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Why we need a new Marx; because the market isn't moral.

Only 11 people came to his funeral: Karl Marx was ued to being an unpopular guy. Still, 1991 might have thrown him. As the yoke of communism was lifted from a quarter billion people, apostasies abounded. Forget the erstwhile Soviet Union: Even China dismissed Marx's ideas as "not necessarily appropriate" to the times. And after 35 years of tilting at privately owned, socially irresponsible windmills, Britain's stalwart Marxist Review ceased the struggle.

In the epic contest between Marx and Adam Smith, Smith's market economy has won in a rout. As Maggie Thatcher recently remarked, "The whole world is now following the American lead." But don't imagine Marx recanting in his grave: There are still a few glitches in our system that would send that old schadenfreude down his spine. In the salad days of 19th-century capitalism, profit-motivated entrepreneurs left beetles in the bread; today they leave fecal matter in the whitefish. His capitalists poured gunk into the Thames; ours leak tritium into the Savannah. And more than a century after Das Kapital, those prospering capitalists still leave behind a politically marginal class of improverished people.

Nine million of us are out of work; 35 million don't have health insurance; 13 percent live in poverty as the income "gap" between rich and poor stretches into a canyon. Even Marx, who had the soul of an accountant, would be sick of the figures. But he'd see that all this misery can't be blamed on business cycles alone. In the eighties, a decade that fuel-injected the incomes of the upper and upper-middle classes, the ranks of the poor and near-porr burgeoned.

"Buy something," begged a recent ad for Range Rover, neatly summarizing Bush's latest recession remedy. "Buy a microwave. A basset hound. Theater tickets. A Tootsie Roll. Something. Because if we all wait for the recession to be officially declared over to start spending again, the problem will simply keep feeding on itself." Yet as the president prescribes more capitalism, he seems to be unaware of a problem more capitalism, from Marx's day to ours, perpetually creates: If the workers are too poor, they can't buy what they, or anyone else, produce. To Marx, that fact presaged the revolution. To us, it suggests a way out. Maybe what America needs in its overexamined economic convalescence is not more market after all. Maybe what we need is more Marx.

Well, not more Marx, exactly, but a reconstructed one: a Marx convinced finally that capitalism is the best way to organize our economic lives, who grasps the importance of investment incentives and a vigorous GNP, yet who sees capitalism's fault lines, from the unemployed worker to the polluted river to the cancerous down-winder. So seeing, perhaps he'll arouse some popular passion for the third party the old Marx most despised: the state, whos role in crafting capitalism with a moral dimension has never been more needed.

Capitalist punishment

Ahmad Saloum has a life so simple it could be an elementary school diagram of market exchange. A Syrian immigrant in Brooklyn, he accepts no government assistance. Instead, six days a week, the 27-year-old sells his labor--12 hours of it a day--to a Queens shoestore. In return, he receives $ 360 a week, which he quickly sends back into the economy in exchange for food and shelter. But even a fourthgrader could figure out what's missing from this economic case study: opportunity--in Ahmad's case a very tangible thing. After a year in this country, he speaks virtually no English. He cannot read or write it. He doesn't enroll in classes because his work schedule doesn't permit it; his stomach doesn't permit cutting back his hours. He'll be stacking shoe boxes for a while.

Ahmad's expansive working day is a classic capitalist tendency in action. With the machines bought and the rent fixed, labor--man--becomes the great economic variable. In order to maximize profits, the owner strives to get more work--surplus value--from labor. According to Harvard economist Juliet Schor, this phenomenon is no 19th-century quirk. The average employed American today is on the job 163 more hours a year than in 1970--that's 320 more hours a year than his German and French counterparts. Unfortunately, those extra hours aren't being exchanged for more cars, refrigerators, or even electric foot massagers. A recent study by the Joint Economic Committee found that middle-class and poor American families have been working harder for 20 years just to maintain the same level of real income. Yet the breadth of the committee's categories disguises the truly significant phenomenon: While wages for college-educated workers increased during the eighties, the earnings of the less educated plummented. More than 8 million working adults now reside on the wrong side of the poverty line.

America's working class, with its secretaries and pipefitters and security guards, looks a lot more comfortable than Marx's starving baker's boys, but two things about the working class's predicament seem to transcend time: It's still our most screwed population, and it still can't look to the government for help. When Marx charge that power tends to ally with capital, he wasn't just talking about Republicans, either. More than half of American families earn less than $ 35,000 a year, but when campaigning Democrats invoke the hardships of "average families," they are often using a definition of term that included all but the top 5 percent of American households--a generosity of vision reflected in their tax reform plans. Consider Bill Clinton's notion of tax relief. If you're an attorney making $ 100,000 a year, you'll get an $ 850 tax cut. If you're a nurse's aide bringing home $ 20,000, you'll get a break one-eight that size.

Of course, even if Democrats' tax relief plans really did try to give the average worker a break, a few hundred dollars' worth of rebates in the pocket wouldn't do much to address the root cause of his misery; chronically low wages, which are brought to us by a simple fact of oversupply. There are millions of Americans out there who'd jump at the change to have any job at all. But, as usual, the state is on the wrong end of the class struggle. During the past two decades, government's notion of the "natural rate" of unemployment has crept from 3 to 6 percent, while full employment stratagems have commanded about as much political currency as proposals for reviving the draft.

American's "reserve army of unemployed" makes capital feels secure, at least in the short run. High unemployment keeps wages low, restrains inflation, discourages turnover--in other words, it helps capital maximize profit. But in the long run, it yields too many poor and jobless people who buy no cars, houses, or VCRs.

Of course, talk of increasing the wages of the working class invariably evokes from capitalists bleats about global competitiveness--and it is hard to deny that high wages to autoworkers can have an effect on the price of Chevys. But American executive compensation is clearly not tethered to such rigorous standards of competitiveness, as evinced by the stat of the season: The ratio of an American CEO's income to that of an average worker is 116 to 1, compared to 19 to 1 for Japanese CEOs.

How to give would-be workers jobs, and thus needy workers all the leverage competitiveness will allow? One way would be get "competitive" with executive salaries--something layoff-leaders like GM have so far been loathe to do. While a million bucks lopped off the CEO's salary package wouldn't spread very deep across the company payroll--a fact executives are quick to point out--a few more millions withheld from the vice presidents, PR executives, and marketing mavens might.

Still, there might be other, more imaginative ways to give the working class a hand. In the eighties, for instance, the steel industry noted that if it abolished mandatory overtime, 30,000 new jobs would be created. The UAW estimated that, with similar changes in the auto industry, 80,000 more people would have work. (Hmmm, the new Marx would note: The number of unemployed autoworkers today is 80,000.) But we don't have to rely on speculation. When IG Metall, the German metalworkers' union, won a 37-and-a-half-hour work week, 300,000 new jobs were spawned. But imagine Ahmad asking his boss for shorter hours at the same pay for the good of the unemployed.

Here, a creative government might sweep into action, exploring ways to curb the tendency to tolerate low wages and high unemployment without unnecessarily burdening business. But instead of finding imaginative solutions, our government's quietly making things worse with a policy so familiar we can barely see it.

Retirement security and health care are two elemental human needs, yet the American system places the burden of paying for them squarely on the backs social security tax isn't just regressive; it's confiscatory. The combined employer-employee social security tax rates rose from 4 percent in 1955 to 15.3 percent in 1990. In 1970, the average fringe benefit package (which includes that other big-ticket item, health insurance) comprised 17 percent of salary packages; today, it's twice that.

This burden is perhaps the most significant obstacle to job creation in America, and apparently one of the least recognized. No major candidate. Democrat or Republican, has even floated the idea of removing the responsibility for health insurance and retirement security from the workplace altogether. The result isn't just that many of us, employed and unemployed lack health insurance. It's that the sensible capitalist will do anything he can not to hire more workers and pay more fringes. It's far more sensible to horsewhip the ones he's got.

That government should provide direct, meanstested pensions and nationlized health care is self-evident to most industrialized countries, for the usual sappy humanitarian reasons. The new Marx might explain the compelling economic side effect: Reducing the cost of hiring extra workers would give businesses an earthly reason for doing the Lord's work.

Fish story

Still, when Marx observed that "capital is reckless of the health or length of life of the laborer, unless under compulsion from society," long hours and low pay weren't the half of it. He was thinking of basic human safety--something some capitalists could still think a little harder about. Consider the steel manufacturer Nucor, which runs 22 steel mills and plants across the country. In profit-maximizing terms, it's doing swell: its plants are five times more labor-efficient than the typical Japanese mill, which, needless to say, is a heck of a lot more productive than the average Pennsylvania plant. Unfortunately, Nucor also has the highest accident-related death rate in the industry, more than double the industry average. It's not in Nucor's immediate self-interest to worry about those casualties. There are plenty of folks in the rural areas where Nucor operates who'd drink a cup of molten slag to earn ten bucks an hour.

If we can't expect capital to treat its own workers decently, we certainly can't expect it to worry about the effects of sulphur emissions on communities 300 miles away. That's another capitalist tendency a smart government could rein in. But does it?

This winter, Consumer Reports sleuths descended upon shops and supermarkets in New York City and Chicago to buy fish. Of 113 samples purchased, 29 percent were spoiled and 44 percent contaminated with fecal bacteria. That kind of supply-side venality makes perfect sense in profit-making terms. Why throw out fish you can sell, especially when lax government regulations virtually assure that you can get away with it? For years, the fish lobby has successfully wriggled out of the mandatory inspection laws required for poultry and beef.

The new Marx would see that the only way to ensure conscienctious capitalists is to have good watchdogs nipping at their heels. And our gut reactions to leaky breast implants and fetid clams suggest that Americans believe that, too. But government? In Marx's day, government toadies helped cotton-processers eviscerate factory reforms; in ours, they help auto manufacturers shall the Clean Air Act.

The old Marx, incapable of envisioning a government committed or muscular enough to stand up to capital, gave up entirely on the democratic state. But if capitalism is indeed the way to go, the new Marx posits, perhaps its inherent injustices can be countervailed by an aggressive government. Perhaps the state can play as heroic a role in the new order as the proletariat was to have played in the last one.

Heaven from Penney's

Heroic government? The idea seems ludicrous today, after decades of leadership that has viewed the government and the market as antagonistic forces. But government can improve American capitalism; in fact, it already has. One the eve of Franklin Roosevelt's inauguration, with a quarter of the American population unemployed and factory production halved, Reinhold Niebuhr wrote his famous epitaph for American capitalism, expressing the fervent conviction that it ought to die. Yet an activist administration not only restored faith in both government and capitalism, but--thanks to massive spending on public works and defense--paved the way for an economic boom that lasted half a century. While the best that Bush can summon up as a cure for economic crisis is a plan to dole out our tax rebates early, FDR in one term abandoned the gold standard; created the FHA, FDIC, and TVA; and put securities cops on Wall Street--activism that had lasting repercussions. In fact, acceptance of government's role in tempering the excesses of capitalism became so well ingrained in the American psyche that, as late as the early seventies, a Republican president was coerced by public will to create OSHA and the EPA.

Can you imagine FDR shopping at Penney's to stop the Depression? He didn't have to. He had better ideas, primarily because his personal commitment drew a legion of talented men and (occasionally) women to Washington determined to defeat the Depression. Harry Hopkins came, along with Abe Fortas, Paul Porter, and Thurman Arnold, who forsook a professorship at Yale Law to work in Justice's antitrust division. At the famous "Little Red House" on R Street shared by brain-trusters Tommy Corcoran and Ben Cohen, the birthrate of ideas about government's possibilities soared.

While some of those people came to Washington because there weren't jobs elsewhere, others were compelled by the idea that, as one of FDR's advisers, Adolf Berle, put it, declining a role in government might be declining a place in the history of capitalism. And it might have been. Although the government these idealists concocted had more than a few Rube Goldberg gears, it nevertheless managed to achieve several missions impossible: restoring faith in the banks, restraining prices during a major war. In 1936, when a Canadian journalist asked Roosevelt what all his policy pyrotechnics were meant to accomplish, the president shrugged. "To do what any honest government of any country would do--try to increase the security and happiness of a larger number of people."

How did our faith in the worth of that mission change so much that by 1980 Ronald Reagan could win a vast electoral majority with the assertion, "Government isn't the solution to our problem, it is our problem"? In part because Reagan was right. As early as the late thirties, the civil servants who had given Roosevelt's rhetoric credibility had begun to plant the seeds of the eighties' disenchantment.

For starters, folks like Corcoran, Arnold, and Fortas, who established a tradition by coming into government, fostered a second one by leaving via the revolving door. (In his first few months out of government, corcoran reaped $ 100,000 peddling his influence to big business and foreign governments.) And the cost of the revolving door was greater than a simple loss of talent. When other bright young men entered government, some did so with an eye to cashing in later--which meant not offending corporations that might eventually hire them. That cynicism fed the natural tendency of the regulatory body to become waterboys for the regulated group. (America's cod-eaters don't have a bumptious lobby to keep the FDA in line; America's fish processers do.)

Still, it wasn't just that the brightest were coming in briefly only to walk out to become rich; it's that fewer bright ones were coming in, period--a phenomenon fostered by a succession of presidents from Eisenhower through Bush who were either idifferent or downright hostile to the civil service. While the appeal of activist government, and thus the quality of public servants, resurged brieftly after Kennedy's election and again during Johnshon's WAr on Poverty. America's expectations for government had been gradually lowered. Add to that Vietnam, Watergate, IRS screwups, and diabolic clerks at the DMV, and the stage was set for Ronald Reagan. In 1986, one of the president's personnel officials encapsulated the prevailing sentiment in The Wall Street Journal: "Government's goal should not be employee excellence but employee sufficiency." With that kind of clarion call to public service, it's no wonder the Volcker Commission found in the late eighties that 90 percent of college honor students had never seriously considered working in government. After decades of neglect and narrow thinking, antigovernment rhetoric had become a self-fulfilling prophecy.

Today, our market needs help, but it's unlikely to get it from a ederal bureaucracy run by the diffident and the mediocre: a government that requires carpentry trade schools to have libraries but not to prove that they've taught kids a skill; a government that mandates the number of inches between ladder rungs and the shape of stuffed teddy bears' ears but can't find answers to key questions about job shortages, the health-care crisis, and countless environmental hazards. Thus even in this recession, Americans have about as much faith in government's ability to rectify capitalism as the old Marx did. National health insurance? Who'd trust the government to oversee our chemotherapy when it can't even deliver our mail?

That's precisely why we need a new Marx now: someone who understands where the market fails and has the energy to rethink government's role in fixing it. The choice isn't, as conservatives and liberals tend to cast it, between government and no government, between furious regulation and indiscriminate "regulation freezes." The alternative is smart, imaginative, efficiency-oriented government action. And it simply won't materialize without leadership.

As the post-Marx era dawns, our president can do what he's been doing all along: advise us to take our tax rebates to the mall and buy socks--poverty and unemployment and other quirks of the market be damned. Or he can decide that this is a signal juncture in the history of capitalism--the moment when, with creative government intervention, Adam Smith's work-in-progress might be perfected. The cynical 19th-century Marx would immediately put his money on the shopping trip. The new Marx, and the rest of us, should be dead set on providing the old man wrong.
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Author:Boo, Katherine
Publication:Washington Monthly
Date:Mar 1, 1992
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