Redistribution

 

As Bernie Sanders continues to triumph in Democratic primaries expect to hear increased denunciations of socialism. Along the way I suspect there will be denunciations of redistribution as well.

However, it’d important to understand that the crucial redistribution has already happened and the same people who are complaining the loudest are the ones who benefited the most.

Allow me to explain.

From the New Deal to the late 1970’s, America maintained a much more equalitarian economy where every worker, from the CEO down to production personnel, served partly as a manager, participating in planning and coordination as well as sharing in the fruits of rising productivity.

US corporations invested in continuous paid training of long-term employees, allowing them to rise up the ranks. At IBM, for example, a 40-year worker might spend more than four years, or 10 percent, of his work life in fully paid, IBM-provided training. Meanwhile, top executives enjoyed commensurately less control and captured lower incomes. This democratic approach to management compressed the distribution of income and status.

While this state of affairs enhanced widespread prosperity, not everyone was happy.

The wealthy and their management allies, who had seen their profits and prestige diminish during this period seized upon the stagflation of the 1970’s to stage a counter-revolution. A new ideal of shareholder primacy, powerfully championed by Milton Friedman provided the intellectual underpinning to this ideology. Shareholder primacy argued that “the paramount duty of management and of boards of directors is to the corporation’s stockholders.”

This ideology of shareholder value as the highest responsibility of a corporation allowed a new class of management consultants–epitomized by McKinsey & Company–to focus on efficiency and to pursue this duty by expressly and relentlessly taking aim at the middle managers who had dominated mid-century firms, and whose wages cut into shareholder profits.

McKinsey framed its path to downsizing, which the firm called “overhead value analysis,” to deal with this problem. As McKinsey’s John Neuman admitted in an essay introducing the method, the “process, though swift, is not painless. Since overhead expenses are typically 70% to 85% people-related and most savings come from work-force reductions, cutting overhead does demand some wrenching decisions.”

This fundamental redistribution thus implemented and rationalized a transformation in the American corporation. Corporations downsized in response not to particular business problems but rather to a new managerial ethos and methods; they downsized when profitable as well as when struggling, and during booms as well as busts.

There was an appreciation of the societal costs these wrenching decisions might cause. When IBM abandoned lifetime employment in the 1990s, local officials asked gun-shop owners around its headquarters to close their stores while employees absorbed the shock.

I wonder if it’s a coincidence that workplace massacres began happening during this same period?

In effect, this fundamental economic redistribution allowed corporations to replace lifetime employees with short-term, part-time, and even subcontracted workers, hired under ever more tightly controlled arrangements, who sell particular skills and even specified outputs, and who manage nothing at all.

This is the world we live in presently. It’s called the Gig Economy.

Mid-century, democratic management empowered ordinary workers and disempowered elite executives. Today, top executives boast immense powers of command—and, as a result, capture virtually all of management’s economic returns. Whereas at mid-century a typical large-company CEO made 20 times a production worker’s income, today’s CEOs make nearly 300 times as much.

Now that’s some redistribution.

Going further, what obvious is the central role that redistribution has played in fueling the enormous economic inequalities that played no small part in the election of Donald Trump and now threaten to turn the United States into a caste society.

At this point I’m pretty sure that the feral elite who control the DNC are going to pull out all the stops to prevent Sanders from becoming the Democratic contender which is too bad because his candidacy would offer an amazing window into the the kayfabe our political process has become.

For one thing, an election between Sanders and Trump would expose the Resistance for the phonies they are. For all the talk of Donald Trump as some sort of Manchurian–Nazi/Russian puppet, if the choice were between Sanders and Trump I’m pretty sure that all the wealthy liberals would vote for Trump. Think about it, from the standpoint of those liberals tied to investor-class interests, a Trump victory in 2020, even if it were to raise a serious threat of authoritarianism, could be less disturbing than a Sanders-led, political realignment that threatened their redistributed gains.

Not only that but all the manipulations and obvious hypocrisy has the potential to cause profound, widespread cognitive dissonance. If enough people in the world’s most powerful nation wake up to the fact that they don’t have the kind of political system they were taught about in school, if they realize that everything they’ve been told about how their government operates is a lie, if they realize their lives have been made so unnecessarily difficult by a ruling oligarchic class with a vested interest in keeping them poor and distracted, well, then we’re looking at an actual revolution.

In this transformative milieu language matters.

Crucially, socialism and redistribution are pejoratives aimed at Sanders and his supporters to divert attention away from the fact that 40 years of redistribution has resulted in socialism for corporations and their wealthy owners and the savagery of the “free market” for the rest of us.

 

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