Category: Socio/Political Theory

There is only one class of people who are absolutely essential to the operation of any enterprise, and that is the workers. Workers do all of the actual adding of value that is the underlying function of all businesses. All the other functions, management, sales, marketing and ownership are simply supportive of the activities of the workers, and while often useful (though in my observation less often than one might think) are not in fact essential to the process. A group of workers could get together and run a business completely by themselves. Sole proprietors do it all the time. If management is thought to be useful, the workers could hire a manager who would be their employee. As for the ownership, they are the very least useful to the orderly and profitable running of a business. In fact, far from contributing to the success of the business, they do the exact opposite, they drain it of money. Whatever your feelings about their right to do so, this is unquestionably what they do, and if they magically disappeared tomorrow, everyone else involved in the business would be better off. 

I should probably digress briefly to make the point that many owners are also managers, and in their role as managers of course they may well provide value, but in their role as owners they provide none.

If on the other hand the workers all over the world magically disappeared tomorrow, the businesses would be brought to a standstill. The owners, managers, salespeople could not function. The would have nothing to own, manage or sell. This realization terrifies those at the top. They are totally dependent upon the workers, and their whole existence depends on the workers not realizing this. They have us bamboozled into thinking that if they ceased their activities all the nice things we have would disappear. No more cars, televisions, computers or smart phones. It seems to me that this seriously underestimates the resourcefulness of the American people. First of all if they stopped making new cars people would make existing ones last much longer (look at Cuba for an example of this) and secondly people would set up small businesses building cars. These already exist and would proliferate. 

The rapid decline of the corporate system would no doubt cause widespread disruption. This is true of all large scale change. We would no doubt have to adapt to severely changed circumstances, at least in the short term, but we are a very smart people. We have just lost faith in our common power. We used to think that as a nation we could do anything, and we dared great things, like connecting two oceans together with a canal, or putting men on the moon and robots on Mars. We could debate whether or not such activities are useful, but nobody can deny that they were truly impressive feats. Yet we think that without the protective cradle of the corporate culture we would be helpless. 

The truth is that we need a certain amount of struggle to be happy. Many people who lived through World War II said later that the war years were the time they felt most alive in their life. As always it is a matter of balance. Too much struggle makes you miserable and robs you of hope, which is essential to life. But too little struggle is equally harmful, and I believe that this is one of the challenges our culture has been dealing with. 

So we should not fear change or even some reduction in our circumstances. We certainly lead an incredibly wasteful way of life and could reduce our consumption by a large percentage and probably find ourselves happier.  We can rediscover the joys of helping each other out, of banding together to fend for ourselves. The great heroic individual, walking alone in the world, does not exist. Yes, each of us is an individual, and we lead autonomous lives, but we live them in the context of the other individuals around us who together form something larger that we call society.  We are social creatures and we need to rediscover that too, and start acting appropriately in that capacity.

At the very top of the economic system of the capitalist world is the ownership class. These are the family fortunes that go back generations. The families that through unimaginably complex ownership structures own and control virtually all of the essential resources of the country. Land, housing, mineral rights, water rights, pharmaceuticals, food, energy and the media through which virtually all our information comes, are all effectively owned and controlled by these few. 

This class comprises everyone who is born into a family whose money is not derived from a job, profession or a business that they are personally involved in. They do not depend on their labor or their skills or their brainpower for their living, bur receive income that is theirs because of the circumstances of their birth. 

This group is itself stratified. At the very bottom are the members of the farther reaches of such families, who simply get a monthly check and take no other part in the system. Even though these people did nothing themselves to deserve their good fortune, many of them do great social good with their money. It should not be imagined that all the members of the ownership class are concerned only for their own benefit; on the contrary, most of them are charming and generous people who support all kinds of good causes. 

The income of those at or near the top is derived from passive investments that are virtually immune to economic conditions. While much of their money is in the form of stock and shares, a stock market crash is to them a golden opportunity to increase their wealth. The value of stocks is of no concern to someone who does not need to sell their holdings. People who have sufficient funds to ride out the storm can buy shares at rock bottom prices, then wait until the value climbs back again, which historically it always has. Note the qualification: the fact that something has always happened to date does not mean that it will never happen. In fact I will show that it is not only possible that this edifice will eventually fail completely, but certain. The only question is how soon and how fast.

This situation has come about because of the long term effects of two social customs: inheritance and primogeniture. Primogeniture is the custom in the modern capitalist world for the great fortunes to be passed down intact to a single individual in each generation, usually the oldest male. At different times inheritance taxes have taken a bite, but this is largely avoided at the very top level by trusts and offshore holdings and all the tricks of the financial services industry. The result has been that over the last 200 years or so the wealth of the country has become concentrated into fewer and fewer hands.

At the same time it has become steadily more opaque. One feature of people at this level is that they are pathologically secretive about their wealth. They do not reveal the full extent of it even to their closest family members. Outside of the boardroom and private offices, money is simply never discussed. This makes it very difficult to assess the true seriousness of the issue; whatever wealth these people are known to possess, it is absolutely certain that they in fact own many times more. Part of the difficulty is that their wealth is highly diversified, and they plan for the long term. The annual yields from their holdings are so large that there is absolutely no chance that they will run short of money (as long as the system itself remains in place, that is.) They are therefore willing to simply sit on unused assets, knowing that one day they will benefit their descendants. In the case of land holdings this has dire social consequences. Vast amounts of land are owned by people who have never even set foot there, yet they have absolute control over what happens to it. In many cases it is not economically worthwhile for them to develop land, so it is kept from use by anyone at all. It cannot be used for growing food, or for meeting housing needs; it simply sits idle. The same principle applies to housing. 

There was a time when it was relatively easy to identify the ownership class; they were the ones with fine carriages and large estates and many retainers. Over the years they have used their money to insulate themselves, to the extent that they are now all but impossible to identify. Similarly over the years they have learned to conceal the size and sources of their wealth. A significant portion of their income is spent on armies of accountants and lawyers whose main purpose is to obscure the details of what they own and control. 

To the extent that they are visible at all it is in the role of philanthropists and supporters of fine things like symphonies and the ballet. Their friends and acquaintances think they are fine people. They think of themselves as virtuous and even often try to use their income in helpful and constructive ways. This simply shows that individual virtue can exist even in a corrupt system. It does not in any way justify the mechanisms by which they have the wealth to be able to be so generous with. 

If you seek actual documentary material on this level of our society, I highly recommend two movies by Jamie Johnson, a young member of the Johnson and Johnson family. They are called Born Rich and The One Percent, and both can be found complete on YouTube. He interviews and documents the lifestyles of many of his friends (who I must imagine by now must be his former friends), also the children of Old Money. The level of self entitlement of these people who had their entire life presented to them on a platter, who have had to deal nothing whatever to actually deserve their station in life, is truly astonishing.

In the Wealth of Nations, Adam Smith bases the amount that workers must be paid on both the cost of their living and the requirement that they must be able to afford to have children, to breed the next generation of workers. He assumes that workers breed workers, and aristocrats breed aristocrats and so forth. This attitude is somewhat reminiscent of the caste system in India, where your social position was entirely decided by the circumstances of your birth. At the time and place Smith was writing, Scotland in1776, social mobility was rare, at least in an upward direction. Today in the US we pride ourselves on being a classless society, where anyone, no matter where they are born, can succeed and grow rich. Yet the truth is that we have a class structure almost as rigid as that of Smith’s time. 

It has been observed that Americans do not see themselves as being economically oppressed, but rather as temporarily embarrassed millionaires. Yet in truth there is almost no chance of a regular person becoming even moderately wealthy. This fact is obscured by the wide public attention given to a few prominent and rare exceptions. There was a brief glorious period between the end of World War II and the end of the Fifties when a blue collar American worker could live a dignified life, own a house, take regular vacations, have a non-working wife, send his children to college and retire in comfort. Since that time the plight of the American worker has grown steadily grimmer. Now it takes the combined earnings of husband and wife to barely stay afloat, and forget the pension plan, that disappeared in the last restructuring.

A useful way to look at the US class system is to divide it into five main classes: the owners, the corporate executive class, the professional and small business class, the wage slaves and the indigent. This is of course only one way of dividing the classes, and I do not mean to imply that they are separate and distinct; they are more like general categories that meld seamlessly into one another.

The owners are what is sometimes referred to as the one percent, though it is more accurately more like one tenth of one percent. These are the families whose fortunes are based on the inherited ownership of the vast majority of the resources of the world which they charge everyone else for access to. Unlike the rulers of old, who lived in castles and had followers to enforce their authority, most of these people are anonymous. They use their wealth to isolate themselves and to avoid having to come into contact with the lower classes.

Below this level is the corporate executive class. These are the hirelings of the ownership class who actually run the businesses from which the owners derive their income.  This class is very well rewarded; they are the visible wealthy. They are the CEOs and directors of major public companies and the bankers and hedge fund managers and the like. 

Next come what remains of the middle classes; professionals, small business owners. This class is still relatively free and independent. It also includes people who have made money in sports or entertainment. It is important to note, though, that this freedom is only enjoyed by those who resisted the temptation to leverage their success. During the 1980’s middle class America went on a spending orgy financed by the increasing value of their assets, notably real estate. When the inevitable crash came, or actually series of crashes in various asset categories, those who were not actually wiped out ended up hanging on by their fingernails, completely at the mercy of the bankers they owe money to.

Next comes the class of the wage slaves, which encompasses everyone below the previous levels. People in this category have little or no accumulated capital. Yet they have the constant unremitting burden of the monthly nut; all of the expenses that they must meet in order even to survive. No matter if there are no jobs for them, if they are sick or have dependents that need their time and attention, they still have to pay on time every month. They are therefore utterly dependent upon their sources of income, and therefore upon their employers.

Failure to meet this challenge, which can easily happen through some random and unavoidable setback, results in being cast into the lowest class of all, the indigent. These are the people who truly have nothing. They are commonly called the homeless, but this focuses on only one aspect of their plight. They are the outcasts who are shunned by our society. This is not the case in all cultures. In India, for instance, especially in the more rural areas, beggars have a place in the community, and are accorded a place at the table and a corner to sleep in. In the US, on the other hand, homeless people are pariahs. I recently attended a public meeting on the topic of a proposed homeless services center, and the level of vitriol towards these unfortunates was truly shocking. People who spoke in favor of the project were literally shouted down. This kind of social treatment is severely demoralizing.

Once a person falls into this last category, it is very hard indeed to climb back out. The strictures of living this way cause a cascade of self reinforcing effects. You cannot keep yourself and your clothes clean. You start to look emaciated. Your self esteem is eroded. The less you have, the harder it becomes to acquire anything. You have no place to keep tools so you have almost no way to make money except the most menial jobs. You have no transportation and the busses are so poorly scheduled that it takes all day to get to town and back. There are few public bathrooms. And all the time you have the constant necessity to be in some physical location twenty four hours a day when there is no place to are welcome to be, and someone is always moving you along. It is impossible to convey in words the full impact of homelessness on a person. They are caught in a vicious spiral. They longer they are homeless the worse they look and feel, and the harder it is to function at all, let alone have any chance of improving their circumstances.

This is the social structure in the US today. But simply listing the social classes tells only part of the story. To gain a full picture we need to delve into the relative amount of power wielded by each class, who controls whom, how the wealth is shared between the classes and which classes are growing and which shrinking.