/Let’s Get Serious About Inequality and Socialism

Let’s Get Serious About Inequality and Socialism

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why_socialism_by_finnishecosocialist-d75hvfeThanks to the presidential candidacy of Senator Bernie Sanders, economic inequality and socialism have become topics of political debate, capturing the attention of both the electorate and the media. Sanders has correctly perceived public dismay and disgust with the rapidly growing divide between the 1% and the rest of us. He has also accurately observed that, especially among the legions of young people who are his most ardent enthusiasts, the word “socialism” no longer has a deeply negative connotation. In fact, some polls have shown that a majority of those under thirty favor socialism over capitalism and would vote a socialist into the White House.[1]

Inequality and socialism are broad concepts, subject to various meanings. Sanders’ supporters, especially those with radical sympathies, claim that his campaign is the beginning of a sharp leftward shift in the U.S. political landscape. It has made economic equality and socialism, with its egalitarian ethic, respectable ideas again. It will now be possible to build upon the opening Sanders has provided and create a socialist movement, one with mass appeal and real power, in the United States. Some argue that this is already happening in their labor unions, environmental organizations, and community groups.[2]

Given that this optimistic scenario hinges on what Sanders has been saying about inequality and socialism, it is incumbent upon us to examine his talking points carefully. These will be the starting points, the principles that most of those who are presumed to be incipient socialists will have embedded in their minds as a radical movement begins to take shape. Let us look at inequality and socialism in turn. First, Sanders’ focus has been on income inequality. He rails against the “billionaire class,” which uses its income to rig the political system, aided by corrupt campaign financing and the Supreme Court’s Citizens United decision. But what is striking about Sanders is his silence on the root causes of inequality. There may be a good reason for this. His overall platform is left-liberal. That is, he sees the capitalist economy as a great growth engine but one in which a strong government ensures a more equitable distribution of the fruits of economic expansion and the social provision of many essential services, such as schooling and healthcare, paid for or provided directly by the government, which must levy progressive taxes to finance the necessary expenditures. Add to this, increased regulation of businesses, especially those in finance, greater public employment, more union-friendly labor laws, and a higher minimum wage.

All of this would reduce income inequality. However, not enough to put a deep dent in the yearly incomes of the richest Americans. If we take just 1,361 households in the Unites States in 2012, those who comprise the richest 1/1,000 of the top 1% of income recipients, we find that their mean yearly income was $161 million.[3] Several members of this elite group took in more than one billion dollars that year; in 2013, the three incomes at the pinnacle of the income ladder grabbed an astonishing $9.8 billion.[4] Sanders’ proposals, even if every one of them were implemented, would not reduce these incomes enough to matter. Households with this much money would spend millions of dollars, but they would save still more, and this cash would be added to their wealth. Just below these extraordinarily income-rich households are many thousands more, for which much  the same can be said.

And therein lies the rub. What would Sanders’ program do to alter the unconscionable inequality in wealth? In the United States in 2009, the wealthiest 1% owned 42.4 percent of all net financial assets (financial instruments such as stocks, bonds, bank accounts, and all other financial instruments minus non-mortgage debt).[5] If we look at the fraction of particular assets owned by the 1%, this time for 2010, we get:

Stocks and Mutual Funds 48.8%

Financial Securities 64.4%

Trusts 38.0%

Business Equity 61.4%

Non-home Real Estate 35.5%[6]

These fractions would remain much the same should Sanders’ economic agenda be enacted. And this means, in turn, that nothing fundamental will change. This is because wealth is central to the growing divide between the 1% and the rest of us. Inequality is a reflection of vastly unequal power. Here is how economist Eric Schutz defines individual power in his book, Inequality and Power: The Economics of Class: “If person A can get person B to do something in A’s interest by taking advantage of some situation or set of circumstances to which B, were he or she free to choose with full knowledge from among all possible alternatives, would not give full consent, then A has power over B.”[7] There is no question that those in the upper reaches of the 1% have at least potential power over us. They could ruin our lives if they wanted to. They have tremendous political influence, which their wealth makes possible, and which they are using to make them still more powerful and to destroy our capacity to resist. If we extend Schutz’s definition to include the power exerted by the 1% as a class, which they do through their joint corporate ownership of the nation and the world’s productive capital, the most important kind of wealth, then what they can do to us is much greater than what they can as individuals. They are our employers, and their power to control our labor power, our capacity to work, has risen exponentially as their wealth has grown. Perhaps a quote from my book, The Great Inequality, will make this clear. Read it in the context of a growing concentration of wealth in the hands of a tiny minority of extremely rich individuals and the corresponding rise in the size and power of the corporations they control:

The advantage capitalists have vis-à-vis their employees is as obvious as it is neglected by mainstream economists. Workers do not have the wealth to withstand periods without employment, and while they might quit a particular job, they cannot quit all jobs. In addition, the ownership of businesses gives capitalists the legal right to structure their workplaces (through detailed division of labor, mechanization, close monitoring to ensure maximum intensity, and so forth) so that the amount of labor used is always a good deal less than the supply of workers. This pool of surplus labor, Marx’s “reserve army,” serves to keep the employed in line, from making excessive wage and hour demands on the bosses. Employers also create artificial job hierarchies to split workers and keep them from seeing their common interests. In larger firms, seemingly impersonal bureaucracies make rules that come to be accepted as inevitable and even fair. All of these things allow employers to extract a surplus of work from their hired hands, a surplus that the employers get to keep. Power always involves a “taking” by the powerful from those without it. What is taken is the fruits of the exercise of their labor time. The control of the labor power of others over a definite period of time, in other words, is the principal basis of economic profit and power under capitalism.[8]

Further, a consideration of class power, the ability of the wealthy to “take” from the rest of us, means that they will use their control of the economy’s commanding heights to structure society as a whole in their own image and likeness, with profound implications:

. . . society is structured in such a way that there can be no escape from persistent inequalities unless the power (class) relationship is confronted directly and abolished. Although we don’t usually think this way, it is true that as we make our individual choices, we also collectively make “social choices.” That is, we structure the very society that faces us with constraints when we choose. However, to say this is to suggest that we are not at all equal in terms of how society itself is constructed. At the level of society, power is critically important.[9]

Capital determines how our societies are organized, and we will not and cannot escape this unless and until capital’s power is destroyed. That Bernie Sanders has been inaudible on this tells us either that he has little grasp of it or believes that it is not necessary to attack this power and the wealth that is its outward sign. Taxing higher incomes more progressively, breaking up the big banks, taxing speculative financial trades, providing single-payer but still privately provided health care, and a $15 minimum wage will not diminish the power wealth gives its owners. This is especially so today, when the super-wealthy and the businesses they control are transnational and largely immune to what any particular government might do. This global dimension of class power doesn’t appear to be on Sanders’ radar at all.

If we are serious about inequality, we have to address the supremacy of capital, directly and forcefully. In terms of politics, the state would have to levy extremely progressive taxes, similar to the 90 percent applied to the top income bracket during the Second World War and early 1950s. Wealth taxation of the greatest accumulation of assets would have to be confiscatory, which it should be in any event. What harm would come to society if Bill Gates’ wealth was taxed away? Or that of any hedge fund operator? A meaningful guaranteed annual income would have to be implemented, high enough to ensure that everyone could live decently without working for wages. A basket of goods and services would have to be each person’s right. The prison system as currently structured would have to be abolished. Housing policy would have to be revolutionized, with quality housing built by the government and provided as cheaply as possible and free to those who are poorest. The nature of work would have to be completely revamped so that jobs were meaningful and worth doing from society’s point of view. Of course, to say these things is to admit that they could never be achieved in capitalism, and it is also to acknowledge that right now, most Americans would not be in favor of them, including most of Bernie Sander’s supporters. On the other hand, how will Sanders’ modest attacks on inequality serve as a viable starting point to move us toward a social revolution?

Second, how does Sanders define socialism? Rather peculiarly. Eugene Debs, one of Sanders’ heroes, understood socialism to mean social ownership of society’s productive wealth and democratic planning of economic activity. It meant the abolition, through class struggle, of the wage system and a radical divorce from the entire complex web of markets that are capitalism’s face and façade, beneath which lie brutally exploitive relations of production and the debasement of the natural world. It intended an end to the debilitating division of labor that guarantees most workers a lifetime of alienation and stultifying work. It demanded production for use and not for profit. It supposed, in other words, the abolition of capitalism. Sanders, to the contrary, sees socialism as social democracy, with capitalism intact, although with a stronger, more aggressive, and progressive role for the government, which must ensure less income dispersion and more equality of opportunity, as well as generous provision of social services, so that, in effect, health care, education at all levels, social security, and the like become human rights. If this is socialism, its advent will not lead to the fulfillment of Debs’ dream. It certainly hasn’t in Denmark, which Sanders suggested as a model for the United States in one of his debates with Hillary Clinton, or in any other country. In fact, in every country where social democracy has had a strong foothold, where union densities dwarf those here, it has been under relentless attack, and the political forces of the right have been ascendant for some time.[10] Social provision of goods and services, while much more generous than in the United States, has eroded considerably, even as it is denied to newly-arrived immigrants, who face a growing racism.[11]

Social democracy in Western Europe took shape under special historical circumstances: the strong communist movements, allied with the Soviet Union, existing in most European nations after the Second World War; the rapid economic growth that followed the massive rebuilding that took place after the war, aided by U.S. aid and U.S. exports; the need of European capital to cooperate with and make concessions to non-communist labor unions, if only to coopt any future radicalization; and the strict capital controls and fixed currency exchange rates that facilitated national development. We live in an altogether different world today, one in which capital and the state are in a symbiotic relationship to dismantle social democracy, privatize social services, destroy labor unions, and ensure capital’s ability to do what it desires in every corner of the earth and every part of our lives.

Given this, it is astonishing to witness the narrow nationalism of the Sanders’ phenomenon. Inequality, for example, is a global reality, and the growing divide between rich and poor in each country is intimately connected to that in every other country. As a case in point, both corporations and individuals have been on a land-buying binge around the world. They use their money to buy cooperation from national governments, which invariably means that peasants are forced from their land and left to seek whatever work they can find in cities at home and in richer countries. Thus inequality rises in both places, and tremendous pools of surplus labor are created, enhancing capital’s power and reducing that of the working class. Sanders, echoing Donald Trump, decries the demise of U.S. manufacturing and the shift of production from now destitute towns in the United States to venues in China, Mexico, Vietnam, and elsewhere. But like Trump, he doesn’t say that this is the inevitable consequence of the enormous growth in the power of the super-rich and, more importantly, the corporations they own. That the marketplaces of the world are more interconnected than ever, and it is this, more than trade deals, that drives capital toward the abundant and cheap labor in the Global South. And seldom a word about the subhuman conditions under which workers in these faraway places labor. Never a word about how we should be acting in solidarity with Chinese workers, whose strike record and militancy, in the face of severe state repression, puts our working class to shame. What is more, capital’s power here and abroad, the very power that brings with it rising inequality, is buttressed by the military might of the United States and several other countries. How is inequality going to end and socialism begin unless this might is condemned and struggled against? How is socialism to be given birth if politics in the most powerful nation on earth and the one most responsible for the world’s human misery and approaching environmental Armageddon stays within the confines of “America First”? Nationalism in the United States, in whatever guise, means that gains here are bound to come at the expense of the poorest people in the world.

If we are serious about socialism, we must say, as often as possible, what it is. We must initiate and engage in a radical education project, in our organizations and in our conversations and writing. And we must take steps now to begin to move toward socialism, divorcing ourselves from the tyranny of the marketplace. Commit ourselves to radical communal self-help measures, in the spirit of Freedom Summer during the Civil Rights Movement, the community social service programs of the Black Panther Party, the housing projects of some labor unions, the collective cleaning, food provisioning, and educating of Occupy Wall Street, the community gardens being constructed in Detroit, urban farming in Cuba, and thousands of other contemporary and historical examples. Work to reduce our own unnecessary consumption. Offer solidarity to all oppressed people. Refuse to join the military. Demand control of our unions and all levels of government. And of great importance, begin to build independent and unabashedly radical political organizations, including a working-class political party.[12]

The proposition that a political campaign waged inside the Democratic Party can lead us toward equality and socialism is dubious. To be sure, there are a fair number of people supporting Bernie Sanders who consider themselves socialists or can be drawn to the socialist cause. Yet, a perusal of what many of them say in blogs, essays, and on social media is troubling. Declared radicals who wholeheartedly endorse Sanders appear to define socialism as he does. Jacobin magazine provides a case in point. With a paid circulation of more than 20,000, an energetic young editor and staff, much positive publicity in media here and abroad, and reading groups forming around the United States, it is by far the most important new left-wing journal in the country. The magazine ardently supports Bernie Sanders and champions the notion that he has opened the doors to a significant socialist movement. Yet, as a recent, trenchant critique demonstrates, its socialism barely differs from Sanders’. The Jacobin recipe for the future is a left liberal program with full employment as its centerpiece, generous social welfare programs, and, in the end, some form of market socialism in which workers elect managers and firms compete relentlessly in the marketplace.[13]

Perhaps the reality is that Jacobin millennials and their older brethren so enthusiastic for Sanders have modest aims, similar to his liberal base. If only we could take the first small steps to be like Denmark or Sweden, wouldn’t that be great? Who could ask for anything more? It is as if they believe only piecemeal changes can occur, slowly and gradually. That economist Alfred Marshall was right when he said, “Nature makes no leaps.” Thus they embrace the very bourgeois ideology they claim to oppose. This, in my view, is a dead-end strategy for achieving socialism as envisioned by Marx, Engels, Luxemburg, Debs, and millions of others around the globe. Maybe it will work, and I wish those who think so well. But for those of us who hold fast to the dream of a classless society, egalitarian, radically democratic, with a surfeit of leisure and socially, collectively provided goods and services, there is but one choice. Hold fast to our vision and principles. To the grand narrative that best explains the reality in which we find ourselves. Put our shoulders to the wheel, no matter the opposition, and struggle on.


[1] See https://www.washingtonpost.com/news/rampage/wp/2016/02/05/millennials-have-a-higher-opinion-of-socialism-than-of-capitalism/

[2] See, for example, Michael Albert’s interview with labor stalwarts Steve Early and Rand Wilson, http://www.counterpunch.org/2016/02/19/labor-the-left-sanders-an-interview-with-steve-early-and-rand-wilson/. Also the essay by Ralph Nader at http://www.counterpunch.org/2016/04/08/big-union-leaders-betray-sanders-and-workers/

[3] David Cay Johnston, “The top .001 percent are different from you and me,” http://america.aljazeera.com/opinions/2015/6/the-top-001-percent-are-different-from-you-and-me.html.

[4] http://www.forbes.com/sites/nathanvardi/2014/02/26/the-highest-earning-hedge-fund-managers-and-traders/#3aebab2b1984.

[5] Sylvia A. Allegretto, “The State of Working America’s Wealth, 2011: Through Volatility and Turmoil, the Gap Widens,” EPI Briefing Paper #292, March 23, 2011, http://epi.org.

[6] Edward N. Wolff, “The Asset Price Meltdown and the Wealth of the Middle Class,” NBER Working Paper Series, Working Paper 18559, 2012, http:/nber.org/papers/w18559.pdf, 57, Table 9. Business equity refers to businesses that are not corporations, such as partnerships and sole proprietorships.

[7] Eric A. Schutz, Inequality and Power: The Economics of Class (London: Routledge, 2011), 66.

[8] Michael D. Yates, The Great Inequality (London: Routledge, 2016), 36.

[9] Ibid., 35.

[10] See the informative article by Louis Proyect, “Sanders, Sweden and Socialism,” the eighth in a series on Scandinavian social democracy, http://www.thenorthstar.info/?p=12519..

[11] http://www.theguardian.com/world/2015/oct/01/swedens-liberal-reputation-tarnished-as-race-attacks-rise. Also, http://www.ibtimes.com/refugee-police-clashes-why-wealthy-denmark-taking-such-harsh-stance-against-syrians-2090937.

[12] For a more complete development of these ideas, see my essay at http://www.truth-out.org/news/item/29643-the-growing-degradation-of-work-and-life-and-what-we-might-do-to-end-it

[13] Jason E. Smith, “Let Us Be Terrible: Considerations on the Jacobin Club,” http://brooklynremploymenail.org/2016/04/field-notes/let-us-be-terrible.

Postscript: This essay was first published, in a slightly different form, in Truthout on April 30, 2016. It elicited many comments on both Truthout and Facebook. Most of the comments were thoughtful and respectful, even when the writer disagreed with what I said. However, a fair number of older leftists, Sanders’ diehards all, were at their usual dismissive selves, saying, as they have done before, that I am an ultra-leftist, ignorant of political reality and the historic significance of the Sanders’ phenomenon. You’d think, having seen so many Bernie Sanders in the past, herding left-leaning progressives back into the Democratic flock, would know better. But not so. They seem to have learned nothing at all. Paul Street has an interesting recent discussion of this, well-worth reading (http://www.counterpunch.org/2016/05/06/hey-bernie-leave-them-kids-alone/). I would add that quite of few of the critics are liberals masquerading as leftist. The radical leveling implicit in socialism scares them to death. As someone who agrees with my analysis said, many of them have a lot to lose.

Two other points are worth making. I note in the essay that it isn’t trade deals alone, as Sanders implies, that has caused such a loss of employment in manufacturing. I worked for thirty-two years in a steel town, Johnstown, Pennsylvania. Things hit the skids there in the early 1980s, long before the enactment of the North American Free Trade Agreement was enacted. And more generally, as Kim Moody shows (https://www.solidarity-us.org/site/node/4660), manufacturing is hardly absent in the United States, even in the devastated industrial heartland, and overall grew throughout recent decades. However, employment has not kept pace because employers have been able to utilize ever more sophisticated and ruthless controls over the labor process. In Moody’s words:

Between the recessions of 1980-82, 1990-92, and 2000-03 output increased by 6% a year, but employment remained flat due primarily to the large productivity gains, averaging over 3% a year achieved by capital through the application of new technology and lean production methods often supplemented or even supplanted by biometric and electronic monitoring, measuring and enforcing of labor standardization and intensification. One measure of the intensification of labor over these years has been the decrease in break time from 13% of the work day in the 1980s to 8% in the 2000s for those in routine goods and service-producing jobs.

This simply tells us that the power of capital has risen dramatically.

Second, while Sanders goes on and on about the banks, he neglects to be very specific about their evil deeds. For example, has has failed to make the connection between the housing bubble and the diabolical shakedowns of borrowers by banks—not all of which were “too big to fail”—in minority communities. In other words, Sanders could have connected the power of capital to its racist practices. Instead he talked about black poverty and “ghetto” neighborhoods. Matt Taibbi has published an important article on this (http://www.rollingstone.com/politics/news/the-line-that-may-have-won-hillary-clinton-the-nomination-20160428). In his prescient words:

When most people hear the words “Wall Street,” they think of the stock market. And since African-American voters have traditionally distrusted and avoided the stock market, at least in comparison to white investors, there is a perception that “Wall Street” is an issue that doesn’t really concern black people.

In the subprime era, though, banks actually used this cliché to their advantage. They profited immensely from a real-estate operation that specifically targeted people who stayed away from the financial markets, and carefully guarded their money by putting it in their homes.

According to one study, about two-thirds of all subprime loans between 2000 and 2007 were made to people who already owned their homes. The targets were often elderly, in particular men and women of color. Visiting loan officers convinced these borrowers to use the homes they’d poured their savings into their whole lives as ATM machines.

Perhaps this helps us understand why Sanders has fared so poorly among black voters. And why racism must be attacked directly and not subsumed within a class-only narrative.