[OPE-L] Michael D. Yates, All the Economics You Need to Know in One Lesson

From: glevy@PRATT.EDU
Date: Sun Oct 15 2006 - 08:55:45 EDT

Published on MRZine; URL is at end of article./ In solidarity, Jerry

Michael D. Yates, "All the Economics You Need to Know in One Lesson"

All the Economics You Need to Know in One Lesson

by Michael D. Yates

This essay complements my forthcoming book: Cheap Motels and a Hot Plate:
an Economist's Travelogue (Monthly Review Press).

We Meet an Economist

Karen and I were hiking in Santa Fe, New Mexico, on the Atalaya Mountain
Trail, which begins in the parking lot of St. John's College.  This
college, like its sister college in Annapolis, Maryland, is dedicated to a
"Great Books" program.  Students read and discuss the "great books" of
Western Civilization, beginning with the ancient Greeks, while at the same
time studying languages and sciences.  The goal of the college is to
provide an education that seeks "to free men and women from the tyrannies
of unexamined opinions and inherited prejudices.  It also endeavors to
enable them to make intelligent, free choices concerning the ends and
means of both public and private life."

Economics as taught in our colleges and universities and propounded by our
pundits and politicians is a good example of a tyranny of "unexamined
opinions and inherited prejudices."  Ironically, on our hike we met a man
who embodied this tyranny.  We had stopped to catch our breath on the
steep path.  Santa Fe is more than 7,000 feet above sea level, and we had
not yet acclimated to the altitude.  An older man was hiking with some
friends, and when he saw us he said "hello."  We struck up a conversation,
and he asked me what I was doing in Santa Fe.  I told him that I was a
writer and journalist and we were traveling around the United States
gathering information for a travel book to be written from the perspective
of an economist.  He asked us what we had been observing in our travels.
We told him that the three things that stood out most were environmental
degradation, suburban sprawl, and growing economic inequality.

I could tell by his demeanor that he did not agree with what we were
saying.  When we finished, he said that he had a different take on things.
 He thought that almost everything was getting better.  He said that he
had been born in Phoenix, Arizona, in 1934, and the air was better today
than then, even though there were two million more people there.  People
were living longer and were healthier than ever before.  What especially
impressed him was the remarkable distribution system developed by modern
retailers.  People could get almost anything they wanted anywhere in the
country, quickly and efficiently.  "Why," he said, "almost everyone in the
country lives within an hour of a Wal-Mart Supercenter."  After we said
that organic food was expensive and hard to get in much of the country, he
launched into a long story about his battle against prostate cancer.  He
said that he had radically altered his diet and was eating natural foods,
including organic vegetable juices purchased cheaply at Wal-Mart
Supercenters.  He suggested that anyone could do the same.

While we were talking, two more of his companions joined us.  One of them
said, "I see you have met the professor."  My interlocutor also had a PhD
in Economics and had also taught in a college for a few years.  I thought
to myself, "Well, that explains a lot."

The Dismal Science

Economics is a peculiar discipline.  The dominant economic theory is
called the "neoclassical" theory; it is the only one taught in all but a
handful of graduate schools.  It is the one I was taught, and it is the
one the economist we met in Santa Fe was taught.  It is preached with a
zeal and demand for conformity that has led critics to characterize it as
a religious cult.  Newly-minted PhDs leave school convinced that they have
a special knowledge unavailable to the ordinary person, and they devote
themselves to giving this knowledge to others.

The main trick used by professors of economics is to draw their pupils
into a make-believe world and then convince them that this world is a good
approximation to the real world, enough so that the world in which we live
can be studied effectively by analyzing the fantasy world.  In fact, the
professors also claim that this pretend world is a good approximation not
just of the world of today but of the world of any time in human
existence, so that any society can be studied through its lens.  To them
the neoclassical theory is as universal and timeless as the theories of
Einstein.  They see economics as the physics of the social world.

The economists take their analysis one step further.  The hypothetical
world of their theory is in all important respects an ideal world, the
best we could have.  Therefore any deviation from it that we observe in
the world of existence should, in the interest of human happiness, be

It is a curious thing to say that something should change in the living
world because it does not conform to a world which does not, and, as we
shall see, could never, exist.  For example, a minimum wage set by the
government interferes with the efficient operation of the ideal world by
causing a loss of employment.  The neoclassical economists then conclude
that we should not have a minimum wage in the actually existing world.
Or, the economists conflate the ideal economy of their theory with the
real economy, which is capitalism.  Since the imaginary economy is good,
so too is capitalism.  It is no wonder that economics has been compared to
religion.  To hold such views requires a strong faith.

It is instructive to look carefully at the model economy of economic
theory.  What the economists do is make a set of restrictive assumptions.
They say, "let us assume we have an economy with the following features."
They then list these features and trace out their logical economic

According to the economists, an economy is defined as a system of markets,
that is, as the entire set of actions we call buying and selling.  They
assume that in every market for goods and services (called product
markets) and in every market for labor, land, and capital goods (called
factor markets), there are numerous independent and isolated buyers and
sellers.  They further assume that each of these buyers and sellers is a
single-minded "maximizer," fixated in all of his or her actions on getting
the most of something.  Sellers of goods and services business firms, for
example are assumed to be trying to maximize their profits.  The business
firm is assumed to be the equivalent of an individual; the relationships
among people inside the firm are ignored and presumed to have nothing to
do with the firm's behavior.  Buyers of goods and services, called
consumers, are assumed to be trying to maximize their "utility," the
satisfaction they get from consuming goods and services.  If consumers are
faced with two collections of good and services with the same price, they
will always pick the one that makes them happier.  If the two collections
give the same happiness, they will always choose the cheaper one.

In the factor markets, the buyers are business firms (the sellers in
product markets), and they try to maximize profits by purchasing labor and
the other building blocks of production only when these inputs add more to
firm revenue than to firm cost.  For workers to be hired, in other words,
they must be productive enough to justify their pay.  It follows that
workers will not be hired if they are not productive enough or if they
demand too high a wage rate.

The main sellers in factor markets are workers trying to market their
ability to work.  They supply their labor only if the wage offered by
employers is greater than the joy they get from not working.  Like
consumers, they try to maximize their utility, by dividing their time
between work and free time in such a way so that they are happier than if
they had divided it any other way.

The economists assume that many thousands of independent and selfish
buyers and sellers meet in thousands of market places and try to strike
bargains.  Each buyer and seller is assumed to be such an insignificant
part of any market that no one of them can have any influence on what
happens in the market.  If one buyer decides to purchase one more unit,
this buyer's actions cannot create a shortage of the product for sale and
make its price rise.  The same argument holds for all sellers as well.

The end result of the haggling in the marketplaces by all the buyers and
sellers is that there is established in each market a "just right" price
and a "just right" amount of each good and service produced.  This happens
because each buyer and seller acts solely in self-interest.  If a price is
too high, the sellers will lower their prices rather than not sell the
product.  If the price is too low, buyers will offer higher prices rather
than do without something that gives them "utility."  In the end, each
price is neither too high nor too low, but "just right."  The amounts
supplied are "just right" for similar reasons.  If too much is supplied,
the price will fall and less will be supplied by profit-seeking firms.  If
too little is supplied, the price will rise and more will be supplied.

The markets, then, deliver prices and quantities for all goods and
services (and for all factors of production, since the same processes are
working there too) that are optimal.  No other prices and quantities are
"just right."  The "just right" prices and quantities are called
"equilibrium" prices and quantities, and these are the ones the markets
give us.

The great thing about all this, according to the economists, is that it
occurs without any human planning.  No conscious human action is needed;
the markets work automatically.  As one of the gurus of the economists,
Adam Smith, put it, it is as if there is an "invisible hand" guiding the
selfish actions of the buyers and sellers toward an optimal outcome.

So far, then, the economists have assumed that there are large numbers of
buyers and sellers in every market, so many that no individual actor in
any market can make anything happen by its own actions.  They have also
assumed that all buyers and sellers act strictly out of self-interest,
always trying to maximize something, whether it be profits or happiness.
However, other assumptions are needed for the markets in the economists'
model economy to perform optimally.  Each participant in the marketplace
must be independent of every other participant.  For example, what one
firm does must not enter into the profit-maximizing calculations of any
other firm in a market.  If one company wants to lower its price because
there is a glut of the product in the market, it might hesitate to do so
if it thinks that its rivals will start a price war if it does.

Every player in every market also must have complete knowledge concerning
everything that might influence his or her decisions.  It is difficult to
make rational decisions or assume that choices are free when market actors
lack available information, either because they don't know it is available
or because someone else is monopolizing it.

How does neoclassical economics explain the large and rising inequality,
uninspiring jobs, and environmental degradation we saw so much of in our
travels?  The analysis of the imaginary economy, which is at the heart of
the theory, provides the answers.  There are two possibilities.  An answer
might flow directly from the analysis of the ideal economy.  Or the world
of reality might not conform to that of the ideal one, and this could be
the cause of the problem.

Let's look at inequality.  Since in the imaginary world, people are
rewarded financially according to their productivity, those with low
incomes must be less productive than those with high ones.  Or, those who
are poor might have stronger desires for leisure than those who earn large
incomes.  In either case, low wages or poverty are the direct result of
choices made by individuals.  People might have decided not to do the
things that would make them more productive, such as obtain more education
and training.  Those who choose not to become computer literate cannot
expect to a land a high-tech job.

It could also be true that society's decision-makers those in government,
for example have, perhaps out of ignorance or an uninformed desire to "do
good," created barriers to the making of better choices.  The government
might have mandated that employers pay a minimum wage, thus denying
employment to anyone not productive enough to justify an employer paying
that wage.  Or perhaps the government has legislated money transfers to
the poor, to help them out of poverty, without realizing that this will
encourage them to be lazy, unwilling to work hard when they can get free

The theory provides two types of solutions to inequality.  First, if some
of us cannot improve our productivity because we are too poor to buy more
education or training, the government can enact laws and programs that
make it easier for us to do so.  Low interest loans to students would be a
good example.  Subsidies to employers who hire and train the less
advantaged would be another.  Second, if there are currently in place
public policies that have the effect of harming those who have low wages
or are poor (harming them in the ideal world of the theory, that is), then
these should be eliminated.  Minimum wage laws and welfare programs would
be two good examples.

What about bad jobs?  Economists have approached this problem in two ways.
 It is implied in the theory of the make-believe economy that work is
inherently bad.  People work only to get the money necessary to buy the
things that give them satisfaction or "utility."  Work, itself, give us
only dissatisfaction or "disutility"; this is why we must receive a wage
to work.  So there is no use to complain that jobs don't use our full
human capacities; it is not possible that they could.

This rather biblical notion of work begs a question: why are some jobs so
much worse than others?  Here the theory must do some fancy footwork.  The
basic idea is similar to the premise of the movie, Field of Dreams.  Build
a baseball field in the cornfields of Iowa, and fans will flock to it.  If
people want better jobs, all they need to do is make themselves available
for them.  As possible employers see that there are hordes of people ready
to do meaningful work, they will note that they can now supply such jobs
at wages that will ensure them a good profit.  The implication of this
analysis is that there are not more good jobs because workers don't want
them.  So employers have no incentive to offer them.  If it were the case
that some workers who want good jobs can't afford to accept the lower
wages that would initially be necessary of employers to supply the better
jobs, the government could again offer subsidies to employers.

Thousands of articles have been written by economists on the environment.
Much of it revolves around the so-called "tragedy of the commons."  In the
make believe economy of the theory, every bit of property the land, the
air, and the seas is private property.  All of the selfish actors in the
markets do everything in their power to preserve their property, and as a
result the society as a whole benefits.  Whenever there is common
property, each person suffers no individual cost if he or she uses it up.
You won't litter your yard, but you might toss trash on a public beach or
in a park.  Only when property is private is there an incentive, for those
who own it, to preserve it.  Here is one situation in which the real world
differs from the ideal world that cries out for an easy solution.  The air
cannot literally be made into private property, but people can be forced
to treat it as if it were.  If companies had to pay to  pollute the
atmosphere, they would either produce a smaller quantity of polluting
output (emissions from power plants, for example), or they would find
cost-effective ways to reduce pollution.  In other words, it is necessary
to create market conditions in cases in which previously something could
be used without cost.  To take another example, consider cars.  Auto
companies and consumers bear only part of the entire costs of car
production and use.  Society as a whole bears the costs of auto emissions,
acid rain, and so forth.  The solution is to privatize the costs society
bears, by, for example, taxing gasoline to push the price up and force
conservation.  And charge high tolls for road use.

It is beyond the scope of this essay to provide a full-scale critique of
mainstream economics.  However, if neoclassical economics were a science,
its practitioners would subject the theory to rigorous tests and reject it
if it proved unable to pass these tests.  The theory has repeatedly proven
itself a poor model of reality, failing test after test: there is no
evidence that a higher minimum wage causes a loss of employment; there is
no correlation between a worker's wages and a worker's productivity; there
is no evidence that providing people with needed resources, as in a
welfare system, causes them to use their time unproductively; there is no
evidence that jobs requiring skills are increasing despite the fact that
hundreds of millions of people would like them; there is no evidence that
people inevitably destroy property held in common or that making property
private guarantees that it will be used in a socially beneficial manner.

Yet the neoclassical theory is taught universally in our colleges and
universities, and every economic pundit and economic adviser in government
is a believer in the theory.  Why is this so?  Why could nothing I might
have said changed the mind of the economist hiker I met in Santa Fe?  I
think the reason is that neoclassical economics is a gigantic propaganda
device aimed at covering up the power of those with money and convincing
the rest of us that whatever bad things are happening are either
inevitable or our own fault.  You are rich because you are more productive
(and hence deserving) than I.  Or you are innately more future-oriented
than I; you go to school so you will be productive in the future, while I
would rather party now and have a menial job later.  If things are going
to hell in a handbasket, it is because the real world economy has not been
structured to be exactly like that of the ideal economy of the theory.
It's my fault, or the government's fault, or it's human nature.  It is
never the fault of the system itself.  This provides the best possible
cover for the grotesque wealth of the few, the rotten jobs of the many,
and the ruination of the environment.

Toward the Truth

They say that the truth will set us free.  Well, here is the truth about
the economy.  The economy Karen and I have been witnessing firsthand is a
capitalist economy.  In such an economy the society's productive wealth is
owned by a small fraction of the population.  This property is protected
by the law, which means that is protected by police force, that is by the
state's use of violence.  The vast majority of people own no or very
little productive property and must depend on the few owners for their
daily bread.  This dependence takes the form of offering their ability to
work to the owners in exchange for a wage.  However, this exchange is not
and cannot be one between equals; the party owning what the other party
needs has a built-in advantage.  Employers use their superior bargaining
position to "negotiate" a wage and conditions of employment that guarantee
them the ability to extract from workers an amount of labor sufficient not
only to pay the workers' wages and replace the capital used up in
production but also to generate a surplus above costs.  That is, workers
are forced by the fact that they own nothing to work a number of hours
greater than those that would pay their wages and the capital costs, and
they must give up the output produced during these "surplus" hours to
their employer.  The employer owns all of the output, simply because the
employer owns the business.

The surplus hours workers are compelled to labor are the source of the
employers' profits.  If the workers had controlled production, they may
have chosen to supply surplus hours (to generate funds necessary for the
business's expansion, for example), but the decision would have been
theirs and not someone else's.  In capitalism, the owners own the output,
and therefore they own the profits that come from the surplus labor.
These profits are extracted from workers whether they like it or not.

Profits are the motor force of capitalist economies.  Each business
establishment is in a dog-eat-dog competition with other businesses
locally, nationally, and today, internationally.  This competition
dictates to the owners of each business that they must use the profits to
make the business grow.  A company that doesn't get as much profit as
possible from the labor of its workers and use this profit to grow is one
that will not survive the relentless competition.  A company that does not
survive is one that does not confer on its owners all the perquisites of
success in capitalism: consumer goods, status, and political power.
Owners will do just about anything to ensure the survival and growth of
their companies.

To extract profits and grow, corporate owners must try to put downward
pressure on wages, to prevent them from growing at a pace that would eat
into the surplus labor time.  They are helped in this by their
considerable political power; they can pressure the government, often
successfully, to pass laws and utilize its police power to prevent or make
it hard for workers to organize to push their wages up and improve their
conditions of employment.  They are also aided by the strong tendency of
capitalist economies to create large reserves of surplus labor, a "reserve
army of the unemployed."  This reserve is produced by the removal of
people from farming (often by force), by the continual mechanization of
production, by employer use of labor-saving and de-skilling techniques
(see below), by shifting production around the world, and by the tendency
of capitalist economies to sink into periodic recessions and depressions.
Unemployed labor (including full-time homemakers and prisoners) is
available to replace employed workers or at least keep them from demanding
too much money, shorter hours, or better working conditions.  The
education system guarantees that nearly everyone in the reserve army has
the capacity to do a variety of jobs.

Since profits are what make capitalist economies tick and since profits
come from surplus labor, it behooves employers to exert maximum control
over workers.  This is done primarily by structuring workplaces in such a
way that workers have as little opportunity to interfere with production
as possible.  What workers do at work how they do their jobs, at what
pace, and with what intensity is called the labor process.  Employers must
control this if they are to make money.  Control is the essence of
capitalist management.

A grasp of just two concepts is necessary for anyone to understand modern
work.  The first is the Babbage Principle, and the second is Taylorism.
The inventor and manufacturer Charles Babbage showed that an employer
intent on making money must organize work so that the amount of skilled
labor used on any job is minimized.  If a job requires both skilled and
unskilled work, don't allow the skilled worker to do the unskilled parts.
Skilled labor is expensive; unskilled is not. A skilled metal smith might
go through several steps to make a large batch of tin funnels: making a
template, tracing the design on sheets of metal, cutting out the funnel
shapes, bending the metal shapes, connecting the ends, and finishing and
polishing the funnels.  Babbage taught employers to use unskilled laborers
to repetitively perform just one of the last five steps, or "details," of
the task of funnel-making.  Use cheap labor to replace expensive labor
wherever possible.  The Babbage Principle is a fundamental technique of
capitalist management; few jobs are immune to it.

Taylorism is the name given to the management theory developed by
Frederick W. Taylor.  Taylor, the son of well-to-do Philadelphia Quakers,
was sent to work by his father in a machine shop following an emotional
collapse.  There he was able to capitalize on his obsessive-compulsive
personality in a war against the skilled machinists.  After he learned the
machinists' trade, he was made foreman and began a lifelong campaign to
find and enforce the "one best way" to do the work.  Taylor became the
founder and chief agitator for "scientific management."  Despite its
high-sounding name, scientific management aims to systematize the Babbage
Principle by placing all control over work processes in the hands of the
employer.  First, management, through the employment if industrial
engineers, studies in minute detail what each worker does.  Jobs are
broken down into their fundamental motions.  Then management writes a
detailed description of each job's motions, reorganizing them to minimize
the time it takes to do each one.  The employer next orders each worker to
do the work exactly as the engineers say it should be done, using the
Babbage Principle whenever possible.  By systematic study of work and a
willingness to fire recalcitrant workers, Taylor said that management
could gain a monopoly of work knowledge and use this to control the entire
work process.  Taylor taught, and employers were apt pupils.  Profits
ultimately depend upon the ability of employers to control their workers.
Skilled workers are difficult to control, so their skills must be

To the capitalist mind, all objects are thought of in terms of their money
cost.  All things are commodities, to be bought and sold.  Whatever else
things might be is irrelevant in terms of what is most important to the
system, namely the accumulation of capital, the extraction of maximum
profits from labor and the use of these profits to achieve maximum growth
of capital.  We have just seen that our capacity to work is a commodity,
bought at the lowest price possible and controlled and exploited to the
maximum extent possible.  However, there are other inputs that must be
purchased beside labor.  And these inputs as well as the commodities
needed by workers for their survival (food, clothing, shelter) are either
an intrinsic part of the natural world or produced in conjunction with it.
 Coal and iron must be removed from the earth before they can be used to
produce steel.  Ground must be planted before food can be produced; trees
must be cut down or cleared before houses can be built.  What is more, all
production alters the natural world.  The energy produced at a power plant
throws all sorts of substances into the atmosphere.  Some crops may
deplete the soil of its nutrients.  The production and use of some
products can even alter climates.

All production affects nature, and economic systems prior to capitalism
damaged the environment.  However, two features of capitalism radically
distinguish it from all previous political economies.  First, capitalism
produces goods and services on a scale unimaginable even four hundred
years ago.  Even if employers tried their best not to harm nature, their
collective size would make the task a daunting one.  But there is a second
unique feature of capitalism.  Everything is viewed through a calculus of
private cost.  Or to put it in more academic language, capitalism tends to
commodify everything, to turn every object into something for sale.
Nothing else matters except that resources be available when needed and at
a low price.  Lumber companies want trees no matter what other functions
these trees might serve or that they might be beautiful objects for us to
contemplate.  If companies can get away with dumping wastes into our
rivers and oceans or into the air, they will do this, figuring that if
they do not some rival might.  Dangerous products will be foisted on the
public, even if the harm they might do is known by the producing company,
as long as the monetary gain from doing so is greater than any cost
arising from lawsuits or other consumer actions.  The political power that
modern giant corporations wield insulates them from severe governmental
regulation or legal penalties.

The Proof Is in the Pudding

If what I have said about capitalism is true, what would we expect to see
with respect to inequality, jobs, and the environment?  With a small group
of people owning and having near absolute control over the entire
society's productive resources, it is inevitable that there will be large
income inequalities.  Productive property (land, buildings, machinery,
factories, and the like) is inherently unequally distributed.  Since this
property generates income (rents, interest, and profits), these will be
unevenly divided as well.  Unless workers are organized, the very nature
of the system confers so much economic and political power on the owners
that they are able to leverage their initial economic advantages and make
them grow larger.  There will be significant impediments to the
organization of workers, including the reserve army of labor, so under
typical conditions, capitalist economies will exhibit large and often
growing inequalities of wealth and income.  These will translate into many
related inequalities, including housing.

What about jobs?  Today the Babbage Principle and Taylorism are built into
every workplace and are so common that they are taken for granted.  Almost
no jobs are immune to them; they might be so for awhile but not over the
long haul.  This means that there will be few good jobs available in a
capitalist society (again, the organization of workers can, again at least
temporarily, offer workers some hope here).  Among all the animals, human
beings are unique in their ability to transform the world around them by
their labor.  This ability, in turn, hinges on the human capability to
conceptualize what they do before doing it.  We can think about our work,
plan it out beforehand.  This gives us enjoyment as well as lots of output
to consume.  Unfortunately, capitalism blocks us from taking advantage of
our innate human capacities.

There is no reason to expect that capitalism will encourage wise social
use of the environment.  Quite the contrary, if the natural world is seen
merely as a set of exploitable commodities, we would expect to see a
short-term profit orientation that views resources, and human beings, as

The evidence in support of my analysis of capitalism is overwhelming.
Just consider the following facts:

1. 2.8 billion people, about one-half the world's population, survive on
less than two dollars per day, and 1.2 billion on less than one dollar per
day.  Even supposing that some of these people get some goods and services
outside of the money economy and that prices for some foodstuffs and other
necessities are very low, these are appalling numbers.

2. The richest fifth of the world's people consume 86 percent of all
products, while the poorest fifth purchases 1.3 percent  everything from
meat to paper and automobiles.

3. The three richest persons in the world have assets greater than the
combined GDPs of the 48 poorest nations (note that this is a comparison of
wealth to income).  So, if the three richest persons sold their assets,
they could buy the total output of these 48 countries.

4. If the poorest 47 percent of the world's people (about 2.5 billion
persons) pooled their yearly incomes, they could just purchase the assets
of the world's wealthiest 225 individuals.

5. The richest 1 percent of people in the world get as much income as the
poorest 57 percent.  The richest 5 percent had in 1993 an average income
114 times greater than that of the poorest 5 percent, rising from 78 times
in 1988.  The poorest 5 percent grew poorer, losing 25 percent of their
real income, while the richest 20 percent saw their real incomes grow by
12 percent, more than twice as high as average world income.

6. If we look just at the United States, we see similar results.  The rich
are asset heavy, especially with respect to financial assets (those which
yield income), and debt poor, while the opposite is true for those with
the lowest incomes.  In 2001, the richest 1 percent of households owned
44.8 percent of all common stock (excluding stock owned through pensions);
the poorest 80 percent owned 5.8 percent.  This suggests that the poorest
10 or 20 own a minuscule share of stock.  Even including stocks held
through various pension arrangements, in 2001, those households with
yearly incomes less than $15,000 held 1.1 percent of all stocks, while
those with annual incomes equal to or grater than $250,000 owned 40.6
percent of all stock.  Debt, on the other hand, bears down most heavily on
the poor.  In 2001, debt service payments made up 40 percent or more of
yearly household income for 27 percent of those households with less than
$20,000 in income.  For households with yearly income between $90,000 and
100,000, the percentage was 2 percent.  Thirteen percent of the former
group were sixty days or more late paying their bills; for the latter
group the rate was 1.3 percent.

For at least the past thirty years, the distributions of wealth and income
have become more unequal, nearly everywhere in the world.

The evidence on jobs is just as devastating as that on inequality.  While
economists and pundits babble on about all the good jobs that high tech is
bringing, the truth is that most new jobs created don't have much cachet.
As I said in another venue,

  Nearly 30 million persons labor as teaching assistants, food preparers
and servers, counter attendants, cashiers, counter and rental clerks,
bookkeepers, customer service reps, stock clerks and order fillers,
secretaries, general office clerks, assemblers, sorters, helpers, truck
drivers, packers and packagers, and laborers.  The Bureau of Labor
Statistics estimates that the ten occupations with the largest job
growth between 2000 and 2010 will be food preparation and service
workers, customer service representatives, registered nurses, retail
salespersons, computer support specialists, cashiers, general office
clerks, security guards, computer software engineers, and waiters and
waitresses.  Of these, nurses and software engineers are the only
obviously "good" jobs, and even these are rapidly being rationalized or
outsourced by cost-conscious managers.

Today high-tech and low-tech jobs alike are shifted around the world by
firms competing in the global marketplace, and this is going to continue
into the indefinite future.  As is the operation of the Babbage principle
and Taylorism.  And if you think most jobs in the United States leave a
lot to be desired, then take a look at the world's poor countries:
hundreds of thousands of young sex workers, camel jockeys, child factory
laborers, adult sweatshop workers, and house servants.  It is enough to
say that in India, call center work is seen as a desirable job, and the
call centers are filled with college graduates.  There are more than 150
million persons openly unemployed in the world.

Although there have been strong movements determined to clean up the
world, they have not been very successful, given how much we now know
about the impact of modern capitalist production on the environment.
Poisoned food, power plant smog even in remote places like Big Bend
National Park, scores of "Superfund" sites still mired in waste and filth
and with no money in sight to restore them, global warming, mass
extinction of species, cities so polluted that people have to stay indoors
or wear masks, forests clear-cut of trees, the list goes on.  It may be
true that mother earth has an amazing capacity to restore herself, but it
is a fair bet to think we not have enough time left for her to do it
before we are all of us dead or too sick to care.

The Future

If we don't change our ways, the future looks bleak.  I shudder to think
what my great grandchildren will see if they make the voyage of national
discovery we made.  One gigantic urban-suburban-exurban mess of traffic
jams, strip malls, and concrete, marked by a bunker mentality and reality
of the few versus the many (gated and guarded enclaves for the rich and
hideous mass housing and prisons for the rest of us), all of us fearful of
ever more devastating "natural" disasters.  Don't laugh, these things are
already here; we're not that far away from apocalypse.

The good news is that human beings are a resourceful species.  If the many
organized against the few and took things into our own hands, we could
reinvent the world.  There is no compelling reason why there couldn't be
far greater equality, work worthy of human beings, and harmony between us
and the natural world.  I don't have any grand plan for change, but, at a
minimum, I offer the following:

We have to bring capitalism to an end.  The system has outlived whatever
historical necessity it might have had.  There is simply no way that
capitalism can solve the problems we saw everywhere in the country, much
less solve these problems around the world, where they are many times more
severe.  One critic of capitalism put it this way: socialism or barbarism.
 We are well down the road toward barbarism.

If we reject capitalism, what should we replace it with.  In the end, we
will determine this in the context of our struggles to end a barbarous
system and give birth to a new one.  However, some things will be

First, we will have to end the growth for growth's sake mentality
dominating our own society.  There is no need for output to grow
willy-nilly without any sense of what production is appropriate and how
the output is distributed.  To limit growth, however, will require some
national (and eventually international) planning.  There is no reason why
a national dialogue could not take place on priorities and needs and
methods discovered for the implementation of what such dialogues conclude
is required to be done.  There is no reason why, especially given modern
computer technology, that planning cannot be done democratically.

Second, much planning and decision-making can and should be done on as
local a level as possible.  If the Mormons in the West could plan their
towns and their agriculture to meet local human needs, there is no reason
why all towns cannot do this.  What purpose does urban-suburban-exurban
sprawl serve?  Shouldn't it be eliminated as quickly as possible?
Shouldn't our living spaces encourage as much walking as possible?
Shouldn't we have reliable and fast public transportation?  Shouldn't we
have good, efficient, and reasonably-sized housing for all?  Why should
homelessness and substandard housing coexist with 20,000 square feet

Third, our agriculture will have to be radically revamped, to end the
sharp split between town and country evident around the world.
Smaller-scale, locally-oriented, environmentally-sound, gardens-everywhere
agriculture needs to replace, as much as possible, the large-scale,
corporate farming that now dominates world agriculture.  Consider that
Cuba, despite terrible economic hardship caused by the collapse of the
Soviet Union upon which it depended, achieved food independence in less
than a generation after this collapse, and did so without super-mechanized
and chemically-dependent agriculture.

Fourth, workers and communities must jointly manage as many of our
workplaces as possible.  Every worker should be trained to understand
production and to manage complex modern technology.  As much dangerous and
menial work as possible should be mechanized out of existence, and that
which remains should be shared out as much as possible.  Alienating mass
production assembly line-like work should be eliminated wherever possible,
and production by coordinated work teams should be used instead.  Swedish
auto workers proved that this can be done.

Fifth, our education system should be completely scrapped and replaced
with one in which the problems of inequality, work, and environment are
made the center of study and in which the arts, both in terms of art as
traditionally conceived and the mechanical arts, are taught to every
student, not just in special subjects but integrated into all studies.

To those who say that such ideas are utopian and incapable of realization,
I say this.  Look around you.  Isn't it truly utopian to believe that we
can continue along the path we have been traveling for so long now and
with such shameful and deadly results?

Michael D. Yates is associate editor of Monthly Review. He was for many
years professor of economics at the University of Pittsburgh at Johnstown.
He is author of Longer Hours, Fewer Jobs: Employment and Unemployment in
the United States (1994), Why Unions Matter (1998), and Naming the System:
Inequality and Work in the Global System (2004), all published by Monthly
Review Press.
URL: <http://mrzine.monthlyreview.org/yates141006.html>

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