Alternatives to Capitalist Organization of Production and Distribution SP10
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Economics -> American Capitalism and Social Justice Spring 10
In recent decades, capitalism and in particular, American capitalism, has been under much scrutiny for the specific shortcomings implicit to the system. Such allegations have led to many academics proposing other systems of production and distribution that would reduce or eliminate these faults in hopes of implementing a radically new system to better the economy and society as a whole. This project will analyze some of the alternative systems to capitalism proposed by professors and scholars. The proposals and/or ideas expressed by economists Domhoff, Yates, Alperovitz, and Bowles, Edwards & Roosevelt will be analyzed and connected to this issue regarding capitalism. Following this, a few of the groups working towards other systems of production, namely co-operatives, will be explained- highlighting their goals and what exactly it is that they are hoping to accomplish. Finally, these organizations and the ideas put forth by the selected authors will be combined to analyze the prospect of social justice in a post-capitalist era.
Contents
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What is Capitalism?
From it's beginning, capitalism has been responsible for constant changes and innovation, revolutionizing the way the world produces and lives. It is considered to be one of the most, if not the most efficient systems of production and distribution known to man. The system is credited with the growth and expansion of cities, rapid population growth, technological revolutions, globalization, increasing standards of living, and new roles of government.[2]
Today, American capitalism is blamed for placing an even greater concentration of wealth and of the means of productions into the hands of very few, and creating the income inequality that currently plagues American society and the economy. In recent decades, capitalist corporations in America have been growing rapidly at the expense of small businesses loses profits and being forced to close their doors.
Perspectives
Gar Alperovitz and a "Pluralist Commonwealth"
Gar Alperovitz, a Lionel R. Bauman Professor of Political Economy at the University of Maryland, is the author of America Beyond Capitalism: Reclaiming our Wealth, our Liberty, and our Democracy. In his text, he posits the idea of a completely new political-economic system what he terms a “Pluralist Commonwealth”. As traditional capitalism has generated numerous issues regarding equality and liberty, Alperovitz stresses the need to create an underlying structure for a system that is different in “fundamental ways”.[3] He uses the term Pluralist to emphasize democratic diversity and individual liberty, and the term Commonwealth to highlight the creation of public wealth-holding institutions.[4] The four major components of this system, as he argues, are the strengthening of community democracy, increase in free time, greater citizen equality, and decentralization and creation of a more regional-based system.
Community Democracy
- A Pluralist Commonwealth will focus primarily on developing community democracy through favoring local civil society institutions and increasing the power of local governments when making meaningful decisions, all in hopes of strengthening democracy as a whole. Through developing new types of ownership institutions, namely worker-owned firms, citizens will be allowed greater power and a more powerful voice in the decisions made on a regular basis. With greater participation and power in local government, Alperovitz argues that citizens will be more connected, and will resultantly have more say and be more inclined to participate at the national level. Simply put, active, engaged citizenship will lead to a more representative national democracy.
Increase in Free Time
- Through decreasing the average number of hours worked in a municipality, or creating more free time, citizens will be much more active in areas outside of work. Most importantly, this freedom will lead to a greater participation in local government and decision-making. Because people now have the time to do so, they will become involved in local and possibly national democracy. Consequently, the people will have larger representation in government. The ability to contribute democratically will award people greater individual liberty and equality.
Greater Equality
- The increase in equality, as previously mentioned, primarily comes through greater representation in democracy. To further generate equality, Alperovitz also puts forward the idea of a “Public Trust” which is a national institution that would essentially oversee investments of public stock. Through stock ownership in a public trust, proceeds would be returned to individuals and communities, and be used to fund basic elements such as education and medical care. National wealth-holding institutions would replace the current excessive corporate ownership of capital and strengthen local economies. Directly through an increase in democracy and indirectly through the returns of public investment (a Public Trust), each community would slowly achieve greater equality.
The Constitution of the United States of America
Decentralization
- Adding to the increase in democratic representation through a rise in free time, a decentralization of power and growth of regional authority would further escalate citizen democratic power, leading to greater liberty and equality. A regional reorganization of politics and power would put each person in the center of the decision-making process of decisions affecting him or her, making it easier to influence such decisions. Through time, community-based politics would raise democracy, and accordingly improve the liberties and equality toward the people.
Gar Alperovitz’s idea of a Pluralist Commonwealth creates accountability and transparency all while encouraging competition. He argues that despite several inquiries regarding the efficiency of the system, a Pluralist Commonwealth would be as efficient, if not more efficient than a capitalist or socialist economic system. Because the workers and the community will now have a direct investment into their businesses, their productivity, and resultant efficiency, will rise. This revolutionary idea challenges the common belief that firms must stay separate from government. Through changing the universally accepted form of ownership and power, this system develops strategies to allow increased accountability and transparency. In short, and in his own words, a Pluralist Commonwealth will reclaim “our wealth, our liberty, and our democracy”.[5]
G. William Domhoff and The Corporate Community
In the book, "Who Rules America?" the author, William Domhoff, analyzes and explains his theory of the corporate community's dominance of America. The "corporate community", as Domhoff refers to, is composed of a very small and elite social class in the United States. This elite social class is comprised of the wealthiest individuals and the owners of the largest corporations and businesses in the U.S. Domhoff explains how and why owners of these large businesses and corporations are so united even though they represent very diverse and at times competing businesses. Members of the corporate community all share a common interest, which is to maintain and expand their influence and dominance in America. The reason why they are able to hold so much sway in a democratic country in which they represent a fraction of the overall community while at the same time having interests that clash with the interests of the majority, is because of their heavy influence on public opinion, policy planning networks, the American electoral system, and the federal government.[6]
The corporate community invests heavily into altering the public opinion in order to mask and alter the perception of reality. The corporate community engages in public opinion campaigns that seek to play upon American values in order to skew the reality of the situation and more specifically divert the blame and responsibility from the elite business owners to the working individuals themselves. The public opinion campaigns latches onto the American ideal that in America if an individual works hard enough for anything she or he will be able to achieve or become anything they want. It is this false notion that the corporate community then abuses to deflect attention from them. Members of the corporate community go on to say they are wealthy because they earned it and if members of the working class want to attain greater wealth they too have to work hard for it, but the reality is that most of the wealth members of the corporate community have is inherited.
The nature of the American electoral system increases the role and importance of wealthy donors. The more national and prominent the public office the more money and fund raising is required to wage a viable political campaign. This obstacle makes it nearly impossible for a candidate to run for a national ballot without the approval of wealthy donors. Even Barack Obama who championed himself as having raised so much of his campaign funding from small donors had received the same percentage of contribution from the wealthy donors as George w. Bush[7]. The heavy reliance of politicians on the very wealthy to fund their political campaigns is a huge obstacle in reducing the influence the corporate community has on American politics and the federal government.
The corporate community also has the disposal of the lobbyist groups and think tanks that lobby members of congress and heavily influence the political agenda being set. While the liberal-labor coalition has some lobbyist groups and think tanks of their own in comparison they have a lot less funding.
In essence the corporate community has been able to systematically dominate all the levers of power in America that is why they have been able to continually increase their profits even when the overall economy has not been doing well. The more they continue to dominate the levers of power in America they harder it becomes for the liberal-labor coalition to challenge them. This is why unions have seen a steady decline in numbers and power and why there hasn’t been a substantial increase in minimum wage in decades. This is also why the United States has the most stingy welfare system in of all the developed world because the corporate community has the ability to stem any movement or call for increasing social benefits that may have an adverse affect on their rate of profit.
Michael D. Yates on the Importance of Unions
In the book, “Why Unions Matter’, the author, Michael D. Yates, highlights the role unions play in America. As Yates argues unions are the best means to challenge corporate domination in the United States. Yates first examines the history of unions in America and talks about the importance of unions. Unions are effective because as Yates states, there is power in numbers. Unions are a means to bring large groups of people who have similar interest and goals together in order to concentrate their influence and power as individual workers into a powerful organization that has a higher likelihood of being able to challenge corporate abuse and domination.
Yates stresses the importance for unions to be united and organized. Corporations and business will go to great length, at times even use illegal methods, to make sure that their employees do not form unions. Business along with negative press from the mass media often smear union’s image. Unions are labeled as undemocratic and without a purpose or benefits other than paying dues, but as Yates points out the average wage for a worker in a union (includes all workers) is more than five dollars more. Average wage of union workers is $24.10 while the average wage of a non-union worker is only $18.81, a percentage increase of 28.1 percent[8]. The benefits are not just regulated to increase in wages but union members receive much larger insurance, pension and compensation. The benefits to workers of being in a union are clear and this is why employers work so hard to defeat any effort to unionize.
Yates states that not all unions are effective, he argues that the effectiveness of a union depends on how organized it is. Unions, as Yates argues need to be pro-active and constantly working to increase their numbers as well as to becoming highly organized to be able to sufficiently and effectively stand up against the challenges of corporate America. Yates stresses the need to remain united as union members and to instill a sense of pride in union members. Owners, as they have done ever since the very founding of the U.S. try and use any means of separation to divide workers. Often times they use workers ethnicities and race to divide the workers. Owners know that unions are a lot less powerful and effective when their members are divided or when unions are smaller in size.
S. Bowles, R. Edwards, & F. Roosevelt and The Shortcomings of Capitalism
In their book, Bowles, Edwards, and Roosevelt reveal many of the shortcomings of capitalism, particularly in terms of efficiency, fairness, and democracy. These shortcomings are essentially rooted in the ongoing domination of the upper class, the economic and cultural focus on maximizing profits, and the resulting conflicts between the capitalist and working class.
Efficiency
- In terms of efficiency, the main faults of capitalism lie in the determination of firms to maximize profits. Usually, decisions to increase profits do not necessarily denote an increase in efficiency, as firms will misuse workers or technology in ways that do not proportionally increase profit nor reduce inputs. All firms care about is that profits are increasing, and this is often done at the expense of worker well-being and resource management. Additionally, the mistreatment of workers often leads to even less productivity, as workers will work at the lowest possible intensity out of resentment towards their superiors or dissatisfaction in their work. This, along with the oversimplification of jobs in order to enhance overall productivity and cheapen worker training, leads to an overall lack of fulfillment and development among workers. In order to maximize efficiency, firms need to take into account the big picture instead of simply viewing success as maximizing profit[9].
Fairness
- In terms of fairness, capitalism falls short in that it emphasizes competition and systems of hierarchy both economically and socially. This is because capitalists establish "systems of control" in order to control workers and maintain corporate dominance within firms and society[10]. As a result, despite recent increases in overall wealth and productivity, the lower classes are actually remaining stagnant while the upper class prospers, thus enhancing inequality. Lower classes are restricted to inferior neighborhoods, which are less safe and have poor services such as police, education, and doctors. On the other hand, upper classes maintain their status through excellent services, social networks, and inheritance of wealth. This perpetuates an unfair class structure based on unequal opportunity rather than actuall skill and work ethic that is a direct result of capitalism. Additionally, inequality greatly affects women and minorities, as they are often restricted to lower paying and less prestigious jobs that allow discrimination to remain commonplace in society[11].
Democracy
- In terms of democracy, capitalism is counterproductive in that it takes control away from the majority and allows capitalists to have much more power in decision making processes. For example, the systems of control within firms that enforce dominance over workers also prevent them from taking action against unfair treatment and lower wages. In order to achieve their goals, workers must seek help outside of the firm, particularly by joining unions. However, there are alternatives to this. For example, the authors discuss the idea of “Democratic Firms” in which private ownership is eliminated and all investment and means of production are shared by the workers. This would allow workers to be their own bosses and set their own rules and regulations to naturally prevent unfair treatment or wages. Also, because worker productivity directly relates to firm productivity, workers will work at maximum efficiency in order to make more money for their firm and therefore themselves. Not only would this raise productivity, but it would also raise the overall pride and satisfaction workers have in their jobs and in their lives. However, admittedly, there are several cons to Democratic Firms, both in that they require a large amount of initial worker capital and put workers at risk to bankruptcy as they are unable to diversify their investments. Still, Democratic Firms and other ideas that promote shared ownership clearly provide a wide variety of benefits, both economically and socially, that are unable to be attained in capitalism[12]
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Organizations
International Cooperative Alliance
The 240 members of the International Cooperative Alliance range from businesses to other similar, pro-cooperative organizations. Depending on the region, their members are comprised mostly of credit unions and banks, farming organizations, unions for co-operatives, and federations advocating co-operatives. This organization has a very strong international presence, with only a few member organizations located in the United States. The most recognizable and well-known member to the ICA in the United States, however, is the Nationwide Mutual Insurance Company.
United States Federation of Worker Cooperatives
USFWC website claims that it has members all across the country and in diverse industries that represent different shapes and sizes. Currently there are over seventy worker cooperatives and democratic workplaces whose membership total exceeds 1500 and continues to grow.
The Capital Ownership Group
Mission Statement: “To create, build and serve a coalition that promotes broad ownership of productive capital; reduces inequality of income and wealth; increases sustainable economic development; expands opportunities for people to realize their productive and creative potential; stabilizes local communities by improving living standards; and enhances the quality of life for all.” [14]
Overview
The Capital Ownership Group (COG) is a network of scholars, professionals, and activists seeking to decrease the negative effects of globalization caused by private ownership. COG, which has over 600 members worldwide, functions as an “online virtual think tank”, operating out of Kent State University[15]. The organization’s methods can be divided into three main categories. First, COG focuses on gathering information and conducting research on the benefits of broad ownership and the disadvantages of private ownership. Second, COG conducts polling on public opinion and policy makers and uses this information to find out the best ways to create proposals. Then, by combining their research, they develop proposals and educational programs to inform the public, sway policy makers, and send to the media. Additionally, the organization publishes articles and holds information sessions to raise awareness, seek further exposure, and gain new membership and support. Third, COG strives to create new broad ownership firms and support those already in existence. It is important to note that COG is a global organization, and this support extends outside of the United States to a wide variety of countries and economies, including developing countries of the third world[16].
The Overarching Goal
A "Pluralist Commonwealth" & Co-operatives
Not Quite Co-operatives, But a Progressive Shift
Alperovitz, Domhoff and Yates all agree on the fact that corporation and business owners have too much power. Because of the very nature of capitalism, the interests of owners and the interests of workers will always be at odds with one another. Owners are continually looking for ways to increase their rate of profit, while workers are looking to increase their wages, benefits and leisure time all of which have an inverse relation to the owners rate of profit. Both Domhoff and Yates state that it is very important to close the gap between the small very wealthy class who control a disproportionally high amount of power in America and the majority of Americans who fall under the poor and working classes. However Domhoff and Yates do not advocate ignoring the government or working without the government, like Alperovitz proposes. Domhoff believes that the Obama administration has a chance to help shift the balance of power in favor of the liberal-labor coalition and in Yates book, he makes it very clear that unions should not ignore the government and should work with the National Labor Relations Act (NLRA) and the National Labor Relations Board (NLRB), government institution created to represent the interest of unions. This is different from what Alperovitz is calling for, who believes the role of government should be reduced and employees should go about bringing change alone. Alperovitz reforms envisages a system where there is no separation of owners from workers. Cooperatives is a system in which all the workers are owners, hence it eliminates the continual conflict of interests between the workers and owners. Domhoff and Yates do not advocate removing the separation between workers and owners, they advocate a less radical idea by aiming to close the gap of power between the two groups in order to achieve a more harmonious and democratic society.
Overcoming the Shortcomings of Capitalism
The ideals of these organizations mesh very well with the perspectives of Bowles, Edwards, and Roosevelt. In their book, the authors blame the economy’s shortcomings in efficiency, fairness, and democracy on the system of private ownership that defines capitalism[18]. These organizations, however, seek to remove private ownership and have the means of production owned cooperatively by the workers. This would provide many benefits to society, both economically and socially. First, by having the workers directly invested into their own firms, they would work at maximum intensity because their productivity would be directly connected to their overall success. Second, by redistributing income and reducing the income gap, society would become more equal and more people would gain access to adequate services, thus increasing the overall quality of life. Additionally, firms would be more inclined to invest in community improvements, as their wealth would be shared amongst the workers instead of selfishly hoarded by capitalist owners. Third, by giving decision-making power back to the workers, democracy within firms would increase and exploitation and destructive behavior of firms would be reduced[19].
Therefore, in comparing these organizations to the ideas of Bowles, Edwards, and Roosevelt, it is clear that their proposed changes would provide many benefits to society. Namely, replacing private ownership with cooperatives would restore worker pride, satisfaction, and equality without sacrificing any efficiency[20].
The switch from capitalism to another system is very hard to envision and would likely have to gradually occur over a long period of time. However, these organizations, which promote alternatives to private ownership through informing the public, creating and supporting cooperatives, and affecting public policy, are a step in the right direction towards a new economic system.
A Final Analysis of Social Justice
The goals of these organizations are consistent with the ideals of social justice. They are attempting to reduce the inequality and discrimination in the world caused by private ownership and corporate dominance. Capitalism has created a culture of competition, exploitation, and conflict that goes against the very social goals of society. Instead of competing, people should seek to attain the highest level of human development and satisfaction while working together to achieve goals deemed valuable by the community as a whole. By taking away private ownership and creating cooperative firms, this would be much easier, as workers would be more inclined to use their revenue to collectively invest in their communities rather than personal gain. Moreover, in returning capital ownership to the workers, true democracy would be restored to prevent future dominance and antisocial behavior in the economy. The very principle of cooperatives stresses the importance of equality of all members. The belief of pure equality amongst all members would combat racism and sexism and all forms of discrimination that has plagued and continues to plague the United States and the rest of the world. Without these forms of discrimination the people are less likly to be divided and as a united front the majority of people who do not come from the elite and wealthy classes will be able to stop the abuses and exploitations of the corporate community. We all will live in a much more democratic, peaceful and successful community if all members view each other as equals, a principle that is the very core of cooperatives.
Project Completed by Samem Jarbarkhail, Rob Nation, and Dan Vickery
Works Cited
- ↑ Barone, Charles. Class lecture. American Capitalism and Social Justice. (See picture to right)
- ↑ Bowles S, Edwards R, Roosevelt F. Understanding Capitalism. United States: Oxford University Press, 2004
- ↑ Alperovitz, Gar. America Beyond Capitalism. Hoboken, NJ: John Wiley & Sons, 2005.
- ↑ Alperovitz, Gar. America Beyond Capitalism. Hoboken, NJ: John Wiley & Sons, 2005.
- ↑ Alperovitz, Gar. America Beyond Capitalism. Hoboken, NJ: John Wiley & Sons, 2005.
- ↑ Domhoff, William. Who Rules America?. Santa Cruz, CA: Higher Education, 2010.
- ↑ Domhoff, William. Who Rules America?. Santa Cruz, CA: Higher Education, 2010.
- ↑ Yates, Michael. Why Unions Matter. New York, NY: Monthly Review Press, 2009.
- ↑ Bowles S, Edwards R, Roosevelt F. Understanding Capitalism. United States: Oxford University Press, 2004
- ↑ Bowles S, Edwards R, Roosevelt F. Understanding Capitalism. United States: Oxford University Press, 2004
- ↑ Bowles S, Edwards R, Roosevelt F. Understanding Capitalism. United States: Oxford University Press, 2004
- ↑ Bowles S, Edwards R, Roosevelt F. Understanding Capitalism. United States: Oxford University Press, 2004
- ↑ http://www.usworker.coop/about
- ↑ http://www.capitalownership.org/mgo.html
- ↑ http://www.capitalownership.org/mgo.html
- ↑ http://www.capitalownership.org/mgo.html
- ↑ Alperovitz, Gar. America Beyond Capitalism. Hoboken, NJ: John Wiley & Sons, 2005.
- ↑ Bowles S, Edwards R, Roosevelt F. Understanding Capitalism. United States: Oxford University Press, 2004
- ↑ Bowles S, Edwards R, Roosevelt F. Understanding Capitalism. United States: Oxford University Press, 2004
- ↑ Bowles S, Edwards R, Roosevelt F. Understanding Capitalism. United States: Oxford University Press, 2004
