Capitalist economics explained

by Richard Mellor

Afscme Local 444, retired

I am not sure where to start here.  I have just finished reading an op-ed piece in the Wall Street Journal written by an esteemed economics professor and have to say, I am not impressed; it’s a bit like a children’s story.

Paul Rubin is a professor of economics at Emory University and a former president of the Southern Economics Association.  His piece is a condensed version of his presidential address to that organization.

Rubin is deeply disturbed that even the new head of the Vatican and its network of businesses and moneymaking ventures joined the litany of criticisms of the beloved free market.  The Catholic Church is the dominant religious institution of global capitalism and while the Pope’s attack on the “tyranny of markets” is recognized by those in the know as a marketing tool necessary to swell the Vatican’s dwindling ranks, having the head of such an important ally refer to the free market as “tyranny” is a dangerous game given the present hostile climate.

The hostile climate making Rubin a little edgy is the half hearted attempt at reigning in the banks through increased regulation, the election of what he calls, “an extreme anti-market candidate” in New York City, an “outright socialist” in France and the “list goes on and on” although he fails to mention the election of an “outright “socialist to the Seattle City Council in the form of Socialist Alternative’s Kshama Sawant. The Great Recession’s wake has not yet dissipated and is not likely to.

How do we explain this “emporiophobia” the term describing a “fear of markets’ according to the eminent professor?  It’s all a matter of semantics and economists are to blame by using the term “competition” instead of “cooperation” which fosters an anti-market bias he explains. So all those folks who lost their homes and jobs in the aftermath of the Great Recession take note.

Competition implies winners and losers and human beings, softies that we are, tend to sympathize with losers according to Rubin.  When humans starve to death for lack of money or die from diseases cured long ago because it’s not profitable enough for capitalists to invest in social infrastructure and modern medical facilities; we sympathize with the victim and feel anger toward the wealthy, that’s why Rubin and his class blame such crises on flawed individuals, human nature, the inability of certain ethnic groups to govern because they hate democracy or attribute it to that much used term of theirs “crony capitalism”.  The capitalism in the belly of US society is of a pure and egalitarian nature no doubt.

Economists and the mass media should use the term “cooperation” when it comes to describing the economy says Rubin. The “competitive economy” would be better described as the “cooperative economy.”  Cooperation evokes a positive response from people, competition, a negative one.

Rubin is smart guy; he’s been to college and all that, so follow his explanation closely.  Competition doesn’t accurately describe market activity and he proves it by starting with the most basic economic unit (not a commodity) but the transaction, the transfer of one commodity from one person to another, the basic act of exchange.  This transaction is cooperative he argues because it’s a “win-win” situation, both parties gain from the voluntary exchange---there are no losers.

This is true perhaps for barter or in an economy like feudalism for example where the products of human activity were primarily for consumption or use and the purpose of the transaction was exchanging a use value one possesses in abundance for one that he or she lacks; the producer owned the product. But Rubin is talking here about an economic system, capitalism, where the product of human labor is for sale in the global marketplace, is mass produced by many individual workers, none of whom have ownership rights over the product of their labor.

Rubin goes on to explain. Competition is present in markets he admits but its “competition for the right to cooperate”. Capitalists and their enterprises must “compete” for what he calls the “privilege” of selling to the consumer, what he stresses is “the right to cooperate with consumers.”. Workers on the other hand must “compete for the right to cooperate with employers.” “People would feel much more favorably toward a "cooperative economy" than a "competitive economy." Rubin argues, yet he says it’s not about semantics.

The workers in the manufacturing centers of Bangladesh “cooperate” with their employers and they must compete with each other for the right to enter in to this cooperative relationship with the factory owner.

Brilliant stuff isn’t it. The esteemed professor gives us the example of WalMart to make it crystal clear: “Wal-Mart comes to town and several small businesses disappear. How do we represent that event? If we think in competitive terms, we say, "Wal-Mart has outcompeted small firms and driven them out of business.".

If we take a cooperative view of the same event, we say, "Wal-Mart has done a better job of cooperating with customers by selling them things on better terms, and the small firms were not able to cooperate as well." Same facts, but a very different emotional reaction.

And what about the poor?  The professor helps us out with this complex age old problem as well.  We must not by any means say that the poor person has been outcompeted in the market but that he can’t cooperate as well with the employers through a lack of skills.

The professor sums it all up for us.  The problem with viewing the world of the market as one of competition instead of cooperation is that if we take the example of the poor person we could end up by blaming successful people we think of as outcompeting him and being the winner as opposed to our poor person as the loser.  Not good. It could lead to damaging legislation that would harm this cooperative relationship between people in human society. It could lead curbing or banning some aspects of the cooperative transaction of exchange between the employer and the workers for example, “minimum-wage laws, for instance—that make it even more difficult for the poor person to cooperate.”  The answer should be to give the poor person more skills so they can have something to sell in this wonderful cooperative marketplace.

“In economics, everyone can win from exchange.” says the esteemed professor, “Economists should make that distinction if they want to convince more people that a market economy is a powerful tool for human flourishing.”

I am not an economist or professor of any type; I achieved the dizzy heights of Heavy Equipment Operator in my work/life experience because the bosses were willing to cooperate with me. It was a complex process.  A black worker came to the Union and filed a grievance because most of them worked in the ditch and never got out of it. There was no internal training mechanism for truck driving or to be a backhoe operator, it depended on who your boss was and whether or not they allowed you to use the machinery in your spare time or at lunch which was technically prohibited.  There was a settlement to that dispute which forced the bosses to be cooperative and they instituted an internal training program and I was fortunate enough to benefit from it.  When you get a promotion that pays more money with less physical labor, that’s progress.

One important revelation from reading this stuff is how the ruling class and its intellectual propagandists fear the working class.  It's an optimistic picture he paints of us as we feel for the underdog, we feel for the poor and we don't like those that exploit the weak. BusinessWeek found this in focus groups it developed in the aftermath of the Great Recession. It was instituting a campaign to boost the popularity of capitalism but found that the mood was very hostile to the term as people associated it with the strong beating down the weak. BW didn't use the term in its campaign. They also know that at some point the anger and distaste for the system and market violence breaks out in to social unrest destabilizing society and harming profits.

Some years ago I was sitting in my bosse's office and when he stepped out for a second I glanced at a book he was reading about management techniques. It had this interesting comment in it:

"If you're going to strive to motivate workers through autonomy and empowerment, it's important to remember that the primary burden is to make sure employees believe what you say. Don't tell them you want them to be empowered to increase the company's profits.  Tel them you want them to be empowered because it's the best way to remain competitive and guaruntee everyone their jobs." Carl Robinson, Vice President, Organizational Psychologists

When I think of the world we live in. The esteemed professor here has social prestige and lives a good life with a comfortable job at a prominent university and all for espousing nonsense and falsifying history.

And as a shop steward I defended workers who were fired for falsifying time sheets. Cooperate my ass.