DRAFT: This module has unpublished changes.

Darius Muniz                                                                                                                              Professor Chibber

American Capitalism                                                                                                April 29th, 2011


                                Resource Restraints on Social Mobilization in the U.S.

            People like to think of the United States as the land of opportunities where social mobility is only restrained by the limits of a person’s will and imagination. The irony is that our country actually has less social mobility and more inequality than most developed countries in the world today. When we talk about inequality in the United States, we usually have a couple of different things in mind. We think immediately of income inequality. Inequalities of important life outcomes also come to mind like health, housing, education, and, of course, we think of the inequalities of opportunity that are created by a group's social location; race, urban poverty, and gender. But a fundamental form of inequality in our society is an underlying factor that influences each of these: inequalities of wealth across social groups. Two facts are particularly important when it comes to wealth: first, that wealth is in general very unevenly distributed in the United States, and second, that there are very striking inequalities when we look at the average wealth of major social groups.

            Maintenance of the status quo is run predominantly by hugely affluent business people in industry, commerce, the dominant media as well as others in academia, and private foundations. They spread the false gospel that "capitalism breeds democracy and prosperity" ignoring how democratic freedoms are incompatible with acquisitive corporate free-enterprise thriving on the exploitation of the majority everywhere through capitalism. What about important values relating to justice, health, occupational and consumer safety, regard for future generations, and accountability in government along with concern for the environment, an educated and informed citizenry, affordable housing, worker rights, and an end to wars and conflict. In a capitalist democracy, we all fend for our selves, and are able to have anything if we are in the position to pay for it. The result is an enormous growing disparity between haves and have-nots and a biased government that moves to the tide of the financially affluent and is oblivious to the ones in greatest need.

            In the United States the national political economy was led to create a system that gave enormous and very lightly regulated power to large organizations and corporations; that, once established, these organizations systematically defended their rights and freedom of action; and now these corporations exercise power at every level in American society. Corporations and large organizations wield micro-power over the tens of millions of Americans who work within them, meso-power over the environmental status of communities and regions and the consumption patterns of individuals, and macro-power over the direction that legislation and policy takes. And this degree of power is now deeply entrenched to the point that it influences our very political system, enables wealth to be concentrated among elites, and maintains inequality through mechanisms that promote an active role from elites while restraining the majority of the rest of the population.

Wealth Inequality

            Edward Wolff has written about the facts and causes of wealth inequality in the United States in which he summarizes his conclusion in these bleak terms: The gap between the rich and the poor is greater now, at the start of the twenty-first century, than at any time since 1929. The sharp increase in inequality since the late 1970’s has made wealth distribution in the United States more unequal than it was in what used to be perceived as the class-ridden societies of northwestern Europe. The number of households worth $1,000,000 or more grew by almost 60 percent; the number worth $10,000,000 or more almost quadrupled (Wolff, top heavy). The international comparison of wealth inequality is particularly disturbing. Wolff provides a chart of the share of marketable wealth held by the top percentile in the US, from 1920 to 1998. The graph is striking. The US shows a pattern that is unique among all other western societies. It starts at 35% in 1920; then rises and falls slowly around the 30% level. The US then begins a downward trend in the mid-1960s, falling to a low of 20% in the 1970s; and then, during the Reagan years and following, the percent of wealth rises to roughly 35%. So now we are roughly back to where we were in 1920 when it comes to wealth inequalities in the United States with an apparent merry go round that is equal to a stagnation in social mobility (Wessel, rich-poor gap).

            Why does this kind of inequality matter? Partly because significant inequalities of wealth have important implications for such things as the relative political power of various groups; the opportunities that groups have within and across generations; and the relative security that various individuals and groups have when faced with economic adversity. People who own little or nothing have little to fall back on when they lose a job, face a serious illness, or move into retirement. People who have a lot of wealth, by contrast, are able to exercise a disproportionate amount of political influence; they are able to ensure that their children are well educated and well prepared for careers; and they have substantial buffers when times are hard (Wright, analysis of poverty).

            The mechanism through which this concentration of wealth occurs is also an important factor. People who have wealth have an advantage in gathering the information necessary to increase their wealth; they have networks of other wealth holders who can improve their access to opportunities for wealth acquisition; they have advantages in gaining advanced professional and graduate training that increase their likelihood of assuming high positions in wealth-creating enterprises; and they can afford to include high-risk, high-gain strategies in their investment portfolios (Wright analysis of poverty). So it is a fairly obvious reality wealth enables the opportunity for more wealth. The most fundamental disadvantages that derive from the educational opportunities that are offered to children and young people in inner-city neighborhoods are another crucial mechanism. It seems obvious that the greatest enhancement that can be offered to a young person is a good education; and this is true in the question of wealth acquisition no less than the acquisition of upward social mobility.

Class status and education

A crucial question to pose as we think about class and social mobility is the issue of the social mechanisms through which children are launched into careers and economic positions in society. A pure meritocracy is a society in which specific social mechanisms distinguish between high-achieving and low-achieving individuals, assigning high-achieving individuals to desirable positions in society (Wright, analysis of poverty). A pure plutocracy is a society in which holders of wealth provide advantages to their children, ensuring that their adult children become the wealth-holders of the next generation. In each case there are fairly visible social mechanisms through which children from specific social environments are tracked into specific groups of roles in society (Wright, analysis of poverty).

            But another relevant fact is the sharply differentiated opportunities that exist for children and young adults from various social groups in many societies, including the United States. How schooling is provided to children across all income groups; the kind and quality of healthcare that is available across income and race; to what extent are job opportunities made available to all individuals without regard to status, race, or income; and how are urban people treated relative to suburban or rural people when it comes to the availability of important social opportunities? There are substantial differences across many societies when it comes to distinctions like these and the opportunities attainable by one class are not as easily attainable by the other.

            Education is certainly one of the chief mechanisms of social mobility in any society; it involves providing the child and young adult with the tools necessary to translate personal qualities and talents into productive activity. So inequalities in access to education constitute a central barrier to social mobility. And it seems all too clear that children have very unequal educational opportunities throughout the United States, from pre-school to the university level (Rainwater & Smeeding, doing poorly). These inequalities link with socially significant facts like family income, place of residence, and race; and they link in turn with the career paths and eventual SES of the young people who are placed in one or another of these educational settings. Race is a particularly prevalent form of structural inequalities of opportunity in the US; how slowly patterns of racial segregation are changing in the cities of the United States; and along with segregation come limitation on opportunities associated with health, education, and employment.

            When comparing the relatively limited degree of social mobility that currently exists in the United States by international standards, they are understandable when we consider the entrenched structures that exist in our country determining the opportunities available to children and young adults. Race, poverty, and geography conspire to create recurring patterns of low SES across generations of families in the United States (Rainwater & Smeeding, doing poorly). These factors and the role that they now play within the complex social and political system of modern America lead to a stagnation of social mobility. Another factor is our economic organizations such as business and industry that concentrate wealth and power; socialize employees and customers alike to meet their needs; and pass off to the rest of society the cost of their pollution, crowding, accidents, and encouragement of destructive life styles. In the "free market" economy of the United States, regulation of business and industry to prevent or mitigate this market failure is relatively ineffective, as compared to that enacted by other industrialized countries.

Corporate Capitalism

Today, corporate giants get multi-billions in all kinds of handouts we pay for. They come in tax breaks, price supports, loan guarantees (many never repaid), bailouts, marketing services, export subsidies, R & D grants, free use of the public broadcasting spectrum, and huge subsidies and other government-directed benefits proving "big government" works great and business loves it (Corporate Welfare). The system works by socializing costs and privatizing profits in an enormous upward redistribution of income from the working populace to the corporate rich. Even the tax system works to corporate advantage with corporations today paying, on average, a tiny 7.4% of their revenues compared to 49% in the 1950s. Sixty percent of US corporations pay no income taxes, and many profitable ones get rebates (Corporate Welfare).

            That's reality in today's America with government showering business with a worlwind of benefits and ordinary working people paying for them in a huge upward distribution of income now way exceeding one trillion dollars annually and rising. With all its faults, its defenders say "democratic capitalism" evolved through gradual reform. Though true at times, most often an unempowered unmobilized public is no match for the power of corporate capital with government and the military allied with it. The situation is grim with wealth and power firmly in charge and ordinary working people losing out. Corporations rely on downsizing and offshore manufacturing and other high-paying jobs to cheap labor markets to reduce costs and raise profits. They maintain lean labor forces, rely heavily on part-time workers, are hostile to unions, and achieve the benefits of a huge reserve army of unemployed or underemployed to contain wage pressures. Corporations have, perhaps, been the most effective organization for the advancement of free markets and wealth consolidation in capitalist societies. The only restraint on these corporations having complete financial domination through capitalism has traditionally been the ability for workers to consolidate into unions and utilize their power of collective bargaining, exert political influence, and disturb the flow of capital through strikes.

Workers, Unions and Politics

Unions are highly complex organizations. They organize workers in capitalist societies as market actors, as components of wider collective organizations for the productions of goods and services, and as agents of a social class pursuing democracy and social justice. Unions thus emerge at the point of production, and their organizational capacity in the first instance is wholly dependent upon the power they exercise there. Unions become inextricably linked to the community politics structuring local labor market conditions (Piven &Cloward,Workers Movement). Labor markets are, in turn, embedded and legitimated in the even wider processes of state formation. Nation-states provide a common currency, legal structure, and social institutions, and remain the central location of power and class formation. For unions, states present the legal framework in which they must conduct themselves; develop the social policies in which the conflicting interests of workers and employers over employment security versus labor market flexibility are struggled over; and establish the key institutional matrix in which social classes contest political power. Unions can be defined as combinations of workers pursuing wage improvements and better working conditions through collective bargaining and political actions (Piven & Cloward, Workers Movement).

            In the US, the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) was consolidated in 1955, and gathers virtually all US unions together. The organizational matrix of national labor movements only begins to tell us how workers are organized as a class, and their class capacities to structure collective bargaining outcomes and struggle over state policies (Piven & Cloward, Workers Movement). The division of workers into separate workplaces, for example, may result in the ‘sectionalism’ in a union as it focuses narrowly on its own workers wages and job security. As a result of the militant opposition of American business, including the extensive use of private violence against union organization to this day, US unions have been pushed to embrace a narrow business unionism, and have never overcome workers’ disorganization in the face of repeated employers’ offences (Piven & Cloward, Workers Movement). Reliance on the business oriented Democratic Party for political representation has provided little relief and, indeed, reinforced the American union focus on maintaining local workplace representation (Ferguson & Rogers, Revisionist Democrats).

            Unions now realizing that power, wealth, and class dominate America and the notion of real democracy and are nothing but a pure illusion. Today, America the beautiful only exists for the privileged few and no one else, even during Franklin Roosevelt's New Deal, an era commonly believed to have brought great transformations on behalf of what FDR called the forgotten man. Roosevelt was a patrician allied with business interests trying to save capitalism in America from meeting the same fate as in Czarist Russia in 1917. That was priority number one, and giving a little to save the system was a small price to pay. Only faced with mass unrest were relief programs created to relieve human need. So some real democratic gains were achieved, most notably essential social welfare legislation. Key but short-lived was the passage of the landmark Wagner Act in 1935 establishing the National Labor Relations Board (NLRB). It gave labor the right to bargain collectively on equal terms with management for the first time ever, an achievement the repressive 1947 Taft-Hartley Act began undoing that's now lost altogether. The New Deal era hardly adds up to a great triumph for the common people, with government mostly being responsive to the will and needs of corporate capitalism. It was true then but far more so now through subsidies, services and protections that business could not provide for itself and even though plenty of them can but don't have to because government, with our tax dollars, does it for them (Corporate Welfare).

Our Corrupted Electoral Process

            It almost understates the problem saying our "electoral process is in need of serious rescue and repair." In large measure, it's on life-support barely hanging on and is now little more than theater in a nominal democracy serving the privileged alone. They make the rules in a dominant two-party duopoly; effectively keep out interloper alternative choices (Piven & Cloward, Americans don’t vote). While differences between both sides exist, on one issue they're united. They're both committed to waging imperial wars for predatory corporate capital's right to exploit workers, gain new markets, control the world's resources, and rule it without challenge. Unless that changes, whichever party wins elections won't matter. Neither one will serve popular interests, only privileged ones ( Piven & Cloward, Americans don’t vote).

            Our electoral system is structured to make it near impossible for both dominant parties to lose to a third party surprise. We have "winner take all" elections artificially magnifying major parties' strengths. Whichever party gets a plurality of votes (even if not a majority) wins 100% representation so parties on the short end getting lesser vote totals in congressional districts get no representation for their supporters. If we had a proportional representation system, it would be different as party representation would match the percent of votes it won. Redistricting, as a function of decennial reapportionment, rigs the system as well especially when it’s most extreme methods are used to maximize party strength in how district lines are drawn (Piven & Cloward, Americans don’t vote). Then there's the issue of campaign funding and where most of it comes from. It's not from the public supporting people-oriented candidates. It's from powerful corporate donors for candidates supporting their interests, and the amounts contributed are huge. All donations come with strings attached and we all know what they are and what's expected of winning candidates.

            Market forces only work for the ones controlling them, assuring that they benefit by exploiting the majority of others. They want us to believe millions of nonvoters are content with present social conditions, and the growing concentration of executive power is a good thing because the president is democratically responsive to broad national interests, ones affecting the public. They tell us exclusion of third parties makes our system work better, and all state vices are, in fact, virtues. It is clearly evident that social mobility in the U. S. is restrained by a number of political, social, and financial factors that allow for the rich to get richer and the poor to remain the unorganized and cooperative silent bystander. Major reforms are needed to produce equality and to redistribute the large concentrations of wealth that is strategically monopolized by this country’s top 1% elite class.

            Reforms like reintroducing a fair progressive tax system and eliminating benefits only the rich get; ending powerful monied interests controlling the electoral process; promoting public financing supporting all candidates; abolishing the Electoral College and our winner take all system; abolishing electronic voting and reintroducing paper ballots counted by hand by civil servants running elections; establishing a minimum livable wage and guaranteed income for the indigent; promoting full employment and the right to organize and bargain on equal terms with management; establishing free education for everyone to the highest levels; ending gender, racial, ethnic and religious discrimination and criminal justice inequities; returning the public airwaves to its rightful owner - the public and opening then up fully to all views on all issues with no corporate or government censorship; enabling seniors, the poor and disabled to have a minimum living income adjusted for inflation with an equitable Social Security program for everyone paid for by a progressively fair tax system, not the regressive payroll tax one now in place letting the rich off the hook by burdening average and low-wage earners; and finally establishing public ownership over the major means of production in a true social democracy.

DRAFT: This module has unpublished changes.