Myths About Socialism: Is it Really Just a Matter of Corporate Greed?

(By the American Party of Labor)

Unlike other political philosophers, Karl Marx did not simply dream up an ideal society or concoct ad hoc solutions to the social problems he saw in his time. Marx was an observer who devoted far more of his time and energy to observing and recording the inner workings of capitalism, not socialism. In short, Marx was not an ideologue, but a critic, observing reality and analyzing how things worked.

In this installment, we will look at a myth which doesn’t concern socialism so much as it does capitalism, or people’s beliefs about capitalism. This misunderstanding has a serious impact; one cannot appreciate socialism without an understanding of capitalism. To Marx, socialism was not a long list of ideals about how things should be, but instead a mode of production and society which would grow out of capitalist society, once capitalism’s internal contradictions had been overcome. It is precisely for this reason that to appreciate socialism in a Marxist sense, one needs to study and understand capitalism.

Yet despite never-ending discourse about capitalism, both for and against, few people, including its die-hard proponents and its most determined detractors, actually understand what capitalism is. This leads to confusion about the problems we are facing as a species.

In the classic 90’s noire film The Usual Suspects, the character “Verbal” Kint delivers one of the film’s most memorable lines: “The greatest trick the devil ever pulled, was convincing the world that he doesn’t exist.” He speaks of the arch-criminal mastermind, known as Keyser Söze. Söze had been a small time criminal in Turkey until a tragic attack on his family forces him to go underground. From that time on, the few people who know what he looks like end up dead, and he runs his criminal empire by using pawns that have no knowledge as to who they are working for.

Capitalism works in a similar way, where millions of anonymous people engage in activities without knowledge of each other. As Marx put it, the relationship between people is reduced to the nexus of cash payment. This inevitably leads to situations where the drop in the price for a particular commodity on the world market suddenly has a very real impact on the workers in different countries, even if they are not directly involved in the production of that commodity. It creates global crises where the effects of events which occurred several decades in the past suddenly have a massive impact on people today. It leaves the great majority of ordinary people confused and struggling to find a Keyser Söze, a face which can be matched to these events, in short, someone to blame.

The ruling class and its media organs are all too happy to provide scapegoats for the people to condemn, be they “lazy people,” illegal immigrants, the government or trade unions. Of course the so-called “left” in many countries also has scapegoats, and while they are slightly more deserving of blame, the focus is restricted so that we only see certain actors in the capitalist system, instead of looking at the system itself. These scapegoats are typically the bankers and corporations. This sentiment is loudly expressed at all kinds of “leftist” demonstrations, be they anti-WTO, anti-war, or the recent Occupation protests, and it can be typically summed up in two words- “corporate greed.”

Greed is, of course, a negative personality trait. It’s even more than that; according to the Catholic doctrine, it is one of the seven cardinal sins. We don’t like greedy people, and even the mainstream media presents us with images of greedy corporate villains from time to time. Nobody likes greed. So at every protest we have hundreds of signs and slogans condemning “corporate greed,” even from people who claim they are opposed to the capitalist system itself. What’s wrong with this picture?

On the face of it, one could take statistics of productivity and real wages in the U.S. over the last century and make a strong case that our problem stems from corporate greed. After a productivity boom due to the wide-scale introduction of computers and automation into the workplace, profits went up while real wages began to stagnate and occasionally fall. Profits were further increased by closing factories in the U.S. and moving abroad, followed by outsourcing even more jobs to countries which much lower wages.

The divergence between profits and real wages could be characterized as those at the top taking a larger share of the wealth. Yet if we consider, quite correctly, that this wealth is something like a pie, and that the top percentile is taking a larger share, we are left with the question of who produced this wealth in the first place. In other words, what entitles that top 1%, 5%, etc., to any share of the wealth? The answer of course, is private property and the laws which protect this “right.”

If one does no labor, produces no wealth, and yet through ownership appropriates the wealth created by others’ labor, does it really matter if he takes a larger or smaller cut?

We must also question the claim that “corporations,” or more accurately their stockholders, boards of directors, and executives really are “greedy” at all. This might come as a shock to some people, who have taken it as self-evident that these capitalists are indeed greedy. That corporations and their executives are greedy is an idea that comes not so much from a popular culture which spreads this message in recent times, but also from the ideas many of us learn as we grow up. In America, many of us have been taught that our system is a classless system, or that if class exists, it is based on one’s income. We are taught that very rich people earned their wealth through hard work and risk-taking, whereas the very poor make bad choices and thus remain in poverty. We are taught that these “classes” work together in some way to make the whole country run, and problems will arise if there is any conflict between them.

From a variety of sources across the political spectrum, we are told of some mythical golden age at some vaguely-determined time period, where wealthy people made handsome profits, poor people were taken care of by state programs, and there was a large “middle class” which served as the foundation of America. Focus on this middle class, and its preservation, is so paramount that it neglects to ask any tough questions about the two “classes” on the margins, the poor, and the rich. This kind of mythology, and the current lamentations of a “dwindling middle class,” help fuel the idea that the rich, and specifically the corporations, are greedy. That is to say that at some time in the past, they weren’t so greedy, but lately they have become so. Hence, the problem isn’t capitalism but rather greed.

However, neither greed, nor its opposite, altruism, have anything to do with the capitalist system.

As an analogy, you can use virtually any competitive sport or game. Opponents expect each other to give the maximum effort in order to win. Cunning, deception, and aggression are totally acceptable and even admirable in any number of sports. The rules of the game determine and dictate the behavior of the players. Two men, who might otherwise be some of the nicest people you might meet, transform completely in the boxing ring. They need not be violent people; violence is simply a part of the sport.

This analogy tells us a lot about capitalism. The capitalist system has rules, much like the boxing ring. For the boxer in the ring, not fighting is not an option. For the capitalist who wants to remain in business, not turning a profit is likewise not an option.

In order to be successful as a capitalist, one must play by the rules. In this system, multiple capitalists enter the market and attempt to out-compete one another for the largest market share. This inevitably forces all the “players” to adopt certain behaviors so as to maintain their position or advance. One behavior influenced by this competition is the introduction of new production technology. More efficient production methods enable one capitalist to increase their market share by producing more products more cheaply than their competitors. But any advantage that one capitalist might gain via this new technology will be short-lived; the competition will adopt the same methods and technology so as to remain competitive. Those companies which cannot implement these changes will go out of business.

The adoption of more efficient means of production within an industry typically drives down the prices of commodities produced by that industry. The technological advance allows one to sell more of their products at cheaper prices than the competition. Because some of the competition will inevitably catch up, this advantage can only be temporary. At the same time, the race for more advanced technology can lead to massive expenditures and operating costs over time. Furthermore, increased production will further drive down prices as the market becomes glutted with a particular commodity.

All of these are factors contributing to something Marx called the “falling rate of profit.” Why bring this up at all? As it turns out, this is a very instructive point about capitalist behavior. The capitalist begins expanding and overhauling his production methods in order to grab the largest share of the market. Unfortunately for him, all his competitors are trying to do the same; everyone aims at taking the largest share. These aims are not driven by greed; these are simply the rules of the game. The struggle for the top, or just to survive, forces the capitalist to invest ever increasing amount of money into expansion, research and development, and the implementation of more efficient production methods.

He is not fully aware as to the plans of his competitors; he can only assume they will go all out to knock him out of the market. Every other competitor understands this as well. Eventually, all their efforts at self-preservation and domination of the market end up having the opposite effect. The market becomes flooded, prices drop, certain commodities are no longer profitable, companies go bankrupt, a crisis occurs, and so on. What do we learn from this? We learn that while each capitalist enters into the “game” with the fullest intentions of winning, the conditions of the game force them into adopting behaviors which will eventually lead to failure for many of the players. Greed, altruism, arrogance, hubris, and indeed even personality itself play almost no role in this process.

This same lesson applies when capitalists close plants in one country and move them to another with cheaper labor. The capitalist cannot consider preserving the jobs of his American employees at the risk of losing market share to his competitors; he knows that if he does not move his operations overseas, pretty soon he’ll have to close them anyway. In the same way, he cannot consider the conditions of the foreign workers who will fill his new overseas factories. The only questions are who will accept the lowest wages, work the longest hours, tolerate the worst conditions, and which country will offer the best tax breaks.

To call these capitalists cold or greedy would be like condemning a boxer as aggressive and violent for hitting his opponent. While this may seem like an excuse for the capitalist, it is in fact a condemnation of capitalism. It routinely rewards greedy, selfish, and inhuman behavior, while punishing altruism, empathy, and solidarity.

To be sure, the ruling capitalist class certainly has a number of negative personality traits, most of which are rooted in their class perspective. They are often convinced that they are “self-made,” that they work hard, and that they earned everything they have. In the media we see these people insisting that society could not function without them, and that we need them to “create jobs.” The more delusional among them subscribe to the Randian fantasy that they are the “producers” of human society, while the workers are in fact lazy, shiftless parasites. Despite any of these genuinely negative traits, focusing on the personalities of individual capitalists makes it seem like the problem isn’t the system, but rather a question of the “wrong” people at the top.

The other problem which stems from attributing society’s problems to greed is that it implies that there can be friendly, not-so-greedy capitalists who could change society in such a way that benefits everyone. This misconception leads to another gross error, whereby capitalists who express “progressive” ideals are lauded and admired without regard to how they appropriated their wealth.

For example, ever since Warren Buffett publicly stated that the government should stop “coddling” the rich with lower taxes, the mainstream American “left” has turned him into a quasi-hero. Of course, when one has acquired as much wealth as Warren Buffett, it matters little whether or not the government raises taxes on the rich. Buffett can bet that even if they do raise taxes, it is unlikely to cause any drop in his standard of living.

In fact, the richest Americans were doing quite well back in the late 40’s and 50’s when taxes were as high as 90%. Even more influential is George Soros, a speculator who would easily fit the stereotype of a Wall Street “fat cat” were it not for the massive amounts of money he has spent on propagating liberal values. Both Buffett and Soros enjoy a win-win scenario; their fortunes are secure no matter who dominates the government. No matter how much lip service people like Soros or Buffett pay to progressive taxation or preserving the “middle class,” you aren’t likely to hear any of them admit that their wealth was not derived from actual productive work, much less that a system where the wealthiest citizens do not engage in productive work is inherently wrong. Soros also doesn’t seem to see anything wrong with wealthy billionaires influencing the political system, so long as they espouse his philosophy when doing so. If the working class isn’t allowed its own voice, this isn’t seen as detrimental to democracy.

The idea that all classes in society can get along and adequately and equally achieve their desires is often peddled by contemporary liberals and in particular, die-hard supporters of the Democratic Party. How is this any different than the vision of Republicans and other conservatives who insist that the same aims can be achieved if only the rich and successful were unfettered enough? Both sides deny class struggle; both sides are selling a win-win scenario that is nothing but a fantasy.

There is no doubt that one can rightly call many capitalists greedy. On the other hand, one could find plenty of capitalists who are decent people on a personal level. We would do well to remember that we as workers find ourselves in competition with other workers, both at home and abroad, and when one worker gets a job it often leaves another one without work. Rather than see this as a problem of people, whether workers or capitalists, we should see this for what it is — a problem of capitalism. The evil of capitalism is not that the system is run by greedy, cold-hearted people, but rather that it forces people to act in this manner in order to survive. Greed is rewarded, cooperation and altruism are punished. It’s also good to keep this in mind when one hears about “good” capitalists like George Soros. There is no doubt that his massive donations in places like Eastern Europe have directly helped some people. However, it is important to keep in mind that Soros’ NGOs also played a role in destroying the economy and societies of Eastern Europe, and that however flawed those societies may have been at that time, the people would have been better off had they not been robbed by capitalists and speculators which people like Soros helped unleash. Charities cannot possibly make up for the lack of jobs, much less jobs which pay a living wage along with generous social benefits.

As the drama of the Occupy movements unfold, one need not be discouraged just because some of the slogans reflect major ideological flaws. Through much of the 20th century, the official dogma dictated that America was a classless society. For at least 30 years, free-market dogma has had free reign over American discourse. After 1991 this reached a crescendo of “there is no alternative (to capitalism)” and “this is the end of history.” Now that the party is over and the hangover is starting to clear, people in America are starting to examine class once again.

As class, that is a concrete concept of classes based on material reality, begins to appear more and more in our national discourse, people will inevitably start to see that society’s classes have inherent, irreconcilable differences, and that it is these differences and not greed which are the root of our current problems.

Reblogged from The Red Phoenix, the official newspaper of the American Party of Labor



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