A Wrong Turn in Our Form of Capitalism
What are the forces driving our nation into this deep hole? One is a structural change in our system of capitalism. It is shifting from a form of capitalism friendly to the core principles of democracy to one much less so.
In the decades following WWII, our growing economy was referred to as the “rising tide that raises all boats.” This metaphor captured the democracy-friendly thrust of our economy.
Consumer demand accounts for an astounding 70 percent of our economy. When jobs are plentiful and wages at all levels rise steadily, consumer demand stimulates economic growth. This form of capitalism is profoundly democratic, spreading opportunity throughout the working population.
But our economy has failed to follow this pattern for more than three decades now. The Great Recession of 2007-8 made things worse, but wages for the majority of the workforce were stagnant long before.
Even before the Recession, expanding incomes at the top came at the expense of those in the middle and bottom. Businesses invested in technology, rather than in people. Competition from low-wage countries helped kill off America’s abundance of well-paying, low skill jobs.
The result has been stagnation in the workplace leading to stagnation in demand leading to low levels of growth and a big increase in consumer debt and long term unemployment.
Our nation has confronted the fear of this kind of economic stagnation many times since the Great Depression of the 1930s. Each time the threat has subsided without doing much harm.
Is this time different?
I fear that it is.
Companies have learned to be profitable even when demand is weak. They do so by slashing costs—especially the costs of labor. They have grown accustomed to exporting jobs and building up their cash reserves rather than investing in training and people. To top it off, mechanization is becoming a more prominent feature of service jobs as well as of manufacturing ones.
Cumulatively, these changes are creating a structural shift in our form of capitalism – away from the democratic rising-tide-raises-all-boats structure and towards a less democratic form that favors the top quintile and condemns the rest to stagnation.
Rebooting Democracy is a blog authored by Public Agenda co-founder Dan Yankelovich. While the views that Dan shares in his blog should not be interpreted as representing official Public Agenda positions, the purpose behind the blog and the spirit in which it is presented resonate powerfully with our values and the work that we do. To receive Rebooting Democracy in your inbox, subscribe here.
This Time IS Different
Submitted by: Craig Paterson on Wednesday, May 28th, 2014
Yes...this time is different. And, yes...we're dealing with a political structure that is more-and-more an oligarchy and less-and-less a democracy. How then do we pursue public deliberation? Our deliberative methodologies were crafted to support democracy's effectiveness...so, how do we shift our methodologies in light of this apparent "...structural shift in our form of capitalism..."? Thanks for sharing these thoughts!
Submitted by: Chris Gates on Thursday, May 29th, 2014
Dan: How can we have this conversation in a thoughtful way that doesn't turn into a 'have/have not' dialogue? The 'Occupy' movement was successful in surfacing the issue and a failure in helping us frame the question in a way that allowed us to find common ground and move forward. If we all can now agree that there is a 1%/99% issue in this country, how can we talk about it productively, without rancor?
This Time IS Different
Submitted by: Todd Grubb on Thursday, May 29th, 2014
While this time seems different, it is really "here we go again."
(1) The US had great and growing income disparity in the 1890's. Then along came an "accidental president," Theodore Roosevelt--a trust buster, followed by World War I which promoted jobs and more income balance.
(2) The "roaring 20's" followed and income disparity grew disportionally again. Then we had the Wall Street crash and the Great Recession of the 1930's. And then,
(3) We had World War II and the following years of prosperity which again promoted jobs and more income balance as described in the article, "This Time IS Different."
So, we are now "recovering" from the 2007-08 financial disaster and market crash, and although we seem to have had a financial recovery (e.g., the stock market is at now highs) who knows when the general population will prosper again. It may take another war (and much more debt) or another tremendous political accident/reformation of some sort (which is very unlikely given our oligarchy controlled political and electorial system).
I hope the necssary governmental restructuring comes through reformation and not revolution, but the controlling interests may hold out until we have a revolution, unless we first destroy mother earth (as we continue to extract, pollute, and poison it for human habitation).
Sorry, not a pretty picture. But apparently we can't "all get along together" for the common good. Self-interest wins -- for a while, then we all lose. It's too bad, but that's our system. We voted for it.