Forty-Seven Trillion Dollars: Exploitation Writ Large

“Exploitation” is a word seldom encountered today. Its common usage roughly spans the heyday of socialist thinking, especially the era of Marx’s influence over socialist theory. It was and should still be the cornerstone of Marx’s critique of capitalism.

But the idea of labor exploitation-- capitalists taking uncompensated advantage of workers’ labor-- has largely disappeared outside of the Communist Parties. It is more common to find the word attached to sexual or animal abuse, cultural appropriation, or other sins outside the bounds of class. But class exploitation, the structural exploitation once fruitfully viewed as the centerpiece of capitalist relations of production, the basis for the era of capitalism, is out of fashion with today’s Western left.

That’s not to deny a concerted outrage over inequality of income and wealth; certainly, the broad spectrum of opinion from the center to the left decries the vast gap between the obscenely wealthy and those equally obscenely impoverished. But there is little attention paid to how that enormous chasm is produced and continually reproduced. Nor is there much imagination of life without it.

Hopefully that might change.

A recent article in Time magazine-- a popularization of a scholarly paper from the staid, ultra-conservative Rand Corporation-- declares dramatically in sensational headlines: America’s 1% Has Taken $50 Trillion From the Bottom 90%.

The Rand paper, Trends in Incomes From 1975 to 2018 argues with a great deal more nuance, but equal force, that if the thirty-year (1945-1975) trend of household income distribution had been maintained over the next forty-two years (1976-2018), the bottom 90% would have earned $47 trillion more over that period! 

Put another way, the bottom 90% would have received 67% more income than it actually did in the one year, 2018-- the final year of the study; those below the upper 10% threshold would share $2.5 trillion more than they actually received for their labor, $2.5 trillion in 2018 that went instead into the bank accounts of the highest 10% of earners.

As the authors of the Time article emphasize,
“This is not some back-of-the-napkin approximation…”, but a rigorous conclusion based upon the premise that 1945 to 1975 was a period of relative stability of inequality. That is, in the thirty-year post-war period, the gap between the rich and everyone else grew little and declined little. The French elites celebrate a similar era in Europe with the expression “les trente glorieuse”-- the thirty glorious years of relative prosperity. The majority maintained its lower status, but lost little ground to the rich.

While the Rand authors, C. Price and K. Edwards, do not explain this ‘equilibrium’ of inequality, an explanation is readily at hand. The Western powers were in an intense, winner-take-all competition with socialism and its friends after World War II. The ruling classes made an unspoken compact with respective labor movements in Europe and the US that they would encourage the idea that labor’s income would move proportionally with increases in productivity, effectively “freezing” social inequality in place.

In return, labor was expected to accommodate, even participate in Cold War foreign policy and embrace capitalism. In the political sphere, this compact guaranteed that the urge to reform or change would be contained in the Democratic Party or the European Social Democracies. Where mass Communist Parties emerged, the securities services would go to any length to aid and abet the center-left in denying them access to power.

In the US, the informal compact produced the purging of the left in the labor movement, cultural and intellectual conformity, and entrenchment of the two-party system.

As Price and Edwards demonstrate, the stability of income distribution, of class-income differences, changed dramatically after 1975. Income distribution shifted sharply to the benefit of the top 10% and even more so to the top 1%. The shift was so great in the post-1975 period that the authors calculate that 90% lost $47 trillion by 2018. But, again, they have no clear and comprehensive explanation, beyond noting that the “rise in inequality has been attributed to many different factors including technological advancement, decline in union membership, and globalization.”

While these conventionally cited factors may well have played some role in the shift in income distribution, they were hardly sufficient to explain the extremely sharp turn that Price and Edwards show.

Rather, the reversal came with the profound economic crisis of the 1970s: the oil crisis and intractable stagnation and inflation, two conditions that conventional economics (then Keynesian-influenced) could not even conceive of as occurring together. The concurrent fall in the rate of profit forced a radical reexamination of policy on the part of the ruling class (in the US as well as Europe). Welfare policies and class accommodation were jettisoned for a raw, no-holds barred assault on the income and living standards of the 90%.

With the decline and disappearance of Soviet and Eastern European power, a decade or more later, the last elements of the post-war compact with labor and its allies were also jettisoned. The US ruling class perceived no need for any further accommodation with US working people. Capital mobility and the availability of an enormous new pool of skilled, but low-cost labor capped the period and placed enormous pressure on the incomes of Price and Edward’s 90%. Labor unions received this shock treatment and, without a militant left, struggled to respond. New logistical technologies smoothed the way for a sharp increase in global trade, investments, and job migration.

While Price and Edwards struggle with an explanation for the qualitative changes that occurred after 1975, Marxist theory offers a ready answer. Capital mounted a concerted offensive in the 1970s resulting in a massive increase in the rate of exploitation in response to a profound crisis and the failure of the policies of the immediate postwar era to answer that crisis. 

With the rate of profit under siege, the US ruling class unilaterally cast aside the Cold War compromises and ruthlessly attacked the income and living standards of the working-class majority. Wages have been essentially stagnant since the 1970s, while productivity and national product have grown, filling the coffers of the corporations and the bank accounts of the rich.

Characterizing this period as the rise of “neoliberalism,” as much of the left favors, obfuscates the deeper processes that spawned the dramatic shift in the rate of exploitation, the appropriation of an additional $47 trillion from one class to another in a forty-two year span. It wasn’t an intellectual victory in the policy wars, a spark of evil intent, the domination of the political right, or a temporary or contingent aberration of capitalism, but a strategic adaptation-- accepted by nearly the entire ruling class and its political minions-- in the appropriation of surplus value-- the exploitation of labor-- that accounts for the dramatic gains of the capitalist class and its hangers-on. 

Though they were agents in the change, Carter, Reagan, and Thatcher were only the faces of another stage in capitalism’s course correction. Those who think that the super-exploitation exposed by Price and Edwards can be tempered by a return to the “glory” of the immediate postwar period fail to understand the logic of capitalism. That period has long given way to a new dynamic. 

But the Price and Edward revelations succeed in exposing an important point. If the super-exploitation of the last forty-two years-- the appropriation of the $47 trillion-- is recognized as unjust, as the Time headline suggests, then the “ordinary” exploitation of the previous period is equally unjust since both lead directly to inequalities.

There is no escaping the conclusion that the economic inequality that more and more people are rejecting is itself deeply rooted in capitalism and its profit-generating, exploitative mechanism. Surely the scope of super-exploitation that Price and Edwards spotlight should challenge the legitimacy of capitalism, not only as it is today, but also how it was before it took a vicious turn. 

Greg Godels

zzsblogml@gmail.com

The Paid Pipers of Hypocrisy

Is there a word more abused by the monopoly media than the word “corruption”? For US journalists, corruption is the sin committed by bureaucrats, administrators, and politicians everywhere outside of the US and its closest allies. 

A glance at the map of corruption devised by Transparency International, an NGO favored by the capitalist punditry, shows a remarkable result: skin color and political independence correlate pretty closely with the magnitude of corruption in the eyes of the “scholars” at Transparency International. It seems that the darker-skinned people have a predilection to tolerate corruption, as do those people who fail to accept the leadership of the US and its Euro-Asian sycophants. Needless to say, poor Haiti-- both dark-skinned and unforgiven for its overthrow of colonialism-- is allegedly most cursed by corruption, as are Venezuela, Syria, DPRK, several African states, and some failed states wrecked by imperialism.

If this index, itself, seems curiously corrupted by bias, consider the exposure of what may be the most egregious, far-reaching corruption of recent years: the conflict of interest of US Federal judges. In a recent in-depth study of 685 cases heard before US Federal judges over the last decade, The Wall Street Journal found that 131 out of the 600 hundred or so Federal judges ruled on cases in which the judge or family members held interests-- securities-- in one of the litigants. In other words, almost one in five Federal judges bore a conflict of interest in the cases examined. 

This is, however, not simply a matter of bad judgement on the part of the judges, but a violation of a 1974 law that explicitly makes it illegal for Federal judges or their family members to hold investments in companies coming before the court:

Nothing bars judges from owning stocks, but federal law since 1974 has prohibited judges from hearing cases that involve a party in which they, their spouses or their minor children have a “legal or equitable interest, however small.” That law and the Judicial Conference of the U.S., which is the federal courts’ policy-making body, require judges to avoid even the appearance of a conflict. Although most lawsuits don’t directly affect a company’s stock price, the Supreme Court in 1988 said the law’s purpose is to promote confidence in the judiciary. (WSJ)

And yet no Federal judge has ever been charged, not to mention convicted, under this law. The Federal judiciary, a cornerstone of our three branches of national governance, is therefore riddled with conflicts of interest and, by any rational measure, corruption. 

The WSJ story, a powerful exposé of corruption at the highest level of the US government, immediately follows the late September announcement of the resignations of two Federal Reserve Presidents, who engaged in extensive security trades while the Federal Reserve was embarking on policy changes potentially advantageous to the trades. While both denied any wrongdoing, many commentators saw a rather blatant conflict of interest. The widespread suspicion of insider trading-- high level corruption-- likely prompted the resignations.

In both cases, attention sank like an anchor in the media maelstrom.

While a few major media outlets made matter-of-fact reports of the two cases, outrage was noticeable for its absence. The pundits who are scandalized by customs officials in developing countries accepting $5 bribes to expedite the shuffling of papers were strangely silent over Federal judges’ rulings in cases where they held financial interests and Federal Reserve officials profiteering. The politicians exclaiming the corruption of foreign leaders showed little interest in the shameful behavior of high officials appointed to decide matters of greatest import to the people of the US.

As author and law school educator, Dan Kovalik, points out regarding the Federal judges:

One might think that all of this would create a huge scandal, and maybe even a US Department of Justice investigation to root out corrupt judges to at least try to bring some fairness and equity to our legal system. But no such righting of the US system will come – not any time soon, anyway. Instead, the US, true to its long-standing practice of projecting its own sins on others so it doesn’t have to get to grips with its own, is focused on rooting out corruption – both real and fabricated – in other countries.

To guarantee that no one dwelled on rampant Federal corruption, four days after the WSJ article appeared in the print edition, the International Consortium of Investigative Journalism, a well-connected Washington DC-based organization, released a brief summary of the so-called Pandora Papers, allegedly a massive anonymous dump of data on off-shore tax havens used by important people in numerous countries. Media outrage ensued. Pitchforks were sharpened. 

The ICIJ is an oddity. Created as a depository for leaked information along the lines of WikiLeaks, ICIJ has never received the kind of violent hostility visited upon WikiLeaks and especially its founder, Julian Assange. Instead, ICIJ’s “scandalous” findings have been met with media enthusiasm and official acceptance or, at worst, indifference. Since little that it reveals is actually illegal, ICIJ findings are essentially celebrity-shaming. 

Astute observers have pointed to several curiosities. Ben Norton noted that the Pandora Papers shames few prominent United States personalities, a blatant failing shared by the aforementioned Transparency International. Apologists have offered the ludicrous explanation that favorable US tax policy makes it unnecessary for the rich in the US to seek tax havens. 

Norton also chronicles the funding for ICIJ, the usual pack of US CIA fronts, collaborators, phony NGOs, and the ubiquitous Soros Foundation.

Which, of course, raises the question of the source of the data dump, billed as a “trove of more than 11.9 million confidential files…” Does any individual or organization beyond the CIA, NSA, or other counterpart intelligence agency have the resources to acquire the data released in the Pandora Papers? Or the other leaks that preceded it? The Panama Papers? China Cables? Paradise Papers?

Isn’t it odd that unnamed sources can, seemingly with ease, steal private data “troves” and pass them anonymously on to a group (“...the biggest [mainstream] journalism partnership in history…”) without revealing a hint of the chain of events that led to the disclosures? Even more bizarrely, no one in the media-- no “premier” investigative journalist-- seems in the slightest interested in discovering this pathway. It just happened. No interest on the part of the FBI. No charges of data theft. Of hacking.

Compare this to the intense media bonfires kindled by leaks ranging from the Clinton campaign revelations to the Jeffrey Epstein scandal. Apparently, the Pandora Papers, despite open questions over the legality of their acquisition, have the stamp of official propriety.

Maybe it has something to do with the media’s determination to spin the findings to embarrass Vladimir Putin and Bashar al-Assad and other targets of US and EU policies.

Call it a conspiracy theory, but the Pandora Paper’s convenient release overshadowed stories that the media had already chosen to ignore. It served nicely as a distraction. Corruption at the highest levels of US governance never made the Britney Spears/Gabby Petito news cycle.

Some might argue that our channels of information, our chronicles of events, are broken and compromised. Some cynically see our media as a megaphone of officialdom. Certainly the evidence is there for both views.

The simple fact is that monopoly news is no news at all.

Postscript: Today’s WSJ (October 16, 2021) reveals that 61 of the 131 Federal judges cited actually traded stocks of litigants while they were adjudicating cases involving those litigants, a blatant basis for conflict of interest charges in violation of the 1974 statute! Corruption!

Greg Godels

zzsblogml@gmail.com