Saturday, March 30, 2013

Time Magazine- Marx was right,,, sort of

World Finance: Marx's Revenge: How Class Struggle is Shaping the World

By Michael SchumanMarch 25, 2013

Karl Marx was supposed to be dead and buried. With the collapse of the
Soviet Union and China’s Great Leap Forward into capitalism, communism
faded into the quaint backdrop of James Bond movies or the deviant
mantra of Kim Jong Un. The class conflict that Marx believed
determined the course of history seemed to melt away in a prosperous
era of free trade and free enterprise. The far-reaching power of
globalization, linking the most remote corners of the planet in
lucrative bonds of finance, outsourcing and “borderless”
manufacturing, offered everybody from Silicon Valley tech gurus to
Chinese farm girls ample opportunities to get rich. Asia in the latter
decades of the 20th century witnessed perhaps the most remarkable
record of poverty alleviation in human history — all thanks to the
very capitalist tools of trade, entrepreneurship and foreign
investment. Capitalism appeared to be fulfilling its promise — to
uplift everyone to new heights of wealth and welfare.

Or so we thought. With the global economy in a protracted crisis, and
workers around the world burdened by joblessness, debt and stagnant
incomes, Marx’s biting critique of capitalism — that the system is
inherently unjust and self-destructive — cannot be so easily
dismissed. Marx theorized that the capitalist system would inevitably
impoverish the masses as the world’s wealth became concentrated in the
hands of a greedy few, causing economic crises and heightened conflict
between the rich and working classes. “Accumulation of wealth at one
pole is at the same time accumulation of misery, agony of toil,
slavery, ignorance, brutality, mental degradation, at the opposite
pole,” Marx wrote.

A growing dossier of evidence suggests that he may have been right. It
is sadly all too easy to find statistics that show the rich are
getting richer while the middle class and poor are not. A September
study from the Economic Policy Institute (EPI) in Washington noted
that the median annual earnings of a full-time, male worker in the
U.S. in 2011, at $48,202, were smaller than in 1973. Between 1983 and
2010, 74% of the gains in wealth in the U.S. went to the richest 5%,
while the bottom 60% suffered a decline, the EPI calculated. No wonder
some have given the 19th century German philosopher a second look. In
China, the Marxist country that turned its back on Marx, Yu Rongjun
was inspired by world events to pen a musical based on Marx’s classic
Das Kapital. “You can find reality matches what is described in the
book,” says the playwright.

That’s not to say Marx was entirely correct. His “dictatorship of the
proletariat” didn’t quite work out as planned. [ Not an accurate reference} But the consequence of
this widening inequality is just what Marx had predicted: class
struggle is back. Workers of the world are growing angrier and
demanding their fair share of the global economy. From the floor of
the U.S. Congress to the streets of Athens to the assembly lines of
southern China, political and economic events are being shaped by
escalating tensions between capital and labor to a degree unseen since
the communist revolutions of the 20th century. How this struggle plays
out will influence the direction of global economic policy, the future
of the welfare state, political stability in China, and who governs
from Washington to Rome. What would Marx say today? “Some variation
of: ‘I told you so,’” says Richard Wolff, a Marxist economist at the
New School in New York. “The income gap is producing a level of
tension that I have not seen in my lifetime.”

Tensions between economic classes in the U.S. are clearly on the rise.
Society has been perceived as split between the “99%” (the regular
folk, struggling to get by) and the “1%” (the connected and privileged
superrich getting richer every day). In a Pew Research Center poll
released last year, two-thirds of the respondents believed the U.S.
suffered from “strong” or “very strong” conflict between rich and
poor, a significant 19-percentage-point increase from 2009, ranking it
as the No. 1 division in society.

The heightened conflict has dominated American politics. The partisan
battle over how to fix the nation’s budget deficit has been, to a
great degree, a class struggle. Whenever President Barack Obama talks
of raising taxes on the wealthiest Americans to close the budget gap,
conservatives scream he is launching a “class war” against the
affluent. Yet the Republicans are engaged in some class struggle of
their own. The GOP’s plan for fiscal health effectively hoists the
burden of adjustment onto the middle and poorer economic classes
through cuts to social services. Obama based a big part of his
re-election campaign on characterizing the Republicans as insensitive
to the working classes. GOP nominee Mitt Romney, the President
charged, had only a “one-point plan” for the U.S. economy — “to make
sure that folks at the top play by a different set of rules.”

Amid the rhetoric, though, there are signs that this new American
classism has shifted the debate over the nation’s economic policy.
Trickle-down economics, which insists that the success of the 1% will
benefit the 99%, has come under heavy scrutiny. David Madland, a
director at the Center for American Progress, a Washington-based think
tank, believes that the 2012 presidential campaign has brought about a
renewed focus on rebuilding the middle class, and a search for a
different economic agenda to achieve that goal. “The whole way of
thinking about the economy is being turned on its head,” he says. “I
sense a fundamental shift taking place.”

The ferocity of the new class struggle is even more pronounced in
France. Last May, as the pain of the financial crisis and budget cuts
made the rich-poor divide starker to many ordinary citizens, they
voted in the Socialist Party’s François Hollande, who had once
proclaimed: “I don’t like the rich.” He has proved true to his word.
Key to his victory was a campaign pledge to extract more from the
wealthy to maintain France’s welfare state. To avoid the drastic
spending cuts other policymakers in Europe have instituted to close
yawning budget deficits, Hollande planned to hike the income tax rate
to as high as 75%. Though that idea got shot down by the country’s
Constitutional Council, Hollande is scheming ways to introduce a
similar measure. At the same time, Hollande has tilted government back
toward the common man. He reversed an unpopular decision by his
predecessor to increase France’s retirement age by lowering it back
down to the original 60 for some workers. Many in France want Hollande
to go even further. “Hollande’s tax proposal has to be the first step
in the government acknowledging capitalism in its current form has
become so unfair and dysfunctional it risks imploding without deep
reform,” says Charlotte Boulanger, a development official for NGOs.

His tactics, however, are sparking a backlash from the capitalist
class. Mao Zedong might have insisted that “political power grows out
of the barrel of a gun,” but in a world where das kapital is more and
more mobile, the weapons of class struggle have changed. Rather than
paying out to Hollande, some of France’s wealthy are moving out —
taking badly needed jobs and investment with them. Jean-Émile
Rosenblum, founder of online retailer, is setting up both
his life and new venture in the U.S., where he feels the climate is
far more hospitable for businessmen. “Increased class conflict is a
normal consequence of any economic crisis, but the political
exploitation of that has been demagogic and discriminatory,” Rosenblum
says. “Rather than relying on (entrepreneurs) to create the companies
and jobs we need, France is hounding them away.”

The rich-poor divide is perhaps most volatile in China. Ironically,
Obama and the newly installed President of Communist China, Xi
Jinping, face the same challenge. Intensifying class struggle is not
just a phenomenon of the slow-growth, debt-ridden industrialized
world. Even in rapidly expanding emerging markets, tension between
rich and poor is becoming a primary concern for policymakers. Contrary
to what many disgruntled Americans and Europeans believe, China has
not been a workers’ paradise. The “iron rice bowl” — the Mao-era
practice of guaranteeing workers jobs for life — faded with Maoism,
and during the reform era, workers have had few rights. Even though
wage income in China’s cities is growing substantially, the rich-poor
gap is extremely wide. Another Pew study revealed that nearly half of
the Chinese surveyed consider the rich-poor divide a very big problem,
while 8 out of 10 agreed with the proposition that the “rich just get
richer while the poor get poorer” in China.

Resentment is reaching a boiling point in China’s factory towns.
“People from the outside see our lives as very bountiful, but the real
life in the factory is very different,” says factory worker Peng Ming
in the southern industrial enclave of Shenzhen. Facing long hours,
rising costs, indifferent managers and often late pay, workers are
beginning to sound like true proletariat. “The way the rich get money
is through exploiting the workers,” says Guan Guohau, another Shenzhen
factory employee. “Communism is what we are looking forward to.”
Unless the government takes greater action to improve their welfare,
they say, the laborers will become more and more willing to take
action themselves. “Workers will organize more,” Peng predicts. “All
the workers should be united.”

That may already be happening. Tracking the level of labor unrest in
China is difficult, but experts believe it has been on the rise. A new
generation of factory workers — better informed than their parents,
thanks to the Internet — has become more outspoken in its demands for
better wages and working conditions. So far, the government’s response
has been mixed. Policymakers have raised minimum wages to boost
incomes, toughened up labor laws to give workers more protection, and
in some cases, allowed them to strike. But the government still
discourages independent worker activism, often with force. Such
tactics have left China’s proletariat distrustful of their proletarian
dictatorship. “The government thinks more about the companies than
us,” says Guan. If Xi doesn’t reform the economy so the ordinary
Chinese benefit more from the nation’s growth, he runs the risk of
fueling social unrest.

Marx would have predicted just such an outcome. As the proletariat
woke to their common class interests, they’d overthrow the unjust
capitalist system and replace it with a new, socialist wonderland.
Communists “openly declare that their ends can be attained only by the
forcible overthrow of all existing social conditions,” Marx wrote.
“The proletarians have nothing to lose but their chains.” There are
signs that the world’s laborers are increasingly impatient with their
feeble prospects. Tens of thousands have taken to the streets of
cities like Madrid and Athens, protesting stratospheric unemployment
and the austerity measures that are making matters even worse.

So far, though, Marx’s revolution has yet to materialize. Workers may
have common problems, but they aren’t banding together to resolve
them. Union membership in the U.S., for example, has continued to
decline through the economic crisis, while the Occupy Wall Street
movement fizzled. Protesters, says Jacques Rancière, an expert in
Marxism at the University of Paris, aren’t aiming to replace
capitalism, as Marx had forecast, but merely to reform it. “We’re not
seeing protesting classes call for an overthrow or destruction of
socioeconomic systems in place,” he explains. “What class conflict is
producing today are calls to fix systems so they become more viable
and sustainable for the long run by redistributing the wealth

Despite such calls, however, current economic policy continues to fuel
class tensions. In China, senior officials have paid lip service to
narrowing the income gap but in practice have dodged the reforms
(fighting corruption, liberalizing the finance sector) that could make
that happen. Debt-burdened governments in Europe have slashed welfare
programs even as joblessness has risen and growth sagged. In most
cases, the solution chosen to repair capitalism has been more
capitalism. Policymakers in Rome, Madrid and Athens are being
pressured by bondholders to dismantle protection for workers and
further deregulate domestic markets. Owen Jones, the British author of
Chavs: The Demonization of the Working Class, calls this “a class war
from above.”

There are few to stand in the way. The emergence of a global labor
market has defanged unions throughout the developed world. The
political left, dragged rightward since the free-market onslaught of
Margaret Thatcher and Ronald Reagan, has not devised a credible
alternative course. “Virtually all progressive or leftist parties
contributed at some point to the rise and reach of financial markets,
and rolling back of welfare systems in order to prove they were
capable of reform,” Rancière notes. “I’d say the prospects of Labor or
Socialists parties or governments anywhere significantly reconfiguring
— much less turning over — current economic systems to be pretty

That leaves open a scary possibility: that Marx not only diagnosed
capitalism’s flaws but also the outcome of those flaws. If
policymakers don’t discover new methods of ensuring fair economic
opportunity, the workers of the world may just unite. Marx may yet
have his revenge.

— With reporting by Bruce Crumley / Paris; Chengcheng Jiang / Beijing;
Shan-shan Wang / Shenzhen

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