Category Archives: Economy

Poverty Doesn’t Just Happen

Economic inequality is the cause of poverty. We will never overcome poverty until we take on its root cause in inequality. Peter Marcuse discusses structural issues in the economy which tend to institutionalize poverty:

Exploitation at the work place. Keeping the pay for workers as low as possible is an inherent part of running a business and making a profit: the lower wages are, the higher profits are. Employers are “job creators” only against their will; the fewer workers they need use to produce a different product or service, the better off the employer is. The high pay for business executives and dividends to shareholders are directly at the expense of the workers in their businesses. .

Exploitation at the consumption end. Increasing the demand for ever more consumers goods, of course necessarily paid for out of wages, increases the profits of the producers of those goods and the wealth of the owners of the firms that produce them. Inducing demand artificially, through advertising and the wide array of cultural patterns of the kinds long documented by sociologists and economists, supports the consumption exploitation of poor (as well as middle class) consumers, to the benefit of the rich.

Exploitation at the financial end. Where, after all, do extraordinary profits of hedge fund managers and bankers come from? Ultimately, of course, from the prices paid by the purchasers of the goods and services they are financing. Their interest and dividend incomes and high salaries are really based on the profits of those making their money from more direct exploitation of the poor.

Exploitation of the benefits of land ownership, an obvious and pervasive monopoly, paid, as economists put it, by rent not for anything that the recipient of rent payments has produced or done, but solely extracted by him through the possession of something in limited supply for which there is demand. Property owners and developers are among the richest of the rich (think Donald Trump), in large part because they are able to benefit from the speculative increases in the pries of land which they own.  Ultimately, those benefits are paid for in the prices consumers pay and the rents that tenants pay, a regressively distributive system enriching land owners at the expense of all others.

All four of these forms of exploitation are among the primary causes of poverty and, centrally, inequality.

Digging deeper into what a war on poverty ought to be about would lead to examining, not only how the poor might be directly helped, but also how the rich might be constrained in those actions that keep the poor in poverty. Digging deeper into how inequality might be reduced would lead not only to measuring the extent to which it is reflected in income inequality and be ameliorated by boosting the incomes at the bottom rungs of the ladder of opportunity but would lead also to the same concern for limiting the way the rich get to the top of the ladder to begin with.

The dispute between Governor Cuomo and Mayor de Blasio over the financing of pre-kindergarten for poor children is a vivid example of the difference, Cuomo’s insistence on paying out of general funds, does help to alleviate poverty, but it also avoids de Blasio’s proposal for  paying through a dedicated tax on incomes over %$500,000 addresses inequality directly. Thus Cuomo may alleviate poverty but de Blasio aims further directly to reduce inequality, looking both at the top and the bottom of the ladder. Reducing poverty is much less controversial than reducing inequality, which confronts more basic vested interests.

Readers can take a look at Marcuse’s analysis at

On This Day the Darkness Is Vanquished by a Growing Light

On December 21, 1844, history was made. On that day the Rochdale Equitable Pioneers Society opened the doors of the first consumer-owned cooperative store enabling working people to buy quality goods at fair prices. This was the beginning of the modern cooperative movement which today counts over ONE BILLION co-op members in more than one million cooperative societies.

We are told by the Corporate media that their version of a Free Society is the only alternative to a Totalitarian State. It’s a lie, the alternative to the injustice of a society in which the rich exploit the people is not the injustice of a state where the bureaucrats exploit the people. No, the alternative to both is a society where all who are workers and consumers are also owners. We don’t need another ‘ism, we need Democracy. Political democracy complemented by economic democracy.

Take a look at the information about Cooperation, see the Co-op Archive at, the “History of the Cooperative Movement” at Wikipedia, the graphic novel “Cooperative Revolution” at and Community Wealth at



NAFTA, or “Shafta”, Another Nail in the Coffin of the Economy

As the Obama regime moves towards the passage of yet another so-called “Free Trade” deal (TPP), we should consider what past deals have produced. The following passage comes from a press release from the Economic Policy Institute:

Former President Bill Clinton claimed that NAFTA would create an “export boom to Mexico” that would create 200,000 jobs in two years and a million jobs in five years, “many more jobs than will be lost” due to rising imports. The economic logic behind his argument was clear: Trade creae new jobs in exporting industries and destroys jobs when imports replace the output of domestic firms. Fast forward 20 years and it’s clear that things didn’t work out as Clinton promised. NAFTA led to a flood of outsourcing and foreign direct investment in Mexico. U.S. imports from Mexico grew much more rapidly than exports, leading to growing trade deficits, as shown in the Figure. Jobs making cars, electronics, and apparel and other goods moved to Mexico, and job losses piled up in the United States, especially in the Midwest where those products used to be made. By 2010, trade deficits with Mexico had eliminated 682,900 godd U.S. jobs, most (60.8 percent) in manufacturing. Claims by the U.S. Chamber of Commerce that NAFTA “trade” has created millions of jobs are based on disingenuous accounting, which counts only jobs gained by exports but ignores jobs lost due to growing imports.


Pope Condemns the Idolatry of Money

Pope Francis I in his capacity as pastor and teacher has issued a papal encyclical, EVANGELIUM GAUDIUM, in which the  economics of exploitation is condemned.

Just as the commandment “Thou shalt not kill” sets a clear limit in order to safeguard the value of human life, today we also have to say “thou shalt not” to an economy of exclusion and inequality. Such an economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.

Human beings are themselves considered consumer goods to be used and then discarded. We have created a “disposable” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.

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One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

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Today in many places we hear a call for greater security. But until exclusion and inequality in society and between peoples is reversed, it will be impossible to eliminate violence. The poor and the poorer peoples are accused of violence, yet without equal opportunities the different forms of aggression and conflict will find a fertile terrain for growth and eventually explode. When a society – whether local, national or global – is willing to leave a part of itself on the fringes, no political programmes or resources spent on law enforcement or surveillance systems can indefinitely guarantee tranquility. This is not the case simply because inequality provokes a violent reaction from those excluded from the system, but because the socioeconomic system is unjust at its root. Just as goodness tends to spread, the toleration of evil, which is injustice, tends to expand its baneful influence and quietly to undermine any political and social system, no matter how solid it may appear. If every action has its consequences, an evil embedded in the structures of a society has a constant potential for disintegration and death. It is evil crystallized in unjust social structures, which cannot be the basis of hope for a better future. We are far from the so-called “end of history”, since the conditions for a sustainable and peaceful development have not yet been adequately articulated and realized.


Wisdom from an Honest Conservative

Clyde N Wilson is an old-right conservative. The sort for whom Capitalism is regarded as a reckless destroyer of tradition and community. He recently posted a column of things which he regarded as “forlorn hopes”. The following is one of his:

The American people ever understanding that government debt does not exist to cover necessary expenditures but to provide risk-free, tax-free income to capitalists.

War as Disaster Capitalism

Consider one more definition of war: not as politics or even as commerce, but as societal catastrophe.  Thinking this way, we can apply Naomi Klein’s concepts of the “shock doctrine” and “disaster capitalism” to it.  When such disasters occur, there are always those who seek to turn a profit.

Most Americans are, however, discouraged from thinking about war this way thanks to the power of what we call “patriotism” or, at an extreme, “superpatriotism” when it applies to us, and the significantly more negative “nationalism” or “ultra-nationalism” when it appears in other countries.  During wars, we’re told to “support our troops,” to wave the flag, to put country first, to respect the patriotic ideal of selfless service and redemptive sacrifice (even if all but 1% of us are never expected to serve or sacrifice).

We’re discouraged from reflecting on the uncomfortable fact that, as “our” troops sacrifice and suffer, others in society are profiting big time.  Such thoughts are considered unseemly and unpatriotic.  Pay no attention to the war profiteers, who pass as perfectly respectable companies.  After all, any price is worth paying (or profits worth offering up) to contain the enemy — not so long ago, the red menace, but in the twenty-first century, the murderous terrorist.

Forever war is forever profitable.  Think of the Lockheed Martins of the world.  In their commerce with the Pentagon, as well as the militaries of other nations, they ultimately seek cash payment for their weapons and a world in which such weaponry will be eternally needed.  In the pursuit of security or victory, political leaders willingly pay their price.

Call it a Clausewitzian/Marxian feedback loop or the dialectic of Carl and Karl.  It also represents the eternal marriage of combat and commerce.  If it doesn’t catch all of what war is about, it should at least remind us of the degree to which war as disaster capitalism is driven by profit and power.

For a synthesis, we need only turn from Carl or Karl to Cal — President Calvin Coolidge, that is.  “The business of America is business,” he declared in the Roaring Twenties.  Almost a century later, the business of America is war, even if today’s presidents are too polite to mention that the business is booming.



If the Market is God, God Blesses Workers Ownership

Workers’ Ownership isn’t pie-in-the-sky but a practical profitable mode of enterprise

Workers’ owned enterprise is frequently dismissed as idealistic twaddle. Yet the indices of performance indicate that the model is productive and profitable.

In London, where an Employee Ownership Index tracks the performance of companies which have some form of employee ownership of shares, employee-owned firms rate high. In the first 10 months of the current year, employee owned companies rose 36% while the conventional stockholder-owned company only managed an 11% growth rate.

Capital Strategies, a finance company, reported that a 100 (pounds, not dollars) invested in employee-owned companies would now be worth 635 while the so-so same-same companies only grew to 264 from an initial 100 investment.

Not bad for a pipe dream, huh?

SOURCE: Financial Times (October 4, 2013)