Under-Market Capitalism to Commodified Over-Market - Immigration, Weed & Pornography
Immortalist
illegal "underground" enterprises, according to author and Atlantic Monthly
correspondent Eric Schlosser. And while this segment is never discussed in
the newspaper business pages, Schlosser tackles it with the same in-depth
analysis and compulsive readability that made his Fast Food Nation a best
seller. Reefer Madness spotlights marijuana, migrant labor, and pornography,
three of the most thriving black market industries, and analyzes the
often-tenuous place each holds in society as a whole. While each of the
three could be the subject of its own book, Schlosser keeps his scope narrow
by concentrating on the lives of the participants in the underground
economy, especially Mark Young, an Indiana man given a life sentence for
participating in a marijuana sale, and Ohio porn magnate Reuben Sturman. At
just 21 pages, the treatment of migrant laborers in the California
strawberry fields is dealt with more briefly but is just as compelling
thanks to the first-person narrative of Schlosser's investigation. In
telling these stories, which are both personal and universal, Schlosser
deftly explores the manner in which his subjects are treated (and punished)
compared to others in more above-ground ventures. Along the way, he asks
hard questions as to what that treatment says about America. Schlosser
writing is passionately opinionated, but this is no mere opinion piece: his
perspective is amply supported by extensive research and clearly reasoned
interpretation of data. His direct and forceful writing style makes the
impact greater still. After reading Reefer Madness, readers are likely to be
shocked, appalled, and flat-out bewildered by what's happening in the cracks
and crevices of American business. --John Moe--This text refers to the
Hardcover edition.
From Publishers Weekly
From the bestselling author of Fast Food Nation comes this captivating look
at the underbelly of the American marketplace. In three sections, Schlosser,
an Atlantic Monthly correspondent, examines the marijuana, migrant labor and
pornography trades, offering compelling tales of crime and punishment as
well as an illuminating glimpse at the inner workings of the underground
economy. The book revolves around two figures: Mark Young of Indiana, who
was sentenced to life in prison without parole for his relatively minor role
in a marijuana deal; and Reuben Sturman, an enigmatic Ohio man who built and
controlled a formidable pornography distribution empire before finally being
convicted of tax evasion, after beating a string of obscenity charges.
Through recounting Young's and Sturman's ordeals, and to a lesser extent,
the lives of migrant strawberry pickers in California, Schlosser unravels an
American society that has "become alienated and at odds with itself." Like
Fast Food Nation, this is an eye-opening book, offering the same high level
of reporting and research. But while Schlosser does put forth forceful and
unique market-based arguments, he isn't the first to take aim at the
nation's drug laws and the puritanical hypocrisy that seeks to jail
pornographers while permitting indentured servitude in California's
strawberry fields. Nevertheless, this is a solid-and timely-second effort
from Schlosser. As world events force Americans to choose values worth
fighting for, Schlosser reminds readers, "the price of freedom is often what
freedom brings."
Copyright 2003 Reed Business Information, Inc.--This text refers to the
Hardcover edition.
From AudioFile
The American black market accounts for 10 percent of the U.S. economy,
according to this crusading journalist. "When much is wrong," he writes,
"much needs to be hidden." Examining this dark world for injustices,
Schlosser reports that punishment is more severe in some states for selling
marijuana than for killing with a gun. Anti-porn laws are equally
nonsensical, and illegal immigrants work in conditions so wretched as to
throw a shadow on the land of the free. Three magazine articles are roped
together here, with a brief essay to start and another to finish. While this
book lacks the artful unity of the author's bestselling FAST FOOD NATION,
Schlosser's precise outrage is as compelling off as on the page. B.H.C. ©
AudioFile 2003, Portland, Maine-- Copyright © AudioFile, Portland,
Maine--This text refers to the Audio CD edition.
From Booklist
Schlosser is the author of the best-selling Fast Food Nation (2001), which
was a consciousness-raising examination of the fast-food industry. He now
turns his reporting acumen to American underground economic activity, which,
according to him, constitutes 9 to 10 percent of this country's economy--in
other words, millions and millions of dollars that "cannot be accounted
for." The black market in the U.S. "is where economic activities remain off
the books, where they are unrecorded, unreported, and in violation of the
law." The author focuses on three major black-market arenas: marijuana, the
most widely used illegal drug in the U.S.; migrant workers in California,
most of them illegal immigrants; and the pornography industry. Of course,
woven into his account of this trio of black-market gold mines is also an
examination of their effect on all of us, for the consequences are far
reaching, from employing a child-care worker to downloading pornography off
the Internet. His careful research and equally careful writing style
contribute to a study that is certain to garner as much attention as his
previous book. Brad Hooper
Copyright © American Library Association. All rights reserved--This text
refers to the Hardcover edition.
Product Description:
America"s black market is much larger than we realize, and it affects us all
deeply, whether or not we smoke pot, rent a risqué video, or pay our kids"
nannies in cash. In Reefer Madness the best-selling author of Fast Food
Nation turns his exacting eye on the underbelly of the American marketplace
and its far-reaching influence on our society. Exposing three American
mainstays - pot, porn, and illegal immigrants - Eric Schlosser shows how the
black market has burgeoned over the past several decades. He also draws
compelling parallels between underground and overground: how tycoons and
gangsters rise and fall, how new techonology shapes a market, how government
intervention can reinvigorate black markets as well as mainstream ones, and
how big business learns - and profits - from the underground. Reefer Madness
is a powerful investigation that illuminates the shadow economy and the
culture that casts that shadow.
Reefer Madness : Sex, Drugs, and Cheap Labor in the American Black Market
by Eric Schlosser
http://www.amazon.com/exec/obidos/ASIN/0618446702/qid=1109288012/
--------------------------
Reefer Madness is a stepping off point to research Schlosser's issues
further. Of the advertised 310 pages, only 220-230 or so are text. Highly
detailed notes follow, with myriad sources and their synopsis, spurring the
reader toward more in-depth material.
Schlosser covers three aspects of the black market: 1) Pornography, which is
now absorbed into the legal big business (and hence acceptable) market. 2)
Illegal drugs, that a majority of voters prefer some legalization of... so
the tide may be turning from illicit to licit. 3) Illegal workers, who are
either ignored or profitably used, and are almost surely to be with us as
far as the eye can see.
The big theme of Reefer Madness is that our (democratic) government is,
relating to Schlosser's 3 issues, wholly lacking in big-picture common
sense. Instead, the government is guided by big money and morality plays
fuelled by (perpetual) campaign speeches. And constituents are too
self-absorbed, apathetic, or busily treading water to push for more humane
policies. I know, that all sounds cliche. But Reefer Madness gets into
details. Schlosser stripped away some of my necessary illusions about
government... illusions I wasn't really aware of having in the first place.
After Reefer Madness, you will likely be changed and wondering "What the
heck is going on?!" And, as usual, Schlosser tells good stories of
individuals while making his macro-points. A quick, solid read.
--------------------------
The Underground U.S. Economy, March 30, 2004
Reviewer: Bryan Carey "Bryan Carey" (Knoxville, TN)
Drugs, pornography, and cheap immigrant labor are three areas of known
controversy when it comes to the buying and selling of goods and the
government's attempts to regulate these economic activities. Yet all three
of these areas represent growing, thriving components of the national
economy. This latest book by Eric Schlosser examines these three segments of
the economy, and while it provides some good insight in some areas, it
misses the mark in others.
In the first chapter, the author talks about the fallacies and misleading
information about marijuana and how the failed war on drugs has caused
countless American tragedies while doing absolutely nothing to stop this
very lucrative business from continuing to thrive underground. Many people
have been unnecessarily searched; had their property seized under false
pretenses; and sometimes have even been killed by the drug police. Schlosser
correctly points out these many travesties of the drug war, and he concludes
the chapter by stating that the only logical resolution to the problem to
legalize the product and tax it.
The chapters on the pornography industry and migrant workers are not quite
as good, but they still have some good points to make. Schlosser talks about
the frustration faced by illegal workers who want a job and often give in
and work in the strawberry fields of California for very low wages. They
have no recourse because they are here illegally. And with the pornography
industry, Schlosser seems sympathetic to those who are prosecuted for
engaging in consensual activity. However, in these two chapters, Schlosser
isn't very clear on what should be done to solve the problems. After the
chapter on immigrant workers, all Schlosser can do is blame the free market
for the problem. The situation is, of course, much more complex than that.
The real issue is what to do with migrant workers. If they had full rights
and if employers were held accountable for their actions, there wouldn't be
a free market problem. It almost seems like Schlosser just threw this in
because he couldn't think of any other way to address the issue. With the
pornography chapter, Schlosser correctly states that morals cannot and
should not be legislated so he manages to provide a little more guidance
than he does with the migrant workers problem, but he doesn't say much
beyond that.
To help give this book a more humanistic side, Schlosser speaks directly to
some of the people involved in these underground markets and he includes
direct quotes from many of them. This is a good idea, in my opinion, because
it helps the reader gain a better understanding for what is going on and
what the people involved are thinking as they involve themselves in these
illegal activities.
Black markets, while illegal and unethical, comprise a large part of the
U.S. economy. There is very little that can be done to eliminate them
completely. But we, as a nation, can make some moves that would minimize the
negative impacts of these underground economies. "Reefer Madness" does a
decent job in showing how much damage can result when business is forced to
go into hiding and he does a fair job (although incomplete) in showing what
can be done in some instances to lessen the impact of the black market.
These activities will never disappear, but there are many things we can do
to keep the problem from getting worse, as "Reefer Madness" correctly points
out.
-------------------------------
There are three long, but very well-written essays in this book, portions of
which previously appeared in the Atlantic Monthly, Rolling Stone and the US
News and World Report.
The first, the title essay, is on the marijuana business in the United
States with a concentration on the "killer weed's" legal history, its
economics and how it is cultivated today. Schlosser presents the
unembellished facts along with some vivid detail about the growers, the
sellers, the law enforcement people, and the politicians. Reading this
reinforces my belief that the "new prohibition" (not so new anymore of
course) is really a full employment program for the law enforcement
establishment endorsed by hypocritical social conservatives (Rush Limbaugh
would be a fine example) and Christian fundamentalists, most of whom have
little idea about what is going on.
The second essay, entitled "In the Strawberry Fields," is about Mexican
laborers in virtual peonage in California, the history of this phenomenon,
its politics, its economic consequences, and the reality of today's
conditions in the field and across the border. The endemic political and
economic hypocrisy is illustrated by Scholosser's eye-opening observation on
why Mexican migrants are routinely rounded up and sent back to Mexican in a
kind of (wink, wink) revolving door policy. When migrants are allowed to
settle here and raise their children, the states end up paying for their
education and welfare. However by periodically deporting them we benefit
from their cheap labor "while Mexico...in effect...[pays] for the education,
health care, and retirement of California's farmworkers." (p. 95)
The third essay, "An Empire of the Obscene" is about the pornography
business with the focus on porn king Reuben Sturman and his nemesis IRS
agent Richard N. Rosfelder, Jr. who finally got Sturman for tax evasion.
Although this is the longest essay in the book (longer than the other two
combined), I found it the least interesting. That Sturman was able to
launder and hide his profits off shore in the same manner as drug dealers
(and, for example, Enron) was interesting, as was the way Schlosser
chronicles how pornography has become such a huge business that it now
accounts for a significant part of the revenues of some Fortune 500
companies.
Holding the essays together is Schlosser's idea that the private morality of
Americans is inconsistent with our public morality, and that the evidence
for this is especially compelling in these three domains of the black market
economy. He frames the essays with an introduction called, "The
Underground," and a postscript named rather hopefully, "Out of the
Underground."
Some highlights:
"Today approximately three-quarters of all $100 bills circulate outside the
United States." As Schlosser notes, this "serves, in essence, as a gigantic
interest-free loan" from them to us. (p. 7) (I just hope that George W.
Bush's huge deficients don't lessen the world's love for the Yankee dollar
and lead them to adopt the Euro instead.)
"Import barriers [on marijuana] drove prices high enough to make domestic
production extremely profitable," allowing UCLA professor Mark A. R. Kleiman
to note that this is "a rare instance in which protectionism actually
worked." Schlosser adds, "Some American marijuana is now worth more per
ounce than gold." (p. 36)
"The new mandatory minimum laws [for marijuana possession and trafficking]
took...power from the judge and handed it to the prosecutor" who could
decide who to prosecute and for what. (p. 45) This results in an uneven
application of the law and "de facto sentencing by police and prosecutors."
(p. 53) Added to the power the police have because of the forfeiture laws,
and one sees that justice in marijuana cases can be anything but. Schlosser
cites an example in Ventura County, California in which drug agents had
first obtained an appraisal of a $5-million ranch and then raided it for
marijuana cultivation only to find nothing growing there. (p. 62)
A further point about the forfeiture laws (which I think are
unconstitutional since they are seizures without due process) is that
informers may get up to one-quarter of the proceeds. Schlosser claims that
this has resulted in a "new business: the buying and selling of drug leads.
Defendants who hope to avoid a lengthy...sentence...can now secretly buy
information from vendors on the black market." (pp. 62-63)
Recalling that justice Douglas H. Ginsburg (nominated by Reagan) declined
nomination to the US Supreme Court "after confessing that he smoked
marijuana as a young man," Schlosser recalls the McCarthy era's "defining
political question"--Are you now, or have you ever been, a member of the
Communist party?--with today's question that congressmen and political
candidates have to answer: Are you now, or have you ever been, a pot smoker?
(p. 49) On page 51 Schlosser notes however that "Legislation to impose drug
testing on members of Congress has repeatedly died in committee and never
reached the floor for a vote."
Finally, Schlosser compares America's attitude toward the drug Viagra with
its attitude toward marijuana. He recalls Bob Dole's TV commercial for
Viagra and then notes that "Elizabeth Dole, now a US senator from North
Carolina, apparently doesn't oppose this sort of recreational drug use."
Bottom line: social conservatives will deplore this book, and right wing AM
shock jocks will rant against it, while most of the rest of the country will
ignore it. Too bad. This is a fine piece of work by Schlosser and everyone
involved in the project, and an engrossing read.
----------------------------------
For a non-fiction book to be such a page turner is quite a rarity. This is a
lucid, well-researched, and rational look into "taboo" subjects people tend
to have extremely strong opinions on. Reefer Madness strips the subjects of
their stereotypes: the pothead, the illegal mexican stealing American jobs,
the sleazy porn industry and looks into why these things are so loathed in
public and yet remain so relentlessly prolific and lucrative. I found the
segment on porn some of the most engrossing....growing up mostly in the
internet age it's hard for me to imagine supreme court cases and federal
investigations into what is basically considered tame by modern standards
(and probably available for sale at your nearest mall). But it was the
research on marijuana "madness" that fascinated/perplexed me the most. When
we look at other countries which have legalized the possession or sale of
drugs and see that they have not collapsed in some doomsday scenario......
When we consider how many criminals we've created/locked up simply for
possessing a joint.......it simply defies logic. By reading this book I hope
we will all finally be able to base our opinions on facts and reason and not
propaganda and unfounded fear, opening the way for a genuine dialouge.
------------------------------
------------------------------
One-sided arguments and author biases, January 17, 2005
Reviewer: T. R. Turner (Cincinnati, OH USA) - See all my reviews
I was introduced to the writing of Eric Schlosser through his book Fast Food
Nation. While FFN was a truly fascinating, entertaining, and enlightening
look into the world of fast food and the industry's influence on American
culture, Reefer Madness was the author's effort to train his skeptical
journalistic skills on the American black market and its influence on our
economy.
Unlike the book's predecessor, Reefer Madness reeked of the author's agenda.
As Schlosser described case after case of the government's harsh prosecution
of drug offenders (many of them first-timers), I got the impression that I
was only being told half the story. There was an obvious point that
Schlosser was trying to make, and I felt time and again that he was only
reporting facts and anecdotes that supported his argument. I would like to
have had the full stories, as reported from both prosecutors AND defendants,
but the book comes up short in this regard.
Schlosser does do an excellent job of introducing us to three facets of the
nation's black market economy: drugs, illegal (cheap) labor, and porn. He
does a great job of bringing to light just how influential these facets are
to our mainstream economy and daily lives. With regards to his fact finding
efforts and presentation of little-known pieces of our society, Schlosser
excels as usual. Unfortunately, the book is handicapped by the not-so-hidden
agenda of its author and the one-sided arguments that are made on said
agenda's behalf. All in all, a decent effort with some serious flaws.
----------------------------------
I give Reefer Madness one star not because it is unreadable or devoid of
information, but rather because it is dishonest and utterly pointless. If
Fast Food Nation was Schlosser's platinum record, this is his lousy
follow-up EP.
Each essay is, individually, a decent (if thin) treatment of its respective
subject matter. But Schlosser does not make even the faintest attempt to
give each issue its due -- these are MAJOR public policy issues, not
cocktail party tidbits -- and even his afterword fails to explain exactly
why they're appearing in the same book together. Presumably the common theme
is the underground economy, but he does not describe any real similiarities
other than the banal observation that drugs, servitude, and porn are illegal
(or not, in the case of porn) and profitable for certain people. And he does
not even attempt to create an overall portrait of the "underground economy;"
at best, he offers small glimpses into it.
Finally, each of these issues is of vital importance, and giving them
slapdash treatment does no justice to their gravity. Reefer Madness is
nothing more than the scraps of other books that Schlosser was too lazy to
write.
----------------------------------------------
I now know more about drug and obscenity laws than I ever imagined I'd need
the brain cell storage to accommodate ... and that's a peculiarly good
thing. I came out of this book with a new set of unlikely personal heroes -
men and women who first challenged the absurdly restrictive obscenity laws
in order to make health and birth control information legal to ship through
the US mail ... and even folks like the irrepressibly obnoxious Larry Flynt,
who is in some respects our nation's last defense against enforced,
legislated morality. Read about the bizarre, inconsistent and patently
ridiculous drug laws that keep marijuana users under a heavier legal boot
than convicted child rapists. Find out why I will never again, so long as I
live, spend money at a Taco Bell. If this seems like a broad spread to cover
in one book, that's because part of the beauty of Schlosser is his ability
to ferret out the very real connections between legitimate business and the
black markets that we (as the blindly consuming public) may never suspect.
In our present culture of conspicuous censorship and our lamely
moral-high-ground-napping political climate, this is a highly instructive
read. GO AND GET IT. Consider it your civic duty to educate yourself on what
your government and its corporate cohorts are really up to while you're not
watching.
------------------------------------
-------------------------------------
Notes From Underground
By Sam Sifton
REEFER MADNESS
Sex, Drugs, and Cheap Labor
in the American Black Market.
By Eric Schlosser.
310 pp. Boston:
Houghton Mifflin Company. $23.
SEX! Drugs! We'll get to cheap labor in due course. ''The current demand for
marijuana and pornography is deeply revealing,'' Eric Schlosser writes in
the introduction to ''Reefer Madness: Sex, Drugs, and Cheap Labor in the
American Black Market,'' three essays that explore facets of America's
estimated $650 billion underground economy. ''Here are two commodities that
Americans publicly abhor, privately adore and buy in astonishing amounts.''
Schlosser, who delivered a stirring indictment of the business and culture
of American appetites in his first book, ''Fast Food Nation,'' now throws
more muck rakes at our national mores.
The first is a chapter on the booming business of American marijuana
cultivation -- and a damning of the nation's mandatory minimum sentencing
laws. The last is a serious romp through the recent history of pornography
in the United States, a story that hangs on the tale of Reuben Sturman, the
self-styled Walt Disney of porn, who died in a prison hospital in 1997.
Stuck in the middle is an investigation of the terrible working conditions
endured by illegal immigrants in California in order to harvest strawberries
under the hot sun.
What connects these three reports? The free market. We are a nation of
consumers. (Perhaps our demand for strawberries is less revealing of our
souls or culture than our desire for filmed sexual intercourse or a
quarter-ounce of pot, but we do purchase a lot of them all the same.)
Schlosser's guiding principle for ''Reefer Madness'' seems to be that the
three essays can add up to a refutation of Adam Smith's theory of the modern
market economy. ''The idea of the marketplace as the fullest expression of
democracy has a strong appeal,'' he writes in the conclusion, ''Out of the
Underground.'' ''But it assumes that economic motives are the only human
motives. If making money were all that mattered, there would be no nurses,
teachers, poets, farmers, soldiers, police officers or professors of
medieval literature.'' To which list I would add: no stoned video-store
clerks or onanistic builders of amateur porn sites on the Web, either. And,
of course, no advocates for fair wages for migrant farmworkers.
Schlosser's argument walks a difficult, winding path. Porn, he says, should
be made legal across the board, and pot as well. Both actions would throw
light upon the darkness of the black market and thus reduce America's gross
national pretense of virtue. At the same time, though, he writes, ''All
those who now consider themselves devotees of the market should take a good
look at what is happening in California. Left to its own devices, the free
market always seeks a work force that is hungry, desperate and cheap.''
Which is true enough. As Schlosser smartly notes: ''The sort of black market
labor once narrowly confined to California agriculture is now widespread in
meatpacking, construction and garment manufacturing. The growth of the
underground has lowered wages, eliminated benefits and reduced job security
in these industries.''
But we were talking about pot and porn. The addition of labor to the
discussion renders the argument muddy. And as a result, ''Reefer Madness''
often seems more a congealed denunciation of American hypocrisy than a
volume that came together as the result of careful thought. Small-time drug
dealers in jail for life, migrant strawberry workers living on the edge of
slavery, porn stars reclaiming their sexual power and businessmen profiting
from that goal -- this all may be the underground, but you can't see it for
the fog.
You know what, though? Never mind. There are other measures of a
journalist's success than the cohesion of a collection of essays. Schlosser
is a fine and diligent reporter with a real gift for description, and his
three dispatches are fascinating pieces of work. In particular, Schlosser's
riveting profile of Mark Young, an Indiana man convicted on federal charges
for his part in arranging a large marijuana sale, does much to humanize his
examination of America's domestic marijuana business, a business, the author
reports, that is worth more than $4 billion a year.
''One of the great ironies of American drug policy is that antidrug laws
have tended to become most punitive long after the use of a drug has
peaked,'' Schlosser writes, adding: ''Marijuana use among the young peaked
in 1979. Strict federal laws were passed seven years later, when use had
already fallen by about 40 percent; and the explanation most young people
gave for quitting marijuana was the perceived health risk, not fear of
imprisonment.'' Young, who had introduced a buyer to a seller of marijuana,
received a life sentence, Schlosser reports, and was placed in the federal
penitentiary in Leavenworth, Kan.
Schlosser's investigation of California's strawberry harvest, meanwhile, is
harrowing in its description of workers who labor six-month years for less
than $7,500 and have life expectancies under 50. It is also fiercely
eloquent in its conclusions. ''If the current abuse of illegal immigrants is
allowed to continue,'' he writes, ''the United States soon won't have to
import a foreign peasantry. We will have created our own.''
His chapter on pornography, ''An Empire of the Obscene,'' the longest in the
book, rockets along on the heels of its protagonist, Reuben Sturman, a wily
porn magnate and antigovernment agitator who could make a fine noir hero for
Hollywood. ''You wanted to know how the industry started,'' Sturman tells
Schlosser when they meet in a medium-security prison in Kentucky a year
before Sturman's death. ''Well, you're looking at the person who started
it.''
Here's what to do. Read these three pieces as if they were distinct articles
in the same magazine, one that can afford to have only a single,
hard-working reporter on staff. This is very good journalism, after all,
stacked like cordwood. And there is much to learn about the evils of this
world -- even if there's no need to tie them all together just yet. Black
markets, Schlosser writes, ''will always be with us. But they will recede in
importance when our public morality is consistent with our private one.''
See you then.
http://query.nytimes.com/search/full-page?res=9C03EED61F3DF932A25756C0A9659C8B63
-----------------------------------
With pot and porn outstripping corn, America's black economy is flying high
Illegal migrants provide the muscle for US black market
Duncan Campbell in Los Angeles
Friday May 2, 2003
The Guardian
1. Marijuana, 2. pornography and 3. illegal labour have created a hidden
market in the United States which now accounts for as much as 10% of the
American economy, according to a study. As a cash crop, marijuana is
believed to have outstripped maize, and hardcore porn revenue is equal to
Hollywood's domestic box office takings.
Despite laws that punish marijuana cultivation more strictly than murder in
some states, Americans spend more on illegal drugs than on cigarettes. And
despite official disapproval of pornography, the US leads the world in
export of explicit sex videos, according to Reefer Madness: Sex, Drugs and
Cheap Labour in the American Black Market, by Eric Schlosser.
Although the official American economy has been suffering a downturn, the
shadow economy is enjoying unprecedented levels of success, much in the way
that the prohibition period fuelled the illegal markets in the 30s.
Schlosser found that three specific industries accounted for a major portion
of this boom.
No aspect of farming has grown faster in the US over the past three decades
than marijuana, with one-third of the public over the age of 12 having
smoked the drug.
While the nation's largest legal cash crop, maize, produces about $19bn
(£11.9bn) in revenue, "plausible" estimates for the value of marijuana crops
reach $25bn. Steve White, a former coordinator for the US drug enforcement
administration's cannabis eradication programme, estimates that the drug is
now the country's largest cash crop.
1. Marijuana Belt
Schlosser writes: "Although popular stereotypes depict marijuana growers as
ageing hippies in northern California or Hawaii, the majority of the
marijuana now cultivated domestically is being grown in the nation's
mid-section - a swath running from the Appalachians west to the Great
Plains. Throughout this Marijuana Belt drug fortunes are being made by
farmers who often seem to have stepped from a page of the old Saturday
Evening Post."
Some of the most expensive crops are grown indoors on the west coast using
advanced scientific techniques but the American heartlands account for the
largest volume. Some estimates suggest 3 million Americans grow marijuana,
although mostly for their own or their friends' use, but between 100,000 and
200,000 are believed to do so for a living.
The laws against the drug are strict. There were 724,000 people arrested for
marijuana offences in 2001 and about 50,000 are in prison. Commercial
growers can serve sentences far longer than those for murder, but the high
risks appear to have had little effect on production or availability: 89% of
secondary school students surveyed indicated that they could easily obtain
the drug.
2. Pornography
The annual number of hardcore video rentals in the US has risen from 79m in
1985 to 759m in 2001. Hardcore pornography in the shape of videos, the
internet, live sex acts and cable television is now estimated to generate
around $10bn, roughly the same amount as Hollywood's US box office receipts.
Americans spend more money at strip clubs than at Broadway, regional
theatres and orchestra performances combined. The industry has mushroomed
since the 70s, when a federal study found that it was worth little more than
$10m.
Now the US leads the world in pornography; about 211 new films are produced
every week. Los Angeles area is the centre of the film boom and many of
those in the trade are otherwise respectable citizens.
Nina Hartley, a porn star, told Schlosser: "You'd be surprised how many
producers and manufacturers are Republicans."
The majority of women in the films earn about $400 a scene. At the moment,
there is a surplus of women in California hoping to enter the industry.
The internet has provided a fresh and profitable outlet. In 1997 about
22,000 porn websites existed; the number is now closer to 300,000 and
growing.
More than a million illegal farmworkers are estimated to be employed in the
US, with the average worker being a 29-year-old from Mexico.
3. Surplus labour
The total number of illegal immigrants is estimated at about 8 million and
many are being paid cash in a shadow economy.
Many live in primitive conditions: a survey in Soledad, in the heart of
California's agricultural territory, found that 1,500 of them, one-eighth of
the town's official population, were living in garages. There are mutual
economic benefits.
"Migrant work in California has long absorbed Mexican surplus labour, while
Mexico has in effect paid for the education, health care and retirement of
California's farmworkers," writes Schlosser. "Maintaining the current level
of poverty among migrant farmworkers saves the average American household
around $50 a year."
The advantages to the employer are clear, most notably in LA county, where
an estimated 28% of workers are paid in cash.
Schlosser believes that the shadow economy will continue to thrive as long
as marijuana and pornography remain illicit.
"A society that can punish a marijuana offender more severely than a
murderer is caught in the grip of a deep psychosis," he concludes. "Black
markets will always be with us. But they will recede in importance when the
public morality is consistent with our private one. The underground is a
good measure of the progress and the health of nations. When much is wrong,
much needs to be hidden."
· Reefer Madness: Sex, Drugs and Cheap Labour in the American Black Market
by Eric Schlosser, published by Houghton Mifflin
http://www.guardian.co.uk/usa/story/0,12271,947880,00.html
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Schlosser Offers Antidote to Reefer Madness
by Ari Armstrong, May 20, 2004
Eric Schlosser struck me as a hell of a nice guy, and one deeply concerned
with seeing justice done. Unfortunately, he also fails to understand the
free market, and his vague neo-Marxist sentiments lead him to advocate some
policies that in fact undermine justice.
Yet where Schlosser directs much of his energy is chronicling the horrors of
U.S. drug policy. On this issue, his political philosophy does not distract
from his journalistic work. Schlosser spoke at the Boulder Barnes&Noble on
May 18 to discuss his book, Reefer Madness: Sex, Drugs, and Cheap Labor in
the American Black Market. The book compiles three essays about marijuana,
illegal immigrants, and pornography. His previous book is Fast Food Nation:
The Dark Side of the All-American Meal, and he is currently working on a
book about American prisons. I picked up his two books at the event, though
I haven't had a chance to read them yet, so here I discuss only his remarks
in Boulder.
Schlosser said that, in writing about America's huge underground economy, he
is actually addressing the mainstream. The black market touches each of us
in many ways, from the friends we see arrested to the food we eat, and of
course the black market is bound up with popular politics.
The underground economy, which Schlosser describes as "all those economic
transactions that are unreported, unrecorded, or somehow in violation of the
law," constitutes 8-10% of GDP, by conservative estimates. The IRS reports
$1.5 trillion in income goes unreported each year, and that excludes the
proceeds of (otherwise) criminal activity. The illegal marketplace is "vast,
enormous," Schlosser said, and it's been getting larger since the 1970s.
"The lines between the black market and the mainstream... shift," Schlosser
noted. Marijuana, which remains completely illegal under some level of
legislation everywhere in the nation (leading to fights over federalism and
local control), is one of the largest, if not the largest, cash crop in the
U.S. Meanwhile, pornography, once largely an underground commodity, now is a
huge legal industry. And gambling, once illegal almost everywhere in the
nation, is now conducted by many state legislatures (to the detriment of the
poor, Schlosser argued).
Schlosser believes the illegality of marijuana cannot be explained by the
properties of the drug. "I use a much more dangerous drug recreationally,
which is alcohol," he said. "It's a poison... it's very toxic." He pointed
out alcohol must be consumed in large quantities for intoxication, and this
can lead to severe damage of the body. Around 100,000 deaths annually can be
attributed to alcohol, a drug also linked to "all kinds of anti-social,
destructive effects."
Of course, marijuana is not innocuous: "Logic would dictate breathing smoke
deeply into your lungs... is probably not good for you." (Of course, smoking
marijuana is not the only way to consume it.) Particularly the young, those
with a history of mental illness, and pregnant women should not smoke
marijuana, Schlosser urged. Still, it's relatively non-toxic, and there has
been "no known fatal dose of marijuana." And, of course, marijuana also has
many health benefits for some ill users.
"Given the remarkably low toxicity... some of the penalties you can receive
are extraordinary," Schlosser remarked. He then recounted several stories of
harsh felony convictions and multi-year prison sentences handed down for
marijuana use. "How did we get to a point where some marijuana users
[receive] harsher sentences than some murderers?" Schlosser wondered.
Mostly poor blacks and poor Hispanics are busted for marijuana violations,
Schlosser said, even though marijuana use among these groups is not
disproportionately higher. Schlosser believes the marijuana laws "have very
little to do with the plant... and more to do with the people who use it."
Originally, the political movement to ban marijuana was motivated by racism,
particularly against Mexicans. Then jazz, the beatniks, hippies, and the
hip-hop crowd were targeted as corruptive forces. These are "people the
mainstream doesn't like or is afraid of."
Meanwhile, when some of the harshest drug warriors saw their sons and
daughters arrested on drug charges, they immediately called their fancy
lawyers and pleaded with the courts for lenient sentences. In the corrupt
world of modern drug policy, what's good for poor black and Hispanic kids
isn't at all good for the rich progeny of the political class. Schlosser
concludes, "I don't believe there is a war on drugs, I believe there is a
war on poor people who use certain drugs."
Schlosser argues this war on (some users of some) drugs undermines the
criminal justice system and all our civil rights. "The war on drugs is a
violation of civil rights... If they can do this to them, maybe, someday,
they'll do it to you."
Expressing a similar sentiment as the one described by Fatema Gunja in The
New Prohibition, Schlosser said of the drug war, "This is a moral crusade."
Prohibitionist laws "intervene in the market on moral grounds."
Schlosser is exactly right to describe the drug war as a pseudo-religion.
Rational argument can barely penetrate the self-righteous furor of many drug
warriors. As has happened throughout the centuries, mainstream religion is
invoked in the name of persecuting the poor, the darker-skinned, and the
social outcasts.
Where Schlosser gets into trouble is in describing free-market ideology in
similar terms. Throughout his presentation, Schlosser again and again
referred to the free market as a "religion." He said Adam Smith is "an
idealist in many ways" who saw "God miraculously matching buying and
selling." Schlosser equated "the invisible hand" with the divine.
Of course most early Western economists were Christians -- as were most
other people. But that doesn't mean the theories of economics and of the
free market are linked to or dependent upon religion. Smith invoked not a
literal "invisible hand," but instead employed a metaphor. I'm confident
that, if Schlosser wished to check, he would discover that economists and
advocates of the free market tend to be atheistic more than practically all
other groups. If Schlosser would read free-market economists, he would find
that set of theories is described in secularist, scientific terms. There's
nothing mystical or mysterious about supply and demand. The fact that no
central planner can acquire enough knowledge to dictate supply and demand
does not place economics outside of the realm of science, it merely
describes the nature of reality.
Notably, Schlosser uses the terms "idealist" and "ideology" as if they were
indicative of a religious (or pseudo-religious) outlook. Thus, he reveals a
basically pragmatist frame of reference. I use that term here to indicate
not a concern with practical consequences -- which most people share -- but
the philosophical assumptions that hold principles are (ironically, in
principle) useless in guiding our behavior and automatically prone to
zealotry. Thus, Schlosser holds free-market theory in suspicion, precisely
because it is coherent and far-reaching.
To add to his own confusion, Schlosser apparently conflates the free market
with something like what Reagan advocated. Well, if that's his standard,
it's no wonder he misunderstands the (actual) free market. The politics of
Nixon, Reagan, and the Bushes are in fact antithetical to the free market
and overtly hostile to it. Indeed, the Libertarian Party was formed in 1971,
largely in reaction to Nixon's anti-market policies.
There is, of course, a grain of truth buried in Schlosser's mountainous
assumptions. True, today many among the "Christian right" pay lip service to
the free market, even as they advocate all sorts of market interventions
(such as the drug war). But what passes as the "right wing" today is far
from homogeneous. The religious right picked up its free-market rhetoric
(and that's all it is, is rhetoric) from the secularist libertarian right.
These two groups generally are at war with each other and sometimes
collaborate simply because the Marxists of the left constitute a common
enemy. The libertarian right (I consider myself a libertarian but not a
member of the right-wing) generally is suspicious of the religious right and
very much in favor of maintaining the separation of church and state. That
some political leaders placate both groups has nothing to do with the
interrelationship of the groups' core ideas -- there is none -- and
everything to do with stitching together a fundamentally reactionary
coalition.
Another problem for Schlosser is that Smith is not really a free-market
economist. Yes, he laid the groundwork for much free-market thought, but he
also shared with Marx (and passed on to Marx) the labor theory of value.
Murray Rothbard, a student of the 20th Century's preeminent free-market
economist Ludwig von Mises, disliked Adam Smith and frequently abused him.
So if Schlosser wants to figure out what free-market economics is, he should
read people like Mises, Mises's students, including Rothbard and George
Reisman, pop writers such as Henry Hazlitt, and even Chicago Schoolers such
as Milton Friedman (whom Mises nevertheless criticized for straying from
free markets).
Schlosser's misunderstanding of free-market economics led him to make a
large and surprising blunder. Again, Schlosser correctly noted the drug war
is an intervention in the market on pseudo-moralistic grounds. He further
pointed out that this is in direct contradiction to the vaguely
pro-market-sounding rhetoric of the right. But Schlosser's conclusion is not
that the right should overcome its hypocrisy, support free markets, and end
the drug war, as one might expect. Instead, Schlosser argues the
"free-market religion of ours is a false one, and a myth." Further,
"government is intervening in the economy every single day," and "government
has been involved in the market since the beginning of this country."
Schlosser's conclusion, then, is that, given the government necessarily
intervenes in the market, it should do so in order to help the poor, not
hurt them by locking them up in prison for smoking a relatively harmless
plant. The problem he finds is not economic intervention, but rather the
unwise use of economic intervention. Schlosser weaves a sophisticated -- and
fantastically wrong -- social theory that holds the pseudo-moralism of the
market is bound up with the pseudo-moralism of prohibition. Even though the
open market and the black market seem like opposites, they are in fact
fundamentally interdependent, linked by a schizophrenic righteous furor. I
give Schlosser points for ingenuity.
There is a much simpler sociological theory to explain the contradiction he
describes -- a theory that has the additional virtue of being true.
Prohibition is in fact directly linked to other economic interventions, and
it is the opposite of the free market. I cannot name a single person I would
label a "free-market advocate" who favors the prohibition of (some) drugs.
Partly, this is a semantic issue: support of drug prohibition automatically
disqualifies one as a free-market advocate. But there's more to it than
that. Those who sometimes employ free-market rhetoric, but who also support
the drug war, do not in fact favor the general free market, either. That is,
drug warriors are quick to intervene in the economy for all sorts of other
reasons. It is no coincidence that the "war on poverty" and the "war on
drugs" relies upon the same linguistic setup. The two sorts of interventions
are in fact brothers.
One specific example drives home the nature of Schlosser's mistakes. He
offers up as an example of the need for more economic intervention the
plight of illegal immigrants, some of whom are enslaved. Hello? The entire
problem was created by government intervention --- specifically the
political act of making illegal (much) immigrant labor. In this case,
government intervention in the economy directly and obviously caused the
problem, yet Schlosser somehow is able to overlook this and put his sole
trust in the government to resolve the problem. Harry Browne's explanation,
"the government breaks your legs, then hands you a pair of crutches and
tells you how great it is," often seems strident, but here it fits
perfectly.
Of course, not all governmental action constitutes "economic intervention."
Or, if Schlosser prefers, we can say that some sorts of "intervention" are
good, while others are bad. Specifically, acts of governance to protect
people's rights -- e.g., to stop predators from enslaving others -- is a
necessary part and foundation of the free market. The free market is not
necessarily hostile to governance, as Schlosser seems to assume, but
dependent upon it. Without the rule of law, there is no free market. (I'll
leave aside various disputes concerning the proper definition of
"government" -- it is sufficient for our purposes to posit any organized
effort to enforce the rule of law.) Thus, the proper solution to the
exploitation of immigrants is two-fold: remove improper economic
interventions and add proper ones (i.e., efforts to stop enslavement and so
forth). We can learn a lot from Schlosser, so long as we are willing to
discard his false assumptions and bogus conclusions.
To be sure, Schlosser has some superficial understanding of the free-market
case. For example, he mentioned some discussions he's had with friends about
minimum wage laws, overtime regulations, and unions. He correctly noted the
free-market position wonders, "Why should the government have anything to do
with it?" However, Schlosser merely mentioned these examples as obvious
flaws with the free-market perspective -- without bothering to explain why
they're flaws. It is objectively true that wage and overtime laws reduce the
choices available to workers and reduce the amount of pay available to some
workers (generally the poorest). Unions are perfectly compatible with free
markets -- so long as the unions are not granted special political powers
(as they are today). The economic interventions Schlosser favors in fact
hurt precisely the poor -- so much for "economic justice."
Notice that, while libertarian critics of the drug war are perhaps fewer in
number than their left-wing counterparts, the libertarian case against the
drug war is much stronger. Schlosser mentioned so-called "liberal"
politicians have been among the worst offenders when it comes to passing
draconian drug legislation. But Schlosser spoke of this as if it were an
accident. The libertarian case builds upon the concept of individual rights
and draws in a rich economic critique. Libertarians understand the drug war
creates economic distortions in much the same way as other economic
interventions do. Leftists adopt economic intervention as a way of political
life, so it's no wonder they also often support intervention in the drug
markets.
Schlosser also seems to assume the free-market case depends upon treating
economically efficient outcomes as moral outcomes. Nothing could be further
from the truth (despite the erroneous treatment of this matter by some
libertarians). Just as we can (politically) support free speech without
(morally) supporting all specific expressions, so we can support free
markets without morally supporting all market outcomes.
Notably, Schlosser himself is engaging in capitalism in order to reform
capitalism. I have begun to careful limit the types of meat products I'll
buy and consume because of precisely the sorts of concerns that animate
Schlosser. The (mostly corporate-run) health-food stores are a market
response to perceived problems.
As another example, I would argue that the majority of television
programming is garbage that people should avoid. I watch only a few hours of
television per week at most, and then mostly news and educational
programming. On the other hand, some shows (Buffy the Vampire Slayer, Star
Trek) are quite worth while, and my wife and I rent quite a few movies. The
argument is not that all moral outcomes are good or moral. The argument,
instead, is that a free market is a necessary, but not a sufficient,
condition for moral outcomes. Again, the argument is similar to the one for
free speech. (Censorship is nothing but economic intervention in one
particular market.)
Some things Schlosser criticizes, then, such as slavery, are simply not part
of the free market, and indeed are hostile to it. He's right to look to
legal solutions in such cases. Other things, like unhealthy food, can and
should be criticized and solved through the market -- through voluntary
action and persuasion. (Of course, false advertising is a form of fraud that
is properly addressed through law. Negligence that spreads disease too is
properly actionable) And yet other things Schlosser criticizes are in fact
good. For instance, he said that, while Barnes&Noble is okay because at
least the large corporate chain sells books, Costco and Wal-mart are a "real
threat to the book business." Why? Because they buy select titles at high
quantities and sell them to their customers at a discount. Gee, it's just a
tragedy that people are able to buy books at lower prices. Of course,
Schlosser's publisher is free to abstain from contracting with those big
stores, and Schlosser is free to pursue yet other alternatives (including
e-publishing and whatever else). (Yes, Costco carries Fast Food Nation,
right alongside Nickel and Dimed and Stupid White Men.) Today, thanks to
market advances, it's easier to obtain a book -- virtually any book ever
published -- than it has ever been in the history of the world.
The great irony in all this is that Schlosser feels he can attack the
free-market position as a pseudo-religious "ideology," when in fact his own
political philosophy is largely the product of two specific ideologies --
the Marxist theory of exploitation wrapped in the colorful paper of
pragmatism. Thus, he pretends that others are ideological freaks (freaks
because they are ideological), whereas he's supposedly just approaching the
issues from a common-sense, journalistic perspective -- see it and report
it. Yet Schlosser's own ideological blinders prevent him from clearly
understanding what free markets are all about and evaluating them on common
footing with his own ideological assumptions. That is, he maintains a double
standard: he offers weak attacks against the free-market perspective and
assumes he can get away with that because his target is an "ideology," even
as he pretends his own views are not ideological and therefore above the
need for theoretical critique.
Yet in the end, Schlosser has performed a great service. His specific
criticisms of drug policies and other sorts of economic interventions are
lively and well-informed. I look forward to perusing his books to follow his
evidence and anecdotes, and also to further consider his ideological
presuppositions. And when will these horribly destructive prohibitionist
laws finally be repealed? Schlosser answers: "When all of you make it
happen."
http://www.freecolorado.com/2004/05/schlosser.html
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Excerpt from 'Reefer Madness'
By Eric Schlosser
THE UNDERGROUND
Adam Smith believed in a God that was kind and wise and all-powerful. The
great theorist of the free market believed in Providence. "The happiness of
mankind," Smith wrote, "seems to have been the original purpose intended by
the Author of nature." The workings of the Lord could be found not in the
pages of a holy book, nor in miracles, but in the daily, mundane buying-and-
selling of the marketplace. Each purchase might be driven by an individual
desire, but behind them all lay "the invisible hand" of the Divine. This
invisible hand set prices and wages. It determined supply and demand. It
represented the sum of all human wishes. Without relying on any conscious
intervention by man, the free market improved agriculture and industry,
created surplus wealth, and made sure that the things being produced were
the things people wanted to buy. Human beings lacked the wisdom, Smith felt,
to improve society deliberately or to achieve Progress through some
elaborate plan. But if every man pursued his own self-interest and obeyed
only his "passions," the invisible hand would guarantee that everybody else
benefited, too.
Published in 1776, The Wealth of Nations later had a profound effect upon
the nation born that year. The idea that "life, liberty, and the pursuit of
happiness" were unalienable rights, endowed by a Creator, fit perfectly with
the economic theories of Adam Smith. "Life, liberty and estate" was the
well-known phrase that Thomas Jefferson amended slightly for the Declaration
of Independence. The United States was the first country to discard feudal
and aristocratic traditions and replace them with a republican devotion to
marketplace ideals. More than two centuries later, America's leading
companies-General Motors, General Electric, ExxonMobil, Microsoft, Wal-Mart,
Boeing, et al.-have annual revenues larger than those of many sovereign
states. No currency is more powerful than the U.S. dollar, and the closing
prices on Wall Street guide the financial markets of Tokyo, London, Paris,
and Frankfurt. The unsurpassed wealth of the United States has enabled it to
build a military without rival. And yet there is more to the U.S. economy,
much more, than meets the eye. In addition to America's famous corporations
and brands, the invisible hand has also produced a largely invisible
economy, secretive and well hidden, with its own labor demand, price
structure, and set of commodities.
"Black," "shadow," "irregular," "informal," "illegal," "subterranean,"
"underground"-a variety of adjectives have been used to describe this other
economy. Although defined in numerous ways, at its simplest the American
underground is where economic activities remain off the books, where they
are unrecorded, unreported, and in violation of the law. These activities
range from the commonplace (an electrician demanding payment in cash and
failing to declare the payment as income) to the criminal (a gang member
selling methamphetamine). They include moonlighting, check kiting, and
fencing stolen goods; street vending and tax evading; employing day laborers
and child laborers; running sweatshops and chop shops; smuggling cigarettes,
guns, and illegal immigrants; selling fake Rolexes, pirating CDs. Economists
disagree about the actual size of the underground economy and how to measure
it. Some studies look at the discrepancy between the amount of personal
income declared on tax returns and the amount of money that is actually
spent. Other studies examine changes in currency supply, the velocity of
money, levels of electricity usage. Each of these methodologies has its
merits. All have produced conclusions that are debatable. There is general
agreement, however, on two points: America's underground economy is vast-and
most of its growth occurred in the past thirty years.
Any estimate of illegal economic activity is bound to lack precision, since
it attempts to quantify things that people have carefully tried to hide.
Nevertheless, the best estimates convey a sense of scale and proportion. In
1997 the Austrian economist Friedrich Schneider calculated the rise of
America's "shadow economy" by tracing changes in the demand for currency.
According to Schneider, in 1970 the size of the underground was between 2.6
and 4.6% of America's gross domestic product (GDP). By 1994 it had reached
9.4% of the GDP-about $650 billion. Using a different methodology in 1998,
Charles Rossotti, the commissioner of the Internal Revenue Service, told
Congress that during the previous year Americans had failed to pay about
$200 billion of federal taxes that were owed, an amount larger than the
government's annual spending on Medicare. Assuming an average federal tax
rate of 14%, that means Americans somehow neglected to report almost $1.5
trillion in personal income. The IRS estimate did not include undeclared
earnings from criminal activity.
Two other periods in modern American history were marked by thriving
underground economies. From 1920 to 1933, the prohibition of alcohol led to
widespread trafficking and the rise of organized crime. At the height of
Prohibition, Americans spent about $5 billion a year on alcohol (roughly $54
billion in today's dollars). This black market constituted about 5 percent
of the U.S. gross national product at the time. When Prohibition ended, some
bootleggers became well-respected businessmen. During the Second World War,
the imposition of rationing and price controls created even larger black
markets. A system designed to distribute scarce commodities fairly had some
unanticipated effects: a burgeoning trade in ration books and a hidden cash
economy. Perhaps 5% of the nation's gasoline and 20% of its meat were soon
bought and sold illegally. According to one estimate, by the end of the war
Americans were failing to report as much as 15% of their personal income.
The underground subsided amid the prosperity of the Eisenhower era. Wages
increased, tax evasion decreased, and no illegal commodity generated the
sort of profits once supplied by bootleg alcohol. And then at some point in
the mid- to late 1960s the underground economy began to grow. Conservative
economists point to high income tax rates and excessive government
regulation as the fundamental causes. Liberals contend that declining wages,
unemployment, union busting, and the business deregulation of the Reagan
years were much more responsible for shifting economic activity underground.
The explanations offered by the left and the right are not mutually
exclusive. A stagnant economy prompted Americans of every background to work
off the books. The hippie counterculture of the 1960s and the anti-tax
movement of the late 1970s shared common ground in their dislike of
government, encouraging defiance of the IRS. A new drug culture provided new
opportunities for organized crime. The expansion of America's underground
economy over the last thirty years stemmed not only from economic hardship
and a desire for illegal profits, but also from a growing sense of
alienation, anger at authority, and disrespect for the law.
During roughly the same period similar phenomena occurred throughout the
western industrialized world. The underground economy of the European Union
may now be larger than that of the United States. Years of high
unemployment, high tax rates, illegal immigration, and widespread
disillusion with government have created enormous undergrounds. According to
Friedrich Schneider's estimates, these shadow economies range in size from
an estimated 12.5% of GDP in Great Britain to an estimated 27 percent of GDP
in Italy. Countries that were once part of the Soviet Union have even larger
black markets. In Estonia the underground is now responsible for an
estimated 39% of GDP; in Russia, for an estimated 45%; in Ukraine, for an
estimated 51%. The underground is sometimes the most vibrant sector of these
transition economies, the place where free enterprise has finally bloomed.
But in many ways the growth of black markets in the developed world
represents a step backward. An expanding underground economy is often
associated with increased corruption and a greater disparity in wealth. For
years government officials and members of the Communist Party secretly
profited from the Soviet Union's "second economy," offering services and
commodities unavailable through the mainstream. The largest undergrounds are
now found in the developing world, where governments are corrupt and laws
are routinely ignored. In Bolivia the underground economy is responsible for
an estimated 65% of GDP. In Nigeria it accounts for perhaps 76%.
The U.S. dollar now serves as the unofficial currency of this new global
underground. During the late 1960s and early 1970s American economists began
to notice that the amount of currency in circulation had grown much larger
than the amount ordinary citizens were likely to use in their everyday
transactions. The discovery led to the first inklings that an underground
economy was emerging in the United States. While business publications
heralded the advent of a cashless, credit-based economy, the use of
banknotes quietly soared. The $100 bill soon became the underground
favorite, not just in the United States, but overseas as well, thanks to its
high face value and the relative stability of the dollar. During the late
1970s the outflow of currency from the United States averaged about $2
billion a year. By the 1990s, about $20 billion in U.S. currency was being
shipped to foreign countries every year. Today approximately three-quarters
of all $100 bills circulate outside the United States.
The supremacy of the dollar in the global underground has proven a boon to
the American economy. The outflow of U.S. currency now serves, in essence,
as a gigantic interest-free loan. Every time the U.S. Treasury issues new
banknotes, it purchases an equal value of interest-bearing securities. Those
securities are liquidated only when the currency is taken out of circulation
and put into a bank. In 2000 the U.S. Treasury earned an estimated $32.7
billion in interest from its banknotes circulating overseas. The 1996
redesign of the $100 bill was partly motivated by fears that Middle Eastern
counterfeiters had created a convincingly real $100 bill, a "supernote" that
might threaten the role of U.S. currency in unofficial transactions. The
latest threat to the $100 bill comes not from organized crime figures, but
from the central bank of the European Union. The new 500-euro note is
perfect for black market activity. It has roughly five times the value of a
$100 bill, allowing drug dealers and smugglers to lighten their suitcases.
Portugal has banned the 500-euro note for those reasons, and its acceptance
in other foreign undergrounds is not yet certain.
The three essays in this book shed light on different aspects of the
American underground-and on the ways it has changed society, for better or
worse. "Reefer Madness" looks at the legal and economic consequences of
marijuana use in the United States. Pot has become a hugely popular black
market commodity, more widely used throughout the world than any other
illegal drug. The enforcement of state and federal laws regarding marijuana
guides its production, sets the punishments for its users, and suggests the
arbitrary nature of many cultural taboos. Americans not only smoke more
marijuana but also imprison more people for marijuana than any other western
industrialized nation.
"In the Strawberry Fields" examines the plight of migrant workers in
California agriculture, who are mainly illegal immigrants. The state's
recruitment of illegals from Mexico started a trend that has lately spread
throughout the United States. Many employers now prefer to use black market
labor. Although immigrant smuggling looms as a multi-billion-dollar business
in its own right, the growing reliance on illegals has far-reaching
implications beyond the underground, affecting wages, working conditions,
and even the practice of democracy in the rest of society.
"An Empire of the Obscene" traces the history of the pornography industry
through the career of an obscure businessman and his successors. It
describes how a commodity once traded only on the black market recently
entered the mainstream, turning behavior long thought deviant into popular
entertainment. Profits from the sale of pornography that used to be earned
by organized crime figures are now being made by some of America's largest
corporations. The current demand for marijuana and pornography is deeply
revealing. Here are two commodities that Americans publicly abhor, privately
adore, and buy in astonishing amounts.
Linking all three essays is a belief that the underground is inextricably
linked to the mainstream. The lines separating them are fluid, not
permanently fixed. One cannot be fully understood without regard to the
other. The vastness and complexity of the underground challenge the
mathematical certainties of conventional economic thinking. Hard numbers
suddenly appear illusory. Prices on Wall Street rise or fall based on
minuscule changes in the rate of inflation, the unemployment rate, the
latest predictions about the GNP. Billions of dollars may change hands
because an economic measurement shifts by one-tenth of a percent. But what
do those statistics really mean, if 20%, 10 percent, or even 5% of a
nation's economy somehow cannot be accounted for? America's great economic
successes of the past two decades-in software, telecommunications,
aerospace, computing-are only part of the story. Marlboro, Camel, and Philip
Morris are familiar names, and the tobacco industry is one of the most
powerful lobbies in Washington, D.C. But Americans now spend more money on
illegal drugs than on cigarettes.
The proper role of the state and the proper limits on the free market are
central themes of this book. The political system of the United States and
the economic system proposed by Adam Smith are ostensibly dedicated to
freedom. Since 1776 Americans have been willing to fight and to die for
freedom. You will search long and hard to find an American who thinks
freedom is a bad thing. The question that has been much more difficult to
answer is: Freedom for whom? Should the government be protecting the freedom
of workers or employers? Of consumers, or manufacturers? Of the majority who
live one way, or the minority who choose to live differently? In the
abstract, freedom is always easy to celebrate. But adherence to that lofty
ideal seems impossible to achieve. Despite the best of libertarian
intentions, giving unchecked freedom to one group usually means denying it
to another.
What happens in the underground economy is worth examining because of how
fortunes are made there, how lives are often ruined there, how the
vicissitudes of the law can deem one man a gangster or a chief executive (or
both). If you truly want to know a person, you need to look beyond the
public face, the jobs on the résumé, the books on the shelves, the family
pictures on the desk. You may learn more from what's hidden in a drawer.
There is always more to us than what we will admit. If the market does
indeed embody the sum of all human wishes, then the secret ones are just as
important as the ones that are openly displayed. Like the yin and yang, the
mainstream and the underground are ultimately two sides of the same thing.
To know a country you must see it whole.
Copyright © 2003 by Eric Schlosser. Reprinted by permission of Houghton
Mifflin Company.
http://www.usatoday.com/life/books/excerpts/2003-05-13-reefer-madness_x.htm
Immortalist
Walk down most roads in the Middle East, the former Soviet Union, or Latin
America, and you will see many things: houses used for shelter; parcels of
land being tilled, sowed, and harvested; merchandise being bought and sold.
Assets in developing and former communist countries primarily serve these
immediate physical purposes. In the West, however, the same assets also lead
a parallel life as capital outside the physical world. They can be used to
put in motion more production by securing the interests of other parties as
"collateral" for a mortgage, for example, or by assuring the supply of other
forms of credit and public utilities.
Why can't buildings and land elsewhere in the world also lead this parallel
life? Why can't the enormous resources in developing and former communist
countries, which my colleagues at the Institute for Liberty and Democracy
(Lima) and I estimate at $9.3 trillion of dead capital, produce value beyond
their "natural" state? My reply is, dead capital exists because we have
forgotten (or perhaps never realized) that converting a physical asset to
generate capital-using your house to borrow money to finance an enterprise,
for example-requires a very complex process. It is not unlike the process
that Albert Einstein taught us whereby a single brick can be made to release
a huge amount of energy in the form of an atomic explosion. By analogy,
capital is the result of discovering and unleashing potential energy from
the trillions of bricks that the poor have accumulated in their buildings.
Clues from the past
To unravel the mystery of capital, we have to go back to the seminal meaning
of the word. In medieval Latin, "capital" appears to have denoted head of
cattle or other livestock, which have always been important sources of
wealth beyond the basic meat, milk, hides, wool, and fuel they provide.
Livestock can also reproduce themselves. Thus, the term "capital" begins to
do two jobs simultaneously, capturing the physical dimension of assets
(livestock) as well as their potential to generate surplus value. From the
barnyard, it was only a short step to the desks of the inventors of
economics, who generally defined "capital" as that part of a country's
assets that initiates surplus production and increases productivity.
Great classical economists such as Adam Smith and, later, Karl Marx believed
that capital was the engine that powered the market economy. In The Wealth
of Nations, Smith emphasized one point that is at the very heart of the
mystery we are trying to solve: for accumulated assets to become active
capital and put additional production in motion, they must be fixed and
realized in some particular subject "which lasts for some time at least
after that labour is past. It is, as it were, a certain quantity of labour
stocked and stored up to be employed, if necessary, upon some other
occasion." What I take from Smith is that capital is not the accumulated
stock of assets but the potential it holds to deploy new production. This
potential is, of course, abstract. It must be processed and fixed into a
tangible form before we can release it-just like the potential nuclear
energy in Einstein's brick.
This essential meaning of capital has been lost to history. Capital is now
confused with money, which is only one of the many forms in which it
travels. It is always easier to remember a difficult concept in one of its
tangible manifestations than in its essence. The mind wraps itself around
"money" more easily than "capital." But it is a mistake to assume that money
is what finally fixes capital. Money facilitates transactions, allowing us
to buy and sell things, but it is not itself the progenitor of additional
production.
Potential energy in assets
What is it that fixes the potential of an asset so that it can put
additional production into motion? What detaches value from a simple house
and fixes it in a way that allows us to realize it as capital?
We can begin to find an answer by using our energy analogy. Consider a
mountain lake. We can think about this lake in its immediate physical
context and see some primary uses for it, such as canoeing and fishing. But
when we think about this same lake as an engineer would by focusing on its
capacity to generate electrical energy, by means of a hydroelectric plant,
as an additional value beyond the lake's natural state as a body of water,
we suddenly see the potential created by the lake's elevated position. The
challenge for the engineer is finding out how he can create a process that
allows him to convert and fix this potential into a form that can be used to
do additional work.
Capital, like energy, is a dormant value. Bringing it to life requires us to
go beyond looking at our assets as they are to actively thinking about them
as they could be. It requires a process for fixing an asset's economic
potential into a form that can be used to initiate additional production.
Although the process that converts the potential energy in the water into
electricity is well known, the one that gives assets the form required to
put in motion more production is not known. This is so because that key
process was not deliberately set up to create capital but for the more
mundane purpose of protecting property ownership. As the property systems of
Western nations grew, they developed, imperceptibly, a variety of mechanisms
that gradually combined into a process that churned out capital as never
before.
Hidden conversion process of the West
In the West, this formal property system begins to process assets into
capital by describing and organizing the most economically and socially
useful aspects about assets, preserving this information in a recording
system-as insertions in a written ledger or a blip on a computer disk-and
then embodying it in a title. A set of detailed and precise legal rules
governs this entire process. Formal property records and titles thus
represent our shared concept of what is economically meaningful about any
asset. They capture and organize all the relevant information required to
conceptualize the potential value of an asset and so allow us to control it.
Any asset whose economic and social aspects are not fixed in a formal
property system is extremely hard to move in the market. How can the huge
amounts of assets changing hands in a modern market economy be controlled,
if not through a formal property process? Without such a system, any trade
of an asset, say a piece of real estate, requires an enormous effort just to
determine the basics of the transaction: Does the seller own the real estate
and have the right to transfer it? Can he pledge it? Will the new owner be
accepted as such by those who enforce property rights? What are the
effective means to exclude other claimants? This is why the exchange of most
assets outside the West is restricted to local circles of trading partners.
Developing and former communist countries' principal problem is clearly not
the lack of entrepreneurship: the poor have accumulated trillions of dollars
of real estate during the past forty years. What the poor lack is easy
access to the property mechanisms that could legally fix the economic
potential of their assets so that they could be used to produce, secure, or
guarantee greater value in the expanded market.
Why has the genesis of capital become such a mystery? Why have the rich
nations of the world, so quick with their economic advice, not explained how
indispensable formal property is to capital formation? The answer is that
the process within the formal property system that breaks down assets into
capital is extremely difficult to visualize. It is hidden in thousands of
pieces of legislation, statutes, regulations, and institutions that govern
the system. Anyone trapped in such a legal morass would be hard-pressed to
figure out how the system actually works. The only way to see it is from
outside the system-from the extralegal sector-which is where my colleagues
and I do most of our research.
The formal property systems of the West produce six effects that allow their
citizens to generate capital.
(1) Fixing the economic potential of assets. Capital is born by representing
in writing-in a title, a security, a contract, and other such records-the
most economically and socially useful qualities about the asset as opposed
to the visually more striking aspects of the asset. This is where potential
value is first described and registered. The moment you focus your attention
on the title of a house, for example, and not on the house itself, you have
automatically stepped from the material world into the conceptual universe
where capital lives.
The proof that formal property is pure concept comes when a house changes
hands: nothing physically changes. Property is not the house itself but an
economic concept about the house, embodied in a legal representation that
describes not its physical qualities but rather economically and socially
meaningful qualities we humans have attributed to the house (such as the
ability to use it for a variety of purposes-for example, to generate funds
for investment in a business without having to sell the house-by providing
security to lenders in the form of liens, mortgages, easements, or other
covenants). In advanced nations, this formal property representation
functions as the means to secure the interests of other parties and to
create accountability by providing all the information, references, rules,
and enforcement mechanisms required to do so.
Legal property thus gave the West the tools to produce surplus value over
and above its physical assets. Whether anyone intended it or not, the legal
property system became the staircase that took these nations from the
universe of assets in their natural state to the conceptual universe of
capital where assets can be viewed in their full productive potential.
(2) Integrating dispersed information into one system. The reason capitalism
has triumphed in the West and sputtered in the rest of the world is because
most of the assets in Western nations have been integrated into one formal
representational system. This integration did not happen casually. Over
decades in the nineteenth century, politicians, legislators, and judges
pulled together the scattered facts and rules that had governed property
throughout cities, villages, buildings, and farms and integrated them into
one system. This "pulling together" of property representations, a
revolutionary moment in the history of developed nations, deposited all the
information and rules governing the accumulated wealth of their citizens
into one knowledge base. Before that moment, information about assets was
far less accessible. Every farm or settlement recorded its assets and the
rules governing them in rudimentary ledgers, symbols, or oral testimony. But
the information was atomized, dispersed, and not available to any one agent
at any given moment.
Developing and former communist nations have not created unified formal
property systems. In all of these countries I have studied, I have never
found just one legal system but instead dozens and hundreds, managed by all
sorts of organizations, some legal, others extralegal, ranging from small
entrepreneurial groups to housing organizations. Consequently, what people
in those countries can do with their property is limited to the imagination
of the owners and their acquaintances. In Western countries, where property
information is standardized and universally available, what owners can do
with their assets benefits from the collective imagination of a larger
network of people.
It may surprise the Western reader that most of the world's nations have yet
to integrate extralegal property agreements into one formal legal system.
For Westerners today, there supposedly is only one law-the official one.
Diverse informal property arrangements, however, were once the norm in every
nation-the West's reliance on integrated property systems is a phenomenon of
at most the last two hundred years. The reason it is so hard to follow the
history of the integration of widespread property systems is that the
process took place over a very long time.
(3) Making people accountable. The integration of all property systems under
one formal property law shifted the legitimacy of the rights of owners from
the political context of local communities to the impersonal context of law.
Releasing owners from restrictive local arrangements and bringing them into
a more integrated legal system facilitated their accountability.
By transforming people with real property interests into accountable
individuals, formal property created individuals from masses. People no
longer needed to rely on neighborhood relationships or make local
arrangements to protect their rights to assets. They were thus freed to
explore how to generate surplus value from their own assets. But there was a
price to pay: once inside a formal property system, owners lost their
anonymity while their individual accountability was reinforced. People who
do not pay for goods or services they have consumed can be identified,
charged interest penalties, fined, and embargoed, and can have their credit
ratings downgraded. Authorities are able to learn about legal infractions
and dishonored contracts; they can suspend services, place liens against
property, and withdraw some or all of the privileges of legal property.
Respect in Western nations for property and transactions is hardly encoded
in their citizens' DNA; it is rather the result of having enforceable formal
property systems. Formal property's role in protecting not only ownership
but also the security of transactions strongly encourages citizens in
advanced countries to respect titles, honor contracts, and obey the law.
Legal property thus invites commitment.
The lack of legal property thus explains why citizens in developing and
former communist nations cannot make profitable contracts with strangers and
cannot get credit, insurance, or utilities services: they have no property
to lose. Because they have no legal property, they are taken seriously as
contracting parties only by their immediate family and neighbors. People
with nothing to lose are trapped in the grubby basement of the precapitalist
world.
(4) Making assets fungible. One of the most important things a formal
property system does is transform assets from a less accessible condition to
a more accessible condition, so that they can do additional work. Unlike
physical assets, representations of assets are easily combined, divided,
mobilized, and used to stimulate business deals. By uncoupling the economic
features of an asset from its rigid, physical state, a representation makes
the asset "fungible"-able to be fashioned to suit practically any
transaction.
By describing all assets in standard categories, an integrated formal
property system enables the comparison of two architecturally different
buildings constructed for the same purpose. This allows one to discriminate
quickly and inexpensively between similarities and differences in assets
without having to deal with each asset as if it were unique.
Standard property descriptions in the West are also written to facilitate
the combination of assets. Formal property rules require assets to be
described and characterized in a way that not only outlines their
singularities but also points out their similarities to other assets, thus
making potential combinations more obvious. Through the use of standardized
records, one can determine how to exploit a particular asset most
profitably.
Representations also enable one to divide assets without touching them.
Whereas an asset such as a factory may be an indivisible unit in the real
world, in the conceptual universe of formal property representation it can
be subdivided into any number of portions. Citizens of advanced nations are
thus able to split most of their assets into shares, each of which can be
owned by different persons, with different rights, to carry out different
functions.
Formal property representations can also serve as movable stand-ins for
physical assets, enabling owners and entrepreneurs to simulate hypothetical
situations in order to explore other profitable uses of their assets. In
addition, all standard formal property documents are crafted in such a way
as to facilitate the easy measurement of an asset's attributes. By providing
standards, Western formal property systems have significantly reduced the
transaction costs of mobilizing and using assets.
(5) Networking people. By making assets fungible, by attaching owners to
assets, assets to addresses, and ownership to enforcement, and by making
information on the history of assets and owners easily accessible, formal
property systems converted the citizens of the West into a network of
individually identifiable and accountable business agents. The formal
property process created a whole infrastructure of connecting devices that,
like a railway switchyard, allowed the assets (trains) to run safely between
people (stations). Formal property's contribution to mankind is not the
protection of ownership: squatters, housing organizations, mafias, and even
primitive tribes manage to protect their assets quite efficiently. The
property system's real breakthrough is that it radically improved the flow
of communications about assets and their potential. It also enhanced the
status of their owners.
Western legal property also provides businesses with information about
assets and their owners, verifiable addresses, and objective records of
property values, all of which lead to credit records. This information and
the existence of integrated law make risk more manageable by spreading it
through insurance-type devices as well as by pooling property to secure
debts.
Few seem to have noticed that the legal property system of an advanced
nation is the center of a complex web of connections that equips ordinary
citizens to form ties with both the government and the private sector, and
so to obtain additional goods and services. Without the tools of formal
property, it is hard to see how assets could be used for everything they
accomplish in the West.
(6) Protecting transactions. One important reason why the Western formal
property system works like a network is that all the property records
(titles, deeds, securities, and contracts that describe the economically
significant aspects of assets) are continually tracked and protected as they
travel through time and space. Public agencies are the stewards of an
advanced nation's representations. They administer the files that contain
all the economically useful descriptions of assets, whether land, buildings,
chattels, ships, industries, mines, or airplanes. These files will alert
anyone eager to use an asset about things that may restrict or enhance its
utilization, such as encumbrances, easements, leases, arrears, bankruptcies,
or mortgages. In addition to public record-keeping systems, many other
private services (escrow and closing organizations, appraisers, etc.) have
evolved to assist parties in fixing, moving, and tracking representations so
they can easily and securely produce surplus value.
Although they are established to protect the security of both ownership and
transactions, it is obvious that Western systems emphasize the latter.
Security is principally focused on producing trust in transactions so that
people can more easily make their assets lead a parallel life as capital.
The Western emphasis on the security of transactions allows citizens to move
large amounts of assets with very few transactions. In most developing
countries, by contrast, the law and official agencies are trapped by early
colonial and Roman law, which tilt toward protecting ownership. They have
become the custodians of the wishes of the dead.
Conclusion
Much of the marginalization of the poor in developing and former communist
nations comes from their inability to benefit from the six effects that
formal property provides. The challenge these countries face is not whether
they should produce or receive more money but whether they can understand
the legal institutions and summon the political will necessary to build a
property system that is easily accessible to the poor.
The French historian Fernand Braudel found it a great mystery that at the
inception of Western capitalism, it served only a privileged few, just as it
does elsewhere in the world today:
The key problem is to find out why that sector of society of the past, which
I would not hesitate to call capitalist, should have lived as if in a bell
jar, cut off from the rest; why was it not able to expand and conquer the
whole of society? . . . [Why was it that] a significant rate of capital
formation was possible only in certain sectors and not in the whole market
economy of the time?
I believe the answer to Braudel's question lies in restricted access to
formal property, both in the West's past and in developing and former
communist countries today. Local and foreign investors do have capital;
their assets are more or less integrated, fungible, networked, and protected
by formal property systems. But they are only a tiny minority-those who can
afford the expert lawyers, insider connections, and patience required to
navigate the red tape of their property systems. The great majority of
people, who cannot get the fruits of their labor represented by the formal
property system, live outside Braudel's bell jar.
The bell jar makes capitalism a private club, open only to a privileged few,
and enrages the billions standing outside looking in. This capitalist
apartheid will inevitably continue until we all come to terms with the
critical flaw in many countries' legal and political systems that prevents
the majority from entering the formal property system.
The time is right to find out why most countries have not been able to
create open formal property systems. This is the moment, as Third World and
former communist nations are living through their most ambitious attempts to
implement capitalist systems, to lift the bell jar.
http://www.ild.org.pe/papers-art/ch3-cond-en.htm
http://www.amazon.com/exec/obidos/tg/detail/-/0465016154/
Immortalist
Robert D. Putnam
An Interview with Robert Putnam
--------------------------------------------------------------------------------
Many students of the new democracies that have emerged over the past decade
and a half have emphasized the importance of a strong and active civil
society to the consolidation of democracy. Especially with regard to the
postcommunist countries, scholars and democratic activists alike have
lamented the absence or obliteration of traditions of independent civic
engagement and a widespread tendency toward passive reliance on the state.
To those concerned with the weakness of civil societies in the developing or
postcommunist world, the advanced Western democracies and above all the
United States have typically been taken as models to be emulated. There is
striking evidence, however, that the vibrancy of American civil society has
notably declined over the past several decades.
Ever since the publication of Alexis de Tocqueville's Democracy in America,
the United States has played a central role in systematic studies of the
links between democracy and civil society. Although this is in part because
trends in American life are often regarded as harbingers of social
modernization, it is also because America has traditionally been considered
unusually "civic" (a reputation that, as we shall later see, has not been
entirely unjustified).
When Tocqueville visited the United States in the 1830s, it was the
Americans' propensity for civic association that most impressed him as the
key to their unprecedented ability to make democracy work. "Americans of all
ages, all stations in life, and all types of disposition," [End Page 65] he
observed, "are forever forming associations. There are not only commercial
and industrial associations in which all take part, but others of a thousand
different types--religious, moral, serious, futile, very general and very
limited, immensely large and very minute. . . . Nothing, in my view,
deserves more attention than the intellectual and moral associations in
America." 1
Recently, American social scientists of a neo-Tocquevillean bent have
unearthed a wide range of empirical evidence that the quality of public life
and the performance of social institutions (and not only in America) are
indeed powerfully influenced by norms and networks of civic engagement.
Researchers in such fields as education, urban poverty, unemployment, the
control of crime and drug abuse, and even health have discovered that
successful outcomes are more likely in civically engaged communities.
Similarly, research on the varying economic attainments of different ethnic
groups in the United States has demonstrated the importance of social bonds
within each group. These results are consistent with research in a wide
range of settings that demonstrates the vital importance of social networks
for job placement and many other economic outcomes.
Meanwhile, a seemingly unrelated body of research on the sociology of
economic development has also focused attention on the role of social
networks. Some of this work is situated in the developing countries, and
some of it elucidates the peculiarly successful "network capitalism" of East
Asia. 2 Even in less exotic Western economies, however, researchers have
discovered highly efficient, highly flexible "industrial districts" based on
networks of collaboration among workers and small entrepreneurs. Far from
being paleoindustrial anachronisms, these dense interpersonal and
interorganizational networks undergird ultramodern industries, from the high
tech of Silicon Valley to the high fashion of Benetton.
The norms and networks of civic engagement also powerfully affect the
performance of representative government. That, at least, was the central
conclusion of my own 20-year, quasi-experimental study of subnational
governments in different regions of Italy. 3 Although all these regional
governments seemed identical on paper, their levels of effectiveness varied
dramatically. Systematic inquiry showed that the quality of governance was
determined by longstanding traditions of civic engagement (or its absence).
Voter turnout, newspaper readership, membership in choral societies and
football clubs--these were the hallmarks of a successful region. In fact,
historical analysis suggested that these networks of organized reciprocity
and civic solidarity, far from being an epiphenomenon of socioeconomic
modernization, were a precondition for it.
No doubt the mechanisms through which civic engagement and social
connectedness produce such results--better schools, faster economic [End
Page 66] development, lower crime, and more effective government--are
multiple and complex. While these briefly recounted findings require further
confirmation and perhaps qualification, the parallels across hundreds of
empirical studies in a dozen disparate disciplines and subfields are
striking. Social scientists in several fields have recently suggested a
common framework for understanding these phenomena, a framework that rests
on the concept of social capital. 4 By analogy with notions of physical
capital and human capital--tools and training that enhance individual
productivity--"social capital" refers to features of social organization
such as networks, norms, and social trust that facilitate coordination and
cooperation for mutual benefit.
For a variety of reasons, life is easier in a community blessed with a
substantial stock of social capital. In the first place, networks of civic
engagement foster sturdy norms of generalized reciprocity and encourage the
emergence of social trust. Such networks facilitate coordination and
communication, amplify reputations, and thus allow dilemmas of collective
action to be resolved. When economic and political negotiation is embedded
in dense networks of social interaction, incentives for opportunism are
reduced. At the same time, networks of civic engagement embody past success
at collaboration, which can serve as a cultural template for future
collaboration. Finally, dense networks of interaction probably broaden the
participants' sense of self, developing the "I" into the "we," or (in the
language of rational-choice theorists) enhancing the participants' "taste"
for collective benefits.
I do not intend here to survey (much less contribute to) the development of
the theory of social capital. Instead, I use the central premise of that
rapidly growing body of work--that social connections and civic engagement
pervasively influence our public life, as well as our private prospects--as
the starting point for an empirical survey of trends in social capital in
contemporary America. I concentrate here entirely on the American case,
although the developments I portray may in some measure characterize many
contemporary societies.
Whatever Happened to Civic Engagement?
We begin with familiar evidence on changing patterns of political
participation, not least because it is immediately relevant to issues of
democracy in the narrow sense. Consider the well-known decline in turnout in
national elections over the last three decades. From a relative high point
in the early 1960s, voter turnout had by 1990 declined by nearly a quarter;
tens of millions of Americans had forsaken their parents' habitual readiness
to engage in the simplest act of citizenship. Broadly similar trends also
characterize participation in state and local elections.
It is not just the voting booth that has been increasingly deserted by [End
Page 67] Americans. A series of identical questions posed by the Roper
Organization to national samples ten times each year over the last two
decades reveals that since 1973 the number of Americans who report that "in
the past year" they have "attended a public meeting on town or school
affairs" has fallen by more than a third (from 22 percent in 1973 to 13
percent in 1993). Similar (or even greater) relative declines are evident in
responses to questions about attending a political rally or speech, serving
on a committee of some local organization, and working for a political
party. By almost every measure, Americans' direct engagement in politics and
government has fallen steadily and sharply over the last generation, despite
the fact that average levels of education--the best individual-level
predictor of political participation--have risen sharply throughout this
period. Every year over the last decade or two, millions more have withdrawn
from the affairs of their communities.
Not coincidentally, Americans have also disengaged psychologically from
politics and government over this era. The proportion of Americans who reply
that they "trust the government in Washington" only "some of the time" or
"almost never" has risen steadily from 30 percent in 1966 to 75 percent in
1992.
These trends are well known, of course, and taken by themselves would seem
amenable to a strictly political explanation. Perhaps the long litany of
political tragedies and scandals since the 1960s (assassinations, Vietnam,
Watergate, Irangate, and so on) has triggered an understandable disgust for
politics and government among Americans, and that in turn has motivated
their withdrawal. I do not doubt that this common interpretation has some
merit, but its limitations become plain when we examine trends in civic
engagement of a wider sort.
Our survey of organizational membership among Americans can usefully begin
with a glance at the aggregate results of the General Social Survey, a
scientifically conducted, national-sample survey that has been repeated 14
times over the last two decades. Church-related groups constitute the most
common type of organization joined by Americans; they are especially popular
with women. Other types of organizations frequently joined by women include
school-service groups (mostly parent-teacher associations), sports groups,
professional societies, and literary societies. Among men, sports clubs,
labor unions, professional societies, fraternal groups, veterans' groups,
and service clubs are all relatively popular.
Religious affiliation is by far the most common associational [End Page 68]
membership among Americans. Indeed, by many measures America continues to be
(even more than in Tocqueville's time) an astonishingly "churched" society.
For example, the United States has more houses of worship per capita than
any other nation on Earth. Yet religious sentiment in America seems to be
becoming somewhat less tied to institutions and more self-defined.
How have these complex crosscurrents played out over the last three or four
decades in terms of Americans' engagement with organized religion? The
general pattern is clear: The 1960s witnessed a significant drop in reported
weekly churchgoing--from roughly 48 percent in the late 1950s to roughly 41
percent in the early 1970s. Since then, it has stagnated or (according to
some surveys) declined still further. Meanwhile, data from the General
Social Survey show a modest decline in membership in all "church-related
groups" over the last 20 years. It would seem, then, that net participation
by Americans, both in religious services and in church-related groups, has
declined modestly (by perhaps a sixth) since the 1960s.
For many years, labor unions provided one of the most common organizational
affiliations among American workers. Yet union membership has been falling
for nearly four decades, with the steepest decline occurring between 1975
and 1985. Since the mid-1950s, when union membership peaked, the unionized
portion of the nonagricultural work force in America has dropped by more
than half, falling from 32.5 percent in 1953 to 15.8 percent in 1992. By
now, virtually all of the explosive growth in union membership that was
associated with the New Deal has been erased. The solidarity of union halls
is now mostly a fading memory of aging men. 5
The parent-teacher association (PTA) has been an especially important form
of civic engagement in twentieth-century America because parental
involvement in the educational process represents a particularly productive
form of social capital. It is, therefore, dismaying to discover that
participation in parent-teacher organizations has dropped drastically over
the last generation, from more than 12 million in 1964 to barely 5 million
in 1982 before recovering to approximately 7 million now.
Next, we turn to evidence on membership in (and volunteering for) civic and
fraternal organizations. These data show some striking patterns. First,
membership in traditional women's groups has declined more or less steadily
since the mid-1960s. For example, membership in the national Federation of
Women's Clubs is down by more than half (59 percent) since 1964, while
membership in the League of Women Voters (LWV) is off 42 percent since 1969.
6
Similar reductions are apparent in the numbers of volunteers for mainline
civic organizations, such as the Boy Scouts (off by 26 percent since 1970)
and the Red Cross (off by 61 percent since 1970). But what about the
possibility that volunteers have simply switched their loyalties [End Page
69] to other organizations? Evidence on "regular" (as opposed to occasional
or "drop-by") volunteering is available from the Labor Department's Current
Population Surveys of 1974 and 1989. These estimates suggest that serious
volunteering declined by roughly one-sixth over these 15 years, from 24
percent of adults in 1974 to 20 percent in 1989. The multitudes of Red Cross
aides and Boy Scout troop leaders now missing in action have apparently not
been offset by equal numbers of new recruits elsewhere.
Fraternal organizations have also witnessed a substantial drop in membership
during the 1980s and 1990s. Membership is down significantly in such groups
as the Lions (off 12 percent since 1983), the Elks (off 18 percent since
1979), the Shriners (off 27 percent since 1979), the Jaycees (off 44 percent
since 1979), and the Masons (down 39 percent since 1959). In sum, after
expanding steadily throughout most of this century, many major civic
organizations have experienced a sudden, substantial, and nearly
simultaneous decline in membership over the last decade or two.
The most whimsical yet discomfiting bit of evidence of social disengagement
in contemporary America that I have discovered is this: more Americans are
bowling today than ever before, but bowling in organized leagues has
plummeted in the last decade or so. Between 1980 and 1993 the total number
of bowlers in America increased by 10 percent, while league bowling
decreased by 40 percent. (Lest this be thought a wholly trivial example, I
should note that nearly 80 million Americans went bowling at least once
during 1993, nearly a third more than voted in the 1994 congressional
elections and roughly the same number as claim to attend church regularly.
Even after the 1980s' plunge in league bowling, nearly 3 percent of American
adults regularly bowl in leagues.) The rise of solo bowling threatens the
livelihood of bowling-lane proprietors because those who bowl as members of
leagues consume three times as much beer and pizza as solo bowlers, and the
money in bowling is in the beer and pizza, not the balls and shoes. The
broader social significance, however, lies in the social interaction and
even occasionally civic conversations over beer and pizza that solo bowlers
forgo. Whether or not bowling beats balloting in the eyes of most Americans,
bowling teams illustrate yet another vanishing form of social capital.
Countertrends
At this point, however, we must confront a serious counterargument. Perhaps
the traditional forms of civic organization whose decay we have been tracing
have been replaced by vibrant new organizations. For example, national
environmental organizations (like the Sierra Club) and feminist groups (like
the National Organization for Women) grew rapidly [End Page 70] during the
1970s and 1980s and now count hundreds of thousands of dues-paying members.
An even more dramatic example is the American Association of Retired Persons
(AARP), which grew exponentially from 400,000 card-carrying members in 1960
to 33 million in 1993, becoming (after the Catholic Church) the largest
private organization in the world. The national administrators of these
organizations are among the most feared lobbyists in Washington, in large
part because of their massive mailing lists of presumably loyal members.
These new mass-membership organizations are plainly of great political
importance. From the point of view of social connectedness, however, they
are sufficiently different from classic "secondary associations" that we
need to invent a new label--perhaps "tertiary associations." For the vast
majority of their members, the only act of membership consists in writing a
check for dues or perhaps occasionally reading a newsletter. Few ever attend
any meetings of such organizations, and most are unlikely ever (knowingly)
to encounter any other member. The bond between any two members of the
Sierra Club is less like the bond between any two members of a gardening
club and more like the bond between any two Red Sox fans (or perhaps any two
devoted Honda owners): they root for the same team and they share some of
the same interests, but they are unaware of each other's existence. Their
ties, in short, are to common symbols, common leaders, and perhaps common
ideals, but not to one another. The theory of social capital argues that
associational membership should, for example, increase social trust, but
this prediction is much less straightforward with regard to membership in
tertiary associations. From the point of view of social connectedness, the
Environmental Defense Fund and a bowling league are just not in the same
category.
If the growth of tertiary organizations represents one potential (but
probably not real) counterexample to my thesis, a second countertrend is
represented by the growing prominence of nonprofit organizations, especially
nonprofit service agencies. This so-called third sector includes everything
from Oxfam and the Metropolitan Museum of Art to the Ford Foundation and the
Mayo Clinic. In other words, although most secondary associations are
nonprofits, most nonprofit agencies are not secondary associations. To
identify trends in the size of the nonprofit sector with trends in social
connectedness would be another fundamental conceptual mistake. 7
A third potential countertrend is much more relevant to an assessment of
social capital and civic engagement. Some able researchers have argued that
the last few decades have witnessed a rapid expansion in "support groups" of
various sorts. Robert Wuthnow reports that fully 40 percent of all Americans
claim to be "currently involved in [a] small group that meets regularly and
provides support or caring for those who participate in it." 8 Many of these
groups are religiously affiliated, but [End Page 71] many others are not.
For example, nearly 5 percent of Wuthnow's national sample claim to
participate regularly in a "self-help" group, such as Alcoholics Anonymous,
and nearly as many say they belong to book-discussion groups and hobby
clubs.
The groups described by Wuthnow's respondents unquestionably represent an
important form of social capital, and they need to be accounted for in any
serious reckoning of trends in social connectedness. On the other hand, they
do not typically play the same role as traditional civic associations. As
Wuthnow emphasizes,
Small groups may not be fostering community as effectively as many of
their proponents would like. Some small groups merely provide occasions for
individuals to focus on themselves in the presence of others. The social
contract binding members together asserts only the weakest of obligations.
Come if you have time. Talk if you feel like it. Respect everyone's opinion.
Never criticize. Leave quietly if you become dissatisfied. . . . We can
imagine that [these small groups] really substitute for families,
neighborhoods, and broader community attachments that may demand lifelong
commitments, when, in fact, they do not. 9
All three of these potential countertrends--tertiary organizations,
nonprofit organizations, and support groups--need somehow to be weighed
against the erosion of conventional civic organizations. One way of doing so
is to consult the General Social Survey.
Within all educational categories, total associational membership declined
significantly between 1967 and 1993. Among the college-educated, the average
number of group memberships per person fell from 2.8 to 2.0 (a 26-percent
decline); among high-school graduates, the number fell from 1.8 to 1.2 (32
percent); and among those with fewer than 12 years of education, the number
fell from 1.4 to 1.1 (25 percent). In other words, at all educational (and
hence social) levels of American society, and counting all sorts of group
memberships, the average number of associational memberships has fallen by
about a fourth over the last quarter-century. Without controls for
educational levels, the trend is not nearly so clear, but the central point
is this: more Americans than ever before are in social circumstances that
foster associational involvement (higher education, middle age, and so on),
but nevertheless aggregate associational membership appears to be stagnant
or declining.
Broken down by type of group, the downward trend is most marked for
church-related groups, for labor unions, for fraternal and veterans'
organizations, and for school-service groups. Conversely, membership in
professional associations has risen over these years, although less than
might have been predicted, given sharply rising educational and occupational
levels. Essentially the same trends are evident for both men and women in
the sample. In short, the available survey evidence [End Page 72] confirms
our earlier conclusion: American social capital in the form of civic
associations has significantly eroded over the last generation.
Good Neighborliness and Social Trust
I noted earlier that most readily available quantitative evidence on trends
in social connectedness involves formal settings, such as the voting booth,
the union hall, or the PTA. One glaring exception is so widely discussed as
to require little comment here: the most fundamental form of social capital
is the family, and the massive evidence of the loosening of bonds within the
family (both extended and nuclear) is well known. This trend, of course, is
quite consistent with--and may help to explain--our theme of social
decapitalization.
A second aspect of informal social capital on which we happen to have
reasonably reliable time-series data involves neighborliness. In each
General Social Survey since 1974 respondents have been asked, "How often do
you spend a social evening with a neighbor?" The proportion of Americans who
socialize with their neighbors more than once a year has slowly but steadily
declined over the last two decades, from 72 percent in 1974 to 61 percent in
1993. (On the other hand, socializing with "friends who do not live in your
neighborhood" appears to be on the increase, a trend that may reflect the
growth of workplace-based social connections.)
Americans are also less trusting. The proportion of Americans saying that
most people can be trusted fell by more than a third between 1960, when 58
percent chose that alternative, and 1993, when only 37 percent did. The same
trend is apparent in all educational groups; indeed, because social trust is
also correlated with education and because educational levels have risen
sharply, the overall decrease in social trust is even more apparent if we
control for education.
Our discussion of trends in social connectedness and civic engagement has
tacitly assumed that all the forms of social capital that we have discussed
are themselves coherently correlated across individuals. This is in fact
true. Members of associations are much more likely than nonmembers to
participate in politics, to spend time with neighbors, to express social
trust, and so on.
The close correlation between social trust and associational membership is
true not only across time and across individuals, but also across countries.
Evidence from the 1991 World Values Survey demonstrates the following: 10
1.. Across the 35 countries in this survey, social trust and civic
engagement are strongly correlated; the greater the density of associational
membership in a society, the more trusting its citizens. Trust and
engagement are two facets of the same underlying factor--social capital.[End
Page 73]
2.. America still ranks relatively high by cross-national standards on
both these dimensions of social capital. Even in the 1990s, after several
decades' erosion, Americans are more trusting and more engaged than people
in most other countries of the world.
3.. The trends of the past quarter-century, however, have apparently moved
the United States significantly lower in the international rankings of
social capital. The recent deterioration in American social capital has been
sufficiently great that (if no other country changed its position in the
meantime) another quarter-century of change at the same rate would bring the
United States, roughly speaking, to the midpoint among all these countries,
roughly equivalent to South Korea, Belgium, or Estonia today. Two
generations' decline at the same rate would leave the United States at the
level of today's Chile, Portugal, and Slovenia.
Why Is U.S. Social Capital Eroding?
As we have seen, something has happened in America in the last two or three
decades to diminish civic engagement and social connectedness. What could
that "something" be? Here are several possible explanations, along with some
initial evidence on each.
The movement of women into the labor force. Over these same two or three
decades, many millions of American women have moved out of the home into
paid employment. This is the primary, though not the sole, reason why the
weekly working hours of the average American have increased significantly
during these years. It seems highly plausible that this social revolution
should have reduced the time and energy available for building social
capital. For certain organizations, such as the PTA, the League of Women
Voters, the Federation of Women's Clubs, and the Red Cross, this is almost
certainly an important part of the story. The sharpest decline in women's
civic participation seems to have come in the 1970s; membership in such
"women's" organizations as these has been virtually halved since the late
1960s. By contrast, most of the decline in participation in men's
organizations occurred about ten years later; the total decline to date has
been approximately 25 percent for the typical organization. On the other
hand, the survey data imply that the aggregate declines for men are
virtually as great as those for women. It is logically possible, of course,
that the male declines might represent the knock-on effect of women's
liberation, as dishwashing crowded out the lodge, but time-budget studies
suggest that most husbands of working wives have assumed only a minor part
of the housework. In short, something besides the women's revolution seems
to lie behind the erosion of social capital.
Mobility: The "re-potting" hypothesis. Numerous studies of organizational
involvement have shown that residential stability and such related phenomena
as homeownership are clearly associated with greater [End Page 74] civic
engagement. Mobility, like frequent re-potting of plants, tends to disrupt
root systems, and it takes time for an uprooted individual to put down new
roots. It seems plausible that the automobile, suburbanization, and the
movement to the Sun Belt have reduced the social rootedness of the average
American, but one fundamental difficulty with this hypothesis is apparent:
the best evidence shows that residential stability and homeownership in
America have risen modestly since 1965, and are surely higher now than
during the 1950s, when civic engagement and social connectedness by our
measures was definitely higher.
Other demographic transformations. A range of additional changes have
transformed the American family since the 1960s--fewer marriages, more
divorces, fewer children, lower real wages, and so on. Each of these changes
might account for some of the slackening of civic engagement, since married,
middle-class parents are generally more socially involved than other people.
Moreover, the changes in scale that have swept over the American economy in
these years--illustrated by the replacement of the corner grocery by the
supermarket and now perhaps of the supermarket by electronic shopping at
home, or the replacement of community-based enterprises by outposts of
distant multinational firms--may perhaps have undermined the material and
even physical basis for civic engagement.
The technological transformation of leisure. There is reason to believe that
deep-seated technological trends are radically "privatizing" or
"individualizing" our use of leisure time and thus disrupting many
opportunities for social-capital formation. The most obvious and probably
the most powerful instrument of this revolution is television. Time-budget
studies in the 1960s showed that the growth in time spent watching
television dwarfed all other changes in the way Americans passed their days
and nights. Television has made our communities (or, rather, what we
experience as our communities) wider and shallower. In the language of
economics, electronic technology enables individual tastes to be satisfied
more fully, but at the cost of the positive social externalities associated
with more primitive forms of entertainment. The same logic applies to the
replacement of vaudeville by the movies and now of movies by the VCR. The
new "virtual reality" helmets that we will soon don to be entertained in
total isolation are merely the latest extension of this trend. Is technology
thus driving a wedge between our individual interests and our collective
interests? It is a question that seems worth exploring more systematically.
What Is to Be Done?
The last refuge of a social-scientific scoundrel is to call for more
research. Nevertheless, I cannot forbear from suggesting some further lines
of inquiry. [End Page 75]
a.. We must sort out the dimensions of social capital, which clearly is
not a unidimensional concept, despite language (even in this essay) that
implies the contrary. What types of organizations and networks most
effectively embody--or generate--social capital, in the sense of mutual
reciprocity, the resolution of dilemmas of collective action, and the
broadening of social identities? In this essay I have emphasized the density
of associational life. In earlier work I stressed the structure of networks,
arguing that "horizontal" ties represented more productive social capital
than vertical ties. 11
b.. Another set of important issues involves macrosociological
crosscurrents that might intersect with the trends described here. What will
be the impact, for example, of electronic networks on social capital? My
hunch is that meeting in an electronic forum is not the equivalent of
meeting in a bowling alley--or even in a saloon--but hard empirical research
is needed. What about the development of social capital in the workplace? Is
it growing in counterpoint to the decline of civic engagement, reflecting
some social analogue of the first law of thermodynamics--social capital is
neither created nor destroyed, merely redistributed? Or do the trends
described in this essay represent a deadweight loss?
c.. A rounded assessment of changes in American social capital over the
last quarter-century needs to count the costs as well as the benefits of
community engagement. We must not romanticize small-town, middle-class civic
life in the America of the 1950s. In addition to the deleterious trends
emphasized in this essay, recent decades have witnessed a substantial
decline in intolerance and probably also in overt discrimination, and those
beneficent trends may be related in complex ways to the erosion of
traditional social capital. Moreover, a balanced accounting of the
social-capital books would need to reconcile the insights of this approach
with the undoubted insights offered by Mancur Olson and others who stress
that closely knit social, economic, and political organizations are prone to
inefficient cartelization and to what political economists term "rent
seeking" and ordinary men and women call corruption. 12
d.. Finally, and perhaps most urgently, we need to explore creatively how
public policy impinges on (or might impinge on) social-capital formation. In
some well-known instances, public policy has destroyed highly effective
social networks and norms. American slum-clearance policy of the 1950s and
1960s, for example, renovated physical capital, [End Page 76] but at a very
high cost to existing social capital. The consolidation of country post
offices and small school districts has promised administrative and financial
efficiencies, but full-cost accounting for the effects of these policies on
social capital might produce a more negative verdict. On the other hand,
such past initiatives as the county agricultural-agent system, community
colleges, and tax deductions for charitable contributions illustrate that
government can encourage social-capital formation. Even a recent proposal in
San Luis Obispo, California, to require that all new houses have front
porches illustrates the power of government to influence where and how
networks are formed.
The concept of "civil society" has played a central role in the recent
global debate about the preconditions for democracy and democratization. In
the newer democracies this phrase has properly focused attention on the need
to foster a vibrant civic life in soils traditionally inhospitable to
self-government. In the established democracies, ironically, growing numbers
of citizens are questioning the effectiveness of their public institutions
at the very moment when liberal democracy has swept the battlefield, both
ideologically and geopolitically. In America, at least, there is reason to
suspect that this democratic disarray may be linked to a broad and
continuing erosion of civic engagement that began a quarter-century ago.
High on our scholarly agenda should be the question of whether a comparable
erosion of social capital may be under way in other advanced democracies,
perhaps in different institutional and behavioral guises. High on America's
agenda should be the question of how to reverse these adverse trends in
social connectedness, thus restoring civic engagement and civic trust.
Robert D. Putnam is Dillon Professor of International Affairs and director
of the Center for International Affairs at Harvard University. His most
recent books are Double-Edged Diplomacy: International Bargaining and
Domestic Politics (1993) and Making Democracy Work: Civic Traditions in
Modern Italy (1993), which is reviewed elsewhere in this issue. He is now
completing a study of the revitalization of American democracy.
Commentary and writings on related topics:
a.. Nicholas Lemann, Kicking in Groups, The Atlantic Monthly (April 1996).
b.. Mary Ann Zehr, Getting Involved in Civic Life, Foundation News and
Commentary (May/June 1996). The Foundation News and Commentary is a
publication of The Council on Foundations.
Notes
1. Alexis de Tocqueville, Democracy in America, ed. J.P. Maier, trans.
George Lawrence (Garden City, N.Y.: Anchor Books, 1969), 513-17.
2. On social networks and economic growth in the developing world, see
Milton J. Esman and Norman Uphoff, Local Organizations: Intermediaries in
Rural Development (Ithaca: Cornell University Press, 1984), esp. 15-42 and
99-180; and Albert O. Hirschman, Getting Ahead Collectively: Grassroots
Experiences in Latin America (Elmsford, N.Y.: Pergamon Press, 1984), esp.
42-77. On East Asia, see Gustav Papanek, "The New Asian Capitalism: An
Economic Portrait," in Peter L. Berger and Hsin-Huang Michael Hsiao, eds.,
In Search of an East Asian Development Model (New Brunswick, N.J.:
Transaction, 1987), 27-80; Peter B. Evans, "The State as Problem and
Solution: Predation, Embedded Autonomy and Structural Change," in Stephan
Haggard and Robert R. Kaufman, eds., The Politics of Economic Adjustment
(Princeton: Princeton University Press, 1992), 139-81; and Gary G. Hamilton,
William Zeile, and Wan-Jin Kim, "Network Structure of East Asian Economies,"
in Stewart R. Clegg and S. Gordon Redding, eds., Capitalism in Contrasting
Cultures (Hawthorne, N.Y.: De Gruyter, 1990), 105-29. See also Gary G.
Hamilton and Nicole Woolsey Biggart, "Market, Culture, and Authority: A
Comparative Analysis of Management and Organization in the Far East,"
American Journal of Sociology (Supplement) 94 (1988): S52-S94; and Susan
Greenhalgh, "Families and Networks in Taiwan's Economic Development," in
Edwin Winckler and Susan Greenhalgh, eds., Contending Approaches to the
Political Economy of Taiwan (Armonk, N.Y.: M.E. Sharpe, 1987), 224-45.
3. Robert D. Putnam, Making Democracy Work: Civic Traditions in Modern Italy
(Princeton: Princeton University Press, 1993).
4. James S. Coleman deserves primary credit for developing the "social
capital" theoretical framework. See his "Social Capital in the Creation of
Human Capital," American Journal of Sociology (Supplement) 94 (1988):
S95-S120, as well as his The Foundations of Social Theory (Cambridge:
Harvard University Press, 1990), 300-21. See also Mark Granovetter,
"Economic Action and Social Structure: The Problem of Embeddedness,"
American Journal of Sociology 91 (1985): 481-510; Glenn C. Loury, "Why
Should We Care About Group Inequality?" Social Philosophy and Policy 5
(1987): 249-71; and Robert D. Putnam, "The Prosperous Community: Social
Capital and Public Life," American Prospect 13 (1993): 35-42. To my
knowledge, the first scholar to use the term "social capital" in its current
sense was Jane Jacobs, in The Death and Life of Great American Cities (New
York: Random House, 1961), 138.
5. Any simplistically political interpretation of the collapse of American
unionism would need to confront the fact that the steepest decline began
more than six years before the Reagan administration's attack on PATCO. Data
from the General Social Survey show a roughly 40-percent decline in reported
union membership between 1975 and 1991.
6. Data for the LWV are available over a longer time span and show an
interesting pattern: a sharp slump during the Depression, a strong and
sustained rise after World War II that more than tripled membership between
1945 and 1969, and then the post-1969 decline, which has already erased
virtually all the postwar gains and continues still. This same historical
pattern applies to those men's fraternal organizations for which comparable
data are available--steady increases for the first seven decades of the
century, interrupted only by the Great Depression, followed by a collapse in
the 1970s and 1980s that has already wiped out most of the postwar expansion
and continues apace.
7. Cf. Lester M. Salamon, "The Rise of the Nonprofit Sector," Foreign
Affairs 73 (July-August 1994): 109-22. See also Salamon, "Partners in Public
Service: The Scope and Theory of Government-Nonprofit Relations," in Walter
W. Powell, ed., The Nonprofit Sector: A Research Handbook (New Haven: Yale
University Press, 1987), 99-117. Salamon's empirical evidence does not
sustain his broad claims about a global "associational revolution"
comparable in significance to the rise of the nation-state several centuries
ago.
8. Robert Wuthnow, Sharing the Journey: Support Groups and America's New
Quest for Community (New York: The Free Press, 1994), 45.
9. Ibid., 3-6.
10. I am grateful to Ronald Inglehart, who directs this unique
cross-national project, for sharing these highly useful data with me. See
his "The Impact of Culture on Economic Development: Theory, Hypotheses, and
Some Empirical Tests" (unpublished manuscript, University of Michigan,
1994).
11. See my Making Democracy Work, esp. ch. 6.
12. See Mancur Olson, The Rise and Decline of Nations: Economic Growth,
Stagflation, and Social Rigidities (New Haven: Yale University Press, 1982),
2.
http://www.infed.org/thinkers/putnam.htm
unknown
you are wasting your time.
Stop pushing your silly books and book reviews, the only book
that you need to read was written 150 years ago: Capital by Karl Marx.
Granted, it might be too tough for you, but try to get through volume
one, at least, the basic idea is there in excruciating detail. Nothing
more needs to be said, and you have nothing new to say, so go away.