GuidoWorld

Capitalism: Defeating Its Foes

June 21, 2009 on 2:16 pm | In General | No Comments

This is another installment from The Value(s) of Money a book project I started back in 1992.
Capitalism: Defeating its Foes

Our love affair with values and are obsession with monetary concerns appear to be interconnected. Years ago many people resisted the tendency to base life on the value of money. What happened to those concerns?

Americans have not always embraced our system of free enterprise with such fervor. Objections to capitalism have come from intellectuals and common men alike ever since its inception. Since the beginning days of the industrial revolution many people have feared the possible destruction of the soul of man through the over-emphasis of money. Religious figures, moralists and philosophers cautioned and warned man of the dangers inherent in monetary ambition. The desire for wealth was equated with greed and avarice, and directly opposed to the Christian qualities of charity and compassion. A person focused on wealth could not focus on God or his fellow man. “Money”, as every school boy was taught, “is the root of all evil”.

Such sentiments were not only preached from the pulpit, but felt in the heart of most common laborers. The average worker concerned himself with providing food for his family, not with having a career. Owners and bosses were seldom respected by the workers, and most employees harbored no desire to become bosses.

Social thinkers such as Marx focused on the “alienation” caused by mass production and labor. Alienation coupled with the divisions caused by class distinctions between owners and workers were viewed as explosive enough to cause the eventual downfall of capitalism.

Though no downfall came to pass, one cannot overlook the tensions that exist between owners and workers. As Marx had predicted the bitter feelings sometimes turned into worker revolts in many industrialized nations. Our labor unions were formed from the strikes and protests fostered by the friction between labor and management.

The tensions between labor and management are still common in every corporation and business in America. Yet, a national uprising against management becomes more doubtful each passing year. Even though the percentage of people living in poverty has remained high, and the monetary gap between workers and owners continues to grow, more people appear content with the free enterprise system than ever before.

The factors leading to our growing acceptance of free enterprise and the resulting gaps between the wealthy and the poor are numerous and complex. Instead of writing an entire book on the reasons for the emergence of modern commerce, I’ll just mention a few of the more simple reasons.

Marxists who predicted the demise of capitalism did so by the premise of a workers revolt. The exploited and personally alienated slave labor would band together to rise up and over throw the power elite owners. The labor versus management battle which still smolders today has lost a lot of its momentum over the years.

The boss/slave, labor/management conflict at the core of Marxist revolution has undergone many changes over the last century. In the early days of capitalism the structure of the average factory and business was fairly simple. You did indeed have an owner, usually somewhat visible, and a flock of workers he hired and fired. Owners seldom hid their wealth, making themselves an easy target of jealousy and hatred by dressing and acting differently than their employees. Shoving their wealth, position and power in the faces of all they employed the industrialist was an obvious owner of slaves.

Through the years as industry and business expanded the simple two tier system was disposed of for a number of reasons. First, as owners bought out competitive businesses they gave the old owners non labor positions in the company. No matter how humiliating the take over was, the old owner usually retained a supervisory position over the common worker.

Just through sheer expansion itself, owners were forced to delegate management positions to others in helping supervise the workers. When these things happened the owner/boss-worker/slave dyad had settled into the labor-management division.

Since the end of WWII the emergence of very large corporations and businesses has further blurred the distinction between owner and worker. The sheer numbers of tasks and employees demanded that a number of intermediary positions be created. Corporations have a number of divisions, in which a host of presidents, vice-presidents, assistant and associate presidents and vice-presidents supervise professional technicians and engineers, who likewise supervise foremen and supervisors, who oversee a well hierarchical work force.

Over the last few decades the division between labor and management is getting blurred and difficult to distinguish. In today’s marketplace even smaller agencies and businesses have a number of layers of power. The smallest promotion in modern business often results in a worker having supervisory responsibilities over other workers.

Even entry level workers specializing in a specific skill or technique can be given a managerial role of responsibility in their given area. This means that while remaining on the bottom of the corporate totem pole in terms of pay scale and job description an employee may function as a supervisor in his or her area of expertise. One cannot always state that one division is more important than another, therefore, a strict hierarchical chain of command is often impossible to distinguish in even moderate sized business organizations.

The multilevel organizational pattern of modern business often makes it impossible for one to distinguish between labor and management. Even when the administrative cut off point is not arbitrary many of those functioning as laborers have fellow workers they supervise or instruct.
The days of the owner as sole power player are over. In the modern work place power and position is shared by many people. In today’s business world it is rare to find a worker with seniority totally without any roles of power or authority.

A great percentage of today’s workers enjoy (at least occasionally) the fruits of power and position. Though they are exploited and treated as a commodity, they themselves treat others in much the same way. The end result is that most workers are seduced and corrupted by the system and the power it affords.

A salesman who feels abused and exploited by his supervisors will in turn feel a sense of power and retribution when he in turn sells his product to a customer at an inflated price. Though his bosses take an unwarranted portion of his profits, he in turn regains his self-esteem by taking advantage of trusting customers.

In our society almost everyone is given some opportunities to exploit and capitalize on others. This is the free enterprise system available to all. Our acceptance of the system comes from the fact that almost all of us use the system to our advantage. No matter how low on the social economic ladder we might be, we all partake in the exploitation of our fellow man.

Though some bemoan the practices of modern business, most have learned to accept them as a necessary part of life. Our standards make adjustments to the real world, and the flexibility of values accommodates these changes much better than any other term.

The competitive nature of free enterprise resulted in the creation of multinational corporations and huge conglomerates. In these vast structures it was inevitable that the owner-worker dyad would have to be replaced by a more diversified field of power and responsibilities. As technology advanced the administrative divisions had to share their power and position with other divisions such as research and development, engineering and sales.

Smaller organizations desiring to be successful modeled themselves after the larger corporations taking on their multi©layered approach. This protracted managerial style made it difficult for workers movements to grow.

In a structure of unclear divisions between labor and management no one knows who to ally themselves with in a workers revolt. In a system where a large percentage of the work force share (at least minimally) in the fruits of power and control over others it is difficult to organize a workers rebellion.

Offering a few crumbs of power to corrupt and influence the average worker was not always done accidentally. When workers gained political leverage through organizing unions and worker reform groups, it is not pure coincidence that industries and corporations began to restructure their organizations.

Advertising, public relations and sales departments were well aware of how to influence the psychology of both the worker and the consumer. The business world had the best PR money could buy. Winning the loyalty and allegiance of the worker became a high priority for corporate America. The goal of acquiring worker loyalty without sharing a large percentage of the profits was accomplished by many.

History, too, was favorable to the dissolution of popular resistance to the acceptance of monetary supremacy and free enterprise. The people’s revolt in Russia in 1917 had world wide implications. Humanitarians, liberals and many intellectuals hailed the Russian Revolution as a precursor to the over throw of all worker oppression. The Marxist view of freedom gained popularity and its somewhat abstruse theory began to be watered down for mass consumption. Communistic and socialistic ideals fueled the rhetoric behind all social movements. In the U.S., Marxist ideas were central to the public demand for social security, labor unions, paid vacations, workers compensation, the 40 hour work week, and almost every other worker’s right gained in this century.

While worker movements grew in this country, corporate America was busy trying to discredit the ideologies fueling social change (Marxism, Communism and Socialism). Equating democracy with capitalism became a popular theme. The average American was being sold on the idea that Communism was a threat to Democracy and not the ally of social change.

The fears garnered during two world wars and the Depression were easy to arouse and direct towards Communism. The emerging affluence of the U.S. following these troublesome times forged a formidable national pride. Riding the waves of good fortune, the business world was able to share a minimal portion of the wealth being generated with a sizable middle class.

By this time the civil atrocities of Soviet Communism were easy to depict. Whatever truth and benefit Marxist ideas contained were destroyed by its association with Soviet Communism. Just as democracy was equated with capitalism, Marxist ideals were being equated with the Soviet totalitarian state. The American media and business world made certain that no American could support any Marxist idea without being viewed as a supporter of the oppressive practices of the USSR.

The Red Scare of the fifties just sealed the coffin for the expression of Marxist ideals in the U.S. Since any utterable criticism of capitalism could be found in Marx it would be viewed as treason for any loyal American to question the practices of capitalism. The taboo of Marxism in America signaled the death of any social movement in the U.S. which called into question the economic practices of capitalism.

By the end of the fifties almost all political discussion regarding any alternatives to our functioning system of commerce died. Since then almost all ethical condemnations and moral warnings regarding a life preoccupied with monetary concerns have come from the pulpit.

Clergy from all denominations and faiths often warned their parishioners of the harms and evils inherent in making money too important. Not only did they profess that spiritual matters were more important than fiscal ones, but so were many practical matters. The faithful were frequently told that religious qualities such as compassion, charity, forgiveness, honesty and truth were far more important ingredients to living a good and comfortable life than having a lot of money.

Money was accepted as essential for survival, and an important and practical tool for the success of missionary work throughout the globe. Yet, monetary ambition was an evil, a temptation from the devil, standing in the way of God’s grace. A man moving towards money was surely a man running from salvation and towards damnation.

It is still common for modern religious figures to warn their parishioners of the dangers of worshiping money. Yet, the verbal passion in insisting on financial restraint has subsided. This growing tolerance of fiscal priorities might be explained by increased exposure of churches to the economic realities of competition.

The number of one parish communities continues to shrink. The number and variety of churches in a community is growing. Churches are often in competition with each other for the same parishioners. The survival of a parish often depends on the very same dynamics as any other business. They need to sell themselves to the public and attain a market share to cover their overhead. Without generating a sizable profit, a church may lose out to a neighboring church that is more attractive, comfortable and having the resources available to have a positive impact on the community. Wealthy churches inspire confidence in their ability to be effective and influential in both charitable and political concerns.

Clergy desiring to have their parish not only survive but thrive are forced to accept the economic realities of the real world. Often times they need to walk a thin line between exhorting their flock to live a spiritual and not material existence, and asking for their financial assistance to execute their charitable and moral ideals. Harping too long and hard on the evils of money may either alienate their parishioners into finding another parish, or may cause their incessant requests for donations to look hypocritical.

All of the preceding arguments and points only scratch the surface in helping explain why monetary concerns have become supreme in our society. Monetary issues pervade our personal and professional existence. Other concerns no matter how important are almost impossible to divorce from the intricate web of commerce modern life is woven into. The political and social taboo of even questioning our free enterprise system strengthens its hold on our lives while making even the possibility of an alternative way of life seem impossible. In such an environment any criticism of the free enterprise system is at best unrealistic and more likely unpatriotic, revolutionary or just plain crazy.

If our values are based on the value we place on everything in our life from objects to thoughts, then it is difficult to overestimate the role of economics in our personal and social value systems.

Jim Guido

CEO Pay Regulation

June 16, 2009 on 7:06 pm | In General | 2 Comments

There has been some talk recently that President Obama would like to put a cap on pay for executives of US corporations. Support and pressure to enact such measures come from many sources. Many tax payers are angry that the stimulus programs and bailouts have been funneled to the wealthiest of people. Laid off workers are upset at the reported bonuses, salaries and raises being doled out to executives of major corporations. Economists and financial historians point to the destructive role that salary imbalances have played in previous depressions and economic crisis in the US and other nations since the middle ages.

Yet, there are plenty of voices out there that look at any cap placed upon CEO’s pay as being anti-capitalisitic and potentially very harmful to any chance our economy has of recovering. Some financial historians will cite previous governmental regualtions and interventions as reasons why previous economic depressions have been so severe and lasted so long.

I personally have been opposed to the growing gap in wealth during the entire expansion period since 1980. The increasing percentage of wealth in a decreasing percentage of the population has always seemed cruel and counterproductive to me. More and more wealth into fewer and fewer hands has been with us during our entire economic roller coaster ride.

My thoughts and solutions to this situation have remained the same over the last couple of decades. Rather than place a specific monetary cap on CEO’s I would suggest we put in place a limit in the relationship of a CEO’s pay with the lowest paid workers in the company. In this way CEO’s are free to make as much as they can inside the system, and their pay raises are based on and reflect the pay raises of their workers.

I’m not able to say what the exact relationship should be, but I’m sure a task force comprised of economists, sociologists and international relations experts could come up with a workable scale. Especially if this pay scale was going to be reviewed every few years.

Such a pay scale would look something like the following. A corporation CEO’s total pay and compensation cannot be more than 300 times the pay of the least payed employee. Now, even though 300 times sounds like a huge differential and it is, the pay of our current CEO’s eclipses this by many times.

In the above example a corporation that paid its entry level workers 20,000 a year would only be able to make 6 million per year in salary, bonuses and other compensation. Obviously the CEO could make much more money if his entry level workers made more. A CEO paying his lowliest employees 40,000 could take in 12 million a year.

Now, I just picked the 300:1 ratio out of thin air. A economic task force could better determine a functional and fair CEO to worker ratio which probably would be different for companies of varied sizes and with varied work forces.

Yet, the benefit of the ratio would be two fold. First it would prevent the gaps between workers and management from spiraling out of control. And second it would give management sufficient incentive to improve the pay of their workers. Workers making more pay would have more disposable income to spend on the economy and CEO’s making more money would be doing so only when the company and its workers are succeeding.

A CEO in this type of structure would be highly rewarded for improving the standard of living of his workers, and these richer workers would be better able to spend, save and invest in an expanding economy than in our current system. In our current system workers pay has not kept up with inflation and the pay increase rate of management and executives.

I believe this system is not only fair, but more functional and sustainable than our current format. This same system for business could also be used for government. While pay raises for executives is dependent on pay increases for workers, likewise pay increases for pubic servants could be made dependent on monetary improvements for the lowest 10% of the populace. If a pubic official knew that his potential pay raise was dependent on the monetary improvement of the bottom 10% of citizens in his district, state or nation, then he would make it his main priority to improve their lot in life.

The above suggestion could be played out in the following manner. Let’s say the bottom 10% of the nation was averaging making $10,000 then a senator would only be able to get a 10% raise when the bottom 10% was averaging $11,000 per year. Once again these numbers were pulled out of nowhere and a competent task force could best decide if the ratio would be 1:1 or if a pubic servant would be available for a 1% raise for every 3% gain realized by the bottom 5% of the populace.

The goal would be for politicians to become more invested in the economic improvement of their constituents,

I know these are rough ideas, and there would need to be much dialogue and discussion to prevent these ideas from being abused and worked around. Yet, the potential abuses are not too difficult to imagine and successfully address especially if these pay ratios were reviewed often in a public format in which the public had the power to replace any task force members who appear to be acting in ways which are against the public interests.

Jim Guido

The Trojan Horse President

June 7, 2009 on 5:51 pm | In General | No Comments

During the campaign trail Barak Obama seemed like a breath of fresh air in a fear and hatred dominate presidential race. His message was one of hope and compassion often talking about how the US could continue to be the most powerful nation in the world without having to compromise its high humanitarian values.

For those of you who have visited the site often you are well aware of the fact that I had my doubts of Obama’s ability to follow through on his words. I felt that any true challenger to the status quo wold not be allowed to win their party’s nomination. The  media assasination of Howard Dean and Ralph Nader in the previous election and Ron Paul and Dennis Kucinich in the recent election formed the basis of my cynical stance.

Yet, in my post following Obama’s first day in office I stated how pleasantly surprised I was with his pledge to close Guantanamo and his stance opposed to torture along with his balanced approach towards Israel and the middle east. I did add as a caveat that I was very concerned about who he had named as cabinet members and policy advisors. These people, especially his economic team, were well entrenched insiders who were major players in the very economic system in crisis that Obama was pledging to reform.

Well it didn’t take long for Obama to move away from reform and back to the status quo. Soon his tough words on torture and Guantanamo softened, his words of diplomacy towards the middle east were belied by his actions in Afghanistan, Pakistan, and Isreal, and the bailout and stimulus programs flew in the face of his previous populist viewpoints.

One could make the case that his foreign policies have become even more aggressive and militaristic than the Bush administration. Not only is torture alive and well but the stealth bombings of Pakistan, and the use of banned weapons in Afghanistan is upping the immoral ante of the US as a global bully. The bombing of Pakistani civilians in the hope of killing a few suspected terrorists, and the melting of Afghans through the use of white phosphorous is a step in the wrong direction if your goal is moral leadership.

I was always amazed at how Republican’s who called themselves the moral majority or the religious right could support policies that propagated torture and murder. Now, I’m likewise baffled by the Democrats who are coming up with excuse after excuse to justify Obama’s recent policy decisions and imperialistic actions. Of course, many people, just bury their head in the sand and don’t even acknowledge the heinous actions done in our name.

It appears obvous to me that neither party is willing or interested in making the world a safer and more harmonious place. Fear mongering and bullying is the only game in town.

As a citizen of the US I feel no moral superiority over anyone else on the globe. I don’t necessarily think nations that oppose our policies are inerently evil and dangerous. There are good and mean people in every nation and society on the globe, yet I have a hard time finding any nation’s foreign policies more vicious than ours. Being good is accomplished through good deeds not by living in a specific geographic space or espousing a specific political philosophy.

Jim Guido