Jul 3, 2012

Profit Is Theft: It Sounds Absurd but Here's Why

By Tim Hjersted / filmsforaction.org

Take a look at this info-graphic. The disparity is absurd, and the 99% does need a raise. But while we're fighting for 15, we need to look beyond raising the minimum wage, as it doesn't get us anywhere close to solving the root problem. 

Profit is theft, in our current economy. That is the profound conclusion that must be addressed. But surely no one will agree with this on its face. It sounds equally absurd. But corporate/ceo/shareholder profit would not exist if workers were paid the full value of their work. All workers contribute to the profit or losses of a business. But in traditional capitalist practice, only the owners or shareholders receive the profits while 99% of the workers - the working class minus management usually - receives a static wage. And this wage *must* be depressed lower than the full value of their work otherwise profit could not exist.

Just to make sure this is totally clear, let's say a worker does 8 hours of work to produce $160 in value for the company. If everyone was paid the full value of their work this person would get paid $160. Instead, this worker is paid $8 an hour and receives $64, while the other $96 goes to the owners. When this wealth extraction occurs day after day after day, it's no wonder we see the rich getting richer while the poor stays poor. The working class is getting robbed by the very nature of the wage-based employee/owner system.

In a fair system, profit would no longer be the exclusive domain of a tiny ownership class. Profit would be shared among all the workers who contributed to that profit, rather than a few individuals who can potentially make one up-front investment in the beginning of a business and then never lift a finger while wealth is continually extracted from the workers every year, year after year after year...

So this is the ponzi scheme in play here. The house of cards. When wealth is continually extracted to pad the ever growing salaries and bonuses of an outrageously affluent ownership/investment class, the wealth gap eventually starts to create problems for the health of the ecosystem as a whole. The social costs of this robbery become externalized.

People struggle to pay their bills and buy food for their family, even working two or three jobs. They can't afford health insurance or the mortgage on their house, so more people default and lose their homes. As you'd expect, government is asked to step in: to pay for healthcare, food stamps, social security and other basic necessities people can't afford because every month a part of their salary is stolen from them to give a little extra to the owners. 

What we have today is government subsidized robbery. The government provides just enough 'welfare' assistance so that businesses can keep ripping off their poverty-wage workers, who would be revolting in the streets without this government assistance. Meanwhile, the taxpayers pay for the burden of this subsidy while capitalists rake in the profits.

Socialized costs. Privatized gains.

It is ironic to me that so many people decry the evils of having their paycheck "robbed" in the form of a government tax, when the original robbery that created the need for this tax goes unnoticed. (Of course, this robbery-by-force, ie, tax by the government to pay for wars and the mass killing of civilians that I strongly oppose is equally detestable, but that is a subject for another time.)

If the free-market thinkers reading this have made it this far, hopefully now they can see that I recognize the free-market concept as the best part of what people tend to think of as capitalism. Yet capitalism has become a sort of propaganda today, as it boasts primarily its greatest strength (the free market) as its only virtue, while downplaying or ignoring its 2 primary flaws: private ownership of the means of production and wage slavery.

But in an alternative successor system, called Economic Democracy - the free market would still exist and be enhanced. But the flaws of capitalism would be addressed. Instead of private ownership of the means of production (profit and control held exclusively by the ownership class) and wage labor, we would have: 

(A) *Social* control of investment. This would eliminate the 1% investment and ownership class (banks, CEOs, Wall Street traders etc), which act like a sort of parasite on the economy as a whole, by virtue of their ability to make money off of money - an entirely fraudulent practice in terms of generating true wealth for the earth and its people. This is a huge concept in itself but to sum it up: capital assets would be owned by society (the means of production, ie factories, equipment, land etc). In return for the use of these assets, a business would pay a capital tax, which would be used to invest further in the growth of new or existing businesses or projects. Decisions about how these investment funds are spent would be made locally by a new system of directly-democratic government. The people of a city would convene in large assemblies to decide how these investment funds should be spent. They would also negotiate a portion of these funds to be pooled with the funds of other regional cities for regional-scale investments, and on occasion would pool some of these funds into a national fund for national scale projects, which would be quite rare. By giving the power of investment to people rather than private individuals, investments would benefit society rather than this tiny minority of people. Read more about this idea here and here.

(B) Worker Self-Management, aka, workplace democracy. Workers would have a say in the business or corporation they work for. All workers would have an "ownership" share in the company and thus receive a share of its profits. These profits would likely not be equal but the disparity between the lowest paid and the highest paid would be significantly reduced from the current disparity in America (Compare 475: 1 in America versus 20:1 in Canada vs 4:1 roughly in a democratic economic system. The Mondragon Corporation provides an excellent case study of this model already in practice).

Workplace democracy, beyond enhancing economic justice, also would have profound effects on social justice. Corporations could not continue to act so brazenly if decisions were no longer made by a tiny minority concerned purely with money and other aberrant values. Could all the workers of Monsanto or British Petroleum allow their company to do what they do if they had a say over it? The rationale: "I just work here and have to do what I have to to survive" would no longer apply. Workers would have control over the decisions and policies of the corporation.

(C) As mentioned before, the marketplace would remain an integral element of the system, but it would actually function more properly and as intended, as the marketplace we have today is not even close to "free." This subject has been heavily propagandized, and many believe our country is becoming more socialist, but in truth we are more capitalist than we ever have been. Call this "corporate capitalism" if you like. Either way, it is the system we have always had since the beginning of capitalism's history in the 1500s.

Capitalism, in practice, has always been "corporate socialism," where corporations exact their influence on government to create more self-benefiting hand-outs, tax-breaks, or virtual monopolies by influencing laws and regulations. People often blame the government for creating an unfair market when it is the corporations themselves which have influenced all the laws and regulations in place to benefit and reduce competition for themselves. The Koch brothers can sing the gospel of the free market and deregulation all day, but in truth this is just propaganda speak, or code for, "we want more socialist benefits for our company and ourselves, the 1%, so tax the poorest the most and strip social services so you can give more of that pie to us."

In a true market-place, laws and regulations would not be designed almost exclusively to benefit corporations and the 1%. For example, pollution regulations would actually tax polluters and revoke corporate charters if a corporation abused the land, air or water that it has access to. These elements should be considered the common heritage of the world, and should be used to benefit the world as a whole, rather than be seen as the property of a few individuals to benefit only those individuals to the detriment of everyone else. As it stands now, most environmental "regulations" only legalize a certain level of pollution and protect corporations from lawsuits and other liabilities.

In a true free and fair market-place, General Electric would not pay zero in taxes (and receive a subsidy!), nor would the biggest oil companies receive huge tax breaks. So, you get the idea. Free-market rhetoric has been used as propaganda to hide the slight-of-hand robbery that has occurred. 

Because of this, in America, people either believe we have a capitalist system that is becoming more socialist (evil!), or people believe we have a system of corporate capitalism or crony capitalism, and better values and reforms are all we need to fix an overall good system. In reality, as said before, what we have is a system of corporate socialism that has always functioned in this way, and it is finally meeting its inevitable societal conclusion. And because this "state-guaranteed system of privilege" is always how capitalism has worked since its beginning, I simply like to call this "capitalism." Capitalism, but with my eyes wide open to what it actually is.

No matter what you want to call it though, the overlying capitalist mythology within our culture has convinced us that workers get what they deserve and owners get what they deserve. And so the root injustice of the system goes on unchallenged while small concessions are requested, such as a higher minimum wage, as suggested by this info-graphic. Or, people blame the government for interfering with the "purity" of the marketplace while never stopping to notice all this government interference primarily benefits a single class of people and the corporations they hold stock in. So instead we see people on the right voting for republicans who lower taxes for the rich and give subsidies to corporations, and people on the left pushing for a higher minimum wage and better government benefits, which is much like asking for prettier window-dressings to decorate the walls of our cell. So what's the difference between conservatives and liberals? One wants freedom and gets even more desolate cell conditions; the other wants better cell conditions without ever realizing they were never free.

Instead, we need to stop the robbery. We need to free ourselves from this wage slavery which robs our paychecks every month and keeps us in debt and forever on the rat wheel just to survive. 

Profit should be shared among all workers, and all workers should have an ownership and a decision-making stake in the company they belong to. All workers should reap the full fruits of their labor, in other words, and have autonomy over their lives.

What we need... is Economic Democracy. And this is what we need to fight for.


Sources:
After Capitalism  By David Schweickart

The Iron Fist Behind the Invisible Hand: Corporate Capitalism As a State-Guaranteed System of Privilege

Beyond Elections (Film)

 

Post-Script:
Need further proof that a great robbery of the working class has occurred? Take a look at this chart.



It shows productivity rising quite dramatically, and compensation rising roughly with productivity until 1979, and then compensation virtually stagnates up to the present day. Where did all the wealth go? It went to the top 10% - to the ownership and investment class, to capitalists, in other words. All of the massive wealth that America's working class generated during that period of tremendous productivity, sucked up and robbed from them for 40 years.
 

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