Wednesday, March 26, 2014

Lets "Decommodify" People

There is one point on which Adam Smith, the godfather of classical economics, and Karl Marx, its severest critic, are in basic agreement: that our "market society" is founded on the "commodification of labor." To quote Benjamin Radcliff, author of The Political Economy of Human Happiness:" The phrase is designed to illustrate the fact that people's ability to work---which is to say, their human capacity for intelligence, creativity, imagination, and judgment that separates them from the machines they manipulate--is something that is bought and sold in the market like any other commodity." Individuals must, of necessity, "sell their capacity to work--in order to survive." Given the difficulty of separating "who we are" from "what we do," it is well-nigh impossible not to "take the further step and simply think of people themselves being "commodified," i.e. being themselves turned into commodities." As counterintuitive as it may be, the first published exposition of the concept came in 1776, on page 67 of Smith's Wealth of Nations, the "bible" of classical economics,
as well as of today's neo-classical version. As you history and econ majors undoubtedly know, Marx was not even born until 1818. Two of America's most revered political philosophers--Thomas Jefferson and Abraham Lincoln--both asserted that labor was necessarily antecedent, and therefore superior, to capital.

Although Smith and Marx are in substantial agreement concerning the logic, advantages, and costs of capitalism, they diverge over the structural differences between the market for labor and that for everything else. Smith regards labor as a unique genus of commodity, and therefore governed by a different set of rules in the marketplace. He concurs with Marx that employers take advantage of their privileged positions to extract a disproportionate share of the "surplus" from their subordinates, that employees are forced to submit to this inequitable bargain because of their absolute need to provide for themselves and their families when the "means of production" are beyond their control, and that "profit" comes from the owner's disproportionate appropriation of the "surplus" or "value" created by the efforts of the workforce. That being the case, increased productivity ought to result in higher wages as well as greater profits, but we all know that the reality is more of a nightmare than a fairy tale. While Smith agrees with Marx that employers will maximize their self-interest by reserving a disproportionately large share of the surplus for themselves and their organizations, he concludes that this disparity can--and should be--remedied by removing what he considers "artificial restraints" on the labor market. Doing so, Smith posits, would establish a genuinely free labor market in which the worker's share of the surplus would be set by the same "invisible hand" that determines the price of every other, non-human kind of commodity. Marx, to the contrary, insists that the guiding hand needs to be "visible," in the form of what John Kenneth Galbraith brilliantly termed "countervailing forces," chiefly the organization of workers and the power of the democratically controlled state. It is precisely that divergence in remedies that still continues to place today's progressives/liberals and conservative/reactionaries at opposite ends of the political spectrum.

The operant question, then, is how to "decommodify" labor in order to bring about "the greatest good for the greatest number." I firmly believe that the most effective and reasonable solution is that laid out by Professor Radcliff in his The Political Economy of Human Happiness. At the risk of oversimplifying his carefully constructed and meticulously researched argument, the task requires three basic elements: Labor Unions, Big Government, and the Welfare State. Transactions in the market economy, Radcliff explains, "depends on an inherent asymmetry in power between two classes of persons, one of which depends for its livelihood on the sale of its labor power as a commodity, and another who purchases that commodity in order to so profit by." Capital is always in a superior position because "its very ownership over the capital resources that allow production ensure that it need not engage in wage or salary labor in order to survive or flourish." (He makes it abundantly clear that this same asymmetry obtains regardless of whether the laborers are unskilled workers toiling for a miniscule wage or a well-educated, highly-skilled, relatively well compensated professional. Although Radcliff avoids using the trite "golden rule" cliché that "he who has the gold makes the rules," the same logic obviously applies.)

The economic advantages of collective versus individual bargaining on wages, hours, working conditions, and "fringe benefits" are too well documented to rehearse here. What is less appreciated is the fact that non-union employees of the same enterprise also share in those benefits, and that union -negotiated contracts enhance pay scales throughout entire industries or professions. (My Dad was  a dues-paying member of the brewery workers union who was often involved in contract negotiations. I remember his anger when his fellow employees who refused to pay union dues were always among the first to press him and his fellow negotiators about what benefits they had secured for everyone.) Unionized workers also wield much more political clout in lobbying for labor-friendly legislation and campaigning in elections. Unionization, Radcliff. argues, "provides the basis for mobilization in the electoral and policy-making processes, wherein unions make financial and human (i.e. activist and volunteer) contributions to progressive parties and movements so as to become, potentially, an organized interest that sees itself as representing all workers. As historian Samuel Hays famously observed about life in the Progressive Era, it is a case of "organize or perish."  Or as various commentators over the years have put it, we live in an economy that provides socialism for the rich, and free enterprise for everyone else. The most affluent Americans passionately extol the benefits of "rugged individualism," while working even more passionately to protect their own advantages by creating ever more convoluted and powerful organizations. Moreover, unions bestow upon their members a sense of "agency"---of belonging to something greater than the individual, of making a difference, of "mattering" in the larger scheme of things, of being more of a valued human being, instead of  just a commodity.

Big Government and the Welfare State are almost inextricably intertwined. It is well-nigh impossible to conceive of a big government that does not include a variety of welfare functions within its scope. It is equally ridiculous to imagine a welfare state that is not a vital component of a vast and complex administrative apparatus. As Radcliff cogently explains, the welfare state "directly transfers income from its a priori market distribution to a politically determined distribution." Specifically, it "distributes unemployment and sickness benefits, family allowances, pensions, and other kinds of income maintenance to those in need." In short, it "decommodifies" persons in a manner that fundamentally changes the basic relationship between workers and employers, and that has profound consequences for both individuals and society. The welfare state reduces poverty and increases standards of living, ameliorates the insecurity endemic in the market system, as well as the pathologies resulting from it. In myriad ways, it also conveys a sense of "agency": the ability to control one's own life and to make free choices. It enables families to maintain an acceptable standard of living "independent of market participation," and "emancipates" them from "the deleterious consequences of the market." 

Besides administering the Welfare State, Big Government attempts to bring some measure of equity and rational order to the economy and the environment. The U.S. has never had an a completely unregulated, laissez-faire economy (not with Alexander Hamilton and Henry Clay setting the boundaries), but the marketplace and the desire for untrammeled growth and profit ran amok during most of the 19th century. Government regulation of the economy haltingly began with the Granger Laws of the 1870s, the Interstate Commerce Act of 1887, and the Sherman Anti-Trust Act of 1890. It picked up steam during the administrations of Theodore Roosevelt and Woodrow Wilson. The defining issue of the landmark election campaign of 1912 between TR and WW was whether the "Trusts" (code word for Big Business domination of the economy) should be "busted" or "regulated." Funny thing, small business people, farmers, workers, and just about everyone else regarded mergers producing monopolies or oligopolies to be a threat to their economic well-being. Nowadays we celebrate them as if they benefit everyone. <Who was more savvy--them or us?> The reforms of the Wilson administration--aided by World War I--produced the beginnings of a reasonably effective regulatory state, and those of the New Deal, Fair Deal, New Frontier, and Great Society built upon that foundation. The attempt to roll back the accomplishments of the Progressive Era during the 1920s resulted in the Great Depression, which, in turn, gave impetus to demands for greater federal regulation.

Even Eisenhower, Nixon, and mainstream Republicans generally understood that the Regulatory State and the Welfare State were not only here to stay, but were also the necessary components of a prosperous and equitable economy.So did most of the leaders in business and finance, even though they had to contend with high taxes, reasonably strict regulations, and empowered labor unions. The result was more than three decades of continuous growth and prosperity, the longest and most productive in our history. But it all began to unravel in the 1980s, and has been on a precipitous downward slide ever since. Much of that decline has been due to globalization, cybernation, technological revolution, downsizing, outsourcing and other supposedly "apolitical" developments, but the impact could have been far less devastating if most of the Big Government apparatus had not been systematically and maliciously trashed by reactionary Republicans and  "centrist, third way" Democrats, at the behest of Big Business and even Bigger Finance. For more detailed discussion see my posts of May 20, 2013 ("The Right Wing Juggernaut"), October 23, 2013 (Back to the 19th Century," and Rule and Ruin: the Downfall of Moderation and the Destruction of the Republican Party, from Eisenhower to the Tea Party by Geoffrey Kabaservice.

Of course, it goes without saying that Labor Unions, Big Government ,and the Welfare State are the major targets of "commodifiers,",Tea Partiers, and all those who don't understand where their own self-interest really lies. As I stated in my post about The Political Economy of Human Happiness (January 1, 2014), I wholeheartedly agree with Radcliff's argument that everyone---even the super rich and their minions--fare better under a progressive, "decommodified" regime. The historical record on that point is beyond serious dispute. But I am under no illusion that they will experience an epiphany and begin to work with progressives to build a just and humane society. It will have to be forced upon them.They will resist with every weapon at their disposal. It will be a long and bitter conflict, but "the good guys" have triumphed before.  <See my The Income Tax and the Progressive Era for a detailed account of the decades-long  struggle to enact the federal income tax over the ferocious resistance of the super-rich during the Gilded Age and the Progressive Era.> What can we, as mere mortals, do to bring about "the greatest good for the greatest number"? We can strive to be "active citizens," instead of "passive consumers" or "commodities in the marketplace.

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