OPINION

ANOTHER FINE MESS

As regards the crisis in this country, not only the mess the financial institutions have gotten us into, due to their greed and growing largeness and interdependence, and the constant pressure on the mass of people (us) to over-consume, and in light of the growing spread between the rich and the rest of us, who like to think we’re the middle class but are actually included in the bulk of the people who are poorer than they have ever been and working harder than ever to keep it that way, these words from Edmund Wilson’s To the Finland Station: The Revolutionary Tradition in Europe and the Rise of Socialism explicating some of Karl Marx’s statements on an unregulated capitalist system, seem to me quite revealing. He may have been wrong about a lot of things, but not economics. Marx believed that the capitalist system involved fundamental contradictions which ensured its eventual destruction. His theory of these contradictions – which he thought of in terms of Hegelian opposites*[– may be stated with much simplification as follows:The capitalist system was based on private property and so was inevitably competitive. The aim of every manufacturer was always to undersell the rest, so that there would be a continual stimulus to more efficient methods of production. But the more efficient an industry became – the faster the machines were able to do the work and the fewer people were needed to tend them – the more people would be thrown out of jobs and the more would wages be reduced. That is, the more the commodities produced, the fewer the people who would be able to buy them. In order to get rid of his goods under these continually tightening conditions, the manufacturer would have to undercut his competitors, and that would mean further reduction of wages and still more efficient machinery, and, consequently, again in the long run, fewer people would be able to buy what he was making. This situation has already produced a jam and a depression about every ten years; and the only way for the manufacturer to get a reprieve from the vicious cycle was to find new foreign markets for his products – an escape which would not in the long run save him.

The more efficiently goods were manufactured, the more money would be needed for the plant; and it would seem to pay the manufacturer to build the plant bigger and bigger. Thus the industries would keep growing and the companies keep merging till each industry would be well on its way becoming one great unified organization, and the money which kept them going would have been concentrated in a very few hands. But actually the bigger big business grew, the larger the sums of money it dealt in, the smaller its rate of profit became. At last the contradictions involved in this process would jam the whole system so badly – there being no more fresh markets available – that it would become intolerable, impossible, for society to function at all unless the money and the great centralized plants were taken away from the people who claimed to own them and who were incapable of conceiving them as a means to any more beneficent end than that of making themselves rich out of the profits, and were run for the public good. The working [read “middle”] class would be able to accomplish this, because it would have increased to enormous proportions and have grown conscious of its interests as a class as incompatible with the interests of its employers; and it would now find itself so hard-pressed by privation that no alternative would be possible for it. All its scruples would be overcome by the realization that this privation coincided with an era when the production of what they needed had become possible with an ease and on a scale which had never been imagined in history.

Now we may reject the Hegelian-Marxist Dialectic as a genuine law of nature, but we cannot deny that Marx has here made effective use of it to demonstrate the necessity for socialism. Nothing else had so brought home the paradoxes of destitution imposed by abundance, of great public utilities rendered useless by the property rights of those who controlled them. Nor was it necessary to accept the metaphysics of the Labor Theory of Value and to argue from it a priori, as Mr. Strachey does, in order to be convinced by Marx that this process must land capitalism in an impasse. The great thing was that Marx had been able, as the bourgeois economists had not, to see the capitalist economy in the perspective of the centuries as something which, like other economies, had had a beginning and must have an end. Mathematician, historian and prophet, he had grasped the laws of its precipitate progress and foreseen the disasters of its slumps as nobody else had done. * This is not important to this quote; it involves what is called thesis, antithesis, then synthesis. In other words, to simplify it pretty badly, pressure in society to grow and change, counter-pressure to keep things as they are, and a compromise that resolves the contrary pressures so that growth can take place.

My comments: This is remarkable in as much as Marx pondered and wrote these ideas back in the 1860s or 70s. Wilson’s book, which is one of the best histories of an ideology that I know of (i.e. an intellectual history), was published in 1940. Unbridled capitalism has lasted as long as it has only because two brave U.S. Presidents did something about it: Theodore Roosevelt when he trust-busted (took action) against the powerful financiers of his day; and Franklin D. Roosevelt, who steered this country toward socialistic solutions to the great Depression of his day. Otherwise politicians, both Democrat and Republican, but especially Republican, have been financed by the powerful rich with their lobbies and bribes, and have not tried very hard to regulate or control the enormous greed of those who seek power and money as their only goals in life. Reagan began the deregulation, at the same time running up a trillion dollar debt whose only good was to bankrupt the Soviet Union and bring an end to the Cold War. The death blow has been given by George W. Bush, who started his first administration by giving a trillion dollars to the wealthy few, and starting a foolish war that has already been the longest this country has ever fought and is still costing us ten billion dollars a month (one billion of which, naturally, goes to Dick Cheney’s company, and which means, of course, that they will see he gets his cut once he is out of office for a while). Always, those in power scare us with words like “socialism” and “nationalized,” words left over from the Red-scare to keep us from looking at the truth about our society. The chief function of a government is, to me, to secure our liberties and keep us free from attack, both without and within. But capitalism must be regulated to keep us from attack within; otherwise you are turning society over to the predators and thieves. And certain things are essential to socialize: education and health, for starters. These are just two of the things that should not be run by the profit motive, indeed, cannot be so run. There are other requirements of living the good life that do not lend themselves, or should not be, to satisfaction by profit-seeking people. There is a Biblical saying that the poor will always be with us; so, too, will the rich. But they have to be regulated. We cannot expect people whose only aim is their own wealth and power to do what is right, or even best, for the people as a whole.

Now, for the financial crisis: The government will probably bail out the wealthy people who got us into this mess because of their greed. A basic tenet of behavioral science is, reward the behavior you want, don’t reward behavior you don’t want. I don’t think we ought to reward the behavior of the financial institutions, and their executives, who got us into the mess. I know not doing so will have enormous consequences to society as a whole (or so they tell us, and they’re probably right). My personal view is that we should spend the 700 billion by pumping it into the economy where it will do some good, and help the people who will be, and are, most hurt by this huge failure of our leaders. For starters, we could double the FDIC account protection to $200,000; help the hapless home owner caught up in this terrible housing mess; strengthen Social Security so the benefits will be there for all poor baby boomers who have been deluded into thinking 401ks are truly a safe way to provide for your old age; put more money into schools and spend money on public projects to provide work for the unemployed; and lengthen the term for unemployment benefits. And, for God’s sake, really regulate the foxes that are in charge of our chicken coops.

It’s a bad, bad sign that the gap between the rich and poor has continued to widen in this country, as if we’re a banana republic. It is not true that what’s good for General Motors is good for the country, not when the worker making the cars cannot afford to by one (and, by the way, look at the mess General Motors is in; another case of greed running a corporation. Remember when they made cars built to obsolesce in three years. Thank God for the Japanese, who taught them, though they really haven’t learned the lesson, to make cars that are economical and that last more than a half dozen years). And while I’m on it, we’ve got to stop being so totally a society of consumers; there are other things in life than just material goods.

The trouble with consumerism is that enough is never enough; let’s start appreciating some of the more important things in life, our families, culture, personal growth, and, yes, even a more spiritual life.