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Posted at 03:14 PM ET, 05/21/2012

PostScript: Samuelson and capitalism on trial [Updated]

Robert Samuelson argues today that the 2012 presidential election seems to be shaping up as a debate over the relative importance to the economy of labor (workers) vs. that of capital (owners/investors). According to capitalist theory, workers and investors should want the same things: a rising economic tide that lifts all boat-citizens, who in turn can then move out of the harbor and let other boats push out and discover exciting new leakproof technologies and even more exciting and coherent maritime metaphors we can’t think of right now.

Why, then, does it seem like labor and capital are competing against each other in the rhetoric of the presidential race? Thirteen hundred commenters seem to have opinions on this.

As Samuelson points out, since the recession officially/technically ended, the investors and owners have recovered much faster than the workers have. The presidential candidates have different plans of attack for this problem: help out workers more directly (Obama) or help out owners more directly (Romney). At least so their rhetoric goes.

MichSeag opines that it’s not clear that workers in the real world are benefiting at all from businesses’ economic growth:

The massive [ramp]-up in productivity and technological advances over the past 30-years has most certainly enriched the capitalists, it has been a net-negative and abject failure at raising mass living standards. This is neither a function of productivity nor technological advancement, but rather a function of plutocracy!

And Skeptic1 argues that, even if the rhetorical battle lines seem to be drawn as Samuelson argues, championing the middle class in a speech doesn’t make Obama a class crusader:

What policies has Obama proposed that convince you that he’ll raise your standard of living?

Darn, that real world again.

Jrussell1 notes that if labor and capital are truly interdependent, it should be a much bigger deal for the capital side that labor is weakening:

What Marx failed to [anticipate] was the creation of worker unions, which in the end run saved capitalism from itself, created better living standards for all by being paid a fair wage which in turn created more expendable money to buy the products capitalism produced. To continue today’s brand of capitalism that tilts the field dramatically in favor of the wealthy will in time not only hurt the worker, but capitalism in general.
There may be a bunch of reasons that the battle is playing out in rhetoric and not in detailed plans, but PostScript suggests that the politicians are acting very much like the businesses Samuelson refers to — the ones that are hoarding cash until they can be more certain what the markets will look like. The candidates are holding back, too. It's not all that useful to make specific economic plans until the winner knows for sure what his voters want, and, even more important, what his Congress will look like.

[UPDATE, 4:00 p.m] Robert Samuelson replies:

“MichSeag argues that most of the economic growth of recent decades went to capitalists and little — if any — resulted in ‘raising mass living standards.’ I would certainly qualify that substantially. Think of all the things that are widespread today that didn’t exist — or barely existed — three decades ago: a) almost anything having to do with the Internet, including personal computers, laptops and tablets; b) cell phones and their offspring; c) and the vast program choices available to most Americans through cable or satellite television. Of course, these only scratch the surface; there have been vast advances in medical devices (artificial knees and hips) and drugs.

“You can argue (I certainly would) that some of these advances don’t improve our lives all that much: Is the world really better off with 200 choices to watch TV rather than, say, four or six? But what’s clear from most of these advances is that major corporations have an interest in creating mass markets for their products by both lowering prices and improving quality. That is, they will try to keep prices as high as they can without jeopardizing their mass markets and their profits.

“My second comment concerns the observation by Jrussell1 that unions saved capitalism by raising wages, which created purchasing power for the middle class. Up to a point, I agree that unions directly influenced the distribution of income. Many of these unions in the 1950s and 1960s were in industries dominated by a few companies (steel, rubber, automobiles, airlines) that had the market power to pass labor increases onto the consuming public by raising their prices. Thus, companies and unions were engaged in a quiet alliance to raise prices to customers. That was one effect. But I would argue that the larger effect was to influence non-union companies to reform their workplace practices (including wages, fringe benefits and the power of supervisors and foremen) to avoid being unionized. Labor’s share of national income was higher in the first decades after World War II, and this was one reason. I don’t agree that unions were necessary to make capitalism succeed; but on the whole, they probably contributed — at least in the first decades after World War II — to a healthier distribution of national income than we have today.”

By Rachel Manteuffel  |  03:14 PM ET, 05/21/2012

 
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