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"Compete or Die"
Why do capitalists have such an insatiable thirst for profit? Before capitalism, ruling families consumed the surplus, demanding the biggest, the best, and the most of what was produced. Capitalism transformed the goal of production from consumption to accumulation. Even though the economy of the Middle Ages was dominated by agriculture, there was an embryonic class of capitalists that operated small workshops and bought and sold goods. Over several centuries, this class grew in size and influence until it began to challenge the rule of the landed aristocracy. The French Revolution (1789–1799) marked the first capitalist revolution. The capitalist class replaced the feudal system of production-for-use with a new system of production-for-profit. To the prime directive of all class societies, “Seize the Surplus,” capitalism added a second directive, “Compete or Die.” All capitalists are engaged in a race to accumulate capital. As the previous chapter explained, capital is surplus extracted from the worker that is used to extract more surplus. There is a limit to how much surplus can be consumed, but there is no limit to how much capital can be accumulated. In the 19th century, Karl Marx described the driving force of capitalism as, “Accumulate, accumulate! That is Moses and the prophets! Accumulation for the sake of accumulation, production for the sake of production.” The capitalist cannot stop competing for profit. Capitalist A buys a knitting machine so that his workers can produce more sweaters at a cheaper rate. As his profits roll in, other capitalists rush to purchase knitting machines. Soon, sweaters glut the market and the price of sweaters plummets. Capitalist A has lost his advantage. If he wants to stay in business, he must find another way to raise his profits.
Employers lengthen the workday by demanding overtime. Unpaid overtime is even more profitable. According to the U.S. Labor Department, the practice of working “off the clock” is illegal and widespread. The workday is also lengthened when wages fall so low that more than one job is needed to make ends meet. Productivity rises when workers don’t take holidays and when employers don’t replace workers who fall ill, are injured, retire, or quit. Like speeding up the assembly line, deliberate “short-staffing” forces those who remain to work harder for the same pay. As if people weren’t working hard enough, performance-enhancing drugs are being developed to keep people working longer and performing better. One study found that a compound called CX717 helped sleep-deprived monkeys perform better than when they were well rested. Non-sleep-deprived monkeys who were given the drug did even better. It is more profitable to overwork one section of the labor force and keep the rest unemployed than it is to provide jobs for everyone. Maintaining a pool of unemployed workers pressures those with jobs to accept conditions they might otherwise reject. The unemployed are not rewarded for boosting the profits of the capitalist class. On the contrary, the jobless are condemned as “free-loaders,” even though the capitalists are the ones getting the free ride. Productivity rises when more workers accept temporary, part-time jobs that typically pay less, have few if any benefits, and can be easily terminated. In 2001, 31 percent of female and 23 percent of male workers in America were employed in such jobs. Productivity also rises when employers can pay lower wages to young, female, Black, immigrant, and disabled workers. Employers also increase productivity by cutting wages and benefits. The current attack on unions is being driven by the demand for higher productivity. Even as profits rise, retired seniors are being forced back to work to pay medical bills that are no longer covered by their pension benefits. Employers who hire undocumented immigrants can pay them less than the law demands and sometimes nothing at all. By shafting vulnerable workers, dead-beat bosses make super-profits. Each new industrial technology is designed to extract more value out of each worker. Each generation of workers is promised that if they accept the new technology, they will enjoy easier work, more leisure time, and a higher standard of living. Between 1973 and 2000, the output per worker per hour nearly doubled in the U.S. In other words, all the goods and services produced in 1973 could be produced in half the time by 2000. In her book The Overworked American: The Unexpected Decline of Leisure, Juliet Schor calculates that if workers controlled production: "We actually could have chosen the four-hour day. Or a working year of six months. Or every worker in the United States could be taking every other year off from work — with pay.34 Why did this not happen? More work, less pay
Most Americans are not only working longer and harder, they are also taking home less money. In the late 1960’s, the minimum wage in America was half of what the average worker earned per hour. By 2003, it had fallen to 34 percent of the average wage. A 2004 report called Working Hard, Falling Short found that,
Real wages have dropped so low that two people must work to earn the same income that one used to make. By 2000, half of all families were two-earner families, and more than half of low-income working families were headed by married couples. Families that depend on two incomes are less able to provide home-care for young children, the sick, and the elderly. The resulting stress on the family is discussed in the next chapter. Because the capitalist class seizes the surplus, rising productivity enriches the capitalist class at the expense of the working class. The difference in pay between executives and workers is one measure of this growing inequality. Between 1950 and the mid-1970’s, average executive compensation was about 35 times the average wage. By 1999, the average CEO of a major US corporation was taking home 330 times the average wage and 476 times the average blue-collar wage. By 2004, the proportion of the economy going home in workers’ pockets had dropped to the lowest level ever recorded. The land of opportunity should be renamed the land of inequality. Between 1992 and 2000, the incomes of the 400 wealthiest taxpayers in the U.S. increased 15 times faster than the bottom 90 percent, whose income barely kept up with the rate of inflation. In 2005, the New York Times reported that
Competition corrupts
Competition breeds corruption. When only winners are rewarded, people will do anything to win. Businesses cook their books, employers violate health and safety regulations, students cheat on exams, politicians take bribes, and athletes inject performance enhancing drugs. In 2006, the media reported that hundreds of Americans had been given tissue transplants from illegally-looted corpses. When a corpse can provide thousands of dollars worth of transplantable parts, someone is bound to cut corners. Corruption is standard business practice and occurs in all sectors of the economy, as those with access to desired goods and services enrich themselves by granting favors. According to Global Corruption Report 2006,
The greed for profit overrides human decency. In 2002, America’s largest telecommunications company announced that it was cutting 7,000 jobs on the East Coast. Just a year earlier, Verizon had hailed these same workers as heroes for the way they labored around the clock to restore communication networks destroyed on 9/11. The layoffs were not the result of there being too many workers. Quite the opposite. The company was experiencing rising numbers of customer complaints, more service disruptions, and longer waits for installations and repairs. Nor was the company suffering financially. Verizon’s net income had more than doubled over the previous quarter, and the company’s top executives were making millions of dollars. Driven by Compete or Die, they wanted more. This level of greed is difficult for most people to understand. Capitalists have no use for reciprocity; they profit only by taking more than they give. In contrast, ordinary people depend on reciprocity to survive. When my car blew a tire on a major highway, a passing truck driver pulled over and changed it for me. He refused my offer to pay him for his time, insisting, “If it was my wife or mother, I would want someone to stop and help her.” Life in the working class is precarious, and one needs all the friends one can get. As the saying goes, “It’s only the way the cards have been dealt, that I am the helper instead of the helped.” Interpersonal conflict While feeling one-up generates elation, feeling put-down generates resentment and a burning desire to get even, fueling interpersonal conflict and law suits. In 2003, four-and-a-half billion dollars were paid to settle medical malpractice claims in the U.S. Doctors are not being sued for making mistakes, because most doctors who make mistakes are not sued. Doctors are sued for being arrogant. When medical errors occur, doctors who express genuine concern for their patients are rarely sued; whereas doctors with a condescending attitude are sued repeatedly. Personal competition is fierce because success is determined by the ability to surpass or defeat others. The year I applied to medical school, there were 2,000 applicants for 64 places. All 2,000 applicants qualified academically; they could apply only if they had three years of university with a Grade Point Average of 3.6 or higher (out of 4). However, neither the government nor the medical profession wanted to admit all 2,000 applicants. The government wanted to limit the number of doctors to minimize the budget for medical care. The medical profession wanted to limit the number of doctors to keep physician incomes high. Even though society needed more doctors, and all 2,000 applicants were able and willing to contribute in that way, only 64 would be selected. For 64 hopefuls to win the medical-school lottery, 1,936 would have to lose. The admissions process claimed to distinguish the more worthy candidates from the less worthy ones. Its actual function was to make the lottery appear less arbitrary, because there was no significant difference between those who won and those who lost. At no point in this process did the 2,000 cry, “Foul! Unfair! Let us all in!” The few who were admitted believed that they were chosen because they were superior, while those who were rejected believed that they were turned down because they were inferior (or tried again in the belief that their superiority had been overlooked). In Disciplined Minds, Jeff Schmidt recounts how Black and White applicants to U.C. Davis medical school were set against each other when a few minority students with slightly lower test scores were admitted under affirmative action policies. A White student who was not admitted sued the university, claiming “reverse discrimination,” because his test scores were higher than some of the minority students. Schmidt concludes, They compete and we die Mad Cow Disease began in 1986 in Britain as a result of diseased animal carcasses being fed to livestock that were later consumed by human beings. Over a hundred people died and an unknown number were infected with a deadly brain disease. Millions of cows had to be destroyed, and the British beef industry collapsed. How did this happen? Cows are normally vegetarians. However, they grow faster when they are fed rendered protein. Rendering is the process of pulverizing discarded and diseased animal parts to produce a sludge of raw protein that can be incorporated into animal feed. (Rendered protein is also used to make pet food, fertilizer, cosmetics, concrete, tires, gelatin, candy, and many other products. The rule of Compete or Die demands that when one rancher starts fattening his cattle on rendered protein, all must do the same to stay competitive. Despite the British disaster, the lure of profit prolonged the feeding of rendered beef to North American livestock until 1997, when the U.S. Food and Drug Administration banned the practice. However, the FDA continued to allow diseased cattle remains to be fed to pigs and chickens, whose remains could then be fed back to cows. In December of 2003, the first case of Mad Cow Disease surfaced in the U.S. Before the diagnosis was confirmed, meat from the infected animal had been distributed to more than eight states, and the cow’s spinal cord had been incorporated into food for pets, pigs, and poultry. The government’s first concern was to protect the beef industry. As the news broke, Agriculture Secretary Ann Veneman stated, “We believe that the food supply is fully protected and that consumers should feel fully confident that the beef supply in this country is very safe to eat.” Another diseased cow was identified in December, 2003, and a third was found in June, 2005. In 2004, the Department of Agriculture refused to allow a Kansas beef company to test all of its cattle for BSE (the infection that causes Mad Cow Disease). The National Cattlemen’s Association applauded this decision on the basis that testing all cattle would imply that untested beef might not be safe. While BSE testing is inexpensive, more testing would increase the risk of finding the disease. In 2006, the Department of Agriculture announced that it was reducing testing for BSE from the 1,000 tests per day (about one percent of slaughtered cattle) initiated in response to the first sick cow to one-tenth of that. The reason given was that the risk of BSE was “extraordinarily low.” With less testing, the risk of identifying sick animals is even lower. Servant to capital The State presents itself as a class-neutral force. In reality, the State manages the capitalist system for the ruling class. The State also functions as a capitalist in its own right. The U.S. government is the biggest venture capitalist in the world; three-quarters of all American research engineers and scientists work in federally- funded enterprises. The capitalist State and the corporate class are inseparable. In 2006, coal industry executive Richard Stickler was appointed head of the Mine Safety and Health Administration. The mines that Stickler had previously managed injured workers at rates that were double the national average. No doubt they were also more profitable. State officials and corporate executives are interchangeable because they have the same goal — to serve business through favorable legislation and lucrative contracts. Almost half the politicians who leave Congress become lobbyists or “influence peddlers” for business. This is equally true of Republicans and Democrats. Well-connected lobbyists enable the industries they represent to influence State policies: energy companies decide energy policy, chemical industries dictate pollution regulations, drug companies shape drug policy. Former politicians are also valued for their ability to secure government contracts. In 2006, the New York Times reported that, in the three years since its founding, more than two-thirds of the senior executives at Homeland Security had become executives, consultants, or lobbyists for private security companies that sell services to the federal government. The incestuous relationship between the corporate class and the State is exemplified by Dick Cheney, former CEO of energy corporation Halliburton. Shortly after becoming vice-president, Cheney moved to deregulate the power industry, allowing energy corporations to inflate the price of power and pocket billions of dollars in profit. With Cheney as vice-president, Halliburton secured a contract with the Pentagon to service its global military operations. After the U.S. invaded Iraq, Halliburton was awarded a multi-billion-dollar contract to put out the oil fires, rebuild Iraq’s oil infrastructure, and provision the military. The rule of Compete or Die also dominates international relations. To give the advantage to its own capitalist class, each State strives to:
To regulate the supply of labor, the State sets immigration policy; polices the national borders; regulates and funds education; and licences the skilled trades and professions. When more workers are needed, more immigrants are admitted, and people are encouraged to have more children, or denied the means to control their fertility. To reduce the number of workers, governments clamp down on immigration and restrict the right to have children. During World War II, the federal government passed the Lanham Act, funding daycare for an estimated 600,000 children. This measure enabled more women to enter the workforce to replace men who had been sent to war. When the men returned after the war, the Lanham Act was terminated and women were pushed back into the home. Slave-owners were responsible for feeding and clothing their slaves, and feudal lords had a duty to care for those they ruled (noblesse oblige). The capitalist class is so obsessed with accumulating capital that it is willing to work its laboring class to death. The industrial revolution of the 19th century plunged workers into desperate conditions. Slum housing had little or no ventilation. Garbage and excrement littered the streets, and toxic fumes filled the air. Unguarded machinery mangled human limbs, as malnourished men, women, and children worked around the clock. Frederick Engels documents
The capitalist class refused to solve these problems, so the State stepped in to prevent total social collapse. Today, the State is responsible for public sanitation, housing standards, public health, and pollution control. Labor laws regulate the hours and conditions of work. The State also provides minimal support to the unemployed, the destitute, the elderly, and the disabled. These measures reduce or cushion the destructive effects of capitalist competition — preserving the beast by preventing it from devouring its own tail. Referee What happens when the interests of different industries conflict and both are lobbying hard? Consider the following example. General Motors spends more money on medical care than it spends on steel for its automobiles. As the New York Times points out,
The U.S. auto industry would be more profitable if the State took over the cost of providing medical care; however, a State-funded medical system would put the medical insurance industry out of business. Both industries make hefty political contributions. The inability of the State to resolve this conflict leads to convoluted bureaucratic dances, like the 2004 proposal to establish a “federally chartered but privately run reinsurance organization” for the purpose of “shielding employers from the most expensive medical cases.” Corporate welfare Corporate subsidies do not require that any jobs be created because these subsidies come without strings. Once they have the money, businesses can use it to downsize, contract work out, eliminate unions, and even move away. Such betrayal is inevitable because the primary function of business is to make profits, not create jobs. Governments understand and support this goal. The hype about job creation is designed to make corporate welfare more acceptable to taxpayers and voters. Government-funded social services are another form of corporate welfare. After workers in Flint, Michigan, made General Motors the biggest corporation in the world, GM abandoned the city. Instead of forcing GM to meet its obligations, the government subsidized GM’s move from the city by providing welfare to thousands of laid-off auto workers. The State enables employers to pay poverty wages by covering the difference between what workers earn and what they need to survive. Medicaid, Social Security, children’s medical insurance, free school lunches, Section-Eight housing assistance, income tax credits, and other social supports are a massive boon to employers. In 2001, the state of California spent $86 million providing food stamps and subsidized housing to Wal-Mart employees alone.
The State works to shift the tax burden of the capitalist class to the middle and working classes. Waged workers have taxes deducted automatically from their paychecks, while businesses have innumerable ways to avoid paying their share. In Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super- Business tax shelters cost the U.S. treasury an estimated $54 billion in revenue every year. By creating 881 offshore subsidiaries, the Enron corporation paid absolutely no taxes for four of the five years before it collapsed. Between 1998 and 2001, CSX Corporation made $900 million in profits and paid no taxes at all. On the contrary, it received $164 million in tax rebates. Twenty-one states permit utilities to keep the taxes they collect from customers. Between 2002 and 2004, Xcel Energy collected $723 million in taxes, paid none of it to the government, and received $351 million in tax refunds. In 2005, the Congressional Joint Committee on Taxation calculated that the federal government could increase tax revenues by $311 billion over the following 10 years if it pressed rich individuals and corporations to meet their tax obligations. However, the State has no interest in clamping down on the class that it serves and protects. In 2003, the IRS audited fewer than one quarter of one percent of corporate tax returns. Corporate tax evaders who are caught are seldom punished or even made to pay the money they owe. Furthermore, Congress periodically grants U.S. corporations tax holidays — times when they can import billions of dollars in overseas profits virtually tax free. The State also cushions the corporate class from market forces. Because production is driven by profit, the economy moves through a “profit cycle” of booms and slumps. When producing steel is profitable, everyone rushes to produce it. The resulting boom in steel eventually creates more product than can be sold profitably. “Excess” steel is left to rust, steel workers are laid off, and some steel companies go bankrupt. When steel finally becomes profitable to produce again, capitalists will compete again to produce it. This boom-slump cycle affects every sector of the economy. Despite talk about “market forces,” the State cannot allow large corporations to go bankrupt and take down chunks of the economy with them. In the 1980’s, billions of tax dollars bailed out the bankrupt Savings and Loans industry. Twenty years later, the federal government helped ailing industries to offload their pension obligations. In 2004, a federal judge ruled that the nation’s fourth largest coal company no longer had to provide medical and retirement benefits to more than 3,000 workers, many of whom suffer from Black Lung and other occupational diseases. A year later, a federal bankruptcy court allowed United Airlines to walk away from almost seven billion dollars’ worth of pension obligations, the biggest pension default in American history. Competition goes global Compete or Die is a global imperative; all capitalists need a home State to support them against their foreign rivals. Small industries rely on their State to protect them from foreign competition by setting up tariff barriers. Larger industries depend on their home State to help them penetrate foreign markets. The opposing interests of small and large businesses drive the conflict between “protectionism” and “free trade.” Workers lose either way. Protectionist polices shield smaller industries from having to compete in the world market. Eventually, these less-competitive industries fail anyway, as thousands of laid-off American steelworkers can confirm. Free trade policies make it easier for larger industries to penetrate foreign markets and to set up shop in countries where wages are lower, driving down wages at home. Workers can defend themselves against free trade and protectionism only by uniting across national borders. The “free market” is anything but free because every State does its utmost to further the interests of its own capitalist class. Farm subsidies are a good example. In 2005, the U.S. government paid farmers a record $23 billion in subsidies. These payments allow American agribusiness to dump a surplus of cheap food on the world market. Farmers in poor nations cannot compete with this subsidized produce and are forced out of business, making their countries even more dependent on U.S. food imports.
U.S. Major General Smedley Butler (1881-1940), who was decorated with two Congressional Medals of Honor and a distinguished service medal, had this to say about the link between business and the military.
War without end The United States emerged from World War II as the world’s dominant nation. Over the next 40 years, the U.S. and the Soviet Union were locked in an economic and military struggle for world domination called the Cold War. Because the Soviet Union was economically weaker to begin with, its efforts to match the U.S. in the arms race weakened its economy even further. When the Soviet Union finally collapsed in the late 1980’s, the United States emerged as the number one super-power. However, it wasn’t long before a new challenger appeared. At the beginning of the 21st century, the Chinese economy was growing so fast that it was predicted to match the U.S. economy within 30 years. In 2004, the U.S. produced six times more than China did. Nevertheless, China was producing 70 percent of the world’s toys, 60 percent of its bicycles, 50 percent of its shoes, and 33 percent of its luggage. China also accounted for one-third of the global growth in automobile sales and had become the world’s third largest producer of personal computers. The lure of profit continues to draw foreign investment to China. The average Chinese wage is five percent of the average American wage, and more than one billion Chinese represent a huge market for goods and services. While China poses a growing economic threat to the U.S., there is no contest when it comes to military power. The American military budget is greater than all other nations in the world combined. Not counting Social Security, the federal budget for 2007 was over two trillion dollars, half of which was designated for the military. The U.S. Defense Department budget alone is six times the military budget of Russia, and eight times the military budget of China. Nevertheless, the United States viewed China’s attempt to buy an American oil company as a threat to national security. For the U.S., national security means economic dominance, and China’s efforts to fuel its growing economy threatens that dominance. Compete or Die is no mere slogan. With economic and military rivalry intertwined, war is inevitable. The United States will sacrifice everything to maintain its global dominance. In 1980, President Jimmy Carter proclaimed that any attempt by another nation to control the Persian Gulf would be considered an attack against the U.S. and would be repelled by military force. Well before 9/11, the U.S. Department of Defense declared that, “the mission of the U.S. military today and tomorrow” is “full-spectrum dominance,” defined as “the ability of U.S. forces, operating alone or with allies, to defeat any adversary and control any situation across the range of military operations.” In 2002, President George W. Bush declared the right of the United States to use military measures (including nuclear weapons) against any nation that challenges the United States and to ignore international treaties or agreements that interfere with American interests. The current wars in the Middle East have the potential to ignite a Third World War that would wipe humanity off the planet. We can prevent that terrifying outcome by replacing capitalism with a sharing, cooperative society that has no need for war. That is what most people want. The insistence that war arises from human nature, not capitalist competition, is mistaken. As the next chapter explains, capitalism survives only by overriding the human longing for belonging and security. Summary 34. Schor, J.B., (1991) The overworked American: The unexpected decline of leisure. USA: HarperCollins, p.2. Susan Rosenthal is a practicing physician and the author of Market Madness and Mental Illness (1998) and POWER and Powerlessness (2006). She is a member of the National Writers Union, UAW Local 1981 and can be reached through her web site: www.powerandpowerlessness.com her blog: www.powerandpowerlessness.typepad.com Did you enjoy this article? Email the Author |
