Does Capitalism benefit the American worker?
Raoul Golan
Well, does it? How much wealth does the average worker get
to enjoy in the American capitalist economy? I sat down
at my PC to try to find out - the results surprised me, and
I'm no capitalist. This post is reasonably short and simple,
and could raise a few eyebrows. If you find any holes in the
argument, please let me know.
Basically, I wanted to know whether today's worker is
better off than he was in the 1960's - whether advances in
technology, the supposed triumph of capitalism over the USSR,
and the "New World Order" has actually meant anything to the
worker. In a nutshell, whether Capitalism has delivered on
its promises.
I worked out the Personal Income per Capita and GNP per capita,
and compared it with the average weekly wage as it appears in
"The World Almanac and Book of Facts" in Microsoft Bookshelf.
Did these figures increase at the same rate over 1960-1990?
The results were very interesting.
Contents:
1. Personal Income
2. GNP per capita
3. Average Weekly Wage
5. CPI index (Consumer Price Index)
6. Minimum Wage Level
7. Conclusion of study
8. Where is the US heading?
1. Personal Income.
-------------------
Total Personal Income is given as the indicator of the total income
of the population. It is based on the GNP, minus capital expenditures
and other expenses, plus income from other income sources. This
figure does not include many luxury items which can be claimed as
business expenses, such as personal jets, corporate yachts, etc, etc,
so the 'real' personal income is much higher than this figure.
The following figures have been obtained from "The World Almanac":
Personal Income Population
(in billions $) (in millions)
1960 409.4 179
1970 831.8 203
1975 1313.4 (215)
1980 2258.5 226
1990 4079.8 249
The figure in brackets has been interpolated, since the reference
did not have a figure for that year.
From this, I can calculate:
Pers. Income % increase
per Capita
(in thousands $)
1960 2,280 100
1970 4,097 179
1975 6,110 267
1980 9,993 437
1990 16,380 716
*** One sees more than a sevenfold increase in Personal Income per Capita.
2. GNP per capita
------------------
GNP gives the total product of the nation - it includes the production
of capital goods.
In "The World Almanac", the figures are given as follows:
GNP
(in billions $)
1960 515.3
1970 1015.5
1975 1598.4
1980 2732.0
1990 5524.5
From these figures, I calculate the following:
GNP per capita % increase
(in thousands $)
1960 2.88 100
1970 5.00 174
1975 7.43 258
1980 12.10 420
1990 22.20 771
*** One sees just under an eightfold increase in GNP per Capita.
3. Average Weekly Wage (Manufacturing)
---------------------------------------
The Average Weekly Earnings indicates the average income, excluding
corporations, businesses, etc, for the manufacturing sector. Basically,
what the average wage worker in manufacturing gets.
"The World Almanac" also gives the following Average Weekly Wage,
from which I calculate the % increase:
Avg. Weekly Wage % increase
1960 ($72.33) 100
1964 $91.33 126
1970 $119.83 166
1975 $163.53 226
1980 $235.10 325
1990 $345.35 477
The figure in brackets had to be extrapolated, since the Almanac
does not have a figure for that year.
** One sees less than a fivefold increase from 1960 to 1990.
5. CPI index (Consumer Price Index)
-----------------------------------
How has the CPI index changed over these years? "The World Almanac"
gives the following figures:
CPI
1970 38.8
1975 53.8
1980 82.4
1985 107.6
1990 130.7
(The *&%$^ Almanac doesn't give a figure for 1960!)
The increase from 1990 figure is 336% of the 1970 figure. From
section 4 we see that the 1990 wages are 288% of the 1970 wages
(from $119.83 to $345.35).
** We see CPI increasing by 336% between 1970-1990, while wages
increased only by 288% - wages are NOT keeping up with CPI.
i.e REAL wages have DECLINED.
6. Minimum Wage Level
---------------------
"The World Almanac" gives the following figures for the Minimum
Wage as a percentage of the Average Wage:
Minimum Wage
1950 54%
1961 50%
1968 48%
1974 46%
1978 44%
1981 43%
The reference does not have figures for every year, so I used
the years it did provide. If average wages aren't keeping up with
CPI, minimum wages definitely aren't!
7. Conclusion of study
----------------------
From the Personal Income figures, one would expect the average
American to be earning over 7 times in 1990 what he used to earn
in 1960. After all, as the GNP figures show, he is almost producing
eight times as much wealth in dollars (pre inflation). However, the
average weekly wage has increased less than 5 times - not even enough
to keep up with CPI. Not only that, the minimum wage has decreased from
50% of the average in 1960 to 43% in 1981 (probably much less now).
This shows that the working class is being worked harder and harder, for
less and less. This is certainly responsible for the growing underclass,
and the associated problems of drugs, crime, illiteracy, homelessness.
That Personal Income is increasing shows that some people must be
making more money. What is this extra income, which is not related
to wages? Certainly, it must be payment for something other than labour.
Is this not an indication that the extra income is increasingly
directed to rents and dividends, to those with capital, to the
hands of the few who need not work for a living?
Is this not an indication that the American workers are neglected?
Is this not an indication that "The American Way" is NOT the
WORKER's way, but the BUSINESS OWNER's way? If the majority
of Americans are wage earners, can we say that the "American Way"
is also the "American People's Way"?
8. Where is the US heading?
---------------------------
That the US has a greater income is shown by the increasing Personal
Income per Capita. If this is the case, why are wages not keeping up
with this increased income? Why are they in fact DECREASING relative
to CPI?
The US is becoming richer due to the labour of its workforce and to
the improved machinery of its industry (also the product of its
workers). Why aren't workers enjoying the fruits of their labour,
the effort they put in into making the US more productive?
The US is becoming a polarised society - the rich ARE getting
richer, the workers ARE getting less and less of what they
produce. These trends are those of an oligarchic society,
where labourers produce more and more for an elite few, while
being returned less and less of what they produce.
The media will blame the current state of the American society
on drugs, or the Japanese, or the decay of family values.
Far from it, it is clearly due to the increasing disparity
of wealth between the capitalists and the workers. The truth is
Capitalism can only bring MISERY to the worker.
Mail me at ra...@cssc-syd.tansu.com.au for an article on
DEMOCRATIC Socialism, opposed to all forms of worker
exploitation, be it Stalinist or Capitalist.
--
************** ra...@cssc-syd.tansu.com.au (Raoul Golan) *****************
-"The Angel of History's face is turned toward the past.. Where we perceive -
- a chain of events, he sees a single catastrophe.. the debris before him -
- is piled skyward.. This storm is what we call progress."(Walter Benjamin) -
Leighton Anderson
>
>Well, does it? How much wealth does the average worker get
>to enjoy in the American capitalist economy? I sat down
>at my PC to try to find out - the results surprised me, and
>I'm no capitalist. This post is reasonably short and simple,
>and could raise a few eyebrows. If you find any holes in the
>argument, please let me know.
Please post all the comparable numbers for Australia.
Obviously, adherents of capitalism aren't going to concede that the USA
numbers are the result of laissez faire capitalism in action. But you
might be able to argue that the USA is *relatively* more capitalistic
than Australia, for example. So, let's look at case studies.
But to just post a set of numbers from Microsoft World Almanac, without
relating them to anything else, as the "results of capitalism" . . . ,
that IS a hole in your argument IMHO.
But the idea of using actual *data* in political discussions is a good
one. Maybe it'll catch on. ;-)
Gordon Fitch
| >Well, does it? How much wealth does the average worker get
| >to enjoy in the American capitalist economy? I sat down
| >at my PC to try to find out - the results surprised me, and
| >I'm no capitalist. This post is reasonably short and simple,
| >and could raise a few eyebrows. If you find any holes in the
| >argument, please let me know.
"Leighton Anderson" <p00...@psilink.com>:
| ...
| But to just post a set of numbers from Microsoft World Almanac, without
| relating them to anything else, as the "results of capitalism" . . . ,
| that IS a hole in your argument IMHO.
|
| But the idea of using actual *data* in political discussions is a good
| one. Maybe it'll catch on. ;-)
On the one hand, I can only agree that the use of "actual
data" would lend many of the articles in these newsgroups a
certain sobriety which they have heretofore lacked; now and
then, they would touch some kind of ground, somewhere.
On the other hand, there are two important problems. The
first is that one's ability to summon data is still very
much dependent on wealth, power, and social position. One
who can afford to stay on Nexis all day, or scan large
private databases, can come up with more _facts_ than one
who can't. The facts can then be selected to suit the
argument.
The other problem is that we may not know what the facts
_mean_. "How much wealth does the average worker get to
enjoy in the American capitalist economy?" A number -- but
what is _wealth_? What is _enjoy_? These questions exist
even on a very material level -- for instance, a highly
dynamic industrializing system destroys its environment, in
effect turning public wealth into private wealth; I don't
think we know how to denumerate that effect.
--
)*( Gordon Fitch )*( g...@panix.com )*(
William M. Everett
[I cut all the data. It looks fine to me, what I argue with is
your interpretation. I also want to draw attention to what I've underlined
above]
>7. Conclusion of study
>----------------------
>
>From the Personal Income figures, one would expect the average
>American to be earning over 7 times in 1990 what he used to earn
>in 1960. After all, as the GNP figures show, he is almost producing
>eight times as much wealth in dollars (pre inflation).
> However, the
>average weekly wage has increased less than 5 times
The average weekly *manufacturing* wage. *big* difference. In case
you hadn't noticed the number of people working in the manufacturing sector
has dropped quite a bit in the last 50 years. There is quite a bit of wealth
that is created outside of the manufacturing sector, the service sector has
grown enormously.
That manufacturing wages has dropped really isn't surprising, that
sort of labour is just becoming less and less valuable with the advance of
automation and the like. To put in terms you can understand, we *as a society*
don't need them as much anymore.
>This shows that the working class is being worked harder and harder, for
>less and less.
This shows that *manufacturing* workers are being paid less and less,
it doesn't show that they are working harder.
>
>That Personal Income is increasing shows that some people must be
>making more money.
Yes, probably people in the service sector and investors. Your data
doesn't prove that investors are earning more, but lets assume its true.
With greater automation, capital is more useful in manufacturing, and
therefore its value has gone up. By giving investors a greater return,
this prompts more investment, which makes us all richer. So what?
*********************************************************
William Everett These opinions are mine-
Harvey Mudd College You can't have them
*********************************************************
And in the name of dispossessing the capitalists,
he would dispossess everyone, thus make all men slaves by
taking away from them the power to make choices for
themselves, in return for the false promise of the power
to make choices for others.
-James A. Donald
*********************************************************
Richard Foy
William M. Everett <weve...@jarthur.cs.hmc.edu> wrote:
>
> Yes, probably people in the service sector and investors. Your data
>doesn't prove that investors are earning more, but lets assume its true.
>With greater automation, capital is more useful in manufacturing, and
>therefore its value has gone up. By giving investors a greater return,
>this prompts more investment, which makes us all richer. So what?
I guess I don't follow how giving investors a greater return makes us
"all" richer.
Sure it may do something for me. I have some investments here and
there.
But it certainly doesn't make the homeless, the unemployed richer. It
certainly doesn't make the workers who have been displaced from high
paying manufacturing jobs to low paying service jobs richer.
What am I missing. Or are those people not part of "us?"
--
"If you're a good demagogue, you get all three [race, sex, and
religion] into one sentance." --Gore Vidal
Richard Foy rf...@netcom.com Redondo Beach, CA, USA
Bob Bickford
=>The other problem is that we may not know what the facts
=>_mean_. "How much wealth does the average worker get to
=>enjoy in the American capitalist economy?" A number -- but
=>what is _wealth_? What is _enjoy_?
Economists routinely use measures such as average life expectancy and hours
of work required to obtain enough calories of food intake to survive and
similar such quantifiables; I don't know of any serious economists who claim
to measure "enjoyment", and most seem to agree that "wealth" in the
colloquial sense is pretty near meaningless as well.
=> These questions exist
=>even on a very material level -- for instance, a highly
=>dynamic industrializing system destroys its environment, in
=>effect turning public wealth into private wealth; I don't
=>think we know how to denumerate that effect.
You toss out that assertion as if it were a fact of nature, immutable and
unchangeable, that industrial economies must inevitably destroy the
environment. Fortunately, we're starting to learn that this is *not* the way
that things have to be, and starting to learn how to decrease or eliminate
externalities.
--
Robert Bickford r...@well.com
Co-Founder, Marin Citizens Against Bureaucratic Limits on Entertainment
Raoul Golan
>Raoul Golan <ra...@cssc-syd.tansu.com.au> wrote:
>>
>>Well, does it? How much wealth does the average worker get
>>to enjoy in the American capitalist economy? I sat down
>>at my PC to try to find out - the results surprised me, and
>>I'm no capitalist. This post is reasonably short and simple,
>>and could raise a few eyebrows. If you find any holes in the
>>argument, please let me know.
>Please post all the comparable numbers for Australia.
I wish the Almanac gave the figures for Australia.....I might
have to dig these up from a different source. Australia
is also suffering from a growing gulf between rich and poor -
but not to the extent the US is.
>Obviously, adherents of capitalism aren't going to concede that the USA
>numbers are the result of laissez faire capitalism in action.
Well, that's true. The article really argues against American capitalism,
as opposed to an idealised utopia. One needs different arguments
to show that even idealised laissez faire is a system which is
unsustainable in the long term - once capital is sufficiently accumulated
(and this MUST happen), the large players can push the smaller players
around and rig the level playing field. But the article doesn't
go into that.
Of course, capitalist die-hards will ignore any problem caused by
capitalism and say "Ah, yes, but if capitalism is left to run its
course, eventually we'll all be better off". Maybe, when hell
freezes over. But this is outside the scope of the article.
>But you
>might be able to argue that the USA is *relatively* more capitalistic
>than Australia, for example. So, let's look at case studies.
That would be an interesting exercise - it might take a little effort,
but I think it would be definitely worthwhile. Any volunteers to help
out?
>But to just post a set of numbers from Microsoft World Almanac, without
>relating them to anything else, as the "results of capitalism" . . . ,
>that IS a hole in your argument IMHO.
It depends - if one is attacking capitalism in general, then it is
a hole. If one only criticises the American capitalist system,
then I think it's OK.
>But the idea of using actual *data* in political discussions is a good
>one. Maybe it'll catch on. ;-)
I wouldn't hold my breath :-)
Chris Auld
--
Chris Auld
Department of Economics
Queen's University at Kingston
au...@qed.econ.queensu.ca
Chris Auld
In article <2qmna4$a...@dolphin.cssc-syd.tansu.com.au> ra...@cssc-syd.tansu.com.au
(Raoul Golan) writes:
[ Regarding his previously posted ``study'' ]
>The article really argues against American capitalism
It does no such thing. The primary problem with Mr. Golan's analysis is
his topic is ill-defined: we cannot state whether ``capitalism benefits
the American worker'' without specifying an alternative, ie, does
capitalism benefit the American worker relative to <insert alternate
economic system of your choice>. In addition, we will see in a moment
that asking questions about the status of ``the worker'' is equally
nonsensical.
What Mr. Golan has actually attempted to ascertain is whether labour's
share of national income has gone up or down in the past thirty or so
years. Unfortunately, he did so very poorly, because he used wages in
manufacturing as representative of wages in the entire economy, which is
simply wrong. In 1989, only 18.4% of American workers were in the
manufacturing sector, so their wages can hardly be inferred as
representative. Further, wages, as well as employment, in manufacturing
have been trending down for some time, explaining Mr. Golan's dramatic
results.
Let's look at what has actually happened to labour's share of income over
the period Mr. Golan is interested in:
1959 1969 1979 1989
Compensation of employees, 68.7 72.4 72.8 73.4
% of national income
or, in terms of mean wages,
1960 1970 1980 1990
Real hourly wages, 87.5 104.8 102.8 104.9
Non-farm, 1982=100
Full-time workers
[ Source: Economic Report of the President, 1991 ]
So, according to Mr. Golan's analysis, we should conclude from this that
``capitalism has benefitted the American worker.'' Is this a valid
conclusion? Of course not.
First, these numbers (like Mr. Golan's) are aggregates, and hence conceal
variations in the composition of the workforce. In particular, if _quality
constant_ real wages rise, we would expect that a greater number of people
would wish to participate in the workforce. Since these will tend to be
the people with low skills, who will receive low wages, a rising real wage
for a given quality of labour can cause us to _observe_ falling _average_
wages (this is one of many possible aggregation biases). Indeed, the
participation rate in the U.S. went from 68.7% in 1966 to 76.8% in 1990.
Hence, trying to infer anything meaningful from data aggregated to this
level is pointless.
So what happens if we look at micro-level data? We find that over the last
thirty years, the variance of wages has risen, the return to education has
risen dramatically, and the variance of wages within educational classes has
risen. That is, highly skilled workers are paid relatively more than their
less skilled colleagues, relative to the 1960s. This is consistent with the
rapid rate of technological change that has occurred during that period --
high skilled workers are in demand, low skilled workers are less in demand.
What, then, can we conclude about the status of ``the American worker?''
Nothing. Some workers are better off than they would have been in 1960.
Some workers are worse off than they would have been 1960. The distribution
of earnings has become less equitable, but inferring anything about the
welfare repercussions of capitalism from this is ludicrously ambitious.
I suggest that anyone truly interested in these issues (Mr. Golan in
particular) do some proper research (and, Mr. Golan, remove any
ideological blinkers one might be wearing). Murphy and Welch (1992), ``The
Structure of Wages,'' _Journal of Economic Literature_ 30; 285-326, is a
respected and relatively accessible paper, and probably a good place to
start.
Chris Auld
>Murphy and Welch (1992), ``The
>Structure of Wages,'' _Journal of Economic Literature_ 30; 285-326, is a
>respected and relatively accessible paper, and probably a good place to
>start.
This citation is wrong. The paper I had in mind is:
Katz, L., and Murphy, K. (1992), ``Changes in Relative Wages, 1963-1987:
Supply and Demand Factors.'' _Quarterly Journal of Economics_ 107
35-78.
Sorry if I sent anyone on a wild goose chase.
Boyd Pearson
>In article <2qlt2v$d...@jaws.cs.hmc.edu>,
>William M. Everett <weve...@jarthur.cs.hmc.edu> wrote:
>>
>> Yes, probably people in the service sector and investors. Your data
>>doesn't prove that investors are earning more, but lets assume its true.
>>With greater automation, capital is more useful in manufacturing, and
>>therefore its value has gone up. By giving investors a greater return,
>>this prompts more investment, which makes us all richer. So what?
>I guess I don't follow how giving investors a greater return makes us
>"all" richer.
>Sure it may do something for me. I have some investments here and
>there.
>But it certainly doesn't make the homeless, the unemployed richer. It
TAX - investment taxed - tax to goverment - from goverment to poor ( well in
an ideal society that is)
>certainly doesn't make the workers who have been displaced from high
>paying manufacturing jobs to low paying service jobs richer.
I dont know about the USA but the sevice workerd here get paid more than
manufacturing.g
>What am I missing. Or are those people not part of "us?"
>--
>"If you're a good demagogue, you get all three [race, sex, and
> religion] into one sentance." --Gore Vidal
>Richard Foy rf...@netcom.com Redondo Beach, CA, USA
--
* Yog-Sothoth knows the gate. Yog-Sothoth is the gate. Yog-Sothoth is the key
* and the guardain of the gate. Past, present, future are all one in
* Yog-Sothoth. -H.P.L
* da...@mserve.kiwi.gen.nz
Richard Foy
Richard Z Toptani <rto...@orion.it.luc.edu> wrote:
>
>We DON'T have an American "capitalist" economy. Our government
>destroyed capitalism years ago and left us with a mixed economy,
>so your thoughtful arguments are meaningless.
>
>If you wish to argue against the current American economic system,
>then by all means, do so!
>
>But do not use your arguments to attack capitalism, unless you wish
>to be intentionally dishonest.
>
I agree with what you say. Howver it raises and interesting different
question.
Has the worker become better off or worse off as we shifted from a
more capitalistic to more mixed economy.
Say going back to the early 1800's and excluding the self employed.
--
"Socialism is perfect -- but we need to restructure a bit." --Gorbachev
Richard Z Toptani
: Well, does it? How much wealth does the average worker get
: to enjoy in the American capitalist economy?
We DON'T have an American "capitalist" economy. Our government
destroyed capitalism years ago and left us with a mixed economy,
so your thoughtful arguments are meaningless.
If you wish to argue against the current American economic system,
then by all means, do so!
But do not use your arguments to attack capitalism, unless you wish
to be intentionally dishonest.
--
======================================================================
= Richard Z. Toptani - Loyola University Stritch School of Medicine =
= rto...@orion.it.luc.edu =
= =
= HILLARY'S HEALTH CARE BILL WILL MAKE US ALL ILL =
======================================================================
Publius
Capital is a form of money that gives motion to Ideas
multiplies the mechanical advantage of the hands of the
worker whereby his standard of living is expanded.
In the USA it takes at least $50,000 of capital to make one
decent job. Somebody has to to be $50,000 rich to create
a job and he must be willing to put it in a risk situation
- otherwise the unemplyed worker will just have to stand
around picking his nose.
The minute someone risks his capital and creates some jobs
he assumes a new status in American Society: Instead of
getting a medal he is treated as someone given to criminal
tendencies. The entire bureaucracy descends on him
and tries to do him as much mischief as possible. etc etc
Get with it! PUBLIUS
Michael Ballard
>I wrote:
>Katz, L., and Murphy, K. (1992), ``Changes in Relative Wages, 1963-1987:
> Supply and Demand Factors.'' _Quarterly Journal of Economics_ 107
> 35-78.
>
Thanks Chris. I checked this article out. Interesting: wage inequality
among both men and women increased substantially in the '80s in the
USA. College grads got a sharper rise in wages in comparison with
non college grads and older workers increased their wage differention
with younger workers over the same period--both by about 30%--according
to the article. The article was strong on percentages, weak on hard
$ data, as far as I was concerned. Oh yes, women's wages relative to
men's increased about 8%. Women wage-slaves are still behind overall; but are
catching up, I guess. The struggle continues....
The authors of the article claim that real wages increased overall
16.1 % for workers between 1963 and 1987. My own figures, which
I culled from the Bureau of Labor Statistics in the US show that
average wages in 1977 constant dollars were $8,578 in 1960 and
$8,726 in 1988 or a whopping $148 increase, equalling something close
to 2%.
But to get back to Raoul's data, gleaned from the World Almanac, it
was his point, I believe, to show the difference between real wages
and real production in terms of the GNP measurements. The article in
the Quarterly Jounal of Economics did not address this point. It was
focused on the supply of and demand for differing skills among wage-slaves
of differing education, age and sex. Raoul's point was that the real
GNP had increased 8 times over since 1960 and the workers real wages
had not increased by that much; but according to his calculation had
actually dropped in real terms.
Whether wages dropped or increased, the fact remains that the GNP
increased a whole lot and the GNP is one way to try to measure the
output of the producers i.e. the working class. Their wages never
even come close to being as much as the GNP. That's the way the
wages system works. If the producers actually had control over the
product of their labor, they could then determine what percentage they
wanted to plow back in to production and what percentage they might
want to keep for themselves and whether to decrease the length of the
work day because needs could be met at a lower level of hourly input.
What separates them from this control and the product of their labor
is capitalist and/or State ownership of the productive apparatus.
As the authors of the article in the Quarterly Journal of Economics
make quite clear, without being so rude as actually saying so, is
that labor skills are just commodities and like any other commodity
in the capitalist system, their price (wage) is subject to the laws
of supply and demand. BTW, pork bellies finished off $1.49 yesterday,
while coffee was up a bundle in active trading and what are you
trading for today?
But of course, this is the best of all possible systems, is it not?
It would be unrealistic for us to think that we could effectively
control production in a modern industrial society without the
shareholders of the various companies and their CEO's telling us
what to do?
So, for realism's sake, let's accept the employers' politics and
put our collective noses to capital's grindstone and hope that
some of the wealth we create, even though lots of us have to spend
a lot of time creating junk that we'd never be stupid enough to buy,
trickles back down to us.
Oh yes. For those who might be unrealistic, you can write to the
address below and start yourselves on the road to freedom from
wage-slavery.
Mike B)
--
Join the Wobblies!
e-mail i...@igc.apc.org
You'll be glad you did.
Lorraine Lee
> "Does Capitalism benefit the American worker?" is the Thread:
Capitalism helps them that helps themselves.
Would you rather he get a medal?
Maybe a series of pro-capitalist bumper stickers is in order:
If you have an Idea in motion, thank a capitalist.
If you have a job, thank a capitalist.
If you have something better to do than pick your nose, thank a capitalist.
John Galt died for your sins.
Next time I'm tempted to say or think something negative about my boss, I'll
try and remember that I'd never be a productive member of society without his
sponsorship...
-------------------------------------------------------------------------------
Lorraine Lee ab...@leo.nmc.edu
Don't blame me, I didn't vote. w2...@argo.oakland.edu
Read My Lips
To answer the question directly: Yes, I believe Capitalism
can help the American (or whomever) worker. It built this
country once.
It seems that what you have discovered in your analysis is
"the Great Misconception". Let me explain.
We have been told that our current economy is in turmoil
because of the competitive pressures from Japan and the
emerging "World Economy". We have been told that American
manufacturing isn't competitive. We have been told that
the future economy will be based on Information.
While these arguments may have some grain of truth, for
the most part they are hogwash.
Americans have been dupped by their own government. Our
corporations have become more and more competitive and
lean while the government continues to take a larger and
larger piece of the profits. (The fact is that as the "piece"
continues to grow, it becomes necessary for businesses to
close down because they simply can not turn a profit.)
American workers are straining under an all-time high tax
burden and have been dupped into thinking the only way out
is to work harder and pay more taxes. This is insane.
While our economy has been sputtering and wheezing, the
government sector has exploded in growth! Programs continue
forever, even after they cease to be of use. Pork-barrel
projects are passed cavalierly -- what's a few million here
and there, it's only Uncle Sam's money? New Band-Aid programs
are started to fill in the glaring oversights of existing
programs -- yet, the existing programs continue and continue
to grow!
Every year we work longer for the government -- the day that
you finish paying off your taxes and actually start working
for yourself slips further. How many know of this little
trick? The IRS adjusts the deduction for inflation, right?
Wrong. The adjustment is LESS than inflation, so every year
your taxes go up even if the percentage is the same. (You
are losing purchasing power.)
So it is not the idea of Capitalism that has failed. It is
what our government has become.
-------------------------------------------------------------------------
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Chris Auld
so I refrained from doing so myself. ]
In article <2r3edq$p...@nntp2.Stanford.EDU> miba...@leland.Stanford.EDU (Michael Ballard) writes:
>But to get back to Raoul's data, gleaned from the World Almanac, it
>was his point, I believe, to show the difference between real wages
>and real production in terms of the GNP measurements. The article in
>the Quarterly Jounal of Economics did not address this point. It was
>focused on the supply of and demand for differing skills among wage-slaves
>of differing education, age and sex. Raoul's point was that the real
>GNP had increased 8 times over since 1960 and the workers real wages
>had not increased by that much; but according to his calculation had
>actually dropped in real terms.
I already posted a moderately detailed explanation of why Mr. Golan's
analysis is profoundly flawed, in addition to figures showing that labour's
share of GDP has increased over the last thirty years (and inferring anything
from such a statistic is incorrect). One cannot say anything meaningful
about wage changes without accounting for factors such as education, age, and
sex.
>That's the way the
>wages system works. If the producers actually had control over the
>product of their labor, they could then determine what percentage they
>wanted to plow back in to production and what percentage they might
>want to keep for themselves and whether to decrease the length of the
>work day because needs could be met at a lower level of hourly input.
Who is ``they?'' If worker A wants to increase production but worker B
wants to decrease it (or 50.1% and 49.9% of total workers), in what sense
have workers gained more control over production? Similarly, in what sense
would voting on the length of a work day actually increase any *individual's*
control of how many hours he wishes to work? How could individuals possibly
attain all the knowledge required to make informed decisions about such
allocative problems? In a market system, workers can largely control how
many hours they wish to work by selecting their type of employment. Further,
the `standard' number of hours is determined via complex social interactions
and technology, accounting for myriad factors such as network externalities.
There is no conceivable way `democratic' control by workers would produce a
better outcome, by any reasonable definition of `better.'
>What separates them from this control and the product of their labor
>is capitalist and/or State ownership of the productive apparatus.
>As the authors of the article in the Quarterly Journal of Economics
>make quite clear, without being so rude as actually saying so, is
>that labor skills are just commodities and like any other commodity
>in the capitalist system, their price (wage) is subject to the laws
>of supply and demand.
Well, I'll be so ``rude'': labour is a commodity traded on market much
like any other, with the important caveat that it is subject to far more
complex contracting arrangements than most commodities. I don't see why
stating that various occupations have various market-determined prices is
``rude'' -- these prices act as a remarkably efficient mechanism to match
workers with jobs, to delineate tradeoffs between occupation characteristics
and returns, and to signal both employers and employees of changes in the
economy without overloading either with information. Any economic system
with even modest aspirations to efficiency would have to at least attempt
to simulate the workings of the labour market, and wages would reflect the
same sorts of determinants that they currently do. Any system is ``rude''
in the sense you apparently mean the word.
>But of course, this is the best of all possible systems, is it not?
>It would be unrealistic for us to think that we could effectively
>control production in a modern industrial society without the
>shareholders of the various companies and their CEO's telling us
>what to do?
I haven't been told what to do by a CEO or a shareholder recently. The
outcomes of market economies are determined by interactions between hundreds
of millions of agents trading hundreds of millions of commodities, it is
very naive to suggest that the entire apparatus is being run by a nefarious
elite of shareholders and CEOs.
>So, for realism's sake, let's accept the employers' politics and
>put our collective noses to capital's grindstone and hope that
>some of the wealth we create, even though lots of us have to spend
>a lot of time creating junk that we'd never be stupid enough to buy,
>trickles back down to us.
The average wage earner in the U.S. takes home slightly less than $30,000 a
year. The average family headed by someone between 40 and 64 takes home over
$45,000 a year. That is a decadent amount of income by historical standards,
or compared to most of the contemporary world. It seems a lot wealth is
``trickling'' back down to the worker (I remind you that over 70% of U.S. GDP
is compensation of employees, and U.S. GDP is very large indeed).
>Oh yes. For those who might be unrealistic, you can write to the
>address below and start yourselves on the road to freedom from
>wage-slavery.
What on earth is ``wage-slavery?'' Where do I write to put myself on the
road to freedom from people who use nonsense terms like that?
hnrsp...@kuhub.cc.ukans.edu
what percent of GNP was eaten up by the government over the same period?
Wiswell
Raoul Golan
Same thing, Brett. My groups reinstated, yours deleted.
Funny, I've never had to do this before - it'skind of humorous.
>ra...@cssc-syd.tansu.com.au (Raoul Golan) writes:
>
>>bkot...@afit.af.mil (Brett J. Kottmann) writes:
>
So far you've presented us with the distribution of wealth across
the various income groups. Also, with the increase in wealth of the
various income groups. This data shows that the total wealth of the
25-50K group increased over the Reagan period. You use this fact
to show that Reaganomics helped this income group most.
You know what I'd REALLY like to see? A breakdown on how many
people actually make up such groups. You see, the total wealth
of an income group means very little. One million people with
one dollar each have the same total wealth as one person with
a million dollars, and yet no-one would say that this arrangement
is balanced.
Likewise, if Reaganomics had actually LOWERED the higher middle-income
groups down to the 25-50K group, so that the numbers of this group
swelled, wouldn't you EXPECT an increase in total wealth of this
group? This may or may not have happened - figures for the total
number of people making up these groups are therefore necessary.
> The second missing asset is what economists call "Social
> Security Wealth," the legal claims that most of us have on the Social
> Security System. The discounted present value of these claims owned
> by active or retired workers is $5.6 trillion--an amount equal to
> one-third of all of the wealth reported in the Fed survey....
>
> $5.6 trillion!! And another $4.1 trillion in pensions! And the
>_middle class_ holds most of it! Yet people still try to tell us that the
>"rich" hold all the marbles, only letting crumbs "trickle down" to the rest of
>the nation. If we incorporated all these assets into the net-worth figures,
>the share of the top 1% drops from 36.2% to 25%. Such figures make any
>comparison of the 1980s to a decade of "greed" laughable.
So the top 1% owns at least 25%. And you consider that this disproves that
the 80's were not the decade of "greed". You're entitled to your opinion,
I guess.
> Not to discount the plight of the poor--it is real. However, as we are
>seeing, what the dealers of welfare are telling you and and what is reality are
>two different things. Like the political machines of old, the welfare system
>has become a way to buy votes. Votes are "bought" by stressing the amount of
>welfare the dealer has provided for his "constituents" (addicts, really), and
>how the other candidates will no doubt cut them off from their source of funds.
>And to secure ever increasing sources of "votes", the welfare dealers must
>argue both ends: that welfare works, and that there are more people than even
>"in poverty", so they need more welfare money.
>...end excerpts
There is NO doubt that the welfare state cannot be sustained.
>
>>> Could it be a signal of the failure of the welfare state instead
>>> of the evils of capitalism?
>
>>The welfare state is, of course, a capitalist system too. Not a
>>free market system in the strict sense of the word, but a capitalist
>>one nevertheless.
>
> Ah, well, part of the "capitalist system" but a socialist
> program to redistribute wealth nonetheless.
>
You might call it "Socialist", but then we'd just be arguing about
definitions. Socialists stand for the abolition of the private
ownership of the means of production, so unless this happens, the
system we live in is not Socialist.
Better not to argue about definitions: let's agree that modern Capitalism
is by no means laissez-faire, and agree that welfare measures inside
Capitalism are in the long term unsustainable. But let us keep in
mind that what you call "Socialist" is not what I call "Socialist".
If we started arguing as to whether the welfare state was Socialist or
not, we'd end up with an inane, pointless conversation.
>
>>indicate how wide the gulf is between the top 1% and the 2nd - 10th
>>percentiles. If the top 1% is far ahead from the 2nd-10th percentiles,
>>it means that an elite is in place, and its speeding ahead of
>>everyone else.
>
> Which might be a valid conclusion except that the Treasury
> studies of income mobility (also can be found in "Look Back...",
> or referenced from the original source or NY Times) documents
> that 50% of the top 1% are not there the next decade, having
> fallen to lower income categories.
Does the fact that many of the rich become bankrupt through bad investments
help your argument?
>
>>> I would say these statistics show that more capitalism beats
>>> less capitalism. (Less being France, Italy, UK; more USA,
>>> Canada, Japan. W. Germany, of course, took on a lot of debt and
>>> unemployment in 1989 :)
>
>>I'm pleased with this new trend in using figures to substantiate claims.
>
> "New" only to you perhaps. :)
Believe me, most "capitalists" that hound the left-wing groups NEVER
substantiate their claims. Although I don't agree with what you are
saying, I'm grateful that you go through the trouble to do this.
>
>>However, let us now examine what these figures mean. What does
>>increased GDP mean? It means an increase in the total production
>>of a nation. Does this *necessarily* mean anything to the average
>>citizen? No.
>
> Ah, but the national income is a component. Someone has to be
> making more money. The distribution of income shows that the
> most money is to be found amongst the middle class:
Yes, because there are many, many more in the middle class than in
the rich elite. This does not solve the problem of income disparity,
and it does not mean that the rich are any poorer.
>
>>Why, do you ask? Simple. If most of the revenue of the increased
>>production goes into the pockets of the few, what difference does
>>it make to the average worker if his country has increased GDP?
>
> I'd find it hard to move GDP [up] without having the middle class be
> part of the gain in income.
It would be hard, yes. But then, increased GDP does not mean increased
wages, as I've shown before.
>
>>Without increased wages, do you, as a worker, give two hoots whether
>>your country has increased GDP? Would it affect you any more than
>>if, say, Iceland had increased GDP?
>
> My increased wages will no doubt move GDP up as I either consume
> more or invest more.
Undoubtedly. But the reverse is not true.
>
>>If anything, increased GDP means more for businesses, but unless
>>that surplus is channelled into higher wages and employment, it means
>>very little to the average guy on the street. The article I posted
>>shows that it is NOT being channelled into higher wages.
>
> No, wages will continue to level off as the rest of the world
> catches back up with the US. This is not a bad thing, IMO.
Maybe not in your opinion. Workers in the US with little disposable income
to invest probably disagree.
>
>>Furthermore, a modest increase in GDP concurrent with a large
>>increase in population means less production per capita, no?
>
> Maybe, but per capita GDP increased too (see the source).
This is right. This was part of the original article I wrote.
My point was that one cannot use raw GDP figures to determine
that "more capitalism beats less capitalism". There are many,
many other factors which one has to take into account - facts
which that table did not have. My point is that you could not
come to that conclusion with the data of that table.
>
>>GDP increase on its own says very little - and certainly
>>does not show that "more capitalism beats less capitalism",
>>a vague, subjective and unprovable statement at best.
>
> Sure, if you only want to argue esoterics. But the fact remains
> that of the OECD countries listed, those with less bureaucracy,
> less welfare, less resdistribution of wealth grew more over the
> last 10 years. That is evidence in support of capitalism,
> whether you'd like to admit it or not.
It shows that those countries have a greater growth in GDP. But I
refuse to accept that that is *in itself* a good thing. A balanced
income distribution is something which GDP does not incorporate.
GDP growth alone is NO evidence in support of free markets.
>
> And speaking of evidence, you've yet to provide any that says
> capitalism doesn't benefit the worker. Declining wages are not
> a function of capitalism, but one of global competition
> re-establishing itself after the destruction of WWII.
Competition in a labour market is central to Capitalism.
>
>>Attempting to prove such a statement using GDP growth is a very serious
>>misuse of economic data.
>
> Yeah, right. I can see where this is leading. Deny, deny,
> deny. Why ask for proof if you will simply reject it as
> meaningless statistics?
Statistics can be useful. But they need to be used and interpreted
adequately.
>
>>> Seeing these numbers makes me wonder if Canada has higher wages
>>> than we, and if they do I'd argue that that means we have room
>>> to increase wages without pushing inflation. Japan, of course,
>>> has closed markets.
>
>>This conclusion is too simplistic - it takes no account of population
>>levels, unemployment, education levels of the workforce, whether
>>the increased GDP is due to capital or labour intensive industries,
>>etc, etc. It is dangerous to make such conclusions from GDP alone.
>
> I wasn't. :)
You presented a table comparing the growth in GDP of various countries.
You then said that the table shows that "more capitalism beats less
capitalism" (whatever that means). Sure, it does, if GDP figures were
the end-all be-all of running a successful society. But I'm sure
that you'll agree that it's not.
>>> Anyone who tries to build an economy around a central tenant of
>>> high wages will build an economy highly prone to inflation.
>
>>Anyone who tries to build a capitalist economy around a central tenant of
>>high wages will build an economy highly prone to inflation.
>
>>This shows that capitalist interests are opposed to those of labour.
>
> You're not listening, Raoul. The decline in wages is not a
> component of capitalism, but one of global reality. US wages
> were artificially high after WWII, so a decline is natural.
The wages system IS part of the global capitalist systems. Socialists
argue for the abolishment of the wage system.
>
> No, this is not "advocating lower wages". This is accepting the
> reality of the erosion of wages over time due to inflation.
It is justifying the plight of the worker by appealing to the inevitability
of the problem at hand. No, Capitalism and the wage system are NOT
inevitable, they can be dispensed with. There is NO reason for a worker
to accept a continuously decreasing real wage, except perhaps to
maintain the status quo (something people will have a hard time
accepting), and to perpetuate the capitalist system.
Raoul Golan
Well, does it? How much wealth does the average worker get
to enjoy in the American capitalist economy? I sat down
at my PC to try to find out - the results surprised me, and
I'm no capitalist. This post is reasonably short and simple,
and could raise a few eyebrows. If you find any holes in the
argument, please let me know.
Basically, I wanted to know whether today's worker is
Contents:
1. Personal Income.
-------------------
GNP
(in billions $)
3. Average Weekly Wage (Manufacturing)
---------------------------------------
CPI
i.e REAL wages in manufacturing have DECLINED.
6. Minimum Wage Level
---------------------
"The World Almanac" gives the following figures for the Minimum
Wage as a percentage of the Average Wage:
Minimum Wage
1950 54%
1961 50%
1968 48%
1974 46%
1978 44%
1981 43%
The reference does not have figures for every year, so I used
the years it did provide. If average wages aren't keeping up with
CPI, minimum wages definitely aren't!
7. Conclusion of study
----------------------
From the Personal Income figures, one would expect the average
American to be earning over 7 times in 1990 what he used to earn
in 1960. After all, as the GNP figures show, he is almost producing
eight times as much wealth in dollars (pre inflation). However, the
average weekly wage has increased less than 5 times - not even enough
to keep up with CPI. Not only that, the minimum wage has decreased from
50% of the average in 1960 to 43% in 1981 (probably much less now).
This shows that the working class is being worked harder and harder, for
less and less. This is certainly responsible for the growing underclass,
and the associated problems of drugs, crime, illiteracy, homelessness.
That Personal Income is increasing shows that some people must be
making more money. What is this extra income, which is not related
to wages? Certainly, it must be payment for something other than labour.
Is this not an indication that the extra income is increasingly
directed to rents and dividends, to those with capital, to the
hands of the few who need not work for a living?
Is this not an indication that the American workers are neglected?
Is this not an indication that "The American Way" is NOT the
WORKER's way, but the BUSINESS OWNER's way? If the majority
of Americans are wage earners who do NOT receive rents or dividends,
can we say that the "American Way" is also the "American People's Way"?
8. Where is the US heading?
---------------------------
That the US has a greater income is shown by the increasing Personal
Income per Capita. If this is the case, why are wages not keeping up
with this increased income? Why are they in fact DECREASING relative
to CPI?
The US is becoming richer due to the labour of its workforce and to
the improved machinery of its industry (also the product of its
workers). Why aren't workers enjoying the fruits of their labour,
the effort they put in into making the US more productive?
The US is becoming a polarised society - the rich ARE getting
richer, the workers ARE getting less and less of what they
produce. These trends are those of an oligarchic society,
where labourers produce more and more for an elite few, while
being returned less and less of what they produce.
Some people might argue that these problems are not inherent
to Capitalism, since the US is a "mixed economy". To these
people I'll point out that in the US, the means of production
are privately owned. Production is for profit, not need, and
goods are bought and sold in a market. The American economy,
although embellished with some social measures, is a Capitalist
economy by definition, although not necessarily a completely
free market one. The problems facing the US are thus Capitalist
problems. Surely these people aren't suggesting that the way
to help the status of the working class is to remove these
social measures, which are designed to protect the working
class against an all powerful market? Surely they aren't
suggesting a return to the 19th century English labour market?
The issue of wages is the problem of Capitalism - under
a capitalism a high wage policy invariably leads to high
inflation. This shows that the wages problem cannot be resolved
under Capitalism. The wages system does not work - it must
be abolished, and hence with it, Capitalism too must be
abolished.
The media will blame the current state of the American society
on drugs, or the Japanese, or the decay of family values.
Far from it, it is clearly due to the increasing disparity
of wealth between the capitalists and the workers. The truth is
Capitalism can only bring MISERY to the worker.
Mail me at ra...@cssc-syd.tansu.com.au for an article on
DEMOCRATIC Socialism, opposed to all forms of worker
exploitation, be it Stalinist or Capitalist.
--
Chris Auld
ra...@cssc-syd.tansu.com.au (Raoul Golan) writes:
... his ``analysis'' again. This repost is disturbingly disingenuous since
it has already been pointed out to him that his method is hopelessly flawed.
In case he missed it the first time, here's a few of the problems and a
sketch of some correct reasoning:
--- Begin included text ---
1959 1969 1979 1989
1960 1970 1980 1990
ideological blinkers one might be wearing). Katz, L., and Murphy, K.
(1992) ``Changes in Relative Wages, 1963-1987: Supply and Demand Factors,''
_Quarterly Journal of Economics_ (107) 35-78 is a respected and
relatively accessible paper, and probably a good place to start.
--
MMGOBLUE
Auld) writes:
Save yourself some time. All one needs to do is take a look at what
remains of the once feared eastern bloc. Now, grab your golf clubs
and go enjoy the rest of the day. cb
Raoul Golan
>... his ``analysis'' again. This repost is disturbingly disingenuous since
>it has already been pointed out to him that his method is hopelessly flawed.
>In case he missed it the first time, here's a few of the problems and a
>sketch of some correct reasoning:
I did miss it the first time. I'm glad you've taken the trouble to
post again. This way I have a chance to reply to you - let us see
this about being "disturbingly disingenuous".
>It does no such thing. The primary problem with Mr. Golan's analysis is
>his topic is ill-defined: we cannot state whether ``capitalism benefits
>the American worker'' without specifying an alternative, ie, does
>capitalism benefit the American worker relative to <insert alternate
>economic system of your choice>. In addition, we will see in a moment
>that asking questions about the status of ``the worker'' is equally
>nonsensical.
It is clear that it does not benefit the American worker, specifically
the manufacturing worker, if his real wages are diminishing. It is also
clear that he does not benefit if PI per capita is increasing at a greater
rate than what wages are. And the average figures indicate this - of
course there are cases above and below the mean.
Does slavery benefit the slave? You'd argue that slavery would have
to be compared to something else before you could form an opinion
on the matter.
>What Mr. Golan has actually attempted to ascertain is whether labour's
>share of national income has gone up or down in the past thirty or so
>years. Unfortunately, he did so very poorly, because he used wages in
>manufacturing as representative of wages in the entire economy, which is
>simply wrong.
I did not assume that they were representative of the entire labour
sector. Real wages for all sectors on the whole has increased marginally,
mostly due to the service sector, but still by no means by as much as
Personal Income per capita, or GNP per capita. Even if applied
to other sectors, the argument that wage increases have not
matched increases in PI per capita would still hold.
> 1960 1970 1980 1990
>Real hourly wages, 87.5 104.8 102.8 104.9
>Non-farm, 1982=100
>Full-time workers
>[ Source: Economic Report of the President, 1991 ]
This indicates real wages have increased by 20% since 1960. This of course,
includes the service sector, which I did not analyse nor speak about, and
many high paid white collar workers, including executives. Does this
change the situation for the manufacturing worker?
Does this increase match the rate of increase of PI per capita?
>First, these numbers (like Mr. Golan's) are aggregates, and hence conceal
>variations in the composition of the workforce. In particular, if _quality
>constant_ real wages rise, we would expect that a greater number of people
>would wish to participate in the workforce. Since these will tend to be
>the people with low skills, who will receive low wages, a rising real wage
>for a given quality of labour can cause us to _observe_ falling _average_
>wages (this is one of many possible aggregation biases). Indeed, the
>participation rate in the U.S. went from 68.7% in 1966 to 76.8% in 1990.
>Hence, trying to infer anything meaningful from data aggregated to this
>level is pointless.
What's your point? Under a free market, of course the worker who has
not been able to afford training will receive a lower wage. But this
still doesn't change the fact that *on the whole* the manufacturing
workers are receiving a lower wage. What is "low skill" and "high skill"
is determined by the market itself - the market equates "low skill"
with low pay. Saying that the market is being filled with "low skill"
workers is an euphemism for saying that the average wages are dropping,
and that there's less demand for certain kinds of labour.
I know many PhD's who would be 'low skill' by market standards.
Imagine a technological revolution made most workers obsolete : wages
would then plummet under a free market. The market would write this
off by saying that the labour market has become "low skilled". Of
course, most capitalists don't stop to consider the fact that it is
the workers themselves which bring these technological improvements
and that it is their work which builds new machinery.
A more equitable arrangement would be not to deprive workers of their
means of subsistence, but to distribute the rewards of the increased
productivity among workers.
>So what happens if we look at micro-level data? We find that over the last
>thirty years, the variance of wages has risen, the return to education has
>risen dramatically, and the variance of wages within educational classes has
>risen. That is, highly skilled workers are paid relatively more than their
>less skilled colleagues, relative to the 1960s. This is consistent with the
>rapid rate of technological change that has occurred during that period --
>high skilled workers are in demand, low skilled workers are less in demand.
>What, then, can we conclude about the status of ``the American worker?''
>Nothing. Some workers are better off than they would have been in 1960.
>Some workers are worse off than they would have been 1960. The distribution
>of earnings has become less equitable, but inferring anything about the
>welfare repercussions of capitalism from this is ludicrously ambitious.
Hold on a minute - some people indeed are better off than in the 60's.
No one is making the claim that ALL workers are worse off. The claim
is that on the whole, free market capitalism is working against the
interests of workers : the fact that the market labels some of them
as 'undesirably low skilled' and therefore 'deserving' of a lower wage
is beside the point.
I'd say that to justify the market bringing down wages by appealing
to the issue of low skill, *which itself is determined by the market*,
is a serious case of "ideological blinkers" interfering with reasoning
(as you would put it).
Are poorly paid qualified people also "low skill"? A "low skill" worker
to a capitalist means a worker the capitalist can't make a profit from.
Carter Butts
: Does slavery benefit the slave? You'd argue that slavery would have
: to be compared to something else before you could form an opinion
: on the matter.
What a ludicrous comment! Since "benefit" as you are using it is a
relative statement, of course you would have to compare slavery to something
else to make a statement about it. That was a very crude rhetorical trick.
: What's your point? Under a free market, of course the worker who has
: not been able to afford training will receive a lower wage. But this
: still doesn't change the fact that *on the whole* the manufacturing
: workers are receiving a lower wage. What is "low skill" and "high skill"
: is determined by the market itself - the market equates "low skill"
: with low pay. Saying that the market is being filled with "low skill"
: workers is an euphemism for saying that the average wages are dropping,
: and that there's less demand for certain kinds of labour.
What's the problem? I would certainly hope that there would be less
demand for certain types of labor! Let's take an example:
Once upon a time, almost all labor went into food production.
Strictly speaking, the demand for labor in food production was high enough to
induce almost everyone to work in the food production business. With the
development of improved farming techniques, more productivity per unit labor
input became possible. This reduced the demand for food production labor.
The result? Not everyone could be induced to work in food production. In
our current society, almost no one is still in the food production business.
As a result, workers can do other things, like write computer games and
provide information services like the one (s) we're using right now. If it
wasn't for the obsolescence of certain types of skills, you'd be out picking
berries right now.
: I know many PhD's who would be 'low skill' by market standards.
Is this significant? I think not.
: Imagine a technological revolution made most workers obsolete : wages
: would then plummet under a free market. The market would write this
: off by saying that the labour market has become "low skilled". Of
: course, most capitalists don't stop to consider the fact that it is
: the workers themselves which bring these technological improvements
: and that it is their work which builds new machinery.
Hell, the goal of technological advance is to make ALL work obsolete!
Ideally, no one would have to work, and instead could devote all of their
time to doing whatever they wanted (art, music, whatever). This isn't likely
to happen any time soon, but the point is that it is extremely foolish to
equate work w/prosperity. Prosperity is all about avoiding mandatory work.
That's what humans have been doing ever since they evolved the intelligence
and dexterity to make and use tools.
: A more equitable arrangement would be not to deprive workers of their
: means of subsistence, but to distribute the rewards of the increased
: productivity among workers.
How do you know that's not happening? Your price index says nothing
about the wealth which one dollar will buy. It may be that workers in
manufacturing on average may have fewer real dollars than in 1960, but the
amount of wealth purchasable per dollar is much higher.
After all, you can now buy things like net connections. You couldn't
get that in 1960...
: Hold on a minute - some people indeed are better off than in the 60's.
: No one is making the claim that ALL workers are worse off. The claim
: is that on the whole, free market capitalism is working against the
: interests of workers : the fact that the market labels some of them
: as 'undesirably low skilled' and therefore 'deserving' of a lower wage
: is beside the point.
Wow, the amazing shifting worker. In that paragraph you first used
"worker" in the sentence, "No one is making the claim that ALL workers are
worse off." This implies that some workers are probably doing better than
they would have in the 60's. You then say, "The claim is that on the whole,
free market capitalism is working against the interests of workers...,"
which is at the least too non-specific, given that you just said that
capitalism is working FOR (at least) some workers.
Just for the record, you can't say a damn thing about free market
capitalism from the US economy. But that's the least of my complaints here.
: I'd say that to justify the market bringing down wages by appealing
: to the issue of low skill, *which itself is determined by the market*,
: is a serious case of "ideological blinkers" interfering with reasoning
: (as you would put it).
No, it's just a case of your not understanding how economics works.
: Are poorly paid qualified people also "low skill"? A "low skill" worker
: to a capitalist means a worker the capitalist can't make a profit from.
Actually, people can be poorly paid for a number of reasons,
including the following:
1. Uncertain skills (different from "low" skills)
2. Uncertainty of length of employment
3. Worker is paid through non-cash means (benefits)
4. The job is very desirable (low inducement needed)
5. The worker is easily replaceable
The data you use serves as a poor indicator of actual payment.
For instance, tenured professors make less than their counterparts in
industry. Why? Because tenure reduces uncertainty, and thus is worth
money to a risk-averse individual. Your figures can't capture that.
There's a lot of work on this subject...the only paper I can point to
off the top of my head is "The Hidden Payroll," by Angela O'Rand. I think
it was published in the AJS, I'm not sure.
All in all, your argument might convince someone who knows little
about economics, but anyone who didn't sleep through ECO 101 isn't going to
be taken in.
: --
: ************** ra...@cssc-syd.tansu.com.au (Raoul Golan) *****************
: -"The Angel of History's face is turned toward the past.. Where we perceive -
: - a chain of events, he sees a single catastrophe.. the debris before him -
: - is piled skyward.. This storm is what we call progress."(Walter Benjamin) -
__
Carter Butts /__|
ea...@acpub.duke.edu ----------/ \----------
--------| |--------
"The world is a market, ------| |------
the market is the world." \^^/
-Yoruba Proverb ///\\\
Raoul Golan
>Raoul Golan (ra...@cssc-syd.tansu.com.au) wrote:
>: Does slavery benefit the slave? You'd argue that slavery would have
>: to be compared to something else before you could form an opinion
>: on the matter.
> What a ludicrous comment! Since "benefit" as you are using it is a
>relative statement, of course you would have to compare slavery to something
>else to make a statement about it. That was a very crude rhetorical trick.
And that was really a petty complaint. I feel justified in thinking that
the meaning is clear, so let's just get to the subject matter, shall we?
> Hell, the goal of technological advance is to make ALL work obsolete!
Darn right. That's why I'm not questioning technological advance but
the market system. Where would the worker be, if all work was obsolete
in a market economy? Unemployed.
>Ideally, no one would have to work, and instead could devote all of their
>time to doing whatever they wanted (art, music, whatever).
That is only in the free market utopia idealised by some capitalists.
Few would be doing any of that, since factories would be owned privately
in a market economy. Most people, who only have their labour to sell,
would be on low wages, or unemployed.
>: A more equitable arrangement would be not to deprive workers of their
>: means of subsistence, but to distribute the rewards of the increased
>: productivity among workers.
> How do you know that's not happening? Your price index says nothing
>about the wealth which one dollar will buy. It may be that workers in
>manufacturing on average may have fewer real dollars than in 1960, but the
>amount of wealth purchasable per dollar is much higher.
And what difference would that make? Does that change the fact that
Personal Income per capita is increasing at a greater rate than wages?
> Wow, the amazing shifting worker. In that paragraph you first used
>"worker" in the sentence, "No one is making the claim that ALL workers are
>worse off." This implies that some workers are probably doing better than
>they would have in the 60's. You then say, "The claim is that on the whole,
>free market capitalism is working against the interests of workers...,"
>which is at the least too non-specific, given that you just said that
>capitalism is working FOR (at least) some workers.
Now, this is a little silly. Would you think that I'd be contradicting
myself if I said that business discriminates against blacks on the whole,
and then said that some blacks DO get ahead in business? Can you tell
the difference between speaking of a group as a whole, on average terms,
and making blanket statements about every single member of the group?
I expect a little more than this.
>: I'd say that to justify the market bringing down wages by appealing
>: to the issue of low skill, *which itself is determined by the market*,
>: is a serious case of "ideological blinkers" interfering with reasoning
>: (as you would put it).
> No, it's just a case of your not understanding how economics works.
I see. Then you've missed the point. I said very little on how
"economics works", but rather that there is a very large group of people
(manufacturing workers in particular) for whom the market capitalism has
not worked (surprise, surprise). You haven't even explained why you
disagree with this.
You went off rambling about outmoded production methods and technology -
so what? How is it relevant? It still does not change the fact that
wages are not increasing as much as Personal Income per capita, and
that the system is failing most manufacturing workers, for instance.
You and I *could* come up with an explanation for this IN TERMS OF
CAPITALIST MARKET FORCES, but since it is this system which I'm
questioning, it would be a little circular.
You may have an interest in perpetuating the market system, but obviously
those who are not benefitting will not. Don't expect manufacturing
workers to share your love for the market.
> All in all, your argument might convince someone who knows little
>about economics, but anyone who didn't sleep through ECO 101 isn't going to
>be taken in.
I suggest that you revise your ECO 101, since in the article I said
would have very little, if anything, which contradicts it. I mentioned
very little economic theory, presented some figures, and concluded that,
taking manufacturing workers as an example, market capitalism has not
rewarded them fully with the fruits of increased productivity. I'll be
very surprised if you find an economics textbook which contradicts this.
You might disagree with it on an ideological basis, but that has
nothing to do with economics.
>
> "The world is a market,
> the market is the world."
> -Yoruba Proverb
>
Yet another totalising system destined for the garbage heap, it appears.
Give a man a hammer, and he'll think that the world is a collection of
nails.
One final question: which newsgroup are you writing from? Sounds
like I've replied to right-wing group by mistake.
Carter Butts
: ea...@acpub.duke.edu (Carter Butts) writes:
: >Raoul Golan (ra...@cssc-syd.tansu.com.au) wrote:
: >: Does slavery benefit the slave? You'd argue that slavery would have
: >: to be compared to something else before you could form an opinion
: >: on the matter.
: > What a ludicrous comment! Since "benefit" as you are using it is a
: >relative statement, of course you would have to compare slavery to something
: >else to make a statement about it. That was a very crude rhetorical trick.
: And that was really a petty complaint. I feel justified in thinking that
: the meaning is clear, so let's just get to the subject matter, shall we?
Oh please. The fact that you see my complaint as petty makes it
obvious that you missed the point. Here it is again, in slow motion:
1. You argue that capitalism is "bad" for the American worker.
2. A critic points out that "bad" is meaningless unless compared
with something "better."
3. You deny this, and attempt to confuse issues.
4. I point out that your denial doesn't make any sense, and that you
have not answered the critic's argument (which, I should point
out, invalidates your primary argument).
5. You claim that my complaint is "petty," when in fact it calls
into question your whole argument (which is that capitalism is
"bad" for the American worker).
The complaint is that you haven't shown an alternate history under
some other plausible system which is "better" than the American "capitalist"
one. Either deal with the complaint, or admit that you don't have an
answer. Sneering doesn't work.
: > Hell, the goal of technological advance is to make ALL work obsolete!
: Darn right. That's why I'm not questioning technological advance but
: the market system. Where would the worker be, if all work was obsolete
: in a market economy? Unemployed.
Argh. You missed the POINT! If all work is obsolete, everyone will
be unemployed, obviously. The point is that if (hypothetically) all work
is obsolete, no one has to work to have wealth. What's wrong with
100% unemployment if everyone has all the wealth they want? Nothing. I'm
trying to point out that employment/unemployment/wages ARE NOT equivalent to
standard of living.
: >Ideally, no one would have to work, and instead could devote all of their
: >time to doing whatever they wanted (art, music, whatever).
: That is only in the free market utopia idealised by some capitalists.
Of course it's utopian. That's why I used the word "ideally."
: Few would be doing any of that, since factories would be owned privately
: in a market economy. Most people, who only have their labour to sell,
: would be on low wages, or unemployed.
None of this is relevent. If there is no demand for labor, then
this means that everyone's needs are met without it, in which case wages
and employment status must be irrelevent. It's wealth that matters, not
wages or employment status.
: > How do you know that's not happening? Your price index says nothing
: >about the wealth which one dollar will buy. It may be that workers in
: >manufacturing on average may have fewer real dollars than in 1960, but the
: >amount of wealth purchasable per dollar is much higher.
: And what difference would that make? Does that change the fact that
: Personal Income per capita is increasing at a greater rate than wages?
Actually, that makes a huge difference. The fact that you don't
see this difference should bother you. What I'm telling you is that you
can't say a damn thing about the standard of living of a worker from his
wage. If you want to say that someone is better off under one system than
another, you have to compare standards of living (read: wealth) rather
than wages. Not that you've given us an alternative against which to
compare...
: Now, this is a little silly. Would you think that I'd be contradicting
: myself if I said that business discriminates against blacks on the whole,
: and then said that some blacks DO get ahead in business? Can you tell
: the difference between speaking of a group as a whole, on average terms,
: and making blanket statements about every single member of the group?
Perhaps I'm concerned that you don't know the difference. Your
original wording was not as well clarified as the more carefully prepared
statement above. If you are going to use "workers" in multiple contexts like
that, you need to make sure that you have made it clear which "workers" is
which, so that we don't find you using vague wording to weasel out of an
argument later on. :-)
: I expect a little more than this.
And you don't even know me....
: I see. Then you've missed the point. I said very little on how
: "economics works", but rather that there is a very large group of people
: (manufacturing workers in particular) for whom the market capitalism has
: not worked (surprise, surprise). You haven't even explained why you
: disagree with this.
What does it mean to say that capitalism (ha ha) "has not worked"
for some group of people? If you mean that some skill sets and job roles
aren't valued as highly as they used to be, then I challenge you to
explain why this should be otherwise.
: You went off rambling about outmoded production methods and technology -
: so what? How is it relevant? It still does not change the fact that
: wages are not increasing as much as Personal Income per capita, and
: that the system is failing most manufacturing workers, for instance.
: You and I *could* come up with an explanation for this IN TERMS OF
: CAPITALIST MARKET FORCES, but since it is this system which I'm
: questioning, it would be a little circular.
Ah, but it is totally relevant. As less and less labor is required
for a given amount of output in a particular area of endeavor, labor within
that area is valued less. Thus, wages within that area fall, prompting
exit. Likewise, new areas of endeavor are always cropping up, and a
high value for labor in these new fields prompts entry. The point is that
the advance of technology is constantly causing the value of different
kinds of labor to shift, and thus it is no surprise that we should see
wages decline in any particular area.
If it is THIS that you disagree with, then you need to make a case
against assigning wages based on value. You have not done so.
BTW, none of this changes the fact that you haven't really shown
that manufacturing jobs are one of the places where labor value is falling
(and it has already been pointed out that "manufacturing jobs" is too
broad a label to mean much). You haven't answered my wealth arguments, and
you haven't proved that real income (including benefits and the like) in
the manufacturing sector has gone the way wages have. All you have talked
about is wages, and wages by themselves are meaningless.
: You may have an interest in perpetuating the market system, but obviously
: those who are not benefitting will not. Don't expect manufacturing
: workers to share your love for the market.
Sigh. When you can't attack the argument, go for the arguer...and
be sure to make your attacks emotional ones.
: > All in all, your argument might convince someone who knows little
: >about economics, but anyone who didn't sleep through ECO 101 isn't going to
: >be taken in.
: I suggest that you revise your ECO 101, since in the article I said
: would have very little, if anything, which contradicts it. I mentioned
: very little economic theory, presented some figures, and concluded that,
: taking manufacturing workers as an example, market capitalism has not
: rewarded them fully with the fruits of increased productivity. I'll be
: very surprised if you find an economics textbook which contradicts this.
Actually, you are trying to equate wages with standard of living,
something which does contradict economic theory. (I agree, however, that
you did mention very little about economic theory).
: You might disagree with it on an ideological basis, but that has
: nothing to do with economics.
My ideology hasn't been mentioned at all. All of the objections
which have been raised have been either logical or economic in nature.
: >
: > "The world is a market,
: > the market is the world."
: > -Yoruba Proverb
: >
: Yet another totalising system destined for the garbage heap, it appears.
: Give a man a hammer, and he'll think that the world is a collection of
: nails.
Oh yawn.
: One final question: which newsgroup are you writing from? Sounds
: like I've replied to right-wing group by mistake.
Translation: Oh dear, I thought I was only preaching to the choir!
Once again, if you can't defend your argument then go after your
assailant...
: --
: ************** ra...@cssc-syd.tansu.com.au (Raoul Golan) *****************
: -"The Angel of History's face is turned toward the past.. Where we perceive -
: - a chain of events, he sees a single catastrophe.. the debris before him -
: - is piled skyward.. This storm is what we call progress."(Walter Benjamin) -
Carter Butts /__|
ea...@acpub.duke.edu ----------/ \----------
--------| |--------
"Know your enemy, and know yourself, ------| |------
and in one hundred battles you will \^^/
never be in peril." -Sun Tzu ///\\\
Raoul Golan
[re: the situation when there is little demand for labour]
>: Few would be doing any of that, since factories would be owned privately
>: in a market economy. Most people, who only have their labour to sell,
>: would be on low wages, or unemployed.
> None of this is relevent. If there is no demand for labor, then
>this means that everyone's needs are met without it, in which case wages
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^!!!!!
>and employment status must be irrelevent. It's wealth that matters, not
>wages or employment status.
For someone who makes snide remarks about ECO 101, you certainly
are showing a profound lack of understanding on the subject.
If the factories are privately owned in this scenario, those who own
no property have NOTHING to sell, since not even their labour
fetches anything. They would be reduced to poverty - it would NOT
be the case that "everyone's needs are met without it [employment]".
An illustration of this is the business cycle downturn : precisely
when there is a crisis of overproduction does a slump in employment
and investment occur - this happens when factories are producing
too much to bring a profit to business owners, and because there
is little demand for labour. In spite of there being abundant productive
capacity, people are still retrenched and businesses still shut down.
No demand for labour means misery under the market system, not
the satisfaction of "everyone's needs".
>: I suggest that you revise your ECO 101, since in the article I said
>: would have very little, if anything, which contradicts it. I mentioned
>: very little economic theory, presented some figures, and concluded that,
>: taking manufacturing workers as an example, market capitalism has not
>: rewarded them fully with the fruits of increased productivity. I'll be
>: very surprised if you find an economics textbook which contradicts this.
> Actually, you are trying to equate wages with standard of living,
>something which does contradict economic theory. (I agree, however, that
>you did mention very little about economic theory).
As far as I'm aware, I do not mention "standard of living" in the article
at all. This is a case of sloppy reading on your part, of attempting
to read what you expect to read as opposed to what is actually written.
I enjoy entering discussion with those who have a contrary point of
view, but I consider arguing with someone who bases his opinions
on sloppy misuderstandings of what is being said to be a complete
waste of time.
>: One final question: which newsgroup are you writing from? Sounds
>: like I've replied to right-wing group by mistake.
> Translation: Oh dear, I thought I was only preaching to the choir!
No, see above about my reluctance to waste my time with such discussions.
BilStanley
(Michael Ballard) writes:
> Raoul's point was that the real
>GNP had increased 8 times over since 1960 and the workers real wages
>had not increased by that much; but according to his calculation had
>actually dropped in real terms.
>Whether wages dropped or increased, the fact remains that the GNP
>increased a whole lot and the GNP is one way to try to measure the
>output of the producers i.e. the working class. Their wages never
>even come close to being as much as the GNP. That's the way the
>wages system works. If the producers actually had control over the
>product of their labor, they could then determine what percentage they
>wanted to plow back in to production and what percentage they might
>want to keep for themselves and whether to decrease the length of the
>work day because needs could be met at a lower level of hourly input.
>What separates them from this control and the product of their labor
>is capitalist and/or State ownership of the productive apparatus.
MIke, A few questions: Was the 8 fold increase in GNP adjusted for
inflation? Does Raoul (or you) mean to suggest that the total amount of
"stuff" (goods and services) produced in the U.S. increased "in real
terms" by a factor of 8?! I suggest the real increase was considerably
less. Regardless, let's assume, for the sake of argument, that the GNP
did increase in real terms by a factor of 8. What do you suppose happened
to all that stuff that was produced? By definition, it must have been
purchased or consumed by all those "slave laborers" you refer to.
Admittedly, not all was consumed - a percentage was reinvested in capital
goods (new plant and equipment), but historically this percentage has
consistently ranged from 7% to about 12.5% of GNP since the Bureau of
Labor & Statistics has been keeping track of such figures.
I agree that real wages did not grow much (or were flat in some periods)
in the past two decades (a reflection of the increasingly poor education
being delivered by our government schools). But, the differences in real
wage gains and real growth in GNP could only have been marginal at best.
If the theory of supply and demand tells us anything, it tells us that
stuff is not produced unless someone buys it. You stated: "the fact
remains that the GNP increased a whole lot and the GNP is one way to try
to measure the output of the producers i.e. the working class. Their wages
never even come close to being as much as the GNP." If this were true,
then U.S. businesses must have trillions of dollars of unsold inventories
sitting in their warehouses. In fact, the opposite is true: Overall, the
size of business inventories is less today than 10 years ago - a tribute
to computers used to achieve "just in time" inventory controls.
Finally, Mike, if you are concerned about having "control over the product
of <your> labor," might I suggest that you start your own business. You
can risk your own hard earned capital to buy land and equipment, work day
and night to meet the incessant demands of an ever changing market place -
attempting always to provide a quality product at a competitive price so
that those "slave laborers" will buy your product rather than your fellow
competitors. You'll find Mike that the control you want over the product
of your own labor will not be determined by you. Rather, the market place
will determine for both you and your employees the value of your labor.
It's called Capitalism, Mike. It rewards those who work (i.e., produce).
It can be a tough system, but, with all its faults, it has produced a
society that allows you to sit at a $2,000+ machine in air-conditioned
comfort (apparantly at Stanford Univ) and criticize the system that
produced your current circumstance. What is it with you folks out there
in California? Maybe it's something in the water!
Sincerely,
BilSt...@aol.com (Bill Stanley, Carmel, Indiana - heartland of a
working America)