By now, news of the first quarter financial results for the U.S. economy, like this Associated Press report, has had time to trickle down, so to speak.
Productivity during the first quarter grew at an annualized rate of 8.4%, the strongest in almost 20 years. This metric is especially interesting in light of continuing large-scale layoffs throughout the various sectors of the economy. As a result of fewer people working, the number of hours worked fell at a rate of 2.1%.
Predictably, stocks rose.
The question that’s not being asked in the mainstream media is, “Who benefited from that astounding productivity boost?” The question’s not being asked because the answer is not pleasant. The answer is the same ugly turd in the economic punchbowl it’s always been: “anywhere but the pockets of those responsible for the gains.”
Do the math: 8.4% productivity gains against average hourly compensation gains of 2.8% and unit labor costs dropping by 5.4%. What’s wrong with this picture? There’s a significant, indefensible, and inequitable gap between the productivity and compensation gains.
It’s clearly time to give economic-rights structures like Panama’s La Prensa a go in this country. At this newspaper, capital is given a yearly wage—say 10%—and gets paid off the top. The rest of the publication’s profits are split evenly with the employees.
My wife will call me a socialist or communist for suggesting such a structure, but I’m a capitalist through and through. The free marketeers (who are really capital oligarchs) like to trot out Adam Smith and John Locke when issues like this come up.
John Locke is most known in the oligarch circles for his bromide that government “has no other end but the preservation of Property.” Marjorie Kelly in The Divine Right of Capital: Dethroning the Corporate Aristocracy reminds us that property meant something completely different to Locke and his contemporaries than it does to us by referencing UCLA political scientist Richard Ashcraft. Property, for Locke, “did not mean merely wealth: it meant one’s life, liberty, and possessions. In modern terms, it means everything that is one’s own, including family, dignity, and the right to a decent life. Ashcraft emphasizes that Locke did not exalt property rights in general but favored only those rights stemming from honest industry.” Locke, contrary to the rote recitation of the oligarchs, did not favor blanket property rights. In fact, he was among the first to deny eternal property rights. Instead, Locke favored allowing property rights only for that resulting from “honest industry.”
For his part, Adam Smith’s invisible hand has been saluted so much and so often by the oligarchs that it surely has a serious case of carpal tunnel syndrome. Kelly points out that Smith referred to high corporate profits as an “absurd tax.” Adam Smith was clear: “To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.”
The quarter’s productivity gains, when coupled with the minimal hourly wage gains paints a desolate picture of the typical American corporation, “levying an absurd tax on employees and the community in order to benefit an idle, speculative, stock-owning aristocracy,” in Marjorie Kelly’s words. While the courts continue to insist that corporations exist solely to maximize returns to shareholders, it’s time for us to rethink the purpose of both corporations and capital.
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