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Can America's Middle Class Be Saved? (V) Middle Class Destiny Explored

Aug 25, 2009
"Source, where are you?
Remedy, where are you?
Economics, are you finally going to change?"

-- Rene Char, "Feuillets d'Hypnos"(1)--

Tocqueville feared the emergence of a despotic state in America -- an anti-utopia in which a quiet, titular state oversees a timid, hard-working population whose members are all alike and equal, fat, dumb, and happy.

In his much maligned "malaise" speech, President Carter struck the same cord when he spoke of the worship of self-indulgence and of "paralysis and stagnation and drift" gripping America.

The rising world of falling expectations; of open meetings of closed minds; of more church steeples and stop signs; of legal crimes; indeed, of a tyranny of laws: is it inevitable?

Economics do not exist in a vacuum. They always have a context, both factual and ideological. And it is human values that form the context in which "exchange" value or economics reside.

In what was the biggest selling, university economics textbook of all times, Paul Samuelson defined "economics" as "the study of how men and society CHOOSE, with or without the use of money, to employ SCARCE productive resources to produce various commodities over time and distribute them for consumption, now and in the future, among various people and groups in society."(2)

Note carefully that Samuelson assumes having a choice about employing scarce resources. Obviously,

(i) Samuelson's "scarce resources" were not absolutely scarce. They were scarce only at a certain price offered. If you wanted more of them, all you had to do was pay more for them.

(ii) Those scarce resources were not absolute necessities. Adam Smith and Paul Samuelson were writing in a time when water, air, food, and other absolute necessities were not absolutely scarce on a global scale; consequently, their reasoning made sense.

That situation is changing, however, and most likely irrevocably. Whenever and wherever absolute necessities such as water are absolutely scarce, there is no choice. If the United Nations is right, 1.8 billion people will experience a water calamity in less than 20 years.

The separation of "use" value and "exchange" value in such cases ends. The former invades, overwhelms the latter. The man with the last cup of water will not sell it at any price.

But what is a "necessity"? One of the weak points in classical economics has always been an operational definition of necessity, because necessity is to a large extent culturally determined. A necessity in America may not be a necessity in Haiti.

As water, food, and other absolute necessities become absolutely scarce, cultural determination will lose its power of definition, and economics will enter a new era unlike any other in human history.

(i) If Samuelson's definition is retained, economics in the future will be "post-economics" relative to the economics taught today.

(ii) If his definition is rejected because "scarcity" becomes absolute scarcity, economics will be forced to become really, actually, truly, finally . . . economical.

John Adams' recommendation to Thomas Jefferson, "as We are poor We ought to be Oeconomists,"(3) will assume its full value. And Rene Char's plea quoted at the head of this article will be answered in the affirmative: economics will finally change, for better if consciously constituted and managed, for worse if unconsciously controlled and endured.

Could the emerging scarcity of absolute necessities constellate values so as to form a foundation for (i) a new economic sector?

Even more spectacular, could those scarcities constellate values so as to create (ii) a new source for the creation of wealth? Smith identified land, labor, and capital as "the three original sources of all revenue as well as of all exchangeable value. All other revenue is ultimately derived from some one or other of these."(4)

The creation of either a new sector or a fourth source would have a momentous impact on the middle class.

Through it all, however, the long-term, cyclical decline of the middle class stays in place. As long as capitalism is capitalism, any new economic sector or a fourth source of exchange value, any extraordinary scientific or technological innovation, will ultimately undergo the same centralization of enterprise and division of labor with its accompanying routinization and standardization.

No matter how many reprieves and new leases on life are granted to the middle class over the centuries, then, the fundamental problem remains. Which is why the malaise President Carter described -- the stupor Rimbaud and Tocqueville predicted -- is not fully dissipated by any of the fates or the destiny cited above.

The only thing allowing for a definitive resolution of the middle class decline and fall is that the revolution in values creates a post-capitalist/post socialist economic system.

Unlike fate number five, we are speaking of changes of, not in, the capitalist system. Concentration and centralization of enterprise could end; the specialization of labor could stop. In particular, the relentless quest for higher rates of profit would terminate.

A new economic system should not be cavalierly dismissed as impossible. Karl Marx defined a "commodity" as "an object of human wants, a means of existence in the widest sense of the term."(5) Adam Smith gave greater specificity to "widest sense": the "necessaries, conveniences, and amusements of human life."(6)

There is a fundamental agreement, then, that the key to economics is ultimately what people value. It follows that a change in values could change the creation and maintenance of exchange value and the economic system in which is operates.

The emerging absolute scarcity of absolute necessities could force such a change. We cannot force men to be free. Men can be forced, however, to be economical. How they handle that outcome will ultimately determine whether or not mankind survives.

Samuelson noted that choices about resources are made both with and without money. Will the second, non-monetary option undergo a renaissance as water, food and other absolute necessities become scarce, or will the first option continue to dominate and dictate -- with all the uncontrolled fury of a tornado, tsunami, or other natural disaster?

To those political and economic conservatives who will say that a new system, a new economic sector, or a new source for generating economic value are preposterous ideas, all I can say is, given the current prevailing values, you are correct.

However, this essay may be correct about something else: an All-Directions, Tocquevillian despotic state sitting atop an All-Directions economy: would not that be the Fourth Reich?

FOOTNOTES

(1) Rene Char, "Feuillets d'Hypnos," Gallimard, Paris, 2007, p. 18.
(2) Paul A. Samuelson, "Economics: An Introductory Analysis," fifth edition, McGraw-Hill, New York, 1961, p. 7. Capitalized words italicized by Samuelson.
(3) John Adams, "Adams to Jefferson, Grosvenor Square Nov. 1. 1785," in Lester J. Cappon, Editor, "The Adams-Jefferson Letters: The Complete Correspondence between Thomas Jefferson and Abigail and John Adams," The University of North Carolina Press, Chapel Hill, North Carolina, 2005, p. 88.
(4) Adam Smith, "The Wealth of Nations," Penguin Books, London, England, 1997, pp. 155, 356.
(5) Karl Marx, "A Contribution to The Critique of Political Economy," Edited by Maurice Dobb, S. W. Ryazanskaya, translator, International Publishers, New York, 1970, p. 27.
(6) Adam Smith, op.cit., p. 133.
About the Author
Thomas Belvedere is the pseudonym of a political consultant to senators, representatives, governors, and the media. He worked for all levels of government, and for all three branches. An accredited expert witness in federal court, he has a Ph.D. in political science.

He authored "The Source of Terrorism: Middle Class Rebellion."

For his website, go to Thomas Belvedere.
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