What if capitalism fails

Since , the median male wage in the US has dropped by 1. Workers at the top of the earnings and education distribution have seen their paychecks continue to fatten: not so on the middle and bottom rungs of the labor market.

Wage growth remains torpid in the middle of the distribution. Most American workers are still paid by the hour, and half of them have no formal control over their schedules. Two in five hourly-paid workers aged between 26 and 32 know their schedules less than a week in advance.

Hard to arrange childcare on that notice. Many American workers are fighting, like the trade unions of old, on two fronts: for money, and for time.

There are two competing explanations for what happened to tear the connective tissue between growth and wages: the Productivity Story and the Power Story. The productivity story goes as follows: wages reflect the productivity of the worker; the modern economy rewards skills more than in the past; and lots of people have not upskilled quickly enough. Free markets could deliver fair-enough outcomes, so long as everyone got the education and training they needed.

There are two problems with this story. First, the necessary investments in education and training were never actually made. Lifelong learning never made it from the thinktank policy briefs and Davos panels to the real lives of real people. Richard V. Reeves John C.

The second problem is that productivity turns out to be only part of the story — and perhaps not even the most important part. It is certainly wrong to claim that there is no relationship at all between productivity growth and wage growth. But the connection has certainly become less clear over time, and harder to square with the trends in wage inequality.

Even the strongest and most thoughtful proponents of the Productivity Story, such as Michael Strain, director of economic policy studies at the American Enterprise Institute, concede that it is but one element.

The Power Story is that wages do not reflect the productivity of the worker, but their power. Lower wages are a reflection of growing powerlessness, the result of four intersecting trends. First, unions have become almost mythical creatures, unicorns of the labor market.

Just one in 20 workers in the US private sector are members of a trade union, down from more than one in four in the s. Sometime around , US businesses declared war on unions, and won. Second, the wage gap between similarly qualified workers in different companies has widened. One widely cited study finds that one-third of the increase in the earnings gap from to occurred within firms, while two-thirds of the rise occurred between firms.

It is the market power of one firm versus another that determines wages, rather than the power of a particular employer versus its workers. Even if workers can get organized, they cannot force a completely different employer to share more of their surplus with them.

Now that would be socialism. Fourth, the labor market is not as tight as it looks. But the headline rate tells us less than in the past, because millions of workers have dropped out altogether, and so are not counted in the unemployment statistics. Black, Hispanic and less-educated adults have all seen the sharpest drops in participation. This powerlessness of workers in specific companies has fueled calls for higher minimum wages.

Less than two decades into the twenty-first century, it is evident that capitalism has failed as a social system. The institutions of liberal democracy are at the point of collapse, while fascism, the rear guard of the capitalist system, is again on the march, along with patriarchy, racism, imperialism, and war. To say that capitalism is a failed system is not, of course, to suggest that its breakdown and disintegration is imminent.

Indications of this failure of capitalism are everywhere. Stagnation of investment punctuated by bubbles of financial expansion, which then inevitably burst, now characterizes the so-called free market. Real wages for most workers in the United States have barely budged in forty years despite steadily rising productivity.

Unemployment data has become more and more meaningless due to a new institutionalized underemployment in the form of contract labor in the gig economy. The capture of the surplus value produced by overexploited populations in the poorest regions of the world, via the global labor arbitrage instituted by multinational corporations, is leading to an unprecedented amassing of financial wealth at the center of the world economy and relative poverty in the periphery.

The global reserve army of labor is some 70 percent larger than the active labor army of formally employed workers. Adequate health care, housing, education, and clean water and air are increasingly out of reach for large sections of the population, even in wealthy countries in North America and Europe, while transportation is becoming more difficult in the United States and many other countries due to irrationally high levels of dependency on the automobile and disinvestment in public transportation.

Urban structures are more and more characterized by gentrification and segregation, with cities becoming the playthings of the well-to-do while marginalized populations are shunted aside. About half a million people, most of them children, are homeless on any given night in the United States. In the United States and other high-income countries, life expectancy is in decline, with a remarkable resurgence of Victorian illnesses related to poverty and exploitation.

In Britain, gout, scarlet fever, whooping cough, and even scurvy are now resurgent, along with tuberculosis. With inadequate enforcement of work health and safety regulations, black lung disease has returned with a vengeance in U.

At the instigation of giant corporations, philanthrocapitalist foundations, and neoliberal governments, public education has been restructured around corporate-designed testing based on the implementation of robotic common-core standards. This is generating massive databases on the student population, much of which are now being surreptitiously marketed and sold.

More than two million people in the United States are behind bars, a higher rate of incarceration than any other country in the world, constituting a new Jim Crow. The total population in prison is nearly equal to the number of people in Houston, Texas, the fourth largest U. African Americans and Latinos make up 56 percent of those incarcerated, while constituting only about 32 percent of the U. Nearly 50 percent of American adults, and a much higher percentage among African Americans and Native Americans, have an immediate family member who has spent or is currently spending time behind bars.

Both black men and Native American men in the United States are nearly three times, Hispanic men nearly two times, more likely to die of police shootings than white men.

Violence against women and the expropriation of their unpaid labor, as well as the higher level of exploitation of their paid labor, are integral to the way in which power is organized in capitalist society—and how it seeks to divide rather than unify the population. The mass media-propaganda system, part of the larger corporate matrix, is now merging into a social media-based propaganda system that is more porous and seemingly anarchic, but more universal and more than ever favoring money and power.

War, engineered by the United States and other major powers at the apex of the system, has become perpetual in strategic oil regions such as the Middle East, and threatens to escalate into a global thermonuclear exchange. A new Cold War and nuclear arms race is in the making between the United States and Russia, while Washington is seeking to place road blocks to the continued rise of China. The Trump administration has created a new space force as a separate branch of the military in an attempt to ensure U.

Sounding the alarm on the increasing dangers of a nuclear war and of climate destabilization, the distinguished Bulletin of Atomic Scientists moved its doomsday clock in to two minutes to midnight, the closest since , when it marked the advent of thermonuclear weapons. Increasingly severe economic sanctions are being imposed by the United States on countries like Venezuela and Nicaragua, despite their democratic elections—or because of them.

Trade and currency wars are being actively promoted by core states, while racist barriers against immigration continue to be erected in Europe and the United States as some 60 million refugees and internally displaced peoples flee devastated environments. Migrant populations worldwide have risen to million, with those residing in high-income countries constituting more than 14 percent of the populations of those countries, up from less than 10 percent in Meanwhile, ruling circles and wealthy countries seek to wall off islands of power and privilege from the mass of humanity, who are to be left to their fate.

More than three-quarters of a billion people, over 10 percent of the world population, are chronically malnourished.

Around forty million Americans, representing one out of eight households, including nearly thirteen million children, are food insecure. The Anthropocene epoch, first ushered in by the Great Acceleration of the world economy immediately after the Second World War, has generated enormous rifts in planetary boundaries, extending from climate change to ocean acidification, to the sixth extinction, to disruption of the global nitrogen and phosphorus cycles, to the loss of freshwater, to the disappearance of forests, to widespread toxic-chemical and radioactive pollution.

Biologists expect that half of all species will be facing extinction by the end of the century. Earth System scientists warn that the world is now perilously close to a Hothouse Earth , in which catastrophic climate change will be locked in and irreversible.

Nevertheless, major energy corporations continue to lie about climate change, promoting and bankrolling climate denialism—while admitting the truth in their internal documents.

These corporations are working to accelerate the extraction and production of fossil fuels, including the dirtiest, most greenhouse gas-generating varieties, reaping enormous profits in the process.

In response to scientific reports on climate change, Exxon Mobil declared that it intends to extract and sell all of the fossil-fuel reserves at its disposal. Capitalist countries across the board are putting the accumulation of wealth for a few above combatting climate destabilization, threatening the very future of humanity.

The mode of economic accounting intrinsic to capitalism designates as a value-generating good or service anything that passes through the market and therefore produces income. As environmental economist K. We have now reached a point in the twenty-first century in which the externalities of this irrational system, such as the costs of war, the depletion of natural resources, the waste of human lives, and the disruption of the planetary environment, now far exceed any future economic benefits that capitalism offers to society as a whole.

The accumulation of capital and the amassing of wealth are increasingly occurring at the expense of an irrevocable rift in the social and environmental conditions governing human life on earth. Some would argue that China stands as an exception to much of the above, characterized as it is by a seemingly unstoppable rate of economic advance though carrying with it deep social and ecological contradictions.

Yet Chinese development has its roots in the Chinese Revolution, carried out by the Chinese Communist Party headed by Mao Zedong, whereby it liberated itself from the imperialist system. This allowed it to develop for decades under a planned economy largely free of constraints from outside forces, establishing a strong agricultural and industrial economic base.

China, therefore, stands not so much for the successes of late capitalism but rather for its inherent limitations. The current Chinese model, moreover, carries within it many of the destructive tendencies of the system of capital accumulation. How did these disastrous conditions characterizing capitalism worldwide develop? An understanding of the failure of capitalism, beginning in the twentieth century, requires a historical examination of the rise of neoliberalism, and how this has only served to increase the destructiveness of the system.

Only then can we address the future of humanity in the twenty-first century. Many of the symptoms of the failure of capitalism described above are well-known. Nevertheless, they are often attributed not to capitalism as a system, but simply to neoliberalism, viewed as a particular paradigm of capitalist development that can be replaced by another, better one. For many people on the left, the answer to neoliberalism or disaster capitalism is a return to welfare-state liberalism, market regulation, or some form of limited social democracy, and thus to a more rational capitalism.

It is not the failure of capitalism itself that is perceived as the problem, but rather the failure of neoliberal capitalism. In contrast, the Marxian tradition understands neoliberalism as an inherent outgrowth of late capitalism, associated with the domination of monopoly-finance capital. A critical-historical analysis of neoliberalism is therefore crucial both to grounding our understanding of capitalism today and uncovering the reason why all alternatives to neoliberalism and its capitalist absolutism are closed within the system itself.

He strongly condemned labor legislation, compulsory social insurance, trade unions, unemployment insurance, socialization or nationalization , taxation, and inflation as the enemies of his refurbished liberalism. These forms of Capitalism work, not by replacing traditional moral systems with a price system, but by scaling up the essential elements of traditional moral systems. A higher good e. These more enlightened forms of Capitalism go by many names, reflecting independent historical derivations.

They broadly converge with enlightened forms of Socialism, which explicitly begin by focusing on the common good but also appreciate the power of free enterprise, appropriately regulated. They knew that governance in all its forms, from the U. Constitution to the organization of its economy, requires aligning self-interest with the common good.

The idea that a free market can accomplish this alignment all by itself is a nineteenth and twentieth-century invention that has no scientific warrant and has failed in practice. In the spirit of the Federalist Papers , Publius is a collective pseudonym for the group of people organizing this collection of essays. Love this series, Darwinizing! Thank you, by the way, for your nuanced understanding of Smith and the Federalists. Ideally that return on investment should be put back into the economy, but that is driven by supply and demand, and if that demand is not there, there is no incentive to grow, so that money just sits in the coffers of the rich doing nothing for anyone…eventually this system is going to implode on itself when so much money is being syphoned out of the working class that they cannot afford to live, and we all know where those profits are sitting.

Save my name, email, and website in this browser for the next time I comment. This site uses Akismet to reduce spam. Learn how your comment data is processed. Hit enter to search or ESC to close. Publius In the spirit of the Federalist Papers , Publius is a collective pseudonym for the group of people organizing this collection of essays.