Since 2007, All the Trouble Is In the Labor Market
No May Day would be complete without fawning coverage of socialism, the ideological strain that traces back to Karl Marx. It wasn’t always this way, of course, a more recent embrace which has sought to soften the rough edges of the practical (meaning genocidal) consequences of the man’s philosophy. The key to it, as always, is labor.
Right now, on Netflix you can watch a series called Genius of the Modern World. Historian Bettany Hughes has chosen three men whose contributions she claims shaped the world in which we live. They are Sigmund Freud, Friedrich Nietzsche, and, of course, Marx. They all contributed, all right, but the last one in particular not so much in a good way. Genius.
The New York Times, as it has been doing a lot the past few years, published an op-ed this week in time for May Day that outright stated Marx was right. Happy birthday to him:
“In 2002, the French philosopher Alain Badiou declared at a conference I attended in London that Marx had become the philosopher of the middle class. What did he mean? I believe he meant that educated liberal opinion is today more or less unanimous in its agreement that Marx’s basic thesis — that capitalism is driven by a deeply divisive class struggle in which the ruling-class minority appropriates the surplus labor of the working-class majority as profit — is correct.”
The author of those words was Jason Barker. Mr. Barker is an associate professor of philosophy at Kyung Hee University in South Korea. One wonders if he can’t see over to the other side of the DMZ (a well-earned cheap shot).
As you can tell from just this one quote, Barker is no recent convert. He has been preaching about Marxism for some time. This isn’t particularly new or interesting, many especially in the academic world having been doing just that since Das Kapital was first made widely available. The question we need to ask ourselves is, why now?
Marxism is relatively simple in its criticism of capitalism, even though it gets to it by a long, superfluous road. It denies there is any such thing as voluntary exchange. In any modern economy, you are no longer the owner of your own labor. You can’t survive on your own therefore you are forced into a labor/wage arrangement that greatly benefits the business owner (capitalist). This latter person or persons steals your labor by pocketing a surplus. They win, you lose. There is no mutually beneficial arrangement by this understanding.
This massive income inequality becomes paramount, on both sides. For the socialist, it is the animating feature of worker unrest and dissatisfaction. For the capitalist, it is an inherent flaw that inevitably, as Marx forecast, leads to the system’s destruction. Too much wealth concentrates at the top, can only concentrate at the top, torches and pitchforks not long after.
That’s ultimately what Marxists have been waiting for – the worldwide revolution and total overthrow of the old order. Whenever you hear one denying the empirical proof of socialism’s destructive traits, economic as well as in its human toll, they will uniformly claim that it whatever it was wasn’t “true” socialism. Marx knew even in the nineteenth century that so long as even a small sliver of capitalism was left available somewhere in the world, the revolution could never be complete; it would fall short of true socialism.
Thus, Venezuela today or the Soviet Union yesterday were not really communist or socialist according to this rigid doctrine. In 1850, Marx told the Central Committee to the Communist League:
“[It is our duty] to make the revolution permanent until all the more or less propertied classes have been driven from their ruling positions, until the proletariat has conquered state power and until the association of the proletarians has progressed sufficiently far—not only in one country but in all the leading countries of the world—that competition between the proletarians of these countries ceases and at least the decisive forces of production are concentrated in the hands of the workers.”
To most people upon being exposed to such dogma it sounds like lunacy. To base an entire philosophical structure upon the idea of strict coercion just doesn’t comport with a life full of choices. Only someone like Bernie Sanders could complain about twenty-three kinds of men’s deodorant.
In bringing up that topic in 2015 during the early stages of the 2016 Presidential Campaign, many thought Senator Sanders was disqualifying himself by being obviously ridiculous. Not so, his supporters responded. To them, it was another genius statement, a cutting critique worthy of this Marx revival.
Matt Bruenig of the Progressive outfit Demos wrote in defense of the Senator, calling the underarm argument “one of the most substantive of the campaign so far.”
“Whenever someone argues that we should distribute the national income more evenly so as to reduce poverty and inequality (as Sanders does), the very first thing someone says in response is that doing so will reduce growth and innovation. Sanders is mocking this argument, saying he'd gladly cut poverty and inequality even if it meant a reduction in superficial product innovation.”
In other words, the Socialist in power would be there to redirect the nation’s energies away from developing 18 different pairs of sneakers and toward inventing the internet, clean fuel, and all the stuff capitalism has already provided (in addition to 23 types of deodorant). That waste, what Bruenig claims is “superficial”, could then be channeled into ending hunger (despite the fact that today even the most impoverished among us are in far more danger of obesity than starvation).
The New York Times was once somewhat less willing to stand for all this. In January 1982, the newspaper reported what was still a common occurrence on the other side of the Iron Curtain. We might forget today that it was ultimately food shortages that spurred on the Solidarity movement in Poland, one of the most crucial developments that eventually toppled the Eastern bloc dominoes. In Russia itself, the Times noted the irony of one state food store situated just two miles down Krasnoprudnaya Street from the mighty walls of the Kremlin.
“At noontime one day last week the meat counter was down to pitiful cuts of beef and mutton, mostly fat and bone. After a few weeks late last year when it disappeared from Moscow shops, butter was on sale again, but with a limit of 1.1 pounds per shopper. The vegetable counter boasted symmetrically arranged displays of carrots, beetroot and cabbage, but much of it was rotten.
“A foreigner not long in the Soviet Union who visited the shop whispered his surprise to a Muscovite companion. But the man was not dismayed. 'Comparatively speaking, this is really quite good, better than many of the stores in the suburbs,' he said. ‘There, you're lucky to find butter at all, and there's hardly ever any mutton.'”
Just four months later, in May 1982, Soviet leader Leonid Brezhnev was forced to defend two decades of disastrous top-down agricultural policy. How in the world could a supposedly modern nation in nineteen eighty-two descend into such mismanagement that its government would have to declare food an urgent national emergency?
Again, from the New York Times:
“Although Mr. Brezhnev went to some lengths in his speech to defend the agricultural policies he has pursued in his 17 years in power, he underscored the urgency of the problem when he declared that a rapid improvement of food supplies 'is not only a top economic priority, but also an urgent sociopolitical task.'”
Brezhnev’s speech was never shown, instead his words were redelivered on state television read by local announcers. He blamed the capitalist West, as was and is standard practice, for not sharing its overabundance without ever noting the stinging irony of the complaint. Food embargoes were one thing the poor Soviets were forced to endure, but that only meant the system wasn’t quite the self-sufficient powerhouse Josef Stalin once claimed Communism would create for, could only create for, Russia.
“In the long document, the Soviet leader recited the increasingly familiar litany of Soviet agricultural problems -chronic inefficiency in all areas of food production, shortages in mechanization, migration of peasants to the cities, shortages of fertilizer and herbicides, an antiquated and irrational pricing policy, lack of coordination among sectors, and transportation and storage problems that led to immense waste through rot or loss.”
This was no minor backwater new to the doctrine, it was Soviet Russia the world’s pre-eminent example of Marxism and nominally a global superpower. But Brezhnev never had to contend with twenty-three kinds of underarm sprays. He might have spared himself, and his country, quite a lot by doing nothing more than reading Leonard Read’s actually powerful 1958 essay I, Pencil.
“…if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing.”
If Marx was ever right about one big thing (he was actually correct about a number of smaller things), it was that without worldwide revolution nobody would voluntarily choose socialism so long as an alternative mode of producing pencils existed somewhere. They would need to be coerced, either confronted directly or through neglect.
Hugo Chavez rose to power in Venezuela in 1998. After first trying an unsuccessful coup, he won the election on the same old leftist promises borrowed from the medieval tale of Robin Hood; he would take from the rich who had stolen from the poor under their forced system of repression. Since Venezuela had a lot of poor, it wasn’t a tough sell for a majority.
But in December 2007, Chavez was defeated at the ballot box. He proposed greatly expanding his already dictatorial powers, paving the way for a more complete socialist transformation of Venezuela. Presumably, that would have meant a bigger, badder Robin Hood. Yet, 50.7% of voters disapproved.
It was an odd turn of events. After all, oil producers like Venezuela were in the midst of an epic boom. The global credit bubble, created by the massive growth of the eurodollar system, had allowed these places to amass unparalleled (for them) amounts of wealth and prosperity. Since Chavismo populism like all good socialism is aimed at the poor, why would they not support going still further?
Writing for Foreign Affairs in March 2008, Francisco Rodriguez observed:
“Neither official statistics nor independent estimates show any evidence that Chávez has reoriented state priorities to benefit the poor. Most health and human development indicators have shown no significant improvement beyond that which is normal in the midst of an oil boom. Indeed, some have deteriorated worryingly, and official estimates indicate that income inequality has increased. The ‘Chávez is good for the poor’ hypothesis is inconsistent with the facts.”
It appears that enough of them agreed and were willing to express it in the form of an official vote. It didn’t stop the man, of course, and he went ahead with many of his “reforms” anyway. Coercion.
I could spend the rest of this essay recounting the almost literal Hell the country has become now that “dollars” aren’t so plentiful for Chavez’s successors, but you’ve likely already heard enough stories of pure devastation and the vast economic wasteland the near Bolivarian paradise has become. That’s not really my intent here.
As necessary as it is to remind ourselves of these dangers, that’s not enough to keep them at bay. Not even close. Many Americans, Europeans, Brazilians, etc., will be seduced by “equality” surmising that a relatively small turn in that direction won’t mean Venezuela or Brezhnev. You can forgive them, or you should, for exploring the idea that no matter the costs a little socialism just might turn out better than what we’ve got right now.
Maybe allowing Mr. Socialist Government to strike three or four varieties of deodorant from the store shelves would be worth the risk for an unproven promise of actual wage growth and labor market security.
It’s this reason that should trouble us. Why now? Because the state of labor in this world is as precarious as it has been in four generations. Worse, Economists refuse to address the deficiency honestly. They say either the economy is already doing great now, which it clearly isn’t, or that it will 100% absolutely completely totally guaranteed turn great any day now - never mind the 3,921 days already exhausted and wasted since August 9, 2007, waiting for it to yet be plausible.
The statistics are truly grim, where all of a sudden they lend credence to the Jason Barker’s of the world who claim capitalists are stealing your wages when ten years ago the same idea wouldn’t have merited any reaction at all. The numbers are worth recounting still another time.
Real Personal Income excluding Transfer Receipts was estimated to have been $12.2 trillion in March 2018 (at a seasonally-adjusted annual rate). This particular data series is one of the few, and the only one pertaining to income, which the NBER uses to date business cycles. And it has barely moved in more than two years. Going back to October 2015, a period of twenty-nine months, it has gained just 2.8% total.
During that same period, the unemployment rate has fallen well below what Economists claim is full employment. This latter measure, despite inherent difficulties addressing the participation problem, has been used as the primary source to claim the economy right now is doing very well; booming. Even President Trump, who campaigned on it being “fake”, now in office has embraced the low level, pointing to it as a measure for successful policies.
On the ground, out in the public, that may not be the perception at all. Instead, you might hear and see the 4.1% unemployment rate and wonder who it is doing well in this economy. It might even seem that maybe those kooky sneaker haters have a point; as if some unseen force of inequality is holding you back unfairly while others profit at your (opportunity) expense.
The number of people who may start thinking this way isn’t really revealed by the lack of income growth since the 2015-16 downturn. It is a far, far larger problem.
If the Great “Recession” had been an actual recession, the economy and its labor market would have returned to its prior baseline even after the large contraction it did suffer. It may have taken some additional time, a longer recovery than other business cycles, but by now ten years later that would all have been in the past.
Yet, Real Personal Income excluding Transfer Receipts would have been just less than $15 trillion in March 2018 had recovery actually taken place. That’s an enormous, incomprehensible difference, this $2.7 trillion “missing” income ($12.221T - $14.956T pro forma). Worse, it doesn’t show up in any mainstream analysis. What gets reported is the simple and misleading fact that Real Personal Income in March was higher than it was in February, which was higher than January. It’s described as growth, and often purposefully mischaracterized as “strong growth”, when it is anything but.
The US labor market last year experienced one of its worst (non-recession) years in a long time. How could it have been any other way given the state of income “growth?” But that’s not at all how it has been defined. Again, even Trump has moved away from the actual situation. He might do well to pay attention to Chavez’s 2007 electoral defeat, the difference between mainstream characterization and on-the-ground reality and perception of that reality.
It’s not enough to recall the horrors and desperately dangerous deficiencies of economic socialism, and in truth it avoids the real issue at hand, a logical fallacy of sorts. Doing nothing more than that risks further alienation of the already vulnerable. The labor market must be addressed in an honest fashion. The unemployment rate is at best ambiguous, and more likely deceptive and utterly worthless. The American labor force is suffering like it hasn’t since the 1930’s, but nobody seems willing to challenge Economists’ easily disproved claims.
Into that vacuum had swept Mr. Trump himself, but also Mr. Sanders. The mere election of the former didn’t immediately fix the problem; rather, things have gotten worse since the campaign ended (to be clear, it had nothing to do with Trump and everything to do with the lingering effects of the 2014-16 “rising dollar”). It’s become a worldwide phenomenon.
Communists always focus on labor, though often for the exact wrong reasons. But since 2007, that’s where all the trouble has been, and remains. Workers need someone other than them to get serious about it, where deodorant is just the beginning of the seduction. May Day is still only trending toward becoming an official holiday.
