by Alan Briskin | Conscious Capitalism, Leadership
A serial journal of cogent reflections and irreverent insights on the social effects of capitalism and the roots of partisan politics. Pairing prose with HDR photography and “flash points” drawn from current and historical perspectives, the author seeks to recover lost wisdom and courageous action beyond the shouting and noise of today’s headlines.
Chapter Four, Part One:
Out of Depression and War, a
New Vision of Wealth Distribution
Time Range: 1929-1944, 2012
FLASH POINT
Wall Street, October 1929
The Roaring Twenties
collapsed amid a giant speculative bubble. The Dow Jones Industrial Average had
increased fivefold over a six-year period, and there seemed no end in sight. As
if in a giant craps game, players were left with their cash on the table. Who
would have guessed? The wealth benefits of surplus value appeared to have no
real counterforce, or so it seemed. Simultaneously, an investor class now began
to understand that speculation about the future of profit could be more
profitable than creating goods and services. It was this latter lesson that
stuck even as a whole army of economists would be engaged to figure out how to
avoid the next crash. Financial services, particularly the purchase and sale of
commercial paper, would eventually become the new game in town, but not quite
yet.
Freedom from Fear and
Want: State of the Union, 1944
In his final State of the Union speech at the end
of his second term of office, President Franklin D. Roosevelt laid out his thoughts
in a particularly blunt fashion. World War II was nearing an end but still far
from a clear conclusion. He had to rally a country that had been through a
desperate depression and still faced an uncertain future. In this speech, he
laid out the clear connection between security and poverty. He declared: “And
an equally basic essential to peace is a decent standard of living for all
individual men and women and children in all nations. Freedom from fear is
eternally linked with freedom from want.”
Yet
he knew this was not a shared belief. He warned of the insanity of “the
so-called ‘normalcy’ of the 1920’s” and went as far as to call those financial
excesses “the spirit of Fascism here at home.” Acknowledging American sacrifice
that had met the demands of war with courage and stood ready to make further
contributions, he cautioned about a “noisy minority” demanding “special favors
for special groups … who swarm through the lobbies of the Congress and the
cocktail bars of Washington, representing these special groups as opposed to
the basic interests of the nation as a whole.”
HDR (High Dynamic Range) Photography by Alan Briskin: multiple shots at different exposures are combined into one image in order to show “more of what’s there”.
Was Roosevelt feeling a little stressed out? No wonder his opposition suggested that he was a Socialist; he was making points remarkably similar to those of Marx at the Red Lion Pub. It was as if he were declaring the danger of lobbying groups shilling for owners of capital, congregating on an imaginary Das Kapital Street right in the heart of the nation’s capital. Could such a K Street ever exist? Would we allow it?
FLASH POINTS
Corporations
That Spent the Most on Lobbying Saw Tax Rates Decline: Report
“The top eight companies that spent the most on federal lobbying from 2007
to 2009 all saw their reported tax rates decrease from 2007 to 2010, according to a new analysis released Monday by the
Sunlight Foundation.
“The report notes that these top eight firms spent
$540 million on lobbying from 2007 to 2009. They filed 332 lobbying reports
that mentioned taxes and named 491 different tax bills in those reports.
“The top eight companies that spent the most on
lobbying were Exxon Mobil, Verizon Communications, General Electric, AT&T,
Altria, Amgen, Northrop Grumman and Boeing. Exxon Mobil spent the most, some
$81.92 million from 2007 to 2009.
“AT&T recorded the largest tax reduction, with
its tax rate falling from 34.0 percent to negative 6.4 percent from 2007 to
2010, or an estimated reduction of more than $7.3 billion.”
— Huffington Post, April 17, 2012
Roosevelt understood that we were entering a
period of increasing interdependence: “In this war, we have been compelled to
learn how interdependent upon each other are all groups and sections of the
population of America.” Not individuals, but groups. This is a critical
distinction, meaning that subgroups of the whole must learn to work toward
common purposes. We must, Roosevelt insisted, be concerned with groups made up
of businesspeople and farmers but also teachers on pensions and soldiers
returning from duty. We are all
interconnected. A high standard of living that leaves behind significant
subpopulations is a dangerous illusion. “We cannot be content,” he declared in
one of the more famous lines from his speech, “no matter how high that general
standard of living may be, if some fraction of our people — whether it be
one-third or one-fifth or one-tenth — is ill-fed, ill-clothed, ill-housed, and
insecure.”
Declaring
the need for an economic bill of
rights, he proclaimed that without them, individual rights of life and liberty
would be compromised and our political
bill of rights would be in jeopardy. Just as today we have, as a matter of
national pride, a system of government that protects free speech, free press,
free worship, trial by jury, freedom from unreasonable searches, and free
elections, Roosevelt hoped that one day we could say the same about an economic
bill of rights. What were some of these rights?
- The right to useful and remunerative work
- The right to earn enough to provide
adequate food and clothing and recreation
- The right of every family to a decent home
- The right of adequate medical care
- The right of adequate protection from the
economic fears of old age, sickness, and unemployment
- The right to a good education
During
Roosevelt’s time in office, he oversaw the creation of the Social Security
System, Securities and Exchange Commission (SEC), Federal Housing
Administration (FHA), and Works Progress Administration (WPA), and the passage
of the Wagner Act, which aided the promotion of unions. If Roosevelt sounded at
all like Marx in his warnings, his actions could not have been more different.
He believed in government’s right to act on behalf of those in need, rather
than have those in need organizing together in revolt. Marx was far more
cynical, if not realistic. He believed that governments would be lackeys
catering to whichever class of owners currently held power. He predicted that governments
would be socially incapable of reining in capitalism’s excesses.
Roosevelt
believed otherwise. He thought government should be willing to be referees in
the capitalist’s game of concentrating wealth in fewer and fewer hands. He
believed it was essential on both moral grounds and in the name of democracy as
a living, viable entity. For Roosevelt, political rights in the United States
and around the world depended on freedom from want as well as fear. If
political and economic rights diverged too greatly, he feared that terrorism,
fundamentalism, and extremism of all forms would split the nation and the
world. Was he just a worrier?
Next Week: Out of Depression and War, a New Vision of
Wealth Distribution, Part Two
The economic bill of rights highlighted a scar in the American psyche.
Roosevelt’s time in office, which included a failed coup d’état directed
against him, deepened the resolve of factions opposed to government
intervention. From this moment on, a
widening split would cleave those who believed in federal intervention from
those who perceived arrogance in a government that addressed questions of
economic distribution.
Conservatives, as opposed
to liberals, proclaimed that people had a right to own what they owned and
government should be on a very short leash. Government intervention should be
held to the strictest criteria for determining what benefited the nation as a
whole, especially in regard to infringing on private property and wealth
accumulation.
by Alan Briskin | Business, Collective Folly, Community, Conscious Capitalism
A serial journal of cogent reflections and irreverent insights on the social effects of capitalism and the roots of partisan politics. Pairing prose with HDR photography and “flash points” drawn from current and historical perspectives, the author seeks to recover lost wisdom and courageous action beyond the shouting and noise of today’s headlines.
Chapter Three:
Ghosts of Past, Present, and Yet to Come
Time Range: 1911, 2011-12
Would not progress and economic growth lift all ships? Rather than economic cycles leading to greater economic division and social fragmentation, would there not transpire higher levels of educational attainment, greater entrepreneurial opportunities, and increased social mobility? In time, isn’t it logical to think that an investment class would value knowledge and motivation for its workers, leading to better working conditions, not worse? How could it be otherwise? With time, progress would surely come.
Like the ghosts of Past, Present, and Yet to Come in Dickens’s A Christmas Carol, recently published as Marx trekked his way toward the Red Lion Pub, Marx’s portrait of the rich and poor tweaks the imagination and conscience. With little sentimentality, he predicted that society would repeat a pattern of boom and bust, with causalities counted, surprise voiced, and renewed commitment to the same pattern over and over again. His writings suggested that we would all be caught in a matrix of exploitation and protest already calculated into the design, until the final act — Judgment Day. Is it true? Are we simply trapped in a version of the movie Jerry Maguire, with the Cuba Gooding Jr. character shouting, “Show me the money!”?
HDR (High Dynamic Range) Photography by Alan Briskin: multiple shots at different exposures are combined into one image in order to show “more of what’s there”.
FLASH POINT
New York City, March 15, 1911
In the Triangle Shirtwaist Factory Fire, 146 garment workers died. The doors and stairwells to the exits had been locked to prevent theft and employees’ taking unauthorized breaks. Most of the workers who died were Italian and Jewish immigrants aged 16 to 23. Many died leaping from the eighth, ninth, and tenth floors.
In the 20th century, with the exception of one other fire and the destruction of the World Trade Center on September 11, 2001, it was the deadliest disaster in New York City’s history.
There were no eight-leaved clovers here, only actual working people. The fire stirred public outrage and forced city agencies to initiate safety reforms. The devastation also stimulated the growth of the International Ladies’ Garment Union in their efforts to battle sweatshop conditions.
Chengdu, China, May 2011
“[An] explosion ripped through Building A5 on a Friday evening last May, an eruption of fire and noise that twisted metal pipes as if they were discarded straws.
“When workers in the cafeteria ran outside, they saw black smoke pouring from shattered windows. It came from the area where employees polished thousands of iPad cases a day.
“Two people were killed immediately, and over a dozen others hurt. As the injured were rushed into ambulances, one in particular stood out. His features had been smeared by the blast, scrubbed by heat and violence until a mat of red and black had replaced his mouth and nose.…
“In the last decade, Apple has become one of the mightiest, richest and most successful companies in the world, in part by mastering global manufacturing. Apple and its high-technology peers — as well as dozens of other American industries — have achieved a pace of innovation nearly unmatched in modern history.
“However, the workers assembling iPhones, iPads and other devices often labor in harsh conditions, according to employees inside those plants.… Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms.”
~ New York Times, January 26, 2012
Mike Daisey, creator of the one-man show The Agony and the Ecstasy of Steve Jobs, defended his theatrical license when confronted with inaccuracies in his portrayal of certain events and dialogue based on interviews in Chengdu:
“I stand by my work. My show is a theatrical piece whose goal is to create a human connection between our gorgeous devices and the brutal circumstances from which they emerge. It uses a combination of fact, memoir, and dramatic license to tell its story, and I believe it does so with integrity. Certainly, the comprehensive investigations undertaken by the New York Times and a number of labor rights groups to document conditions in electronics manufacturing would seem to bear this out.”
~ Huffington Post, March 16, 2012
“Foxconn Technology Group will keep on increasing worker salaries in China and cutting the hours of work, Chairman Terry Gou said on Sunday, after it came under fire for poor working conditions for employees making Apple iPhones and iPads.…
“We have a saying now in the company, ‘You work fewer hours, but get more pay,’ Gou told Reuters at the 2012 Boao Forum for Asia in China’s Hainan island province. ‘We won’t stop here and will continue to increase salaries.’”
~ Reuters, April 2, 2012
Next Week: Out of Depression and War, a New Vision of Wealth Distribution
by Alan Briskin | Collective Folly, Conscious Capitalism, Politics
A serial journal of cogent reflections and irreverent insights on the social effects of capitalism and the roots of partisan politics. Pairing prose with HDR photography and “flash points” drawn from current and historical perspectives, the author seeks to recover lost wisdom and courageous action beyond the shouting and noise of today’s headlines.
Chapter Two:
The Calculus of Capitalism
1847 – 1880
What Marx provided was a theoretical blueprint for cracks that lay in the foundation of a new economic edifice called capitalism. And he did it in the way many intuitive but slightly skewed geniuses operate: by masking it in endless obsessive formulations that make one cry uncle and then demanding that no one deviate from its precepts. Clever. But his insights deserve a closer look if we think of them not solely as literal but also as allegorical intuitions about society, the collective.
Marx had an uncanny grasp of how systems evolve and become unstable. His insights are of particular importance today, when even some of our most successful capitalists are questioning capitalism’s further development and many feel the need to insert the word “conscious” as an adjective to describe the kind of capitalism that is sought. In this light, Marx can be seen as a forerunner of Freud, bringing illumination to unconscious capitalism. And to achieve his purpose, he used not personal dreams but the concept of surplus value, a hypothetical construct from which countless threads of connections were made.
Like dreams, surplus value was something obvious. Every business needed profit to survive. But like dreams, what at first seemed inconsequential or even innocent proved to have hidden meaning. Behind the obvious lay a labyrinthine set of relationships with very real consequences.
HDR photography involves multiple shots at different exposures combined into one image so the viewer can see more of what’s there.
FLASH POINT
New York City, 1890
“The truth is that pauperism grows in the tenements as naturally as weeds in a garden lot. A moral distemper, like crime, it finds there its most fertile soil. All the surroundings of tenement-house life favors its growth, and where once it has taken root, it is harder to dislodge than the most virulent physical disease.”
~ From How the Other Half Lives, written by Jacob Riis
Marx’s discussion of surplus value and the commentary from others that followed remind me of Talmudic debates about how far a person should be permitted to walk without wearing a skullcap on his head — i.e., endless debate with circular arguments that leave one pondering what, if anything, is being said. One can easily become overwhelmed by the debate and even wonder whether God could be so petty. But behind the debate regarding surplus value lay an insight about an invisible force competitive with any theology: the force of money, power, and influence.
Surplus value was the theorized amount that a worker labored beyond what was needed for his or her minimal subsistence. Each additional hour was a surplus that accrued to someone, the worker or the owner of the labor. At the time of Marx’s writing, factory workers spent on average 80 hours a week working, and much of it was surplus value. The question, of course, was who would benefit from the surplus increment.
Marx’s answer was the owner of the factory, the person who owned the means of production, a relatively small class of people who Marx wrote “created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces, machinery … clearing of whole continents for cultivation … what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor?”
Most critically, the calculus of surplus labor provided the ability to project profit after all costs of producing the product or service were removed. And this allowed one to attract investment capital, which created further growth, a never-ending cycle of wealth accumulation.
Consider Facebook today as an example of a company that attracted billions of dollars of investment before selling even one dollar of advertising. Its projection of profit was the attractor. Or Apple, whose Chinese factories and low costs of manufacturing ensured profitability from its ever-expanding network of products. The ability to favorably leverage surplus value fuels confidence among investors that greater and greater wealth is possible. How cool is that?
But Marx saw it all in a dispassionate glare, not the dream of social good fueled by producing ever more products and services but a fierce, never-ending conflict swinging tragically among groups vying for domination. There were flies in the wealth-accumulation ointment.
Marx foresaw competitors and counterforces lurking everywhere. Other capitalists would try to horn in on your product. Workers would demand higher wages. Governmental forces might interfere with your enterprise and would need to be neutralized. A ceaseless battle would ensue among those struggling to achieve wealth and others trying to hold them back. New classes of wealth producers would eventually replace older ones, such as in the case of the commercial classes of 17th-century Europe edging out the privileged bloodlines of the aristocracy or early-19th-century English capitalists overcoming the landed gentry. Wherever one turned, struggle and exploitation would be the rule.
In this new institution of commerce, labor-saving machinery would play a pivotal role as a means to reduce labor costs, but technological innovations would ultimately prove unsuccessful as the source of profit. In Marx’s hypothetical world, the costs of creating and purchasing labor-saving technology would cancel out its ability to generate surplus value even as each competing capitalist would be forced to incorporate the technology into his enterprise or be at a disadvantage.
Labor-saving machinery would result in greater unemployment, initially moderating worker demand for higher wages but influencing a drop of consumption as fewer people could afford new things. The downward spiral would lead to an ever more desperate attempt to find new markets and compete effectively with other capitalists. Larger enterprises would swallow up smaller ones, and, as in a game of musical chairs, consolidation would lead to fewer job opportunities, lessening or even lowering the demand for wages. Finally, surplus value would reappear and the cycle would continue.
Workers would again seek self-interest through higher wages, new kinds of labor-saving technology would be conceived, larger enterprises would swallow up smaller ones, profits would swell until limits were reached, often due to corruption, and economic collapse would follow. In Marx’s dark vision, the consistent element was that only human labor could provide surplus value, but with ruinous consequences. This is why Marx, never shy of the provocative metaphor, compared the capitalist class to the undead, because “vampire-like, [it] only lives by sucking living labor.”
Beyond the hypothetical cycles of boom and bust, Marx somehow also intuited a fundamental psychological conflict between the structure for making goods and the superstructure that owned and profited from the enterprise. The first required high levels of integration, cooperation, and concerns for interdependence. Multiple processes had to be aligned to produce the final product. A certain measure of fairness and motivation needed to be stimulated among those working together. What every organizational consultant today knows is necessary for successful enterprise was somehow foreseen by Marx, working out his obsessive formulas in isolation.
But Marx saw something else, a psychological quality that most of us do not want to see. It was this: The majority of owners would exhibit mirror-opposite tendencies. They would be highly individualistic, idiosyncratic, seeking autonomy more than anything else, wary of anyone with too intrusive a social conscience. They would be, for the large part, disdainful of the collective, particularly those elements of society that were not successful. Words like personal responsibility and accountability would take on almost a sacred tone when addressed to subordinates. What would primarily concern the ownership class was their privilege, solidifying their capital accumulation, passing it on to their children, and expanding their freedom to do exactly as they desired. Forces on behalf of social planning, with its requirement for a modicum of social cooperation, would thrust themselves against the psychology of individual privilege, and they would grind away at each other like tectonic plates just below the surface.
Main Sources
The Worldly Philosophers, by Robert L. Heilbroner
The Communist Manifesto, by Karl Marx and Friedrich Engels
Grand Pursuit, by Sylvia Nasar
Next Week: Ghosts of Past, Present, and Yet to Come
Would not progress and economic growth lift all ships? Rather than economic cycles leading to greater economic division and social fragmentation, would there not transpire higher levels of educational attainment, greater entrepreneurial opportunities, and increased social mobility? In time, isn’t it logical to think that an investment class would value knowledge and motivation for its workers, leading to better working conditions, not worse? How could it be otherwise? With time, progress would surely come…
by Alan Briskin | Collective Folly, Conscious Capitalism, Humor, Politics
A serial journal of cogent reflections and irreverent insights on the social effects of capitalism and the roots of partisan politics. Pairing prose with HDR photography and “flash points” drawn from current and historical perspectives, the author seeks to recover lost wisdom and courageous action beyond the shouting and noise of today’s headlines.
Chapter One:
Eight-Leaved Clovers of the World, Unite
London, 1847
On a bleak November day, two men trudged along Great Windmill Street in London. They breathed in air yellow from industrial waste and pondered the extremes of wealth and poverty that had sprung up like gods and demons across the city landscape. Between their poor vision and the London fog, they could barely see a foot ahead of themselves, but in their minds’ eye, they saw a future of increasing economic division. Somewhere not too distant in time, they believed, anger would well up among the workers, culminating in revolutionary action.
One of them wanted to show the world with a simple parable, like an ancient prophet, why society’s self-destruction was inevitable. The other, the son of a Jewish family that adopted Christianity, was born into affluence and respectability, but called to forsake his relations, though not so much that he wasn’t willing to borrow money from them. So it was that these two compatriots, Friedrich Engels and Karl Marx, made their way to the Red Lion Pub.
HDR (High Dynamic Range) Photography by Alan Briskin: multiple shots at different exposures are combined into one image in order to show “more of what’s there”.
FLASH POINT
New York City, 1890
“These are the economic conditions that enable my manufacturing friend to boast that New York can “beat the world” on cheap clothing. In support of his claim he told me that a single Bowery firm last year sold fifteen thousand suits at $1.95 that averaged in cost $1.12 ½.”
~ From How the Other Half Lives, written by Jacob Riis
It was as if the two of them were destined to emerge victorious among a ragtag group of immigrants, intellectuals, utopians, anarchists, and protesters who had come together to chart a new social contract. Marx, full of himself, was never more alive than in a good intellectual battle, and Engels had the cheerfulness, adaptability, and good nature of a born organizer. “This time we will have our way,” he wrote to Marx before they arrived in London. And have their way, they did. The German Workers’ Educational Union, a convenient public relations front for the Communist League, voted to adopt their draft of the Communist Manifesto, which Marx had read portions of out loud to the group. However, what the group heard was in some doubt, given Marx’s accent and lisp. One witness recalled that when Marx said “workers,” some thought he said “eight-leaved clovers,” which must have been somewhat confusing.
Marx and Engels were early practitioners of a particularly speculative and ambiguous field of social science initially described as “political economy” and later shortened to “economics,” denoting a more neutral and quantitative perspective regarding society’s production and distribution of goods and services. Originally derived from an ancient Greek word, the root meaning of economics had to do with the management or administration of a household. But the household was now nations and transnational corporations.
Marx and Engels were visionaries, foreseeing a new economic institution that was still emerging, one that would harness the energies of human imagination in no less dramatic a fashion than Prometheus’s giving fire to humanity. Engels, in particular, was awed by what was occurring around them. He was not alone marveling at the extraordinary gifts of commerce, high culture, diversity, social mobility, new services, and hope that this new economic institution engendered. Capitalism was a dream for many of an ever-lasting prosperity. Marx and Engels sought to waken them to its true consequences.
In mid-19th-century London, the physical location where Marx and Engels delivered the Manifesto, their parable on social disintegration, there was no greater center of commerce in the world. It was a marketplace without comparison, a hive of activity where “at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs” could be found. Incomes were, on average, 40% higher there than in other English cities, and the results were palpable, with a level of escalating consumer demand driving entrepreneurial forces toward novelty, innovation, new technologies, and entire new industries.
These new economic arrangements were a thunderbolt challenging hundreds if not thousands of years of human history. Commerce of this proportion was a social retort to common beliefs about the inescapability of material deprivation for the masses. Capitalism was to be a buffering institution between the transcendent and random forces of God and nature on the one hand and control over one’s own personal destiny on the other. Trade of this form and intensity was a force for progress, freedom, and increasing liberty. What could go wrong?
The question hovers over us today as it did for Marx and Engels. They were witnesses to an emerging economic institution that still had no agreed-upon name. In the Communist Manifesto, they were more prone to talk about a bourgeoisie class than a capitalist class, but over the next 20 years, Marx would settle on words and terms like capitalist and capitalist mode of production, using them thousands of times in his economic discourses. But just as “eight-leaved clovers” had been mistaken for “workers,” audiences would hear different things, make wildly different judgments about their meaning and effects, and in the end polarize the choices between capitalism and communism, missing the collective context and dreams that had brought these words to consciousness in the first place.
Main Sources
The Worldly Philosophers, by Robert L. Heilbroner
The Communist Manifesto, by Karl Marx and Friedrich Engels
Grand Pursuit, by Sylvia Nasar
Next Week: The Calculus of Capitalism
What Marx provided was a theoretical blueprint for cracks that lay in the foundation of a new economic edifice called capitalism. And he did it in the way many intuitive but slightly skewed geniuses operate: by masking it in endless obsessive formulations that make one cry uncle and then demanding that no one deviate from its precepts. Clever…
