THE WAY WE ARE NOW

Alerted by Jim’s evocation of Frederick Jameson’s minatory words, I shall not here attempt to imagine the end of capitalism, but I shall begin a general analysis of the present situation, drawing, as I indicated, on the work of Marx and the data of Piketty et al.

We human beings at all times and in all places live by purposefully and collectively transforming nature as well as ourselves in order to meet our needs and gratify our desires.  Capitalism organizes this activity by placing ownership of the means of production in private hands, thereby enabling the owners to demand a ransom for the use of the means of production from those who actually use it to do the work.  The ransom is called profit.  This arrangement is enforced by the police power of the state and its courts, and is rationalized and sanctified by religion, philosophy, literature, mass media, and neo-classical economics.

Part of the ransom is re-invested to expand the scope of production in hopes of increasing the flow of profit; part is devoted to maintaining the life style of the owners of the capital; and more and more as the years go by, a part of the ransom is simply accumulated in monetary form but neither re-invested nor spent on luxury goods.

Ever since the emergence of the modern joint-stock corporation, as memorialized by Adolf Berle and Gardiner Means, it has become common for the class of managerial employees to hi-jack a portion of the profit and pay it to themselves in the form of exorbitant salaries and stock options, comfortable in their insulation from the shareholders who are, in legal theory if not in economic practice, the owners of the ransom.

It is immediately obvious that this set of arrangements guarantees that the owners of capital will, barring a temporary Depression or a destructive World War, grow steadily richer.  At some times, those doing the work will be successful in demanding a larger share of what they produce, either in the form of higher wages or in the form of government transfer payments.  At other times, the share of those who do the work will be driven lower.  But always, structurally, inevitably, ineluctably, the owners will grow richer.  This is the outcome that Marx’s theory predicts and that Piketty’s data confirm.

Since capitalists are mortal but capital is not, over time an ever larger share of the ransom is passed on to young men and women who, though no doubt of sterling character, have had no hand at all in its accumulation.  In Piketty’s term, derived from the French, there emerges the patrimonial economy.  This is an eminently satisfactory state of affairs if you are one of those born to the purple.  For the rest of us, not so much.

Species in which individuals of one sex is very much larger than individuals of the other are said to be sexually dimorphic.  A striking example is the blanket octopus.  According to the National Geographic, “Males are about the size of a walnut—less than an inch long—but some females can reach a whopping six feet long.”  Capitalism, we might say, exhibits a monstrous economic dimorphism.  The aggregate net worth of the lower one half of all American households is zero:  the totality of the value of their assets, be they homes, cars, bank accounts, television sets, cell phones, or household furnishings is offset by the totality of their debts – mortgages, credit card debt, student loans, and the like.  Bernie likes to say, for effect, that America’s richest three people have more wealth than the bottom half of the population, but that actually underestimates the disparity, if Piketty, Saez, and Zucman are to be believed.

What to do?  I shall address this vexing question tomorrow.