode of economic production. Each of these was taking shape between the mid-eighteenth and mid-nineteenth century. Today we are surrounded by phenomena that represent important quantitative developments of each of these themes, and developed to the point that it makes a qualitative difference – life today is different than in 1950, or 1900, but the most radical historical distinction, practically a rupture with the past, occurred for a generation in the mid to late 19th century when the beginnings of modern communication and transportation, large scale mass media in the form of what Benedict Anderson has called “print capitalism,” and the fully developed industrial revolution all came together.

Fast Communication

In Simon Winchester’s book Krakatoa: The Day the World Exploded, August 27, 1883, one of the most interesting facts discussed is that the eruption and devastation of Krakatoa was one of the first, if not the first, events which people all around the world knew about within a couple days, thanks to a global telegraphy network by then in place.

Today, we take for granted near-instantaneous global communication, with nearly up to the minute news from around the world readily available. While this, made possible via all the communications technologies developed since the telegraph, is an important improvement over the flow of information around the world in a few days, the development and implementation of a world wide telegraph system was a far more radical transformation of communication. That is, the spread of information around the planet within a few days is quite rapid and even near-instantaneous, compared to the months it had previously taken for such global communication.

Fast Transportation

The most important recent innovations in modern transportation, as discussed by Friedman, are probably the standardized shipping container and mega-ships to carry them around the world, with these helping to facilitate just in time production, the outsourcing of manufacturing jobs, and the low prices at Walmart. Still, while many around the world still can’t take for granted the use of fast personal transportation or jetliners, and while these are just becoming readily available to the masses in places like India or China, these have been largely taken for granted by many in more economically developed parts of the world for decades.

Further, the truly radical and new invention was not of the airplane or automobile, nor the shipping container and mega-ship, but the harnessing of effective steam engines for transportation, whether in the form of ocean-going steam ships, river boats, or railroads. Not to diminish the significance of planes or cars, but the steam engine was the first modern transportation technology and made the world “small” to a greater degree, cutting transportation times for people or goods from months or years to days or weeks.

Mass Media

CNN, the world wide web, email, online news, and the blogosphere are important and make our lives today different than that of a generation ago. Again, though, the absolute new-ness of such technologies and media pales in comparison to the first mass media.

In Imagined Communities, Benedict Anderson talks about the significance of early mass media in the form of “print capitalism,” i.e. newspapers which had increasing prominence from the mid-18th through the mid-19th century. As Anderson argues, such early mass media had an important role to play in shaping how people saw the world and their place in it, and in the process helped to facilitate the development of national consciousness and the modern nation-state. For the very first time, large numbers of people within a particular national context were exposed to the same news in the same form at roughly the same time, facilitating a sort of national “dialogue” and the “imagined community” of the nation.

Capitalism

Capitalism has roots that stretch back before the mid-19th century, but it is during that period that capitalist production became dominant alongside a matured industrial revolution in an increasingly global economy. It was also in this period that quite large numbers of people in northeastern North America and western Europe were being “proletarianized” for the first time.

Most today take free wage labor for granted. Workers might fear the loss of their jobs or desire a larger slice of the capitalist pie in the form of higher wages or better benefits, but most workers, at least in places that have been thoroughly capitalist in production for several generations (Michael Taussig’s book The Devil and Commodity Fetishism in South America presents the very different perspectives of workers just being proletarianized in Colombia and Bolivia), don’t experience wage labor as unnatural or alienating (enervating, perhaps, but not unnatural or alienating – where instead pulling one’s weight or doing an honest day’s work can be a source of great pride). The process of becoming proletarian, of going from being a largely self-subsistent farmer or someone who sold the products of their labor to someone who sold their labor, a bodily process, without any ownership or stake in the products of their labor, was experienced quite differently. Today, and for a century or so in the earliest thoroughly capitalist parts of the world, labor unions typically fight for a better stake within capitalist production for labor, where early proletarians saw their new position as a radical and alienating experience, often resisting not only their low place within the system, but the system altogether.

Three Things Karl Marx Didn't See Coming

Karl Marx is rightly regarded by many as one of history’s most brilliant thinkers on society and political economy, while for many, including for many who regard him as an important foundational thinker for the social sciences, he has an image problem associated with the things done in his name in the 20th century.

There’s another problem for more orthodox Marxism (where Marxist-Leninism and Maoism are clearly unorthodox Marxisms) – namely that its predictions of a worldwide communist revolution have simply not come to pass. It’s possible we’re just not thinking with a long enough timeframe. Marx argued that the revolution won’t occur until all the contradictions of the capitalist mode of production have been developed and worked out, and it’s possible that that simply hasn’t happened yet – some of the phenomena associated with globalization, such as the outsourcing of manufacturing jobs as capital chases the cheapest labor in a global labor market alongside the attempt to cultivate those same outsourced workers as consumers of products now produced by cheaper labor in China or elsewhere, could fit right into the orthodox Marxist framework of the contradictions of capitalist production being worked out.

More importantly, I think, is that capitalism turned out to be more stable and resilient to revolutionary resistance than Marx envisioned. To be fair, this is largely due to factors that developed after Marx’s development of his basic ideas, so it’s more the case that capitalism turned out to be more stable and resilient than Marx could have envisioned and more stable than it actually was at the time Marx’s ideas were developing. There are three things in particular which Marx didn’t see coming that provided much greater stability to capitalist production – the limited liability stock corporation, a rapprochement between labor and capital, and a blurring of the distinction between capital and labor.

Before the legalization and establishment of limited liability stock corporations, initially in the U.K. and U.S., investors in a corporation not only risked the money they had invested in stock but also took on the risks of the corporation and any debts it might acquire in the case of failure. This placed a limit on the number of potential investors and on the variety of ventures that those investors would be willing to invest in; it also meant that personal fortunes were easily ruined along with the failing of a corporation. As a result, capital and capitalism were in fact highly unstable and susceptible to resistance at the time Marx was developing his ideas. The limited liability stock corporation, by making investors only liable for the specific amount of money they had invested, changed all of that. It didn’t guarantee the stability of a particular corporation, but did shore up the stability of capitalist production as a system.

Another thing that Marx didn’t seem to see coming was a rapprochement between labor and capital, especially in the U.S. by the early 20th century, but also elsewhere. The economic interests of labor and capital remain opposed, but the trade union movement realized it could achieve greater standing for labor by foregoing any attempt to radically transform the capitalist mode of production as the cost for acquiring a larger percentage of the surplus value produced in the form of wages. To be sure, more radical or revolutionary elements of labor, whether in the form of the I.W.W. wobblies in the U.S. or Bolshevik revolutionaries in Russia, greatly contributed to capital’s willingness to give concessions to less revolutionary trade unionists (just as the enhanced position of capital in the current globalizing context diminishes capital’s willingness to give concessions), but the mutual agreement of labor and capital to commit to capitalism and restrict their fight to the proportional share of the spoils gave capitalism a greater stability and resilience than Marx or anyone else in the 19th century could be expected to have imagined.

Finally, the division between capital and labor is blurred as never before. The opposition between the interests of capital as capital and labor as labor are as contradictory as ever, but for many individuals this now means that their own interests contradict, because to varying degrees they are both. Over the past century, the effects of capitalist production under limited liability stock corporations and in the context of a rapprochement between labor and capital have created a setting where more and more workers are also limited capitalists, primarily in the form of owning stock as part of retirement packages, tying individual worker’s interests to the interests of capital as never before.

The "Sameness" of Republicans and Democrats

There is a common lament, in particular by liberals and other leftists, that the U.S.’s two major political parties are all the same. One of the benefits of the Bush Administration is that it has taught us how far from true that claim is. Certainly fewer still engage in this lament than before 2000 (to maintain the claim is tantamount to thinking that the events of the last six years would have gone essentially the same under a Gore Administration), but it’s still a common enough sentiment. While I do regard as patently ridiculous any claim that the Republican and Democratic parties are virtually identical (which doesn’t mean that I think either party is particularly great), I do think that they are more similar than is healthy for the representation of a broad range of interests and perspectives in a fully functioning democracy.

There are several reasons for this, some of which are widely familiar: both parties are heavily lobbied and largely represent corporate and other monied interests, and this has become more true as campaign financing has become a more and more important part of federal and state and some local politicking.

There is another factor that produces some convergence between the parties that reflects a feature of the relationship between labor and capital for the last century in American capitalism. An article in the February 24, 2007 issue of The Economist (p. 37), “The Environment: Green Sums,” discusses different reasons why passing new legislation to tighten emissions caps for automobiles will have trouble passing through Congress. Not only will Republicans, or Democrats, who routinely represent the interests of the automobile and/or oil industries be reluctant to pass on such legislation, but so will those Democrats who rely on the support of labor, and in particular auto workers who see more stringent emission standards as threatening the standing of manufacturing jobs by threatening the standing of American auto corporations.

There has always been, and always will be, an opposition in the interests of labor and capital that is a structural element of capitalism (even while there has been a blurring of the line between who is labor and who is capital, via things like stock holdings as a now fairly standard part of retirement packages for workers fortunate enough to have retirement packages). While there is a perennial tension between capital and labor, there has been for a century or so a limited rapprochement between the camps in the U.S., with the labor movement in the U.S. for a long time now emphasizing a stable stake within the capitalist system rather than any sort of revolutionary transformation.

Globalization has enhanced the bargaining position of capital while greatly diminishing labor’s bargaining position and ability to hang on to a stable piece of the capitalist pie. So far at least, labor has responded not by radicalizing (and this smartly so – globalization has greatly weakened the structural position of labor anywhere, even while benefiting those same workers as consumers in some ways) but by conservatively attempting to hang on to what it has. It might never have been the case that what is good for General Motors is necessarily good for labor, and that certainly can’t be taken for granted today, but it is very much the case that what is bad for General Motors is bad for labor. One result is that Democrats who do genuinely try to represent the interests of labor on some issues end up converging with politicians who more clearly represent the interests of capital.