Tag Archives: capitalism

Social Capitalism

I’ve been thinking a lot about the opposition between ‘capitalism’ and ‘socialism’ which groups like the Tea Party reinforce. However, I am beginning to think this opposition is artificial in some serious way. By taking the current economic climate as a ‘capitalism in practise’ and following it to its logical conclusion, I want to argue that the end result will largely be no different from ‘socialism’. This is primarily a speculative fiction through which an argument by analogy can be made. My argument hinges on two primary concepts: (1) owners within capitalism will pay as little as possible for everything — labour, goods, etc — and the least they can pay is nothing, and (2) governments take the responsibility for public welfare precisely in the places where ‘normal’ people are unable to afford the ‘luxuries’ of a healthy, productive life.

The current state of affairs is that there is rampant unemployment. One of the dominant ways corporations exploit this is through unpaid (or horribly underpaid) internships whereby a person who needs an income to live ‘normally’ undertakes massive debt to work at below-market rates in order to get a job which pays at market rates. In some places (e.g. Georgia’s Georgia Works program and the new federal ‘Bridge to Work’ variation, UK’s workfare program), the government supports this initiative by pushing unemployed workers currently receiving unemployment funds to work at corporations which do not need to pay for that labour in return. In other words, corporations are receiving unpaid labour while governments compensate the workers involved at rates well below the minimum wage — hence my two central concepts above.

With the continued push for privatisation of every imaginable public service (education, construction, military, prisons, medicine, etc), we are seeing the rise of corporate ownership and control rather than any kind of ‘free market’ idealised utopia which libertarians so desperately want. Combining all of these elements, the logical conclusion is the collapse of a capital-based economy because the majority of people within the system will continue to be institutionally marginalised, de-valued, and discarded as anything but property. People will continue to work, but their subsistence will not come in the form of wages from their employer-owners but in the form of corporate-sponsored social programs which dictate the lives of their worker-slaves from what workers can ‘purchase’ with their work credits to how workers can spend their ‘free time’. A central government will disappear because its primary source of revenue — taxes from the working class — will have dried up; if it continues to exist, it will do so only through loans and bailouts from private corporations which shall use that power to control the social order.

Workers will be evaluated and valued according to their production; those who produce more will be valued more. Teachers will be evaluated according to how many of their students can understand basic instructions to become workers. Universities will be valued according to the direct ‘usefulness’ of their research (which shall be reduced to disciplines in science, technology, engineering, and mathematics) because they will have become departments of industrial research for their corporate owners. Police and courts will be evaluated according to how many people are disciplined (through tickets and fines which require more work from the workers, or imprisonment for those which reject the corporation’s right to labour). Politicians will become corporate representatives and the political process will become one of agreeing on ways to exploit workers for corporate accumulation of capital. All media (internet, television, films, radio, etc) will be much the same — that is, artificially produced — with the added effect of being 100% propaganda for corporations.

Perhaps my handful of readers are wondering how would this be ‘socialism’. The answer is simple: workers have access to all basics of life — food, shelter, medical care, etc — without a mediating system of exchange (i.e. currency). Everything is reduced to a distorted version of Marx’s labour theory of value. This distortion arose through a capitalist supply-and-demand moment of inspiration: massive unemployment through the replacement of paid human labour by unpaid machine labour has produced an excess supply of labour which has driven down its value to nearly nothing. Every worker in the corporate system is reduced to a status equal to that of machines and nothing they produce has any value (because their labour value is also nothing). Instead, the value which corporations desire is the value of flesh — and they begin to exchange workers and potential workers while simultaneously trying to takeover each other. In the end, only one corporation remains and owns everything. In other words, those owners (which also eventually are reduced to one) have accumulated everything of value because they own the entirety of the planet despite the proliferation of brands which have no actual difference because their products are produced in the same factories by the same workers using the same source materials. The branding of products, corporations, and workers is used to control the workers by making them believe that there is a competition amongst brands and that their brand is demonstrably superior to all others.

The analogy to this fictive dystopia is simple: this planet has limited resources. The logical end of capitalism as it is currently practised and as a ‘free market’ ideal which libertarians and others wish it to become is the kind of future I describe. By going to its logical conclusion (albeit only through speculative fiction), there are clear dangers in taking the existing economy and moving towards a ‘free market’ utopia. The first danger is that it will actually produce a sort of corporate-controlled ‘socialism’ that most proponents despise. The second danger is the abuse of a corporate-government alliance to overstep government boundaries and revoke civil liberties. The obvious response is to increase regulations on corporations and break the marriage between corporations and governments rather than to deregulate, privatise, and lax regulations.

Education for Profit

Open admissions sounds like a good thing. Who doesn’t want to enable people a chance to get a university education? However, this has two major flaws: most students are underprepared academically and, at least in the case of a for-profit institution, there is a distinct cycle of abuse. I will address both of these flaws dealing from my own experience from within an open admission, for-profit university (OAFPU).

Underprepared

The first is fairly straightforward: most students (from my experience) who attend open admissions universities do so because they are unable to gain admission at a ‘normal’ (i.e. selective admissions) university. This in and of itself is not a bad thing. Many community colleges are geared towards taking in underprepared students and building up an underprepared student’s knowledge. Some might require a student to first complete remedial courses before enrolling in other courses. This is a good thing because it prepares students for higher education and it prevents the (further) ‘dumbing down’ of courses. However, when remedial courses are prescribed as ‘optional but recommended’, students only harm their own education. For example, at one of the for-profit universities where I have taught, I have found students who are unable to cite material in any format, double-space a paper (in MS Word), or even properly format a header. That’s in addition to having little to no grasp of grammar and spelling. The result is that these students do poorly in written assignments despite having some intriguing content (the university’s grading rubrics require a dedicated grammar component). What’s sad, though, is that this includes students in their third and fourth years of their education.

Connected to being underprepared, I have noticed that most of these students simply do not have the time or effort to do their assigned work. Students rarely, if ever, read the assignments beforehand. In order to fit their schedules, many classes at the OAFPU meet just once per week for four hours each meeting. Oftentimes, the material for one intro-level course is compressed further so that one meeting might cover what other universities might have made into an entire course by itself (e.g. the Mathematics course covers trigonometry in one week, statistics in another, etc). Add into that mix the fact that most students want to leave an hour early because they have to wake up early (as early as 6 hours from the end of class) for work, family, etc. The result of this mix is that the OAFPU has reduced its educational goals to overly-simplified ideas which do not resemble those of a university. For example, it is an institutional requirement that students upon completion of intro level (100/1000) courses are merely able to identify concepts. For a world religions course, this means being able to correlate a pantheon of deities (with names, of course) to Furballism.

Again, this might sound practical, but the way in which it gets executed is horrendous. The tests, as mandated and planned by the institution (i.e. instructors are not supposed to go rogue and make their own examinations), really focus on how well a student can look up the information in their textbook. To suit this end, the institution has created the tests online in their learning management system (LMS) and indicated that these tests are open book and have a very generous time limit (roughly one hour for every twenty multiple choice answers). If an instructor wants to do these in-class (many of my students ask for this because they claim to not have time outside of class to do the tests outside of class), that’s one to two hours less of lecture material. When I have asked about the open book tests, the response from the administration has been that students really only need to learn how to look up information rather than waste their time learning Hamster Fur Weaving or Gerbil Literature (despite these being required general education courses). Oh, and I should not forget that many students arrive late — despite any penalties attached to it. An instructor might only have 30 minutes of good class time in a week if she were to follow the institutional requirements and wait for students to appear.

At the OAFPU, instructors are expected to be engaging and provide a good educational service to their students. This means that instructors should not lecture for more than fifteen minutes at a time, should incorporate ’30-minute documentaries’ (read that as ‘shows from Discovery and History channels’), lengthy group discussions about students’ opinions on the material, and anything else which might involve students. The rationale behind this is based on the theory that ‘adult learners’ are different from other learners and do not wish to ‘suffer through traditional lectures’ but rather want to add their own insight and discuss the material (the same material which they have not read). The institution uses the process of administrative observation to verify that instructors aren’t ‘boring the students with a lecture’. The wondrous observation occurs randomly and consists of the observer counting to see which students are concerned with the class session, regardless of content (i.e. even if the ‘presentation’ is ‘engaging’ according to their plan, students which can’t be bothered to be engaged count against the instructor).

Abused

I now wish to turn to the more important aspect of this post: the cycle of abuse. It is deeply connected to the OAFPU’s ‘commitment’ to educating the underprepared. For students to attend the great OAFPUs, they must, of course, spend money. Tuition at these institutions tend to run much higher than the local public/non-profit open access institutions. Places like the University of Phoenix charge around $10,500* a year for a full-time load over five years in a BA/BS program in business marketing (total is $53k provided that the student does not repeat any classes). In contrast, local open admissions schools cost a third of that price (even their out-of-state/non-resident costs are lower) despite these schools providing the same degree of education with the same schedule flexibility.

Instead, the primary site of financial abuse is through student loans. Like many universities, the OAFPU accepts federal financial aid (loans and grants) as well as other education benefits (e.g. GI Bill). Many students enroll at OAFPU because they will get a refund check from their financial aid. The attendance policy at an OAFPU is very liberal (a student is dropped only if she is marked absent for four consecutive weeks), and the academic integrity policy is a joke (the worst consequence listed is a F for the course in which the student was caught plagiarising — and that’s only if the student is a repeat offender with a major infraction). However, these two policies keep students enrolled so that the university gets profits. This is in addition to the OAFPU’s aggressive policy of getting students to enroll in future terms (regardless of academic standing) and to attend often enough to evade being dropped from their courses. Some of these activities include the administration phoning absent students weekly, the requirement that instructors are also to communicate with the absent student, and paid academic advisers who spend two-thirds of each term phoning students either to enroll or encourage students to communicate with their instructors and attend class.

The worst case of students are those who enroll and attend until they receive their financial aid check. Chances are, these students have no intention of paying back any loans. Rumours have circulated that there is a subset of students who transfer from OAFPU to OAFPU until they are expelled after the many generous probationary terms. However, the generous and liberal nature of university policies which allow these students to persist leads me to suspect that the primary purpose of these policies is so that the university can extract as much profit from these students rather than to attempt to educate them (or remove them if they are not interested in acquiring an education). I believe that is the danger and harm in corporatising education: the goal of profit will always supersede the goal of education often at the expense of education.

To take underprepared and uninterested people as students and cater to their desires (e.g. a degree without any difficult academic work) is a great recipe for profits. However, it is also a horrible recipe for a university; and this is where the corporatised university leads us: the decision to provide education as an institute of higher learning versus the decision to make profits as a ‘student-oriented’ corporation selling an ‘education product’ through ‘engaging lectures’.

 

*NB: Phoenix seems to have two different prices: a nationwide cost per credit hour for ‘lower-level’ courses and a regional cost per credit hour for ‘upper-level’ courses, so the price may fluctuate a bit. I compared the prices for New Orleans, LA; Philadelphia, PA; and Denver, CO; I used the least expensive of the three.

Wealth creation

Adrian Rogers, a previously major figure in the Southern Baptist Convention, once said that ‘you cannot multiply wealth by dividing it’ as a way of critiquing socialism. However, such a statement is misguided for two reasons, one which concerns to process of wealth creation within capitalism, and another which concerns the utility of a monetary system within socialism. I’ll start with the second one first (since it is a more direct response to the statement).

The nature of socialism can be defined as the very absence of wealth rather than simply the redistribution of wealth. Since everyone is equal across the board, there is no wealth to be distributed or divided. In fact, the more idealised version of socialism rejects the usage of a monetary system. Everyone is entitled to a basic level of living: health care, education, a job, food, housing, etc. Within a developed practise of socialism, the necessity and commonality of these things would see the usage of money as a central mediating factor (i.e. income from a job and payment of services and goods) disappears. There is no need for money in these basic transactions. Instead, money is reduced to a less meaningful mediator (perhaps used for transactions with parties external to the socialist system and/or for purchasing unnecessary products). To speak of ‘wealth’ within socialism requires an inequality or the capitalist belief that wealth can be possessed. This is exactly how many reactions to the Occupy Wall Street movement fail to recognise their arguments: the respondent often speaks of giving money away to people instead of providing an avenue for the people to become gainfully employed. At its heart, then, Western capitalism misconstrues an integral part of socialism by viewing it as a variation of capitalism rather than as an alternative system. It cannot fathom the possibility of a way of life without a monetary intermediary despite the existence of such communities before the rise of capitalism (e.g. prior to the enclosure of the commons in the sixteenth century).

Since the ascendancy of capitalism and its monetary intermediary, its greatest proponents have a romanticised notion of the creation of wealth. In fact, one could argue that wealth did not exist prior to capitalism because wealth requires an inequality in the cost of production and the product’s selling price*. Prior to industrialisation (and modern capitalism), the person selling the product was often its producer. The sale ‘price’ was equivalent to the cost of production, which means that a person was ‘breaking even’ rather than gaining extra wealth. However, after the advent of industrialisation — which began a process of alienating the workers who produced products and the product itself — the capitalist owner could sell a product for more than what he paid to have the workers produce the product. This can be done either by charging the buyer more than the cost of the product, by paying less to have the product produced, or both. The first is often considered an integral part of the process of supply and demand. However, it does not last often because the second option viciously undercuts that process. As a result, the second is often the primary way of gaining wealth.

The way in which production costs are minimised can be by technological advancements, but competition always catches up. Instead, costs are reduced more permanently by simply paying less. In particular, the workers are paid less than ‘actual market value’ for their labour. In other words, the creation of wealth comes first and foremost by the exploitation of labour. The process of industrialisation increases this effect because a worker is no longer producing a shoe but rather a small part of a shoe. The worker is alienated (again) from her product. (Don’t believe me? Notice the brief mention in this article about Mike Daisey showing a Foxconn worker who helped build the iPad the finished product for the first time.) The result is that the worker no longer knows how to build a complete product and is unable to compete (ignoring intellectual property and copyright laws) with the owner. The only options a worker has is (1) to continue working and be underpaid, (2) quit and find another job which will do the same thing ultimately, or (3) protest.

When individual workers protest, the owner has the ability to terminate the employment and hire a replacement (which is easy to find when there is an army of unemployed workers desperate for any income and willing to sell themselves for even less). This is where unions enter in: by forming unions, workers have greater strength. When a unionised workforce strikes, the owner is unable to get more products to sell because the entire industrialised process is halted. The owner, like the workers, does not know how to produce the product; the owner may have the knowledge and schematics but is often unable to operate the machinery and tools needed to assemble the product. As a result, the owner is faced with two major options: (1) remove the entire union workforce and re-hire and re-train a new workforce (something that would cost a lot of money for training as well as a loss of income while the factory re-build) or (2) deal with the union and appease the workers. In a country or state which protects workers, the first option is often illegal (at least for a period of time which allows negotiation). By forcing owners to attempt to resolve labour disputes, these states and countries provide a basic employment security which allows workers to bargain effectively for their labour. In other words, the power of collective bargaining is a way for workers to demand a more equal distribution of profits to those who actually produce the products. However, many countries and states are moving away from these protections and are implementing at-will employment laws and (as Indiana is preparing to do) ‘right-to-work’ laws. The result is the resurgence of the exploitation of workers for the accumulation of profits which is often coded in terms of creatio ex nihilo whereby the capitalist owner (magically) adds value to a product which allows it to be sold for more than its worth. The reality, however, is less than magical because the wealth does not come from nothing despite the imagination that the whole of the product is worth more than the sum of its parts.

* NB: I am using ‘price’ loosely here for a product may have been exchanged for something other than currency (e.g. other products).

Credit Money

This is a very short hypothesis I’ve been thinking about. Basically, money itself has no existence any more except as a measurement of debt and the means by which one is enslaved. While this may have been realised decades before now, it is fully obvious. With the automation of salaries (e.g. direct deposit) and goods payment (e.g. direct debit, monthly debit, etc), one lives without money. One must work to pay bills, but there is no longer any tangible exchange because everything is now virtual. We could remove money and capital from the entire project and nothing would change in the process — people would still work and they would still have the same things.

However, this is based on the argument that people would refuse to work if not forced. That is, without the weight of debt, people would do nothing. This would suggest, then, that there was never a time when people were not in debt. Even egalitarian agrarian communities must have been in some kind of financial debt for them to begin to collect and produce beyond the needs of their community in order to trade goods! The fallacy of such an argument should be obvious for we can trace historically when debt enters the social consciousness. Humans have lived and worked without the force of debt. Perhaps the only solid position in which debt has been necessary is in a post-slavery capitalist economy primarily because debt in cases like this serves to ensure a dichotomy between owners and workers which is almost indistinguishable from the dichotomy between owners and slaves. To work is to be a slave.

Such sentiment has become popular in theological parlance when speaking of the death and resurrection of Christ. Humanity is treated as being indebted to Christ and God (doubly so!) and, therefore, must repent and serve Christ out of the guilt of debt. This is the penal substitution theory. Humanity is mired in guilt of sin before God. Then, Christ pays God the debt of sin humanity owes. Therefore, humanity is indebted to Christ through repentance of the (already-paid) sin and subservience for the grace of such sacrifice. Christian missions and evangelism takes on this aspect of service and repentance. This is particularly noticeable in evangelical circles where one’s ‘witness’ centres on how one has changed into a better person because one has acknowledged the guilt-sin-debt.

For me, however, this sounds very twisted. It misses out on the story of liberation from sin-guilt-debt because it performs an act of double-think in which liberation is sin-guilt-debt so that one must become a willing slave in order to be truly free. However, I want to focus on a different interpretation of atonement. The dual nature of Christ is often used to displace the debt of guilt. On the cross, Christ takes on the sin of the world, but it is destroyed with the human nature of Christ to keep the God nature clean and pure. Rather than paying the debt humanity owes to God (and thus keep the system of debt), Christ erases that entire logic and thus allows humanity full access, communication, and equality with God. Christ is no longer the passive vessel of exchange that magically balances the accounting books of God while putting humanity into further debt but the active destroyer of sin-guilt-debt. Humanity is therefore freed from God and the debts of sin, able to walk away. Salvation and redemption is thus the starting over of the human-God relationship. In other words, the death and resurrection of Christ is a gamble by God that erases the logic of sin-guilt-debt in order to allow a free relationship in which one willingly partakes service not as a servant but as a partner in the act of redemption itself (perhaps best seen as in terms of an adopted child).

The language of debt and credit is erased so that the work of God continues in and through people. Perhaps, though, it may be better to term such activity something other than work for the Christian is not a slave to God. However, this also returns us to the human social economy of debt. Perhaps the way through capitalism is not in the erasure of money but rather the erasure of debt. The liberation of humanity from itself requires a re-thinking of human social relations which removes the possibility of slaves — both those captured or sold and those waged — so that people can ‘work’ without debt.

The Wrong University

Recently, the syndicated columnist David Brooks wrote an article on inequality. In it, he argued that the focus on income distribution inequality (‘Blue Inequality’) is a lesser source of social inequality when compared to the income opportunity inequality (‘Red Inequality’). His argument suggests that society should be focused on improving education opportunity (which he implies is connected to social mobility) rather than the income inequality actively created by the wealthy executives who evade taxes as much as possible and seek greater corporate efficiency by actively reducing the workforce.

‘Red Inequality’ is an important concern. However, there are two problems with Brooks’s argument. First, the solution is not more education. Secondly, the overlap between ‘Red’ and ‘Blue’ inequality is huge (if not total); and where the two inequalities differ, the social resolution of ‘Red Inequality’ implicates a resolution to ‘Blue Inequality’. I’ll tackle each point here.

Monetising Education

The first problem with Brooks’s article is that he sees university education as providing the means by which one gets a ‘decent’ occupation and the opportunity for one to become socially mobile (positively). University education, for Brooks apparently, is the prime location for gaining ‘transferable skills’ (and perhaps interpersonal connections for gainful employment). Brooks does a great disservice to education by reducing it to a means towards income opportunity. By cheapening the education process, Brooks reinforces the ‘Red Inequality’ which he has already downplayed. Here, Brooks presents himself as a faithful adherent to the American civil-capital religion in promoting the neoliberal belief that the university is merely a tool for better income. Further, Brooks fails to note that greater income opportunity does not imply greater income. Plus, there’s that pesky requirement of paying off student loans — something which now accounts for more US household debt than credit cards — and there’s still questions whether the higher income outweighs the cost (e.g. this though I don’t agree with the ‘solution’ at the end — one which complements Brooks’s). In short, if one goes to university with the expectation of a better paying job, a higher quality of lifestyle, or even just a job, one will be sorely disappointed despite appearances of success. University education may provide ‘transferable skills’ but they are to be seen as the byproduct of an enriching education rather than its primary focus.

Social Equality

Brooks goes to great length to separate ‘Red’ and ‘Blue’ inequalities. However, he does this in order to exclude the critique of capitalism. As a result, Brooks reveals himself as a ‘liberal’ who believes the free market is the centre of the universe. One should attend university in order to ‘work hard’ at a low-paying job while the executives and owners make more and more money. In fact, one should be thankful for the ‘job creators’ allowing them to work at all — after all, they could have just as easily moved production to China where they pay children far less to work far more hours and they’re more grateful than the snobbery of the general American! The social equality which Brooks argues is more important is the equality of opportunity even if the actualisation of such opportunity never occurs. It is a virtual equality in which the divide of ‘Red Inequality’ widens and those fortunate to be born into a family on the wealthy side are truly a different class of humanity. Those unlucky to be born into the majority side should ‘work hard’ for the opportunity to cross the gap. What Brooks ignores in his argument for ‘educational opportunity’ is that social mobility — especially for the lower half is, at best, unlikely (and that study was before any recession).

Fighting against only one colour of inequality is impossible. Focussing on ‘Blue Inequality’ is ineffective in the long term if there is no change in ‘Red Inequality’. Having a larger base of well-educated working class would actually do more harm than good. This is because capitalism thrives on the competition of labour and the dissolution of working class solidarity. In other words, the wealthy make more money when there is a surplus of labour in the form of qualified yet unemployed who are put in the position of working for less or not being able to survive. As Brooks’s own NY Times wrote just a few weeks ago, ‘employers may feel less compelled to offer expansive benefits to people desperate for work’. To push for ‘educational opportunity’ means to reinforce that practise.

However, to face ‘Red Inequality’ requires the creation of more ‘educational opportunity’. Why? Because it pushes for better quality jobs and slows the migration of wealth towards the upper echelon of society. By slowing the accumulation of wealth at the top (where it would stay), it allows for that to be reinvested into society by creating the demand for more jobs and more innovation. Rather than a surplus of well-educated working class which allows the exploitation of labour, the result would be a demand for more well-educated working class. That would mean more ‘educational opportunity’ as well as incentives to becoming educated (e.g. greater grants and scholarships). In short, ‘Blue Inequality’ is ‘Red Inequality’.