The Paradox of Capital

A lot of people have been fired in the name of productivity.

The boss hires a third party consultant to deliver the bad news. An administrative assistant meekly collects the victim's personal items, handing him a cardboard box in exchange for a career. A rent-a-cop escorts the victim from the building, shaking his head, saying, "you know, I'm just doing my job." Everyone else breathes a sigh of relief, opening their Outlook calendars and canceling that vacation. On a Friday afternoon, another poor schlub is cast out into the austere wilderness of the job market.

Down the hall from the ritual beheadings, a kid fresh out of school takes an unpaid internship in the hopes that it will lead to an entry-level position at a place that is letting go all of the employees who have enough tenure and health insurance claims to cost the boss something. He's living at his parent's house, and delivering pizza at night for a little extra cash.

In the boardroom, company executives pour over a PowerPoint full of graphs and tables that show the employee raises, benefits, hours, and wages of those poor souls without stock options or an MBA. They're able to close down half the accounting department because of some new software. Their product can be made at half the cost across the world. Their competitors are ravenous. This is no time for a raise. There will be no bonus this year. The people downstairs should be glad we still need them.

Competition is spoken of as a virtue in the same way that gladiators who kill other gladiators are spoken of as honorable warriors. Competition trims the fat, separates the wheat from the chaff, culls the sick from the healthy. You must compete or die, but playing the game leads to glory. But for a civilization, as opposed to a conglomeration of individuals, competition can be a race to the bottom just as easily as a race to the top.

Neoclassical economics is rational and internally consistent, but it considers power to be some extraneous variable even though it is square in the middle of the behaviors it intends to model. Neoclassical economics posits that the tension between labor and capital can produce high-quality goods and services, and it does, provided that the tension between the two is balanced. Too much power in one direction or another can mess up the whole market dream. If labor has the upper hand, products are crumby and expensive. We hear that all the time. It's the unions who did GM and Chrysler in. That's probably true, but if it is, so is its converse. If capital has the upper hand, products are stellar and cheap, but labor doesn't even have the money to buy what they make.

One man's productivity increase is another's job, is another's mortgage payment, is another's tax payment, is another's grocery bill. Too many of us are caught in what Marx rightly called a "paradox of capitalism." The guy who costs the company money in wages is the same guy who'll be buying the company's product at the mall. Hardcore businessman Henry Ford recognized this, and paid his people enough to afford a Model T. We're feeling the consequences of low wages: people can't afford to by what they're selling.

In order to save capitalism, the people in charge need to brush up on their Marx. We've had enough Hayek and Friedman for now. Stock markets are doing ok, executives have never done better. Capital is plentiful and ready to work. This is a labor crisis.

Unlike Marx, I believe that this tension between labor and capital will always be there. The alternatives on either side are untenable. But I've heard enough from the monied interests who claim that there is no choice, that people should take what they can get and like it. I'm tired of the corporate apologists who tell us to suck it up. People are making the same amount of money as they did in 1998, and have far higher expenses, even as our GDP has increased about 20 percent. Capital has too much power. Labor is more than just a cost of doing business, like the price of wheat or pork bellies. We depend on it for prosperity as much as we depend on capital for production.

Maybe productivity can come from somewhere else instead of that guy they just fired. At least for a little while. Please?