Capitalism

This essay on Capitalism was written by Prof. Lawrence Davidson, who teaches history at West Chester University.

Pope John Paul II once remarked that "pervading nationalism imposes its dominion on man today in many different forms and with an aggressiveness that spares no one." Whatever else you might think of this Pontiff, he makes a good point here–and one applicable to the U.S.A. American politicians never tire of telling us that ours is the greatest nation on earth and, for the world’s sake, we must aggressively (often by war) expand our freedoms, as well as our general culture, to the ends of the earth. Actually, this is a message that has been repeated for two hundred years and "its dominion" here in the "land of the free" is manifest. For many citizens, this assumption is one of the primary reasons we invaded Iraq, are hanging on in Afghanistan, and swear eternal loyalty to the Israelis. It is probably the cas e that American political and civic leaders invoke God and national manifest destiny more than those of any other nationality.



Capitalism

This is the world’s prevalent economic system. It is based on private ownership of the means of production and the creation of goods and services for profit. Wage labor is an important element on the cost side of the capitalist ledger. So are things like safe working conditions and worker benefits. The capitalist impulse is to minimize costs in order to maximize profit. Left to themselves, capitalists will pay workers (white collar or otherwise) the lowest possible wages and deny or minimize other benefits. They will ignore worker safety and deny any responsibility for worker health. The only reason these important aspects of the work place prevail is because of the pressure put upon the capitalist system by unions on the one hand, and government regulatory agencies on the other. If you want to maximize the probability of economic breakdown, just destroy all effective government regulation of the economy and outlaw uni ons.

Part II - Ideologies at odds　

Nationalism and capitalism are quite different ideologies, yet somehow Americans have conflated them. Take a list of what are considered the best things

about Capitalism: equality, achievement, freedom, growth and even happiness, and then compare them to a list of things considered the best about America: equality, opportunity for personal growth, freedom, a longer and fuller life. What do you know! They’re almost the same. This is odd and not a little illogical. Why so? Well, consider the fact that these ideologies operate in opposition one to another. And do so right out in the open.　

Here is a good example. On 11 July 2012, Fred Grimm, a columnist for the Miami Herald wrote a piece entitled "This column was made in the U.S.A." In it he notes that "last year the Wall Street Journal surveyed employment data from a number of the nation’s heftier corporations...and found that while they were cutting their domestic workforces by 2.9 million over a decade, they had hired 2.4 million people overseas." What sort of jobs are being exported by American corporate executives with, one assumes, the approval of their largely American stockholders? It turns out that they are not just your mundane factory floor jobs. They also include the work of: accountants, radiologists, architects, mortgage banking officers, computer technicians, and journalists (outsourcing the writing of local news st ories to underpaid reporters in places like the Philippine).

As the Wall Street Journal noted, this has been going on for a while now. Back in a 12 January 2004 edition of the Harvard Business School’s online publication, Working Knowledge, James Heskett told us that "arguments based on accepted [those accepting are not named] macroeconomic theory generally come down in support of the free exportation of jobs." But then Heskett quoted Brad Leach’s observation that "the real question is how to deal with the disproportionality of this impact: the broad, shallow, positive impact on product prices versus the narrow [sic], deep, negative impact on individuals."
In other words, American capitalism has been sticking it to American nationalism, at least to the extent of destroying a minimum of 2.9 million jobs over the past decade. Is this an example of capitalism promoting achievement, or growth, or happiness? Certainly not for those 2.9 million American ex-employees. So just how could American corporations, the executives and stock holders of which are, one assumes, loyal and patriotic Americans, do such a thing?
Part III - Capitalism Wins

Well, it would seem that nationalism has met its match. It has been overwhelmed by that which lies at the heart of capitalism: profit. Thus, consider a hypothetical American corporation A which makes socks in town X and has done so for a hundred years. At some point corporation A finds itself confronted with competition from cheaper socks made abroad and allowed into the U.S. by the millions of pairs because of laws placed on the books by free-market American Senators and Congresspersons. These foreign socks are being willingly purchased, instead of A’s more expensive domestic brand, by red blooded American consumers. So the executives of corporation A face a serious problem. It does not take them long to figure out that if they move out of town X, where the labor costs are relatively high, and relocate to some foreign country with no unions or government regulations, their labor costs will go down and their competitiveness and profitability will go up. But to do so wi ll destroy the economic basis of town X and the lives of its patriotic citizens who have loyally served corporation A for generations. So what do you do? Well, just ask the residents of all the defunct textile towns on the U.S. east coast from New England to the Carolinas.
Very few entrepreneurs or their customers are going to admit that such issues as cost, profit and price are more important than every one of those things listed as the best of capitalism and nationalism. No, they will just ignore the distinctly second place status of equality, freedom, doing your best, growth and happiness, etc., and they will pretend that the economic destruction of workers’ lives is an unavoidable consequence of commonsense business. Blame it on the natural laws of macroeconomics if you must. When the time comes for Mexican or Chinese or Indian workers to organize and achieve regulation of their industries so as to obtain decent wages and benefits, their lives in turn will be ruined as their employers run away to other places with lower labor costs, fewer required benefits and lower corporate taxes. For when it comes to the so-called commonsense demands of business, profits are more important than life itself (though not the financial well-being of th e investors). 　

Part IV - Coping Mechanisms

I think that a growing number of Americans, witnessing the long running exportation of their livelihoods, do sense that the ground is moving under their feet. A 19 November 2011 New York Times op-ed by Charles Blow entitled "Decline of American Exceptionalism" reports that a Pew Research Center poll found that just 49% of Americans agreed with the statement "our people are not perfect but our culture is superior to others." That was down from 60% in the year 2002.

It is hard to see your culture as superior when so many jobs are being shipped abroad. Yet, if we can extrapolate out from the Pew poll, nearly half the nation still seems to manage it. How do they do it? Here are some suggestions:

1. Displacing a sense of powerlessness. Whether you are the victim or it is your neighbor, one just doesn’t know what to do about the situation. But it helps to believe that, even though jobless, you live in a great country, the power and traditions of which assure that you are better off than some worker in an Indonesian sweatshop turning out upscale Nikes. Holding on to that thought, many of the displaced buck up and start looking for other, usually less lucrative, work. Some of them may also take to beating up their kids or spouses when frustrations of the job search run high.

2. Dealing with cognitive dissonance. One has two contradictory concepts in one’s head at once (the U.S. is the greatest show on earth vs. too many of our jobs are being exported, contributing to the fact that a lot of us are getting poorer) and it is uncomfortable. So one naturally tries to reconcile the problem. For instance, you can tell yourself that the dichotomy is temporary and will disappear after a period of economic adjustment. Or, this is a great opportunity to get retrained for a position better than the one you just lost (ignoring the fact that the effectiveness of retraining programs is now being called into question).

3. The phenomenon of volunteering. For those who have lost their jobs but retain enough of a pension or savings to live on (usually an older crowd approaching retirement age) they can take solace in the world of volunteers. Actually, this is a pattern of work which allows a lot of non-profit, and some for-profit businesses as well, to get free labor. So the worker ends up doing for free what he or she should rightly be paid for–particularly in an avidly capitalist society like ours. It is a cockeyed sort of situation, but it does allow many older, displaced workers, to salvage some self-esteem even while they are exploited.

Part V - Conclusion

Most often our lives are too narrowly focused to allow us to understand the larger economic and political forces impacting us. We know our local area, we know the work we do (or did), and we know what those in leadership positions tell us. But all of this knowledge turns out to be inadequate when we are hit by debilitating social change. Then, most of us feel helpless and passively resign ourselves to what we consider fate, or perhaps God’s will. 　

We are trained from childhood to behave like this. Remember temper tantrums? When our children throw them they soon learn that it doesn’t work. As adults we seem to have carried over the lesson. Relatively small numbers of us do occasionally loudly protest our situation, but with rare exceptions what do we learn? It doesn’t work. Perhaps we should try harder.

The ideals of capitalism, so ardently believed in, turn out to be false except for (as the current saying goes) the fortunate 1%. And those of nationalism? They too are drilled into our heads from childhood. But, alas, they cannot substitute for one’s supper.