Category: Economics and Inequality

It’s Not the Money

Contrary to what the commentators on ESPN and Sports Illustrated are saying, the dispute between the players and the owners that is preventing baseball from coming to an agreement on how to have a 2020 season, is not about the money.  Everybody says it’s about money.  It’s about power.  America’s oligarchs hate employees having the slightest modicum of leverage.  The owners want to “break” the players, want to make them eat shit–and they will happily forego the season (and “damage the game” as all the commentators keep piously saying) to prove they hold the whip.

Not only are the sums they are haggling over risible in relation to the owners’ wealth (none of the stories even divides the gross sum by thirty to show what each individual owner’s losses would be), but (as a Five Thirty Eight article has shown in detail) the owners are also with 99% certainty lying about the financial hit they would take. [https://fivethirtyeight.com/features/mlb-owners-say-they-could-lose-4-billion-even-if-games-are-played-does-that-math-add-up/] That, of course, is why the owners refuse to open their books to the players.

Another Five Thirty Eight article shows that the average player has a career of less than four years (thus failing to meet the five year minimum for a pension and other lifetime benefits) and makes less than two million dollars total. [https://fivethirtyeight.com/features/how-much-money-do-mlb-players-really-make/] And that is after losing money during their years of minor league play, where they do not receive a living wage.

This all, of course, is par for the course in the world of “private equity”: no accountability accompanied by every imaginable dodge to evade taxes, strip value, and move money from the bottom up to the top.

Equity is the operative term here. The owners’ complaints about lost revenue are mostly a red herring.  Owning a baseball team is more like owning a house than owning a business.  The big return on investment is not from revenue, but from the growth in the value of the franchise over time.  You cash in big time when you sell the team, not during the years that you own it.  Plus you get the status of belonging to one of the most exclusive clubs in the world. Only thirty members.

The fury against workers on the part of employers (how wonderful that in baseball they are called “owners”) is part of the ugliness of our time, when the worst impulses of the powerful are openly, even proudly, on display–and the relentlessness of their sadism (a greediness that gains its edge, its frisson, by being augmented by cruelty) dismays, appalls, and baffles.  Such an expenditure of energy on nastiness.  Don’t the uber-rich have better ways to spend their time and money?  What happened to pleasure?

The players’ resolute (thus far) stand really is the proletariat striking back.  And similar to the ways that George Floyd’s death and the subsequent protests have changed perceptions of racism and the police, the needle of public opinion has moved somewhat (although not quite enough).  Unlike what happened in previous labor disputes in baseball, this time the players are not getting all the blame from the public.  Opinion is more divided, although nowhere close to all in the players’ favor.  The success of neoliberal ideology is manifest every time the public echoes the hatred of unions–a hatred that goes hand-in-glove with the concerted efforts by business (aided by the courts, Congress, and the regulatory state) over the past eighty years to destroy unions.

Milton Friedman claimed capitalism could not be discriminatory because that interfered with economic efficiency.  Surely, some competitor would arise who didn’t have those sexist, racist, and/or religious biases and would, because more profitable, drive the discriminators from the field.  Laughable in its naiveté and in the ability of theory to blind you to what is right there in front of your eyes.

The overlords hate it when people get “uppity”—whether the offenders are workers or people of color or “the weaker sex.”  Keeping—or putting—people back in their place is priceless, a motive worth every penny lost for it.  The economic history of the American South shows that Friedman, in a certain way, was right.  Discrimination does lead to poorer economic outcomes.  But the profit motive isn’t strong enough to overcome the will to discrimination.  The baseball owners will bite off their nose to spite their face.  They will destroy baseball rather than enter into a partnership with their players, a partnership that would introduce a modicum of equality into the relationship between capital and labor.

Economic Power/Political Power

A quick addition to my last post.

The desire is to somehow hold economic power and political power apart, using each as a counterbalance against the other.  To give the state absolute power over the economy is to insure vast economic inequality.  Such has, generally speaking, been the lesson of history.  Powerful states of the pre-modern era presided over massively unequal societies.

But there is a modern exception.  Communism in Russia and Eastern Europe did produce fairly egalitarian societies; in that case, state power was used against the accumulation of wealth by the few.  There still existed a privileged elite of state officials, but there was also a general distribution of economic goods.  The problem, of course, was a combination of state tyranny with low productivity.  The paranoia that afflicts all tyrannies led to abuses that made life unbearable.

But (actually existing) communism did show that it is possible to use state (political) power to mitigate economic inequality.  Social democracy from 1945 to 1970 was also successful in this direction.  Under social democracy, the economy enjoys a relative autonomy, but is highly regulated by a state that interferes to prevent large inequities.

Where there is some kind of norm that political power (defined as the ability to direct the actions of state institutions) should not either 1) be a route to economic gain or 2) be working hand-in-glove with the economically powerful to secure their positions, the violations of that norm are called “corruption.”  The Marxist, of course, says that the state in all capitalist societies (the “bourgeois state”) is corrupt if that is our definition of corruption.  The state will always have been “captured” by the plutocrats.

What belies that Marxist analysis is that the plutocrats hate the state and do everything in their power (under the slogan of laissez-faire) to render the state a non-player in economic and social matters.  Capitalists do not want an effective state of any sort—either of the left, center, or right.  A strong state of any stripe is not going to let the economy goes its own way, but will (instead) fight to gain control over it.  I think it fair to say that the fight between political and economic power mirrors the fight between civil and religious power in the early days of the nation-state.  The English king versus the clergy and the Pope.

The ordinary citizen, I am arguing, is better off when neither side can win this fight, when the two antagonists have enough standing to prevent one from having it all its way.

Our current mess comes in two forms, the worst of all worlds.  We have a weak state combined with massive corruption.  What powers the state still has are placed at the service of capital while politicians use office to get rich.  We have a regulatory apparatus that is almost completely dormant.  From the SEC to the IRS, from the FDA to the EPA, the agencies are not doing their jobs, but standing idly by while the corporations, financiers, and tax-evading rich do their thing.

The leftist response is to say that the whole set-up in unworkable.  We need a new social organization.  I have just finished reading Fredric Jameson’s An American Utopia (Verso, 2016).  Interestingly enough, Jameson also thinks we need “dual power” in order to move out of our current mess.  The subtitle of his book is “Dual Power and the Universal Army.”  More about Jameson in subsequent posts.

Here I just want to reiterate what I take to be a fundamental liberal tenet: all concentrations of power are to be avoided; monopolies of power in any society are a disaster that mirror the equal but opposite disaster of civil war.  Absolute sovereignty of the Hobbesian sort is not a solution; but the absence of all sovereignty is, as Hobbes saw, a formula for endless violence.  Jameson says the key political problem for any Utopia is “federalism.”  That seems right to me, if we take federalism to mean the distribution of power to various social locations.  Having a market that stands in some autonomy from the state is an example of federalism.  There are, of course, other forms that federalism can take.  All of those forms are ways of working against the concentration of power in one place.

Liberalism (Yet Again)

In his London Review of Books review (February 6th issue) of Alexander Zevin’s history of The Economist magazine, Stefan Collini makes a point I have often made-and which I presented at some length on this blog some eighteen months ago.  To wit, the term “liberalism” is used in such a loose, baggy way that it comes to mean nothing at all—or, more usually, everything that the one who deploys the term despises.  If John Dewey and Margret Thatcher are both liberals, what could the term possibly designate?

My take has always been that there are a number of things—habeas corpus, religious tolerance, social welfare programs, freedom of the press—that in specific contexts can be identified as “liberal” in contrast to more authoritarian positions, but that the existence of these specific things are the product of different historical exigencies and do not cohere into some coherent, overall ideology.  They may be a family resemblance among the positions that get called “liberal,” but there is no necessary connection between habeas corpus and religious tolerance.  You can easily have one without the other, as was true in England for several centuries.

In a letter to the LRB, Zevin objects to Collini’s refusal to credit the more generalized use of the term “liberal.”  I find his objection cogent and thus offer it here:

“Resistant, in general, to overarching categories, he [Collini] seems particularly sensitive when it comes to liberalism. ‘When people ask me if the division between men of the Right and men of the Left still makes sense,’ the essayist Alain once remarked, ‘the first thing that comes to mind is that the person asking the question is certainly not a man of the Left.’  When someone says, mutatis mutandis, ‘all you mean by liberalism’ is ‘not socialism’ and ‘there is no such thing,’ it is safe to assume the speaker is a liberal, defensively protecting himself.”

So, yes, guilty as charged.  I am a liberal—and do have something at stake in claiming that the term ‘liberalism’ is used in too loose a fashion to do much good.  I want a finer grained statement of what specific features of the political landscape are desirable, are worth fighting to preserve where they exist, and to introduce where they do not.  We should know what we are talking about—and what we are advocating for.  Zevin’s point (not surprisingly) is that the liberalism of The Economist encompassed its support of the Vietnam and Iraqi wars; Collini, no doubt, would argue that many liberals opposed those wars, whereas they were the brainchild of many to the right of liberalism, those often called neo-conservatives.  The right, in other words, was more solidly unified in its opinion on those wars than a sorely divided liberal camp. Yes, some liberals supported those wars, but hardly all.  And it is very hard to believe that a centrist like Al Gore would have led the US into that “war of choice” in Iraq.  To which, the anti-liberal leftist says I have two words for you: Tony Blair.

The left, it seems, needs to continually assert its distance from a detested center that it calls ‘liberalism.”  It also needs to constantly trumpet the sins of that liberalism and to mitigate its differences from the right.  For the soi disant radical left, neo-liberal and neo-conservative become equivalent terms, with no appreciable difference between them.  Hilary Clinton is no better and no worse than George W. Bush.  And somehow both are liberals.

My defensiveness comes from wanting to save the term “liberal” to designate a raft of values and positions I wish to advocate.  Maybe I should give that up, call myself a “social democrat,” and move on.  I resist that move because there are values captured by “liberalism” (especially those connected to rights and tolerance) that aren’t covered by “social democrat,” with its focus on economic sufficiency and regulation of market forces and market practices.

But how about the “not socialism” broad brush?  Michael Clune, in an essay entitled “Judgment and Equality” (Critical Inquiry, 2019, pp. 910—917), repeats the by-now familiar dismissal of liberalism’s individualism, its reduction of everything to “choice,” to “consumer preference.”  Even a cursory reading of 20th century liberals such as Dewey or Charles Taylor would indicate how sloppy a vision of liberalism such a charge demonstrates.  Not to mention that one standard conservative charge against liberals is precisely that they negate individual responsibility in their emphasis on the social determinants of behavior.  Which is it?  Liberals are full-scale believers in heroic individual autonomy, or they are apologists for the impoverished and the misfit, blaming social conditions for their perceived failures?

Still, Clune does make a concrete claim: “The liberal tradition supports the effort to correct egregious market inequities through policies that leave the market intact” (928).

Now we are talking.  I do think that the commitments I think of as liberal include an acceptance of the market.  That acceptance is, partly, pragmatic (in the vulgar, not philosophical, sense of that term.)  I think the chances of overthrowing the market and installing something different in its place are nonexistent.  In that sense, there is no realistic alternative at the current moment.  So, says the radical, you and Thatcher are the same.  Told you so.

Not so fast.  What I am saying is that the consequential political battles of our time are going to be fought over what kind of market we are going to have.  This is a real battle, with real stakes.  The right over the past seventy years has fought tooth and nail to discredit social democracy, to roll back any state (or other) regulation of the market, and any mechanisms (from unions to minimum wage laws to other forms of state involvement in wage negotiations) that would overcome the imbalances of power existing between employers and workers in an unregulated market.  We know two things: one, that the right has been largely successful in this battle; two, that the vast majority of workers in the West are worse off now than they were in 1960.  Social democracy was a better deal for workers than the present regime (call it neo-liberal if you like, although that term ignores the liberalism of the twentieth century in favor of the “classical liberalism” of the 19th).

Another (contingent) feature of liberalism is its distrust of concentrations of power, its desire to share power around, to create “checks and balances.”  Currently, that entails a recognition that economic power is over-concentrated; that we need state power to counterbalance it because the collective power of workers (through unions or other mechanisms) is hard (if not impossible) to mobilize under present economic conditions.

It is fair to say that the founders were more concerned about concentrated state power than about concentrated economic power.  It is a stretch, I believe, to see Jefferson as a laissez-faire classical economist, but his words and ideas can be wrenched in that direction (by historians like Joyce Appleby) because he wanted to establish sources of power outside of the state’s reach.

I think economic sufficiency does provide a citizen with some independence from the state.  Therefore, I am also willing to argue that acceptance of markets is not just a pragmatic expediency, but also justified in its own right.  Economic bases of power apart from the state are not necessarily a bad thing.

The bad thing is overweening economic power, just as tyrannical state power is a bad thing.  Markets, like states, tend toward the abuse of power.  We need mechanisms, enforceable regulations and structuring rules, to curb market power.  We also need to identify various basics—like health care, education, transportation, clean water and energy—that are not well served by markets and create alternative institutions for their provision.  The best guideline for these alternative institutions is that old liberal standby: equality of access for all.

There are three very strong arguments against the market.  One, the market inevitably produces wildly unequal outcomes.  The liberal response: there are mechanisms, including unions, taxes, and redistributive policies that can combat those unequal outcomes.

Second, markets are inimical with democracy.  The liberal response: workplace democracy is possible, as is political democracy.  Its achievement depends on active mechanisms of participation which must be mandated as part of corporate and state governance.  But there is no absolute bar to the existence of such mechanisms.

Third, economic power always overwhelms political power—if it does not simply convert itself directly into political power.  The reforms that liberalism envisions as answers to numbers one and two never happen because the opponents of such reforms always already have power—which means the power to perpetuate existing inequalities.

That last argument is the killer.  It simply seems true—and then the issue becomes how best to diminish the power of the wealthy, how to turn plutocracy into democracy, and use the democratic state to rein in the inequities of the market (not to mention its environmental degradations).

At this point in the argument, I don’t think the leftist and the liberal have very different goals.  They just differ strongly on tactics.  Is it better to aim to win the way to reform of the market?  Or is it better to work toward the total overthrow of the market?  I don’t see any remotely realistic pathway to that second goal, which is why I remain someone committed to the re-emergence, in even stronger and better form, of social democracy.

Plus Ça Change . . .

Offered without comment.  From Flaubert’s 1869 Sentimental Education (the Penguin edition of 1964, translated by Robert Baldick).

“’All the same,’ protested Martinon, ‘poverty exists, and we have to admit it.  But neither Science nor Authority can be expected to apply the remedy.  It is purely a matter for individuals.  When the lower classes make up their minds to rid themselves of their vices, they will free themselves from their wants.  Let the common people be more moral and they will be less poor!’

According to Monsieur Dambreuse, nothing useful could be done without enormous capital.  So the only possible way was to entrust, ‘as was suggested, incidentally, by Saint-Simon’s disciples (oh, yes, there was some good in them!  Give the devil his due) to entrust, I say, the cause of Progress to those who can increase the national wealth.’ Imperceptibly, the conversation moved on to the great industrial undertakings, the railways and the mines” (238).

“Most of the men there had served at least four governments; and they would have sold France or the whole human race to safeguard their fortune, to spare themselves the slightest feeling of discomfort or embarrassment, or even out of mere servility and instinctive worship of strength.  They all declared that political crimes were unpardonable. . . . One high official even proclaimed, ‘For my part, Monsieur, if I found out my brother was involved in a plot, I should denounce him!” (240).