Thursday, September 20, 2007

Who is on the central committee of the American ruling class?

An old chestnut of the Marxist left had it that captains of industry were the central committee of the ruling class in capitalist societies. The mythic stereotype persists in progressive circles that what is wrong with society flows from the selfish proclivities of its ruling elite – an elite that, in capitalist societies, grows out of business as lichens on a rock.

Remove the elite, this theory goes, and all will be well, or at least much better.

This month’s Vanity Fair magazine in the United States offers an opportunity to reflect a bit on this thesis about capitalist elites.

The magazine identifies the 100 members of the New American establishment. Where do they come from?

Thirty one made their money in or through Hollywood.

Fifteen come from the world of fashion (Gucci, Revlon, etc.).

Nineteen from the media.

Eighteen from Wall Street or other finance and investment houses.

Nine from business – but consumer businesses like computers, Google, Walmart, Sony,, Starbucks.

Three held political office, but those one was from media and another from Hollywood before they reached elected office.

Then there were five outliers - an architect, a casino owner, a philanthropist, an advertising mogul, and a Russian Oligarch.

This list hardly looks like the traditional capitalist conspiracy to squeeze out the surplus from the sweat of peasants and proletarians.

The themes of success here are: consumer self-indulgence, celebrity, low-brow entertainment, and easy money taken from all those tempted to speculate in securities. Kind of a disparagement of American values and standards if you ask me.

Of course, Vanity Fair does not represent your top of the line Marxist sociology or even very good class stratification analysis. But it does reflect well its own cultural biases.

It reveals the commanding heights (again to use old Marxist terms) of the post-industrial society.

I am not sure what systematic role there might be within this elite for business ethics or corporate social responsibility. Warren Buffet and Bill and Melinda Gates, however, were included in the group and they are major philanthropic donors now. So all is not lost.

Monday, September 17, 2007

No Free Lunch

A story in our local paper makes for general reflection about markets and capitalism.

Out of concern to reduce greenhouse gas production and hold off global warming, many are turning to the use of ethanol for a fuel. Ethanol in the United States is made from corn. Demand for ethanol is pushing up the price of field corn. This makes some farmers very happy.

But not all farmers. The corn farmer's win is the hog farmer's loss - and the dairy farmer and those who feed cattle for the slaughterhouses. Corn is a cost for these farmers, so higher corn prices mean lower profits for them or higher prices for consumers of meat and dairy products.

The National Corn Growers Association is lobbing the Congress for more ethanol production but the meat and dairy lobbyists are opposed.

Prices are like that; they divide to conquer. A high price is good for some and bad for others and vice-versa. It is hard to think of a price that can keep everyone happy in the status quo. Prices change and such changes impact standards of living, use of technology, accumulation of savings, etc. Markets are constantly shifting opportunities and upsetting establishments. They are demanding and uncompromising. Some would say disciplined while others call them immoral and insensitive to human needs.

One has to be nimble and flexible to ride the currents of markets without capsizing. Facing up to the need for change, for invention, adaptation, is a character trait and an intellectual ability. Surviving in a market environment is a return on human capital.

But it also takes finance capital. Having a rainy day fund makes it more probable that new opportunities will be found and used when prices shift against status quo expectations.

Steve Young

Wednesday, September 12, 2007

For Samuel P. Huntington

Where have all the ideas gone?

We have academics by the droves and more graduating every year but where are the ideas that drive civilization to its highest and best uses?

As modern society specializes more and more, sub-divides and compartmentalizes to get better mastery of technique, great and grand ideas are more and more marginalized and pushed to the sides of our consciousness. Nowhere is this more true than academia where professionalization in specialities leads to promotion.

Prof. Samuel P. Huntington over a decade ago put forth an idea - is there an inevitable clash of civilizations? His vision of a problem has colored our lives and policies after the collapse of Communist and the rise of sectarian fundamentalism and ethnic zenophobias.

Sam was my tutor 40 years ago in my senior year of undergraduate study. I have kept in touch, not regularly but fondly, now and then over the years. Sam has remembered me and been warm and helpful in our subsequent meetings.

But I learned yesterday that he is not well and most likely will be unable to contribute any more "ideas" to academia and global civilization.

Sic Transit Gloria Mundi. All must pass and this too will pass.

But right now I feel a deeper sadness over the sumbolism of this loss - where are the ideas? How will we move forward for our children and grandchildren without ideas? How will we find courage and the will to work for a common good without profound thoughts and understandings?

If all is trivialized, then everything about us, in us, around us, will be trivialized.

I feel grateful to have worked with and been challenged by Sam Huntington.

And I hope our work at the Caux Round Table will always gather in and promote "ideas" in the face of all that seeks to marginalize our humanity.

Steve Young

Saturday, September 8, 2007

Look what the cat brought in!

from Warsaw

Globalization has its fans and its detractors. Human trafficking around the world has indeed spread new technologies and changed living conditions. But transportation as a human contrivance has its drawbacks as well.

I think of invasive species coming into the United States through international commerce: the Zebra mussel and Dutch Elm Disease and now Asian pythons loose in the Florida swamps and doing very well in their new habitat to the distress of older occupants.

But a visit to Cracow yesterday brought me an example of humans as invasion species. There is now a booming trourist trade from the UK and Ireland of people coming just to Cracow for a weekend to get as drunk as their bodies can stand. They fly in on cheap discount airline flights. They get so drunk they fall over over the streets around the old market square.

A brochure in my hotel room advertised the "booze cruise" - you sign up for a cruise on the river to get so drunk that you can't walk - but the boat has chaperons at the railing to keep you from falling in the Vistula River. But you are assured by the brochure, no matter what, the booze will keep flowing.

Cracovians are less than pleased with this turn in their tourist market. One said to me: "This is not what we had in mind when we joined the European Union."

They also worry over a Gresham's law of tourism - offensive tourists drive away the good ones.
and cheapen in all manner of ways the community that seeks to live off the largess of strangers.

Entrepreneurial cost-cutting as an innovation in service delivery has led to this threat to an existing environment. Do these innovative carriers have some social responsibility to correct the external costs to older Cracow customs and habits that their actions have caused?

Should they raise fares to reduce demand for the service? Screen their passengers? Demand damage deposits payable to the city of Cracow?

Should Cracow impose a tax on drinks? Ask tourists to get a license in order to drink within city limits?

Steve Young
Sept 9, 2007

Thursday, September 6, 2007

Lessons from Warsaw

Warsaw is growing. As you land in the airport as I did yesterday, some dozen or more planes are at their gates, taking off or on the taxiways - more action that when I first came here in 2005. The airport itself has been expanded. The laying of new water mains has closed several main avenues in central Warsaw and created long delays in traffic - one of the signs of successful modernization all around the world. A new shopping mall is up - across from the Palace of Culture which was Stalin's gift to the Polish people and is kept by them as a simple reminder of past subservience to Communist dictat. Streets have been resurfaced; buildings and pedestrians have less and less of that pervasive brown/grey drabness of buildings, streets, clothing and facial expressions that one associates with all genuine dictatorships of the proletariat.

The Polish economy has been growing by 6% a year. Poland is part of the European Union - a full citizen of Europe at last.

The significance of all this: capitalism works; it really works. It is a system of human activity that meets human needs and grows and expands, changes and diversifies.

Is capitalism perfect - a heavenly ideal realized here on earth? No way. As a human system it is prey to all the errors and follies that the species exults in. Like any of us seeking to be better, it needs ideals to shape and constrain its ambitions, systems of checks and balances to keep it from excess, and laws and regulations to minimize its abuses of power.

It is always a work in progress. As is said about the price of liberty, eternal vigilance is also the cost of a moral capitalism.

Steve Young
Sept 6, 2007

Monday, September 3, 2007

Labor Day in America

Today, Monday Sept 3rd, there is much commentary in the United States over the meaning of Labor Day.

I associate Labor Day with American Capitalism. As I remember, it was initiated to discourage American workers from celebrating May 1st, the day set aside by the Socialist International for honoring and elevating working men and women in the early phase of global capitalism.

The American political elite wanted no truck with socialism and, as a result of this political agenda, set aside a day for labor to be honored within a free market capitalism where individualism and rights of free association were regarded as correct socio-economic scripture.

Socialism is now discredited and Communism is dead. So May 1st seems to have become a superfluous holiday.

So too in many ways has "labor" day. "Labor" as a factor of production is becoming an historical artifact. Workers and employees will always be a part of product - but "labor" with its connotation of physical human efforts, sweat, and drudgery is less and less part of employment - especially highly paid employment.

Value in the free market increasingly goes to forms of capital - not physical power paid for as a commodity in hourly or daily units. Finance capital gets higher and higher returns. The rising share of national income in the United States held by the well-to-do is to a great extent a reflection of their participation in securities ownership and the rising return to securities over the last 40 years.

Reputation capital - brand equity - gets a good return.

Human capital - productive, education, specialized employees - gets more return than human labor power.

Management skills - human relations skills - bring more than assembly line or trade union work. White collar is more pervasive these days than blue collar.

Knowledge, invention, intellectual property rights - all get higher returns these days.

Manufacturing as a share of national income in the US is declining - not just because of outsourcing to low cost producers, but as a result of the information and computer chip revolution in human civilization. Just as agriculture in the US now absorbs a tiny fraction of the work force - about 2% I think - (once it was over 80% before the industrial age got going), manufacturing done under modern conditions takes in fewer and fewer workers. Each worker is more productive and can command higher wages, but the number of workers needed in shrinking.

In short, employees are moving from costs on the income statement to becoming an asset on the balance sheet.

In consequence, our entire way of thinking about workers and employees needs to change. If they are capital assets for society, then we need to ensure that they are properly "capitalized" - with life long education, good health care, with their own retirement savings accounts, with easy access to finance capital to start their own businesses. And, moreover, the wellbeing of our workers - those who have a large responsibility in making capitalism work - is important to us all.

Steve Young