- js reader version
- view hidden posts
- tags and related articles
by Ann Robertson and Bill Leumer
Thursday, Dec. 13, 2012 at 4:37 AM
In his recent New York Times op-ed piece, Princeton professor and regular columnist for The New York Times, Paul Krugman observed:
The American economy is still, by most measures, deeply depressed. But corporate profits are at record high. It’s simple: profits have surged as a share of national income, while wages and other labor compensation are down. The pie isn’t growing the way it should — but capital is doing fine by grabbing an ever-larger slice, at labor’s expense.
And then he adds with almost shocked incredulity: “Wait — are we really back to talking about capital versus labor? Isn’t that an old-fashioned, almost Marxist sort of discussion, out of date in our modern information economy?”
This is exactly the conflict that Marx identified as the fundamental, inescapable contradiction of the capitalist system that would eventually create the conditions of its downfall: there is a tendency for the owners of businesses, the capitalists, to accumulate ever-vaster wealth while the people who work for them experience a declining standard of living.
Marx supported this conclusion by offering a description of the fundamental operating mechanism of capitalism. Capitalism is based on the principle of private ownership and competition. Private businesses compete with one another for customers, and those who fail to attract a sufficient number eventually perish. But in order to attract customers, businesses must maximize the quality of their product while minimizing its price. If two products embody the same quality but one is cheaper, customers, in pursuit of their self-interest, will purchase the cheaper version, all other factors being equal.
This means that capitalists must constantly attempt to minimize the price of their product simply for the sake of their own survival. If a business devises a way to lower costs, it can capture the market. But, as Marx pointed out, labor costs are a huge factor in determining the price of a product. So those businesses that minimize labor costs can prevail in the dog-eat-dog world of capitalism. For this reason, a downward pressure on wages and benefits is always operating to one degree or another.
But Krugman made no reference to this aspect of Marx’s analysis and instead identified two other factors that contribute to the growing inequality in wealth between capitalists and workers, both of which are discussed by Marx.
The first factor involves the introduction of technology into the labor process, i.e. “labor-saving” technology. In other words, machines replace workers or reduce the amount of skill required in the labor process. To give a current example, software has been developed that analyzes legal documents at a fraction of the time it takes lawyers while costing much less. Accordingly, many well-paid lawyers lose their jobs to such software. Living during the industrial age, Marx supplied many such examples.
Krugman referred to his second explanatory factor that increases inequality between capitalists and labor as the “monopoly power” of large corporations where “increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees.” Here Krugman is approaching the heart of Marxist theory.
Krugman is basically arguing that large corporations use their power to override purely economic trends and simply demand that their employees work for less. But this is precisely the point of Marxism, although from the other direction. Marx persistently argued that capitalism could not function without the willingness of the working class to perform the work. When workers organize and engage in collective action by withholding their labor, the balance of power shifts in favor of the workers who can then demand higher wages as a condition for their return to work, as the ILWU (International Longshore and Warehouse Union) recently did on the West Coast and the teachers did in Chicago.
Amazingly, Krugman never mentions the decline of organized labor as a huge factor explaining the decline of the standard of living of working people, adding that there has been so little discussion of these developments. But others, especially former Secretary of Labor Robert Reich, have discussed these trends and identified the decline of labor as a major factor.
In the 1930s when labor unions were tenaciously fighting for working people, huge gains were made in terms of salaries and benefits. They conducted militant sit-down strikes and mobilized tens of thousands of people from the community to support labor’s struggles. Their successes were to a large degree responsible for the emergence of the so-called middle class that thrived in the 1950s and 1960s.
Workers who are organized, acting both collectively and forcefully, can change the economic landscape. But once organized labor becomes complacent and relaxes its guard and ceases to struggle, the laws of capitalism ineluctably grind down their gains and the growing inequality returns until workers again rise up.
Marx argued that eventually workers would see the futility of this repeating cycle, reject capitalism altogether, and begin to construct a socialist society built on entirely humanistic and democratic principles.
In a recent New York Times article on unionizing workers at the bottom of the pay scale, a union organizer was quoted as saying, “We must go back to the strategies of nonviolent disruption of the 1930s.” Currently organized labor is all but dying out. Strikes are like an endangered species. Rather than engaging in militant struggles, union members are urged to elect Democrats who then call on workers to accept sacrifices.
AFL-CIO President Richard Trumka has called on working people “to fight like hell” to resist cuts to Social Security and Medicare. But these are just words. To this date, the unions have failed to mobilize their members to stage massive demonstrations across the country against cuts to these popular social programs – demonstrations that could culminate in hundreds of thousands of working people descending on Washington, D.C. to make their demands clear to the Obama administration and the rest of the politicians. Without the unions taking the lead in this struggle, there is little individual workers will be able to accomplish. And if the unions refuse to return to their more militant roots but remain invisible, economists like Paul Krugman will continue to ignore their existence and overlook their current historic failure to defend working people.
Report this post as:
LATEST COMMENTS ABOUT THIS ARTICLE
Listed below are the 10 latest comments of 1 posted about this article.
These comments are anonymously submitted by the website visitors.
Anti-Eviction Mapping Project Shows Shocking Eviction Trends in L.A.
Steve Mnuchin video at UCLA released
Actress and Philanthropist Tanna Frederick Hosts Project Save Our Surf Beach Clean Ups
Resolution of the Rent Strike in Boyle Heights
Step Up As LAPD Chief Charlie Beck Steps Down
Our House Grief Support Center Hosts 9th Annual Run For Hope, April 29
Don’t let this LA County Probation Department overhaul proposal sit on the shelf
Echo Park Residents Sue LA Over Controversial Development
Former Signal Hill police officer pleads guilty in road-rage incident in Irvine
Calif. Police Accused of 'Collusion' With Neo-Nazis After Release of Court Documents
Center for the Study of Political Graphics exhibit on Police Abuse posters
City Agrees to Settle Lawsuit Claiming Pasadena Police Officer Had His Sister Falsely Arre
Professor's Study Highlights Health Risks of Urban Oil Drilling
Claims paid involving Pasadena Police Department 2014 to present
Pasadenans - get your license plate reader records from police
LA Times Homicide Report
Last of California's nuclear power plants is on its way out
Patrisse Khan-Cullors explains why Black Lives Matter
Women's March L.A., 2018
The case for US government sanctions on Israel
Women of LA Rise Again to Denounce Trump Photoset 4
Women of LA Rise Again to Denounce Trump Photoset 3
Women of LA Rise Again to Denounce Trump PhotoSet 2
Women of LA Rise Again to Denounce Trump PhotoSet 1
Women's Political Representation & Electoral Reform
Trial Starts for Woman with Erb’s Palsy Punched in Face Repeatedly by LAPD Officers
Dear District Attorney Jackie Lacey, Prosecute Killer Cops, Signed: Your Constituents
Great solidarity action today
More Local News...
Paraphysique de domination/scotomisation
legal blog - police surveillance
FBI Tracked Activists Involved With Black Lives Matter as They Travelled Across the U.S.
Important report on fbi atrocities
Questions for TSA after reports of laptop and phone searches on domestic flights
No, Robert Mueller And James Comey Aren’t Heroes
Baltimore cops and the rotten core of policing
Spring 2018 National Immigrant Solidarity Network News Alert!
Six Months After Maria, Puerto Rico and US Virgin Islands Wait for Relief
Trump - Hard as Steel
Paraphysique de l'hologramme
Fbi crimes and cover-up by local authorities
what does a mexican driver's license look like?
One Way to Respond to Foreign Ops in Our Elections
Stratégie onirique du coup du monde
Tour Announcement: Whole Milk's California Cruising Tour 2018
50 years have passed since the Kerner & McCone Commissions
Crash on the Horizon
Caribbean Religious Leaders Call for Debt Relief in Face of Disasters
America's judiciary is in collapse
Under the Gun in Ireland
The Shortwave Report 03/16/18 Listen Globally!
Travail de l'idéologie
Crisis 2.0: A Policy for the 99%
How fbi corrupts cjs
When Will the Me Too Movement Take on the New Age?
La société du plagiat compilateur
12 Step Programs Free Me From Addiction
More Breaking News...