Here is the central economic paradox of our times. There is enough to go around. But it’s not getting around enough.
This is not an abstract problem. Economists know it, and they have a whole set of rules, axioms and theories designed to provide guidelines and mechanisms to move an economy through troubled waters, like we’re in now.
But what happens when their paradigms break down? The Fed has been printing money, buying bonds and keeping interest rates near zero, for years now. We should be drowning in inflation, the way the Fed is gushing dollars.
But we’re not. Instead, we have a serious prospect of deflation during this deluge of cash and credit. No wonder the economists are confused.
Why is there no inflation? Because work doesn’t pay. Inflation happens when too much cash chases too few goods. But only the one percent has too much cash, and there’s just so much they can buy. Meanwhile, the purchasing power of the vast majority of working people has been withering for decades.
How did we get here? The markets took us here. When the great postwar coalitions of liberal democracy broke down, we were promised affluence without end, if only the people got out of the way. We were told that government was the enemy and the market was our friend. And we bought it.
We gave unbridled markets a chance; we gave them two generations of chances. We made the wrong choice.
The result was a terrible depression that killed the middle class and damn near destroyed capitalism. And we’re ripe for another fall, because we never fixed the hole we fell into in the first place.
What went wrong? People didn’t have enough income, so they went deep in debt. Eventually they couldn’t keep up. The credit cards went first, then they stopped buying cars, and finally they defaulted on their mortgages. When several million people defaulted, Wall Street defaulted. The credit markets froze up. Business activity ground to a halt. Panic spread like swine flu, respecting no national borders. Capitalism had a seizure.
The governments of the world snapped into action. They poured cataracts of money into the bleeding body of capitalism to keep it alive. They’re doing it still. But they’re transfusing a corpse. The money leaks out of our gaping economic wounds as fast as they pour it in.
Since the Reagan Administration, the GDP goes up and up and not a stinking dime trickles down. But several trillion dimes trickle up.
What we are left with is thongs of people laboring in jobs that provide grotesquely inadequate compensation. Retail employees, office help, home health care givers, cab drivers, the nice lady who works the desk at the cat hospital … I could go on and on. It would be easier to compile a list of jobs that do pay a living wage.
But the crimes of the market fundamentalists were only beginning. Their next victim was welfare. Welfare is an easy target. Welfare robs the spirit of vitality; it’s an insidious condition, to be discouraged at all costs. That is received wisdom in America. We received it from Ronald Reagan and his fellow-travelers thirty years ago. Even Democrats swallowed that “wisdom” whole, and by the ‘90s it was a Democratic president, Bill Clinton, who declared the end of “welfare as we know it.”
And what do we have now, twenty years later? Welfare as we never knew it. Wal-Mart “associates” who survive on food stamps. Fast food workers who feed their families at food banks.
We’ve come full circle. From welfare to work programs to welfare and work programs.
Business is going to push down the cost of labor by outsourcing, underpaying and automating as much as it can. I don’t think that’s in dispute at this point.
But some force has to push the other way, or a society that is coming apart at the seams will rip irretrievably, into two highly unequal, warring camps.
That used to be the job of the unions. But we barely have unions anymore. The great masses of factory workers are gone forever, a distant memory. Now we have a dispersed workforce, all on their own, against the unchecked power of globalized markets. It’s not a fair fight.
This is an unsustainable state of affairs. When societies get this top-heavy one of two things eventually happens. They reform, or they crash.
We don’t want a crash. A crash leads to societal war, and wars are horribly destructive and uncontrollable. You start out with hyperinflation until it takes a billion marks to buy a knockwurst. There are riots in the streets, fistfights in the Reichstag, and you wind up with Adolph Hitler. That’s a crash.
Or, you suffer a terrible depression. Strikes are violently suppressed. There are riots in the streets and, at the last possible moment, you wind up with Franklin Delano Roosevelt. That’s reform. Reform is better.
But the reform we so desperately need can only come from people, organized into a big, insistent, group behind a powerful new idea. Here’s one: When the game’s not working anymore, change the rules.
I have an idea for a new set of rules: I call it Market Socialism. How does it differ from old, failed socialism? Market Socialism isn’t a call for redistribution. It demands a fair original distribution of the wealth created by our capitalist economy.
The old socialists thought they could abolish the markets and command the economy to do what they wanted. But you can’t do that, and if you try, you wind up telling people what they can do, down to the smallest details of their lives. Thus socialism became tyranny.
But it is totally unnecessary to command an economy on the granular level, in order to produce just results. You might as well command an acre of ground to produce wheat (they tried and wound up having to import wheat from us.)
The markets are expert at innovating ways to get more wheat from that acre, where they have failed is in providing enough people with the wherewithal to buy bread.
What are the particulars of Market Socialism? I don’t have a manifesto. What I have is a first principle. The markets exist to serve the people, not the other way around.
Market fundamentalists would say that’s an impossible dream. As if there was only one possible way for the markets to operate.
Nonsense. The markets are not some heavenly ordained thing, created perfect and whole from the day of conception. The markets, capitalism and economics are human constructs. Contract law, monetary policies, trade agreements, common stock corporations, and a thousand other particulars of market capitalism as we know it have been constructed through the centuries. We made the markets; we can change them.
Market socialism seeks to change the rules about work and money. It lets the markets be the markets. But it sets some parameters.
Work cannot equal poverty; every job must pay a living wage. Market Socialism demands that every law, every tax and every regulation for our economy be written with two goals in mind. Create all the wealth we can, and spread it around as widely as possible.
Market Socialism is only an idea. Its methods and particulars are still to be determined. But if enough people are inspired by that idea, the programs will follow. We know what the goal is: a decent living for those who live and work, today and tomorrow.
Market fundamentalism is taking us further and further from that goal. But we’re not slaves of the markets; we can get there if we have the will. And Market Socialism is the way.