One of the major long-term threats to our nation is income and wealth disparity. The maintenance of long outmoded understandings of capitalism and property rights have only exacerbated a growing disparity of income and wealth that marginalizes, belittles, and dooms millions of men and women to a new dark age of hopelessness and despair. An unwitting weapon in the arsenal of a dominant class of a few over a subservient class of the many is the wage system. Wage slavery, the systemic lowering of standards of living, and the archaic assumptions of wages themselves are as pernicious a wrong as human bondage.
Of course, this income and wealth disparity is in a real sense reflective of the financial capitalism that dominates our economics in contrast to the underinvestment in industrial capitalism. It has resulted in the accumulation of unproductive wealth for the very few, and the reality that with lower and lower wages and income, consumer goods are for many Americans more and more out of reach.
The collapse of the family wage has been well documented by scholars such as Elizabeth Warren and Amelia Warren Tyage in The Two-Income Trap, for example, ”… a story of families with no savings, mountains of credit card debt, and mortgages that were through the roof. A story of flat-lining incomes, disappearing jobs, sky-rocketing health care costs, and out of sight college costs.”
The lack of or the downright systematic destruction of the family wage is a recurring and historic struggle that on occasion had been corrected in large measure by religious or union activism. With their institutional erosion, beginning in the 1970s when post-war parity ended, wages have never caught up with the cost of living but rather have lowered, an erosion and disparity that continues today.
The long list of added indignities to working men and women includes the elimination of full indemnity health care managed by non-profits, replaced by legislative act, with a fractured and unsatisfactory private health care system, and the intentional moving of industries out of communities into lower-wage countries without adequate redress. In addition, the tightening of traditional tools of working men and women that palliated the effect of stagnant wages, such as easy access to credit and unquestioned access to bankruptcy protection, was piece by piece irrevocably altered. The social contract was effectively abolished substituting in its place, regressive policy changes that have shattered the lives of millions, and which has written many Americans out of the illusion of a middle-class lifestyle.
These intentional changes to laws centered on progressive policy, for laws with predictable regressive and austere outcomes were in large part brought about by special interest lobbies serving an oligarchic economic scheme driven by Wall Street financial institutions. It was aided and abetted by a client class and public officials more than willing to cede power to Wall Street who acted more like a client class to those special interests than the guardians of their constituents.
Economist and scholar Yanis Varoufakis has pointed out that the end of the Bretton Woods arrangement, as the United States became a debtor nation and the ascendancy of financial capitalism over industrial capitalism, replaced its former economic scheme, essentially a “New Deal for the world” with Wall Street banking institutions funneling the world’s surplus through its door and providing Treasury Bills built on financialised derivatives to those nations.
The current economic scheme, which began its march to illegitimacy in the 1970s, collapsed in 2008 and the lending financial institutions, which have been hobbling along, essentially bankrupt at the time of the crash, have been bailed out by the government while ordinary people continue to suffer the effects of that collapse.
This immense build-up of wealth aided by the largest bailout to failing banks by the taxpaying public’s government has led to an unprecedented concentration of both income and wealth in the few and continued degradation of the many.
The income disparity has been well documented. Chad Stone, Danilo Trisi, Arloc Sherman, and Jennifer Beltrán in their study for the Center on Budget and Policy Priorities, entitled ‘’A Guide to Statistics on Historical Trends in Income Inequality’’ thoughtfully point out that beginning in the 1970s, ‘’income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow’’ and that ‘’the concentration of income at the very top rose to levels last seen during…the ‘Roaring Twenties’.’’
Wealth, which is even more concentrated than income, was found equally lop-sided in its distribution, according to the report. The report stated that ‘’the distributional financial accounts illustrate how little wealth the bottom 50 percent of households have (less than 2 percent) and how much the top 10 percent have (almost three quarters).’’ ‘The best survey data show that the share of wealth held by the top 1 percent rose from 30 percent in 1989 to 39 percent in 2016, while the share held by the bottom 90 percent fell from 33 percent to 23 percent.’’
We have been suffering from an economic and political environment that effectively enhances the few rather than the many, creditors rather than debtors, and private insurance interests rather than those who need care. This toxic economic environment has ruined those that have toiled or long to toil but have lost employment, savings, opportunity, hope, and dignity, burdened by debt for educational loans, yet unable to purchase in a consumer economy consumer goods.
In other words, every community outside of affluent areas has felt the economic collapse of their communities, and the men, women, children, and businesses of those communities have been and still are adversely impacted by substantial economic loss.
The shared prosperity notion after World War II essentially ended in the 1970s. With the ascendancy of financial capitalism, there is in finance less concern with an industry’s locus and more concern with financial turnover making worker’s concerns institutionally irrelevant while these financial institutions bailed out by the public, accumulate vast amounts of wealth that are essentially not recycled into the industrial economy.
The diminishment of a worker’s worth renders an employee a mere marginal reference in today’s industrial and financial scheme, not worthy of the profit and loss statement.
Ironically, the capitalists and financial banks who feared an international workers combine at the beginning of the twentieth century, have themselves become the internationalists leaving their home countries bereft of essential production of products as the recent pandemic has pointed out so vividly. The current failed financial investment system trumps concerns about quality of life and the future of all, for the profits and control of a few. The wages and quality of life of all people are drowned out as the few retreat into their gated communities, a self-isolation that began well before the pandemic.
In any analysis of change, it is helpful to look at what obstacles are presented to it.
We are more often than not, prisoners of time-honored but unquestioned premises and the assumptions and definitions that flow from those premises. Our own Declaration of Independence acknowledged this when it stated:
”…all experience hath shown, that mankind are most disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.”
Laws and legal premises however restated are somewhat bound and constrained by the ancient definitions, assumptions, and premises from which they are predicated, the forms to which we are accustomed in the expectation that this creates a sense of stability.
Change, and there has been much change over the years, comes during periods of stability as a result of changes in practice and understanding.
Yet these are not stable times. This age of instability calls for a radical questioning and reform of prior premises, assumptions, and laws, which in their omission, rather than enhance stability further social and economic injustice.
For example, the Scottish economist David Ricardo stated in his book Principles of Political Economy and Taxation that: “…the exchange value of a commodity is governed by the labor expended in its production.”
That analysis in large measure has meant an analysis of wages. Wages have been assumed to be the sole non-benefit compensation of the worker and have been included rightfully so in any analysis – Wages and Production, Wages and the Cost of Living to name a few economic indicators employed to determine cost. It has always been assumed that wages included compensation for the work done.
Wages in industry have traditionally been considered as the cost of hiring a worker to either produce or aid in the production of a product. This definition in the industrial and post-industrial age is surely awkward at best, as awkward as describing the great industrial and post-industrial oligarchic and in some instances monopolistic corporations and combines of today as artificial persons created by law engaging in rugged individualism.
Yet there is a missing factor in the cost of production analysis that requires a change, rather a correction, to our understanding of property, possession, and wages. It is a correction that will eventually need to be reflected in the law. It is change that will foster stability. Change that will reduce in some measure income and wealth inequality and the pernicious dominant- subservient model that has resulted in so many aspects of human let alone industrial relations being perverted to means and ends unworthy of the human race. The change demanded now will contribute to a kinder understanding of human worth as we make this modern world, a truly democratic society as we must, and as we shall, rather than the strained society we currently find.
Let us re-examine and question our understanding of wages as a small step in this direction.
Wages have not satisfactorily addressed the workers’ financial interest in the product of their works.
The exertion of labor is compensated by wages, but the labor dividend inherent in the produced product has never been adequately compensated for nor properly addressed. In actuality, wages are in a real sense nothing more, nothing less than compensation for the exertion of a worker’s labor. The worker has earned, however, an additional compensation, a value of labor in the product itself.
If wages are the compensation in fact for the exertion of labor, there must be due to the laborer an added labor dividend, which is the compensation due for the value of labor in every product produced. In this sense, labor has an ownership and possessory interest in the product itself through this labor dividend.
In other words:
If W= compensation for the exertion of labor and LD= compensation for the value of labor in every product produced then the formula that can be inferred is:
W+LD= Y of the individual laborer for work performed.
The definition of wages, property, possession, ownership, and control must be readjusted to include the Labor Dividend in every product produced. The Labor Dividend should be clearly reflected in every collective bargaining agreement.
Our definitions of property and possession and indeed control overproduction must be re-adjusted to include the Labor Dividend in every product produced.
As “Big Bill” Hayward once noted, “ The mine owners did not find the gold, they did not mine the gold, but by some weird alchemy all the gold belonged to them”.
The Labor Dividend is such that it should be recognized that the possessor of a product owes a fiduciary responsibility to the workers who produced that product for their fair share of the product itself in addition to wages. Failure to so account for it is nothing less than an unjust enrichment that should be acknowledged and be recovered by the workers or their representatives by law.
Failure to compensate workers for their ownership interest in the property produced will require equitable redress.
Justice Cardoso once wrote about the so-called constructive trust, “ A constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest equity converts him into a trustee.” Our existing understandings of ownership and property limit this principle to very narrow constraints than the lofty principle set forth by Justice Cardoso suggests.
Indeed these equitable principles historically inure more often than not to the employer rather than the employee.
Was the “conscience of equity” meant to be so narrowly construed?
In the case of what constitutes “ownership” and “property” and the premises, assumptions, and laws that follow therefrom we have reached a point where those understandings and those definitions no longer justify nor bring about a fair and equitable result, to the degree that they ever did. We must recognize a new understanding of possession and ownership, by the creation of an Industrial Workers Constructive Trust to protect the Labor Dividend.
It is up to the people and their collective representatives to insist on the inclusion of the Labor Dividend. It is time for an awakening amongst all the people that economic remedy is in their grasp. People are on the move to end racism and redefine policing policies, and economic reform along democratic principles must surely follow.
The solution, however, is fundamentally an economic rather than a political one. The ascendency of economic special interests over the political has never been more apparent.
The Supreme Court for example in its 2010 Citizens United v. FEC, 558 US 310, (2010) decision, as reviewed in an excellent 2015 article by Daniel I Wiener for the Brennan Center for Justice, stated “a narrow majority of the Supreme Court upended a century of precedent to declare that corporations (and, by extension, labor unions) have a First Amendment right to spend unlimited money on elections. Few modern Supreme Court decisions have received as much public attention or backlash. Justice Ruth Bader Ginsburg called it the worst ruling of the current Court, saying “[I]f there was one decision I would overrule, it would be Citizens United. Sixteen state legislatures and almost 600 cities, towns, villages, and other organizations have voted to support a constitutional amendment to overturn the ruling.”
The Court failed to recognize the predictable channeling of “dark money” by unaccountable non-profits, and the so-called Super-PACS and their often successful manipulation of public discourse. The Court failed to take into account that the political process has been even more removed from an electorate that feels betrayed, manipulated, and marginalized. Lastly, it ignored the current reality that the political world has itself ceded power to the Wall Street Financiers.
The current obsession and passion for or against certain political figures, however sincerely necessary and important, obfuscates the reality that power has substantially shifted to the economic financiers rather than the politicians. President Eisenhower’s admonition appears to have come true that Democracy has become “the phantom of tomorrow.”
Despite their immense power and wealth, ironically, it is that immense accumulation of the unproductive wealth of the powerful oligarchs and multi-national corporations that embody them which are rendering these financial capitalists antiquated and therefore under the scrutiny of mankind because of their utter irrelevance in engendering positive economic distribution to the many.
They are very relevant in the services they provide, but overall the accumulation of wealth they obtain does more harm to people than the services received by them. They and their financial allies have been favored for far too long.
As Professor Yanis Varoufakis and others have pointed out, much of the recent oligarchy’s technology has in large measure been the fruits of government and government-sponsored research. To the degree that public investment has been utilized the public is entitled to a return on that investment. The time for change is upon us.
Last year the largest corporations made a move. The Business Roundtable on August 19, 2019, issued its Statement on the Purpose of a Corporation. For the first time, it drifted from the mantra that the sole obligation of a corporation was to its shareholders and included “Delivering value to customers, investing in our employees, dealing fairly and equitably with our suppliers, supporting the communities in which we work along with generating long term value for shareholders”. The signatures to this commitment were updated in December 2019, February 2020, April 2020, and June 2020.
Corporate America has amended its calling. The signatories to this statement can begin by ensuring that workers have a seat at the table.
Now is the time for Corporate America to recognize the Labor Dividend in this country:
- They must address the loss of the Labor Dividend caused by corporate decisions to move labor production abroad, not through further training but by compensation.
- They must address the loss of income to the American people whose wages have stagnated while unproductive accumulated wealth reaches new heights.
- They must address how surplus wealth can be used to provide a decent standard of living not only to all Americans but to the workers of the world.
- They must foster a spirit of industrial democracy in a much more radical and meaningful manner than in the past. Every plant should have a labor council and be a self-governing entity in the spirit of Peter Drucker when he said, ”Above all, we shall have to prevent centralized bureaucratic despotism by building a genuine self-government in the industrial sphere”, and “The plant must be made into a self-governing social community.”
Direct Action has an important role in reshaping the view of the world from the few to the many, in the best tradition of American Democracy.
Direct action, an action that is lawful, peaceful yet powerful, of the people will help lead to economic change and peaceful change in the political sense. “Change will not come from above.”
Now is the time to express in a public demonstration that something is terribly wrong and that we as a people are not going to stand for it. This is neither a partisan nor ideological struggle but rather a struggle for simple human decency and the loss of economic control that over fifty years of economic upheaval have caused.
The time has come for a Great American Walk Out. Well organized and thoughtfully planned and executed, where men and women, peacefully and lawfully, at a fixed time and date walk out of the workplace for a fixed period to let the capitalists and all their minions know that enough is enough.
The organizational efforts of the One Big Union in this regard have never been more important or relevant. Now is the time to stand united for responsible change.
It would be well to keep in mind seven remedies of change.
Remedy No. 1:
The Value of Labor in every product must be recognized and the laborer as part of that product must receive a Labor Dividend as compensation for that product outside of wages. Further, loss of the Labor Dividend caused by the moving of industry abroad must be compensated.
Remedy no. 2:
The definition of ownership and property must encompass in this regard the laborer’s interest in the product produced, and the income due each worker adjusted accordingly.
Remedy no. 3:
The over-concentration of wealth can be put to use ensuring a quality life for all, not just a few.
Remedy no. 4:
The courts must reassess the economic barriers of relief and create an Industrial Worker’s Constructive Trust when workers are not compensated for the Labor Dividend in the product produced.
Remedy no. 5:
Men and women should join a “Great American Walk Out” signaling that people have had enough economic manipulation and calling for honest economic reform.
Remedy no. 6:
Men and women should join the One Big Union to be able to protect and defend the rights people have earned through the sweat of their brow.
Remedy no 7:
Industrial democracy and decentralized decision making by the workers in a self-governing work environment must be enhanced in our economic and corporate conversation, or democracy itself is threatened.
In conclusion, righteous anger is everywhere. Anger is the conscience awakening and it leads if properly directed by our free will to hope and selfless love.
Anger is the stepping- stone to clarity and the serenity of action that recognizes that commitment is based on the works you leave behind.
What shall be said of this angry generation? Did we leave behind a new understanding of property and possessions, and that every product produced contains a labor dividend to which a worker is entitled?
When one industry was displaced to another nation or region “to keep labor costs down” did we provide for those displaced workers compensation in an amount equal to the value of labor in the displaced product as if it were made here?
Did our new understanding cause definitions of property and possessions to be altered and reflected in law so that the law provides a true spirit of equity?
Did we leave behind a new understanding of property and possessions recognizing the worth of every man and woman?
Did we build a new world based on love, justice, and understanding or simply replace the domination of one people by another so ingrained in us is the desire to possess and control?
Unless all the people share in all the wealth, wealth is not clean.
Unless all the people share the hunger, hunger is unjust.
Unless all the people share in decision-making, decision-making, however well-intentioned, is part of the problem, not the solution.
The Value of Labor is right because all people have value. We must begin the task of systemic reform now.
Let a Great American Walk Out demonstrate peacefully and lawfully that as long as one person’s value is diminished humanity is diminished, that as long as one person is unjustly sent to prison we are all imprisoned, that as long as one person issued because of bad credit debt we are all debtors.