Unreasonable World

Stephen Weil

Stephen Weil
Washington, District of Columbia, USA
December 31
Graduated from Emory University majoring in international affairs and history. Currently a research intern at the Center for Strategic and International Studies. All views expressed herein are my own. You can view my blog in its original format here: http://unreasonableworld.wordpress.com/.

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MARCH 13, 2012 9:52PM

The Real Class Warriors

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The past few years have seen incredible political turbulence, both in America and throughout the globe. From the Arab Spring to Occupy Wall Street, prevailing political ideologies have been put to the test. What we are witnessing is a revolution in global consciousness.

For some half a century, the majority of the world’s population had bought into, or at least passively accepted, Washington’s neoliberal consensus. Billions of the world’s poorest citizens toiled in excruciating conditions and under repressive regimes, either because they saw no hope for change or because they believed that, with time, everything would get better. After all, the logic of trickle-down economics predicted that a rising tide would lift all boats. As it turned out, most of those boats were capsized while a few yachts weathered the storms.

But there is hope for a better future. As the Oxford economist Judith Marquand has eloquently argued, “markets operate only according to the rules that people set for them.” There would be no market without a government to set up a legal framework guaranteeing property rights and other “rules of the game.” That government, ostensibly at least, is composed of and for its people. The conclusion is obvious: we, the people, can pressure our “representatives” to make the rules fair.

The existing neoliberal market structure has yet to face a significant mainstream challenge. Certainly, activists of various stripes have pushed for specific legal changes: air pollution standards, protections against employment discrimination, etc. Despite these occasional nuisances, however, the underlying assumption of our existing model—that unburdened free markets will ultimately assign each individual a “fair value” for their contributions—has gone largely unchallenged in the political mainstream.

Despite the fact that our political-economic system is the byproduct of particular historical and social circumstances, it is nevertheless portrayed by its defenders as somehow neutral and inevitable. Particularly in American culture, those who criticize the principles of “free enterprise” are invariably portrayed by the right as socialists, as if this term were inherently derogatory.

Outside of the age-old tactic of labeling one’s opponents socialist, the defenders of the free market have developed a number of rhetoric strategies to discredit their critics. In recent times, one phrase has become particularly prominent: “class warfare.” This strategy has scored well for the political right, as it summons up images of Bolshevik revolutionaries and violent civil strife that are then associated with any calls for reform. It’s a good thing that these old dogs managed to learn a new trick, because the word “socialism” has been gradually losing some of its negative appeal, especially among younger generations.

The class warfare narrative is quite straightforward: those who express concern over wealth inequality are “class warriors” attempting to demonize the wealthy and successful members of society in order to compensate for their own shortcomings. This argument rests on the previously discussed presumption of neutrality; because a free market provides opportunities for everyone to pull themselves up “by their bootstraps,” anyone left hanging must have simply failed to work hard enough. It is from this perspective that individuals such as Mitt Romney can brush off the legitimate arguments of groups like Occupy as the “politics of envy.”

In reality, our current economic system is far from neutral, and class warfare is already underway. In the period ranging from the aftermath of World War II through the early 1970s, the United States experienced unprecedented economic growth. Despite the steady accumulation of wealth, the share of national income held by the richest Americans stayed relatively constant. What we have witnessed in the ensuing four decades, however, calls into question the supposed neutrality of our market system; backed by powerful business lobbies and special interests, the rules of our economic game have been actively re-written in order to favor the powerful.

Two political scientists, Jacob Hacker and Paul Pierson, have documented this effort in their masterful book, Winner-Take-All Politics. Across the board, through means such as deregulation and modification of the tax code, our system has been altered to preserve and expand the influence of the wealthiest citizens. Much of the political debate in America has centered on the capital gains tax rate as the primary example of this phenomenon, but this is only a piece of the broader picture.

What is even more disturbing than the raw figures on inequality is that these disparities have become self-perpetuating; accumulating greater wealth affords an individual greater political influence, which can then be employed to re-write the rules of the game in a fashion that secures even greater wealth. Hacker and Pierson call particular attention to the work of two Princeton political scientists who examined the correlation between constituent interests and the voting records of their Senators. These researchers found the correlation to be positive for the top one-third of the income bracket, but negative for those in the bottom one-third. You read that correctly; if the poorest third of Americans support a particular policy, then our Senate is actually less likely to implement it. The result is a system of “representative” democracy in which only privileged interests receive a fair hearing.

These elites claim to represent the interests of society at large. Large corporations contend that lower tax rates and less stringent regulations allow them to act as “job creators,” using their excess capital to hire more workers and thus provide greater stimulus for the economy. The issue is that, as an empirical matter, this capital has primarily been used to expand profits rather than payrolls. How else could one explain why CEOs now receive a wage almost three hundred times greater than their average worker, when only a few decades ago that number was closer to thirty?

In reality, as the venture capitalist Nick Hanauer has argued, consumers are the real job creators. Certainly, without any investors, firms would lack the capital to hire workers and create goods. On the other hand, without consumer demand for those products, there would be no market to generate regular profits. Why then do we continue to propagate the supposedly neutral presumption that tax breaks for the rich create jobs, whereas tax breaks for the poor are some form of socialist redistribution? If consumers had more cash in their pockets, they would inevitably buy more goods, generating greater profits for producers, and consequently allowing them to increasing hiring and production. Yet Romney and company are defenders of “free enterprise,” while Obama is a “class warrior.” Something seems awry.

Another important point, as argued by Hacker and Pierson, is that the vast majority of political activity occurs not on Election Day, but during the “organized combat” of day-to-day legislative efforts. This is an arena suited to corporate interests rather than average citizens. Groups of like-minded businesses can band together and exert significant influence on specific issues, whereas citizens are left to wait for an opportunity to cast a ballot once every four years.

Imagine, for example, that you served in Congress. A bill comes up for debate that would institute more stringent environmental regulations for paper producers. Lobbyists for the paper industry promise to pour thousands into your campaign coffers for opposing the bill. Even if there was significant public support for this proposed legislation, how likely is it that, among thousands of issues considered by voters, you would be voted out of office on the basis of paper policy? Your choice is thus obvious: vote down the bill. This example might seem like cherry picking, but the broader point is that elections are rarely decided by one piece of legislation. The fortunes of a particular industry, however, might be. Thus, while our votes might have some impact on the general direction of government policy, corporations will always be better placed to shape the specific agenda. And that agenda almost universally favors the wealthy.

This returns us to the original point: if demands for higher capital gains taxes or a stronger social safety net constitute “class warfare,” then the day-to-day activities of special interests groups certainly fit the same bill. Corporations pump billions of dollars each year into lobbying efforts designed to secure their interests: lower tax rates, fewer regulations, access to foreign markets. The average citizen has significantly weaker tools are their disposal to influence government policy. The problem is ultimately not with “class warfare,” it’s that one side is armed with tanks while the other is desperately fighting back with Molotov cocktails.

If markets truly operate by the rules that people set for them, then the most effective strategy available to us is to follow in the footsteps of groups like Occupy and work to challenge our shared cultural assumptions. Corporations are, after all, able to so effectively promote their interests precisely because ideas like “trickle-down economics” and the myth of the “job creators” are so widely accepted.

Even if citizens never have the same sway as corporate lobbyists over particular pieces of legislation (the outcome of the SOPA/PIPA debate does, however, provide some indication that we could put up a fair fight), we can nevertheless play a role in setting the general course of our policies. As long as people remain convinced that our market is fundamentally “fair,” then calls for increased regulation or redistribution of opportunity will be blown off as “class warfare.” If, on the other hand, people come to recognize that our supposedly “free” market is not so neutral, then perhaps politicians would face greater pressure to rewrite the rules of the game. Once that broader cultural shift occurs, then specific regulations will become easier to implement (including, perhaps, restrictions on lobbying).

So pick up your pens (or, more accurately, go to your keyboards) and let the class warfare begin. Hopefully we will find that pens are, after all, mightier than swords.

Author tags:

politics, ows, inequality, economy

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