<TITLE>Section C - Introduction </TITLE>
<H1>Section C - What are the myths of capitalist economics?</H1>
Within capitalism, economics plays an important ideological role. Economics
has been used to construct a theory from which exploitation and oppression
are excluded, by definition. We will attempt here to explain why capitalism
is deeply exploitative. Elsewhere, in <a href="secBcon.html">section B</a>, we have indicated why
capitalism is oppressive and will not repeat ourselves here.
In many ways economics plays the role within capitalism that religion
played in the Middle Ages, namely to provide justification for the dominant
social system and hierarchies (indeed, one neo-classical economist said that
<i>"[u]ntil the econometricians have the answer for us, placing reliance upon
neo-classical economic theory is a matter of faith,"</i> which, of course, he
had [C.E. Ferguson, <b>The Neo-classical Theory of Production and Distribution</b>,
p. xvii]). Like religion, its basis in science is usually lacking and its
theories more based upon "leaps of faith" than empirical fact. In the
process of our discussion in this section we will often expose the
ideological apologetics that capitalist economics create to defend
the status quo and the system of oppression and exploitation it produces.
Indeed, the weakness of economics is even acknowledged by a few within the
profession itself. According to Paul Ormerod, <i>"orthodox economics is in many
ways an empty box. Its understanding of the world is similar to that of the
physical sciences in the Middle Ages. A few insights have been obtained which
stand the test of time, but they are very few indeed, and the whole basis of
conventional economics is deeply flawed."</i> Moreover, he notes the <i>"overwhelming
empirical evidence against the validity of its theories."</i> [<b>The Death of
Economics</b>, p. ix, p. 67]
It is rare to see an economist be so honest. The majority of economists
seem happy to go on with their theories, trying to squeeze life into the
Procrustean bed of their models. And, like the priests of old, make it
hard for non-academics to question their dogmas. As Ormerod notes,
<i>"economics is often intimidating. Its practitioners. . . have erected
around the discipline a barrier of jargon and mathematics which makes
the subject difficult to penetrate for the non-initiated."</i> [<b>Op. Cit.</b></b>,
So here we try to get to the heart of modern capitalism, cutting through
the ideological myths that supporters of the system have created around
it. Here we expose the apologetics for what they are, expose the ideological
role of economics as a means to justify, indeed ignore, exploitation and
oppression. As an example, let us take a workers wage.
For most capitalist economics, a given wage is supposed to be equal to the
"marginal contribution" that an individual makes to a given company. Are
we <b>really</b> expected to believe this? Common sense (and empirical
evidence) suggests otherwise. Consider Mr. Rand Araskog, the CEO of ITT,
who in 1990 was paid a salary of $7 million. Is it conceivable that an
ITT accountant calculated that, all else being the same, ITT's $20.4
billion in revenues that year would have been $7 million less without Mr.
Araskog -- hence determining his marginal contribution to be $7 million?
In 1979 the average CEO in the US received 29 times more income than the
average manufacturing worker; by 1985 the ratio had risen to 40 times
more, and by 1988 it had risen to 93 times more. This disturbing trend led
even conservative <b>Business Week</b> to opine that the excesses of corporate
leaders might finally be getting out of hand (Kevin Phillips, <b>The
Politics of Rich and Poor: Wealth and the American Electorate in the
Reagan Aftermath</b>, p. 180). The warning apparently went unheeded, however,
because by 1990 the average American CEO was earning about 100 times more
than the average factory worker (Tom Athanasiou, <i>"After the Summit,"</i>
<b>Socialist Review</b> 92/4 (October-December, 1992)). Yet during the same
period, workers' real wages remained flat. Are we to believe that during
the 1980s, the marginal contribution of CEOs more than tripled whereas
workers' marginal contributions remained stagnant?
Taking another example, if workers create only the equivalent of what they
are paid, how can that explain why, in a recent ACM study of wages in the
computer fields, it was found that black workers get paid less (on average)
than white ones doing the same job (even in the same workplace)? Does having
white skin increase a worker's creative ability when producing the same goods?
And it seems a strange coincidence that the people with power in a company,
when working out who contributes most to a product, decide it's themselves!
So what is the reason for this extreme wage difference? Simply put, it's
due to the totalitarian nature of capitalist firms. Those at the bottom
of the company have no say in what happens within it; so as long as the
share-owners are happy, wage differentials will rise and rise (particularly
when top management own large amounts of shares!). (The totalitarian nature
of private property has been discussed earlier -- see <a href="secB4.html">section B.4</a>).
A good manager is one who reduces the power of the company's employees,
allowing an increased share of the wealth produced by those employees to
go to those on top. Yet without the creativity and energy of the engineers,
the shop floor workers, the administrative staff, etc., the company would
have literally <b>nothing</b> to sell.
It is capitalist property relations that allow this monopolisation of
wealth by those who own (or boss) but do not produce. The workers do not
get the full value of what they produce, nor do they have a say in how
the surplus value produced by their labour gets used (e.g. investment
decisions). Others have monopolised both the wealth produced by workers
and the decision-making power within the company. This is a private
form of taxation without representation, just as the company is a
private form of statism.
Of course, it could be argued that the owning class provide the capital
without which the worker could not produce. But where does capital come
from? From profits, which represent the unpaid labour of past generations.
And before that? From the tribute of serfs to their feudal masters. And
before that? The right of conquest which imposed feudalism on the peasants.
And before that? Well, the point is made. Every generation of property
owners gets a "free lunch" due to the obvious fact that we inherit the
ideas and constructions of past generations, such as our current notion
of property rights. Capitalism places the dead hand of the past on living
generations, strangling the individuality of the many for the privilege of
the few. Whether we break free of this burden and take a new direction
depends on the individuals who are alive <b>now.</b>
In the sections that follow, the exploitative nature of capitalism is
explained in greater detail. We would like to point out that for anarchists,
exploitation is not more important than domination. Anarchists are opposed
to both equally and consider them to be two sides of the same coin. You
cannot have domination without exploitation nor exploitation without
domination. As Emma Goldman pointed out, under capitalism:
<i>"Man is being robbed not merely of the products of his labour, but of the
power of free initiative, of originality, and the interest in, or desire
for, the things he is making."</i> [<b>Red Emma Speaks</b>, p. 53]