Myth#27: Capitalism Is Good For Workers

I grew up taking pride in calling myself a capitalist.  At the simplest level it is simply letting individuals and companies freely trade with each other -- but a set of rules has evolved that defines what is fair.   The question is, "are the rules fair?".  Is there a balance of power between the various groups in our capitalist system?

Is our capitalism dominated by special interest groups just like our government?  Is it possible to have free and fair trade when the government that governs our capitalism is dominated by special interest groups?
  

"Free" Capitalism puts a value on everything relative to the value of everything else.  There is no other system that works better than this... how many pounds of bread is one pound of steel worth.  The Soviet Union didn't know how to  do this during their prime.  They looked it up in Western newspapers.  Really.  Of course, if they were having a drought in Society Union and not in the west, the Soviets were using a low value for bread.

Capitalism optimizes a system based on the underlying rules and power groups that operate within it.  For instance, print more money and capitalism lowers the value of that currency, although there may be a lag.   Raise taxes, something painful, and the system adjusts to avoid taxes more.  Make business taxes cheaper overseas then business moves overseas to minimize taxes.  

There are four primary groups in American capitalism, shareholders, customers, government, and workers.  All of these groups have power/representation except for the American worker.  Unions used to represent the worker, but their power has been minimized; government used to represent the worker, but our pathetic Congress no longer represents anyone but themselves in getting re-elected.

There is another huge factor working against the worker, there are seven billion humans on this plant.  Capitalism automatically discounts anything that is in excess supply. 
We are also replacing humans with machines, computers, and technology in general, see Myth#3 There are No Solutions for Unemployment.  Also not good for human's value in the capitalistic machine.

BUT sadly ... it goes further than this.  If capitalism just valued things based on their scarcity,  all still might not be too bad for workers.  But, the value of all things are adjusted by what I will call the Good Old Boy Club.  If one factor of production has the power to adjust its value, for instance, labor unions fifty years ago, then the value of an item is raised or lowered by this power, this leverage.   More on this in later posts. 

But for now, let me just say our form of Capitalism has been fined tuned by the Good Old Boy Club to optimize things for those in power.  And who is in power ... in corporations it is The Board of Directors and Upper Management, and in Government it is the Top Layers of Government and the Military Industrial Complex, see Eisenhower. 

In companies, it is easy to see how upper management serves on the Board of other corporations who in turn serve on their board.  They take care of each other.  The Good Old Boy Club has also reached from corporations to the government for decades, but with PAC's from corporations buying elections the connection no longer has to be secretive ... the buying and selling of officials is out in the open.  Congress for example has only one mission ... get elected, get re-elected.  And a complacent population that does not know history is easy to control. 

Most companies, like most families, just get by, making a modest profit, paying their bills, putting a little in the bank for a rainy day.  But, from time to time companies by the brilliance of their workers or simply being at the right place at the right time make a killing.  This is not bad because it means they have met a need or a want extraordinarily well. Government gets their cut via taxes and then the Good Old Boys in Congress spend it for their special interest groups. But who decides where the rest of it goes? 

To pick on Apple ... it has $400 billion in cash that has been generated from the combined brains of its workers and management and meeting the need for a great cell phone, the Iphone.  Shareholders have also put up cash to get the whole show started.  Who is going to decide how this bounty is destributed: hint: a few key shareholders and upper management.  The workers gave up their rights to any of this extraordinary bounty the day they signed a pile of papers in the personal office on their first day of work. If they wanted a job, they had no choice.  For example, they signed a paper saying any patents they create will belong to the company -- which strangely does not include them in this context.   The Good Old Boy in Upper Management will throw them a few crumbs to keep them happy, but they have no legal right to the wealth they helped create.  (Apple will take care of their workers better than most companies, but in our present world, they certainly are not expected to.)

How created wealth is distributed/shared is not automatically determined by capitalism.  It is a construct that develops by a series of laws and legal decisions and past practice that establishes the rules of capitalism in our country.  Of course, recall who writes the laws ... industry usually .. upper management ... the good old boy club.  If workers are employed because of their special skills, they do not have final say about matters affecting how money is distributed, or much of anything else.

So, we have developed our flavor of capitalism that very effectively distributes money to the good old boy club ... upper management, the Board of Directors, preferred shareholders (read good old boy club),  Congress (good old boy club), etc.  BUT NOT THE WORKERS.  

As jobs become more scarce (End of Work by Jeremy Rifkn), will we as workers and citizens fight over the last scraps or will be informed enough to unite together to change the rules of distribution. Will we unite to set up Term Limits for Congress? Will we even care enough to know what rule changes we want for our form of capitalism, or will we meekly follow the good old boys?