By W. Ryan Wishart, R. Jonna, and Cade Jameson (the authors are doctoral students at the University of Oregon with interests in political economy and environmental sociology)
There is a great deal of well deserved excitement about the Power Shift conference this weekend and its potential as a springboard for an environmental and social justice movement. Even the name “Power Shift” is radical in its implication, in the literal sense of grasping a problem at its root. Who possesses power today and who needs to have more (or less) to reach our goals? Energy Action has a tradition of examining environmental problems in the light of racial and class-based power inequalities and oppression. In line with the conference’s stated goal to “Understand the magnitude of both the challenges and opportunities presented by the climate crisis and explore our own capacities to create transformative change,” we hope to contribute to this discussion of the nature of the current power structure and who must be the constituencies of a movement strong enough to “create transformative change.”
The current economic crisis has laid bare that power in society is political-economic and that the balance of power in Washington is steeply tilted in favor of hedge fund owners, not homeowners. The class struggle occurring in the fight over the big three automakers is illustrative of the “magnitude of the challenges” we face. This essay is divided into two parts. First, we examine the power structures and class struggles made more clearly visible by the crisis and introduce readers to critical political economic perspectives. Second, we use the auto bailout controversy to illustrate the importance and opportunity for interlinking environmental movements with the labor movement at the grassroots level.
Pt.1
The crisis faced by the big three U.S. automakers received an explosion of media coverage as they attempted to snatch some crumbs from the bailout pie. Auto bailout plans have been subjected to much greater scrutiny than the those of the financial sector, and for a pittance in comparison, because business has exploited the opportunity to attack the few decent paying union jobs in the U.S., partially by arguing that weak worker productivity is to blame for the big three’s woes. Any doubt that this is the central focus of the business class and their representatives in Washington should be cleared by the Senate memo that surfaced stressing the imperative of, above all, using the auto bailout to take the “first shot against organized labor, instead of taking their first blow from it.” A related argument, implicitly attacking organized labor as well, places blame primarily on the poor decisions of “insular management.” New York Times’ columnist Thomas Friedman, for example, exhibited this type of ignorance by pondering exasperatedly, “How could these companies be so bad for so long?”
Unfortunately, the underlying rationale of such arguments have been echoed by some in the environmental camp, such as the Breakthrough Institute, who (regarding the auto bailout) remain silent on the role of organized labor, and simply decry the lack of investment in innovative, green technology by the big three, which they believe would both be good for the environment and the health of the industry. Almost everyone agrees that the government should supply these companies with the capital they need to avoid collapse, and that steps should be taken to make Detroit, in the words of a Breakthrough fellow, “adopt a corporate culture that embraces innovation and produces high-quality cars that match the American consumer’s demands.” Within the narrow limits in which the debate is framed, several suggestions for doing so have been offered up.
First, there is consensus that the “bad apples” who have mismanaged the Big Three must be fired and replaced by up-and-coming entrepreneurial talent. Thomas Freidman’s dream solution is to place Apple CEO Steve Jobs in charge of GM, who will be sure to produce an “iCar” that runs “next generation cellulosic ethanol.” Others feel replacing management is not enough and it is necessary to have government oversight, hence the government plans to appoint a car czar to fill this function. To restore “innovation”, some argue for a Bell telephone style dismantling of the industry which will allow the forces of market competition to run their course. This new competitive environment would be guided by government financial support and subsidies for the development of technology.
The auto-bailout proposal fits within the logic of a broader view of the economy as follows: innovative, new technology is seen as the primary source of productivity, and increasing productivity is the most important part of economic growth-”it’s simple,” opines another Breakthrough fellow, “the single most important factor for long-term U.S. economic vitality is our productivity growth[!]” From this perspective, the government must be called upon to artificially create more competitive market conditions that will promote new technologies and solve our twin crises (economic and environmental).
Variations on this argument are endlessly repeated in the mass media. Each ignores the deeper contradictions at the heart of the economy, the understanding of which would not only explain the roots of the economic crises but inform the demands of those engaged in popular political action. The difference of groups’ willingness to confront these deeper contradictions is visible in the contrast between the demands of rank and file auto workers (these are examined in more detail in Pt.2) and the appraisals and recommendations of establishment commentators (and some in the environmental movement). Below we discuss just a few examples of the dissembling and fallacious reasoning that these arguments conceal.
The way that the terms “productivity” and “innovation” are used often leads to much confusion.[1] “Productivity” is not the same as “efficiency” and “innovation” is not synonymous with “green technology”. Sounding the alarm over supposed slowdowns in labor productivity is nothing new,[2] and it is not only the rationale that is fallacious but the reality. As the New York Times pointed out, productivity has increased by more than double the rate of pay, due in large part to a decline in organized labor:
In [a] recent report on the boom in profits, economists at Goldman Sachs wrote, “The most important contributor to higher profit margins over the past five years has been a decline in labor’s share of national income.”…[In] recent years, the productivity gains have continued while pay increases have not kept up. Worker productivity rose 16.6 percent from 2000 to 2005, while total compensation for the median worker rose 7.2 percent, according to … the Economic Policy Institute… Benefits accounted for most of the increase. “If I had to sum it up,” said Jared Bernstein, a senior economist at the institute, “it comes down to bargaining power and the lack of ability of many in the work force to claim their fair share of growth.”
It is clear that declining labor productivity is not the source of our current problems. Further, it should be obvious to everyone in the environmental movement that “high technology” and “green technology” can, and often are, quite different: some of the best solutions to certain problems, like substituting organic for conventional agriculture, are “low-tech” indeed.
To avoid such confusions, which arise from remaining wedded to modern economic ideology, it seems prudent to turn to Joseph Schumpeter, who was the first to comprehensively theorize the necessity of innovation to a healthy capitalist economy. Schumpeter was not at all concerned with ecologically sensitive innovation, but with explaining business cycles and economic crisis. “Neo-Schumpeterian” arguments are repeated by many today: to solve economic crises it is necessary to stimulate the national economy by unleashing the vast innovative potential of entrepreneurs and let them battle it out so that we may reach, through the process of “creative destruction,” a socio-ecological utopia some refer to as Natural Capitalism. (Business Week recently assessed such claims in “Little Green Lies.”)
As can be seen, there is a longing for the bygone days of price-competitive capitalism, when (supposedly) hoards of entrepreneurs battled it out to the death for the benefit of society. However, according to Schumpeter’s most prominent intellectual rival (and friend), Paul Sweezy, it was the logic, contradictions, and crises of the system itself that precipitated the momentous shift to the “monopoly capital” phase of the system at end of the 19th century. “To imagine,” Paul Baran and Sweezy pointed out in Monopoly Capital, that the system “could possibly be regulated in the public interest would be to imagine away the very characteristics of that society which make it what it is.” (1966, 111)
Stated plainly, the theory of monopoly capital deals with the implications of the rise of giant corporations. Monopoly Capital, hugely popular when it was published, investigates the many significant implications of this change in the system; for example, changes in the form of competition, the rate of introduction of innovations, the role of the state, and, most importantly, the tendency to economic stagnation and crisis. It is beyond the scope of this essay to explain the theory in detail,[3] but it should be obvious that there are significant problems with uncritically adopting the mainstream rationale of both the crisis and the potential for building a green capitalist economy.
For example, we should not be surprised that the Big Three built SUVs instead of hybrids: the former were more profitable (don’t think they didn’t do a cost analysis) and CEOs are under legal obligation to shareholders to turn the highest profit. Lately, even for Toyota (also in dire economic straits), according to Bloomberg.com, “only the new Sequoia and Lexus LX SUVs recorded sales gains, with every other model across the Toyota, Lexus and Scion line falling.” Under these circumstances, should one expect Toyota to start pumping out more hybrids (not that this would solve any environmental problems)? This highlights the irrationality not of “bad apples” but of the system.
Given the proportions of the current crisis, business and finance’s singular priority is to restart economic growth. To preserve themselves, they will obviously welcome, even demand, the infusion of taxpayer funds but flee from the table when the bill comes due. With the broader political-economic power structure intact, any “green” or “progressive” stipulations attached to these funds will be shirked, regulations subverted or repealed, and profits increased only at a cost to workers, consumers, and the planet, just as in the past. Without a mass social uprising, on the scale of the 1930s it is likely politically impossible to overcome the vociferous opposition to government intervention on the scale necessary that will inevitably surface amongst firmly entrenched oligopolies.
Continued in Pt.2…
[1] Indeed, productivity is a very difficult phenomenon to model. The argument that the increased productivity of the “new economy” of the late 1990s was the result of technological innovation is accompanied by caveats from the likes of Alan Greenspan. Greenspan “insists that wages have been kept down and unit labor costs restrained by increased job insecurity of workers at any given level of unemployment, due to globalization and the creation of more flexible labor markets” Instead, “increased class struggle imposed from above and the increasing costs of losing a job (particularly given the rising indebtedness of the working class), gets closer to the truth in explaining why ‘wage inflation’ did not ignite during the economic expansion, than do claims regarding structural improvements in productivity…underlying this of course are structural problems of overexploitation, uneven distribution of income of wealth, and lack of effective demand that are always present under capitalist conditions. Such basic truths of accumulation, which were widely acknowledged in the days of the Keynesian revolution, remain as valid today as ever-the New Economy notwithstanding.” (The Editors, “The New Economy: Myth and Reality” Monthly Review, April 2001)
[2] See Harry Magdoff and Paul Sweezy, The Deepening Crisis of U.S. Capitalism (Monthly Review Press, 1981), chapters 11 and 16. “An unrelenting growth in productivity is needed for one and only one purpose in this country: to enable capitalists to make greater profits and accumulate more capital…The truth is that a rational society in the United States-one concerned with people’s needs and with the conditions under which they spend their working lives-would be more concerned with reducing than increasing productivity.” (126)
[3] Obviously one would start with reading Monopoly Capital, but if you are interested in current applications of the theory, see The Great Financial Crisis: Causes and Consequences by John Bellamy Foster and Fred Magdoff.
Thanks for the thoughtful piece. Unfortunately you’ve significantly misrepresented the ideas and positions of the Breakthrough Institute, but before I respond, I’m hoping you can clarify a couple things. You quote an article from Monthly Review asserting the following:
“The truth is that a rational society in the United States – one concerned with people’s needs and with the conditions under which they spend their working lives – would be more concerned with reducing than increasing productivity.”
Two critical questions arise:
(1) Do you agree with the assertion that we should aim to reduce our productivity?
(2) If you don’t believe productivity growth is the primary driver of increased prosperity (or that it may even reduce prosperity), how do you propose that developing countries (or any society) become more affluent?
Thanks for your query. You seem to have noticed that the authors of the article were referring to the U.S. in particular. If you had taken the time to look at our source, you would have found the following just above the part we quoted:
We cannot end this examination of the current phoney campaign about sluggish productivity gains without at least raising the truly fundamental question: Why do we need more productivity? If we were talking about a Third World country, the answer would be obvious. There productive capacity in field and factory is woefully inadequate to meet the basic needs of the people. Because of that, a socialist country, or one striving to achieve socialism, would have to commit itself not only to provide jobs for all, but also to increase the capacity of workers to produce more.
But what about an industrially advanced country like the United States? Here we have a skilled labor force and an enormous productive capacity. If still more productive capacity should be needed, we have the knowledge and the means to create it—witness what happened during the Second World War. Yet despite all this available and potential wealth we have mass unemployment and poverty. Moreover, in addition to the army of unemployed, there are many millions presently engaged in wasteful and anti-social work who could be transferred to more useful productive activity. In view of the extent of our idle and wasted human power and of our enormous productive capacity, we surely don’t need enhanced productivity to produce even much more than we are now producing. We have the productivity and the resources, in’ fact, to produce all that would be needed to eliminate poverty and provide everyone with fuller and richer lives.
We would not have included the quotation if we didn’t believe it, to answer your first question. Nowhere in our piece do we assume that certain Breakthrough Fellows necessarily represent “the Institute”. Further, we have written in good faith that all of our quotations are correct and that we do not take any of the quotations out of context. We welcome a response.
Because a society produces the most stuff doesn’t mean that its people are better off. And I wouldn’t want the desire for affluence to be the guiding principle in my developing nation. I suggest reading into steady state economies. Herman Daly is a good contemporary economist to read.
Teryn,
Thanks for getting this conversation rolling! I didn’t have anything to do with the article but wanted to lend some thoughts to your two critical questions.
1) Yes! That is if we define productivity as the output of our entire life time. But if we talk about increasing productivity of our working hours, than maybe productivity is OK. As long as we’re significantly reducing the hours that we work. Because what we’re producing is material goods and other silly services which aren’t needed in our affluent society. In fact the goods that are most scarce in our current society are 1) health, 2) community, 3) family, 4) time, and 5) spiritual fulfillment. AKA Happiness. None of these things are connected to productivity, and in fact seem to me to be negatively impacted by demands of increasing material productivity.
2) This is different from development, which surely needs a boost in productivity to lift people out of poverty. But once a society meets the basics of Maslow’s hierarchy, then the rest of them can’t be met by increased productivity. We passed that threshold in the united states near 100 years ago. And since that time we work longer hours for less pay to have more crap that makes us depressed. (see TV) So the problem is not a lack of productivity but a mis-allocation of resources.
Two questions for you. Do you think we should be striving to increase prosperity here in the US and that we should be trying to become more affluent?
Given our current economic and environmental circumstances it seems appropriate to ask whether we might just want to revisit a capitalistic standard for decision making that has and will, unfortunately, continue to govern policy priorities and public as well as private resource allocation. Namely, can the enterprise or product being considered pass the”Commercial Viability” tests? “Commercially viable” ought not be the sole standard upon which a nation determines its fundamental components needed for economic and social transformation. Schumpeter and Sweezy implicitly accept this standard as integral to capitalism and therefore, offer no comparative socialistic standard with which to challenge the new capitalists of the late and early nineteenth century. Greenspan and company, Ayn Rand, insisted on profitability as the raison d’etre for all policy choices. We must now for self preservation shed these standards, if only temporarily to effect immediate in energy and environmental transformation. With these to sectors we will uncover the basis upon which to reduce not only our financial burdens but our resistance to institutional change in health care and education.
As a nation on the precipice of economic depression we have very little time to allow the return of the magic of unfettered competion. In the critical area of environmental security the most appropriate standard would be one where the source of funding allocates on a basis of the highest net benefit to society. Whose technology improves the commons more by reducing CO2 the most.
The smallest ratio based on (a unit of CO2 emissions/per dollar of public/private funding.)
We can review expierence of all renewable technologies against this standard. Clearly, other standards will be needed but they should not replace the above.
Because in our current circumstance the objective function is to restore a healthy environment as soon as possible. We spend billions subsidizing the wrong things every year. What marginal benefit is there to pouring billions into ethanol as well as carbon sequestration research when in reality we need to eliminate the source, not offer a carrot for the production of more CO2 under the guise that someday ethanol will be affordable without subsidies and coal will be clean.
We would be infinitly better off by repealing laws which prohibit cultivation of hemp for industrial uses. Today industrial hemp is cultivated in Canada, China, Russia, Hungary, Germany, the Netherlands, France, Spain, England, Poland and many other Eastern European countries.
Industrial hemp can yield 3-8 dry tons of fiber per acre. This is four times what an average forest can yield. It can replace wood fiber and help save our forests. Trees take approximately 20 years to mature – hemp takes 4 months. Hemp is the perfect source for fuel. It produces more biomass than any other plant. If we had to pay at the pump for all the military costs to keep the oil flowing clean burning alcohol fuel produced from hemp would be a bargain. Yet the fossil fuel culture and its mantra of “commercial viability” prevents the use of this resource.
Renewable energy technologies like turbines that extract energy from flowing water are intuitevly no or low CO2 contributors. The are constant, clean, replicable at low costs, and can contribute to building local, regional distributive systems. Since we have tens of thousands of sluiceways in the U.S. these scalable turbines are ideal producers of energy.
Teryn Norris asks (If you don’t believe productivity growth is the primary driver of increased prosperity (or that it may even reduce prosperity), how do you propose that developing countries (or any society) becomes more affluent?
I question the need for increased prosperity driven by productivity growth as a necessary and sufficient condition for affluence. Depends of course if we can agree on a definition for affluence. Is it the affluence of Mormans, or the affluence of the Amish, both groups survive and flourish?
And both have high rates of productivity. The difference is in what they value. It’s the same in all societies. The old saw is appropriate here, “Many know the price of everything, and the value of nothing.”
Thanks for your response, Jay. My words exactly. Teryn, what I translate your vision of a prosperous future for humanity as is depressing and kind of terrifying.