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stiglitz makes some good points but misses the mark in his afl-cio speech: can’t fix what isn’t broken

September 16, 2013

Last week, Joseph Stiglitz, a relatively well-known, Nobel-prize winning economist, gave a speech at the 2013 AFL-CIO Convention in Los Angeles, California. On the one hand, I’m glad that Stiglitz is one of the few economists who’s been talking about the growing inequality, as well as pointing towards working-class organization as a means of resisting the depredations of capital and the 1%. But on the other, I think he puts too much faith in ‘the economy’ and the way it ‘should work,’ as well as the implication that our well-functioning ‘people’s government’ is “becoming a government of the 1%.”

I think Stiglitz is partially right in that some of the wealth inequality we’re currently experiencing is due to polices and laws that’ve weakened unions, eroded the minimum wage to the lowest level (in real terms) since the 1950s, that put Wall Street’s toxic innovations ahead of workers, etc. What I disagree with, however, is the idea that inequality isn’t a result of the way capitalism functions and the social forms (including the state) that that functioning engenders. I think our politics have always been ‘sick’ in the sense that they’ve always dominated by the interests of a privileged class of wealthy, ruling class elites, whether it’s been the white, male landowners of the late 1700s or the 1% of today.

Stiglitz says that our democracy is in peril, and that with economic inequality comes political inequality. But as David Harvey illustrates in Limits to Capital, part of Marx’s critique in Capital details precisely how the contradictions inherent within the capitalist mode of production produces a fundamental contradiction between the equality presupposed by exchange and the inequality via the exploitation of labour required to gain profit. So from the very onset, the kernel of inequality is already present within our political-economic system. And that inequality is the basis for much of the struggle between capital and labour.

Workers are, in principle, “free to sell their labour under whatever conditions of contract (for whatever length of working day) they please.” However, they also must compete against one another in the labour market, where capitalists who are forced to internalize the profit-seeking motive due to the coercive laws of competition purchase workers’ labour time with the sole purpose being the accumulation of profit (accumulation for accumulation’s sake), putting workers at a disadvantage on an individual level. (28-30) (One of the main reasons I favour some kind of universal basic income is that it has the potential to empower workers, decommodify labour-power by helping free workers from absolute dependence on wage labour for subsistence, and enlarge the nonmarket social economy.)

And that inequality in the economic sphere is further carried into the political sphere since the accumulation of profit on the part of capital in the form of money, which itself is a form of social power, gives capital (particularly as a class) a disproportionate political advantage, putting workers at a disadvantage on a broader political level. In addition, the more workers collectively resist the depredations of capital, the “more the capitalists are forced to constitute themselves as a class to ensure collectively that the conditions for progressive accumulation are preserved” (30).

In essence, this battle between capital and labour, between the 1% and the 99%, is a continuous battle. It’s easy to say that the divide between them can be fixed, that the proverbial ‘divided house’ can be reunited, if workers come together and organize in an effort to “restore not only democracy to Washington, but to the workplace” (or conversely, if capital, as a class, places limits upon itself). But I think that’s a lot harder, if not impossible, to actually do.

We can certainly do our best to organize and push for reforms to try and limit the 1%’s power and the damage done by the ‘enlightened self-interest’ of capital and powerful corporations, but as Stiglitz himself notes, corporations themselves are now considered ‘natural persons’ and have managed to acquire certain constitutionally-protected rights. A company and a CEO can get away with things no average working-class citizen could, and that’s precisely because the legal and political superstructures are built decidedly in their favour—always have been considering that the Founding Fathers themselves were mainly wealthy, ruling class elites, and the ‘aristocracy of our monied corporations’ that Thomas Jefferson was so worried about are simply the next evolutionary step in a long line of wealthy, ruling class elites.

Our economy was never ‘well’ to begin with. While circumstances have led to periods of high growth and low unemployment (the general idea of wellness), those periods were simply periodic events punctuated by periods of crisis and continuous battles between capital and labour. The ‘economy’ isn’t just a snapshot of historical prosperity; it’s the complex history of booms and busts and class struggle that’s characterized the capitalist mode of production.

Basically, all this is really saying is that the economic game is rigged. To fix these problems, we need to change the rules; and to change the rules, we need to change the system. Yes, workers need to come together and organize, but not to restore democracy to Washington or the workplace—to instill democracy and freedom where it’s never truly existed before. And to do that, they need to theoretically “unravel the constraints to the free application of human labour” (to steal a phrase from Harvey) in an effort to practically “‘expropriate the expropriators’ and so to achieve the conscious reconstruction of the value form through collective action” (38).


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