From today’s New York Times, in a lead article on poverty in the US:
“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”
When I think on this, when I let it seep into my feelings, I become a bit nauseous. It implies that we have an economic system that by its very nature puts profits over people — better, profits for some over the well-being of many. “You basically don’t want workers.” If the system could get along without workers, it would. If it could create wealth for shareholders without creating wealth for workers, it would.
Something is sick with the system.
I know, Adam Smith — or those who interpret him — tell us that if we pursue profits, then all the people will eventually profit. Profits come first, and the invisible hand will take care of the distribution. I guess I would have to say about the invisible hand what atheists say about God: where’s the empirical evidence for what you are claiming to be real?
“It’s the system, stupid” would seem to apply. The system needs fixing. — Or, do we need a new system? I really am not sure.
It’s a double edged sword. Without improvements in efficiency, we wouldn’t have the printed word (think how many transcribers were put out of business when Gutenberg came along), mass transit, phone systems of today, computers, you name it… With each efficiency gain, jobs will be lost, but new ones always seem to sprout up, weather in the US, or abroad (I’m sure if you ask the Indians, they love how America outsources work). I’m not sure there is a better system out there. If there is, I’m sure the industrious in America will grab it and run.
Thanks for the input, Ben. Can’t disagree, and don’t want to. But to question the capitalist system is not necessary to call for its destruction but, rather, for its reformation.
Did you watch CBS Sunday Morning? I think the biggest issue is the out of control salaries of the top executives, which have gone from 27x the average wage earner (late 1970’s) to 279x (today). The boards of directors of these large corporations need to become more vested in the companies they oversee and stop handing over the golden parachute weather the CEO is successful or not. They also need to start looking at short term gains and instead look at long term growth. The quarter to quarter short term outlook is killing the value of dedicated employees that keep a company going.
Marx once said that all nations with a capitalist mode of production are seized periodically by a feverish attempt to make money without the intervention of the process of production, that is, “less workers but more profits.” This “feverish attemp” is unmistakably visible especially in finacial capitalism. I think that recent proposals for re-enacting some parts of Glass-Steagall Act could be conducive to prevent the “feverish attempt.”
Yes, Makito, I agree that a re-instating of the Glass-Steagall Act would be a remedy, indeed an essential, remedy for making sure that the mess we are in does not happen again. Why is Congrees — why is Obama — apparently so blind to this?